09
Nov

Monday Morning Bounce

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The Week Ahead: Pretty Slow, only trade balance considered market moving

  • Monday 11/9: No economic data release
  • Tuesday 11/10: No economic data release
  • Wednesday 11/11: No economic data release
  • Thursday 11/12: EIA Oil Inventory Report (delayed due to Veteran's Day), EIA Natural Storage Report, Jobless claims (forecast 505K), and Wal-Mart lays out its holiday forecast. 
  • Friday 11/13: Trade balance (forecast -31.5 B), Import price index (forecast 0.5%), Consumer sentiment (forecast 72 vs 70.6 last reading)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Earnings Calendar
  • Stuff We Care About Today
  • Odds & Ends

Holdings Watch:

  • $10KP II:
    • $22,000
    • 54% Cash
  • Current Holdings Tab is updated.

 

Commodity  Watch:

Crude oil inched up 0.6% last week to close at $77.43. The 12 month crude strip is now trading at $80.52. This morning crude is trading up $0.80 to $1, mostly on a weaker dollar and as Ida heads into the central Gulf. Barring any serious damage to offshore production and/or offloading facilities or any damage to onshore refining assets I would expect any storm related surge in prices to be quickly retraced.

  • OPEC Watch: OPEC raised its 2010 demand forecast slightly yesterday. The UAE minister says oil output hike not on table for December meeting and others have made the same comment in the last few days despite increasingly lax quota compliance. 
  • Dollar Watch: The dollar index sank to 75.15 overnight after G20 talks pointed to stimulus until the end of time. The index is not far from its recent low of 74.95 back on October 23rd and I'm still in the "next stop 72" camp.

Natural gas fell 9% last week to close at $4.60 as some recently bullish gas traders sold in the wake of an EIA gas supply report that showed smaller declines in key states than they wanted. The 12 month strip is now trading at $5.25. This morning gas is trading off nearly a dime as Ida weakens.

  • Weather Watch:

    • Week Before Last: 74 HDDs which produced a 29 Bcf injection.
    • Last Week: 104 HDDs vs:
      • 101 previously forecast.
      • 110 normal.
      • 72 a year ago.
    • This Week's Forecast: Not available...Accuweather is calling this week warmer than normal.
  • Tropics Watch: Hurricane Ida - Not a threat and barely a Cat 1 Storm at it rapidly approaches the Central Gulf which is where most oil and natural gas production in the Gulf is located (link to MMS here). The tracks on the storm are highly varied with an increasing number calling for it to loop back southward into Gulf upon landfall due to another system's steering.

    • Potential Implications: (I expect all of these to have minimal, fleeting impact on prices; I would not expect any significant damage to offshore facilities from a Cat 1 or 2 storm and many players have spent the years since Katrina hardening their facilities.)
      • Natural Gas: Gulf of Mexico production totals roughly 7 Bcfgpd, or about 6% of U.S. Lower 48 production. Given the current track of the storm, about 70% of Gulf could be temporarily affected by Ida. BP, MRO and a handful of others have announced minor shut ins so far. 
      • Crude Oil: The Louisiana Offshore Oil Port (the LOOP) shuttered operations Sunday ahead of Ida. The LOOP accounts for roughly 1.3 mm bopd capacity per day, or 13% of total intake capacity. 
      • Refiners:  Modest positive but only very briefly given the track is too far east.
         

Earning Calendar - the last few names announce.

Stuff We Care About Today

ROSE Reports In Line Numbers, Announces 2nd Successful Eagle Ford Well, Still Waiting On Bakken Results

The 3Q Numbers:

  • Production of 120.7 MMcfepd, down 14% from the year ago Q, they are transitioning from explorationists to resource players. Breakdown by region:

    • South Texas: 46 MMcfepd - focus of most of their drilling
    • Rockies: 17 MMcfepd - Pinedale Anticline
    • Sacramento Basin: 41 MMcfped, slight increase due to their bypassed play recompletion focus
    • Gulf of Mexico: 7 MMcfepd ... and up for sale.
  • Revenue of $64.5 mm vs $64 mm expected
  • Costs - LOE ok at $1.20 / Mcfe, G&A in line
  • EPS of $0.11 vs $0.10 expected

Operational Highlights

  • Eagle Ford Shale

    • 2nd Eagle Ford well in Webb County completed for 5.5 MMcfepd after the quarter's end (sort of ok for the play to day, not great, not terrible, high liquids cut helps.
    • 3rd Eagle Ford well to spud before year end.
    • 42,000 acres in the play now and rising
  • Montana Bakken 

    • Encouraged enough Happy enough with cores and log from the vertical that they drilled to TD in the horizontal section. And spud a second well. Completion on the first well soon. They did note that they will allocate a significant chunk of their 2010 capex to this play. Hopefully we'll get more data on the call.

