Tuesday Morning

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Sentiment Watch: Flu like, alternating periods of hot and cold. We get home prices and consumer confidence a little later this morning. We get more earnings from E&Ps we care about later in the week but results and other news will likely continue to be dominated by the wild, seemingly random movements in the equity markets. 

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today - COG
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $22,700
    • 48% Cash
    • The Current Holdings Tab Is Updated.
  • Yesterday's Trades:

    • PXD – Added (5) November $45 Calls (PXDKI) for $1.65 with the stock at $44. See post for details.
    • SWN – Added another (5) SWN $50 November calls for $1.55 with the stock at $48.45. Earnings Friday.
    • SWN – Added (10) more SWN $50 November calls for $0.90 with the stock at $46.45.
    • WLL – Added (5) WLL $60 November Calls (WLLKL) for $2.45 with the stock just falling through $59. I continue to hold the $65 strikes here as well. Earnings mid week.

Commodity Watch

Crude oil fell $1.82 to close at $78.68 yesterday on a 0.7% "rally" in the dollar and a steeper drop in equity markets. This morning crude is trading up slightly on a very slight move back down in the dollar.

  • Early Read On Oil Inventories:

    • Crude: Up 1.5 mm barrels (upside risk remains elevated here)
    • Gasoline: Down 1.0 mm barrels
    • Distillates: Down 0.6 mm barrels (thinking it will be a larger draw down)

Natural gas tumbled $0.27 to close at $4.51 yesterday on warmer weather this week and last and expectations that the injection season may linger a little longer. The front month rolls to the December contract on Wednesday leading to increased volatility. This morning gas is trading flat.

  • Imports Watch: Down 0.5 Bcfgdp from last week and 1.0 Bcfgpd from last year.

    • Canada: 6.2 Bcfgpd, off 0.2 Bcfgpd from last week and 1.6 Bcfgpd from last year.
    • LNG: 1.3 Bcfgpd, off 0.3 Bcfgpd from last week but 0.6 Bcfgpd from last year's depressed levels.

Crack Spread Update

Key Takeaways: Still in a holding pattern. Group made another effort to breakout yesterday but again, can barely put more than a one day run together before sagging. Will listen to the VLO call today at 11 EST.

Stuff We Care About Today

COG Reports Strong 3Q09 Results; Announces Big Wells, Guides Higher

The 3Q Numbers:

  • Production: 25.5 (277 MMcfepd and 95% natural gas), near the upper end of the guidance range of 24.7 to 25.8 Bcfe vs:

    • 2Q09 of 25.6 Bcfe
    • 3Q08 of 24.2 Bcfe

  • Revenue of $207 mm vs $205 mm expected
  • EPS of $0.38 vs $0.36 expected
  • CFPS of $1.53 vs $1.28 expected

Operational Bullets:


  • First horizontal East Texas Haynesville completion is producing 21- MMcfepd after 11 days on line

    • this is a big rate for a Texas Haynesville well,
    • 7,800 psi seems high to most announced on this side of the play
    • COG mentioned they are still recovering frac fluid (well is still cleaning up) and they expect production to incline further for a time.
    • This makes for a stunning E. Texas Haynesville well.


  • Little additional information since their last ops update in September but to summarize:
  • 24 hour IPs have ranged from 4.6 to 11.5 MMcfepd - respectable.
  • Their 2 most recent completions are producing 6.5 MMcfepd on the 40th day of production which isn't half bad.
  • Total production is > 50 MMcfepd from 5 MMcfepd a year ago. 
  • They now have 173,000 gross acres in the play.

Pettet East Texas Oil Play

  • 4 wells drilled to date:

    • laterals of 3800 to 5200 feet,
    • no information on costs but I don't think they are very high
    • IPs range from 815 to 936 bopd
    • First 30 day average production of 450 to 514 bopd
  • Total production is now > 1,000 bopd
  • They have 175 to 225 gross locations
  • Gross reserves per well are thought to be about 240 mboe.



