02
Nov

Merger Monday Morning – Welcome to November

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Market Sentiment Watch: Dubious with a heaping load of cautious. Happy to see a green day today? Sure. Do I trust it? Not yet. Give me three in a row. This week is much busier for E&P earnings (see calendar and comments below).

Headline Items:

  • CIT Files Bankruptcy as expected.
  • China Watch: Still Growing
  • Ford: Unexpected profits, on track to achieve 2009 targets.
  • Merger Monday Watch: DNR acquires EAC (see stuff section)
  • Eco data watch: ISM after the open will likely be key in sustaining any rally.


 

The Week Ahead:

  • Monday 11/2: ISM (forecast 53%), Construction spending (forecast - 0.2%)
  • Tuesday 11/3: Factory orders (forecast 0.5%), car sales (forecast 10.5 mm)
  • Wednesday 11/4:  EIA Oil Inventory Report, ADP employment, FOMC rate decision (no change expected)
  • Thursday 11/5: EIA Natural Storage Report, Jobless claims (forecast 520K)
  • Friday 11/6: Non farm payrolls (forecast for October -150K), unemployment rate (forecast -9.9%)

In Today's Post:

  1. Holdings Watch
  2. Commodity  Watch
  3. Natural Gas Supply Slide Show
  4. Earning Watch - Energy Earnings Week 3 (Calendar with comments)
  5. Stuff We Care About Today
  6. Odds & Ends

Holdings Watch:

  • $10KP II:
    • $18,900
    • 73% Cash
    • Current Holdings Tab is updated.
    • The $10KP II Spreadsheet Tab is updated.
    • As mentioned above, I'm sitting on my hands for a bit due to broad market conditions.

 

Commodity  Watch:

Crude oil fell 4.3% last week to close at $77.00. The 12 month crude strip is now trading at $79.69. This is a pretty healthy level for crude prices and the sharp moves in pricing will help to ensure OPEC does nothing at its December meeting in terms of raising production levels as the group can see the fragility of the recent run up. This morning crude is trading up $0.50 t0 $1.00.

  • OPEC Watch #1: Libyan oil minister says OPEC unlikely to raise quotas - see, I told ya so.
  • OPEC Watch #2: Because they don't need to. October data for the Cartel shows them now pumping 106% of their official quotas (or an extra 1.465 mm bopd), the highest level in 10 months.

Natural gas fell 8% last week to close at $5.05 on the December contract. Gas continues to trade with extreme volatility in the shoulder season. Natural gas in storage continues to hone in on about 3.8 Tcf as a peak and I'm confident it won't go much higher than that unless we get a protracted period of mild weather that extends the injection season. At this point, it doesn't look like that will be the case. The 12 month strip is now trading at $5.62 and the curve has flattened with the front months nearly pricing in that peak. This morning gas is trading flat.

  • Weather Watch: Cold Weather Returns. Heating Degree Days (HDDs) compared to gas storage injections:

    • Week Before Last: 66 CDDS which was warmer than normal but still produced a sub average 25 Bcf injection.
    • Last Week: 74, spot on with the Climate Prediction Center's original outlook.
    • This Week's Forecast: 101


Natural Gas Supply Slide Show:

Key Point: Nearly flat production numbers month to month are somewhat of a disappoint on the surface. Not entirely unexpected and the trajectory of production is still moving in the right direction (down) for many of the key gas producing segments. A large inventory of drilled but not yet completed wells is muting declines that wold normally be expected after the large drop we have seen in the rig count. Flush production from the shale plays is playing a part as well. Given the low percentage of non-conventional production to convention production in the U.S., I still expect declines to accelerate this Winter and into 2010 (meaning we'll have to wait for a couple of more months at least to see the start of the more noticeable declines).

Earning Watch: Week 3

I'll have preview comments out on several of these as the week progresses including some in comments today. I have no option positions in the names in the first part of the week and in in most, no common stock position either so those are primarily "get to know you better" conference calls. 


Stuff We Care About Today

  • Merger Monday Watch: DNR Acquires EAC
  • 186 MMBOE proved reserves taken out for $4.5 B. That comes to roughly $24 per barrel (not to pricey on the proved alone, cheap on the potential reserves that EAC was working on.
  • Synergies are obvious as DNR has surplus CO2 and EAC has CO2 needs in the Rockies
  • Gives DNR exposure to the Bakken
  • Increases DNR's exposure to the Haynesville
  • Highlights the company's double whammy nature of EOR (enhanced oil recovery (via CO2)) and carbon sequestration.
  • Bulks them up in terms of reserves to put them on the radar of bigger buyers (either large cap E&Ps or a Major) who are looking to "get green" in 2010 and beyond.

