29
May

Friday – Thank you Sir May I Have Another

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 Arrested Development Watch: Just close out my rant yesterday on crude oil and the proposed higher royalties ...


One Way, or Another, They're Gonna Gitya Watch: The Administration has imposed a 1 year moratorium on building roads on 58 million acres of U.S. national forest land. The edict takes effect immediately and supercedes any State laws passed regarding road building. These roads are used for logging, mining and um, drilling, etc. So if you have a federal less in BFE National Park and no road, good luck to you, I'm guessing you're not going to be getting an extension. 

 

Nutbag Watch - Day 5 - Fearing he was losing camera time to other world leaders, Kim Jung Il launched a sixth short range missle overnight and reiterated Khrushchev-like statements. It looks like its up to China to geld this guy.

 

In Today’s Post: 

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today
  6. Odds & Ends

 

Holdings Watch: 

  • $10KP: $31,200 / 47% Cash / The Wiki Holdings Tab is Updated.
  • Holdings Watch Current Thoughts: I've been adding calls into market and sector weakness for the last two weeks in the wake of 1Q earnings. I'm now thinking of taking a few chips off the table into near term rallies. Remember that June is one of the rare expiration months where you get five weeks in between options expirations so the front month contracts still have 3 weeks of life left after this week.

  • Added (10) more WRES November $2.50 calls for $0.50 with the stock at $2.03 yesterday.

 

Commodity Watch: 

Crude oil rallied strongly ending the day up $1.63 at $65.08 following a bigger than expected draw on crude inventories and a generally bullish in tone EIA report. Crude is now trading at a seven month high.  The crude market also took heart from OPEC's comments regarding signs of demand recovery. This morning crude is trading up a buck plus and above $66.

  • Dollar Watch: The dollar fell out of bed overnight, breaking support at 80 and trading towards 79.50 and a five month low. Support looks to be closer to 76.

Natural gas jumped $0.32 to close at $3.96 yesterday after the EIA released a gas injection report of 106 Bcf but also revised past week's storage tallies slightly lower. See comments on gas prices next section. This morning gas is trading up a dime at $4.06.

  • Gas Supply Watch: We should get March natural gas supply data sometime today. Look for a continued decline in Total and Texas production.
  • Tropics Watch: Hurricane season officially kicks off Monday, and TD1 has already formed and drifted harmless into the mid north Atlantic. The weather tab at left contains everything for your storm chasing needs. HAM and Fox have lots of images and storm tracks while sites like crown provide good text updates.

Natural Gas Review


ZComment: Not a lot to say. Market saw a smaller than expected injection and a small (7 Bcf) downward revision to the storage numbers for last week and reacted strongly on high volume.  The revision doesn't change the fact that storage is very full for this time of year (still second fullest on record for this week of the year) and the smaller than expected injection but it still tied the record injection for this week in history. Demand is a long way from "recovered". This may be the peak for this year's injections as we start to get some summer feeling heat this week and next and that should start to add cooling load to the currently weak demand picture.


EIA Oil Inventory Review


ZComment: Big draw as the refining complex cranks back to life. Imports remained low for a third week but I think that's probably anomalous (a bit early to wishfully think China is sucking enough barrels in their direction to make that big a difference). Gasoline demand was stout and in fact was 1.8% above last year's levels for this week.  I'd like to see it hold up, above 9.3 mm barrels per day, for a few more weeks before I get even sort of excited about anything that vaguely resesmbles a refinery.

CRUDE OIL:

Crude Imports - This number has hugged the low end of the seasonal range for the last 3 weeks. That's not enough time to declare a new trend and as we've seen of late, OPEC compliance is inching lower. It may however be an indication of rising demand for crude from Asia, something Saudi and others have been hinting at. Time will tell and it could be just noise.


 

GASOLINE - Big bump in production, and a most probably temporary bump in demand.

 




 

 

 

DISTILLATES - Demand still flatlined, stocks still bloated.




 

 

Stuff We Care About Today

Sign of the Times Watch: DVN and COG announced restructurings of their operational models to reduce costs. Both firms will be closing regional offices and combining divisions, and laying off employees. Other firms are taking these same steps a little more quietly but I expect to see more of this as we approach Fall bank line redetermination time.


WRES Addendum. I've added a 2010 model that shows the additional cash flow in the higher oil price case due to their lack of 2010 hedges. The $75 oil case sees roughly a doubling of cash flow despite a modeled 10% production decline simply because the 2009 oil hedges are not present in 2010.  See the report here.

 IOC - Oil Is Indeed In Their Big Gas Play In Papua New Guinea

  • Antelope - They recovered 35 degree oil in a the second sidetrack of the Antelope 1 well. Good news to confirm an oil rim when you already have as much gas as the do.
  • They plan additional tests so its early to say how much oil they've found as they gave few details. Surely will not hurt the stock though.
  • This isn't one I follow closely anymore but I gotta say Nice one Reef!

Odds & Ends

Analyst Watch:

  • (TLM) cut to Sector Perform at CIBC
  • (ECA) cut to Market Perform at BMO
  • Dahlman raises (PXP) target from $22 to $32, rated Buy.

Housekeeping Watch: Anyone with RBC research please send me the schedule for their energy conference next week. Thanks.

194 Responses to “Friday – Thank you Sir May I Have Another”

  1. 1
    Sambone Says:

    By Lananh Nguyen
    Of DOW JONES NEWSWIRES

    LONDON (Dow Jones)–Nymex crude oil futures surged to a fresh six-month high
    above $66 a barrel in London Friday, boosted by higher equities, a weaker
    dollar and lower U.S. crude inventories.
    “Oil continues its magnificent run on the back of dollar weakness and unabated
    risk appetite,” says Andrey Kryuchenkov, vice-president of commodities research
    at VTB Capital. Meanwhile, “U.S. refinery runs are starting to look better
    while U.S. crude stockpiles are finally shrinking.”
    At 1050 GMT, the front-month July Brent contract on London’s ICE futures
    exchange was up $1.01 at $65.40 a barrel after touching a six-month peak at
    $65.43 a barrel.
    The front-month July contract on the New York Mercantile Exchange was trading
    $1.07 higher at $66.15 a barrel after earlier hitting a six-month high at
    $66.17 a barrel.
    The ICE’s gasoil contract for June delivery was up $14.75 at $519.25 a metric
    ton, while Nymex gasoline for June delivery was up 181 points at 192.87 cents a
    gallon.
    Oil prices were buoyed by optimism over the global economy Friday as
    participants followed through on Thursday’s gains with more buying. Oil has
    risen around 17% in the last 10 trading sessions.
    Strength in broader financial markets was lifting crude in the short term, as
    was a weaker dollar, participants said.
    “It is no puzzle as to why oil prices are rising despite weak current
    fundamentals,” said David Hufton, managing director at PVM Oil Associates in
    London. “They are going up because speculators are hopeful that a bottom has
    been reached and an economic recovery is about to take place.”
    Thursday’s data from the U.S. Department of Energy showing a 5.4 million
    barrel decline in crude inventories suggested the global glut – which has
    weighed on prices in recent months – could be dissipating.
    While the data bolstered prices in the near term, market participants said
    they would search for more indications that demand – and by inference, economic
    activity – was starting to rebound amid the global economic slowdown.
    “Participants are perhaps starting to see the first signs of a meaningful
    inventory drawdown,” said Edward Meir, an analyst at MF Global in New York. “It
    remains to be seen whether this destocking trend will continue.”
    Meir warned oil demand was still relatively weak and said massive oil
    inventories were also being held in floating storage.
    The optimism pervading the oil market may be overdone, said analysts at KBC
    Market Services in the U.K. Although sentiment has been boosted in recent
    weeks, “demand is weak and showing little short term sign of improving,” the
    analysts said.

    -By Lananh Nguyen, Dow Jones Newswires
    Dow Jones Newswires
    05-29-09 0700ET

  2. 2
    Sambone Says:

    9:00 (Dow Jones) Crude oil’s trading around $66 a barrel — highest price
    since November — but energy stocks have lagged the commodity during the same
    time frame, Bespoke Investment Group says. When oil tanked at the end of 2008,
    energy stocks clearly outperformed the commodity. But since then, blog notes
    the ratio has fallen nearly as fast as it rose. “The current ratio is right
    near its average over the last 7 years, but it is ‘oversold’ based on recent
    action,” Bespoke says. “At some point this ratio is bound to reverse as oil
    stocks begin to catch up with the commodity, the commodity begins to (pull)
    back in, or both.”

  3. 3
    bill Says:

    >Nutbag Watch – Day 5

    You got me on that headline…thought you were going to talk about leaders closer to home.

