Sentiment Watch: Uber bullishness yesterday left me wanting to pull chips off the table. I did in NFX (which shot up 11% yesterday) but also added higher strikes for more leverage to any analyst follow through, in RRC (which worked well into earnings but seems stretched in the short term) and in CLR which had a good run with oil and in which I will likely reposition myself closer to earnings. No fundamental reasons to run away from these names now other than the broad market has been up for 10  to 12 days depending on which index you look at and that kind of run usually ends badly. Better to hoard cash in the whole "sell high, buy low" spirit.

NFX Wrap: Could not have asked for a better quarter from an operational or news buzz standpoint. I "uprisked" my call position here yesterday during the call and I will be quick to take profits in the higher strike calls if the broader market rally starts to show real signs of cracking. The notes from yesterday's NFX conference call have been added to yesterday's pre call note on the Reports tab.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today - Next Week's Earnings Calendar, Earnings Watch: SLB
  5. Odds & Ends

Holdings Watch

  • $10KP:

    • $27,410
    • 58% Cash
    • The Wiki Holdings tab is updated.
    • I will update the $10KP tab on Monday.
  • Yesterday's Trades:

    • NFX - Sold 2/3rds of the NFX $35 August Calls (NFXHG) for $4.10, up 141%.

    • NFX - Added (20) August $40 Calls (NFXHH) for $1.10 with the stock at $38.60.

    • RRC - Sold the August $42.50 calls for $4.30 on the mid, up 93%. I continue to hold the $45 strikes. Conference call went well, valuation on CFPS is a bit high, on potential NAV very low. I’ll rebuy if it softens.

    • RRC - Sold the August $45 calls for $2.55, up 26%. That takes me out of RRC but I will reposition when this cools a bit.

    • CLR - Sold the August $30 Calls for $2.25, also up 93% on the day. Just raising a cash and will likely play their early August earnings release.

Commodity Watch

Crude oil jumped $1.76 after strong existing homes sales were announced to close at $67.16 yesterday. This morning crude is trading flat.

  • China Watch: Ecuador agrees to begin exports of 100,000 bopd or 20% of Ecuadoran production for the next two years. Get used to seeing more of these kinds of headlines.
  • Dollar Watch: The dollar continues to toy with the 78.50 level and has little support until 73.

Natural gas tumbled $0.24 to close at $3.55 yesterday on profit taking after the EIA reported a 66 Bcf injection, spot on with analyst's estimates (see details below). This morning gas is trading up two pennies.

  • Tropics Watch: Nothing on the radar.

Natural Gas Storage Review

ZComment: The Street set the bar high, it was still met, including a withdrawal in the western and yet gas fell hard. Call it profit taking. Call it short repositioning. Call it traders taking notice of a number of E&P press releases detailing more gas than filled the Hindenberg at every turn with the fear that the market will likewise go down in flame. Besides, it is early in the cycle to have a sustainable run in gas prices. especially given the magnitude of the "drilled but not completed" phenomenon.  We need solid data on production declines and while we will get another data point (May '09 supply) next week, it will unlikely be worthy of a run over $4.

Notes on the following graphs:

A) Broken record watch: we're at record levels for this time of year and going to a new record for peak storage in October.

B&C) We continue to eat away at the surplus to year ago and the five year average.

D) Injections are now tracking seasonal norms. Cumulative injections are still 1.3 Bcfgpd ahead of the five year average but given the relatively mild summer much of the eastern region has experienced this summer that's not too bad. While anecdotal evidence indicates industrial demand remains weak the deficit of demand has shrunken with warmer weather meaning gas is stealing generation share from coal. 



Stuff We Care About Today

Earnings Next Week - A few interesting names next week but nothing compared to the week after that for E&P

Earnings Watch:

SLB Reports Top and Bottom Line Beats; Outlook Is Cloudy

  • The 2Q Numbers:
    • Revenue of $5.53 B vs $5.46 B expected
    • EPS of $0.68 (ex items)  vs $0.63 expected
  • Favorite Quotes
    • “Compared to the first quarter, the overall sequential rate of revenue decline slowed as a further precipitous drop in North America was offset by slowing rates of decline and some recovery in other parts of the world.
    • "Whilst production has begun to show some decline and summer demand has been strong, it will still require a further substantial increase in demand to stimulate and sustain higher levels of drilling. We do not anticipate this will happen before 2010."
  • Outlook: They see some stability in NAM activity but not a major rally in the rig count, they do see continued project cancellations internationally.
  • Nutshell: After doing well with HAL calls on Monday, I made a decision not to play SLB going into earnings today. HAL's projected 3 to 5% projected slip in international operating margins had me quickly looking for the door three and today's SLB PR did little alleviate concerns that the international segment, which has kept the heartbeat for Service names going these past few quarters is now going to see more of a squeeze ... again, without a recovery in N. America. 
  • Conference Call: Today, 9 EST.

