Tuesday – Time For A Tentative Bounce

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Sentiment Watch: Cautious. Sitting tight. Nibbling here and there. Feels like a turn is near but this light volume summer sell off makes one long for a higher cash weighting (I'm just under 60% after yesteray).  Better to let "them" turn the market when they decide it's oversold than to get into "this is too insanely cheap to pass up" mode in earnest, trying to pick a bottom against a take no prisoners, but again, very light volume, low conviction, market. As always, don't trade angry. But do note that yesterday saw most of the damage done in the first 30 minutes of trading with accumulation throughout most of the day except for the capitulatory looking close. Others are nibbling too.

In Today's Post

  1. Holdings Watch
  2. Commodity Watch
  3. Price Deck Watch
  4. Crack Spread Update
  5. Stuff We Care About Today - Coal
  6. Odds & Ends

Holdings Watch

  • $10KP

    • $19,100
    • 59% Cash
    • The wiki tab is updated

Yesterday's Trades:

  • HK - Opening down 8% on no news was a bit much for me. Added the HK July $20 calls (HKGD), (10) of them, for $1.95, with the stock just under $21. Market is in “baby and bathwater disposal mode” for the first time in quite some time and I feel the hit the stocks are taking is unwarranted.

Commodity Watch:

Crude oil fell $2.83 to close at $67.19 yesterday on the August contract which takes over as the front month contract today. Weakness came on the back of a weak equity market and a stronger dollar. This morning crude is trading up above $68 as the dollar gives back yesterday's move and OPEC talks about stricter quota compliance after a brief period of laxness.

  • OPEC Watch: OPEC president reiterates $75 per barrel target by year end; says possible without damaging global economy. He also said that compliance with production quotas had eased to 75% but that more recent data showed many members are starting to more strictly follow their quotas fearing a relapse in weak prices.
  • Nigeria Watch: 1Q09 production fell to 1.68 mm bopd, well below their theoretical capacity of 3.0 mm bopd. 
  • China Watch: According to Apache ~ China’s refineries are forecast to run at record rates of 89 percent of capacity in June, up from 86 percent in May.

Natural gas fell a dime to close at $3.93 yesterday, trading lower with oil after a hit wave inspired bit of early morning bullishness. This morning gas is trading up a few cents with the bounce in oil.

  • Imports Watch:
    • Canada: 6.2 Bcfgpd last week, still very low, down 0.9 Bcfgpd from last year at this time.
    • LNG: 1.3 Bcfgpd last week, this is off 0.3 Bcfgpd from the previous week. Still no flood despite all the dire predictions it would be here early in the 2Q.
  • Tropics Watch: A tropical wave has formed over the western gulf but is likely to come ashore in Mexico before significant development occurs. This may cause high seas and delays to exports from Mexico but its impact will likely be small.  Sea surface temperatures in the Gulf and in the Carribbean continue to heat up on schedule which will increase the intensity of near term storm development. 

Price Deck Watch: Prices for oil are well below the forward strip. For gas not so much but this is the first time this year when we can say that prices in the outer half of the strip are higher for gas than what analysts are looking for. This translates into a flattening of CFPS estimates after the 2Q09 reporting period.

Crack Spread Update

Same story, different week. I continue to avoid the group through headfakes large and small. Cracks are up but just barely and not enough to come close to outweighing the dilution cause by recent secondaries. Moreover, the drop in gasoline prices from Friday and Monday has erased last week's modest margin gains.

Stuff We Care About Today

Coal thoughts

  1. Time to start paying attention to the group again after the recent rally and fall
  2. Coal and natural gas prices are linked and I expect natural gas prices to be higher later this year and be higher on average in 2010 relative to 2009.
  3. Production in the U.S. has been severely curtailed due to low local and export demand. (see below) If we were seeing this kind of fall off in natural gas production prices would be closer to $6, not $4, and yet coal prices
  4. Inventories appear to be elevated but the data is far from current.
  5. The producing stocks seem to have found footing with the energy sector and despite the current administrations animosity towards them.
  6. Circling back to the beginning, I will be paying closer attention to the names on the second quarter calls but for now, I'm just watching.

Coal Multiples: Cheapish.


Coal Stocks: Note that the EIA's most recent data is for February. For some reason, while they can track production on a weekly basis inventories allude them for four months. I suspect that given the rapid decline in production stocks are moving back towards more normalized levels and anecdotal evidence supports this suspicion without necessarily verifying it.


Nutshell: The group is off 20% in the last week and my interest in that kind of a move, when I see prices rising in the future as the supply/demand situation becomes more balanced, is kicked up a notch.  BTU remains most interesting name here but again, doing nothing for now but paying more attention.


Odds & Ends

Analyst Watch:

  • (COP) raised to Outperform at Bernstein

118 Responses to “Tuesday – Time For A Tentative Bounce”

  1. 1
    zman Says:

    Matt Simmons about to be on CNBC

  2. 2
    zman Says:

    Matt Simmons interview highlights:

    sees Iran, Nigeria, Venezuela as drivers behind higher prices, at least that was his focus today.

    said Iran is a mess from an oil field infrastructure standpoint, doesn’t believe changing out Mahmoud will result in an influx of western tech that will boost production. Simply said Iran’s oil fields are too old to produce more … his way of saying they are depleted/depleting beyond their peak capacity. Iran has said recently they are boosting productive capacity.

    said Venezuela oil workers look likely to go on strike.

