Monday Morning And Baby It’s Cold Outside

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Market Sentiment Watch: Many eyes will be on Copenhagen as Global Climate talks open and with just about no news out of the Feds on the economy or from companies in the energy sector we should have the makings of a pretty dull session.

One would think "green energy" names would have been the place to be in the lead up to what many think will be tens of trillions of dollars in spending over the next two decades. While the TAN and GEX green ETFs had strong week's last week, their YTD performances, up 11% and 6% respectively, pale in comparison to those of the gassy stocks (as measured by the XNG up 33%) or oil service (with the OIH up 55%).  Oversupply and fear of a global subsidy retrenchment in the solar arena has hobbled those stocks while wind power has run into project financing troubles. 

There's little doubt that the next two weeks in Copenhagen will bring proclamations of renewed commitment to green energy production and green building and catchy phrases like "2 degrees in 10 years" (which is easier for most people to think about than the past "1 degree over 100 years"), there seems to be more talk than action and more broad strokes than definitive plans to boost spending. Therefore any runs we are seeing may be extremely short lived like the echos of rhetoric.

The Week Ahead: Slow early, accelerating into the week's close.

  • Monday 12/7: Consumer credit (forecast of -$9.8 B)
  • Tuesday 12/8: None
  • Wednesday 12/9:  EIA Oil Inventory Report, Wholesale inventories
  • Thursday 12/10: EIA Natural Storage Report, jobless claims (forecast 448K vs 457K last week), trade balance (forecast -$37 B)
  • Friday 12/11: Retail sales (forecast 0.5%),  ex autos (forecast 0.4%), Inventories (forecast 1.0%),  Consumer sentiment (forecast 69 vs 67.4 last month)

In Today's Post:

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

Holdings Watch:


Commodity  Watch:

Crude oil eased 0.8% last week to close at $75.47. The 12 month crude strip is now trading up 0.8% at $81.22. This morning crude is trading down about a buck, notably below $75, but I really don't get concerned unless it threatens $70. 

  • Dollar Watch: Continuation of a bounce seen Friday on the Payrolls numbers is sending gold down nearly $30, reddening oil futures into the out months and weakening the equity futures.
  • OPEC Watch:

    • Nigeria output between 1.80 and 1.85 mm bopd, strong work from the 1.5 mm bopd earlier this year under rebel pressure.  MEND and the government apparently remain in talks.
    • Libya output will not meet 3 mm bopd by 2012 target. Libya said it was more likely to reach 3 mm bopd by 2015 or 2016 from current levels of 2 mm bopd. This is the second OPEC nation in a week to outline delays due to oil prices. Could be that, could be a warning shot prior to Copenhagen.
  • Goldman Oil Price Forecast Watch:
    • $90 average for 2010 (same as its old forecast, constrained by the lack of demand growth I've been harping about in my Thursday posts).
    • $110 in 2011.

Natural gas fell a whopping 12% last week to close at $4.59. The 12 month strip closed down 10% at 5.06. Gas will need to see a series of larger than average withdrawals over December to maintain the $4.50 to $5.25 range. Note that natural gas is the worst performing commodity of the year on the Wrap and among the worst performing commodities of the year. Cold weather and a series of monthly production reports showing further declines in supply could usher in a combination "flight to what hasn't worked/short cover" play. This morning gas is trading up 26 cents on the following:

  • Weather Watch: Heating Degree Days (HDDs) compared to gas storage injections/withdrawals:

    • Week Before Last:129 HDDs which produced an injection of 2 Bcf last week.
    • Last Week: 169 vs a prior forecast of 169 HDDs. This is inline with year ago and normal readings for this time of year.  Last year saw a withdrawal of 66 Bcf. 
    • This Week's Forecast: 204 HDDs.  A year ago, a reading of 199 HDDs produced a withdrawal of 116 Bcf.



Stuff We Care About Today

I'll have the Big Orange Charts for the large caps in tomorrow post (APA,APC, CHK, DVN, EOG, SWN, XTO).

I'll also add play sub tabs to the E&P tab with tables of various metrics for players in the Bakken, Eagle Ford, Haynesville, Marcellus and other plays for quick reference.