  • 4Q goes from a range of 268.8 to 280.0 Bcfe to a range of 280 to 295 Bcfe
  • That puts 2009 at at 102 to 104 Bcfe, or 8 to 9% YoY growth
  • 2010 Initiated at 120 to 125.6 Bcfe, or 17 to 21% YoY growth


Nutshell: Big beat, big wells, upped guidance for 2009, established stronger guidance for 2010; not a lot not to hate here. Current 8x 2010 CFPS isn't cheap but estimates more than likely on the rise here.

Conference Call: Today, 9:30 EST

KOG Prices Secondary

  • 10 mm shares at $2.20 for net proceeds of $24.9 mm.
  • This should give them cash on hand of close to $28 mm
  • Credit line to follow.
  • Hedging to follow that.


Yesterday's PXD Eagle Ford comments have been added to the Eagle Ford page on the Reports tab.

Jubilance For Jubilee Continues. Chinese firm Sinopec and the Ghana National Petroleum Corporation itself have thrown their hats in the ring as potential suitors of Kosmos's stake in the offshore field along with Exxon and CNOOC. 

Odds & Ends

Analyst Watch:

  • Jefferies raised (COG) target from $41 to $48
  • JPM raises (COG) to Overweight

120 Responses to “Tuesday Morning”

  1. 1
    BirdsofpreyRcool Says:

    TechTrader is calling for a SHORT trade to have the best odds of working today… 60/40

    HeadTrader commiserating with BIDU stockholders.

    IG13 103 +1bps wider from yesterday’s close

    HY13 93 3/4 down 1/4 pt from close

  2. 2
    zman Says:

    Thanks BOP, not a lot of rhyme/reason to futures at the moment, feels like a coin toss.

    Dollar hanging in there but so are crude and crude products and natural gas.

    COG quarter was stellar and that’s getting noticed which bodes well for others in the E&P space that post standout quarters.

  3. 3
    zman Says:

    Case Shiller Home Prices:

    * 19 of 20 areas show improvement (sorry Cleveland).

    * August home prices up 1.2% from July

    * August down 11.3% YoY

  4. 4
    TEXWS6 Says:


    Any clue as to where COG’s ETX Haynesville well was?

  5. 5
    zman Says:

    TEX – I think it’s north central San Augustine county.

  6. 6
    elijahwc Says:

    Street seems well pleased with KOG. Here is the take on the Dow Wire.

    Kodiak Oil Slightly Raises Stock-Sale Size; Discount At 3.5%

    Kodiak Oil & Gas Corp. (KOG) slightly boosted the size of its pending stock
    offering as it was priced at a 3.5% discount to Monday’s closing price.
    The company on Monday announced plans to sell up as much as 11.5 million
    shares, looking to fund drilling activities at leases in the upper Midwest.
    Kodiak on Tuesday put the minimum size at 12 million as it was priced at
    $2.20. Monday’s disclosure helped send the stock down 7.7%.
    The stock sale, which would boost shares outstanding from the current 100
    million, comes as the stock has surged from 16 cents earlier this year.
    Kodiak has reported drilling success the past several months in the Bakken
    shale field of North Dakota. Shale plays have been a key growth sector for
    natural-gas drilling while overall activity slumps amid falling demand and
    inventories at record levels.
    The company for the second quarter reported in August its production more
    than doubled, allowing its loss to narrow despite the tumble in commodity
    prices which has ravaged petroleum companies’ bottom lines this year.

    -By Kevin Kingsbury; Dow Jones

  7. 7
    zman Says:

    Analyst Watch: RBC takes PXD target to $60 from $48.

  8. 8
    zman Says:

    KOG – It was the most conservative play they had available. In a month, no one is going to care about the dilution. If oil cracked back to $65 however and the stock was at $1.75 people would be wondering why they missed the deal window.

  9. 9
    zman Says:

    Analyst Watch:
    COG target goes to $56 from $47 at Pritchard

    IOC target goes to $73 from $67 at Morgan Stanley.

    Crude futures back to flat in a heart beat from up $0.60 following housing numbers. Going to be another wild one.

  10. 10
    zman Says:

    COG mid $42s. Wow. Will watch for a pullback there and listen to the call. I used to follow these guys, back when they were more boring. Would like to hear about what their bread and butter reserves are doing, not just the sexy stuff.