  3. 3
    nifkin Says:

    I understand ur busy ZMan- but how can u not run a nutbag watcch on this bberg story…. June 23 (Bloomberg) — Japan may cancel a planned $1.5 billion loan for Venezuela’s El Palito and Puerto La Cruz oil refineries after the South American nation seized Japanese company assets, said a person familiar with the situation.
    The Japan Bank for International Cooperation, or JBIC, is reviewing loans for the upgrades after Venezuela took over Japanese iron and chemicals assets and fell behind on payments to oil-service contractors, according to the person, who declined to be identified because the review isn’t public. The refineries have a combined 327,000 barrels-a-day of capacity.
    Venezuelan President Hugo Chavez is risking as much as
    $33.5 billion in Japanese investment as he takes over plants owned by companies such as Tokyo-based Mitsubishi Corp.
    Petroleos de Venezuela SA, the state-owned oil company, is also behind on payments to contractors including Japan’s Toyo Engineering Corp., according to the person.
    “If that money were to dry out they’d be in a serious pinch,” said Roger Tissot, a consultant with Gas Energy Latin America in Vernon, British Columbia. “It doesn’t matter if you’re from China, Japan, Saudi Arabia or Wall Street, you want your money back and a little bit of return.”

    Insurance Coverage

    Nippon Export and Investment Insurance, or Nexi, is also considering ending coverage for projects in Venezuela, the person said. The agency insures most Japanese holdings in Venezuela. The company has been holding internal meetings to determine its insurance coverage policy for Japanese investments in Venezuela, Kyoichi Suzuki, the head of the agency’s country risk analysis group, said by phone June 19.
    Rafael Ramirez, Venezuela’s oil and energy minister and president of PDVSA, as the state oil company is known, didn’t immediately respond to a request for comment sent to his communications office.
    Hirofumi Kawagoshi, the head of investor relations at Toyo Engineering, confirmed that Venezuela has been behind in payments for a 60-billion-yen ($631 million) contract to build a fertilizer plant. The accord was signed in 2007, Kawagoshi said.
    Planned Japanese investments in Venezuela include $10 billion in liquefied natural gas projects, $8 billion in petrochemicals and $1.5 billion for the refineries, Chavez said while visiting Japanese Prime Minister Taro Aso in April.

    ‘Grave Concerns’

    “We have grave concerns about Venezuela’s nationalization of the industries and need to continue internal discussions before determining our clear future policy,” Nexi’s Suzuki said.
    Japanese companies may lose their appetite for investing in the South American country without Nexi coverage because they would be fully exposed to risks, said Hidetoshi Shioda, a senior energy analyst at Mizuho Securities Co. in Tokyo.
    Mitsubishi has an agreement to finance upgrading the Puerto La Cruz refinery, according to a statement from Chavez’s office.
    A Mitsubishi spokesman, who can’t be named because of the company’s internal rules, declined to comment on the agreement or on future talks on the refinery project.
    JBIC, through a spokesperson who wouldn’t be named because of bank policy, declined to comment on any review of the loan because negotiations are still ongoing. Venezuela’s Foreign Ministry didn’t immediately respond to a call and e-mailed questions from Bloomberg News seeking comment.

    Exit From Venezuela

    “Trading houses and other Japanese investors would get out of Venezuela if they don’t have the Japanese government’s strong financial backing,” said Yasuhiro Narita, an analyst specializing in trading houses at Nomura Securities Co. in Tokyo.
    Mitsubishi, Mitsui & Co. and Itochu Corp. are among the partners designing two liquefied natural gas plants where Ramirez said Japanese investment may reach $10 billion.
    Mitsui will look into the impact of Venezuela’s possible nationalization of industries and take appropriate action in consultation with its Japanese partners, said a spokesman, who declined to be named because of company policy. An Itochu spokesman, who also can’t be identified because of internal rules, declined to comment.
    In 2007, JBIC led a group including Mitsui and Marubeni Corp. that loaned PDVSA $3.5 billion to be paid in cash, crude oil or petroleum products over 15 years, according to PDVSA’s annual report.
    Venezuela has nationalized two industries with Japanese investment this year. Chavez took over the hot briquetted iron industry May 22, including Complejo Siderurgico de Guayana CA, or Comsigua, where shareholders include Kobe, Japan-based Kobe Steel Ltd. and Tokyo-based Marubeni.
    The Latin American nation’s legislature passed a law June
    16 to take over primary and intermediate chemicals plants, such as the Metor methanol plant where Mitsubishi Gas Chemical Co.
    and Mitsubishi, both of Tokyo, share a majority stake.
    PDVSA is at least $5 billion behind on payments to contractors, with several complaining that they have received only token payments since August.

  4. 4
    zman Says:

    Nifkin – amazing, eh? Cause and effect. What the heck did Hugo think would happen? Now, don’t pay the oil workers and see how long they decide to work without pay.

