Monday Morning – Welcome To Winter

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Market Sentiment Watch: No economic data release today means the market will be thinking about tomorrow's GDP revision and what to buy online for last minute gifts while faking work. For my own part, I'll be using the week to look back at my early 2008 thoughts and continue to tweak the portfolio as always. I do plan on entering 2010 with a high percentage of cash in the options portfolio as history has proven that the flip of the calendar can be a trying time (especially in the first week of the new year) but will be adding positions in a couple more names this week for window dressing runs before year end.

If you missed the Link to the Last Week's Stat Wrap click.

The Week Ahead:

  • Monday 12/21: No economic data release scheduled.
  • Tuesday 12/22: 3Q GDP revision (forecast 2.7%, down from initial read of 2.8%), Existing home sales (forecast 6.28 mm),
  • Wednesday 12/23:  EIA Oil Inventory Report, Personal income (forecast 0.4%), Consumer spending (forecast 0.6%), Consumer sentiment (forecast 74, last read 73.4), New home sales (forecast 420K),
  • Thursday 12/24: EIA Natural Storage Report, Jobless claims (forecast 470K vs 480 K last week), Durable goods (forecast 0.8%), MARKET CLOSES AT 1 PM EST
  • Friday 12/25: MERRY CHRISTMAS

In Today's Post:

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

Holdings Watch:

  • $10KP II:
    • $20,500
    • 75% Cash.
  • The Holdings tab has been updated.
  • Friday's Opened Trades:
    • HAL – Added (20) January $31 Calls (HZLAD) for $0.73.
    • SWN – Bought (10) SWN $48 Calls (TKQAV) for $1.55.
    • NOG – Added (20) of the $12.50 January calls (NOGAV) for $0.30.

Commodity  Watch:

Crude oil rose 5% last week to close at $73.36. The 12 month crude strip is now trading at $77.34. The February contract takes over as the prompt month contract tomorrow and is currently trading at 74.42 and looks like this on a chart.  This morning the February crude contract is trading up 50 cents.

  • OPEC Watch: The Cartel holds its 155th regular meeting tomorrow. Expect no change in quotas from this meeting.
  • Ahmad Is A Nutbag Watch: Iran confirmed that it crossed the border into Iraq last week, taking possession of an oil well and raising the Iranian flag just long enough to snap a few photos. The White House comment that Iran will face "consequences" should it continue to rebuff efforts to monitor its nuclear program.
  • Rebel Yell Watch: Nigerian rebels (remember these guys?) are claiming they carried out their first attack since the cease fire began because they claim the government is delaying peace talks.  A Shell or Chevron pipeline was said to be struck but there is not confirmation as of yet.

Natural gas jumped 12% last week to close at $5.78. The 12 month strip is now trading at $6.01 and this is the second time this year the strip has breached $6 territory giving operators a chance to lock some really decent pricing for the Spring shoulder season (see contract prices below).  While I think this past week's snowy weather in the East and this week's mid section deep freeze will support gas prices as high as the low $6's I have to think that once this burst of cold is behind us prices will tilt back away from the recent highs. This morning gas is trading up slightly.

  • Weather Watch: Weather returns to "normal" readings.

    • Week Before Last: 232 HDDs which was much colder than last year and normal and yielded last Thursday's monster 207 Bcf withdrawal report.
    • Last Week: 202 HDDs vs a prior forecast of 192; 206 last year and 201 normal. This should yield another above average withdrawal this Thursday.
    • This Week's Forecast: Also 202 HDDs as warmth moves into the nation's mid section early in the week for the next big winter storm hits mid week.



Stuff We Care About Today

Catalyst List Watch:

Additions to the list this week:

  1. New section on NOG
  2. BEXP section updated for recent drilling results, new plans
  3. KOG section updated

The Catalyst List is updated every Monday and archived on the Catalyst Tab.


CLNE and T Link Up Again

  • AT&T opts to convert another 463 Ford vans to CNG with CLNE; that's 463 in 1Q and now another 463 in 2Q
  • Looks like program could be expanding in 3Q beyond vans
  • Nutshell: This name is on my Long Term list, I don't own it but probably will soon. I continue to think 2010 will be a breakout year for them with passage of the Natural Gas Act propelling more conversions and more widespread use of natural gas as a transportation fuel.

UPL Acquires Marcellus Acreage

  • $400 million for 80,000 Pennsylvania acres from a private company ($5,000 per acre).
  • Gives UPL 250K net acres in the play.
  • UPL will be added as one of my more frequent "go to" names in 2010 along with RRC for gas plays. 

Odds & Ends

Analyst Watch:

  • (HAL) - Added to Strategic Selections List at UBS

Interesting Reading Watch:


149 Responses to “Monday Morning – Welcome To Winter”

  1. 1
    BirdsofpreyRcool Says:

    It’s official. The stats are in and it was HIGH YIELD by a mile, as the outperforming asset class of 2009. Followed by Commodities, Gold, Stocks, Corporate Bonds, and Govt Bonds. Thru the end of November, the High Yield Index returned 58% in 2009. And it has rallied significantly since Dec 1, as stocks have merely been doing the Dog Paddle in circles around the shallow end of the pool.

    Just to put numbers on it… the Corporate Bond CDS Indices stand at —

    Investment Grade +87 1/2 bps (this was around +275 bps this time last year)

    High Yield 98 3/4 points (this was around 68 points this time last year)


    High Yield only has years like this once about every 5 – 7 yrs (think 1994-5, 2003-4, and now 2009). For a bit of a history lesson, go back and look what happened to the stock market during the 2-3 yrs following a major rally in high yield bonds (Hint: it doesn’t go down).

    The caveat this time is Stupid Govt Tricks. But, as we are seeing with the watered down results of the healthcare bill and the emerging push-back on the global plan to redistribute wealth and power under the cause of “Climate Change,” maybe sanity is trying to get back into the room. Hope so. Stupid Govt Policy over the last decade has been very destructive. ‘Nuff said.

  2. 2
    Gtinvest Says:

    Goodmorning Z , I did not see your comment on rig counts for friday. US total plus 32 and 16 oil, 16 gas. TEXAS + 20 , What are your thoughts?

