22
Dec

Tuesday Morning – GDP Low, OPEC Status Quo, DVN Deal

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Market Sentiment Watch: Jingle Bellee. OPEC did nothing (as expected) and the GDP revision figures were light of consensus which may sap the dollar, laying the groundwork for what should be a relatively quiet session.  In M&A news, DVN is on the tape with a $1.3billion sale to Maersk of three of its Lower Tertiary plays in the deepwater Gulf of Mexico which will be supportive of group psychology

Ecodata Watch:

  • 3Q GDP revision to 2.2% vs a forecast of 2.7% and the initial reading of 2.8%,
  • Existing home sales of are forecast at 6.28 mm and will hit the tape at 10 am EST.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today - HAL, KOG
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $20,900
    • 54% Cash
    • The Holdings Tab Is Updated.
  • Yesterday's Trades:

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

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

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

    • NOG – Added (5) February $10 calls (NOGBB) for $2.05 (added on the mid with the stock at $11.42).

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


Commodity Watch

Crude oil fell $0.70 to close at $73.72 yesterday with the decline coming in front of OPEC and year end tax issues and with a stronger greenback. This morning crude is trading off about 50 cents after OPEC did nothing at their 155th meeting.

  • OPEC Watch: As expected, the Cartel left their quotas unchanged. Prices may retreat in the near term after the group failed to adequately address continuing quota cheating.  At their next meeting I'd look for them to seriously consider upping production quotas, especially if prices make a move above the recent range. This would not necessarily be a crude price sinking event as much as a limiting event as the new quotas would probably just be a reflection of aggregate current production (since compliance has slipped markedly in the last nine months) and would signal OPEC's confidence that demand recovery is truly underway and not just in Asia. 
  • Early Read On Oil Inventories:
    • Crude: DOWN 1.6 MM barrels
    • Gasoline: UP 1.15 MM barrlles - This is a fairly type build for this time of year.
    • Distillates: DOWN 2 MM barrels - Normally in this week of the year inventories are relatively unchanged as the refiners are cranking away to meet demand.

Natural gas backed off $0.11 to close at $5.67 yesterday on a warmer forecast and profit taking after a strong run of late.  This morning gas is trading off another 5 to 10 cents.
 

Crack Spread Update


Same Story, Different Week. Cracks remain depressed, estimates for the independent refining group are closer to guesstimates. My sense is that only real product demand will inspire much in the way of a rally in the group. As far as M&A activity goes, it appears that no one is interested in own U.S. refining assets at this time.

 

Stuff We Care About Today

HAL & PBR Research Deal

  • PBR signs 3 year research and tech deal with HAL for sub salt projects off Brazil.
  • Up to 15 projects.
  • Establishes first South American research center for HAL.
  • No $ figure attached to the deal but it will make for good conversation on the next conference call. 

 

KOG Back of the Envelope Update ~ This is probably a bit conservative

What's different from the last BOTE look here?

  1. Cut prospective acreage % from 90% to 75%. That's probably a bit harsh but their area does have limits in it and is not, looking at the results to date, what I'd call, the Core.
  2. Cut EURs from 600,000 BOE to 500,000 BOE per well.
  3. Boosted share count to reflect last deal.
  4. Boosted other assets to reflect last deal.
  5. This section will be added to the KOG Notes page.

Valuation:

  • Acreage Value: There is no way for me to justify KOG's current valuation on an acreage value basis as that would come to $6,800 per acre (net of cash) which is considerably above going rate for "Bakken Lite" territory (to borrow EOG's term). Besides, that's really more useful when a company has not yet spun the drillbit and only comes into play as a takeover thought in that early stage and would really only come into play here if the stock plummets substantially.
  • Price / Cash Flow: The stock is trading at a reasonable multiple of 2010 CFPS of $0.26 at present (8.7x), a little high but that's not uncommon for an early stage company with room to grow. Should they accelerate growth in 2010 I could see this figure moving to as much as 12x which gets you to about $3.
  • Potential Reserves:  For now however, I like using potential reserves as a reasonable measure of upside and will adjust my estimates accordingly in the future as well results become available. Recent transactions in the market continue to suggest that my $15 per undeveloped or "in the ground" potential barrel is appropriate.

