Monday Morning

As 2Q09 results fade away and people look to the earnings picture for the second half I’m left thinking that the summer conferences are the only thing left to buoy the stocks after the broad market’s mega rally of the last few weeks/months. For most companies, cost cutting efforts culminated in beats of drastically reduced estimates but we are now entering that "so now what?" phase at the end of summer. The Street has historically abandoned ship this time of year, wanting to get in one last trip to the Hamptons or Hilton Head leaving stocks listless on light volumes. I too will be venturing out mid week, doing my part to rally jet fuel demand. Wrap comments will be incorporated in the Monday post.

Conference Watch: Enercom's "The Oil & Gas Conference" hosted in Denver will run from Monday to Thursday. See the schedule here.

Petrohawk's New Presentation Watch: Sweet 2Q09 results meet sour deal news. Having completed their secondary, HK has a new presentation available on their website here. Since the company has a habit of replacing the old presentation with the new one I have gotten into the habit of printing them out. Here are the key highlights:

Potential Reserves Grew From 23.6 to 26.5 Tcfe In the August Presentation:

  • Haynesville Shale:
    • A majority of the increase in potential reserves came from a upgrade of the per well estimated recoverable reserves from 6.5 to 7.5 Bcfe.
    • There's a good slide showing numerous wells tracking above the 7.5 Bcfe type curve
    • This data comes from 40 wells ; they will drill 78 wells in the Haynesville this year
    • They have 325,000 net acres; 2,400+ drilling locations
    • Reserve potential is seen as 14.9 Tcfe
    • Booked reserves as of year end is 0.163 Tcfe (163 B's)
  • Eagle Ford Shale:
    • 210,000 net acres; 1,500 drilling locations
    • Reserve potential of 7.0 Bcfe
    • Booked reserves so far 0.001 Tcfe (1 Bcfe)
    • Wells are looking like 5-6 Bcfe apiece but it is early and they have again started accumulating acreage in areas they feel may potentially be other cores in the play.
    • Recently added a 3rd rig and will be at 6 by year end, they plan to sink 29 wells this year.
    • Finding costs are already under $1 / Mcfe here.
  • Fayetteville Shale:
    • 157,000 net acres; 2,500 potential drilling locations
    • Reserve potential of 3.0 Tcfe
    • Booked reserves so far of 0.173 Tcfe (173 Bcfe)
    • 2 rigs running and mainly exploiting through non-operated participation

Booked Reserves at Year End 2008: 1.42 Tcfe

  • They are condoning a JP Morgan estimate calling for 58% reserve growth this year, which implies a one to one ratio with production growth for 2009. This is probably conservative.


ZComment: Good to see a new presentation out after the deal was closed. The deal itself raised $549 mm and should obviate the need for further dilution into the first part of 2010 as this cash + cash flow on well hedged production + an untapped credit line should be sufficient, unless of course they find a deal they just have to have or otherwise increase their capital budget. One complicating factor in support of the stock last week was that several analysts went restricted on the name either due to a high yield deal on the horizon or due to a pending sale of their Permian assets. While their support would have been beneficial to the shares late last week, my sense is that things will calm down over the next week or two and people will begin to focus on the best in show production growth on extremely low cash operating cost structures with the highest unbooked potential to booked reserves ratio in their peer group. 

The Week Ahead:

  • Monday 8/10: No economic data release scheduled
  • Tuesday 8/11: Productivity (expected 5.4$, last 1.6%), Wholesale inventories (last -0.8%)
  • Wednesday 8/12:  EIA Oil Inventory Report, FOMC (expect No Change)
  • Thursday 8/13: EIA Natural Storage Report, Initial Jobless Claims (exp 540,000) Retail Sales (expect 0.8%, 0.1% ex Autos), Inventories (expected -1.0%)
  • Friday 8/14: CPI (expect 0.0%, Core 0.1%), Industrial Production (expect 0.8%), Consumer Sentiment for August (expect 69 vs last of 66)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today - Earnings calendar, CRZO, KWK
  • Odds & Ends

Holdings Watch:

  • $10KP: $21,400 / 41% Cash
  • The Wiki has been updated.


