Thursday – Gas Preview and Oil Review + Lots O’ Earnings

162 thoughts on “Thursday – Gas Preview and Oil Review + Lots O’ Earnings”

1. KOG announced the 2 completions.
   Kodiak Oil & Gas Corp. Announces Two More Successful Bakken Completions;
   http://finance.yahoo.com/news/Kodiak-Oil-Gas-Corp-Announces-prnews-3630527936.html?

2. http://finance.yahoo.com/news/Kodiak-Oil-Gas-Corp-Announces-prnews-3630527936.html?x=0

3. First link didn’t work…sorry.

4. KNOC acquires HTE

   http://online.wsj.com/article/SB10001424052748704224004574488124019412440.html?ru=yahoo&mod=yahoo_hs

5. “Will the global credit crunch lead to worldwide oil, gas supply crunch?”

   http://www.epmag.com/WebOnly2009/item47206.php

   Another variable to throw into the mix..

6. useg

   bop , here’s your answer 🙂

   http://finance.yahoo.com/news/US-Energy-Corp-Files-Form-S3-pz-3869217449.html?x=0&.v=1

7. Bill – I recall they have the right to participate in additional wells beyond the initial ones with BEXP. Makes sense that if BEXP’s accelerates drilling and they want in those wells, they have to have a way to pay their tab. Kind of a problem to have.

8. oxy reported, Kern county calif helped

   “Our Kern County discovery has made a significant contribution to this production growth. Kern County gross production run rates grew from 7,700 BOE per day around the end of the first quarter, to 17,300 BOE per day at the end of the second quarter and to approximately 26,000 BOE per day at the end of the third quarter.”

9. I wonder if the NFX granite wash numbers is going to help FST?

10. BSJ – can’t hurt them. I would say this it already has since the July announcement on the NFX rates.

11. NFX call starts in a couple…

12. Anyone see any Street comments on BEXP. I saw one upgrade last night to an $11.50 target at JPM and SMH took it to accumulate this am.

13. KOG — the PR was very professional and very low-key. I’d say TOO low-key, but that is Lynn’s style (not to hype). The only hype-y part of the PR was the statement that with these last two wells, KOG has “proved up substantially all of our FBIR acreage block.” Ummmmm. No. Not yet. Still have to complete and test well #9, before they can make that statement, IMHO. I wonder if Lynn is trying to infer that they are pleased with what they say in the shaker, during the drilling of #9 (which was finished drilling and is waiting on completing now)… but I don’t think so. You don’t know what these wells will do, until you complete and test them.

    So, just one more well, and then KOG can make the statement about having proved up their acreage on the Rez.

    One thing that was good to see… KOG officially planning to drill a 3FS well in 1H10. From competitor’s wells, KOG already knows the 3FS is productive under their acreage… but, it will be great to sink a well to prove it.

    Maybe KOG should hire Jefferies, for the next round of equity offering… Jefferies did a bang-up job for BEXP here.

14. WLT downgraded to market perform at Avondale

15. KOG — if I sound disappointed with the operational update, I’m not. Also, I think that the “proof of concept” has been achieved in the economics of longer vs shorter laterals. And KOG says they will drill longer ones now, unless the acreage position dictates short. So, the economics can only continue to improve from here.

16. Thanks RS

17. NFX – Doing a good job of conducting an extremely boring call.

    Q&A

    Bakken – EUR – still too early to tell. Encouraged by what they’ve seen, but no new data to share.

    Analysts are grasping for detail.

    …

18. NFX – won’t discuss either of the 2 new Bakken wells due to competitive reasons. Won’t even say target zone. That’s a bit weak.

    Could have news on those wells in the next few weeks, could be longer.

    In Williston, they have 75 locations ID’d and ready to drill

19. For KOG not to jump on the operational update is just silly stuff. With the results from wells 7&8, they have derisked more acreage and added more real assets (reserves) to their balance sheet. But I guess today is not the day that investors are reaching for more mini-micro-cap-risk assets.

    That will turn on a dime, for KOG, one day soon. This stock tends to move in stair-steps. After building a base at 2.50 here, the next step will take us up and over 3.00. Not “if”… just “when.” Unless oil falls back to $50.

20. BOP – its just a funked out market. NFX had a strong quarter, decent updates, but didn’t give out year guidance and is guilty of boring me at the moment and so the stock falls 5%, despite a good upgrade.

21. Good place to add some XEC .

22. NFX – Q&A cont.

    Granite Wash – staying on trend to be 8 Bcfe wells. Nothing new, my kingdom for something for new.

    Putting together budget for 2010, well guided by cash flow, not too terribly different than 2009. This implies maybe $200 mm in free cash flow next year.

23. NFX – Q&A

    Woodford comment – they think these 10,000 foot, SXL, (super extended wells) are thought to perform just like 4 of their original wells in the play, so the economics become pretty compelling.

    On the restarted Woodford wells (after the voluntary curtailment) they are seeing above plan production as the wells come back on.

24. XEC, getting hurt on report of reduction in production volumes that they had previously mentioned when they cut back rigs. Another good well for them in Yegua/Cook by Beaumont Airport, 22 mmcfd and 1700 bopd. ……..Somewhat disappointed in stock action in KOG but this has happened before when they have announced. When they get gas line hooked up,all of their wells will make enough $ off strippable liquids to pay all loe on those wells.

