Tuesday Morning

138 thoughts on “Tuesday Morning”

1. WLT on the tape with headlines saying

   steelmaking coal demand has recovered…

   sees production of 8 mm tons in 2010 (this is a reiteration of what they said on the 3Q call)

   sees 2010 revenue rise by over over $240 mm on higher production (estimates show 2010 rising by $370mm so not sure that’s going to wow people)

   adds 35 mm tons reserve mine to portfolio

2. Z – who is the citi oil and gas analyst now that is covering EOG and SWN? I didn’t know they had hired anyone to fill Gil Yang’s shoes

3. Not a lot of conviction out of TechTrader this morning… he’s calling for a 55/45 SHORT trade to work best. However, it’s unclear if he is sticking to this, with the gap down at open. Either way, 55/45 is in the wishy-washy camp.

   HeadTrader is not making any calls for today. Volume too light.

4. 1520 – Dunno, all I see is the headline, will see if I can find out.

5. 1520s — Robert Morris is listed as the analyst at Citi on EOG et al.

6. Z: Do you know the new guy @ Citi Robert Morris?

7. Robert Morris went to the Colorado Schoold of Mines, graduating in 1884… so, he should know his stuff (assuming that Harvard MBA didn’t screw him up) 😉

8. Bob Morris is not a slacker, smart guy

   WLL – lack of reaction to the news at L&C so far. Better day and it would be up $2 easy.

9. oops… he’s not THAT old… 1984, that is.

10. Just no appetite for “commodity” stocks this morning, news, upgrades don’t matter at present. Not a huge sell down, but market going back through 1,100 on the S&P and a dollar rally and no economic data has people staying away.

11. EXXI – didn’t see pricing, do see they will present tomorrow at the Southcoast conference.

12. ZTRADE

    WLL – Added a $60 December call (WLLLL) for $4.80 with the stock off 75 cents with a weak group. See site for details of last nights pr there.

13. EXXI — they price after close tonight.

14. Thanks BOP, going to need to get a little help from the market for them to get $2.20.

    I don’t see any economic data between now and the close of consequence, you?

15. #1 Greenhouse Gas = WATER VAPOR

    Funny they don’t mention that, what do they expect us to do, stop water useage? LOL!

16. TEX – yeah, they just banned humidity.

17. TEX — either the EPA will live to regret their outrageous “decision” about regulating carbon yesterday… or we The People will. There is no middle ground.

18. Playing about on the North Dakota map server, like WLL said, Golden County is pretty sparsely drilled, especially if you are looking at horizontals. I see a bunch of smaller names like Moran and Samedan there, a few XTO and Hunt wells, and EAC and then WLL.

19. I’m really surprised to see crude dipping this much. Anybody see it as a leading indicator for the economy takign a step back? Everybody still seems to be saying that 75-80$ of S&P earnings are achievable next year and if that’s the case I find it hard to believe that crude pulls back with OPEC staying the course?

20. Just for orientation purposes, a North Dakota map:

    http://www.censusfinder.com/mapnd.htm

    Golden County is on the border with Montana, far from the usual hubbub of Bakken activity. Their well is just east of the Upper Bakken pinchout line, looks like they’ve canceled their permits west of it and permitted a couple more wells just east of this well.

    You can play around on the North Dakota mapserver with this link:

    https://www.dmr.nd.gov/OaGIMS/viewer.htm

21. VTZ – I think it’s an over-reaction. Plus, get the “wrong kind” of statement out of Copenhagen, which ends just before the OPEC meeting on the 22nd and the Cartel could take a hard line on curbing quota cheating. OPEC has already made noises about the developed world paying them not to produce oil or some such.

    NG up another 12 cents at $5.09, stocks watching the market, not gas at the moment. The longer the divergence keeps up, the more of a snap back on the stocks (higher) I would expect.

22. Re 15: Tex – classic!!!!

23. CLNE – RJ started them at Outperform with a $15 target yesterday. Talk about a good play for Copehagen.

24. Rocky Mountain Oil Journal Current Issue – Vol. 89 Num. 49 – December 4, 2009Whiting Plans More Three Forks Action Along Billings Nose
    Golden Valley County, North Dakota
    As reported in last week’s issue of the RMOJ, Whiting O&G (Whiting) has commenced testing a horizontal Three Forks well within Bicentennial Field, 22 miles northwest of Medora, N.D., at the Federal #32-4HBKCE, sw-ne 4-143n-103w, Golden Valley County. According to field sources, this indicated new pay discovery has reportedly tested up to 70 bo per hour after frac. The company has released no information on this hole, which if completed as a commercial Three Forks well, would represent the first production of its type in Golden Valley County. This well could also have a significant impact on those operators who have acreage and or production along the Billings Nose.

