04
Aug

Tuesday Trepidation

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The market is taking a breather and I plan to continue raising cash as the employment report on Friday approaches and this market enters the tired period following the earnings deluge. I do plan to add a little EOG for Friday's report after having tried and been too cheap to get filled during the day yesterday. 

 

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today - Earnings Watch: CHK, SM,
  5. Odds & Ends

Holdings Watch:

  • $10KP:

    • $38,600
    • 46% Cash - I will continue to raise cash as the week progresses.
    • The Wiki Holdings Tab Is Updated.

Yesterday's Trades:

  • WLL - Sold the remaining (10) August $45 calls (WLLHI) for $3.60, up 254%. I continue to hold the September $50s but may let them go soon.
  • OII - Sold all (10) August $50 Calls (OIIHJ) for $4.30, up 175%.
  • SWN - Sold the (15) August $42 calls (TKQHC) for $2.00, up 44%, with the stock at $42.75.
  • SWN - Sold the (5) August $40 calls (TKQHH) for $3.30, up 26%.
  • FSLR - Adding (2) August $160 calls (HJQHL) for $5.90 with the stock trading sideways at $155. I continue to hold the September $180 call here as well. After listening to the call again and managements comments on the potential impact on income of the rebate program in German my sense is that the downside to earnings has been more than adequately reflected in last Friday’s swoon in the shares. But I’m not going in large as you can see.
  • HK - Added (20) September $26 Calls (HKIP) for $1.45 with the stock at $25.35. I’m overweight here and plan to purge some but not all August calls today. Earnings due out Wednesday, see yesterday's post for comments.

Commodity Watch

Crude oil jumped $2.13  to close at $71.58 yesterday, a 4 week high on strong equities, strong data out of China, and a diving dollar.  This morning crude is trading off about $0.50 after the spending data failed to significantly impress the broad markets.

  • Early Read On Oil Inventories:
    • Crude: UP 1.05 million barrels
    • Gasoline: DOWN 1.7 mm barrels
    • Distillates: UP 1.15 mm barrels
  • Brazil Watch:  Brazil said making their 2.05 mm bopd for this year will be difficult and that new production from sub salt discoveries will not kick in until 2013.

Natural gas jumped 38 cents to close at $4.03 yesterday. Early in the morning rumors circulated that APC's 0.9 Bcfgpd Independence Hub was down but the company later confirmed it was not. Yesterday's rally gets back to my answer to the weekend question regarding why I won't short gas now even though I think it will likely still see lower lows this Fall. Three words: Unpredicatable, significant, volatility.  This morning gas is trading off with oil.

  • Imports Watch: Imports of 0.4 Bcfgpd from last week; off 0.6 Bcfpgd from last year.

    • LNG fell back to 1.1 Bcfgpd.
    • Canadian imports are holding firm at 7.5 Bcfgpd.

 

Crack Spread Update


Key Takeaways:

  1. Currently I'm short (via VLO puts) and wrong. Or at least, the stock has gone up with the market making the position less valuable but that's quibbling with the fact of the matter.
  2. Does the rally make me rethink the puts? No, it may prompt me to add some more with a little more of a longevity to them. But I by no means think it's "onward and upward" for the independent refining sector.
  3. Why not? Because of the heating oil position and unemployment:
    1. Distillates are over-stored by truly historic proportions. Diesel demand remains virtually absent. This doesn't bode well for diesel and heating oil prices.
    2. Unemployment meanwhile continues to tick higher and a recovery in the economy appears, at least to this casual observer, completely jobless in nature. Joblessness means less commuting and less vacations and while demand hasn't continued to decline it has not accelerated into the heart of the driving season. This doesn't bode well for gasoline prices.


Stuff We Care About Today

Earnings Watch:

 

CHK Reported  Strong 2Q09 Results

The 2Q Numbers:

  • Production of 2.453 Bcfepd (this was preannounced).
  • Operating Costs: Coming down nicely
  • EPS of $0.62 (ex items) vs $0.51 expected
  • CFPS of $1.66 vs $1.35 expected

Operational Highlights: Those were in the Friday post.

Asset Monetizations. (CHK) has been monetizing its lower upside assets to reduce debt / and or bridge the gap on capex vs flow.