25. NFX

    Trigger well – Bakken – still cleaning up at the moment, premature to say more, anticipate drilling in the 1Q. Just not what people want to hear now, nothing to sink teeth into aside from the word “encouraged”

26. MCF doing a small pilot onshore, Panola county, CV wells. Hmmm.

    NFX – sees a little more downside to drilling costs.

    NG storage in 10 minutes.

27. NFX call over. Little to add to the press release. DJ headline showed a revenue miss which as usual is incorrect as they don’t understand hedge accounting, it was a big revenue beat on hedging. I think most analysts come away with a sense that things are on track and that we will get more data on Bakken, super extended Woodford, and China drilling on the 4Q call. I won’t do anything here today most likely.

28. With WLT good quarter, I wonder if we are going to get sell on the good news and take your profits sort of thing. This applies to all the big winners in the market. Another example might be WFC. In another words a beat of the street might not lead to a up bounding stock. Just a thought.

29. West / BOP – had not had a good chance to look at the KOG pr. A little earlier pr from them would be street friendly. Numbers look decent, not barn burner. I think it goes higher on a better market day. I think it would have helped for them to release cumulative well numbers on the first six with some EUR comments on the first few, since they have so few wells and they have an increasing set of investor eyes on the stock.

30. 18 Bcf . Wow.

31. That puts storage at 3734 with 2 or 3 weeks left to go in the season. Should top us out a bit lower than where the big gas bears have been thinking just a couple of weeks back. Next week we will get a bigger injection but after that it should really trend down hill unless we have a big warming trend. So far gassy name could care less.

32. Odd reaction to some pretty bullish gas numbers.

    But, it’s not that cold here, in the NE, yesterday, today, tomorrow. Just wait until the NY traders have to stand on the train platform, stomping their feet to stay warm. It will happen. Does every year.

33. BOP..anything from TT and HT today? Thanks as always for sharing those.

34. BOP – yep. Plus we get more supply numbers in another week. Should show more modestly (but discernibly) down numbers. In the meantime its all about the forecast.

35. MCF doing a small pilot onshore, Panola county, CV wells. Hmmm.

    http://finance.yahoo.com/news/Contango-to-Invest-in-East-bw-2835775716.html?x=0&.v=1

    what do you think?

    The ceo likes the idc and wants to replace 32 bcf of annual production

36. Bill

    First reaction is that “mission creep” is normally a bad thing. This is not what these guys do.

    But second reaction is that they are very good at outsourcing what they do and meticulous with the numbers. So it probably works well for them.

    Third reaction I steal from Wyoming. It’s damn hard to screw up a CV well.

    Fourth reaction is – I wonder if it has Haynesville / Bossier potential underneath the Cotton Valley?

37. Remember in the past, MCF was in alot of onshore plays, but they sold them off. For example they were in the Fayettville but sold that off a couple of year ago. They try to buy when things are cheap and sell dear. Alot harder said than done.

38. john11 — sorry about not posting TT and HT comments earlier. Nice to know you find them useful.

    TT was quiet this morning… guessing it was a 50/50 day. But, it doesn’t much matter now, as he usually does all his day-trading before 11am ET.

    HT said that “despite all the good EPS #s, it apears that the bears will win today.” But, he thinks this is a good thing, as it builds a foundation under the rally and will allow it to continue.

    Thing is, it gets harder from here, to rally significantly. So, sector and stock picking become much more important. As does some more active trading. That said, we believe that Christmas will be better this year than last (hardly a stretch, given how lousy last year was at this time). We think that will allow the mrkt to rally up another couple of percentage points.

    Seeing comments from NY Money Center Bank CDS Trading Desk saying that institutionals are still “buying risk on dips.” And those guys deal with the largest of the large institutionals and HFs. So, can’t add any better color than that.

39. BSJ – I do remember that and good point.

40. After reviewing the press release

    1. The ceo likes to defer taxes
    2. he was planning on 4 gom wells in 2010 costing 15 m each
    3. he has spud one of those wells and planning for 2 more/
    4. I think he defers the 4th gom well in favor of the lower risk cotton valley 15 well package , which after tax will cost less than 15.0
    5. he makes a 15 % return on the investment

    I like it–In one of his presentations, he mentions long term ror of between 5 to 10 %

    His finding cost will be 1.33 a mcf, with a 6 dollar strip, the return should be a done deal

41. What’s up with APC? It just has picked up its ears and is green in a sea of red.

42. Thanks Bill. Last I saw the 4th GOM well was still in the plan but its site was dependent on the outcome of one the other three. I think it was a second fault block on the same structure. So if you hit the first you drill the second. If the first is a dry hole, you step back and take another look at your seismic.

43. Bud is PT Barnum and Lynn is tile salesman. Sometimes geologists have a hard time making something exciting.

44. Probably caught a favorable not from someone in a morning piece today though I don’t see it. It was outperforming yesterday after underperforming the day before so its a bit out of sync with the other big caps. Also, you had EOG and CHK downgraded today so you maybe seeing some transferal between them as a few managers seek to keep the same big cap E&P exposure.