Nutshell: In line quarter, ok operations update, encouraged by them being encouraged in their Montana Bakken test. Eagle Ford results didn't blow my socks off but they are new to the play. I continue to hold the common.

Conference Call: Today, 11 am EST

 

Odds & Ends

Analyst Watch:

  • EOG cut to Hold at Goldman
  • EOG target raised from $81 to $112, rating stays Overweight at Barclays
  • APC target upped from $66 to $75, rating Equal Weight
  • SD raised to Neutral at Goldman

 

138 Responses to “Monday Morning Bounce”

  1. 1
    zman Says:

    Natixis raises BEXP target from $10 to $13

    KWK on the tape with slightly better than expected numbers.

    MCF results out – looks way better than the one analyst that follows them was looking for.

  2. 2
    zman Says:

    TPH with a good catch, saying NFX is now high bidder for TXCO assets which gives them a solid entry into the western end of the Eagle Ford shale play.

  3. 3
    VTZ Says:

    Dollar just over 75 now.

  4. 4
    bill Says:

    mcf release here

    http://finance.yahoo.com/news/Contango-Reports-First-bw-3663131337.html?x=0&.v=1

    Read it, its incredible,imho

    cash cost 61 cents an mcf

    earned 85c vs 45c estimate

    cash per mcf was 4.00 when avg selling price was 3.40 due to liquids

    non hedged, production @ 8 bcf per qtr, every 1 dollar in ng prices means 50 cents falls to the bottom line

  5. 5
    bill Says:

    Interesting comment by the ceo

    “Mr. Peak continued, “Industry supply trends together with my gleanings from a number of recent industry conference calls lead me to believe the industry may be on its way to drilling gas prices back to the $2.00 to $4.00/Mcf price level. Even though demand for natural gas is likely increasing, supply from the onshore lower 48 since November 2008 has been basically flat despite an approximate 50% drop in rigs drilling for natural gas. In essence the increase in production from shale wells has overcome ongoing industry-wide geologic decline while drilling significantly fewer wells”

  6. 6
    BirdsofpreyRcool Says:

    reef — re: TXCO — good call on the post-BK equity trading. Stock was trading like it was “worth something.” But NFX’s official $223mm offer for the assets (against over $332mm of debt and other liabilities) pretty much says “no soup for YOU” to stockholders.

    Stock was trading at 40cents on Friday. Sometimes, euqity investors can be just a little TOO optimistic.

  7. 7
    VTZ Says:

    Dollar at previous low… tapping and looking to break down. Has no reason for support and will crack.

  8. 8
    BirdsofpreyRcool Says:

    TechTrader taking a long weekend today.

    HeadTrader thinks we sell at open, then it slows down… he says he can’t find a reason for the mrkt to be up other than the Senate saying House heathcare bill is DOA. He thinks it’s a slooooooooooooooooooooow day…

  9. 9
    tomdavis12 Says:

    Z: US$ goes to 72. What effect would you guess for CL, NG, GC.

  10. 10
    BirdsofpreyRcool Says:

    TechTrader doing a fly-by and saying if the mrkt opens down, then there is a 65% chance the best trade will be LONG today. And (it gets better) if the mrkt gaps UP, the odds of a long trade working increases to 70 or 75%. This is one of the higher-conviction days, for TT, in recent trading.

  11. 11
    kyleandy Says:

    bop – te TXCO no crumbs, no anything for me??

  12. 12
    BirdsofpreyRcool Says:

    HERO — GS upgrading to Outperf with a $7 PT

  13. 13
    BirdsofpreyRcool Says:

    kyleandy — not if i read the balance sheet correctly… take a look at their latest monthly filing and add up the liabilities (both pre- and post-petition). Looks to be more than the $223mm that is being offered for the assets. There might be some sort of bone, thrown to equity (like NFX warrants or something), but in this case, I doubt it.

    I’ll take another look at the BS to make sure they didn’t (somehow) pay down their revolver debt.

  14. 14
    kyleandy Says:

    bop – thks

  15. 15
    BirdsofpreyRcool Says:

    TXCO 9/30/09 BS shows total pre- and post-petition liabilities of $358.8mm. These get paid first (“priority of claims”) from any proceeds from the sale of the assets. If anything is left over, that is what goes to equity. Given NFX’s purchase price of $223mmm, doesn’t look to be the case here.

  16. 16
    bill Says:

    sd up 7 %
    hk up 2 %
    chk up 2

  17. 17
    kyleandy Says:

    bop – thks guess i’ll try and salvage something

  18. 18
    zman Says:

    No power at office. On phone connection. Tom. Dollar there would be postive oil and gold. Probably not so much for ng

  19. 19
    BirdsofpreyRcool Says:

    kyleandy — TXCO… it’s a tad confusing, as NFX did not buy 100% of the assets here. But, don’t know how much value remains. And it still has to add up to more than the liabilities…

  20. 20
    jiveyjr Says:

    my technology is all farooqed up this morning too…so much for my weekend pledge to be nicer and gentler here at the office….hope Z gets up soon

  21. 21
    zman Says:

    I’m in.