    Whiting is now planning to drill several more Three Forks tests roughly 2 miles east–southeast of their indicated discovery, which will include the Ellison Creek #11-1TFH, nw-nw 1-143n-103w; and 2 miles to the south, the Dry Creek #11-13TFH, nw-nw 13-143n-103w.

    Both of these new ventures, which are located in Morgan Draw Field, will be drilled on 1,280-acre spacing with proposed true measured depths of 20,539’ and 20,222’, respectively.

    The Ellison Creek #11-1TFH is expected to have a bottom-hole location in the sw-se 12-143n-103w. Location of this test is nearly a mile southwest of a horizontal Bakken producer operated by Chaparral Energy at the AHEL #36-44 H-1, se-se 36-144n-103w. Completed in 1989, this Morgan Draw field well has cumulated more than 131 k bo, 59 mmcfg, and 1,400 bw from the Bakken interval at 10,788’–13,351’. This hole is currently only averaging 163 bo per month.

    A similar distance southwest of the #11-1TFH, Encore Operating has a horizontal Bakken producer at the Morgan Draw Federal C 5, nw-nw 11-143n-103w. This well has cumulated in excess of 282 k bo, 118 mmcfg, and 40 k bw since 1992, with oil coming from the open-hole interval at 9,811’–14,896’.

    Whiting’s other Three Forks prospect, the #11-13TFH, is scheduled to have its bottom hole terminate in the sw-se 24-143n-103w. The nearest drilling to this location is less than a half-mile north at a horizontal Birdbear producer operated by Whiting. The Federal #14-7H, sw-sw 7-143n-102w, was given an IPP of 93 bopd, 75 mcfgpd, and 189 bwpd from the open-hole Birdbear interval at 10,045’–17,395’. After first coming on-line in March of 2007, this venture has cumulated more than 65 k bo, 82 mmcfg, and 60 k bw. Roughly a half-mile southwest of the #11-13TFH, BTA Oil Producers operates a vertical Red River well at the 20006 JV-P Equity Redtail B 1, nw-se 14-143n-103w. This producer has yielded more than 78 k bo, 10 mmcfg, and 50 k bw since 2002.

    Currently, Morgan Draw Field is producing from the Bakken, Birdbear, Madison, and Red River and has cumulated in excess of 2 mmbo, 2.4 bcfg, and 2.8 mmbw since 1982.

25. Thanks West for the extra deets.

26. KOG’s October average rate of production for wells off confidential status : #1: 75 bopd (49%nri), #2: 132bopd (49%nri), #3: 212bopd (41%nri), #4: 351bopd(30.5%nri), #5: 246bopd (41%nri), #6: 381 bopd(41%nri), …………………………..

27. Z: I notice that ATW has been slowly been going south lately. It is back under 35. Do you have an interest in ATW now or in the future?

28. Morning all.

    Indices – I still have us in a wave iv correction- lots of chop. I do not see us tanking ahead of next year. That said this week looks like it could be weak and trend gently downwards. Support at 1085,1075,1070,1062. Any of those could mark the bottom of the correction but I prefer the middle numbers. Once the low is in I think the strength will resume next week.

29. The rally that follows the correction should coincide with the final leg down in the dollar and wave v up in metals.

30. Z: Comments from the Citi E&P report. In covering the E&P sector for the past 15 years, we consistently observed that the direction of the outlook for commodity prices has dictated the relative performance of the group. … The E&P sector is on course to outperfrom the broader markets in 2009 for the seventh time in the past eight years. Consensus view of crude for next year is $75 vs $81.12 strip. Consensus view NG $6.10 vs $5.07 strip. His view NG $4.75. Divergence with Aubrey seems to be widening. Stay tuned.

31. West – can’t remember how long those have been on line. WLL discloses 30 and 60 day rates in their presentations. Many of them holding up better than I would ahve expected when looking at the play a year ago.

    BSJ – still watching it.

    Nicky – thanks much, as always, market trumping pretty much any stock specific good news unless your ticker is FDX…UPS should benefit from same trend but not getting a green pass today.

32. Z: CHK green. Did you see anything other than the hold from Citi

33. Z – the more bearish alternative is that the markets have already topped and that any retracement we see will be a wave ii but I just don’t like this option at all. No way they let this go yet.