Commodity  Watch:

Crude oil rose 2% last week to close at $70.93. The end of the week saw a little profit taking on a jobs strengthened dollar. The 12 month crude strip is now trading at $76.20. This morning crude is trading off slightly with equity futures even as the dollar gives back a little of Friday's gains.

  • China Watch: Stimulus Not Ending Soon.
  • Hugo Is A Nugbag Watch: Venezuela and Columbia potentially going to war this week.  Hugo sees a Yankee under every rock and across every border and thinks the Columbians are selling out as they plan to lease military bases to the Americans who in turn continue to provide aid in the war on drugs. Hugo has cancelled his "cheap oil for Columbia program", withdrawn his diplomats and told the military and the people to get ready to rumble. Probably fluff but it could be supportive for crude as Chavez has in the past threatened to cut the supply of crude from his Banana Republic when pushed.

Natural gas inched up 0.6% last week to close at $3.67. The 12 month strip is now trading at a much loftier $5.32 and I have a feeling the unhedged for 2010 will soon be tempted as we get some tropical strength before the end of season gas on gas competition sets in. This morning gas is trading up 5+ cents.

  • Weather Watch: Summer heat finally setting in most parts of the country. Cooling Degree Days (CDDs) compared to gas storage injections:

    • Week Before Last: 75 CDDs which yielded an injection to storage of 66 Bcf.
    • Last Week: 67 CDDs vs 78 previously forecast. This will probably produce an injection in the 75 to 80 Bcf range.
    • This Week's Forecast: 88 CDDs. Unlikely to reach this level as CPC's model has been out of whack all summer.
  • Tropics Watch:  First interesting looking system of the season. Click animate.

Stuff We Care About Today



Earnings Watch:

CRZO Reported Good 2Q09 Results

The 2Q Numbers:

  • Production of 86.7 MMcfepd vs 91.8 MMcfepd last quarter
    • up 29% vs 2Q08
  • Revenues of $48.8 mm vs $44 mm expected
  • Operating Costs
    • LOE of $0.79 per Mcfe vs $0.74 last quarter and $0.95 last year.
  • EPS of $0.41 vs $0.29 expected


  • Continue to hold a big backlog of uncompleted Barnett Shale wells (representing 87 MMcfepd of potential initial prodcution);
  • plans in the Barnett remain unchanged with 3 operated rigs running and no plan to increase capital spending due to low gas prices.
  • fracced first Marcellus well, no data yet.

Conference call: Today, 11 am EST

KWK Reported Better Than Expected 2Q09 Results

The 2Q Numbers:

  • Production of 331 MMcfepd (71% gas, 27% NGLs), up 40% YoY
    • Strong Barnett growth
  • Revenues of $206 mm vs $194 mm expected
    • strong price realizations helped by all those NGLs. 
  • Operating Costs
  • EPS of $0.24 (ex items) vs $0.18 expected


  • debt reduced by $196 mm in the quarter; leverage still remains high here with debt to cap now at 79%
  • 5 rigs running in the Core Barnett play.


  • 3Q production of 310 to 320 MMcfepd.

Nutshell: Good results, will watch how it opens, but will likely read the transcript here as the Corrizo call is concurrent with this one and that name is cheaper and less debt encumbered and a bit more interesting. 

Conference call: Today, 11 am EST

Odds & Ends

Analyst Watch:

  • (GDP) price target cut at Jefco from $29 to $26.

Housekeeping Watch:  Vacation. I will post but be out of communication for most of Tuesday but plan to post skeleton posts Wednesday through Friday.

106 Responses to “Monday Morning”

  1. 1
    ram Says:

    Hopefully your family will be vacationing at the most entertaining city in the U.S.