    FTC product alerts:

    The staff at the local SBUX.. Top notch and
    AT&T for getting me wifi access in 6 minutes flat.

    SBUX double shot energy + coffee which apparently makes me type faster but not better

    My iphone which I have to admit beats a blackberry for stock applications

  22. 22
    kyleandy Says:

    fidelity and bofa both down. scottrade working

  23. 23
    zman Says:

    ROSE – good to see group leading performance on their earnings…pretty encouraged that they are drilling a 2nd Bakken well prior to first one’s completion

  24. 24
    zman Says:

    Also nice to see WLL making a push for its 2009 high with higher oil.

  25. 25
    zman Says:

    Thanks for the HT and TT comments BOP. I guess TT is pretty confident of the long call at this point.

  26. 26
    bloodystupidjohnson Says:

    Peak vs Papa: two of my favorite people. Both smart and shareholder friendly. Both very industry savy. However one says nat gas pricing is going up and the other down because one thinks supply increasing and the other thinks supply decreasing.

    So, whatever position one takes, you can always point to a very smart person agreeing with you.

  27. 27
    zman Says:

    BSJ – have not looked, how much of a hedge does MCF have on right now. I note that the more hedged you are, the more you see gas prices tumbling. If you look at the mitigation of declines in the aggregate lower 48, it is coming from a recovery of Gomex production and then a small move up in LA, flat OK offfsetting some down down TX prod. I don’t think the “shale offsetting declines of conventional ” is completely justified.

  28. 28
    zman Says:

    Ida now a TS

    http://weather.myfoxtampabay.com/maps/WTVT/custom/storms/ida_track.html

  29. 29
    bloodystupidjohnson Says:

    I don’t think MCF is hedged at all. Of course MCF has no debt, so they can be more light on potenial hedges.

  30. 30
    bloodystupidjohnson Says:

    Z, your writing you take a more Papa point of view as compared to Peaks. But Peak is smart, as are you (lolo) and Papa. That what makes this arguement so interesting.

  31. 31
    zman Says:

    I didn’t either but thought I’d check, so liquids bumped them over the avg gas price? If he really believes that it would be prudent to go ahead and hedge some, since he does produce gas ya know. Otherwise, he might as well go ahead and become the Jeff Bridges character in Men Who Stare at Goats.

    He’s not alone, listen to the guys at LINE who are also smart, gas not going up for a long long time according to them… and they are 100% hedged and even monetized some out year hedges to boost 2010 and 2011 floors.

  32. 32
    zman Says:

    BSJ – no doubt they have better info than I. Papa’s model is top notch. Anadarko’s was better last time I was there which was year’s ago it was years ahead of everyone on the sell side on both supply and demand. They sounded pretty cautious on `12 month gas prices on their 3Q call and I’m not a raging bull. I just think we go back to $7 for a 2H10 average gas price.

  33. 33
    bloodystupidjohnson Says:

    I think by having no debt, that sort of hedges MCF in a sense. If Peak is wrong, MCF is going to make alot of money. If he is right, then having no debt and producing fields is not really going to kill MCF by having no hedges.

  34. 34
    zman Says:

    Saw drilling permits run by the Feds will cost you $6500, up from $4000 soon. Net impact is negligible on the industry, just annoying as they are just doing it because they can.

  35. 35
    zman Says:

    Hear ya BSJ and I tend to agree. One consideration would be lease expirations. If gas goes to to for a protracted period, those hedges could protect a capital budget that gets those leases drilled before they expire. Assuming they leased them with the intent to drill them

  36. 36
    zman Says:

    Starbuck music is damn annoying. Going to crank the ROSE call in 15 minutes to hear over Streisand.

  37. 37
    zman Says:

    Good to see watch: that the powers that be once again seem to like HK today.

  38. 38
    zman Says:

    BOP – did McQuarrie do anything with it’s KOG target?

  39. 39
    zman Says:

    Cannacord takes GMXR target from 17 to 22

  40. 40
    zman Says:

    V – Dollar at 15 month low. Good call man.

  41. 41
    BirdsofpreyRcool Says:

    KOG — Macquarie still stuck in the mud with a 10/29/09 PT of $1.40. I must say, they are not making their clients any money, with that call.

  42. 42
    zman Says:

    Maybe the don’t work weekends, could be a Tuesday call.

    ROSE in 5, KWK too but it was uneventful

  43. 43
    bloodystupidjohnson Says:

    I think if gas did go back down to 2, then you might see Peak buy some of the “distressed merchandise” that will come onto the market. For example, he recently bought some Cotton Valley property. Peak is the ultimate contraian, a man after my own heart.

  44. 44
    zman Says:

    So contrarian it makes me wonder why he’s public.

