Monday Morning – Waiting on the Gas Numbers

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Market Sentiment Watch: Muddled.


  • Dubai - Starting to look contained (Asia shot up 3% on that thought) but fear over other potential Dubai's remains.
  • Black Friday Followup:
    • ShopperTrak says sales were up 0.5% over 2008's Black Friday to $10.66 billion. Basically more people went shopping but their average ticket fell. Many stories are using the word "only" in front of the 0.5% number.
    • Considering that sales were UP 3.0% on 2008's BF from 2007 and that A LOT more people are currently unemployed (the official unemployment rate is now 10.2%) higher sales figures are fairly impressive. Maybe those stronger sentiment numbers aren't too far off the mark.
    • Online sales grew 35%. They only make up about 10% of total sales but that's still impressive.
  • Cyber Monday - that's today and the deals are said to be even more impressive...probably good news for FDX and UPS.

The Week Ahead:

  • Monday 11/30: Chicago PMI
  • Tuesday 12/1: ISM (forecast 55.5%), Construction spending (forecast -0.3%), New car sales for November (forecast 9.6 mm)
  • Wednesday 12/2:  EIA Oil Inventory Report, ADP employment, Beige Book
  • Thursday 12/3: EIA Natural Storage Report, Jobless claims-----, ISM nonmanufacturing (forecast 50.5%)
  • Friday 12/4: Nonfarm Payrolls (forecast -125,000 vs -190,000 last month), Unemployment Rate (forecast 10.2%, flat with last month), Factory orders (forecast 0.5%)

In Today's Post:

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

Holdings Watch:

  • $10KP II:
    • $10,700
    • 57% Cash
  • Current Holdings Tab is updated.


Commodity  Watch:

Crude oil fell 2% last week to close at $76.05 on the front month. The 12 month crude strip however eased only 4 pennies and is now trading at $80.57. This morning crude is trading flat.

  • OPEC Watch: Russia again invited to sit in. Nothing is likely to come of this but Russia says it will return to sitting in on the Cartel's meetings at the December 22 powwow. 
  • Dollar Watch: Resuming its downward trajectory after a brief rally on Friday. The dollar index is back through 74.75 this morning.
  • Iran Watch: Iran plan's to build 10 new uranium enrichment sites.

Natural gas jumped 9% last week to close at $5.19 after the EIA reported a smaller than expected and most probably final injection of the season. The 12 month strip is now trading at $5.60 with the back end of the strip trading above $6. This morning gas is trading off 20 cents despite a colder forecast ... my sense is traders are taking small bets against gas before the latest supply figures are released by EIA today.

  • Natural Gas Supply Watch: I will be constantly monitoring the EIA during the day as there is no set time for the release of this data.
  • Weather Watch: December To Remember - Going To Be A Cold One. Heating Degree Days (HDDs) compared to gas storage injections/withdrawals:

    • Week Before Last: 113 HDDs which yielded an injection of 2 Bcf.
    • Last Week: 128 HDDs vs a prior forecast of 126,  so look for the first withdrawal from storage of the season this Thursday. Normal for this week of the year is 160 and we saw 167 last year so still nothing to write home about ...
    • ... This Week's Forecast: Unavailable from the CPC but it will again be colder.
  • Tropics Watch: The Atlantic Hurricane season officially draws to a close today.



Stuff We Care About Today

Not a lot of news out this morning in the space although we will see a couple more energy conferences in coming days which could provide a good excuse for companies to come out with some more pre holiday news items:

  • Canaccord Adams Global Energy Conference - Dec 2, 2009
  • Jefferies Energy Summit – Dec 3, 2009
  • Southcoast 2009 Energy Conference – Dec 8, 2009

Trade of the Day Watch: I do plan to be proactive when the gas numbers hit (and not before).

  • On the receipt of bullish numbers I'm likely to add exposure to SWN (all gas, essentially unhedged for 2010 and growing volumes smartly).
  • In the case of more bearish numbers I'll be looking at Puts on either UPL or RRC, high growth but also high forward cash flow multiple names for a trade. 

DPTR Exploring Strategic Alternatives

  • This is one we had a quick Put trade on a couple of months past when they drilled an important dry hole.
  • Cue "This Is The End" by the Doors.

Odds & Ends

Analyst Watch:

  • GEOI - target cut from $18 to $16 at Wunderlich.


145 Responses to “Monday Morning – Waiting on the Gas Numbers”

  1. 1
    zman Says:

    AEZ – on the tape with more recompletion news. Note to management, this is not news that you can recomplete a well. Lump theses together and save them for the quarterly. Still, interesting name and it has come off somewhat from its recent highs.

  2. 2
    zman Says:

    Bakken minnow NOG along with BEXP and ROSE at Cannacord Global Energy Conference this week – worth a listen.


    See page 4

  3. 3
    BirdsofpreyRcool Says:

    TechTrader MIA today.

    HeadTrader not sure how the mrkt action will play out. Points out that Europe was back down again today, so we will have to wait to see what people say about that. HT points out that “retail is pretty good so far.”

  4. 4
    choices Says:


    Not much new here but “the beat goes on.”

  5. 5
    zman Says:

    NG was up Friday, now off 5.5% on no new data. Watching for NG monthly and 914 release, too early to expect it out.

    Commodities coming off now with oil having failed through 76, heating oil leading gasoline lower.

  6. 6
    md Says:

    any other names on bullish news.

  7. 7
    zman Says:

    Choices – the opening line of that is simply wrong. An agendized statement if you will. Bringing Shork out in the next paragraph underscores that agenda. Now he sees gas hanging out at $4 all year…I guess that’s better than his call for it to go to $0. Qatar and others are sending gas to China in search of higher prices. China is building regas facilities as fast as they can. Note also that the shipment he mentions was from summer and we have seen no big rally in LNG since. Honestly, it’s like the reporters get a couple of fresh quotes and change the dates in these and don’t do any new work. Ugh.