  • This quarter they announced that they closed VPP #5 for $371 mm.
  • Upcoming deals: (roughly $1 Billion in monetizations).
    • VPP #6 in Louisiana for $225 to $250 mm.
    • 50% sale of its Barnett Shale and Mid-con gathering system in the 3Q for $550+ mm.
    • Other mature producing assets for $200 mm.

Favorite Quotes: "Chesapeake’s 2009 asset monetization program is on track with $900 million of proceeds captured to date and multiple transactions progressing toward completion in the second half of 2009 that will lead to total asset monetizations for the year of between $2.35 and $3.05 billion. We anticipate this program, combined with strong operating cash flow, will enable the company to continue funding its highly economic investment program solely from internal resources while at the same time reducing the company’s debt levels both absolutely and on a per proved mcfe basis."

Guidance: Production for 2009 goes up from 865 60 875 Bcfe to a new range of 875 to 885 Bcfe.

Hedging:

  • Rest of 2009: (90% of natural gas production is hedged) /  92% of total production is natural gas.
    • 52% of gas with swaps at $7.34
    • 38% with floors at $7.12
  • 2010 - lightly hedged
    • 13% of gas with swaps at $9.78
    • 8% with floors at $6.78

Nutshell:  Strong quarter. I think on the conference call analysts and investors are going to want to hear something close to a promise from Aubrey that he won't go spend crazy in the currently low gas price environment. I currently own some stock here but have been away from the options for quite some time.

Conference Call: Today, 9 am EST

SM Reported Better Than Expected 2Q09 Results; Guides Production Growth Higher

  • The 2Q Numbers:
    • Production of 28.2 Bcfe above the guidance range of 26.5 to 28 Bcfe.

      • 3% above 2Q08 on an apples to apples basis.
      • Growth was organic.
    • Revenue of $205 mm vs $180 mm expected
    • Operating Costs: Better than expected cash costs
      • LOE of $1.26 Mcfe vs much higher guidance ($1.49 to $1.54), coming down towards peers.
      • G&A of $0.64 Mcfe  was well below guidance, in line with peers
      • Transportation costs were similarly low to guidance
    • EPS of $0.24 (ex items) vs $0.02 expected
    • CFPS of $1.87 vs $1.50 expected


  • Operational Highlights: A whole lot of drilling with no finish just yet.
    • Eagle Ford Shale - No new production results to announce. A second, longer lateral test is being completed now. Management did say that results in the previously announced first well and data from the second well have been encouraing enough to prompt them to increase their 2009 program in the play from 4 planned wells to 8 (six more wells by year end via one rig's continuous effort). They also have 3 wells in their JV acreage with APC that are ready to be completed (all 25% interest to SM). Aggregated net share count increased from 215,000 to 225,000 acres since last notice. 
    • Williston Basin: Expect to drill their first operated Three Forks Sanish test in the fourth quarter.
    • Marcellus Shale: first science laden well will be completed soon with another well planned for their small acreage position in the play (40,000 net acres).
    • Haynesville: only drilling to hold acreage. Their second well, down in San Augustine County, where SWN drilled one of the biggest IP E.Texas Haynesville wells recently is awaiting completion
    • Granite Wash: They have 31,000 net acres and after NFX and then CHK announced "monster wells" here they are looking for targets themselves.

 

  • Guidance:

    • 2009 Production Guidance going up: From a range of 103 to 106 Bcfe to a range of 107 to 110 Bcfe, equates to negative 5% growth on the mid point. This the second time this year they have bumped production guidance. 
    • Cash cost guidance coming down significantly in the back half on a per unit basis:
      • LOE of 1.36 ot 1.39 per Mcfe
  • Nutshell: Very strong numbers for the quarter, good guidance on production and costs, really couldn't ask for much more improvement in the near term. Would have like to have seen another well completed-- in the E.F.S. but that should be done within the next few weeks.
  • Conference Call: Today, 10 am EST

Calls Today: (all times EST)

  • CHK 9 am
  • SM 10 am
  • APC 10 am
  • DNR 11 am

Companies with Wednesday Conference Calls: (all times EST)

  • HK 9 am
  • PQ 9:30 am
  • XCO 10 am
  • PXD 10 am
  • WRES 10 am
  • DVN 11 am 

HK Pre Earnings Snapshot:

HK - Long three sets of calls and the common.

