Thursday Morning – Oil Review and Gas Preview + MLPs

Print Friendly, PDF & Email


Market Sentiment Watch: Tepid, thin action. Jobless claims rose 17,000 to 474,000, higher than expected, and it's possible this actually sends the market up today as it thwarts recent and, in my opinion, unfounded speculation that the Fed will be acting any time soon to tighten.


In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today - MLP Watch, APC, HK
  6. Odds & Ends


Holdings Watch:

  • $10KP II:
    • $5,500
    • 17% Cash

Yesterday's Trades:

  • None 

Commodity Watch:

Crude oil fell to its lowest level in two months yesterday, ending off $1.95 at $70.67. The EIA released some generally poor looking numbers for distillate demand although gasoline demand remains firm. This morning crude is trading up 50 cents.

Natural gas dropped hard on the distillate numbers even though the two are rarely well correlated to close off 22 cents at $4.90 yesterday. This morning gas is trading up 2 pennies.

Natural Gas Preview

  • My number: 55 Bcf withdrawal ~ given that weather was flat with last year, imports were down 1.1 Bcfgpd YoY, and production is likely to be down about 1 to 1.5 Bcfgpd from last December. Demand is the wildcard but if we go with down 1 Bcfgpd on L48 production, down 1 Bcfgpd on imports, that's 14 Bcf for the week that's not in the calculations relative to last year. 
    • History:
      • Last Week: 2 Bcf Injection
      • Last Year: 66 Bcf Withdrawal
      • 5 Year Average: 131 Bcf injection
      • 10 year Hi: 27 Bcf injection
      • 10 year Low: 202 Bcf withdrawal
    • Weather
    • Imports
  • Street Consensus: 48 Bcf


EIA Oil Inventory Review

ZComment: Crude sells off as HO demand disappoints. Note from the table above that due to bigger builds last year, all three benchmark inventories declined on a YoY basis.  Builds in distillates are common this time of year prior to the heart of winter setting in as refiners crank up production to meet perceived coming demand.

CRUDE OIL - Bigger than expected draw due to very low, sustained imports.










Stuff We Care About Today

MLP Watch:

Some closing thoughts. I am considering swapping out my LINE position for one in VNR. I haven't filled out the complete picture and there's little need to rush out of one and into the other but in my re-evaluation of the group the higher distribution coverage ratio, backed by strongly priced oil and gas hedges pushed VNR up in my line of thinking.  I may just add VNR, swapping out some other non yielding common position (here's looking at you SD) for it. I'll let ya know as I get closer to pulling the trigger.

APC Deepwater Gomex Well

  • Lucius Discovery - Keithley Canyon 875 (very deep water, way out there)
  • More than 200 feet of pay in 3 way closure trap up against salt. Good porosity, and perm, no word on the aerial extent and but the pre drill reserves were 100+ mm BOE so it means more to PXP than APC purely from a reserves standpoint. 
  • APC operates and has a 50% working interest in the discovery. (PXP) has 33%, (ME) has 17%.
  • As usual, the stock will move on the news and maybe a little more than usual as it has pulled back despite recent successes off Africa and South America.

HK in Fortune's - 10 Best Stocks for 2010 - link to the puff piece

Odds & Ends

Analyst Watch:

  • (GDP) upped to Buy at SuntTrust
  • (XEC) initiated at Market Perform at FBR
  • (WLT) target raised from $67 to $85


157 Responses to “Thursday Morning – Oil Review and Gas Preview + MLPs”

  1. 1
    zman Says:

    PXP bid way up on the news in the post, seems a bit aggressive. ME’s rally at this point a little bit more reasonable.

    V – Art Cashin on CNBC this am saying the line in the sand on the dollar index is your 76.30 level.

    Natural gas – now up 7 cents, I think the Street number is met with flat to lower prices (not a big sell off unless the number is low to the Street). Anything over my number at 55 should send gas back towards $5.25.

  2. 2
    zman Says:

    SLB – Credit Suisse reiterating outperform, says recent concerns that hit HAL for 2 cents on the 4Q from Mexico don’t apply to SLB. I’d add that the market has taken more out of both stocks than the 2 cent impact was worth.

  3. 3
    zman Says:

    IOC – Papua New Guinea approves their LNG terminal.

  4. 4
    reefguy Says:

    ioc- PNG approved their LNG project. Up im the premarket $2

  5. 5
    zman Says:

    Just saw that too Reef, congrats. Funny to think about 4+ inch chokes relative to the local size. Unreal. What are reserve potential estimates now? They are going to drill deeper to test for an oil leg, no?