    Banning roads for a year..if i held a lease in those areas, id sue

  4. 4
    bill Says:

    Did you see tudors comments today re pxp..
    new presentation..i didnt see anything..but they liked it

  5. 5
    bill Says:

    >Dahlman raises (PXP) target from $22 to $32, rated Buy.

    Does anyone have this report?

  6. 6
    zman Says:

    Re 3 – hehehe

    Re 4 – yes, I don’t that play or frankly them, well enough to comment. Not yet anyway.

    Re 5 – I don’t just, the headline, if anyone has it I’d like a copy.

  7. 7
    zman Says:

    BOP – thanks again for the KWK debt read yesterday, nice 11+ indications this morning.

  8. 8
    BirdsofpreyRcool Says:

    TechTrader (following yesterday afternoon’s rare comments) — “70/30 green day… looking for a morning rally until mutual fund crowd runs out of money”

  9. 9
    Sambone Says:

    By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–U.S. crude oil imports from Saudi Arabia, the world’s
    largest oil exporter, fell to their lowest level in more than 20 years in
    March, government data released Thursday show.
    Figures from the Energy Information Administration show imports from the
    Saudis plunged 38.5% from a year earlier, to 944,000 barrels a day, the lowest
    level since November 1988.
    Saudi Arabia accounted for 10% of U.S. imports in the month, its lowest share
    since May 1987, EIA data show. Saudi dropped to the No. 4 ranking among top
    U.S. crude oil sources, for the first time since April 2004, behind Canada,
    Mexico and Venezuela.
    The decline in crude supplies from the desert kingdom comes as Saudi Arabia,
    the de facto leader of OPEC, led oil exporters in slashing production amid
    crumbling demand and rising global inventories. The EIA estimated Saudi
    Arabia’s output in early 2009, when oil arriving in the U.S. would have been
    pumped, dropped to a 15-year low of just over 8 million barrels a day.
    The U.S. wasn’t alone in seeing less Saudi crude in the month, as official
    data from China showed imports of Saudi crude fell 27% year-on-year and were
    nearly 22% below the February level. Even with the declines, Saudi Arabia was
    the biggest crude oil supplier to China, which is the second-biggest oil
    consumer in the world behind the U.S.
    U.S. crude oil imports in March averaged 9.441 million barrels a day, up 2.6%
    from February, but down 1.8% from a year earlier and the lowest rate of crude
    imports in March since 2003.
    Canada was the top crude oil supplier for the 37th straight month.
    The EIA reported U.S. oil demand in March fell 5.4%, or more than 1 million
    barrels a day, from a year earlier to a 12-year low for the month of 18.672
    million barrels a day. Demand fell on a year-to-year basis for the 20th
    straight month in March.
    The gain in imports in the month help push company-held crude oil inventories
    at the end of March to 365.8 million barrels – the highest level since August
    1990 and 1.3% above earlier estimates for the month, EIA data show. March
    imports include some 221,000 barrels a day brought in and shipped to the
    Strategic Petroleum Reserve. The emergency stockpile grew by more than 5
    million barrels in the month to a record level of 712.8 million barrels.
    Commercial crude stocks rose as U.S. refiners slashed processing rates as the
    weak economy sapped demand for petroleum products, as witnessed by gasoline
    demand which was at a six-year low for the month. Refiners cut crude oil
    processing by 1.9% to near 14.1 million barrels a day, a 12-year low for the
    month. Excluding months in 2005 and 2008 when hurricanes disrupted refinery
    operations, crude processing rates were the lowest in March in any month since
    February 2000.

    EIA Revised Top 10 US Crude Oil Import Sources
    (figures in million barrels per day)
    Mar Feb Mar Jan-Mar Jan-Mar
    09 09 08 09 08
    Canada 1.845 1.913 1.795 1.901 1.886
    Mexico 1.092 1.219 1.232 1.203 1.220
    Venezuela 0.949 0.960 0.858 1.029 0.980
    Saudi Arabia 0.944 1.099 1.535 1.128 1.541
    Nigeria 0.860 0.457 1.154 0.607 1.102
    Angola 0.644 0.671 0.384 0.612 0.433
    Iraq 0.587 0.554 0.773 0.570 0.697
    Brazil 0.334 0.365 0.188 0.365 0.175
    Colombia 0.254 0.225 0.135 0.235 0.174
    Russia 0.219 0.139 0.108 0.173 0.068

    -By David Bird, Dow Jones Newswires
    Dow Jones Newswires
    05-29-09 0847ET

  10. 10
    BirdsofpreyRcool Says:

    z — does KWK have significant acreage in the Eagle Ford??

  11. 11
    nifkin Says:

    Tudor Pick PXP comments
    PXP exploration update ($26.10 – B) – Great indications at Friesian, but still too soon to call commercial. New presentation filed in 8-K shows Friesian has 89’ deeper pay, setting liner, drilling ahead to M-21 Sand (Tahiti current producing sand), results likely 3-4 weeks out. Initial pay bodes well for deep potential at Friesian (150mmboe net to PXP, $19/share unrisked). Drilling schedule shows June 2009 spud for Salida and Northwood, ~120day wells with 4Q results.

  12. 12
    zman Says:

    KWK – Nope, big in Barnett shale. This is a deleveraging play for me. They have an inventory of drilled but not completed wells so you get growth without turning the drill bit to the right (as much) in the near term. Plus, they are liquids rich so higher oil prices will drag NGL realizations up.

    I have some $10 and $12.50 calls and I was getting a little anxious about the later ones.

  13. 13
    zman Says:

    Nifkin – where do you obtain your conference schedules (guessing Bloom) and do you have the RBC schedule for June 1,2

  14. 14
    zman Says:

    BOP – anything from HT? How’s the bond market looking? Thanks.

    Anyone have a move quote for a green screen?

  15. 15
    zman Says:

    Reef – Nice call IOC. Any further thoughts on how much oil they have been talking about, not much to run on in the release.

  16. 16
    zman Says:

    PXD June $30 calls coming out of purgatory now – holding through news, possible next week.

  17. 17
    VTZ Says:

    Gold through resistance means fresh run at 1000 and if it breaks it its on to much higher highs imo, 1200 ish first target.

  18. 18
    zman Says:

    VTZ – you playing something like Hecla or the GLD on that?

  19. 19
    Garyinhou Says:

    kwk knocked at 11.20

  20. 20
    zman Says:

    Market having a tough time sorting a rally out here.

  21. 21
    VTZ Says:

    I play Silver Wheaton (SLW), Anatolia (ANO), Kinross (K), and a basket through the Sprott Gold and Precious Metals Fund. They hold physical bullion and small caps.

  22. 22
    BirdsofpreyRcool Says:

    stocks selling off… but credit “on fire” (from the NY Money Center Bank trading desk)

  23. 23
    della05 Says:

    Thanks for the reassuring words on PXD yesterday, I was getting nervous for a second or two.

  24. 24
    BirdsofpreyRcool Says:

    heard KWK might have some Eagle Ford acreage… haven’t looked. Know they are a barnett play… but heard something about the EF too….

  25. 25
    zman Says:

    D – I hear ya, still could be no joy at that well of course, or no information which might cause the stock to ebb a bit. Broad market is defining all the moves to day with a nod to higher oil and natural gas.

  26. 26
    zman Says:

    BOP – had not noticed that, thanks, will check.

  27. 27
    BirdsofpreyRcool Says:

    HeadTrader would wait for the U of Mich confidence number to come out… then buy any dip.

    Or, he would buy 1/2 here, then buy if sell-off from U of M #

  28. 28
    reefguy Says:

    ioc- oil column height is not less than 90′, but cannot be more than 200′. When you have a hydrocarbon clumn of 3000′, we call that a rim of 35 gravity oil.
    Since this is a complex carbonate reservoir, ultimate volume of recoverable oil depends on the rock quality(P+P) in which the oil rim lays.
    I think it is likely to be in poorer quality rock. Being fractured, it will be very difficult to keep out bottom water or gas from above.
    Simple solution is to drill laterals about 20′ below the gas/oil contact.
    Just some thoughts…I am still long

  29. 29
    1520sbroad Says:

    any gold investors out there ever heard of a closed end fund with ticker ASA? it holds common stocks of a variety of producers worldwide – mostly South Africa and Canada.

  30. 30
    BirdsofpreyRcool Says:

    Hearing that we should take a closer look at the EF players.

  31. 31
    zman Says:

    1520 – I traded ASA many years ago. That one has special tax consequences.