IOC News Ahead?

Odds & Ends

Analyst Watch:

  • EXXI - Initiated at Buy at UBS with $3.50 target
  • SM - Initiated at Neutral
  • XTO - KeyBanc cuts to Hold
  • REXX - KeyBanc boosts target from $12 to $16, maintains Buy. 

Interesting Reading Watch:

 

186 Responses to “Tuesday Morning – GDP Low, OPEC Status Quo, DVN Deal”

  1. 1
    zman Says:

    EXXI trading back above $2 on that UBS initiation. Of course, UBS helped run the books on the last deal so many will take this coverage with a grain of salt.

  2. 2
    BirdsofpreyRcool Says:

    z — thank you for your KOG BOTE update. I think it’s a reasonable valuation, at this point. Still upside, but not as much, with the additional shares and results from #9. Would like to see them use a little cash flow in upcoming quarters to buy into some wells in other areas of the Bakken. Lynn alluded to doing this, when he did the capital raise. But, he also thought #9 would be an “average well” (and not a duster) when he did that last raise, fwiw.

  3. 3
    zman Says:

    BOP – I’d like to see some of the other operator wells in the area come in ok, lots of upside if the TFS works well in their area…wonder why he’s a mid 2010 test on that?

  4. 4
    BirdsofpreyRcool Says:

    z — now that they have drilled all corners of their FBIR acreage (and HBP it… wonder what that means for the #9 area… but anyway), Lynn is drilling where he knows he will get cash flow. Also, they are planning on tying into a pipeline late in 2010, so that probably affects drilling locations and timing too.

  5. 5
    zman Says:

    Yep, surely so.

  6. 6
    tomdavis12 Says:

    Z: Cramer had RRC as the next XTO last night. CEO was on.

  7. 7
    zman Says:

    Thanks Tom

  8. 8
    zman Says:

    Comforting things watch:

    http://news.yahoo.com/s/nm/20091222/wl_nm/us_iran_nuclear_ahmadinejad

  9. 9
    edstile Says:

    Z – Do you have any information or thoughts on Crimson Exploration (CXPO)?

  10. 10
    bill Says:

    re your link Gerrmandering..

    I think its unconstituitonal to send money to “democratic” states at the expense of others

    I assume texas and Oklahoma would get pounded with the c02/energy bill

  11. 11
    RMD Says:

    Musing about KOG valuation (and NOG and others) for a second:
    $if I pay in the market $6,800/acre X 640 acres = $4.4mm + D&C cost of well of $4.5mm =$8.9mm.
    If my EUR is 500m BOE worth $15 = $7.5mm.
    So far my “market” cost $8.9mm, “value” $7.5mm.
    TFS well cost (?) $4.0mm, zero land cost, so cost is $4.0mm. EUR 250m X $15 = $3.8mm.
    These #s are before royalty costs.
    OK, what am I missing here, of course remembering the co. paid less than “market” for their acres?

  12. 12
    zman Says:

    Ed – Name rings a bell but not sure from where, will take a quick look.

    RMD – you mean on a take out? Then nothing. Your well costs are a bit high, can get it done for just under $3 mm with the right operator. And people are thinking 320s in other areas so that cuts your acreage cost per well by half. But here, so far, I think 640 acre spacing is appropriate for throwing numbers around. And, as you say, they didn’t pay that for the acres.

  13. 13
    zman Says:

    Stocks drifting …. in the right direction. Liking the action in EOG on a chart but volume is negligible. EOG is breaking out right now. Jerome, any thoughts?

  14. 14
    zman Says:

    NOG getting back on track after bouts of selling yesterday.

  15. 15
    RMD Says:

    12: the calculation is what I am paying for the acres as a stockholder in today’s market,so the co.’s return is higher but my “return at market” is low-negative at today’s stock price.
    Well cost is a guess; NOG’s cheap Slawson wells are under $4mm, AEZ’s 9,000 ft lateral, 24 stage frac is $6.0mm; so I took a guess.

  16. 16
    baylor3217 Says:

    Picked up some POT on this recent pullback. Any thoughts there?