  5. 5
    BirdsofpreyRcool Says:

    Good morning… got caught on a couple of calls, so apologise for tardiness.

    TechTrader = best trade is short early for a sell off into lunch but be careful of a bounce and rally, it might be a V shaped day… odds are very low overall

    Sounds like it could be a reversal day to me…

  6. 6
    zman Says:

    Thanks BOP, little news, very quiet out there.

  7. 7
    BirdsofpreyRcool Says:

    feels like the calm before 2nd quarter earnings storm… yes. very quiet.

  8. 8
    BirdsofpreyRcool Says:

    think NOG is out there, trying to do a direct stock placement… anybody else hear this?

  9. 9
    zman Says:

    Very tentative action pre FOMC and jobs. Looks like people have shifted form watching the U.S. Open to Wimbledon.

  10. 10
    West Says:

    just a confirmation of what we thought about announcement:Quoted message:

    “Thanks for your interest in Kodiak Oil & Gas Corp. As indicated in our last news release with operations discussion, in late May and into June completion work is in progress on the TSB #16-8-16H and the TSB #16-8-7H wells. Once Kodiak has completed both of the wells and has performed production tests, we expect to provide an interim operations update. This is consistent with our past policy when activity and material news is appropriate to disseminate to the market. We expect the next operations update sometime later in June when we have assembled the data to present to the market.
    It is Kodiak’s policy to provide the market with material information that can help investors make decisions, especially in these early days where each well can make a difference. We do not want to encourage well-watching, but we also understand the importance of the early wells for the company and its investors. So investors can expect, as referenced above, material information in the form of occasional interim operations updates driven by oilfield activity and of course in the quarterly and year-end earnings reports. I write all of this so as to be clear on how we think about news and information flow. We have released the occasional operations updates in the past and would hope to be able to move to a quarterly operations update when we have more critical mass with respect to wells drilled, etc.

  11. 11
    BirdsofpreyRcool Says:

    News at 10… am

    Richmond Fed Manufacturing Index (exp 5)
    Existing Home Sales for May (exp 4.82M)
    Existing Home Sales MoM (exp 3.0%)
    House Price Index MoM (exp -0.4%)

    That’s the scorecard… waiting to see what the results are.

  12. 12
    BirdsofpreyRcool Says:

    Existing Home Sales for May 4.77M
    Existing Home Sales MoM 2.4%
    House Price Index MoM -0.1%

  13. 13
    BirdsofpreyRcool Says:

    Richmond Fed Manufacturing Index 6

  14. 14
    TEXWS6 Says:

    FYI, just to get on a topic I know a little more about. We just turned on what’s touted as the best well in the Haynesville play. It’s smack dab in the middle of HK acreage, good news for them as well!

  15. 15
    BirdsofpreyRcool Says:

    West — I tried to buy some more KOG this morning at 1.00, but missed. I think the move from 1.20 to .92 was due to a combo of nervousness about this next operations update (due sooooooon) and some comments from jealous competitors about the risk of owning acreage on the Indian Reservation.

    Here is a partial list of other companies with Bakken leases on the FBIR —

    Sure, the leasing process is slower and more complicated on the Rez… but no reason to think any contracts will not be honored. I think that is just some nasty rumor stuff that is circulating by competitors who are trying to raise capital themselves… and are having to explain why KOG looks “so cheap” here.

    JMHO. Will know a lot more in a day or so.

  16. 16
    zman Says:

    Tex – congrats. I don’t see a pr from you guys but can you disclose the parish, maybe a ballpark rate (with pressure and choke)?

    Market not happy with your numbers BOP.

    Thanks for the KOG updates BOP and West.

  17. 17
    BirdsofpreyRcool Says:

    I don’t think the mrkt liked the foreclosure rate.

    Home Resales in U.S. Rise 2.4% in May to 4.77 Million Rate
    2009-06-23 14:01:48.76 GMT

    By Courtney Schlisserman
    June 23 (Bloomberg) — Home resales in the U.S. rose in May for a second month as record foreclosures caused prices to drop.
    Purchases increased 2.4 percent to an annual rate of 4.77 million, lower than forecast, the National Association of Realtors said today in Washington. The median price fell 17 percent, the third-largest decrease on record.
    Tax breaks for first-time buyers in the Obama administration’s stimulus plan, falling property values and lower mortgage rates have helped support the market. At the same time, any recovery is likely to be limited with unemployment rising and borrowing costs shooting back up.
    “We’re seeing some signs of stability,” Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida, said before the report. “A lot is going to depend on mortgage rates if they stay low. You’re still looking at a lot of supply out there and it’s going to take a long time to work through all of that.”
    Economists forecast existing sales would rise to a 4.82 million rate, according to the median of 74 projections in a Bloomberg News survey. Estimates ranged from 4.6 million to 5 million. April’s reading was revised down to a 4.66 million pace from 4.68 million.
    May’s sales pace was the strongest since October and last month’s gain marked the first back-to-back increase since 2005.

