T.G.I.F.

149 thoughts on “T.G.I.F.”

1. Z – don’t know if you saw this; had a piece on PQ and broker upgrade.

   http://www.notablecalls.blogspot.com/

   Also, any thoughts on WRES and KOG after earnings and secondaries ?…. trading ranges; outlooks.

2. sd has made a proposal to buy bankrupt crusader assets for 230 m

   Crusader b/k filing started when their line was cut 5 m

   anyways , the equity holders are not represented and the debt holders have offerred mgt a bonus for a quick sale between 200 and 300 m

   This is a filing by the equity holders for status in bankrupcy court

   http://docs.bmcgroup.com/Crusaderenergygroup/docs/txnb_3-09-bk-31797_532_0.pdf

   My conclusion, sd is getting a helluva a deal, maybe a 25 % return on its investment and perhaps 100 % on its cash investment and crusader shareholders are getting screwed with kru mgt in on the screw job

   If you are long sd, read it

3. z, nice call on swn. tPH loves the results..indicating higher on a down day

4. and there is more

   87 m in ebitda next 12 months 34 daily mcfe production

   equity committee objects to “fire sale”

   http://docs.bmcgroup.com/Crusaderenergygroup/docs/txnb_3-09-bk-31797_721.pdf

   its amazing to me these “boobs” (mgt) screwed their shareholders so badly over a 5 m credit line shortfall

5. Pack – JPM missed the rally in the name and upgraded after a weak day. I don’t see anything new there. Not that I dislike the name, just think its had a pretty good run, too good for me to chase for now.

   WRES – That’s a February or March decision for me, nothing sooner. Will listen to the next call and see if they give some kind of guidance on plans now that they’ve raised money.

   KOG – I think it moves up with the Bakkens, oil over the next 12 to 24 months, should be a strong performer vs that group. I continue to hold it.

6. NG up a dime just before open.

   Crude down 60 cents

   SD – should get the conference call on the deal closing next week or at latest first half November. I think they did get a steal on those reserves. I think there is upside in the form of under exploited acreage/reserve potential on those lands. I think the action in the stock of late has less to do with the name and everything to do with the market. The high debt names, recently considered “at risk” fell off sharply as momentum in the market waned.

7. finally, this one from a creditor who opposes the deal

   http://docs.bmcgroup.com/Crusaderenergygroup/docs/txnb_3-09-bk-31797_719_0.pdf

   sd faces headwinds in getting this done

   The most amazing aspect of this whole thing (to me) is that mgt was bot off by the debtors who give them a bonus for screwing the shareholders by

8. Interesting rally off the $5 level for natural gas, now up about 20 cents. Weather.

   SWN moving … not much else though.

9. sd gets a helluva a deal if it happens but i dont think it comes off

10. #4- Bill, Z,what is the upshot of this objection-can the equity committee block or impead the sale-I’m sure lawyers are standing by to anything or everything possible to throw a wrench in the works.

11. The equity holders have no say in it after the company filed for BK. They’re generally wiped out. The debt holders are being taken care of as I understand it the deal pays the debt holdings off. Its a competitive bid and SD’s bid was highest. So unless they get outbid, my understanding is it will happen.

12. Thanks for #7,#9,#11.

13. The market is so schizo right now.

14. The nearly uniformly red screen today is what I was apprehensive about yesterday. Market risk is still my biggest concern. Those were really good results from SWN, stock up a buck in a sea of red is nice but it deserves to see multiple expansion especially when you look at other shale dominated plays like RRC and UPL who trade at significant premiums to SWN.

15. V – absolutely nutty at present. FWIW, I think we close higher from here (since we don’t have the HT and TT call since BOP is out).

16. NG almost trading like someone knows something about the supply data today. Naah, couldn’t be. That’s like getting an advance copy of the crop report.

17. Chicago PMI at 54.2%, vs 50% expected. Surprising.

    Consumer sentiment out shortly.

    SWN call in 10 minutes.

18. Shocked out of my socks on WLL lack of follow through.

19. ng up 15 cents to 5.23 yest the ng stocks are getting crushed

    Im going out for fresh air

20. Consumer sentiment at 70.6 vs 70.5 forecast. Shocking.

21. Bill – they’re joined at the hip with the S&P which needs a prozac.

22. NOG on the tape with a secondary. Another Bakken name I’m starting to watch a little more closely.

23. SWN 3Q09 Conference Call

    SWN at beginning of call, up $1.60.