  32. 32
    BirdsofpreyRcool Says:

    U of M Conf # exp’d at 68.0… comes out at 10am

  33. 33
    BirdsofpreyRcool Says:

    68.7 right around expectations

  34. 34
    1520sbroad Says:

    i’m looking at the pdf re: US taxpayers right now

  35. 35
    zman Says:

    BOP – I have HK and PXD for Eagle Ford exposure. Big acreage positions in both, a number of widely distributed big wells at HK, first well completed but data not yet released at PXD (and double the acreage of HK with excellent well control due to Edwards experience in S. Texas)

    TXCO is bk
    APC is probably too large to get much leverage out of even a big set of wells there.
    SM – not a big fan
    SFY – I wish them well but also not a big fan
    ROSE – interesting but not drilling any wells right now.
    TMR – smallest acreage position
    REOS / ZaZa – I don’t know em

  36. 36
    zman Says:

    … and I should add that so far I can’t find mention that KWK has any designs on the Eagle Ford, although they could and probably due have some S. Texas acreage that could be prospective for it.

  37. 37
    BirdsofpreyRcool Says:

    z — whoa. quick service. thanks for the info! agree on APC, SM, and SFY.

  38. 38
    reefguy Says:

    EF-older thread. PXD says EF column is up into fractured chalk. Largest owner of old chalk wells is MLP EVEP. This is a stealth exposure. I am not sure those guys even realize it.

  39. 39
    BirdsofpreyRcool Says:

    hearing some stuff re: a recent PXD well… will try to follow up.

  40. 40
    BirdsofpreyRcool Says:

    thanks reef!

  41. 41
    jat Says:

    Z,

    sent you the rbc, you should have it

  42. 42
    jplaton Says:

    Any opinions on UGA? HAve heard from a trader it trades at a discount to Crude and needs to catch up.

  43. 43
    zman Says:

    Reef – Nice, thanks.

    BOP – you mean their DeWitt county E.F. test? That’s the one they said yesterday has been completed and is being turned to sales. They will have news on it “shortly”. No further drilling there until 3Q and then its a long range step out (75 miles!, ok so not really a step out but it tells you they think they may be onto something over a broad portion of their 310,000 acres).

    I never want to overplay the significance of a single well. Doesn’t mean a play works, even if you have a good one. Street reaction should be strong to a high single digit IP with condensate and before I get told that its meaningless without pressure data, I hear your concern.

  44. 44
    1520sbroad Says:

    i need some more time to look over ASA – might be better off buying one of the tickers inside it.

  45. 45
    BirdsofpreyRcool Says:

    heard pressure data was eye-popping… want need to check deets. exactly the well as there is some (potentially intentional) mis-information out there.

    ie. you don’t wanna go around, bragging about a well, while you’re still trying to lease acreage…

  46. 46
    BirdsofpreyRcool Says:

    kyleandy — your instinct to add to KOG at a buck was spot on. you pull that trigger?

  47. 47
    zman Says:

    JP – I think the quick money has been made in gasoline. It could go higher, getting dragged up by oil but we’ve had an impressive run and it’s not clear that demand is really back up to stay. Good numbers last week but those and the ones from the week before were Memorial Day related. Another couple of weeks and I’ll be a little more favorably inclined towards it. Could it run another 10% from here? Sure. But I think that takes higher oil to do and as we approach $70 I think the bulls are going to run out of steam, at least near term.

    If you are thinking long term, I think gasoline prices will move modestly higher. Lot of hyrbrid and electric car issues down the road but that may actually boost prices as refiners cut capacity to match. Ethanol also likely to be a driver of higher gasoline prices.

  48. 48
    Sambone Says:

    By Christine Buurma
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Natural gas futures extended gains Friday, lifted by
    rising commodity prices and positive economic data.
    Natural gas for July delivery on the New York Mercantile Exchange was trading
    9.7 cents higher, or 2.45%, at $4.054 a million British thermal units after
    opening floor trade 13.2 cents higher at $4.089/MMBtu.
    A weaker U.S. dollar was helping to lift commodities across the board, while
    economic data pointed to sign of recovery that could boost the demand for
    natural gas. Gas prices have fallen about 70% from last summer as economic
    downturn curbs gas demand, particularly among industrial consumers.
    “Gas is a little late to the party, but it’s certainly caught the dollar
    weakness play that’s been lifting the energy complex overall,” said John
    Kilduff, an analyst with MF Global in New York.
    Revised Commerce Department data showed Friday that the U.S. economy
    contracted by less than previously thought during the first quarter of 2009.
    The economy contracted by an annualized rate of 5.7% in the first quarter, down
    from the initial 6.1% prediction.
    “The gas market appears to be renewing its focus on expectations of an
    economic recovery rather than current high levels of storage and low levels of
    demand,” analysts with Tradition Energy in Stamford, Conn. wrote in a note to
    clients Friday.
    But ample supplies and forecasts of mild weather in the major gas-consuming
    regions could place downward pressure on prices. Total gas in U.S. storage as
    of May 22 was 2.213 trillion cubic feet, 21.6% above the five-year average and
    31% above last year’s level.
    MDA EarthSat, a Rockville, Md. private forecaster, was predicting mostly
    normal temperatures across the eastern and Midwestern U.S. from May 29 to June
    7. The moderate temperatures were expected to limit the demand for natural gas
    for heating.
    -By Christine Buurma, Dow Jones Newswires
    Dow Jones Newswires
    05-29-09 0935ET

  49. 49
    Sambone Says:

    By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures continued higher for a fifth straight
    day early Friday, trading above $66 a barrel after a fresh six-month high.
    Traders said activity was likely to be dominated by movements in June gasoline
    and heating oil futures, which expire at the settlement. Prices across the
    board have been getting a boost from signs of tightening inventories in the
    U.S., the world’s largest oil consumer, and hopes of a bottoming out of the
    recession which will spark a turnaround in weak oil demand.
    Saudi Arabian Oil Minister Ali Naimi threw fuel on the fire, expressing hope
    this week that crude oil prices could rise above $75 a barrel by the end of the
    year. He also repeated warnings that prices could rise sharply in coming years
    to top last summer’s peak of $147 a barrel, if oil prices stay below $75,
    choking off needed investments by producers.
    Front-month July crude oil futures jumped 6.6%, or more than $4.03 a barrel
    heading into Friday’s trading as Naimi’s remarks played into a continuing
    speculative rally in oil and other commodities based on hopes of a coming
    economic turnaround.
    At 9:24 AM EDT, July crude was up $1.22 at $66.30 a barrel, after hitting a
    high of $66.43 a barrel earlier, the highest level since Nov. 5.
    OPEC on Thursday kept its oil output ceiling in place and said it aims to
    shrink the ballooning global oil inventory overhang that threatens to undermine
    its price target.
    Latest U.S. weekly oil inventory data, released Thursday, showed an unexpected
    large drop of 5.4 million barrels in crude oil inventories, but stocks still
    remain near their highest levels since September 1990.
    Implied gasoline demand jumped 3.3% to its highest level since Aug. 31, 2007
    in the week ended May 22, the Energy Information Administration said. But the
    figure likely reflects movements through the supply chain to the retail level
    ahead of the Memorial Day holiday, which was celebrated May 25. Analysts said
    they will be watching for further signs of gasoline demand. EIA data shows
    gasoline deliveries typically drop week-to-week by 1% or more in the week of
    the Memorial Day holiday, which kicks off the summer driving season.
    June RBOB gasoline futures were up 2.68 cents at $1.9373 a gallon, while June
    heating oil was up 3.76c at $1.6390.
    – By David Bird, Dow Jones Newswires

    Dow Jones Newswires
    05-29-09 0928ET

  50. 50
    jplaton Says:

    Thanks Z, the trader I spoke with suggested a $40 price target on UGA based on his analytics.

  51. 51
    choices Says:

    1520-asa-you prob have 15% withholding

    web site but i have not checked on tax consequences-do not know the fund.

    http://www.asaltd.com/

  52. 52
    VTZ Says:

    Nice trading and analysis lately Z.

  53. 53
    1520sbroad Says:

    choices – thanks – looks similar to canadian royalty trust at my first glance – but also looks like there are some other variables depending on how much distribution they pay and how i elect to classify shares

  54. 54
    Garyinhou Says:

    Z, any plans with kwk 10’s or 12.5’s?

  55. 55
    kyleandy Says:

    bop – KOG no

    PXD – Pressure is eye-popping” i assume thats good???/

  56. 56
    zman Says:

    JP – re 50 – ok, have to noodle on that.

    VTZ – Even a blind squirrel finds a nut once in awhile. Thanks! Helps to pay for the 50% overage on the kitchen remodel last year.

    BOP re 45 – Is that a PXD well? The Reos press release mentioned a big well and I never found who drilled it. That was a monster of a well with something like a 17 mm/d IP and nearly 3,000 bcpd. Zoiks if true, that rivals anything you see in the H.S.

    On acreage – PXD has there’s largely HBP now, don’t know that they are adding anything/much to it.

  57. 57
    zman Says:

    West – have you logged in yet? Miss your commentary from the old days.