Odds & Ends

Analyst Watch:

  • (SWN) target upped at Barclays from $48 to $54, rating Overweight
  • (UPL) target upped at Barclays from $45 to $55, rating Equalweight

 

 

 

 

117 Responses to “Merger Monday Morning – Welcome to November”

  1. 1
    zman Says:

    Analyst Watch:
    SunTrust raises NFX to Buy on valuation.

  2. 2
    zman Says:

    KWK on the tape looking for 20% volume growth in 2010, after a record 2009. That will move that name as they have a lot of drilled but not completed wells to hook up meaning limited capital relative to output which should translate into 2010 free cash flow for debt reduction.

  3. 3
    zman Says:

    Green open on tap, E&P should get a little extra boost from the DNR/EAC merger. A lot of thought has gone into that one and I may buy some DNR common.

    Conventional wisdom on the Street and from industry is that consolidation is around the corner. Last winter people thought it would occur with the Spring redetermination. When Spring came and there was no plethora of M&A activity, thinking moved to the Fall redetermination season. With oil prices seemingly stable and likely rising in the future and gas prices having bottomed, and financing for bridge loans and revolvers available again it appears the doors for mergers has been reopened. I’ll be putting together a list of names in targetsville.

  4. 4
    zman Says:

    Knock, knock, this thing on?

  5. 5
    zman Says:

    FBR cutting price targets on the solars this morning, maintaining underperform ratings.

  6. 6
    rseidman Says:

    Good morning to all!

  7. 7
    elduque Says:

    Good morning

  8. 8
    zman Says:

    Good morning guys, thanks. Home office full of pukers today. Gotta love winter.

    Nice green open. They should close the market for the day now. SWN, NFX, WLL opening much better.

    Does anyone have a note that’s out on WLL.

    Oil gave back a buck plus of gains to go to flat now.

    Can’t find Nicky or BOP so it may be a pretty quiet one today.

    Jerome, can you take a look at levels on the S&P500?

  9. 9
    zman Says:

    CNBC reporting OPEC volumes were down slightly in October, this counters a report from Bloomberg that they were up again.

  10. 10
    ram Says:

    Here.

  11. 11
    zman Says:

    NG down a dime plus. Good, cold, weather forecast. Gas is off on last week’s EIA 914 data.

  12. 12
    bill Says:

    dnr is a good buy here but so is everything else

    13 dollar buyers will make money, imho

  13. 13
    bill Says:

    # 2 everybody is showing 2010 growth

    chk
    hk
    sd
    swn

    who isnt?

  14. 14
    bill Says:

    energy selling off unable to hold puny gains

  15. 15
    zman Says:

    Bill – the mom and pops and the conventional producers of natural gas. Reef can speak to current private co activity levels better than I can but they ground to a halt many months ago and only recently have added a few rigs back.

  16. 16
    zman Says:

    Bill – so far just tracking the S&P.

  17. 17
    zman Says:

    Bill – do you see news on WLL? I have a news notice but don’t see a story.

  18. 18
    zman Says:

    Analyst Watch: SWN started at Buy at Ameriprise.

  19. 19
    zman Says:

    ISM at 55.7% vs 53% consensus. Hoooraaay.

    Pending home sales up 6.1%, up 8 months in a row.

  20. 20
    zman Says:

    Tempted to buy in on this rally, will be patient, watching the walking wounded calls I have come back to life here and there now.

    Construction spending up 0.8%, better than expected.

    Dow and S&P shooting higher, S&P just took out the 1050 level.

  21. 21
    zman Says:

    Crude up a buck now. Good boy ISM.

  22. 22
    Alhambra Says:

    Z – do you have any comments or expectations for CHK’s conference call? Things you would like to hear from them?

  23. 23
    john11 Says:

    OKLAHOMA CITY, Nov. 2 /CNW/ — Devon Energy Corporation (DVN) announced the results of a successful Haynesville Shale well in San Augustine County, Texas. The Kardell Gas Unit 1H achieved an average continuous 24-hour flow rate of approximately 30.7M cubic feet of natural gas equivalent per day through a 37/64-inch choke. Flowing pressure was 6,824 pounds per square inch. The Kardell well was drilled to a total measured depth of 18,350 feet, including a horizontal lateral section of approximately 4,500 feet. Devon operates the well with a 48% working interest. Crimson Exploration Inc. (CXPO) owns the remaining 52% working interest.

