T.G.I.F.

210 thoughts on “T.G.I.F.”

1. We think the double-digit unemployment number was inevitable for this downturn. But Jobs Numbers trend on non-farms still positive. Especially with the revision to last month’s. The 10-handle on unemployment is the kind of headline risk I worried about for today… but, bonds not reacting much to it.

2. TPH on SD

   SandRidge downgraded to Hold from Buy (SD – $10.62 – H) – Cutting target to $19 from $24. Bad optics…missed Q3 by 11% and flat production until 2Q’10 plus equity overhang from potential Crusader deal likely leads to underperforming stock until mid-2010 when growth is closer, exploration wells are drilling, and gas market clearer. 120bcfe 2010 guidance (+14% y/y) feels very “beatable” with acquired volumes, but slower ramp and peak shaving production cuts NAV. Step back up at $8 1P NAV.

3. TPH current dance card —

   Oil: PXD, CXO, APA.
   Gas: HK, XCO, KWK

4. Thanks BOP – as you can see I don’t disagree with TPH on the SD. If they say things about Crusader it may help the stock, don’t know if they will. Changed mind on conf call schedule and will listen to Papa at EOG in 10 minutes.

5. Z,

   Out in the field completing wells, but a quick comment from yesterday. Carbo’s proppants are pretty much sold out. I see them raising prices because the demand is there.

6. TechTrader is 55/45 LONG (with good trading color/indicators) today.

   HeadTrader thinks you buy the morning sell-off. But he points out that Futures were at 1074.50 pre-numbers…. now 1054.60. The 1074.50 buyer must be re-examining his employment options about now… (actually, HT says it’s all machine-traded).

7. Oil off $2+ now. Gold down as well but not as much.

   Notes to the administration:

   1) “created or saved” is as non-sensical as “fair and balanced”.

   2) small business is not going to hire because you promote home energy efficiency. That doesn’t come close to making any sense.

   3) Businesses are leary of hiring when the rule set for what they have to do for their employees is in hourly flux. Healthcare reform is one example. A paid leave swine flu bill is another. Gee I feel like a vacat…I mean, I feel sick, give me 7 days of pay please… Ugh.

8. Thanks Tex!

9. EOG call starting.

10. BOP /// TT … long from where ? yesterday’s close ? or from here ?

    Still a coin flip IMO.

11. EOG stock marked up a buck now on their guidance outlined in the post.

12. machine traded ? shocking …

13. more tph on sd

    seems like they are pissed that tph model is off. (“communication is always better than surprises”)

    The qtr gave them 3 m more ebitda and tph says its worth 19 and the stock at 10
    ———————————-

    Managing a company vs managing a stock – We think SD did the right thing for the company by curtailing production growth…interestingly lower production lead to $3MM higher than modeled EBITDA in Q3. The problem is they should have officially lowered guidance from the 110-120bcfe range before cutting guidance to 105bcfe (TPH was 111bcfe)…communication is always better than surprises. SD missed our Q3 production by 11%, but interestingly deferring gas in the low price environment generated $3MM more EBITDA (EPS 14c below our 15c/ street 16c).

14. Halliburton awarded 5-year Turnkey drilling contract by Saudi Aramco for south Ghawar. The five-year contract, with an option for an additional five-year period, calls for the provision of drilling rigs, directional and horizontal drilling, logging while drilling, cementing, mud engineering, wireline logging, completion, perforating, and other well construction activities, including engineering and management of the entire drilling operations. Project is expected to utilize three to four rigs, and will involve between 153 and 185 oil production, water injection and evaluation wells contract is Saudi Aramco’s first-ever award for an integrated turnkey drilling contract. Doesnt look to be a needle mover for HAL

15. sd strategy– the 7 up approach

    “The pause that refreshes”

    CEo says they can grow as fast as the rest of the industry and I with the other ng companies would show some constaint with volume growth

    While im on my rant…

    chk threw in the towel and “wont take it for the team” and now it appears they are trying to emulate swn

16. Sd say production will be 180 bcf in 2012 from 120 bcf in 2010

17. EOG’s drilling plan:

    In 2009, they didn’t see a reason to grow gas volumes in N. America due to low prices.

    In 2010, flat production first half, then increase 6% in second half, with growth coming from Haynesville (part of which is the JV with HK)

    60% of N. America budget goes to oil next year.

    Barnett Combo – “total dominance” in the play.
    – spacing is going to get tight
    – avg vertical well to EUR 220 MBOE, for $2.2 mm, 70% IRR at strip.
    – avg horizontal well (used where the Barnett is thinner) EUR was 152 MBOE, now thinking 280 MBOE for $3.3 mm CWC, 60% IRR at current prices.
    – Plan 12 drilling rigs (7 Hz, 5 vert)
    – Drill 225? wells in 2010 vs 120 in 2009

    Bakken –
    infrastructure projects on schedule – crude railcar process by Feb.
    TFS – will have more data next quarter.

18. nothing drawn on revolver
    cap planned for 100m , they spent 98
    ebitda 3 m better

19. I’m likely to take higher strike calls in EOG shortly after the open.

    They are about to talk Haynesville which will impact HK.

20. 120 bcf guidance without crusader

    crusader worth 8 bcf wont know until mid november, so updie is 128 to 130

    750 budget includes crusader costs of 230 m
    so that means they could run at 520 m

21. EOG – Haynesville –

    The Gammage exploration well they have been avoiding talking about for 2 quarters now. Decent well with a short lateral.

    Followed with the 3 wells listed in the post. Very strong results.

    Plan 10 rigs in 2010, see production going from 40 MM/d now to 200 MM/d by ye10.

22. Re 20 – thanks, that’s good capex info.

23. PackMan — TT is a pattern day-trader. Thing is, he is good at it. But you have to look at the odds of his trades working out too. Lately, his odds have been in the 55/45 range, so not highly-convicted. He hedges his recommendations with saying that he is talking about the “best trade for today.” You have to figure out whether he means (for example, today) to go long the open, or wait for a sell-off to reverse, to go long. One thing, tho, TT is usually done for the day by noon… and always done by 2pm. He does not take afternoon-day-trade risk. By 2pm EST, he is on the beach… literally!

