05
Jun

Jobless T.G.I.F.

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Jobs Watch: Much better than expected; still ugly but less so. May non-farm payrolls:

  • Negative 345,000 vs expectations of 525,000 lost.
  • April was revised slightly low
  • 9.4% unemployment rate vs expected 9.2%

 

Housekeeping Watch: Sometimes tabs on the upper left side of the site get a bit dated. It may be that I forget to post the most recent take on something or it may be that I'm taking a hiatus from that subject (as in the case with the refiners and the bulkers of late). If you ever see something that's out of date that you would like to see updated, shoot me a note or comment and I'll get it updated in short order. Thanks, and with that I give you my Friday movie quote:

"Screws fall out all the time, the worlds' an imperfect place."

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today - E&P multiple quick update, GMXR
  5. WIOWIO - KWK
  6. Odds & Ends


Holdings Watch:

  • $10KP:

    • $31,100
    • 40% cash (I will be lightening up on June calls soon)
    • The Wiki Tab is updated.
  • No trades yesterday.


Commodity Watch

Crude oil went ga-ga for Goldman price forecast upgrade yesterday, rising $2.69 to close at $68.81, the highest levels seen since November of 2008. The 12 month strip end the session at $72.67. This morning oil is trading above $70 this morning following the payrolls number.

  • IEA Watch: IEA head says: "We haven't seen much of a recovery in demand, so expectation of economic recovery is very high but fundamentals haven't improved so much ... If the economy is not recovering but the price is going up, it makes for a very bad, negative implication." ZComment: The IEA needs an industrial sized bottle of prozac. From week to week they fluctuate between raising the alarm that prices are too low to inspire global oil and gas investment  which will lead to a calamatous rise in prices when the global economy recovers and demand picks back up to decrying high prices as something that will hinder global growth and adding that OPEC should produce more to keep prices low.

Natural gas rose $0.04 to close at $3.81, despite a pretty bearish looking and unexpectedly large injection into storage (see next section). This morning gas is trading up 10 to 15 cents as oil surges.

Natural Gas Storage Review - Filling Up Fast

ZComment: Gas in storage is at record levels for this week of the year.  Simply put, we're getting fuller faster than I would have expected due to a combination of continued strong production and weak industrial gas demand. The cumulative build season to date is now 100 Bcf above the five year average as seen below. It will take much warmer than normal weather and perhaps a disruptive storm in the Gulf of Mexico to close this gap any time soon.-







Stuff We Care About Today

E&P Multiple Update: The following charts show the change in consensus cash flow per share (CFPS) estimates for the E&P companies we frequent on the site plus the change in oil and gas 12 month and front month crude strips and in the stock prices themselves over the past month.  Notes follow the charts.


Notes to charts above:

  1. As described in a previous post,  analyst estimates are now too low for oil and still too high (but less so) for natural gas if the forward strip is to be believed. I expect oilier names to outperform, in general, as we go into the 2Q earnings driven by positive CFPS revisions which are not yet reflected in estimates.
  2. The stocks are cheap by historic stands. Long R/P stocks should warrant higher cash flow multiples. Focusing on 2010, as that is the year which most analysts will point to pretty soon, the stocks are for the most part cheaper than on 2009 numbers. The ones that are more expensive are predominantly the ones with smaller hedges, especially on natural gas in 2010.
  3. Note the estimates on the big caps have not yet filtered through higher than previously expected oil prices just yet...analysts have been raising their oil price decks for 2009 and 2010 but most have been more quiet about it than Goldman was yesterday.
  4. As far as performance goes, the stocks have not really moved much over the last month as the impact of a mid teens rise in both the front month and 12 month  strip for  crude has been offset by fits and starts and ultimately a lower 1 month price on natural gas. Kudos to Bill for having the best returning pick with PXP over the last month.


GMXR - Bank Line Redetermination, Hedge Update

  • Redetermined at $175 mm vs prior $190 mm. Management repeatedly stated they thought they would be redetermined flat, at $190 mm.
  • Hedge Update:
    • 2009: 70% of expected gas production hedged at $7.77 (unchanged)
    • 2010: 70% hedged at $6.50 (unchanged)
    • 2011 and 2012 have added new hedges, small (less than 25% of current production)
  • Nutshell: Not great, not disastrous. The redetermination was a bit overdue, I'm sure due to squabbling between management and the bank line group (I'm sure persistent low gas prices spooked the bankers). No mention of a change in activity levels but since they recent did an equity secondary I doubt there should not be a need to trim back levels based on the reduced borrowing base.  In short a minor negative that is probably forgotten in a week or two although it is costing them, in the near term, $15 mm of potential flexibility.

Why I Own, What I Own: I plan to do one or two of these each day as a refresher.

KWK -  I currently hold the June $10 and $12.50 calls.

  • Cheapish, gassy but very well hedged name with deep drilling inventory and long reserve life: At 4.7x P/2009CF and implied value per Mcfe of $3.34 the name is trading on the cheapish side vs history. Taking into account the debt, at 8.2x TEV /  '09 EBITDA it is in line with historic measures.
    • Lower cost producer: $1.09 per Mcfe on lease operating expense; low cash cost (LOE+G&A+prod. tax) of $1.64 last quarter.
    • Production growth of ~ 25% probably "in the bag" due to previously drilled wells, deep inventory
    • 3/4's of production is natural gas gas but the produce high BTU content NGLs (about 20% of production) which is good in this low gas price, liquids premium market.
    • Strong hedges:
      • 2009: 77% of gas hedged at $8.75
      • 2010: 48% at $8.17
    • Long reserve life: over 15 years on 2009 production levels and 2008 reserves (less recent Barnett deal)
    • Balance Sheet OK:
      • debt to total cap is elevated but not out of control providing a bonus as credit risks continue to ease
      • Improved slightly after a recent asset sale
      • No debt maturites before 2012
  • My plan here is to sell the near month calls soon and revisit the story on the next pullback in the group and to start including this name along with a few other new names for me in my list of "go to" trades. 

