Tuesday – Welcome To December + The Natural Gas Supply Show and Lots, Lots More

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Market Sentiment Watch:  Tilting towards green as Dubai debacle fears subside. Market eying nearby, recent highs.

  • Ecodata Watch: (all to be released after the open at 10 am EST)

    • ISM (forecast 55.5%),
    • Construction spending (forecast -0.3%),
    • New car sales for November (forecast 9.6 mm)

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Supply Summary - with new and improved charts
  4. Crack Spread Update
  5. Stuff We Care About Today - BEXP, SD Deal, ---Conference Watch
  6. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $10,000
    • 18% Cash
    • The Current Holdings Tab Is Updated.
  • Yesterday's Trades:

    • WLL – Added (5) more WLL $65 calls (WLLLM) for $1.15 with the stock at $62.20.
    • BEXP – Added (5) BEXP January $10 Calls (QBJAB) for $1.15 with the stock at $10.30.
    • 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.
    • 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.
    • HK – Added (5) more of December $22 Calls (HKLS) for $1.25 with the stock down $0.20 on the day.

Commodity Watch

Crude oil rallied $1.23 to close at $77.28 yesterday. Crude remains volatile but fairly range bound. This morning crude is trading up about 90 cents.

  • Early Read On Oil Inventories: (from the Bloomberg Survey)
    • Crude- DOWN 700,000 barrels
    • Gasoline- UP 800,000 barrels
    • Distillates- DOWN 500,000 barrels
  • OPEC Watch: Tanker tracker "Oil Movements"  expects oil shipments from OPEC for the four weeks ended Dec. 5 to be flat at 22.78 MM Bopd.

Natural gas dropped like a stone from the opening bell on no news ending off $0.34 to close at $4.848 yesterday, despite an increasingly cold forecast. EIA released their marketed production for the month of September just after the close of NYMEX yesterday. This morning gas is trading off a dime as people wanted bigger declines out of the production report (the declines are becoming more cleasr - see my review next section).

  • Imports Watch: 7.0 Bcfgdp, down 1.9 Bcfgpd from last week and 1.6 Bcfgpd from last year.

    • Canada: Big drop, fell to 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.
    • LNG: Also a big drop in LNG to 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.


Natural Gas Supply Update: EIA Releases September Data

Key Takeaways:

  • For September, Lower 48 Gas Supply was 58.2 Bcfgpd. This compares to:
    • 59.4 Bcfgpd in August,
    • 58.4 Bcfgpd in December 2008, so down just barely since the start of the year
  • Texas, Gulf of Mexico, Other States, Wyoming, Oklahoma and New Mexico all eased month to month.
  • Louisiana continues to rise as should be expected.

I've added a new set of charts for those of you who are in a hurry, followed by the usual set which include more comments and rig counts.

On To The Regular Charts ...

Crack Spread Update

Key Takeaways: It still stinks to be a domestic refiner and I continue to avoid the group.

Stuff We Care About Today

BEXP - More Rough Rider Bakken Results

  • Strand 16-9 #1H - Northwest Rough Rider Area - Williams Cnty, ND
    • IP of 2,264 BOEpd on a 24 hour flow back. This is the highest rate yet announced by BEXP.

      • 1,947 bopd; 1.9 MMcfgpd
      • 26 stage frac, (this was planned to be a 28 stage well)
      • 21% working interest until payout to USEG on the JV wells, afterwhich the WI will increase.
    • It's not a twin well or nearby offset but a pretty good step out, 8 miles to the southeast of the BCD farms well (IP of 1,776 BOEpd in October) and 6 miles east of the Lee 16-21 (IP of 1,554 BOEpd in November)
    • BEXP has 104,100 acres in the Rough Rider area of the Williston Basin.
    • ~ 2,000 BOEpd wells are becoming run of the mill here.
  • Upcoming Wells:
    • Williston 25-36#1H -  completion before year end
      • 32 frac stages,
      • far east side of their RR acreage,
    • State 36-1 #1H - completion before year end
      • 30 frac stages,
      • far northeast side of their RR acreage,
    • Jackson 35-34 #1 H - Spud 11/10/2009, now at TD, may be complete before year end,
      • this well is not subject to the USEG JV, working interest: 58%
      • located in the heart of their acreage
    • Owan Nehring 27-34 #1H - about to spud
      • 49% WI
      • Bakken test in the western Rough Rider area
    • Liffrig 20-29 #1H - about to spud
      • 72% working interest
      • Three Forks Sanish test in the Ross Project area of Montrail Cnty, ND
      • BEXP has 36,200 net acres in the Ross area.