  45. 45
    reefguy Says:

    Hero up 14%

  46. 46
    bloodystupidjohnson Says:

    We’ll you know, last year, before the market and energy crash, he did try to sell the company. He had some deal where he sold the production and shareholders where to keep the current leases and get the cash from the production sale. But the collapse of nat gas and credit market put an end to that.

  47. 47
    zman Says:

    ROSE CC

    Started call at $14.85

    Comfortable to guide an unspecified level of growth in 2010 for both production and reserves.

    Not going to tell you every detail about Eagle Ford and Bakken as they are still leasing.

    “substantially” increase 2010 capex, substantial portion will go to EFS and Bakken.

    Increasing focus on oilier plays …

  48. 48
    zman Says:

    Crude up 2.40, blame the dollar, not Ida

    ROSE –

    We expect to grow volumes consistent with long term goals … call growth in 2010 “step function”

    Not a big tug from leasehold demands

    Guidance in December …

  49. 49
    zman Says:

    ROSE

    – someone should hold a “how to conduct your quarterly conference call” course for IR guys. Day 1 – How not to read the pr. Ugh.

  50. 50
    bill Says:

    Peak/MCF is unhedged and Monday morning quarterbacking he could have hedged in at 10 + last year.

    Yes he mentioned avg prices were 3.40 and he still made cash margins of about 4 mcf due to liquids

  51. 51
    bloodystupidjohnson Says:

    WLT, just hit its 52 week high. If you own WLT, you have to accept the crazy volatility in the stock.

  52. 52
    zman Says:

    BSJ – agreed, it’s still cheap into the upper $70s on 2010 CFPS. I hold the $60s and $65s of November now.

  53. 53
    zman Says:

    I don’t show them quite at a 52 high though, unless I’m running delayed in here and don’t know it.

  54. 54
    bloodystupidjohnson Says:

    With WLT, you got to remember the quality of its assets. It has the BEST coking coal assets in the country, it has no railroad transportation problems, and is near a major port. And now, after the spin offs, it is one clean operation.

  55. 55
    bloodystupidjohnson Says:

    According to Scottrade, it hit 68.31 today, which is a new 52 week high.

  56. 56
    zman Says:

    ROSE CC Cont.

    Confident they will be in the upper end of their prior full year 2009 production guidance range.

    Divestitures coming will take down overall decline rates and LOE.

    Ahh you wrote WLT and I read WLT. I hold a couple of the $60 calls in WLT.

  57. 57
    zman Says:

    ROSE Operations Comments:

    1st EFS continues to meet expectations, added acreage around it during the quarter, the Santa Cruz well (#3) will be 9 miles south of the discovery well, will go to 300 foot frac stages from 400 in the first well. Will be active here (Spring Ranch area) in 2010.

    2nd well – 30 miles west of Springer Ranch – 10 stage frac, 3700 foot lateral, 90 barrels of condensate per 1 mmcf of gas, one of the highers liquids cuts in the play seen. Added to acreage in this area too, 17,000 acres in this area (the Gates area)

  58. 58
    zman Says:

    ROSE Ops Comments

    >200 drilling locations on 160s on their EFS acreage, still adding, may have 1 to 3 rigs next year.

    Bakken

    1St – Tribal Gunsight well – lodgepoll and bakken test,

    2nd well Tribal Riverbend well spud, 30 miles northwest.

    Everything they thought about the Williston (Alberta Bakken) continues to hold up. This is my Montana Bakken play.

  59. 59
    zman Says:

    ROSE CC Q&A

    > 230K acres in this area of the Bakken, like KOG they are on tribal lands, I don’t think anyone else is this far north and west and still in the U.S. and still in the Williston.

    1st well – you can assume they hit with this well as they would not have taken it to the horizontal td otherwise. his quote

    They’ll probably drill 5 to 6 wells as they attempt to delineate the play, rather scattered about to help prove it up.

  60. 60
    zman Says:

    ROSE Q&A

    Eagle Ford – 47 K net acres

    Gates Ranch area is in the oil/condensate window of the play – 17k acres, 80+% working interest, contiguous.

    Sprinker Ranch – dry gas area, 14 K net acres, majority 100% WI.

    The rest (15K net ) has not been disclosed as to where it is.

    Macquarrie Question: looking for ranges on 2010 goals – answered with its premature, but have been looking to build up inventory position and build liquidity. If you read between the lines he just said look for double digit growth when they release guidance next month.

  61. 61
    zman Says:

    ROSE – Quite a few analysts on this call for a little company.

    Dow just shot to a new 2009 high. Gnomes seen on ledges.

  62. 62
    zman Says:

    ROSE – what’s hold fat capex level?

    $170 mm in the past. Think costs down enough now to call it $150 mm. They have many years of inventory that would allow to hold flat if need be at the $150 mm level.

    Bakken – already contracting for takeaway capacity.

  63. 63
    bloodystupidjohnson Says:

    “Dow just shot to 52 week high”, was that a Kass prediction? LOLO!