    TEX or Wyoming – if you’d care to guest lecture on pressure in the shales for Kyle that would be great compared to the job I’d probably do of it. Us non-engineer types would appreciate the lesson.

  58. 58
    zman Says:

    Gary – re KWK – I was thinking to take those $12.50s off the table soon, that’s a bit of a stretch and one bad day and they are really set back.

  59. 59
    BirdsofpreyRcool Says:

    #55 — this might not refer to PXD’s well… checking details. Think some head-fakes are at work here. But, yes, “eye popping pressure” would be good.

  60. 60
    zman Says:

    Doing some PSA’s on the wrap this weekend. If anyone has job listings feel free to send along.

  61. 61
    zman Says:

    BOP – in your checking can you ask about H2S presence?

  62. 62
    ram Says:

    ZMAN – Is there an E&P technical recruiter in the house?

  63. 63
    BirdsofpreyRcool Says:

    kyleandy — my bad. I never got back to posting more on KOG. Been tied up in some other things lately. But, there was a large seller that pushed the price back to a buck. Don’t know why they were selling. No fundamental reason to sell here. So, we missed our near-term buy oppy. That said, there are a lot of trading days between now and June 22nd. But, I would plan on adding/buying shares before then. Sorry to let you down here…

  64. 64
    zman Says:

    EIA Gas monthly not yet out, gas looking pretty cautiously at $4 from above. If those March numbers come in decently I’ll double the SWN, otherwise, I’ll sell it for now and revisit in awhile, same on a possible sale of the HK and on the KWK $12.50s.

  65. 65
    zman Says:

    There’s a headhunter in here, yes.

  66. 66
    isleworth Says:

    when is that number due Z?

  67. 67
    zman Says:

    Isle – today sometime. It’s your tax dollars at work so could be today, could be Monday.

  68. 68
    zman Says:

    West – Not that I saw but I’d probably miss that, playing Parshall with EOG and then further afield occassionally CLR and more rarely (to my regret of late) WLL. BOP, you have anything on that?

  69. 69
    ram Says:

    Thanks – I found him.

  70. 70
    zman Says:

    WRES starting to get its groove back. I added a 2010 quick model to the piece from the other day. Link in the post above.

  71. 71
    kyleandy Says:

    reef – EVEP having big day maybe somebody there does realize it.

  72. 72
    zman Says:

    LINE knocking on $20

  73. 73
    West Says:

    BOP, pls add color to 6-22-09 comment for KOG,thx. I’m thinking they will announce at least 1 well result from the #3 Tuesday at the RBC conference. You seem to have better sources on this than me and may have better infor.

  74. 74
    zman Says:

    Supply data out for March: Nothing for gas bulls to be excited about yet.

    U.S. Lower 48: 59.03 Bcfgpd, down from 59.37 in Feb. Pretty much flat vs Mar 2008.

    Texas fell slightly month to month

    Wyoming slightly down – basically flat feb to march

    Oklahoma backing off now (about time)

    New Mexico – flat

    Louisiana – surprisingly flat.

    Gulf of Mexico – flat – which is interesting, recovery from the storms ended about then for any significant increments.

    Other States – which is the aggregate of places like Arkansas which isn’t broken out by state was flat month to month. That’s been a big growth driver but rounding over for the last five months now.

  75. 75
    zman Says:

    I’ll have the monthly gas supply slide show out with the Monday post.

    NG numbers could care less, not sure they’ve noticed the numbers are out yet. Gas up about 8 cents at 4.04 now.

    Should get rig counts in 2 more hours.

  76. 76
    Garyinhou Says:

    Hey Ram, sorry was away.. I need to update my opening(s) with Z.. what’s up?

  77. 77
    BirdsofpreyRcool Says:

    west #73 — KOG has said that they want to announce the results from wells 3 and 4 together. I think they just moved a completion rig onto 3 in the last coupla days. I thought that rig was there two weeks ago… but, I think they are taking their time, as oil prices are rebounding. Anyway, while they could have initial results from well 3 at RBC, don’t think they will share them. That said, Lynn’s body language lately has been very very positive. It will be tough for him to keep that out of the presentation.

  78. 78
    bill Says:

    i pulled the trigger on kog today at 1.10

  79. 79
    Garyinhou Says:

    Z.. I will send email too.. but job wise….

    Previous openings for me are gone and I have new one.

    Sr. Project Manager, Houston, TX
    7+ years project management of manufactured and fabricated offshore drilling and production equipment. Exp in machine shop/ fabrication environment preferred. Exp with MRP/ERP required, preferably SAP.

    Anne Kumaga’s Weatherford openings are close to being filled, will provide any info on new openings there when she gets them.

  80. 80
    West Says:

    thx

  81. 81
    zman Says:

    Thanks Gary, you send em and I’ll post em.

  82. 82
    zman Says:

    Nicky / Tater – got levels on the SP?

  83. 83
    isleworth Says:

    Z – is it correct that those EIA nat gas numbers are from March – two months old?

  84. 84
    BirdsofpreyRcool Says:

    bill — i didn’t know that KOG is presenting at RBC. But, as i said, Lynn is having a tough time suppressing the giggles these days. So, could be a reason for KOG to move higher.

    What time/day do they present?

  85. 85
    zman Says:

    Isle – yes.

  86. 86
    BirdsofpreyRcool Says:

    west — you going to RBC? would love to hear your KOG comments tuesday….

  87. 87
    zman Says:

    Marketwatch on energy stocks:

    http://www.marketwatch.com/story//energy-stocks-extend-gains-to-cap-off-a-strong-may

    Note the oil service comment. Unreal.

  88. 88
    zman Says:

    Also from the above link, note that Goldman thinks FSLR could replace GM in the SP500.

  89. 89
    zman Says:

    NG trying to defend $4 post number release.

  90. 90
    zman Says:

    Looking at a monthly chart of SWN, you sure wouldn’t think natural gas was having trouble holding $4.

  91. 91
    West Says:

    KOG- @ RBC Tues,3.30edt; no

  92. 92
    BirdsofpreyRcool Says:

    thanks, west.

  93. 93
    1520sbroad Says:

    swn 12 month chart is interesting too when compared to nat gas. hard to believe gas was double what it is now a year ago.

  94. 94
    zman Says:

    Gas not holding $4.

  95. 95
    zman Says:

    ZTRADE:

    Sold the SWN June $40 calls for 4.10, up 56%, felt extended, will buy it back lower later. Natural gas not holding the $4 level well after the release of March supply data.

  96. 96
    gaamblor Says:

    z,

    any data on canadian ng production? are the lower imports due to lower production.

  97. 97
    VTZ Says:

    Gaamblor… yes. Drilling has fallen off even worse than the US except for the Horn River/Montney/Northern BC shale areas

  98. 98
    BirdsofpreyRcool Says:

    TechTrader says that there may be a rare double-low at 12:10 EDT today… heading for that now.

  99. 99
    zman Says:

    Gaamblor – Their storage is high as well due to the economy up there and weather. Their production has been falling for quite some time but I don’t have recent data. A majority of the production comes from the WCSB (Western Canadian Sedimentary Basin) and this area is not seeing production growth. You also have some increased demand from the oil sands projects, not sure how big that is though compared to what it was two to three years ago, I’d think not a whole lot bigger but it all adds up. On the eastern side, you’ve had some issues at Sable Island, in the last couple of months that could be helping to exaggerate the reduction in supplies. I used to track all the pipe volumes coming across the border and the production by province but I used to have interns who could 10 key too.

  100. 100
    zman Says:

    VTZ could likely address the oil sand demand for natural gas growth issue.

  101. 101
    choices Says:

    http://www.bloomberg.com/apps/news?pid=20601109&sid=ab8SraKYnR2Q&refer=home

    shell cut production at refinery

  102. 102
    bill Says:

    is there any play by buying txco

    someone likes it

    http://biz.yahoo.com/e/090528/txco8-k.html

  103. 103
    zman Says:

    Thanks choices, saw the Deer Park “upset” this morning, big refinery, have not heard a timeline on restart or if it was off fully, that kind of thing can, if it stays off for a bit, jack up gasoline.

  104. 104
    zman Says:

    Bill – I’ve thought about it and I’m probably not going to play. That’s more roulette like than I like to go. I wonder at the fact that APC doesn’t just buy them under and be done with it for their Eagle Ford shale.

  105. 105
    zman Says:

    98 – BOP, forgive me but I am, at hear, a TA neophyte. What does a double bottom signify on the minute chart, I’d guess a bounce much higher but just a guess.

  106. 106
    VTZ Says:

    Ok, so for oil sands NG demand growth year over year there has not been that much although in the long term Alberta is forecasted to be a net importer of NG whereas now most of the volumes from Alberta’s WCSB as Z mentioned in the previous post.