  6. 6
    BirdsofpreyRcool Says:

    TechTrader out with a 60/40 SHORT call as the day-trading money maker today.

    HeadTrader = “getting harder to predict intraday moves with the low volume if u use appropriate stops because of spikes… i still like buying dips for investing til proven wrong”

  7. 7
    zman Says:

    Thanks BOP, here’s to TT being wrong, lol, at least in the energy space.

    I also expect Hanukkah to impact trading tomorrow as people peel out early.

  8. 8
    reefguy Says:

    Reserves are north of 6T, in oil column now, test before years end.

  9. 9
    zman Says:

    Epperson reporting Saudi saying Asia going back to “full allocation” in January. She mentioned that people now think even Saudi has been cheating on their quota sense May, which makes some degree of sense as they have been trying to contain prices to not quash a tenuous recovery in the U.S.. My sense is they are already there on the Asia thing and this is pre-meeting rhetoric designed to promote three messages: 1) OPEC is not the greedy boogey man, 2) OPEC ALWAYS has the capacity to meet demand, especially Saudi and 3) things are strong in Asia, forget the China hype, strong in all of oil consuming Asia.

  10. 10
    zman Says:

    Reef – thanks, what’s their NRI on that?

  11. 11
    reefguy Says:

    54%…WI and NRI the same

  12. 12
    zman Says:

    Reef – I think you could be up another $10 on a big oil leg. Have read a few analyst quick notes there of late, lot of speculation that rate could be higher in subsequent wells as well, that one well alone could supply an LNG train. That’s one big structure.

  13. 13
    BirdsofpreyRcool Says:

    It’s kind of a Stopped Clock market, intraday. It seems like both sides have the opportunity to make money, if done correctly.

  14. 14
    reefguy Says:

    z- there are twenty other structures to test

  15. 15
    zman Says:

    BOP – I’m sticking with my opening comment, that a little worse news is bad for the dollar as it alleviates this whole fear of Fed action thing, which is bogus anytime soon. Adding to that, crude flat lining gives them even less to worry about on the inflation front.

  16. 16
    zman Says:

    Reef – here ya. And they’ve tested two at this point, right, Elk and Antelope. Was it Raymond James who used to have the “crazy” $65 target here. Wonder where that guy is now on this?

  17. 17
    zman Says:

    BOP – I think EXXI did what it needed in terms of price action yesterday. I like it flat here, considering adding a second piece now.

  18. 18
    zman Says:

    RMD – any thoughts on the VNR? I was going through all of the MLP presentations last night and they came way up in my book, made LINE look a little less shiny to me.

  19. 19
    zman Says:

    WLT back above $70. Good gas numbers will help that one get back to its highs. BTU probably the easier trader from an options standpoint.

  20. 20
    reefguy Says:

    That guy is Wayne Andrews, he is now VP of Invesyor Relations for IOC.

  21. 21
    zman Says:

    Jerome – Can you look at LINE and VNR charts? VNR on the cusp of breaking out of a base, I think with good reason. Not willing to punt my LINE just yet, getting paid nicely to wait there but their coverage ratio is trending towards 1.0x now making it harder to see upped distributions in 2010 (at least not upped significantly). The VNR is probably going to a low of 1.5 to 1.6 on coverage next year. Their collars actually make their distributable cash flow higher in the lower commodity price environment, good matrix in their presentation on that. Anyway, lots of room to bump the payout next year just for the sake of keeping the trajectory of payout growth up.

    LINE may too but only slightly and while I don’t think there is a chance that cut the distribution, it is less exciting from a capital appreciation standpoint. While LINE has performed well, note that it has been underpforming its peers, strictly on a unit price basis. It’s probably the safest of the upstream MLPs.

  22. 22
    zman Says:

    Reef – right, right, gotcha. Who’s the axe on the name on the Street now? Would like to do a little weekend reading.

  23. 23
    BirdsofpreyRcool Says:

    EXXI — the number of shares traded yesterday was eye-popping. I think you’re right. The convert pref’ds did what they were going to do. The dust has settled.

    Now that I think back, I believe the stock tumbled from $2.15 or so when the convert deal was upped from $75 to 100mm. That was a CFO/corporate finance mistake, imho. But, they didn’t ask me for my opinion. I think EXXI will come to regret putting all those converts on their balance sheet, that said, the stock is cheap cheap cheap here.