  3. 3
    zman Says:

    GT – Almost put a graph in but got busy. They’re recovering faster than I would like. If this continues much longer I would bet gas eases when the weather moderates as it always does mid winter. We’re going to need to see further demonstrable production declines and a bigger erosion of the YoY deficit to keep gas above $5 through January.

  4. 4
    zman Says:

    Crude up 75 cents on Feb contract with the dollar easing.

    NG has given up 14 cents of overnight gas and is down a few pennies on the milder forecast.

  5. 5
    BirdsofpreyRcool Says:

    CRT out with an update on EXXI, both the bonds and the stock.

    To summarize —

    Following the Mitsui asset purchase, value of the 10% Notes are entirely backed by producing assets alone down to around $55 oil and $5.00 nat gas. They are still cheap, at $90 or so (13.7% yield to maturity 6/13).

    Post acqtn, EXXI’s proved (developed and undeveloped) alone support $3.00 per share price. Further upside will come from proving up more of their acreage and — of course — any success from their participation in the two deep shelf wells with MMR (DJ and BlackBeard).

  6. 6
    zman Says:

    GT – flipside is it’s good new for the NAM focused service guys. Perhaps part of UBS’ thinking in putting HAL on their Select List this morning. The rigs that are being added back are generally the biggest and best, so good news for someone like NBR. Should also be welcome for SII, BHI, CRR, CLB.

  7. 7
    zman Says:

    AEZ on the tape announcing they have spud their first Bakken well at the Goliath Project. Well to D&C in about 45 days, don’t know their working interest as that wasn’t in the pr.

    In other news I’m headed over to the coffee machine. From there, I will likely get a little milk and sugar and plan to have my coffee back to my desk in 3 to 4 minutes where I will test it for heat content and flavor.

  8. 8
    Gtinvest Says:

    My thoughts were if its oil rigs good , gas rigs bad. How much conversion if any is required for a rig to switch between oil and gas drilling?

  9. 9
    zman Says:

    GT – not much for the rig itself. Other stuff goes with certain types of drilling. Biggest change between this cycle and last will be the higher horsepower needed to drill horizontal. Takes a bigger rig to drill down 10,000 feet and over (laterally) 10,000 feet and more of that type of work is being done now.

    Last week’s rig count change can be see here:


    Both gas and oil advancing according to Baker Hughes.

  10. 10
    BirdsofpreyRcool Says:

    TechTrader in with a whopping 55/45 LONG call today.

    HeadTrader pointing out that some healthcare stocks are getting a hard look, due to the 1-yr delay in some payment portions of the healthcare bill. Also, we will probably see some names making weird moved to self-correct after the rebalancing moves on Friday.

    That said, KOG looking to (at least open) around $2.35. That will be nice to see. The Short Attack on KOG on the public Yahoo Msg Board is chillingly vicious…

  11. 11
    bill Says:

    REGARDING YOUR CHART, not a great yr for gas prices

    please refer at last 3 months vs the 3 months in q3. Now for the investment play

    Remember tiny MCF contango oil, they are an unhedged gas producer. Last qtr, they had cash flow of about 4 per mcf and 85 cents proit per share. This qtr gas prices are about a buck higher and this will flow to the bottom line impact about 50 cents positive

    potential offsets are dry wells. They are drilling in cotton valley and one gom well.

    Anyways, its cheap at 46

  12. 12
    bill Says:

    # 1 excellent post bop

  13. 13
    zman Says:

    Bill – Still not a great year, only thing saving E&P this year has been falling costs on both a drilling and a per unit operating basis and hedges. Next should be much better and the futures market is discounting the rebalancing of the supply demand situation by mid year ish.

    Re MCF. Good metrics, quirky, unfriendly to Street name, and down since we started talking about it. I like them but there is no options play there for me just on the basis of it trading thinly. I think there is more upside in SGY and ATPG on the shelf in 2010.

  14. 14
    zman Says:

    UBS pumping HAL a day late for my WildZ of last week. I had seen that play out enough times to take the hit early on Friday and roll at the same time …. starting to work now.

    SWN moving.

    WLL and NFX are the names I am looking to add before year end on the call side by the way.

  15. 15
    zman Says:

    Reef – Just not getting a pull back on IOC.

  16. 16
    zman Says:

    Meant to add EOG to that last line in 14.

  17. 17
    zman Says:

    And either WLT, ANT or BTU in coal.

  18. 18
    zman Says:


    EOG – Added (3) EOG January $95 Calls (EOGAS) for $2.80 with the stock at about $94.30. Starting small.

    ANR – Added (5) ANR January 45 calls (ANRAI)for $1.50 with stock at $44. Metallurgical coal play.

    These are positioning trades to take advantage of year end window dressing and are names that I like in early 2010.

  19. 19
    Dman Says:

    BOP – about that “global plan to redistribute wealth and power under the cause of ‘Climate Change'”

    Strange that the developing countries, i.e. the would-be beneficiaries of such a redistribution, are the ones who won’t play ball & pulled the plug.

    So there’s a conspiracy but the beneficiaries of the scam weren’t in on it? Right. That’s no way to run a mafia.

    If you want to see what a “global plan to redistribute wealth and power” would actually look like, how about 30 years of “globalization” in which all the wealth production was shifted to China, leaving the West with only “consumption” for an economy.

    Brought to you by who? Who was driving this? Care to nominate some suspects for the scam of the century?

  20. 20
    zman Says:

    AT&T must be going for greenest cell carrier with that CLNE announcement.

  21. 21
    zman Says:


    NOG – Added (5) February $10 calls (NOGBB) for $2.05 (added on the mid with the stock at $11.42). Just giving myself a little room if my timing is off on the catalysts listed in the post.

  22. 22
    zman Says:

    Canaccord Adams adds ROSE to Best Ideas List. It’s a good bet they know something on the first Montana Bakken well and want to be visible before news comes out there. I may take some calls but only if I can split those fat spreads and only in the Februaries as the company may take their time PRing that one. Lots of people are thinking they have a good well with the first test.

  23. 23
    zman Says:

    Jerome – can you take a look at the HAL chart? Thx.

  24. 24
    zman Says:

    MLPs still ripping higher.

  25. 25
    zman Says:

    BEXP eying $14.

