10
Sep

Thursday – Oil and Natural Gas Inventory Previews

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 OPEC Watch: Closing Comments From the 154th OPEC Meeting:

  • The market remains oversupplied. 
  • Current production quota levels are to remain unchanged until markets become more balanced. 
  • There was no mention of compliance in the close of meeting statement. In the Q&A, the Secretary General stated that they expect members to adhere to their production quotas but that compliance is pretty good under the current circumstances. Current compliance is 68 to 70%. They will be looking for a bit better member quota adherence in the remaining months of the year. 
  • OPEC is not in favor of any price band, their experience is that it didn't work. 
  • As far as price goes, they are looking at the environment around them. They are walking a very thin line, don't want to jeopardize the recovery that they see right now. They do not think $80 oil would jeopardize the recovery. 
  • At the same time, they need more capacity and they need a high enough price to engender investment. Anything below $75 does not accomplish this. They went on to point out that their year to date basket price has averaged $52 so the investment hurdle has not been met this year and that when they see prices at $75 for 10 days they don't suddenly run out and invest in new capacity.
     
  • OPEC will meet again December 22 in Angola to reassess the oil markets.


Sentiment Watch: Still in the "would you look at the legs on this market?!" camp. After OPEC held pat, IEA raised its global crude demand forecasts for 2009 and 2010 and that should help support crude before inventories today but also in the weeks to come (see below). Jobless claims came in at 550,000 vs 568,000 expected. We get EIA natural gas and oil inventory reports later this morning. Finally note that with Fall, news flow continues to accelerate and we had good releases from NFX and CLR overnight.


In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Inventory Preview
  4. Oil Inventory Preview
  5. Stuff We Care About Today - NFX, CLR
  6. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $8,000
    • 28% Cash
    • The current holdings and spreadsheet pages have been updated.

 

  • Yesterday's Trades:
    • HK – Doubled my September $24 Calls (added 20 more of the HKIO) for $0.30 with the stock at $23 following their presentation at Barclays.

Commodity Watch:

Crude oil inched up $0.21 to close at $71.31 yesterday as it awaited OPEC and took some solace in a falling dollar. After the close, the API released a very mixed bag of numbers (see below). The EIA's holiday delayed numbers will be released at 11 am EST. This morning crude is trading up slightly.

  • IEA Watch: Global Crude Demand Forecast Going Up: Both 2009 and 2010 forecast raised by roughly 0.5 MM bopd.

    • 2008: 85.41 mm bopd
    • 2009: 84.4 mm bopd
    • 2010: 85.7 mm bopd
    • IEA noted that much of the current addition to 2009 demand comes from stock building in China.

Natural gas closed up 2 pennies to $2.83 after a third day of short covering.  We get the gas numbers at the regular time today (10:30 EST) and the estimates have fallen to a level which should be a tough number to make (see next section). This morning gas is trading flat.

  • ECA Says Horn River Could Be 500 Tcf. This would put it at the top of the North American shale plays. Good news for EOG and APA, probably NXY and TLM as well. Not great news for long term gas prices ... commercial scale development is years away.

 

Natural Gas Preview

  • My number: 75 to 80 Bcf Injection.
    • History:
      • Last Week: 65 Bcf
      • Last Year: 63 Bcf
      • 5 Year Average: 81 Bcf
    • Weather: 46 CDDs last week. Cooler than normal and much cooler than last year.
    • Imports: Flat with the prior week and year ago levels.
  • Street Consensus: 72 Bcf. This was 78 on Tuesday so this feels a bit like a set up.

ZComment: After the "large" gains gas has made in the last three sessions a miss here will be a big test for at least the front month contract. My suspicion is that the trader/analysts who remain short have raised the bar (by lowering their injection estimate) despite the weather to a point that it may be difficult for gas to reach. This may or may not matter but without the fear of tropical disturbance or sustained summer like weather it may be difficult for the short covering rally to top $3 which would trigger stops and send gas higher.   

Oil Inventory Preview


API Watch:

  • Crude: DOWN 7.216 mm barrels
  • Gasoline: UP 0.571 mm barrels
  • Distillates: UP 3.282 mm barrels

ZComment: What messy numbers. I'm disregarding API's numbers this week as they don't seem to make a lot of sense until you think about the rally in utilization last week and think that maybe the API is again playing catchup with oil demand taking one last, late Summer spurt before settling in for a long, steep utilization and therefore crude demand decline this Fall.

 

Stuff We Care About Today


 

Barclays Presentations I Care About Today: (all times EST; Bold indicates I will certainly be on the call)

  • NFX 7:45 - See notes below
  • UPL 9:05
  • SWN 9:45
  • NBR 10:25
  • RIG 11:05
  • BTU OR CRK 11:45
  • ATW 12:25
  • WLL 1:05
  • LINN 3:05
  • PXD 3:45
  • GDP OR SGY 4:25

Renshaw Presentations I Care About Today: (all times EST)

  • GMXR 9:30
  • GDP 10:00
  • GST 12:30
  • ATPG 3:40

NFX Gets Busier In Asia

  • Second discovery in shallow water, Pearl River Mouth Basin China (off Hong Kong):
    • The LF (Lufeng) 7-1 tested at 6,000 bopd out of one of several sands. Total pay interval of 250 feet (6 darcy reservoir so it can seriously flow) The production test was constrained by the test equipment.
    • This was an appraisal well to initial discovery well, the LF  7-2 announced as successful with 60 feet of pay but without a test rate back in April 2008.
    • This discovery sets up another test which will likely spud in 2010
    • NFX says they now have > 30 mm boe here on an 8/8ths basis
    • China can opt to back in for a 51% interest in any development.
    • Currently, NFX produces about 2,800 net bopd in China over in Bohai Bay.
    • This is set to be a 2012 production event so NFX continues to firm up their long term production profile. They're targeting production of 15,000 bopd net by Pearl River by 2013. See total co production numbers below.
  • Malaysia Development Acceleration:
    • Now accelerating Malay development, drilling 3 wells before year end, but staying within original capital budget on a whole company basis. Most likely this is a combination of well cost savings on the domestic front and perhaps some reduced drilling in the mid-con (although that last is pure speculation on my part).
    • Plan to drill 3 more wells in 2010 here.
  • For Comparative Purposes:
    • 2Q Production Was 710 MMcfepd or 118 MBOEpd
    • 2008 YE Reserves were 2,950 Bcfe or 492 mm BOE.
    • NFX trades at 3.6x 2009 and 3.9x 2010 estimated CFPS
    • NFX speaks at Barclays today at 7:45 am EST. Their Barclays presentation has been retooled to show a significant and increasing emphasis on oil production.
    • This section has been added to the NFX Notes Page.

CLR Updates Operations - Announces Lodgepole and Three Forks Sanish Discoveries

  • Lodgepole:

    • Everyone will be talking about the Lodgepole formation the same way they did about the Three Forks Sanish - where is it? who has it? what's it worth?  You'll note in my ROSE piece from the other day I mentioned they are currently drilling a vertical well in Montana that would test the Bakken, TFS, and the Lodgepole.
    • What CLR Found: Lodgepole discovery in Stark County, N.D. (southern North Dakota) - Vertical Test, Flowed 463 Bopd from 10 feet of perforations.
    • Historically, Lodgepole formation oil accumulation was thought to be small, 8 mm boe according to the U.S.G.S. in aggregate and limited to Stark County. The last successful well here was in the late 1990s. 
    • A little background on Stark County Lodgepole mounds.
  • Three Forks Sanish
    • CLR also announced three more Three Forks Sanish Wells in 3 counties (McKenzie, Dunn, and Divide) with IP's of 1,273 , 730, and 661 BOEpd resepectively. The Divide county T.F.S. test is the furtherest north I have seen production from that formation yet.
    • Drilling times down from 40 days in 2008, to 28 days in 1H09, to 16 days for the last well even as the total measured depth has been extended from 15,000 to 20,000 feet.
    • CLR has over 200,000 net acres it thinks are prospective for TFS development and they have drilled over a dozen wells across their acreage this year to prove up the paly. Most of the IPs have been > 800 boepd.
  • Nushell: Should be another good day for the name, and we should get a test of the 2Q press release highs of just over $40 when CLR presented its best evidence yet of the middle Bakken and Three Forks Sanish being distinct plays. Potentially adding a third play is interesting, far from proven and no doubt less ubiquitous across their acreage, but interesting. 