  24. 24
    RMD Says:

    I don’t see anything on WLL.
    SM conf. call Tues. at 10:00 EST.

  25. 25
    zman Says:

    Alhambra – Ya know, I hold the common and I think the main thing I’d like to see there is capital discipline. We’ve gotten all of the operations stuff out of the way between the analyst day two weeks ago and two operational press releases in the last week. Numbers are basically a non-event as they have pre announced production now. So I would like to here them talk more about their capital decision matrix, IRRs of individual plays that get $ vs those that don’t. Secondly, I’d like to hear more about their non-conventional oil shale recovery efforts, been pretty quiet but they have made noises about getting oilier over time. As far as stock moving news, I only see talk of oil or another asset monetization as being catalytic.

    re 23. Wow-Big well. Good for COG, SWN, probably ECA.

  26. 26
    zman Says:

    RMD – thanks, the schedule gets so crowded this week I have to leave off another 5 or so names.

    Good to see market reacting well to positive eco data. Let’s see that hold through the close. On the stock side, good news at KWK not really leading to outperformance, same for DVN as that’s a big well and they’ve been somewhat quiet in the play despite a large acreage position.

  27. 27
    Alhambra Says:

    Thank you

  28. 28
    bloodystupidjohnson Says:

    Years ago I worked as a devils advocate at a mutual fund. This means it was my job to present the contrary views on investment ideas etc. I am going to do this with some of Z views on DNR.

    First, this changes the business model of DNR, always a dicy thing. Two, DNR does not have surplus CO2 and that CO2 is located in the gulf, not the Rockies. They are thinking about a billion pipeline to bring CO2 from the midwest. Three, EAC has had trouble with some of the field and method of injection of EOR. They first was going to use air, that didn’t work, so then switching to water flooding. Four, this take DNR into areas where they have never been. If they sell these properties, there is no guarntee that they will get fair value.

  29. 29
    zman Says:

    Zman Long Term Portfolio Trades:

    Sold 20% of my KOG position for $2.45, up 120%.

    These funds were swapped into SD at $10.49.

  30. 30
    choices Says:

    Euro strong this AM, up to 1.4843, big bounce off 1.47+ area.

    Dec Gold up 22+ to 1062

    USD sliding

  31. 31
    zman Says:

    BSJ – Thanks. 1) Agreed its dicey to change a business model but I think the Street would appreciate a little shake up there, especially if they see upside in things like the Bakken, I have not yet looked through EAC to know how much upside is there, their potential and probable reserves are large relative to their provded. 2) I used to follow DNR back in the day. The proved and probables would give them plenty of excess CO2. 3) I don’t know the status of the midwest pipeline, but it would be welcomed by many in the Rockies. I don’t know EAC well as I don’t follow them, so I don’t know any details on that field. DNR has lots of experience working with CO2 floods now. 4) kind of circles back to one but true, there is no guarantee they could monetize what they don’t want out of the deal. I haven’t bought it, I just think it makes sense for DNR from a 10,000 foot level and I’m starting to look into it.

  32. 32
    bloodystupidjohnson Says:

    DNR also has a new CEO, that might be trying to put his stamp on the company. Always leary when the Brumley family wants to sell out. They have done this in the past, and they usually get good deals. They are in the process of building the green pipeline (820 mill effort). DNR CO2 is from the Jackson Dome. They are looking for more areas of CO2.

  33. 33
    zman Says:

    Thanks BSJ, going to listen to the DNR conference call in 10 minutes.

  34. 34
    isleworth Says:

    Goldman out with this comment:

    We believe investors should take advantage of the recent bout of general stock market volatility and de-risking to add to positions in oil companies we consider “secular winners” or are otherwise well positioned for the new upcycle. Our trio of favorites remains Conviction Buy rated Petrobras and Suncor Energy and Buy rated Occidental Petroleum followed by Buy rated Holly Corp. and Hess. There is no change to our bullish crude oil view or our preference for companies that are strategically well positioned for the upcycle.

  35. 35
    bloodystupidjohnson Says:

    When I wrote they are building the green pipeline, I of course meant DNR.