 

 

Odds & Ends

Analyst Watch:

  • (BRY) raised to Buy at Goldman
  •  (ROSE) initiated as Buy at Canaccord

 

108 Responses to “Jobless T.G.I.F.”

  1. 1
    zman Says:

    Nicky – in light of the job numbers, do you still feel that SP500 will be a brick wall? Pre open indications are above that level but that can change. If we open above it, do you think that level remains resistance?

  2. 2
    zman Says:

    Dollar bumping up a bit post jobs is now sapping strength from crude and NG. Its not that big a rally in the dollar so unless that really picks up I would expect crude to return to tracking the SP after a morning bout of profit taking.

    Art Cashin on CNBC made a good point about these end of day rallies. Said he thought fund managers are worried about a quarter in which they sat on the sidelines and now have little to show for it whereas the indexes will show big gains. He says a lot of them are holding there nose as they don’t believe in the rally but are forced to buy, bidding and failing to buy all day and then just taking the ask near the close. Makes some good sense.

  3. 3
    zman Says:

    CNBC saying the unemployment rate, if you count all those who have fallen out of the official count because they have quit looking is now 16.4%. Ouch.

  4. 4
    Sambone Says:

    By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures prices climbed above $70 a barrel for
    the first time in seven months Friday after May U.S. nonfarm payrolls fell by
    less than was expected.
    July crude oil, which had dipped into negative territory in the minutes prior
    to the report, jumped to a high of $70.32, the highest level since Nov. 5. At
    8:37 a.m. EDT, crude was up $1.08 at $69.85 a barrel.
    Crude has gained sharply in the past week on predictions from the Organization
    of Petroleum Exporting Countries and bankers that oil prices will climb above
    $75 a barrel by year end. Goldman Sachs sees prices at $85 by the end of 2009
    and at $95 by the end of 2010.
    The Labor Department said Friday that nonfarm payrolls fell by 345,000 in May,
    compared with a survey consensus of 525,000. April nonfarm payrolls was
    504,000, adjusted down from 539,000. Still, the May unemployment rate rose to a
    25-year-high of 9.4%, compared with a consensus of 9.2%.

    -By David Bird, Dow Jones Newswires

    Dow Jones Newswires
    06-05-09 0849ET

  5. 5
    BirdsofpreyRcool Says:

    Credit Market — picture this… buy-side bond geeks, all other the country, sending instant msgs and bloombergs to each other …. “HOLY COW! IG traded at 116!!”

    Bond Desks, on the other hand, are skeptical. “u can argue that a lot is priced into the massive rally that we’ve had… I think next is 130 vs 110”

    That is the credit morning update. In a nutshell. Massive massive rally over the last 2 weeks. But a lot of head-shaking and skepticism. This is what “climbing a wall of worry” feels like. Stocks… who knows. They will go up, they will go down. But, ultimately, they will either lead or follow the bond mrkt. Right now, bonds are rallying, albeit, on low volume.

    So, i continue to pick a few stocks to watch and try to buy them on down-days at a price i am comfortable buying-and-holding. For more than a week, anyway. It’s a start.

    IG 119 1/2 wider, off the morning tights

    HY 84 3/8 inching back to the 85-comfort level

  6. 6
    zman Says:

    Dollar index back over 80.

  7. 7
    BirdsofpreyRcool Says:

    “bond geeks all OVER the country”

    fingers just have an agenda of their own, sometimes

  8. 8
    zman Says:

    Crude slightly red as dollar advances.

  9. 9
    BirdsofpreyRcool Says:

    TechTrader says it’s a “low odds day” so he has his arms crossed and refuses to say any more.

    HeadTrader thinks we rally, then sell off, then wishy-washy into close.

    “wishy-washy” means we could go either way. Wonder if we will see the mrkts pick a direction in the last hour or 1/2 hour? Wonder if that direction is down? Do PMs want to head into the weekend long?? Does anyone really want to short the mrkt here?? Don’t know. Waiting for the crystal ball to clear. Near-term calls are tough… shoulda bought the Tiffany Crystal Ball (instead of the one from Wal-Mart). My bias is to stay invested, for now. Mrkt will be higher by year end… just unclear what the path will be from now to then. And there’s that GGG…. first healthcare, then cap-and-trade. Big, mrkt-moving stuff.

    Friday morning ramblings….

  10. 10
    tater Says:

    Wasn’t Nicky using a projected number around 956 that she had expected to see? Futures popped immediately to that figure on the fantasy jobs report. (Do economists have a fantasy draft and make trades and stuff in a kind of NY version of real life? Hey, take a trip and stay at a Super 8 just once please).

    Once again Nicky, very nice call!

  11. 11
    BirdsofpreyRcool Says:

    Summary from the Best Cross-Asset Class Stragegist In the World’s morning commentary —
    ————————————-

    We’ve pointed out that the credit crisis was never about the economy; it was about the debt. With the Chrysler and GM events, the credit market has been signaling that the credit crisis is on the wane and is likely to be reversed.

    While the economy is thus not central to the end of the credit crisis, today’s payroll number has given the euphoric buying of credit (that began with Chrysler) a boost after the bond market took a breather for a few days in front of the payroll number. The payroll number further cements the bond market’s view that the crisis is waning. We understand that equity investors do not fully believe this, so we continue to emphasize the themes we’ve had in recent months: protection, asset class plays (i.e. discount junk funds married with stock puts) and sector plays (i.e. beaten-down financials vs. retailers). At some point, stock investors will come around to the view of the credit market, but it may be a volatile summer before that happens.