  17. 17
    BirdsofpreyRcool Says:

    EXXI — bit of info from the trading desk… apparently a guy from Mt Kellett Capital took down an 8% stake. I don’t know him, but it’s Mark McGoldrick, who has been described as a “superstar GS prop fund/special situations” guy. That (“special sits”) describes EXXI pretty well… so, makes some sense.

  18. 18
    zman Says:

    Baylor – My POT guy sent me a TA note saying it is still in a downtrend. I’ll see if he can comment on the site.

  19. 19
    zman Says:

    Existing home sales a bit stronger than expected.

  20. 20
    zman Says:

    Where is the Bear parade on CNBC? Market near highs for the year. Why only bring them out when it is falling.

  21. 21
    baylor3217 Says:

    Z – 18 – POT Seems to have bounced off the 50 day this morning. I bought some 110 calls with the stock around 106.50.

    Research indicates that demand is a little stronger than expected and with the recent mini-pullback in NG prices may give it an excuse to run back up to the 20 day over the next few sessions.

    Very volatile but seems to have been in a 100-120 range lately.

  22. 22
    baylor3217 Says:

    Re 20 – Cramer made a strong case for why the market will not go lower now through the end of the year the other night.

    Barring any geopolitical type events, it sounded logical. Not sure what we should expect come January.

    Circle 1/29 on the calendar for initial 4Q GDP. Market may mark time between now and then.

  23. 23
    zman Says:

    Thanks Baylor, a little profit taking in NG wouldn’t hurt POT. Not sure how much of their cost structure it is. Not sure how much ammonia POT produces of its total. I know for AGU the swing on gas prices is pretty big (although I bet they hedged).

    BEXP looking at $14
    NOG looking at $11.50

    EOG and IOC moving well. No news from IOC today but the week is young and the rumors can be better than truth, lol.

    CLNE – wow

    VNR – botched that buy in (as in I set my limit too low multiple times now thinking I’d nab it on the cheap), just keeps running. Rest of MLPs continue to rally but more slowly.

  24. 24
    baylor3217 Says:

    Interestingly EOG Jan 95 calls only have volume of 3 today with open interest of 7,700 on this fairly sizeable move upwards.

    That seems a bit odd to me but I don’t know what average option volume is for them on a given day.

  25. 25
    RMD Says:

    #23: reminder that VNR has always (save for a week here or there) sold at a premium yield to LINE. They are about equal now, though VNR has said they will increase the distribution (but not by how much) and LINE has not commented that I know of.

  26. 26
    zman Says:

    Baylor, don’t know avg either but its early. Also noticing spreads are expanding on many names with bids dipped to the downside, making them below intrinsic value on in the money stocks. Not exactly a sign of a very active market.

  27. 27
    zman Says:

    RMD – thanks. VNR has A LOT more room to do so than LINE. I think LINE bumps it a couple of pennies a quarter soon but that’s all.

  28. 28
    zman Says:

    ROSE breaking out.

  29. 29
    reefguy Says:

    IOC- Three catalysts before Jan options expiration: Dst in lower pay column, Mitsui JV on stripping plant, another investment house picks up coverage.

  30. 30
    zman Says:

    ZTRADE:

    BEXP – Sold the January $10 Calls for $4, up 240% with the stock at $14. Will reposition in short order as I want to maintain leverage for further news here. I continue to hold the common.

  31. 31
    zman Says:

    Thanks Reef

  32. 32
    zman Says:

    ZTRADE:

    BEXP – Added (10) January $15 calls (QBJAC) for $0.45 (0n the mid and easily) with the stock at $14.05.