  64. 64
    zman Says:

    Call still going, lots of analyst interest, sounds like all 10 analysts who cover it are on the call.

  65. 65
    Wyoming Says:

    http://screencast.com/t/rtyozDUTpiT3

    For the Eagles.

  66. 66
    zman Says:

    and ROSE moving up during the Q&A. Analysts coming away pretty favorable. Lots of easy, cheap production maintenance recompletions they can do in the Sacramento Basin, also low cost stuff in the Rockies.

  67. 67
    zman Says:

    Thanks Wyoming, great map

    Power back on at office, back in 30 minutes

  68. 68
    TEXWS6 Says:

    Do the rates on the map include liquids (gas equivalent) or is it just gas?

  69. 69
    bill Says:

    Basis differentials have narrowed. Some area getting a major premium to Henry Hub

    Any reason why this happens , vq likes to brag that they sell their ng in Calif

  70. 70
    RMD Says:

    BSJ: did MCF ever reveal what the price/mcf was in their ’08 production sale?

  71. 71
    zman Says:

    Tex – Just looking at the HK well, that’s an MMcfe and not an MMcfg.

    Bill – happens as you increase takeaway capacity to market. Either by adding new pipelines, which is the case with Rockies gas recently with Rockies Express taking gas East or with the Boardwalk Pipeline, which increased takeaway cap from the Fayetteville Shale. The other way to accomplish this is with declining production or increased demand in a region.

  72. 72
    Wyoming Says:

    Tex,

    I believe they are doing the equivalent thing. The one I am looking at looks like it has on the map the 1,000 BTU adjust. The table they have prior (see link below) looks to have the equivalent with the liquids added.

    http://screencast.com/t/AwzNUNCBmp

    For grins:

    http://screencast.com/t/w9Mc6zyYY
    http://screencast.com/t/sTQyOkqvNF

  73. 73
    bill Says:

    sd had hedge their basis at a cost of 70 cents. Im sure they deliver to many points but waha used to be a big discount to HH now about par, so they lost alot of money on that hedge 135 m or so which is in their q3 PL. Offsetting that was their HH hedge in the 8’s

  74. 74
    kyleandy Says:

    wyo = great map – now u need to find one for the bakken!!!

  75. 75
    RMD Says:

    EVEP (and I suppose Enervest) agrees with Peak/MCF. On conf. call said he’d been wrong about $1.00 gas but expects gas could have a rough yr. in ’10 as “reality starts to set in”. Shale co.s still spending 35-50% greater than cash flow not helping. RAJA asked a Q about shale gas displacing conventional in Appalachia.
    Is this answer correct??
    He said since shale has higher pressures they use different gathering systems (impling there is no shale vs. conventional competition?); EVEP has gathering and compression systems for their legacy gas, plus long relationships with the Columbia and Dominion trunk pipelines. Hence their competition is other conventional producers, not CHK.
    Does this make sense, especially if gas goes to $2-3.00 as EVEP still expects?

  76. 76
    Wyoming Says:

    Mt. Rushmore as seen from the North.

    http://screencast.com/t/pvLSkMhp

  77. 77
    zman Says:

    I don’t teach my girls this:

  78. 78
    bill Says:

    70 mcf

    Freeport LNG Development, L.P.

    On February 5, 2008, the Company sold its ten percent (10%) limited partnership interest in Freeport LNG Development L.P. (“Freeport LNG”) to Turbo LNG LLC, an affiliate of Osaka Gas Co., Ltd., for $68.0 million, and recognized a pre-tax gain of approximately $63.4 million on the sale. Freeport LNG is a limited partnership formed to develop, construct and operate a 1.75 billion cubic feet per day (“Bcfd”) liquefied natural gas (“LNG”) receiving and gasification terminal on Quintana Island, near Freeport, Texas. The Company used $20.3 million of the proceeds from the sale to pay off its debt with The Royal Bank of Scotland plc, including principal, interest and fees. Another $20.0 million was used to pay off its debt with a private investment firm. The remaining $27.7 million was used for working capital purposes.

    Arkansas Fayetteville Shale

    On December 21, 2007, the Company sold its Western core Arkansas Fayetteville Shale properties to Petrohawk Energy Corporation for $199.2 million. The sale was effective October 1, 2007. The Company sold approximately 14,200 acres with 6.4 Mmcfd of production, net to Contango. The Company recognized a gain of approximately $155.9 million for the fiscal year ended June 30, 2008 as a result of this sale.

    On January 30, 2008, the Company sold its Eastern core Arkansas Fayetteville Shale properties to XTO Energy, Inc. for approximately $128.0 million. The sale was effective December 1, 2007. The Eastern core consisted of approximately 11,200 acres with 3.0 Mmcfd of production, net to Contango. The Company recognized a gain of approximately $106.4 million for the fiscal year ended June 30, 2008 as a result of this sale.

