01
Jun

Monday Morning And All Is Green Plus The Natural Gas Supply Slide Show

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China's Carbon Plan (for the U.S.): from the WSJ ~ China has proposed that developed countries such as the U.S. cut their carbon emissions by on average 40% from 1990 levels and subsidize pollution reduction and technology transfer to poorer countries. Developing nations such as China and India would have voluntary greenhouse goals under Beijing's proposal.

The Week Ahead:

  • Monday 6/1: Personal income (expected -0.2%), consumer spending (exp -0.2%), ISM (exp 42%), construction spending (exp 0% to -1.6%)
  • Tuesday 6/2: Pending home sales (exp +4%)
  • Wednesday 6/3:  EIA Oil Inventory Report, ADP employment (exp -430,000), factory orders (exp up slightly)
  • Thursday 6/4: EIA Natural Storage Report, jobless claims (exp 599 to 620,000)
  • Friday 6/5: payrolls (expected down 500 to 520,000), unemployment rate (exp 8.9 to 9.2%)

In Today's Post:

  • Holdings Watch
  • Commodity Watch
  • Natural Gas Supply Slide Show
  • Stuff We Care About Today
  • Odds & Ends

Holdings Watch:

  • $10KP - $33,300 / 61% Cash
  • The Wiki Holdings Tab is updated.
  • $10KP Tab is updated.

 

Commodity  Watch:

Crude oil rose 8% last week to close at $66.31. The 12 month crude strip is now trading at $69.15. This morning crude is trading up close to $68 with all eyes now planted on $70.

  • Dollar Watch: Look out below! Looks like the dollar is on a collision course with at least 75 which is like to push crude to $70. I see a lot of stories in the media including analysts comments saying fundamentals will reassert themselves, that demand is wimpy and that prices have doubled in recent months and oil will again be cut in half. The  point about oil having doubled is true but I'd add that this is a "futures" market and prices are being driven higher not just by speculators but by the expectation of real buyers in a recover, and longer term, the decline in supply attributable to the rapid fall in prices from last year. My sense is that both the dollar and oil initially bounce off the 75 and 70 levels respectively but the claims that the current fundamentals will reassert themselves and send oil back towards $30 are unfounded and more than a little unlikely this year.  

  • China Watch: Strategic Petroleum Reserve to be Boosted. China has said it will expand its version of the SPR from current plans. Phase I was to hold 102 mm barrels, phase II, another 169 mm barrels. Now Beijing has upped their goal to 90 days of supply. The 90 target accomplishes two things:
    • it makes China eligible to join the IEA and
    • at 8 mm bopd of demand (estimate of China's current consumption), it would tally to reserves of 720 million barrels or roughly the same size as that of the U.S. Strategic Petroleum Reserve.

Natural gas climbed a little over 5% last week to close at $3.84. The end of the week saw gas failing to hold the $4 mark after the monthly figures for supply The 12 month strip is now trading at $5.17. This morning gas is trading up $0.15.

  • Weather Watch: Cooling degree days moving up on cue with norms.

    • Last week came in at 30 vs 31 normal and 33 expected.
    • The forecast for this week is 34 vs 37 normal.
  • Tropics Watch: Nothing to speak of.

Natural Gas Supply Slide Show

ZComment: Not a lot to say this month that the slides don't illustrate below. Daily production fell from 59.4 in February to 59.0 Bcf in March. Key production growth states are showing signs of rolling but it will be a slow price as the production eases in the face of steeply lower activity, balanced by the hooking up of wells whose completions were delayed. This post will be archived on the Natural Gas tab.

Stuff We Care About Today


RBC Energy Conference Schedule (all times EST). Bold indicates names whose slides I'll be looking over for updates. a

Monday - June 1

  • 8:05 AM EQT HAL REXX TDW
  • 8:30 AM ACPW AES GOK HK
  • 9:40 AM BJS EGY OIS PRE WMB
  • 10:15 AM ARD AS ATN PTEN
  • 10:50 AM BKH CRZO TLM WEL WLL
  • 11:25 AM CHK CLR DUK
  • 1:45 PM BEXP CPN EVEP PEP
  • 2:20 PM CGV PBR SWN TTES UDRL
  • 2:55 PM DNR ECA GTE.CN WRES
  • 3:03 PM CNX KOG LINE UPL
  • 4:05 PM ALY NGAS RRCM XTO
  • 4:40 PM GLF PETD RDC SII

Tuesday, June 2

  • 8:30 AM ELON ENP NVE SWSI
  • 9:05 AM BGC BTU CXO ESE ORA
  • 9:40 AM ACI BBEP ME NOV SE
  • 10:15 AM APC FTI OII PLUG UTL
  • 10:50 AM AXC.CN PNM SD SFY
  • 11:25 AM DYN FST HTM RIG TLW.LN
  • 1:10 PM CNE NE NOG OYOG
  • 1:45 PM BHI GDP LNG NKO.CN WTI
  • 2:20 PM COMV KWK NXY RAME RZ
  • 2:55 PM ITRI PXD TCW TTI

Odds & Ends

Analyst Watch:

  • Jefferies raised price targets on its entire E&P coverage list and initiated (BEXP) with a Buy rating. The upgraded prices are most likely the functioning of a revised crude price deck as the bigger price target increases are going to the oilier names.

