22
Jul

Wednesday Morning Pause

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In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Why I Own What I Own - RRC and NFX pre Earnings Thoughts
  5. Stuff We Care About Today
  6. Odds & Ends

Holdings Watch:

  • $10KP:

    • $21,800
    • 40% Cash

Yesterday's Trades:

  • BJS - Added (5) August $15 PUTS (BJSTC) with the stock at $14.50, up 1% following an earnings miss but amidst a strong market and commodities back drop. Call in 20 minutes and I will add more, do nothing, or punt at that time.
  • RRC - Added (5) August $45 Calls (RRCHI) for $2 with the stock down a dime on the day at $44.30. Earnings are Thursday and I will likely add more of these on strength should be get before the call while taking profits in my $42.50 call position. 


Commodity Watch:

Crude oil eased up $0.32 to close at $65.31 yesterday on the September crude contract which takes over as the front month contract today. API released a bearish but illogical numbers after the close which sent futures south over night (see more next section). This morning crude is trading off $0.50 to $1.00.



Natural gas inched up nearly two pennies to close at $3.70 yesterday, reversing another bout of early morning weakness. This morning gas is giving back the two pennies.

Oil Inventory Preview


API Watch: Bearish looking report

  • Crude: Up 3.1 mm barrels
    • API says utilization was off 2% with 367,000 bopd fewer barrels entering refineries last week than the prior week.
    • But API also shows Imports declining 563,000 bopd last week, which makes the large and unexpected build in crude stocks hard to fathom.  
    • Imports
  • Gasoline: Up 1.3 mm  barrels 
  • Distillates: Up 147,000 barrels - this would be the one ray of sunshine in an otherwise cloudy report.

 

ZComment: The API data has oil spooked this morning but I would not expect EIA to show the same large crude inventory build without a drop in refinery inputs AND a increase in crude imports. I continue to look for refining utilization to peel back away from last week's levels  (API says it did already) which were 2009 highs but this may take another 3 to 4 weeks. The most important number of the day will again be the gasoline demand figure (need to see this in the 9.3 to 9.4 mm bpd level to get closer to the normal seasonal track) but I'll be keeping an eye on diesel and jet fuel to see if there is any carry over from the last report's slight uptick.

 

Why I Own What I Own - RRC and NFX pre Earnings

RRC - Range Resources

  • Little chance of a top line miss as they pre announced volumes that beat previous guidance a week ago
  • Operations Update - Just had one Mid July, link to my review of it .
  • Nutshell - Not sure they will have a lot of new things to say but it will give them:

    • an opportunity to discuss their recent upgrade of Marcellus EURs in a Q&A forum
    • and they may raise guidance from the official 10% to something a touch higher.
    • they are a low cost, well hedge gassy player with a strong position in the Marcellus which is probably the #2 play in terms of breakeven on gas prices in the U.S. at present.
    • I may punt today if we see a strong move up into the close as the name, much like its gassy counterpart SWN operating in the Fayetteville, is richly valued after the recent move. That's not to say it can't add another 5 to 10% but further visibility on 2010 prices is going to be needed to warrant going much over a 10x 2010 multiple of cash flow per share.
  • A few handy stats:

 

NFX - Newfield Exportation

  • Other than a press release at the beginning of June regarding two deepwater discoveries, Newfield has been very quiet about its operations since the April update. See what I wrote about that here.
  • I don't expect them to beat 2Q production guidance by much if any amount as they have been deferring new Woodford completions.
  • However, there is the distinct possiblity they may beat on the revenue line as differentials have been improving in three of their key plays.
  • I expect them to reiterate production guidance for 2009 of 6 to 10%.
  • There is an outside shot they either raise the bottom end of guidance or reduce cap ex without changing guidance due to cost savings.
  • I think we may see some reallocation of capital from the Woodford Shale, which currently dominates their budget, to the Bakken Shale and Monument Butte field (increasing exposure to oil vs gas). This is just a guess on my part but it would be logical as their Woodford acreage is almost entirely held by production and the play has got to be sub economic at current prices (so why overweight the focus in the current environment?)
  • In they Bakken, they should have a long lateral Three Forks Sanish well completed (Moberg 1-29H). Look for them to potentially talk about adding a rig to their activity here  (only 1 rig now) and to talk about drilling times and completion costs beginning to fall. 
  • They announced two more deepwater Gulf of Mexico discoveries in June which they should elaborate on after having really glossed over deepwater on the last couple of calls. Look for them to start talking up 2010 Gomex startups. 
  • Nutshell: The stock is cheap, but perpetually so. Part of this historical normality, part of this is anti Rockies, anti MidCon bias. They continue to work finding costs lower and have a number of plays where repeatable success is dependent on the application of less and less capital.

A few more useful stats:

 

 

Stuff We Care About Today

----

Earnings Watch:

NBR Reports 2Q Numbers.

Special Note: I'm not long now so this is a cursory fly by. I will listen to the call at 11 EST for more color on them and the other predominantly land based drillers.

  • The 2Q09 Numbers:

    • Revenue of $868 mm vs $923 mm expected
    • EPS of $0.32 (ex items) vs $0.26 expected
  • Quotes:
    • "I believe that the third quarter will likely represent a bottom in all of our operations, although it remains difficult to predict the timing and pace of the eventual upturn in natural gas driven activity,"
  • Nutshell: I don't own options here currently but will listen to the call as I like to keep up with the story.
  • Conference Call: Today, 11am EST.