  33. 33
    elijahwc Says:

    POT – I’m looking for a long entry as well but with regard to the other side of the trade (capacity) as articulated below:

    Dahlman Rose & Co, LLC Reiterate Hold – Industry Overview
    We remain very concerned regarding the long-term status of the potash market and its ability to fully retain the power of its oligopolistic structure. In our view, the oligopoly’s discipline has formed the backbone for the group’s valuation. As such, any deterioration in the oligopoly’s structure may have a major impact on both industry pricing and volume distribution as well as earnings metrics. While we are fully on-board with the idea of rising potash demand, we have major misgivings about simply assuming that the fertilizer market conditions experienced in the period encompassing 2005 to 3Q08 will return anytime soon, even excluding the extreme run-up of 1H08. We are also skeptical about assuming that the companies will be able to return to their 2007 peak sales volumes by 2011 or earlier. Forget the farmers’ dissatisfaction with their recent treatment by suppliers, we just do not see a catalyst, short of a major miss in grain production, driving demand back to those levels in that time frame. It is our sense that a far more gradual rebound in volume (except for the increase into 2010 from the exceptionally low demand of 2009) is in store for the market for at least the next 2 to 3 years. As a result, we see little urgency from buyers to purchase product, unlike 2007 and 2008 when there was a fear of not being able to get potash. In that earlier period, the producers were running flat out with little near-term upside capacity capability. Today, even if we assume 2010 demand of 50 million metric tons (slightly above our own and the current consensus estimate) and clear out the producers’ enormous inventory, there is still plenty of capacity upside. In fact, at 50 million metric tons of production, there may be at least 12 to 15 million tons of excess capacity globally, even assuming the industry can only attain 90% operating rate at peak. We highlight some recent data points: § Lower Brazilian pricing § Stubbornly high North American producer potash inventories § Lower prices for product at small buyers like Sri Lanka and Vietnam (pricing less than $50/metric ton above the India benchmark) § Advancing plans for new capacity from Vale and Agrium (AGU, Buy Rated) In our view, these data points combined with events which have been building over the last 6 to 9 months, such as: § China’s potash negotiating team being politicized § The industry’s inability to conclude a China contract since March 2009 § Rising global producer inventories since 3Q08 to levels well-above the norm § Escalation of customer ill-will toward producers have significantly heightened our concern regarding the long-term fundamental outlook and medium-term prospects for potash-levered fertilizer shares. The question is whether these situations, taken together, may be indicative of a negative paradigm shift. Is there the possibility that the disciplined oligopoly structure for potash and its ability to buffer pricing from supply/demand fundamentals may be weakening, in much the same way that OPEC’s hold on the oil markets was weakened following the 1980 price peak? While we are retaining our Hold rating on both POT and IPI, we note the ratcheting up of the risk profile.

    Contact: Institutional Trading – 212-920-2940

  34. 34
    baylor3217 Says:

    Thanks for the info ELijah

  35. 35
    West Says:

    The “UGLY DUCKLING PLAY” DNR…….Underloved, Underestimated potentional resources, Undervalued stock price. Closed Conroe Field acquistion today with huge long term reserve additions from CO2 flood. Their new green pipeline opens up all of southern LA and se TX fields to CO2 floods which are some huge ooip fields….Oh Yeah my own PT Barnum imitation since I picked them for the next take out.

  36. 36
    zman Says:

    West – Got any scoop on ROSE’ MT Bakken well?

  37. 37
    Popeye Says:

    More cold coming at ya from the left coast.

  38. 38
    zman Says:

    Yep Chicago going to be a blizzard.

    In the South we are too warm.

  39. 39
    JD Says:

    POT: daily chart in downturn (see MACD), though trying hard to hold the 50day at 106.80 or so. While it can reverse quickly on a daily chart, the weekly chart then comes into play with more gravity and current support on the 200day and 50day near 93. 106.80 area appears to be the crucial holding point.

  40. 40
    jiveyjr Says:

    I just been posting away on yesterday’s blog…I’m old and get lost here and there

  41. 41
    bloodystupidjohnson Says:

    West: Re DNR — I would forget DNR, at least for awhile. It is an arbs battle ground with too many cross currents until the EAC deal closes.

  42. 42
    zman Says:

    Thanks JD.

  43. 43
    zman Says:

    Market entering Wow-Boring territory.

  44. 44
    zman Says:

    VTZ – any updated thoughts on gold here?