 Interesting Story Watch:

  • Gas hydrates: Still a ways from development but interesting long term implications for the deepwater experience E&P set (APC, DVN especially, also Shell, CVX)
  • Economic Rebound Preparations: Get your commodities now before they are gone. The story includes the favorite quote of the day “The distribution chain will generate this giant sucking sound of demand,”~ CEO Alcoa.

144 Responses to “Monday Morning And All Is Green Plus The Natural Gas Supply Slide Show”

  1. 1
    BirdsofpreyRcool Says:

    Credit Mrkt Update… wow.

    GM filing = creates some certainty. China growth = a catalyst. Fixed income investors reaching for risk, both lower-rated companies and further down the capital structure (buying subordinated debt, not just senior secured debt). Good measurement of risk appetite.

    Hearing hedge funds are still only net 45% invested and mutual funds holding cash. These guys have underperformed their benchmarks and will try to play catch-up. Expect shorts to experience some squeezing action.

    Amazing rally in credit.

    IG 133 1/2

    HY 83

  2. 2
    BirdsofpreyRcool Says:

    Dow rebalance … GM and Citibank out… Cisco and Travelers in.

  3. 3
    zman Says:

    Good point on the squeeze play. Good site for checking your stock’s short interest.

    http://shortsqueeze.com/

  4. 4
    BirdsofpreyRcool Says:

    TechTrader = low odds and bad colour

    HeadTrader = buy the dips… for reasons cited above (underinvestment by PMs)

  5. 5
    BirdsofpreyRcool Says:

    Something to keep in mind, if we are easing out of a recessionary mind-set and approaching a rally (even if it’s only a mild rally)… the last time we emerged from a recession, there were fewer hedge funds around. Hedge funds short stocks. So, instead of just money manager who where under-invested coming into the market, you will also have the dynamic of strategic short-covering. That will have the odd affect of making the unloved stocks/sectors potentiall outperform for a while.

    Just something to keep in mind.

  6. 6
    BirdsofpreyRcool Says:

    PQ hit $6 in pre-mrkt. Nice hold, z.

  7. 7
    zman Says:

    Thanks for the color BOP. Good points.

    Going into the last month of the quarter, I think Jefferies’ move this morning is good foreshadowing of what the rest of the E&P analyst crowd will doing as they mark their models to market. The big ups for price targets were in the oilier names and that makes sense given the oil run. On the gassy names, the valuation is getting a bit stretched on a historic basis for the fast growers like SWN and HK. It can get more stretched of course but the uncertainty factor will make the stocks harder to root for vs oil where you have renewed price stability. I think the bigger pop comes later for natural gas but for now, as those models get new, higher oil prices cranked through them, it will be the oily or higher oil percentage names that get the big push from the analysts. That’s CLR, BRY, WLL, DNR, APC, NFX (gassier than not but has the Bakken and foreign oil adding more weight), EOG (gassy but getting more liquids rich).

  8. 8
    zman Says:

    NG up 23 cents at 4.07. Nothing in the tropics and the weather comps are actually not great vs last year for this week (it was really hot a year ago), so this looks like a move on oil, the broad market, etc.

  9. 9
    zman Says:

    Yet another conference:

    http://news.prnewswire.com/DisplayReleaseContent.aspx?ACCT=104&STORY=/www/story/06-01-2009/0005035658&EDATE=

  10. 10
    zman Says:

    BOP – So KOG won’t have much new to say at RBC today?

  11. 11
    zman Says:

    Should have added WRES to that oily list above.

  12. 12
    BirdsofpreyRcool Says:

    KOG at RBC… nothing “new” but positive body language coming from Lynn. Company set to do lots of one-on-ones, i guess. But they will NOT be releasing any info from wells 3 and 4. That will be an “end of June” event.

  13. 13
    zman Says:

    ZTRADES:

    $10KP: WRES – Added 500 shares at $2.34

    Added 20 August $2.50 Calls for $0.50. I continue to hold the November $2.50 calls here as well.

  14. 14
    zman Says:

    Thanks for #12 BOP.

  15. 15
    zman Says:

    Published this on yahoo and google finance over the weekend on WRES.

    http://seekingalpha.com/article/140018-warren-resources-can-afford-to-wait-for-higher-natural-gas-prices?source=yahoo

    The piece on this site has the 2010 model added.

  16. 16
    West Says:

    KOG, updated their presentation slide show for conf. One of my previous questions got answered, as previous slide show didn’t show that they had leased all the land for the Charging Eagle #7( prev slide show this was #8). Their new presentation shows approx an add’l 880 ac on the north end of the tract.It still shows 100% wi on this well. It shows apprx. spud date late July.

  17. 17
    BirdsofpreyRcool Says:

    west — so, is that 880 ac additive to their net 37,000? So net Bakken acres up to almost 38,00? Just updating my model. Thx for the head’s up on the new presentation.