  12. 12
    zman Says:

    Yep, got an email saying it was 956. I was referring to her level from a comment Monday and did not realize it had been revised upward by her.

  13. 13
    bill Says:

    http://online.wsj.com/article/SB124416485187987585.html#mod=todays_us_page_one

  14. 14
    BirdsofpreyRcool Says:

    Additional Commentary. Nobody’s saying it’s all sunshine and gumdrops.
    —————————————–

    Payrolls were down 345k, compared to the consensus of -520k. After revisions the payroll total was actually a stunning 257k better than expected, which is one of the largest positive surprises that we can remember.

    However, the total amount of hours worked fell at a sharper rate. So this is a positive surprise only in that the economy is losing jobs at a slower rate, but the economy has not turned up.

  15. 15
    1520sbroad Says:

    #2 – one of the brokers that i keep in touch with from the old days told me the other day over lunch that a good thing to watch these days might be stocks at or over $100 a share. Fund managers that have been sitting on their hands flock to these first to put cash to work when they feel like they have to catch the market train that has left the station. Names like IBM, AAPL, POT, XOM – spots were managers can drop large amounts of cash and then show their cash position dropping quickly

  16. 16
    zman Says:

    Everyone seems to expect the morning rally to fail and for the market to close lower from commentary I’m reading. I’m with Cashin. They “want” the market higher, I’m staying long but will reduce positions for cash into strength.

    Crude green again, frenzied trading.

  17. 17
    BirdsofpreyRcool Says:

    1520s — thanks for sharing that. interesting. will watch!

  18. 18
    zman Says:

    Re 15 – That’s absolutely true.

  19. 19
    1520sbroad Says:

    personally i’d like to see a huge volume day today – even if we don’t go up a ton – just like to see some folks get off their hands.

  20. 20
    BirdsofpreyRcool Says:

    Excellent read on Credit Markets vs Equity action

    http://www.capmarkets.com/ViewFile.asp?ID1=118342&ID2=327323293&ssid=1&directory=6571&bm=0&filename=06.05.09_Is_the_Credit_Crisis_Over.pdf

  21. 21
    bill Says:

    The analyst cash flow numbers are suspect at least in the case of pxp.

    using your number’s the strip for crude is up 10 bucks in 1 month.

    PXP produces over 50,000 b /day so 10 bucks is another half m a day, 15 m per month and 45 m per qtr so cash flow per share should be rising not falling from 6.39 to 5.89 as indicated above.

    I sold my pxp to take profits but will get back in on profit taking

    Some of the better hedge oil companies like dnr,line, pxp, might have a q2 loss due to the value of their oil hedges being worth less marked to market but we look at cash flow 🙂 not reported earnings

  22. 22
    BirdsofpreyRcool Says:

    Some of the Credit Market Euphoria is wearing off… as expected. Will be a useful data point to see where we close today.

    IG 120

    HY 84 3/8

  23. 23
    zman Says:

    Hear ya Bill. As we approach quarter end and analysts start marking their estimates to market and re-examining their forward prices we should see the less hedged, oilier names see better boosts to their CFPS estimates. Analysts are still gun shy so I would not expect big ups except for 2Q and maybe 3Q numbers.

  24. 24
    zman Says:

    E&Ps largely trading with the equity markets and not crude/NG which are both down again. They will not maintain their gains if the dollar continues to rally and sends crude down a couple of bucks but for now they are holding OK.

  25. 25
    Sambone Says:

    June 5 (Reuters) – The number of drilling rigs operating
    globally fell 3.5 percent in May compared with April, according
    to closely watched data from Baker Hughes Inc BHI.
    The global rig count fell to 1,983 in May, from 2,055 in
    April as drillers, particularly in United States and Canada,
    continued to idle rigs in the wake of falling energy demand.
    However, the international rig count for May was 993, up 7
    from the 986 counted in April. This is the first time the
    international rig count has been up this year.
    U.S. rig count for May was 918, down 77 from April, the
    lowest decline rate since November last year.
    Rig count in the U.S. has been hit particularly hard so far
    because many wells are drilled with equipment on shorter
    contracts and by smaller operators that respond more quickly to
    market signals in order to manage their cash and risk.
    But over the last few weeks analyst have been turning bullish
    on the drillers and oilfield services providers.
    Canada rig count for April was down by 2 to 72.
    Recently Dahlman Rose upgraded its outlook for the offshore
    drillers citing its expectation for increased spending by oil and
    gas exploration and production companies.
    Deutsche Bank also upgraded few drillers saying improving oil
    market conditions and an increase in drilling intensity for oil
    should boost demand.
    Last month, Citigroup and Morgan Stanley raised their price
    targets on U.S.-based oil services companies, including
    Halliburton HAL, Schlumberger SLB, and Baker Hughes
    BHI citing an anticipated recovery in oilfield fundamentals.
    (Reporting by Hezron Selvi in Bangalore, Editing by Dinesh Nair)

    Fri Jun 5 13:27:33 2009

  26. 26
    zman Says:

    Wow. Disregard 24.