 FSLR To Open Small French Plant

  • 100 MW per year manufacturing capacity (about 9% of FSLR's current capacity)

  • First 10 years of production to be taken by JV partner

  • This is their first move in France where solar development has been slow but recently mandated by the government to grow by 400% over the next 12 years.

  • I plan to be long FSLR Calls before earnings next Thursday, not for this news in particular but for yet another strong quarter with further cost per watt reductions.

Odds & Ends

Analyst Watch:

  •  (NFX) raised to Buy at Cannacord
  • (NFX) price target raised from $31 to $37 at Barclays, maintains Equal-Weight rating (you can't please everyone)
  • (SPWRA) raised to Outperform at FBR
  • (ESV) cut to Sell at Jesup
  •  (RRC) target upped from $46 to $50, rating stays Hold.

134 Responses to “T.G.I.F.”

  1. 1
    bill Says:

    Tanker rates are below operating costs
    Bulker rates in holding pattern

  2. 2
    BirdsofpreyRcool Says:

    quote from the JPMo trade desk…

    “this is real buying across the board and our volumes are as big as they have been in 6 wks. We are also seeing some momentum buying as well as a small amount of short covering. Price doesn’t seem to be a concern right now for some long only’s as it feels like they are chasing performance and have clearly been underinvested. Mkt breaking out is forcing the hand of many that had been on sidelines. Volumes tapered off a bit into the afternoon but buyers remain present in this market (for the market overall, volumes heavier than they have been for the last few weeks).”

  3. 3
    zman Says:

    SLB call about to start.

    Hear ya Bill, GNK reports next week.

  4. 4
    zman Says:

    BOP – did you see the video at the bottom of the TPH today? That’s funny.

  5. 5
    zman Says:

    From the compliance department burdened:

    Z: Notes from NE CC: Solid performance. Made some management changes. Much more optimistic than 6 months ago. They were unhappy that crude didn’t stay around $40/bl longer to weed out more rife raff. They are clearly managing their business very cautiously. 71% gross margins down slightly from 1st quarter. They are not expecting to see much lower costs (equip, crews etc.). Debt 11% to Cap. Expecting cap ex of $1.3B over next 12 months. $1B spoken for. $300M to buy back shares, buy distressed equip, extra div. Got the feeling they wanted to be more sure of where things are headed before doing any risk. Tenders for jack-ups coming from Saudi Aramco up to 7, Pemex 3-4 Nigeria 3. Industry new builds down but almost all will be delayed –avg 75 days. 10B backlog 1.5B of the 10B is from JU’s. Majority of questions in Q&A were about their JU”s. Fleet is 71% contracted for 2009, 41% in ’10 and 40% in ’11. When utilization of the world wide JU fleet is at 85% that turns pricing in their favor. Right now less, a figure was not given. Daily pricing range today for JU’s is $85K – $115K. GOM is a problem because most JU’s are NG. If NG goes up the offshore guys will benefit greatly. Not thrilled with tenders right now but MUCH extension discussions going on. Customers can hedge production @ $70+/bl and are reluctant to stop drilling. Historically $60 – $70/bl has been very profitable range for their customers. Areas of tenders are more crude. Their white elephant – Globetrotter new build may prove very valuable with the recent RIG deep water extension. They will be happy in the 500K+/day range. Deep water still firm. SB price target $50/sh. Earnings projections $6.23 ’09 $5.43 ’10 $5.87 ’11. Good solid cash flow story. Should do well if world economies strengthen and especially if you are bullish on Crude and NG. S

  6. 6
    bill Says:

    OWNERS of very large crude carriers will have to consider laying up tankers if loss-making time charter rates persist, writes Martyn Wingrove .

    Rates are at their worst levels for decades because of the oversupply of vessels to transport Middle East crude and the drop in oil consumption this year.

    The high number of oil company relets available on the spot market is also keeping rates at rock bottom levels.

    Spot rates are so poor for VLCCs that owners are in effect paying charterers to transport their oil on western routes out of the Middle East.

    “If the market remains poor with negative time charter rates, owners will have to look at lay-ups. Owners cannot keep paying to transport oil so it is only natural for there to be lay-ups,” Nor Ocean Stockholm managing director Per Mansson said.