    “solid quarter despite 7 year low gas prices and despite maintenance on Boardwalk”

    Don’t expect either of those to be as much of a factor in the 4th quarter.

    1 Bcfgpd milestone surpassed last week.

    From here only the new stuff or highlights:

    …

24. Aneritrade only allows option bids down to the nickel.

    Anyone use a broker that lets you bid down to the penny?

25. CNBC rant: This morning, again, CNBC has Bidens chief economist advisor, Bernstein, on TV. Can a position be more outside the loop than this post. On the pecking order of White House insiders and policy makers, this has got to rate as near the bottom. I bet the news he past on was gotten because he read the Times or Post reporters. Matter of fact those reporters are probably more in the loop and have more input into policy matters than this guy.

26. SWN CC #2

    Fayetteville gross production:

    1.23 Bcfgpd, up 100% from year ago levels

    Tighter spacing – 700 feet or less on 200 wells, (about 65 acre spacing), encouraged, points to 10 to 12 wells per section.

    3 wells put on at rates of 6 mm/d during the quarter,

    3 wells after quarter end > 6 Mm/d

    Haynesville:

    Total production:

    34.7 MMcfepd gross, 10.2 mm /d net from the Haynesville

    BSJ = LOL

27. Z, the key with WLL is how it finishes the day and next week. It is not surprising that the move Thur is facing some profit taking.

28. BSJ – My thinking is that it goes higher in fairly short order. It has near term catalysts, has set up double digit production growth for 2010, and remains a cheap name in the group. It’s not an accident they continue to drill the biggest wells in the Bakken. Normally I don’t make statements about market reactions, but I am surprised by the lack of follow through post call yesterday. The weakness today is market related.

29. #24…yes and no…see this IB link..
    http://www.interactivebrokers.com/en/general/communiques/2006/10-25-06.php?ib_entity=llc

30. ACI: I see that ACI is also doing well today. The Leer thinks that coal demand is starting to pick up.

31. Analyst Watch:

    WLL – Barclay keeps it at equal weight, but takes price target from $53 to $70.

32. BSJ – I prefer BTU or WLT to ACI. ACI has repeatedly had cost issues and production hiccups crop up. They beat estimates this morning but the estimates were severely depressed.

33. SWN CC

    Marcellus – they are in the thickest part, lots of good wells around them, and they like their wells. They still are not saying much about their activities here.

    S&P rolling over. Ugh.

34. My point was that Leer see coal demand starting to pick up. Since ACI is mostly thermal coal, this might have some bearing on nat gas and electricty output and economic activity.

35. http://www.zerohedge.com/article/cnbc-viewership-plunges-50-october

    heh.

36. BSJ – ok, gotcha.

    SWN has backed off with the market; I don’t think anything mentioned on the call would account for the move. Up about 2% at this point, still one of the only green names on my screen. I think it is clear people would like them to get their 2010 hedges on.

37. We’re still putting on wells from the Boardwalk pipeline shut in period. They have a backlog of a month of wells. Sounds like they will beat their 4Q guidance.

    Call over, good call, not much to add to the press release and what I put in the post. The hiccup on Fayetteville metrics (not going up each quarter in a linear function that I cited in the post) was indeed a function of the pipeline curtailment and not the result of a “flattening” as the laterals get longer or the number of frac stages increases. They still have not seen evidence of where IPs will flatten.

38. Adding to 37, this makes sense when you think about the company having to selectively turn wells to sales in a capacity constrained environment. You don’t turn on the bigger, more recently drilled wells when there is no place to put the gas. Makes sense that their biggest IP well was turned to sales after the end of the quarter (so it’s not in the stats for the quarter) with the pipeline coming back into service in early October.

39. Re 35 – thanks for the chuckle.

    Natural gas monthly should be out an hour now.

40. That’s a large fire:

    http://www.google.com/hostednews/ap/article/ALeqM5gwLvd_gUEGs2ga_LP0Rs2S5CjxYwD9BLEQM80

41. Triva: which dead person makes the most for their estate? Is it Elvis, or Michael Jackson? No — it is fashion designer Yves Saint Laurent.

