18
Sep
Witchy Friday
Sentiment Watch: Market looks ready to take a breather but for all the prognostications of an impending major sell down, it also does not seem ready to fall off a cliff just yet. Glad to have cash, nibbling opportunistically and in some new areas but mostly, hugging that cash until the broader market sorts itself out.
In Today's Post:
- Holdings Watch
- Commodity Watch
- Natural Gas Storage Review
- Stuff We Care About Today - Gulf of Mexico Shelf Players Update Part II
- Odds & Ends
Holdings Watch
- $10KP II:
- $19,700
- 73% cash
- 3% in puts
- The Current Holdings tab is updated.
- I will update the $10KP II tab again for Monday.
- $19,700
- Yesterday's Trades:
- HAL – Added (5) October $27.50 PUTS (HZLVR) for $1.20 with the stock at $28.
- TSO – Added (10) October $16 calls for $0.80 (TSPJP) with the stock at $15.70. See reasoning in the Tuesday post. Group started to move up yesterday 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.
- APC - 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.
Commodity Watch
Crude oil eased 4 cents to close at $72.47 yesterday. This morning crude is trading trading with equity futures having sold off 1% overnight with Asia but recovered modestly this morning.
Natural gas fell $0.30 to close at $3.46 yesterday after the EIA reported a better than expected storage injection (see below). This morning gas is trading up five to ten cents, eying a low in the mid-Atlantic (see link below)
- El Nino Update: More storms this winter but not really predictive from a temperature standpoint.
- Tropics Watch: Some signs of mid-Atlantic organization
Natural Gas Storage Review
ZComment: EIA reported a much lower than expected injection yesterday. The crowd liked it for about 10 minutes but then the momentum shifted back to short term profit taking. Aside from the price action on gas, it's important to keep watching the movements in storage as they continue to auger for a storage peak that is lower than many on the Street still forecast. This is due to the fact that the Street continues to use average end of season injections and is not giving enough credit to production declines and curtailments that are making themselves pretty plain in the weekly data. Recall that last week's data reflected temperatures that were in line with the prior week AND contained a holiday (which lessens industrial demand) and yet the injection fell week to week. First, have a look at the basic graphs ...
.... From these you can readily see ...
A) We're still at record levels of storage for this time of year.
B) & C) The surpluses to year ago and 5 year averages continue to decline
D) Injections are running in line with normal to slightly below normal levels. This is due to high storage but also apparently due to higher levels of industrial demand.
Moving into a look at the directionality of injections this season we see a distinct shift occurred back in June. Looking at injections on a season to date, cumulative basis relative to the five year average injection level, we have seen injections drop from a 1.8 Bcfgpd surplus to a more benevolent 1.0 Bcfgpd level.
... And I continue to see peak storage in the 3.7 to 3.85 Tcf range.
Stuff We Care About Today
Gulf of Mexico Shelf Player Update: Part 2
- The Long Shot Bet In The Offshore: CPE. $2.23. (And I think a suckers bet.)
- CPE - 9.75% Senior debt ($200 mm ) due December 2010, becoming more onshore focused. Production comes from a combination of Shelf and near Shelf Deepwater developments (Habanero (11.25% working interest) and Medusa (15% WI)). Medusa is roughly a third of their current production and it should see one workover and one new well late in 2010 that should keep production close to flat 2010 vs 2009.
- Activity curtailed at present due to prices, workovers a go, exploration delayed ... in other words they are on a maintenance budget.
- Production:
- 2008: 31.4 MMcfepd, 51% gas
- Current production: 30 MMcfepd
- 2009 guidance: 28 to 34 MMcfepd
- 2008: 31.4 MMcfepd, 51% gas
- Hedges: Lightly hedged, adding to 2010 hedges
- Reserves: At year end 54.8 Bcfe
- The Plan - transition to more onshore activity and oil. Added a small amount of West Texas Wolfberry reserves earlier this month.
- What killed the stock last year? Suspension of their deepwater project at Entrada in the deepwater Gulf of Mexico due to higher than expected costs and the fall in oil prices. The company has non-recourse debt on its balance sheet of $83, or 30% of total liabilities that may be taken off the books. The lease expired in June and this project won't be coming back. However, the debt may be coming off the books as it was a non-recourse loan from their partner in the well for which they have not yet received a receivalbe. Their balance sheet would improve substantially if this simply goes away as management has promised it will.
- Valuation:
- TEV / EBITDA 2009 of 5.6x
- TEV / EBITDA 2010 of 7.3x (note this falls next year as production is expected to decline)
- TEV / Reserves of $6.13 / Mcfe which is extemely high, this comes down to $4.60 if the Entrada debt goes away... still high.
