Thursday – Gas Preview and Oil Review

190 thoughts on “Thursday – Gas Preview and Oil Review”

1. Eli – thanks for that note. Agreed. You should post your thoughts on the “lack of hedging” here.

2. APC – a little follow up. Ghana wants to take one of the junior partners (who wants to sell) out of Jubilee. This is APC’s big find 700 miles to the south east of yesterday’s Venus. Price not yet disclosed.

   CL down 60 cents
   NG down a dime

3. Jobless claims came in at 545K vs 563K exp

   Housing starts were in line at 598K. Ya gotta wonder why rising starts are needed at this juncture. I mean, come on, banks are paying people to squat in foreclosed homes and there is another wave of foreclosures coming. So adding to supply is a good idea? Seems deflationary, as in the value of my property being deflated.

4. Good morning.

   Credit Market taking a bit of a rest and giving back some of it’s breathtaking gains over the last week or so. Speculation is that much of the move in the High Yield Index was “nothing but short covering.” And “they seem to be done now.” Frankly, HY is too tight, compared to other indices and stocks.

   But, here’s the thing… people always talk about “short covering” like it’s something different than “real buying.” But it IS real buying… by the ones who were most convicted that the mrkt was headed lower. So, should “short covering” be dismissed as “not real buyers”? I would argue the opposite. That the ones most sensitive to a change in mrkt direction are changing their minds.

   Anyway, “buying” is “buying,” in my book. Whether it’s short covering, or longs going long. That said, the positive move in the HY index has been eye-popping… just as it was eye-popping in the other direction, just over a yr ago.

   IG 105 1/2 (this traded as tight as 98 the other day)

   HY 94 1/4 (this traded as high as 96)

5. z – in your chart on gom shelf players, what does TEV stand for

6. From our cross-asset class strategist this morning…

   http://www.capmarkets.com/ViewFile.asp?ID1=123796&ID2=351882589&ssid=1&directory=6571&bm=0&filename=09.17.09_Implications_of_the_V_Shaped_Credit_Recovery.pdf

   He went out with a “buy” on C yesterday. He lays out his arguments for that recommendation here.

7. Just looked at the morning comment from TPH on HAL. They really like it.

   Looking at their comments, they are higher than the Street on EPS for next year, they admit that margins in N. America will be under pressure, that margins in the international arena will be under pressure, and that HAL has again reiterated that in fact, its past down margin guidance is still just that, down. They see HAL grabbing market share during this downturn but admit that cost savings may not show up more in the 3Q numbers, maybe in 4q. In NAM specifically, they see continued pricing pressure, especially in the markets where activity has been strong like the Haynesville and Marcellus.

   But again, they like it.

8. Enterprise value, basically debt + mkt cap

9. Just IMing HeadTrader that the mrkt feels like it could go in either direction today. He came back with TechTrader’s odds… 50/50.

   So, who knows.

   HT adds his color — “I would be biased to the downside after strength the last few days, but would be NIMBLE [his emphasis] ’cause I still like to buy dips for more than one day [swing trading]”

10. Kyle – when I compare companies with similar balance sheet structures, P/E or P/CF is fine. Because they are financing their future in similar manners.

    But when you are presented with a set of companies with wildly different capital structures, as is the case especially in the offshore, where some have a little debt and some have a lot, a better comparison, to get them into the realm of apples to apples is to take Mkt Cap + Debt less Working Capital / EBITDA (earnings before interest, taxes, depr and amort). That basically gets them on the same page.

    Note in the table how CPE looks cheap on a P/CF basis. Their mkt cap has been punished for their enormous debt load. P/CF doesn’t show you that. But take a look at TEV/EBITDA and suddenly, with the debt added into the picture of how the world views the asset, you can see the name looks expensive.

11. BOP tells me the Street fell to 79 Bcf from 80 listed in the post, so they are inching closer to my number. With the holiday in there I’d give the number 5 to 10 Bcf from last week given that the weather was pretty similar, gets tough to call this time of year anyway, I went with five on my math and a little tweaking for curtailments and flow orders turning gas back. I continue to think the injections from here on out will be on the smaller side of historic averages.

12. KOG – easy there stock, relax, base out. Too far too fast can make new investors hit the exits quickly.

    E&P group opened red but looks like it wants to turn green. Another day like yesterday and they can have all of my October calls as well.

    APC moving on up.

13. VTZ – dead on calls on the dollar and gold. Way to go.

14. z — after watching your storage predictions for over a year, I have to say that I find you the most accurate… not to put any PRESSURE on you, or anything. But, you seem to have a good feel for how the numbers are calculated.