    Longer term, we may have to wait until their Jan or Feb operations update to get some updraft (on confirmation that hurricane-damaged production is back on line), but it will happen. Unless there is news on Davy Jones first.

    Anyway, MY BAD, for not recognizing the damage those converts would cause. But bottom line = EXXI raised all the money they needed to close the Mitsui deal, and that is a good thing.

  24. 24
    reefguy Says:

    Morgan Stanley- Evan Calio- target near term $83- High $140

  25. 25
    zman Says:

    Reef – Is PNG their only partner?

  26. 26
    zman Says:

    Crude down as the dollar decides to rally again.

  27. 27
    VTZ Says:

    RE 1 – The line in the sand is 76.33. Art Cashin is really off his game 🙂

  28. 28
    choices Says:




    VNR did a secondary @$18 1 Dec, acquired some property in Permian Basis, increased production and reserves.

  29. 29
    zman Says:

    Choice – yeah, most of them raised capital in the recent past. VNR is getting oilier with that Permian Basin buy, which is another plus. Their hedges are very high, over 80% of gas production next year hedged at $8+ and 60% of oil hedged at $86.

  30. 30
    zman Says:

    NG inventories in 15 minutes, NG up 3 cents.

  31. 31
    BossmanG Says:

    Hi all, does anyone have any opinion on coal for 2010?

  32. 32
    kyleandy Says:

    VTX – wish i had got your post re OILERS before i left last nite. might have saved me some money, congrats!!

  33. 33
    zman Says:

    ROSE pushing new high at $18.50, volumes have been very strong of late.

  34. 34
    zman Says:

    Boss – Higher for both high BTU eastern and lower BTU, but cleaner coal from the PRB. Higher also for met coals. We’ve seen a good sized reduction in mine capacity in the U.S. this year and demand has picked up overseas. Inventories remain higher than normal but as gas prices rise we should see a return to more coal fired generation. We should see higher generation period next year as this year was an outlier on the low side due to the economy and mild weather.

  35. 35
    choices Says:

    Z-VNR:first article above indicated the underwriters exercised option to purchase additional $6 mil,which is also a plus.

  36. 36
    tomdavis12 Says:

    Z: Is the VNR you discussed more illiquid than the LINE. If so, should we be patient accumulating positions

  37. 37
    zman Says:

    Choice – right, good appetite for the deal/name.

  38. 38
    reefguy Says:

    ioc- no oily partners, Asian utilities and or financials..

  39. 39
    zman Says:

    Tom – yeah, its a smaller name. Lower reserves, mkt cap etc.

    LINE is the biggest of the upstream MLPs and is I think the 20th largest E&P company in the U.S.

    VNR is much, much smaller, like a tenth of the size on market cap.

    And, I haven’t added any yet and don’t know that I will. I think I will but am still trying the story out. I usually DCA into anything I have not held before. On an MLP where I think it’s a “safe bet” like this one I probably go in in thirds or halfs.

  40. 40
    reefguy Says:

    z-I expected Calio to raise his target today…Maybe $90

  41. 41
    BossmanG Says:

    thanks Z!

  42. 42
    zman Says:

    WLT and WLL back to trading in tandem. Gas number in 30 seconds.

  43. 43
    zman Says:

    Natural gas inventories

    64 bcf withdrawal. big number.

  44. 44
    zman Says:

    Natural gas up 25 cents immediately.

  45. 45
    zman Says:

    Gas blowing up through $5.25, up 7%, just short of the peak high in November of 5.29.

  46. 46
    VTZ Says:

    Good call to whoever was looking for 60 the other day.

  47. 47
    Jerome Blank Says:

    Re: #21, both LINE and VNR are on P&F buy signals, with VNR showing a bit better relative strength between the two stocks, but both are strong relative strength stocks against the cash S&P, right now VNR is having a bit of a struggle getting above $19, forming an ascending triangle with support at $17.50, VNR stays on a P&F buy signal until a print of $16…LINE continues, from a technical perspective, to develope more like an ascending wedge, similar to BEXP…this formation is like an ever extending tree branch, you want to continue to see higher highs and higher lows within the formation, like BEXP…line is hugging the lower trendline now, I’d like to see LINE above $25.75, subjective moment, but LINE feels a bit precarious right here, its surly not going down, but it seems a bit tired…between the two I’m leaning long VNR …I’d feel better already long LINE from a lower price point until it gets above $25.75

  48. 48
    reefguy Says:

    ng shorts getting pounded

  49. 49
    zman Says:

    That withdrawal puts us right in line with last year. Our weather was slightly WARMER than last year’s. I gave a little ground on demand being the wild card but this helps firm up my thinking on December supply being 1 to 1.5 Bcfgpd lower (from production) and 1.1 Bcfgpd lower (from imports) than this time last year. Next week should see a much bigger number given the storm.