45. All the moves off the lows are S&P contingent, moving with its minute chart. NFX has crawled back from a $2+ loss during the call to off 66 cents. A very muted woohoo.

46. West = lol

47. Hearing that APC strength attributed to release that BP has retained Goldman regarding a bid for Kosmos Energy’s stake in the Jubilee where APC has a stake

48. west #43 — well put.

49. HK filled their gap today. Jerome, any color there?

50. West – meant to ask a question. Do you see a difference in how KOG is reporting IP in this press release vs how BEXP reported theirs the other day?

51. Horizontal CV wells are for those smaller company’s IMO that know the play, and that’s their bread and butter. These wells will do 4-5Bcf EUR on a good side and cost 3MM$ to drill and complete.

52. Z – your buy finger gettin’ itchy?

53. sssssshhhhhhhhhhh…. I bot some HK Nov26 calls on the dip right after the nat gas number. The sell off just seemed stupid. I hope.

54. Dman – No. Market feels a bit weird to me. I’m happy to buy in a few days if it falls out of bed. SP wants to go up a bit today but is tentative. I was just writing on the backup site (where V is consigned today) that the big move up in oil got no play in the stocks due to the WFC downgrade or what ever, then today, the dollar rallies very small, and oil falls, but much less than yesterday and the group is overly red. Makes 0 sense but I’m not going to fight it. Will wait.

    I have SWN and SLB reporting tomorrow and I’m not adding to those either.

    Continue to be impressed with the follow through over at BEXP. Not in danger of falling in love with that position, think it could go into mid $11s on a good day at which point it might catch a Monday morning downgrade by someone not on the deal team.

55. Congrats to the compliance impaired for picking one of the few names in the energy space to actually go up on earnings this quarter. NE up a buck.

56. RCC – beat numbers but say nothing new, fall 3%.

57. Agree it is weird out there. Stocks not believing crude above $80 … or maybe the believed it already a month ago & are over it.

58. Re: # 49, HK seems to be finding support at the gap…only a bit of cosmetic damage so far in regard to HK, HK remains on a P&F buy signal and holds on to its x’s until a print of $25, where it goes back into o’s. The print near $25 would be a restest of significant past trendline resistance which should now be expected to provide support…a major confluence of support again at $22, HK stays on a buy signal from here until a print of $21

59. I don’t know how many people follow http://www.billcara.com work. But he thinks one should not buy when the RSI (7) on a daily basis is over 70. Should wait until get below 30. If you look at all the E&P names, they where all over 70, some into the 80’s. These where very over bought stocks.

60. Thanks J.

    S&P creeping higher. I’ve asked Nicky to add some technical comments.

    OIH greening a bit, very tentative moves.

61. Morning all. Well fwiw I think the top may be in. That reversal was nasty yesterday and I could just ‘feel’ it coming all day. If the top is in, then we are currently tracing out an abc correction for wave ii and we are right now in 2c up. A couple of things have me slightly unsure about the top being in and that is mainly the currency action. Dollar still looks weak, euro strong etc. If the top is in we should not get back above 1088 SPX. Any higher and likely we have another high out there. SPX looks very weak and Dow only stronger due to several of their components reporting okay earnings today.

62. Nicky – what about this dip looks different to you than the one that started the month?

63. NG down a dime, broke $5. Volatility continues. I don’t think for now it has much impact on the stocks. Everything keying off the S&P and oil. Oil down a buck after up over $2 yesterday, still about $80.

    Volumes in group pretty low.

64. As long as the institutional fixed income desk continues to see “buyers of risk on dips,” this rally ain’t over. The easy money has been made. But, can still make more in stocks, than sitting in money markets, I believe.

    ‘Course… talkin’ my book. So, take it for what it’s worth and just call me “Bill” (as in “Gross,” that is).

65. BOP – I’m about 40% with you…and 60% in money market, lol.

66. Dman – getting tempted on EOG.

67. Z, The ip while drilling out the plugs still doesn’t sound right to me. You fraced about a million lbs of sand and 20k barrels of fluid down the hole , so when drill that out it’s kinda like a shaking a coca cola can. I just don’t ever remember any company reporting it that way. You know sometimes they also use oil to frac the well but most of these should be slick water fracs.

68. I see your point, will ask about it.

69. Thursday musings…

    Another thing… without the Bears, standing on the platform, waving their handkercheifs, the Train can’t leave the station.

    Markets climb a wall of worry. When people stop worrying, that is when we should start worrying the most.

    That said, Stupid Congressional Moves (The old GGG), scares/worries me the most. While congress is busy, wringing it’s hands over WHY businesses won’t hire… i just want to shake them by the scruff of their necks. People have NO IDEA what their own Govt is going to require of them… taxes, new mandates, cost of tax-and-trade. And they complain that banks “aren’t lending…” DUH. You have the daily headlines of pay-czars and “pending financial regulation” to put the cap on any excessive banking activity. The fact that they can’t see this just means we should all stop sending money to Washington. They are idiots and don’t know how the real world works.

    Here’s a headline, proving my last comment — “Four-Year-Old Improperly Got First-Time Homebuyer Credit, Treasury Reports.” sheesh.

    rant over.