  45. 45
    baylor3217 Says:

    HAL gets to 30.50 and fails

  46. 46
    baylor3217 Says:

    Chart for SLB almost the exact opposite today. interesting

  47. 47
    West Says:

    #41,BSJ agreed but thats part of the ugly.As far as I can tell most of the deals are not for cos that had an improving chart but the laggards and financially challenged. Just one of the theories….Z , I think maybe I have given you this article RMOJ…..Vol. 89 Num. 44 – October 30, 2009Next >Rosetta, Anschutz Plan More Exploration on Blackfeet Lands
    Glacier County, Montana
    Houston-based Rosetta Resources (Rosetta) and Anschutz Exploration (Anschutz), Denver, both plan more exploration within the confines of the 1.5-million acre Blackfeet Indian Reservation along the western flank of the Sweetgrass Arch in northern Montana. Both of these firms have active exploration programs on the tribal lands.

    Rosetta plans another horizontal Bakken test some 7 miles north of the huge Cut Bank field complex and in between two smaller fields, Big Rock to the west and Blackfoot to the east. Both of these smaller fields produce oil and gas from the Cretaceous and Paleozoic strata.

    Representing their fourth horizontal wildcat staked on the reservation, Rosetta plans to drill the Tribal Big Rock #29-13H, sw-sw 29-37n-6w, a proposed 9,097’ Bakken test that will have a bottom-hole location in the nw-nw 29-37n-6w. There are no Bakken penetrations in the immediate area. Roughly 3 miles east of this staking is Blackfoot Field, a shallow oil pool discovered in 1956 that has produced more than 1.8 mmbo and 1.3 bcfg from the Dakota, Cut Bank, and Madison. A similar distance to the west is Big Rock Field, a gas reservoir that has cumulated more than 7.3 bcfg and 13 k bo since 1963. This production is coming from the Blackleaf, Colorado Shale, Big Rock, and Bow Island.

    Nineteen miles to the south, Rosetta has completed drilling the the #31-16H Tribal Gunsight, se-se 31-34n-6w, a a 9,150’ horizontal Devonian Three Forks test. No information has been released on this well; however, field reports indicate oil has been recovered and it is possible that this wildcat may be a discovery. This test is roughly 1 mile northeast of a dry hole that had good shows in the Devonian. Drilled by Flank Oil, the #1 Bugbee, se-sw 6-33n-6w, bottomed in the Three Forks at a depth of 5,350’. The company perforated the Three Forks section open-hole from 5,028’ to 5,030’ and swabbed up to 10 gallons of oil per hour. Deemed noncommercial, no production casing was run, and the hole was abandoned in 1958.

    Two miles west of Rosetta’s possible discovery is the huge Cut Bank field complex, a stratigraphic-type trap that is considered a class “A” oil and gas reservoir. First discovered in 1926, this field has cumulated more than 171.6 mmbo and 650 bcfg from the Cut Bank, Madison, Bow Island, Kootenai, Sunburst, Lander, Moulton, Black Leaf, and Dakota. This production is coming from depths less than 4,500’. With more than 1,000 holes drilled within this field, this reservoir is currently producing from 600 wells and is averaging 23,731 bo and 130 mmcfg per month. At this time, there is no Devonian production within the field.

    The rig that drilled the #31-16H—Elenburg No. 21—has now moved 18 miles northwest and is making hole for Rosetta at the Tribal Riverbend #12-13H, sw-nw 12-37n-9w. This 10,675’ horizontal Bakken prospect is roughly a mile west of Landslide Butte Field, a vertical Mississippian Sun River and Madison oil pool that has produced more than 861 k bo and 925 mmcfg following its discovery in 1966. The nearest well to the #12-13H active drillsite to penetrate the Bakken section is nearly a mile to the east at a dry hole drilled by Beren Corp. at the #1 Johnson, se-se 12-37n-9w. This hole bottomed in the Devonian Souris River at a depth of 6,984’. The company set 5½-inch production casing to 6,355’ and perforated the Madison, Banff, Bakken, and Nisku with negligible results. No additional testing was conducted, and the hole was abandoned in 1981.

    The final test planned by the company on reservation lands is the Tribal Riverbend W #07-4H, nw-nw 7-36n-9w, a projected 11,230’ horizontal Devonian Souris River test that will spot in the nw-nw 7-36n-9w, Glacier County. The bottom hole is scheduled to terminate in the sw-sw 7-36n-9w.