  36. 36
    PackMan Says:

    My trades from Friday in Sd, BEXP, HK all working out moderately well (all profitable, but small).

    Will reposition …

    Going long SRS

  37. 37
    zman Says:

    Thanks Isle, good to know what the mother ship is up to. They’re looking pretty good on their $85 target for year end.

  38. 38
    zman Says:

    Thanks BSJ, I guess they never bought a Rockies source or pipeline system, there was talk a few years back.

  39. 39
    bill Says:

    dnr call starts in a minute

    i didnt see anything on wll

  40. 40
    rseidman Says:

    FWIW I didn’t get email ofyour last trade. Saw it on twitter, though

  41. 41
    zman Says:

    RS – please send an email of that to zmanadmin@gmail.com and we’ll look into it.

    DNR call starting now.

  42. 42
    zman Says:

    KOG – odd step down on the minute chart. I still like the name, just took a little off the table.

  43. 43
    VTZ Says:

    I think one of the reasons gold is up so much is the CIT failure and the implications it has on the real economy and small business. In turn, more bailouts, printing is likely.

  44. 44
    VTZ Says:

    Also, the dollar is overbought and gold is oversold on some charts and some stoichastics are looking favorable for another move. It would also mean than the dollar failed to break out of the descending wedge it’s in.

  45. 45
    rseidman Says:

    I got it now. Thanks

  46. 46
    cargocult Says:

    No rush on this question but can anyone explain, for the uninitiated(me), how the accounting for energy companies work, profit and loss wise, since so many of these companies are showing big losses. For example, google finance shows SD with earnings of -$15.98.

  47. 47
    zman Says:

    DNR call droning on, will have to do a little more work before/if I bite.

    Cargo – good question.

    I don’t look at earnings as there are too many variables between the companies that make the earnings a useless measure for comparison either to other E&Ps or to the health of the E&P itself.

    Exploration and Production companies are reinvestment businesses (meaning they generate cash so they can plow it back into the business) so what you really want to know is what kind cash flow does the business kick off from operations. Generally speaking, you can take net income and add back deferred taxes, depreciation, exploration expenses if any (depends on the accounting regime and again shows the pointlessness of earnings). One of the things you may be seeing on a company like SD is past impairments on reserves. These are an accounting item, and are not cash but obviously they distort the EPS picture. These are backed out of the cash flow calculation (added back) as they have no impact whatsoever on cash.

    Feel free to ask follow ups, just listening to some blah, blah, blah from DNR’s finance guy on the new balance sheet there.

  48. 48
    bloodystupidjohnson Says:

    Since I am not listening to the DNR call, where there any questions on how this is going to effect ENP. ENP is a master limited partnership carved out from EAC.

  49. 49
    PackMan Says:

    http://www.zerohedge.com/article/bob-janjuah-back-and-he-pissed

  50. 50
    zman Says:

    DNR Q&A about to start which should be interesting/telling regarding Street sentiment about the deal.

    What is the President talking about on CNBC right now, see job headlines, bold action required coming across.

  51. 51
    Nicky Says:

    Good morning all.

    Not sure if Z posted my levels for Friday but we did go slightly lower. It looks to me as if the final wave v down was made overnight and we are now seeing the wave ii rebound. Resistance is at 1050, 1067, 1070. I think we are likely to hit 1067 before this rally is done. There are some other alternatives and this market is very difficult right now but larger cycles are pointing down to mid – end November and I still think we work our way towards the 960 area on the SPX.

  52. 52
    zman Says:

    BSJ – not yet, DNR just said they like the MLP as a finance source earlier.

    DNR – feel like CO2 sources in the Rockies are plentiful (from existing and potential).

    EAC – assets not CO2 flooded. Says they see some 17 to 18% recovery in a pilot at Cedar Creek anticline. Says they have done some analysis showing it will work well for EAC’s field.

    Crude up $1.50 now. Got to say energy stocks not keeping up as the market (S&P500) seems to have hit at a wall at the 1050 level.

    CO2 Rockies – all sourced from Rockies, not piped in from the midwest. Natural and man made sources.

    Thanks Nicky.

  53. 53
    zman Says:

    Nicky – I think this week is going to be tough sledding as all eyes are on end of week jobs data.

  54. 54
    Nicky Says:

    Yes Z – I don’t disagree the volatility seems to be back big time with large swings every other day. That data this morning was pretty bullish however.