  50. 50
    zman Says:

    SWN looks to have put in a near term bottom, should run here.

    HK in Fortunes 10 Best for 2010.

  51. 51
    zman Says:

    Thanks Jerome, makes sense and helps.

  52. 52
    nifkin Says:

    anyone follow DPTR or know why its underperforming today?

  53. 53
    cargocult Says:

    What’s not to like about EVEP? Excellent yield, low PE, good trend?

  54. 54
    bloodystupidjohnson Says:

    For you traders out there, these nat gas stocks were so over sold they deserved a bounce. For example the RSI-7 for RRC was in the teens. Now is move the start of a new up leg, your guess is as good as mine.

  55. 55
    zman Says:

    Cargo – Nothing on that basis. The others have a similar current yield. The distribution coverage ratio is higher for VNR which gives it a better shot at raising distributions in the near future.

    Nifkin – I do, they are in trouble. That’s the one I took puts on a couple of months back when they missed on a key well in a new play, stock got halved immediately and is now trying to sell itself. I’d do puts again but these sub $1 names are not worth the trouble.

  56. 56
    zman Says:

    BSJ – yeah, I honestly do. That gas number was pretty important. Not just because it was bigger than the Street’s 44 to 48 range or my 55 Bcf number but because the weather between the years was similar (although a bit warmer this year) and the withdrawals were so close, 66 Bcf last year and 64 Bcf this year. Analysts use that kind of week (where the data is similar for both degree days and storage) to tweak their models. Very helpful for grounding you in the now on demand, supply etc.

  57. 57
    Jerome Blank Says:

    SWN held support above the 200 day SMA yesteday, from here SWN three box reverses back into x’s on a print of $43, SWN could face a good deal of friction at P&F trendline resistance in a zone $45-$46, as of now, SWN breaks resistance and goes back on a buy signal on a print of $46, on the downside SWN needs to hold $39.50…

  58. 58
    elduque Says:

    Hi Z and all

    Just returned from Myanmar (Burma), thanks for your good call on natural gas.

    Just need about 3 more months of days like this to get my portfolio to where I think it should be.


  59. 59
    zman Says:

    Hear ya ElD! Was beginning to question my model after last 2 weeks of gas numbers but tail of shoulder season is always squishy with lots of non demand related positioning going on. Would bet on small imports from Canada next week due to the cold up there and a big withdrawal in the States.

  60. 60
    zman Says:

    ROSE moving on to $19. That one could see a little BTRSTN action once they give up the goods on the Alberta Bakken. If it swoons on good news there, I plan to add more to my common position.

  61. 61
    zman Says:

    V – You’ve got to be happier with the WLL today, looks ready to challenge the recent high if oil will hang in above $70.

  62. 62
    zman Says:

    BOP – where was Gasman on natural gas today?

  63. 63
    VTZ Says:

    Much happier. I was just really surprised at the lack of any sort of market response to the news. Seemed unreasonable that it was all priced in prior to the release of results.

    Of note on the dollar, We have made 4 consecutive lower highs in the past 2 days. All of them were at or under the key resistance level. Pretty short term bearish based on my simple noobie technical analysis.

  64. 64
    bloodystupidjohnson Says:

    Since Z has been including AXAS info, I see where director Burke is continuing his purchases of AXAS common stock over the last few days.

  65. 65
    zman Says:

    Oil really walking a fine line here. Take out $70 and you will hit a lot of stops, probably goes $65 to $67 if it snaps $70, if not that day, then shortly after. Does make OPEC’s decision more than easy not to raise production.

  66. 66
    BirdsofpreyRcool Says:

    Z — #62…. deleted that CRT email, but I seem to recall Duane was at 60 bfc. I’ll make sure to pass along what he thinks from here on.

    By the way, Duane is a huge supporter of EXXI’s intrinsic value. But, haven’t seen an update, post acqtn and share issuance. Will be looking for that too.

  67. 67
    bloodystupidjohnson Says:

    Man, you know the bulls are sowing their oats, when even SD is going up — lol.