    The rate for VLCCs taking Middle East oil to the US was dragged down by Kuwait Petroleum, when the state-run company fixed Frontline’s 2004-built, 305,318 dwt Front Energy for W19.75. This equates to a time charter equivalent of around minus $7,000 per day.

    The rate on the Baltic Exchange’s TD1 route — shipping 280,000 tonnes of crude from Ras Tanura in Saudi Arabia to the US Gulf — was W21.7, or $6,200 per day yesterday. This is one of the lowest rates ever reported by the Baltic for TD1 and is down from $18,700 per day reported in the final week of June.

    VLCCs taking Middle East crude to Asia were getting rates of W30, or $3,000 per day, London brokers said.

    “Cargo supplies are still low and there is too much tonnage. Some owners are competing for this business but some will not,” a Braemar Seascope broker said.

    “There is some oil company relet tonnage out there, especially a lot of Japan and South Korean relets. These companies take whatever rates they can get to keep these tankers moving.”

    Asian refiners were planning to reduce throughput from their facilities this quarter to do scheduled maintenance work and prepare them for producing heating oil in the winter.

    VLCC fixture activity picked up this week after the August Middle East loading programmes were released. More than 13 VLCCs have been fixed so far for the August loadings, Imarex Asia said.

    Imarex added that there were 72 VLCCs available to load Middle East crude in the next four weeks. This rose to 89 for the next 35 days.

    “We do not expect this increased activity to transform into higher rates yet as ships are still well supplied,” Imarex said in a report.


  7. 7
    BirdsofpreyRcool Says:

    Divergence between TT and HT today….

    TT says it’s a 60/40 long day.

    HT said he would rather short the rally.

    TT says the “rally will continue until the MBAs in Boston run out of money.”

    HT says he would rather miss the long side of the trade today and focus on going short at some point. He favors FAZ and QID.

    So… pick your stocks, pick your points, there seems to be a little for everyone today.

    Or, just go walk the dog…

  8. 8
    BirdsofpreyRcool Says:

    #4 — i watched Kevin & Jill’s entrance… you mean the Haynesville movie? will take a look…

  9. 9
    BirdsofpreyRcool Says:

    ok… you musta meant Kevin & Jill, cuz the Haynesville wasn’t funny.



  10. 10
    zman Says:

    SLB CC – seeing more deferred and canceled projects. Don’t see current prices as inspiring enough investment in oil projects.

  11. 11
    zman Says:

    BOP – yep, meant the wedding.

  12. 12
    West Says:

    BOP, Would you mind checking with your source at KOG on drill timetable for Charging Eagle. The NDIC is showing rig mobilized to site with little green derrick on their map. Thanks

  13. 13
    zman Says:

    I may switch to the COG call at the half hour. SLB call not exactly revelational.

  14. 14
    zman Says:

    SLB sounding pretty cautious on 2009 and 2010 in terms of international oil projects. Gould sees a rebuilding of activity sometime in 2010 as oil prices come back due to reductions in volumes, especially in heavier oil, and other more marginal IRR production.

    Non-NAM margins: they think HAL’s 300 to 500 basis point reduction is “not unreasonable”

  15. 15
    BirdsofpreyRcool Says:

    West — will do. But, I will say that i’m not surprised the rig has mobilized, as i’m sure they have finished drilling site 5/6… so, it’s on to 7/8 on the Charging Eagle prospect. KOG said it “takes longer than people think, to move the rig… although 7/8 is not far (as the crow flies), because of the river, we have to drive the rig 85 miles around, to get to Charging Eagle.”

    So, it was a complete rig disassembly, not just a scoot. So, if the rig gets there at the beginning of August and they have to drill both wells before moving the completion rig on… then a week to test both wells… still “October” does sound like a long time to wait to hear results from CE. Also, KOG said they thought they would have results from the Stetson well, before spudding south of the river. So, maybe they are being deliberately slow, in order to get those results first.

    But, will double check for you (and the rest of us).

  16. 16
    zman Says:

    Analyst Watch:

    RBC taking DO target from 85 to 102

    SLB CEO saying he is a “little less pessimistic” but says he could again become “much more pessimistic”

  17. 17
    zman Says:

    NFX topping 40 early.

  18. 18
    zman Says:

    NFX one of the very few green things in E&P on my screen. If we get a rally to further squeeze shorts in the broad market, this type of day will yield what is strong becomes stronger action. I don’t think anyone will have cause for a downgrade there after yesterday but I would say that you may have some profit taking after the 13% two day rally if the market does fade.

  19. 19
    BirdsofpreyRcool Says:

    West, or anyone else — any more questions for the boys at KOG?