  26. 26
    BirdsofpreyRcool Says:

    Dman — all you have to do, is follow the money (as always)… Al Gore, private equity, GE, Goldman Sachs, the IMF, global bankers, McKinsey&Co. These are just a few of the players who profit (tremendously) from the power and money shift of Climate Politics. You think I think it’s all about helping the stated “beneficiaries” (poor countries and “declining” polar bear population)? LOL. That is only the window dressing, that preys upon the U.S. guilt about having a better than global average lifestyle.

    When I finally looked at the “hockey stick” and realized that the “Scientific Community” had left out the Medieval Warming Period AND the Cooling/Cold period (from around 1310 to 1850), I realized just how corrupt the “scientific data” are. How do you explain Vikings growing tender greens in Greenland around 1,000. There are GLACIERS sitting on those old farmlands now.

    It’s not the paddle (or whatever it’s called) part of the “hockey stick” that is wrong… it’s the “shaft.” The earth has aways experienced Climate Change. But the “scientists” went to great lengths to hide that. No intellegent conversation/discussion/analysis can be entered into, until the data becomes DE-politicized.

    By the way, some of the greatest innovations and even evolution of modern man have been DUE to changes in climate and how man adapted to them. Weather has NEVER been “hockey shaft” stable. Never. And that is the ultimate of disingenuousness (to put it mildly) to claim (and “graph”) that is has. That is all I am going to say about it. I am Done here.

  27. 27
    West Says:

    #7, from the recent issue of Rocky Mountain Oil Journal, 12-18-09……….Current Issue – Vol. 89 Num. 51 – December 18, 2009American Drilling Horizontal Bakken Test North of Ray Field
    Williams County, North Dakota
    Denver-based American Oil and Gas (AOG) has spud a horizontal Bakken wildcat several miles northeast of Ray Field, a multipay oil and gas reservoir that produces from the Bakken, Stonewall, and Red River in Williams County, North Dakota. AOG has moved in Nabors rig No. 486 and is making hole at the Tong Trust #1-20H, sw-se 20-157n-96w. This projected 10,280’ (true vertical depth) wildcat is slated to have a bottom hole in the nw-ne 17-157n-96w, which would indicate a horizontal leg of roughly 9,000’. This prospect was originally permitted by Nebraska-based Evertson Operating (Evertson) and was part of the Goliath Project, a 60,000 net-acre spread located in the overall area of 156n–157n, 96w–98w. The play concept is stacked formations, with multiple targets being the Mission Canyon, Bakken, Three Forks, Silurian, Red River, and Winnipeg. Evertson is no longer a partner in the project, leaving only AOG and an unnamed company as working interest holders. Evertson had initially permitted this prospect as a Three Forks test; however, those plans have been changed by AOG as the company now plans to drill the #1-20H as a horizontal Bakken test only. The unnamed partner will have the opportunity to earn 25 percent of AOG’s working interest in approximately half of the 60,000 net acres in the Goliath Project by funding 100 percent of AOG’s interest in the #1-20H. This one-well, drill-to-earn arrangement calls for AOG to be carried for and retain 30 percent of its original interest in the well and drillsite spacing unit. The unnamed company will also pay up to an additional $1.1 million to AOG as part of the agreement.

    The nearest venture to the Tong Trust #1-20H active drillsite that penetrated the Bakken is almost a mile to the northwest at a dry hole drilled by Texaco in 1963. The Clarence Pederson #1, nw-se 19-157n-96w, bottomed in the Duperow at a depth of 10,954’. The company conducted a drillstem test across the Bakken/Three Forks interval from 10,203’ to 10,243’, which recovered 350’ of muddy water with a slight sulfur smell and 2,232’ of water cushion. Other DSTs in this hole evaluated the Charles at 8,187’, the Frobisher at 8,854’, and two in the Duperow at 10,668’ and 10,735’. No significant shows were recovered, and the hole was abandoned.

    The closest horizontal production to the Tong Trust #1-20H location is some 2 miles southeast, where Evertson established new pay from the horizontal Bakken in Ray Field. The AOG Champion #1-25H, ne-ne 25-157n-97w, is a trilateral Bakken discovery that was given an IPF of 182 bopd and 576 bwpd from the openhole interval at 10,613’–17,264’. Based on current oil prices, this hole is considered a noncommercial discovery and will not pay for itself. After first going on-line in January of 2007, this well has produced 16.1 k bo, 31.3 mmcfg, and 34 k bw. Latest production figures supplied to the state show that this hole is producing approximately 12 bopd and 35 bwpd. No future Bakken offsets are planned for #1-25H. It should be pointed out that it is possible the AOG Champion #1-25H will not pay for itself because of completion techniques, not reservoir quality.

    Ray Field has cumulated more than 661 k bo, 9.4 bcfg, and 191 k bw following its discovery in 1982. The primary source of this production is coming from the vertical Red River and Stonewall.

  28. 28
    bill Says:

    what do you mean “unfriendly to Street name”? i think the street is unfriendly to them.

    I agree they are not followed, they don’t bother having investor calls but the ceo tries to get the word out.

    He puts out , roughly, a monthly Operations update.

    It’s a pure ng play, low cost operator. If you are neutral or bearish on ng dont invest here or any other ng name

  29. 29
    zman Says:

    West –

    Bill – easy. All I’m saying is I see one analyst following them. They don’t need the Street as they don’t do equity deals and have a declining share count. Good for them. But it doesn’t get you coverage. Not saying there is anything wrong with that. Just doesn’t fit the normal mold and the Street likes that mold. The hippy dippy dude stuff is fun on the presentations but lousy if you are an analyst wanting real guidance. I see a real lack of production guidance in their presentations and press releases. Yes they are low cost which is great on or off the Shelf and I like it as common goes but it seems like a buy and hold to me and not something I could play for options.

  30. 30
    zman Says:

    West – Got any write up like that on Slawson’s Stallion well?

  31. 31
    Dman Says:

    BOP – would you care to point me to the original source, in an actual scientific publication (I mean a journal paper, not a UN document) where a faulty graph occurs?

    The idea that climate scientists don’t know about historical climate events is ludicrous. After all, where did you learn about them from? Were they written on a stone tablet you found lying around? No, they were discovered by scientists. So you say that scientists published a graph, ignoring climate events that all climate scientists know existed. So any such scientist could have immediately shot down a paper with such a graph in it.