70. Pay czars, aka “commissars”, I am still wanting for them to cut some of the overpriced guranteed salaries of some sports figures.

71. MCF news seemed good news-bad news to me. Putting excess cash to work at decent ROR is good in a semi predictable vehicle, but less than corp. target ROR is bad. I wonder is their outside geoligists Rex turned this up, and whether deal could lead to other things, ie, new onshore inituitives, deeper Bossier/HS opportunities with this deal or subsequent deals.

72. RE: #66, P&F and 20 SMA daily support for EOG at $87.01-$88, from here EOG goes on a sell signal on a print of $87

73. chk and sd down about 5 %

    mmr trying to go positive

    im a little suprised at the NG stocks taking the hit they have

74. RE – 73 I’m with you Bill. It doesn’t seem like the gas stocks have really responded to the recent gas price moves above 5

75. Hey V, who let you in here? Oily, gassy both down pretty good bit today. If you look back at the wraps from a couple of weeks back you can see the XNG outperforming the broad markets, settling back now.

    I’m not in the top camp either but I don’t step in on days where the action is more drift like than spike down like. I do like to buy on weakness, just not this kind of weakness.

    Oil regained $80 and gas regaining $5 on a 1 minute up tick in the S&P.

    Dollar still looks like toast to me, especially after yesterday’s move.

76. Z – on EOG: Gary B Smith (formerly of Realmoney) had a rule never to buy on the day of a gap down. Second day is usually lower again. I found this rule holds up pretty well, but Smith is a pure technician – no fundamental edge at all & he would trade anything with a symbol if it conformed to his technical setups. Likewise, if it didn’t conform, no dice.

77. I realize gas has outperformed but the strip has also gone from 2.50 not long ago to 5 now.

    I don’t think the dollar will find any support, even at technical levels. The carry trade is just ramping up and the faith is the dollar is just starting to wind down.

78. I shouldnt have said the strip… The strip has gone up and the front month has gone to 5.

79. Dollar hasn’t even been able to look at the downtrend line, let alone cross it. But things don’t stay on a straight line forever. Of course, it could depart from that straight line by capitulating *down* instead of the corrective rally everyone has been looking for.

80. Dman – Yeah, that rule seems to generally hold but I find it often depends on the closing price in relation to the day’s move. Close on the low and its somewhat more likely to be down the following morning, close on the mid of the day, rallying off the day’s low and its more subject to the whim of the market the next day. I could never be a pure TA guy. I have to see the whole body of evidence.

81. V- I hear ya, the move in the strip has been gradual and the stocks have reflected a portion of it. Analyst estimates were above the strip until recently, now they are mostly in line with some below it. So the stocks were discounting gas prices that had to rise versus ones that now could be locked in on hedges. So the stocks should have more confidence in moving higher here. Market trying to put on a rally, energy finding no love, just drifting.

82. V – by the way, did the site just start working for you?

83. BOP … everything is a rental in my book !

84. Z – NFX; buy sell or hold at 46 ?

85. I’m holding it now.

86. Headline — “Credit-Card Defaults in U.S. Fall to 10.72% from Record High, Moody’s Says.”

    The high was 11.49% in August.

87. The focal length of trading within the KOG daily triangle is now $2.45 to $2.65…

88. Site started working right when I posted 73 or maybe 5 minutes before.

89. V – Ok thanks. Just curious if it just winked to the new page when you refreshed. Anyone, it is out of my hands. Jerks were supposed to do it on the weekend. Jerks did it after the close last night with no notice to me. I’m told it will be a non-event by tomorrow and once you are seeing the site, you won’t have the problem again.

90. Wondering if energy catches a bid a little later with a $80+ close on oil and the SP drifting up. At some point people ought to take an interest. I still find it hard to believe that all the gap downs were over a downgrade of a bank and price cuts at Walmart.

91. Re: #84…just one view, but even on a short term basis NFX is not a technical sell here…from where its trading right now, NFX remains on a buy signal until a print of $40, as of now it hasn’t even broken the 20 period daily SMA intraday…

92. Z, it could be just profit taking. These stocks have been on a tear over the last two months.

93. BSJ – That is my thought. Light volume, probably nervous hands of the recently in.

94. z — i think the gap down yesterday was due to the inability of the SPX to hold onto 1098 or so. When it couldn’t, program trading just slammed the market as buyers stepped to the curb.

95. Seems like a lot of pressure building up in KOG

96. RE 89 – I could see the Wednesday post and I could see the twitter alert that you posted the Thursday post.

    I left for a while and then came back and when it refreshed I needed to re-log then it went to the Thursday post.