  • Thoughts from yesterday:
    • I expect them to modestly beat numbers, and would have put just under 50/50 odds on a production guidance boost for 2H09 before seeing SWN’s guidance on Friday.
    • I don’t think they’ll take a guidance hit as they are less leverage than Southwestern is to the Fayetteville Shale  and even if they do it would be slight and quickly forgiven by the Street.
    • Eagle Ford Shale: I expect them to announce that they are adding a third rig in the second half (or strongly hinting that they might) to the Eagle Ford Shale play. They could have data on 6 to 8 more wells here as drilling times have fallen rapidly.  We know that they drilled their "best two wells" in the play since the last press release and the data there has been kept close to the vest. We also know that the a majority of the  recent drilling has not be long range stepouts but more akin to offsets to their biggest wells drilled so far in areas that are in the more liquids rich northern part of their acreage.
    • In the Haynesville look for drill times and costs to have fallen yet again and possibly for an update on their JV well in the East Texas part of the play with EOG (although that honor may go to EOG with their report Friday).
  • Some additional thoughts:
    • In the Fayetteville shale there has been some concern about HK's production from the basin in the near term following SWN's announcement last week that it would be reducing produciton in the second half while repairs were completed on sections of a lateral to the Boardwalk pipeline.
      • While a majority of SWN's activity is focused on the Fayetteville shale, the same is not true for HK, where only 16% of production was sourced in 2008.
      • This came to 49 MMcfepd in '08 and HK has in place arrangements to get 200 MMcfepd to market, some through Boardwalk, some through alternative routes.=
    • I think there are even odds for a boost in production guidance for 2009 and would put better odds that they will be raising the year again on the third quarter release.

 

 

Odds & Ends

Analyst Watch:

  • Nada

91 Responses to “Tuesday Trepidation”

  1. 1
    zman Says:

    CHK conference call just started.

    Oil recovering nicely now.

  2. 2
    zman Says:

    CHK CC #1

    CHK – can they live within cash flow?

    2009: 4 to 5% growth
    2010: 7 to 8%

    Aubrey pretty sassy this am. Sounds like comments are going to be exceedingly brief.

  3. 3
    zman Says:

    CHK CC #2

    Seeing very strong basis differentials, seeing levels not seen since 2004, 2002, seeing some areas of positive basis aside from Appalachia where you normally see it.

    Commented that BP’s carry in the Fayetteville shale, means they have a negative $8000 per acre cost and therefore an infinite return.

    Going to Q&A

  4. 4
    zman Says:

    CHK Q&A #1

    Drilling Capex Increase?

    Increases in Wash plays, Haynesville, and Marcellus. No increase in Barnett.

    Better results in Hayesville

    Last 15 wells have seen IPs over > 14.3 MM/d

    Marcellus – any color on variability – not yet, they are still buying acreage in Bradford and Susquehana and over in W. Virginia. They have a good acreage position in Washington county near RRCs wells.

    Why resume curtailed volumes:

    Because basis improved, so wellhead prices improved.

    They see full storage causing involuntary curtailments and didn’t see a reason to take one on the chin for the team.

  5. 5
    bill Says:

    intersting answer to why they pumped more ng rather than holding back

    answer, (in so many words) get it while gettin is good

    involuntary shut in will lower ng prices in q3

    i hope someone asks about lack of 2010 hedges

  6. 6
    zman Says:

    CHK Q&A #2

    Working on developing some oil shale plays in W. Texas and in New Mexico. Not yet commercial but working on it.

    They don’t see a problem holding acreage in their 4 big shale plays and continue to add acreage.

  7. 7
    zman Says:

    CHK Q&A #3

    Said Granite Wash play would be the best in the company were it not for the carries they have in their other plays. Good reflection on NFX.

  8. 8
    zman Says:

    Bill – you’d hope so. My best guess is that they will add to 2010 to get to their normal upwards of 60% on the first winter related spike in prices (short covering).

  9. 9
    zman Says:

    … which is what SWN has said in the past. Wait for a sharp spike and layer in hedges opportunistically.

  10. 10
    bill Says:

    cxo got an upgrade from tudor

  11. 11
    bill Says:

    chk sees a yoy 3 to 5 bcf declines by next spring summer

    i have to see that to believe it

  12. 12
    nifkin Says:

    Aug. 4 (Bloomberg) — The Colorado State University
    hurricane team lowered its 2009 Atlantic hurricane forecast

    based on developing El Nino conditions that are expected to
    intensify over the remainder of the hurricane season.