    OK, so show me the paper.

    BTW, you didn’t answer my question. I was asking about the global distribution of wealth & power that actually happened over the last 30 years. It happened already! It’s done. The US is left with the “consumption” and (I forgot to mention before) the debt. China has the actual economy.

  32. 32
    zman Says:

    Adding to 29:

    I’ve seen hippy management’s before. The whole “we’re different, we’re
    better” thing generally ends up with your stock trading at a discount, even
    if you are different and better. Which these guys are.

  33. 33
    baylor3217 Says:

    KOG back up over the close friday (sans the 142,000 share order as the doors were closing)

  34. 34
    redjack Says:

    If you get a chance, take a look at EPD. I find the chart, the dividend, and the options enticing.

  35. 35
    baylor3217 Says:

    Broader market question – it seems to be generally and widely accepted that stocks will drift higher through the end of the year due to the predictions on big money action.

    If we assume that position is correct, would we expect to see any correction in January for the larger market as the measuring stick for the mutual funds, etc re-sets?

    In other words, would it be a good time to sell broader market strength at the end of the year and see how things play out or to hang in there.

    What are your plans?

  36. 36
    bill Says:

    29..good points..sorry if I sounded like i was jumping on you..didnt mean it that way..just wanted to understand what you meant. Your points are fair and i concur, its a buy and hold. The only catylst (near term) is the one and only well they are drilling in the gom and/or a spike in ng

    You are right they dont issue guidance other than current production rate, (which btw is growing). I think its not that he doesnt care, he thinks no one is listening. Its totally ignored no debt cash machine

  37. 37
    bloodystupidjohnson Says:

    I can’t see where you think ANR is a met coal play. On a pro forma basis, don’t they get only 14% of sales from met coal and 86% from thermal coal?

  38. 38
    zman Says:

    RJ – I would but I don’t do midstream and pipes, wouldn’t know where to begin, lol. Nice chart though.

  39. 39
    zman Says:

    Re 35 – That’s exactly what I was hinting at with today’s opening paragraph, for the options only, not the stocks.

  40. 40
    bill Says:

    One last thing, it was in the 50’s last month before ng dipped, ng recovered, its stock price hasn’t.

    I think it could get back into the 50’s if ng holds here and if that thesis plays out the jan 45’s could double from todays lod of 3 to over 6

    anyways, i hold stock and options and i will add more before they present at the jan ipaa meeting in florida and earnings announcements.

  41. 41
    bloodystupidjohnson Says:

    Ken Heebner is one of the smartest fund managers out there. He thinks that in this cycle, met coal and copper will be in very short supply and their prices will surpass last years peaks.

    However note, Heebner is know to change his opinion a dime. He is not known as the “mad bomber” for nothing.

  42. 42
    zman Says:

    BSJ – yes, as a % of the total pie that’s correct, but they deliver the most tons (11 to 13 mm per year of anyone in terms of met coal in the U.S.) – going by Simmons data, they see 11 mm mt in 2010. Strong prices expected to get stronger there and in thermal coal next year, but especially on the met side. My thinking is people will want to be here and in WLT by year end.

  43. 43
    zman Says:

    BSJ – Simmons concurs on the met coal pricing issue. They see high inventories in the U.S. for thermal coal through 2011 but higher prices on the back of the worst year in quite some time for generation.

  44. 44
    zman Says:

    Bill – Re MCF – what’s the next catalyst there in terms of exploratory drilling, timeline?

  45. 45
    zman Says:

    Yahoo main page has that “unlikely fuel” story as its lead right now that I put at the bottom of the post. How the author thinks natural gas is “unlikely” I have no idea.

  46. 46
    bloodystupidjohnson Says:

    Z: I am biase. I can see WLT (now a longer term holding – lol), but not ANR. I think if I wanted to go out on the risk scale I would consider MEE before ANR. In truth I would probably buy TCK before either of these.

  47. 47
    zman Says:

    Boring market. What is the next event the shorts are going to call for toppling the market?

  48. 48
    bloodystupidjohnson Says:

    Met coal pricing: if memory serves, I think met coal got to 300+ per ton last year.

    On WLT: one reason for WLT and even TCK is the quality of their met coal. Not all met coal is the same. WLT and maybe some of the western Canadian met coal producers might have the best quality met coal in the world.

  49. 49
    zman Says:

    BSJ – WLT I like, Simmons calls fully valued but I really don’t see that. They are probably just waiting on the chart to pull back. Numbers there keeping climbing.

    Re MEE – Aren’t they going to have trouble with the Obama Administration and the whole valley-fill method? Just wondering.

    And TCK I don’t know but I don’t often trade north of the border.

  50. 50
    bloodystupidjohnson Says:

    MEE: Yes, that could be a problem. Plus all the new safety restrictions on under ground mines. This will also effect ANR too. That is MEE, for my money, is a high risk, high reward stock.

    I use to be a fan of ANR, but have soured on the stock since their purchase of Foundation coal. I did not like the deal becuase this made ANR less met coal and more thermal coal. Plus I just did not like Foundations operations.

  51. 51
    skimo Says:

    post 19 dman,
    go to http://blogs.telegraph.co.uk/news/geraldwarner/100020279/copenhagen-climate-summit-most-important-paper-in-the-world-is-a-glorified-un-press-release/
    then in that blog is a utube video link with a graph correlating earth temperature change to solar activity with about a 1 to 1 correlation. Someone said it best when they said “your view on climate change has a lot to do with your politics and general world view.” The Al Gores and Barrack Obamas who want wealth redistribution want you to believe in this scam for their own self interest. By the way there is also a US Senate minority report with around 700 well-regarded Scientists from around the world, including more than a few who were formerly associated with the UN climate change body that are huge skeptics of global warming. Hell, even the global warming guys must be skeptical, they changed it to “climate change” cause facts are we’re cooling down. Now, can we get back to finding ways to make money?

  52. 52
    zman Says:

    BSJ – roger that, just like a barrel is not a barrel is not a barrel. WLT’s is very high quality, needed for high quality steel production.

    I think one of the things in ANR’s favor in 2010 is leverage to unpriced Met coal tons. They have a big swing on EBITDA for each $10 / ton change in met coal prices as per slide 21 in their last presentation. 2010 Street EBITDA is $926 mm and ANR puts the sensitivity at $80 mm for each $10 change in met coal prices. Wow.