Odds & Ends

Analyst Watch:

  • Solar plays (STP), (SPWRA) and (JASO) upped to Overweight at Barclays
  • AGU upped to Buy at UBS
  • HERO picked up with a Market Perform rating and a $5 target at FBR

Very Interesting Reading Watch:

Just When You Thought I Couldn't Find A Smaller Bakken Play Watch:

  • SSN - Samson Oil & Gas - yep, Australian,
  • Williston Basin, Bakken - 2 wells drilled, 3 more on the way
  • Other than that they have a smattering of other Rockies, West Texas, and Gulf Coast minority interest projects in the U.S.
  • Total company production: itty bitty (65 BOEpd in the September quarter). 
  • A whopping $USD 12 mm market cap
  • Balance sheet = ugly, violation of debt convenants, etc,  but apparently improving with higher oil prices from a debt to reserves perspective. 


113 Responses to “Monday Morning And Baby It’s Cold Outside”

  1. 1
    isleworth Says:

    8K Filing this AM – EXXI – As previously disclosed in the 2009 Annual Report on Form 10-K of Energy XXI (Bermuda) Limited (the “Company”) as filed with the Securities and Exchange Commission on September 4, 2009, the Company is participating in the ultra-deep exploration well at South Marsh Island Block 230 on the Gulf of Mexico shelf (“Davy Jones”), which is in 20 feet of water offshore Louisiana.

    Davy Jones, operated by McMoRan Exploration Co. (“McMoRan”), is currently at a total depth of 28,112 feet with a targeted total depth of 29,000 feet. The well’s last casing point is at 23,500 feet, leaving 4,612 feet of open-hole, of which the last 2,357 feet has yet to be logged. Consistent with McMoRan’s previous ultra-deep exploration efforts, interim logging operations have commenced to evaluate the open-hole section not yet logged prior to recommencing drilling operations.

    Based on interpretation of paleo data and seismic correlation, Davy Jones is believed to have entered the targeted Eocene/Paleocene interval. The current seismic and paleo data interpretation from Davy Jones indicates additional portions of the Eocene/Paleocene section remain to be drilled to pursue reservoir-quality sands that have been penetrated by others in multiple wells in the equivalent deepwater trend of the Gulf of Mexico. Pipe-conveyed wireline logging of the current open-hole section is expected to be completed within five days. This interim log should provide results of the previously drilled section and further correlation of the geological interval. Following these logging efforts, an estimated 20 to 40 days of operations will be required to attain the targeted total depth of 29,000 feet, depending on wellbore conditions.

    The Company is funding 14.1 percent of the exploratory costs to earn a 15.8 percent working interest and 12.6 percent net revenue interest, with an estimated net cost to the Company of $10 million to the planned total depth.

  2. 2
    Jerome Blank Says:

    SSN was a $19 stock in 2008, it’s a 10 cent stock now…but improving? Zman, can it stay out of bankruptcy?

    Just for info…gold futures go on a sell signal on a print of $1130

  3. 3
    Jerome Blank Says:

    Re: #2, intended to say 19 cents

  4. 4
    zman Says:

    Jerome – no idea, they say things are better now, haven’t looked at it, which is why I didn’t put it in the stuff section. There are many little guys I’d never touch who grab a few Hayneville or Bakken acres so their name can be associated with the plays. I would have to tear them apart to tell and I’ve got a full plate of better looking single digit midgets at present.

    NG holding 26 cents at the open. Oil watching the broad markets as the dollar rally, is, um, not really much of a rally today.

    Thanks Isle, Reef sent to me early, have not had a chance to peruse yet.

  5. 5
    BirdsofpreyRcool Says:

    Good Morning!

    TechTrader not very chatty… but out with a 60/40 SHORT call for today’s best day trade.

    HeadTrader is hung over (The Holiday Party Circuit is grueling). Saying even less than TT.

  6. 6
    zman Says:

    I updated the ZLT over the weekend, please note that while I spend more time talking about the options stuff as that’s more time sensitive, the bulk of my holdings is in the ZLT, stocks which I generally buy and hold, often times for years, and rarely less several months.

    ROSE at 18.10, another new high, data soonish.

  7. 7
    BirdsofpreyRcool Says:

    I hope that someday, we can look back at this and laugh. But for now, it’s not very funny.


  8. 8
    BirdsofpreyRcool Says:

    Getting the first hint of little snow flurries here.

    Finally! It’s kinda funny when Houston gets SNOW before Detroit.

  9. 9
    zman Says:

    Thanks BOP – I was just wondering what the carbon footprint of sending and lodging 15,000 delegates for two weeks would be.

  10. 10
    zman Says:

    re 8 – Global Polar Inversion

    Contrary to what you might think watch:
    CHK awarded Producer of the Year and Industry Leadership Awards and was finalist for, wait for it … CEO of the Year by Platts.