- TEV / EBITDA 2009 of 5.6x
- CPE - 9.75% Senior debt ($200 mm ) due December 2010, becoming more onshore focused. Production comes from a combination of Shelf and near Shelf Deepwater developments (Habanero (11.25% working interest) and Medusa (15% WI)). Medusa is roughly a third of their current production and it should see one workover and one new well late in 2010 that should keep production close to flat 2010 vs 2009.
Next week: Looks at MCF, SGY and ATPG (but only if it comes in a bit).
Link to yesterday's post for Gomex Shelf player stats.
CRED - Drilling Their First Horizontal Bakken Well
- The Petro-Hunt 148 with a planned 10,000 foot lateral,
- Located on the Fort Berthold Reservation, 10 miles to the west of KOG's #1 and 2 wells. This is the far west side of the Reservation, close to the Neeson and next to two Peak wells with IPs of 1,200 and 600 bopd.
- They sold this one down to a 10% interest
- in the process of permitting two more wells.
- Credo only has 4,900 net acres in the play with other blocks close to the KOG pads
- Company has a 15 mm in cash, no debt and market cap of $105 mm so its a micro cap, and it is somewhat expensive on trailing reserves although those are price depressed numbers. It would likely get a bit of a move if the well comes in close in terms of IP to its neighbors.
Conference Watch:
- B of A smidcap conf will have some of our names next week.
- IPAA at end of month.
Odds & Ends
Analyst Watch:
- (CVX) upped to Outperform at Credit Suisse
Interesting Article Watch:
GDP on the tape with Haynesville ops update, looking over it now.
September 18th, 2009 at 7:22 amCHK moving on MS.
“In a deal with Chesapeake Energy announced on Tuesday, they’ll receive almost double the bonus offered previously and an additional bump in the royalties they keep. The five-year deal offers $5,750 per acre immediately as a sign-up bonus, 20 percent royalties and a multiyear extension option.
The Wyoming County landowners group represents about 37,000 acres that haven’t been leased yet, and if all property owners sign up, the deal, in bonus money alone, is worth about $212.75 million.”
http://www.rigzone.com/news/article.asp?a_id=80439
September 18th, 2009 at 7:23 amIOC started at Morgan Stanley at Overweight, going to run a bit.
September 18th, 2009 at 7:31 amFriday humor:
http://www.nypost.com/p/news/local/manhattan/jad_gets_heave_ho_from_helmsley_nIJbRjyo9FqI7FhHe5SM3O
😉 (for BOP)
September 18th, 2009 at 8:03 amEROC on tape announcing proposal by General Partner refinancing the LP and selling the LP the GP’s subordinated stock and 49% of the GP’s stock. Only read this once but it looks like the GP is bailing out to some extent. Unstable states don’t last long, something had to give!
September 18th, 2009 at 8:04 amNB: from memory the GP’s holdings in the sub. stock tie into the arrearage in the distribution; I’ll have to clarify just how that works.
My quick thought is the GP decided the LP was never going to recover in it’s current state.
GDP press release. Solid, jam the shorts Haynesville update.
September 18th, 2009 at 8:09 amNG up 11 cents. Short term profit taking over already? Back to the short squeeze.
September 18th, 2009 at 8:09 amWyo — likin’ old Leona’s ghost a little more. LOL.
September 18th, 2009 at 8:12 amWyoming – your KEG still liked by TPH.
September 18th, 2009 at 8:13 amLast two options expiry days have been “non-events,” in HeadTrader’s book. But, here goes…
TechTrader is 55/45 short today.
HeadTrader says he wouldn’t be surprised to see them rip the mrkt to new highs.
Then he adds… guess it wouldn’t take much to the upside to get there…
September 18th, 2009 at 8:17 amBears are getting a tad desperate… saw some comments last night that were trying to make a BIG DEAL out of the Investment Grade Bond Index backing up 3 basis points yesterday.
THREE BASIS POINTS. Ha! We eat three basis points on our toast every morning. That’s nothing. Sheesh.
September 18th, 2009 at 8:19 amBOP – I put a bonds are overheated story at the bottom of the post just for you.
September 18th, 2009 at 8:23 amThanks, z. Been seeing a lot of those lately. Overheated bonds just means stocks are cheap. But completely agree. At these spreads, i’d rather be in stocks, than bonds.
September 18th, 2009 at 8:24 amre 10. Agreed, they are usually throw away days.
September 18th, 2009 at 8:31 amRefiners making fresh highs early.
RMD – the CRED might be up your alley.
September 18th, 2009 at 8:32 amioc up $5.25. I tried helping you guys
September 18th, 2009 at 8:33 amGoldman raised APC target to $60, stays Neutral, giving the shares a bit of a lull.