  53. 53
    zman Says:

    Notice I’m as neutral as Switzerland in the above debate. My only regret is that I didn’t find a way to short emissions credits mid way through COP 15 when talks broke down as they have sold off since the meet and greet.

  54. 54
    bill Says:

    re 44 mcf, thank you for asking , lol

    Nautilus well was spud in October, should hear something good or bad within a month


    Also, they started drilling in the Cotton valley but the risk will be spread over 15 well package, goal is to earn 15 % while defering taxes..this will be accomplished if ng stays above 6 on the strip as discussed here


    They plan on drilling 2 or 3 more wells in the western gom during 2010 at a cost of 15 m each

    they have over 50 m cash, debt free, and generating about 21 m in after tax cash per qtr or 85 m per year.

    Id like to see them continuing buying back shares but I think at this point he is more interested in replacing production and growing the company although i think sub 45 he is a buyer

  55. 55
    BirdsofpreyRcool Says:

    Dman — #31… here is a good start. Plus, I have long been a student of the affect of Climate Change on Man’s history. So, I have been aware of the Medieval Warming Period (when, for example, populations and property values soared in England, pushing real estate to a bubbbly frenzy in 1312) and the subsequent “Little Ice Age” that followed (which goes pretty far in explaining why the Bubonic Plague had such a devastating affect on the European population). I guess I just never thought that anyone in the scientific community would ignore (or worse, not even know about) these very recent examples of how climate changes dramatically (and quite suddenly, it seems) without the input of man’s impact on the ecosystem.

    I am not saying we don’t have an impact. But, please, let’s start with legitimate data in order to have a legitimate discussion.


  56. 56
    zman Says:

    Bill – thanks. And don’t think I like them. Their costs are nothing. They outsource to good people. And they don’t pay themselves too much. I just don’t understand why they are public, lol.

  57. 57
    BirdsofpreyRcool Says:

    skimo #51 — perfectly said. And I apologize (in advance) for #55. I promise to go back to making $$ now.

  58. 58
    bloodystupidjohnson Says:

    RE: 52 that is true. Coal is usually sold on 1/2/3 year contract basis. For example all of 2010 and maybe 2011 production might be already sold and priced. So one way of looking at coal stocks is which company has the most tons of unpriced coal. This can be looked at like hedge or unhedge nat gas. Which company will benefit the most from higher prices.

  59. 59
    zman Says:

    I just like how you guys are so respectful of each other. Could use that in the Senate now and again, where things are starting to look more and more like Parliament in Thailand.

  60. 60
    bloodystupidjohnson Says:

    What liberal Dems (an oxymoron) not being respectful of each other. Surely you jest.

  61. 61
    Dman Says:

    BOP, skimo.

    Call me disappointed. I ask for references to *actual* scientific papers. Instead I get youtube videos and “americanthinker”.

    Holy cow.

    Surely, BOP, if you are going to be making claims about climate science being wrong, you *must* have actually seen the papers you are criticizing.

    Or, as it turns out, maybe not.

    If you haven’t seen the papers, you don’t even know what you are criticizing, let alone the merits of the critique.


  62. 62
    zman Says:

    Expecting one more PR out of BEXP this week, one day after the bell, if it doesn’t happen tonight or tomorrow night I’d like them to hold off until the following week as no one will be attention on Thursday.

    West – not to be a nag but did you see my question on the Stallion well. 36 stages on a extended lateral in the core of the play. Inquiring minds want to know.

  63. 63
    bloodystupidjohnson Says:

    Bill: you are right on MCF. It is a quality company. I am surprised that it has not really moved more than it has. It is not hedged and rising nat gas prices plays right in their hands. It could be that investors are waiting the results of the current well being drilled.

    Of course it also might be that Contago is not really a household name and that many people just lump them in with other shelf producers — which they definitely are not.

  64. 64
    ram Says:

    Right, making money. Is there an expected event timeline for EXXI?

  65. 65
    reefguy Says:

    55-requires a “memory” of past events. Politicians have no memory

  66. 66
    ram Says:

    The NSSW could be a new category for. 2010.

  67. 67
    zman Says:

    BSJ/ Bill – does MCF have an anti hedging policy that you recall or are they just waiting out higher prices. Some of these guys are in the camp that they are price takers and that they operate and that’s it, let the market sort out the price for them. Personally I think that’s a bit naive or some other similar word, like guys with no debt. I mean, have they ever heard of weighted average cost of capital.

  68. 68
    zman Says:

    What is NSSW?

  69. 69
    reefguy Says:

    IOC- prep for press release at close

  70. 70
    ram Says:

    As a semi-good Catholic, I like to abstain from fowl language as we approach Christmas, so I will refer you to the bottom of today’s post. Can’t wait for druken partys coming up.

  71. 71
    zman Says:


    IOC – Added (2) January $70 calls for $5.90 with the stock at $71.20.

  72. 72
    bloodystupidjohnson Says:

    Z: maybe they have heard of CAPM and the weighted average cost of capital and decide just not to play that game — lol

    I find it refreshing that, when other companies are selling their stock at fractions of what the CEO’s say it is worth in order to pay off debt, that MCF has cash to buy whatever assets they want.

  73. 73
    zman Says:

    Ah, lol Ram, lol.

  74. 74
    zman Says:

    Jat – there is a story on Reuters about crude prices being soft between now and year end due to the tax issue you were talking about. All it says is that refiners don’t want to buy now and carry crude on their books at year end due to taxes.

  75. 75
    zman Says:

    Automoblox a big hit by the way. Kid liked it too.

  76. 76
    ram Says:

    Is there any rumors to where IOC could be valued at after the announcement?

  77. 77
    reefguy Says:

    76- Value or equity price??

  78. 78
    zman Says:

    Useless and annoying office jargon.


    Note that it does not include the word “ramp”. As in “those boys at SWN ramped their volumes something fierce in 2009 and will ramp them further in 2010”

  79. 79
    ram Says:

    Aren’t they tied together?