  27. 27
    Sambone Says:

    By David Bird
    Of DOW JONES NEWSWIRES

    NEW YORK (Dow Jones)–Crude oil futures prices dropped below $69 a barrel
    early Friday after climbing to a seven-month high above $70 a barrel in
    response to news that U.S. nonfarm payrolls fell by less in May than was
    expected.
    “This initial rally in crude looks to have failed,” aided by strength in the
    dollar, said Adam Klopfenstein, senior market strategist at Lind-Waldock.
    Earlier, dollar weakness helped boost crude futures.
    Jim Ritterbusch, president of Ritterbusch and Associates said crude could show
    continued strength in coming days, with further gains to $76 in the next few
    weeks.
    Crude has gained sharply in the past week on predictions from OPEC and bankers
    that oil prices will climb above $75 a barrel by year end. Goldman Sachs sees
    prices at $85 by the end of 2009 and at $95 by the end of 2010. The bank sees
    declining non-OPEC output tightening supply as global oil demand improves amid
    an expected economic recovery.
    Still, in the U.S., the world’s biggest oil consumer, demand hit its lowest
    level in 10 years in the latest week, and inventories remain at extremely high
    levels.
    The Labor Department said Friday that nonfarm payrolls fell by 345,000 in May,
    compared with a consensus of 525,000. April nonfarm payrolls were 504,000,
    adjusted down from 539,000. Still, the May unemployment rate rose to a fresh
    25-year-high of 9.4%, compared with a consensus of 9.2%.
    At 9:17 a.m. EDT, July crude was down 34 cents at $68.47 a barrel, after a
    high of $70.32, the most since Nov. 5.
    July RBOB gasoline futures were 97 points lower at $1.9524 a gallon, while
    July heating oil was down 64 points, at $1.7776 a gallon.

    -By David Bird, Dow Jones Newswires (Madalina Iacob contributed to this report.)

    Dow Jones Newswires
    06-05-09 0927ET

  28. 28
    BirdsofpreyRcool Says:

    Credit losing steam with stocks….

    IG 123 1/2

    HY 83

  29. 29
    Dman Says:

    BOP – regardless of what equity investors believe, I would just point out that whether they buy or sell SPX today, they get a report which is 41% higher than on March 6.

    So looking at equities & bonds, who is leading who?

  30. 30
    BirdsofpreyRcool Says:

    oops… HY too low

    HY 83 11/16 big difference.

  31. 31
    Dman Says:

    BOP – #29 refers to #11.

  32. 32
    zman Says:

    E&P volumes running a bit high for this time of day, just a sense, not scientific, just scrolling through some names. Looks like a willingness to bottom fish and not sell them off in some sort of a panic.

    Oil down a buck, trading calming down there as well. Feels like some profit taking on the dollar rally which after yesterday’s Goldman pump is not to be unexpected.

  33. 33
    BirdsofpreyRcool Says:

    TechTrader just uncrossed his arms… says 66/34 odds for a positive close.

    just fyi

  34. 34
    BirdsofpreyRcool Says:

    HY trading up a bit

    HY 83 15/16

  35. 35
    BirdsofpreyRcool Says:

    IG 121

    HY 84

  36. 36
    VTZ Says:

    Just woke up and ahahaha, what a BS takedown in gold.

  37. 37
    zman Says:

    Needless to say, I’m with TT

  38. 38
    Sambone Says:

    “The Breakfast Club – 1985”

    BTW, “Bill” died!

  39. 39
    VTZ Says:

    and rise in the dollar.

  40. 40
    zman Says:

    Yep, re Bill. No bueno.

  41. 41
    zman Says:

    Got another report the Morgan Stanley Elliot Waver is thinking like Nicky.

    VTZ – I hear ya and I agree with ya.

    Looking at that 16.4% number on actual unemployment rate (if you count the uncounted) makes me want to buy stock in home security companies.

  42. 42
    BirdsofpreyRcool Says:

    Dman — Credit hit it’s low on Dec 6th. Equity on March 6th. Equities have been dragging credit up, since March 6th… until Credit took over, about 2 weeks ago. So, bit of a back and forth. But, credit got us into this mess… credit will have to pull us out. And that is happening. Albeit, with Volatility still clouding the picture.

    HY 84 1/4 +1/2 point now

  43. 43
    VTZ Says:

    CNBC can rant all they want about how and why this recession/depression isn’t even close to the 30s but if the broad unemployment gets up to 20-25% (which is very well could) it’s no different. They aren’t even comparing the same metric when they talk about unemployment.

  44. 44
    zman Says:

    Crude down 20 cents, market up 50. I guess this is my little rally, lol.

  45. 45
    Dman Says:

    BOP – I guess you could say that despite the 41% ramp, it is still hard to actually find anyone who admits to “investing” in equities. Trading, yes, investing…hmmm. So in that sense I see the idea of equity investors not yet “believing”. But when they do get religion, would that be your moment to buy or sell? (somewhat of a rhetorical question).

    VTZ – I’d *really* like to see a fair comparison of unemployment now vs. the 1930s.

  46. 46
    Sambone Says:

    By Steve Gelsi

    Energy stocks fell Friday as investors weighed the implications of a
    better-than-expected U.S. jobs report against flat oil prices and prospects for
    fresh oil and gas regulations in Washington.
    Blue-chip shares sustained modest losses in the early going, with Exxon Mobil
    Corp. (XOM) down 0.5% to $72.63 and Chevron Corp. (CVX) off 0.3% to $69.53.
    Among sector benchmarks, the Philadelphia Oil Service Index subtracted 1.5% to
    178, the Amex Oil Index gave up 1% to 978 and the Amex Natural Gas Index fell
    0.8% to 443.
    Energy stocks initially moved up as the Labor Department reported a loss of
    345,000 in payrolls for May, less severe a contraction than had been expected
    and the lowest number since September.
    In energy trading, crude-oil futures were off 9 cents to $68.72 a barrel after
    momentarily spiking to the $70 mark on the payrolls data.
    Among stocks in the spotlight, Noble Corp. (NE) fell 12 cents to $36.16, as
    analysts at Pritchard Capital Markets reiterated their buy rating and a $38 a
    share price target.
    The company said on Thursday that energy activity is increasing in the North
    Sea, and it’s forecasting a need for jack-up rigs from Pemex, Mexico’s
    state-run oil giant.
    Noble also said it’s moving into advanced talks with Exxon Mobil, Chevron and
    France’s Total SA (TOT) over long-term contracts in Angola.
    Meanwhile, The Wall Street Journal reported the oil-and-gas industry is
    gearing up for a battle in Washington over fracturing wells with water and
    pumping out oil and gas.
    Two Democratic lawmakers plan to introduce measures to regulate “fracking” at
    the federal level for the first time amid concerns about tainted drinking
    water.