  2. 2
    BirdsofpreyRcool Says:

    wow, z… even on vacation, you are prolific!

    SMH raised their rating on HK to Accumulate and put a $29 price target on the stock. For all the reasons you cited above.

  3. 3
    zman Says:

    HK – Credit Suisse stays at Neutral with a $26 target.

    Thanks Ram but no city, very quiet beach.

    BOP – not gone yet, vacation starts tomorrow.

  4. 4
    zman Says:

    How do you not notice you’ve been overbilled by $100 billion?


    Could be bad news for shipping rates if Rio Tinto and China get into an extended spat.

  5. 5
    BirdsofpreyRcool Says:

    z — oh. you’re still here… never mind!


  6. 6
    zman Says:

    Names of interest speaking at Enercom today:


    See schedule link in post.

  7. 7
    zman Says:

    BOP – just waiting in the wings aren’t you, heh, heh? I’ll be bugging you via blackberry all week.

  8. 8
    BirdsofpreyRcool Says:

    TechTrader takes Fridays and Mondays off in August… he can do that. He is rich.

    HeadTrader says he wants to say “sell rallies” with the way the banks performed at the end of the day on Friday.

    I think it’s key to watch if the shorters return to the mrkt. They have been absent for the last 6 weeks.

  9. 9
    choices Says:

    Z-#4-Baltic Dry Index has been trending down, off 35% since early June.

    On another matter, I notice Goldman has trotted out Abby Joseph Cohen, who says we are in a new bull market. She is one of the better contrary indicators out there-Goldman must be going into their distribution phase of the “bringing in the sheep” campaign.

    Have a great vacation.

  10. 10
    bill Says:

    here is vq presentation for today


  11. 11
    bill Says:

    vq nuggets

    -95 % hedged for by “floors” only 52 % hedge at ceilings

    capital budget mostly earmarked 70 % for workovers

  12. 12
    zman Says:

    Thanks Bill, will look over. Way to stay with the PXP last week. They priced that deal right for the long term.

  13. 13
    zman Says:

    Sudden snap back in oil from a last minute retreat earlier as the dollar toys with going a little higher.

    Crude up 30 cents now,
    NG strong all night, now up 8 cents, looking at that little pile of clouds in the east Atlantic.

  14. 14
    BirdsofpreyRcool Says:

    NYC is bracing for the hottest day of the summer… and humidity is going to make it worse.

    Maybe traders on the train platform this morning are thinking about buying natty gas players…

  15. 15
    BirdsofpreyRcool Says:

    History Lesson — There was a lot of commemorative press this weekend concerning the two year anniversary of the kickoff to the credit crunch. According to the London Telegraph, the credit crunch started on 9 August 2007 when French bank BNP Paribas suspended three funds facing losses on US sub-prime mortgage lending. That caused banks to stop lending to each other, interest rates to soar, and provoked the funding crisis at Northern Rock which resulted in the run on its funds. As part of the 2-year anniversary, the IMF released a study revealing that the world’s governments have spent a cumulative $11.9T in various rescue operations relating to the credit crunch. Britain spent the most, expending 81.8% of its GDP.

  16. 16
    choices Says:

    I believe UNG rolls over its contracts this week-seems that NatGas is always weaker when that occurs.

  17. 17
    zman Says:

    Interesting BOP, Parisbas was the cowardly bank responsible for dozen bankruptcies in the last 90s when oil hit $12. Other banks wanted to play ball to keep little E&Ps afloat. Parisbas wanted out in a panic.

  18. 18
    zman Says:

    Barclays with positive comments on EOG on Friday. Fails to mention the weakness or give a supposition for its cause. Basically says good quarter, we like it.

  19. 19
    BirdsofpreyRcool Says:

    Was it Bart Simpson who called Paribas “cheese eating surrender monkeys”? Seems he got it right.

  20. 20
    zman Says:

    HK playing around at the deal price and a little better.

