30
Oct
T.G.I.F.
Market Sentiment: Nice reversal yesterday on GDP. In the early hours it looked like the market was going to have trouble keeping that momentum going. I'm still sitting on my hands as far as trading goes today; I'd rather the market make me a believer and I'm plenty long as it is.
Eco Data Watch
- Employment costs: 0.4% vs 0.4% forecast
- Personal income: - 0.1% vs - 0.1% forecast
- Consumer spending: - 0.6% vs - 0.4% forecast
- We get Chicago PMI (forecast 50%) and Consumer sentiment (forecast 70.5 which is hard to buy off on) a little later this morning.
Big Cap Earnings Watch
- CVX reports $1.72 (excluding gains) vs 1.47 expected, a day after XOM reported a small miss.
In Today's Post:
- Holdings Watch
- Commodity Watch
- Natural Gas Storage Review
- Stuff We Care About Today- WLL wrap, SWN, CHK
- Odds & Ends
Holdings Watch
- $10KP II:
- $20,000
- 51% Cash
- The Current Holdings tab is updated.
- I will update the $10KP tab on Monday.
- $20,000
- Yesterday's Trades:
- None
- None
Commodity Watch
Crude oil rallied $2.41 yesterday on a booming equity market and slumping dollar to close at $79.87 yesterday. This morning crude is trading off 60 cents on a ever so slightly stronger dollar.
- Dollar: So much for the rally. The dollar rolled back over yesterday on positive GDP news, fairly obvious that all the calls for the end of the carry trade were again premature. With the dollar index at 76 I remain in the camp with 72 as a target.
Natural gas closed flat at $5.06 yesterday after the EIA reported an "in line" storage injection (see below). Mid day today we should get supply data for the month of August. I expect to see further evidence of declines. This morning gas is trading up a few cents.
Natural Gas Storage Review
ZComment - In line number reported yesterday; injections continue to impress but most likely on storage limitations, curtailments and a bit better demand and not on weather has been mild. I'm still thinking storage will peak at around 3.8 Tcf but 50 or even 100 Bs to the upside is both possible should weather patterns remain mild and also wouldn't make much difference. We should get further evidence of supply declines today from the EIA which, along with weather, will set the near term focus for gas prices.
Stuff We Care About Today
WLL Post Quarter Wrap
- Looking at double digit growth for 2010
- Consistently drilling these wells for $5 mm
- Lewis and Clark comment from CEO – “watch the results of the next well (this is the one that should be done mid November), it made a believer out of me”.
SWN Reports Strong 3Q09 Results, Boosts Guidance To Pre Boardwalk Problem Levels, and Announces Another Big E. Texas Haynesville Well.
The 3Q Numbers:
- Production was73.2 Bcfe vs
- a guidance range of 66 to 68 Bcfe (with Boardwalk pipeline repairs taken care of early, it was like flipping a switch to beat the guidance range.
- 2Q volumes of 74.3 Bcfe
- Revenues of $502.9 mm vs $387 mm expected
- EPS of $0.34 vs $0.34 expected
- CFPS of $0.95 vs $0.82 expected
Guidance - Going Back Up:
- Volume guidance for the year as of the end of the second quarter was 278 to 288 Bcfe,
- SWN increased guidance back to their old range, 297 to 300 Bcfe, up 58% from 2008 levels
- this means 4Q production guidance of 86 to 89 Bcfe (a nice jump from the 73.2 Bcfe curtailed levels seen this past quarter).
- SWN has the ability to ratchet capital to quickly drive strong unit volume growth.
- While we don't yet have 2010 guidance from the company in hand, I would expect a number north of 40% when they provide this with the end of year results.
Operations Update
- Fayetteville Shale:
- Well metrics flat lined this quarter vs last. While we normally look for increases in lateral length to translate into higher IPs, we have seen this dip or flat spot in the road before. That time was also associated with slowdowns in drilling brought about by pipeline capacity constraints.
- Highlights from the shale include a 6 and a 6.7 MMcfepd IP well (average here is about 4); note the 6.7 MMcfepd well is SWN's highest rate Fayetteville shale well to date, and, like CHK's big well, was in the southern part of the play
- Well metrics flat lined this quarter vs last. While we normally look for increases in lateral length to translate into higher IPs, we have seen this dip or flat spot in the road before. That time was also associated with slowdowns in drilling brought about by pipeline capacity constraints.
- East Texas Haynesville: Things are heating up here.
- Wells 1 and 2 were announced earlier this year with rates of 7.2 and 13.4 MMcfepd
- Well #3 IP'd at 16.7 MMcfepd, in San Augustine County which is where COG announced their big well earlier this week.
- Well #4 is testing now.
- Well #5 is waiting on completion and well #6 is drilling.