    -By Steve Gelsi
    Dow Jones Newswires
    06-05-09 1025ET

  47. 47
    Sambone Says:

    off subject

    Jim Cramer – June 2009

    “I’ll just come right out and say it: Ben Bernanke will go down as the greatest Federal Reserve chairman in history.”

  48. 48
    VTZ Says:

    Dman – http://www.shadowstats.com/alternate_data

    The SGS alternate unemployment data is an estimated comparison using the same broad measure of unemployment before they started screwing with the definitions and metrics.

  49. 49
    BirdsofpreyRcool Says:

    re: Jobs. I can’t help but think there is a very permanent loss of many many jobs. Jobs that are not going to come back. Maybe the return to the 1 job per household is a little over-stated… but, i think there is a trend that way. If so, a lot of stuff that was “outsourced” in keeping the homelife going is gone. Dog-walkers, personal trainers, manicurists… probably permanently thin the ranks there. So, the “recovery” is not going to take us back to where we were (not that anyone believes it would).

    This is a value-stock picker’s market now. Something people on this board are pretty good at.

    BTW, the sell-off was due to a rumor that the jobs number contained a giant error. Labor Sec’y Solis came out 15 mins ago and said that rumor is false. She stands by the Jobs Report as reported. Mrkt rebounded on that.

  50. 50
    BirdsofpreyRcool Says:

    Comparing the current unemployment rate to the 1930’s would be an interesting exercise. However, so much has changed. In the 30s, women did not work, kids worked for free on the farm (or in their dad’s shop), and govt did not provide much of a safety net. May be too much of an apple-and-oranges exercise now. Just thinking out loud…

  51. 51
    VTZ Says:

    BOP – She came out and said there was no error but somehow next month they are going to revise it up to 500,000 quietly. No error though, never…

  52. 52
    zman Says:

    Movie quote Friday

    “Say hello to my little bounce”

  53. 53
    BirdsofpreyRcool Says:

    VTZ — lol. Never confuse me with someone who believes a govt official… just reporting, not supporting. 😉

  54. 54
    BirdsofpreyRcool Says:

    IG 118 -5 1/2… tears

  55. 55
    zman Says:

    BOP and V – I hear ya re govt data. I used to deal with EIA and EPA quite a bit. Nothing would shock me about data quality at either department. I learned way back not to hinge too much on one number at a particular point but to follow trends. Repeating to myself the phrase “it is what it is” helps.

  56. 56
    BirdsofpreyRcool Says:

    z — totally stumped on your movie quote… are you sure you meant “bounce”? or, was that just a stock mrkt reference… and i’m too dumb to get the joke (suspect the latter…)

  57. 57
    VTZ Says:

    One thing that cracks me up is people expecting the housing market construction jobs to come back… THERE’S WAY TOO MANY HOUSES ALREADY.

  58. 58
    BirdsofpreyRcool Says:

    VTZ — yep. Even funnier than Dog-Walkers.

  59. 59
    zman Says:

    BOP – replace bounce with friend.

    Odd bounce in NG today, still feels bottomish, but 3Q worries persist.

  60. 60
    bill Says:

    when will good news be out on pxd

    seems like the gas stocks are all down

  61. 61
    zman Says:

    Holdings Watch thoughts – very brief.

    After today we have 2 weeks left until expiration is this is one of the 4 “long” months between expirations of the year.

    KWK – I will opportunistically sell soon, it is acting well and I’d frankly like to milk it a little more.

    HK – can sell the Junes next week higher I think.

    PXD – not acting great or terrible, waiting on news. If we don’t get it the first half of next week I’ll punt on the Junes and hold and maybe add to the July’s on weakness.

    EOG – thinking that firms soon as estimates start going up into quarter end.

    WRES is the only other thing on options plate now and that is kind of long term hold.

    All stocks held I have no trouble holding longer: current list is the same with WRES, PQ, NFX, GMXR, NBR, CHK, CLR, GMXR, FTO, SWN. Was not all that excited by the GMXR news this am but not a big deal for now in light of the upside reserve potential.

  62. 62
    zman Says:

    Bill – was typing 61 and finished before I saw 60.

    Re PXD. I have no idea. I know if I call them and ask they will not say with is standard for the industry.

    My sense is very soon based on:
    *They have tied the well to sales, so they have the data in hand.
    * they said at recent conferences they would get that data to market soon.

    Caveats here:
    They could be leasing more acreage around the well and don’t want to overtly tip their hand. That can hold the data release for a long time, including to the 2Q release in July.