 

Odds & Ends

Analyst Watch:

  • Southcoast rating changes:

    • HK from Hold to Buy
    • CPE from Sell to Hold
    • UPL from Hold to Buy
    • XTO from Hold to Buy
  • Oppenheimer initiates driller coverage:

    • DO, ATW, and PDE as Outperfrom
    • ESV, RIG, and NE as Perform

 

225 Responses to “Thursday – Oil and Natural Gas Inventory Previews”

  1. 1
    zman Says:

    NFX conference call went well, incorporated a few more things from into the NFX section. Nice to hear someone talk about darcies and not have mill or micro in front of it.

  2. 2
    zman Says:

    NFX and CLR likely to be good outperformers today. ROSE may slowly get a little bit of action from the mention of Lodgepole production but that’s a connection only Wall Street could make as they are a state away from each other. I think the Lodgepole mounds are charged by the lower and upper Bakken and their is a limestone seal. They are basically bumps with good communication which can give you high initial rates. May be a little early to get as excited as some of the comments from the operator of the Stark County well gets in this press release:

    http://phx.corporate-ir.net/phoenix.zhtml?c=197380&p=irol-newsArticle&ID=1330259&highlight=

  3. 3
    zman Says:

    The UPL presentation is apparently not being broadcast from Barclays. Good low cost gas producer, nothing new in the pdf from what I can tell. I have enough gas on my plate for now but may start using UPL and RRC from time to time in addition to SWN as my gas proxy. SWN speaks at 9:45 EST at Barclays.

  4. 4
    zman Says:

    Eli – that finviz.com site is very cool, thanks again.

    Dollar looking like it’s had it, going lower.

  5. 5
    zman Says:

    Boos to TPH for their lack of coverage of current events at HK post deal. Either cover a name or don’t. That HK EFS was their biggest yet in the play and deserves a mention, yet today all they talk about is EP having acreage within (they think) HK’s territory. Lame.

  6. 6
    BirdsofpreyRcool Says:

    Good morning.

    TechTrader says it’s a 60/40 short day, but expect a lot of volatility (if prior patterns hold up).

    HeadTrader agrees with the short but recommends you keep a very tight leash on any day-trading position.

    High Yield Bonds continue to outperform… even with the massive amount of issuance in the pipeline. Pretty astonishing, really. In the face of all this new supply, you usually see some spread widening, to accomodate the new issuance. Tells me a flood of cash has flowed into the lower-grade corporate bond mrkt.

  7. 7
    zman Says:

    Phrase of the day: vuggy carbonate.

  8. 8
    BirdsofpreyRcool Says:

    Oh Stop!! That phrase brings tears of joy to the eyes of a petroleum geologist.

  9. 9
    zman Says:

    – it’s what middle eastern dreams are made out of.

  10. 10
    BirdsofpreyRcool Says:

    It almost renders the petroleum engineer useless… that type of formation will produce itself!

  11. 11
    BirdsofpreyRcool Says:

    HK can’t decide whether to fly higher, or continue to flap around. Thought we would see some more excitement, after the EFS well results.

    Think we will in time, tho…

  12. 12
    zman Says:

    From the “I’m not a geologist but I took a course yada, yada, yada”

    Vugs are little holes in the reservoir. This gives the reservoir better porosity and permeability. Think of porosity like a sponge’s ability to hold a solution and perm as its ability to let it pass through it. In this case, the reservoir is a vuggy carbonate (limestone) so you get high production if it is filled with hyrdrocarbons. Higher still as this one is naturally fractured. Bet they are leasing like crazy in Stark county.

  13. 13
    BirdsofpreyRcool Says:

    From the SMH morning note —

    CLR – discovery in Lodgpole formation which is above Bakken and TFS, 463 bopd from 10ft vertical perf; there have been 41 lodgepole discoveries in the last 15 years; they do have some running room here; not in our numbers formally and we will review guuidance with the company soon; also, latest TFS completed well costs under $5mm and 6.8mm/d in Anadarko woodford, CLR has 117K net acres there.

  14. 14
    zman Says:

    HK – I think the Barclays and JPM (deal) analysts will be onto that big well. I think around the deal price you run into deal related supply so it is going to be bumpy until the stock from the deal held by the more nervous hands is cleaned up.

    You can see the Lodgepole mounds on 3D pretty well. I guess ROSE has seen similar mounds in Montana as that bit is now turning to the right to test all three plays.

  15. 15
    BirdsofpreyRcool Says:

    nice explanation, z.

    Vugs without permeability yield very little production. Vugs combined with permeability is just about the best reservoir I know of. It is truly the definition of finding the “Sweet Spot” within a producing formation.

  16. 16
    BirdsofpreyRcool Says:

    Basically, you are looking at the Lower Mississippian age equivalent of a reef formation. It is one of the few facies changes you can actually see on seismic.

  17. 17
    zman Says:

    SWN presentation starting now.

  18. 18
    zman Says:

    NFX reacting negatively to a 5,000 share sale by the chairman, that’s an opportunity in my book.

  19. 19
    zman Says:

    ZTRADE:

    Added (2 to start) NFX October $45 Calls for $0.75 with the stock at $40.50. The stock had a good bit of news out last night but is off with a small insider sale and with the market early. See site for details on last night’s press release.

  20. 20
    reefguy Says:

    Walsortian Mounds. Now z has fallen into it! In the late 199o’s this play was made, with some success. The problem is that they are one or two, maybe three well stratigaphics “mounds”. Yes thet are visible and definable on 3-D, but at the time, the ability to use seismic to find porous from non-porous bodies was not possible.
    It does not suprise me that Bakken players will find them, perhaps unexpectedly. I thing, however they are a small value(very small?) add to the Bakken story. IMHO

  21. 21
    zman Says:

    CLR pushing $40 which is good as it is waking up my Sept. $40 calls.

  22. 22
    zman Says:

    Reef – thanks, I was concerned that they didn’t have a lot of running room. USGS said the whole play is small a long time ago. Wondering at the tone of the pr, they let the operator have a “best well I’ve ever seen quote” which is kind of rookie.

    The TFS is bigger news in my book as they are finding good TFS nearly to Canada and are working hard to prove it up on more of their acreage. They have 3 rigs now, going to five in the Bakken.

  23. 23
    zman Says:

    SWN call ongoing – hearing little new, all positive, but nothing new so far.

  24. 24
    reefguy Says:

    z-tfs is two to three orders of magnitude larger than lodgepole mounds

  25. 25
    zman Says:

    Wow – Don’t drink and drill. Subsea 7 says they have fired 60 people in the last year for drug and alcohol abuse. The phrase should be “got Shale?”, not “got Meth?”

  26. 26
    zman Says:

    Reef – I only see mention of Lodgepole in Stark County. I have not got a good cross section cartoon showing it. Have the mounds not be found in other neighboring counties.

  27. 27
    BirdsofpreyRcool Says:

    reef — great point. Yes, totally agree, a minor part of the Bakken story. As mentioned earlier, like drilling into a sweet spot. But, not something you can build an entire play around. Unless it’s Reefs in Michigan. (But Shell got to that play decades ago.)

  28. 28
    reefguy Says:

    Yes in adjacent counties

  29. 29
    zman Says:

    Ever heard of them in Montana? Northwest Montana perhaps, lol.

    Production on those falls off a cliff normally right? But they almost have to work well with floods as well.

  30. 30
    zman Says:

    Reef – I just think its adjacent conventional production. I saw MRO put a horizontal into it awhile back, wondering if that is CLR’s plan or just go with a few verticals…they didn’t give much data in the pr.