Reporting After The Close or Before Tomorrow's Open: (CLB), (NFX), (RRC), and (ESV)

Odds & Ends

Analyst Watch:

  • (BTU) cut to Hold at Citi.

133 Responses to “Wednesday Morning Pause”

  1. 1
    BirdsofpreyRcool Says:

    Mrkt Technicals from JPMo

    SP500 technical update from JPMorgan’s M Krauss – S+P 500 Cash (954): Small pullback to 943, after retesting the 956 June 11 peak. Same level, but the market is much healthier now than June 11: Bullish Sentiment is still quite tempered (only 55% bulls 10 day DSI vs 83% in early June!), Breadth is MUCH healthier, and Momentum is stronger. So, corrective dips should be bought. Tues held 941 first support. The 934/927 area sees Buyers. Stay core bullish above the 910-906 July 15 gap and 887 July 13 breakout. Next SPX upside target is the 968 June channel measured move. Mon, we upped our 4Q target to 1000-1050. May be seen earlier. Follows 869 July 8 Summer bottom holding 875-830 correction targets. That was just a pause in the bull cycle from the 666 March 6 trough. Long termceiling stays 1100-1150.

  2. 2
    ram Says:

    So RRC could be sell the news and NFX could be buy the news?

  3. 3
    zman Says:

    Ram – something like that. I own them both now but if RRC gets a run into earnings today I may punt half or all the position. I don’t really see letting go of much NFX before the call but may if it were to run. Looking at the futures I’m not sure we get those pre numbers runs today but EIA can always swing the commodities.

    BOP – thanks for sharing.

  4. 4
    zman Says:

    Solar watch:

    Yingli commenting last 6 weeks has seen a big improvement for U.S. commercial solar projects.

    Also China adding solar subsidies:

    http://www.reuters.com/article/marketsNews/idAFPEK12570920090721?rpc=44

  5. 5
    zman Says:

    SU call in 15 minutes, will let ya know if I hear anything interesting.

  6. 6
    jat Says:

    Z– make sure you dial into that SU call correctly. If you hit one number off, it takes you to a singles chat line. And you don’t want that happening when you’re on speakerphone.

  7. 7
    zman Says:

    Jat, let me know which number to misdial in case the call is boring, lol.

  8. 8
    BirdsofpreyRcool Says:

    TechTrader is quiet this morning.

    HeadTrader went short at close last night. Will cover as he still thinks you buy on weakness.

    Not a lot of trading color today. HT looking for direction from mrkt open. Will keep you informed.

  9. 9
    BirdsofpreyRcool Says:

    PXP bonds are a little stronger today…

  10. 10
    zman Says:

    BJS – Goldman taking down 2010 numbers by 4 cents to get them to $0.35 (Street at $0.47), but taking 2011 numbers up to $0.97. As expected,people cutting numbers but not changing ratings, they are staying neutral. Saw TPH thought was fairly priced now, no longer cheap.

  11. 11
    BirdsofpreyRcool Says:

    TechTrader weighs in… 55/45 long, but a lousy trading day.

    Hint: TT only commits large chunks of capital on “good trading days.”

  12. 12
    zman Says:

    Bill – What do attribute the rally in VQ to?

  13. 13
    zman Says:

    SU commenting that the outlook changed so little from last time that they aren’t going to go through it on the call. Already into the Q&A.

  14. 14
    zman Says:

    VTZ – SU will be able to talk about a decision on Firebag/Voyager by year end, may have Firebag 3 decision before that. Sounds like Firebag 3 is a certain to be decisioned on earlier than year end.

    They see less hedging going forward.

    They have still not had time to completely analyze international opportunities (Libya, Syria).

    On Bitumen competition – don’t see a big flood of it, don’t think all announced projects happen, come on on time, or run at the stated capacities.

  15. 15
    zman Says:

    NG yet again fighting off an opening decline, now up 4 cents. Gassy stocks recovering well after an ugly open on very low volume. All moves really moot until we get the reaction to the EIA numbers in 30 minutes.

  16. 16
    BossmanG Says:

    Z, what do you think of the $1 run up in cl the last 30 min?

  17. 17
    zman Says:

    Boss – it’s tied to the move in the SP. Basically its just noise until we see EIA. I do think the API numbers were on the odd side of reality last night (hard to get a big build in crude with imports down so much but they seem to be averaging data over a couple of weeks.) As I’ve written recently, I’m not surprised to see utilization back away in their numbers as demand remains poor-ish for gasoline and pitiful on the diesel side. If EIA reports similar numbers look for lower crude from here towards a $60 test, depending on products. I think the first blush reaction could prove the wrong one in that case if diesel does see a smaller than seasonally normal build.

  18. 18
    zman Says:

    SU instilling a lot of confidence in their due diligence on new and existing projects, good call. Will likely move from here on oil and not the quarter’s results which were fine.

  19. 19
    zman Says:

    Tater – I did see your comments last night, thanks, let me know if you come up with anything else.

  20. 20
    VTZ Says:

    I think Firebag will go ahead 100%. They should also finish a new hydrotreater in 2010 which will provide margin uplift.

    Less hedging is nice to see although the existing hedges were good to see.

    I can’t comment on Petro-Can’s international properties

    Regarding bitumen, I could talk for hours about the market and the ways it could go.

    Briefly, what has happened is that because Mexican crudes and Venezuelan crudes production has fallen off, there is extra heavy capacity in the US refineries which is causing an increase in demand for heavier crudes. Synbit (about 50% synthetic/50% bitumen) is desireable because of the high distillate yield and because it’s a good balancing crude for a refinery’s feed diet.