15. Re 14 – Now watch me brick this one big time!

16. yeah… i know. I just put the kiss of death on ya. But I thought that new people should know that — at least historically — your calculations are well worth noting.

17. Thanks Bop. Back at ya on all things credit. Smart work there.

18. And KOG of course.

19. z — thx. I’m gonna have to come up with another one. Thing is, I can only follow so many, as I do more stuff than just energy, so I try to pick my points. But need to surf for a few more ideas in E&P land. That’s where this site becomes very helpful.

20. Sloppy, floppy trading day. Might stay this way through options expiry tomorrow.

21. APC- significant discovery of first oil in “Liberia”basin makes the next basin to the north west off Guinea curious. A microcap; HDY holds 20,000,000 acre concession there. This is super high risk equity idea.

22. Natixis cuts ATPG from Buy to Hold.

23. XTO playing catch up to the big cap E&Ps today.

24. Adding to 21.

    I read up on them last night after Reef’s prompting. Essentially they are a company with some good resumes and a concession off Guinea which the geologist CEO (former of the Kuwait oil company) thinks is highly prospective. They have nothing in terms of a balance sheet at this time, not debt, market cap is under $100mm, but no production that I saw. The CEO is new and I read his transcript when he addressed shareholders about taking the job in August.

    Essentially they are working up the seismic on the concession, a very large patch of water with both deepwater and shallow water targets in an effort to get to a point where they can decide where to drill and whether or not to farmout part of the project to a partner. The CEO said they have had partnership interest and are exploring both majority parnterhsips (where they would be highly carried and not operate), minority partnerships (which would be more of a financial transaction), or lastly, doing a market deal to pay for further seismic and drilling. They have to drill a well by the end of 2011 so you won’t see real news here outside of a partnership before that time most likely.

    What will move the stock is activity in the vicinity by the likes of APC, Tullow, Woodside etc., grabs by the governments as well like you are seeing with Jubilee to the south east.

    Anyway, interesting, nothing in terms of an asset you can say something about reserves or production about. But interesting and it is the kind of thing that in this market can pop. I am probably not going to take a piece but I have a little more reading to do before I decide for sure and if I do take some it will be small.

25. How about a contest, guess the spot price of ng for each month and a grand price for guessing the forward strip for 2010 any day prior to end of this year?

26. reef — thanks for passing that along. You know the mngmt team there at HDY? Headed up by an old Amoco International guy, it looks like.

27. Philly Fed 14.1.
    9.0 was expected.

28. BOP

    CEO is Ray Leonard, taking most of his comp in stock. August 11 webcast was pretty informative.

    http://www.hypd.com/

    I need to know more about their outstanding warrants and a couple of things to get comfy but it can run in this kind of market.

29. HDY- have watched and chuckled for four years until: 1) Now have real O&G managaement 2)APC in Liberia Basin.
    I am going to nibble some equity based on close-ology and gut

30. Irony Watch:

    Southcoast cuts SGY to hold, favors WTI.

31. BOP – by the way, agree re your short covering is buying comment. The only delta is that sometimes there is a lack of follow through by natural buyers in the wake of a short cover. The trading vehicle stalls and the shorts re short.

32. Good morning.

    Running for the door in equities:

    http://online.wsj.com/mdc/public/page/2_3022-mflppg-moneyflow.

    SPY Citi and Q’s leading selling on strength with huge money flows

33. z — sure, ok. Agreed. And shorts are tenacious creatures. They have to be. Their “upside” isn’t as much as their “downside.” And once they get a bone, they love to chew on it.

34. If we get an 85+ Bcf number, which I doubt, but if we get that with the report in 15 minutes, I will take some puts in NG stocks. Probably SGY, maybe even a little of one of (SWN,UPL,RRC, or HK for a trade) and definitely HAL which is NG levered.

35. Adding to 34

    I will also punt my KWK $15 Octobers on that kind of a bad number.

36. http://www.epmag.com/WebOnly2009/item45024.php

    Tough on stripper wells. Long KEG for P&A’s if this happens.

37. Rick Santelli digs a bit deeper into Philly Fed and it isn’t pretty – New business orders down and hirings down.

38. Wyo – yeah but who’s going to pay for the P&A’s?

39. President scrapping the old European missile defense plan. I wonder what the U.S. gets from Putin for that.

40. GT – will have to think about that one.

41. maybe he’ll sign a bare chested photo for the white house wall

42. Gary comment = coffee out nose.

43. Natural gas inventory report:

    66 Bcf – that’s pretty bullish

44. 66

45. Gas from down 8 to up 8 cents in a second.

46. gas may cross $4

47. full is full and at some point the weekly number will be 0

    so is the 66 due to lower production or is it due to there is no where to put it

48. Reef – could indeed. Love the CNBC interview with the trader who when asked that question said, “I’m struggling with a $4 handle with so much in the tank.” Pretty naive view of what prices gas.