34. Tom – check out his vintage chart on page 12.

    I don’t quibble with the numbers in that chart. Note the 2009 annual production decline rate of 44%. That means the average of all U.S. gas wells drilled in 2009 will decline by 44% in 2010. Note this is higher than 2008 (32%), 2007 (27%), 2006 (24%) and so on. EOG used to put out the same chart and the numbers were indeed lower back when I last saw one. The message is stop drilling and supply falls off a cliff, faster than ever before. Now, cut the rig count in half (as we have done) and what have you got? A trend towards a balanced market, sometime mid next year, depends on the winter and the economy, but the direction is set.

35. re 32 – No sir.

36. ——————————————————————————–

    KOG’s October average rate of production for wells off confidential status : #1: 75 bopd (49%nri), #2: 132bopd (49%nri), #3: 212bopd (41%nri), #4: 351bopd(30.5%nri), #5: 246bopd (41%nri), #6: 381 bopd(41%nri), …………………………………….. KOG #1:Pool: BAKKEN Perfs: 11356-15525 Comp: 4/24/2009 Status: F Date: 4/24/2009
    Cumulative Production Data
    Pool: BAKKEN Cum Oil: 27262 Cum MCF Gas: 17793 Cum Water: 6100 [Interactive Performance Curve] [PDF Curve]
    Production Test Data
    IP Test Date: 4/24/2009 Pool: BAKKEN IP Oil: 604 IP MCF: 107 IP Water: 393, current rate: 75bopd
    #2:Pool: BAKKEN Perfs: 10651-14810 Comp: 5/6/2009 Status: F Date: 8/7/2009
    Cumulative Production Data
    Pool: BAKKEN Cum Oil: 40249 Cum MCF Gas: 24906 Cum Water: 13415 [Interactive Performance Curve] [PDF Curve]
    Production Test Data
    IP Test Date: 5/7/2009 Pool: BAKKEN IP Oil: 1274 IP MCF: 717 IP Water: 2138
    current rate : 132 bopd #3:Pool: BAKKEN Perfs: 11297-15760 Comp: 6/21/2009 Status: F Date: 6/21/2009
    Cumulative Production Data
    Pool: BAKKEN Cum Oil: 33306 Cum MCF Gas: 24712 Cum Water: 9196 [Interactive Performance Curve] [PDF Curve]
    Production Test Data
    IP Test Date: 6/21/2009 Pool: BAKKEN IP Oil: 711 IP MCF: 604 IP Water: 880
    #4 Pool: BAKKEN Perfs: 10927-19240 Comp: 8/9/2009 Status: F Date: 8/14/2009 Spacing: 2SEC
    Cumulative Production Data
    Pool: BAKKEN Cum Oil: 37447 Cum MCF Gas: 23728 Cum Water: 14585 [Interactive Performance Curve] [PDF Curve]
    Production Test Data
    IP Test Date: 8/14/2009 Pool: BAKKEN IP Oil: 1309 IP MCF: 1100 IP Water: 1873
    #5: Pool: BAKKEN Perfs: 11756-15919 Comp: 9/6/2009 Status: F Date: 9/7/2009 Spacing: W2
    Cumulative Production Data
    Pool: BAKKEN Cum Oil: 18270 Cum MCF Gas: 12917 Cum Water: 7311 [Interactive Performance Curve] [PDF Curve]
    Production Test Data
    IP Test Date: 9/7/2009 Pool: BAKKEN IP Oil: 903 IP MCF: 451 IP Water: 833
    #6: Pool: BAKKEN Perfs: 10927-19240 Comp: 8/9/2009 Status: F Date: 8/14/2009 Spacing: 2SEC
    Cumulative Production Data
    Pool: BAKKEN Cum Oil: 37447 Cum MCF Gas: 23728 Cum Water: 14585 [Interactive Performance Curve] [PDF Curve]
    Production Test Data
    IP Test Date: 8/14/2009 Pool: BAKKEN IP Oil: 1309 IP MCF: 1100 IP Water: 1873

37. Thanks West, handy service you have there. IPs to current, declines look pretty standard for the KOG wells in my quick look.

    Nicky – thanks, I don’t think they punt yet either.

38. Oil kind of interesting here. I hear (although now I have turned them off!) CNBC saying oil traders are calling for 70 in the next day or so – based on what????
    Support at 72.40.