Nutshell: Another strong IP, some may quibble with the methodology here but their presentations show long term production is holding in ok. I don't know if the IP testing methods are consistent from well to well but assuming there is no outright deceipt then the wells point to improvements in completion methods combined with longer laterals and more frac stages are leading to better flows for less $/ BOE delivered. There is a good map on slide 33 of their latest presentation so you can tell which wells are where,  click here. (BEXP) speaks at Cannaccord on Wednesday and at Bank of America on Thursday. These notes will be added to the BEXP notes page.


SD Acquires Permian Basin Assets; Announces Secondary

  • $800 mm for :
    • 482 Bcfe (65% liquids) plus some raw land from FST
    • $1.65 / Mcfe
    • For reference, the market is currently valuing SD's proved reserves at about $1.70 / Mcfe
  • SD Announces Secondary
    • 22 mm shares vs 183.5 mm outstanding at present
    • 2 mm shares of 6% convertible preferred.
    • They should also need to add about $400 mm to the debt side of the balance sheet.
    • Tom Ward is also selling 2 mm shares. I really don't like that.
  • Nutshell: I know they want to get oily and quick but this is a big piece to bit off given their balance sheet. The debt holders will actually like the big share deal but not the small prefered offering. I can't say how much I dislike seeing management tack on personal shares in a secondary, especially near the lows for the stock. Ugh.

IOC's Big Antelope Well In Papua New Guinea

  • 705 MMcfepd flow rate (or 129,000 BOEpd). Wow.  As they put it, that's a world record rate. 
  • Stock bid way up...nice call Reef. Stock is likely to run even harder after the open and I may take some way out of the money calls just in case on a WildZ.
  • Together with previous wells IOC thinks it has 1.2 Bcfgpd of productive capacity, easily enough to justify multiple LNG trains.
  • I have been away from the stock to my own chagrin for too long now.


Conference Watch:

Canaccord- Adams Global Energy - All times EST. 

  • Full schedule here, Dec 1 and 2. Interesting names presenting,
    • Tuesday: KWK, BPZ, MHR,
    • Wednesday: BEPX, NOG, ROSE, ATPG, END


Jefferies Energy Summit - December 2 and 3rd - Should be a pretty good conference in terms of attendance, if you have the roster please send


Odds & Ends

Analyst Watch:

  • Stiffel resumes HK with a Buy rating.


124 Responses to “Tuesday – Welcome To December + The Natural Gas Supply Show and Lots, Lots More”

  1. 1
    zman Says:

    Curb my enthusiasm watch: RBC raises BEXP target from $10 to $11. I think they’ve been behind on the stick here and are playing catch up on their targets, probably can’t get to a higher number due to the cash flow multiple.Their lack of a buy rating does not however curb my thoughts that the stock will go higher in the near term as they release a string of good wells. If anyone gets this piece please send it along. Thanks.

  2. 2
    Jay Says:

    Doing some research re Bakken. Does anyone have an idea how many TOTAL rigs we have in the US capable of drilling these wells to depth + the horizontal section?



  3. 3
    zman Says:

    Jay – have you looked at the latest NBR’s presentation, should shed some light.


  4. 4
    zman Says:

    Reef – Nice call IOC, bid up $6

  5. 5
    BirdsofpreyRcool Says:

    EXXI — offering 90mm shares of common + $75mm of convertible perpetual preferreds.

    Someone must of gotten wind of that in the last 2 hrs of trading yesterday.

    EXXI adding about 40% more production for just about 40% equity dilution. However, it gives them a much stronger borrowing base and balance sheet. This transaction is a “hit-it-outta-the-park” home run for the 10% bonds. Kudos to all who stepped up to the plate there.

  6. 6
    zman Says:

    Broken record watch: Art Cashin thinks a geopolitcal event could send money flying into the dollar and sink the market.

    Jay let me know if I can help track down some of that data for you.

  7. 7
    zman Says:

    HO and RBOB pretty strong again, up a 1% pre open, helping oil to a dollar rally now.

    Dollar is off 50 bp at 74.42, recent low was 74.23.

    NG trying to make a small recovery this morning, best guess is that folks are not yet convinced those are good numbers. If you look at the first set of charts in my slide show I think the trends are pretty clear.

  8. 8
    BirdsofpreyRcool Says:

    TechTrader is out with a 60/40 LONG call for today’s trade.

    HeadTrader wants to see how the mrkt reacts after what appears to be a strong gap up at open.

  9. 9
    zman Says:

    Less dilution than I would have guessed though BOP, given their deal $ needs.

  10. 10
    BirdsofpreyRcool Says:

    EXXI — it’s also a great transaction for the overall company, debat and equity both. Reduces financial risk by increasing cash flow without increasing E&P risk. Also, gives them debt capacity to opportunistically add more assets, if they come along at the right price. If they add back the hurricane-damaged production on schedule (Nov-Feb), think this stock sees a 3-handle by mid-Jan.