    May Sales

    May traditionally is one of the top three sales months of the year as the weather turns warmer and families prepare to move before the start of the next school year, according to the NAR. The group adjusts the figures for these seasonal variation in order to facilitate month-to-month comparisons.
    Sales were 3.6 percent compared with a year earlier.
    The number of houses on the market dropped 3.5 percent to
    3.8 million in May, NAR said. At the current sales pace, it would take 9.6 months to sell those homes, compared with 10.1 months in April.
    The median price of an existing home fell to $173,000 in May from $207,900 a year earlier, the NAR said. The price has fallen as sales slumped and financial institutions auctioned off foreclosed properties.
    While the loss has devastated some family, others were able to buy a house for the first time because of the drop in values.
    The federal government is trying to stabilize the market by offering lenders incentives to modify the terms of delinquent mortgages and the Federal Reserve has pledged to buy mortgage- backed securities to free up funding for home loans.

    Distressed Sales

    The share of homes sold as foreclosures or otherwise distressed properties was about 33 percent last month, down from the 40 percent to 50 percent seen earlier in the year, NAR said.
    Foreclosure filings in the U.S. surpassed 300,000 for a third straight month in May and may reach a record 1.8 million by the first half of the year, RealtyTrac Inc. said June 11.
    The jump in foreclosures is one of the reasons more first- time buyers have entered the market. First-time buyers accounted for about 29 percent of May sales.
    The Obama administration’s stimulus plan provided an $8,000 tax credit for first-time home buyers for purchases completed before Dec. 1.
    Still, soaring unemployment and high levels of debt will put home ownership beyond the reach of would-be buyers even as home prices fall, according to a report yesterday by Harvard University’s Joint Center for Housing Studies.
    Mortgage borrowing costs are also starting to climb. The rate on a 30-year fixed loan has averaged 5.42 percent so far this month, up from 4.86 percent in May, according to figures from Freddie Mac. The rate reached 4.78 percent in April, the lowest level since records began in 1972.


    The Standard & Poor’s homebuilder supercomposite index has retreated 23 percent since reaching a seven-month high on May 4 as concern mounted that the backup in interest rates will choke off any recovery before it develops.
    The Fed is buying as much as $1.75 trillion of housing debt and Treasuries this year in a bid to lower borrowing costs.
    Total assets on the balance sheet have expanded by $1.18 trillion over the past year to $2 trillion.
    The central bank is scheduled to hold its policy meeting today and tomorrow. It has held the benchmark interest rate near zero since December.
    Recent increases in home construction are a sign the market is starting to stabilize, helped by government programs such as tax credits for first-time homebuyers, Shaun Donovan, secretary of Housing and Urban Development, said June 18.
    Housing starts increased 17 percent in May, the Commerce Department said last week.
    While Toll Brothers Inc. and Hovnanian Enterprises Inc.
    reported second-quarter losses that exceeded analysts’
    forecasts, they both noted there were signs of stability in the housing market.
    “Although we lowered our sales prices further, which resulted in the land impairments we took during the second quarter, we have seen more stability in home prices over the most recent six weeks,” Chief Executive Officer Ara Hovnanian, said in a statement June 2.

  18. 18
    zman Says:

    Tex – can you say if it was in Red River or De Soto?

  19. 19
    TEXWS6 Says:

    Red River

    20MMcfd at over 8200psi

  20. 20
    West Says:

    8 of the 41 rigs running in North Dakota are drilling on the Reservation. These cos do not seem to be worried about it, so I will not worry either.

  21. 21
    zman Says:

    Thanks Tex.

  22. 22
    BirdsofpreyRcool Says:

    West — great data point. Thanks. I think we can put that “risk” to bed now and focus on the operations.

    Recent comments seem to indicate that things are going according to schedule. If KOG is able to report a successful completion on the long lateral (well #4) I think the mrkt would breath a sigh of relief. You don’t get as much recovery from a long lateral (as you would from 2 short ones), but the lower drilling costs + efficiencies in completion = makes it more economic. Other companies with long laterals (WTT, CLR, XTO, BEXP) report that you get about 1.7x the reserves vs 2 short laterals. Just FYI.

  23. 23
    tater Says:

    Just a little TA:
    Those moving averages, the 50 and 20 EMA’s, are very likely to act as resistance on the way back up should we develop a bounce in the future. Especially if a particular moving average acted as support during the rally.
    So if it was the 20 EMA that was continually tested and held support on the rally since March, and now price is below that landmark, should we get a bounce the 20 EMA is then very likely to be a resistance level.
    Same goes for the 50 EMA.
    Just something to keep in the back of your mind as this sell-off has been brutal enough to engender a snap back.

  24. 24
    PackMan Says:

    what is going on w/ CHK ??

  25. 25
    zman Says:

    Thanks Tater, point taken. With that in mind I continue to be concentrated in a very few names.

    PXD – too cheap, oil recovery needed to get the stock back up off the flow. At 5.0x 2009 (ok) but 2.9x 2010 CFPS (very cheap), it is one of the least expensive mid cap names in the group and has catalysts down the road but no longer near term. I will reposition for earnings as they will have a chance to speak out about their E.F.S., something they should have done in a conference call following that press release.

    EOG – cheap for it, probably no news until 2Q, good well results in its new oil plays, likely a small beat on production and a bigger one on oil prices in store for the quarter.