24. EOG – big wells in Horn River (B.C.), getting stronger as they go. Sounds like they are working well with the B.C. government.

    Marcellus – 2 rigs, consistent results.

25. Thoughts on how we should play hk today?

26. EOG

    1st horizontal frac in China will be done this quarter, no results release until mid 10.

27. Additional color (trading mumbo-jumbo)from TT — For Today: Switch game plans again, for the traditional UN Friday rally. Go Long on the morning pullback usually early (which may not be much) for a rally up into lunch at 1:30, and then on into the last hour at 3:55 and 4:15. Look for a few points with below average odds of 55/45. See the Program Trading Pattern Recognition section for the best times to execute this trade. Be sure to tighten stops after any rally in the morning and especially after 11:05 and 12:40. And again at lunch at 1:30.
    Gamblers: The real gamble again today is holding long positions after lunch and into the last hour at 3:55 and 4:15 the most common times for new highs. Two patterns did sell off in the last hour, so know your stops well after 2:10 as usual on every Red day.

28. Baylor – I’ll watch it and then decide, it’ll be largely up to the market’s ultimate direction today but EOG’s Q&A could provide upside for HK as they talk about the Hayensville JV wells.

29. sd says with low prices they didn’t want to drill high hyperbolic wells

    seems reasonable to me

30. EOG Gas Macro

    Estimate U.S. gas production will be down 3.2 Bcfgpd by December vs Dec. 2008

    Estimate down 5 Bcfgpd by mid 2010 from Dec. 2008.

    Expect gas market to tighten by mid 2010.

    Storage has been running less since July…sounds familiar.

31. EOG comment on SEC Reserves Rule Change

    Look for big variability, will be hard to tell what’s what this year. Same as my thinking. There is more leeway for weirdness in numbers that will come out this year meaning some little guys especially will try to pull a fast one with their reserve estimates.

32. From Cross Asset Class Stragegist #2, On the Payroll Number —

    The headline payroll number came in at -190k, a little worse than the -175k consensus. In addition, the largely symbolic unemployment rate was a little worse than expected, coming in at 10.2% (we feel that unemployment is on a path to peak above 11%) vs. the 9.9% consensus. This is leading people to say the report was in-line/slightly disappointing.

    But after revisions, the payroll number was actually 76k above consensus, and hours worked were up. So we would term this report as “a little better than expected” – still bad, as the economy seeks a bottom, but less bad than it was earlier this year as we transition to what is likely to be a sub-par recovery.

    So the short-term outcome remains confusing, and is likely at the mercy of stock investors as they juggle the perception of a sub-par payroll number with the reality of a little better than expected report.

    Yesterday stocks rallied up to just shy of that emotionally important S&P 1070 area; and the futures early this morning brought stocks up to that area again. So we’re resetting the clock on the “week or so” (emphasis on the “or so”) timeframe that the credit bears are likely going to need, to see stocks get above/below that level, before covering/adding to their bear positions. We believe the sentiment of stock investors is so poor that we are likely to see at least a couple of attempts to knock prices down in the next week. So we still think it is likely that stocks need to become oversold before they surge again, but there is the potential for fat tails around that statement.

    Of course, from a big picture standpoint, we remind investors that the issue isn’t whether the economy recovers, but whether the credit market recovers. On that front, the credit market has remained strong this week. The preliminary indication of the credit markets’ response to the payroll number is positive, while the credit derivative market’s reaction (driven by the credit bears) is very slightly negative.

33. Re 29 – agreed, if you don’t have to hold acreage via the drillbit it is reasonable to wait.

34. Re 32 – yeah, I was trying to convey that in the opening bullets, Cantonia on CNBC saying they are just terrible numbers. He needs to get another job.

35. EOG called up $2 pre market. If the market does recover it probably breaks out to new highs. I may take some $100 December or even $100 November calls for a quick trade.

36. … or $95 strikes.

37. sd getting crushed down 11 %

    ridiculous imho

38. EOG

    No habla Eagle Ford.

    Open secret they are drilling there, no comment, will say within 12 months.

39. conclusion

    market loves growth even if it doesnt make sense

40. Bill – on a day like today, with their PR alone, I’m not surprised, weak hands will come out smashing the bid. Later I think they are ok, good in my ZLT for a long term hold.

41. re 39 – Most analysts due though none will admit that. Makes their life easy. “what, you upped your numbers again, duuudddeee sweet”. Lot easier to pitch that to your sales force than “yes they cut numbers again but we believe in long term value”. Believe me, the later takes longer to sell and is generally sold to a smarter, more appraising type of client.

42. ZTRADE

    EOG – Added December $100 Calls (EOGLT) for $1.70 with the stock just under $91 after strong results and during a good 3Q call. See site for details.

43. EOG Q&A

    Haynesville question

    Acreage is very tight, hard to had much more.

    In 2010, any $ spent on acreage is going to be very heavily skewed towards oil/liquids, not gas and not Haynesville.

44. BOP – Tell HT and TT good job from me.

45. EOG

    When the analysts get off this call I expect most of them to say happy, happy, joy, joy type things.

    Three Forks Sanish – thinking it is more prospective under their core position than they previously did. I recall the comment a year ago that they thought it was spotty, then I recall them saying no reason not to think its under our core, and now they think due to offset operator drilling that it is more than likely and they’ll be testing that in 2010.

    Haynesville: acreage 60% Tx / 40% La.

46. V – Congrats on the $1,100.

47. Seems to me that stocks sold off, then everyone noticed the $$ red & with a 75 handle. So the “dollar down stocks up” hammer hit all the trading kneecaps & the buy reflex resulted.