  8. 8
    zman Says:

    Md – Well, the short names would very likely run as well, along with KWK, SD, HK, all the way up to CHK. Depends on how bullish the numbers are. My best guessitamate is that we see gas retreat only slightly, maybe less than 0.5 Bcfgpd. It would have to be more than that for me to do a trade on it.

  9. 9
    Jerome Blank Says:

    Re: Stuff we care about today…UPL is in an interesting technical spot…UPL is currently on a P&F sell signal, but reversed back into x’s on above average vol back on 11/25 with the print of $49, the reversal occured right at long term P&F trend line support, the $45 level is critical for UPL, a print thru $45 breaks long term support and raises the probability of lower prices, a print of $50 puts UPL back on a buy signal and would be a positive development for UPL’s technical picture…

  10. 10
    zman Says:

    Goldman out raising the steels by the way, says prices have bottomed. Probably a good thing for WLT.

  11. 11
    zman Says:

    Re UPL – 8.7x 2010 CFPS – somewhat pricey, but not terribly so, only thinking for a trade.

    SWN – 8x

    RRC – 10.8x

    And I should have added on the bullish side, the short squeeze names of GMXR and GDP.

  12. 12
    zman Says:

    If you are bored watch:

    If you are not too busy with the Cyber Monday deal hunt, help me watch this site for the gas supply update. I’m keeping a tab open and occasionally hitting refresh:


  13. 13
    Gtinvest Says:

    If anyone interested Aubrey had some interesting comments on natural gas declines over next 1 to 6 months and how private companies infuence the eia data. listen to last minutes 35 to end of B of A conference: conference:http://www.chk.com/Investors/Events/Pages/default.aspx

  14. 14
    zman Says:

    And lastly md, I’ll add to the HK position. They are cheapish for them, well hedged but it will help the piece that’s not and, if really bullish, aid them in their quest to monetize non core gas assets. Should have added above, blame the tryptophan.

  15. 15
    zman Says:

    Group starting to green a bit.

    In the event of very bullish gas numbers, HAL will also be a go to name and provides tight, tight, option bid/ask spreads.

  16. 16
    BirdsofpreyRcool Says:

    Someone’s adding to HK as we speak, it seems. Pretty stong move.

    Also,that AEZ well is a recompletion of a vertical well. Agreed that the one-well “news” is rather bush league… but that’s nice production from the Niobrara on a non-horizontal well.

  17. 17
    BirdsofpreyRcool Says:

    Chigago Purchasing Managers at 56.1 vs 53 exp’d and 54.2 prior.

  18. 18
    zman Says:

    Chicago PMI at 56.1% vs 54.2% last month.

  19. 19
    BirdsofpreyRcool Says:


  20. 20
    zman Says:

    Hear ya on that BOP – I just recall they announced the 1st one a week or so ago, know they are trying to say stuff to hold the stock up ahead of news from the Bakken.

  21. 21
    choices Says:

    #7-thanks, Z-agree-that is why I am here and not simply reading stale press comments-hence, my cmt, the beat goes on-constant banging an old story-the people who are going to make money on NG will be the ones that detect an early turn and that will not come from stale press stories.

  22. 22
    zman Says:

    Choices – and please continue to post those, sometimes there are nuggets there.

  23. 23
    Jerome Blank Says:

    Thus far, HK held the intraday re-test of 200 day SMA support at $22.50…like to see it move thru resistance at $22.85, if that holds, then a $24 print reverses the stock back into x’s and perfects a “Bear trap”…

  24. 24
    rseidman Says:

    for those interested: 09:36 ATPG ATP Oil & Gas upgraded earlier to Add at CapitalOne southcoast based on valuation; tgt $18 (15.86 +0.35)

  25. 25
    zman Says:

    Jerome – HK = $23. I agree with your comments but want to see those gas numbers before adding more.

  26. 26
    zman Says:

    WLT acting well again, Dubai schmoobai

  27. 27
    zman Says:


    WLL – Added (5) more WLL $65 calls (WLLLM) for $1.15 with the stock at $62.20. I am adding a little more oily exposure but look for some gassy name trades later today after the release of the EIA supply data.

  28. 28
    BirdsofpreyRcool Says:

    Cross-Asset Class Strategist #2 — on Dubai and implications. Also, 100% agree with his comments that US Govt action has actually PROLONGED this downturn (not helped, as the Govt claims, of course).


  29. 29
    zman Says:


    BEXP – Added (5) BEXP December $10 Calls (QBJAB) for $1.15 with the stock at $10.30.

  30. 30
    zman Says:

    BOP – Do you mean the government has actually created or saved the downturn 😉

  31. 31
    zman Says:

    EXXI – tapping $2.50. Jerome, any thoughts there?

  32. 32
    bloodystupidjohnson Says:

    Cardium well: Beren Energy has just announced their lates horizontal oil well in the Cardium. — 915 meters in length – 6 frac stages – 1250 bbl/day over a three day period.

  33. 33
    zman Says:

    BSJ – I don’t know them, what’s the story there?

    Interesting comments on air traffic:

    The International Air Transport Association said international cargo demand fell 0.5% in October from a year ago, a significant improvement from the 5.4% year-over-year decline in September.

    Passenger demand was up 0.5%.

    “The improvement that started since passenger traffic hit bottom in March is similar to the pace of growth in 2006 and 2007,” the trade group said in a statement. “Without an exaggerated rebound from pent-up demand, there will be no rapid catch-up to the growth trend established in the 2005 to early-2008 period.”