    The heavy crude capacity has increased steadily for the past few years and the supply is now no longer there because of the downturn.

    I would expect the market for heavier crudes to stay strong and continue to de-incentivize the construction of upgraders to upgrade to a synthetic crude.

  21. 21
    zman Says:

    Interesting to see the recover from $1 off sales at the open, especially names like CLR which are unhedged oil. CLR is trying to break up through its 200 day average and, oil report willing, could see a run once through the current level back towards $35 (my layman’s TA read) between now and the August 2Q report.

  22. 22
    BirdsofpreyRcool Says:

    “Firebag”… for some reason, that name always cracks me up.

    z — HT had a question… if you thought nat gas would rally, who would you buy for a trading name here? doesn’t have to be cheap, just one that moves with a lot of beta to nat gas. I’m guessing swn and rrc. I would say hk too, but fearful of their next equity offering. thx

  23. 23
    zman Says:

    V – re Bitumen, that’s basically what they said, blaming falling Mexico supply for the increased demand from other sources. Seems like the higher demand means higher prices which would be tougher on, I suspect, VLO’s margins.

  24. 24
    zman Says:

    BOP – for a trade or long term?

  25. 25
    BirdsofpreyRcool Says:

    HT only thinks one or two days at a time….

  26. 26
    zman Says:

    BOP – Stocks or options?

  27. 27
    BirdsofpreyRcool Says:

    stocks

  28. 28
    BirdsofpreyRcool Says:

    HT — just clarified… he is asking for a LONG TERM list. Very non-DT like.

  29. 29
    BirdsofpreyRcool Says:

    make that “non-HT”

    asking what he means by LT… could mean a week.

    [note to self, always clarify first, before using up board space… sorry!]

  30. 30
    zman Says:

    SWN #1
    HK #2 (what’s the chance you are actually in when they announce the deal with a 2 day time horizon)

    Larger cap if you need the liquidity, XTO, CHK

    If you are talking about a good beat on storage day then higher beta may be a bit smaller: GDP and GMXR can run harder but it depends a lot on what they have just done. BBG in the rockies can really move with the right gas report (if West region shows a small, small build or a summer draw this guy pops).

  31. 31
    BirdsofpreyRcool Says:

    last clarification… HT must be asking for a client as he says “1 yr or longer.” I know that personally, HT doesn’t think past the next weekend. But, that is why he is such a good trader.

  32. 32
    Wyoming Says:

    The price of milk?

    JACKSON , Miss. (AP) — A gas pipeline exploded in rural Smith County in south Mississippi Wednesday, killing one person and leaving three others critically injured, officials say.

    The explosion was reported around 4 p.m. on County Road 99 just south of Sylvarena, said Mississippi Emergency Management Agency spokesman Jeff Rent. The blast occurred on part of the Midcontinent Express pipeline belonging to Kinder Morgan.

    “There was a pressure test that was being conducted by a third party contractor on the Midcontinent Express pipeline when they had a failure,” said Joe Hollier, a spokesman for Kinder Morgan Inc. said. “It’s tragic that there was a loss of life. It’s never a good day when an accident like this occurs.”

    Hollier said the contractors conducting the tests were Beckville, Texas-based Grand Bluff Construction Co. and Priority Energy.

    Rent said a fire in the area had been put out and there was no evacuation. He said he did not know how many workers were at the scene when the explosion happened.

    A phone message left with a spokesman for Grand Bluff Construction was not immediately returned Wednesday evening.

    Three medical helicopters lifted the critically injured from the scene, Jim Pollard, a spokesman for AMR ambulance service told The Clarion-Ledger newspaper in Jackson . All three were taken to the University of Mississippi Medical Center in Jackson .

    Two had life-threatening injuries and the third was in stable condition, Pollard said. Officials have not disclosed their identities or the nature of their injuries.

    Houston-based Kinder Morgan owns or operates more than 35,000 miles of pipelines and 170 terminals in North America .

    http://screencast.com/t/9pwMUtrg

    http://screencast.com/t/eqIeO1qF

    Images can be expanded.

  33. 33
    zman Says:

    Re 29: one or two days and a week are the same for me but SWN most likely, always expensive, always a go to name if the gas number is an outlier. Ya know, gas is up big off the low. Maybe we have a shot at $4 but I don’t see much more in a week’s space. Could go up there and bounce lower. We do get supply numbers on the 30th but that’s a whole 8 days away.

  34. 34
    zman Says:

    Re 31 – EOG, CHK, HK, SWN, RRC, CRK, BBG, XCO, KWK

    riskier GMXR, GDP, SD

  35. 35
    zman Says:

    EIA Inventory Report:

    Crude: down 1.8 mm barrels
    Gasoline: up 0.8 mm barrels
    Distillate: up 1.2 mm barrels

    Utilization: 85.8% – backed off slightly
    Crude imports: 9.2 mm bopd, down a bit but not out of seasonal bounds

    Gasoline demand: 9.255 mm bpd, hanging in there

    Dist demand: 3.455 mm bpd – holding the line, good

    …….

  36. 36
    BirdsofpreyRcool Says:

    z — HT says “thank you”

  37. 37
    zman Says:

    Adding to 35, those are much better numbers than API, but not bullish except on the distillate side. Oil is trying to figure out which way to break from here.