  55. 55
    zman Says:

    Nicky – right, unfortunately job creation seems nil at present. I watched CNBC pretty early this morning and one of the president’s economic advisory team (the president of ORCL) was asked about things to help out small businesses that were being talked about. His best idea was home refurbishment. Insert double take here. He said that insulating homes would save energy and help contractors (builders). Ummm. Ok. So they asked him about lower taxes, reminding him that there are lots of types of small businesses, that they all aren’t just home remodelers. He said basically that everybody wants lower taxes but that we have to pay for past commitments. In other words, NO. So, their plan to create jobs remains focused on energy and healthcare reform. I am tempted to see if there are solar installer jobs in my area, just to see if even that has been done yet. I rather doubt it. Without job growth I don’t see the consumer coming back and without the consumer coming back (and with consumer credit tightening and becoming more expensive) I don’t see a broad based economic recovery taking purchase. Just my two cents.

  56. 56
    PackMan Says:

    Z – 55 — that’s been my thesis ….

  57. 57
    bloodystupidjohnson Says:

    It is really amazing how cluessless Obama and his people are on how the economy really works.

  58. 58
    bloodystupidjohnson Says:

    Z, how is the proforma balance sheet of DNR going to look like. If someone is interested in buying DNR in the future, this is an area to keep an eye on.

  59. 59
    VTZ Says:

    The government philosophy of turning cars and houses into the economic driver again is the main problem. WE DON’T ALL NEED NEW HOUSES AND CARS ALL THE TIME. There are other sectors as you say that, if developed, could drive our economy… productive ones… that actually make things… that hasn’t been a driver for 20-30 years and that’s also the problem.

  60. 60
    milepost_43 Says:

    Medicine Bow coal-gaso plant will have a large quantity but who knows when if ever. RNCH had a contract for XOM CO2 but they are BK now. The COP Lost Cabin vol is peanuts. XOM @ Shute Creek has some CO2 available and is only even medium term RM supply available. That is the one to watch.

  61. 61
    zman Says:

    BSJ – not sure how indebted it will be, there’s talk of a $500 mm asset sale but they have not picked out the non-core asset(s) to sell yet. They will hold a stake in that MLP, can’t page back in the slides, will have to wait post call to see if they post a pdf.

    Stock’s just treading water now with a sideways S&P500.

  62. 62
    zman Says:

    Thanks Milepost. I’m not going to do anything on these guys today. Plus the broad market looks shady.

  63. 63
    zman Says:

    Analyst Watch: Thomas Weisel ups them from Hold to Buy.

  64. 64
    bloodystupidjohnson Says:

    If DNR deals goes through, then DNR will be the general partner of two MLPs — GEL and ENP.

  65. 65
    bloodystupidjohnson Says:

    On DNR asset sales, when DNR sold some of their Barnett shale nat gas assets this year, at the time, there was alot of complaints that they did not really get a good deal.

  66. 66
    bloodystupidjohnson Says:

    Taking off my devils advocate hat, my view on the DNR merger is — I don’t know yet (really going out on a limb). I still have to get my hands around this NEW DNR. It is a change of business model and geography. I can see good and bad. The key for me will be the balance sheet. But one thing, it will be an oily company. EAC was oily and so was the old DNR. I will also be watching the prices they get on some asset sales.

  67. 67
    zman Says:

    BSJ – same here, will do a little reading, no rush in my mind.

  68. 68
    Nicky Says:

    Z – re 55, I couldn’t agree more. By 2011 or sooner the SPX is going to be below 666. There is no recovery, there is now just massive debt everywhere you look and the USA is broke.

  69. 69
    zman Says:

    ROSE moving back well away from its recent highs. I sold that Call for a slight gain a couple of weeks back but am holding the common. At this point I still am unlikely to add calls back in front of earnings next week. If they miss in the Montana Bakken I wouldn’t want to hold calls. And if they hit, it will take the market some time after the open to figure out what it means to the name.

  70. 70
    zman Says:

    Nicky – I was thinking the market would have more trouble forging significantly further ahead. However, I do think you see S&P earnings growth accelerate next year as even a slight uptick in top line growth will translate into a bigger move on the bottom line due to cost cutting efforts that have already taken place. I think this keeps the declines in check and leads to a trending market (sideways to up slightly over the next year) as the market multiple contracts.