  68. 68
    zman Says:

    Got the gas number I wanted, added a whopping 20 cents to SD and I find myself asking “self, why do you still own SD if the story has changed from the original buy in thesis so much and the CEO thought so much of the deal that he wanted to sell 2 mm shares along with it, there are better things to own self” and so I say, fair warning, I will be taking this one off the stock list again. I think it could be a double in 2 years but I’m not sure from what point that double occurs and I don’t really get the new acquisition from a size/debt standpoint. Doesn’t feel like that much of a steel and quite different from what they would have gotten for only a little bit more $ with Crusader.

  69. 69
    zman Says:

    BSJ – Ha! Wrote 68 before I saw your 67. I like it long term and it may have a little run on gas next two weeks but I think I’m going to take a break from owning the name for awhile.

  70. 70
    bloodystupidjohnson Says:

    Z: As you said the other day, if the original reason for owning a stock changes then you should sell the stock.

  71. 71
    zman Says:

    BSJ – that’s one of my rules, unless of course the story is improved on the change. Here I just don’t think so. Read a couple of Street notes where the analysts were now in the “Oh really?” camp.

  72. 72
    Jerome Blank Says:

    #64 AXAS…quite a triangle forming on the daily chart

  73. 73
    zman Says:

    After the snow, the cold sets in:


  74. 74
    zman Says:

    GOOG – just said they will be profitable on Youtube in the near future. Haven’t heard that before. Hey, I don’t just own energy ya know.

  75. 75
    bloodystupidjohnson Says:

    Then Z, I don’t understand why you don’t sell SD. You can also buy it back again if you become more confident in the story.

    Making a mistake on valueing a stock is one thing, but making a mistake on an investment rule is quite another.

  76. 76
    zman Says:

    BSJ – just milking it on gas.

  77. 77
    zman Says:

    Here’s an obvious statement: Oil needs to stay above and close above $70 today. Flat now, thinking it will have some extreme volatility right before the close of Nymex. Crude in my book is oversold. Normally I argue that big runs to the upside in crude are not a great a thing as the hangover is always worse than the party unless the move up is somehow justified. The move from $70 to $80 plus took took about the same time about the same amount of time (2 weeks) as it did to go back to $70. More than obvious that support is at $70.

  78. 78
    reefguy Says:

    z- SD with Forest aquisition becomes a CO2 story me thinks.

  79. 79
    zman Says:

    Reef – yeah, like a gassier DNR.

    Oil just cut $70.

  80. 80
    Jerome Blank Says:

    Continuous Oil futures went on a P&F sell signal with the print below $72, also giving up P&F trendline support, worrisome that $70 may not hold up …

  81. 81
    zman Says:

    Jerome – ya know oil is a bit of a different animal than a stock from a charts perspective. I was looking for a test of $70 and we have that. It does not seem that stops are being blown out just yet. In between the $10s (60s, 70s, 80s) you often have a little support just above the whole dollar figure and if you cut those you run down or up to the next one in fairly short order. On the $10s, what I often see is stops set just below that if taken out mean look out next $5 down mark. If it holds during the day, then I’d look for a pretty good bounce.

  82. 82
    Jerome Blank Says:

    RE: #81, interesting…I appreciate that insight…thanks

  83. 83
    Jerome Blank Says:

    RE: #81, if you adjust the continuous crude P&F contract for Avg. true range, the buy and sell signals are very reliable…they don’t occur often with the adjustment, but they should be heeded…it’s interesting that on a chart adjusted for ATR, crude is still on a buy signal in o’s, but is a long way from a sell signal…if you have very deep pockets, this chart is a valuable medium to watch…

  84. 84
    zman Says:

    Jerome – nothing earth shattering, just been watching it for a long, long time. Couldn’t tell ya boo about how gold trades.

    Crude hanging around 70.10-.15, close should be wild.

    NG numbers: preliminary read on next week 125 Bcf pull.

  85. 85
    Jerome Blank Says:

    Gravity continues to pull on EXXI intraday, dialing down on the 30 minute, light vol now with a bearish mini descending trangle forming, trying to break Wednesday’s low…20 and 50 period MA’s moving lower as well…not looking great right now…we might get to buy more lower today…need a nice reversal candle and a break back above $1.90 pronto…

  86. 86
    zman Says:

    Pack – signed up for that Stocktwits site. Starting to see some followers from there, thanks. Should I use $ or $$ in my tweets or does it matter. I don’t general give out much except my closed trades there.

  87. 87
    zman Says:

    IOC topping $70, Reef nice call, too bad I was too cheap with it at $60 on those options. Still think it goes higher and am looking for an opportunity to add January calls there.