  11. 11
    BirdsofpreyRcool Says:

    z — it’s less dilution b/c they get the benefits of the cash flow bewteen now and closing. EXXI structured themselves a very smart deal. And the way they financed it makes a lot of sense too. As a Caa1-rated credit, it doesn’t make sense to issue term debt today (maybe next year) and it never makes sense to lean on your revolver to fund acqtns (except in the very short term, IMHO).

    Once EXXI gets the hurricane-shut-in production back on line, pays down a bit of debt with cash flow… I think we see them in the mrkt with another debt deal. Another thing is, they can pay down up to 35% of the newly-issued 16% 2nd lien debt (without paying any call-type premium) with the proceeds of any equity offering until 6/11. Bet they use some of the equity offering to do that too.

    EXXI has lots more financial flexibility now. And flexibility means they can take advantage of equity-enhancing moves.

  12. 12
    Bob Says:

    #5 – Agree someone knew something. My day order to buy at $2.26 was filled at 3:59:59. Extreme volume spike at the close.

    EXXI 10’s offered at 90 today

  13. 13
    zman Says:

    Re 11 – Thanks BOP.

  14. 14
    TEXWS6 Says:


    What is the TVD/TMD of the Bakken wells?

  15. 15
    zman Says:

    TEX – vertically down between 10 and 11,000 feet, then anywhere from 3 to as much as 9,000 feet (though rare) on the horizontal. Most are TMD around 15 to 16,000 feet.

  16. 16
    BirdsofpreyRcool Says:

    Bob — Frankly, given all the things EXXI can do with their operations and balance sheet now, I wouldn’t be surprised to see the stock close toady where your order filled yesterday. Wouldn’t be surprised to see the 2ndary priced at 2.25. But, I watched the volume spike at close yesterday and knew something was going on.

  17. 17
    zman Says:

    Gold knocking on $1,200.

    Oil back up to $78.50

    NG down 17 cents this morning to 4.68, support at 4.60.

  18. 18
    BirdsofpreyRcool Says:

    reef — major congrats on your IOC call!

  19. 19
    BirdsofpreyRcool Says:

    “toady”??? ha. “today”….

  20. 20
    Bob Says:

    BOP- We are already there!

  21. 21
    milepost_43 Says:

    Full load of EXXI 10%ers here….thanks..

  22. 22
    zman Says:

    Conference Calendar Request Watch:

    Jefferies Energy Summit Dec 2 -3

    FBR’s Fall Conference – Dec 2-?

    Anyone have the agendas? Thanks.

  23. 23
    BirdsofpreyRcool Says:

    EXXI — the last 3 months have truly been transformative for this company. Restructuring debt obligations, reramping hurricane-shut in production, renegotiating bank debt, drilling better than expected production wells, buying into two high-risk wells at low cost, receiving insurance proceeds … and now a very accretive asset transaction that further delevers the balance sheet. 6 months ago, I wouldn’t have bothered to take a second look at EXXI. It’s a different company now.

  24. 24
    zman Says:

    BOP – Schiller mentioned being able to do 400 mm shares + on that last conference call, so 90 mm seems like a a great deal, lol, big sigh of relief from the current shareholders and of course the debt side likes any issuance of common.

    WLT moving through 70 nicely now.

    WLL at $64 +, stones throw from the annual highs. I know they are speaking at at least one conference this week and have said they will have a well update out before year end. If they don’t have it out this week I will go ahead and roll to January contracts there.

  25. 25
    BirdsofpreyRcool Says:

    milepost — great to hear! We all worked together on that bond… nice when something works out for people.

    This is what this site is all about. Thanks, z!

  26. 26
    zman Says:

    LINE did a small deal in the Permian and Anadarko basins as well but I did not have time to review it this morning. Stock taking it in stride, moving through $25 now.

  27. 27
    zman Says:

    That LINE deal is mostly PDP (proved developed producing) and oily (80% liquids on the reserves). So they paid $154.5 mm for about 12 MMBOE or $12.87 per barrel of oil equivalent (or $2.15 per Mcfe). That’s a good price for largely developed reserves, a little high to what you pay for more moose pasture type acquisitions as its already had the capex applied to prove it up. This is a good example of what companies like LINE do. Hedge and acquire during the lean pricing environments and shed assets and hedge during the inflated environments. Meanwhile, they still yield 10%+, they have increased the prices of their hedges (100% hedged still) over the next 3 years by swapping out some 2013+ year hedges. This makes the dividend rock solid and acquisitions like this will likely bolster it. This also bumps them a bit more toward the oily side (they are balance before it) and that should please the Street as well.

  28. 28
    zman Says:

    Thanks BOP re 25. I get a lot out of it too.

    Watching IOC for a pullback, think that could go higher, waiting on Eco data due out in 15 minutes before pulling trigger on anything.