  11. 11
    zman Says:

    COG call starting. Those Pettet Lime oil wells in E. Texas are interesting, would like to see them ramp that activity.

    2010: hedges
    18% at $11.43 on natural gas
    Oil hedged at $1.25

  12. 12
    zman Says:

    Reaction in COG vs reaction in NFX. NFX didn’t give 2010. Analysts love to be spoon fed. Big well helps but its the guidance driving the stock this morning.

    On Friday, SWN is unlikely to provide 2010 guidance as they typically don’t do that on the 3Q call. I don’t think it will be as much of an issue for them as it was for NFX last week as they are almost a pure shale play and the numbers aren’t that hard to get to on top line growth. Also, they could have catalytic results both in the Fayetteville and in the Haynesville.

  13. 13
    zman Says:

    COG – Haynesville well was in the County Line prospect area so that’s San Augustine county.

  14. 14
    BirdsofpreyRcool Says:

    z — what did COG hedge their oil at again?

  15. 15
    zman Says:

    COG Call notes:

    Marcellus program to double in 2010 vs 2009,

    9 horizontal wells producing now to account for the > 50 mm/d at present.

    13 hz wells and 9 vertical sawaiting completion.

  16. 16
    zman Says:

    $125 but its only 5% of production, old hedge.

  17. 17
    BirdsofpreyRcool Says:

    thanks. too bad only 5%… lol

  18. 18
    zman Says:

    COG will be flavor of the day all day long. PXD had this status yesterday, caught some upgrades today and is up a whopping 40 cents (< 1%) today. Market back to having the attention span of a gnat. COG is up 10% now, could end day up as much as 15% depending on the call. COG has 32,000 net acres in Haynesville. 150 to 250 locations. 2nd well is flowing back currently, not too distant future on news (that can support the stock over the next couple of weeks) Preparing a nearby 100% COG location for an early 2010 spud. Sounds like they have a sweet spot in E. Texas on their hands. EOG is right down here, so is HK, so is SM.

  19. 19
    zman Says:

    COG –

    Reserve replacement will > 200%, nice.

    Entire 2010 capex goes to Marcellus, E. Tx Pettet, Jame Lime, Taylor Sand, and may move it more towards a Haynesville focused program. So we have more of a focus on the shales than ever before in this name. No mention of gulf coast exploration in that.

  20. 20
    zman Says:

    COG – 170,000 gross Marcellus acres is just about the same number for net, sounds all Pennsylvania.

    Marcellus – drill only number is 18 to 22 days, add another 20 days to complete. This is down from a combined 80+ days last year.

    Reef – Don’t know if you saw it yesterday but the print function has been fixed.

  21. 21
    zman Says:

    KOG – can’t dislike the day after reaction.

  22. 22
    reefguy Says:

    COG- Pettet in which counties??

  23. 23
    zman Says:

    Pettet is on top of the County Line area so dead center San Augustine,

    see slide 14 here:

  24. 24
    isleworth Says:

    KOG upgraded to Outperform at Raymond James

  25. 25
    zman Says:

    COG Completed Well Costs per play:

    Pettet: $3.2 mm

    Haynesville: $10 mm – 14 stage. Pricey but early in their look at the play. Science, not yet optimized etc.

    Marcellus: $3.6 mm horizontals

    Rig Count 2010

    6 rigs in Marcellus
    3 to 4 rigs in E. Texas

  26. 26
    zman Says:

    Consumer Confidence falls to 47.7 vs 53.4 in September and 53.2 expectation. Way to go economic eggheads. Market falling off.

  27. 27
    BirdsofpreyRcool Says:

    KOG — the biggest near-term (negative) uncertainty is behind us. Dilution is done and money is in the door.

    The fact that they did the 2ndary before knowing the results of well #9 tells me that #9 is not expected to add anything “new” to the story (good, or bad) and that KOG just needed to get their credit facility in place as a backstop to hedging production. So, the “story” there should quiet down a little. Big catalysts will be a 3FS test (1Q10 maybe?), continued production growth with XTO starting to drill on their JV acreage, upside potential from their DVN JV in the Vermillion (which is currently carried at zero value, but may actually add to revenues in 2010), hooking into infrastructure in 2H10, and higher oil prices. Basically, functioning like a funded and operating E&P.