  38. 38
    zman Says:

    BOP – back at him times 10!

  39. 39
    BirdsofpreyRcool Says:

    z — actually, HT said “winner, winner, chicken dinner”…. but, you would have to know HT to understand what he means there. 😉

  40. 40
    gaamblor Says:

    how do API and EIA line up for the overall total storage numbers now?

  41. 41
    zman Says:

    BOP – I know that phrase well, it’s what we yell at the Black Jack table!

  42. 42
    zman Says:

    G – They are within a few percent of each other, with EIA on the light side by 7 mm barrels.

  43. 43
    zman Says:

    Bill’s VQ is on fire, just don’t know why.

  44. 44
    zman Says:

    Oil deciding to let the market dictate direction from here. Again, not as bad as API, especially on the fall in crude stocks, not build, which looking at utilization falling but also imports falling makes a heck of a lot more sense than API.

    Is Ben saying anything to tump the market?

  45. 45
    DrLink Says:

    Re 43 VQ(perhaps this could be it)

    A group of independent producers is set to receive more than $1 billion in recovered costs after the federal government declined to appeal a court’s order to pay the costs for some offshore California leases that were never developed

    On November 15, 2005, the United States Court of Federal Claims issued a ruling granting the plaintiffs’ motion for summary judgment as to liability and partial summary judgment as to damages in the breach of contract lawsuit Amber Resources Company et al. v. United States, Case No. 02-30c. The court’s ruling also denied the United States’ motion to dismiss and motion for summary judgment. The United States Court of Federal Claims ruled that the federal government’s imposition of new and onerous requirements that stood as a significant obstacle to oil and gas development breached agreements that it made when it sold 36 federal leases offshore California. The court further ruled that the Government must give back to the current lessees the more than $1.1 billion in lease bonuses it had received at the time of sale

    On December 24, 2008, the United States Court of Appeals for the Federal Circuit agreed to stay the mandate for 90 days pending consideration of the Government’s possible filing of a petition for writ of certiorari. No payments will be made until all appeals have either been waived or exhausted. We are among the current lessees of the 36 leases.
    plus sacramento is know going to allow a offshore rig to drill for the first time in years…….

  46. 46
    jat Says:

    Yes, but in the realm of completely unrelated, did you know the etymology of “winner-winner”?

    “The legend tells that years ago every casino in Las Vegas had a three-piece chicken dinner with a potato and a veggie for $1.79. A standard bet back then was $2, hence when you won a bet you had enough for a chicken dinner.”

    I say Z takes all his yearly contributions from us and takes us out to next year’s GS Vegas Energy conference. I only go to Weil, and the Harrah’s there is less than thrilling.

  47. 47
    zman Says:

    Jat – I was there for the open of gambling in the city when Morgan Keegan held a Southern Comfort conference back in the early 90s. Talk about a good way to get mugged inside and out.

    Thanks for the history lesson, have to remember that one.

  48. 48
    BirdsofpreyRcool Says:

    jat — cool info. thanks!

  49. 49
    West Says:

    Bakken Update: CLR recently had a hearing before the NDIC ( 7-21-09) regarding drilling units in McKenzie, ND and one of the engineers made reference to their findings concerning the possibility the Bakken & 3forks are, in fact, 2 different resrvoirs.In June 2008, CLR drld Mathistad 3frks which pot for 1100bopd and has cum 86k since then. In early 2009 CLR drld a 2nd well on MATH lse to the mid Bkn about 100 ‘ above 3frks.Special pressure sensors were installed in the 3frks to monitor MB frac for communication. The CLR engineer volunteered that the test indicated that these were 2 different reservoirs, further studies will continue. CLR is applying for super pads NE of the Math wls where they will drl up to 8 wls from the same pad, 4-3frks and 4 MB. Thia area lies ssw of xto super pad wells on the Missouri River and the Petro-Hunt well that has made in excess of 800k from the 3frks. The area along the Nesson Anticline is generating some of the best wells in the 3frks and very good MB due to natural fracturing.

  50. 50
    zman Says:

    Oil following the market now.

    Thanks DR Link. Not playing but always interested in understanding those sorts of moves.

    Thanks West, I’m continuing to hold, will likely reposition before earnings – Aug 6th. They may get a pop from TFS test results from NFX tomorrow (8,500′ lateral in McKensie county).

  51. 51
    zman Says:

    NG on fire, up 15 cents now.

    This is why

    http://www.crownweather.com/?page_id=29

    Won’t likely be a threat to the Gulf. Still, the weather and sea surface temps are getting more conducive to development.

  52. 52
    BirdsofpreyRcool Says:

    west — Thanks for the update! Had not heard the follow up on CLR’s Math wells. But, that is HUGE news for the Bakken acreage holders as it adds more evidence that there is double the reserve estimates (from two separate target horizons) in the basin.

    Has CLR put out a PR (or any other public comment, other than to the NDIC) about the results from their MD/TFS tests??

  53. 53
    West Says:

    Z, do u have a well name r location on NFX wl ?

  54. 54
    zman Says:

    West – Moberg 1-29H

  55. 55
    Nicky Says:

    Morning all.

    Broader market – I see more upside. Looks this morning like we are currently in ii down of v up. So we could see a final explosion to the upside to complete v. Target areas are many. I think we will exceed 962 SPX. So next area I have is 971 and then how about 999 (666 (March low) upside down??). But seriously how many more up days can we have. Ftse just completed 8!