48. GDP Goodrich Petroleum upgraded to Accumulate from Neutral at SMH Capital- tgt $32 – looking green

49. Dman – right. S&P 1075 level kind of important to defeat a H&S forming there.

50. Switching casinos-heh

    http://www.bloomberg.com/apps/news?pid=20601079&sid=a3nweQ7iz1_o

51. Thanks Eli – I just can’t do it re GDP right now, two much multiple for what you get in my book.

    EOG Q&A

    Question about horizontal drilling vs the gas supply model.

    They are a bit puzzled by the recent EIA data. Had to think about what to say on this call.

    Drilling has slow, production will fall, Canadian production levitated for 6 to 9 months longer than thought before it started to fall, may be due to uncompleted wells and that may be what’s happening in the States now. At EOG they’ve mostly worked through their uncompleted wells now.

52. WLT has retaken the pre earnings levels. It was a good quarter, stock is still inexpensive, I will continue to hold for awhile. Like the FST trade the other day, that trade is along the lines of “getting to know the name better both as a company and as a trading vehicle”

53. Switching from the EOG call to the BEXP call.

    BEXP responding to their numbers a bit better than I expected.

54. BEXP Conf Call:

    BEXP new slide show up.

    Stock flat at 10.74

55. EOG, On most of their Parshall acreage they have already filed for permits to drill 3Forks wells parallel to existing BKN wells spaced half way between the 2 wells in theory to try not to communicate between two zones.

56. Thanks much West

57. Idiots that dumped sd at 9.41 are having 2nd thoughts with the stock rallying back to 10. I added more to my position on the over reaction not lucky enough to get 9.41 but happy with my 9.65 purchase

58. EOG is leasing EagleFord as we speak, they are doing a good job on keeping things quiet. FYI, they are leasing acreage north of Houston!

59. PackMan — your 9.50 buy-level on SD looks golden. Whether you did it (or not), nice plan.

60. BEXP – Slide 13

    Big growth 2010 shown. Wasn’t in the PR.

    3Q oil volumes: 2.8 Mboepd

    4Q down a little due to USEG

    1Q10 3.7 m boepd
    2Q10 5.3
    3Q10 7.2
    4Q10 7.8

    More than double oil production by end of 2010. Strong work.

61. bill #20: I thought SD said capx AND 120bcf production included KRU, and if KRU did not close they would direct capx elsewhere to make up the production.
    JEF downgrades some stocks based on “concerns regarding nat gas prices”.

62. Dollar rolling over, crude has not yet noticed.

63. RMD – did you see which stocks?

64. Ram – be safe man:

    http://tropics.hamweather.com/2009/atlantic/ida/trackmap_zoom1.html

65. For someone who served with the First Cav in Vietnam, my prayers and wishes are with the families of those at Ft Hood.

66. BSJ – likewise, meant to add to front of post. I am personally not worthy of what those people sacrifice daily.

    Italyinvestory, if you are out there, stay safe man.

67. FYI – mid-Bossier Shale article

    http://www.nola.com/business/index.ssf/2009/11/another_natural_gas_discovery.html

68. Skittish market.

69. Bossier Shale will NOT rival the Haynesville. This will be one of those that makes sense at +6$ gas, not 4$ gas. I have completed more Bossier shale wells than anybody out there.

70. Odd looking trades on S&P again, very jumpy.

    Only names up amongst Bakkens at present, EOG and NOG.

71. According to TT, we could sell off into lunch… then bounce around. Trend after 1:30 EST could be a grind higher, with a fast bump right at the end.

72. #65,#66-Agree-It rips my guts out to see what those troops and more so their families go through every day.

73. Thanks Bop

74. JEF comment on KWK gives flavor of downgrade:
    We have deepening concerns about the state of natural gas markets
    longer-term. As a result, we are wary of companies with financial
    leverage and heavy gas exposure. KWK’s natural gas liquids stream
    helps insulate the economics, but forward year floor prices for natural
    gas are trending lower.

75. KOG starting in a few… I take notes the old-fashioned way (on paper), so may not be the best source of what they are saying in real time. So, anyone on the call, pls post the important stuff.

76. KOG — easy to show HUGE %age increases… when you’re coming off a zero base… but, nice numbers.

77. Yep. Next time you speak to them tell them we know how to read. Thanks.

78. I know… this is highly irritating.

79. It’s their IR guy… he wants to believe he is adding value. ha.

80. He sounds ner vous.

81. Yep… Big Day for him! He gets to show he can READ.

82. RE 46: Thanks but it was short-lived. I expect to see a whole lot more where that came from especially after the reaction to the unemployment data today sending the chances of a raise in rates in April from 85 ish percent to 65 ish percent. I expect to see that decrease as time goes on.

    As for gold in the short term here I’m not sure where the rally stops but once we put in a new higher low then the trader boxes are going to go nuts and then I expect to see big momo gains on the way to 1500 and beyond eventually.

83. MB productive over “substantially all” their acreage (wonder what %age that translates to)… expect to complete Tall Bear #9 this yr. So, #9 prob not a dry hole.

84. V – today’s numbers only push the Fed’s change of stance further away, agree. Also bad for the dollar. Fire up the presses, we have jobs to create or save.

85. From PXP latest conf call on Davy Jones:

    Flores: “Davy Jones, yes, I’ve told people that Jim Bob once again has proved himself to be the world’s greatest geologist. We found the Eocene much shallower in the northern part of the Gulf than it;s ever been found and proved alot of the miss about the Eocene and Wilcox being at 60,000 feet in the northern part or the Gulf. We are at 255 in the Eocene. We have not seen the Wilcox sand. It’s below Paleo was, and we are going back into drilling it. So the geologic concept is no longer wild. It’s no longer unproven. The geologic concept is right now we are down to whether we get the trophy or not and have some good sands on the structure and have the hydrocarbons that we think on the 20,000 acre structure in the middle of South Marsh Island should have. So we are into pure commerciality at this point, but it is quite amazing to rethink the geology in the northern half of the Gulf based on this well and what’s possible if we find some good sands”.