  21. 21
    1520sbroad Says:

    #14 – very warm here in NJ today. Bright sun as well as 90% humidity. The AC here is already running hard.

  22. 22
    zman Says:

    BOP – got that message on KOG – you are too right re CFPS not being the way to look at them now. Some analysts …just bug me. Makes you wonder if they get the whole “economies of scale” concept. Per unit costs go down with higher production etc, etc. Oh well. I still say $1.50 to $2.00 on NAV but that’s without having run through it again and didn’t give them any credit for TFS.

  23. 23
    zman Says:

    Volumes look exceedingly light out there today.

  24. 24
    BirdsofpreyRcool Says:

    z — that’s b/c TechTrader and his buddies don’t trade on mondays in August…

  25. 25
    bill Says:

    clr ceo on cnbc now

  26. 26
    bill Says:

    he said administration ignoring ng

    ng a bridge to the future

  27. 27
    zman Says:

    Missed it Bill. They speak late today in Denver.

    Hear ya BOP, listless trading. I’ve noticed that the market has sold off lately whenever there is no U.S. economic release.

  28. 28
    Dman Says:

    #4 The Chinese govt’s totalitarian DNA is certainly rearing its head. These idiots actually thought that kidnapping the Rio Tinto negotiating team would somehow save them money. Instead, the spot price immediately jumped 10% & since Rio can hardly negotiate a long term contract when all their negotiators are locked up (& their company strategy forcefully extracted), China will have to buy at the spot price.

    I think all of this nonsense is somehow bound up with brewing political instability in China (causing them to abandon their pretenses of being post-communist). If China cracks up due to economic problems … I guess that would qualify as the next leg in the ongoing world crisis.

  29. 29
    zman Says:

    Dman – probably followed in short order by the “resource” wars. Oil first, then food, then water.

  30. 30
    zman Says:

    If you get a recovery in the market today this looks like one of those days where energy will disproportionately outperform, perhaps more so because of the weak attendance.

  31. 31
    ram Says:

    Smoking down here, still trying to adjust to this level of humidity.

  32. 32
    bill Says:

    musings on iran


  33. 33
    Dman Says:

    Z – #29 interesting that you say that. There does seem to be a sense of panic in China that they cannot secure resources that they want on their own terms. For example they demanded a discount from Rio, instead of accepting the price that Japan & Korea had agreed to. For some reason they thought that “demanding” = “getting”. But Rio didn’t budge & then China seems to have gone nuts.

    China is looking ahead further than most countries & they seem to sense that all their efforts to buy or secure oil/minerals etc are not quite getting there. So now they are getting aggressive but I think it will be counterproductive. Which could lead to even more aggression …

  34. 34
    BirdsofpreyRcool Says:

    z — didn’t you call the HK stock price action for today? You said that last time, it took 3 days, then the stock went higher from the 2ndary price. We are right on sched.

  35. 35
    bill Says:

    Dag Kilen provides some oil demand data: Global oil demand improved by 892k bpd month over month
    in July but remained around 2 million bpd lower than a year ago level as total demand was seen at 84.26
    million bpd, according to data from Energy Intelligence. Led by strong Chinese demand, the annual
    decline was at 2.4% in July, somewhat better than the 3.9% pace seen in Q2’09. Chinese demand was
    up 4.7% to 8.7 million bpd. Data for the U.S suggests demand in July was 250k bpd higher than for June
    and 600k bpd higher than May, ending at 18.78 million bpd. The annual decline was however still 3.9%,
    but better than the 6.1% seen in first half of this year.

  36. 36
    Dman Says:

    Z – how about SWN here as the hurricane season approaches peak potential?

  37. 37
    zman Says:

    Bill – thanks, not sure if that is a guy or a tanker tracker firm but that is a huge increase in demand.

    BOP – a little early to say but I think it improves for a bit, market willing of course. If the SP falls out of bed this one gets shot in the head (at least in the near term).