  71. 71
    bloodystupidjohnson Says:

    It sure looks to me that the market wants to go down.

  72. 72
    zman Says:

    And with that said, S&P500 back to pre ISM release levels. That was short lived.

    People liking yield, see the MLP’s

    BBEP
    CEP – only red name
    ENP
    EVEP
    LGCY
    LINE
    PSE
    QELP
    VNR

  73. 73
    zman Says:

    Market red.

    Note the complete lack of follow through on the refining segment. I may short the next 1 and a half day rally there.

  74. 74
    zman Says:

    UTS Energy has agreed to sell its 50% working interest in three Alberta oil sands leases to Imperial Oil and ExxonMobil for about C$250 million

  75. 75
    zman Says:

    Silver lining: if we get a recovery today, the strongest names will likely get stronger: SWN, NFX, BBG and PQ (who report tomorrow and neither of which I’m in at the moment), and WLL which started out very strong today but was sold off through the round numbers as the day progressed. Not very tempted to add to anything now as I don’t have much faith in the broad market’s ability to bounce. Bears will be emboldened by this sell off on “good” news.

  76. 76
    VTZ Says:

    UTS – Smart move… They are basically threatening Suncor with that move.

  77. 77
    VTZ Says:

    I’d also like to point out that I said they would monetize their leases last week 🙂 although I thought it would be to Suncor.

  78. 78
    zman Says:

    Every time I think about doing a short term trade, I give it 15 minutes. And then I don’t do it. May put in some low ball bids on a couple of names in a bit for earnings but for the most part I remain seated on my hands.

  79. 79
    zman Says:

    V – I remember. When do you think some of the smaller players (and who) get gobbled up?

  80. 80
    VTZ Says:

    Well, it obviously depends on price. UTS already fought off Total and managed to monetize assets strategically so I think they should be able to fend off unwelcomed takeovers.

    UTS and OPC are still the most obvious ones because of the working interests in other operators’ projects. Pengrowth and Connacher are the others that could go although Connacher is fairly debt-burdened. Peyto is a nice gas asset with an established base and it’s also a company that has grown 100% organically. Peyto isn’t as high growth as some of the others though.

    I think that if we see another drop in oil prices down to the 55$ range the smart move would be for majors to come snap it all up but as we have seen recently, most people would prefer to pay near the top (?).

    Your guess is as good as mine as to when these companies get taken out. The oil sands part of ECA is going to be the first big target. I virtually guarantee it gets bought by either COP or XOM when it becomes public. The gas portion goes to the highest bidder as well. To me, buying ECA right now is like buying something that will get a xx% premium at some point in the future. I’m looking for a decent entry there.

    To be honest, I don’t think Nexen gets taken out preferentially over these other options. But that’s just me. People want the long-life, high reserve assets for their balance sheet. Nexen just isn’t leveraged that way enough.

  81. 81
    zman Says:

    Ok thanks. What about some of the little guys like BQI?

  82. 82
    VTZ Says:

    I don’t think anybody in their right mind is interested in BQI until:
    a) Saskatchewan clarifies its rules and expectations on oil sands royalties
    b) The technology is more commercially proven

    Ultimately their assets will be worth a lot of money but I don’t think that time is within the next 5 years.

  83. 83
    VTZ Says:

    If they can get their Albertan assets into production and generate cash I would change my opinion.

  84. 84
    zman Says:

    Thanks V – anyone else with acreage and a plan but nothing running now that might get swallowed.

  85. 85
    VTZ Says:

    You can only provide so many resource estimates without proving out your production until people don’t care anymore. They are going to need to dilute their shareholders a lot before they make any real headway.

  86. 86
    zman Says:

    Market at LOD. Like I said early, if only they could have closed the market just after the open. Daily pattern on the S&P looks like a mirror image of the last two month ends. Still possible to make a higher low and recover from here.

  87. 87
    zman Says:

    VTZ – roger that. Same thing applied to some of the U.S. oil and gas shale players over the last 3 years. Great acreage but its moose pasture until you put straws into it and prove it up and that took many, many equity and debt offerings.

  88. 88
    VTZ Says:

    Ivanhoe and Petrobank

  89. 89
    VTZ Says:

    Bronco Energy as well

  90. 90
    zman Says:

    Used to own a slug of Ivan for different reasons. Don’t know the other two. Will add the tickers to my Sands list.