  63. 63
    bill Says:

    Analyst: Some Producers in Denial
    from NGI’s Daily Gas Price Index June 05, 2009
    Judging by recent exploration and production (E&P) company behavior, some in the energy patch are in denial that low gas prices will be around for a while, Becca Followill, managing director at Tudor, Pickering Holt & Co. Securities Inc., told an industry audience in Houston Thursday

  64. 64
    bill Says:

    chk seems to be burning thru cash and has only 20 hedged in 2010

    swn hedges run out

    the whole industry is in a world of hurt if prices stay here

  65. 65
    zman Says:

    I’d add that most are not but drilling behavior is driven by more than just current low prices and return but also by things like “wow, I need to get my acreage into HBP or I’m screwed”. For the most part, people are operating within cash flow. Those that are not either have low economic threshhold plays like the Haynesvile or E. Texas Deep Bossier or have room on the balance sheet and a desire to get more acreage held by production before their leases expire (like SWN).

  66. 66
    zman Says:

    Bill – agree they will have to scale back drilling programs but the maintenance budgets for many of these guys are fairly low, especially a SWN, so they can pull back drilling more and still be ok on cash flows. On CHK their interest coverage is fine and they won’t have anything coming due for years on the debt side. I expect an upward dragging effect from oil on NG next year. Also, you have winter which SWN believe will give them a better shot at a hedge. You have to wonder, if all that LNG is coming here in lieu of Europe and Asia, why LNG, the company, is applying to receive and then reship the LNG elsewhere.

  67. 67
    cargocult Says:

    Any take on CWEI? It has a PE ratio of 2.59 and makes up almost 2% of BlackRock’s energy and resource fund.

  68. 68
    zman Says:

    NG up 12 cents, odd, feels like a cover. CFTC won’t tell us much this week but next week’s number could be interesting.

  69. 69
    zman Says:

    Cargo – apologies, I don’t follow Clayton. I could look at it if you like but anything intelligent won’t come from me until next week (if then, lol)

  70. 70
    Sambone Says:

    “You wanna fuck with me? Okay. You wanna play rough? Okay. Say hello to my little friend!”
    Scarface – 1983

  71. 71
    Sambone Says:

    My turn;

    “The ratio of people to cake is too big.”

  72. 72
    bill Says:

    chk has a new outlook– they spent some time talking about production declines with rig lay down

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzQwNTk3fENoaWxkSUQ9MzI2MjQ3fFR5cGU9MQ==&t=1

  73. 73
    Sambone Says:

    KIEV (AFP)–Ukraine will pay its Russian gas bill for May on Friday, President
    Viktor Yushchenko said, after Moscow said a missed deadline could trigger a new
    gas crisis.
    “The payment for the gas will go out in about an hour,” Yushchenko said at a
    meeting with his national security council, quoted by Interfax news agency.
    Yushchenko said he had authorized the release of 3.8 billion hryvnia for the
    payment to Russian state-run energy giant Gazprom OAO (GAZP.RS), news agencies
    reported.
    “I had no other option but to approve the decision today to release the
    funds,” said Yushchenko, a pro-Western leader who has sparred repeatedly with
    Moscow over the gas issue.
    Wednesday, Russian Prime Minister Vladimir Putin warned Russian gas supplies
    to Europe across Ukraine could come to a “full stop” if Kiev was unable to pay
    its bills on time. Such a situation would lead to a repetition of the January
    gas crisis, when a bitter payment dispute between Moscow and Kiev led to a
    cutoff of Russian gas supplies to more than a dozen European countries.
    Ukrainian state gas firm Naftogaz said Friday the country’s total gas bill for
    May was $647 million. Before Yushchenko released the funds Friday, Naftogaz had
    only $120 million on hand to pay its bill, an official from Yuschenko’s office
    said.
    Naftogaz spokesman Valentin Zemlyansky told AFP the payment would go through
    on Friday evening. But Gazprom spokesman Sergei Kupriyanov said payment hadn’t
    been received as of 1900 Moscow time (1500 GMT).
    “As of this hour no payment has been received,” he was quoted as saying by
    RIA-Novosti news agency.
    The effective deadline for Ukraine to pay its May gas bill is next Tuesday,
    Kupryianov said. The deadline has been reported as June 7 but the real deadline
    is later because Sunday and Monday are state holidays in Ukraine, he explained.
    Ukraine has been one of the hardest-hit countries amid the global economic
    crisis and Russia has raised questions about the country’s ability to pay its
    gas bills. But Kiev insists it has the funds to pay them.
    About 80% of Russian gas supplies to the European Union pass through Ukraine,
    a fact which has forced the E.U. to pay close attention to the perennial gas
    disputes between the two ex-Soviet neighbors.

    Dow Jones Newswires
    06-05-09 1147ET

  74. 74
    BirdsofpreyRcool Says:

    Sam- sounds like Office Space… one of my favs!

  75. 75
    bill Says:

    3 wells in haynesville 22 m +

  76. 76
    zman Says:

    Sam – good call. I have no idea on the quote but want to see any movie that acknowledges such a basic truth.

    Bill – thanks, will go look. Saw DVN and XTO saying they thought return to balanced gas market is a 2010, not 2009 event. CHK still going with 3Q / 4Q, saying the peak was definitely 1Q.

  77. 77
    Sambone Says:

    BOP is the winner!

  78. 78
    zman Says:

    Wow. It’s been a long week. Office Space is in the personal library, can’t believe I missed that.

    NG surprisingly strong here, approaching $4.

  79. 79
    della05 Says:

    PXD green again, now for good news early next week. If not, I guess I’ll join you in shifting out of June and into July.

  80. 80
    zman Says:

    Della – The other thing I left out is the possibility they had a problem with the well. I don’t get that feeling listening to management but you never know until you see it. Their well is far to the east of the HK and APC/TXCOQ and COP activity. They have good well control through the area and seismic. Their log looked good (high porosity (for a shale at 10% average) and gamma showed distinct 205 foot section of shale. Could have good natural fracturing they mentioned, its a little higher pressure and a little hotter (over 300 degrees) so they’ve pre warned people not to expect a boatload of liquids but more dry gas with a little bit of associated condensate. Anyway, you could have mech issues, its still early in the play.