    Also, I suspect KOG will get away from reporting on well-pairs on an individual basis. The urgency to promote the sizzle here is diminished by having flowing revenues and a funded 2010 capital budget. Lynn will try to act like a “normal” E&P… while at the same time, keep an eye and ear open to suitors. At the right price, KOG will be bought.

  28. 28
    BirdsofpreyRcool Says:

    KOG — hearing Raymond James upgraded to Outperform.

  29. 29
    zman Says:

    BOP – agreed, bet they go to ops updates with their quarterly release unless they drill a really big kahuna well somewhere.

    KOG – re RJ, nice of them, seeing more of that, will see if I can get their target piece on that upgrade.

  30. 30
    VTZ Says:

    Gold pierced support at 1034 will be looking for 1020-1025 for support.

  31. 31
    zman Says:

    Want to cut costs out of the system? Fire all the economists. What a bunch of eggheads? They obviously just pull the consumer confidence numbers out of an orifice.

  32. 32
    BirdsofpreyRcool Says:

    KOG — rumor mill has it that KeyBanc is thinking $4 NAV at YE09 and $6 at YE10. But, Key is clearly axed to get the stock higher here (2ndary success + will probably be the banker on any biz combo in KOG’s future).

  33. 33
    zman Says:

    Victory today for the group will be closing flat to down 1%.

    KOG – BOP, again agreed. I think its fine here. Where’d all your deal anger go, lol?

  34. 34
    BirdsofpreyRcool Says:

    I’m still pissed… but, it’s over and done. So, what’s the point? They got it done, they got money… NEXT.

  35. 35
    BirdsofpreyRcool Says:

    And I hope Macquarie and BMO Capital shorted the SHIT out of KOG on the news. They both had the bad form of publishing $1.40 and $1.00 PTs on the day the deal was announced and done. I hope their trading desks rip a new one for the analysts there.

    No anger. Just seeing Universal Harmony… 😉

  36. 36
    BirdsofpreyRcool Says:

    [make that “seeking”…]

  37. 37
    isleworth Says:

    RJ target price $3

  38. 38
    BirdsofpreyRcool Says:

    Thanks, isle.

  39. 39
    zman Says:

    KOG re $3. I can get to that number fairly easily. Further positive drilling may let them up that to $4 by 1Q or 2Q10 depending on the timing of a Three Forks Test. Also, there is some TFS test to the west of their original wells which could serve to increase prospectivity of the TFS under a portion of their block.

  40. 40
    isleworth Says:

    Z – Is first week of Nov when do you expect to hear more on the SD acquisition of Crusader?

  41. 41
    zman Says:

    COG – mentioned the Chemicals side in increasing demand.

    Isle – yes.

  42. 42
    zman Says:

    COG – getting down into tiny brass tacks now.

    VLO call in 30 minutes. Note the complete lack of follow through in that group’s performance. Jerome, when you get a chance can you look at VLO, TSO, SUN as I really think those are going to be a technical trade at some point on a slight improvement in the fundamentals.

  43. 43
    zman Says:

    Why did the market just go all “happy, happy, joy, joy”?

  44. 44
    elijahwc Says:

    OT – Jeremy Grantham’s Q3 letter is out. Good writer and worth 30 minutes later this evening. This link shold ge you in but if not registration is free.


    Z check your mail

  45. 45
    BirdsofpreyRcool Says:

    IBM boosts share buyback program by $5B

  46. 46
    BirdsofpreyRcool Says:

    Some musings by X-Asset Class Strategist…


  47. 47
    zman Says:

    Thanks, got that RJ piece on KOG. Good to have someone on the Street with a decent looking model on them. They have production doubling in 2010 vs 2009, not unrealistic, they have cots almost flat on a BOE basis, probably conservative. So the Street starts to look at KOG on P/CF and not just reserves value. It will be a pricey multiple at first as they come out of the cellar but 2011, which people will start looking at mid way through 2010 should show some pretty good multiple contraction making the name look cheaper.