    HK – they have news but have not chosen to release it yet. Makes me think they wanted to release it closer to the peak but on the chart (around $26) but had to wait on their investor meeting to bump that share count so they can do a secondary on the heals of the press release. Why else wait unless you want to save it all for the 2Q release which is typically not their M.O.? Call me cynical but I think they wanted to float a secondary in the upper $20s.

  26. 26
    tater Says:

    Just to add a bit to #23, the reasoning behind that logic isn’t that those levels are particularly special or magical, it’s that guys with much more money than me are lurking to sell at those levels on a push back up into them. Kind of a “playbook” kind of thing, much the way another playbook said buy the dollar in recent months.
    Doesn’t make a whole lot of sense, but if that’s the way they are going to play, who am I to ask why.

  27. 27
    zman Says:

    Pack – nothing from a news standpoint, all of the large cap E&Ps are selling off again todya, CHK worst but not by much. It looks to be filling a gap at $18 from April 1.

  28. 28
    zman Says:

    Sambone – not sure if you are around today but was wondering if you had an SST link that would let you scroll through the gulf and Caribbean graphs over time to watch the water heat up.

  29. 29
    PackMan Says:

    Yes I see what is going on in sector last week or so. Just a huge pullback. Seems overdone, no ?

  30. 30
    zman Says:

    Pack – yep, did you see my graph at the beginning of the post? Somewhat overdone I’d say, at least from a “they produce this and sell it for X” standpoint. For some reason E&P, like cell phones in the 90s, radio before that, and tulips before that. attracts a malingering sort of investor whose high beta personality doesn’t work within the bounds of logic or reasonable valuations from time to time.

  31. 31
    BirdsofpreyRcool Says:

    z — #28… LOL.

    Definition of a Sloooooooooooow Day

  32. 32
    zman Says:

    BOP – other people collect beenie babies or bobble head dolls, I collect weather links.

    Man, sweltering in the South. Natural gas not noticing yet, need more heat in the northeast.

  33. 33
    BirdsofpreyRcool Says:

    z — I collect rocks. Not even “special” rocks. Just rocks. Gives me something solid to hold on to.

    Some geologists are trained… some are just born that way. I love rocks. Sick, eh?

  34. 34
    zman Says:

    BOP – rocks are good for a variety of things. Still have mine from my Hyne course years ago. Also good for throwing. Tater probably has rocks in his cave.

    Wow, shamboring. Considering going on a vacation this year as I skipped Honduras. Anyone been to Emerald Isle? Requirements are sand and kid friendly. Checkout the keys but apparently beaches are rough coral type, not fun to walk on.

  35. 35
    zman Says:

    Dollar yet again looking at 80 from above, oil sold off early, now back at 68 near HOD, seems to be trying to get its footing. Looking for a small draw in crude stocks tomorrow and small builds, last I saw, in gasoline and distillate stocks. After hearing/reading talking heads spout about $4 gasoline less than a week ago, I see same people saying gasoline has peaked in price for the summer. I doubt it. We should get another run into the end of summer and there will undoubtedly be storm related peaks in the next month or so.

  36. 36
    West Says:

    Z, I meant to tell you that a little birdie told me that EOG hit a 2000+ bopd oil well in South Texas the other day. I don’t have specifics but south of the San Antonio in Karnes County. They are also having success with their horizontal Niobarra prospects in Wyoming. This is probably not enough to move the needle, but makes the long term picture just keep getting better. Short term I don’t think it has found the low for this pull back. In the Bakken they r the undisputed King of the horizontal & almost all of their’s laterals r 4500′. It will be interesting to see if KOG’s short lateral ip for more than their long lateral. They should be thru with the frac on the #3 by now but I haven’t heard anything as of now. Some of the Trading in KOG would support the theory that they r getting a little leakage on the #4 well. Just some paint drying thoughts.

  37. 37
    zman Says:

    Thanks West, I was just going through the most recent gas update from Credit Suisse and responding slide by slide to their comments. Very bearish gas, points to up rig count last week and other noise. He has EOG underperform and I told my emailer inquiring about the piece that Credit Suisse just doesn’t get the EOG story at all. Thanks for the updates, that S. Texas well has been mentioned in my notes pre drill, also the Niobrara, 2,000 bopd would be bigger than expected.

  38. 38
    zman Says:

    Re EOG and Bakken, agreed, good acreage. They at first downplayed the TFS as spotty, now they are liking it as well as the m. Bakken.

  39. 39
    zman Says:

    Agreed re trading activity, would add that yesterday was none too kind to most of the single digit midgets, especially WRES and that too is bouncing back a bit today.

  40. 40
    West Says:

    I continue to favor the oily names and would be avoiding the gas for another day. To be honest I’m having a hard time finding a good chart in the e&p realm right now.

  41. 41
    Sambone Says:

    #28, Is this what your looking for?


  42. 42
    zman Says:

    That’s pretty sweet Sam, thanks! Will add to the weather tab. Wonder if you have one for the Carib as well?

  43. 43
    West Says:

    Z, I guess I missed the EOG comments about the TFS, could update me r link me. thx

  44. 44
    Sambone Says:

    I believe this is what your looking for in regards to temp.