    By the way, if anyone has the name of the PXD well, I’ve been looking the PXD DeWitt County filings and am not sure which permit this one is (they have several horizontals permitted to 17 or 17,500 feet, just crossing my I’s and dotting my T’s.

  81. 81
    Popeye Says:

    Quote:
    “You remind me of my daddy. Mama told me he liked skinny women with breasts that stood up and said “Hello””

  82. 82
    zman Says:

    Bill – I heard them mention those wells at RBC, not sure if these are the same but likely.

    Also, note that HK has news coming at some point on their “biggest well yet” in the Eagle Ford which could push the EFS names up more. This HK well could be the Butaud well mentioned in a REOS press release which was said to be much larger IP than what we have seen so far. No, I don’t know pressures or choke but the well would have been a 30 + MMcfepd well if the rates are correct in the press release.

  83. 83
    zman Says:

    Pop – strangely rings a bell but can’t put finger on it.

  84. 84
    zman Says:

    Crude up 40 cents, back above 69; stocks warming up into the afternoon.

    Should get rig counts in the next hour or so.

  85. 85
    Popeye Says:

    “OK, manslaughterer…
    who just broke parole and has only
    immoral purposes in mind,

    as far as you’re concerned.
    – Thank the Lord!”

  86. 86
    zman Says:

    Popeye – still don’t know.

    Rig Count Watch

    Oil rigs down 8 to 179 vs 385 a year ago
    Gas down 3 to 700 vs 1493 a year ago

    Horizontals down 4 to 372 from 548 a year ago.

    Notably, Louisiana saw the biggest drop (that honor has usually gone to Texas).

    Louisiana rigs fell 11 to 132 vs 160 a year ago.

    Texas dropped 3 to 327 from 931 a year ago. Declines are coming.

  87. 87
    Popeye Says:

    “Wild At Heart”. My all time fav.

  88. 88
    Sambone Says:

    “Uh oh. Baby, you’d better get me back to that hotel. You got me hotter than Georgia asphalt.” That is hot!

    Wild at Heart – 1980?

  89. 89
    BirdsofpreyRcool Says:

    Popeye — sounded way too familiar… now i know why. Dark movie… from a dark director. But, had to look it up… so cheated.

  90. 90
    Sambone Says:

    “We figured there was too much happiness here for just the two of us, so we figured the next logical step was to have us a critter.”

  91. 91
    zman Says:

    Re 90: Arizona?

  92. 92
    Sambone Says:

    Man Z, you and think alike.
    “Raising Arizona – 1987”

  93. 93
    Sambone Says:

    HOUSTON (Dow Jones)–The total number of rigs drilling for oil and natural
    gas in the U.S. fell this week as producers continued to curb drilling activity
    amid slumping energy prices.
    The number of oil and gas rigs fell to 887, down 12 from the previous week,
    according to rig data from oil-field services company Baker Hughes Inc. (BHI).
    The number of gas rigs was 700, a drop of three rigs from last week, while the
    number of oil rigs fell to 179, a decline of eight rigs. The number of
    miscellaneous rigs was down one rig and stands at eight.
    The number of gas rigs in use peaked at 1,606 in September.
    Natural gas prices have plunged about 71% from summer highs amid robust
    production from U.S. onshore natural gas fields and slumping demand. Large
    industrial consumers have scaled back gas use to cut costs during the
    recession. In response to falling gas prices, producers such as Chesapeake
    Energy Corp. (CHK) and Devon Energy Corp. (DVN) have slashed their spending
    plans and rig counts to reduce the flow of new gas supplies into the market.
    Analysts anticipate that the sharp decline in natural gas drilling activity
    will eventually bring supply back in line with demand and help bolster gas
    prices.
    Gas for June delivery on the New York Mercantile Exchange was recently down
    11.6 cents, or 3.04%, at $3.926 a million British thermal units.

    -By Jason Womack, Dow Jones Newswires
    Dow Jones Newswires
    06-05-09 1315ET

  94. 94
    zman Says:

    Roger that Sam. Had someone over the night at the house who said Princess Bride was a stupid movie, then added Office Space was too. It was hard to be civil.

  95. 95
    Sambone Says:

    Throw em out of da house!

    Who doesn’t like Miracle Max: “Sonny, true love is the greatest thing, in the world-except for a nice MLT – mutton, lettuce and tomato sandwich, where the mutton is nice and lean and the tomato is ripe
    [smacks his lips]
    they’re so perky, I love that.

  96. 96
    Sambone Says:

    What is sad is that I had to buy my 24 year old assistant a copy of “Good Fellas”. She had never seen it! What a waste.

  97. 97
    BirdsofpreyRcool Says:

    HeadTrader said “we had our rally”…. now we are going to flop around, then close in the green.

    just passing comments along.

  98. 98
    zman Says:

    Sounds about right, volumes nothing to write home about in most energy names.

  99. 99
    Sambone Says:

    Weekened reading;

    http://www.nakedhedgefund.com/wp-content/uploads/2009/05/200day2.pdf

  100. 100
    zman Says:

    Second largest drop in consumer debt:

    http://www.marketwatch.com/story/us-consumer-debt-falls-by-157-billion

  101. 101
    zman Says:

    End of day/week push? Now this kind of trading feels like summer.