    Dman – I own a little, been particularly weak last few days following their pipeline related production guidance reduction. I think it along with RRC and UPL will be your big beta moves if something wicked gets steered into the Gomex.

  38. 38
    bill Says:

    on drybulk

    rates recently weak and all stocks took a hit on earnings.

    Doug Mavrinac’s Shipping Weekly: While the near-term impact on dry bulk shipping spot charter rates
    has been negative, we believe the strengthening demand for steel that is primarily responsible for the
    increased iron ore prices is very much a positive development and view the current weakness as a
    necessary transitory period in the recovery of the broader dry bulk shipping market.
    Omar Nokta’s Shipping Weekly: Confidence remains relatively low for the dry bulk sector. Stocks
    performed poorly last week as the spot market took a hit, and FFAs remain in deep backwardation. We
    continue to believe however that upward momentum in global steel markets will carry over to dry bulk with
    spot rates set to see higher highs and higher lows during the next several months. It is interesting to note
    that current Capesize rates at $45,000/day are deemed “weak” yet are much higher than the $15,000-
    $25,000/day expected for the second half during the first five months of this year.

  39. 39
    bill Says:

    as bad as things are in the drybulk segment they are worse in the tanker segmen

    checkout current suezmax rates 3 to 4 per day–avg operating cost are 10 k a day

    nat who is mostly spot could dive to low 20’s from 30 and could make a good short if this continues


  40. 40
    bill Says:

    range resources enercom slides


  41. 41
    zman Says:

    Saw them Bill, didn’t see anything new though. Liked that quarter, like the story.

    Does anyone see if the Enercom presentations are being webcast. I can’t seem to find a link that goes there.

  42. 42
    zman Says:

    EOG finally getting a little respect for those results on Friday. Possible reasons for weakness:

    Light hedges going forward and comments they will stay that way until they see prices improve.

    Lower than expected U.S. gas production – this one is a non-event in my book as their production can move around quite a bit depending on how much processing of liquids from the gas stream they elect to do. Its not surprising with the strength in NGL prices relative to gas that they elect to take more liquids out.

  43. 43
    zman Says:

    EOG – could also have been lack of details on their E. Texas Haynesville well – they acknowledged that the well existed but that’s all and an unwillingness to comment on their activities in the Eagle Ford.

  44. 44
    bill Says:

    webcast links for enercom




  45. 45
    Dman Says:

    For anyone keeping score, a new low in COW today. This doesn’t exactly scream green shoots to me, since it seems to imply that a shift from beef to eg pasta is still underway.

    Meanwhile sugar is going through the roof on the global supply/demand picture. SGG has been a rocket & today’s move is helping drag DBA up nearly 2%.

    HK looks to be in a “bowl” formation on the 5 minute chart. Needs to get clear of $23 (at the risk of stating the obvious).

  46. 46
    zman Says:

    Thanks much Bill

  47. 47
    zman Says:

    Dman – Ha, I state the obvious for a living, lol.

  48. 48
    bill Says:

    sd still moving higher

  49. 49
    BirdsofpreyRcool Says:

    bill — what did SD say on their conf call that really lit the fire here?

  50. 50
    choices Says:

    sd doing fairly well lately

  51. 51
    zman Says:

    Getting on CRZO call now, stock unched on the day.

    I hear ya Bill, am watching it.

  52. 52
    choices Says:

    again, need to refresh prior to posting

  53. 53
    bill Says:

    gmxr with an update

    things are moving

    cog impressive report

  54. 54
    zman Says:

    GMXR on the tape with another decent Haynesville E. Tx well

    CRZO – 95 mm/d current, 80 mm of it comes from the Barnett. Sounds high vs their 3Q guidance.

  55. 55
    bill Says:

    Tudor had positive comments on sd

  56. 56
    bill Says:

    cog has fantastic hedges and nice marcelus position

    paid off some dbt ytd and underspending cash flow

    low as 20 in march now 36

  57. 57
    zman Says:

    Re SD – I might have chased that here if I was going to be around this week. As it stands now, not going to do it.