  31. 31
    bill Says:

    the swn guy is putting me to sleep

  32. 32
    zman Says:

    Bill – Yeah, nothing wrong with it at all, just droning a bit.

  33. 33
    zman Says:

    BOP – did you punt on HK, stock moving well, lol.

  34. 34
    zman Says:

    NG off 8 cents, gas storage in 10 minutes.

  35. 35
    BirdsofpreyRcool Says:

    z — can’t even think of a (printable) response to your comment.

    Still long and strong the Hawk.

  36. 36
    BirdsofpreyRcool Says:

    I just like to whine a bit about it… but, I try to stick with my convictions. Just like you!

  37. 37
    zman Says:

    BOP – I only said it because of your I sense that your inner strength can handle the ribbing.

    JPM and Barclays guys must be touting it today.

  38. 38
    zman Says:

    SWN call over – I got little new out of that except maybe a little more optimistic attitude towards the E. Tx part of the Haynesville.

    KOG refusing to sell the news.

  39. 39
    BirdsofpreyRcool Says:

    #35 was said with a laugh… but it doesn’t appear to READ that way. OOPS.

    If you can’t take it, you have no place in the kitchen (or something like that).

  40. 40
    zman Says:

    VTZ – sent you something on sands.

  41. 41
    zman Says:

    39 – I knew how you meant it. The internet is a very flat medium.

  42. 42
    BirdsofpreyRcool Says:

    hence the popularity of the little smiley-faces and stuff… annoying, but useful.

    🙂

  43. 43
    zman Says:

    Touché. Still don’t like them.

  44. 44
    zman Says:

    69 Bcf

    Street was at 72

    Immediate reaction was to trade gas off the day’s low.

  45. 45
    zman Says:

    We get the oil numbers in 30 minutes.

  46. 46
    Dman Says:

    Honestly Z, I must have used hundreds of those smiley’s before you announced you don’t like them… I felt so guilty for all those past smileys. Not that I like them, but like BOP says they were invented for a reason… which is that online it is easy to the tone wrong.

    I don’t like them because they are very crude indicators of tone … but they are a lot quicker than writing a paragraph & then waiting a day to re-read it to see if it “sounds right”.

  47. 47
    zman Says:

    Raymond James – neutral rating reiteration on KOG today. Says things are improving, prospects looking up. I see no target price and they stayed at market perform after essentially parsing the press release. Useless. Unless. Unless you wait to upgrade closer to the next well and to deal time. Clever.

  48. 48
    BirdsofpreyRcool Says:

    z doesn’t use exclamation points either… it appears obvious that, at some point in his prior life, he had a very nasty and rigorous and traditional editor.

  49. 49
    zman Says:

    Dman – You just earned an invite to our egg nog laden X-mas party. I thought sarcasm was a lost art. Upon further reflection, I now like all smileys other than the one that automatical replaces the number eight if I use a paren. Now, if you will tell me the difference between a vug and karst, quickly, without googling it, I’ll buy you a “Got Bakken?” or “Got Shale?” limited edition Zman’s Energy Brain t-shirt.

    Gas in the green, oil improving as it closes on inventories but that is just broad market confidence.

  50. 50
    zman Says:

    BOP – True. I had a nice young thing editor first, with a voice like honey. She got replaced by an old crone from Goldman who was never seen to smile or laugh despite the rumors of Jameson in her desk drawer. Apparently, she destroyed my ability to use the word “very” as well.

  51. 51
    BirdsofpreyRcool Says:

    hmmm…. i see your point on “very.” Not that I will stop using it… but it now has “sore thumb” status. As in “sticking out…”

  52. 52
    zman Says:

    HK approaching a post deal high!!!!!!!!!!!!

  53. 53
    zman Says:

    ROSE – someone starting to notice they have the word Lodgepole in their vocabulary.

  54. 54
    BirdsofpreyRcool Says:

    z! Is that you, showing emotion?? Cracking a SMILE. This is truly a very very special DAY for you!! 🙂 🙂 🙂

  55. 55
    zman Says:

    Don’t get used to it.

    NG fighting to stay green, going to be up to the bigger players. A smaller injection at this point likely means a small boost in industrial demand but a bigger element of production curtailment.

    If we get bullish looking EIA oil numbers today I would expect a shot at $3 on natural gas.

  56. 56
    zman Says:

    WLL – through 54, still a cheap Bakken name.

    CLR at 40.50 which is above the 2Q press release high from a month ago marking a new 2009 high. My $40 calls are alive and kicking.

  57. 57
    BirdsofpreyRcool Says:

    HeadTrader weighing in… saying “you have to keep buying the dips, until proven wrong.” That is the mo-mo philosophy, but it is also working.

    Something to ponder… stocks actually do well, in an inflationary environment… not HYPER inflationary, of course. Inflation makes YoY earnings look better.

    Not condoning/defending/explaining… just pointing this out.

  58. 58
    zman Says:

    EIA Oil Inventory Report

    Crude down 5.9 mm bbsa
    Gasoline up 2.1
    Distillates up 2.0

    Utilization: 87.2 % – that’s staying high through the holiday, will fall next week.
    Crude Imports: 9.1 mm bopd – middling
    Gasoline Demand: 9.283 mm bpd – ok, not great end to the season
    Distillate Demand: 3.482 mm bpd – in line with last week, good to see

    Total product supply remained high, off just slightly from last week.

    Mixed bag numbers, just like API last night. …

    Oil was up 95 cents before the report at 72.25

  59. 59
    isleworth Says:

    Z – hearing anything on PQ these days? Any current thoughts?

  60. 60
    zman Says:

    …continued …

    Jet fuel actually picked up on holiday travel last week to some pretty good levels

    Stocks at Cushing ticked up 0.1 to 31.3 mm barrels.

    Good news on the numbers was that the draw on crude was primarily related to throughput at refineries, we saw 15.1 mm bpd inputs for the first time in I don’t know how long, will check. Bad news is that definitely will not last as driving season draws to a close and VLO and others who have announced production curtailments go ahead and carry them out, in addition to their normal maintenance season shut downs.

  61. 61
    zman Says:

    Isle – Nothing new, but I have taken my eye of them since the 2Q call as their activity is depressed and I sold my stock. I will look into it. They should be doing a gulf coast test soon but I don’t see them reaccelerating in the Woodford or Fayetteville soon on the gas side.

  62. 62
    Dman Says:

    Z – you know full well I have no *idea* what a vug or a karst is. And I’m not even going to google it. Well, maybe later I will.

    GMXR has seen high volume bars in the last hour of trading yesterday & the day before. I’m guessing a bit of short scrambling & wouldn’t be surprised to see that again.

    Nice moves in KWK, HK.

  63. 63
    Jerome Blank Says:

    PQ is still on a P&F sell signal, goes back on a buy signal at $5.00

  64. 64
    Dman Says:

    BOP – somehow I’m not entirely convinced by Z’s new conversion to smileys. We need to find some Z-compliant emoticons. I’m thinking they’d be a little complicated. Maybe a graph of some sort, indicating YoY mood deficits with little circles pointing out important spikes.

  65. 65
    zman Says:

    Dman – You wouldn’t want the shirt off my back anyway.

    NG taking its cue from oil to rally now. Again, numbers for oil rather mixed, products are down as they made a lot of gas in anticipation of labor day driving. Oil could easily still roll over here, have a feeling it won’t but just a feeling. If Bank of England had tightened up a bit it would have been helpful to the dollar drop cause but oh well.

  66. 66
    zman Says:

    Missed getting on the NBR and RIG calls due to the oil numbers. Will listen to NBR later … I’d really like to hear how NAM levered service is hunky dory with no gas rig recovery until the second half of 2010.

    Will listen to BTU call at 11:45 EST.

  67. 67
    zman Says:

    Jerome – At what level does ROSE qualify on point and figure as a buy signal?

  68. 68
    BirdsofpreyRcool Says:

    Dman, well… we know !!, “very,” and ;), are out.

  69. 69
    zman Says:

    Anyone planning to listen to CRK at 11:45EST?