    Air cargo companies have cut back their capacity by 7.4% in October because of the recession and falling demand.

    An early economic indicator, air cargo companies transport 35% of the value of traded international goods.

  34. 34
    zman Says:

    Wow. If you think the market has made a good move in here, look at FDX, $35 to $85 since March, looking to break out again. AMZN looking to be marking an all time high … consumer ist nicht tot.

  35. 35
    zman Says:

    One way to get oil prices up:

    Somali pirates seize Saudi tanker, a VLCC, headed to the U.S. I recommend using rubber bullets to take that one back.


  36. 36
    bloodystupidjohnson Says:

    The story is the revolution taking place in horizontal drilling. It started in the Barnett, spread to the Bakkans, and now is going to other areas such as the Monetery in Calif, and the Cardium in Canada.

    PWE, a major player in the play, is switching to almost all horizontal drilling. The technology is just starting to be applied to these other plays, and will have a learning curve.

    PWE is the major player, with micro caps such as BEN.TO and MEL.TO also playing.

  37. 37
    kiaora Says:

    Z….Those dec BEXP calls are jan.

  38. 38
    Jerome Blank Says:

    EXXI is trading in a bullish channel, EXXI broke below and outside the channel early in the day on 11/20, a difficult thing to watch, only to close back up near the bottom of the daily channel line creating a rare “reversal morning star hammer”, the next day on 11/23 the stock gapped higher back into the channel and has continued to trade higher creating a new higher high on the daily chart, the technical pattern stays bullish as long as EXXI stays within the channel which from here would be a break below $2.10, I was looking to add add’l shares to current positions with any pull back to support at or about $2.30, right now the stock looks great…

  39. 39
    bloodystupidjohnson Says:

    Z: a good primer is PWE investor day conf call or with the Monetery, VQ investor day.

    So far everyone is talking about the Bakkans, but this tech is starting to applied to other formations.

  40. 40
    zman Says:

    BSJ – that first part is not enough for me. Everyone and his out of work brother is now drilling horizontally. Completing them economically, well, that’s a different story. Where’s that play, what do they cost to drill, what’s the transport scenario (discount to Nymex), how much acreage do they have, is this the first well or have they had repeatable success, what’s the balance sheet like, what’s the TEV to potential reserves? … these are the questions that come to mind.

  41. 41
    1520sbroad Says:

    #36 – BSJ – do you follow PWE? I have for a long time. I’ll have to look at BEN and MEL

  42. 42
    zman Says:

    K – good notice. I was flipping back and forth between the two and bought the wrong ones at the last minute. No harm as I like being long over the period with at least 3 more wells to be announced before year end, just not my intention.

  43. 43
    zman Says:

    Equity traders and NG traders not talking today. NG down 29 cents waiting on that report. SWN up a buck…I’m still waiting on the numbers.

  44. 44
    reefguy Says:

    IOC- up $1.70 waiting om Antelope #2 test this afternoon. How about 300 MMCFPD and 7500 BCPD??

  45. 45
    zman Says:

    Planning to listen to some 3Q calls I missed today as conference stuff doesn’t start until tomorrow and like I wrote in the post, there is not much news to ponder.

    Wow Reef, nice. Are they having a conference call in private or public?

  46. 46
    bloodystupidjohnson Says:

    No Z, you have to do your own work. But read their 10 Q/K reports, listen to their conf calls and investor days. You know the routine. However here is a nice anaylsts report http://www.nexstar-energy.com/documents/reports/ww-2009-09-08.pdf

    Bottom line the wells are economic with nice IRR in the 50’s.

  47. 47
    reefguy Says:

    Having a private(200 folks) flare party in PNG. Morgan Stanley on site, will have an announcemnet before am manana.

  48. 48
    zman Says:

    Market still acting ho-hum towards ATW which had earnings last week. Watching.

    Reading the 3Q OII transcript for the first time, call replay no longer available. Good stuff as always, looking for catalysts.

  49. 49
    zman Says:

    Thanks Reef – may take a little for a quick trade, been awhile.

  50. 50
    bloodystupidjohnson Says:

    RE 41: yes I do follow PWE. It is the chicken way to play this play.

  51. 51
    zman Says:

    Reef – just like I remember, those calls are wow-expensive.

  52. 52
    Jerome Blank Says:

    Follow up to #38 Re EXXI, on the upside, would like to see EXXI break above the previous recent high of $2.60 printed back on 10/23, this would still be well within the daily channel, but a break to new highs makes more probable a test of the upward channel boundry from $3.00 to $3.50, the price zone depending on when the test takes place…a test of $3.50 would also be the first test of major P&F trendline resistance…

  53. 53
    zman Says:

    Thanks Jerome, that $2.60 figure was what I was thinking of.

    Market just hit the reset button on the day, everything pretty much back to where it stated or a little better (flat). Obviously, some other folks thinking of playing SWN for the gas numbers too as it is outperforming along with XCO.

    OII – story remains strong, going to grow fleet of ROVs next year, probably up 25 units vs their 200 plus now, earnings stay flat with 2009 due to projects business being off (no hurricanes in the Gulf). Will watch for a dip. If we see Gulf of Mexico jackup business picking up they stand to benefit from the same trend.

  54. 54
    bloodystupidjohnson Says:

    Cardium is in Alberta Canada (west central part). According to PWE there is probably about 9 billion barrels OOIP with a 16% recovery rate.

    F and D costs 14 – 18
    Op ex 10

    IRR around 50% with WTI of a 65 to 75.

  55. 55
    zman Says:

    Thanks BSJ – that’s a start, will take a look at Beren.

    Wow-boring market today. Called EIA, “no idea if the gas monthly comes out today but it should.” Your tax dollars not working very hard for that response.