September 18th, 2009 at 8:34 amReef- can’t kiss all the girls.
September 18th, 2009 at 8:35 amMS-IOC model could be a $100 stock
September 18th, 2009 at 8:36 amReef – Does Raymond James still cover it, they used to say $65 I think.
September 18th, 2009 at 8:42 amRJ-do not know,IOC hired their analyst
September 18th, 2009 at 8:48 amRJ strong buy- $54 target
September 18th, 2009 at 8:50 amThanks Reef.
September 18th, 2009 at 8:53 amMay add a quick trade to APC as it pulls back on the Goldman semi-snub. I have to look at that kind of upgrade of their price target as a mark to market event, and seeing as the stock broke out to new highs, while they were Neutral, it tells me the analyst was asleep at the wheel and is content to stay that way. Irritating they still have that much swing in the market. Stock may retrench to middle of the gap range from the Wednesday well announcement. Not a big position for me, won’t make it one if I add another piece to the trading calls I added yesterday. The rest of the Street who are buys are likely to make a round of calls this morning and try to keep it from filling the gap entirely.
September 18th, 2009 at 8:56 am19. Would M Helm be the analyst with MS?
September 18th, 2009 at 9:01 amBakken profit taking continuing, 2 to 5% drops for all the usual suspects. Watching the WLL for an entry potentially next week.
September 18th, 2009 at 9:03 amNote to GDP – never put out an ops update on a Friday … no one cares.
September 18th, 2009 at 9:05 amHelm was the analyst with MS that was following Triton energy at one time and made some great calls on their discovery of the Cuisiana field. Not that it means anything… just curious.
September 18th, 2009 at 9:09 amZ – #27 = opportunity?
Market trying to deal with the shock of seeing the dollar up 0.4%
September 18th, 2009 at 9:10 amThanks Oklahoma, I don’t know that guy.
Dman – maybe, I’m staying light for the moment on my exposure. Have some KWK but really little else levered to the commodity. If I were to go after a natural gas short squeeze candidate it would be GDP or GMXR or maybe SD. Depends on how much you like debt. Also a consideration will be amount of revolver drawn down vs the month end gas price as people look at another round of non-cash reserve writedowns and then redeterminations thereafter. I’m doing a little work right now on that. Guys like PQ, that have run hard, also have 100% of their available line drawn right now. If gas prices turn back down that could be sort of ugly. Again, happy I went largely to cash when I did.
September 18th, 2009 at 9:14 am#30 – I think Nicky was saying that she expected some sort of retest in the commodity.
September 18th, 2009 at 9:21 amZ – I keep forgetting to mention: some of the new hot money in energy could be due to the demise of levered ETFs like DXO. All those hedgies need some new toys.
September 18th, 2009 at 9:23 amre 32 – good point D. On a related note, I wonder, on natural gas, how much of the short covering rally, was the fear of the shorts of UNG deciding that it could indeed go ahead and issue new units.
September 18th, 2009 at 9:28 amTSO seems to have had a big turnaround in the past 10 min. Any reasoning?
September 18th, 2009 at 9:54 amBaylor – nothing I see, noisy day with expiration. Price action probably doesn’t mean much today. Rest of the refiners have backed off their highs from earlier with only VLO still barely green.
September 18th, 2009 at 9:56 amKWK CFO on the tape selling some shares
Seeing more and more of this, OII last night with a exec with a bigger sale.
September 18th, 2009 at 10:00 amVIX creeping back up.
September 18th, 2009 at 10:05 amRe 36 – WLL seems to have had one of the bigger runs the last two weeks. Possible put opportunity?
September 18th, 2009 at 10:06 amFriday Semi-OT:
This is a new video of a portable oil production system that I invented. Operators needing to “produce or plug” their are the main buyers right now.
My production cost with this system is about 1/7 of using traditional equipment on a per bbl basis.
http://www.youtube.com/watch?v=4LaHxz7ijKY
JR
September 18th, 2009 at 10:08 amAgreed big run but I’m less of a technical guy on names like that. It remains very cheap to its peers so, if I were going to put a Bakken, and I’d rather just hold cash and buy them again lower, it would be a higher multiple name like CLR. In my book, given where oil is and the results to date, the run at WLL is well deserved and has further upside left. They have the biggest wells in the play and a lot of them, chances are they have another ops update this fall with more wells attached to it that could/should re catalyze the stock.
September 18th, 2009 at 10:10 amBidding a little APC add here.
Sweet Jay, is this one partnered with HP or the likes?
Can you give the link to your website again?