    This staking by Rosetta is a little more than a mile southwest of a dry hole drilled by Cenergy Exploration at the #1-32 Swenson Warren, sw-se 32-37n-9w. Reaching the Mississippian Madison at a depth of 5,775’, this well was abandoned in 1983. The company ran two DSTs in the hole, one in the Lower Cretaceous Bow Island and the other in the Jurassic Sawtooth. The Bow Island interval at 4,447’–4,465’ reversed out 730’ of mud while the Sawtooth test from 5,637’ to 5,700’ recovered 20’ of slightly gas-cut mud with the sampler containing 1,300 cc of mud. No additional tests were performed, and the hole was plugged. Log tops of this failure include the Rierdon at 5,540’, Sawtooth at 5,636’, and the Madison was picked at 5,671’ under a KB elevation of 4,282’.

    The W #07-4H location scales some 6 miles southwest of Rosetta’s active Tribal Riverbend #12-13H.

    Another outfit that has exploration plans on the reservation is Anschutz. The company has announced plans to drill a 9,543’ vertical Bakken test at the White Calf #1-4, sw-nw 4-30n-10w. This remote test is roughly 7 miles southeast of Two Medicine Field, an anticlinal trap that is bounded on the east flank by thrust faults. This pool, which is currently shut in, was discovered in 1954 by Union Oil at the Morning Gun #31, sw-sw 18-31n-11w. This venture tested up to 10 mmcfgpd and 250 bcpd from the Mississippian section near 9,000’ but was plugged in 1955 because of a lack of market. Several offsets were drilled, and the field cumulated more than 275 mmcfg, 11,510 bc, and 17,223 bw from the Mississippian. This field has been shut-in since 1982.

    The nearest hole drilled to the White Calf #1-4 staking is 2 miles southwest at a failure drilled by Atlantic Richfield (Arco) at the #1-7 MaGee, se-nw 7-30n-10w. This test bottomed in the vertical section of the Duperow at a depth of 10,200’. The company conducted DSTs in the Blackleaf, Sun River, Sunburst, and Potlatch. The only show was across the Potlatch interval from 9,445’ to 9,482’ where Arco recovered 10’ of slightly oil- and gas-cut mud with the sampler holding 2,000 cc of slightly gas- and oil-cut mud and 1 cubic foot of gas. Production casing was run to 10,198’ and the Sun River, Cut Bank, and Duperow were perforated with negligible results. The well was plugged in 1984.

    This newest Anschutz staking is the sixth test planned by the company on the Blackfeet Indian Reservation. To date, Anschutz has drilled three prospects on tribal lands, none of which have been completed as any type of discovery. The company has at least three more prospects to drill

  48. 48
    BirdsofpreyRcool Says:

    jiveyjr #40… LOL 😉

  49. 49
    zman Says:

    West – didn’t have that one, thanks, probably where the rumor about the Tribal Gunsight well comes from. A bit surprised they have not yet announced it as they have acknowledged to keep people up to date on the play.

  50. 50
    zman Says:

    NFG on tape mentioning EOG as operating some of its Marcellus wells. Other than that, see nothing on the stock to explain the little pop above the previous range. Volumes just north of nothing. $100 seems an obvious target for them now.

  51. 51
    baylor3217 Says:

    I sold my EOG options today to raise a little cash ahead of christmas. Just felt like it was getting into a tepid area after recent runs to this general level and failing hard.

  52. 52
    VTZ Says:

    RE 44: No new thoughts other than it gave up the trendline a lot easier than I thought it would on the incredible rally in the dollar.

    I still don’t think it dips under 1000 but it seems more likely that its going to retest the breakout which I find quite silly.

  53. 53
    baylor3217 Says:

    Anyone ever use shortsqueeze.com?

  54. 54
    zman Says:

    Baylor – yes, the link is in the link list on the upper right hand of the site. Good site.

  55. 55
    baylor3217 Says:

    LOL. Cool. I clearly hadn’t seen that one. If it was a snake it woulda bit me

  56. 56
    JD Says:

    FWIW…GLD looks a little like POT in that if GLD does not hold the 21day, approx 104, on a weekly chart, it could be headed to 96, the 50day on a wkly. On the daily chart, GLD has already broken below the 50day as of today.