39. Z: If NG consensus sell side is $6.10 strip is $5.10 Citi is $4.75 Aubrey & EOG is $7.00. Where is the Z for next year? Do you agree with these numbers? If I guess you are closer to Aubrey, then HK smells like an opportunity if you can be a buy and hold for two years.

40. Anyone see Meredith Whitney on CNBC this morning. At the end they said to her you have ten seconds to find something postive to say about the markets going forward. She took a deep breath and said ‘Blindside was a great movie’! ie nothing positive to say.

41. I saw that. She actually made some good points and I agree with her that the banking system accounting is practically fraudulent. Look at the 6 banks’ assets that failed this past week. Their assets weren’t purchased for close to what they had them marked at on the books and the FDIC was forced to take loss-sharing guarantees.

42. The real dollar battle has started in the 76-76.30 range.

43. Tom – Last time I recall saying where I was on gas for 2010 was a month or so ago. Probably $5.50 to $6.50 for an average Weighted towards the Summer and Winter of 2010 with prices ending the year near their annual high. We will exit Spring with record amounts of gas in storage, that’s a given. We have such a high level of storage now due in part to the fact that we enter the season at a high. But gas prices should pay more attention to the trajectory of gas production (down) and the trajectory of gas demand (up from here is not hard) as we move into Spring, more than to the absolute level of storage. This is why you see past “high” levels of storage not always indicating low gas prices.

    Obviously a lot depends on winter. If gas goes back to $6 in the short term I think gas storage troughs at a higher level than it otherwise would as volumes are diverted to the U.S. So I don’t see prices really running next year either. In 2011, the need for large capital spending in the U.S. slows greatly as we transition from “hold all your leases” to “develop your held acreage”. At that point, the big lease holders will slow down if prices are not up (or services prices are not quite a bit lower).

44. VTZ – what are you thinking on gold? I think this retracement goes back to somewhere between 1080 and 1130 (it could already be done but I dont think so) and then we see another blast to the upside for wave v. If I am wrong about the blast to the upside for wave v we should still see a pretty good blast to the upside for wave ii.

45. NG up 14 cents. Another day like that and we’ll be pushing into 1 month high territory. Woohoo.

46. On gold I’m a strong buyer at 1090 and I will add again at 1120 although I don’t think it necessarily has to go down to 1120. If it holds here for 1 more day and the USD doesn’t break above 76.33 then I’ll probably add the piece that I otherwise would have added at 1120 ish.

    In terms of the need to retest the low I don’t think we need to as we retested immediately after the breakout and as such it’s confirmed.

    I think the upwards trendline from when we were in the mid 900s still stays intact and I’m using that as my support and also the reason why I’m a strong buyer at the 1090 range.

47. Jerome – would you look at CLNE when you get a chance?

48. I meant the need to retest the breakout in my second paragraph.

49. The only reason the dollar is rallying is the Greece/Dubai issue, which is funny because Moody’s also came out and said that the US and UK credit status have deteriorated as well. That’s bullish for the gold case all around as everything suggests money creation and it’s all anti-paper.

50. Thanks VTZ and essentially agree and no it doesn’t have to go down to 1120 although I think it would ‘look’ better with another wave down.

51. The Dubai thing is likely to go on for a while because keep in mind that in order to get a better deal with creditors, Dubai has to threaten to default. That point was made on a couple articles I read about the situation.

52. No thank you. Glad we’re on the same page (as we have been of late).

    I expect the next wave up to be strong and sustained as everybody and their dog missed or was underinvested in the move up and hedge funds and individuals alike all love a good amount of “bubble” momo investing.

53. I think this move down from 12xx to now was just selling from the weak hands who added on the breakout above 1034.

54. them Copenhagers must be running YGE…it’s a monster the past few days

55. Listening to President Obama on jobs on CNBC, talking cap gains.

56. Wonder what “eliminating cap gains on small business stock investment” means exactly.

57. I thought exactly the same thing so here is the SBA’s size definitions for small business:http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=13&PART=121&SECTION=201&TYPE=PDF

58. Totally agree re #52 and people who missed out first time around wanting to get in. Also if the count is right and its a v it could be huge vertical move.

59. Z – I haven’t been able to keep track lately. What’s your current view on SD? I gather they had a secondary after the Crusader thing fell apart.