September 18th, 2009 at 10:11 amJust had some site issues, am working with host to move to a new, faster, better, server as our traffic has increased.
September 18th, 2009 at 10:26 amRe 42
Friday movie quote:
“screws fall out all the time, the world is an imperfect place”
This is another reason to follow us on Twitter. Code word ZmansEnrgyBrain. If the site goes down I can let you know over there
or you can just go to the backup site at:
http://zmanbackup.wordpress.com/
September 18th, 2009 at 10:30 amEROC proposal has got my dander up this morning.
My take, its a major screw job on the current unitholders and enriches NGP (eroc original sponsor) and current management , to the detriment of current unitholders
The proposals is self serving and is outright theft.
As it turns out, i flipped my shares yesterday at a profit, but thats irrelevent.
Nothing pisses me off more than insiders screwing the little guys.
______________________________________
eroc an mlp has 3 lines of business.
midstream-pipes located in depressed areas
upstream- gas wells in alabama
minerals- royalty interests in haynesville and other places
the crown jewel is the minerals business, no costs pure profit and will grow as more wells come on line
NGP is offering to steal the crown jewel for cheap money and “bribe” current mgt to make it happen, (by offering them a new incentive deal”).
NGP own 20 % of eroc
At one time eroc traded at 30, it fell to 3 with lower oil and ng prices and when they suspended the dividend. They earmarked the cashflow to debt reduction.
They have too much debt:
they could sell shares
they could sell assets
they could do nothing and earmark 140 m annual cash flow to debt reduction
or they can let , significant insider steal the best asset for short money and take a bonus to enable it
Im going to follow it and hope someone sues to stop it.
Post deal, they should have about 100 m shares and 100 m ebitda so best case 1.00 per share and with a 5 dollar stock price it goes to 8 to 10 or so.
September 18th, 2009 at 10:30 amZTRADE:
APC – rounding out my October call position on weakness in the name due to a Goldman Neutral reiteration there this morning. Added (5) more of the $65 October calls for $1.65 with the stock at $61.90.
September 18th, 2009 at 10:35 amThanks Z,
Yes, this is the system that uses the production tubing that is licensed to Parker-Hannifin for manufacture. We are about to start testing for 1,750′ depths as well.
We have licensed the states of Kansas, Oklahoma and part of N. Texas under our Utility Patents to folks who want to build/buy/sell the systems.
Two websites:
http://www.blackstormsystem.com and
http://www.strippersolutions.com
Have a great Friday!
JR
September 18th, 2009 at 10:35 amGot a copy of the SMH report. Thanks for that. Another analyst saying look through the trough on drilling and the double dip of natural gas rig count falling again. He’s saying avoid the drillers but like service like HAL sense the wells are more intensive. I personally don’t get the argument for that as they have been more service intensive for quite some time so that should already be in the Street’s estimates. As to pricing power, I just don’t get that from my conversations with guys who are paying the service companies. I guess we shall see.
September 18th, 2009 at 10:38 amBest of luck JR… You pull off the whole Indiana Jones thing well by the way.
September 18th, 2009 at 10:39 amIf you haven’t watched the video in 39 I’d tell you it’s worth your time. If the Administration takes away the marginal well tax exemption status (for stripper wells) then that kind of good old fashioned American ingenuity gets a good old fashioned kick in the crotch. I’m personally a fan of ingenuity.
September 18th, 2009 at 10:56 amjay liked the rocking chair touch in the video!!!!
September 18th, 2009 at 10:59 amSemi OT – Stripper Wells
We’re in the middle of a once great oilfield that had the gas drive blown off/wasted. The really big deal will be having site-specific Enhanced Oil Recovery – totally avoids gov’t sign off in doing large units.. just empowers individual operators – much desired because we have an unusually high %’age of oil in the ground – at shallow depths – with lots of wellbores.
The portable system lets me make more oil with one set of equipment than I could otherwise make with 20 sets. If I can play off the synergies in getting the oil to move w/ EOR + mobile production then the economics are going to change a whole lot.
I’ll email you Mah Story for reading over a beer sometime..
JR
September 18th, 2009 at 11:06 amIs there any reason why the ng stocks are getting pummeled today?
HK which never ran up getting hammered
September 18th, 2009 at 11:19 amswn down but i think that one is fully valued
Bill – good question. I suspect it has more to do with early direction on the day in the energy group as a whole and expiration. Weak just keeps getting weaker unless the broad market can put on a rally. Also, seeing a bit of insider sells which scares people. Both SWN and HK are higher multiple stocks, but both are higher growth rate names as well. They are probably growing reserves at at least 1.0x their production rate this year as they have historically. That puts a lot of Bcfe in the calculation for 2009 when looking at $/Mcfe. But on days like today, there is not going to be a lot of discriminating going on. As to HK not having run, there’s the dilution of the numbers to consider from their secondary. 10% more shares out and the price is 5% higher so, not a huge run but it has moved and again, it was already more expensive that most. I hold it as a reserves growth story for the long term and will buy it again on softness in the stock for a trade in options as it is the #1 grower (of any size) in the group this year. Very low cost, very high quality set of assets, with 10x+ reserve potential under their acres to current bookings.