  102. 102
    nifkin Says:

    does anyone know how much of the front month nat gas UNG holds? I want to say 25%- they start to roll next Friday. USO starts Tue goes to Fri FYI

  103. 103
    Sambone Says:

    By David Bird
    Of DOW JONES NEWSWIRES

    Crude-oil prices ended modestly lower Friday on profit-taking from seven-month
    highs amid lingering concerns about the state of the U.S. economy.
    Light, sweet crude oil for July delivery settled at $68.44 a barrel, down 37
    cents, or 0.5%. For the week, crude rose 3.2%, or $2.13 a barrel. July ICE
    Brent crude settled down 37 cents at $68.34.
    The Labor Department said Friday that nonfarm payrolls fell by 345,000 in May,
    compared with a consensus estimate of 525,000. The drop in April nonfarm
    payrolls was 504,000, adjusted down from 539,000. May’s decline was the
    smallest monthly drop in eight months, but the May unemployment rate rose to a
    fresh 25-year-high of 9.4%, compared with a consensus estimate of 9.2%.
    July crude climbed to a fresh seven-month high of $70.32 a barrel before
    profit-takers took over. The contract bounced to a low of $67.54, on twists in
    equity prices and the dollar, and held support above Tuesday’s low of $67.50.
    “I think the sentiment is still higher, there are lot of funds in the market,”
    said Nauman Barakat, senior vice president at Macquarie Futures. “Any
    corrections are being bought back quickly.”
    Oil traders have been fed a steady diet of higher price forecasts in recent
    days, with Saudi Arabia and others in the Organization of Petroleum Exporting
    Countries calling $75-$80 a barrel a fair price for oil and one that the global
    economy can handle. Saudi Arabia Oil Minister Ali Naimi said he hoped the price
    could reach that level by the end of the year.
    Influential bankers Goldman Sachs Group Inc. forecast crude will hit $85 by
    the end of 2009 and $95 a barrel by the end of 2010. Goldman said declining
    non-OPEC production won’t keep pace with needed growth in oil supplies when the
    global economy and oil demand improve.
    Hopes and expectations of a global turnaround have drawn fund investors into
    energy futures and other commodities, with many analysts cautioning that
    still-rising prices are getting well ahead of current supply-demand and
    economic fundamentals.
    Crude futures have more than doubled from their January 20 low of $32.70 a
    barrel, even as oil demand in the U.S., the world’s biggest oil consumer, is at
    a 10-year low amid bloated stockpiles. Gasoline has been the one area with
    relatively tight inventories, but demand at the start of the peak summer
    driving season has been weak compared with a year earlier, even with a 40% drop
    in retail prices.
    The May U.S. jobs report “was not as bad as expected, but it was still awful,”
    said Peter Beutel, president of trading advisory firm Cameron Hanover. The data
    show “at least a third of a million workers who will not be commuting to work
    each day…or taking vacations.
    “We still have problems building a nearly $40 advance in oil prices on a
    foundation of ‘slightly less horrible’ economic conditions,” he said.
    July delivery RBOB gasoline futures settled down 0.4%, or 75 points, at
    $1.9546 a gallon, while July heating oil was down 0.8%, or 139 points, at
    $1.7701 a gallon.

    -By David Bird, Dow Jones Newswires
    Dow Jones Newswires
    06-05-09 1534ET

  104. 104
    zman Says:

    EOD E&P buying, again.

  105. 105
    zman Says:

    beerthirty

  106. 106
    Paul in Kansas City Says:

    great week gentleman and ladies! great insights by all the posters; Z have a good one.

  107. 107
    BirdsofpreyRcool Says:

    Welp. Stocks had a kind of poopy close… but credit rallied and held up today. We’ll see what sort of headlines the weekend brings. But, all else equal, we should be able to move higher on stocks next week. Assuming stocks follow the bond market.

    IG 119

    HY 84 1/2

    Have a wonderful weekend, all.

  108. 108
    West Says:

    Bakken Weekend Update: (1) WLL closes deal with private oil co. for interest in Sanish field. Private co. will pay 65% of WLL completed well cost for 50% interest. Link to news releasehttp://phx.corporate-ir.net/phoenix.zhtml?c=147759&p=irol-newsArticle_Print&ID=1296494&highlight=. This will be great help to develop this field as WLL has to much debt to be an effective developer of the field in a stand alone capacity. I have personally being avoiding the stock long term because of the debt and how they did a stock offering in February and then showed in their non official reports and presentation what their yearend 2008 would have been including this cash from 2/2009. This was a red flag to me. Probably time to look again, this is a really hard stock to trade options on because of the spread and lack of volume……..(2)South of the Sanish MRO continues to add 1280s in the Reunion Bay Field area and west of the Missouri River in McKenzie Co,ND. According to the Rocky Mountain Oil Journal (RMOJ): MRO continues develop 100,000 ac tract purchased from variuos interest for 42 million mostly on the western side of the Lake Sakakawea, the third largest manmade lake in the United States, after Lake Mead and Lake Powell. MRO also completed a Lodgepole well in the Baily Field which is above the Bakken formation. This would seem t be a localized situation due to fault running thru area. Link to Bakken Discussion group site with this article and other information that may be of interest,http://bakkenshale.blogspot.com/2009/06/marathon-opens-lower-lodgepole-third.html…………(3)Questar, STR, Has staked its fourth well on it’s 78,000 acre prospect which is mainly under Lake Sakakawea. These prospects are all on the east side of the Lake in an area that EOG is also drlg some wildcats.STR interest surrounds KOG’s acresge like a horeshoe. If you put all this together on a map and look in the center of all the activity you will find KOG. As a discloser I own KOG so I may report this with some leanings in that direction. Core positon established and not having much pull back to add to positions. At $1.15 its like buying an option that doesn’t expire. I don’t know how close to the end of June well announcements you can wait to get in the stock, but if the mkt corrects there will probably be an lower entry point. thx

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