  56. 56
    zman Says:

    Packman – so you were disappointed with the Black Friday sales volumes. I can tell you that everything is negotiable on price these days, not just cars, and especially when bought from local chains or single shops. Its a haggler’s dream land out there. Probably not a good sign for employment as everyone is going to get in the habit of expecting to pay less than sticker for everything but food and gasoline.

  57. 57
    zman Says:

    Analyst Watch: ATPG – upped to Add at Southcoast, target $18

  58. 58
    zman Says:

    From the APA Weekly:

    This week, most of the U.S. should have colder-than-normal temperatures. Most of the U.S. east of the Rockies should have colder-than-normal temperatures and the U.S. west of the Rockies should have normal to warmer-than-normal temperatures in the six- to 10-day period. During the eight- to 14-day time period the Upper West, Rockies and all regions east are forecasted to have colder-than-normal temperatures while Southwest will have normal temperatures.

  59. 59
    zman Says:

    Imports Watch:

    Big drop in LNG: 0.7 Bcfgpd, which was 0.1 Bcfgpd more than a year ago but off trend from recent weeks, and down 0.4 Bcfgpd from last week’s number. No gas tsunami yet.

    Canadian imports were 6.3 Bcfgpd, which was 1.5 Bcfgpd less than a year ago and off 1.5 Bcfgpd from last week’s surprising jump in volumes.

  60. 60
    bloodystupidjohnson Says:

    Cold weather: IMO it depends where it is cold. For the greatest gas usage it is best if it is cold from Chicago, across the midwest, past my house in northeasten Ohio to NY city. First we have the pop, and more importantly, we use nat gas for heating. Not all areas use nat gas for heating, but use heating oil or electricity.

  61. 61
    bloodystupidjohnson Says:

    Bloodystupidjohnson lucks strikes again. I wanted to buy XYZ stock. As soon as I buy it, of course it drops another 2%. I should be hired out for people who want a stock to move a certain way. I just take the other side of the coin.

  62. 62
    zman Says:

    BSJ – I use gas-weighted, population weighted degree days in my model. Absolutely matters where it is cold. The CPC has a problem again this week with their estimates. So I grabbed the read off the APA site.

  63. 63
    zman Says:

    BSJ – man you have a short focus on your buys. I noted your comments last week on the common stock buy ins I made on HK and WLL. Both are higher than the purchase price now but fell right after I bought in. Those minute charts will drive you crazy if you let them.

  64. 64
    bloodystupidjohnson Says:

    Maybe I should have put LOL next to the last line.

    I realize that I CAN NOT pick the top or pick the bottom. I average in and average out. On the stock I just bought, I am happy that it did decline becuase I want to buy more of it, and I have a rough idea of what its worth.

  65. 65
    zman Says:

    Hear ya BSJ, the internet is a flat medium without the LOLs, smileys etc, to indicate tone. Wow-boring action continues, still no EIA update.

  66. 66
    ram Says:

    I’m also known as the “cooler”.

  67. 67
    zman Says:

    Ram – I hope you had a good holiday. If you’re not too busy do click that EIA link every once in awhile for me. Gas usually doesn’t notice for 15 to 30 minutes after they release and I’d like to be on top of the number today.

  68. 68
    zman Says:

    In fact there is a mug in it, a very high quality mug I might add, if anyone posts that the new data is up before I do. Thanks. Offer limited to first comment on it and yeah, it actually has to be posted on the EIA site.

  69. 69
    zman Says:

    Here’s that link again:


    At top left it currently says:

    release date: October 30
    next release date: November 30

    That will shift when they post.

  70. 70
    zman Says:

    December returns: generally positive:


  71. 71
    zman Says:

    Gasoline up a 1 percent today, not sure I get why unless it is the travel stats for the holiday which were supposed to be pretty good. Oil off 15 cents and drifting with the markets…its like no one is minding the store. That VLCC was full of oil by the way, $20 mm worth.

  72. 72
    rseidman Says:

    Z: #57, I wrote that on # 24

  73. 73
    zman Says:

    Thanks RS, must have missed it.

  74. 74
    zman Says:

    Reading an MS pre game piece on the 914 data. They make a good point about the Boardwalk Lateral outage taking Fayetteville Shale volumes down during the quarter although I think they are overstating the impact at 1 Bcfgpd. We should be able to easily see the impact in the “other states” category.

    In Texas they see declines of 1.5 Bcfgpd in September. They would be a monster number and I don’t anticipate that. If we get something that big it will be unlikely to matter which gassy name you buy as the shares will all be up in size.

    Obviously gas traders did not see this piece and buy into it.

  75. 75
    tomdavis12 Says:

    Z: Morgan Stanley E&P analyst recommending playing UPL, XEC, EOG & CHK if 914 data is positive.

  76. 76
    zman Says:

    Thanks for sending that Tom, just outlined the first page in 74.

  77. 77
    zman Says:

    Liking my post picks for the day given gas numbers. If we get the bullish numbers, I may add RRC as it is acting like I thought it would in the event of bad numbers before the numbers are even out. I will also likely take HAL long in the event of strong numbers.

  78. 78
    zman Says:

    NG down 6.8% now and drifting lower in a news vacuum.

  79. 79
    md Says:

    The Crude oil Monthly product supplied came out for Sept. at 18362. Seems low

  80. 80
    BirdsofpreyRcool Says:

    HeadTrader waking up from his nap, just pinged with — “361mm shares on SPX throught 1 pm… did 550mm on Friday… this is nuts!”

  81. 81
    tomdavis12 Says:

    Z: Who are the top few sell side analysts that the street generally listens to?