  29. 29
    choices Says:

    SD looks like dead money for a lengthy period if it does not completely fall out of bed-I own a fair amt, partially hedged but not nearly enough-got to wonder where the Board is when Ward steps up and says give me some of that-typical Board rubber stamp action-huge deal, huge debt load, huge disappointment for existing shareholders.

    On a good note, thanks BOP for the EXXI 10’s, bid 86, ask 90 on IB.

  30. 30
    zman Says:

    FST on the flipside is loving the SD deal, up 11%.

  31. 31
    zman Says:

    HK back to acting odd/poor vs the group. Another Buy recommendation, another yawn from the market.

  32. 32
    BirdsofpreyRcool Says:

    choices — thanks for the EXXI 10s bond quote. Seeing Jefferies on the bid at 86, but no offer. Let’s see where those bonds are quoted at the end of today. Give us an update, if you can. thanks!!

  33. 33
    isleworth Says:

    FYI – BEXP Insider activity yesterday:

    Chairman Brigham registers 150,000 shares for sale

    VP Exploration Larson sells 6,608 shares

  34. 34
    zman Says:

    The United States is falling behind in the race for clean, renewable energy and risks losing its prominence in high-tech manufacturing, U.S. Energy Secretary Steven Chu said on Monday.


    News flash pal, the U.S. is falling behind in the energy race period.

    Meanwhile I see EPA saying news cars can burn higher ethanol blend. Wonder if they know that more alcohol in the blend means lower mileage….funny how they don’t tell you that.

  35. 35
    zman Says:

    ISM weaker than expected, construction spending better,

  36. 36
    zman Says:

    Isle – thanks, had not seen. Lots of reasons to sell, only 1 to buy. At least they didn’t tack it on to the last company deal.

  37. 37
    VTZ Says:

    For whatever it’s worth, to me it looks like the action is suggesting that support on the dollar index breaks in the 74 range and falls to 72 ish before putting in a minor bottom. Especially because practically everyone is looking for a bounce now and has been for the past x weeks.

  38. 38
    zman Says:

    V – hear ya on the $, I’m in that camp as well.

  39. 39
    zman Says:

    IOC pulling back with group/market, watching for an entry, maybe the $65 Decembers. Would like to see it halfway fill today’s gap.

  40. 40
    zman Says:

    Temperature outlooks:

    6-10 day:
    8-14 day:
    1 month:

  41. 41
    Jerome Blank Says:

    So far EXXI is trading between yesterdays support level at $2.30, now acting as resistance, and the channel line at $2.10, would like to see EXXI hold the channel on close…thanks for the great comments BOP

  42. 42
    zman Says:

    Bakken Quick Thoughts:

    AEZ back to $3, just imagine if they had Bakken news to share.

    KOG loafing along waiting on wells 9-11 results, guessing they lump them into one release in January.

    BEXP should have 2 if not 3 more wells to report prior to year end.

    WLL will have results on a number of wells including Lewis and Clark test in the TFS prior to Christmas.

    ROSE should have comments on their first Montana Bakken well soon, bidding some calls there last two days, no luck.

  43. 43
    Jay Says:

    Z – Reason for inquiry into rig availability for Bakken is Matt Simmon’s remark that it would require 10K rigs to exploit the play at a rate that would have any meaningful impact in offsetting declines during the near terms.

  44. 44
    bloodystupidjohnson Says:

    I see that PWE has announced that they closed on selling their heavy oil properties in the lloydminster area to Huskey Energy. These properties where producing 6000 barrels per day.

  45. 45
    Jay Says:

    Pirates Holding 11 Ships, 264 Sailors Off Somalia


    These are the guys charged with controlling the mess.


  46. 46
    zman Says:

    Jay – ha, he’s exaggerating and nope, we don’t have anywhere close to that amount of high horsepower rigs. We don’t even have that many cold stacked POS rigs.

  47. 47
    zman Says:

    Re 45, amazing they can take a VLCC with a boat that small. My kids have bigger boats in the tub.

  48. 48
    zman Says:
  49. 49
    zman Says:

    ROSE – did not get my trade off there.

  50. 50
    Nicky Says:

    Morning all. Beautiful day here in Florida!

    I am still overall more bullish than bearish on the indices. I think that we have a large wave iv triangle playing out. If this is the case we should see a move back down to the 1070 – 80 area on the SPX shortly. Once the low is in place I would look for the rally to resume in wave v.
    Low does not appear to be in place for the USD which is likely to move up next before another leg down.

  51. 51
    zman Says:

    Morning Nicky, any thoughts on Crude and Natural Gas charts?