  18. 18
    West Says:

    bop, I cannot get the file to open this morning but as I remember it they said 37,000 ac as of a previuos date with no reference to this. In their first qtr fin statement it said that they had spent approx $ 550,000 on lease acq and seismic in the first qtr. Maybe we can get some add’l color from someone. Price action might lead one to believe, that they (stock buyers) think they will say something today. As I would have without your excellent infor, thx

  19. 19
    BirdsofpreyRcool Says:

    west — KOG… yikes! now i feel bad… if you had bought, you would be up a lot today. So, i didn’t make a trading call… just confirming that Lynn is not going to release any more well results until the “end of June.” But, if i kept you out of making some $$ today, i feel horrible.

    Personally, i think Kyleandy has the best “feel” for trading this stock. The move back to $1 the other day was someone selling… for no reason. I should have been quicker to get that info and act on it. As it stands, still looking for a pull-back tho.

    If anyone is buying today, thinking there will be results released at RBC, maybe that disappointment will show up tomorrow. We shall see.

  20. 20
    BirdsofpreyRcool Says:

    KOG — also, Lynn is not all that great at keeping confidential info confidential. I think we will get an indication of the testing at wells 3/4 long before the official results are out. Again, we shall see.

  21. 21
    zman Says:

    Couple of names I have more than the usual amount of leverage to on a tear today, KWK and PXD. I’m likely to close out the higher strike KWK calls pretty soon. On the PXD, they speak at RBC tomorrow afternoon so I think that one can extend for a little longer as we may be seeing a press release to go along with their first eagle ford shale well before the presentation or at least in the next week or so.

  22. 22
    Dman Says:

    Sign of the times:

    http://finance.yahoo.com/career-work/article/107125/Land-a-Government-Job-Now

  23. 23
    West Says:

    bop, core position in place for some time. Just playing edge area for some extreme moves if I’m quick.I am still not able to get presentation to pull up, but they had also updated operations for the wells.

  24. 24
    BirdsofpreyRcool Says:

    thanks, west. i’ve been in KOG for a while myself… but, at much higher prices for much of it.

  25. 25
    zman Says:

    Changes to price deck driving the upped targets:

    2009
    gas goes from 4.80 to 4.90
    oil goes from 45 to 55

    2010
    gas goes from 6 to 6.50
    oil goes from 55 to 66

  26. 26
    BirdsofpreyRcool Says:

    Remember when the Investment Grade bond index almost hit 300 bps? Well… i do. Won’t ever forget the fear. We are miles away from that this morning. Almost to the point where it’s no longer necessary to talk about the credit market on this board anymore. That’s a good thing.

    IG 129 bps -10bps

    HY 83 3/8 +1.75 (H-U-G-E move in high yield)

  27. 27
    1520sbroad Says:

    Anyone know of a good site/source that details the whole carbon emissions/trading/cap and trade idea?

  28. 28
    zman Says:

    As Jefco raised that price deck they listed
    KWK, XTO, EOG, UPL, COG as their focus stocks.

  29. 29
    BirdsofpreyRcool Says:

    1520s — i haven’t looked… but Duke Energy is one of the proponants of cap and trade. i’d check there.

  30. 30
    zman Says:

    … and SLB has a carbon capture website here:

    http://www.slb.com/content/news/inside/2008/200802_carbon.asp

  31. 31
    1520sbroad Says:

    i’m just trying to get my head around it as it appears that some form of that legislation is going to happen. I’ll look at the duke.

    the trading piece i understand but how do credits get issued? who gets to issue credits?

  32. 32
    kyleandy Says:

    BOP – we’ll see how my “feel” is for KOG. just bot some at 1.19. maybe the “one on ones” find a buyer. also, am considering u said they are not too good about not leaking info. so if they have good news, i suspect u can’t wait till june 22. after writing this just read #20!!!!! at least we thinking alike!!!

  33. 33
    tater Says:

    S&P high from Jan ’09 is 942.75 and the 200 EMA is now around 943.80. This appears to be the reason for the rest at this time.

  34. 34
    Webloner Says:

    Z your thoughts on HK, PL.

  35. 35
    zman Says:

    1520 – if the cap and trade for carbon works like SOx and NOx programs (acid rain) then you will see an annual auction of allowances by EPA. Then they will be traded through 20 or 30 different brokers in a fairly liquid but highly volatile market. Heard talk that you would be able to trade some form of copycat vehicle (like an ETF) through the CME as well.

  36. 36
    zman Says:

    Webloner – Mimster asked same question yesterday and I still feel the same way so it here it is from the wrap:

    Mim – HK is high beta to the group, which is inching higher after a long winter so to speak. As far as catalysts go, none in the very near term to really jump out and grab the stock. More like lack of anti-catalysts in the form of deals being done by others whereas HK has already done their deals for the near term. Valuation is a bit stretched if you think gas prices stay low for an extended period but they are well hedged. Sometime before the 2Q call in July I would put even odds on an operations update. Look for more solid Haynesville and big well Eagle Ford news there.