    The team now anticipates 10 named storms forming in the
    Atlantic basin between June 1 and Nov. 30. Four of the storms

    are predicted to become hurricanes, and of those four, two are
    expected to develop into major hurricanes (Saffir/Simpson

    category 3-4-5) with sustained winds of 111 mph or greater.
    The scientists reduced their forecast from June’s
    prediction of 11 named storms, five hurricanes and two major

    hurricanes. Long-term averages are 9.6 named storms, 5.9
    hurricanes and 2.3 major hurricanes per year.

  13. 13
    zman Says:

    CHK Q&A #4

    Don’t expect to see rigs bounce back substantially, don’t expect to see rigs over 1,000 or 1,100 over the next 12 months.

    Tremendous amount of idle service capacity.

    Accuracy of the 914 data. At the end of the day, they think it is the most reliable. see 2 to 2.5 Bcfgpd by year end on a yoy basis, down 5 Bcfgpd yoy by Spring. This is in line with what they have said before.

    Bill – I don’t doubt the 5 number. The data we are seeing now is still reflecting May and if you refer to the YoY change chart at the bottom of the monthly slide show you can see the rapid decline in growth. But we shall see.

  14. 14
    zman Says:

    Thanks Nifkin

  15. 15
    bill Says:

    if 5 bcf happens and we get a economic recovery we could see a perfect storm on the upside with equity prices tripling

    ring the bell for me please

  16. 16
    bill Says:

    chk peaked around 23, then sold off, now charging back..tudor said theya are close to an upgrade

  17. 17
    Dman Says:

    GMXR spiking … CHK related?

    CRK down 5% .. I’m guessing because of CHK comments on NG & CRK being unhedged.

  18. 18
    zman Says:

    Bill, yep, it would be up quite a bit more on a commodity and market green day.

    Good comments by them on why the CFTC should not limit position size.

    Dman – probably, I didn’t see a lot on the ops side to sink your teeth into on the CRK.

    Switching to the SM conf call.

  19. 19
    zman Says:

    ZTRADE

    HK – Added (20) more September $26 calls (HKIP) for $1.50 with the stock at 25.35. I will very like liquidate some of my August positions before the close today with earnings out tomorrow.

  20. 20
    zman Says:

    SM Call starting, about to talk about their Eagle Ford effort.

  21. 21
    zman Says:

    Bill – Did you hear comment on 2010 hedges for CHK, I didn’t get a sense of when they will add more but I may have missed it?

  22. 22
    bill Says:

    i didnt hear them address it directly but they expect short term weakness and longer term strength so i think your comment on msg # 8 is right on

  23. 23
    zman Says:

    Thanks Bill. Of course, what is it they say about a thing happening when everyone expects it to? Oh yes, it generally doesn’t. If prices don’t move up some by Spring the smaller, leveraged players, who have not hedged are going to get squeezed. The bigger guys like CHK and SWN will increase their debt load and turn out some small looking CFPS results.

  24. 24
    zman Says:

    SM – “the Eagle Ford drills like a dream”. The vertical section going at 1,000 feet a day. Sounds like what HK has been seeing as they drill wells similar to those (in total measured depth) of the Haynesville in less than half the time. Big help on costs.

  25. 25
    zman Says:

    SM call going very well, doesn’t sound like they will be press releasing the next EFS well any time soon even though it is finishing up today. I’d guess maybe they talk about it at a conference in September.

  26. 26
    zman Says:

    SM call over, nothing revelational, pretty solid stuff. Will continue to watch them a little more closely.

  27. 27
    john11 Says:

    Is SM at EnerCom next week?

  28. 28
    zman Says:

    John – yes. They won’t be announcing the 2nd EFS well then though either. It should be flowing back then and they want to get a longer test on it and not just announce a 24 hour IP. Sounds like sometime in September, maybe they will be a Barclays and announce it around then.

  29. 29
    john11 Says:

    thx Z

  30. 30
    RMD Says:

    CHK hedging in ’10 answer was to Barrow Hanley question. As I u/s it, St. reports today have hedges for ’10 down to 21% of production, but they omit, CHK says correctly omits, written calls. Written calls don’t hedge, just produce a one time premium from the call which runs around $0.50-$1.00. CHK said we lifted mostly 2H10 hedges because we expect gas prices to be higher then, specifically $6-8.00./m

  31. 31
    zman Says:

    Thanks for the clarification, heard the bit about calls, agree to leave those out. Sounds like the same party line SWN is selling. Hedge for 2010 later once prices rebound and in between be glad you have good 3q and 4q hedges on now.