  20. 20
    zman Says:

    SLB – a lot of people on “incentivized leave of absence” . SLB sees some consolidation in the industry if the NAM market bumps along for the next 6 months as it wears some people out.

  21. 21
    zman Says:


    Current differential to WTI
    Transportation costs
    LOE per BOE

    30 day and 60 day average production rates or what they have to date on the first few wells.

    Go forward G&A in $mm, (got to be some ramp)

    you can remind me of the royalty rate.

    I assume they have NOLs out the yingyang

  22. 22
    tater Says:

    NFX – I think the orange Fib lines drawn on the daily chart indicate the next resistance levels above fairly well as they coincide with other landmarks. 42.50 then 48.48.
    Support below is around the June highs or the Fib line at 36.50.
    Looks like a version of a cup and handle, so I would expect a test back to the breakout level at 37ish before streaking to the moon.
    The daily volume spikes in 2009 don’t appear to be a tell as to future price movement.

  23. 23
    ram Says:

    ZMAN – Unloaded CLR. Are you 100% out until earnings?

  24. 24
    BirdsofpreyRcool Says:

    KOG = 15% royalty rate

  25. 25
    zman Says:

    Ram – from the post:

    CLR – Sold the August $30 Calls for $2.25, also up 93% on the day. Just raising a cash and will likely play their early August earnings release.

  26. 26
    West Says:

    BOP, I guess I thought that you meant that they were not going to start drlg CE until October.This would have the rig sitting there idle for a couple of months. I will try to hit u with a few Q in a few. As always , THX

  27. 27
    1520sbroad Says:

    Z- saw HK finally penciled in a date for earnings – 8/5


  28. 28
    BirdsofpreyRcool Says:

    west — my bad… didn’t explain it very well. KOG said CE would be an “October event.” So, I take that to mean that they will have results to release in October. But, I wasn’t clear on that, agreed.

  29. 29
    zman Says:

    1520 – yes and if it weakens I will add more this afternoon.

  30. 30
    zman Says:

    Emailed in comment:

    Buffett: I don’t predict short term movements, but 10 years from now the dollar will buy a lot less than it does now.

  31. 31
    BirdsofpreyRcool Says:

    Michigan consumer sentiment up a bit vs exp’d at 66 (vs 65 expd)

  32. 32
    BirdsofpreyRcool Says:

    Happy Michiganders did little to support the mrkt. Besides, most institutional investors get that number early (it’s a paid subscription).

  33. 33
    1520sbroad Says:

    #29 – HK operational update pre earnings completely off the table now?

  34. 34
    zman Says:

    1520 – most likely yes. RRC did a 1 week pre announce and then had little to say yesterday. Never say never but I doubt it. Either way, they give you one by the 5th.

    COG getting clubbed and those were not bad results.

  35. 35
    BirdsofpreyRcool Says:

    Michigan Consumer Sentiment — bloomberg incorrectly had June sentiment at 64.5, when june was actually 70.8. So, at 66, it was a fairly large step down in consumer sentiment.

    It’s all about “jobs.” And there ain’t any.

  36. 36
    zman Says:

    BOP – who needs jobs when we have cost cutting, lol. Market already trying to fight off that number.

  37. 37
    BirdsofpreyRcool Says:

    No… i don’t think the mrkt craps out on that number. Too much real money coming off the bench, if you believe JPMo’s trading desk. That said, would think we take a breather, somewhere in here.

  38. 38
    1520sbroad Says:

    Gotcha on HK. I have been building a position in GMXR for my haynesville-ish exposure. Seems like it has taken a bigger hit without a whole lot of recovery that we have seen in other names.

    I have HK covered slightly out of the money in anticipation of some sort of capital market hit.

  39. 39
    West Says:

    BOP, Please ask if they have timetable for jv well with Petro-Hunt on their western side of Mocassin Creek and if it will be a TFS test or maybe even both.

  40. 40
    BirdsofpreyRcool Says:

    west — i’ll ask them where they are going after tall bear (9/10)… but, that pretty much takes them through the end of this year. They have about 20 wells permitted, tho. So will find out what’s next. Also, they have said they are not thinking about TFS test yet, but will get an update on that. Thanks for your questions!