September 18th, 2009 at 11:28 am#15 CRED: Z, at a very cursory look I think I like the MCF story better, but will keep looking.
September 18th, 2009 at 11:35 am#44 EROC: Bill, I think history almost always shows that financial engineering tricks (read: MLP spin-offs) run into some problem not anticipated at the IPO (except maybe by the GP, which is why they sun off the MLP in the first place). EROC was financed wrong, had a mishmash of unmanaable assets, and mgt sho signed on anyway. I hope they have a conf.call because I’d like to hear their public spin on this.
DPTR One guy who has followed stock thinks Col. River Bottom well is key to the future and has formation damage.
September 18th, 2009 at 11:38 amRMD – since when do I only get to pick one off the beaten path name, LOL?
Re MCF – you’ve got to love the part in their presentation where they point out that taxes are by far their biggest cost. $2 per Mcfe goes to taxes vs $0.62 for LOE and $0.20 for G&A (I was right, still only 7 employees). Talk about working for the government.
September 18th, 2009 at 11:39 amYes, I noticed that tax comment. So, tell us what you really think…
September 18th, 2009 at 11:44 amRMD – Something they can clean up perhaps. Did he get a skin #?
Re Mcf – Monday or Tuesday. If soccer is rained out then Monday.
September 18th, 2009 at 11:46 amRig Count Watch:
Oil: down 7 to 288 vs 413 year ago
Natural Gas: down 2 to 699 vs 1606 year ago
Horizontals: up 4 to 430 vs 638
Canada up 22 to 206 vs 433
Texas is rolling back over, down last week, down 15 more this, at 373 vs 949 a year ago. Barnett just not economic at $3 gas.
September 18th, 2009 at 11:53 amNG up 20 cents, or 6% back to $3.66. We get the first good look at CFTC numbers following this short covering rally later today. Should see the net short contract. If it hasn’t moved much yet this rally in gas could get new legs.
September 18th, 2009 at 11:55 amNot to be too tangential, but there is an oil company executive on CBS’s “Survivor,” and he makes us all look really, really bad.
http://www.youtube.com/watch?v=kfIQpF3jD9o
On the first episode, he creates a “dumb-ass girl alliance,” empties his tribe’s water, burns his teammates’ socks, and tells a sob story about losing his house in New Orleans and his dog in Hurricane Katrina.
He’s from Dayton, TX, and he’s never had a dog.
September 18th, 2009 at 11:57 amZ – do you think stocks notice that move in nat gas today or is there just too much options expiration noise?
September 18th, 2009 at 11:58 am1520 – If it holds into the close of NYMEX in 1.5 hours, maybe, looks like they are starting to notice it now a bit. For me, the question isn’t so much today, as I’m not playing any Septmebers for expiry, but next week, something Reef mentioned yesterday, which is that if there had not been a holiday in last week’s demand number we would have been well below trend given the weather on the injection. Its a bit milder this week so that mitigates it a bit but I have to think the injection is going to be lower 60s due to line pack issues. Also, we may get supply data a bit early (Next Friday) from the EIA for the month of July. If we see a small downtick it could set the shorts to running. I’m pretty content to nibble on red days for awhile and hold lots of cash. Isn’t this supposed to be the worst two months of the year? If Kass’ gnome is right, the jig on the market is up. Of course, NG happens to be just about the worst performing assets out there ytd, or maybe second if count the paper Iranian votes are taken on. So it may be the asset to rotate to of choice.
September 18th, 2009 at 12:04 pmCrossing the word “bit” out of my vocabulary.
September 18th, 2009 at 12:06 pm#63 – agreed. I have taken some profits too and will spend a few marginal dollars on calls for nat gas e&p while waiting to see if the market will sort out some.