    The only startups have been Opti/Nexen and CNRL Horizons although Opti has a gasifier therefore their NG consumption is reduced as they gasify the heavy part of the barrel for energy.

    Give me a bit and I’ll come up with an estimate of NG consumption per barrel of oil.

  107. 107
    zman Says:

    VTZ – if you give the Mcf per barrel could I also trouble you for a total oil sands bopd figure?

  108. 108
    BirdsofpreyRcool Says:

    In TechTrader’s world… we just saw the low for today.

  109. 109
    VTZ Says:

    I meant to say that most of the volumes are exported.

    The serious demand growth from oil sands producers will not occur until more projects and expansions are completed.

    Most expansion are likely delayed to the 2015 timeframe now that most development work has stopped or slowed. Kearl and Shell Expansion 1 are the only startups between now and 2012.

  110. 110
    BirdsofpreyRcool Says:

    z — re #105… ummmm…. two bottoms?

    😉

  111. 111
    zman Says:

    Ok BOP, I deserved that. And after all, twins are good thing.

  112. 112
    BirdsofpreyRcool Says:

    z — i’m no TA person myself… so, TechTrader’s talk is often over my head. But, took the rare double-bottom comment to mean that we would bounce higher from here.

    That’s why I post his comments verbatum. I don’t want to mess them up with my ignorance.

  113. 113
    zman Says:

    NG – down 6 cents now and looks unable to hold $3.90.

  114. 114
    Garyinhou Says:

    1st Friday Movie Quote:

    “I’m proud of you, all of you, every man wants his children to be better than he was, you are.”

  115. 115
    VTZ Says:

    I can give you the mining figure easily. Insitu is harder to track.

    Suncor (SU)
    Capacity: ~350 kbpd (if you include Firebag SAGD)
    Throughput: ~300 kbpd
    Syncrude Ownership: http://www.syncrude.ca/users/folder.asp?FolderID=5626
    Capacity: ~360 kbpd
    Throughput: ~290 kbpd
    Albian (RDS.a/MRO/CVX)
    Capacity: 180 kbpd
    Throughput: 135-150 kbpd
    CNRL Horizons 1:
    Capacity: 110 kbpd
    Throughput: still ramping although I’ve heard that their startup went very poorly due to weather. Kind of hush-hush.
    Opti/Nexen (SAGD+upgrading only):
    Capacity: 60 kbpd high quality synthetic
    Throughput: still ramping up

    With all the SAGD and mining projects there is probably ~1500 kbpd coming from Alberta.

    Keep in mind there is a large disparity of products between sour, 940 kg/m3, 350 cst Heavy to premium (compared to WTI) light sweet crudes.

    http://www.energy.gov.ab.ca/LandAccess/pdfs/OilSands_Projects.pdf For the list of projects.

  116. 116
    VTZ Says:

    Nobody publishes the mcf/bbl number so I kind of have to back-calculate. Give me a bit.

  117. 117
    Sambone Says:

    MOSCOW (AFP)–Ukraine’s problems in paying its bills for Russian gas have
    created an “exceptionally serious” situation, Russia’s Prime Minister Vladimir
    Putin said Friday, again urging the EU to help out.
    “The problem surrounding the transit (of gas to the rest of Europe) in Ukraine
    is very serious and doesn’t just involve Russia and Ukraine,” Putin said in a
    statement on his Web site.

    Dow Jones Newswires
    05-29-09 1231ET

  118. 118
    zman Says:

    114 – true, can’t place the movie though. Here’s another about sons.

    “Poor John. Who says poor John? Don’t everybody sob at once! My God, if I went up in flames there’s not a living soul who’d pee on me to put the fire out!”

  119. 119
    Sambone Says:

    The Cowboys – John Wayne – Wil Andersen (1972)

  120. 120
    zman Says:

    Rig counts not out yet, market looks to have fallen asleep.

    Got this in an email from Nicky:

    reckon we are very close to a top with all this stuff, energy (not nat gas), metals (silver at my target area) and gold as now moved above 967 which I needed to see.
    European currencies look very overbought so $ maybe ready to bounce.

    I can’t give you a target area for oil cos it could top anywhere between here and $80 to be honest!

    Key levels for spx are big picture 930 and 880. I am working on the idea that we are in an abcde triangle and maybe have one more trip to 880 before we launch higher for the last time and out of the triangle. This could take us into my end of June timeframe for a top.

  121. 121
    Sambone Says:

    By Tom Doggett
    WASHINGTON, May 29 (Reuters) – U.S. Senator Bernie Sanders
    has asked the federal futures market regulator to crack down on
    speculators whom he blamed for pushing up crude oil and
    gasoline prices.
    The price for crude oil topped $66 a barrel on Friday, up
    more than 70 percent since mid-January. The rising oil costs
    have been passed on to consumers in the form of higher prices
    for gasoline, jet fuel and other oil products.
    Sanders said the jump in petroleum prices was not
    justified, given that global oil demand this year is forecast
    to post the sharpest annual decline since 1981 and petroleum
    inventories are at their highest level in years.
    “While prices have gone down from their historic highs of
    last summer, there is mounting evidence that excessive
    speculation, not supply and demand, is the cause for the recent
    run-up in oil prices,” Sanders said in a letter on Thursday to
    Gary Gensler, the new chairman of the Commodity Futures Trading
    Commission.
    Sanders urged the CFTC, which oversees futures markets like
    the New York Mercantile Exchange, to use its emergency powers
    to ensure that oil and gasoline is accurately priced.
    The agency has the authority to limit the number of oil
    futures contracts a trader can control, boost margin
    requirements and suspend trading altogether for some market
    participants.
    “The increased price of oil and gas is already causing
    severe financial hardship for American families, truckers,
    small business, airlines and farmers, and it putting enormous
    strain on an economy already in the throes of a deep
    recession,” Sanders said.
    He said the CFTC should immediately classify bank holding
    companies, such as Goldman Sachs and Morgan Stanley, as
    speculators and impose strict contract position limits on
    them.
    Sanders said such companies “should not be allowed to make
    windfall profits in the oil market when in one division their
    analysts predict that oil prices will skyrocket, thereby
    driving new buyers to make investments in oil futures, while in
    another division their traders harvest huge returns on their
    oil positions.”
    CFTC officials could not be reached for comment.
    (Editing by Walter Bagley)

    Fri May 29 16:49:38 2009

  122. 122
    Garyinhou Says:

    Sambone scores.. Bruce dern’s character simply called “Long hair” in the credits… sweet.

  123. 123
    Sambone Says:

    By Susan Daker
    Of DOW JONES NEWSWIRES

    HOUSTON (Dow Jones)–Louisiana’s electrical grid remains vulnerable to the
    storm-related outages that last year led to lengthy disruptions at many of the
    state’s refineries. The lingering weakness of the power system is making
    refiners nervous – and increases the likelihood of gasoline shortages and price
    spikes in the eastern half of the U.S. during the 2009 hurricane season, which
    officially lasts from June 1 through Nov. 30.
    The Louisiana Energy User Group, or LEUG, a trade association that includes
    many of the state’s refiners, says the electric grid owned by Entergy Corp.
    (ETR) still lacks the necessary upgrades to prevent widespread outages during
    the upcoming hurricane season.
    “It’s not only important to Louisiana, it’s also a critical component of
    energy infrastructure across the Southeast,” said LEUG President Brenda Harris.
    “The grid system is still in the same condition going into this summer pretty
    much as it was last summer.”
    Entergy contends that improving the system isn’t as easy as flipping a switch.
    Making upgrades is costly and time-consuming, said Larry Daspit, an Entergy
    spokesman in Houston. But “Entergy does upgrade and improve its transmission
    lines,” he said. A major Louisiana project will be announced next week, but
    Daspit said he couldn’t provide more details until then.
    Refinery shut-ins could lead to gasoline and diesel fuel price spikes this
    year because the plants have been running well below normal capacity levels.
    Therefore, the summer driving season is likely to draw down inventories, which
    usually act as a cushion when shut-downs occur. The National Oceanic and
    Atmospheric Administration said last week that the 2009 Atlantic Hurricane
    season will have fewer storms than recorded in 2008.
    LEUG isn’t the only stakeholder sounding off about the power grid. The
    Louisiana Public Service Commission, which is in charge of regulating
    utilities, is also looking into the issue. The state’s Governor Bobby Jindal, a
    Republican, has publicly said improvements are needed. In the immediate
    aftermath of Gustav, Jindal said power was the one of the biggest issues facing
    the state. A better system could have sped up the recovery process, he said.