  37. 37
    zman Says:

    Tater – when you get a chance can you look at KWK and PXD? Thanks.

  38. 38
    1520sbroad Says:

    #35 – that is what i have heard about too. Acution and then trading.

    I have recently seen references to new projects that were “creating carbon credits”. things like waste to energy, landfill reclamations, landfill gas electricity generation etc. I am trying to figure out if the “credits” that are being created here are actually marketable or is this just a figure of speech?

  39. 39
    zman Says:

    1520 – as I understand the current iteration of the plan, those would be marketable.

  40. 40
    1520sbroad Says:

    how do they become marketable? If i own a waste to energy plant how do i measure what credits i have and then how do i bring them to the pit at the CME and sell them to some willing buyer?

  41. 41
    BirdsofpreyRcool Says:

    Cap-and-Trade, ballooning deficits… we give the Chinese so much to giggle about these days….

    “Chinese assets are very safe,” Geithner said in response to a question after a speech at Peking University….

    His answer drew loud laughter from his student audience, reflecting scepticism in China about the wisdom of a developing country accumulating a vast stockpile of foreign reserves instead of spending the money to raise living standards at home.

    http://www.reuters.com/article/usDollarRpt/idUSPEK14475620090601

  42. 42
    zman Says:

    1520 – as I understand it, and I read this sometime ago but this is essentially the plan, your facility would be tested by highly paid EPA consultants who would determine what operating rate you warrant (ie, you are doing something that consumes X amount of carbon or other green activity) and then you would periodically (probably annually) be granted your allowances that you would then be free to sell.

  43. 43
    zman Says:

    Tater – one other thing, you made a comment on 5/26 about testing the April low or “at least the red line”. Still think it plays out that way now?

  44. 44
    1520sbroad Says:

    ah ha – that is the key linkage. Testing by EPA = X number of credits. I will do some more reading.

    the timber industry might be an interesting play on this idea.

  45. 45
    zman Says:

    Interesting thought 1520, it depends on how far they decide to take the argument. You could see them essentially paying WY and IP not to cut down trees.

  46. 46
    1520sbroad Says:

    exactly – if i am a timber operator with a lot of acres of timber that i do not intend to cut for 15 years can i apply for credits on those trees (carbon sponges) as they grow?

  47. 47
    zman Says:

    1520 – theoretically, but who knows what form the final legislation will take? I have not seen trees mentioned but I have not been looking. I sort of think if it turns out to be too good a deal for big business it will be toned down.

  48. 48
    RMD Says:

    stripper wells for Reef and Z:
    85% of US wells (420,000+) are “marginal” producing under 10 bbls./d. They produce 915,000bbls/d or 18% of production. 296,000 gas stripper wells produce 1.7tcfe/yr. or 9% of production. There are 2 measures for gas wells, 60mcf/d and 75m/d.

  49. 49
    zman Says:

    RMD – thanks much! That jives with the 20% ballpark of production number I was thinking about. Taking away the marginal well tax credits and you can kiss those goodbye and JY would add, bankrupt a lot of folks.

  50. 50
    zman Says:

    Market seems to be reacting favorably to the President’s car speech.

  51. 51
    cargocult Says:

    Any prospects for PQ these days?

  52. 52
    bill Says:

    bulker

    http://shipping.capitallink.com/shipping_weekly_review/market_commentary.html?senddt=060109

  53. 53
    zman Says:

    Gazprom says to import 1.5 Bcfgpd LNG by year end, sees adding another 3 Bcfgpd next year.

    Comments are telling about LNG liquefaction capacity owners.

    “once capacity is running, no LNG player would think about shut down”

    “the recession has led to world demand destruction and increased global LNG production. Demand in Japan is down, so there is a drive to North America. There are plenty of ships right now to move in the Atlantic Basin. The infinite sink market for gas is the U.S.”

  54. 54
    zman Says:

    Cargo – I own the stock, the scare there was spending vs bank line. They moved into survival mode months back and I bought some around $1. They continue to be cheap on forward P/CF and on assets. I’m holding. I’ve found the options thin and difficult to trade.

  55. 55
    zman Says:

    re 52 – yep, and the stocks are moving up too. I am on the sidelines for a bit, just a lot of irons in the fire, didn’t feel like going after another after I missed what I thought was a good entry point on DSX about $2.50 below hear. Watching, waiting.

  56. 56
    choices Says:

    30-yr T-bonds being dumped,off 2’19-Geithner’s Chinese visit must not be going so well

  57. 57
    West Says:

    I finally got KOG’s site to pull up and it shows 56k ac gross/ 37k net as of 1-1-2009. One thing that I have always wondered about is that this amount has remained constant even after they did the 60/40 deal on the Mocassin Creek acreage with the private company. I continue to believe that that private company may have been Zenergy. This occurred at about the same time as Zenergy did a deal with Peak North Dakota on acreage in this area. KOG has filed for five 1280 units between Mocassin Creek and Two shields Butte 5&6 in area shown on map as Skunk Creek, 50% ami with Peak ND

  58. 58
    zman Says:

    SWN, CHK, others participating in a Hayensville / Fayetteville shale panel here now:

    http://www.wsw.com/webcast/rbc102/panel2/

  59. 59
    zman Says:

    58 actually, that was a panel heard earlier today.