- Wells 1 and 2 were announced earlier this year with rates of 7.2 and 13.4 MMcfepd
What I was Looking For From The SWN Quarter:
* Probably a CFPS beat along with better than guidance production. Check, Check
* Maybe upped guidance for 4Q. Check
* No 2010 guidance yet. Check
* Some higher IPs in the Fayetteville, especially after CHK’s comments on the southern side of the play 2 weeks ago. Check, got the biggest well they've drilled to date and it was on the Southern side of the play
* Probably no change to EUR thoughts but another increase in average IP. Check
* Should have news on a 3rd well in E. Texas. Last two were impressive, especially for 1st shots in the play. Check, third well comes in high to the first and second wells.
* Marcellus? Probably not, they have kept pretty quiet there. Check
Conference Call: Today, 10 am EST
CHK Releases Yet Another Operational Update; Earnings Next Week
Pretty much the same material they offered on their analyst day a couple of weeks back. Production growth targets"
- 2009: 5 to 6%
- 2010: 8 to 10%
- 2011: 12 to 14%
Everything else looks like a rehash of recent news...not sure what they will talk about on the call next week.
Odds & Ends
Analyst Watch:
- nada
Interesting Article Watch:
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.
October 30th, 2009 at 8:00 amsd 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
October 30th, 2009 at 8:05 amz, nice call on swn. tPH loves the results..indicating higher on a down day
October 30th, 2009 at 8:06 amand 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
October 30th, 2009 at 8:17 amPack – 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.
October 30th, 2009 at 8:23 amNG 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.
October 30th, 2009 at 8:26 amfinally, 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
October 30th, 2009 at 8:30 amInteresting rally off the $5 level for natural gas, now up about 20 cents. Weather.
SWN moving … not much else though.
October 30th, 2009 at 8:31 amsd gets a helluva a deal if it happens but i dont think it comes off
October 30th, 2009 at 8:31 am#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.
October 30th, 2009 at 8:33 amThe 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.
October 30th, 2009 at 8:34 amThanks for #7,#9,#11.
October 30th, 2009 at 8:36 amThe market is so schizo right now.
October 30th, 2009 at 8:41 amThe 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.
October 30th, 2009 at 8:41 amV – 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).
October 30th, 2009 at 8:43 amNG 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.
October 30th, 2009 at 8:45 amChicago PMI at 54.2%, vs 50% expected. Surprising.
Consumer sentiment out shortly.
SWN call in 10 minutes.
October 30th, 2009 at 8:50 amShocked out of my socks on WLL lack of follow through.
October 30th, 2009 at 8:55 amng up 15 cents to 5.23 yest the ng stocks are getting crushed
Im going out for fresh air
October 30th, 2009 at 8:56 amConsumer sentiment at 70.6 vs 70.5 forecast. Shocking.
October 30th, 2009 at 8:57 amBill – they’re joined at the hip with the S&P which needs a prozac.
October 30th, 2009 at 9:00 amNOG on the tape with a secondary. Another Bakken name I’m starting to watch a little more closely.
October 30th, 2009 at 9:03 amSWN 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:
…
October 30th, 2009 at 9:08 amAneritrade only allows option bids down to the nickel.
Anyone use a broker that lets you bid down to the penny?
October 30th, 2009 at 9:10 amCNBC 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.
October 30th, 2009 at 9:13 amSWN 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
October 30th, 2009 at 9:14 amZ, 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.
October 30th, 2009 at 9:14 amBSJ – 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.
October 30th, 2009 at 9:17 am#24…yes and no…see this IB link..
October 30th, 2009 at 9:18 amhttp://www.interactivebrokers.com/en/general/communiques/2006/10-25-06.php?ib_entity=llc
ACI: I see that ACI is also doing well today. The Leer thinks that coal demand is starting to pick up.
October 30th, 2009 at 9:26 amAnalyst Watch:
WLL – Barclay keeps it at equal weight, but takes price target from $53 to $70.
October 30th, 2009 at 9:29 amBSJ – 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.
October 30th, 2009 at 9:30 amSWN 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.
October 30th, 2009 at 9:33 amMy 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.
October 30th, 2009 at 9:33 amhttp://www.zerohedge.com/article/cnbc-viewership-plunges-50-october
heh.
October 30th, 2009 at 9:40 amBSJ – 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.
October 30th, 2009 at 9:41 amWe’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.
October 30th, 2009 at 9:46 amAdding 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.
October 30th, 2009 at 9:48 amRe 35 – thanks for the chuckle.
Natural gas monthly should be out an hour now.
October 30th, 2009 at 9:52 amThat’s a large fire:
http://www.google.com/hostednews/ap/article/ALeqM5gwLvd_gUEGs2ga_LP0Rs2S5CjxYwD9BLEQM80
October 30th, 2009 at 9:54 amTriva: which dead person makes the most for their estate? Is it Elvis, or Michael Jackson? No — it is fashion designer Yves Saint Laurent.