  48. 48
    zman Says:

    Eli – re 47 and email. Thanks. I think he’s taking a pretty conservative angle on that model which is a good thing. Gotta give the guy kudos for supporting someone else’s deal. Seeing more of that lately as bankers scramble for business. Good bet RJ will be in the credit line syndicate in add to Key.

  49. 49
    VTZ Says:

    Z – Market went happy happy joy joy because the dollar peaked and turned down. Simple trade to watch. Makes the lives of all those “sophisticated traders” so difficult.

  50. 50
    zman Says:

    Tick chart on the SP shows this market still needs a prozac, very jumpy.

  51. 51
    bill Says:

    drys reported today

    30 m profit on 5.4 billion in assets

    254 m shares o/s–AVOID
    does not include 40 m shares for preferred share conversion given to the ceo for his drillship obligations

    other bulkers stocks report tomorrow

  52. 52
    zman Says:

    V – I hear ya, still up on day. If you ask me, this little “rally” is just a bump in the road on the way to 72. Rally = reload.

    VLO Call in 5 minutes. Could be a mover for gasoline and therefore crude as I expect them to express even more dire views on the domestic refining industry. Also good if you like to get your anti-DC energy rant on.

  53. 53
    zman Says:

    Bill – isn’t DSX soon?

  54. 54
    VTZ Says:

    I just reloaded at support for gold.

    Willing to reload energy, gold and ag bets again at nice opportunities.

  55. 55
    zman Says:

    Hearing no more rumors out of MMR sources.

    VLO call starting.

  56. 56
    zman Says:

    KOG holding at the pre deal announcement closing price. Not bad.

  57. 57
    Jerome Blank Says:

    Re: #42, of the three, TSO has a bit of a better technical set up right now…TSO recently traded up thru P&F trendline resistance to go back on a buy signal with the print of $16.50, so TSO is currently on a buy signal… although VLO is still on a P&F sell signal its trading up against trendline resistance and goes back on a buy with a print of $22, SUN has been on a rip, going back on a P&F buy with the print of $32, SUN may be just a bit extended, SUN goes back into o’s on a print of $31, where it finds moving avg support and remains on a buy…

  58. 58
    zman Says:

    Thanks much J, that helps.

    VLO Outlook:
    * 4Q looks weak like 3Q

    * This factors into their decision to bring some planned maintenance that was scheduled for 2010 into this quarter (why operate when margins are this cruddy?)

    * Focus remains on cost control

  59. 59
    RMD Says:

    Several co.s have mentioned their first tests in the Bossier shale in ’10, including COG today. This makes me think more analysts/investors/companies will be looking at GST’s holdings there (and take me out at high prices).

  60. 60
    zman Says:

    VLO Q&A

    Trucking indexes turning up.

  61. 61
    zman Says:


    PXD – Sold the $45 Nov Call position taken yesterday for $2.65, up 61%. Will reposition same dollars into WLL prior to their earnings tomorrow evening, not very trusting of this market and not willing to delve further into my cash position at this time.

  62. 62
    zman Says:

    RMD – keep holding onto that dream man.

  63. 63
    zman Says:


    WLL – Added (5) more WLL $60 November calls (WLLKL) for $2.65 with the stock trading flattish on the day. Earnings later this week.

  64. 64
    cargocult Says:

    Any insight into WRES decline?

  65. 65
    zman Says:

    CNBC saying Iran is balking at the new plan to have their uranium further enriched on foreign soil.

  66. 66
    zman Says:

    Cargo – It fell because of the secondary announced late last week. Now that was a poorly handled secondary as the go forward plan was not clearly articulated. I have an email in with them, no response. I’m there for a little longer term, looking to the 2010 reserve report on higher prices. I’ve got a list of questions into their IR guy, so far no response.

  67. 67
    zman Says:

    VLO call = morose with a touch of upbeat regarding cost cutting. Stock continues to trade lower. I continue to avoid the group.