60. RE: #47 CLNE…interesting technical pattern…if you draw an upward sloping trendline beginning with the low on 11/20/08, with trendline touch points in 3/09, 8/09, and the latest consolidation retest almost thru the entire month of November, you can see CLNE broke below this long term trendline and is now retesting this old long time support as resistance as we speak today with the high near $12.75, the 50 day daily SMA right at that point is also creating a conflunce of resistance here…bringing in a P&F analysis, CLNE is currently on a P&F sell signal, but is still trading above its long term P&F trendline which breaks if the stock trades below $10.00, interestingly, CLNE three box reverses back into x’s from here on a print of $13, which would also be a break back above the traditional trendline…a print of $13 would really improve the technical picture for CLNE, CLNE is back on a P&F buy signal on a print of $13.50…

61. D – essentially I’m in a company that is vastly different than the one I thought it would be and am looking for an exit. Had a bunch more thoughts on it yesterday, but I plan to sell into strength.

62. Z – OK. I was looking for a possible entry point, but needed your take on the nature of the beast.

    Er… how about CRK, down to $36 from $49. Gotta be a bargain !!??

63. VTZ – do you have a view on ABX?

64. I’d rather buy other things but I would bet money on ABX being the consolidator of the sector seeing as there are few undeveloped quality mines left and they have unwound their hedges. Maybe there’s an OTC product I can buy to bet on that (jokes).

    For larger or midcap companies I would rather own Goldcorp or Kinross or Agnico as examples. My preference is still juniors and some growthy midcaps.

65. Pretty honest headline, don’t know what holds the dollar up here:

    http://finance.yahoo.com/news/New-Obama-plans-spend-our-way-apf-1476302163.html?x=0&sec=topStories&pos=main&asset=&ccode=

66. Z – deflationistas claim that much more money is about to vanish in the form of debt debacles than the Fed has been printing. Now they may not be right, but they have an argument to make & I guess the market likes to take a break from listening to just one argument & give the other one some time. Hence the existence of counter-trend rallies.

67. Dman – hear ya, another weird, low volume day.

68. EXXI is at a fairly important technical juncture here, I have EXXI right at the lower channel line again (redrawn to account for recent price action)…the 50 day daily SMA is so far holding it up here…just for fun, this looks to me like an ascending megaphone channel, a neutral pattern with the probable trend in the direction of the break, not common, but it’s a bit worrisome that it keeps chasing the lower channel, I would like to see this level hold, a bounce would be nice…

69. Stocks just drifting, in weak get weaker mode for the most part.

    BOP – you said it best re TARP funds the other day. Once government has the hands on the money, it will find a way to keep it. Why payback funds that had a specific purpose when you can take them and use them for something else? Saves the whole mess of dealing with the system, you know, checks and balances and all that bunk. EPA figured that out yesterday as well.

70. Thank you, Jerome.

    EXXI pricing 90mm 2ndary shares after close today. Disappointing to see the mrkt walk it down, ahead of that. But, on a light volume day, with energy in general down, and trying to place that many shares, I guess it’s no surprise.

    Bottom line = Not going to win my 2ndary pricing bet down here… but, how it trades tomorrow should answer the question of “where do we go from here?”

71. ATPG: CEO Reese on Bloomberg-general overview.

    http://www.bloomberg.com/avp/avp.htm?N=cfo&T=ATP%20Oil's%20Reese%20Says%20%60Titan'%20to%20Start%20Producing%20in%202010&clipSRC=mms://media2.bloomberg.com/cache/vMHrtMoTNMek.asf

72. #69 Washinton DC is a bottomless Black Hole. Keeps sucking more and more in… but nothing ever escapes.

    Really, it’s govt in general. Just look at any state tax that was supposed to be “temporary.”

    Back to topic… Officially disappointed in EXXI price. Didn’t try to trade my core shares. Probably should have. But holding for the longer-term on their very impressive ramp up in oil production from existing fields.

73. Re: Gold….A break below 1140 would be a second test of P&F support in gold futures…gold goes back on a sell signal with a print of 1130, gold bulls might be looking to buy in this support zone with a stop below 1130…unless it’s a bear trap, a quick three box reversal after the $1130 print, long term P&F trendline support is all the way down at $1000

74. Dollar looking to test 76.33 from the bottom?

75. VTZ, looks like $ index futures are at a new daily high now, from here $ needs to print $78 to three box reverse out of o’s…

76. Gassy stocks completely ignoring natural gas. Grabbing some lunch.

77. 76.22 right now

78. If it closes above 76.33 I’ll start looking to 78 for sure.

79. Hi BOP…RE: EXXI, thanks for #70…long term, I don’t see any immediate technical worries, from here, EXXI stays in x’s on a buy signal until a print of $1.75, if it prints thru $1.75, EXXI goes back into o’s, but holds the buy signal until a a print of $1.25…the laws of physics change down at those levels, like quantum level theory vs. Newtonian physics….the P&F properties change for these s tiny but mighty stocks when you get down near $1, lets see if it really gets there….