49. gst ,next little guy on the move

50. Was this a cooler week?

    BTW, some will pay out of their OpEx others will probably BK and the State will have to flip the bill. Refer to the article about the old Forest properties I posted (bottom of the volcano).

51. Bill

    Not sure I understand your first statement. 3.7 Tcf would be perceived differently than 3.85 or 4.0, all are considered full.

    The lower number is almost certain a combination of voluntary and involuntary curtailments, probably not demand given that it was a holiday week, however, industrial consumers have rarely had prices this good. And chemical shipments, which are a big slice of that piece of demand are rising.

52. No, it was in line with the last one.

53. 66 in the face of a short labor day week.
    Next week may be the key on industrial pickup. We know coal use is down 15% Y over Y.

54. Can anyone remind me of the website with the horizontal drilling animation? Drillers HS daughter has a presentation and was looking for a visual aid.

    I believe it was a Bakken operators site.

55. Reef – exactly my thinking as well. Electricity ytd running between 4 and 5% down, coal much worse so gas is grabbing share on the heat rate conversion. (BTU/KwH) just more economic for utilities for gas right now.

56. http://www.loga.la/haynesville-shale.html

57. Note gas failed to sustain rally. It has had a strong run. If it goes ahead and backs off some more in what appears to be a frenzy, I will carry out #34,35

58. i am thinking full is an absolute number and as one approaches it a combination of voluntary and involuntary curtailments happen and the “lower” weekly number is greeted with great glee and interperted as production is under control or demand is rising.

    I think we have made strides, but i still see companies producing more hk,swn,chk name them..they all are higher

59. 5 day week could have been a 60 or 62

60. #39 – Not long ago, Russia agreed to allow the US to supply Af-Pak via its territory. Could be this is part of that deal. Which is icing on the cake for Mr Putin, since he has plenty of other motives to assist the US in getting further ensnared in Af-Pak, just as the Russians did in the 1980’s.

61. Bill – I think what you can’t see is the big number of names that aren’t going to grow this year. HK and SWN for sure but even Aubrey is looking flattish as his big new wells offset declines elsewhere. Most names who are staying within cash flow aren’t going to be able to hold flat as cash flow is depressed by these prices, especially next year as many are lightly hedged. On the private company side, I understand things are shut down so that’s another big chunk of production that will be slipping in 2010.

62. RE 13 – I feel like I’ve had a good feel for the market interactions recently.

    In my opinion, there is no way that gold does not at least test 1033. I think it’s likely that gold tries to close above 1014 one more day and build a solid base above 1000 before making a run at it.

    Seeing as the dollar has not found technical support anywhere in the 76 range it’s likely that psycological resistance at 76 is the last chance.

    To me, if 76 breaks on the USD it’s assured that gold makes new highs.

    To those that say gold is overbought, look at a weekly chart and it has a long way to go.

63. 72 for the USD and 1150-1200 for gold after a break both ways would make sense to me.

64. VTZ – not sure I understand your comments about the USD not finding support in the 76 area. Its been holding in that area all week? I have it currently at 76.40. That said it looks like it needs another spike lower.

65. Gary,

    You are a gentleman and a scholar. I will honor you with a beer during tonight’s game. Thank you.

66. KEG – might be the play of the century. What’s stripper well production in the U.S. about a quarter of oil production. Without the marginal well tax status many those are toast. Unless prices are much higher. Good idea Wyo.

    I actually think the President is a friend of those wanting higher natural gas prices. Not because he’s in favor of natural gas demand increasing via transportation but via restrictions on drilling on both a geographic and a clean water act basis.

67. Z RE#1 Sorry this took so long.

    This morning Helene Meisler an old school Techie that I follow offered up this observation, “I suppose if I had to sum it up, we’ve seen tons of call-buying on stocks (that’s the low equity put/call ratio), but also we’ve seen tons of put-buying on the index (that’s the relatively high index put/call ratio). That would mean folks are buying stocks but hedging with an index put.

    The change is that Wednesday there was no more hedging.”

    To which I penned in an client email this morning:

    All

    An interesting observation about pros tossing in the towel is contained in
    the attachment above.

    Please note “The change is that Wednesday there was no more hedging.”.

    We are getting close.