  80. 80
    bill Says:

    I like the guy that runs it too. He used to be a banker (the old type that didnt take excessive risks)

    He has no overhead, doesnt issue (many) options, isn’t enriching himself at expense of others. Pays his staff well and as he says, work has to be fun or why do it

    He doesnt have a problem of selling assets when prices rise as he demonstrated when he sold off the lng facility and the fayatville assets to swn and he almost cashed out on the high on the 9 gas wells when ng cratered along with the market and 2 hurricanes hit.

    Maybe he does cash out when ng finally recovers and MCF is trading closer to 3 per mcf rather than its current $ 2 per mcf for producing assets

  81. 81
    reefguy Says:

    79- Ony in a perfect world. $82 Share price by January calls

  82. 82
    ram Says:

    O.K. Thanks.

  83. 83
    PackMan Says:

    Retail: What is spin & what is reality ? That is the question …


    NEW YORK (Reuters) – A majority of U.S. shoppers say they are shopping the same amount or less online this holiday season, despite web promotions and a weekend storm that struck the East Coast, according to a survey released on Monday.

    Nearly 57 percent of respondents said their online shopping was the same as a year ago, while almost 24 percent said they were shopping less on the web, according to questions posed by Reuters as part of a larger survey by America’s Research Group.

    The survey polled 1,000 people on Dec. 19 and 20, when a severe snowstorm dumped as much as two feet of snow along the East Coast from Washington, D.C., to New England.

  84. 84
    zman Says:

    Packman – so is a disappointing selling season the next trigger for the bear’s to clink glasses of whatever they clink glasses of?

  85. 85
    bill Says:

    Hey I can resist jumping into the global bs err warming debate. I think the world would be worse off with global cooling in fact mankind would die off although it might help my ng stocks

    Suppose man can affect climate
    Suppose we remove all co2 from the atmosphere

    then what> we cause a global ice age and we have 100 foot glaciers wiping out Manhatten. Can mankind fine tune and inject co2 to flip the switch to obtain ideal climate. They cant even balance a budget. Therein lies another problem , govt out of control but we will leave that for another day

    i prefer warm weather rather than Dante’s inferno

    i agree its all politics> I’m starting to see these little golf cart type cars on the road, aka Pelosi mobiles, God help the occupants if they hit a curb at a speed of 20 mph. If had some excess cash Id buy a hummer and run the moonbats off the road.

    Merry Christmas! 🙂

  86. 86
    BirdsofpreyRcool Says:

    ram — #64 EXXI. There are some positive and some negative events on the horizon for EXXI.

    Personally, i still think the 10% Notes and the 7.25% perpet pref’ds (at par or below) will be the best way to play the volatility in this one (and still sleep well at night). I see the possibility for big swings in the stock (keeping in mind that volatility cuts both ways). Near term = Mitsui acqtn closing + continued ramp in production = positives. Non-economic results from Davy Jones = negative. Don’t think we will know about DJ until Jan… or Feb… tough call, as the well is progressing very very slowly, at it’s current depth.

    Also, reef has some helpful thoughts on EXXI….

  87. 87
    bill Says:

    Obamas working hard these days leading up to Christmas with passenger bill of rights


    I dont know about you, but i prefer my plane to stay on the ground rather than take off into a thunderstorm

    These evil airlines companies, here some new regulations for you, even though the good govt caused them. Enjoy and please dont earn a profit we dont like that. With love, xoxox BHO

  88. 88
    Jerome Blank Says:

    #23 HAL update…HAL reversed back into x’s on its current buy signal with the print thru $30, pushing back into the daily ascending triangle, possibly now staging for another try at stubborn resistance at $32…a print of $32 would be a breakout above resistance for HAL, depending on how you interpret the traditional daily chart, HAL tested resistace near $32 at least 7 times since the middle of october….it’s like knocking at a wall with a hammer, keep stiking at it and eventually it breaks thru…but first I would like to see it hold within the body of the ascending triangle,if it rolls over too deeply from here the probabilty of a near term retest is reduced….

  89. 89
    zman Says:

    JB – thanks much. Just watching the BEXP trade on up.

  90. 90
    bill Says:

    on 67

    >BSJ/ Bill – does MCF have an anti hedging

    The ceo doesnt beleive in it. he says if you want to hedge ng (against your long holdings) you can do it.

    His guiding principle is to be the lowest cost provider.

    He talked about this in one of his presentations

  91. 91
    zman Says:

    Just looking around, volumes are extremely light.

  92. 92
    jat Says:

    Re HAL / general service. While playing way too much poker at Borgata over the weekend, I was speaking with a guy at Elementis Specialties who has been selling drilling fluid for 30 years. After his KK cracked my AA preflop for a tidy cash sum, he was more than happy to tell me about his business. Pertinent to this thread, he was saying that December was the busiest December they’d had in a long time. Another anecdotal report jiving with a lot of the newsflow out there that, domestically, this had been a good quarter for service IMO.

    I like HAL, but I’m talking my book.

  93. 93
    zman Says:

    Thanks Jat, good stuff. TPH saying the 4Q wasn’t great for SLB but they will still beat Consenus by a small margin. Should be a bit better for HAL from what I can tell.

  94. 94
    PackMan Says:

    Z – 84 … that I couldn’t tell you. But since retail has performed very strongly; I would think they could sell off quite a bit.

  95. 95
    zman Says:

    Pack – My thinking too. Who cares if you sell a lot of stuff if you have no margin on it? I just want people out and driving around looking for those great deals, lol.

  96. 96
    PackMan Says:

    Z – I know you think sometimes I am an uber bear. That’s not the case.

    I just get ticked off by all the BS that goes on in the market (up or down) and lately its been up.

    The recovery thesis, particularly as far as the consumer is concerned is complete BS; that’s all I am trying to point out.

    And I trade my views on that sometimes as well which just adds to my ire.

    I just hate to see people suckered in by the Wall Street spin machine and lies planted in the media to support that.

  97. 97
    zman Says:

    NG down 14 cents, crude off 50 cents. And the group has put the breaks on the morning rally but isn’t really falling off much either. We should see a few more last minute press releases this week, perhaps in some of our names.

  98. 98
    zman Says:

    Pack – I don’t think uber bear, just more of a bear than me. Whatever makes you money man!

  99. 99
    PackMan Says:

    Bill 85 – I saw a great line over the weekend, to the effect of “Who the hell do we think we are to think that we can or should change the climate ?”

  100. 100
    PackMan Says:

    98- hear hear !