80. Dman, #59 re: SD You may have this but this is the last presentation by SD, provides summary of Permian acquistion reserves provided by Forest(not independently verified).

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzYxMTYwfENoaWxkSUQ9MzU0NDcyfFR5cGU9MQ==&t=1

    I hold a fair amt of stk and I’m trying to convince myself to hang in there-as Jerome mentioned, seems to have support around $8-8.50. I also appreciate Z’s cmt that the picture for the company has changed since Crusader acquisition was cancelled-it may be dead money at best, over-burdened with debt at worst. Not very good reasons to hang in but sometimes I’m too bull-headed to take a fairly sizable loss.

81. #80, slides #14 and 19 are Forest related.

82. Hi choices, SD is finding some support again right at the 61% fib retracement level and right at the initial P&F price objective at $8.50, looks like the move down is on decreasing vol…thinking that when energy gets a little lift, SD may rally off oversold conditions and a bounce off the fib retracement back to resistance at the 20 day daily SMA at about $9.50, which is a little bit of a better exit point…

83. just becamse a big KOG in the wheel at 2.26

84. but that wasn’t no floor…wow

85. KOG — wow. What happened? They are fraccing, completing, and testing well #9 this week. So, sudden moves like that always makes people worry that “someone KNOWS something.” Maybe they do. Usually they don’t.

    Don’t you just love light volume days? sheesh. I sure don’t.

86. RE: KOG… large vol traded on the 1 min bar at 2:07 eastern time…KOG holds its buy in x’s until a print of $2…the low so far is $2.09

87. I expect we will get an operational update from KOG soon. Earliest would be this Friday. If not by then, definitely should be next week.

88. boy somebody did just dump a load of KOG at market it appears…guess that happens in cheap stocks when people buy a bunch, get scared and don’t have a little “birdie” whispering in their ear eh?

89. #82-thanks, Jerome.

90. GOLD being defended at 1130…folks bullish on gold are not going to give up the buy signal that easily…? if 1130 breaks too easily, watch for a bear trap…

91. 1130 was a great place to try a intraday contrarian trade in gold, already a $5 profit….

92. “Carry trade” / “Risk trade” reloaders at support for gold and resistance in the dollar.

    I can see CNBC now talking about the risk trade being over tonight or on fast money.

93. By the way, Gold did not print 1130 exactly, the low was 1130.70, so gold futures are still holding the buy signal…

94. I’m still waiting to see the dollar reverse above 76.30.

95. jivey — lol. I hope so! For all i know (or don’t know) KOG might have blown a frac stage on well #9. We’ll find out soon.

    As I watch the trading action in the little energy kids, I am thinking it might have been programmed trading that kicked a slug of KOG to the curb. Maybe not… why would a computer want to mess with little KOG?

    In the bigger picture, why would anyone want to buy an oil stock, while the Climate Change Summit is taking place in Copenhagen and the EPA declared war on the Carbon atom yesterday? Seems like it’s a Bad Hair Day for the Oil Patch in general. With the little, high-beta kids getting kicked around the playground the hardest.

96. NG up $0.145, SWN off 3.6%
    this is ONE butt-ugly day in the energy patch, gold stks as well.

97. gold ticking 1130.00 now

98. … and cracked.

99. wave v down for gold. looking good. just how far does it go…

100. 1090 worst case.

101. Worst/Best depending on if you’re looking to accumulate or otherwise

102. My best guess is just above 1120 and reversal of dollar index just above 76.30.

103. adding 1/3rd long KOG at 2.24

104. Here, just not much to say about the moves today, little rhyme/reason on the size of some of them, especially among the little guys.

     Oil down a 5th day, longest losing streak since July.

     NG up another 3%…still no one watching that, will need a big withdrawal this Thursday to keep it over $5 and continued cold forecast. Forecast says so far so good through at least mid December.

     S&P seems to be holding 1090 but see Nicky’s support levels above if it fades that mark.

     WLL – great news this morning, down “just” a percent today, compared to most of the Bakkens that’s not half bad.

105. go, West, go! Give that computer-seller heck!

106. Simmons upgraded WLL to Overweight from Neutral on the Lewis and Clark well.

     Simmons said the pipeline coming on allows them to cut their differentials from $8 to $5om $8/Boe. This and the L&C area becoming a working play ups their NAV by $9 to $82.