  45. 45
    zman Says:

    West – hear ya on 40. I like the oilier names short term and both oil and gas longer term. All the analysts are jumping on the oily names for the Q2 period now so look for upgrades of things like a CLR (unhedged oil, potential to be growth with catalytic well results) vs SWN which may have a differential problem but will also be growthy and I think will have for once, some nice, non Fayetteville shale news). HK I like for the near term catalyst potential and growthiness but I’ll take my leave as soon as I see a post ops update bounce as I don’t trust Floyd not to dilute me.

  46. 46
    BirdsofpreyRcool Says:

    west — KOG well #3 and 4 have been completed. Just sitting around, waiting for the results to be released. Contrary to earlier hints and innuendos, I don’t think there were any operational issues with either well; the short- or long-lateral.

    If the wells behave like other short vs. long, then the long lateral should have 1.7x the EUR of the short one. I’m not exactly sure how that is reflected in the IPs, tho. Probably worth asking that question.

  47. 47
    Sambone Says:

    Way off subject for those with nothing to do on a slow day!


  48. 48
    PackMan Says:

    Z – 30 – Oh, you mean we are supposed to read those posts ?

    just kidding ….

  49. 49
    zman Says:

    West – In 3Q08 EOG poo poo’d the idea of the TFS being a homogeneous zone below the m. Bakken, Papa said this:

    “Now we’re still studying the three forks Spanish outside the Parshall areas. We said in the past in the Parshall area, we really don’t see too much prospectively there, but that we have 370,000 acres at total Wilson Basin, of which about 110,000 in that Parshall flash Houston area. So that big slug of acreage outside of that we think is highly prospective, particularly three forks.Now we’re still studying the three forks Spanish outside the Parshall areas. We said in the past in the Parshall area, we really don’t see too much prospectively there, but that we have 370,000 acres at total Wilson Basin, of which about 110,000 in that Parshall flash Houston area. So that big slug of acreage outside of that we think is highly prospective, particularly three forks.”

    Since then they have made noises during conferences but not on their quarterly calls about the TFS being more prospective. I know heard it, have not tracked down a link to one of those comments though.

    Crude up a dollar now as the USD caves through 80. Stocks are not really paying attention to anything besides the Dow.

  50. 50
    zman Says:

    47 – thanks for that one too Sam, much appreciated. We’re about to get to that time of year where we can both watch the paint dry and the storms churn, lol.

    Packman – you know how to hurt a guy 😉

    Watching more things than usual after this little pullback, including with renewed vigor, the coals (that’s for you Pack in cased you missed in the post) and drybulks, with DSX now in the $13s, that was a Dahlman Rose upgrade at about $16 a couple of weeks back. Interesting.

    Interesting action now. Looking like people are starting to bottom fish. Maybe this is my mid day turn I’ve been waiting for. Not holding breath.

  51. 51
    elduque Says:

    I would appreciate a comment on EVEP if anybody has any info.

    Thank you

  52. 52
    BirdsofpreyRcool Says:

    z — #49. wow. Did Papa really say it twice?? He must be really really serious!

  53. 53
    West Says:

    That would be good news that there were no ops issues. Lynn had said on cc that he thought longer lateral would add .6 to .7 more eur. I thought the teddy bear had said that they were looking for 2000 bopd on the shorter #3.

  54. 54
    BirdsofpreyRcool Says:

    West — yep. Teddy Bear Cam heard “2,000+” whispers… given other wells in the area, that would be HUGE. So, not going to be disappointed if they can’t hit that number. Still… why say it then?

    Head scratcher.

    Good news is that we shall know, very soon.

  55. 55
    zman Says:

    BOP – no, cut and paste error, just the one time. I’d bet they put a little more into the 2Q press release as 1Q was scant on details (since they have curtailed a bit of activity) and they have a habit of going from thin to beefy on the quarterly pr’s.

  56. 56
    BirdsofpreyRcool Says:

    z — #55 LOL… figured. Just wanted to let you know that we really DO read your stuff. 😉

  57. 57
    zman Says:

    BOP – you say that now but wait until early July when things really slow to a crawl. I’ll have to give away mugs and tshirts just to hold your attention for a minute.

  58. 58
    West Says:

    Just so I can get ahead of the crowd on the new tshirt give away. I will take XTO to buy out KOG

  59. 59
    BirdsofpreyRcool Says:

    XTO luuuuuuuuuuuuuuuuuvs KOG!

  60. 60
    zman Says:

    Not a slight on KOG but XTO will buy anything but they will wait until prices are good and high.

    Going to lunch, back in a bit.

  61. 61
    BirdsofpreyRcool Says:

    Didn’t say they would buy them… just said they love them. XTO is partnered with KOG on some of the wells. XTO likes what KOG has been doing.

  62. 62
    zman Says:

    ELd – I’ve got little to add on EVEP at this time. If you want, I can take a fresh look.

  63. 63
    elduque Says:

    No. Just looking around for some names to have a little yield in the portfolio. Don’t own any LINE so maybe just will add that.

    Have fair amount of Can. Trusts, which I like because I do believe the Can. Dollar is good place to be.