  32. 32
    zman Says:

    Listening to the DNR call now. Just working it up, I won’t be buying/selling any.

  33. 33
    bill Says:

    as i listen to dnr call and discussion of co2 capture, i am reminded of sd project with oxy to treat their ng and remove the co2. Oxy reatins the co2

    sd is heavily hedged and i want to be in the name before earnings

  34. 34
    zman Says:

    Bill – I was telling someone yesterday that the name has been completely ignored of late. I’m not playing but I hear ya.

  35. 35
    zman Says:

    WLL – fairly astounded by the energizer bunny action there. That’s the difference between a stock that has already run pre earnings but is cheap and one that is expensive pre and post the call.

  36. 36
    zman Says:

    Dollar – for taking such a beating of late and especially yesterday, for it to be flat today is pretty telling. Pause on the way lower and waiting for more eco data. A miss on Friday’s jobs number could knock it for a loop.

  37. 37
    zman Says:

    CHK best performing big cap E&P by a wide margin. Its been a long time since I’ve said that. I won’t be playing options post call either but have no plans to sell my stock here any time soon. Finding costs and plays are best in show. In the past these guys have underperformed due to higher hedge position. Not a problem, so to speak, this time around. Production is completely a function of capital program and that augers for their modest growth this year and next as prices don’t stay this low through mid 2010. Then next year’s production would probably be more flat to up a percent or two instead of 7 to 8% as planned now.

  38. 38
    zman Says:

    Just saw that RIG announces before the open tomorrow. That got left off my calendar this week.

  39. 39
    zman Says:

    BBG call starting now. This is another one I’m just doing some homework on.

  40. 40
    ram Says:

    RIG used to be on the quarterly tradar. Do you see it back in one or two quarters?

  41. 41
    zman Says:

    Ram – not sure. International shallow water rig utilization is troubling. Depends a lot on what oil prices do. I prefer ATW for my offshore rig exposure although I have not yet bought them for earnings.

  42. 42
    zman Says:

    … and may not.

  43. 43
    zman Says:

    Volumes are very thin again today.

  44. 44
    zman Says:

    Not to exciting over at BBG.

    Does anyone use touchable flatscreens and if so do you like them?

  45. 45
    1520sbroad Says:

    GMXR out with news/earnings/updates:

    http://finance.yahoo.com/news/GMX-Resources-Inc-Announces-pz-448801064.html?x=0&.v=1

  46. 46
    Alhambra Says:

    Z – with HK trading in the 25’s, do you think it is probable that mgmt will issue more stock? Do they need to go to the well again? They just increased the authorized shares issues from 300M to 500M very recently…

  47. 47
    zman Says:

    1520 – saw that, haven’t bothered to look at the numbers yet or the ops updated as I’m just long a little stock in the personal account and no options.

  48. 48
    zman Says:

    A – as soon as I say no, I don’t think so it will happen. I think a deal would be poorly received in the current gas price environment. They already upped capex this year once and said they would be capex/cash flow neutral with the cash they’d already raised for that. Any more and you have to ask what’s the point until you get some more reserves out of the probable and into the proved category. I do think if the stock moves above $30 they do one. I just think they will but I obviously don’t know anything.

    I do plan on lightening my exposure to August calls before the close today as I have been rolling into Septembers.

  49. 49
    zman Says:

    BBG – heartened by recent Rockies gas supply reductions. They think it is just the beginning of the decline and that you are going to see continual declines for awhile. That’s what I’ve been saying, its not “if” but “when” and better you hear it from someone besides me.

  50. 50
    zman Says:

    Missed EOG again today as I am being exceedingly patient/cheap.

  51. 51
    zman Says:

    Crude and natural gas now both positive, strong work in light of yesterday’s gains.

  52. 52
    1520sbroad Says:

    #47 – GMXR release is worth taking a look at in terms of the well results – you will be able to make more sense of them than i will. My take was continued solid well results the likes of which will help them keep drilling.

    Other items of note: the sold their endeavor pipeline interest to kinder for $40m and will use that capital to deploy andother H&P flexrig. Should help their 2010 profile for production.

    They have taken the cost cutting approach as well and are trying to drive days to drill down. I didn’t get a chance to listen to the call but i will try to at some point today or tonight. If anybody here heard the call i would be interested in your take.