  57. 57
    zman Says:

    Baylor – I use it for all my short needs, not sure how often they update interest but it seems to be pretty up to date.

  58. 58
    jiveyjr Says:

    for those interested there are some write ups, both technical and fundamental on kitco.com re: gold that are worth reading

  59. 59
    baylor3217 Says:

    Hey Z, is there anywhere on the site that displays a calendar of upcoming announcements such as unemployment, GDP, etc?

  60. 60
    zman Says:

    Most boring sector of 2009 has to go to refining. All red today, but only slightly. Death by a thousand paper cuts all year long.

  61. 61
    baylor3217 Says:

    Re 57, the main thing I use it for is getting a relative context of the % of float and recent up / down tick there.

    I’m not sure of the accuracy of the data, but I’ve made some decisions on the info there in the past (which may be dangerous).

  62. 62
    zman Says:

    Baylor – I put that in the Monday post for the coming week but beyond that I find this site useful:

    http://www.marketwatch.com/economy-politics/calendars/economic?link=skey

  63. 63
    baylor3217 Says:

    Re 56, POT seems to have reversed trend the last half hour or so. Not sure we’ll see a run to $120 in it (or a run at all, but a move to the 20 day would be nice.

  64. 64
    zman Says:

    Re 61 – I just use it to gauge how short things are relative to each other. Take a higher percent short name like a GMXR, with a smallish float and a decent chart, add a bigger than expected gas storage numbers and wallah, pop on either Thursday or Friday.

  65. 65
    baylor3217 Says:

    KOG seems pinned in the low 2.20s.

    Really low volume today

  66. 66
    zman Says:

    Pinned or ignored, its not exactly a must buy at the moment. Probably going to waffle through year end, rising into the next set of wells, maybe mid quarter completions.

  67. 67
    baylor3217 Says:

    probably more the latter.

  68. 68
    isleworth Says:

    Z – any fresh thoughts on WRES?

  69. 69
    zman Says:

    WRES – No, I don’t expect anything to drive that name until February. Let me check when they normally talk about their budget for the coming year and get back to you.

  70. 70
    kiaora Says:

    JD….Some of the gold gurus I follow feel that gold will go to 1050ish and bounce from there…FWIW

  71. 71
    bloodystupidjohnson Says:

    Z: I am assuming that you think that DVN sale of offshore assets for 1.3 bill is a good thing. Then with the stock only up a quarter, do you think that the news was already baked in the stock or something else? Do you think that DNR should have gone up more on this news?

  72. 72
    zman Says:

    Re DVN – I think it is positive however, I don’t know what the reserves were associated with Cascade, St Malo, etc. Lower Tertiary was once thought to be the Grail so the price does not seem all that high. Will see if I can pin some numbers to it. That kind of pr should be done after market, to give people a little time to work it up, not just before the open on a holiday week.

    DNR – is that news or just the closing of a previously announced deal.

  73. 73
    bloodystupidjohnson Says:

    RE: 72 — that is just the closing of the previously announced Canroe deal.

  74. 74
    VTZ Says:

    RE 70 – That’s what the momo consensus would be which means that so long as the dollar stays weak we’ll at least see a retest of both the India buy level (1045) and maybe the 1034 breakout.

  75. 75
    VTZ Says:

    What I want to know is if anyone is buying the dollar for more than the short term? I find that hard to believe.

  76. 76
    zman Says:

    Seneca, part of National Fuel Gas, mentioned above has a 10 MM/d IP and a 9.5 MM/d 7 day average rate from the Marcellus. This is probably the reason behind the little bit of extra zip in EOG today as that’s a pretty good rate for the play. Why UPL isn’t up but is instead lower is probably hangover from their acquisition in the play yesterday. This Seneca well is just north of UPL’s new acreage. On a normal day that kind of rate would be adding zing to UPL and RRC despite their fat multiples.

  77. 77
    zman Says:

    VTZ – Either the equity markets don’t buy the move in the dollar or the relationship of late between the two has snapped.

  78. 78
    zman Says:

    Consensus looking for 172 Bcf for Thursday’s withdrawal, sounds about right.