September 18th, 2009 at 12:13 pmthanks z, i bot hk calls today.. i think the down move was overdone
rmd- eroc all what you say ,maybe and is true, however, the bod has a duty to look out for all unitholders, not the just the sponsor and mgt
the asset that they are selling is spinning off 25 m in pure cashflow and projected to at least double to 50 m in 3 years with NO RISK.
that asset is surely worth more than 100 m.. the 135 offer price less 31 m in fees eroc would have to pay ngp
so they net 100 m and give up 50 m in annual cash flow and they dont have to pay arrearages to current unit holders 60 cents time 50 m units is another 30m
so the net effective price for those assets is 100 m less 30 or 70 m
they can do a right offering or a secondary without ngp involvement
the stock is at 4.50, surely they will get more than 3.10 in an offering
The proposed deal is theft pure and simple
and even though they have a lot of debt its being paid off at 100 m a year clip
September 18th, 2009 at 12:16 pmbit is well represented in 63.
September 18th, 2009 at 12:16 pmatpg has settled down at 19.70.
Only 1.0 m shares traded today, yesterday was over 5.0 m
I’m still long but have lighten up on the position. Im bullish if they can get titan hooked up an flowing 20,000 bbls of oil per day.
September 18th, 2009 at 12:22 pmWhich brings up a question
Atpg new 600 m platform will process their own oil but it could be used to process someone elses oil.
What processing fees can a platform like that earn?
Would it be a fixed monthly rate or a royalty payment?
One option is to sell half interest to somebody like GE. Maybe a better option, would be to float debt and equity and maintain 100 % ownership
z any thoughts?
September 18th, 2009 at 12:25 pmBill – they would definitely look to tie back satellite discoveries to the hub with spare capacity. Generally is a fee for volume, not sure of the size in terms of dollars, will dig around to see if I can come up with something. That kind of thing would be included in their hurdle rate for the project.
I used to cover a lot of the big caps as they ventured out into the deepwater. Stocks generally rise on discoveries and sell off on initial production unless it is early or on time (which is not always the case as deepwater has lots of issues). I would not have any doubts about them getting the production on line, but that is also already factored into the thinking of the Street or it should be. Just something to think about.
September 18th, 2009 at 12:30 pmHi Zman…HDY is very popular today, curious about the relative lack of particiaption by END, seems like they should be doing better, any thoughts, looking at both for the right type of pullback
September 18th, 2009 at 12:35 pmthanks for 70
i guess they could charge whatever the market would bear. If oil is 70, would a 25 % fee be too extreme?
who owns thunderhorse and is that a production platform?
September 18th, 2009 at 12:44 pmIts going to be a lot lower number than that. Think a few $ per barrel.
Thunderhorse was formerly called Crazy Horse but renamed due to political correctness. Apparently it is better to forget the Indians than honor them. That’s BP and Exxon. Think of a football field sized platform. That was the first time I heard someone use discovery and billion barrels in the same sentence with the knowledge that they only had one straw into it.
http://en.wikipedia.org/wiki/Thunder_Horse
September 18th, 2009 at 12:49 pmdaily shipping report
http://files.irwebpage.com/reports/shipping/08l26Pvi9u/imarex%20daily%20report%209.18.09.pdf
– Jonathan Chappell issued a note (yesterday) highlighting the fact that the tanker equities have
received their fair share of love from the investing world as part of the global macro bull run, yet the dry
sector has seen no such affection. “Specifically, we believe that the near-record high multiples at which
many tanker stocks are currently trading point to a belief that a robust rebound in global oil demand will
drive a material increase in tanker rates and thus earnings. On the other hand, many dry bulk stocks’
valuation apparently reflect a belief that recent favorable economic data points represent a recovery
head-fake and that global trade is set to decline again.”
Nat is totally expose to the spot market and spot rates have been dismal in q3. They pay out 100 cashflow and cashflow will be down and so will the q 3 payout. I say it sells off when they release the “news” I think nat is a profitible short over 30.00
Interesting graph on oil shipments for the last 5 years and current run rate
September 18th, 2009 at 12:52 pmNG up 27 cents, erased yesterday’s give back.
September 18th, 2009 at 12:53 pmHi Zman any thoughts on #71
September 18th, 2009 at 12:54 pmBill – by the way, very impressed with the stay up power of ATPG. I would have expected profit taking here on that move. So far not yet. Again, good trade man.
September 18th, 2009 at 12:54 pmgood stuff on 73— 5 billion to build it, wow those evil oil companies
September 18th, 2009 at 12:56 pmRe HDY – pure spec play.
END – search me when that plays. Maybe people just don’t like the N. Sea any more. I need to do some re-learning of that story as the last things I looked at appeared to have them on the mend after a series of dryholes in 2007/2008.
September 18th, 2009 at 12:57 pmBill – and you have to pay the lease tab on that block and many adjacent blocks for the privilege to drill in several thousand feet of water on a seismic target that you shot and processed at your own expense. If you have a dry hole you don’t get your $ back from the govt. for selling you crappy acreage either. Then there’s the cost of that rig at $500K+ per day, which can be delayed by anything from bad luck to loop currents. Then there’s the development platform and the rig on it to drill all the development holes (because just because you found oil with the exploration well doesn’t mean you can sit back and relax) and then there are hurricanes and from the wiki file above you can see how those can put a kink in your time line.