  64. 64
    zman Says:

    Part of yesterday was end of the contract shenanigans. The August crude contract is now up nearly $2 at $69.40. Stocks still barely noticing.

  65. 65
    zman Says:

    Eld- No change in opinion from me on LINE, I like it, I hold it, I continue to get paid to wait.

  66. 66
    zman Says:

    WLL – anyone see news, they’ve had a good fall, stock acting well today though. Their deal window should be very closed at this point (seniors, common and private equity all done in recent memory). Anyway, seems they are starting to notice oil. Unfortunately, big fat spreads on options as it is infrequently trafficed so you have to be pretty right just to cover the spread.

  67. 67
    zman Says:

    Nigeria Watch:

    AGIP disclosed 33,000 bopd shut in by last weeks attack,

    Still no word from Shell on the 3 attacks over the weekend.

  68. 68
    West Says:

    WLL, the recent deal with Kaiser-Francis should allow them to develop Sanish with additional financial support. I would think this very positive but the options guys pay hardball. I always had to buy in the money at a still large premium. I was looking at some of their wells that r coming off confidential last night and they r tremendous wells. The Lewis & Clark prospect where they will use existing wellbores to complete TFS is another potential mover for the co.

  69. 69
    Nicky Says:

    Afternoon all.

    Everything points to a bounce in the indices – a bounce that is most elusive!

    Watching oil, dollar, metals and indices really feel like they could explode higher. Especially as just about everyone I know is expecting a move to 880 spx!

    That said if we don’t get moving to the upside soon that is exactly where we are headed.

  70. 70
    Nicky Says:

    If the dollar breaks 79.10 would be very bearish.

  71. 71
    zman Says:

    Thanks West.

    Thanks Nicky – been waiting for that bounce for a week now from Najarian and Co, lol. I keep thinking it should be soon, maybe they will notice oil.

  72. 72
    Nicky Says:

    Z – was expecting a correction but its very difficult to try and pinpoint where the low will be. Even if we bounce we likely have lower lows ahead.

  73. 73
    Nicky Says:

    900 SPX is important to get back above. The 50 and 200 dma are crossing which ‘should’ be bullish but we need to get price to close back above there.

  74. 74
    zman Says:

    re 73 – in your book, how soon do we need to get back to 900, this week?

    Schork making comments about Obama administration considering putting extra taxes on Canadian oil sand derived oil.

    This link’s for VTZ:

  75. 75
    RMD Says:

    Someone just told me WLL’s new 6.25% pfd are at 92 after coming at par. NB: I have not confirmed this.

  76. 76
    BirdsofpreyRcool Says:

    RMD — i see those WLL 6.25% convert prefs trading on either side of 94. Where those issued at par today? Guess some accounts got their full allocation… spooked ’em.

  77. 77
    zman Says:

    BOP – those were priced at par on 6/17

  78. 78
    BirdsofpreyRcool Says:

    bloomberg shows them as Issue Date and Settle Date of 6/23… but, doesn’t make sense that they would fall 6 points in one day. thanks.

    that said, WLL stock is off a greater percentage than the converts from 6/17… but, that’s the way it’s supposed to work.

  79. 79
    kyleandy Says:

    rmd – wll/pa on fidelity trading at 84.25 w/ a low of 91 today

  80. 80
    BirdsofpreyRcool Says:

    kyleandy — LIFT THAT OFFER!

  81. 81
    kyleandy Says:

    BOP – any thoughts on when we will hear from KOG?

  82. 82
    BirdsofpreyRcool Says:

    kyleandy — could be as soon as after mrkt close today, or before mrkt open tomorrow. So, literally “any day” now.

  83. 83
    kyleandy Says:

    BOP – lift that offer??????

  84. 84
    BirdsofpreyRcool Says:

    Fidelity is offering WLL 6.25% converts at 84.25? That means you should BUY THEM BEFORE SOMEONE ELSE DOES.

    Unless the 84.25 was a typo.

  85. 85
    BirdsofpreyRcool Says:

    (bond trader talk… “hit the bid” = sell and “lift the offer” = buy)

  86. 86
    kyleandy Says:

    bop – my bad shud have been 94.25

  87. 87
    kyleandy Says:

    WLL/PA bid 93.50 asked 94

  88. 88
    BirdsofpreyRcool Says:

    rats — too bad, kyleandy… i thought you found a $20 bill lying on the sidewalk. Oh well. 😉

  89. 89
    Popeye Says:

    Petrohawk to offer another 25 million shares – Houston Business Journal:

  90. 90
    zman Says:

    I don’t see that anywhere.

  91. 91
    zman Says:

    I do see PQ filing to sell 10 mm shares at the close.

  92. 92
    Hoss Says:

    Schwab showing PQ 10M shares

  93. 93
    zman Says:

    Popeye, I see a site showing that now, don’t see a news bug from HK yet.

  94. 94
    RMD Says:

    comment from Simmons last week I find intriguing: The market capitalization of many commodity ETF & ETNs are higher now than last year when oil prices hit $147/bbl and natural gas were over $13/MMBtu. Broader financial influences have had and will continue to have an impact on oil prices in our view.