  82. 82
    zman Says:

    Tom – Not Wolfe. They seem rotate who the axe is based on particular names. I think GS has some pull still, but the smaller shops are getting more share these days. I’ve honestly stopped caring as much as I used to about that. I think Barclays is generally behind the times on their thoughts and yet the lead analyst there is very smart, he’s just anti = NG these days. I like some of the guys at Jefco and RBC, Weil, Simmons, TPH etc, one SMH guy seems to be smart on the single digit midget crowd.

    Crude soaring, odd.

  83. 83
    zman Says:

    Crude really soaring now, up $1.60. Hmmm.

  84. 84
    ram Says:

    Travelling through Europe last two weeks. Nice to be back in US.

  85. 85
    zman Says:

    Nice, whereabouts?

  86. 86
    zman Says:

    Big ups on both products.

    RBOB up 3%
    HO up 2.45%

  87. 87
    Jerome Blank Says:

    KOG continues to trade a “sloppy triangle”, breaking down then reforming…stays on a solid P&F buy signal until a print of $1.75, we need a trade thru $3 to finally break out of this overcast condition, $3 is a double top breakout above congestion on the P&F chart, major support again at $2

  88. 88
    zman Says:

    CNBC reporting a British yacht being seized by Iran behind the rally in crude. Weird.

  89. 89
    1520sbroad Says:

    train platform crappy weather alert for nymex gas traders for tomorrow morning. hi temps today low 50’s in NYC – dropping thru the day, rain – possibly mixed with frozen precip overnight into tomorrow morning.

  90. 90
    BirdsofpreyRcool Says:

    1520s — thanks for the Cold Trader Report. It really does work.

  91. 91
    1520sbroad Says:

    #90 – the colder the better. next week looks ugly here too.

  92. 92
    kyleandy Says:

    z – juat called EIA said report would be out between now and 5, i asked closer to now or 5 and he wouldn’t say!!!

  93. 93
    zman Says:

    Thanks Kyle, the woman I got told me it should be out today and if not to call back tomorrow. At least your’s was somewhat helpful!

  94. 94
    zman Says:

    When do we get final Black Friday numbers?

  95. 95
    ram Says:

    Lithuania, Denmark,Belgium, Netherlands, and Germany.

  96. 96
    zman Says:

    Ram – any market thoughts out of that?

  97. 97
    1520sbroad Says:


    Iran + British yacht crew = crude up

    Where do i get one of the trucks in the picture?

  98. 98
    zman Says:

    Sheesh, good question. Maybe Wyoming or TexW has access to one.

    Still no release out of EIA.

  99. 99
    zman Says:

    914 data is out. Details in a minute.

  100. 100
    ram Says:

    Sorry,still trying to dethaw my mind and body – didn’t.understand queeeeeeestion.

  101. 101
    zman Says:

    L48 Gross Withdrawals fell

    from 63.22
    to 61.83 Bcfgpd … that’s pretty big and its biggest drop of the year.

    “Other states” was about 0.6 Bcfgpd of that

    Texas was 20.45 from 20.77 last month, its lowest reading of the year.

  102. 102
    zman Says:

    Going to go long a little more gassy stuff in a minute.

  103. 103
    zman Says:

    ZTRADES: Starting small in adding more gas long exposure on the EIA gas number release (see site for details, comment 101, full breakout in the Tuesday post)

    HAL – Added (10) December $30 Calls (HZLLC) for $1.11 with the stock at about 29.25.

    SWN – Added (5) December $45 Calls (TKQLI) for $1.30 with the stock about flat on the day.

  104. 104
    zman Says:


    HK – Added (5) more of December $22 Calls (HKLS) for $1.25 with the stock down $0.20 on the day.

  105. 105
    zman Says:

    Re 100 – Was just thinking you might have seen the next hot thing while you were over there.

  106. 106
    1520sbroad Says:

    Z – EIA hasn’t updated their site fully yet – that link you put up earlier still shows the october data as the most recent. You were citing the data shown in the “What’s New in Natural Gas” section?

    It clearly says at the top of that page that it was updated today?

  107. 107
    1520sbroad Says:

    this is the page – and yes it says it was updated today. I was confused…


  108. 108
    zman Says:

    Marketed production fell:

    Lower 48 fell 1.25 Bcfgpd month to month

    Production fell across the board except for LA which is to be expected. It was the biggest drop of production this year, half of it due to a drop in other states which will be written off as a one time event.

    Natural gas trading like it has not noticed in the Nymex after market.

    Stocks drifting lower with market and with oil coming off its highs. It will probably take a new day of trading in gas for traders to take the new numbers into account and there is no guarantee this will be a big enough number to get them interested in buying gas. I’ll have the usual slide show out with the morning post along with further commentary.

  109. 109
    zman Says:

    USEG out with comments on hooking its BEXP JV wells up to a gas sales line.

    Whoa. USEG got to announce the next BEXP Well

    The Strand 16-9 has an IP of 2,264 BOEpd. That’s another big well in the Rough Rider area, no details on 24 hour test or not. Just getting headlines.

  110. 110
    zman Says:

    The Strand was listed in the last BEXP press release at about to commence completion activities on Nov 16


  111. 111
    zman Says:


    BEXP – Added (20) January BEXP $12.50 calls for $0.30 (on the mid) with the stock at 10.25. See news out on another Bakken well under ticker USEG; IP of 2,264 BOEpd. BEXP should speak at more conferences this week and is continuing to rack up big wells in its Rough Rider area.

  112. 112
    Jerome Blank Says:

    Added additional EXXI shares @ 2.30

  113. 113
    zman Says:

    Odd that BEXP, the operator, chose to let USEG announce that well. They did say that they like doing business with USEG very much and that they could, but would not cherry pick which wells USEG would be in in the future should USEG opt to participate beyond the original JV wells. Sounds like they are playing nice with them so that they go ahead and participate, and if I were USEG I would definitely join in on further wells given the track record so far.