  11. 11
    Jerome Blank Says:

    WLL held a second test of daily support at $65 again this morning, dialing down to the 30 min chart, the bounce happended right at the 50 period SMA, looking good…

  12. 12
    zman Says:

    Jerome – thanks, any more thoughts on SWN, I went long more heavily late last week thinking we’d get a bounce in natural gas this week, so far NG up 6% this morning, SWN more in line with the rest of the group.

  13. 13
    zman Says:

    7 – Just finished reading that. Outrageous, shameful. Like having a council on starving oil men by meeting at the Petroleum Club’s buffet. If we are going for 21st century solutions why aren’t they teleconferencing to get this done. Must be the free prostitutes. Uggghhhh.

  14. 14
    VTZ Says:

    For what it’s worth it’s absolutely freezing here now… We had about 6 inches of snow in a day this weekend and it’s -30C this morning.

  15. 15
    Jerome Blank Says:

    Re: #12, SWN opened strong this morning, but is being weighed down by the P&F sell signal its currently on, but on the bright side, SWN is holding its long term P&F bullish trendline…SWN goes back into x’s on a print of $45, but even in o’s, it holds long term support until a print thru $40…shorter term, I’d like to see SWN spend most of its day above the 200 period SMA on the 30 minute chart, a three box reversal here would really improve the technical picture for SWN…

  16. 16
    zman Says:

    Thanks V. NG reacting well to the cold up 29 cents, no doubt would be up more were it not for the dollar based sell down in commodities. I figure gold finds support and bounces soon, leading other commodities higher. You can’t be talking about spending $10 T on the climate AND support the dollar, just doesn’t work.

  17. 17
    zman Says:

    Jerome – so above about the 43.10 level?

  18. 18
    zman Says:

    Analyst Watch:

    ROSE – upped from Under to Outperform at Raymond James. I’d like to see the reasoning that made them jump two steps if anyone has that report.

    BEXP moving to a new high, NOG inching up as well.

  19. 19
    Jerome Blank Says:

    RE: #17, given that SWN is on a P&F sell signal, we really can’t give it the technical benefit of the doubt…it would be worrisome to me if we started to see closing 30 minute candles below $43..

  20. 20
    zman Says:

    Thanks much J.

    Considering washing out of my SD common position in the next few days at a decent loss. Just not going to have the upside that I saw from Crusader in its new form with a substantially different balance sheet.

  21. 21
    zman Says:

    Dollar retreating on the day now. Oil down 80 cents, NG up 32 cents (7%)

  22. 22
    Jerome Blank Says:

    Re: #20, SD is just not working out as well as anticiapted…this morning SD is bouncing hard off the 61.8% fib retracment level which is watched by a lot of folks…looking at the traditional daily, the bounce might be enough to bring it back to resistance at $9.50, which is at the downward trending 20 day daily SMA for a better exit point…SD reverses back into X’s from here on a print of $10.50, but this feels like the ohter side of the world right now, SD has strong support at $8.00 to $8.50…

  23. 23
    zman Says:

    Housekeeping Watch: Site improvement thoughts. I outlined what I’m working to complete for tomorrow including a reorganization of the E&P tabs to get more play specific. If you have suggestions please send them along in comments. Thanks.

  24. 24
    zman Says:

    Got the ROSE piece, thanks much, reviewing.

  25. 25
    zman Says:

    re 22, thanks. Generally, whether I’m in options or the common, I’m in for a reason. If the reason changes or goes away, I have to ask why I’m still in, is the story the “same enough” or is it improved? If not then I leave, in pretty short order. I don’t exit on the day of the change as it’s generally too late and you are in with the panic sell crowd. It often bounces after that and gas may be a good excuse for that. Don’t get me wrong, good management (at least I think so), great assets, but tough times for them and rich enough valuation and debt levels that I think its probably somewhat capped for awhile and I’d rather go speculate elsewhere.

  26. 26
    bloodystupidjohnson Says:

    RE: 25 I think the biggest mistake people make is not knowing why they own a stock. If you own a stock because of A and it changes to B, then I would sell the stock.

  27. 27
    zman Says:

    BSJ – Agreed. I have an overarching macro thesis and then the individual stock stories as reasoning.

  28. 28
    zman Says:

    MG holding up 32 cents, Crude down a buck. Stocks almost entirely on the green side, up about double the market for the XNG, triple the market for the OIH. I think my “pretty dull session” from the top of the post still applies.

  29. 29
    tomdavis12 Says:

    Z: If general consensus internationally is that there is more NG & LNG available than was perceived 2 years ago. That is leading to more Cap ex going to find oil. Other than your Bakken Boys is there any international sectors or subsectors that should benefit from this trend. Does it make any sense to look at nonUS$ asset denominated companies?