    I think the PXP conf call, and a 200 point dow, was the reason for the nice action in EXXI yesterday.

86. KOG mentioning Red River wells, CLR bread and butter while Bakken grows.

87. the Red River wells… missed it, did they give a date for that? was it just 2010? or 1H10?

88. Think first half, not sure. Those generally aren’t big wells but are consistent. Kind of wonder at the distraction of that and talking about the Vermillion when you could be doing some more interesting things in the FBIR like testing the TFS sooner. Just curious why that is.

89. KOG — sounds like the 2ndary snagged some new institutional investors… good news.

90. The Vermillion is 100% operated by DVN, so not much of a distraction. Wonder if the RR wells have a partner….?

91. Charging Eagle wells were choked back, don’t recall that being in the pr.

92. Does anyone know what % of S&P earnings financials represents right now?

93. WRES announces that it has expanded its commodity hedge program by entering into a zero cost collar on 1,000 barrels of crude oil per day for all of 2010. Under the terms of this transaction, the Company places a floor of $65.00 per barrel and a ceiling of $106.50 per barrel. The costless collar is used to establish a floor price by purchasing a put and a ceiling price by selling a call on anticipated future crude oil production.

94. KOG – not hearing anything to ring an alarm bell either way.

    As to the rest of the stocks, market is large and in charge.

95. Macquarie — why do they care? they have a $1.40 PT on KOG…. LOL.

96. Thanks for the heads up Isle, probably a smart move on their part, big fat range should make it fairly low cost.

97. BOP – always good to gauge the mood of the low ball analyst. He’s the guy who can raise his target the most.

98. HT is thinking about doing a day trade in HK at 23.50-ish… depending on what the broader mrkt is doing. No hurry, think we bounce around ’til 1:30 or so. But, just “crystal-ball-ish” stuff.

99. Also, I loved how CNBC talked about the USD as a safe haven this morning immediately after talking about how money was going to be free for an indefinate amount of time. The spin machine was definately in full force this morning.

100. z — no doubt. The negative report is usually the best place to start, when looking at a new name.

101. good! RR follow up question…

102. yep… sounds like KOG might not be the operator on those RR wells. Like that. Less distraction from the FBIR.

103. KOG cc — what’s new? sounds like they plan to keep the 2nd well… that would accelerate their production ramp up. Would like to hear who they are working with on the planned RedRiver wells. With the 2ndary done and anticipated CFFO, KOG believes they have fully-funded their 2010 capex (yay!). Also, as revolver availability increases, will be able to opportunistically add to acreage and/or participate in more Bakken wells.

     Overall, KOG is in a good place right now. 2010 should be their year.

104. sorry… make that “they plan to keep the 2nd rig”

105. I think Macquarie raises their PT on KOG, btw. Too many upside opps… from 3FS, RR, 2nd rig, revolver availability-funded opps, DVN-operated Vermillion, hooking up to pipeline in 2010… unless oil tanks, KOG’s NAV is going to continue to move up and to the right.

106. I got the impression he might have a new target on Monday.

107. Market has entered the wow-boring phase.

108. Gee, I wonder how those shorts Kass put on are doing? LOL

109. Next week we have no govt data Monday through Wednesday, Feds closed for Veterans Day on Wednesday but market is open.

110. BOP – re HK, I think it snaps back only with a move on the market higher WITH oil carried higher as well. NG off 20 cents is hurting the gas trade today as well and part of that is probably the latest track on Ida which shows a depression over the coast of Honduras, and a tropical storm in the Gulf next week. That’s probably not enough to get much excitement out of gas. If it churns up, and some thing it will into a Cat 1 or 2 and goes mid Gulf instead of the current E. Gulf track, that will lift NG for a couple of days.

     Oil always gets hit on a bigger payroll number, as people start talking about the drivers. Even though this payroll report was a net uptick when you count revisions, crude knocked out a couple of whole number levels of support and is now looking like it wants to drift into the close.

111. Hurricanes and nat gas: when ever a big hurricane does damage in the gulf, nat gas prices temporary shoot up, but long term it is usually not good for nat gas pricing. Why, because there seems to be always MORE demand destruction than supply destruction.

112. z — great points. We were talking about the same thing… it’s really just a mrtk-trading call. But, the natty gas kids seem to be taking it on the chin (with nat gas prices) today. The “easy” trade was the volatility this morning… it gets a lot more speculative from here on out.

113. BOP – Do you know the answer to 92 on a trailing or forward basis?

114. sd struggling to get back

     its doing so well (relatively speaking)
     its out performing bexp today

115. VTZ — i’ll see if i can get the answer… we pay bloomberg big bucks to help, can always ask.

116. BSJ – depends on the extent of damage. People still bringing production back on from Ike/Gustav in 2008. We lost 7 Bcfgpd for many weeks afters and then in the 2 to 3 Bcgfpd for months thereafter. Gas oversupply would have been more critical without those storms.

117. VTZ — just to calibrate… i see SPX “actual” earnings at $48.78 right now, making price/EPS 21.9x. that what you are looking at?

118. KOG, I think that BEXP has at least some % WI in the Northern Montana acreage, as they have mentioned this in the past. EOG is active in the northwestern part of ND but everything is being held tight. Very encouraged by the call and comments from Lynn and Jim. As BOP said 2010 should be an excellent year for KOG. I am not an expert but the 3Forks logs look as good if not better than the BKN section in the REZ wells shown. They will probably drill the 3Forks at an offset parallel as EOG is planning with up to 3 wells in a 640 ac unit. Since they are not going to frac # 9 until December, stock may trade in a range here barring a outside interest. Price target 1 year out at least $ 3.50 which would be a 40% move from here. This would be a extremely good buy on any pull back.

119. Think he wanted what % of S&P was financials’ earnings.

120. http://www2.standardandpoors.com/portal/site/sp/en/us/page.topic/indices_500/2,3,2,2,0,0,0,0,0,1,5,0,0,0,0,0.html

     Found the data. Sorry.