  53. 53
    zman Says:

    Market strength has got HK within a hair of going positive. My sense is if it goes green it could put on a small run before the close which will provide a nice opportunity to punt some or all of my August calls while holding the Septembers for results. I’d hold the Augusts except for two things 1) they are too big a piece of the 10KP and 2) I don’t trust Floyd not to announce something like a bump in capex in the Eagle Ford that could inspire “deal fear” and that could whack those Augusts.

  54. 54
    zman Says:

    LINE at $23.

  55. 55
    zman Says:

    Going through it now 1520

  56. 56
    zman Says:

    What was Nicky’s next resistance level for the S&P? We’re at 1,006.

  57. 57
    john11 Says:

    fyi..LINE ex-div tomorrow.

  58. 58
    zman Says:

    Right John, brokers are no doubt selling that dividend, lol.

    GMXR results – solid, nothing really noteworthy over other E. Tx Haynesville/Bossier shale players. Costs are coming down like others but realize that CHK said earlier they have completed some of the recent big IP Haynesville wells (read > 6.5 Bcfe) for under $7 mm. Seems to me like they must be leaving some costs out there. Anyway, the E. Texas wells though big by historical standards aren’t competing as well from a finding costs standpoint. However, what drives a little name like this one is takeout potential (probably a couple of quarters early for that) and production growth, which they are working on .

  59. 59
    zman Says:

    SEC to ban Flash Trading

    http://www.marketwatch.com/story/schumer-sec-to-ban-flash-trading-2009-08-04

  60. 60
    Bob Says:

    LINE: Same exact thing is happening as did last quarter. On the day before going ex-div, there are 16,000 ITM calls sold. Last trade was 8,000. Seller collects the distribution and the $3 premium and probably loses the stock on the 21st, only to buy it back for next quarter. I did this last quarter on a small portion of my holding, and it worked ok

  61. 61
    zman Says:

    Last thing on HK, just going through my quick and dirty model for the quarter. Barring weird charges that we would back out anyway, it looks like they should beat on EPS by at least a few pennies. Street is looking for 5 cents. That assumes they come in at the middle of guidance and takes into account their hedges and that per unit costs don’t get better from quarter to quarter which they should. That also assumes they stay at 8% oil or about about 4,800 bopd out of 430,000 MMcfepd of production. I have a feeling their oilier EFS production is going to drive that number closer to 5,000 bopd which would be a good thing. I still plan on taking some or all of the August calls off the table before the close leaving the Septembers to play the report.

  62. 62
    DrLink Says:

    Z- re HK Sept calls etc. Do you ever have a concern with the traditional “Fall Shoulder” sell off that seems to take place every year (Sept,Oct)with the oil and gas E&P’s? Most years I have been rewarded by hanging tough and holding through the dip because the trend was myfriend (except last year, when it was not just the oils, but the whole world crashed…..

  63. 63
    zman Says:

    Dr – I’ve got that concept in the back of my mind, especially just after earnings season ends. But for those, I won’t be around that long. I went with Septembers simply to give myself a little time cushion if Floyd decides to drop a little surprise on us. The delta on the Septembers was nearly the same as that of the Augusts at a dollar strike higher so I figured it was time to move them forward. Now, I still have to sell that which they are replacing which is the $24 and $25 strike Augusts and you should see those trades in a bit here.

  64. 64
    VTZ Says:

    Pit session close in gold above 965 is significant and sets up a move to 980 as final resistance before retest of the highs.

    I am also surprised at the lack of bounce in the USD thus far.

  65. 65
    zman Says:

    Awful lot of voices calling for gold over $1,000 now.

  66. 66
    VTZ Says:

    Because everyone is jumping on the technicals, now that they’ve turned bullish and most people missed out 80-100 dollars of the move.

    Dollar has broken down so that’s no longer supportive, more auction incoming next week, long bond rates are increasing, foreign buyer talk is bearish for bonds.

    Most people are surprised it’s not onto new highs already considering what’s going on…

  67. 67
    VTZ Says:

    That being said, I wouldn’t be surprised to see a pullback as far as 920 or even 880 to shake out some weak hands.

  68. 68
    zman Says:

    This the quietest day on the site I can recall in a year. Stocks look the same way.