    This is what I meant earlier regarding a minor recovery in the broad market leading to outperformance on the day. If they get the broads positive E&P will have a pretty strong day.

  58. 58
    zman Says:

    Core acreage in the Barnett has dropped below $10,000 per acre. This is when someone who is cash rich should be buying. Like EOG or XOM (but this Exxon abandoned ship in the U.S. its pretty unlikely). Guys like CRZO are too small to really bite off a big piece, while guys like KWK are too strapped.

  59. 59
    bill Says:

    vq presenting next– oily company

    i have a little sold most into strength

  60. 60
    zman Says:

    Bill – speaking of COG, little CRZO saying some of their Marcellus acreage they will test next year is near those COG wells and some CHK wells that have been pretty good rate.

  61. 61
    zman Says:

    Surprised to see KOG not going to Enercom. That conference is relatively new but is an up and comer and includes all of their future peers.

  62. 62
    zman Says:

    CRZO call ending. Stock still unched. Call went well, stock is not expensive. Story is a little boring right now as they stay within cash flow and work their plan. I don’t really see a catalyst but it may get some favorable nods from the analyst crowd in a minute here.

  63. 63
    zman Says:

    Yep, there goes CRZO, thought that quarter was more interesting than the KWK one. Will read KWK’s transcript later.

  64. 64
    BirdsofpreyRcool Says:

    CEO question… does anyone here know (either personally, or by reputation) Malone Mitchell? thanks.

  65. 65
    zman Says:

    BOP – good call a while back on the CRZO. Nice and steady and still not expensive.

  66. 66
    BirdsofpreyRcool Says:

    z — thanks. Waiting for my KOG to double too… taking a bit longer than my Evil Plan anticipated, tho.

  67. 67
    zman Says:

    WLL call in 15 minutes. That stock just continues to run. I’m thinking CLR will follow it up after the little session of give back we had at the end of last week.

  68. 68
    zman Says:

    BOP – that size seller in KOG from Friday has moved down to the 1.02 level today. Not a lot behind him showing though.

  69. 69
    bill Says:

    wll will presenting in 15 min

  70. 70
    zman Says:

    Dollar index creeping higher, back over 79 now.

    XNG up 1.2%, with the SP down 0.3%. If the broads go higher at the end of the day look for EnP to keep up or expand that spread. This is definitely one of those strong get stronger and weak get weaker days.

    Anyone see a broker comment on SWN. This is extending beyond where I would have thought and I’m getting tempted to add a lower August strike call.

  71. 71
    zman Says:

    Enercom running a bit behind, WLL should start in the next 5 minutes.

    Market looking a bit weaker, group riding it out on the green side. Still have not found any negative comments on SWN so it looks like they just started out negative and got stuck that way. I may add a little August $40 position if this broader weakness gets worse.

  72. 72
    zman Says:

    WLL – good company overview, nothing new but a good refresher if you are not up on them.

  73. 73
    zman Says:

    RMD – XEC is speaking now at Enercom (see links above). They just mentioned that 40 MM/d IP well you referenced on Friday.

  74. 74
    zman Says:

    XEC is going to run through the Cana Woodford play, west of OKC. This is not your typical Woodford that you think of with NFX or with CHK selling out or PQ making their bread and butter. Sometimes referred to as the deep Cana or deep Woodford. Notes to follow …

  75. 75
    zman Says:

    Cana Woodford –

    deeper than Woodford, higher pressure, more porosity, more gas in place.

    6.3 to 6.9 Bcfe per well / 1st 30 day average of 4.7 mm/d, pretty dry

    deep, with 4000 to 4600 foot laterals

    $7.5 to 8mm /ea

    average land cost $2,300/acre

    see total 2 to 3 Tcfe potential.