  52. 52
    West Says:

    BAKKEN. WLL should have results from Lewis & Clark well and 3Forks well in the Northern portion of the Sanish Field available if they want to discuss this tomorrow. The Lewis and Clark had lots of oil and gas shows while drlg, but had several drl bit issues during the lateral. This gives them some very positive information on this area with a lot of room to run. Their 3Forks well offsets BEXP’s Strobeck 27-34#1 which tested for 2,021 boepd. WLL put away all 26 stages of frac and should have an excellent well. This will be good to see how they will report their well and we can compare this to BEXP’s neighboring well. If I am not mistaken BEXP has a working interest in this well also…..NDIC permits for several of the larger players gives us an idea on how some plan to develop both zones simo. EOG is planning 640 ac 5000′ laterals spced half way between upper Bakken wells . Thought here is that this will give best chance of not frac over to other zone or communicating. WLL is planning to develop both formations with long 10,000′ laterals at least initially spaced equal distance and parallel to upper Bakken wells . STR has filed to drill 4 wells just North of KOG and XTO’s jv property. They have filed to drill Bakken and 3Forks from same pad with wells running parallel but offset. XTO has filed and had approved rules for Heart Butte Field allowing development on 320,640 and 1280 this basically covers all of KOG’s northern acreage. KOG first 3Forks test will be in 2010 and will probably be a two wells test parallel and between four existing Bakken producers so that they can monitor frac and any possible communication between wells.Peak ND, Zenergy and Petro-Hunt all have 3Forks test planned in the area , so the longer until KOG spuds 3Forks test the better their information will be at that time. I would expect XTO to pick up the pace in this area rapidly and KOG will concentrate their efforts on the Heart Butte area. The Williston and the Permian Basins remain the preferred oil play areas and as long as the oil to gas differential remains so high this will continue.

  53. 53
    bloodystupidjohnson Says:

    For you END shareholders, I see where the CEO just bought 100,000 at .95 — 11/30/09

  54. 54
    zman Says:

    West – agreed, they have it down and completed, said last call they wanted to put it in with some other wells in a pr. Meant to thank you for sending that file last night re the geology, thanks mcuh, green oil on the shakers generally a good thing, lol. Also, the big flares nice to see.

  55. 55
    zman Says:

    BSJ – Transier is a smart guy (CFO at Ocean under Hackett back in the day), my mistake was relying on that too much. Don’t know when that one turns around but glad to see him dropping some more cash into his position.

  56. 56
    Nicky Says:

    Z – my overall view of oil is that it will eventually break out of this sideways range to the upside. The move up since the start of last week could be the start of it or again we may end up being stuck in the range and subject to another move down first. To be honest I am surprised it isn’t acting stronger based on geopolitical events.

    I am still bullish on nat gas although I did close my longs a couple of weeks back as I could see we were going to see a correction – I need to take a look at the long term charts and will get back to you.

  57. 57
    VTZ Says:

    Silver breaking out suggests gold will also move higher and dollar lower.

  58. 58
    zman Says:

    Nicky – thanks. I actually like to see crude not participate just yet, would rather see the demand data for products get back up first which it has started to do but needs more… Crude getting too much ahead of that means headaches down the road as people would suddenly say, whoa, its run too far, too fast, so I think this range is pretty healthy.

  59. 59
    zman Says:

    ROSE – I give up on trying to buy options there. The bid / ask on the options and the size of those does not match reality. I’ve taken the offer a couple of times now only to see that it is fake, very weird, no need to play their game there, I’ll keep holding my common.

  60. 60
    zman Says:

    NG off 6 cents now, backing off from an 18 cent drop earlier, good volume coming in above $4.70.

  61. 61
    zman Says:

    SWN breaking above its 50 day SMA. Any thoughts there Jerome.

  62. 62
    Jerome Blank Says:

    Something must be going on with HDY, up almost 10%…fairly significant opening gap higher which is still holding..

  63. 63
    zman Says:

    Jerome – they could be speaking somewhere, the president puts on a good show. Also, Ghana is hot for Jubilee now (story today on Upstream), may be resparking interest in offshore W. Africa.

  64. 64
    zman Says:

    Jerome – one last one, HAL. Spreads so tight there I could make a living off just trading that as a proxy on both the OIH and on natural gas when it runs, seems fairly immune to when gas dips, much more so than the E&Ps they work for are that is.

  65. 65
    zman Says:

    NG down 2 pennies.

    WLL really going for it today, one more day half this good and we are at 52 week highs. Still cheapest name I can find in the Bakken space.

    WLT – same comments as to its part of the coal space.

  66. 66
    Jerome Blank Says:

    RE: #61 SWN is currently on a P&F sell signal, but continues to hold support at its long term P&F trendline, the latest example was the bounce off $41 back on 11/20 reversing SWN back into x’s, where it is now…the P&F trendline tracks just abovee the 200 day SMA on the traditional chart, where you can see what looks like invisable support on a traditinal daily chart…the tough thing about SWN is its large swing trade oscillations….SWN goes back on a P&F buy from here on a print of $48

  67. 67
    bloodystupidjohnson Says:

    Z: Mark Twain said “a mine is a hole in ground with a liar at the top.”