  70. 70
    Dman Says:

    Z – I listened to the recent NOV call. They pretty much assumed nothing good in their NAM market & were mainly talking about the global oil side. Analysts mostly asked about the Brazil rigs.

  71. 71
    zman Says:

    Dman – hear ya KWK and HK moves … its like Dawn of the Dead.

  72. 72
    zman Says:

    Dman – and that and Mexico could be their saving grace. NBR can transition rigs as well down to Mexico for big tenders. They are pretty cut rate priced though. I just look at the OIH up double the best of the energy space and 4x the market YTD and I scratch my head.

  73. 73
    zman Says:

    Oil looking pretty weak as gasoline is down almost 2%.

  74. 74
    VTZ Says:

    BOP 57 is why we can be assured that the govt is willing to inflate their way out.

    Ben has all but said that this is what he intends to do, while at the same time posturing enough for China.

  75. 75
    VTZ Says:

    The funny part is that China knows that what the US is going to do and are starting to position themselves accordingly. The US govt on the other hand thinks they’re being smooth/cute by proclaiming the recession is over due to the insane amounts of dollars they’ve printed and distributed. Really this is counterproductive.

    Suggestion to US policymakers, media and politicians. Stop antagonizing China and portraying them as evil for trying to protect their savings.

    Maybe there’s a lesson to be learned here?

  76. 76
    BirdsofpreyRcool Says:

    VTZ — agreed. I physically cringe, every time I hear our govt criticize anything China is doing. China is watching out for China and will do what’s best for China. (Which is more than can be said for many in our own govt.)

  77. 77
    Jerome Blank Says:

    Re: #67, hi ZMAN…ROSE has a great looking P&F chart, it’s currently on a buy signal from its print of $9.50 back in the middle of July, it then rallied to break its long term downward P&F trendline of $13.00 in early August…it’s currently in a bullish trading range…a fresh buy signal out of the current consolidation prints at $14.00, target price from a print of $14 calculates to $24.00…at its current price and before going on a new buy signal, ROSE goes back on a sell signal with a print of 11.00, long term P&F support again at $8.00

  78. 78
    zman Says:

    Much obliged J 🙂

  79. 79
    Dman Says:

    #74 – the best bit of wisdom I’ve seen on the inflation/deflation issue is that in a fiat currency regime, it is ultimately a political decision whether to allow deflation or to instead print money to inflate out of it. They almost always try to print like crazy. The worse the deflationary pressure, the more they print, as Ben has plainly said they will.

    Z – #72: would the very different balance-sheet structure of service vs. E&P have anything to do with it?

  80. 80
    VTZ Says:

    Z – Just looked at that report. It’s a surprisingly complete overview of the projects.

  81. 81
    VTZ Says:

    RE 79 – Ben has flat out said on multiple occasions that the mistake that Japan made was stopping stimulus too early. Rest assured that the US will overkill it.

  82. 82
    Wyoming Says:

    http://www.epmag.com/Videos/item44878.php
    http://www.epmag.com/WebOnly2009/item44871.php
    http://www.epmag.com/WebOnly2009/item44985.php

  83. 83
    zman Says:

    Dman – oh great, make me think for a minute, nice. Yeah, that’s no doubt part of it. I just see continued deflation or at least lack of pricing power and flattish activity next year. I’m an E&P guy as you know and there are service guys here who would argue with me on the whole coming pricing power of the service segment but I still don’t see it and having talked with some guys who drill the wells very recently, I can say that neither do they. One could simply say service fell harder first and therefore it is first to front run a move to better times. But I don’t see the catalyst for further moves up in the NAM levered service names now…but then, this market will astound you and the OIH is high beta and there you have it, upward and onward. I await the next big undeserved upward run on names like HAL to take puts.

    Crude fought off its first trip into negative territory alright following numbers. Would like to see some of the oil price volatility smooth out now.

  84. 84
    Dman Says:

    VTZ & BOP – I saw an interesting article yesterday that may shed some light on what the US & Chinese governments are up to behind the scenes. Because whatever the apparent bickering, which is just for public consumption, they must be working together in private since they both want to hold the system together for their own political survival.

    Recall that analyses of some of the TARP programs showed that they amounted to huge give-aways to participating private entities. The govt takes all the risk but the private party can win big. Well the Chinese have decided that they like that sort of risk-reward setup & are looking to see how they can “invest” in some of these give-aways of US taxpayer funds.

    Now they would only let that be known if it was already understood that the US govt was OK with it. Why would they be OK with it? Because the Chinese must be setting some conditions on their continuing massive purchases of Treasuries. It looks to me like their money comes in one door & they want to make an arrangement where it can go back thru another, more obscure door.

    That’s my interpretation of the facts in the article – I’ll see if I can find it for ya.

  85. 85
    West Says:

    ATPG

  86. 86
    zman Says:

    West – Yep, I saw it too, not chasing and I can’t congratulate Bill every day on it so I thought I’d just not comment. They picked up a target upgrade by Canaccord from $11 to $17 this morning.

  87. 87
    West Says:

    Mr. E is putting it on the shorts

  88. 88
    bill Says:

    i took some profits on atpg options today that i held due to the move.. i still like it and im still long the common..

    It has a huge short interest and everyone is piling into energy stocks. In early July I couldnt give any of them away

    I think the company issues shares at some point..they were happy with 8.25 3 months ago.

    Anyways, i dont like chasing names either. It seems to have a pullback early, then strength, then late day selling

  89. 89
    VTZ Says:

    Agree Z and I agree that there are many ways in which they are working together, but expect the pace of treasury purchases to moderate. They’re just trying to ease the fall for the US for their own sake. USDs work well for buying foreign assets right now.

  90. 90
    zman Says:

    Wyoming – thanks. First video reinforces the opportunity. “1,000s” of sites for sequestration world wide.

    Re California – no kidding.

    Re Tibor – you remember how long Crazy Horse took to get on production. A lot longer than they thought. Great closing quote about congress. wow, “obese leaches”

  91. 91
    zman Says:

    NG back to yesterday’s high, tapped 2.99 a minute ago.

  92. 92
    Wyoming Says:

    Ca article is one of those Duh things for us but the inlaws in Los Angles don’t understand. Oil companys bad um kay.

  93. 93
    zman Says:

    Hear ya Wyoming – oil companies can boost South Park quotes too, as in “screw you guys, I’m going home”. Saw Salazar is now thinking about risk-weighted royalties. Is that a government jobs program or what? Will they hire a bunch of geologists to pour over the Gomex lease sale blocks to ascribe probabilities to each block with the less risky targets getting a higher royalty? Sheesh.

  94. 94
    zman Says:

    FYI – gasoline demand was above the five year average for the second consecutive week. Hmmm.

  95. 95
    VTZ Says:

    Think job creation Z. This is how you become a productive society. They can add all those jobs to GDP and just print their salaries… no biggie. The money will go back into circulation and feed into banking system deposits and it will just be another form of stimulus.

    You’re not thinking outside the box enough.

  96. 96
    Dman Says:

    Can’t find the article re #84. It’s out there on them intertubes somewhere…

  97. 97
    Wyoming Says:

    Very good and impressive, now do you know what character drinks coffee? Hint – underwear gnomes.

  98. 98
    zman Says:

    Crude down on second post data test, cutting through 71, will, likely run hard for a bit, maybe takes a shot at 70. Funny how Epperson can tell you wow, bigger build in gasoline but can’t make the demand quote or the link between the crude draw and the fact that there was an end of season bump in gasoline production. Useless. My kingdom for Melissa Francis back covering oil full time.

  99. 99
    zman Says:

    re 97 – I’ve exhausted by SP knowledge.

    VTZ – I’m waiting for them to put me in a box, a trader tax paid for box, actually. Ugh. Ok, done ranting.

  100. 100
    Wyoming Says:

    Dman RE 84 was this it?

    http://yellowroad.wallstreetexaminer.com/blogs/?p=234

    Z – it is Tweak

  101. 101
    Dman Says:

    Wyo – no, that ain’t it.