    West, if you see any deets on these wells lemme know. I’m sure this one was just a 24 hour test as well. thanks.

    I would think it would make the stock run.

  114. 114
    zman Says:

    I’d point out this is where the Catalyst Watch comes in very handy as I was sure BEXP had not yet announced that well (it was one of the at least 3 remaining to be announced this year above). So I see it on the list, then I go to the press releases at BEXP and sure enough, it’s not in the public domain yet. Maybe they don’t press it at all but I’d bet its out tomorrow or Wednesday for their conference presentation at Cannaccord.

  115. 115
    zman Says:

    Speaking of EXXI – MHR speaks this week at conferences.

  116. 116
    zman Says:

    Stocks not noticing the little rally in the market (NYMEX is already closed)…seems like a lot of people are not at their desks today. Hard to believe BEPX is just sitting there up 2 pennies at the moment.

  117. 117
    Jerome Blank Says:

    EXXI…a few big vol trades down here at $2.30 support, we’ll see if it holds…next intraday support zones are at $2.20 (20 day daily SMA) and major support again at $2.10 (channel line)…

  118. 118
    Jerome Blank Says:

    It would be nice to see HK “doji” close above the 200 day daily SMA at $22.50, even here it’s still inside the range of the huge breakout day back on 11/25, but above $22.50 its on the support side rather than resistance…

  119. 119
    zman Says:

    BEXP starting to inch up, approaching 10.50 now. I’d like to see them pr this in the morning with some more details, especially if they would give 30 day rates on the previously drilled wells.

  120. 120
    BirdsofpreyRcool Says:

    Thanks for your EXXI updates, Jerome.

  121. 121
    zman Says:

    I second that, keep those PF comments coming J.

  122. 122
    zman Says:

    Dubia World – $26 B in debt subject to restructuring.

  123. 123
    isleworth Says:

    Anadarko Petro will continue to spend aggressively in finding new oil and developing large projects.

    Co will continue to spend aggressively in finding new oil and developing large projects–and doesn’t rule out a bigger stake in Ghana’s hottest oilfield. Co’s 2010 capital expenditure budget will be at least $4.5 billion, which is at the higher end of this year’s budget.

  124. 124
    zman Says:


  125. 125
    West Says:

    From the 11-27-09 edition of Rocky Mountain Oil Journal: EOG Plans More Bakken Work Near Montana Border
    Williams County, North Dakota
    EOG Resources (EOG), North Dakota’s largest Bakken producer, appears to have had some encouragement at a horizontal wildcat located some 14 miles west of Williston, N.D. With no information released, the company has reportedly encountered good Bakken shows at the Round Prairie #1-17H, nw-nw 17-154n-103w, Williams County. Reinforcing these reports, 3 miles west of the #1-17H EOG has created five 960-acre spacing units that adjoin the Montana state line. The new units, which call for one horizontal Bakken test in each, include sections 2 and 3, 10 and 11, 14 and 15, 22 and 23, and 26 and 27 of 154n-104w. Based on exhibits filed with the North Dakota Industrial Commission, the horizontal leg in each unit will be on a southeast to northwest trend. No permit applications have been submitted to the state as of yet. EOG also supplied the following geological and economic data regarding the created drilling units:

    Vertical thickness:


    Water saturation:

    Oil gravity:
    41.2° API


    Formation volume factor:

    Gas/oil ratio:

    1.0086 gravity @ 1,675 btu

    OIP 960 acres:
    5,700 mbo (205 stb/acre-ft)

    Est. recovery factor:

    Estimated EUR:
    425 mbo

    Net sales

    Severance tax:

    Operating costs:

    Net income:



    Undiscounted cashflow

    The new units where EOG plans to drill are several miles west of Round Prairie Field, an abandoned Red River and Winnipegosis oil and gas pool. Discovered in 1968, this field produced more than 287 k bo and 2.4 bcfg. None of the three wells in the field tested or reported shows in the Bakken.

    Roughly a mile southeast of the company’s #1-17H active drillsite, and 3 miles southeast of EOG’s new drilling units, Viersen & Cochran drilled a failure at the Gessner #1, nw-ne 20-154n-103w. This test bottomed in the Red River at a depth 13,300’. One DST was attempted in this hole across the Bakken interval at 10,485’–10,555’; however, it was considered a misrun as a result of the tool getting stuck in the hole. The Bakken top in this wildcat was picked at 10,511’ from a KB elevation of 2,241’.

    EOG isn’t the only company playing the Bakken in this general area. Both Zenergy Inc. (Zenergy) and Brigham Oil and Gas (BOG) also have plans to drill for the Bakken. Four miles to the east from the #1-17H drillsite, Zenergy has a location staked for a probable Bakken venture at the Anderson #1-13H, nw-nw 13-154n-103w. The section where Zenergy plans to drill was originally part of a 1,280-acre drilling unit created by BOG. Approved in January of 2006, this unit was spaced for the horizontal Bakken and included sections 13 and 24 of 154n-103w. No permit was ever applied for by BOG for this unit; it is probable, however, that Zenergy and BOG have some type of joint venture in this area. One mile northwest of their latest staking, Zenergy also operates a horizontal Madison test at the Gibbins #1-11H, nw-nw 11-154n-103w. Spotting within Painted Woods Field, this well was given an IPP of 68 bopd, 35 mcfgpd, and 478 bwpd from the sideways Madison interval at 9,224’–14,719’. Since April of 2005, this hole has made more than 39 k bo, 15.9 mmcfg, and 274 k bw.