    Here to fore, I have been watching the “quality of leadership” of the
    financials and the “quality of weakness” in the dollar as my tells.

    The financials gave up two weeks ago whereas the dollar is still doing just
    fine.

    Now, I’m attempting to discern whether everyone is on the same side of the
    ship and “no more hedging” in an overbought market will sure get you there.

    The last marker we need to see is a rush to the market by issuers in order
    to accommodate the new found appetite for financial assets and thus over
    supply demand.

    Lots of deals coming.

    Maybe its time for a pause.

68. no problemo and thanks!

69. Bidding some October HAL puts, small.

    Re 65 – agreed. I’d bet they swap similar photos. I wonder if Putin will take O’s off the wall when Hugo visits.

70. Re 67 – I’ve known Eli since the early 90s and when he talks, I listen.

71. OIH strangely negative on the day. Lots of profit made there in a very short amount of time.

72. ZTRADE:

    HAL – Added (5) October $27.50 PUTS (HZLVR) for $1.20 with the stock at $28.

73. There are a lot of mom and pops who are attractive to operators for the obvious. Offshore, I think Tetra (TTI) has a good product;

    http://screencast.com/t/Q1HJqlxM

    Full presentation here:

    http://tetratec.com/Investor_Relations/Investor_Presentations/Investor_Presentations.aqf

74. Nicky – It’s been sliding. It’s not at all like the 78.30 level that was defended with a passion on multiple occasions.

75. VLO – any news there? big volume today

76. 1520 – I think a group upgrade, was just noticing it up 8+%, TSO and SUN moving too.

77. 1520 – Could also just be that the group hasn’t run and the weak margins have been factored into the prices. Soleil cut TSO this morning to sell which seems very out of touch at this juncture.

78. ZTRADE:

    TSO – Added (10) October $16 calls for $0.80 with the stock at $15.70. See reasoning in the Tuesday post. Group started to move up today after being a laggard. Downgrades not affecting the stock. I am likely to double this if it backs off as I was planning to add TSO soon anyway.

79. z – look at the sept option chain for vlo – big action on the $20 calls for tomorrow too. perhaps someone engineering an in the money finish.

80. 1520 – still don’t see fresh news. There have been consolidation rumors swirling but when you listen to VLO, TSO, SUN, FTO they all say no one is looking at buying anything. Heating oil and gasoline popping a bit compared to oil today but not enough to warrant this move.

81. 1520 – I have a feeling hot money has discovered that the last frontier is refining. Group hasn’t moved, estimates bashed, economy set to recover (don’t throw rocks at me but it will recover some day ya know) etc. Expectations are set very low. So they dive in.

82. i owned VLO the last time johnny hotmoney found refining. a wild ride.

83. Another consideration on the TSO. 20% short.

    http://shortsqueeze.com/?symbol=tso&submit=Short+Quote%99

84. KOG seeing a little pt here.

85. #83 – good point – refining has been a good short for quite a while. Like nat gas eventually the pendulum does swing.

86. VTZ but the count is also quite clear and it shows us now in v. It will end.

87. APC – UBS took target from $68 to $75 on yesterday’s news, seeing some profit taking now, moving more with the market than anything else.

    Nicky – where’s your next line in the sand for oil resistance.

88. I agree it will end. Keep in mind I’m not trading the USD, I’m trading gold. I only use the USD as an indicator. If it trades sideways-ish for a bit gold can still make new highs.

89. Opti Canada surges in heavy volume for 2nd day
    15 minutes ago – Reuters
    CALGARY, Alberta (Reuters) – Opti Canada Inc shares surged for a second day on Thursday as speculation swirled over the reason for the gains in the company known for its minority stake in Nexen Inc’s Long Lake oil sands project.

    Opti was up 27 Canadian cents, or 12 percent, at C$2.52 on the Toronto Stock Exchange late in the morning on volume of nearly 9 million shares.

    Nexen shares were up 8 Canadian cents at C$25.68

    The rise brought Opti’s two-day gain to 50 percent. The company has not reported any developments, and officials have not been available for comment.

    Some analysts have said investors may believe Opti could be the next takeover target for a Chinese oil company after PetroChina’s C$1.9 billion ($1.8 billion) deal in August to buy a 60 percent stake in two planned oil sands projects from privately held Athabasca Oil Sands Corp.

90. Talk about falling out of bed, NFX reaction to insiders selling?

91. A – After the run it has had it is not surprising to see it come in some. Maybe the insider selling adds to the fall a bit but that news was out days ago and the selling was pretty small. Maybe they fear more or maybe this is just profit taking. The name remains on the cheaper side of the group and they have a number of long and short term catalysts that should make it more of a goto name going forward. I have my tiny October call position and if we get much more of a pull back, I’ll look to double that next week.