  102. 102
    BirdsofpreyRcool Says:

    #97… couldn’t resist… one of my fav WSJ columns of recent years —

    http://online.wsj.com/article/SB124329131991652291.html

  103. 103
    zman Says:

    Wyoming – That guy is awesome. So if Simpsons is ok for a 4yr old, I wonder if SP is ok for a 6 yr old. Hmmm.

    Crude fought off bout of selling #2, back green and at 71.50 level. Distillate inventories are definitely the biggest negative out there for current pricing I see. 25% above the 5yr average now. It loooooks like distillate demand is picking up a bit, maybe a touch higher than seasonal trend.

    NG at 3

  104. 104
    BirdsofpreyRcool Says:

    Tweek

  105. 105
    zman Says:

    The middle part of #102 on energy just caused me to break a rib.

    NG at $3.04 by the way.

  106. 106
    zman Says:

    WLL presentation in 10 minutes

  107. 107
    zman Says:

    NFX has recovered well from that opening bit of Trice sale silliness. Chart is a stone’s throw away from a HOY but all of these names have added a gap this week to fill at some future point.

  108. 108
    Dman Says:

    #84 – found the article. I got the acronym wrong, it was the PPIP, not the TARP, not that I pretend to understand either of them:

    “CIC Looks to Pile Cash Into U.S. Real Estate”

    http://online.wsj.com/article/SB125243309793493085.html

  109. 109
    BirdsofpreyRcool Says:

    HK finally left the nest…

  110. 110
    elijahwc Says:

    FYI: The “Gimmie Credit” folks on PXP’s recent deal.

    Plains Exploration & Production
    PXP 7.75%
    500m
    B1/BB
    11.169%YTC

    8.217%YTM
    97.875
    Call 6/15/11 @ 103.88

    6/15/2015
    +590bps/5yr UST

    600mm deal

    Gimme Credit® / Exploration & Production
    Carl Blake (cblake@gimmecredit.com)
    September 10, 2009

    Back in August, Plains Exploration and Production announced the restructuring of its joint venture agreement with Chesapeake Energy and issued 15 million shares of common stock. We told investors at the time that we thought Plains would likely tap the high-yield market to fund a portion of the $1.1 billion that’s due to Chesapeake by the end of September (see GC report dated 8/10/09). So it wasn’t a surprise to see Plains at the head of the line on the first day after the high-yield primary market’s Labor Day recess to place $400 million of 8.625% ten-year senior notes, which it issued at a discount to yield 8.875%.

    Plains has been trying for some time to mitigate the risk of the mammoth funding commitment it made to Chesapeake in exchange for a 20% stake in a majority of Chesapeake’s Haynesville properties. The deal had repeatedly caused Plains to pay top dollar to raise funds during challenging periods of the recent credit cycle. We, therefore, view this as a watershed event as it sharply reduces the variability in cash requirements just as Chesapeake accelerates its activities in Haynesville. More good news: by restructuring its joint venture with Chesapeake and reallocating capital to its oil-rich California properties, Plains believes it can reduce its capex budget for 2010 by 20% to $1 billion while doubling its production growth from 5% to 10%. We think Plains’ substantial hedge position (covering 90% and 70% of anticipated production for the remainder of 2009 and 2010, respectively) and balanced production mix (which is now expected to be 60% crude oil) bodes well for the current commodity price environment. The upside potential associated with Plains’ natural gas activities in Haynesville also augurs quite well for the future. Logistically, the company plans to combine proceeds from the transaction (which we estimate at $386 million) with $346 million of proceeds from an equity offering last month, along with cash on hand of $456 million as of the end of the second quarter, in order to fund the payment. Pro forma for the note offering, we estimate total debt of $2.4 billion (increasing leverage a turn to 2.8x), net debt/proved reserves of $8.30/BOE, and pro forma liquidity of $1.2 billion, primarily reflecting undrawn revolver availability.

    The current NYMEX curve suggests that, over the next 24 months, crude oil prices will remain above $70/bbl, and natural gas prices could rebound sharply (albeit off depressed levels, reflecting weak interim demand and near-capacity underground storage). Preliminary results suggest that Haynesville has tremendous potential and that Chesapeake is an able partner. Plains also has promising assets in the Gulf of Mexico that complement its long-lived California reserve base, but the company’s production and reserve performance has been sketchy in the past. This inconsistent performance is reflected in its three-year average reserve replacement cost, which we calculate at over $47/BOE, nearly 50% higher than the estimated industry average of $31/BOE. While past performance may not be indicative of the company’s future performance, we think there is a risk that Plains won’t be able to achieve its goals for production and reserve growth cost-effectively.

    As of the close on Wednesday, Plains’ newly issued 8.625% notes due in 2019 were hovering around the issue price, to yield 8.8%, essentially in line with the 10% notes due in 2016 (issued in May) that have a similar covenant package. Those bonds, which we lowered to underperform in mid August at 108.5 (y.t.w. 8%), have since traded off, presumably in anticipation of the new deal and in sympathy with the decline in natural gas prices, which have fallen 23% in the last 30 days. With the overhang of new issuance removed, we now believe Plains’ bonds are positioned to outperform, but owing to depressed commodity prices and operational uncertainties, we see near-term limited upside.

    Plains Exploration: Sr Notes: 400mn 8.625% 10/15/19; 565mn 10% 3/1/16; 500mn 7% 3/15/17; 600mn 7.5% 6/15/15;400mn 7.65% 6/1/16

  111. 111
    zman Says:

    BOP – I’ve been flying a little close to the wind on that name myself. Looks like its trying to fill the deal gap down … would like to see better volume on this move.

  112. 112
    Dman Says:

    HK – I’m so proud of ya, you actually remembered you’re an energy stock & the world’s running out of energy.

  113. 113
    zman Says:

    Waiting on the WLL call to start, not terrible jazz playing.

    Speaking of gnomes, what’s Kass thinking now with the SP going upward and onward, raising more cash I would guess.

  114. 114
    Dman Says:

    #113 raising more cash by selling short?

  115. 115
    elijahwc Says:

    re 87. Mr E = Evans???

  116. 116
    baylor3217 Says:

    Big run in hk. If oil can hold I may be able to exit a winner on my options. Missed opporunity to help my dca. Dang you work! Can’t day trade for a living yet.

  117. 117
    West Says:

    when does atpg present and do u have link? thx

  118. 118
    elijahwc Says:

    Kass last checked in on 09/08 on RMSilver as follows:

    My view continues to be that we have made a high for the year.

    S&P futures shot up by over 10 points in premarket trading and, despite the near-panting from the bullish cabal, churned most of the day and closed with an advance of slightly less than those levels.
    In terms of price action, as I mentioned previously, the financials, excluding Goldman Sachs (GS), underperformed for the second consecutive trading day.

    In terms of rising sentiment, we are now arguably at the polar opposite of March’s generational bottom as investors have turned far more positive as is implicit in the terrific price action and in the limited fear (and rising complacency) on the part of most investors (and investment surveys).

    As expressed in today’s opening missive, I have again adopted a variant (but bearish) view in opposition to the current constructive price momentum, a view that I feel increasingly comfortable with as I did six short months ago.

    Our due bills are mounting, and the outlook over the balance of the year does not seem, to this observer, nearly as sanguine as many expect.

    My view continues to be that we have made a high for the year.

    I will be traveling and out until Friday, but you will be in the very capable hands of Gary “The Count” Dvorchak.

    Thanks for reading The Edge, and enjoy your week.

  119. 119
    zman Says:

    WLL Presentation:

    From the company – 3 great things at WLL:
    1) 75% oil
    2) Great play in the Bakken, production ramping
    3) CO2 projects in OK and TX both reacting above the indie engineering forecast.

    Sees debt coming down more by end of quarter

    Can double reserves by developing their probable and possible reserves. About half of these are in the Bakken.

    …more in a bit …

  120. 120
    zman Says:

    ATPG – 3:40 EST, don’t have a link, probably is on their site.