    If you have read some of the new SEC reserve recording requirements, do you think we will have to dust off Twains comments and put oil wells instead of mines in the sentence?

  68. 68
    Jerome Blank Says:

    RE: #64 HAL is still on a P&F buy signal from its “triple top” breakout back in August, but has recently reversed back into o’s with the break below $29 back on 11/27…HAL had a very difficult time breaking $32, and depending on your interpretation of the chart, HAL tested this area appox 7 times between 10/21 and 11/18…the current three box reversal into o’s puts HAL at 50 day daily SMA and also at the bottom tendline of a forming ascending triangle where it appers to be finding support, if HAL holds above $28, HAL three box reverses back into x’s on a print of $32, this would be a very interesting 8th test of this resistance level…

  69. 69
    zman Says:

    BSJ – yep, I think they will be shale gas wells mostly, but yep. I think some of the changes are pretty good, like the average pricing instead of point in time, and some of the offset well rules make sense but I think there is going to be widespread liberal use of the rules on that that could make results for some of the smaller names inflated to what is prudent.

  70. 70
    zman Says:

    Thanks much Jerome, I was playing HAL for a quick move up in NG which has not yet occurred. I probably would be gone before it makes a run as high as $32.

  71. 71
    zman Says:

    NG down a penny

  72. 72
    bloodystupidjohnson Says:

    I agree. I always thought that point in time pricing was stupid particularly when it came during the winter. It overvalued those reserves of nat gas.

    I think it will be a big tell on some managements. If their numbers start to go crazy then, at least for my money, they will become “untouchables”.

  73. 73
    zman Says:

    BSJ – absolutely concur on the “untouchables”. First blush many names are going to “get bigger”. Unless I see the capex to justify it I’m going to shy far away from. I don’t think you need to worry at all about names like EOG but I could see the GMXR’s of the word going crazy with the pen.

  74. 74
    zman Says:

    Still haven’t found a schedule for the Jefferies conference tomorrow, anyone?

  75. 75
    isleworth Says:

    424B5 filing out just on EXXI(Prospectus)

  76. 76
    bloodystupidjohnson Says:

    Well, Papa for one, has been a big voice in telling people to watch out for the “drilling with the pen” action of some of the other operators.

    What is really going to be bad is some of this “drilling by pen” is then going to be hyped by some of the “whores” in the sell side anaylsis community.

  77. 77
    zman Says:

    NG – green

    BSJ – too true. Watching for the bank lines to fail to go up proportionately with the increase in reserves may also yield some insight.

  78. 78
    bloodystupidjohnson Says:

    Z – you have hit it on the head!!!

    Watching bank lines with changing in reserves was my projected game plan.

    Maybe we are related.

  79. 79
    zman Says:

    BSJ – I was keeping that under wraps but since you were moving in that direction…

    NG up 2 cents.

  80. 80
    zman Says:

    ROSE up $1.10. Irritated that the options are completely out of sorts there. Holding the common, looking like a real breakout now.

  81. 81
    BirdsofpreyRcool Says:

    HT — Ford Motor out saying “economy and auto sales have stabilized.”

  82. 82
    zman Says:

    Re F – yep, sales flat with year ago levels in November. Clunkers was over.

  83. 83
    zman Says:

    Toyota – up 11.5% for November.

    Chrysler got slammed but that makes sense given their issues.

  84. 84
    VTZ Says:

    Does anyone else follow Niko Resources (NKO on TSX)??

  85. 85
    zman Says:

    Occam – forwarded you something on your request yesterday.

  86. 86
    zman Says:

    WLL – bumping up on $65. Will sell out/down on Thursday if they don’t have something new to say at the Jefferies conference. They speak tomorrow at BofA at a credit conference but would be surprised to see them drop news in front of that one.

  87. 87
    zman Says:

    BEXP moving to HOD at $11. Holding common and January $10 and $12.50 calls. Break out to my layman’s eye occurs at the old high of about $11.50.

  88. 88
    BirdsofpreyRcool Says:

    ummmmmmmmmmmmm… watching AEZ sprout wings and fly.

  89. 89
    zman Says:

    BOP – Bakkens on fire today. Probably see rallies in KOG and NOG next.

  90. 90
    zman Says:

    …and nice call on the AEZ to RMD.

  91. 91
    BirdsofpreyRcool Says:

    RMD and wcoaster… AEZ = wow!

  92. 92
    zman Says:

    WLL up $3 at 65.25, old high this year was 65.05.

  93. 93
    zman Says:

    NG fading now, off five cents again. Lost momentum as the market stalled out during lunch.