  41. 41
    BirdsofpreyRcool Says:

    west — i see your point… will ask your question as posed. thx

  42. 42
    zman Says:

    Just to add during the lull in the market, that the setup on NFX is one of my favorite patterns. Strong stock in a modestly weak group in a weak market that has good odds at a recovery. The stock holds up better than the group when the broad market sells down but then outperforms on the market’s mini rallies. That kind of action if met with an end of day run could push NFX to $41 today. I will like not stick around if we get a move approaching that sort and will re-enter on market weakness later as I agree with Tater’s assessment that it can’t go up in straight line fashion to the upper $40s. Despite the recent run, the stock remains cheap to the group on current forward numbers which are in the process of being upped.

  43. 43
    zman Says:

    NFX Coverage. Cannacord upped it, did anyone see if Weil or Deutsche Bank did?

  44. 44
    zman Says:

    NG getting back a third of yesterday’s drop. Feels like a bit of a dead cat as there isn’t much cause to rally yet. Next data point next week on supply. SLB commented that there has been some decline in supplies, assume they are talking about Texas and not the other pieces of the pie which have been more flattish except for Louisiana which is starting to advance.

  45. 45
    nifkin Says:

    HK ops update off the table.. gotta wait for it on earnings

  46. 46
    zman Says:

    Someone, probably a shelf player, will get some bad press when/if they figure out this source:


  47. 47
    zman Says:

    Nifkin – I’d say 90% probability its off until earnings, yes, in 12 days. I’m staying long in the interim in one way or another ($24 strikes right now) and may add a bit of $25s, again, if we weaken. They strongly hinted they’d be having an operations update sometime in July but nobody likes to be predictable.

  48. 48
    BirdsofpreyRcool Says:

    NFX 7/23 updates

    DB hold
    GS buy
    UBS buy
    SunTrust neutral
    JPMo overweight
    Sandford outperform
    Stifel Nick buy
    Wells Fargo mrkt perf
    Weedon hold
    Calyon buy

  49. 49
    zman Says:

    Thanks BOP.

    I was sent an email that CSFB did not comment, has no plans to comment and has not commented in months. Unless they are restricted, that would have been a firing offense in my day. Lazy, lazy Wall Street.

  50. 50
    BirdsofpreyRcool Says:

    CS just shows up as “neutral” as of 7/20… so, can’t blame it on a “restricted list.”

  51. 51
    tater Says:

    As I am not a fundamental guy except from what I’ve learned in running my own businesses, could somebody please help me with this whole concept of “cost cutting”.
    To me it either means that a company has somehow shrunk itself (not a good prospect for earnings growth = lower value to me as an investor) or,
    the company has merely accomplished something that it should have been doing all along, cutting waste/managing $ to the fullest extent. This leads me to conclude that the company has been wasting investor money all along = weak company management = weaker forward earnings as management is lazy/wasteful and likely to return to old habits.
    Any thoughts would be appreciated as I search my brain for a good movie quote. Oh wait, watched this one last night:

    Character is being tortured into telling where the Muffin Man is,
    “Eat me!”

  52. 52
    zman Says:

    BOP – yeah I know, not restricted just lazy, as in overpaid, underworked, and soon to be in the soup line. That’s ok really because I have used that analyst in the past as a contra indicator anyway.

  53. 53
    BirdsofpreyRcool Says:

    HT went long MSFT a bit ago… but, with a tight stop. He thinks there is still buying, coming out of Boston and he wants to ride that wave a bit today.

  54. 54
    BirdsofpreyRcool Says:

    #51 — i’ll take a stab at answering that, tater.

    The concept is, during an upswing, companies are too busy filling orders to change operations around. Even worse, due to inefficient operations, companies had to hire temp workers and/or pay over-time to meet demand, so margisn were smaller than they could have been. When the order flow (and ecomony) slows down, companies can take the opportunity to look internally, at what they can do better when the next cycle upturn comes. So, cost-cutting and reorganizing is a forward-looking exercise. The expectation is that the company will hit the next upswing leaner, meaner, quicker, and more profitable.

    If you think about cyclical downturns as a time to do a little Spring Cleaning and rearrange the furniture, you get the picture.

    Doesn’t always work. But, i’ve seen this from the inside. Huge example were the auto supplier guys. When the Big 3 wanted parts, you did EVERYTHING to accomodate that… including expensive overtime and shipping. In a downturn, you try to correct the bottlenecks to make it more profitable, when the orders start to flow again.

    Does that make any sense?

  55. 55
    1520sbroad Says:

    Cost cutting – one other big area that i personally witnessed was travel. Times are good – you go and see the client. Times are bad there is a lot less of all of that – no travel in some cases. More time on the phone, conference calls, video calls.

    I would also make the argument that not all business travel is boondoggle oriented. The boondoggling also gets cut out of the budget in a big way.

  56. 56
    jpntexas Says:

    51 = SHREK, just watched it with grandchildren this week!