  60. 60
    zman Says:

    HK said the Eagle Ford for them is a 5 to 6 Bcfe per well for $4.5 mm a pop.

    Says they have 10 to 15 drilled now with 8 reported on. Says last two wells were the best so far, IPs above those reported to date.

  61. 61
    BirdsofpreyRcool Says:

    west — KOG — who was the private company who sold their bakken acreage to XTO? I believe it was Hunt. That was who i was told formed the 6 well JV. But, you’re right… the fact that the 37,000 acres has stayed a static figure is a bit of a head-scratcher for me too.

    thanks for all your help here. i’ll take a look at their acreage map and see if anything has changed. (i printed out that page and have it close, in order to keep the locations, wells, and names straight)

  62. 62
    zman Says:

    SWN – only thing new from them was that they have now drilled some wells in less than 5 days. Recall their average was down to 12 and they have been targeting 8 days before getting into development mode with more than 2 wells per pad. Under 5 days is fast, that’s very strong and they commented further that they are drilling laterals that are twice as long as those they drilled 2 years ago for the same price in part due to that fast drill time.

  63. 63
    BirdsofpreyRcool Says:

    z — these shale plays are continuing to KILL the “traditional exploration” guys. How can a company compete with $4.5mm wells with 6Bs of EURs?

  64. 64
    Nicky Says:

    Good afternoon all.

    Well my triangle completed sooner than I thought Friday. So the pullback we saw Friday was it! e completed and then we took off out of the triangle that has been playing out for weeks in wave v up. The target for the spx for the thrust out of the triangle has actually been achieved this morning at 943. I think we completed iii of v and are now in a sideways iv before a last push up in v of v. How high? Well I hear everyone screaming 1000 is now a given. Its possible but probably too obvious. I actually think the Dow may not push much past its 200 dma at 8750. SPX has already achieved the 200 dma at 928. 950 may end up being a brick wall on the SPX.

  65. 65
    zman Says:

    BOP – good question.

  66. 66
    Nicky Says:

    Okay Z – to the $! I am stubbornly refusing to back down on my count which is still in play as long as the lows around $77 are not taken out – then I will have to concede defeat. Yes I admit I said I thought $80 would hold and it hasn’t! But I think we are in a little iv up today with one more v down needed probably to the low $78’s.

    I know I am going to light a match with this comment but this will coincide with a top in metals and energy and also most likely in the indices.

    Gold and silver appear to need a bit more of a pullback and then one more launch for v of v.

    Some of this stuff is so overbought its just not true!

  67. 67
    zman Says:

    Good back patting episode by Floyd and Aubrey in that link in 58. ECA and SWN getting some kudos as well and Aubrey added that in the core, STR and EP have good acreage positions as well.

    HK – saying their east and south Texas Haynesville test mentioned on the last call came in at 7 MM/d, says they are encouraged that that part of the play will work too but that its deeper, higher costs and that good economics on that fall in about $7-8 gas. Over in the core area general think is you need half that price to have good economics.

    CHK says they are seeing some very big wells in the core, 10 Bcf wells. Says his 3 best wells and HK’s best wells are not on line yet.

  68. 68
    zman Says:

    HK says they have all the Core and Aubrey has all the Tier 1, lol. When they are talking big wells in the core now, they are talking 25 mm/d IP, costs not coming down as fast, says you can’t skimp on the wells (hot, high pressue). Says they are getting the days down though and think they will drill some wells in the $7.5 mm some day.

    Says fracs are getting bigger, more sand, maybe a little less water.

    HK says you can make money at almost any price in the core of the Haynesville. Core is far from all of it I’d point out but it is good size.

    ECA guys says they are in the process of ramping up here. Reiterates these are very early days in the play, cost falling more as a function of efficiency. Says they are being very careful now as they get the process down. Also sees the bigger frac trend.

  69. 69
    zman Says:

    Nicky – thanks for the count in 66. The interesting thing about the issue with energy topping is that the stocks don’t need oil to go up every day. I prefer that oil not go up everyday as that will put fear in the market and get well out of whack with inventories (already there if you just look at a point in time as I was indicating in the post) which can lead to nasty, severe pull backs in oil that the stocks can’t ignore. Holding above $60 is better, in my way of looking at things than taking a moonshot at $75. That kind of action will attract more of the “fast money” to the energy sector. Those guys are annoying. They trade charts only (no offense) and no tickers and not stories and therefore make for more volatility in the group than I care for.

  70. 70
    zman Says:

    CHK on shale well completions in the Fayetteville:

    Says they are trying 1/3 ceramic, 1/3 RCS, 1/3 sand. Says they can’t tell much difference.

  71. 71
    nifkin Says:

    WNR – stock halted

  72. 72
    Nicky Says:

    Yes Z agree – however you can see the speculators are already back in the energy markets – no way do fundamentals support oil at $70. But the whole rally is based around commodities right now. When they pull the plug you could see a nasty correction.