    Lengthy Disruptions

    Gustav made landfall Sept. 1 last year, and knocked out power to nearly
    830,000 homes and businesses. Power, supplied by Entergy, was cut-off to at
    least 12 Louisiana refineries, which account for about 16% of the total U.S.
    refining capacity. It took about a month for the nation’s second largest
    refinery – Exxon Mobil Corp.’s (XOM) Baton Rouge facility – to return to normal
    processing rates.
    Exxon, and many other large corporations including ConocoPhillips (COP),
    Chevron Corp. (CVX), and Colonial Pipeline Company, are members of the trade
    group that is pushing for improvements to Entergy’s transmission
    infrastructure. Large industrial complexes hook up to transmission lines, which
    carry higher voltage of energy than distribution lines, which supply homes and
    small businesses.
    With refineries shut down, as well as crude and products pipelines, gasoline
    supplies dwindled over last summer leading to price spikes in the Midwest and
    Southeast-especially in North Carolina and Georgia.
    Shortly after Gustav hit, Hurricane Ike, a category 3 storm, landed on the
    refinery-laden Texas Gulf Coast only exacerbating gasoline shortages in the
    Southeast. However, the Texas power grid performed better than the grid in
    Louisiana, said Harris, who works for a subsidiary of Occidental Petroleum
    Corp. (OXY).
    Upgrading the transmission lines, isn’t just about guaranteeing better power
    connections for industrial plants, it would also lead to cheaper electricity
    for all users, Harris said.
    Since Ike, CenterPoint Energy (CNP), the utility which serves the Houston
    metro area, has been working at cleaning up dead and distressed trees that
    damaged many residential area power lines in part causing the largest power
    outage in the state’s history, said Leticia Lowe, a spokeswoman for the
    utility. This year CenterPoint is going a step further in asking residents
    permission to cut trees on their property, instead of just taking care of the
    public easements, Lowe said.
    “To my knowledge, we really didn’t have any transmission issues,” she said.

    -By Susan Daker, Dow Jones NewswiresDow Jones Newswires
    05-29-09 1218ET

  124. 124
    BirdsofpreyRcool Says:

    KOG update — got the facts lined up in a row.

    1) KOG will NOT be announcing well results at RBC next Tues. Also, open-forum format at RBC means no webcast and lots of one-on-ones.

    2) Just moved completion equipment onto well #4, the 10,000 ft lateral well, which will be completed first (before well #3). Halliburton is doing the fac job.

    3) Wyoming… maybe some help here …. 10,000 ft lateral = sleeve fac for toe, plug and perf for the rest. [implications??]

    4) Well #3 is 5,000 ft lateral and will be completed after well #4. #3 completion set to go off around June 20th.

    5) Results of both wells will be announced at “the end of June.”

  125. 125
    Sambone Says:

    My turn. One of my most favorite movies;

    Ah, little lad, you’re staring at my fingers. Would you like me to tell you the little story of right-hand/left-hand? The story of good and evil? H-A-T-E! It was with this left hand that old brother Cain struck the blow that laid his brother low. L-O-V-E! You see these fingers, dear hearts? These fingers has veins that run straight to the soul of man. The right hand, friends, the hand of love. Now watch, and I’ll show you the story of life. Those fingers, dear hearts, is always a-warring and a-tugging, one agin t’other. Now watch ’em! Old brother left hand, left hand he’s a fighting, and it looks like love’s a goner. But wait a minute! Hot dog, love’s a winning! Yessirree! It’s love that’s won, and old left hand hate is down for the count!

  126. 126
    choices Says:

    z-re Sam’s #117, I just sent an e-mail to you with the latest issue on Former Sov Union (FSU) energy issues-it’s pdf so do not know how to post here-pls post if you think it is useful.

    Thanks.

  127. 127
    zman Says:

    Choices – thanks, I don’t know how to do that myself. Will have a look at it.

    BOP – thanks for the update.

    Sam – re 125. Creepy, but no idea.

  128. 128
    Sambone Says:

    #118, I like this line better from “The Lion in Winter” 1968;
    “I haven’t kept the Great Bitch in the keep for ten years out of passionate attachment.”

  129. 129
    apbd Says:

    #114, John from John and Kate Plus Eight
    #125, Sonia Sotomayor. lol
    apbd

  130. 130
    Sambone Says:

    #125

    Creepy “The Night of the Hunter” 1955, Starring Robert Mitchum, and directed by Charles Laughton (Note, this is the only movie that Charles Laughton ever directed) It is best viewed at Halloween. The best scene is Shelly Winters in the water. Spooky.

  131. 131
    West Says:

    From today’s RMOJ:MRO expands Big Bend Field from 320 to 6,400 acres and includes five 1280 acre units. This due east of the Reunion Bay field where they continue to drill and this field is currently averaging 22,549 bop month from 5 wells. MRO also has drilled 6 add’l wells in Reunion Bay field that r being held tight. This is north of the Missouri River from KOG’s acreage with independent Zenergy in between the 2 positions. Zenergy has several discoveries west of KOG’s acreage and has some type agreement with Peak North Dakota. Peak has a bakken discovery and also a 3forks discovery in the the heart of KOG’s ac. KOG’s #5 is a direct offset to the Peak’s 3forks well. Unless something has changed MRO continues to drill 10,000 foot laterals and complete with a single stage frac. I believe that KOG with have better wells using mutli-stage fracs similiar to the process EOG is using in the Parshall

  132. 132
    bill Says:

    >U.S. Senator Bernie Sanders
    has asked the federal futures market regulator to crack down on
    speculators whom he blamed for pushing up crude oil and
    gasoline prices.

    HILLARIOUS

    blame everybosy but themselves

    The oil industry needs to grow a set and take theses dopes head on.. full page advertisements, spots on cnbc..etc

  133. 133
    bill Says:

    104

    z i was thinking the same thing

    just dont know if any money will trickle down to shareholders

  134. 134
    BirdsofpreyRcool Says:

    bill — in a BK workout… usually the lawyers and advisors make darn sure that there is no extra money left on the table. 99.8% of the time.

  135. 135
    zman Says:

    Thanks West

    Bill 132 – IPAA does that, no one listens.

    Re 133 – yeah, I just don’t know either.

    Crude up a quarter, looks like a bit of profit taking, would probably accelerate if they pierce $65 to the downside, otherwise, I’d guess it rebounds by the close, equity market willing.

  136. 136
    West Says:

    bop, thx for KOG update

  137. 137
    zman Says:

    SWN trading lower like clockwork with natural gas. Most others ignoring this 3% pullback.

  138. 138
    bill Says:

    134 bop lol

    is there any other way to play it?

  139. 139
    zman Says:

    Rig count watch

    Oil rigs up 7

    Gas rigs down 8 to 703 vs 1,479 1 year ago

    Horizontal rigs up 1 to 376 from 533 1 year ago

  140. 140
    zman Says:

    Re Lion in Winter. Great movie. If you are a fan of historical fiction check out Sharon K Penman, no hydrocarbons, just good characters, great writing.

    http://www.sharonkaypenman.com/

  141. 141
    West Says:

    BOP, do u happen to know if Zenergy is the same co that use to have a large barrnet shale position and sold out about 2 yrs ago?

  142. 142
    VTZ Says:

    Z – I can’t find good enough sources for the mcf/bbl thing. It’s kind of tough because the numbers for NG can be very skewed depending on electrical consumption/cogen demand/Fuel gas demand/Steam integration. It will also varies heavily for integrated mining/upgrading as compared to insitu.

    I won’t forget this because I know it’s a good metric for you.

  143. 143
    BirdsofpreyRcool Says:

    West — there were a couple of companies who sold out large barnett positions 2 yrs (or so) ago. PTSG was one… i don’t know Zenergy. Should I?

  144. 144
    zman Says:

    Thanks V – I once wrote about it and will go back through my paper copies to find what I said. Was younger and smarter then so it should be close to right, lol.

  145. 145
    BirdsofpreyRcool Says:

    bill — you could approach some of the banks in TXCO’s credit facility and see if they would sell you their loan (to get it off their books). You might call the Financial Advisor, to find out if any of the banks want out.

  146. 146
    tater Says:

    S&P ideas: I very much agree with the idea that we are in a consolidating triangle and need to see a break above or below. I like to trade between the lines on the swings, but it’s getting very weird as we head into the weekend. I’ve read it is because of end of month mark ups from mutual funds, but I am more inclined to believe it is the ever present threat of big brother.
    What’s Obama/Pelosi going to spend my kids money on next? If my kid wanted to buy a car company, why the F couldn’t he just buy Toyota and therefore have a good purchase? I guess because that would make too much sense.
    And as for the notion that “The nation can’t afford a GM bankruptcy!” (doesn’t anybody call him out for anything that he says?) or a GM disolution, what about all those smaller leaner (BETTER) car companies that are never going to get any private financing to get off the ground because of the government orchestrated Big 3 monopoly? Maybe if government just got out of the way we could have some very cool local car companies cropping up all over.