October 30th, 2009 at 9:58 amBill – 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.
October 30th, 2009 at 9:59 amWyoming – 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?
October 30th, 2009 at 10:01 amNG up today, reason? Weather:
http://news.yahoo.com/s/ap/us_western_storm
October 30th, 2009 at 10:04 amNicky is still out of pocket, anyone have near term levels on the S&P?
October 30th, 2009 at 10:11 amWow…dollar has almost gain all that it lost yesterday..impressive move.
October 30th, 2009 at 10:20 amGot 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
October 30th, 2009 at 10:23 amBSJ – 25 – Bernstein probably has a good agent. He’s glib; smiles a lot; and is completely FOS.
October 30th, 2009 at 10:28 amAubrey on Mad Money tonight. Why bother ?
October 30th, 2009 at 10:29 amSWN red.
October 30th, 2009 at 10:33 amThe 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.
October 30th, 2009 at 10:35 amNatural 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.
October 30th, 2009 at 10:40 amCan’t wait for October to get done.
October 30th, 2009 at 10:43 amZ, 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.
October 30th, 2009 at 10:44 amEIA 914 out
October 30th, 2009 at 10:45 amNasty
October 30th, 2009 at 10:48 ammmr down 8 %–jeeez
massacre in progress
October 30th, 2009 at 10:49 amIs this just EOY mutual find selling?
Opportunity to avg down in SD?
October 30th, 2009 at 10:50 amBSJ – 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.
October 30th, 2009 at 10:55 amBiden about to speak on jobs
October 30th, 2009 at 11:02 amIs his chief economist on hand? LOL
October 30th, 2009 at 11:05 amToday is unbelieveable with NG where it is.
October 30th, 2009 at 11:15 ammarket 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
October 30th, 2009 at 11:15 am60 … oh, that should be entertaining.
October 30th, 2009 at 11:15 amtaking on some stock here; SD, KOG, HK, looking at some others.
October 30th, 2009 at 11:19 amI’ll have the natural gas supply slide show out with the Monday post.
Here’s to a strong opening in November.
October 30th, 2009 at 11:22 amBuy when there’s blood in the streets
October 30th, 2009 at 11:22 amDollar did break back below the previous support range of 76.30 – 76.40
October 30th, 2009 at 11:22 amBeing 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.
October 30th, 2009 at 11:22 amFslr green in this tape
October 30th, 2009 at 11:24 am650K jobs created or saved. What happened to the > 1 mm created or saved last report?
October 30th, 2009 at 11:30 amIt doesn’t really matter Z, it’s all fake anyways.
October 30th, 2009 at 11:33 amWith that number it cost $240k to save each job
October 30th, 2009 at 11:33 amTrue enough V. Yesterday’s gains all gone.
October 30th, 2009 at 11:34 amFast 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
October 30th, 2009 at 11:36 amUSD banging on 76.33 again. That was the level that broke that started this whole carry trade.
October 30th, 2009 at 11:36 amI have another kog traunche waiting on a pullback to 2.26
October 30th, 2009 at 11:38 amBye,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.
October 30th, 2009 at 11:38 amSWN is probably going to drop 5% monday at this rate.
October 30th, 2009 at 11:41 amFor those that watch tech, rimm down over $20 from it’s recent highs. Amazing move down in 4 weeks
October 30th, 2009 at 11:41 amNG almost ready to follow oil into the red as well
October 30th, 2009 at 11:45 amIt’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+%.
October 30th, 2009 at 11:45 am75 — if they say it again tonite, they will have a greater chance of being right ! LOL
October 30th, 2009 at 11:46 amI 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
October 30th, 2009 at 11:47 amV – Not surprised on the NG pullback; those August numbers were not great. Lower 48 production:
Feb 09: 53.22 Bcfgpd
October 30th, 2009 at 11:49 amMar 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)
Re 83. True enough pack
October 30th, 2009 at 11:50 amUPL – said all the right things re forward growth, stock down 8.5%. No rhyme, no reason.
October 30th, 2009 at 11:52 amMore brokers are focusing on EV/ Eagle Ford acre. This suggests maybe EFS acres are well discounted in valuations.
October 30th, 2009 at 11:53 amNG PRODUCTION hasnt rolled over as everyone said/expected
this is bad news for unhedged ng players, chk comes to mind
October 30th, 2009 at 11:57 amI 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.
October 30th, 2009 at 11:58 amEuro 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
October 30th, 2009 at 12:02 pmCanadian GDP lower than expected and shrunk 0.1% in August.
October 30th, 2009 at 12:04 pmBill – 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.
October 30th, 2009 at 12:05 pmUSD failed at 76.33 again.
October 30th, 2009 at 12:07 pmGeneral 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.
October 30th, 2009 at 12:08 pmZ,
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.