  88. 88
    Jerome Blank Says:

    EXXI ticked below Wednesday’s low, heads up for folks looking to buy at $1.75…

  89. 89
    zman Says:

    Santelli giving the $13 B treasury auction an F.

  90. 90
    zman Says:

    Natural gas ~ remarkable lack of volatility in prices following the post number jump to 5.25. Seems just stuck there and my sense is they won’t take it higher without confirmation that crude isn’t going to fall out of bed. The last little peak before we sold off was 5.29 and we just barely breached that this morning before settling at 5.25 to 5.26. I would not expect a massive move up any way but am surprised how solid this level is looking. There is a lot of covering to do if that really starts and given the move and the volume since, it appears next to nothing has been done on that front yet.

  91. 91
    1520sbroad Says:

    BOP – curious to hear your take on #89. What did Santelli say?

  92. 92
    zman Says:


    SD – Sold my common at $8.40, down 20%. See comment 68 on the site today for reasoning.

  93. 93
    Jerome Blank Says:

    EXXI…at this moment, someone seems to be sitting on the bid at $1.82, buying from all thoses who wish to sell

  94. 94
    VTZ Says:

    http://www.bloomberg.com/apps/news?pid=20602099&sid=ahBXa4Ke_tnc charting oil

  95. 95
    tomdavis12 Says:

    Merrill’s 5 favorite stocks for 2010: PRU, APA, BA, HON, ORCL

  96. 96
    tomdavis12 Says:

    Citi’s top 25 picks include RIG & EVEP

  97. 97
    zman Says:

    Tom – Don’t forget HK in on Fortune’s 2010 list.

  98. 98
    PackMan Says:

    Z – SD I agree; did the same thing w/ my shares; dumped ’em today; although those were at a small gain at least.

    StockTwits … i think $$ is what connects there; remember they have to follow you as well; so if you need to contact them, let me know off line …

    Also, if you want to be introduced to the guy who runs the thing, let me know that as well; could be a $ oppty for you there.

  99. 99
    tomdavis12 Says:

    Z: Z saw your HK Fortune 2010. I agree nice fluff piece.

  100. 100
    zman Says:

    Pack – yep, thanks much.

    On the SD, I was just sticking with my rules, it’s still a double, I think in 2 years and its not like I won’t watch and be happy to buy it back higher if I get a better understanding there. 2011 will no doubt be a big year for them.

  101. 101
    zman Says:

    Tom – Back in the day those and Baron’s pieces could move a stock, now the writing seems so 10,000 foot level to me that they just provide opportunities for managers who are long to get out. Call me cynical.

  102. 102
    zman Says:

    Crude has fought off two forays under $70 now, currently 70.20. Looking at the minute chart both sell offs were on lighter volume than the subsequent rallies, although the second rally was pretty weak. Going to be an interesting close.

  103. 103
    zman Says:

    NG – now up 9% at HOD above $5.30, thought that holding pattern looked a little odd. Gassy stocks starting to wake up to the fact that they in fact sell mostly gas and that $70 oil is not the end of their or any other world as we know it.

  104. 104
    zman Says:

    Great color coded (by IP) map of the Bakken in RBC’s last update. Gives a good feel for just how remote Golden Vally county, ND is from the traditional Neeson drilling. Their Lewis & Clark well is 80 miles from the southern most well in southern Montrail County. This is the biggest IP in the area (1,970 BOEpd) by far, with all but one falling below 500 BOEpd. People thought the Three Forks didn’t work here, allow WLL to pick up their acreage on the sly/cheap.

  105. 105
    DrLink Says:

    re 62 who is Duane the gasman, might I ask?

  106. 106
    Jerome Blank Says:

    I know UNG is not popular, but there is an interesting bottoming formation trying to form with this rally, looks like a compact inverse head and shoulder, support at $9, also for candle stick fans, could be forming a “fry pan bottom”…we’ll see…

  107. 107
    zman Says:

    Gasman generally has one of the better reads on the weekly storage numbers.

  108. 108
    jy Says:

    Z, Thanks for the Upstream MLP Snapshot today. The explanations for the significance of each metric are great for an earth science type. This sort of thing keeps paying customers paying.

  109. 109
    zman Says:

    Jerome – its unpopular with me but not the folks here I think. I would have, over the last week, been better off trading it than my SWN call, at least so far. I used SWN as a proxy for gas and it has not kept pace with this move. Again, so far.