  91. 91
    DrLink Says:

    re 88 I would add their spinoff..PetroBakken Energy Ltd.

  92. 92
    zman Says:

    Pretty surprised by the resilience of crude despite a weak, moody market and a bounce off the lows for the dollar. Crude has in the recent past led the market lower, it may be signaling a return to risk asset investing. Nice sustained move in gold today.

  93. 93
    VTZ Says:

    Re 91 – Yeah sorry, that’s what I meant. PetroBakken now.

    The rest of them are all private.

    The bigger players are CNQ, IMO, SU, COS.un, HSE, BTE, PWE … etc etc. Lots of the trusts have bits and pieces of insitu.

  94. 94
    zman Says:

    ZTRADE:

    FST – Added (10) November $20 calls (FAHKD) for $1.05 with the stock at $19.16. Somewhat higher risk trade as they report tomorrow. They report earnings after the close and could have 1 or 2 high profile wells to talk about (Granite Wash and/or Haynesville Shale). The stock has from its recent peak of $25 when the market decided to roll over 9 trading days ago to its current level of $19 (which is where a recent breakout started).

  95. 95
    john11 Says:

    02-Nov-09 15:17 ET

    Swift Energy and Petrohawk Energy to jointly develop and operate an approximate 26,000 acre portion of Swift Energy’s Eagle Ford Shale (21.07 -0.14)

    Swift Energy and Petrohawk Energy (HK) have executed a definitive agreement to jointly develop and operate an approximate 26,000 acre portion of Swift Energy’s Eagle Ford Shale acreage in McMullen County, Texas. Swift Energy received approximately $26 million in cash consideration upon closing of the agreement. Petrohawk will also fund approximately $13 million of capital expenditures on Swift Energy’s behalf within the first twelve months of the joint venture. If any portion of this amount is not expended during the first twelve months, it will be paid to Swift Energy as cash consideration. Swift Energy retains a 50% interest in the joint venture that calls for joint development of this approximate 26,000 acre prospect area located in Swift Energy’s AWP field and covers leasehold interests beneath the Olmos formation (including the Eagle Ford Shale formation) extending to the base of the Pearsall formation. Petrohawk will serve as operator during the drilling and completion phase of the joint development, and Swift Energy will operate the wells drilled once they have entered the production phase, subject to terms of the agreement. The appraisal drilling program covered by the agreement will begin before the end of 2009 with an acceleration of activity anticipated in 2010.

  96. 96
    zman Says:

    Thanks John, I’d heard the rumor, shouldn’t have much impact on HK’s price if any. Modest positive for SFY as it validates their acreage which is further west in the Eagle Ford and gives them a small carry.

  97. 97
    Dman Says:

    Z – crude, gold & grains = the new cash

    Anything on GMXR or it’s just doing its wild thing?

  98. 98
    zman Says:

    Re GMXR – earlier today when energy was in sea of green love mode, GMXR was down a couple of pennies. Group went into “weak gets weaker” mode when the market did. I looked about a bit, saw nothing on GMXR to account for it other than that. Once again, not a lot of thought going into the sell decision of late. “it’s down” seems to translate into “something must be wrong there, dump it”

  99. 99
    elijahwc Says:

    Greetings. Speaking of something must be wrong there, does anyone know if Jim Bobs mud is now in fact concrete?

  100. 100
    zman Says:

    Wishy washy day, at least it ended green. Tsunami of earnings tomorrow. Beerthirty.

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    VTZ Says:

    Dman – Gold is the new cash, crude and grains are just what you need to buy with it.

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    zman Says:

    Eli – On Davy Jones, that’s going to be awhile I’d bet. He always takes longer than it sounds like he’s going to take. On Blueberry Hill, well, that’s another matter. He’s either stuck or its dry or it needs further study. Will see if I can bother Reef for an update.

  103. 103
    zman Says:

    V – well said.