  30. 30
    zman Says:

    Tom – a lot of focus is going to center on southern W. Africa down to the Cape and then on the other side near the Horn (watch out for pirates in that area). Names to look at will be APC, Tullow, and the Majors but its hard to get leverage on those big names.

    Second area is off Brazil. PBR dominates but there are other names there as well, several small players and APC.

    Third area will be deepwater South China sea. CNOOC, maybe PTR, NFX come to mind as beneficiaries of increased activity.

    Good news in all cases for the deepwater drillers.

  31. 31
    tomdavis12 Says:

    Z: Thanks

  32. 32
    zman Says:

    Imports watch: Last week was down 1.1 Bcfgpd from year ago levels. Canada still weak, LNG at 1.5 Bcfpd, is about double the prior week but still hugging the lower end of the range for this time of year.

  33. 33
    zman Says:

    Interesting options story:


  34. 34
    BirdsofpreyRcool Says:

    man… it’s one boring day! pinged HeadTrader… he complained that i “woke him up.”

  35. 35
    zman Says:

    BOP – other than a few fast trading days on eco data, it may look like this until the new year.

  36. 36
    zman Says:

    NG up 37 cents at $4.96. We may break through $5 tomorrow but I would expect upside to be contained to around $5.25 for now. So far the stocks not really taking much notice of the 8% rally.

  37. 37
    BirdsofpreyRcool Says:

    z — thinking you are right. Other than event-driven trading, looking like a sleeper into the end of the year.

    Think KOG might release an operational update in about a week. They are (finally) completing well #9.

  38. 38
    zman Says:

    Adding to 35 – and in some individual names we should get some more catalytic news as per the Catalyst Watch.

  39. 39
    Jerome Blank Says:

    Boring unless you trade Gold futures intraday, gold, finally breaking above 1148 which it had been pressing against for the last 1/2 hour…

  40. 40
    BirdsofpreyRcool Says:

    And we have EXXI pricing their 90mm+ share secondary tomorrow after market. Stock should breath a sigh of relief, once that is completed.

  41. 41
    zman Says:

    Jerome – I’d bet on the day it next trades green we will see big green there and in other commodities. Dollar still backing off today from Friday’s silly bounce.

  42. 42
    zman Says:

    BOP – I’m sticking with my $2.20 for that, maybe they take it to $2.10, but I agree once done it should feel some weight come off.

  43. 43
    zman Says:

    ROSE and BEXP continue to act like champs. BEXP will have another 2 to 3 wells prior to YE to pr, hopefully they wait until next week and put 2 in the same release as the single well stuff is amateurish and haunts you later when you have the inevitable lackluster well.

  44. 44
    zman Says:

    I’ve got a call in with Nicky for levels.

  45. 45
    zman Says:

    Pack or anyone – what is the purpose of using $$ in a tweet?

  46. 46
    1520sbroad Says:

    BOP or Z – can you give your latest KOG thinking? I have watched them for a while, made a couple of small in and out trades thru the fall. I am looking at them for a potential longer term buy and hold. Any thoughts on the next well results?

  47. 47
    1520sbroad Says:

    I just read #37 re: KOG well result potential. Pays to read all the posts before asking a question…

  48. 48
    BirdsofpreyRcool Says:

    z #42 — thanks for playing my little guessing game. Didn’t see your $2.20 bet on EXXI pricing. So far, you are closer than my $2.25. Did you have a level in mind for where the stock goes, post-pricing?

    Just keeping myself amused, on a slooooooooow day.

  49. 49
    zman Says:

    NG breaking $5, up 42 cents or 9%. Stocks starting to notice a bit.

  50. 50
    zman Says:

    Re 48 – best guess is that it ranges from deal price to $2.50 near term, maybe the recent high. I’d like them to give a post deal “look of the company” presentation but I don’t know that other than holding a conference call for that, which I doubt will happen, they are speaking anywhere soon.

    There is another conference this week, the Southcoast Energy Conf but I don’t know if they are attending.

  51. 51
    Jerome Blank Says:

    A nice trending day in front month Nat Gas futures, 9 10 consecutive 30 minute higher close candles, working on 10, so far today on an opening gap…someone pinch me…

  52. 52
    BirdsofpreyRcool Says:

    1520s — I think KOG is just languishing on the lack of news. I don’t think #9 is a particularly gangbuster well… KOG referred to it as “average” expected results, during their 2ndary offering discussions. “Average” for KOG is not all that exciting, as mngmt seems to go way out of their way to NOT hype well results. In their own words, they use 24 hr IP results, after all the frac fluid is recovered, instead of extrapolating 15 minutes of data.