97. Thanks V, that’s helpful

98. yes on 47

    BP Said to Consider Bid for Jubilee Stake, Hire Goldman Sachs
    2009-10-22 14:53:39.146 GMT

    By Cathy Chan and Jacqueline Simmons
    Oct. 22 (Bloomberg) — BP Plc, Europe’s second-biggest oil company,
    may bid for Kosmos Energy LLC’s stake in the Jubilee field off Ghana’s
    coast and has hired Goldman Sachs Group Inc.
    to advise it, two people familiar with the matter said.
    BP has held talks with Ghana National Petroleum Corp. about a
    potential joint offer for Kosmos’s Ghanaian assets, though no decision
    has been made, the people said, asking not to be identified because the
    discussions are confidential.
    Competition from London-based BP could threaten Exxon Mobil Corp.’s
    plan to purchase Kosmos’s stake in the Jubilee field for at least $4
    billion, one of the people said. Closely held Kosmos, backed by
    Blackstone Group LP and Warburg Pincus LLC, on Oct. 12 said it agreed to
    sell its Ghana assets to Irving, Texas-based Exxon, the world’s largest
    energy company.
    The sale to Exxon, announced earlier this month, included Kosmos’s
    23.49 percent stake in the Jubilee oil field, as well as its other
    assets in the West African nation.
    Goldman Sachs previously advised Cnooc Ltd., the nation’s biggest
    offshore oil producer, on a potential bid for the stake, one of the
    people said. It was unclear whether Hong Kong-listed Cnooc or its
    parent, China National Offshore Oil Corp., would bid with Ghana. New
    York-based Goldman stopped working for Cnooc before being hired by BP,
    the person said.
    BP spokesman David Nicholas declined to comment, as did
    spokespeople for Goldman Sachs and Cnooc. Blackstone spokeswoman
    Christine Anderson and Patrick McGinn, a spokesman for Exxon Mobil,
    declined to comment. Officials at Kosmos couldn’t immediately be reached
    for comment.

    Exclusive Deal

    BP may be hampered in its efforts to bid for the Ghana assets
    because Exxon already has a binding agreement to buy them from Kosmos.
    The deal is exclusive, Kosmos Chief Financial Officer Greg Dunlevy said
    on Oct. 12 in an e-mail.
    Ghana is attracting “many companies” interested in oil exploration
    as its Jubilee field prepares to start output next year, Thomas Manu,
    director of exploration and production at Ghana National Petroleum, said
    yesterday. He declined to comment on whether the company had been
    contacted by BP.
    Manu said Oct. 13 that GNPC was “still in discussions”
    with Kosmos about acquiring its Ghana assets, including a stake in
    Jubilee, and would consider proposals from other companies to join as
    partners.
    Ghana is set to become one of Africa’s newest oil exporters in late
    2010 when production begins at Jubilee, which was discovered in June
    2007 and has potential resources of as many as 1.8 billion barrels,
    according to Tullow Oil Plc, its operator. Tullow said in July that
    Ghana will become one of the world’s top 50 oil producers.
    Tullow owns a 34.7 percent stake in Jubilee and said in a July 15
    statement that other partner interests apart from Kosmos include
    Anadarko Petroleum Corp. with 23.49 percent, Sabre Oil & Gas with 2.81
    percent, EO Group with 1.75 percent and GNPC with 13.75 percent.

99. Re 95 Jerome. Pressure which way? How are you measuring that?

100. Re: #99, KOG has been forming what appears to me to be continuation daily triangle since the middle of Sept…the mkt has been respecting the trendline boundries of this formation, slowly working toward the point of the triangle, where room eventually runs out, the reference to pressure is descriptive of a constant level of trading taking place within a smaller and smaller price range, like a boiling pot with the lid on…there are three things can happen, the stock breaks higher (hopefully), breaks lower (either way releasing the pressure) or the formation is negated by coninuing to trend sidways (least likely)..one of these things has got to occur soon…

101. Z – #80 if you ever said you were a pure TA guy, I’d call the police & tell them to ask the impostor what he has done with the real Z.

102. Wowdead market.

103. BPZ-anybody know why Soros owns just under 5%?

104. Reef – Sorry, no. I kind of sort of follow that one, not close enough to be useful from day to day but I always like what they have to say.

105. I realize I’m tempting fate by saying this, but here goes: it seems to me that crude looks quite comfortable around $80. Not looking particularly lost or bewildered at its new surroundings.

106. RE: #100, I should say that even if the KOG continuation pattern fails, ie: a breakout occurs which is down, please keep in mind that KOG is on a P&F buy signal and holds on to its x’s until a print of $2, which is major support, and from where it is trading now, the buy signal holds until a a print of $1.75, unless something fundamental changes, I’d be buying anything near $2, stop below $1.75…

107. Reef, personal question how are you trading IOC, common, options or a combination of both? Haven’t you had that positon for quite some time now?

108. Dman – oil paying more attention to the market than the oil stocks.

109. Z – did you see the UBS note on EOG? I don’t know their analyst there. Any thoughts?

110. 1520 – I didn’t see it, assume it was a valuation downgrade. That’s a tricky call to make, if the group moves up, it will likely move back up with it, … expensive for a reason. S&P made the same call.

111. #110 – i agree on the tricky part – even more so with E&P earnings starting up. UBS analyst going the hero or goat route.

112. z — that flier you took on MMR seems to be working well. What is the near-term catalyst there?

113. This morning, traders on CNBC saying the gapping nature of the S&P chart late yesterday was a sign of the end. Reminded them of last fall. I wonder if the gapping up chart is a sign of the beginning.

114. Shorts getting their heads handed to them on the CDS Debt desk this afternoon. Fairly amusing. If you’re not a short, that is.