  104. 104
    isleworth Says:

    Chesapeake Energy prelim $0.70 vs $0.65 First Call consensus; revs $1.81 bln vs $1.96 bln First Call consensus. Stock trading down in AH

  105. 105
    john11 Says:

    16:07 ET 11/02/09 SM St. Mary Land & Exploration reports Q3 EPS $0.23 ex-items vs Reuters $0.20 ($34.09)

    Company reports revenues of $185.8M vs Reuters $190.3M.
    Reports production of 26.4 bcfe vs guidance of 25.5-27.0 bcfe.
    Average realized prices, excluding hedging activities, were $3.37 per Mcf of natural gas and $61.93 per barrel of oil during the quarter.
    Average realized prices, inclusive of hedging activities, were $4.95 per Mcf of natural gas and $62.65 per barrel of oil.
    Lease operating expense of $1.30 per MCFE in Q3 of 2009 was below the company’s guidance of $1.35 to $1.40 per MCFE.
    Transportation expense of $0.20 per MCFE in Q3 of 2009 was within the guidance range of $0.15 to $0.20 per MCFE.
    Guides Q4 production to 24.75-26.25 bcfe, lease operating expense to $1.35-1.40/mcfe, and transportation expense to $0.20-0.25/mcfe

  106. 106
    zman Says:

    FST on the tape with earnings, numbers look a touch light on eps, may be result of divestitures, have not gotten to CFPS number yet.

    Has two good Haynesville wells (a 21 mm/d and a 15 mm/d ) and

    one liquids rich Granite Wash well at 30 MMcfepd IP, with a 94% working interest. This is up there with the biggest wells drilled to date in the play.

    Stock marked lower at present.

  107. 107
    VTZ Says:

    I know my horse has been dead for weeks but Market rejected 76.40 on the USDX again.

  108. 108
    zman Says:

    V – keep beating that horse.

  109. 109
    elijahwc Says:

    Briefing comment on SM & FST above:

    16:17 SM St. Mary Lnd/Expl beats by $0.03, reports revs in-line (34.09 -0.01)

    Reports Q3 (Sep) earnings of $0.23 per share, excluding non-recurring items, $0.03 better than the First Call consensus of $0.20; revenues fell 42.7% year/year to $185.8 mln vs the $186.9 mln consensus. Co also provides an update on its operational activity, capital investment levels and financial guidance. Co says it is very excited about the well results in the Eagle Ford shale that is is announcing today and the recent results in its East Texas Haynesville program are encouraging. Co is making great strides in expanding its inventory and is quickly moving the co into a position to be able to organically grow production and proved reserves every year.
    16:16 FST Forest Oil misses by $0.04, misses on revs (19.41 -0.19)

    Reports Q3 (Sep) earnings of $0.48 per share, excluding non-recurring items, $0.04 worse than the First Call consensus of $0.52; revenues fell 62.7% year/year to $177.1 mln vs the $252.1 mln consensus. FST revised its 2009 full year net sales volumes guidance to reflect the effects of asset sales (2 Bcfe) and the negative effects of third-party pipeline or infrastructure shut-ins (1 Bcfe)… Production Expense: As a result of cost cutting efforts employed by the co during 2009 to lease operating expenses and lower expected production and property taxes, Forest has reduced the mid-point of its guidance by an additional 8%, lowering the guided range from $225-255 mln, or $1.20-1.30 per Mcfe, down to $215-225 mln, or ~$1.15-1.20 per Mcfe.

  110. 110
    VTZ Says:

    http://www.bloomberg.com/apps/news?pid=20601109&sid=aic.UTc_Rukg&pos=15

    “The impact of world trade on euro-area gross domestic product is more than three times larger than that of exchange- rate movements,” said Silvio Peruzzo, an economist at RBS in London. “In the euro area, world demand matters more than the currency.”

  111. 111
    zman Says:

    FST – weak numbers, missed top and bottom line, looks like due to weaker than expected production, which includes both deferred volumes and asses sales. Do a better job guiding the Street on that. As a result of weak 3Q volumes, the annual guidance is further guided towards the low end of the range. This goes up against very strong drilling results. The plan going forward is more important but so is communication with the Street.

  112. 112
    zman Says:

    APC on the tape with a 3Q beat and raising full year volume guidance.

  113. 113
    bloodystupidjohnson Says:

    Z what is your view of XCO?

  114. 114
    VTZ Says:

    wow definately the wrong link… delete if possible!

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aAkoEr3mFLv0

  115. 115
    zman Says:

    BSJ – Interesting name, volatile trader, had thought it was an LBO candidate. Haven’t found room for it in my stock portfolio, may some day as I have a lot of Haynesville and probably not enough Marcellus.

  116. 116
    zman Says:

    VTZ – I blew out that first comment.

  117. 117
    zman Says:

    Australia just upped rates by the way. Strong economy getting stronger there. Housing prices at record levels. Not great news for the dollar.

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