September 18th, 2009 at 1:01 pm… all so people can drive.
September 18th, 2009 at 1:01 pmNG up 30 cents, more than it lost in yesterday’s profit taking. You can run shorty but eventually you have to cover.
September 18th, 2009 at 1:02 pmFollowing the NW Times and others “Debunking Peak Oil” pieces, Energy and Capital ran this piece..
to which Merril Lynch responded by saying, “Michael Lynch fired back quickly, saying that my article “tops them all” and alleged that I had predicted $500 oil with a global depression.”
http://www.greenchipstocks.com/articles/reading-peak-oil-deniers/486?roi=echo3-4816543966-3402911-1fa4356872c11a3ee23680a0bdbc2c57&
September 18th, 2009 at 1:13 pmNG up 10% with 15 minutes to go in the NYMEX day.
September 18th, 2009 at 1:14 pmA few tidbits in an otherwise “no kidding” gas story.
http://www.marketwatch.com/story/natural-gas-finds-strategy-against-low-prices-2009-09-18
The comment about industrial fuel scheduling rising for 15 weeks is interesting although I don’t know where that data comes from.
September 18th, 2009 at 1:26 pmRefiners back to flat. Looks like a move up wants to happen in that space.
Got sent another piece showing trucking is starting to pick up. Interesting, would like to see that translate into added diesel demand.
September 18th, 2009 at 1:35 pm83, great article, thx.
September 18th, 2009 at 1:41 pmpicked up some wll on the pull back
September 18th, 2009 at 1:54 pmCLR priced that $300 mm senior deal, 8.25%, ytm 8.375%
September 18th, 2009 at 2:11 pmWas sort of tempted to myself Bill. Feeling pretty patient at the moment, plus this day is pretty much all noise and I thought it probably wouldn’t hurt to see the beginning of next week unfold on the dollar.
September 18th, 2009 at 2:13 pmSeems like a really good price on those CLR bonds.
September 18th, 2009 at 2:17 pmFor CLR that is.
September 18th, 2009 at 2:18 pmI see the final rating on the CLR bonds… B2/BB… so, a full 2-notch difference between moodys and s&p. Must be some parent/subsid differences that moody’s sees. That is usually the reason for a 2 notch difference. Anway, it’s a nice rate for CLR — and, if you believe the BB — not a bad rate for investors either. I like the fact that CLE didn’t up the deal size. Very professional. Very cool. I’m liking the way these guys manage their balance sheet. Kinda anti-Aubrey.
September 18th, 2009 at 2:22 pmFWIW: copper selling off last few days, “may” be a reflection on the strength of the recovery (and general markets).
September 18th, 2009 at 2:22 pmThanks much BOP – given their debt load, which isn’t overly burdensome but isn’t something to overlook either (about 40% debt to cap), I’d like to see them add some hedges on. That runs counter to their thinking however and I really doubt it will happen. Still, the reserve potential here is large compared to the booked barrels.
September 18th, 2009 at 2:26 pmReef – good trades IOC and HDY.
September 18th, 2009 at 2:27 pmgetting lucky
September 18th, 2009 at 2:42 pmZ, whats your opinion on “operation flow orders”
September 18th, 2009 at 2:43 pmhttp://www.zerohedge.com/article/why-has-natural-gas-spiked-60-labor-day
thanks.
or comments/thoughts.
September 18th, 2009 at 2:43 pmBetter lucky than good!
Group de-reddening into the close.
September 18th, 2009 at 2:43 pmBoss – they happen around this time or a little later every year. Due to higher storage they are happening more frequently and earlier than normal. They will result in less gas being put into the pipeline and storage infrastructure in the U.S. They will cause some people to come in at the lower end of 3Q guidance ranges. Pretty hard to tell who or where but many have already taken them into account in their guidance. Basically the production just gets delayed, involuntarily by the pipe owner.
September 18th, 2009 at 2:46 pmRE #73 GOM shelf processing fees normally run ~$1.00/Bbl for oil and water and ~$0.10-$0.20/mcf for gas plus a fixed monthly charge in the $5,000-15,000/well. Compression usually ~ $0.05/stage.
Second– “Thunder Horse” Prospect was originally named “Crazy Horse” after Neil Young’s band – nothing to do w/Lakota Sioux indians at all. Indians got upset– name changed.
September 18th, 2009 at 3:08 pmhttps://secure.oilandgasinvestor.com/shaleseries/
The Marcellus is free, you have to pay for the rest if you want to listen in.