115. RE: #106, KOG…to respond more specifically, the odds favor a pressure break higher with this pattern…in fact, if your trading strategy permits, brave souls should look to buy intraday at $2.45…

116. Way off topic —-

     BOP – i have a bond related question for you – what are “Internotes”? I have researched and haven’t gotten a straight answer.

     My interpretation is that it is a way to market issues to john q. public.

117. Blueberry Hill well although some say that is a red herring compared to Davy Jones. Should have data on BB Hill in the immediate term. Company may already have it. One sand was wet, one was wet to a point and had hydrocarbons on top of that and they were drilling updip to see how much sand on top of the contact they had. One of the those typical Jim Bob statements about “I don’t want to raise expectations ….” To me that’s like saying “with all do respect” right before you do the opposite. Exploration, plain and simple, he thinks he has… something, could be a big pile of charge sand.

118. BOP – see this cusip for example in 116
     46627BEY3

     thanks

119. 1520s — i’m not much help on John Q. Public stuff… i’ll have to ask around. (I have more of a 144a, QIB background… heck, i’m not even licensed to talk to the public. So, have to keep that in mind. ha!!)

120. no problem – not a priority – i was just trying to compare some bonds

121. 1520s — looking at that cusip… that particular note is just an MTN. Those are notes that are issued like commercial paper, off a shelf, but with longer than 270-day maturities. Don’t see any reason why anyone can’t own them… they are registered.

     All else equal, tho, MTNs trade at a higher yield than comparable corporate bonds. For a variety of reasons… but mainly just “liquidity.” So, if you like the corporate credit and are willing to buy and hold the company’s bonds, no reason not to pick up a few extra basis points, buying an MTN over a corporate bond issue.

     Does that help at all??

122. POTUS on cnbc

123. West- Both common and options. This is my third time in common. Bought two trauches, one near 11, the last at 38. Will add at pullback. Careful on options, things take longer than expected.

124. click cnbc off

     bho on

     time for a breath of fresh air

125. #121 – that is in the vein of what i thought. My take was that they were longer maturity publicly traded commercial paper for lack of a better definition.

     I had a wide variety of definitions when i asked around – everything from “inter”national, “inter”im term notes (like when munis issue BAN’s) all kinds of crap.

     Thanks for the “inter”pretation

126. THX Reef

127. Crude closed> $81

128. OIH acting like oil over $80 and NG around $5 and the broad market is up as much as its up.

     E&P still down a percent (on average) … buyers strike today. Volumes really light at this point

129. Step right up, get yer oil service now before SLB reports.

     Thinking about what SLB will say. Haven’t there been a couple (or 3?) big oil chiefs recently out saying there needs to be a huge ramp up in oilfield investment?

130. 1520s — my pleasure!

131. Dman – I think they are make the slightly more conservative but still upbeat version of the call HAL made a week ago. That and I think their seismic division sees light at end of tunnel.

     SWN also – should be good call, maybe say bigger EURs for the longer laterals, defitely say higher IPs, also most probably tweaks guidance up for early end to Boardwalk although that’s well known. Should have some E. Tx well comments in there as well and maybe, just maybe, 2010 guidance.

132. Frac Talk- Once upon a time it was one stage, then three, then six now.. up to 40. Each stage treats a zone that may or may not be the same “quality”. That means each zone may respond quite differently. Knowing that and understanding that after the end of each zone(stage) you place a drillable plug so you can treat the next stage.(All of this starts on the end(the toe). When you have completed all your stages, the last being at the “heel” you may have as many as 40 plugs to drill out before you have a complete flowback.
     As you are drilling each of these plugs, occasionaly a zone that treated very effectively, or is exposed to a natural fracture system, may come roaring back very strong. With such volume on occassion, that it may be difficult to complete the drillout of the other plugs.
     When that occurs an operator may be inclidede to let the well flowback for a time, until a reduction in flowing pressure will allow the other plugs to be drilled out.
     This fast and loose explanation may be the resaon some of theose Bakken, long laterals, 25 stages, are flowing back early without all stages yet contributing.

133. Reef – Thanks. Boiler makers next time I’m in town.

134. Reef, that is not true. Whenever you hit a high pressure or high rate zone that is isolated, it will help you with your drillout as it cleans your well more effectively. We also run flow through plugs, so you can/not drill them, it’s up to the operator.

135. KOG: Since we didn’t get much price appreciation with this news, the market may be saying we are fully priced here. The # 9 is seen as being more risky and odds don’t favor a stonger well than either of these wells. After that it will be acouple of months before we get any additional wells from KOG. I still see huge potentional from the 3forks but that is sometime next year, although we may get somme data points from Peak ND in between now and then. Just as a point of reference Peak’s 3fks well in the Heart Butte field makes about 100bopd and has cum’d about 30k in 6 months , so not as good as the BKN. I would love a pull back just so I could buy some more at a lower price. Of course there is always that potentional of a takeout at any time so you always want to have a position. Just some thoughts.

136. West – I think its a case of unfortunate timing re the group action on the day. Very hard for any name to fight the trend. Maybe it goes higher tomorrow, just not much E&P appetite today. Would like to see that TFS test as well.