42. Bill – did you see BRY results? Stock getting hit, call was same time with SWN, have not looked at it hard yet. Would like to own them on the cheap some day.

43. Wyoming – thanks for that answer on the mud weight last night.

    Did you see WLL’s comment on sliding sleeves, timing and savings yesterday relative to plug and perf?

44. NG up today, reason? Weather:

    http://news.yahoo.com/s/ap/us_western_storm

45. Nicky is still out of pocket, anyone have near term levels on the S&P?

46. Wow…dollar has almost gain all that it lost yesterday..impressive move.

47. Got this via email from Nicky:

    Hi Z

    Sorry its been a kind of busy week. I think 1050 should hold this pullback (1043 worst way) and then we work higher to around 1075, then another leg down.

    N

48. BSJ – 25 – Bernstein probably has a good agent. He’s glib; smiles a lot; and is completely FOS.

49. Aubrey on Mad Money tonight. Why bother ?

50. SWN red.

51. The stock that surprises is still BEXP. Even after the secondary, it still is holding up fairly well. Of course, I just put the kiss of death on BEXP, sorry.

52. Natural gas supply data out: Lousy

    August total marketed production went back up to June levels. Rally in Wyoming was expected as those numbers looked to far off last month. Texas also flattened which didn’t help. Ugly numbers for gas.

53. Can’t wait for October to get done.

54. Z, nat gas supply terrible, however Leer of ACI is seeing a pick up in the demand for thermal coal. What am I missing? Is the supply growth still exploding, your charts say no.

55. EIA 914 out

56. Nasty

57. mmr down 8 %–jeeez

    massacre in progress

58. Is this just EOY mutual find selling?

    Opportunity to avg down in SD?

59. BSJ – I wouldn’t call natural gas supply terrible, it’s no longer rising. However, it is not falling as fast as I or anyone else would like.

    Coal demand is rising from what I can tell, so is natural gas demand. There had been some switching on the part of utilities about 2 months ago from coal to natural gas and we are hearing of some switching back. Evidence is all anecdotal and the use of the two fuels is going to depend on a lot more than just price for many generators.

    Supply will continue to come down through 2010, just more slowly than we are used to due to a combination of bigger bang for the buck (buck being the rig count) wells from the non-conventional sources (shale) and the backlog of drilled but not completed wells. The fact of the matter is that non-conventional resource plays are a small slice of the overall U.S. gas production pie (like about 30% of it). The rest of the pie is being under funded and will decline in the range of 25 to 35% per annum. So 70% falling sharply, 30% rising. Pretty tough to growth that with a rig count below the 900 to 1000 range.

    Baylor – I’m still in sit on hands mode, watching held calls get whacked. Cash feels even more like king given what now looks like a headfake yesterday. It’s just energy, the S&P is cliff diving again, sliced Nicky’s 1050 level like butter.

60. Biden about to speak on jobs

61. Is his chief economist on hand? LOL

62. Today is unbelieveable with NG where it is.

63. market volumes are pretty light but the price declines are anything but light….always hard to know what to do at these moments of truth…technicals mixed…breadth declining and small stocks already have support break per IWM analysis….not yet on larger stocks looking at SPY

64. 60 … oh, that should be entertaining.

65. taking on some stock here; SD, KOG, HK, looking at some others.

66. I’ll have the natural gas supply slide show out with the Monday post.

    Here’s to a strong opening in November.

67. Buy when there’s blood in the streets

68. Dollar did break back below the previous support range of 76.30 – 76.40

69. Being more lucky than smart department:

    Two weeks ago, I bought some really out of the money puts on selected energy names. I did this more for insurance than anything else. I expected them to all expire worthless. They are saving my worthless butt.

    So, in holding options, I guess, at least for me, it is better being luck than smart.

70. Fslr green in this tape

71. 650K jobs created or saved. What happened to the > 1 mm created or saved last report?

72. It doesn’t really matter Z, it’s all fake anyways.

73. With that number it cost $240k to save each job

74. True enough V. Yesterday’s gains all gone.

75. Fast money beEn saying for weeks that stocks will end the year higher. Even said it Last night.

    We shall see. Of course my entrance back into the market in my 401k with a modest position will probably spell doom for their prediction

76. USD banging on 76.33 again. That was the level that broke that started this whole carry trade.

77. I have another kog traunche waiting on a pullback to 2.26

78. Bye,bye all those WLL gains of yesterday. So I guess the answer of a couple days ago, will WLL follow the example of PXD is yes. So, at least till something changes, the smart move is to take one day gains and move on.