  57. 57
    zman Says:

    Re 42 – this action is what I was talking about. NFX hugging $40 through the downturns in the broad market today. Not getting higher highs and it will fall like everything else if the DJIA decides to puke up 200 points but it is very likely to outperform if we see a return trip to green this afternoon.

  58. 58
    tater Says:

    Thanks BOP, makes sense.

    Gingy is my all time favorite action hero.

  59. 59
    Popeye Says:

    $21 billion in profits last year gaming the market with high freq trading.


  60. 60
    zman Says:

    A little bird sent me one analyst’s (he’s at market perform rating) take on the quarter. Big revision to EPS from $4.19 to $4.70 which reflects cost cutting. Everything in the tiny little update piece was positive but they maintained the neutral stance to their “extremely bearish near-term outlook for natural gas prices”.

    Given the cheapness of the name to the group, the strong hedges, falling operating costs, the probable mid single to low double digit growth in 2010 on lower capex than 2009 (their decline rates are lower than in past cycles), and upside from the Bakken, the Granite Wash, a coming flood of development startups in 2009 and 2010 in the deepwater, and a few other items, I think guys like this will be upgrading the name when it is higher later in this cycle.

  61. 61
    VTZ Says:

    Popeye – It’s obvious that computers and technicals run the markets now.

  62. 62
    VTZ Says:

    and algorithms…

  63. 63
    zman Says:

    … Hear ya VTZ re the broad market but there is still opportunity for the stock picker. Which leads me to my first Friday Movie Quote:

    “The richest one percent of this country owns half our country’s wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons and what I do, stock and real estate speculation. It’s bullshit. You got ninety percent of the American public out there with little or no net worth. I create nothing. I own. We make the rules, pal. The news, war, peace, famine, upheaval, the price per paper clip. We pick that rabbit out of the hat while everybody sits out there wondering how the hell we did it. Now you’re not naive enough to think we’re living in a democracy, are you buddy? It’s the free market. And you’re a part of it. You’ve got that killer instinct. Stick around pal, I’ve still got a lot to teach you.”

  64. 64
    choices Says:

    The boyz are getting more sophisticated.


  65. 65
    zman Says:

    NG up 11 cents, oil up 30 cents. Lot of chatter about energy being the horse again for a bit.

  66. 66
    choices Says:

    #64-again, need to refresh before posting-redundant with #59

  67. 67
    1520sbroad Says:

    63 – sounds like gordon gekko

  68. 68
    zman Says:

    Ok, last one was too easy. This is more about keeping a positive mental attitude:

    “Here’s the deal I’m the best there is. Plain and simple. I wake up in the morning and I piss excellence.”

  69. 69
    ram Says:

    With all due respect, it sounds like the guy that ZMAN voted for.

  70. 70
    ram Says:


  71. 71
    zman Says:

    No offense taken.

  72. 72
    BirdsofpreyRcool Says:

    #68… Colonel Sanders?

  73. 73
    zman Says:

    BOP, nope but the same movie has a quote about the colonel

    “Well let me just quote the late-great Colonel Sanders, who said…”I’m too drunk to taste this chicken.” “

  74. 74
    zman Says:

    BOP – any update from HT, he still thinking higher close? Just trying to time an exit.

    Nicky – got any thoughts on direction and levels today?

  75. 75
    bill Says:

    is ng too cheap?


    will it stay cheap?

    chk is betting that it will rise in 2010 as they took alot of hedges off the table

  76. 76
    zman Says:

    Bill – pretty common belief among the gassier E&Ps that they will get to add hedges for 2010 in late Fall 2009 at higher, winter influenced prices. Also that by that time the declines in supply will be more noticeable.

  77. 77
    BirdsofpreyRcool Says:

    HT hasn’t cashed out his MSFT day-trade yet. He’s using that as a mrkt proxy. So far, so good.

  78. 78
    VTZ Says:

    Seeing as Friday is slow… Anybody got suggestions for things I need to do in NYC in mid-August? I’ve been before, but looking for more ideas.

  79. 79
    BirdsofpreyRcool Says:

    Best small art museum in NYC = The Frick

  80. 80
    jpntexas Says:

    BOP, I agree about the Frick. I really enjoy the large gallery room there as well as his office.

  81. 81
    BirdsofpreyRcool Says:

    If you’re interested in history… a 1-hr tour of the Lower East Side Tennament Museum is a real eye-opener. Actually tour a tennament that was left untouched since the 1940s or so… they have reconstructed “life” in the tennaments on the various levels. Great way to get a feel for what life was like, back in the mid 1800s for people struggling to become middle class. Very inspiring, actually.