    Nah….he’d just tax the crap out of ’em anyway.

    Oh yeah, the S&P. That 60 mIn chart that I have posted shows a down channel in red. The top of that channel marks the breakout area for me and the bottom is denoted by any one of the green lines, you can pick your favorite. The bigger picture looks to me like a rally running out of steam. It appears to be slowly turning over in a rounding fashion. It looks to me like we’ve spent too much time on this red step. I think we will test the 930 area before a rollover, but that’s just guessing.

  147. 147
    VTZ Says:

    With electrical consumption, the amount of energy is slightly more than the energy value from the oil produced. Although the energy intensity is improving.

    This only refers the mining/upgrading operations. The insitu energy cost is much less.

  148. 148
    zman Says:

    Tater – re 146. Perfect, thanks.

  149. 149
    isleworth Says:

    Z – do you attribute the weakness in NG to those March EIA numbers?

  150. 150
    BirdsofpreyRcool Says:

    bill — Global Hunter is advising TXCO in BK… if you want to talk to them, I’ve got a number.

    http://sanantonio.bizjournals.com/sanantonio/stories/2009/05/18/daily1.html

  151. 151
    BirdsofpreyRcool Says:

    west — “should I”… sounds confrontational… didn’t mean it to be!

  152. 152
    zman Says:

    Isle – yes I do, they started selling the futures down about 10 minutes after the release hit. They were pretty neutral numbers but people want to be able to point to the data and say “see, it IS declining.” Production will come off, mayhap a little slower than we’d all like as you have some drilled but uncompleted wells that get completed as a slow trickle add to the system for the next several months. We should see some precipitous declines out of Texas at some point soon.

  153. 153
    zman Says:

    MEND rejects government’s amnesty offer.

    One man’s terrorist is another oil speculator’s reason for a rally in crude, ahem, I mean freedom fighter.

  154. 154
    isleworth Says:

    tks Z . We also have two more months of likely production slowdown(April & May) that the EIA report doesn’t account for……right?

  155. 155
    zman Says:

    Isle. Yep. Maybe the increased royalty burden can shave that to a 1 month delay, lol.

  156. 156
    Sambone Says:

    By Matt Whittaker
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Gold futures rallied Friday as speculative funds bought
    the metal while the U.S. dollar declined.
    August gold rose $17.10 to settle at $980.30 an ounce on the Comex division of
    the New York Mercantile Exchange.
    “It’s almost a pure dollar play right now,” said Michael Gross, broker and
    futures analyst with OptionSellers.com.
    Historically, gold has tended to rise when the dollar falls as investors turn
    to the metal as an alternative currency, and vice-versa. Shortly after gold
    closed Friday, the ICE Futures U.S. dollar index was down more than 1.3%.
    Funds were buying the metal and other commodities on continued dollar weakness
    and the potential for inflation, said Frank Lesh, broker and futures analyst
    with FuturePath Trading.
    “The funds are buyers; they’re buying commodities across the board,” he said.
    Stephen Platt, analyst with Archer Financial Services, added: “There’s
    movement of speculative money into commodities as a safe haven just like gold.”
    Silver futures rose along with gold on the sharply lower greenback.
    “It all revolves around the same thing: the lower dollar,” said Leonard
    Kaplan, president of Prospector Asset Management.
    Silver outperformed gold in percentage terms as it catches up with the yellow
    metal, he said.
    Comex July silver rose 45 cents to settle at $15.61 an ounce.
    Meanwhile, platinum and palladium futures rose as the U.S. dollar weakened and
    oil gained.
    Nymex July platinum rose $46.20 to settle at $1,196.00 an ounce, while
    September palladium on the exchange rose $3.95 to settle at $237.45 an ounce.
    Possible investment buying may have also been behind the rise, a trader said.
    “Crude’s definitely helping,” he said.

    Settlements (ranges include open-outcry and electronic trading):
    London PM Gold Fix: $975.50; previous PM $957.75
    Spot gold at 1:32 p.m. EDT: $977.15, up $18.35; Range: $958.75-$980.15
    Aug gold $980.30, up $17.10; Range $960.40-$982.00
    July silver $15.610, up 45 cents; Range $15.145-$15.670
    July platinum $1,196.00, up $46.20; Range $1,146.90-$1,204.00
    Sept palladium $237.45, up $3.95; Range $230.00-$239.50

    -By Matt Whittaker, Dow Jones Newswires
    Dow Jones Newswires
    05-29-09 1426ET

  157. 157
    isleworth Says:

    Increased royalty burden is another nail in the coffin for increased domestic energy production…..can’t wait to see Matt Simmons next presentation where he will be sure to go crazy on that Obama administration proposal…….. 🙂

  158. 158
    zman Says:

    Market looks spent. I will likely come out of the in the money EOG and PXD calls (the 25s) before the close on any kind of a spike. I have enough leverage to PXD in the $30s of June and July.

  159. 159
    zman Says:

    Oil did indeed recover from that earlier minor sell down, closing up $1.16 at $66.25.

    NG however closed very near the LOD at 3.84

    Group’s strength is waning into the afternoon with the broad market.

  160. 160
    cargocult Says:

    How will the increased royalty payments affect the price of NG?

  161. 161
    zman Says:

    Cargo – Impossible for me to say. Someone like CERA and IPAA will definitely take a shot at quantifying it and I’ll be keeping an eye out. It will be passed along to the consumer ultimately, not on a 1 to 1 basis, but it will be in there.

    I think its probably a bigger deal for domestic oil producers and future production or the lack thereof. It’s certainly a gift to OPEC as will drive some service activity their way reducing costs of some line items and I think it ultimately helps to raise the price of oil as you see the world’s largest oil consumer see its production graph roll over yet again. More damaging is the proposal to remove the marginal well tax provisions. Loose the stripper wells in the U.S. and you are looking at at least 1 mm bopd in time that goes away. JY can tell you better than I the impact the changes will have.

  162. 162
    zman Says:

    BOP – want to check with TT and see if he sees a triple bottom?

  163. 163
    Sambone Says:

    OK Troops, I’m outta here! Have a good weekend!

  164. 164
    BirdsofpreyRcool Says:

    TechTrader is done for the day… will see if HeadTrader has an opinion.

  165. 165
    zman Says:

    BOP – thanks, can’t say I blame him.

  166. 166
    BirdsofpreyRcool Says:

    usually TechTrader is done before noon. and on friday’s he always leaves early. so, double-whammy today.

    HeadTrader is involved in a special situation trade today, is not watching the mrkt as a whole.

  167. 167
    zman Says:

    Last laughs for May – ripped from the pages of church bulletins.

    The Prayer & Fasting Conference includes meals.

    —————————–

    The sermon this morning: ‘Jesus Walks on Water.’

    The sermon tonight: ‘Searching for Jesus.’

    ———————————————————-

    Our youth basketball team is back in action

    Wednesday at 8 PM in the recreation hall.

    Come out and watch us kill Christ the King.

    ———————————————————-

    Ladies, don’t forget the rummage sale.

    It’s a chance to get rid of those things not worth

    keeping around the house. Bring your husbands.

    ———————————————————-

    The peace making meeting scheduled for today has

    been cancelled due to a conflict.

    ———————————————————-

    Remember in prayer the many who are sick of

    our community. Smile at someone who is hard

    to love. Say ‘Hell’ to someone who doesn’t care

    much about you.

    ———————————————————

    Don’t let worry kill you off – let the Church help.

    ———————————————————

    Miss Charlene Mason sang ‘I will not pass this way again,’ giving

    obvious pleasure to the congregation.

    ———————————————————-

    For those of you who have children and don’t

    know it, we have a nursery downstairs.

    ———————————————————-

    The Rector will preach his farewell message

    after which the choir will sing: ‘Break Forth

    Into Joy.’

    ———————————————————

    Irving Benson and Jessie Carter were married on

    October 24 in the church. So ends a friendship that

    began in their school days.

    ————————————————–

    Eight new choir robes are currently needed due

    to the addition of several new members, and to

    the deterioration of some older ones.

    ———————————————————

    Scouts are saving aluminum cans, bottles and other

    items to be recycled. Proceeds will be used to cripple

    children.

    ———————————————————

    Please place your donation in the envelope along

    with the deceased person you want remembered.

    ———————————————————

    The church will host an evening of fine dining, super entertainment, and

    gracious hostility.

    ————————————————-

    Potluck supper Sunday at 5:00 PM – prayer and

    medication to follow.

    ———————————————–

    The ladies of the Church have cast off clothing of every

    kind. They may be seen in the basement on Friday afternoon.

    ———————————————————-

    This evening at 7 PM there will be a hymn singing in

    the park across from the Church. Bring a blanket and

    come prepared to sin.