    South of EOG’s #1-17H drillsite, and east of the new drilling units, BOG plans two Bakken prospects: the Owan-Nehring #27-34H, ne-nw 27-154n-103w; and the Owan 29-32 1H, ne-ne 29-154n-103w. Both of these new stakings by BOG are considered field extension wells for Painted Woods Field, a multipay oil pool that currently produces from both the Madison and the horizontal Bakken. The Bakken in this field has cumulated more than 124 k bo, 80 mmcfg, and 96 k bw since 2006. BOG is currently developing the Bakken in this field and to date has staked 12 sideways tests in Williams County; six of these ventures have been drilled, three are drilling, and three are still locations. The overall area of BOG’s activity is in 154n–156n, 102w–103w

  126. 126
    john11 Says:

    BEXP’s release of news at the close..

    Brigham Exploration Announces Strand 16-9 #1H Bakken Well Produces at Initial Rate of Approximately 2,264 BOEPD
    Press Release
    Source: Brigham Exploration
    On 4:01 pm EST, Monday November 30, 2009
    Companies:Brigham Exploration Co.Us Energy Corp.
    AUSTIN, TX–(Marketwire – 11/30/09) – Brigham Exploration Company (NASDAQ:BEXP – News) announced that its operated Strand 16-9 #1H produced approximately 2,264 barrels of oil equivalent per day from the Bakken formation during an early 24 hour flow back period. The Strand was completed with 26 frac stages and represents Brigham’s highest reported 24 hour flow back rate to date of its eight long lateral, multi-stage fracture stimulation completions in the Williston Basin.

    The Strand was successfully fracture stimulated and produced approximately 1,947 barrels of oil and 1.9 MMcf of natural gas, or 2,264 barrels of oil equivalent, from the Bakken formation during a 24 hour period. Brigham maintains an approximate 21% working interest in the Strand, which is the fourth well completed under the drilling participation agreement with U.S. Energy Corp. (NASDAQ:USEG – News). Brigham’s interest in the Strand will increase upon payout of the first six wells in the drilling participation agreement.

    Importantly, the Strand represents Brigham’s third consecutive successful producer in the northwestern portion of its Rough Rider acreage position in Williams County, North Dakota. The Strand is approximately 8 miles to the southeast of Brigham’s BCD Farms 16-21 #1H completion and roughly 6 miles to the east of Brigham’s Lee 16-21 #1H completion. The Strand is also Brigham’s sixth consecutive high rate producer in its Rough Rider project area of Williams and McKenzie County, North Dakota. Brigham has now completed eight consecutive high rate Bakken and Three Forks wells in the basin with early peak production rates averaging approximately 1,900 barrels of oil equivalent per day.

    Brigham is expected to commence completion operations on the Williston 25-36 #1H (~ 35% working interest) and the State 36-1 #1H (~ 15% working interest) in mid December. The Williston and the State, which represent the fifth and sixth drilling participation agreement wells, are expected to be completed with 32 and 30 frac stages, respectively. Brigham has reached total depth on the Jackson 35-34 #1H (~ 58% working interest) and is expected to run 29 swell packers to bottom later this week.

    Brigham is currently in the process of rigging up drilling operations on the Owan Nehring 27-34 #1H (~ 49% working interest), which is a Bakken well in the western portion of its Rough Rider acreage, and the Liffrig 20-29 #1H (~ 72% working interest), which is a Three Forks well in its Ross project area in Mountrail County. Subsequent to completing drilling operations on the Jackson, Brigham will commence the Jack Erickson 6-31 #1H (~ 15% working interest), which will be a Bakken well in our Rough Rider project area proximate to the Brad Olson 9-16 #1H.

    Bud Brigham, the Chairman, President and CEO, stated, “Our operations and geological steering groups continue to deliver exceptional and consistent performance with the completion of the Strand. We believe our completions using a high number of frac stages, perf and plug and ceramic proppant represent an optimal recipe that we’ll continue to modify slightly in order to further improve results. We’re excited with the opportunity to slightly increase the number of frac stages with the Williston and State wells to 32 and 30 stages, respectively, and thereby maximize results on our approximate 150,000 net acres in our core Rough Rider, Ross and Parshall / Austin project areas.”

  127. 127
    john11 Says:

    16:09 ET 11/30/09 FST Forest Oil announces definitive agreement to sell to SanRidge Energy (SD) subsidiary the remainder of its Permian Basin properties ($18.32)

    The sales price is appx $800M. The transaction is expected to close on or before December 31, 2009, with an effective date of November 1, 2009, and is subject to customary closing conditions and post-closing purchase price adjustments. The divested properties are currently producing 46 MMcfe/d and had estimated proved reserves of 321 Bcfe (67% proved developed) as of December 31, 2008.
    In connection with the transaction, SD announced it is selling 2M shares of 6.0% convertible preferred stock and also announced a 22M share secondary offering through Barclays, BofA Merrill Lynch and RBC Captial.
    In addition to the Permian Basin transaction, Forest entered into a definitive agreement in November 2009 to sell additional non-core, primarily non-operated assets, in the Deep Basin in Alberta, Canada for approximately $38 million. This transaction, which is expected to close in December 2009, will bring Forest’s non-core Canadian property divestitures in 2009 to approximately $100 million for assets that produced 11 MMcfe/d and had 65 Bcfe of estimated proved reserves as of December 31, 2008. After the close of this divestiture, Forest will have accomplished approximately 50% of its non-core Canadian divestiture goal

  128. 128
    Bob Says:

    SD acquiring Permian Basin properties for $800 million, selling stock and preferred stock:


  129. 129
    Bob Says:

    SD stock offering: (Also sold $200 million preferred to institutional investor)

    The company also announced today a registered underwritten public offering of 22,000,000 shares of its common stock. In addition, Tom L. Ward, the company’s Chairman, Chief Executive Officer and President, is offering 2,000,000 shares of common stock. The company also intends to grant the underwriters a 30-day option to purchase up to 3,300,000 additional shares of common stock.