    Oil also looks like its ready to move higher with the broader market. $68 maybe.

  56. 56
    zman Says:

    Continuing to sort through the EIA data, notably gasoline production was up strongly, very likely it falls back next week as: 1) last week’s number was suspiciously low given utilization and this week’s was probably a solve to make the EIA’s math work and 2) utilization backed of 2% (which is quite a bit) and gasoline production rose. That won’t continue. So, keeping demand flat, that would auger for a small draw or small build in gasoline next, smaller than this week’s number.

  57. 57
    zman Says:

    Afternoon Nicky and thanks. I think that speculative top with be the sucker’s peak so to speak. What do the waves say after that, how low is the S&P low?

  58. 58
    zman Says:

    Watching RRC closely for an exit pre close. I don’t think they are going to disappoint or say anything disturbing in the pr or on the call but results may be the near term peak and I have the $45s in place in case they are not. Waiting a bit longer but no sense in round tripping a 70% gain here.

  59. 59
    Nicky Says:

    Z – it could be a significant top for both indices but there are several possibilities right now. Either way I would say oil pulls back to early 50’s. If its a bigger top then we are on our way sub 30. But with both indices and oil its possible this is going to turn into a more complicated correction lasting several more months.

  60. 60
    zman Says:

    Thanks much Nicky, how about S&P target? $30 oil this year and I’ll eat a hat.

  61. 61
    zman Says:

    Gasoline demand was off 1% YoY and to the five year. Not too shabby considering nearly 10% unemployment (no need for HOV lanes these days), lack of interest in shopping and travel.

  62. 62
    della05 Says:

    What are your thoughts on the BJS 12.5 Puts? It seems to me to be damage control time.

  63. 63
    Nicky Says:

    Remember I have a year for under $30 I think I said!
    I am more worried about you having to eat one first for nat gas anyway!!
    SPX – well first we have to see where this tops. But likely we then see a sharp retrace. Its also possible that we head to new lows and this marks the end of the wave 2 or B rally. Not my preference though due to cycles.

  64. 64
    zman Says:

    Della – It’s July 22, they have 31 days left in them and I expect the market to pull back soon. The stock should move to the downside after lackluster results and forecast but has not yet. I’m not adding but I have time here. Not a big position, if it does start to break down though I may make it one. I saw little in their press release or on the call that didn’t fall into the category of wishful thinking.

  65. 65
    Nicky Says:

    Z – we have had a five way rally off the march lows. So we have two options as far as I can see. We do a 5,3,5 – ie we are just completing the first five waves up, will then do a 3 wave correction and then another five waves up OR this wave 5 completes the whole rally.

  66. 66
    zman Says:

    Thanks Nicky, got it.

  67. 67
    della05 Says:

    Thanks, I know it’s early and in a “normal year” the stock and the market should fall, but the market drop never seems to happen as predicted. I’m guessing the drop will happen before the next “earnings season”. This time around the companies are beating estimates on low ball expectations and by cutting costs. With no real sign of recovery (hiring etc.) and no where else to cut, I can’t see how there being anything but bad news coming up. As to the BJS Puts, they will likely drop but … without an event, I can’t see it happening by their expiration date. But that’s just me and why I pay the big bucks for your sage advice.

  68. 68
    zman Says:

    Della – big bucks? Cheaper than mochachino a day, lol. But I hear ya. I’m just telling you what I’m going. Oil service did this last quarter saying “the bottom is in, check out all the costs we’ve cut”. And the stocks ran up. Now, people are starting to question just how far out in the future it will be before we actually see a return to growth. 2010 is not it. 2011, probably but using those forward numbers gets you an historically high multiple.

  69. 69
    della05 Says:

    Thanks I noticed you questioned the “big bucks” comment (which I believe have been well spent dollars) but you had no problem with the mention of Sage advice. lol.

  70. 70
    zman Says:

    I take exception to the advice too as I just tell you what I’m thinking/doing and it may not be sage. But its Wednesday and I didn’t want to be picky.

  71. 71
    BirdsofpreyRcool Says:

    della05 — heh, heh, heh… good one. 😉

  72. 72
    zman Says:

    BOP – I should have had UPL in the high beta for a trade camp as well.

    NG up 5% now. Cover rally.

  73. 73
    BirdsofpreyRcool Says:

    z — not jumpin’ on ya. If you didn’t give good, solid advice, why would we sit around and watch the paint dry with ya?

    Also, HeadTrader luuuuuuuuuuuvs you. Especially if you make him $$.

  74. 74
    zman Says:

    Housekeeping Watch: New folks, take a look at the Bio tab at upper left to get an idea of who you are talking to around here and drop us a note at zmanadmin@gmail.com if you want to give the group a clue as to what you do.

  75. 75
    zman Says:

    FSLR back to $150. High odds you see a trade their on the long side before 7/30 earnings.

  76. 76
    zman Says:

    TBP’s comment on passage of the vehicles R&D bill (pre cursor to getting the Natural Gas Act passed) in the House:

    Army–

    It has already been a great week for natural gas and the Pickens Plan.

    Yesterday, another piece of legislation promoting the research and development of natural gas-powered vehicles—H.R. 1622—was passed by the House of Representatives. As CQ Today noted in the coverage of the bill, “Oilman T. Boone Pickens has been crusading for a switch to greater use of natural gas vehicles, as a centerpiece of his campaign to reduce dependence on foreign oil. His plan has been winning growing support from members of Congress, including Senate Majority Leader Harry Reid, D-Nev.”