  95. 95
    zman Says:

    Pop – thought I had a link to it but it disappeared. Do you have one? I see no filing with the SEC.

  96. 96
    zman Says:

    Popeye – found it on a odd little site listed as today but it is a press release originally minted in August 2008:


    So no deal for HK, at least, not today.

  97. 97
    zman Says:

    Would someone post API when they see it? Thanks.

  98. 98
    West Says:

    WLL preferred does anyone have a symbol I can use to pull up quote? thx

  99. 99
    zman Says:

    Try wll_pa.n or wll.p or wll/p

  100. 100
    West Says:

    Thx Z, It didn’t pull up on schwab but I will try again.News said 2.3033 times common price.http://finance.yahoo.com/news/Whiting-Petroleum-Corporation-prnews-15555095.html?.v=1, I will use this price.

  101. 101
    zman Says:

    WLL.A is working on Thomson, shows 94.30 x 94.70.

    Oil coming off a touch in AH, must be API

  102. 102
    Wyoming Says:



  103. 103
    Wyoming Says:


  104. 104
    VTZ Says:

    Hey Z – read that article. At least the numbers she quotes around water is correct.

    With regards to production decreases that untrue.

    In terms of land reclamation or tailings management. The plans are accounted for as part of the costs of the projects. There is lots of reclaimed land. Next time I’m there I’ll show you pictures of the bison park that used to be a tailings pond.

  105. 105
    choices Says:

    HK had some large trades go thru last two minutes of trading, one block of 42,800 @$20.58, did not move the price.

  106. 106
    zman Says:

    API is bearish looking:

    Crude down 72,000 barrels vs 1 mm barrel decline exp.

    Gasoline up 3.7 mm barrels vs 1 mm barrel increase

    Distillates up 2.3 mm barrels vs 800 m exp rise.

  107. 107
    zman Says:

    JAT – if you see the API imports number let me know.

  108. 108
    VTZ Says:

    On another note, I was just at a presentation by our marketers about crude pricing as it relates to the refiners. As you know, the business of upgrading is premised on capturing the light/heavy differential which has been shrinking substantially over the past year even as prices have rebounded.

    We were asking for reasons why and we got some interesting answers that relate to North American refining.

    1. Mexican Maya (heavy) volumes have been decreasing as well as OPEC heavies. This suggest two things, the production in Mexico falling off and also potentially the desire for OPEC to ship more light volumes (they cut the quota so by shipping lights they make more dollars for the same volume.)

    2. Increased heavy pipeline capacity has led to more purchasers for heavy crude. This has led refiners to bid up the price of heavy (because it’s a cheaper feed, if they can process it).

    Anyways, just a comment on refiner space. Marketers told us that these conditions will not last.

  109. 109
    zman Says:

    Thanks V. I’ve seen comments that Iran has as much as 20 mm barrels of heavy crude tankered at present and that it has had trouble finding buyers for it.

  110. 110
    VTZ Says:

    That would make sense on points 1 and 2. I’ve seen those reports as well. It was the first thing I thought of.

  111. 111
    RMD Says:

    CSFB report lowers nat gas guess for summer from 4.50 to 3.75 leads me to muse (but not to forecast): if oil rises from $35 to 70 (round numbers) and corrects half the increase to 53 despite what OPEC and others want. If nat gas stays at 18-1, gas would go below $3.00.

  112. 112
    VTZ Says:

    To be clear, it makes sense in 2 because although the pipelines have increased, they are utilized by the demand.

  113. 113
    zman Says:

    RMD – Someone sent me the CSFB powerpoint earier, I don’t have a way to link the slides in here so I put brief descriptions of his pages in [] but if you have it here are my comments:

    His opening two points on page two are ridiculous [these dealt with rising rig counts and stabilizing production]. The second page has a very “I blow back and forth in the breeze with the latest data point feel to it.” If oil prices fall another $5 bucks I imagine he will no longer see value in the oily names either. His data point on hedging helping out contradicts his EOG bullet about not being hedged. They are timing the hedge to get better prices. Unreal lack of “getting that story” on his part.

    page 5 is silly [shows the uptick in rigs last week as something meaningful]

    pages 6 and 7 don’t make his case on gas, they argue against it. [these were the oil / gas ratio and the forward curve]

    page 9 – good page, must be nice to have interns [these relate to borrowings on revolvers for the group]

    page 11 and 12 – I see no basis for this argument at this time [this is a drastic upward revision in gas production forecast based on the fact that we have not yet seen declines and rigs rose last week, I guess]

  114. 114
    jat Says:

    Just sent API. Big imports decline and large utilization jump and small crude draw doesn’t make sense to me.

  115. 115
    zman Says:

    Thanks Jat, just incorporating that into my thoughts, going back into last week to have a look at the delta in the data to see if they are smoothing out over time. Crude came off a buck in AH so far, probably opens lower in the morning.

  116. 116
    zman Says:

    Crude off about $0.80 from the close.

    V – thanks. Are you hearing more about converting nat gas pipes to oil to get it south of the border?

  117. 117
    VTZ Says:

    New heavy pipelines altogether from Canada to US.

  118. 118
    Wyoming Says:


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