  121. 121
    elijahwc Says:

    DPTR Follow up: from briefing

    13:14 DPTR Delta Petroleum announces continuing completion operations on the Gray Well (3.34 +0.32)

    Co announced an update on the completion activity from the Gray 31-23 well in the Columbia River Basin as Delta has experienced abnormally high trading volumes in its common stock in recent days. On September 8, 2009, Delta received approval to drill four exploratory natural gas wells in the Columbia River Basin. These wells are contingent upon the success of the currently completing Gray 31-23 well. As previously announced by Delta, completion operations involving the Gray 31-23 have commenced and are continuing, but no determination has been made regarding the commerciality of the well.

  122. 122
    Dman Says:

    NG swung positive today on the daily MACD. Crude likewise but the swing looks much stronger in NG.

  123. 123
    BirdsofpreyRcool Says:

    WLL — “Lewis&Clark” = like Parshall?

  124. 124
    zman Says:

    WLL Presentation Cont.

    Lewis and Clark area may develop into something as good as their Sanish/Parshal fields in the Bakken. That’s quite a statement, think he has said it before though.

  125. 125
    zman Says:

    WLL Presentation Cont…

    Nothing new in their presentation, in fact presentation is from last week. All good, just nothing new. They have consistently drilled the biggest wells in the play and a lot of them.

  126. 126
    bill Says:

    atpg

    http://phx.corporate-ir.net/phoenix.zhtml?c=123846&p=irol-irhome

  127. 127
    BirdsofpreyRcool Says:

    FWIW — KOG is hoping that their well #9 looks like the WLL Rigel State 11-16H on slide 22…. “the pinchout zone”

  128. 128
    West Says:

    #87 Mr. E is David Einhorn Greenlight Capital.

  129. 129
    BirdsofpreyRcool Says:

    WOWOWOW…

    HY Index at 91 1/8

    amazing rally in junk bonds… given the fact that there is a ton of issuance currently getting done.

  130. 130
    zman Says:

    WLL Presentation Cont…

    Differentials think fall from $9 now to $7 by year end as they added their own line.

    BOP – you gotta like the fluorescence on slide 35.

  131. 131
    BirdsofpreyRcool Says:

    More slide on GEOLOGY!!

  132. 132
    zman Says:

    WLL Presentation Cont.

    Lewis and Clark Prospect – Three Forks
    175K gross acres
    First well at end of 08 tested > 1000 boepd
    Wells will be drilled out of existing verticals for $4 mm a pop. “Casing exit” wells.
    Next 6 Id’d.
    Next well will drill in 4Q.

    They are in the process of putting together another large L&C type acreage position.

  133. 133
    bill Says:

    wll ceo does a nice job

    i wish i owned some

  134. 134
    zman Says:

    WLL Presentation

    Those CO2 projects outperforming early is pretty key, can add to reserves significantly if they keep that up, especially in the Texas CO2 flood.

    Bill – yep, he got through a heck of a lot in a little bit of time.

  135. 135
    bill Says:

    mr e has a good nose for value

  136. 136
    zman Says:

    WLL Street Consensus:

    2009: 8.37
    2010: 12.24

    Given that have their production is moving rapidly higher, that 4.4x next year’s multiple still looks cheap to me. Low debt to cap and falling and just about no risk of a writedown as they are so oily and the gas is hedged. I think it has more legs but will trade with oil as always.

  137. 137
    bill Says:

    atpg up now 11.3 % unfreakin believable

    why did i sell those options

    arrrrggg

  138. 138
    zman Says:

    Crude fought off sell off attempt #3 on the day and is not pushing back towards $72.

  139. 139
    apbd Says:

    Wow, just like the old days (insert an exclamation point or a smiley face here).
    apbd

  140. 140
    zman Says:

    SP 1040.

  141. 141
    BirdsofpreyRcool Says:

    bill — atpg… don’t beat yourself up. One of the best (savviest) all-energy investors i know just sold the remaining 1/2 of his atpg shares here. So, you’re in smart company.

  142. 142
    West Says:

    141- momo runs r funny things they never do what u expect

  143. 143
    elijahwc Says:

    128 Thanks – He’s a very smart cookie. Buy the way, he’s publicly traded as GLRE.

  144. 144
    BirdsofpreyRcool Says:

    bill — back away from the screen… put down the mouse… take 3 deep breaths.

    And don’t look at ATPG.

  145. 145
    BirdsofpreyRcool Says:

    Hey Koggers! We have achieved a 2-handle.

  146. 146
    zman Says:

    … adding to 141

    and not that I would ever give advice on anything to anyone but …

    “I NEVER beat myself up over profits taken. For that matter, I strive to never to beat myself up over losses. Trade closed? Then its out of my head and off my marketwatch. Sure, I watch it, but only with an eye for the future.”

    That goes right along with the rule “the only one who cares what you paid for a stock or option is you and you shouldn’t.” What you paid for something has no bearing on the vehicle’s value, the market certainly could care less and therefore it should not enter into the sell decision. That trap of needing to “get back to even” is a dangerous one. ”

    ~ excerpts from still to trite and therefore as of yet unpublished trading rules of Zman’s Energy Brain.

  147. 147
    zman Says:

    NG up 10+%

  148. 148
    West Says:

    Sounds like there is a book in there Z. ….Looks like a lot of the sideline money is having to play catch up , especially in energy.

  149. 149
    apbd Says:

    KOG @ $ 2.00. Wow. Now what?
    apbd

  150. 150
    bill Says:

    bop lol, thats exactly what im going to do

  151. 151
    BirdsofpreyRcool Says:

    apbd — according to Jerome… we are good to go to $2.25 before we run out of steam.

  152. 152
    apbd Says:

    BOP TY
    apbd

  153. 153
    zman Says:

    West – Only if printed on soft paper for the times it’s wrong.

    NG at $3.20. Take that Raymond James and all you gas = $0 types.

    HK at a buck over the deal price.

  154. 154
    bill Says:

    vq is up at barclays at 225

    http://investor.venocoinc.com/phoenix.zhtml?c=193733&p=irol-presentations

    oily calif

  155. 155
    bill Says:

    320 wow

    hk up from the dead wow

  156. 156
    BirdsofpreyRcool Says:

    I think the KOG CEO believes that KOG should be trading with a 2-handle here. I don’t think HE thinks it’s over-valued and will therefore rush to do a 2ndary here. Of course he might! But, I think it’s pretty silly to do, before knowing the production results from at least wells 7&8. I mean, they know they hit hydrocarbons in well 7 already, just don’t know how it will produce. But with 1/3rd of KOG’s acreage yet to be proved up (with wells 7, 8, and 9), I hope Lynn sits on his hands until we get some results south of the Little Missouri.

    If the stock continues to run up, however, I could hardly blame him if he took mo-mo money.

  157. 157
    Dman Says:

    NG up 30% in 5 days. Room for more unless they start mentioning it on TV.

  158. 158
    Alhambra Says:

    Congrats Nicky on another amazingly good call on NG

  159. 159
    zman Says:

    Epperson mentioned it earlier. Said it was because the storage number came in light. Useless.

  160. 160
    zman Says:

    EOG awake with the group, back to the upper middle of its range. Their 2Q numbers were excellent, sold off for the wrong reasons, that too may take out the $80 level highs in the next couple of days.

  161. 161
    baylor3217 Says:

    Closed 1/3 of my kog position up 52% and trying to be happy a about the profit booked. Like others on here I try not to second guess a profit but it’s human nature

  162. 162
    BirdsofpreyRcool Says:

    baylor — i’ll bet you get a chance to reload those shares someday soon. Nice trading!

  163. 163
    bill Says:

    here are the vq slides

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzUwMTMyfENoaWxkSUQ9MzM5NTI4fFR5cGU9MQ==&t=1

  164. 164
    West Says:

    EOG is starting to 3forks wells nw of the Sanish. I need to do a report. Also KOG’s wells are really good and this is definitely one of the better areas of the play south of the Sanish. My money still says that Stetson’s well is wet and that CLR’s well east of KOG’s #9 is wet. THE MAGIC LINE KEEP IT IN MIND.