121. We also lost demand. It takes a long time to rebuild some of the infrastructure that goes into the gulf coast chemical complexes. Plus how much of that demand is permantely lost by chemical companies moving off shore to say the middle east where they don’t have to fight a yearly hurricane battle. They kind of lost demand does not readly show up on some of the stats.

122. OK… rough estimate… SPX “earnings” on a trailing 12 month basis are around $49/share. Of that $49, about $14 comes from the S5DBNK subsector (Diversified Banks Index). Members of that index are Comerica, Wells Fargo, and US Bankcorp.

123. BSJ – we did lose some demand, but Chemicals in their entirety for the U.S. is about 5 Bcfgpd. We didn’t loose the whole complex on the Gulf Coast let alone the non Gulf volumes. We lost other demand down there for a time but net/net, the bigger, longer lasting loss is going to be on the supply side.

124. VTZ — that gives 15.4% of SPX is “financials” by mrkt cap… let me know if you find the earnings contribution. OK? thx.

125. The answer if anyone is curious is that, on a trailing basis, financials represent the following percentages of the S&P earnings.

     Q3 2008 to Q2 2009
     operating earnings: 76%

     On a forward basis,
     Q3 2009 to Q2 2010
     operating earnings: 43%

     Reported earnings from Q3 2008 to Q2 2009 were -32.80$.
     The overal S&P index had 8.20$ of earnings.

126. Z, it is too bad you didn’t day trade those HKKE. When I saw the trade latter in the evening I thought you had made lemonade out of lemons, but Mr Market sometimes can be a cruel taskmaster and, at least for now, HK is not cooperating.

127. VTZ — so, on a foward basis, 15.4% of the SPX is expected to provide 43% of the earnings?

128. Those are actually very crazy numbers. 76% of operating earnings were earned by financials over the past year… say goodbye to that when rates go up and the consumer gets crushed, defaults increase and the spread between the 2 and 10 year shrinks.

129. Yes BOP from Q3 2009 to Q2 2010 the estimates say that the financials earn:

     28.82$ of the S&P earnings of 67.29

130. Means that we are currently trading at 15.82 times forward operating earnings of the S&P.

131. Re HK – I’m not generally a daytrader. I’ve got time on those.

132. VTZ – I believe the forward S&P numbers are going to turn out to be light. When revenue growth reasserts itself, leaner structures will provide nice EPS leverage.

133. Crap Sorry, for 2010 I took the energy numbers… wrong row… I’ll redo

134. Sorry for the confusion… was doing it really fast.

     Q3 08 to Q2 09:
     Operating Financials:
     -17.88 $ out of S&P total of 39.79

     Q3 09 to Q2 10:
     Operating Financials:
     8.79 out of 67.29

     13.05%

135. Anyone have a reaction to GEOI’s quarter? Not having a conf. call is poor outreach.

136. Financials are trading at a 15.80 FY 2010 P/E.

     The S&P is trading at a 13.94 FY 2010 P/E

137. VTZ — so, you a little less negative on forward earnings now?? 🙂

138. (i know… irritating EMOTICON)

139. 76% of earnings was energy over the past year! Looks like we’re in the right place?

140. RE 137 – Well maybe not bearish for 2010 because the Fed isn’t going to raise rates for eternity. So yes I think we can beat the 74.99 of full year 2010 earnings.

141. yay! an optimistic VTZ!! cool. 🙂

     (irritating emoticon again…)

142. MIDDAY OVERVIEW

     · Stocks work off opening lows midday; SPX up 3 pts amid lackluster trading. Stocks rallied from their lows reached on back of the BLS report and have spent most of the day hovering around unchanged. Not a whole lot of conviction in either direction and volumes/activity VERY quiet. Our futures desk saw a nice wave of macro short-cover/gamma hedging and even long-only buyers of equity index futs after the open this morning. It now feels like there is a bit of a hole out there because the (futs) buyers are gone. We note that equity futs volumes is running about 20% above average which could be considered a bit weak with today being NFP/Unenjoyment. On ESZ9, we are trading right above the 1064 level our futures desk was watching yesterday; bulls are watching for a close above this point (could suggest a broad trading range/n-t bottom at hand).

     · Equity Sectors – industrials are the best acting group today, although this is all on back of the GE move (GE is up 7% following 2 upgrades). Consumer discretionary stocks also act well (IGT, SBUX, M, etc, all helping drive the strength). HC, staples, utilities, materials, telecoms, tech are all flattish. Financials lagging, hurt by some disappointing earnings (AIG, FNM) and a decline in the REITs (REITs off 1.6% and one of the market’s weakest groups). Transports pretty strong, up >1% and breaking up above the 50day MA for the first time in a couple weeks (transports are up nearly 9% on the week).

     · Commodities – Two notable moves in gold and crude today. Crude is off over $2, nearing $77. Gold is up around $5, but gapped over $1,100 earlier this morning.

     · FX: USD (DXY) is flat to up slightly today. The dollar is up a bit against the Euro and Yen while off slightly to basically flat against the pound. The Yen is also about 1% stronger against the Euro today

     · Corp Credit: trading flattish along with equities; IG is flat and HY is up 1/8 pt.

     · Treasuries – 2s very strong on back of the labor number – extend their rally; 2yr yields fall to multi-month lows (lowest since Apr). 10s also up on the day (2-10 curve flat from yesterday but recall steepened out during Thurs’ session).