  79. 79
    bloodystupidjohnson Says:

    RMD: If I remember correctly, they where going to sell or had an agreement to sell, their interest in the Dutch and Mary Rose fields. I don’t remember the price, but the stock was being bought by its largest shareholder, Sellers, at the time for 80+. Call it brain lock, but that is all I can currently remember. Maybe Bill can help me out here.

  80. 80
    zman Says:

    Jerome – if you get a chance please have a look at NFX. Thx.

  81. 81
    Wyoming Says:

    74,
    posted one the other day, it was a little old but it had some good. I think I just put in a link, not sure how I can querie all of the posts I have made, it was within the last 2 weeks.

  82. 82
    bloodystupidjohnson Says:

    As Bill is now showing, MCF likes to sell high and buy low. That is why if Peaks predication comes to pass, it will not be surprising for MCF to buy from distressed assets.

  83. 83
    zman Says:

    LINE and CHK have a history of doing the same thing, only they carry more leverage.

  84. 84
    1520sbroad Says:

    Z – have you owned LINE long enough to see their tax paperwork etc.? As an LLC i assume they issue K-1’s, any quirks there? Anyone else familiar with LINE come tax time? – i am not put off by quirks just trying to measure them against others of a similar type.

  85. 85
    BirdsofpreyRcool Says:

    pretty big (positive) move in riskier credit today… part of it is due to The Bears, reversing tracks on at least part of their position.

    HY13 93 3/4 +1 1/8pt

    Something to note about the CDS indices (IG and HY) however, is that they are easier to short/go long than underlying credit. So, just because you see them move up or down, isn’t always a reflection of lockstep movement in the underlying cash market. That said, there is always “information content” to be gained from watching these liquid (institutional-only) indices.

  86. 86
    zman Says:

    No I have not, only been in since Spring. I have a tax account so that’s his headache.

  87. 87
    RMD Says:

    re: 82; if Peak’s prediction comes to pass there could be chaos ala 3/09 in Nat Gas Land.

  88. 88
    VTZ Says:

    Market has totally stalled for 3 hours.

  89. 89
    zman Says:

    RMD – I don’t really need to comment on that do I.

    V – hear ya, probably be an interesting last hour. Will be on the CRZO call in 30 minutes.

  90. 90
    zman Says:

    Refiners continuing to not play in the rally.

  91. 91
    zman Says:

    Got this from Nicky via email:

    I think we have a b wave down about to start shortly. SPX has resistance at 1088. b wave could take us back to the 1050 area.

  92. 92
    Jerome Blank Says:

    #80 NFX remains on a P&F buy signal, holding longer term support at $41 and now reversing back into x’s with the print of $44 (good sign)…a very uncomfortable retrace from the recent high above $50 back to support at $41…NFX goes back on a sell signal if it prints $40, (short term sell)but the long term P&F trendline is just below at $37-$38, this trendline held back in july, where NFX rallied to new relative highs off this longer term support…in addition NFX will still likely be above its 200 day daily moving avg on the $40 sell print, so if you are bullish and holding longer term, consider holding until the supportive P&F trendline is actually broken…

  93. 93
    VTZ Says:

    That means Nicky expects the dollar to hold the line. It looks like it is now.

  94. 94
    zman Says:

    Jerome – thanks much!

  95. 95
    zman Says:

    V – For the moment but everything out of the G20 was stimulate, stimulate, stimulate.

    http://www.marketwatch.com/story/dollar-slumps-versus-euro-as-gold-futures-soar-2009-11-09

  96. 96
    zman Says:

    Bill – you could probably day trade ATPG for the volatility of and width of that channel it’s running.

  97. 97
    zman Says:

    EOG gives Brian Singer (at least it should be him) at GS the bird with a rally today. It’s a little muted but generally GS has the power to trump a market call. If anyone gets the GS note on EOG I’d like to see it.

  98. 98
    zman Says:

    Dow at 10,200, Dow Transports moving higher as well, still 3.4% off their 2009 highs which would probably get more bulls into the game.

  99. 99
    zman Says:

    CRZO call started

  100. 100
    VTZ Says:

    95 – Oh I know. Trust me that I don’t think the dollar is worth within 20% of where it is now. It WILL breach 72 at some point and then it will free fall.

    I’m still expecting one rally at 74 or 72 so that we can all reload our energy (and gold) bets at nice levels. Bounce to maybe 78? I’m not selling any gold yet but I have some. I think gold COULD extend this rally to 1250-1300 before a meaningfull pullback to some level above the breakout or to the breakout level (1034).

    I’m watching the 10 and 30s for indications of weakness because the long bond has approached the trendline and once confidence breaks in that and people sell out that will be a lot of USDs floating around looking for a home in non-American assets. The “flight to safety” was a flight to the US long bond and the flight from USD collapse will be the same thing. Keep in mind that the USD was at 72 before the “flight to safety” and rallied a tonne. Expect the same type of decline on the way down. The decline thus far has been based on the weak dollar policy but has not affected the demand for the long bond yet.