92. ng storage is 3,458 bcf

    last year peak was 3,488 bcf

    so i dont know what the systems capacity is but i think we will find out

    the west and east are already at higher levels

    assuming they can squeeze 3.7 in thats 250 bcf fo the next 8 weeks or an avg of 31 a week

93. Bill – The EIA’s last look at peak storage is 3,889 Bcf.

    Non-coincident peak storage is I think around 4,100 Bcf.

94. That EIA look at storage capacity was from August, 2009.

    http://www.eia.doe.gov/pub/oil_gas/natural_gas/feature_articles/2009/ngpeakstorage/ngpeakstorage.pdf

95. NG down 16 cents now; missed an entry on RRC puts. Nothing against RRC but it is the most expensive in the extremely gassy group on a forward cash flow basis.

96. ZTRADE:

    Added (5) APC October $70 calls (AZWJN) for $1.10 with the stock at 64.50, off a little with the group and on profit taking after yesterday’s move.

    I continue to hold the $65 October calls here.

97. Z – I think it likely that oil moves higher with the broader market which I know is rather stating the obvious. It has resistance at 73.30 and 74.50 and it looks likely that it will retest the highs.

    Only an impulsive move under 67 says its done.

98. Cool Nicky, thanks, pretty much what I was thinking. I don’t see much upside beyond $75 though, not until we get a better handle on winter heating demand, what gasoline looks like going forward (3 weeks of positive YoY demand in a row, waahoo), and the fall planting season which should soak up some diesel as well.

99. For those still bullish: I reviewed P&F charts of the group looking for the same blast-off formation that CHK had at $24 and came up with these names (realizing at this point they are laggards):
    BPZ, COG, CXG, CVX,FST,KED, MCF, MRO, and some MLPs which have run a bit more. Full disclosure = I bot FST.)

100. Thanks much RMD.

     From a fundy standpoint, FST has gotten a lot more interesting this year.

     I like the quirky MCF and BPZ is a solid oil story.

101. Opps: forgot GST which I bot also.

102. tax on soda coming

     butter and big macs next

     i swear they go to work every day thinking what can i tax today

103. GST got interesting after their last deal, lot of potential there although I’m told, EFS not on their acreage.

104. If the stripper well operators take a hit, at least in this area, it’s not going to be pretty for the State of Louisiana. Last time lots of operators went bust the State was left with the thousands of Orphan Wells. There are something like 7,000 remaining to be “adopted” in the Shreveport District alone.

     Plugging, if done by the State, costs about 5X what it costs an operator to do it and these jobs are done by local P&A outfits.

     FWIW, this oil field also makes about 1MM bbl/year, a pretty good chunk of severance tax to the State even at stripper well rates 3.25%.

     When the last bust took place in the late 80’s there was one bank left in Shreveport that had not been closed by the FDIC. At the time I had a loan on some acreage adjoining my house, went to the bank to pay my monthly note and was told “don’t do anything, just wait and see what happens.”

     Two years later a guy from New Jersey called who said that he had bought my note and said he wouldn’t settle for less than 9 cents on the dollar! My tax dollars at work.

105. Bill – Would you like fries with that health care order sir?

106. Nice color Jay. Better look into that KEG.

107. Profit taking in the Bakken?

108. Ram – yep, there and just about everywhere else. Looks like the stuff that rose the most recently is having the worst of it.

109. MIDDAY OVERVIEW

     · Equities drift to session lows after a choppy morning; SPX dn 2pts to 1066 while credit underperforms (for a change). Despite some weakness early this afternoon, it remains a very resilient tape that refuses spend much time in the red; ie, negative headlines (ORCL earnings, S&P CDO announcement, etc) are not having a whole lot of impact on broader sentiment. The calendar is pretty quiet for the rest of the week as traders’ attention now turns to tomorrow’s expiration and rebalance.

     · Corp credit is actually underperforming stocks today (finally); very quiet trading in credit and space gives back some of the very strong move from yesterday. IG is wider by a few BPs (back out above 100bp) and HY falls 5/8.

     · Sectors: financials were again leaders on the bounce at the open (extending the very strong rally from last week). Tech is flattish on the day (despite ORCL being off ~2%). Materials strong again (steels are rallying further, extending strength from Wed). On the downside, industrials/cap goods (taking a breather following few sessions of strong trading), transports (this group lagged Wed and is weak again today; FDX off ~1.5%+ after earnings), telecoms (also lagged on Wed and extending weakness today; mgmt at S, VZ, T, DT all spoke this morning at Goldman). Airlines very strong on back of AMR’s announcement (the XAL airline index has been higher for the last 11 consecutive trading sessions).