     Economics Update

     · Unemployment rate blows past 10% in dismal jobs report; Nonfarm employment declined by another 190,000 jobs in October. Even worse than this were the figures reported in the household survey of employment. The unemployment rate smashed through the psychologically significant 10% level to hit 10.2% in October. The number of discouraged job seekers increased last month, as did those who worked part-time for economic reasons but wanted full-time jobs, and as a result the broadest measure of labor underutilization — the U-6 unemployment rate — increased 0.5% point to 17.5%. The establishment survey of employment was very bad, but not significantly worse than expectations. Perhaps one of the more disappointing features of this report was the fact that the average workweek failed to reverse the September decline and remains stuck at 33.0 hours. As a result of that and the 190,000 job loss, total house worked in the private sector fell 0.2% last month. M Feroli

     · Jobs – The Obama administration is considering measures to promote employment including a boost in infrastructure spending and incentives for businesses to hire, White House economic adviser Jared Bernstein said. Bloomberg

     Earnings season update – #s Thurs night/Fri morning

     · Tech – NVDA is the highlight of the night – stock up 7%. Other major reports: INAP +8%, ATVI +4%, SWKS +8%, ROVI +6%, JDSU +5%, SONS -1.8%, PRO -3%, SAPE -10%, VRSN -7%, IRF +1.5%.

     · Telecoms – LEAP -2%.

     · Gaming – IGT +9%

     · Consumer – HAIN +2%, SBUX +6%, CHH -0.8%.

     · Financials – BX +5.7%, FIG -5%, AIG -8%, FNM -8%, KFN +5%, AINV -2%, PMI +6%, RBS +4%.

     · Media – CBS -2%.

     Calendar

     · House will hold an important vote this weekend on its HC bill; House session to kick off 9amET Sat (although the AP says the vote may slip into Sun or next week)

     · G20 finance ministers meeting – Finance ministers and central bank governors from the group will meet on Nov. 6 to 7 to follow up on discussions from the G20 summit in Pittsburgh in late September. The meeting will take place in St. Andrews, Scotland.

143. Z, in a few weeks ECA is going to split off into two companies. A nat gas company ECA, and an integrated oil company — Cenovus Energy. Do you have any views on this.

144. No but I think V does. I only watch the old ECA from afar, haven’t owned it in years. Normally I’d say that’s a good way to break out some value but they canned the deal once and I don’t remember why and and then resurrected it.

145. west #118 — just saw your comments. Thanks! so, you’re saying that EOG or BEXP could be KOG’s partner in the planned RR wells?

146. My opinion is that they are both going to get bought. ECA will be like a canadian CHK, Cenovus will be an immediate takeout target by COP.

147. ECA gas, prime picking for major looking for lots of high quality acreage/assets…

148. I would gladly hold shares in ECA and I’ve been looking to buy at a good level before they split.

149. Remember, being a tax free spin off, Cenovus can not be bought for 2 years, without serve tax consquences.

150. VTZ,

     Give me your reasons on a buy out, as I’ll share mine.

151. So Tex, you like the parent ECA, over the spin off Cenovus.

152. BSJ,

     Explain, I’m just a dumb completions engineer…

153. Prime undeveloped gas properties in many of the best plays. Experienced operator. Not expensive.

     For oil sands piece it’s the same. Integrated partnership with COP, good undeveloped land. Less experience here but good assets with good leverage.

154. Don’t worry Tex I’m just a dumb process engineer. We can congregate to celebrate stupidity with some tasty beverages next time I’m in Texas.

155. Z: Would you consider EOG as bullish about NG next year as Aubrey? It feels like Aubrey is a little out on a limb with only 22% 2010 hedged and a fair amount of debt. His old hedging guru Tom Ward @ SD seems to be hedged. S

156. Also add to the gas side… largest producer and leverage on the marketing side.

157. Tom – without hesitation, no, I would not. But Papa is on the opposite end of the risk spectrum from Aubrey. Both smart guys, both good operators, but very different approaches.

158. If company A, spinoffs company B, shareholders of company A are not subject to a tax on the transaction. This transaction must be pre approved by the SEC. If within 2 years, company B is bought out, then the spinoff could be consider a taxable event to the shareholders with the tax burden falling on company A. It is like the transaction being viewed as a dividend not a tax free distribution.

     Note, Company A, the parent, can be bought out after the transaction with out it triggering any tax problems. So ECA can be bought out, but not Cenovus.

159. Note BSJ that you can already buy Cenovus shares… they are already trading on the TSX for anyone interested not that it should be a mad rush into them.

160. From HT — Hot news from the CME: Dead as a door nail. Only 9000 spoos traded and a million .1 ES. No paper and no selling (that is normal on a red friday in the PM) buy stops at 68.50 to 72even. sell stops at 55.80 to 53.40. and already only FORTY locals working. And that will drop more as the PM goes on, WHY? nice weather in ORD and everyone leaving. And that favors the cash and a grind into the last hour.

     [editor’s note: he is sarcastic when he says “hot news”]

161. BOP, KOG well particpant will probably be dependent on well location. I do not know about EOG and don’t mean to imply that. If it is Bexp they will let us know.

162. This from the last issue of The Rocky Mountain Oil Report, 11-6-09……EOG Seeking Deeper Pay in Parshall Field
     Mountrail County, North Dakota
     Coming as no surprise, EOG Resources (EOG)—the leader in Bakken extraction within the state of North Dakota—is now working to determine if the Upper Devonian Three Forks is a separate reservoir from the middle Bakken member, which is the established pay in Parshall Field. Discovered by EOG, Parshall Field is the largest Bakken oil pool in the state and currently leads North Dakota in overall monthly production. Including confidential wells, production for this field currently exceeds 1.5 mmbo per month from 157 wells. EOG accounts for more than 80 percent of this production.

     The company has moved in Nabors rig No. 148 and has commenced drilling the Austin #101-15H, nw-ne 15-154n-90w; 4 miles to the southeast, EOG is making hole at the Wayzetta #102-02H, nw-ne 2-153n-90w. Nabors rig No. 527 is supplying the iron for this venture.

     Both of these deeper pool wildcats are being drilling on 1,280-acre laydown units created by the company, located in sections 14 and 15 of 154n-90w, and sections 1 and 2 of 153n-90w. EOG has also created two other Three Forks drilling units within Parshall Field encompassing sections 21 and 22 of 152n-90w and sections 20 and 21 of 153n-90w. The company has already staked two Three Fork tests on these last two units: the Parshall #100-22H, se-sw 22-152n-90w; and the Wayzetta #101-21H, sw-se 21-153n-90w. No activity has been reported at either of these sites.