  101. 101
    zman Says:

    The weather on Mars: 50 knots

    http://www.ndbc.noaa.gov/station_page.php?station=42363

  102. 102
    zman Says:

    Heating degree day forecast for this week is out: 91 which is pretty mild for this time of year.

  103. 103
    bill Says:

    96

    im mostly out of atpg but would buy on pullback to the 15’s

    Oil at telemark doesntcome online until april 2010, so 2 more lousy qtrs coming up

    Mcf tried to sell Dutch and Mary Rose fields in june 2008 but cancelled it in sept 2008. They never mentioned what they wanted or what the offers were but as everyone know ng peaked in july 2008 so they almost sold that at the highs

  104. 104
    zman Says:

    Ida Impact – minimal

    MMS plans to release an estimate of shut in production shortly, I would not expect much to be offline.

  105. 105
    zman Says:

    CRZO call a snoozer.

  106. 106
    zman Says:

    ESV rebasing to the U.K. Amazed at how many offshore drillers are taking their HQ’s out of the U.S.

  107. 107
    zman Says:

    Barclays calling the EOG production growth target of 13% for 2010 “much stronger than expected”. That is how I’d characterize it as well. Driscoll is a pretty conservative analyst and in my view has missed a lot being on the sidelines worrying about gas prices but I think he’s right with the price target upgrade and devotion to his Buy rating here. As the name gets oilier it is likely to get more devotees on the sell side.

  108. 108
    BirdsofpreyRcool Says:

    Sort of a wishy-washy piece by Cross Asset Class Strategist #2… still, has some good credit observations and key levels on the SPX

    http://www.capmarkets.com/ViewFile.asp?ID1=320290&ID2=341218357&ssid=2&directory=11608&bm=0&filename=Are_We_Going_To_Be_Wrong_Again_11-9-09.pdf

  109. 109
    zman Says:

    Got the EOG piece from GS. Thanks. Essentially it is a “stock has run XX% from our Buy rec, taking profits” piece. Has little to do with valuation, sounds like a commission generator trade for them, basically saying it trades a little higher than the group and therefore has less upside. I’d tell you that the name generally trades at a wide premium to the group and the fact that it is so narrow to the group now is part of why I own it now and not a reason to sell it back. If it runs into the high $90s near term on a strong market I’ll take profits but I see their downgrade as a non-event.

  110. 110
    zman Says:

    Switching to the TSO call.

  111. 111
    RMD Says:

    89: no comment necessary.

  112. 112
    zman Says:

    SP at 1090+.

    A little surprised by the strength in gasoline and distillates relative to oil today. Ida is not going to be a problem for refined product supply, unless you are thinking of imports and then maybe we lose a day or two of imports that will just get lumped into the next week’s imports.

    TSO says refining capacity could fall into the high 70%’s

  113. 113
    zman Says:

    TSO was talking about it’s own refineries running at 77% in the 4Q, the domestic installed based is running about 80% now.

  114. 114
    jiveyjr Says:

    now that KOG has their secondary out of the way is the new ZMAN strategy to sit back and wait for “you know who from Cowtown” to overpay?

  115. 115
    zman Says:

    TSO – call is a mixed bag of poor results and optimism regarding the future. Q&A about to start.

  116. 116
    zman Says:

    Jivey – either that or let them prove it up and then start to downspace it. I probably won’t sell any more before $3.50 or the T.F.S test.

    S&P just drifting higher.

  117. 117
    jiveyjr Says:

    thx re: KOG

  118. 118
    zman Says:

    Jerome – does the PXD chart look very similar to the NFX chart to you?

  119. 119
    zman Says:

    Jivey – unless I see something I can get more leverage on in the play I probably won’t think of selling it. It’s a nice call option without expiration. I think its probably close to fully valued for now on the Bakken alone, maybe another $0.50 or so and then its pretty full by my way of thinking unless costs fall further, they drill longer laterals and start hitting bigger wells. Then you have the Three Forks and that may be pretty big for them. Then you have “what’s next?” and they probably have enough drilling locations that they won’t need to ask that for another 2 or 3 years. So far, for a little guy, they are doing quite a good job of managing both the ops and the stock. And we’ve all seen any number of single digit midgets muck up a good thing by over promising and then under delivering.

  120. 120
    zman Says:

    TSO – If you strip out the unemployment you actually have growth in gasoline demand on the West Coast. Is that like created or saved gallons of gasoline demand?

  121. 121
    zman Says:

    Analyst Watch:

    BEXP – Raymond James out reiterating Strong Buy and $18 target. Yes, I still own the $10s and the $12.50s and the common.