  73. 73
    zman Says:

    Everyone on the panel agrees that so far there is no big performance gap between sand and ceramic. Hmmm CRR.

  74. 74
    TEXWS6 Says:

    RE #68:

    HK’s D&C costs are going to be substantially higher than the rest of the players in the Haynesville. I think you meant drill and complete for less than 7.5mm$ Z. They are already drilling these wells in less than 40 days, and frac costs have come down over 50 percent!

  75. 75
    zman Says:

    Nicky – true although I think speculators get a bad rap. Who is to say what something is worth aside from those who buy and sell it? The government? No thanks. I’m a speculator. I’m thinking of making up oil speculator t-shirts so people no who to throw rocks when I walk down the street.

  76. 76
    TEXWS6 Says:

    RE #73:

    Depends on their point of view, near or long term about proppants. There is not enough history in any of the shale plays that will tell you which proppant is better. You need TONS of long term production data to tell that truth, initial rates don’t mean anything!

  77. 77
    zman Says:

    Yep, that’s what I meant. For quite some time HK has been saying $9 to 10 mm per well. They have not yet drilled one as cheap as $7.5 mm but that’s the area they are thinking they will get to. On the days, he just mentioned it was less than 40 on recent wells. They’ve had some in the 30s, 40s, 50s and in the past 60s and 70s. Point is we are still trending lower even in this play which is deeper and a little trickier to complete than the other shales.

  78. 78
    zman Says:

    Tex – Agreed re 76. They said they have not seen any gap in performance of the wells so far.

  79. 79
    zman Says:

    WNR filing equity and debt offerings.

  80. 80
    Nicky Says:

    Z – except the price they push it around to has no bearing on what it really is worth in my view. How can it be worth $32 two months ago and $70 today? You hear stories about the guys in the pits not even knowing what they are trading! Its just a vehicle to make money. I have no problem with the aspect of them making money its just with energy it has such a big impact on the rest of the economy.
    Anyway its up 6 days in a row now and we know that can’t last forever!

  81. 81
    zman Says:

    Whose to say the $32 price was right?

  82. 82
    Nicky Says:

    I knew you were going to say that!!

    Well its whatever the market will take isn’t it? And right now they are in danger of squeezing the pips again.

    We are awash with it aren’t we?

  83. 83
    zman Says:

    WRES presentation and webcast no available at RBC.

  84. 84
    VTZ Says:

    Z – Chartists! That’s when it got so oversold they had to buy.

  85. 85
    Nicky Says:

    Its going sub 25 before the bear market is over btw.

  86. 86
    zman Says:

    Right now, there is quite a bit of oil above the ground for the current level of demand.

  87. 87
    Nicky Says:

    VTZ – I don’t disagree with that comment!

  88. 88
    zman Says:

    What’s that word you Brits are fond of? Rubbish?

  89. 89
    VTZ Says:

    The USD is going below 60 on the USD index before the USD bear market is over.

  90. 90
    Nicky Says:

    Oh no not more hats!

  91. 91
    zman Says:

    V re 84. That draws up a movie quote even though it’s only Monday

    “This business will get out of control. It will get out of control and we’ll be luck to live through it.”

  92. 92
    Nicky Says:

    VTZ – re 89 I agree with that statement too but not on this run.

  93. 93
    zman Says:

    These one sided hat bets are for the birds. How about I say $100 before $25? Loser eats a hat.

  94. 94
    zman Says:

    Aubrey quote watch ~ “what will surprise you is how gas prices will begin to move back up before you think it should, it will mystify us all when it happens”

  95. 95
    Nicky Says:

    I can’t take that one Z as I actually think we will trade higher than here for most of this year notwithstanding the pullback we should see shortly.

  96. 96
    VTZ Says:

    I agree too Nicky. I’m actually kind of on board with your pullback in oil and gold now. But in gold I only see a moderate one then a breakout.

  97. 97
    zman Says:

    PXD is closing on $30.

  98. 98
    Nicky Says:

    OMG that GBP/$ is crazy. Going up 300 points each and every day! Its beyond overbought if there was such a thing!

  99. 99
    zman Says:

    Aubrey ~ the tragedy is the amount of $ that we export monthly. Says he drives a natural gas powered car, and filling it up at his house, which is the most expensive source of gas it cost him the equivalent of $0.95 cents per gallon to fill up.

  100. 100
    zman Says:

    Nicky – what time frame do you want, I’m game?

  101. 101
    Nicky Says:

    We are close if not there in oil I would say.

  102. 102
    Nicky Says:

    Okay Z – oil goes to 25 next year. But I can’t say whether it goes to $100 first cos it might!

  103. 103
    zman Says:

    VTZ – by the way, you’ve been spot on with the gold comments of late. On the oil, I too am looking for a pullback, need to see more demand to support this last leg and I just don’t see what OPEC sees, so we are a bit extended. I’d much rather see it come in to $60 or so slowly than go on to $75 and then tank back to $60 and perhaps break some stops and plummet further down. The stocks are starting to discount both a better commodity price environment and the lower cost environment and the ratio between the oil price and the stock price should not be 1 to 1 as the income statement becomes levered to over the cost, varying from company to company.