     According to documents filed with the North Dakota Industrial Commission (NDIC) regarding the most northerly test—the active Austin #101-15H—EOG revealed the following prognosis related to the Three Forks formation:

     Vertical thickness:
     22’

     Porosity:
     11%

     Water saturation:
     45%

     Oil gravity:
     42° API

     BHT:
     204°F

     Formation volume factor:
     1.27

     Gas/oil ratio:
     380 scf/stb

     Gas:
     0.961 gravity at 1,420 btu

     OIP per 640 acres:
     5,204 mbo (370 stb/acre-ft)

     Four miles southeast, EOG supplied the NDIC with anticipated reservoir data on the Wayzetta #102-02H:

     Vertical thickness:
     32’

     Porosity:
     11%

     Water saturation:
     45%

     Oil gravity:
     42° API

     BHT:
     204°F

     Formation volume factor:
     1.27

     Gas/oil ratio:
     380 scf/stb

     Gas:
     0.961 gravity at 1,420 btu

     OIP per 640 acres:
     7,568 mbo (370 stb/acre-ft)

     This deeper pool activity is not the first time EOG has peeked at the Three Forks in Parshall Field. Ten miles to the southeast of the active Wayzetta #102-02H prospect, the company has drilled the Model #100-19H, sw-se 19-152n-89w. Originally staked as the Model #4-19H, in late August 2009 EOG changed the well name and the target formation from the horizontal Bakken to the horizontal Three Forks. No information or ­production figures have been released on this hole, which was drilled with Nabors rig No. 148.

     Another area where EOG plans to evaluate the Three Forks is in the southern portion of Parshall Field. Roughly 12 miles south of the Wayzetta #102-02H, the company has created a 1,280-acre laydown unit involving sections 4 and 5 of 151n-90w. EOG has staked a Three Forks test at the Fertile #100-04H, se-sw 4-151n-90w. This deeper pool wildcat has yet to spud.

     Should the company prove that the Three Forks is a distinct and separate reservoir, and contains commercial amounts of oil beneath established pay in Parshall Field, the ramifications could be huge.

     In a related matter, field reports have indicated that EOG is moving oil from a possible Three Forks well in Stanley Field, which is located north of Parshall Field. The Burke #100-20H, se-se 20-155n-90w, has been drilled but no data has been released by the company. If these reports are true, this would represent the first horizontal Three Forks production established by EOG in the area. Stanley Field currently produces both from the vertical Madison and horizontal Bakken.

163. http://WWW.spinoffadvisors.com/articles/spinoffs101.htm

164. Does that apply to Canadian companies? I remember in 08 when it was going to happen originally that some of my friends and former colleagues were telling me that it was essentially sold already to COP.

165. I think those shares are trading on a when issue basis. They are trading as if the transaction has already taken place.

166. Well, it would apply to US shareholders, since ECA has gotten SEC approval for this being a tax free exchange.

167. EOG does not really have a lot of debt, so they can be light on hedges, whereas CHK is much more debt heavy, so being light on hedges, if Aubry is wrong can really cause some problems later.

168. http://www.encana.com/media/newsreleases/2009/pdfs/1029-arrangement-circular.pdf

169. Re 167. Very true. Aubrey has gone a little further out on the risk limb this year. EOG less than 20% debt to cap and stated goal of $0 debt within a few years. Total different management styles.

     S&P looks like it is perking up right on cue with TT’s comments, needs to take a look at the high from yesterday around 1071.50.

170. VTZ, re #82, can you share your fav gold stocks?

171. BSJ,

     Not a financials guy, but, I know that their assets are strategically located next to another major’s.

172. BOP; 59 … no, I didn’t do it on SD … was a little spooked by the commentary here, so decided to watch and wait …oh well … nice job by those that got in.

     Watching HK slow bleed today; I do have a buy target for today (hint: almost there).

173. PackMan — fwiw, i’m with you. i’m spooked by the fear of SD being dead money for the next coupla quarters. Would prefer to avoid that. It it had traded with an 8-handle, I might have been tempted. But, have enough sleepers in the portfolio right now.

174. ROSE flat with earnings Monday. Holding some common, no options pre call for me.

175. SLW, RBI, K for mid-tiers. I have no problems with Newmont or Agnico Eagle as large cap names.

     I personally prefer to hold a basket of juniors because they are shorted beyond belief and the equities have lagged.

176. I don’t know how easy it is for Americans to invest in Canadian Mutuals but I would strongly recommend the:

     Sprott Gold & Precious Mineral Fund.
     http://www.sprott.com/Fund1.aspx?id=23

     It is run by John Embry and is 5-star rated. It hold a basket of juniors, some bullion of both silver and gold and some mid-tiers.

177. Goldcorp is my favorite large cap.

     That fund would be double bonus for Americans who think the USD is going to decrease because you’d get some CAD appreciation.

178. Z – still here, but I don’t get to follow the site anywhere close to real time. I’m in command of an Air Assault (Helicopter-borne) Light Infantry Battalion now. 2d Battalion 502d Infantry, assigned to the 101st Airborne Division (I guess that blows my zeb board anonymity) I’ve got 812 personnel in the Battalion who are keeping me very, very busy. Almost all doing great things daily for their country, few clearly showing deficient upbringing. No deployment orders yet, but we got pulled off our mission to Iraq and are waiting for POTUS to make a call as to when and where we go next in Afghanistan. Ft Hood situation is a strange and tough to judge before more facts come out. Bottom line is that there are lots of great Soldiers and their families that are unnecessarily hurting on the eve of Veteran’s Day. Honors to the veterans on the board for the 11th and thanks to all for your support of our Servicemen and women.

179. Best of luck and thanks again Italy.

180. 173 – exactly.

     So SD rallies from lows; and HK falls; BEXP falls. Go figure.