  76. 76
    RMD Says:


  77. 77
    zman Says:

    XEC – Gulf Coast

    Yegua – two sisters well was first 3D well

    * 40 MMcfepd IP, (25 mm/d and 2,500 bopd)
    * 20 to 40 Bcfe
    * 100% WI, just west of Beaumont

    14,000′ – turned to sales in July,
    Cost $9.5 mm with payout in about 6 weeks due to the monsterx2 rate.

    Gives them a lot of confidence in their seismic interpretation in the area.

  78. 78
    zman Says:


    2009 est CFPS of $6.09
    2010 est $8.86

    low debt, interesting, more interesting than I last recall.

  79. 79
    zman Says:

    RMD – going to work this one back up (used to know em) over my break.

  80. 80
    zman Says:

    Saw the pony tailed one on CNBC say he is buying the market for a higher close today. I guess I could flip a coin too but why bother. I will say that I’m going to grab a sandwich and be back in 30 minutes. Weak market is not really doing any damage to itself in terms of charts (at least from the way I look at it) and especially not to the stocks. HK is doing a good job of going for its first “above the deal price” close. SWN’s chart looks weakish to me but I still may play it for a little trade. Analyst/traders should set the bar fairly low for this week’s storage injection given last week’s mild weather. That low bar combined with heat this week and maybe a spinner in the Atlantic could lead to gas price strength going into the weekend.

  81. 81
    zman Says:

    And then there were two things to watch:


  82. 82
    West Says:

    BOP, transatlantic petroleum- MM3, tapff, very smart player. He use to own Lariat that became Sandridge. He sold his remaining shares last yr at $50

  83. 83
    BirdsofpreyRcool Says:

    west — i was told to take a long, hard look at his new venture. I was told he is a “walk on water” kind of guy, when it comes to making $$ in the oil patch. So, you think that’s true? TNP (Canadian) is supposed to be taking a massive bet on Turkey, and Mitchell owns 60% of the company. Are you familiar with his new venture? What do you think??

  84. 84
    zman Says:

    Most things seeing relatively light volume as expected. A bit above average for this time of day in HK, good to see it holding over deal price on a weak day. Otherwise, serious paint drying action out there.

  85. 85
    West Says:

    My symbol at Schwab is TAPFF, so that is what I gave u . It is hard to trade because of low trading volume. They also have some acreage in California that is on trend with recent discovery but a pretty good distance from actual field.http://www.transatlanticpetroleum.com/s/Home.asp here is the link. Harder to trade than KOG , but worth a look.

  86. 86
    1520sbroad Says:

    Z- i have been looking more seriously at EOG following last weeks report. A couple of oddball questions that maybe you know the answer to? Where did they get the Chinese acreage, north sea acreage? Not exactly logical in my mind for all the other acreage they are involved with.

    Have they always had zero oil hedges? Is that something they plan to stick with even as their oiliness increases?

    From all i have read thus far i would classify them as a “within cash flow, thru the drillbit” type operator – is this a fair statement?

  87. 87
    BirdsofpreyRcool Says:

    West — thank you for your insights. If you think it’s worth a look, i will do so.

    So TAPFF is the American ADR for TNP CN security. I didn’t know there was a US-traded flavor. Thanks for pointing that out. Both stocks are pretty illiquid, but TAPFF is trading at a 52 week high today. Is there anything in particular that is happening here?

  88. 88
    zman Says:

    Re EOG

    China exposure came from COP who got their exposure when they acquired Burlington Resources. Back in the day, maybe 6 years ago, I remember when the guys at Burlington thought the Sichuan Basin was going to be the Chinese San Juan Basin. Big, very big. EOG is taking that further with horizontal drilling. Infrastructure is of course very disconnected over there but China market for gas is very good, they hinted at better than U.S. prices and it will absorb all the gas they can conceivable get under production through at least 2015. Big acreage, don’t recall exact size but it was in the hundreds of thousands of acres.

    UK they’ve been around for some time. Acquire and exploit acreage. Filling in around existing infrastructure, not big upside, not very exciting.