     · Treasuries: 2s are flattish while 10s and 30s are higher. The Treasury announced the size of next week’s coupon sales and on the whole auction amount a bit lower than our forecasts. Coupon sales coming up Tues Sept 22 ($43B of 2s), Wed Sept 23 ($40B of 5s), and Thurs Sept 24 ($29B of 7s). Color from the desk: We con’t to see real $ demand for the back end, although the most recent leg of the flattening has been driven by the bond contract which is outperforming 10s and 30s on the crv.

     · Dollar again trending lower: has been down for 9 of the last 10 trading sessions. DXY off small (-0.13%) but continues to drift lower (and provide support for risk assets, inc. equities). The euro continues to march higher (at 1.473 now) and at highest level since Aug ’08.

     · S&P today published revised methodologies and assumptions it uses to rate global collateralized debt obligations (CDOs) backed by corporate debt. Today’s publication results from a proposal outlined in a request for comment published on March 16, 2009. “On implementation of today’s update, globally we will place on CreditWatch negative approximately 4,790 public rated corporate CDO tranches with an approximate equivalent U.S. dollar amount of $578 billion”

110. They got Porky on the spit and I really like BBQ so I’m adding March 12.5 on ATPG.

111. West – re 110 – just to be clear, calls or puts?

112. calls, sorry about that, somebody throwing more wood on the fire because I just got some at 7.7.

113. Ram – scroll about 3/4 of the way down on this…pretty much says it all about today.

     http://finviz.com/map3d.ashx

     Note the bright green in refining land.

114. I wonder how cap and trade deals with this:

     http://gmy.news.yahoo.com/vid/15595650

115. S&P Equity taking NFX target up $8 to $54

116. WLL – down 5%. Like it but not tempted yet. Give me another 5% down and I’ll be back long, all other things being equal.

117. Site was down for a few minutes, glitch at host. If you ever see it down shoot me a note or check the back up site at:

     http://zmanbackup.wordpress.com/

118. atpg down 9 %.. nice slap across the head to remind you that markets dont go straight up forever

     ng stocks are over extended except hk

119. 110 lol i bet calls

     i just added oct 20’s and march 15’s

120. After the long run we’ve had, in the mrkts in general and in energy especially, I’m going to guess we give back today and tomorrow. Maybe even Monday. I have some cash on the sidelines from selling down over the last few days. Will be patient in redeploying. But will redeploy. FWIW.

121. Hear ya BOP, echos the last 3 days of my opening paragraph.

     I will say that as sell offs go this one is pretty pathetic. Was hoping to get some deep hits on CLR and WLL to add them back. Being patient.

122. IOC- Antelope #2 encounters pay 345 higher than anticipated. Stock up 8%

123. reef — you’re pretty good with the little international kids. Thanks for keeping us up to date on that stuff.

124. Z, quirky MCF: someone described mgtaswearing sandals and Hawaiian shirts and wondering why the St. ignores them. No one follows stock acording to Yahoo? Any color would be appreciated as 9/14 release sounds stockholder friendly. Thanks.

125. Reef – and they added to ELK share last night, scooping another 4% of it. IOC is capable of big moves and that is a big pile of gas. You still long there?

126. MCF has one analyst following to my knowledge.

     At last check they had 7 employees and pretty much contract out everything except 3D reprocessing, maybe that too. They have made some good finds in the past but the Alice In Wonderland presentation style got a little weird and the Street didn’t see a lot of business from them. Still, worth a look as they had talent and reserves on their side and I will take a look again. I still think of SGY as the gang that couldn’t shoot straight but look at that chart.

127. 114 – Cap n Trade necessary because all the volcano’s were caused by frac’n the Bartnett.

128. MCF – been meaning to look at them a little harder, did not used to have options, does not with fat spreads as the stock is thin. Gotta like cash pile and lack of debt and unused credit line. Reserves per share is high, they’ve got a good track record (again, last time I checked) on the Shelf, don’t know if they have any deepwater interests. Sounds like they are not very busy, planning to drill 4 exploratory wells between now and mid 2010 on the Shelf. Will work it up for Monday or Tuesday.

129. http://www.bloomberg.com/apps/news?pid=20601072&sid=aQOkaXMDTcsY

130. ioc- long but looking

131. re 129 … my favorite quote:

     “We have tended to observe over the months that — despite the claims of some of the bloggers, self-proclaimed ‘experts,’ business TV circus freaks — there does not seem to be a predictable pattern where the front month-second month spread gets wider at the time of UNG’s roll,” Hyland said.