  101. 101
    Jerome Blank Says:

    #89 BEXP has an amazing chart, breaking out above what is considered by many TA’s to be a bearish ascending wedge formation…not common, and a bullish rejection or a non-conformation of the formation is very rare…if you study the P&F chart for BEXP, there are numerous “bullish towers” of x’s of between 6 and 8 stages in duration, BEXP just printed its 8th box with the trade thru $13.50, not at all saying it can’t go higher, but the history for the stock shows that at about this point, there is a higher probability of at least a temporary 3 box reversal, working with this strategy, the next buy point would be a pullback to support from here at $12…

  102. 102
    zman Says:

    Jerome – I’m only in the calls for the next bit of news and then will reposition. It can’t go up forever and they keep raising the bar with their pr’s at some point they are going to put out a 2,000 bopd IP (which is very strong for the play) and some mo-mo type is going to say “what the heck, I thought they were drilling 4,000’s these days, what’s wrong with them” and punchout over the “disappointment”. That’s one of the problems with press releasing each well. Great when they rise in production in linear fashion. Problem is, they can’t do it forever.

  103. 103
    zman Says:

    adding to 102, I plan to continue to hold the common however.

  104. 104
    zman Says:

    Zzzzz,,, stocks just drifting about.

  105. 105
    jiveyjr Says:

    I have been liking the way YGE is acting on its chart..,,

  106. 106
    zman Says:

    Jivey, yes, better than the U.S. big names in solar. I’ve been sitting on my hands on solar, doing a little reading but not pressed to play the group at the moment. Those guys had a huge contract announcement last week.

  107. 107
    VTZ Says:

    Gold at important support right here. I think it should hold 1090.

  108. 108
    zman Says:

    V – I still contend that the recent talk of rate hikes and the boost this has given the dollar is unfounded.

  109. 109
    zman Says:

    BEXP = wow.

  110. 110
    VTZ Says:

    Z – 100% unfounded. This rally is technical relief only.

  111. 111
    VTZ Says:

    Today Jim Sinclair points out that when comparing a bankrupt Greece in the EU to a bankrupt California in the US, the impact of California would far exceed that of Greece and it’s a good point.

  112. 112
    zman Says:

    Hear ya on that V

    ROSE touching $19

    NOG falling off today, profit taking? Anyway, may add a little more soon.

  113. 113
    zman Says:


    Added another (20) NOG $12.50 January calls (NOGAV) on a little weakness in the name (stock at $11.05).

  114. 114
    choices Says:

    z-NOG-what catalyst or timing are you watching concerning Jan vs Feb calls-earlier you took a few Feb calls.


  115. 115
    zman Says:

    Choices – if the Jans are too early I wanted to be in Febs as well. Looking for a well they mentioned on the December 2 presentation to Cannacord, the Stallion well, which was listed as being completed at that time. This is the largest number of frac stages attempted in the Bakken to date, operator Slawson has turned out some very good wells in the play and this is in the core (Montrail County). Should be completed by at least year end, however, with the operator private it could take awhile for them to be able to talk about it, hence the mix of Jans and Febs. NOG has 20% of the well, which could be a big initial rate well and had only 1,500 boepd at last of check of company wide production so if it is big it will be significant to them.

  116. 116
    zman Says:

    The way NOG is trading looks like that filer from last week is taking 10,000 share sales off the table periodically today.

  117. 117
    ram Says:

    Have you seen the volume in the BEXP JAN 15’s?

  118. 118
    zman Says:

    Ram – nope, thanks. Lots of people making bets on news.

  119. 119
    Dman Says:

    Z – you might remember the article a while back on gap-ology & the idea that most gaps are not significant (they get filled) whilst a few are significant & the stocks never look back.

    All the NG stocks I look at have got an XOM/XTO gap. Question is: was that such a game changer that those are “significant” gaps?

  120. 120
    zman Says:

    Dman – No.

  121. 121
    zman Says:

    Adding to 120. For the gaps to be semi-permanent that would need either significantly higher oil and gas prices in the near term, which I don’t see, or further consolidation which will be slow to occur.

  122. 122
    zman Says:

    But adding to 121, since I’m talking to myself, I’d also point out that the October highs have not been taken out in many cases so the run can continue at least through those for many names as we were higher then with lower and markedly less stable natural gas markets.

  123. 123
    cargocult Says:

    Since we’re being “off topic” today I want to add this.

    Desiderata — written by Max Ehrmann in the 1920s
    Not “Found in Old St. Paul’s Church”!

    Go placidly amid the noise and the haste,
    and remember what peace there may be in silence.
    As far as possible, without surrender,
    be on good terms with all persons.
    Speak your truth quietly and clearly;
    and listen to others,
    even to the dull and the ignorant;
    they too have their story.
    Avoid loud and aggressive persons;
    they are vexatious to the spirit.

    If you compare yourself with others,
    you may become vain or bitter,
    for always there will be greater and lesser persons than yourself.
    Enjoy your achievements as well as your plans.
    Keep interested in your own career, however humble;
    it is a real possession in the changing fortunes of time.

    Exercise caution in your business affairs, for the world is full of
    But let this not blind you to what virtue there is;
    many persons strive for high ideals,
    and everywhere life is full of heroism.
    Be yourself. Especially do not feign affection.
    Neither be cynical about love,
    for in the face of all aridity and disenchantment,
    it is as perennial as the grass.

    Take kindly the counsel of the years,
    gracefully surrendering the things of youth.
    Nurture strength of spirit to shield you in sudden misfortune.
    But do not distress yourself with dark imaginings.
    Many fears are born of fatigue and loneliness.

    Beyond a wholesome discipline, be gentle with yourself.
    You are a child of the universe no less than the trees and the stars;
    you have a right to be here. And whether or not it is clear to you,
    no doubt the universe is unfolding as it should.

    Therefore be at peace with God,
    whatever you conceive Him to be.
    And whatever your labors and aspirations,
    in the noisy confusion of life, keep peace in your soul.

    With all its sham, drudgery, and broken dreams,
    it is still a beautiful world.
    Be cheerful. Strive to be happy.