  68. 68
    bill Says:

    dsx in november


    nm tomorrow

  69. 69
    zman Says:

    Thanks Bill, still not seeing much of a reason from a global trade standpoint to go after the dry bulkers yet.

  70. 70
    zman Says:

    CNBC about to do a segment on smart grid after the President granted about $3 B this morning for work there. Might be worth a listen.

  71. 71
    zman Says:

    OPEC comments coming across that the group has no plans to meet with the thought of raising production until prices hit $100.

  72. 72
    zman Says:

    VLO call – there’s an hour of my life I won’t get back. Wowboring. Don’t see any reason to play at this time.

  73. 73
    Alhambra Says:

    re 70 – http://bloomberg.com/apps/news?pid=20601070&sid=aw_G_Kh029b4

  74. 74
    RMD Says:

    comment 62 does not = Universal Harmony.

  75. 75
    zman Says:

    RMD – I opted out of harmony for the day.

    Working up WLL pre call thoughts for numbers tomorrow night. Probably a small beat in the works on production and CFPS.

    Oil all over the place now, S&P back to red, wowboring, directionless market.

  76. 76
    zman Says:

    Fyi, Tudor making a comment that investors will be watching EOG for the usual stuff and included the Cleveland tight oil sand play. This is Crusader country. EOG has had a rig running there all year going for oil, getting some 400 bopd wells that fall off to 200 bopd shortly thereafter.

  77. 77
    zman Says:

    Geithner to testify tomorrow on too big too fail legislation. Market took a header as the news hit.

  78. 78
    zman Says:

    # China / LNG Watch: Qatar has diverted a further 10% of its LNG output from the U.S. to China. Qatar said that it will not send its gas to the low priced U.S. market when China is willing to pay more.

  79. 79
    baylor3217 Says:

    78 that should be good for the ng prices

  80. 80
    BirdsofpreyRcool Says:

    z — exactly what is “too big to fail” legislation?

  81. 81
    Jerome Blank Says:

    BEXP is pulling back toward support, any thoughts on stock vs. the $10 calls here? Do you still like BEXP in front of earnings?

  82. 82
    zman Says:

    Baylor – it helps with that piece of the gas supply pie, yes. I don’t think anyone is going to point to Qatar and buy gas futures but it is part of the puzzle for 2010 that is increasingly price positive.

    BOP – Details not out yet. Barnie Frank saying something about a revolving fund that would bail out those institutions that are deemed TBTF.

    Jerome – nothing new really, I’m still holding both sets of calls and the common. Don’t see earnings as problem for them, more about the drilling and they will be telling it to a wider audience.

  83. 83
    BirdsofpreyRcool Says:

    that’s just stupid. nothing more to say about it.

  84. 84
    zman Says:

    Hear ya BOP, all I can say as that I saw those headlines and the market fell off. Maybe there’s no correlation.

  85. 85
    BirdsofpreyRcool Says:

    No… i think pretty much the entire fate of the mrkt trades on headlines out of Washington DC. Then journalists just go looking for anything OTHER than that to blame it on.

  86. 86
    jat Says:

    Z, what’s the guess tomorrow on DOEs? Haven’t yet listened to VLO call, but headline comments around increased downtime don’t exactly inspire me vis a vis utilization.

  87. 87
    zman Says:


    up 1.8 mm on crude
    down about 1 mm on gasoline and distillate inventories.

    Down utilization is a good thing if you like things that are supportive of oil, unless you own the refining stocks. Then its only a good thing if you name isn’t one of the ones curtailing hard.

  88. 88
    RMD Says:

    CHK comment from Investors Intelligence today:
    Chesapeake Energy (CHK) broke above a multi-month base formation in early September by rallying through $25. Declines over the past week have pulled the share back to that breakout level, providing a second opportunity to play the pattern from a decent entry level. The base yields a target to $35.
    We will buy today for the Trading Portfolio. Three consecutive end-of-day closes beneath $25 would initiate closure on the next session.