    I wonder if a fry pan bottom is what I call a saucer formation? I am a candle stick guy as is 99% of the population and that patter sort of looks like what I call a saucer. I generally look for them to have a longer, flatter bottom with declining volumes but it looks similar, just compressed. However, that’s on the daily, when I shift to a weekly chart, that is one heck of a saucer forming. When those make the turn they do so to the upside with great gusto.

  110. 110
    zman Says:

    Jy – nice to hear and let me know if anything is not clear. I am trying/going to get BOP to add her thoughts on dividend yields on these vs the 10 year (I can probably muddle through it but it would not be as eloquently stated). Anyway, these are not growth names, at least not on a production per share basis and not during low commodity price environments, they are more like annuities, or the volumetric production payment style assets you see guys like CHK monetize from time to time. Good stuff, just not a whole lot upside to the reserves (in general). That long life is very nice when prices are low as you just don’t need much capital to keep production flat or in a long slow decline. If you ever see one of these with offshore assets let me know and I’ll short it. Also, there is some tax weirdness here that I pay an accountant not to fully explain to me.

  111. 111
    zman Says:

    Crude down 9 cents. Remarkable defense underway.

  112. 112
    zman Says:

    Crude flat on a flat dollar.

  113. 113
    zman Says:


    EXXI – Added a second tranche for $1.89, first piece was taken at $2.37 before their secondary and convertible offering was priced.

  114. 114
    Jerome Blank Says:

    Re: #109…Yes, very similar…just for fun, UNG goes back into x’s on a print of $10.00… a print of $12.50 would be “huge” for UNG…

    Looks like EXXI is going to go back to $1.90 without me from $1.75…

  115. 115
    zman Says:

    Jerome – see 113, I’m 2/3 rds in now.

    Crude dodging a big bullet today, closing essentially flat. Stocks should feel free to get up and move about the market watch with oil closed. Liking what I’m seeing in the WLL.

  116. 116
    zman Says:

    HK outperforming the group today, up 5%, tied with FST and CRZO for the lead on stuff I watch. Significant? Probably not just yet but good to see it wake up.

  117. 117
    zman Says:

    Oddness watch:

    The entire single digit midget crowd is uniformly red today. END, AXAS, GST, KOG, LNG, NOG, HDY, FXEN, DPTR, TMR, EXXI … MMR up barely. Odd.

  118. 118
    BirdsofpreyRcool Says:

    Sorry… been nosing around some other things today. Here are the stats on the 30-yr bond auction. The ONE stat that matters the most is the “when issued” yield vs the auction yield. The results speak for themselves.

    $13 bln 30-year Bond Auction: Yield 4.520% (expected 4.483%); Bid/Cover x2.45 (2009 avg 2.41x, prior 2.26x); Indirect Bidders 40.2% (2009 avg 42.8%, prior 44.0%)

  119. 119
    VTZ Says:

    The collapse of the long bond is the last nail in the dollar weakness coffin.

  120. 120
    VTZ Says:

    …or will be I should say

  121. 121
    zman Says:

    Thanks BOP – one of these days China is going to take a week off just to send a message.

  122. 122
    kyleandy Says:

    EVEP been on a tear for 2 days. wonder if it was citi’s top 25 ranking.

  123. 123
    zman Says:

    Noticed that, I think it was them speaking at a conference.

  124. 124
    RMD Says:

    1. On conf. calls, will weigh in on MLPs when I get a chance, though I don’t have lots of new thoughts vs. thoughts already mentioned over time.
    2. Analyst comment from Boston trip: smart people are questioning oil pricing as supply more resilent than expected (Nigeria starting, Iraq and ??), expectations on nat gas all over the place with no smart money consensus.
    3. Tom Ward stock sale was for charitable giving. He bought stock higher in market and on some SD deals. Don’t know but may be taking tax losses.

  125. 125
    kiaora Says:

    VTZ..think gold will find a bottom around here?

  126. 126
    zman Says:

    Thanks RMD

  127. 127
    VTZ Says:

    I added yesterday in the early morning and I don’t hink it will break 1090, but 1120 was the target that me and Nicky had both talked about on Tuesday, which was met and if the dollar holds then gold is going straight back up to new highs on its way above 1500.

  128. 128
    VTZ Says:

    60% of my portfolio is long gold equites/bullion and some of the rest is cash so I can buy bullion if that says anything. I only lightened up on options at the top, no core holdings.

  129. 129
    VTZ Says:

    and I also don’t think gold will ever trade below 1000 again.