    The bill, sponsored by Rep. John Sullivan of Oklahoma (one of the original co-sponsors of the NAT GAS Act), provides $30 million per year for natural gas vehicle research from 2010 to 2014 and directs the Department of Energy and Environmental Protection Agency to focus research on commercial vehicles. The legislation also charges those agencies with developing procedures and national standards for the vehicles and for natural gas fueling stations. A special thank you goes out to Representative Sullivan for being a leader in the nation’s fight to reduce our reliance on foreign oil.

    The vote? It was overwhelmingly in favor of the bill, 393 to 35. It was a huge victory. It’s further evidence of the fact that Members of Congress are recognizing the tremendous benefits of natural gas: it’s clean, it’s abundant and, most importantly, it’s American. Army, you’re really making a difference by reaching out to your elected officials.

    This was a great achievement but we need you to keep up the momentum to get the NAT GAS Act—H.R. 1835 and S. 1408—passed by both chambers of Congress and signed by President Obama into law this year. Take a minute to send your Member of Congress an email asking them to become a co-sponsor of the NAT GAS Act.

  77. 77
    zman Says:

    Anything you guys want to see added to those quickview snapshots in the WIOWIO part of the post this morning?

  78. 78
    zman Says:

    Re 73. I learned long ago to listen to the smart kids. No sense reinventing the wheel, especially if you are not TA inclined like me (I actually got my start reading chart books but that was lifetime ago). Nobody is right all the time but some of the market types have that knack like HT. It’s how I think of Nicky’s near and medium term oil price calls.

  79. 79
    zman Says:

    1520’s bio has been added to the Bios tab here:

    http://zmansenergybrain.com/subscriber-data/bios/

  80. 80
    zman Says:

    Tater – can you add BJS to your list? Thanks. To reach his TA page click here or use the link at upper right.

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2933882&cmd=show&disp=p

  81. 81
    zman Says:

    Oil green, tracking Dow now.

    I think consensus for NG storage tomorrow is 65 Bcf. This is a pretty tough bar to meet as the weather was not quite the hottest of the season to date and imports were a little stronger than in the lowest injection of the season so far set 3 weeks ago at 70 Bcf. I would imagine if we don’t see 65 or smaller tomorrow, gas will give back 20 to 30 cents. Working through the regional weather data now to come up with my estimate but I think 70 to 75 is more like it.

  82. 82
    zman Says:

    For BOP and West:

    Never been a big fan of this one but now they’re in the Bakken too.

    http://www.rigzone.com/news/article.asp?a_id=78451&hmpn=1

  83. 83
    bill Says:

    12 vq rally due to calif offshore opening up

    vq has a play there as well

    refer to my late last night post

  84. 84
    BirdsofpreyRcool Says:

    z — Abraxas… they might not be squirrels, but they dance on the edge of a knife. They have been doing that (successfully) for years, tho. Just not my preferred vehicle. Thanks for the head’s up. Will have to look where they have that Bakken acreage.

  85. 85
    bill Says:

    http://www.mhenergy.com/HOME/News/6460065.xml?sub=HOME&p=HOME/News&?undefined&undefined

    vq is trying to do the same thing as pxp

    pxp is farther along in the approval process

    if calif lets pxp in, it stands to reason vq could also do a similar deal

  86. 86
    zman Says:

    Thanks Bill.

    BOP – It’s bad when the second line below the company name should read:

    “…well, there’s always bankruptcy…”

  87. 87
    bill Says:

    on 45

    thats not it

    i asked vq this question on last earnings call and they said nothing is coming to them

    80 m is going to pxp

  88. 88
    BirdsofpreyRcool Says:

    z — that’s funny… but true. I periodically check their ticker, to see if they have gone BK yet. Always mildly surprised to see they haven’t. Yet.

  89. 89
    zman Says:

    Market feels tired but not done. End of day greening in the card for E&P post oil’s $65+ close.

  90. 90
    bill Says:

    was there news from SD

    down kind of hard today

  91. 91
    zman Says:

    … and still watch the RRC for a convenient exit on the lower strike calls to raise a little cash and derisk the impact of the earnings report. I may not get what I’m after and will definitely hold the $45s into tomorrow’s call.

  92. 92
    zman Says:

    Bill – none that I saw, volumes has been light last few days, stock is moving down to meet its 50 day, a little odd with the action in NG today but this is a noisy trading market this week.

  93. 93
    bill Says:

    back on vq

    I recall that vq mgt on last earnings call mentioned that they would have better success from getting aproval for offshore calif drilling as they wanted to modify current lease as opposed to drilling in a new area

    PXP offered 100 m up front and they would go away in 14 years

    PXP also said they would drill (at an angle) into state waters and not mean a new offshore drilling rig

    VQ will have to do something similar, money talks bullchit walks regarding the politico’s

    ————————————-

    Maybe bop can help here

    vq was trying to get senior creidt indentures modified , they gave up which begs the question

    what did they want modified and why

  94. 94
    West Says:

    trying to get an antelope without the goose and not move the spider web. kinda the squirrel on the knife edge show and it makes paint drying look fast.

  95. 95
    BirdsofpreyRcool Says:

    west — that’s some ZOO you got cooked up there. All waiting in the weeds… watching the paint dry.

  96. 96
    BirdsofpreyRcool Says:

    bill — VQ — i’ll check on it. was it in a PR or something?