October 30th, 2009 at 12:10 pmok, 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.
October 30th, 2009 at 12:15 pmNext up CIT. Trading halted
October 30th, 2009 at 12:19 pm98 – deal with Icahn
C taking a big writedown.
October 30th, 2009 at 12:24 pmwholesale 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
October 30th, 2009 at 12:29 pmEnergy 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.
October 30th, 2009 at 12:31 pmthis feels like market meltdown coming on, doesnt restore confidence and will keep people away from the markets
down 250 now
October 30th, 2009 at 12:32 pmHi Z- what is the effect of the new SEC rulings on reserves?
Or have you already answered my question.
October 30th, 2009 at 12:32 pmEl -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.
October 30th, 2009 at 12:38 pmS&P calls getting pumped up – odd pricing
October 30th, 2009 at 12:41 pmThat is what I figured. However, won’t it help cos. like SD, whose debt to reserves are high?
October 30th, 2009 at 12:41 pmclarify 105 – SPY Nov calls
October 30th, 2009 at 12:42 pmEOG Papa says new rule will just make the more aggressive operators to be even more aggressive with their numbers.
October 30th, 2009 at 12:43 pmEld – 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.
October 30th, 2009 at 12:44 pmI 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.
October 30th, 2009 at 12:44 pmBSJ – right, I do recall him saying that, makes sense.
October 30th, 2009 at 12:44 pmV – it’s below that level right now, correct, wondering if something is wrong with quote.
October 30th, 2009 at 12:45 pmPemex 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.
October 30th, 2009 at 12:59 pmVIX up 6 to 30, up 25%-crazy!!
October 30th, 2009 at 1:04 pmRJ out with an $80 target on WLL. Falling on deaf ears today.
October 30th, 2009 at 1:05 pmUSD 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.
October 30th, 2009 at 1:13 pmV- that’s my plan
October 30th, 2009 at 1:14 pmGlad to hear we’re on the same page.
October 30th, 2009 at 1:16 pmCrude 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.
October 30th, 2009 at 1:25 pmI 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.
October 30th, 2009 at 1:28 pmHear 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.
October 30th, 2009 at 1:31 pmRig 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:
October 30th, 2009 at 1:36 pmN. Dakota up 4 – Bakken
Texas up 13 – my bet is Permian.
adding to 122, Permian, EFS, Barnett
October 30th, 2009 at 1:39 pmVTZ (or Z), do you have any opinion on tsx traded CLL? (connacher)
October 30th, 2009 at 1:41 pmAnalyst Watch:
SWN – UBS takes target from $58 to $65 mid day.
October 30th, 2009 at 1:42 pmBoss – Don’t know ’em.
October 30th, 2009 at 1:43 pmI don’t know; if names you like are down 8-10% in 1 day; you have to buy some IMO.
October 30th, 2009 at 1:43 pmPack – 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.
October 30th, 2009 at 1:46 pmthis comes under the heading of “just in case the bears are correct:
October 30th, 2009 at 1:47 pmI 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
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.
October 30th, 2009 at 1:51 pmI 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!
October 30th, 2009 at 1:51 pmCLL is guilty of not issuing equity when they had the chance.
October 30th, 2009 at 1:53 pmChoices – 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.
October 30th, 2009 at 1:58 pmRe 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.
October 30th, 2009 at 1:58 pmAny thoughts from the group here on if this is just the beginning or an end of fiscal year driven selling?
October 30th, 2009 at 2:02 pmPack 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.
October 30th, 2009 at 2:03 pmVTZ, thanks, much appreciated.
October 30th, 2009 at 2:06 pmZ – 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.
October 30th, 2009 at 2:25 pmZ 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.
October 30th, 2009 at 2:30 pmRE 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.
October 30th, 2009 at 2:38 pmRally time Eli?
October 30th, 2009 at 2:41 pmwe could use some of BOP’s wisecracking here the past two days eh?
October 30th, 2009 at 2:49 pmJivey – If she gets back Monday and the market rallies we can declare her an official good luck charm.
October 30th, 2009 at 2:52 pmRam got his wish:
http://www.accuweather.com/news-story.asp?partner=accuweather&traveler=1&article=9
October 30th, 2009 at 2:53 pmMarket closing on its low. Good riddance October.
Beerthirty.
October 30th, 2009 at 2:58 pmDollar did just break above the 76.33 to finish Friday.
144 – So much for increasing violent weather from climate change.
October 30th, 2009 at 3:03 pmThat’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)
October 30th, 2009 at 3:09 pmScrew you October.
There. I feel better.
October 30th, 2009 at 3:13 pmCool map, almost 1 year old though;
http://www.rseg.com/Rseg/UserFiles/file/Bakken%20MAIN%20MAP12_19_08WEB.pdf
November 1st, 2009 at 7:33 am