  165. 165
    BirdsofpreyRcool Says:

    west — you mean The Pink Line of Death? 😉

  166. 166
    zman Says:

    Crude closed up about $0.60 just under $72

    NG launched into the close, up 15+% above $3.25.

    Gassy growth stocks not reacting nearly as well as gassy highly shorted stocks. Makes me cautious.

  167. 167
    West Says:

    yes I do

  168. 168
    BirdsofpreyRcool Says:

    Geologists HATE to use pink. So, when it shows up on a map, you know it means something really really bad.

  169. 169
    zman Says:

    KOG priced the last deal at $0.75, back in May. If it were a $75 stock, now at $204, I wonder if you’d wait on 2 wells to price a deal. Given the run you’ve had and the run oil has had and the run the market has had and the pile of distillates on hand globally as we head into winter … well, it’s just food for thought. I’m holding for now but they are close to my last asset value read ($2.10) and I may come out of half if they take another leg up.

  170. 170
    jiveyjr Says:

    I’m still pecking at WRES…that’s seems like money in the ground waiting to be marked to market

  171. 171
    elijahwc Says:

    MHR Sighting / G Evans back to old ways

    Magnum Hunter Resources Corporation Announces Acquisition of Sharon Energy Ltd.’s Sharon Resources, Inc.
    1:27pm EDT
    Magnum Hunter Resources Corporation announced the execution of a definitive agreement to acquire 100% of the capital stock of Sharon Resources, Inc., a wholly owned subsidiary of Calgary based Sharon Energy Ltd. The total consideration of $2.35 Million under the agreement will be paid in 2,294,474 shares of restricted common stock of Magnum Hunter Resources Corporation. Closing is anticipated to occur on or about September 30, 2009.

  172. 172
    zman Says:

    Jivey – I could not have summed that up better myself.

  173. 173
    jiveyjr Says:

    it seems to be playing out just the way you had envisioned…..

  174. 174
    zman Says:

    Jivey…fast down, slow up. Not good for options, at least the way I do options, but good for me for the common. I probably ought to be selling calls against my position there.

  175. 175
    zman Says:

    NG at 3.28 up 16% on the day, up 3 cents in the aftermarket. Volume over 140K on the front month. That is big. This contract does not expire until September 28th.

    Note that UNG too is up. 9.4%. Big delta.

  176. 176
    Denise Says:

    This happy Kogger thought this is something to put on ones radar-from Ron Insana

    “After writing about the growing threat emanating from Iran for weeks, it is shocking to me that the markets remain unusually complacent about the imminent deadline that Tehran faces for halting its nuclear enrichment program.
    U.S. Says Iran Could Expedite Nuclear Bomb
    By David E. Sanger
    This article was reported by William J. Broad, Mark Mazzetti and David E. Sanger and written by Mr. Sanger.

    WASHINGTON — American intelligence agencies have concluded in recent months that Iran has created enough nuclear fuel to make a rapid, if risky, sprint for a nuclear weapon. But new intelligence reports delivered to the White House say that the country has deliberately stopped short of the critical last steps to make a bomb.
    The New York Times put out this report late last night, but upon reading the entirety of the article, it looks like press action has been planted by various interests from Washington to Tel Aviv to raise the pressure on Iran, not actually recognize or confront the problem as described.

    A PR offensive will not deter Iranian President Mahmoud Ahmadinejad from continuing work on a bomb, which is why some intelligence experts believe only a real offensive will do the trick.

    Many say “P-Shah!” But I would hate to say, “Ayatollah so!” if this situation deteriorates. My bet is that tensions will rise as we approach the end of September, when the U.S. and U.N. have imposed a deadline for Iran to come to the negotiating table and give up its plans to weaponize nuclear material and work with the West to use nuclear fuel for peaceful, civilian purposes only. Not in this lifetime.

    Iran does not appear to take the West seriously, and while it has slowed the pace of enrichment, the U.S. is reading this as a sign of internal political struggles, while Israel thinks the race for the bomb is on.

    I’d bet on Israel’s intelligence any day, despite their usually hawkish view of any and all geopolitical risks, most of which are deemed existential threats … and not without good reason. Their field work is superior to ours, and my own sources see a conflict, or at least a tension-inducing stalemate, as inevitable.

    I told subscribers of my “Market Movers” newsletter this morning that I purchased 1,000 shares of the Energy Select Sector SPDR (XLE) , which tracks the energy sector index. I may have more moves to come, and subscribers will be alerted if I decide to take more action on oil.

  177. 177
    zman Says:

    Denise – add to that the PRK are now upgrading uranium and plutonium and I think we have some geo-political premium inflation coming back to work.

  178. 178
    zman Says:

    Dollar re-weakening late, oil is marking that trade in the late session. The oily names are marking the move in oil. WLL approaching 55 now.

    If I were to kick myself, it would be over PXD which seems to be moving on up without me.

  179. 179
    Denise Says:

    If anyone on the site subscribes to Stratfor it would be interesting to hear what they are saying about the situation?

  180. 180
    zman Says:

    PXD call in 10 minutes.

  181. 181
    zman Says:

    PXD’s new presentation shows next 5 EFS wells to be in Live Oak and Bee counties to the southwest of their mechanically impaired initial well in Dewitt county.

  182. 182
    bill Says:

    atpg call at 340

  183. 183
    West Says:

    ATPG and KOG battling it out at the top of my watch list.

  184. 184
    West Says:

    bill, have u heard anything about them having a deal with GE for infrastructure as soon as new production platform is in position?

  185. 185
    bill Says:

    atpg up 16 % weeeeeeeeeeeeee

  186. 186
    bill Says:

    rumors of it–

    ge has a 150 m stake in another platform.. i heard they would invest when its hooked up, which is another 3 months

  187. 187
    zman Says:

    PXD call starting now.

  188. 188
    bill Says:

    working on infrastrcuture sales

    gomez pipeline coming soon

    the ceo sounds confident..

    Titan platform getting them attention

    half assets on shelf

  189. 189
    Popeye Says:

    Sorry if this has already been mentioned.

    Capital One Southcoast Upgrades Petrohawk Energy (PK) to Strong Buy

  190. 190
    zman Says:

    BEXP – took the day off.

  191. 191
    elijahwc Says:

    D – go here and sign up for John Mauldin’s Weekly ELetter. He normaly republishes a lot of the Stratfor material under one of his mailings called Outside the Box.

    http://www.frontlinethoughts.com/gateway.asp

  192. 192
    Popeye Says:

    Well is it PK or HK?

  193. 193
    zman Says:

    Saw them up HK to Buy last night.

  194. 194
    BirdsofpreyRcool Says:

    ummmmm….. wow.

  195. 195
    zman Says:

    PXD Presentation

    0 rigs a couple of months ago going to 15 to 17 next year.

    EFS mentioned as drilling 5 gas/condensate wells.

    Highlighting their cash costs being lower than the oil patch group, just above the gassy names.

    Good solid story, should be long, not, and not going to chase today.

  196. 196
    zman Says:

    Beerthirty.

  197. 197
    West Says:

    The “WE” are very happy once again. THX everybody for your input.

  198. 198
    elijahwc Says:

    HK IO

    Single contract below bid trade @ .45

    Someone just discovered why you never hit the market button.

  199. 199
    zman Says:

    PXD thinks EFS is prospective on half of their 310K, two areas, reef thins in between.

    $1500 to $2000 per acre, just ramped in last few weeks.

    Next EFS well will have results on the earnings call in early November (?).

  200. 200
    zman Says:

    GDP call at 3:25 EST.

  201. 201
    Dman Says:

    Denise, re Stratfor: before you worry about their views, need to find out if their track record on Iran is any good. A lot of credible analysts thought GBW was going to attack Iran. Turned out he decided 2 wars was enough to be going on with. Why would Obama take a different view? The whole point of his crazy Af-Pak escalation is to insulate himself against accusations of being “weak” when it comes to attacking impoverished countries. Not much point in that plan if he’s going to attack Iran anyway, or greenlight the Israelis, which he must know will drag him into the resulting conflict.