  82. 82
    VTZ Says:

    Food places? The guys on Sirius NFL radio keep rambling about Del Frisco’s.

  83. 83
    BirdsofpreyRcool Says:

    jpntexas — had a NY native tell me that was his fav art museum. I have to say, it lives up to that hype.

    The current exhibition at the Frick is Whistler. One of the all-time best. Never fails to captivate.

    Also, the juxtaposition of the Holbeins, “Sir Thomas More” and “Thomas Cromwell” (one Holbein respected, the other he didn’t… easy to tell which is which) is worth the trip along.

  84. 84
    BirdsofpreyRcool Says:

    oops… got all artsy-fartsy there for a minute.

  85. 85
    BirdsofpreyRcool Says:

    HT — mrkt is drifting with no conviction either way now…

  86. 86
    zman Says:

    I’ll come out of a little NFX later and add a little more HK in the last hour most likely. Unless I fall asleep first.

  87. 87
    zman Says:

    Because it’s a slow day:


  88. 88
    BirdsofpreyRcool Says:

    heh, heh, heh… way to stir the pot, z! LOVE it. 😉

  89. 89
    bill Says:

    abc has a 20/20 show tonight on oil

  90. 90
    apbd Says:

    Small restaurant, Benjamin’s. Great.
    Corner of 2d Ave and 33d St.

  91. 91
    zman Says:

    Thanks to Jat for letting me know Howard Weil upped their rating on NFX post call to Market Outperform, NAV went from $46 to $52 and CFPS went from $10.67 to $11.38.

    I wrote this yesterday which pretty much jives with their magnitude of raise on the cost cutting:

    “I do think the cost guidance will cause analysts to prop up the second half by as much as $0.50 plus the overage for this quarter so the stock should be getting cheaper by about 10% on a forward P/CF basis. So maybe CFPS goes from $10.87 now for ‘09 to about $11.60 – $11.75. It does help firm up confidence in 2010, right at a time when they will see the benefits of 5 deepwater development plays hitting the top line. I continue to think that their cheap valuation puts a large bullseye on them”

  92. 92
    zman Says:

    This is likely to make the oil service names a little happier, market willing of course.

    Rig Count Watch

    Oil up 13 to 257 vs 393 YoY

    Gas up 10 to 675 vs 1,555 YoY

    Horizontal up 9 to 408 vs 587 YoY

    Canada up 28 (getting back the 20 it shrank last week plus some) to 180 vs 435 YoY

    In the U.S. 11 of the rig adds came from Louisiana.

  93. 93
    tater Says:

    #68 sounds like a Tom Cruise movie, I know you’re a BIG fan!
    Days of Thunder or Comming in hot Goose!

    (just kidding, I need more clues)

  94. 94
    zman Says:

    Tater, how about “shake and bake”

  95. 95
    zman Says:

    Bidding some more HK now

  96. 96
    bill Says:

    tight bid ask on hkht

  97. 97
    Wyoming Says:


  98. 98
    zman Says:

    Yep, they generally have pretty good spreads, lots of options folks in the name. I’m up a couple of strikes to get a little more leverage on a pop should it occur. Not having much luck splitting or bidding.

  99. 99
    zman Says:

    Re 97 – we have a winner.

  100. 100
    zman Says:

    Market feels sleepy, oil has managed to drift up nearly a buck.

  101. 101
    john11 Says:

    PXD just pumped on cnbc by Stifel Nicolaus guy, efs mentioned, suggest buy into earnings.

  102. 102
    PackMan Says:

    Guy on CNBC (Stifel ?) pumped the hell out of PXD just now.

    Friend of yours Z ? LOL.
    Subscriber – sounds like he reads your stuff.

    Didnt move the stock much – 4-5 cents.

    His firm must own a lot of the $25 open interest calls.

  103. 103
    zman Says:


    HK – Added (20) August $25 calls (HKHE) for $1.00 with the stock at $24.50.

  104. 104
    jpntexas Says:

    After a delightful lunch with laughing small grandchildren. I wish the upstairs rooms were still open at the Frick, quite the grand house in it’s day, I am sure! Restaurant talk in NYK, Il Mulino in Greenwich, don’t remember the street, but will always that 2 1/2 hour lunch finished off with homemade grappa. Mange!

  105. 105
    zman Says:

    John and Pack – agreed, will own PXD for the HK earnings. May take some ROSE too for that, despite the run.