79. SWN is probably going to drop 5% monday at this rate.

80. For those that watch tech, rimm down over $20 from it’s recent highs. Amazing move down in 4 weeks

81. NG almost ready to follow oil into the red as well

82. It’s all about the broad market and technicals. Charts like EOG reach a certain point and then snap lower like today. This can go on for awhile. We’ve seen it before. I’d rather let the market tell me when its done and not try to snag the lowest possible price. At least as options go. As to stocks, I’m long what’s on the ZLT page, not changing any of that.

    KOG closed their deal with the overallotment for net proceeds of $28.6 mm.

    V – once again, not a lot of thought going into the sell decisions here. Yesterday people couldn’t get enough of energy and the E&Ps in particular. Today they hate them again. Makes sense for the high beta names with the market down 2+%.

83. 75 — if they say it again tonite, they will have a greater chance of being right ! LOL

84. I really must learn how to buy puts. It can’t be that hard (so why am I no good at it?). My brain wanted to buy SPX puts, but the buy finger didn’t cooperate.

    I did sell a lot of calls against stock, which caused all those stocks to shoot up like crazy. But now, incredibly, those short calls are greening up.

    Z – I’d be interested in any news/thoughts on BRY

85. V – Not surprised on the NG pullback; those August numbers were not great. Lower 48 production:

    Feb 09: 53.22 Bcfgpd
    Mar 52.96
    Apl 52.72
    May 52.51
    Jun 52.31
    Jul 51.53
    Aug 52.44 – spring back up in Wyoming and in the other states category (Fayetteville and Marcellus drivers here)

86. Re 83. True enough pack

87. UPL – said all the right things re forward growth, stock down 8.5%. No rhyme, no reason.

88. More brokers are focusing on EV/ Eagle Ford acre. This suggests maybe EFS acres are well discounted in valuations.

89. NG PRODUCTION hasnt rolled over as everyone said/expected

    this is bad news for unhedged ng players, chk comes to mind

90. I think the brokers are a bit behind on that. I also think the play is, like all shales, far from homogeneous. It’s interesting to compare people’s acreage but I think the better look is at what each player has, the IPs or EURs in that area and then go from there relative to their plans for it and the impact this has on the company’s reserves.

    So I look at them on a acreage X prospectivity X by spacing = locations

    The locations X est EUR X net revenue interest = net reserve potential and then compare that to their booked reserves. The Street will often gravitate towards those names in hot new plays who have the most reserves leverage to the play. This also usually works out to equal the same names who have the most to gain on the production side.

91. Euro very weak last several days (altho it rallied yesterday), Euro weakness=USD strength (Euro approx 58% of DX index)

    Dec Euro attempting to hold above 1.47 but if that fails, USD will continue to strengthen IMHO-Dec Euro currently 1.4732.

    Similarly, Canadian $ broke support @0.94 couple of days ago, now @0.9257

    FWIW

92. Canadian GDP lower than expected and shrunk 0.1% in August.

93. Bill – I still think gas goes up, just not up as quickly. The losses for next year are pretty set in stone at this point. CHK is lightly hedged, so is SWN. But the market has not done a lot to differentiate the hedged from the unhedged over time.

94. USD failed at 76.33 again.

95. General market taking everything down, gold has not been that weak, altho off its recent highs, but gold stk indices getting hammered (HUI,XAU), off >5.5% today, weak all week.

96. Z,

    Sorry a little late to reply, had to go get some preparation H, hard to find in N. Africa.

    No problem for the mud discuss. Should mention that a shoe test is good for the initial casing set but when you drill and slide you wear out casing and should be careful.

    Not sure about all those stages in 1 trip, must be SLB’s TAP system. That system has some hair on it. One day, their press release may be that the well was not completed due to “mechanical issues”. I still prefer the simplicity and cost effectiveness of the plug perf but to each his own.

    On getting logs down; there are many ways and I am sure whoever might have tried but there are hole finders (we call them Donkey (male anatomy goes here)), Tubing conveyed and finally a MAD Pass with LWD. I believe you were discussing a deep water well; if so, they should have contingencies in place, shame on them if the did not.