     … and no one cares.

107. Takes a while to get the computers updated Z 🙂 Give them a break.

108. BOP, I would not expect anything out of KOG until they can finish #11 and put a spin on the #9 which will be an average to below there normal average well in my opinion. Personally this area of their prospect looks better for the 3fks than the Bkn. I showed a lot of selling across the oil stocks I watch at the same time. Next year should be the year for KOG so I consider this the time to reload longs if you can stand hitting yourself in the finger with the hammer. I also like IOC longs in here, strong in a down market.Editor’s Note: Don Lyle sends this report from Papua New Guinea, where he is on location with InterOil Corp. and reporting exclusively for Hart Energy Publishing LP.

     InterOil Corp. (NYSE: IOC) of Cairns, Australia, created a monster, setting a new record for a vertical natural gas well with a drillstem test on December 1. The Antelope-2 measured a calculated flow of 705 million cubic feet per day (MMcf/d) of gas and 11,000 barrels of condensate. The company’s stock rose about 10% on the news, to $61 and change.

     The company, also based in The Woodlands, Texas, tested the well in the remote highlands of Papua New Guinea on its 4.6-million-acre concession. It used a 280/64-in. (4.375-in.) choke that it imported from Saudi Arabia.

     The monster well might produce even more. After the test, InterOil planned to drill another 1,100 feet (335 meters) to test potential from an oil leg in the well. Following that, it planned to drill a horizontal leg to test potential for even higher production rates.

     It would be helpful to put the well size into perspective. If the Antelope-2 well in the Gulf Province in the Papua New Guinea Highlands were produced at the test rate, it could supply two LNG trains with no help. Five of the wells could beat the output of all of the wells in the hottest gas play onshore the U.S., the Barnett Shale.

     InterOil tested Antelope 1 in June for 382 MMcf/d of gas and 5,000 b/d of condensate from a thicker, but less porous, carbonate section. That well tested on a 3.5-in. choke and claimed a Guinness Book of World Records entry, easily outpacing the 250 MMcf/d gas well that previously held the title.

     InterOil’s Elk-4 well on the same structure (across a fault) tested for 105 MMcf/d of gas and 1,890 b/d of condensate in 2008, and the Elk-1 in 2006 tested 102 MMcf/d of gas and 510 b/d of condensate.

     Antelope-2 tested from a gas and liquid column of 1,224 ft (372 m), from 6,000 to 7,228 ft (1,829 m to 2,203 m) on the structure.

     These wells will not see gas production for some time because they are in an isolated section of the Papua New Guinea jungle. The nearest access is the Purari River, three miles from the drill site, and the only roads are the roads InterOil has built from the river and among the four drill sites.

     The company is working with the Papua New Guinea government to build an LNG plant next to its 36,000-barrrel-a day refinery west of the capital, Port Moresby, but current plans call for first shipments of LNG no sooner than 2015 if government approvals come through.

     Until that time, InterOil will produce liquids from the wells and re-inject the gas to maintain pressure.

     A 2008 estimate by a third party engineering company put best-case recoverable gas at 3.8 trillion cubic feet equivalent (Tcfe). By March, 2009, Knowledge Reservoir estimated recoverable hydrocarbons at 6.1 Tcf gas equivalent, including liquids, but that was before the two Antelope wells added their muscle.

     “The new well represents almost 70% of the estimated 1 billion cubic feet a day of feed gas that an entire two-train LNG facility will require at its peak,” says Morgan Stanley E&P analyst Evan Calio, writing from the scene in Papua New Guinea the day of the test.

     “In our view, results continue to exceed the expectations of supporters and challenge the credibility of doubters, further bolstering resource estimates and equally important, confidence in well deliverability.”

     InterOil is an integrated company with all its assets in Papua New Guinea. It owns a refinery capable of processing 36,000 barrels per day, and 4.6 million acres of an exploration concession. It also owns a group of retail service stations it acquired from Shell and BP, and is the largest distributor of refined products in the country.

109. V – They put that PR out at 11:45 PM EST. I have to say, what were you thinking? Most systems won’t show a news ticker on it so some analysts just missed it overnight. In fact, I only saw one write up overnight, from some kook here: http://seekingalpha.com/author/zman

110. What a nutjob.

     Dollar did tick above 76.30 and reverse… this could bode well for us all.