  106. 106
    BirdsofpreyRcool Says:

    jpntexas — how about Babbo? i haven’t been in several years… but, one of the best “tasting dinners, paired with wine” i’ve ever had. Is it still as good?

  107. 107
    BirdsofpreyRcool Says:

    City Search is a great place to find restaurants in NYC


  108. 108
    Popeye Says:

    HK is not even half the normal vol today but not many selling.

  109. 109
    zman Says:

    Just looking around at volumes in the E&P space. Incredibly light, even for a Friday in summer. If you look at options volumes, they too are largely absent.

  110. 110
    zman Says:

    Pop – great minds …

  111. 111
    ram Says:

    I wonder if people are looking for the next NFX delivery of great earnings?

  112. 112
    BirdsofpreyRcool Says:

    HT thinks there is a push to rally here…

  113. 113
    zman Says:

    re 111. Always. For that to work it helps if the name a) is undervalued and b) has some catalytic news.

    SWN and HK may fall into the catalytic news camp but not into the undervalued camp, at least not P/CF. Am mulling that exact concept though and sifting through notes on the cheap names.

    Note where NFX was on P/CF and TEV/EBITDA on this page:


    It’s possible that FST is the next one of these. And I’ll definitely be in for PXD’s call although I don’t expect news so much as a turn in sentiment there with higher oil prices and activity levels.

  114. 114
    zman Says:

    … and adding to that WLL, although that’s had a good run.

  115. 115
    zman Says:

    Re 112. I’ll sell to that!

  116. 116
    BirdsofpreyRcool Says:

    just checked back… HT firm in his conviction. Says there is still 40 mins to go. He is holding out for a push to rally.

  117. 117
    BirdsofpreyRcool Says:

    HT thinks this is it….

  118. 118
    BirdsofpreyRcool Says:

    just passing along his comments… on an otherwise DULL day.

  119. 119
    BirdsofpreyRcool Says:

    OK… HT backing off. He says 1) not enough volume to back a rally, and 2) can’t get through 975 on futures.

    Just fyi

  120. 120
    zman Says:

    Thanks BOP, just watching to see if I need to exit some NFX before the close, will if it gets up into $41 by then but otherwise probably will sit on hands. Not a lot of earnings on Monday, new home sales, little else. Could see them making an effort at a rally then before confidence on Tuesday and employment and GDP later in the week.

  121. 121
    West Says:

    GST, http://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=6430772, Registration wonder if they float as soon as they reverse split and what would this do to price.

  122. 122
    zman Says:

    Saw the S3 … universal shelf. They don’t really need the money at this point. I’d guess it would be received somewhat poorly but that depends on use of proceeds. If they have something interesting in mind this is certainly the time to buy. Started to look into the potential for EFS under their acreage but got distracted by earnings season. They may be too far north but I haven’t dug into it. Reef might have something to add there.

  123. 123
    ram Says:

    Sell NFX 40’s?

  124. 124
    zman Says:

    Ram – I’m thinking about it, yes.

  125. 125
    West Says:

    RMOJ reported that drilling had commenced on KOG’s Charging Eagle #1. In KOG’s filing they showed EUR at 603,000 bo and 482mmcfg with ooip to be 12 mmbo. They also had article about STR was to spudd add’l wells on the NW side of the Lake near recent completion interestingly STR showed 12.3% recovery factor.

  126. 126
    West Says:

    I’m sorry STR to spud on Northeast side of the Lake. They are using 375k oil eur and no gas as they show flaring.

  127. 127
    zman Says:

    Beerthirty! Have a great weekend!

  128. 128
    VTZ Says:

    Great week Z.

  129. 129
    jiveyjr Says:

    I noted you live in Little Rock Z…I luv that horse racing up at Hot Springs…and the little cafe they have called the Post Parade….by chance you are horse racing fan

  130. 130
    zman Says:

    V – yep, didn’t suck, lol. Hope yours was profitable too.

  131. 131
    zman Says:

    Jivey – There’s nothing quite like being in the oval on Derby Day. Fun, fun little town. Next time you are down there check out Sam’s Pizza Pub.

  132. 132
    VTZ Says:

    Didn’t suck. I couldn’t believe the rally so I played a little safer than usual outside of specific stories. My gold plays are still chopping around too and that’s a big chunk for me.

  133. 133
    Hoss Says:


    Is that STR “recent completion” 149N90W Sec 8?

    MHA 1-08H-149-90

    IP: 960 BOEPD


  134. 134
    jiveyjr Says:

    will do re: Sam’s Pizza Pub….have never made it to Louisville on Derby Day…it’s on my list as is the Arkansas Derby….

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