132. I added more KOG at 2.33

133. NG falling into the close of NYMEX, down 6.4%, or 24 cents now at 3.53. Strip is down about half that.

134. jiveyjr — good trading!

135. FWIW, HeadTrader thinks the mrkt closes in the green today. I’m not in his camp, but can see his point. Mrkt stalled, figuring out what to do next.

136. BOP – re 135 – yeah, its a coin toss in my book. No eco data tomorrow.

137. thx BOP…

138. Been on phone…

     Jivey wins the “gutsy move Mav” award for the day.

139. Which roker follows MCF?

140. opps, meant “broker”.

141. Re the Refining Group pop

     According to Dow Jones, analysts saying long term investors may be realizing that there’s not much downside form here for the stocks, so it is worth buying them now while they are cheap.

     Credit Suisse pointing out gasoline demand is showing some signs of recovery.

142. Don’t know, all I see is 1 analyst with EPS estimates…he doesn’t show CFPS or EBITDA so my guess is its a bucket shop, not an energy analyst at all.

143. Deutsche Bank on the tape raising APC target from 49 to 58

144. OT but sort of OnT:

     For those of you who appreciate market commentary and beautiful prose Don Coxes’ most recent Basic Points can be found here.

     http://www.scribd.com/doc/19669373/BMO-CM-Basic-Points-Sept-2009

     The on topic segment (e.g. no sun spots = Very cold) is in the Grains section found on pages 27 through 30, but you are doing yourself a disservice if you do not find the time to read the whole.

     A good single malt goes well when reading Coxe.

145. thx Z…I don’t make many gutsy moves any more…too old to come back

146. RMD — yep… MCF has only one official “analyst” following it… EVA Dimensions, a black-box shop.

147. Imagine my shame: only bucket shops folowing a name I’m interested in!
     Thanks.

148. Feels like pinning action for tomorrow setting in early.

149. RMD – I will make an effort to add some value then.

150. RMD — ha!

     aren’t some of the best stocks the ones the Street doesn’t follow?

151. KOG closes in the green?? What say thee?

152. No idea. Today and tomorrow pretty wonky trading. I’d like to see a continued resurgence in APC today and the refiners tomorrow.

     On refining, I saw the signs and waited. Often the signs come and the group just sits there until someone mentions it in a news story that yes, by the way, demand was up for 3 weeks for gasoline and all is not lost on the distillate side. The refiners taking more capacity off line over the next 2 months should help keep oil in check while boosting product prices. Cold winter won’t hurt either. Anyway, big, easy to understand pieces that the fast money can sink its greedy little teeth into.

153. Re 127. Well, the good news is, they just found water on the moon so if all the fracing buggers the volcanoes into erupting we’ll have a place to move to.

154. Cool surface map of moon with the water story:

     http://www.space.com/scienceastronomy/090917-lro-new-images.html

155. 153, Got to pay the Cap N Trade tax for the trip to the moon. 🙂

156. Dooohhhh. Don’t you have a well to drill somewhere? 😉

157. seeing Wyoming and z use emoticons = just precious.

158. It was an accident, won’t happen again.

     Beerthirty.

159. BOP: #150 = story of my portfolio.

160. west

     how was the bbq

161. For a “down” day… sure wasnt’ very down. Option expiry tomorrow means more of the same, I’ll wager.

162. Matt Simmons has weighed in with a new presentation:

     Investing In Energy: A Nightmare Or An Enlightened Dream

     http://www.simmonsco-intl.com/files/NMS%20Investment%20Mgmt%20Forum.pdf

163. V – Opti says stumped by share gain, shares falling.

164. Got a little smoke inhalation, but finally got the apple out of my mouth. Strong close for ATPG shook out a lot of weaker hands this morning and some reshorting occurred.Here is a site that you can check available shares to short…http://www.interactivebrokers.com/en/trading/ViewShortableStocks.php?key=atpg&cntry=usa&tag=United+States&ib_entity=llc&ln=…..ATPG last 5 days reads like this for shares available to short:9/11–450k,9/14–200k, 9/15–550k, 9/16–1,000k, and today 200k. WE are not really seeing any covering yet and in fact a little reshorting today. If ATPG does an additional offering this will increase the float and decrease the pressure on the shorts to cover.At the last filing 8-31-09 there was 20 % short interest in common float. I was wondering if anybody might have an idea how to find out how much they have registered at this time that could be offered?