    KOG thinks they are being conservative and low-key and professional. I agree. But, still like to see maybe just a LITTLE enthusiasm creep into their announcements. Oh well, in the end, it’s all about the actual cash flow. But that can make for a long wait, for a company in KOG’s position of ramping up production from essentially zero over the last year.

    On the other hand, KOG was trading at 43 cents a year ago… so, can’t exactly complain about low returns on the stock over the last year.

  53. 53
    BirdsofpreyRcool Says:

    z — #50. I like that… underpromise and overdeliver. I think it trades to $2.75… but, continuously talkin’ my book here, as everyone knows.

  54. 54
    zman Says:

    Jerome – where do have resistance on BEPX now that it took out $11.50 rather convincingly?

  55. 55
    zman Says:

    Interns at the home office last Friday:

  56. 56
    BirdsofpreyRcool Says:

    Midday VERVIEW

    Stocks not doing much of anything as SP500 trades flat-to-up small on the day. Seeing a bit of a reversal of the big trades from Fri, as the Dollar trades flattish-to-down and 2yr TSYs catch a bit of a bid (that said, gold continues to come for sale). We are having somewhat of a “rolling rally”, whereby the leadership baton gets passed to some new groups, although it is the defensive sectors that are now catching a bid (like utilities and telecom services) while offensive spaces (like tech and trans) lose altitude. Leadership is thining a bit and certain big momentum stocks (namely AAPL) are losing steam. That said, small caps are outperforming again (albeit very small today) and the tape remains resilient on the whole. Color from the desk remains consistent – buyer are around, but are very careful in picking their spots and aren’t chasing prices. Technical levels are being watched (we still can’t trade through 1115 convincingly) more than fundamental headlines.
    Equity sectors – financials come for sale, w/sp500 fin index falling 0.5% on the day. Banks are doing most of the damage (bank index off near 1%) as investors fear more supply coming to market. Insurance though rebounds from selling pressure last week (due to MET’s ’10 outlook being better-than-feared). Tech is down small on the day – the semis (SOX) continue to have a bid to it although other groups (like software and hardware) getting hit today (AAPL in particular continues to break-down). Seeing telecom and media stocks act great today as the UBS TMT conf kicks off (expectation is for sanguine tone at this event). Telecoms also benefiting from pos. mention in Barron’s (cover story says a place to go to find yield in this market and also was a separate pos article on S). utilities bouncing ~0.9% on the day and extend their outperformance (this group traded well last week too) – dividends helping (also diminished fears around Copenhagen headlines). HMOs rebound 2% after Goldman upgraded the space this morning (also Politico said chances of a true public option are diminishing). REITs and homebuilders are laggards.
    Commodities – Commodities are weaker across the board today. Oil is off nearly a dollar, nearing $74.50. Gold continues its slide, off $25 to below $1,145.
    FX – USD (DXY) is off slightly today and off its highs. The dollar is 0.30% stronger against the Euro and Pound, but almost 1.25% off against the Yen. The Euro is off nearly 1.50% against the Yen. Euro dips a bit after S&P put Greece watch.
    Corp Credit – IG outperformed the tape today as spreads narrowed 1.5 bps, while HY slightly underperfomed as it lost 1/8 of a point.
    Treasuries – The 2-10 year curve was mostly unchanged today as both 2s and 10s rallied with the tape (both are rebounding from their steep sell-offs on Fri). Yields on 2s are now back under 80 bps and yields on 10s are 3.44 percent.

  57. 57
    1520sbroad Says:

    #52 + 53 – you will get no complaints from me. Just curious as they have more or less accomplished what it looks like they wanted to this year and the stock has stalled somewhat. I guess a secondary can do that. I also believe that good management can take the new capital from a secondary and “invest” it profitably. In my opinion, SWN is one of the better examples of that. HK – the jury is still out.

  58. 58
    zman Says:

    Surprised at the lack of interest BTU has taken thus far in the natural gas move. Generally you see them trade in tandem on the big days. Probably see a snap higher there if the gas move hangs in through mid week.

  59. 59
    1520sbroad Says:

    #55 – nice! looks like he has a couple of gears there.

  60. 60
    BirdsofpreyRcool Says:

    1520s — so true. On all counts.

  61. 61
    BirdsofpreyRcool Says:

    That Curan can really MOTOR. Christmas Day is going to be a lot of fun!!