  104. 104
    zman Says:

    Nicky – Ok, if it doesn’t got to $25 next year you eat a hat. I’ll send you that edible hat link.

  105. 105
    Nicky Says:

    The oil traders don’t know the meaning of slowly up to $75. We are up 90% since March and 35% in May alone!

  106. 106
    zman Says:

    Nicky, well, it was too low, lol.

  107. 107
    Nicky Says:

    Probably not as we are still awash with it! But hey I forgot everything is gonna be okay and all our problems have been solved.

  108. 108
    Garyinhou Says:

    Z – Fred Thompson in one of fifty duplicate roles in film… guessing Red October (Opposite of Green May)

  109. 109
    Garyinhou Says:

    Z .. I enjoyed the kwk trade so far… in the 10’s at $1 and out for 2.30 today… muchas gracias

  110. 110
    zman Says:

    Gary – correct. Accept replace ruskie with oil speculator which is much further down the evolutionary chain. Normal people at the top, then politicians, pond scum, then lastly speculators. I create … nothing yada, yada, yada.

  111. 111
    zman Says:

    On the KWK, those $12.50s will go over away from me pretty soon, probably before Wednesday inventories.

  112. 112
    tater Says:

    Been out walking dogs as I am not involved (luckily) at the moment. Charts for KWK and PXD added.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882

    S&P ideas? I am very wrong at the moment. Currently looking to enter short as soon as everybody covers.

    Can you imagine being the Ford motor company right now and trying to sell a new police cruiser to some city? Is it a bribe if one government agency (GM) sends a car over to some official in exchange for a contract for a fleet of cars?

    This is not going to end well.

  113. 113
    VTZ Says:

    Thanks Z, but not as good as the work you do.

    The majority of my assets are actually now in metals rather than energy although I acknowledge that a failure to breakout will likely yield a correction to the 930 (or 880 level where I personally would find it irresistable to add).

    I’m looking for a test of the ~78.30 range on the USD index at the same time as gold tests the 1022 level.

    After this breakdown I expect a mvoe towards 72 corresponding to probably 1150 ish in gold.

  114. 114
    Nicky Says:

    So it seems they have their eyes on $70 before they let this go. Another insane day of upside for no reason. I have had to turn CNBC off in case they bring on Joe Terranova to glibly tell me why I should be long oil up here. Once they roll the Dow over oil is done too. Downside tomorrow at the least.

  115. 115
    Nicky Says:

    VTZ what happens after gold tests 1022 and before it goes to 1150? How low in between?

  116. 116
    choices Says:

    Nicky-yen the only currency that i can see which is weak against the USD-do you see anything to note about that-I have about given up trying to read anything into currency moves other than the USD is trash but what is more trashier (sp) and why. T-Bond crushed today.

    Thanks.

  117. 117
    zman Says:

    Nicky – re 114. Having the sound off helps endure CNBC until something worthwhile comes along.

  118. 118
    Nicky Says:

    SPX could get to 956 when this sideways chop is finished.

  119. 119
    VTZ Says:

    31.8% retrace of the 880 to 1022 move would be 967 which would correspond nicely with one of the technical levels that was broken to cause the test of 1022. Otherwise if that fails, probably ~930. The after the break of 1022 I expect serious buying until it is so overbought it needs to pull back… Maybe just below 1100?

  120. 120
    zman Says:

    Nicky – thanks, was just about to ask, I imagine if you want to go short, good time to enter is on a morning reversal after a sharp open higher to a level like that on the SP. Ours is not to reason why, ours is to profit by the exuberance and sell high.

  121. 121
    VTZ Says:

    Meant to write 38.2%.

  122. 122
    Nicky Says:

    Choices – we may see a bit of weakness in the $/yen to coincide with the last leg down in the $. Then I think the $ blasts higher against the Yen – target 105 area.

  123. 123
    zman Says:

    Oil and NG went out at the HOD. Pretty surprised to see NG rebound 10% today, up 41 cents to $4.25 even.

  124. 124
    zman Says:

    Very strange market in here. Definitely wants to go up. Wondering if this is the sideline cash we always here about. Dow added 100 points in last 5 minutes on Friday after a dull day trading around par. Today another 200+…they just want to take it higher it seems. Looking to take more profits continuing Friday’s theme into tomorrow and Wednesday.

  125. 125
    zman Says:

    DNR RBC presentation now after the close.

  126. 126
    Nicky Says:

    VTZ – thanks for that. Out of interest is your line in the sand for the bullish case for gold 880?

  127. 127
    Nicky Says:

    Market has a weak feel about it to me despite the 300 points to the upside since Friday. I think we are likely in a sideways to down movement before one more blast higher, however I would not be surprised to see this roll over at any time.

  128. 128
    Nicky Says:

    Theory – the bears are trapped here. They need a pullback to get out and it isn’t going to go low enough. So on the next move up they cover which causes the market to spike and then the market tanks once they have all capitulated.