  94. 94
    Jerome Blank Says:

    Re: # 87 BEXP today broke back into that textbook “ascending wedge” which had been forming since the end of August, I agree that $11.50 is an important technical milestone, especially since it has tested that resistance zone numerous times, getting as close as $11.49 on 11/17…BEXP holds its current P&F buy signal from here until a print of $9, BEXP prints another x at $11.50, breaking above the P&F consolidation, from $11.50, next resistance probable at $12.25 to $12.50, which is a zone near the top trendline on the ascending wedge…

  95. 95
    reefguy Says:

    IOC- sorry been off line. On call to PNG, well had stabalized flow of 705 MMCFPD up 7inch casing at 1280# Flowing Casing pressure. Condensate was an estimate from a seperator limited 80 MMCFPD rate. I bought some more today @$61.53. Will set 7″ casing here, Next catalyst is in 1000′ vertical feet after running 7″casing and drilling into oil leg; will take core and run DST. This should be completed by yearend.

  96. 96
    choices Says:

    Jerome-if you have the time, would appreciate your view on SD-in light of the news, the game may have changed on this one.

    Thanks for your input-it is appreciated.

  97. 97
    zman Says:

    Thanks Reef – just missed a little earlier being too cheap, watching. Nice call.

  98. 98
    choices Says:

    BOP-nothing has changed on IB for the EXXI 10’s-still bid 86.5, ask 90, last transaction was 86.5, vol 4.5 mil. I am a little skeptical about last trans # as this line on IB screen (ie for bond trans) does not seem to be updated real time.

  99. 99
    BirdsofpreyRcool Says:

    choices — thanks for the EXXI 10% bond update. So, the bonds you bought for (was it 84.5?) one would now have to pay 90 for? Nice move!

  100. 100
    Jerome Blank Says:

    Re: #96, Hi choices…SD continues to trade down off the P&F sell signal generated off the print below $11.50 back on 10/28, the 200 day daily SMA could not contain matters and the stock broke below this major support zone, which is now resistance at about $10, tested on 11/25…you know, I don’t generally put a lot of emphasis on P&F price objectives for a lot of reasons but in this case, the bearish price objective on the current sell signal is at $8-$8.50 and in this particular case the objective corresponds with other additonal major support points right in that zone, if your still with SD this zone could be the bottom, I also like the P&F symemetry created in this price zone, I’d consider holding if your still with it here…I’m also wondering that if whoever was going to sell on that news has already sold, fairly big vol today…

  101. 101
    john11 Says:

    Wow, just heard SD expected to price tonite. Surprised its that quick.

  102. 102
    choices Says:

    Thanks, Jerome!

    I believe you are right about the selling-I am holding, it is not the first time that I have held some big time losers waiting for the come back or for support to hold-we shall see.

  103. 103
    zman Says:

    Pretty good day, a little profit taking in the last half hour but not on heavy volume, new highs for WLL, ROSE, most other names still well off recent highs.

  104. 104
    zman Says:

    Consensus for inventories tomorrow:

    Crude: Down 0.45 mm barrels
    Gas: Up 0.75 mm barrels
    Distillates: Down 0.35 mm barrels

    Pretty blah numbers expected. Generally you see a bigger draw than that on crude and I expect a slightly bigger draw as refining capacity comes back on line.

    Gasoline – a build is normal this time of year.

    Distillates – I expect a drawdown due to stocking for winter but not a big one. You often see builds this time of year before the real cold sets in but production should still be fairly low now.

  105. 105
    zman Says:


  106. 106
    BirdsofpreyRcool Says:

    API inventory data —

    Crude oil 2.887 mm bbls
    Gasoline 3.423 mm
    distillate 1.059 mm

  107. 107
    ram Says:

    Those are all positive numbers?

  108. 108
    BirdsofpreyRcool Says:

    yes. and they look large to me.

  109. 109
    BirdsofpreyRcool Says:

    Distillate not so surprising… winter has yet to start in the NE.

  110. 110
    zman Says:

    BOP – Lemme know if you get the details page that shows what imports were. Crude off a little on the numbers but frankly they don’t make a lot of sense unless crude imports jumped and production rose leading to the big gasoline build. As you say, distillate not altogether surprising as it does normal build this time of year and winter has been slow to start. EIA will probably look a lot different tomorrow.

  111. 111
    choices Says:


    For those interested in SD, yesterday’s news item-may be old news now but adds a few details.

  112. 112
    PackMan Says:

    16 BOP … good call on EXXI

    I picked up some traders below 2.10 for scalping; thanks for all the good intel here !

  113. 113
    zman Says:

    API numbers making less sense than usual this week. Crude imports down huge, refining inputs off slightly = big build in stocks ???. I think everyone is going to increasingly focus on EIA and ignore API as the API’s just don’t jive.

  114. 114
    choices Says:

    SD pricing announced @ $8.85. SD closed today @$9.02.