    Could be, they were trying to get a debt ceiling test raised, or collateral released. Can’t think why you would pro-actively go to your banks ahead of time, if you’re worried you’re gonna trip financial ration covenants. The banks are gonna charge you to waive the default, either way.

  97. 97
    zman Says:

    BOP – just to add on what it might be, we’ve seen an awful lot of loan covenants stretched willingly by the lender this year to keep away from technical defaults. I’ve not seen a bad reaction yet this to these amendments on the part of shareholders.

  98. 98
    zman Says:

    Adding to NFX thoughts from the post, while I do see them potentially shifting some capital away from the Woodford, I do think we could see some interesting, new news in the play.

  99. 99
    bill Says:

    cnbc just reported that the govt wants to ban corp travel to ‘fun” places

    no vegas, no orlando

    trips to bufallo in the winter is ok

    this tells me the the politico’s have too much time on their hands to think this stuff up

  100. 100
    BirdsofpreyRcool Says:

    z — #97. Nope. It’s the idea that a capital structure is a pie. If bondholders or banks “give a little” that means, all else equal, that equity gets a little more of the pie. So, rarely (if ever) “negative” for equity.

  101. 101
    bill Says:

    they were looking for consents here

    http://finance.yahoo.com/news/VENOCO-Inc-Announces-Cash-prnews-4172183698.html?x=0&.v=1

    then cancelled it here

    http://finance.yahoo.com/news/Venoco-Inc-Terminates-Tender-prnews-747896140.html?x=0&.v=1

  102. 102
    bill Says:

    They were willing to buy back at par

    i dont know what they are trading for

  103. 103
    zman Says:

    Bill re 99 brings me to the movie quote of the day

    ” I will live in Montana. And I will marry a round American woman and raise rabbits, and she will cook them for me. And I will have a pickup truck… maybe even a “recreational vehicle.” And drive from state to state. Do they let you do that?
    Captain Ramius: I suppose.
    Capt. Vasili Borodin: No papers?
    Captain Ramius: No papers, state to state. ”

    I guess now we’ll need papers.

  104. 104
    bill Says:

    lol

    what movie was that

  105. 105
    zman Says:

    охота в течение красного октября

  106. 106
    zman Says:

    Third tropical wave with potential to the west of the two that are now expected to bend towards the east coast.

    Gomex SSTs like warm bathwater now:

    http://weather.myfoxtampabay.com/maps/WTVT/custom/temps_gulf.html

  107. 107
    BirdsofpreyRcool Says:

    bill — VQ pulled the tender b/c they only got 42% of the bondholders to take it. In order to do what they wanted to do (relax certain covenants in the bond indenture) it would have taken at least 90% to have tendered. So, not enough tendered, so can’t relax the covenants, so can’t do the contingent financing. So, let’s just forget we ever had this little conversation, eh? What’s a few covenants, between friends.

    VQ bonds are rates Caa1/B. As a bondholder, i sure as HECK would not want to see my covents relaxed. But, also, bondholders clearly think they can get paid more than 97% + 3% consent fee by holding these bonds longer. The bonds are callable on August 24th, 2009 at 104.38. I’ll bet VQ would have called the rest, if 90% of the bonds tendered.

    Greedy bondholders! 😉

  108. 108
    bill Says:

    on ng for tomorrow

    whats more important

    the raw number or the number vs expectations

  109. 109
    zman Says:

    re 108

    We’re going to get full either way. The number vs expectation should be most important. In the reports from two and three weeks ago the street was honestly underestimating demand. Last week they toyed with the numbers at the last minute to contrive a beat. This one looks like the bar is set pretty high (to invoke profit taking perhaps?). Anyway, still looks like a tough number to make to me.

  110. 110
    bill Says:

    SBOP Thanks

    So if they really want them they could get them at 104.38

    Do you know what they are trading at?

    Seems like yield is low for a junk bond and i wonder what the contingent financing was for

    just to replace the old notes , or that + more and at what rate.

    Now rambling out loud, if they couldnt get new money on notes, they might be tempted to sell shares at these much higher prices to do whatever with.

    I took some profits and covered some long positions so i didnt bet the ranch on it..but i like their oily exposure

  111. 111
    bill Says:

    on 109

    a guru i follow is predicting 70 tomorrow as we had warm weather last week

    this week we have relatively cooler weather

  112. 112
    zman Says:

    Yep – next week’s injection is going to be big.

  113. 113
    jpntexas Says:

    I can’t remember who suggested the PXP trade today, but thanks. Nice day trade, in at 1.70 out at 2.15 in the PXP HF’s.

  114. 114
    BirdsofpreyRcool Says:

    bill — bonds are quoted on TRACE at 91.5… that’s a 13% yield. As Goldman was handling the tender for VQ, bet Goldman had some secured financing deal up it’s sleeve. Maybe a convert… seems to be a pickup in demand for converts these days. But, just guessing. However, we now know that VQ wants to make those bonds go away… they mature 12/11 by the way.

  115. 115
    choices Says:

    Z-#105-Very good, sir. I am impressed.

  116. 116
    BirdsofpreyRcool Says:

    VQ — just to look back in history a bit… those bonds were quoted in the low-50s in March… then moved to par, on the tender offer… now back in the low 90s. Who says “fixed income” is boring!

  117. 117
    zman Says:

    Choices – don’t be, I copied it from a translator program. Petra speaks it though, cool sounding language.