  129. 129
    VTZ Says:

    I just use the technicals as a trading guide. It would be significant but it would not change my bullish outlook. I’d probably sell some short for a bit then accumulate.

    I base my outlook on money supply, monetary base, bond market, usd index, oil/base metals, continued bailouts, etc.

  130. 130
    BirdsofpreyRcool Says:

    Nicky — 128 — agreed. I think we saw some of that in the last 3 minutes of Friday’s mrkt.

  131. 131
    Dman Says:

    Nicky, on the speculation issue: just want to point out that we are in an environment where economists can’t even agree on whether we are seeing inflation or deflation!

    So how can anybody “know” what the “right” price of oil is if they can’t even be sure whether the economy if facing forward or backward, or standing on its head?

    Furthermore, if speculators cause extreme moves, such as the low at $32, why can’t smart, honest, innocent consumers of oil (eg airlines, truckers) buy all the oil they ever wanted at what turned out to be the bargain of a decade? Why didn’t they buy every contract on the face of the earth at $32?

    The reason is that *they* don’t have a clue what the “right” price is any more than the pundits do or anyone else for that matter. So maybe they thought it was going back to $10, just like NG was going to go to zero! But they were wrong.

  132. 132
    zman Says:

    LINE presentation:

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NzIxMXxDaGlsZElEPS0xfFR5cGU9Mw==&t=1

  133. 133
    Nicky Says:

    Dman I take and accept your point. However my point is that most the traders who trade oil (as we saw last year when it was run up to 150) are just speculators – it could be a bag of sugar for all they care. Therefore we really do have no idea what the true value for oil should be. So to answer your question oil has been run to such extremes in the last year that I would think most the people you mention are terrifed to buy it in case they have it wrong.
    But my own view is most these markets are gamed anyway.

  134. 134
    zman Says:

    Beerthirty

  135. 135
    BirdsofpreyRcool Says:

    Credit Indices… as good as stocks behaved today, credit outperformed.

    IG 130 -9bps

    HY 84 1/8 +2.5 points!!!!!!!!!!

  136. 136
    zman Says:

    GEOI on the tape with a Bakken acquisition. Looks like 300,000 for $10.4 mm, or $34 per barrel in the ground which I’d call high, if you just look at the proved. They are obviously looking at more than that. On acreage basis they paid a little over $1,100 per acre. Pretty positive implications for KOG and even for BEXP.

  137. 137
    Hoss Says:

    Z

    NOG announced Bakken acquisition last week also.

    http://finance.yahoo.com/news/Northern-Oil-and-Gas-Inc-prnews-15380403.html?.v=1

  138. 138
    West Says:

    Probably a little late to post but out most of the day. KOG applied for four stand up 1280ac units in: 2&11, 3&10, 14&23, 15&25 of 148N-93W, which on their map would be ami with Peak ND,the Skunk Prospect (couldn’t they find a better name). This would be southwest of the current well they r drlg. Xto acquired their interest in the area from Hunt acq. Their may be some additional interest from XTO in this area as they will know test results of wells sooner and have inside tract. Also the oilstrips r higher & they can sell forward production like they did with Hunt and Headington acq. Also their large prospect southeast in Mercer County, ND may be outside the area of active oil generation. It appears that both the bakken and the 3 forks r wet in at least their initial attempts. Z do u have link to Geoi news alert? thx

  139. 139
    zman Says:

    Thanks Hoss.

    Here’s that link West:

    http://finance.yahoo.com/news/GeoResources-Inc-Completes-bw-15406028.html?.v=1

  140. 140
    Hoss Says:

    No problem Z

    Here’s another recent Bakken transaction:

    http://finance.yahoo.com/news/Gulfport-Energy-Corporation-pz-15329353.html

    also from BMO Oil & Gas Newsletter:
    “Gulfport Energy Corp. sold certain of its oil and gas properties and related
    assets located in the Bakken Shale of North Dakota for $13.0MM. The portion
    of Gulfport’s Bakken Shale assets sold includes approximately 12,270 net acres
    and approximately 190 net boe/d of production (assumed 100% oil based on
    data from Gulfport’s year-end 2008 10-K). The transaction implies a
    preliminary deal value of $68,421/boe of daily production.”

  141. 141
    West Says:

    thx, this is the same property that NOG was involved in with Slawson. They r definitely bidding on the acreage because a 10% interest in 180bopd and 300,000eur wouldn’t justify cost. I will see if I can locate acreage. Slawson is spread around pretty good area with small interest. Just a personal deal but I don’t like to play BEXP for anything less than a very short trade r daytrade.

  142. 142
    zman Says:

    Hear ya on the BEXP, just know they are looking to sell a slug of acreage. Agreed re trading only.

  143. 143
    your guide to paleo Says:

    your guide to paleo

  144. 144
    http://phpfoxexpert.com/demo_creative/index.php?do=/profile-1347/info Says:

    http://phpfoxexpert.com/demo_creative/index.php?do=/profile-1347/info

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