    Current shareholders screwed for the benefit of underwriters but I guess what else is new.


  115. 115
    reefguy Says:

    HDY- Sells a 37% stake and operations in the concession to Repsol for $31MM; that leaves them about 39% WI

  116. 116
    BirdsofpreyRcool Says:

    PackMan — #112… so glad I could be of any help. Thanks for the feedback!

  117. 117
    RMD Says:

    I’m traveling this week so checking in erratically; hearing ROSE’s 1st well very nice,well in 1,500b/d range, 2nd drilling as of week ago. Co. says will not release results well by well, nor until they have time to produce enough to be statistically significant (my words).

  118. 118
    zman Says:

    NFX on the tape adding 2010 oil hedges, and 2011 oil and gas hedges.

    Thanks for the HDY headsup, Reef.

    RMD – have heard same last few days on the ROSE well, seems to be moving the stock eh? Still holding for a move higher … if they are sitting on Bakken reserves in a completely new part of the play it could still be a much higher stock through next year. Lots of respect for management here.

  119. 119
    zman Says:

    USEG offering 5mm shares. Guess who will be participating in the option wells with BEXP.

  120. 120
    PackMan Says:

    BOP … MF Global debt offering cancelled due to “market conditions” … any color on what that is all about ?
    credit market implications ?

  121. 121
    PackMan Says:

    or just a for crap company ?

  122. 122
    BirdsofpreyRcool Says:

    PackMan — given that Cantor Fitz was able to place their $500mm bond offering in Oct, I have to go with your comment #121. But we might also be returning to a bit of “normal” seasonality. In normal years, no “good” company would try to issue debt (especially rated below A2) in July or August, or after Thansgiving thru Jan 2. Equities get done, but trying to issue debt during those time periods made a company look a tad desperate (or pathetic). Still think there is pent up demand for debt… but the door isn’t so wide open that everyone is getting through. Also, sounds like recent trends at MF Global ain’t so hot.

    MF Global Cancels Planned Corporate Bond Offering (Update1)
    2009-12-01 20:23:05.228 GMT

    By John Detrixhe
    Dec. 1 (Bloomberg) — MF Global Ltd., the futures and options broker, canceled a bond offering as investors remain “discriminating” after the worst financial crisis since the Great Depression.
    The $250 million issue of 10-year senior notes was pulled because of “market conditions,” according to a person familiar with the matter who declined to be identified. The Hamilton, Bermuda-based company’s credit rating outlook was changed to “negative” from “stable” by Moody’s Investors Service on Nov. 6, the ratings company said in a statement.
    Even as borrowers sell a record $1.04 trillion of investment-grade corporate debt this year, bond buyers’ risk appetite hasn’t fully returned to the pre-crisis levels, said Alexander Yavorsky, a senior analyst at Moody’s in New York.
    Investment-grade bond yields have tightened 383 basis points relative to similar-maturity Treasuries to 221 basis points as of yesterday, according to Merrill Lynch & Co.’s U.S. Corporate Master index.
    “Spreads have come in a lot, but it’s still a more discriminating environment,” Yavorsky said. “It’s also a market that’s a lot more open than it was right after Lehman, there’s no doubt about that. You can look at the aggregate issuance levels across any sector.”
    Investment-grade spreads averaged 91 basis points in 2006 and 203 basis points in 2007, Merrill Lynch data show. Following the fall of Lehman Brothers Holdings Inc. in September 2008, spreads widened to as much as 656 basis points. One basis point is 0.01 percentage point.

    ‘Optimizing’ Structure

    “We remain focused on optimizing our capital structure through those avenues which best position this company for long- term success,” Tiffany Galvin, a spokeswoman for MF Global, wrote in an e-mail.
    MF Global reported Nov. 5 a $16 million net loss in its fiscal second quarter on lower trading volumes and U.S. interest rates that are near zero percent.
    The loss in the quarter ended Sept. 30 was equivalent to 13 cents a share, and it compared with a profit of $3.5 million, or
    3 cents, a year earlier, the company said. Excluding certain costs, the company earned 1 cent. On that basis, MF Global was estimated to earn 4 cents, according to a Bloomberg survey of 12 analysts.
    Cantor Fitzgerald LP, an inter-dealer broker rated Baa3 by Moody’s, one level lower than MF Global, issued $500 million of 10-year, 7.875 percent bonds on Oct. 14 that priced at 99.308 cents on the dollar, a spread of 455 basis points, Bloomberg data show.

  123. 123
    VTZ Says:

    Gold up after hours on news that HSBC is closing its gold business. Fears are that there are more concerns with delivery and/or legitimacy of physical driving price higher.

  124. 124
    VTZ Says:

    Should clarify that I mean personal gold storage and that they are being selective of which commercials/institutions are being allowed to store with them.

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