September 18th, 2009 at 5:48 pmLast time, other 3 are in spam hell
http://tinyurl.com/lcbxnc
September 18th, 2009 at 5:53 pmOne more
http://www.aspousa.org/index.php/2009/09/the-aftermath-of-the-great-recession-part-i/
September 18th, 2009 at 5:58 pmFrom Rocky Mountain Oil Journal, 9-18-09……Rosetta Plans More Sideways Work on Blackfeet Indian Reservation
Glacier County, Montana
More horizontal work is planned on the Blackfeet Indian Reservation along the western flank of the Sweetgrass Arch in northern Montana. Houston-based Rosetta Resources (Rosetta) has staked the company’s third horizontal test some 7 miles south of the Canadian border and nearly 18 miles northwest of the giant Cut Bank Field. Rosetta’s latest venture will be the Tribal Riverbend W #07-4H, a projected 11,230’ horizontal Devonian Souris River test spotting in the nw-nw 7-36n-9w, Glacier County. The bottom hole is scheduled to terminate in the sw-sw 7-36n-9w.
This latest staking by Rosetta is barely more than a mile southwest of a dry hole drilled by Cenergy Exploration at the #1-32 Swenson Warren, sw-se 32-37n-9w. Drilled to the Mississippian Madison to a depth of 5,775’, this hole was abandoned in 1983. The company did run two DSTs in the hole, one in the Lower Cretaceous Bow Island and the other in the Jurassic Sawtooth. The Bow Island interval at 4,447’–4,465’ reversed out 730 of mud, while the Sawtooth test from 5,637’ to 5,700’ recovered 20’ of slightly gas-cut mud with the sampler containing 1,300 cc of mud. No additional tests were performed, and the hole was plugged. Log tops of this failure include the Rierdon at 5,540’, Sawtooth at 5,636’, and the Madison was picked at 5,671’ under a KB elevation of 4,282’.
The W #07-4H location scales roughly 6 miles southwest of another horizontal test staked by Rosetta at the Tribal Riverbend #12-13H, sw-nw 12-37n-9w. This 10,675’ horizontal Bakken prospect is nearly a mile west of Landslide Butte Field, a vertical Mississippian Sun River and Madison oil pool that has produced more than 861 k bo and 925 mmcfg following its discovery in 1966. The nearest hole to the #12-13H drillsite to penetrate the Bakken section is almost a mile east at a dry hole drilled by Beren Corp. at the #1 Johnson se-se 12-37n-9w. This hole bottomed in the Devonian Souris River at a depth of 6,984’. The company set 5½-in. production casing to 6,355’ and perforated the Madison, Banff, Bakken, and Nisku with negligible results. No other testing was conducted, and the hole was abandoned in 1981.
As mentioned, the W #07-4H represents Rosetta’s third horizontal test planned on Blackfeet tribal lands. Some 19 miles to the southeast, the company continues to drill a 9,150’ horizontal Devonian Three Forks test at the #31-16H Tribal Gunsight, se-se 31-34n-6w. Elenburg rig No. 21 is supplying the iron for this venture.
This active Rosetta prospect is nearly a mile northeast of a dry hole that had good shows in the Devonian. Drilled by Flank Oil, the #1 Bugbee, se-sw 6-33n-6w, bottomed in the Three Forks at a depth of 5,350’. The company open-hole perforated the Three Forks section from 5,028’ to 5,030’ and swabbed up to 10 gallons of oil per hour. Deemed noncommercial, no production casing was run, and the hole was abandoned in 1958.
Two miles west of Rosetta’s active drillsite is the huge Cut Bank Field complex, a stratigraphic-type trap that is considered a Class “A” oil and gas field. First discovered in 1926, this field has cumulated more than 171.6 mmbo and 650 bcfg from the Cut Bank, Madison, Bow Island, Kootenai, Sunburst, Lander, Moulton, Black Leaf, and Dakota. Production is coming from depths less than 4,500’. With more than 1,000 holes drilled within this field, the reservoir is currently producing from nearly 600 wells and is averaging 23,731 bo and 130 mmcfg per month. There is no Devonian production within Cut Bank Field at this time.
September 18th, 2009 at 7:44 pmThanks much West.
September 18th, 2009 at 7:59 pmhttp://www.financialsense.com/fsu/editorials/dancy/2009/0918.html
Z – “Projected production rates will be “the lowest average natural gas production rate seen in Western Canada since 1995.” King also noted exports to the United States likely will fall to 15-year lows. ” says First Energy Capital which, other than Peters and Co would be the best estimate.
September 19th, 2009 at 3:41 pm