  69. 69
    Bob Says:

    #60-call volume now over 64,000 on the Aug 20’s. Nearly 50,000 additional calls spread over Sept-Jan as we approach tomorrow’s ex-div

  70. 70
    zman Says:

    Hear ya Bob, there are guys who do that for a living. Bigger volumes make it worth their while.

  71. 71
    zman Says:

    HK may take it down to the wire or I may not get out of those Augusts, was looking to sell the $25 strikes for sure but the stock weakened faster than I expected and has so far has not caught a pre release rally.

  72. 72
    zman Says:

    HK unwilling to rally into the close pre earnings and API/EIA.

    Beerthirty.

    Would someone post the API numbers when they come out.

  73. 73
    zman Says:

    I would not expect to see anything out of HK until the morning.

  74. 74
    PackMan Says:

    hk — doing a 25 M share offering; what’s wrong w/ these guys ?

  75. 75
    Gtinvest Says:

    hk just out .08 loss and 25m share offering

  76. 76
    zman Says:

    Nice. HK marked down $1.50.

  77. 77
    zman Says:

    Will have something to say in a bit.

    The headline on production is also a shocker.

    2Q average 483 MMcfepd, last quarter was 412, guidance was 425 to 435. Their full year guidance was 435 to 445. So we are looking at big upward guidance revisions.

  78. 78
    ram Says:

    Shocker in a good way to offset the additional shares??

  79. 79
    VTZ Says:

    Wow that production number is MASSIVE.

  80. 80
    zman Says:

    Guidance going from up 44% on the year to up 58% on the year.

    Mid point of 3Q guidance is 0.5 Bcfepd.

    They see 30 to 40% growth in 2010 for the same capital budget as 2009.

  81. 81
    VTZ Says:

    To me the report looks good. The offering is a bummer but it’s not like it was entirely unexpected.

  82. 82
    AAA Says:

    Z,

    I have an inquiry from a family member who holds Spectra Energy, which is apparently in the gathering and pipeline infrastructure business. They just reported a big miss. Any thoughts?

  83. 83
    zman Says:

    AAA – sorry no, I don’t cover the transport realm, wouldn’t be of much help there. I’d check to see what caused the loss before panic sets in, could be non-cash, or otherwise one time.

  84. 84
    1520sbroad Says:

    483 is a wow. Now if we could only get nat gas above $4.

    Didn’t Floyd say something on a call at one point about “if things got really shi__y” we would still be ok” Does $3.85 gas qualify? I guess it does with this kind of production…

  85. 85
    zman Says:

    1520 – I’m going to drop a post on the quarter and my thoughts in about 30 minutes. Watching the AH trading it has at least come off its lows, doesn’t mean much but if I saw the results without this deal it would have been 8% in the other direction. The Haynesville is holding up pretty well which is a lot more important than the IPs. Costs continue to fall, wells continue to get to TD faster than expected. They did not mention the boosting the budget but they spent a lot during the quarter and they are going to be adding more land in both the Haynesville and Eagle Ford and wanted more of a cash cushion.

  86. 86
    1520sbroad Says:

    agreed – without the share offering HK would be up big.

  87. 87
    isleworth Says:

    * API: crude stocks down as imports off sharply
    * Wall Street edges higher on economic data
    (Recasts with API report, adds latest prices, analyst comment)
    NEW YORK, Aug 4 (Reuters) – U.S. crude futures rose in
    post-settlement trading on Tuesday, after industry data showed
    a surprise drawdown in crude oil inventories last week against
    the forecast for a stock build.
    Earlier, NYMEX September crude settled lower for the first
    time in four sessions on profit-taking ahead of supply data.
    Heating oil futures gained further as the American
    Petroleum Institute also reported an unexpected stock draw for
    distillates, which include heating oil and diesel fuel.[API/S]
    Gasoline futures dipped, after API data showed supplies
    were up, going against the forecast for a drawdown.
    The API said that crude stocks fell 1.5 million barrels to
    350.9 million barrels as imports dropped sharply.
    Distillate stocks declined 1.0 million barrels to 157.9
    million barrels and gasoline supplies rose 2.1 million barrels
    to 215.7 million barrels, the API said.
    “The API seems a bit at odds with the seasonal norms,” said
    Tim Evans, analyst at Citi Futures Perspective in New York.
    An expanded Reuters poll of analysts forecast an
    800,000-barrel build in crude stocks in the week to July 31.
    The poll also predicted a 1.2-million barrel rise in distillate
    stocks and a 1.0-million barrel drop in gasoline stocks.
    [EIA/S]
    On Wall Street, stocks edged higher, led by the financial
    sector as economic data pointed to a sustained, if slow
    recovery from the recession, taking the Dow and the S&P to
    nine-month highs. [.N]
    The U.S. dollar gained modestly but traded near its 2009
    low against the euro as a surprisingly strong U.S. housing
    report raised hopes that the worst of the recession was over.
    [USD/]
    PRICES
    * On the New York Mercantile Exchange at the close of
    electronic trading at 5:15 p.m. EDT (2105 GMT), September crude
    CLU9 was up 23 cents, or 0.32 percent, at $71.81 a barrel,
    with the day’s high extended to $71.95. It earlier settled down
    16 cents, or 0.22 percent, at $71.42 after trading from $70.16
    to $71.91.
    * In London, September Brent crude LCOU9 was up $1.29, or
    1.75 percent, at $74.84 a barrel, with the session high rising
    further to $74.89. It had settled up 73 cents, or 1.0 percent,
    at $74.28, trading from $72.24 to $74.38.
    * NYMEX September RBOB RBU9 was down 1.83 cents, or 0.88
    percent, at $2.0510 a gallon. It had settled down 1.26 cents,
    or 0.61 percent, at $2.0567, trading from $2.0375 to $2.0709.
    * NYMEX September heating oil HOU9 was up 4.07 cents, or
    2.17 percent, at $1.9120 a gallon, with the session high
    advancing further to $1.9190, the highest since the intraday
    peak of $1.9212 on Nov. 14. It earlier settled up 3.01 cents,
    or 1.61 percent, at $1.9014, the highest settlement for
    front-month heating oil since Nov. 11’s $1.9290, after trading
    from $1.8480 to $1.9035.
    * The September/September RBOB crack spread
    ended at $14.96, down from $15.33 on Monday. The
    September/September heating oil crack spread was at
    $8.44, rising from $7.01 on Monday.
    * The spread between the current front month and the
    five-year forward crude contract CLc61 ended at $15.58,
    widening from $15.02 on Monday. The September 2014 contract
    settled at $87, up 40 cents, or 0.46 percent.
    TECHNICALS
    NYMEX crude 10-day/20-day moving average: $67.81/$64.68
    Technical support/resistance:
    NYMEX crude: $67.81/$72.20
    NYMEX heating oil: $1.8025/$1.9540
    NYMEX RBOB: $1.9865/$2.1125
    For a full report on technicals, click on [ID:nL4448431]
    MARKET NEWS
    * U.S. consumer spending rose slightly more than expected
    in June, but was largely due to higher gasoline prices.
    Spending rose 0.4 percent after a revised lower 0.1 percent
    increase in May. [ID:nN0482042]
    * But personal income declined by a greater-than-expected
    1.3 percent, the biggest decrease since January 2005, the
    Commerce Department said. [ID:nN03524993]
    * OPEC is unlikely to cut oil output further in September
    if oil prices remain around current levels, two delegates from
    the producer group said on Tuesday. [ID:nL4514880]
    (Reporting by Gene Ramos and Robert Gibbons; Editing by
    Marguerita Choy)

  88. 88
    VTZ Says:

    Pretty big merger. Bakken/Oil Sands combo play of two of my favorite companies!

    http://finance.yahoo.com/news/Petrobank-and-TriStar-to-ccn-3728755223.html?x=0&.v=1

  89. 89
    VTZ Says:

    Bakken focused… Looks nice!

  90. 90
    VTZ Says:

    They are actually divesting all their oil sands leases to be all bakken focused with Montney and Horn River Exposure. Sounds pretty awesome.

  91. 91
    VTZ Says:

    Highlights from PR

    – 2009 total Company exit production greater than 37,000 boepd (after the planned Alberta asset dispositions), more than 95% light oil.
    – More than 1,300 future Bakken drilling locations.
    – Industry leading operating netbacks in excess of $57.00/boe based on US$75.00 WTI.
    – 2010 capital budget of approximately $550 million based on a US$75 WTI oil price.
    – Initial dividend of $0.96 per share per annum, payable monthly, representing a payout ratio of 23% based on run rate cash flow.
    – Excellent financial flexibility with a pro forma debt to cash flow ratio of less than one times.

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