  124. 124
    zman Says:


    My thought on a gift in that price range would be Itunes cards, shot glasses or one of these:

  125. 125
    zman Says:

    Cargo – I’m dual topic, energy as always plus gift ideas. You know, there’s always the gift of a Zman’s Energy Brain subscription to let people know you really care. Beats the IRR on a diamond hands down and it may be tax deductible.

  126. 126
    baylor3217 Says:

    zman – thanks for the suggestions.

  127. 127
    zman Says:

    Baylor – I have to admit shot glasses are iffy. Maybe coffee cups, it really depends on your crew.

  128. 128
    baylor3217 Says:

    As I always say, work is the vice of the drinking class.

    One of my best gifts was a chess set where the pieces were shot glasses with the type of piece emblazoned on the shot glass.

    Made for some interesting games of chess.

  129. 129
    zman Says:

    NOG minute chart is interesting, especially if you show volume bars on it.

    CLNE – I came, I saw, I did nothing. Hmmm.

    IOC moving up into the close.

  130. 130
    baylor3217 Says:

    Z, 129, vini vidi ?

    Not sure what the last one could be with the new colloquialism. Fini?

  131. 131
    zman Says:


    Did I type something that’s not understandable in 129?

  132. 132
    Dman Says:

    Z – I thought #120 was quite definitive – but extra thinking in 121-122 appreciated.

  133. 133
    jiveyjr Says:

    right re: NOG…I bought some at the 5 day ma 10.93 and it turned therebouts and headed up because others had the same notion….thx for the idea…

  134. 134
    zman Says:

    I’m just thinking out loud. Ok, Beerthirty, somebody wake me if news hits on our names.

  135. 135
    baylor3217 Says:

    Z, 131 – I came, I saw, I conquered is vini, vidi, vici in latin (I’m sure you knew that) so I was theorizing what

    I came, I saw, I did nothing was.

  136. 136
    zman Says:

    Baylor – I took Spanish and German and other ceterus paribus and a couple of others I keep no latin in my head. I’m more of checkers guy, lol … except for the stocks.

  137. 137
    baylor3217 Says:

    I like checkers, especially the chinese kind

  138. 138
    BirdsofpreyRcool Says:

    Jerome — could you do a favor for me? I would love to hear your technical assessment of SGU. It’s a heating oil MLP that just took a pretty huge jump on even huger (is that a word?) volume. I would like to know where you think it could go from here? I personally have a much higher price target for the unit shares… but no one has cared for so long, I thought no one would ever care about little SGU again! Thank you.

  139. 139
    choices Says:

    I wonder when the Chinese will just say the hell with it-a gold mine, heh.


  140. 140
    bill Says:

    eroc out with a self serving deal

    the stocks at 5, they are selling their best asset and paying an insider 29 m to buy stock/back stop a rights plan at 3.10

    hell id do that for a measly 10 m

    Dividends in arrearage dont get paid and if current unit holders dont play in rights offering they get diluted.

    Longer term , now that the insider has same shares as unitholders, dividends will probably resume

  141. 141
    zman Says:

    PBR signs 3 year research and tech deal with HAL for sub salt projects off Brazil.

  142. 142
    West Says:


    Govt to sign deal on secound LNG project
    THE National Government is set to sign the gas agreement for the second liquefied natural gas (LNG) project being developed by InterOil Corp.
    Acting Governor-General Dr Allan Marat will sign the deal tomorrow at 2pm at the Government House.
    Then at 3pm, InterOil and the State will sign at Parliament, and at 4pm the documents will be registered with Department of Petroleum and Energy (DPE).
    The agreement will pave the way for further development of the project.
    The National Executive Council (NEC) approved the project agreement in principle last Dec 10, just two days after project developers for the PNG LNG project led by ExxonMobil Corp gave the nod for the project to proceed starting with the construction phase next year.
    Prime Minister Sir Michael Somare had announced the NEC decision.
    InterOil has already applied for petroleum retention licence (PRL), a first step to getting the petroleum development licence (PDL) for the Elk/Antelope fields in Wabo, Gulf province.
    The InterOil project targets a US$6 billion (K17 billion) two-train LNG facility, with each train capable of producing about four million tonnes of LNG per year.
    Petromin PNG Holdings Ltd is the State’s nominee to participate in the project for State’s 22.5% (2% for landowners) interest.

  143. 143
    West Says:

    Z, I’ll see if I have anything on Slawson well.

  144. 144
    zman Says:

    Thanks West, can’t get that link to work but I assume it is what you pasted.

  145. 145
    zman Says:

    Now that’s a flare watch:

    Latest IOC presentation


    Slide 15

  146. 146
    Jerome Blank Says:

    Re: #138, Hi BOP, sorry for the late reply…the print thru $4 today put SGU back on its first P&F buy signal since early 2007, one problem I’m having with SGU is that, for some reason, my chart data from one service to another is particularly inconsistent over longer time frames, making it difficult to pin down support and resistance levels…but it looks like from here $4.60 is the next zone of major longer term resistance… dialing down to a shorter term time frame, SGU most recently had a tough time breaking above $3.95, this zone acting as a ceiling for almost a month…. it looks like most of the vol today came in at the open this morning, hitting resistance again at $3.95, then a surge on lighter vol at the end of the day to break above resistance and print the new P&F buy signal…$3.95 should act as support on any retrace in a shorter term time frame…I’ll put it on my watch list to try and get a better feel for how the stock trades…

  147. 147
    BirdsofpreyRcool Says:

    Jerome — thank you very much. SGU has been a long term holding for me… too “long term,” if the truth be told. But, I bought on the original resturcturing deal (just love it, when debt swaps into equity at non-hideously dilutive terms to support a new management team), it ran up, then got caught with everything else in the downturn. From a fundamental basis, SGU could trade up to $5.50 (EV/EBITDA or % FCF available to shareholders of MLP), but it’s so small and illiquid, that no one seems to care. Until they do. Like today.

    Thank you again. I would be a seller on any move to $5.50, but sounds like it has to get through $4.60 first. I’ll be watching.

  148. 148
    jiveyjr Says:

    VNR popping up on the IBD stocks on the move…

  149. 149
    jiveyjr Says:

    well, I’m going to add gold down here when the GLD hits my fib # 105.05 or so…may end up with a lump of coal in my XMAS stocking…but whatever…will admit I’m wrong if gold breaches 1,033; not too terribly far away…

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