137. KOG — the thing is… you can’t get too cute, trading the name. One day we will wake up to a PR annoucing that the company has been bought out at $xx/share. I don’t know what xx will be, but I know the company has a number in mind… and whoever hits that number, gets to marry the girl. There have been several suitors… no one has produced a pretty enough wedding ring, it seems… yet.

     Just a few more thoughts.

138. Reef / TEX

     Guess my question is, if you read that BEXP release about drilling the plugs and getting your 24 IP at the same time, does it say to you necessarily that that method is inflating the IP. I get that if it were an oil frac that’s a problem if the frac fluids haven’t been recovered yet when measuring. Remember I have bidness degrees when answering.

     BOP – yeah, that’s my point too. I’m happy to hold in here, not day trading but for long term so I ride it through the offering. I may sell half before I think a deal is coming but probably not, too cute.

139. Newsflash…energy investors begin to form spine as day draws to a close.

     Wyo – feel free to chime in on the frac question, I’m doing my best to learn something here.

140. Someone has been on the offer at $2.49 for the last hour in KOG

141. Your IP shouldn’t have anything to do with your flowback rates during the drillout process. You have to flow the well back awhile (depends on formation) and the well will start to cut oil/gas/formation water (chlorides increase). Haynesville wells cut gas VERY quickly, so IP’s are obtained VERY quickly after all plugs are drilled out as these wells make very little water.

142. My question was inspired by the wording of this statement from BEXP in their latest Bakken completion:

     The Brad Olson 9-16 #1H was successfully fracture stimulated and while Brigham was drilling out frac plugs the well produced approximately 1,805 barrels of oil and 1.84 MMcf of natural gas, or 2,112 barrels of oil equivalent, from the Bakken formation during a 24 hour period.

143. i would think that that is not an accurate report of IP. you are injecting up to 2 barrels/min when drilling plugs out, basically creating a false downhole pressure or effectively lifting formation fluids to surface with surface pump pressure! Plus, your coil or stick pipe down hole acts as a velocity string that aids flow!

144. WFC basically getting back the downgrade loss this afternoon. Nice.

145. Which is what West was saying.

146. Any idea how much of a degree of error there could be? Probably not enough info to answer, no pressure, etc.

147. Not to get too focused with the minutia, but it’s fascinating how the support levels hold, KOG holds $2.45 to close within the range…

148. Beerthirty

149. AMZN and AXP up big AH on earnings beats.

150. WRES announcing secondary

151. CHK on the tape announcing record gross operated production in Barnett, Haynesville, Fayetteville, and Marcellus. Kind of useless pr as there should not be much of a surprise in any of that but probably not great for gas price sentiment.

152. Earnings reports out after the close… bottom line = Long Live the Consumer! Reports of his/her death were premature.

153. WRES pr on secondary does not include share count. Ummmm.

154. What a day. E&P disconnect to the S&P. Oil about unchanged, nat gas down even though better numbers. Even though most Even though most E&P stocks where down, this did not include ATW and PXD who had very nice days. WFC(up 4%+) who started this mess in the first place is back up to Bove sell price. So far HAL beats and is up, WLT beats big and is down big and NFX beats, and also has a tough day. Go figure. I guess I picked a bad time to stop drinking.

155. Good summary of the day BSJ.

156. BSJ — why stop drinking??!!?

157. End of Day OVERVIEW

     · Stocks go out at highs after a lackluster morning; SPX +10.5pts to 1092. In the bullet below we provide some reasons people were citing for the afternoon rally, though we note there wasn’t any single great reason for the move (just like there was no single great reason for yesterday’s sell-off). On this rally this afternoon, the huge 1100 level on SP futures is coming back into view. Bears thus far have been successful in defending up there (we failed twice there this week already), while bulls cont to hope for increased hedging/upward momentum as we trade up-to/through that level.

     · Why the strong rally in the afternoon? Some of the items people are talking about: 1) technicals – 1075 held this morning on sp500 (which was a somewhat important level)….2) s&p survey sanguine on US RMBS (hit tape @ 2pmET, which is when rally seemed to get going….per S&P, “Investor forecasts for US home prices for the next 12 months are trending upwards…. projected default rates for the underlying loans in US Alt-A and Sub-Prime RMBS improving since the Q209 survey”)….3) people are pleased w/some of the commentary out of the WMT meeting (although there wasn’t a ton incremental and mgmt’s look on F10 was inline)….4) the Fed came out w/its own comp guidelines for the whole banking industry (beyond those impacted by the White House pay czar) and they were pretty benign (calming fears that Washington was going to start making a lot of noise around pay).

     · Equity sectors: broad-based strength today. Financials were the market’s best performing group (w/sp500 financials up near 3% on the day as US bank earnings season comes to an end; the sp500 bank index is up close to 5% on the day, its best single day performance since back in Jul). Other groups up >1%: retailers (led by JCG’s 15% surge), builders (up >4%), materials (led by DOW and FCX). Transports was the only major group on the red today.

     · Dollar: had been higher for most of the morning but steadily trended lower as risk assets rallied; late in the day Thurs the DXY was flattish on the session.

     · Treasuries: the longer end was sold on concerns re the size of next week’s auction but rallied back to approx. unchanged after the formal Treasury announcement.