97. ok, I see now. The other 350K jobs were attributed to State programs, the 650K is just the feds. Funny, I still don’t see the equation for this anywhere.

    Thanks Wyo… still in hugging cash mode here. Could have been a little less zealous in buying the weakness now but I won’t let Summer 2008 repeat for the thought of maybe making a quick profit on an opening rally. I think it was someone who sounded suspiciously like me that said that it needs to be an intraday turn, not a morning pop (and certainly not on GDP). I’ll let them tell me when to play.

98. Next up CIT. Trading halted

99. 98 – deal with Icahn

    C taking a big writedown.

100. wholesale capitulation in energy names

     bry had good numbers down 10 %

     there a ton of names down 10 % or more

     that like the dow being down 1,000

     all the hot money that came into energy is running away

101. Energy beta is about 2 to 1 on the gas index normally. Today S&P down 2.5%, XNG down 4.4%, not surprising to see the mid and small caps down double or more of the XNG.

102. this feels like market meltdown coming on, doesnt restore confidence and will keep people away from the markets

     down 250 now

103. Hi Z- what is the effect of the new SEC rulings on reserves?

     Or have you already answered my question.

104. El -d the companies are all still trying to figure that out.

     Two big pieces of it.

     1) pricing rule. At present, end of period prices are used for oil and gas to value the reserves. Reserves become uneconomic below a certain price and if you use this arbitrary point in time pricing you may have to write down reserves which are perfectly fine at a slightly higher price.

     Change here is that they will use the a time averaged price, I believe they plan to use the last 12 months. Won’t help reserves that are gassy much this year but since we are low now the implications are positive longer term.

     2) Item is ability to count offset locations as reserves more quickly. This directly benefits the tight gas sand and shale players. Basically if I have a well and a certain number of proven undeveloped locations around it counted as reserve before, I will have a higher number of PUD locations counted now.

     Net effect will confusion with people at first not really sure what to make of some big jumps they will see in company reserves.

105. S&P calls getting pumped up – odd pricing

106. That is what I figured. However, won’t it help cos. like SD, whose debt to reserves are high?

107. clarify 105 – SPY Nov calls

108. EOG Papa says new rule will just make the more aggressive operators to be even more aggressive with their numbers.

109. Eld – I’d bet, when they are compared with a group of their peers that their relative positioning on reserve metrics remains the same. I think an HK is a much better bet for improvement there as they will actually boast strong reserve replacement (probably 200%) before any changes are made to how reserves are made, simply through turning the bit in the Haynesville.

110. I don’t mean to keep beating a dead horse but 76.33 is still holding on the dollar index. It’s churning below and tapping that level although it did briefly cross earlier in the day on a few trades.

111. BSJ – right, I do recall him saying that, makes sense.

112. V – it’s below that level right now, correct, wondering if something is wrong with quote.

113. Pemex on the tape saying talk of scrapping Chicontepec is speculative. Production there still stuck at 30,000 bopd, half this year’s expected ramp. Pemex plans to spend more to figure out the geology there.

114. VIX up 6 to 30, up 25%-crazy!!

115. RJ out with an $80 target on WLL. Falling on deaf ears today.

116. USD backed off 76.33 … market now easing a litle. If this is viewed as a retest we could see the reversal from all this “dollar strength” next week.

117. V- that’s my plan

118. Glad to hear we’re on the same page.

119. Crude off $2.90, just under 77. Taking a little price pressure out of the contract.

     NG hanging onto a $5 handle as we approach the close.

     SD cracking $10.

120. I hope so. Otherwise I’m really on the wrong side of this trade in the short term.

     This has been a buy the dip market since Mach.

121. Hear ya Baylor, me too, which is why I’m not adding in here. Last couple of month ends have looked similar and I added lower into them and that worked. But it was riskier than I like to be.

122. Rig Count Watch:

     Oil up 18 to 330, vs 408 a year ago. That’s a big number.

     Gas up 3 to 728 vs 1552 a year ago

     Horizontal rigs up 25 to 497 vs 650 last year.

     A bit troubled by the quick ramp in rigs here, good for the drillers for sure, thinking NBR, also main line service. Glad to see its almost all oil on the increase. Interesting to see where:
     N. Dakota up 4 – Bakken
     Texas up 13 – my bet is Permian.