  122. 122
    BirdsofpreyRcool Says:

    HERO — the CS upgrade report is well worth the time spent, combing through it. HERO is one of the muckiest of the bottom-dwelling, mud-suckers… but at this point in the cycle — with their recent 2ndary and credit agreement negotiations done — might be time to do some Bottom Feeding here. Bought some a week or so ago and enjoyed the ride down a buck (not). But held on. Given the relative underperformance of HERO vs the rest of their universe, I think it might be time where the rising tide lifts all the (lift)boats (and jack-ups and barges). Caveat = won’t be a hockey-stick recovery in rates and utilization… too much excess capacity and new-builds out there. But, I think it’s time. Added to my position today on expectation that we have reached the low for shelf drilling rigs.

    Just talkin’ my book.

  123. 123
    West Says:

    ——————————————————————————–

    Case No. 11761: Application of Kodiak Oil & Gas (USA) Inc. for an order amending the
    field rules for the Heart Butte-Bakken Pool to allow up to two horizontal wells to be drilled on a 1280-acre spacing unit within Zone III, Sections 28 and 33, T.149N., R.92W., Dunn County, ND, with the second horizontal well drilled and completed in the Bakken Formation at any location not closer than 300 feet to the boundary of the spacing unit and such other
    relief as is appropriate.

    Case No. 11762: Temporary spacing to develop an oil and/or gas pool discovered by the
    Kodiak Oil & Gas (USA) Inc.#1-22-23H Charging Eagle, NENE Section 22, T.147N., R.92W., Dunn County, ND, define the field limits, and enact
    such special field rules as may be necessary.

    Case No. 11634: (Continued) Temporary spacing to develop an oil and/or gas pool discovered by the Kodiak Oil & Gas (USA) Inc., #1-22-10H Charging Eagle, NENE Section 22, T.147N., R.92W., Dunn County, ND, define the field limits, and enact such special field rules as may be necessary.

    https://www.dmr.nd.gov/oilgas/dockets/20

  124. 124
    zman Says:

    BOP – I’ll be playing that area as well, either via RDC or ATW (who has some shallow stuff). I think some of the Shelf rigs adds you are seeing or will see shortly are some big lifting, high horsepower rigs.

  125. 125
    zman Says:

    TSO call over, they sound excited about retooling and cost cutting efforts. I gotta say I just can’t get on board with the name or the group at this time. They have an analyst meeting tomorrow and I’ll tool through those slides. They did that calc on employment adjusted demand being up but I gotta say that its not very scientific and the increase they are seeing in demand (when you strip out the unemployed) is probably just the unemployed looking for jobs or going to the beach more often.

  126. 126
    zman Says:

    Thanks for the update West. I guess mid year 2010 we will see them go to 4 wells per pad (2 m Bakken, 2 TFS)

  127. 127
    baylor3217 Says:

    Thoughts on kog’s move today? Good exit point for an entry lower?

  128. 128
    zman Says:

    Baylor – Not by me but that’s not to say it won’t pull back in here giving a buyer the chance to add lower. I took some profits a couple of weeks ago on 1/5th. That was enough for me for now, see my comments above in 116, 119.

  129. 129
    zman Says:

    MCF gave back a small move higher earlier. How was that call?

  130. 130
    zman Says:

    Analyst Watch:

    EOG – Weeden comes with Strong Buy
    Deutsche comes with an upped target of $115 from $110.

  131. 131
    zman Says:

    S&P and DJIA looking likely to go out at HOD.

  132. 132
    zman Says:

    Beerthirty

  133. 133
    baylor3217 Says:

    Thoughts on follow through tomorrow?

  134. 134
    bill Says:

    129, they didnt have a call
    they are ignored by everyone

    Question:

    In 2008, production took a hit as huricanes shut in a bunch of production causing daily volumes to fall from about 60 bcf a day to 52 a day. This year we will do 60 b a day causing a huge y-o-y increase,

    Will this be a suprise or has the markets priced this in?

    When does ng production fall..the world wants to know?

  135. 135
    zman Says:

    Already priced in.

    Supply declines that will be more noticeable actually started a report back from the last one and will re emerge shortly. I think by Feb or so (November data) you’ll see an acceleration in declines. EOG mentioned that they are almost through their backlog of drilled but not completed wells and that they know of others that are too.

  136. 136
    PackMan Says:

    Not a good call by HT today, BOP.

    He was probably right in his thoughts, but the fix was in !

  137. 137
    PackMan Says:

    TT, on the other hand, identified the potential for a trend day (or as I call it, a Free Money Day) early.

  138. 138
    BirdsofpreyRcool Says:

    PackMan — even HT listens, when TT talks. But, he likes to put his own spin on things. Where TT is usually right is when there is no eco-news to mess up the technical trading patterns in the morning. When there IS eco-news, that is where HT’s practical spin on mrkts helps.

    Just a little something to keep in mind, as I think they are both worth listening to. Glad you follow ’em. I find their input helpful.

    “Free Money Day”… good way to put it. Hope we can enjoy some more of those, as we march toward the end of this dreadfully-trying year.

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