  130. 130
    zman Says:

    S&P teetering on the 1100 mark.

  131. 131
    zman Says:

    BTU’s chart looks like a gas stock, as you would expect from a coal stock. WLT’s looks like something different. It looks like someone who is only restrained in how much they can sell by how much they can get out of the ground.

  132. 132
    zman Says:

    EVEP continues to jump, could be another broker note, but its moving well all right.

  133. 133
    zman Says:

    Tomorrow’s ecodata worries:

    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)

  134. 134
    West Says:

    Did anyone see or hear anything from the KOG Breakfast or did I miss the print?

  135. 135
    zman Says:

    West – we apparently had no one there, just watching it ease.

  136. 136
    West Says:

    Again today a transaction way above the ask to close. It was trading at 2.22 and last trade was 2.30. I have not heard a bird whisper yet. How about you BOP? Didn’t you say something about the Teddy Bear cam getting lost or thrown out of the doghouse?

  137. 137
    PackMan Says:

    VTZ – never say never … lol

  138. 138
    RMD Says:

    ROSE probably suffering from not saying anything new on JRCO call. No news on Bakken until either year-end update (which was 2/2/09 this year) or the yr.-end conf call.
    I would score the tone of the call quietly bullish and my antenna suspect big things FWIW.

  139. 139
    BirdsofpreyRcool Says:

    West — teddy cam knows no more that you and I do at this point… just waiting on results from completing and testing #9. I hope KOG includes some sort of schedule for testing the TFS on the Rez, in their next operational update. Which should be out SOON.

    Brrrrrrrrrrrrrrrrrrrrrrrr. It’s 15 degrees here… beFORE the wind-chill kicks in. Crank up the heat!

  140. 140
    zman Says:

    BOP – 15 is cold. Anyone have an update from Bastardi? I’ve ignored him in the past at my own peril. He called December “one to remember”. Just wondering if he has called back half of the month and January yet.

  141. 141
    zman Says:

    My temp sense says its going to be colder than they originally forecast for this week on Monday. 204 HDDs is only slightly colder than normal.

  142. 142
    BirdsofpreyRcool Says:

    Damn STRAIGHT 15 degrees is COLD!! You gots THAT right.

    On the other hand, it’s -20 on the well #9 site. Yikes! I have the utmost admiration and respect for Rough Necks.

  143. 143
    BirdsofpreyRcool Says:

    Then there’s wcoaster… who has been up to Prudhoe Bay in the middle of winter. Now THAT is some knarly form of C-O-L-D.

  144. 144
    VTZ Says:


    Physical gold trust > GLD

    Pack in 137 – NEVER! haha.

  145. 145
    ram Says:

    Does the KWK announcement look positive?

  146. 146
    VTZ Says:

    BOP – Saturday and Sunday the forecast here is -35 and -40 C

    -40C is -40 F

  147. 147
    BirdsofpreyRcool Says:

    VTZ — where are you? The North Pole?? Or, is it just Calgary (which is practically interchangeble with the North Pole). WOW!!

  148. 148
    VTZ Says:

    Edmonton now.


  149. 149
    BirdsofpreyRcool Says:

    VTZ — that is one COLD looking map. Stay warm, man!

  150. 150
    VTZ Says:

    Send all the NG traders here and see what happens, haha.

  151. 151
    RMD Says:

    Weather comments remind me one analyst’s guru says 6 weeks of very cold expected for the midwest, so get used to it.
    Should help nat gas.

  152. 152
    BirdsofpreyRcool Says:

    VTZ — i’d like to send Al Gore there… but that’s a different topic. ha.

  153. 153
    BirdsofpreyRcool Says:

    RMD — easy for you to say. Aren’t you in some tropical paradise right now?

  154. 154
    zman Says:

    Ram – KWK pr looks pretty decent, 20+% growth, only drilling 100 wells and completing 30 of their inventory of drilled but not yet completed wells. Will look at it for the morning.

  155. 155
    ram Says:

    Thank you Zman. The last time you took options I took the common in KWK. It seems to have lagged like SWN recently.

  156. 156
    RMD Says:

    BOP, back from tropical paradise; it is 26 now, but not too windy thankfully, as I just got in from the nightly dog walk.

  157. 157
    zman Says:

    RMD – are you still a fan of VNR, or was that my imagination a few weeks back?

Leave a Reply

Zman's Energy Brain ~ oil, gas, stocks, etc… is is proudly powered by Wordpress
Navigation Theme by GPS Gazette