  62. 62
    zman Says:

    re 61 – yeah, first gift is a crash helmet

    BEXP gunning for $12, WLL starting to rally again.

    Oil off 60 cents, half away from the LOD

  63. 63
    Jerome Blank Says:

    Re: #54 BEXP…The only resistance that jumps out at me is the top trendline of the daily ascending wedge which the mkt seems to have been respecting since September…price patterns are very subjective, more an art form, but the best subjective estimate would be a zone of resistance from $12.00 to $12.50

  64. 64
    zman Says:

    Thanks much JB.

    SWN making the move on 44 soon.

  65. 65
    zman Says:

    I am noting very light volume in the BEXP move.

  66. 66
    choices Says:

    Not sure what Big Ben said this morning but the DX is now off $0.43 and gold futures bounced strongly from low of approx 1140 to 1160+

  67. 67
    choices Says:

    ATW getting a nice move this AM.

  68. 68
    zman Says:

    Choices – opening comments were basically that we’re not done fixing the problem, said inflation will be kept in hand by the Fed, that ‘s it’s not too near term a problem:


  69. 69
    Jerome Blank Says:

    RE: #65, BEXP… there may be just a little mistrust in the current breakout…this is a beautiffuly formed ascending triangle,problem is in most technical circles this is actually a bearish formation….so I’m wondering if some are on the sidelines looking to see if there is a rejection at the resistance zone, if the breakout is for real, the top side trendline, $12.00-$12.50 zone should hold as support on any retest…

  70. 70
    Jerome Blank Says:

    Re: #69 sorry meant to say “ascending wedge”…there is a big difference….

  71. 71
    zman Says:

    Choices – saw that, was reading some stuff Tom sent on NE and looked over at that part of my screen which I’ve neglected for awhile now. Still a bargain in my book, down a couple from the 3Q level, and still best EPS growth in group next 2 years.

  72. 72
    zman Says:

    Jerome – thanks, I own the common and the Jan $10 and $12.50 calls, am considering lightening up a little, maybe in the calls.

  73. 73
    VTZ Says:

    Bernanke – “I promise that if you keep looking at CPI instead of the value of the dollar which we are destroying you won’t see any inflation”

  74. 74
    VTZ Says:

    Bernanke just cut off the chances of the massive gold short position’s chance to cover.

  75. 75
    VTZ Says:

    “I promise just like all my other promises which were proven to be completely false last week”

  76. 76
    zman Says:

    V – That goes right up there with “a strong dollar is in our interests” and “we believe the Chinese will do what we want and let the Yuan appreciate”

  77. 77
    VTZ Says:

    Not to mention “We believe a strong yuan is in our interests”

  78. 78
    VTZ Says:

    Oh that’s funny, I just left and didn’t submit my message and you had already said the same thing.

  79. 79
    choices Says:

    #68,71-thanks for cmts, Z.

  80. 80
    zman Says:

    BOP – You know you said a couple of weeks back it was the slowest day of the year? Well this seems to be trying to beat it. Whole lotta nuthin goin on with the S&P. Crude back to the low of the day without a rally on the dollar is odd, testing $74 on no real news. OPEC will be smart to leave things alone at the 12/22 meeting, which conveniently comes after the end of the Copenhagen meeting.

  81. 81
    zman Says:

    Oil cracked $74, down $1.65. Repeating from the post, not overly concerned unless it dips below $70. We should see good demand in this week’s report for heating oil as preparation for the real cold of winter boosts demand.

  82. 82
    zman Says:

    ROSE – flipping through the Raymond James upgrade. Basically went from sell to buy. Suddenly they like it and are giving the company a $22 NAV ($9 for proved, $5 for Bakken and $6 for EFS upside).

    Not exactly conservative on RJ’s part since we haven’t got results from the first well yet, the geology is very different where they are and the lease acreage they talk about is actually optioned acres meaning they have to drill commitment wells to keep it all. RJ is giving them credit for 747 locations and 265,000 EUR. Good for talking purposes but it sounds like these guys were just late to the upgrade party. The EUR is pulled out of you know where. If it was core Bakken I’d be fine with double that, Bakken light maybe 300to 500, but 265 over here, well now that’s just the magic of the guesstimate.

    Other than that there is nothing new in terms of actually information in the piece. Happy to get the assist from these guys but they could have written this same piece 2 months ago.

  83. 83
    Wyoming Says:


  84. 84
    zman Says:

    Market testing 1,000, group rolling to flattish with the move. Grabbing lunch.