165. re VLO from phil’s newsletter
     A Vault for Valero Means Call Option Feeding-Frenzy as Expiration Nears

     By Andrew Wilkinson

     Posted: September 17, 2009 – 5:32pm

     Today’s tickers: VLO, NTRI, EFA, BAX & WFC

     VLO – We can explain in part the activity in the September 20 strike call options, which is due to expire at the weekend. That’s straight forward. It’s now in the money following a 9% share price gain to $20.97. Investors have possibly built up a substantial short position at the start of August in the expectation that share would remain below $20 as they have since they collapsed on June 2. Selling short the calls means they stand to retain the premium if the stock price remains south of the border. We see little news to set off today’s enthusiasm for Valero, but the rally that has put the calls into the money has the potential to spark a significant amount of short covering. Options open interest here is around 33,000 while today’s volume is at around 29,000. Expiration Friday tomorrow should be fun. – Valero Energy Corp

166. From Schork this morning:
     One client in Calgary quipped that storage in Canada is so full that Edmonton is going to ban smoking in Alberta for fear of blowing up half the province.

167. Schork has been one of the one’s who has been guilty of oversimplifying the relationship between storage and gas prices, having said in the last month that gas was “going to $0”. Canadian storage is just as “full” as is U.S. storage. Their production declines will almost certainly be greater than those seen in the U.S. in 2010 as their prices have been weaker longer, and their rig count has been far more depressed for longer. Also, while they have shale plays emerging with high IP completions, they have nowhere near the amount of activity in those basins as the U.S. has had in the Barnett, Woodford, Haynesville etc. So, limiting the rigs working in the Western Canadian Sedimentary Basin, from which Canada derives a vast majority of its gas volumes, leads to an inevitable decline in Canadian production.

168. RE 163 – Yeah I doubt it’s due to a deal and it was obviously a rumour. Just showing how undervalued they could be perceived as takeover targets.

     RE 166 and 167 – Canada has nowhere near the storage that the US has so it doesn’t really make a difference. You can see the gas surplus in the AECO price though. That being said, Z is right that drilling in Alberta has completely fallen off a cliff, it’s non-existant.

     RE dollar – $112 Billion in notes next week.

169. V – I wish the Canadian govt would give data away like the U.S. govt on volumes. Would be helpful. Do you have any recent brokerage or other scribblings on the state of production out of the WCSB? My stuff is sadly dated.

170. Just looking at scale, Canadian storage peaks out between 450 and 600 Bcf each year. This year it will set a record as well.

171. I can ask my friend at Peters and Co about the WCSB stats. I guarantee they have something.

172. If it’s not too much trouble that would be great V!

173. The next best solution is just to find stats for BC, Alberta and Saskatchewan.

174. Right but StatsCan data is pay per view which is annoying when you need a lot historical data. In a perfect world I’d have those three provinces on a monthly basis going back 10 years. I have data into about 2003 going back a long time.

175. yeah statscan pisses me off too.

176. Of course, they don’t have the Chinese funding the EIA has, lol.

177. http://www.ziffenergy.com/download/pressrelease/PR20090616-01.pdf

     is interesting but not what you’re looking for. Would suggest LOW production.

178. Thanks, will have a look, the Ziff bros used to put out good stuff.

179. http://www.capp.ca/library/statistics/handbook/pages/statisticalTables.aspx?sectionNo=3

     There’s some stats for you. CAPP is pretty good.

180. Thanks much V.

181. re 179 – Look at Alberta flatten. Flatten Alberta, Flatten. Also note that Maritimes on the E. Coast is just a fart of gas compared to what happens if Alberta rolls over.

182. I have more current and better stuff somewhere. CAPP is good for data though and they are from industry. Dave Collyer for example, the current CAPP president was the former country chair for Shell Canada.

183. http://www.capp.ca/GetDoc.aspx?dt=PDF&docID=152454

     Good high level presentation

184. I’ve read a bunch of data suggesting Alberta is maturing faster than people originally though and it could roll over.

185. We thought it was rolling over late last decade… and it was. If you get the more recent stuff, I’d like to see it. Thanks much.

186. Wait until the drop this year! It will make the 07 to 08 look small.

187. http://www.washingtonpost.com/wp-dyn/content/article/2009/09/17/AR2009091703679_pf.html

188. 183, do they really think supply will total that high by 2030 (~105mm bpd)? Copy of the DOE International Energy outlook.

189. 187 – haha

     183 – I didn’t look at the oil projection. That 105 number does sound familiar though. We’re going to need to spend more $ to get there, lol.

190. How will the OIH do it when they are busy plugging wells that are uneconomical due to lack of incentives.

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