181. Heads up on HK … the big options open interest are on the 23 Puts and 25 calls for Nov. It will be interesting to see if we flop around in that range for the next couple of weeks.

182. They see my HK orders but won’t let me get’em … yet.

183. VTZ-link is a list of junior golds and a few silvers which Van Eck intends to trade as an ETF under symbol GDXJ-registration is not complete yet. I, as are most on this board, am not a big fan of ETFs but it might be interesting to track its performance when it starts trading, prob in Dec. I agree on the future for juniors FWIW but I was butchered by the juniors in 2007-2008.

     http://vaneck.com/sld/vaneck//offerings/press_releases//GDXJ%20Index%20Constituents%20Announcement.pdf

184. amazingly, Petrohawk is down more than SD

     I saw an analyst came out today with doubts on longer term ng prices and will supply in fact roll over

185. Sd could be dead money and so could all the other ng ep names

     Hedges start rolling off for most players and they all think they can load hedges on at higher prices…what happens if that doesnt happen

     a world of hurt

     We had prices in the 2’s in q3, i wouldnt pump anything at that price

186. Well in that case HK is well hedged for 2010 and would pull back on their capex for the portion of production that isn’t.

     I’m not reading anything into the moves in E&P land today, just noise.

187. Futures NG prices are currently well above $6. Aubrey and company can sell their gas for over $6 for the forseeable future if they so desire. Therein lies the problem regarding a gas bubble. Some (unhedged) producers are selling gas in the $3’s or $4’s while others (hedged) are selling their gas for $6 plus. If you’re getting $6 plus for your gas you can drill shale wells all day long in the Marcellus. So, even during a bubble, those hedged producers will keep adding to the bubble. Since all gas is not hedged at higher prices, supply will fall…………….eventually. However, if Aubrey and company hedged 50% of their volumes at over $8 for the next few years (many producers did so last year) and then sell the other 50% at the spot price, the average price received is still high enough to justify drilling and drilling and drilling.

188. and then there is this

     EA to forecast natural gas glut
     LONDON, Nov 5 (Reuters) – The International Energy Agency
     (IEA) is set to forecast global supplies of natural gas will
     rise faster than demand in coming years, the Financial Times
     newspaper reported on Thursday.
     “Global gas markets have evolved from a seller’s market,
     driven by tight supply and demand, to a buyer’s market as
     demand weakens while new supply comes onstream,” the IEA says
     in a draft report of it World Energy Outlook, to be published
     Nov. 10, according to the FT.
     The energy adviser to 28 industrialised countries expects
     overcapacity of liquefied natural gas terminals and gas
     pipelines to reach at least 250 billion cubic metres by 2015,
     over four times the spare capacity in 2007.
     “Projected global demand points to significant under
     utilisation of inter-regional pipeline and LNG capacity around
     the world,” the IEA is reported to say in the draft report.
     “This looming glut could have far reaching effects on gas
     pricing.”

189. re 188, despite the date line that came out a couple of days ago. IEA saw a big spike in LNG coming to the U.S. this year. Didn’t happen.

190. Generally, I use any press release by the IEA to line my cat litter box. At least it does some good there.

191. BOP – I understand where they are coming from from a global supply perspective. I just don’t think they’ve got the demand side down.

192. z — yeah… well, my cat doesn’t seem to care. 😉

193. Volume has been so light this afternoon, that one really can’t make much of any trends. One certainly can’t make money off them, anyway.

194. RE 183 – The only difference between the index and an actively managed fund like Sprott is that the fund generally outperforms the index and in addition it has the flexibility to switch between bigger names and smaller ones as it sees fit for protection and otherwise.

     I suppose as an active trade the ETF might be a better vehicle to capture short term returns but I’m holding my gold as a long-term investment so I’d prefer the mutual as one of my core holdings.

195. Z: Feels like Mr Market is saying cap ex crude si NG nyet. Many of the NG names are greatly undervalued if NG goes to $7.00. I’m not smart enough to figure if that will happen. My squirrel index is not bullish yet. Need more fat squirrels to confirm Farmer Almanac.

196. Tom – I only think Mr Market is saying that he’s left the building for the week.

197. Anybody have any fun predictions for next Monday?

198. Over 9000 puts traded in the hk nov 23s

199. Baylor – I don’t see that. Hmmm.

200. HK has been tracking down its 20 period moving average on the 5 minute all day, tough to be long from a day trade perspective, but longer term HK is still in a prime buy spot, HK remains on a P&F buy signal, with major support at $22-$23, the 200 day daily MA helps at about $22 level, HK stays on a buy until a print of $21…

201. Z – I promise never post as many times as I did today. Have a good weekend folks.

202. Thanks Jerome. Hows the S&P 500 look to you?

203. V – No, no, keep it up. Good stuff that I don’t know much about. Plus I can squeeze in catnaps.

204. Re: #202, going to take a closer look this weekend…

205. Beerthirty. Have a good weekend.

206. 198 – not today … I see 0 volume, but 12,000+ open interest

207. According to Yahoo, I’m showing 9,122 volume on 12,736 open interest in the HK Nov 23 Puts

     http://finance.yahoo.com/q/op?s=HK

     Weird that no one else was seeing the volume from other providers. Makes me wonder about yahoo sometimes.

208. Baylor – looking at Schwab right now, I show 0 contracts traded today, open interest of 12,736.

     ROSE reported after the close. Numbers look in line.

     * Their second EFS well is producing about 7 mm/d, with high amount of liquids after 7 days.

     * The 1st Bakken horizontal is awaiting completion – the took cores and logs of the vertical before deciding to take it horizontal. A second well has been spud.

     They built cash during the quarter and reaffirmed previous guidance. Nothing on 2010 yet.

209. Yahoo is not a good source. What you see there probably reflects the volume on the last day it traded, perhaps it was yesterday; but it was not today.

210. http://www.rollingstone.com/politics/story/30481512/wall_streets_naked_swindle

     Weekend entertainment.

This site uses Akismet to reduce spam. Learn how your comment data is processed.