  118. 118
    BirdsofpreyRcool Says:

    Is it just me? (the non-chartist) Or, does it appear that BJS is done, trying to move up. Stocks with large short-positions can hold up for about 3 days after a non-disasterous-but-still-not-great earnings report. Then, they tend to roll over…

  119. 119
    zman Says:

    Beerthirty. I’ll have NFX and RRC pre call notes out late tonight or at latest before the Thursday post tomorrow.

  120. 120
    zman Says:

    West – turn up anything on that well?

  121. 121
    West Says:

    on confidential will look at offset prod

  122. 122
    zman Says:

    Have not been able to track down the minority working interest holder there. Looking at ND site now.

  123. 123
    bill Says:

    on 114

    thanks for that

    converts make sense– get 3 % coupon and convertible north of 9 maybe 12 or 13

  124. 124
    zman Says:

    West – lonely piece of dirt there, east of Bear Den, north of Lost Creek where SM, XTO, and COP (via Burlington) have been having some success.

  125. 125
    nifkin Says:

    Occidental Petroleum Announces Significant California Oil and Gas Discovery
    2009-07-22 20:15:16.798 GMT

    Occidental Petroleum Announces Significant California Oil and Gas
    Discovery

    LOS ANGELES, July 22, 2009 (GLOBE NEWSWIRE) — Occidental Petroleum
    Corporation (NYSE:OXY) announced today that it has made a significant
    discovery of oil and gas reserves in Kern County, California.

    Occidental believes there are between 150 million and 250 million gross
    barrels of oil equivalent (BOE) reserves within the outlined area where
    Oxy has drilled six wells to date to delineate the discovery. The
    multi-pay zone discovery area, whose areal geological extent is still
    being defined, has both conventional and unconventional pay zones. The
    bulk of the discovery’s producing zones are conventional oil and gas
    bearing formations.

    Occidental’s interest in the discovery area is approximately 80 percent.
    Approximately two-thirds of the discovery is believed to be natural gas.

    “We believe this to be the largest new oil and gas discovery made in
    California in more than 35 years,” said Dr. Ray R. Irani, Chairman and
    Chief Executive Officer of Occidental Petroleum Corporation.

    “It is probable that there are additional reserves outside the defined
    area, and it is possible that structures of this type exist elsewhere in
    Oxy’s 1.1 million net acre position in California. We plan to drill wells
    to exploit these opportunities over the next 5 to 10 years,” Dr. Irani
    said.

    Oxy is currently the largest natural gas producer and third-largest oil
    producer in the state of California, where the company has produced oil
    and gas for more than 50 years. Oxy’s assets in the state include more
    than 7,500 active wells located in 90 fields, spanning 600 miles. Oxy’s
    California proved reserves were 708 million BOE at year-end 2008 and
    represent approximately 24 percent of Oxy’s worldwide reserves.

  126. 126
    john11 Says:

    NFX info available…

    http://finance.yahoo.com/news/Newfield-Reports-Financial-prnews-1160009496.html?x=0&.v=1

    http://finance.yahoo.com/news/Newfield-Exploration-Provides-prnews-2997305963.html?x=0&.v=1

    second link is update for Granite Wash wells

  127. 127
    zman Says:

    John – I’ll have a full review of the quarter and ops out late.

    Production came in mid guidance,
    EPS was $1.28 (clean) vs $1.10 exp
    CFPS was $3.21 vs $2.70.

    Granite Wash wells are continued good news,
    They are pushing guidance towards the, upper end of their previously stated range,

    …more later ….

  128. 128
    zman Says:

    That NFX TFS well came in at 1,200 bopd.

  129. 129
    zman Says:

    Cost control was very good, cash costs fell sequentially, $0.25 per Mcfe below guidance.

  130. 130
    bill Says:

    can u comment on oxy find

    who has the 20 %

  131. 131
    bill Says:

    from oxy 10-k

    California

    Occidental’s California operations consist of Elk Hills, THUMS, Tidelands and other interests in the Ventura, San Joaquin and Sacramento basins.

    Occidental’s interest at Elk Hills includes the Elk Hills oil and gas field in the southern portion of California’s San Joaquin Valley, which it operates with an approximately 78-percent interest, and other adjacent properties. The Elk Hills field is the largest producer of gas in California. Oil and gas production in 2008 from the Elk Hills properties was approximately 84,000 BOE per day. During 2008, Occidental continued to perform infill drilling, field extensions and recompletions identified by advanced reservoir characterization techniques, resulting in 275 new wells being drilled and 550 wells being worked over. At the end of 2008, the Elk Hills properties had an estimated 491 million BOE of proved reserves.

    Occidental owns interests in California properties in the Ventura, San Joaquin and Sacramento basins, other than Elk Hills. The combined properties produce oil and gas from more than 50 fields. Oil and gas production from these properties in 2008 was approximately 24,000 BOE per day. At the end of 2008, the combined properties had an estimated 118 million BOE of proved reserves.

    THUMS conducts the field operations for an oil production unit offshore Long Beach, California. Tidelands is the contract operator for an onshore oil production unit in Long Beach, California. Occidental’s share of production and reserves from both properties is subject to contractual arrangements similar to a PSC. For 2008, Occidental’s share of production from THUMS and Tidelands was approximately 20,000 BOE per day and proved reserves totaled 99 million BOE at year-end.

    i wonder if vq is in the same area

  132. 132
    PackMan Says:

    Bill 104 Hunt For Red October

  133. 133
    zman Says:

    Bill, I’ll track down that minority holder tonight.

    NFX pre call post in 5 minutes.

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