  89. 89
    elijahwc Says:

    Healthcare update hitting the wires:

    Lieberman says he’ll filibuster Reid plan – Politico

    Politico reports Sen. Joe Lieberman (I-Conn.) said that he’d back a GOP filibuster of Senate Majority Leader Harry Reid’s health care reform bill. Lieberman, who caucuses with Democrats and is positioning himself as a fiscal hawk on the issue, said he opposes any health care bill that includes a government-run insurance program — even if it includes a provision allowing states to opt out of the program, as Reid’s has said the Senate bill will. “We’re trying to do too much at once,” Lieberman said. “To put this government-created insurance company on top of everything else is just asking for trouble for the taxpayers, for the premium payers and for the national debt. I don’t think we need it now.” Lieberman added that he’d vote against a public option plan “even with an opt-out because it still creates a whole new government entitlement program for which taxpayers will be on the line.” His comments confirmed that Reid is short of the 60 votes needed to advance the bill out of the Senate, even after Reid included the opt-out provision. Several other moderate Democrats expressed skepticism at the proposal as well, but most of the wavering Democratic senators did not go as far as Lieberman Tuesday, saying they were waiting to see the details.

  90. 90
    jat Says:

    Really? If we get the reversion in imports for which you’ve been looking, coupled with increased downtime, should that lead to a bearish crude build? I hear you on a need for gasoline/dist. draws, just thinking through the possibilities on crude inventories.

  91. 91
    zman Says:

    Interesting trading action (rotten boring and directionless actually), but interesting from the sense that we have had five distinct phases (so far) today. Open green, sell off as per mode since last Wednesday, bounce to greener, sell off to match mid morning low, then bounce again. Someone suggest to our fearless leaders that they go on vacation early.

    If I could get just one member of congress to forward a bill right now it would be that they all take 10% pay cuts until we see the unemployment numbers come back to 5% or less. You don’t have to pass it, just shame all those who won’t vote for it. Of course, you’d need a long list of exceptions including the prohibition of government from actually just putting 3 mm people on payrolls in a day to save congress’ paychecks.

  92. 92
    zman Says:

    Jat – I’m thinking we get a bigger build again tomorrow. VLO’s comments are more q4/q1. Imports are really going to be the big swing however on the week to week.

    I’d bet it ticks a little higher with this week’s report, probably somewhere 9 to 9.5 mm bopd but that’s just a guess fro 8.7 mm bopd the last two weeks. Get that upper end and you likely get a 3 mm barrel crude build, not 1.8.

    And if we don’t see a bigger draw soon in distillates I’m buying stock in L.L. Bean as families simply aren’t filling up due to constrained budgets.

  93. 93
    zman Says:

    RMD – got that email, muchas gracias.

    Good close for oil up 75 cents at 79.4 despite another day of dollar strength. ]

    NG up 3 cents = meeh. Contract changes out there tomorrow. 12 month is at about $5.60. Ok. Waiting on the next set of supply numbers on the 29th from the EIA.

  94. 94
    BirdsofpreyRcool Says:

    sorry, z… LL Bean is private.

  95. 95
    zman Says:

    RMD – Johnson Rice has the PXD number wrong or at least gross when compared to the net of all the other E.F.S. players. It’s 250K net from my understanding.

    WLL trading wildly. I think we get a small beat on production, small upward revision on 2009. Establishment of 2010 production guidance is a possibility but NOT likely. Costs have been coming down, look for more in tomorrow’s post, they report after the close tomorrow.

  96. 96
    zman Says:

    BOP – why so literal? Ok, then lambs wool futures. Double purpose: 1) warmth, and 2) increasing use by the folks in D.C. to pull over our eyes.

  97. 97
    zman Says:

    Biggest moves on in XOM, CVX, and COP I recall without a big move in the market in quite some time. Feels like a fund family buying into energy.

  98. 98
    BirdsofpreyRcool Says:

    HERO is out with earnings pre-mrkt tomorrow. They are widely expect to be pathetic. In fact, the company itself pre-anounced they would be pathetic. So, pathetic is pretty much what I am expecting.

    However, just as it seemed the height of stupidity, to think about the mrkt coming out of the trough in late March, that might be where we are with HERO’s fleet utilization. These guys are kinda the bottom feeders of shallow GoM and transitional drilling. But, with the recent strenghening in energy prices, combined with a slight uptick in permits for GoM shelf drilling… HERO will be worth watching and (if you have nothing better to do) listening to the conf call tomorrow at 10am.