     Eco update

     · Initial jobless claims increased to 531,000 in the week ending October 17 from 520,000 in the week ending October 10. The latest report was for the October payroll survey week. Between the September and October survey weeks, jobless claims fell 19,000, and the four-week average of claims fell 32,000. Thus claims suggest that employment losses started to moderate again in October, despite the increase in claims in the latest week. Also, the general downward trend in claims continues to appear intact. A Reinhart.

     · Housing – 3rd neg. housing data point of the weak – the home price index this morning came in dwn 0.3% (vs. St expectations for a +0.3% increase).

     · Leading Indicators – came in +1% vs. expectations for a +0.8% increase.

     Earnings season recap – slew of earnings out last night/this morning. Recap of some of the bigger reports.

     · Transports – trans flattish on the day, lagging broader market. Slew of reports this morning: UNP -3%, UPS -1%, R -1. DAL, ALK, JBLU all hit in airlines (XAL off small on the day following steep sell-off on Wed).

     · Financials – very strong rally in bank land on back of earnings (we heard from PNC, FITB, STI, HBAN, among others). In asset managers, we received #s from JNS and LM (both stocks sell-off). AMP, PTP and TRV start off the insurance earnings season on an upbeat note (TRV shrs up 6%).

     · Consumer – KMB rallies >5% after strong earnings release. HOT drops ~2% after earnings (but off worst levels). HSY and MJN both sell-off hard post results. PM falls 2% post its report and RAI is flattish. JCG climbs 14% after an upside preannouncement.

     · Media – NYT beats (paper earnings continue to come in better, following GCI last week). NYT shrs trade up 22%.

     · Telecoms – T kicks off earnings season for the group w/numbers better than expectations; keep in mind expectations very subdued and space has traded very poorly of late.

     · Health care – bunch of earnings: MRK (flattish), BMY (dwn 1.5%), CELG (stock up 2%), ZMH (stock up 4.5%), SGP (stock flattish), BCR (up 2%), and AMGN (stock down 5%).

     · Energy – OXY is first major energy firm to report – results beat expectations. Stock is up 3%.

     · Industrials – MMM +3%, BDK +3.5%, GR +6%, RTN +3%, DOW (up 3%), POT (stock is flattish). DHR all reported this morning (stock up small), MMM (up 3%)

     · Tech – very busy night/morning in tech earnings. EBAY off 4% after guidance disappointed. Hardware results being met w/selling (EMC, NCR). LRCX and NVLS both rally after strong earnings. In telecom equipment, ERIC is off 3% and FFIV trades up double digit %s. Software #s mixed reaction – CTXS off 3%, VMW is dwn 1% while CHKP is up 4%. ADS falls 6% after its earnings release. QLGC rallies 6%. after the close we get AMZN, BRCM, CA, CPWR, JNPR, PMCS, WDC, WFR, and SYNA. Fri morning we hear from MSFT.

     Calendar of events to watch

     · Eco events for Friday, Oct. 23rd: US (Existing Home Sales); Eurozone (German IFO, UK GDP); Other (n/a).

     · Corp calendar for Thurs Oct 22: earnings (WFR, CPWR, AVID, SCSC, ELX, NFLX, CB, AXP, HITT, FII, CAKE, AMZN, RVBD, LSCC, JNPR, CYN, BRCM, INFA, BUCY, NTGR, PMCS, WDC, RNOW, SYNA, MCRL, SIMG, Freescale, CA, BNI, COF). WMT has an analyst meeting (10/21-22).

     · Corp Calendar for Fri Oct 23: earnings (Hynix, Danone, MSFT, HON, AVX, FO, IVZ, EXC, CLS, SLB, WHR, IR, WL, SJR, MSFT).

     · Treasuries – there are a bunch of coupon auctions coming up, inc: 5yr TIPS Mon Oct 26 ($7B), 2yrs Tues Oct 27 ($44B), 5s on Wed Oct 28 ($41B), and 7s on Thurs Oct 29 ($31B).

158. c’mon BOP; this is almost all HFT trading; how else is GS, JPM and MS making money.

     The market goes where when and how they want it to.

     No one else is playing … everyone I talk to says there is no real volume in the market; only HFT; and when volume comes in; its on sell side.

159. VALERO GETS UPGRADED BY BARCLAYS

     We raise our 12 month price target to $24/sh from $18/sh, reflecting higher EV per daily barrel of complexity
     target and current higher oil prices (higher inventory value). We believe VLO is currently trading at a cheaper
     valuation versus the group, therefore we raise our relative rating to 1-OW. For investors interested in the
     seasonal trade, we prefer VLO as our trading vehicle.
     􀂃 We raise VLO’s 12 month price target 26% to $24/sh.
     􀂃 We believe the refining industry will bottom within the next 6 to 9 months and thus increase VLO’s EV per daily
     barrel of complexity target 21% to $440. In addition, higher oil prices increase VLO’s inventory market value.
     􀂃 In light of VLO’s cheaper valuation versus the group, we raise our relative rating to 1-OW.
     􀂃 Please see our note: Gasoline Should Outperform Diesel Margin, dated October 23, 2009 for additional color on
     our outlook for the Refining Industry.

160. Dman – I own the stock now.

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