    ———————————————————

    Ladies Bible Study will be held Thursday morning at

    10 AM. All ladies are invited to lunch in the Fellowship

    Hall after the B. S. is done.

    ———————————— ——————- —

    The pastor would appreciate it if the ladies of the

    congregation would lend him their electric girdles for the

    pancake breakfast next Sunday.

    ——————————————–

    Low Self Esteem Support Group will meet Thursday at 7 PM.

    Please use the back door.

    ———————————————————

    The eighth-graders will be presenting Shakespeare’s

    Hamlet in the Church basement Friday at 7 PM.

    The congregation is invited to attend this tragedy.

    ———————————————————-

    Weight Watchers will meet at 7 PM at the First Presbyterian

    Church. Please use large double door at the side entrance.

    ———————————————————-

    The Associate Minister unveiled the church’s new

    tithing campaign slogan: Last Sunday: ”I Upped My

    Pledge – Up Yours’

  168. 168
    tater Says:

    Movie quote:

    Let me make this very clear: this is your deal, not mine, so unless I have written authorization, this whole thing is over before it starts because I’m not going to be the only one left without a chair when the music stops.

  169. 169
    zman Says:

    Tater – Clear and Present Danger.

  170. 170
    tater Says:

    Way too easy for you. I love the “use the back door” on the self esteem group.

  171. 171
    zman Says:

    Tater – yep, that’s just not right.

  172. 172
    tater Says:

    Probably giving way too many lines, but I just love this quote:

    I see all this potential, and I see squandering. God damn it, an entire generation pumping gas, waiting tables; slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don’t need. We’re the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our Great War’s a spiritual war… our Great Depression is our lives. We’ve all been raised on television to believe that one day we’d all be millionaires, and movie gods, and rock stars. But we won’t. And we’re slowly learning that fact. And we’re very, very pissed off.

  173. 173
    zman Says:

    What is that, Network?

  174. 174
    tater Says:

    My most favorite line, but it gives it away:

    You’re not your job. You’re not how much money you have in the bank. You’re not the car you drive. You’re not the contents of your wallet. You’re not your fucking khakis. You’re the all-singing, all-dancing crap of the world.

  175. 175
    bill Says:

    http://finance.yahoo.com/news/Tax-on-big-oil-companies-apf-15386279.html?.v=1

  176. 176
    West Says:

    bop, I was out, just thought u might know the co. They are privately held out of Oklahoma, Robert Zinck is President, I believe. Just trying to get some additional information about them as they have continued drill in this downturn. Just supposition but they may do a deal with KOG on southern acreage, as they recently filed for five 1280units in this area and six 1280ac units just north of the Missouri River. thx

  177. 177
    zman Says:

    ZTRADES:

    Sold the 5 EOG $70 calls for 4.60, up 111%. This amount of profit essentially makes the $80s I still hold into next week a free ride.

    Sold the PXD $25 June calls for $3.40, up 53%. I have enough higher strike leverage here going into next week.

  178. 178
    Jay Reynolds Says:

    Kill the domestic stripper well industry… death will start at the margins and tens of thousands of wellbores will turn into so many enviornmental timebombs quietly ticking away across the countryside as we send more and more of our hard-earned dollars overseas to unfriendly govt’s to buy guns to kill our sons and daughters….

    No operator I know has the money required to P&A scores of wells if they are not profitable.

    If allowed to stay in business (hell, we’re taxed on the oil we sell, EMPTY wellbores, land, pay restoration taxes, sales taxes, employment taxes, taxes on equipment whether in use or not.. you name it) we can continue to upgrade.. as it is, we were just getting on our feet well before the bottom fell out.

    One guy I know, back in the middle late 80’s, snapped at one of his tax bills and loaded up a tubing trailer and drove up to the Caddo Parish Courthouse asking where they wanted the junk.

  179. 179
    zman Says:

    Going into the weekend just north of 60% cash.

    Jay – didn’t you have a source for stripper production as a % of total U.S. production? For some reason I thought it was about 20%.

  180. 180
    zman Says:

    Interesting close. Have a great weekend!

    Tecatethirty!

  181. 181
    BirdsofpreyRcool Says:

    west — #176… thanks! KOG has mentioned that they have “lots of offers” to JV wells. Now that they have raised some equity money, i think they might JV on a well-by-well basis to bootstrap up valuations. Then sell to a larger company. You might be absolutely right about Zenergy. Thanks again and have a great weekend.

  182. 182
    Jay Reynolds Says:

    I am still trying to remember where I have seen the aggregate stripper well production.

    In this field, the Caddo Pine Island Field, production is about 1 million bbls/year and I don’t know of a single oil well which is not a stripper.

  183. 183
    nifkin Says:

    Z- sorry for the late response. Streetaccount.com (pay site) usually has links to conferences. Didnt see one for RBC yet

  184. 184
    nifkin Says:

    RBC Global Energy Conf
    Mon 6/01/09
    8:30-9:00 HK, AES, ACPW, GOK
    9:05-9:35 EQT, HAL, REXX, GTE, TDW
    9:40-10:10 WMB, BJS, OIS, EGY
    10:15-10:45 PTEN, CPG.UN, ARD, BAS, ATN
    10:50-11:20 TLM, WLL, BKH, CRZO, WEL
    11:25-11:55 DUK, CHK, CLR, FTK
    1:45-2:15 Pemex Exploration and Prodn, CPN, BEXP, EVEP
    2:20- 2:50 PBR, SWN, UDRL, CGV, TTES
    2:55-3:25 ECA, DNR, WRES
    3:30-4:00 UPL, CNX, LINE, KOG
    4:05-4:35 XTO, RRC, PD.un, ALY, NGAS
    4:40-5:10 SII, RDC, GLF, PETD

    Tue 6/02/09
    8:30-9:00 NVE, SWSI, EAC, ENP, ELON
    9:05-9:35 BTU, CXO, ORA, BGC, ESE
    9:40-10:10 NOV, ACI, SE, ME, BBEP
    10:15-10:45- FTI, APC, OII, UTL, PLUG
    10:50-11:20 SD, SFY, AXC.TO, PNM
    11:25-11:55 RIG, FST, TLW.L, DYN, HTM
    1:10-1:40 COS.UN, NE, CNE, NOG, OYOG
    1:45-2:15 BHI, NKO.TO, GDP, WTI, LNG
    2:20-2:50 NXY, KWK, RZ, COMV, RAME
    2:55-3:25 PXD, PVA, ITRI, TCW, TTI

  185. 185
    RMD Says:

    Jay #184: I think I have stripper #s somewhere in Simmons data; I’ll look but not now. It’s sleepthirty.

  186. 186
    Wyoming Says:

    Pore Pressure – function of the overburden above the reservoir and possibly tectonic forces. Simple version, think of oil reservoir driven by water from .. some source at surface. Drill into it and it flows as the oil is lighter. Shut in the flow and the pressure will equal 0.44 psi/ft, the same as a column of water. This is called a NORMAL pressure reservoir. Drill with say a 9 lb/gal fluid and you see nothing as far as surface flow.

    Get rid of the water, now the overburden at 1.0 psi/ft (this is used TVD, true vertical depth – don’t multiply by the md (measured depth) especially in a horizontal) is compressing the fluid or gas. Enough pressure and temp and the gas can dew point to a condensate, lets stay single phase for now. Now when your drill bit hits the reservoir with a water based fluid, you get a kick. Shale, sand, carbonate will all have the same petro-physics. The HS has a pore pressure of about 0.9 psi/ft as I understand. The BS is also Over pressured but we do not see difficult surface pressure while drilling as the reservoir has little permeabilities.

    Cool website:

    http://www.geomore.com/

  187. 187
    Wyoming Says:

    124:
    3) Wyoming… maybe some help here …. 10,000 ft lateral = sleeve fac for toe, plug and perf for the rest. [implications??]

    If I understand correctly, no implication. Although I don’t use a sleeve as you describe or as I copied from an earlier presentation and posted; I do use something similar which basically allows me to cement the well and do the first pump down – without having to deploy a Coiled Tubing Unit or workover rig to Tubing Convey Perforate Stage 1 @ the toe. The rest are plug / perf with composite plug isolation.

    10,000′ lat, big medicine.

  188. 188
    BirdsofpreyRcool Says:

    187 — Thanks, Wyoming. 10,000 ft is a lot of opportunity to screw up. Let’s hope Haliburton doesn’t send out the Summer Interns again (like on KOG’s first well). Appreciate your comments… i’m understanding a little more, each time.

  189. 189
    VTZ Says:

    http://www.financialsense.com/fsu/editorials/stinson/2009/0529.html

    Does this match Nicky’s count?

  190. 190
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