  99. 99
    BirdsofpreyRcool Says:

    z — oh. i knew you were kidding… i was just playing the Straight Man. Missed my timing on that response? Darn. No Vaudville for ME.

  100. 100
    zman Says:

    Jat – any comments re HERO. Last name this season to report and expected to be pathetic was WFT. They satisfied on that account. Stock = stuck. Absolutely will listen to the conference call during the mid week lag. Firestorm of energy earnings starts tomorrow night after the bell. And no, I’m not playing FSLR this time around.

  101. 101
    BirdsofpreyRcool Says:

    yeah… but WFT is trading on a 18.5x trailing PE while HERO is truly pathetic at 8.2x

    that said, WFT is cleary stratospherically higher on the food chain than bottom feeding HERO.

  102. 102
    jat Says:

    I don’t really do HERO, way too low quality for me, so my value is little. From what I’ve been reading, a miss does seem largely anticipated. The permabull MS analyst put out a trade recommendation on the 22nd calling to buy it on improving GoM jackup fundamentals, even though the quarter should miss. Makes sense, I guess. Maybe as a PA trade, not as an investment.

    Re: WFT, the more relevant comparison IMO is the 2010 P/E relative to HAL/SLB/BHI. A huge, absolutely huge, discount there. Can’t remember when WFT traded at a discount to even BHI. I understand why the discount exists, with the recent abysmal execution failure and all. I just think that if they come close to turning it around the stock gets unstuck.

  103. 103
    elijahwc Says:

    Group hug for KOG

  104. 104
    BirdsofpreyRcool Says:

    Warm Fuzzies back your way, elija!

  105. 105
    zman Says:

    Jat – any thoughts OII? I’m likely to stay away this time, hearing maybe a soft quarter then stronger 4Q and 2010.

  106. 106
    zman Says:

    Would someone post the API’s when they hit? Thanks.

  107. 107
    zman Says:

    6 stages of the market today. The five mentioned above and then wishy-washy into the close. Ugh.


  108. 108
    bill Says:

    what the heck is going on with sd, underperforms on up days, down days, any day and every day

  109. 109
    zman Says:

    Bill – dunno, directionless for the most part. Lots of weird reversals today. APC up strong all morning, finishes worst amongst large caps. Very weird trading, not on light volume either in most names pretty average to high. WLL volume was high to norm, stock all over the map.

  110. 110
    BirdsofpreyRcool Says:

    The Shale Kids have chased SD off the playground.

    That’s OK. SD is plotting a way to get even.

  111. 111
    zman Says:

    Bill – I think Eli said it best yesterday with his comment that the market had moved away from a price discovery vehicle (I would say just in the last couple of weeks) and that it’s all about the buy programs at the moment and charts.

  112. 112
    zman Says:

    SD with Bakken shale and Cleveland oil sand prospects is a different animal. If they still have Granite Wash in the mix after the deal goes through they will be even more interesting.

  113. 113
    reefguy Says:

    ioc- up 9.3%, yesterday down 11.8%

  114. 114
    BirdsofpreyRcool Says:

    Just quoting from the horse’s mouth. But, I agree… that’s why I say SD is plotting their revenge.

  115. 115
    nifkin Says:

    API reports crude inventories (3.53M) vs. prior +3.85M
    Gasoline inventories (255K) , Distillate inventories (671K).

  116. 116
    jat Says:

    API also saying utilization basically flat with inputs up only 56kpd. Saying imports down -116kpd vs. the prior week.

    Someone explain to me how the APIA comes out with a draw that big. Of course, they were off by 2.5mn on crude last week…

  117. 117
    jat Says:

    SWSI issuing another 900k shares.

  118. 118
    jat Says:

    Correction, 6mln, was just looking at the greenshoe

  119. 119
    zman Says:

    Thanks for posting the API, for what it’s worth.

  120. 120
    VR games Says:

    VR games

    Tuesday Morning | Zman's Energy Brain ~ oil, gas, stocks, etc…

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