123. adding to 122, Permian, EFS, Barnett

124. VTZ (or Z), do you have any opinion on tsx traded CLL? (connacher)

125. Analyst Watch:

     SWN – UBS takes target from $58 to $65 mid day.

126. Boss – Don’t know ’em.

127. I don’t know; if names you like are down 8-10% in 1 day; you have to buy some IMO.

128. Pack – in the common maybe. But this same kind of ignore the good news cycle started last summer and they went a lot lower than we all thought they would. On common that’s fine. On options, that’s death. I’m long now and looking at a slew of scuds if we were to expire today instead of in three weeks. I’ll add more in time but only when I see a little rationale thought return.

129. this comes under the heading of “just in case the bears are correct:
     I just mused what yield “should” LINE go to in a correction? I picked 13.5% which gets you 18.66.
     That by happenstance = a one half pullback of the move from 11 to 25.
     FWIW

130. I have lots of friends who own CLL but I don’t own them personally. They have good properties but also a lot of debt.

     I think they could be a buyout option personally.

     In the short term their shares will be driven by the delivery of Algar project. They have 10,000 bpd coming onstream although I would caution you not to expect it until early to mid 2011. The project will double their capacity.

     They also own a twenty-some % stake in PDP (Petrolifera) which has been punished since May.

131. I guess A question is whether this collapse is enough to trigger more margin selling and if commodity stks are now unattractive ie energy and gold stks, where will the money go-Who are the sellers here, mutual funds and maybe hedge funds.

     Z, would appreciate your views-I certainly was on the wrong side of this one and in 20/20 hindsight, not sure why I started loading up so early-Oct is always ugly.

     Thanks!

132. CLL is guilty of not issuing equity when they had the chance.

133. Choices – my first thought is no, this type of selling does not seem to be the type that begets that kind of action. More selling maybe but so far this has been fairly orderly. If we break below the early October lows on the S&P next week that could change but for now we still have the option of putting in a higher low.

     I don’t think commodity stocks are unattractive as a whole but I don’t really look at them that way anyway. I break it down into groups (E&P, service etc) and then sub groups (oily, gassy) and further from there. On a historic basis, many of our most trafficced in names around here are middle of their range or cheap end of their range on forward P/CF. EOG was getting into the top of its range (which is a premium to the big cap E&P subset) and it got whacked for it. CLR has been held low (in my opinion) by the stock bumping up against the high end of its range.

     As to where the money goes, search me, that’s not my bag. Ask more questions and I will try to answer.

134. Re 132 – which, if the market turns lower on you, is the greater sin than floating an equity offering too early. Good for KOG that they got theirs done when they did.

135. Any thoughts from the group here on if this is just the beginning or an end of fiscal year driven selling?

136. Pack with regards to 128. Don’t get me wrong either, I would like for you to be correct. I just don’t see anything different in the attitude of the market today from yesterday (even though we were up then) or the day before.

137. VTZ, thanks, much appreciated.

138. Z – 128 … you are right about that … I’ve been mostly buying the common today; but did buy some SD $10 options Nov and Jan as well.

139. Z 136 – no argument there; its a crapshoot; I hope I am buying a good dip; but I also know that might turn out not to be the case.

140. RE my comment the other day about COP’s 9% Syncrude stake. There is news today from Imperial Oil who says (Parent = XOM) that they would be interested in buying it so potentially Imperial or Exxon will be spending some cash here.

141. Rally time Eli?

142. we could use some of BOP’s wisecracking here the past two days eh?

143. Jivey – If she gets back Monday and the market rallies we can declare her an official good luck charm.

144. Ram got his wish:

     http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=1&article=9

145. Market closing on its low. Good riddance October.

     Beerthirty.

146. Dollar did just break above the 76.33 to finish Friday.

     144 – So much for increasing violent weather from climate change.

147. That’s right! (Spike the football – jump forward, jump back, jump forard, jump back -looking to the southeast, point with both hands saying not in my backyard baby)

148. Screw you October.

     There. I feel better.

149. Cool map, almost 1 year old though;

     http://www.rseg.com/Rseg/UserFiles/file/Bakken%20MAIN%20MAP12_19_08WEB.pdf

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