    They have a bigger stake in Trinidad, big targets, LNG trains have been rolling for years now, plus ammonia production. Those prices will creep up when the U.S. market does but are economic below $1.75/Mcf

    I don’t recall if they’ve always had 0 oil hedged but up until recently the only thing that mattered to them re oil prices was bunker fuel pricing which was part of the formula used to determine pricing out of Trinidad. They believe oil prices are going higher and don’t want to squash their returns just as they are getting oilier from a total company production standpoint.

    Papa is a conservative guy and I would bet when oil is again well into the $100s you will see him layer in some hedges.

    They mostly live within cash flow, they keep a low debt to cap ratio (19% at present) and have a target of 0% sometime in the future. They keep cash on the balance sheet as a matter of course which is unusual for an E&P but recall that EOG stands for Enron Oil and Gas. These guys have seen the other side of the coin and they got out just before the empire died. Punted some nice Indian operations in the process (which by the way gave them a lot of experience in operating in that region) but they are a lot better off as one of the top 6 E&P companies and not as just a footnote of things that got broken by the “smartest guys in the room”.

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    1520sbroad Says:

    #88 – thanks much. I iknew you would know the full story.

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    zman Says:

    1520 – my sense is that there is nothing in the EOG stock price for China and probably won’t be until mid next year, say, around their analyst day which could be anywhere from May to July.

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    1520sbroad Says:

    is EOG operating those wells in China or are they tangled up in an elaborate state sponsored “partnership” with some one else?

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    Dman Says:

    HK 1-minute chart suggests a seller parked at $23.10. I guess that’s not a bad flip from $22.86.

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    zman Says:

    1520 – They operate. Still could have some weird features, will look into.

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    1520sbroad Says:

    #93 – thanks again, i’ll keep digging.

    Enjoy the time away with your family.

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    zman Says:

    Hear ya 23.10. Someone is soaking it up in 100 share lots, doesn’t want to move it higher. That’s not necessarily a bad thing. I say one day at a time as we get a move that approaches pre earnings levels piece by piece.

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    zman Says:

    Thanks, plan to. If you guys could occasionally post oil, gas and the odd stock price move from time to time tomorrow that would be great as I get comments on the site on the BB.

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    zman Says:

    1520 – all I can see is a structured plan on pricing in China. They said in the call they should have 1st hz well results by ye09 and should have a go, no go decision by mid 2010. Its 130,000 acres but for now, just 1 rig running.

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    1520sbroad Says:

    interesting – i saw the 130k acres in their latest presentation. Worth staying tuned to in their Q4 results.

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    West Says:

    Z have a good one…BOP on transatlantic it is more a bet on MM3, if it is of any interest I own 10k shares. Around here they call him Mr. Midas. One interesting thing is that they can sell everything they produce and they have been getting $ 10.00 an mcf recently on some of their gas. Long term play for growth in developing countries. Most of the wells in Turkey have never been fraced and they r bringing the own completion equipment to the country soon if it is not there now.

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    West Says:

    TNP….8k filinghttp://xml.10kwizard.com/filing_raw.php?repo=tenk&ipage=6459210

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    choices Says:

    TNP was C$0.90 in mid-March-closed C$2.80 today, about 246,000 shares traded on TSE-quite a run.

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    BirdsofpreyRcool Says:

    West — thanks for the link. Pretty timely. By the way, how did you come across TNP? Is it just by following the money (MM3)?

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    Dman Says:

    “Mexico gov’t doubts mount on Chicontepec oil project”


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    bill Says:

    after hours alert



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    West Says:

    Malone Mithcell 3rd (MM3), I don’t know him personally, but have friends that know him. Followed him from Lariat days and his tremendous success in drilling the Pinion Field. He seems to have a uncanny knack for buying low and selling high. He was one of the first e&p operators out here to build his own full intergraded oil production and service company.

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    occam Says:

    BEXP has a nice result, issued a PRn after market close and talked about it at the Enercon conference.

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