    About a week ago Z mentioned that an oil trader thought the action in gold & bonds was due to moves on the Iran front. My question to myself then was, “OK so why was oil ignoring it?”. Oil is now going up, but not like it moves when the Iran issue heats up. The September deadline means there will be rhetoric & sabre-rattling, which could be worth a few $ per barrel. But unless oil starts moving in $5 increments, I’m inclined to think the market just isn’t buying the Iran story.

  202. 202
    Dman Says:

    Continuing #201:

    Mind you, even if the whole thing is bogus, could be good for an oil trade into late Sept.

    (This is where a smiley would normally have been inserted)

  203. 203
    zman Says:

    D – I think the market discount Ahmad after the “election”. I mean, he stopped going to nightclubs, avoided the spotlight, etc. Now that “he’s the only guy” again, he’ll be able to add a bit of nutbag premium back to crude. But you are right, it is limited unless something actually happens. I’d bet on Israel doing a flyover before I see the President or the Security Council sitting down to come up with more stern language that Iran will only make fun of.

  204. 204
    zman Says:

    This cloud pile in the western Gulf may have helped gas late today.

    http://www.ssd.noaa.gov/goes/east/watl/loop-vis.html

  205. 205
    RMD Says:

    OPCO reviewed APA’s views after meeting mgt. My selected bullet points are:
    n Commodity Price Outlook. Apache is bullish on crude oil prices, but bearish
    on natural gas. Farris doesn’t envision a meaningful recovery in gas prices
    soon.
    n CAPEX. APA is setting its 2010 CAPEX budget based on its grim outlook for
    natural gas. Farris said that APA’s 2010 CAPEX should be higher than 2009’s.
    n Services Costs. Farris believes that as long as we are in a $3 natural gas
    environment, services costs will continue to come down, regardless of what the
    services companies say.
    n American Natural Gas Alliance (ANGA). The natural gas consortium is
    ramping up its efforts to combat the coal lobby. Intensive lobbying efforts are
    ongoing, and an advertising campaign will be rolled out shortly.
    n M&A. Farris believes natural gas stocks reflect all of their upside potential. APA
    is not interested in an acquisition at these prices.
    n APA is looking to lock in gas prices now because they don’t believe they will go up any time soon.
    n Gulf of Mexico plays have a short reserve life, but can make money in any price environment and
    have a higher rate of return than a rapidly declining shale play.
    n As long as gas is $3/million BTUs, services costs will have to come down. No matter what the
    services companies or other E&Ps say, there will be cost deterioration. People and salaries can be
    cut if needed, which is what has happened in past cycles in the 1970’s, 1980’s and 1990’s.
    n According to Farris, if natural gas producers don’t change the rules in Washington, they’re in a lot of
    trouble.
    n The coal lobby is a powerful opponent of ANGA. They are senior, well-funded and politically
    connected.
    n Twenty-eight states (including IL, NY, PA, OH and IN) have significant ties to coal industry.
    n The grandfathering of credits to the coal industry is a big hurdle for ANGA.
    n The coal lobby will point to natural gas price volatility, in addition to claiming they are burning cleaner
    coal these days.
    n APA is optimistic that some sort of natural gas incentive or carbon tax will appear in a Senate bill
    sometime in the future.
    Gas production:
    n The best shale plays will be the winners.
    n Any production declines will flatten out because only the initial drop-off will disappear with reduced
    drilling. Producers are doing everything they can to fight declines with new technology.
    n Granite Wash plays will be big over the next few years because of their high liquids content, which
    have higher returns. Sales from just liquids would cover costs, with gas sales being all profit. This is
    the case with gas production in Qatar.
    Gas demand:
    n CNG vehicles could eat up as much as 2 bcf /d of demand.
    n Converting 25% of coal plants to natural gas would increase annual gas demand by 12 tcfe per year.
    Horn River:
    n APA believes it has the best economics of all North American natural gas plays.
    n Well’s initial production was 16-18 mmcfed and is currently about 10 mmcfed.
    n Remote location and lack of structure are the biggest challenges there, in addition to a 10% CO
    2
    content.

  206. 206
    zman Says:

    ROSE on the tape with an operations update. 1 EFS well with results, another completed soon, and a Montana Bakken drilled, about to be cored.

  207. 207
    PackMan Says:

    Wow, what a day; and I made almost no money in this space (out of, or too hedged, in my positions).

    Lot’s of 10% + moves today , and this week in the market in general.

    Re: Doug Kass 118, my recollection in March that he was off by a few days in his bottom call; let’s see how his top call plays out.

    Me: I think today was GS and JPM saying thanks Timmy for the free money; we’ll squeeze ’em higher today for ya since we can’t bribe you with a no show job (like a Snow, Rahmbo, Quayle, Summers, Greenspan, etc.) just yet. But we will.

  208. 208
    PackMan Says:

    176 — Iran:

    I wouldn’t put too much faith in Obama taking an agressive position w/ Iran.

    Read here regarding upcoming UN fest where O wants to shine for the we hate America crowd.

    http://hopeychange.blogspot.com/2009/09/obamas-upcoming-un-coming-out-party.html

  209. 209
    PackMan Says:

    Re: Stratfor; not a big fan in George Friedman’s analysis of things … he never seems to get it right.

  210. 210
    PackMan Says:

    For good middle east info, including on the Iran threat, try

    http://www.jpost.com

    http://www.debka.com

    both Israeli focused; the latter supposedly tied into the intelligence community and a bit alarmist.

  211. 211
    PackMan Says:

    201 Agreed. Basically b/c Obama wants to hug Ahmedinijad, no matter what Iran does or what he does to provoke strong measures (sanctions or military).

    O wants to be loved by the UN; he is not gonna take any meaningful action. He may claim to be “concerned”, but that’s about it.

  212. 212
    PackMan Says:

    203 … exactly Z, what I meant, better said.

  213. 213
    West Says:

    Einhorn’s Greenlight Partners had 1.75 million shares of ATPG at the end of the 2nd quarter. I’m making a bet that the Texas Hold’em player is squeezing the shorts who at last count had 7.1 million shares shorted ( about 20% of the float) with only 500k shares available to be shorted. Of course a lot of good news and a sector rally will make you very uncomfortable. There was steady buying at the ask all day long. One of the things that I like about this stock is that there is a lot of liquidity as far handling trades of all sizes. If some of you have tried to trade WLL stock and options you know what I mean, the MM are not your friend and you can move the stock a lot just by trying to take a position. Also WLL has 100% margin requirement…..I bought ATPG last Thursday and sold 2/3rds of my position today at 17.45. Probably just a little early but this is not normal price action. As a few of you said today it is always good to make a profit and as my mother says you really haven’t made any money unless you sold it……..A lot of the contributors here have been here a long time and a lot of new names to me anyway. This is without a doubt the best source for hard information (and a little bs) that is actionable that I have every had the privilege to be associated with on the net. Special thanks to Z and BOP and everybody else for your words of wisdom and insight.

  214. 214
    PackMan Says:

    For example, re: Iran.

    Today:

    http://www.jpost.com/servlet/Satellite?cid=1251804543278&pagename=JPost%2FJPArticle%2FShowFull

  215. 215
    PackMan Says:

    I am on an Iran roll now:

    http://online.wsj.com/article/SB10001424052970203440104574402583170409334.html

    http://nypost.com/p/news/opinion/opedcolumnists/why_iran_might_talk_with_bam_wquLcVNNBNKND6poL7JSFN

    many considered views, no clear policy ….

  216. 216
    BirdsofpreyRcool Says:

    west — your words are too kind. Frankly, I think we all make a pretty good team. Your hard data well contributions have helped me personally a lot. Thank you!

  217. 217
    zman Says:

    Not that you can really trust any government’s data but China data is rolling across the tape now. Very strong on industrial output, even stronger on lending which had been the big concern, much stronger lending that expected/previously telegraphed by Beijing.

  218. 218
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