  85. 85
    baylor3217 Says:

    Why’s swn not moving much on the run up in ng

  86. 86
    Wyoming Says:

    Looks like it is following the broad market


    SWN in light blue vs. SPY

  87. 87
    Wyoming Says:


    Phase 1 – collect underpants

    Phase 3 – profit

  88. 88
    zman Says:

    Baylor – what Wyo said in 86. It started to march earlier but go pulled back by the broad market. XNG, the gas stock index, is only up .25 % today, many names just barely up. And on any given day, the stocks will vary from the commodity, if gas holds up into mid week, the believability of the rally in the commodity will likely be matched by a rally in the stocks.

  89. 89
    zman Says:

    Kind of a nothing day.

    Good to see the breakout on BEXP, with volume now getting it up to a little better than average.

    Ditto goes for ROSE

    Everything else looks to be trading range

    Will run through the Catalyst List names tomorrow.

  90. 90
    zman Says:


  91. 91
    rseidman Says:

    #55 was adorable.

  92. 92
    PackMan Says:

    Z – 45 … using $$ in a tweet gets posted to another network called StockTwits, and only works if StockTwits is following you on Twitter.

    In other words, a whole bunch of traders will see it on a certain stream that they are following.

  93. 93
    zman Says:

    Thanks RS, working on 10 key skills now.

    Thanks Pack, I’m a twitter neophyte. I wonder if there’s any advantage to getting on that list. Hmmm.

  94. 94
    Jay Says:

    Storage vs line sales question:

    Admittedly I know nothing about how gas storage is arranged hence this question:

    Since we look at storage numbers so closely as a harbinger of prices, do operators have the ability, week by week or on an ongoing basis to decide whether to send their gas to storage or to turn it into sales?

    In other words, in a period of higher HDD’s could withdrawal numbers be lower than expected because operators turned up well/field outputs?



  95. 95
    PackMan Says:

    Wyoming – 83 – They even give limousine liberals a bad name !

  96. 96
    zman Says:

    Jay – lots of strange things can and do happen. Operators can decide prices are too low and either pinch back or shut in wells. If they are producing into a gathering line, it then goes to a trunk line and from their it is the purchaser’s (shipper’s) decision to either put it in storage or send it to an end user depending on their need and what they think prices can do. Shippers are usually putting some gas in storage in one location and sending gas out of storage in another location. You can also have higher volumes in the big lines at one time (high line) than another resulting in less gas being seen as being in storage (artificially created demand) as the gas is “stored” in the pipeline system. Good book on this is a Pennwell publishing book by the name of Trading Natural Gas: A nontechnical guide which sits to my right. If you have high HDDs but low prices and then get a low withdrawal from storage, it could be that shippers put more gas into storage or fulfilled demand from high line pack to wait out higher gas prices, basically an arb.

  97. 97
    BirdsofpreyRcool Says:

    z — #80… is was sooooooooooo sloooooooooooooooooow that I ran out to do some stuff. Missed the mrkt sell off. Any reason?

    Other than the unilateral move by the EPA…

  98. 98
    zman Says:

    AXAS on the tape with an ops update. Pretty so-so. A good wyoming oil well (for WY), mechanical difficulties on a Three Forks test, a dry hole in the Red River (MT), and bunch of hints at some news around the corner. Waiting, watching, not the least bit tempted to buy it at the moment.

  99. 99
    zman Says:

    BOP – Marketwatch tried to blame the sell off in the dollar on Ben (which I buy) and then the sell off of the market on Ben as well (I dunno, felt more like the market ran out of buyers, not a big sell down either way so you didn’t miss much).

  100. 100
    zman Says:

    FDX doing well after hours on a boosted outlook … all those AMZN orders.

  101. 101
    BirdsofpreyRcool Says:

    thanks. yawn.

  102. 102
    BirdsofpreyRcool Says:

    (didn’t mean, “yawn” at the FDX news… thx)

  103. 103
    zman Says:

    Gotta go check out the tree, back after while.

  104. 104
    PackMan Says:

    EPA & Greenhouse Gas Regulation:



    This afternoon, the U.S. EPA is scheduled to announce that it is making a formal endangerment finding for greenhouse gases under the Clean Air Act. This is the factual finding that triggers GHG regulation under various portions of the Act. No doubt, one reason for the announcement today is the administration’s desire to be seen as taking action on climate change during the Copenhagen summit.