111. West — body language says #9 not-so-hot. That said, it’s not a duster either. But, what i really what to hear out of Lynn and the boys is when (and where) they plan their first TFS well on the Rez. Also, at one point in 2010, they could have 3 wells going at once with 2 rigs + a non-operated interest in their wells with XTO. So, 2010 will definitely be a big cash flow year for KOG, agreed.

112. ROSE even on the day. Could be a “buy the rumor, sell the news” event when they finally talk about Montana but I think that their large acreage option would mean the stock goes higher if they see the rumored 1,500 bopd from their Tribal Gunsight well (well #1).

113. BOP – I think you are just seeing some weak hands get shaken out here. With the stock off from recent mid $2s, I think you’ve discounted a mediocre #9 and the stock will move on with the rest of the story once that pr is out. So we’ve probably taken any hit it would have dealt already. I may buy back that piece I sold a few weeks back.

114. KOG did their recent 2ndary at $2.20 in October. And they are just that much further along in their carefully-orchestrated drilling program. Frankly, KOG is right on schedule… maybe 2-3 days late, but prety darn close to where they thought they would be at this point.

115. Fwiw..KOG will be one of the hosting breakfast table companies at the Southcoast Conference tomorrow morning.

     http://www.meetmax.com/upload/cap1209/COS%2009%20Energy%20Conference%20Schedule-4.pdf

116. Also in the FWIW column, would someone post the API’s when they hit tonight? Thx.

117. BOP- Added big time near the close to EXXI- what is your near term view(6 mos)?

118. Is anyone familiar with how correct Bentek has been? The EVEP presentation today said they expect $3.50 nat gas between now and summer; mgt said they agree (they have been very bearish on nat gas) and expect gas to average $4-5.00 for the year.
     Sniped at shale players focusing on production growth at the expense of ROI.
     Said bid on PLL and HK’s Permian sale (with APA), but bid $100mm below Apollo’s $483mm bidfor PLLL, and $100mm under the $376mm winner from HK.
     I keep liking the way mgt presents FWIW, though they have been too bearish recently.

119. Deepwater rig pricing:

     http://www.bloomberg.com/apps/news?pid=20670001&sid=at3CnL__Oik0

120. JRCO is having a conf. call for ROSE Thurs.

121. reef — if oil prices stay around $75, i think EXXI goes to $3.50 in 6 mos. If either Davy Jones and/or Blackbeard hit 1Tcfe, then $6. But, not putting much hope into those two high risk wells.

122. john #115 — thanks for the KOG info. Missed that.

     BTW, nice KOG buys, West!

123. You know it’s a slooooow day, when HeadTrader is reading Craigslist… he sent me this. It got me ROTFL…

     http://newyork.craigslist.org/fct/mis/1494504262.html

124. KOG Kodiak Oil & Gas initiated outperform at Morgan Keegan. No info re targets.

125. RE: EXXI

     While looking for an updated presentation @ EXXI website I noticed their participation at the Capital One Southcoast 2009 Energy Conference had been cancelled despite the confirmation in yesterday’s press release. Stewart Lawrence, the VP of IR @ EXXI confirmed the cancellation via email. He did not provide an explanation

126. ROSE on the tape with 2010 budget, guidance, note in the post tomorrow, stock bid up AH.

127. API

     Crude DOWN 5.8mm
     Gasoline DOWN 0.753mm
     Distillate UP 1.1011mm

128. Thanks BOP – weird looking numbers again. The Crude draw put a little support under crude AH but not a lot.

129. Hoss — thanks. Hate it when they cancel presentations… makes me worry about what’s going on behind the curtain.

     EXXI was supposed to price 90mm shares tonight… haven’t seen any confirmation yet.

130. No problem BOP,

     Waiting to see if they do the Pfd issue and what the terms will be.

     Thanks for all of your input and Good Luck.

131. USDX rally above my level rejected AH.

132. Yahoo msg board sez 1.90 pricing on EXXI deal.

133. Thanks, PackMan. Investors got a good deal at $1.90.

134. BOP … no PR, so who knows what’s what.

     Its possible the offering was undersubscribed for all we know. Guess we’ll find out in the AM.

     So of course I bought a bunch of shares today …. I hope that does not turn out to be a mistake.

135. Cash for Caulkers

     http://finance.yahoo.com/news/Cash-for-Caulkers-could-mean-cnnm-1594823266.html?x=0&.v=1

136. http://www.bloomberg.com/apps/news?pid=20601087&sid=a4ny.J5sdqak&pos=6

     Pimco says falling dollar is good and 10% devaluation only causes 1/4 to 1/2 % increase in CPI.

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