  130. 130
    kyleandy Says:

    z – west – who leases the acreage on the east montana border adjacent to EOG property, or is that more of EOG’S?

  131. 131
    zman Says:

    Wow SD, that’s a lot of shares, bigger deal than I thought they were after.

  132. 132
    md Says:

    Ouch, I nearly bought options in that but stayed close to Z playbook. Dn .40 after hrs.

  133. 133
    zman Says:

    Kyle – I’ll look, I know EOG is across the border, and NOG is too but further north.

  134. 134
    occam Says:

    Just came across a new oil play, Resolute Energy (REN). Very high % oil. Came public quite recently through a SPAC. First presentation as a public company is at FBR conference tomorrow. Appears to be cheap at first look, and has almost now coverage yet. Mgt has good record.

    I would be interested in the thoughts of anyone who looks at this.

  135. 135
    zman Says:

    BEXP bid up slightly to 10.65. Good pr, they speak on Wednesday, should have two more Rough Rider area completions to talk about before the end of the year.

  136. 136
    bill Says:

    sd out with another deal

    tom ward figures how to knock the price down and destroy shareholder value

    On the heels of the crusader deal the stock fell 30 %, that deal was called off, and now this.

    No debt is enough for this guy. Its the most leveraged name out there and now they add another 600 m in debt, and buyers of the conv preferred will short the stock to protect themselves

  137. 137
    zman Says:

    Bill – I have not gotten around to looking at it yet. I own the common, won’t be adding on this unless the metrics are off the chart. My guess is that SD wants to get oily, really thought they would not do something so big.

  138. 138
    bill Says:

    i just listen to the call on this deal. Ward says conv pref buyer will not short shares against the long

    Oil/gas mix moves us from 17 % to 24 %

    Guidance for next year goes up from 120 bcf to 130 to 135

  139. 139
    BirdsofpreyRcool Says:

    Bedtime Market Strategist —

    The Final Stretch
    November is now in the history books posting an impressive 5.7% gain for the month, which makes it the 4th best month of 2009. Normally, one would say that must have been some year but the 8.5% and 11% losses, respectively, in the first two months of the year tarnish some of the luster. To date, 2009 has been a feast or famine year – the average up month gained 5.4% and the average down month lost 7.2%. To the bulls’ advantage, 70% of the months have been positive this year. This is in contrast to 2008, where 75% of the months were down, the average gain in an up month was 2% and the average loss in a down month was 6.66%. From a historic perspective, the 21% year to date gain, while very respectable, is hardly outrageous or unfathomable. It doesn’t even crack the top quartile for performances over the past 82 years, and it comes after the 3 worst performances in that time frame.

    As investors enter the final leg of the 2009 investing marathon, the looming question is whether the market has the stamina to make it to the finish line with the 20+ percent gains intact. During the majority of 2009, Technology and Financials have led. This quarter, leadership has rotated to Health Care (+6.5%) and Energy (+6.1%). Financials reached these approximate levels in early August and have since consolidated in a 12.5% range. Today, the financials showed signs of renewed life, bucking the 4 month trend of underperformance. If sponsorship returns to the Financials in the final month of the year, it will bode well for a solid December performance.

    Black Friday Comps
    The action in retail stocks was fairly weak throughout the session as Consumer Discretionary was the heaviest sector until a late day rally. The takeaway appears to be that most investors were hoping for a healthy upside surprise in the early holiday sales. At first glance, a one-half percent gain over 2008 in total sales and a 7.8% drop in average spending is underwhelming. Conventional logic is that 2008 should be an easy comp, but in reality, it is not. 2008 Black Friday weekend sales were up approximately an average of 18% over 2007 and 2006, and 47% over 2005. This year’s average spending was essentially flat versus 2007. The problem with last year’s holiday shopping was that after Black Friday weekend, the season collapsed as retailers aggressively priced inventory in order to move it. Fearful of a repeat performance, no one wants to step out on a limb this season. Theoretically, the inventory issue is not expected to be a problem this year, so it will be interesting to see the end result.

  140. 140
    zman Says:

    Bill – Agreed, after looking the deal over, not happy with size of the deal relative to the strength of their balance sheet. But more than that, I can’t tell you how much I dislike seeing management tack shares for sale onto a secondary. If its such a great deal, one would think Ward would want to hang onto his 2 mm shares and sell them higher. Whether he suddenly had a need for $16 mm or this is part of a diversification plan I really don’t care. The fact of the matter is, the guy is making the choice to dilute the shares I own while pinching out some of his own.

  141. 141
    BirdsofpreyRcool Says:

    SD — with what I know about Tom Ward and how people view him and trust him… it just doesn’t make sense that he is trying to raise money for an acqtn, but tacking on 2mm of his own shares. Just doesn’t sound like the Tom Ward people thought they knew.

    There has to be a story here. Just don’t know what it is yet.

  142. 142
    PackMan Says:

    That SD story sounds messy … don’t like the Ward thing either…

  143. 143
    Braces mouthguard Shock doctor Says:

    Braces mouthguard Shock doctor

  144. 144
    corporate proxy solicitation rules for investment Says:

    proxy Solicitation Definition

    Monday Morning – Waiting on the Gas Numbers | Zman

  145. 145
    webaddress Says:


    Monday Morning – Waiting on the Gas Numbers | Zman’s Energy Brain ~ oil, gas, stocks, etc…

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