    Given the timing of the announcement, it’s pretty clear the EPA was not dissuaded in the least by the ClimateGate revelations. They had their minds made up. Does this matter legally? Probably not, but that depends on how the EPA defends its decision. Judicial review of the EPA’s decision will be quite deferential, as required by the Clean Air Act, so the EPA does not have to “prove” that its assessment is correct. Rather, all it needs to do is show that its decision was reasonable, given the scientific evidence available. So, as a practical matter, if EPA attorneys dotted their i’s and crossed their t’s (hardly a foregone conclusion given the Agency’s track record), the decision will withstand any legal assault, and the imposition of costly GHG regs will proceed apace. As a consequence, the only way to prevent regulation of GHGs under the Clean Air Act is to convince the EPA to change course (not gonna happen) or pass legislation denying the EPA such regulatory authority.

  105. 105
    PackMan Says:

    100 – must be due to the Fedex letter I sent today.

  106. 106
    BossmanG Says:

    Z, do you have any books similar to the natgas book but about oil trading?

  107. 107
    BossmanG Says:

    (have or not have but recommend lol)

  108. 108
    zman Says:

    Boss – I’m sure Penwell makes one but I don’t have it. Some of the basics are I think included in their Nontechnical Guide to Petroleum Geology, Exploration, Drilling and Production which is itself an excellent book written by Hyne who I took a short Rocks for Analysts class from a long time ago.

  109. 109
    BossmanG Says:

    lol I just looked at their “Oil Trading Manual” $1,570.

    thanks for recommendations!

  110. 110
    zman Says:

    Correction, that book in 108 does not have a section on oil trading.

    This one would although I don’t have a copy of it:


  111. 111
    BirdsofpreyRcool Says:

    Global Warming Data Manipulation — this is very good. And explains why people were under the impression that this is the first “warm” period in man’s history on earth. I always thought it was weird, that no one brought up the fact that the Vikings were growing crops in Greenland, at one point…. which is covered by glaciers now. Also, why would they have called 1300 to 1850 “The Little Ice Age” unless there was a warm period preceeding it?

    NOW i understand what they were hiding from the public. HISTORY.


  112. 112
    BirdsofpreyRcool Says:

    Bedtime Market Strategist

    Collective Indecision
    Today turned out to be a post-jobs report digestion day. The trading action lacked confidence and could not make headway in either direction. Market participants are aware that the November Employment report was so far out of consensus that expectations need to be shifted. Collectively, however, the market appears unsure of which expectations need to shift and at what rate. This collective indecision led to a mild continuation of Friday’s action. Stocks tried to push forward, but could not gain momentum and for the first time in 3 sessions, they did not post a new high for the year. The Russell 2000 again posted a modest outperformance. The Dollar continued to strengthen overnight, but weakened as the U.S. day commenced. Gold and Crude added to their losses despite the flattish Dollar. As the Dollar sacrificed its early strength, Gold managed to recover more than half its losses, while Crude settled on its lows.

    Traders and portfolio managers are taking inventory and asking themselves whether the Dollar should dictate the action. If so, will it still be an inverse relationship or will it dissipate, as we have speculated in this note. How soon will the Fed need to implement its exit strategy? Is a sustained Dollar rally immanent, and will that hurt earnings? As is traditional on Wall Street, when in doubt, investors take a step back and wait for the trend to emerge. When conviction levels are low, investors prefer to react to a real situation versus taking the risk of positioning the wrong way. In the interim, we all find ourselves staring at a timid tape that remains tethered to the flat line until the new thinking emerges in the price action.

    Sector Snapshot
    Considering the humdrum pace of today’s activity, this an opportune time to provide a brief snapshot of how the 10 major S&P Sectors are acting technically. The S&P 500 itself has been in a tight consolidation for the past month. Any attempt to break above 1110 or below 1090 has failed. Playing the momentum of a breakout or breakdown has only led to getting whipsawed. Now that the patterns are so well defined, playing the range will likely work a few more times and then the market will catch everyone off guard and make a move.

    Consumer Discretionary is hovering at the top end of a 1 month range, 233 is a key level to clear. Consumer Staples are still trending higher, but they need to close above 282 to garner additional sponsorship. Energy is making lower highs and lower lows, the 425 level probably does not hold. Financials still cannot hold any rally, the 192-190 support is key. The Health Care uptrend remains intact, there is support at 355. December has been a good month for Industrials relative to the market. If any type of bid enters the market, they should breakout. Technology continues to hold up well and a close above 360 should lead to a breakout. Materials have been trading range bound, a break of the 195 support will be a problem. Telecom and Utilities are breaking out with momentum behind them.

  113. 113
    zman Says:

    WLL on the tape with a 1,970 BOEpd well at Lewis & Clark. Tomorrow should be a good day there.

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