  79. 79
    milepost_43 Says:

    59 62.. I like this Bloomberg site especially for the little write ups on each item
    http://www.bloomberg.com/markets/ecalendar/index.html

  80. 80
    baylor3217 Says:

    Thx milepost. I like that one as well.

  81. 81
    zman Says:

    MP – Thanks, added that to my favs.

  82. 82
    Jerome Blank Says:

    Re:#13 EOG…EOG printed another X on the P&F buy signal with the print thru $96 today…EOG gapped up and out of a daily consolidation triangle back on 12/14 and never looked back…first support on pullbacks from here at $92.50 to $93…

  83. 83
    Jerome Blank Says:

    HAL, so far , doing what it should be doing for the bulls, holding within the ascending triangle retest….

    KOG…still a P&F buy in x’s….my target is still $3.25…

  84. 84
    zman Says:

    Jerome – thanks. Lots of things breaking out now without anything like near term resistance. WLL case in point. These seem to be filling in gaps or at least quick falls from the group crunking that took place in October 2008.

    SWN is an exception in that it is trying to break through $50 which was about the higher from summer 2008. On a monthly chart, that stock looks very interesting to me.

  85. 85
    AAA Says:

    CL futures spiking 50 cents, any news?

  86. 86
    Jerome Blank Says:

    Hi BOP, I have SGU trading up to $4.51 today, on a little lighter vol so far than yesterday, but the 30 min looks like it may be consolidating for a run at resistance at $4.60, I would like to see $3.95 hold to keep the probability favorable…

  87. 87
    zman Says:

    AAA – Could be roll trading volatility. Roll trade occurs between end of contract (yesterday for the Jan’s) and pipeline scheduling, about a 3 day window.

  88. 88
    zman Says:

    …And it dragged natural gas into the green as well.

  89. 89
    West Says:

    EOG requesting order from NDIC to add additional depths as part of the Bakken formation and the ability to drill up to 3 wells from the same pad. The wells would target three separate laterals , Middle Bakken, Upper 3Frks and Lower 3Frks. Adding an additional 500 plus drlg sites in the Parshall Field. Also Train transportion of oil will allow EOG to continue to produce all wells this winter as opposed to last winter’s debacle, where they actually lost money by truck transporting oil to Cushing, OK

  90. 90
    zman Says:

    …Although, I see the next six or so months are up strongly as well of a sudden, so maybe there is a rumor.

  91. 91
    Jerome Blank Says:

    Re: #84, WLL,SWN,BEXP are all 9 box bullish P&F “towers of power”, but the probabilities are increasing for healthy, at least 3 box reversals…”grow the corn stalks, then reap the harvest” so to say…

  92. 92
    zman Says:

    West – thanks, had not heard about the 3rd zone, too far apart to drill between and hit both with 1 well I guess? On the rail, hearing it could be in service before year end. Reduced transportation costs for them, NOG as well, maybe some others.

  93. 93
    baylor3217 Says:

    zman, something about that post and the rail made me think of the plot in Atlas Shrugged, if anyone’s read it.

    The parallels in that book and what the government is doing today are remarkable, especially given that it was written in 1957.

  94. 94
    zman Says:

    Hmmm, the SWN looks quite different to me than the others on a candle stick chart, less mature. From a fundamettal standpoint, the multiple premium for Marcellus players relative to other shale types is somewhat justified but starting to contract as gas prices firm and transportation costs come down in plays like the Fayetteville. So going back to the SWN chart I’d expect it take out the recent highs. If winter proves to a cold one in the northeast I’d also expect RRC to run through its recent highs fairly quickly (Cramer or no Cramer).

  95. 95
    zman Says:

    Baylor, yeah, truth becoming stranger than fiction.

    HAL taking another shot at 30.50 soon.

    CLNE – If I had to pick one regret for 2009 …

  96. 96
    BirdsofpreyRcool Says:

    Jerome #86 — strangely, i have no idea why SGU picked the last two days to scoot up. Absolutely NO IDEA. Except that is it cheap and will either increase the distribution and/or do accretive acqtns. Frankly, someone should just buy out the entire company… it was pretty stupid to set it up in an MLP structure. But, old mngmt is gone and Yorktown Energy Partners owns the GP. I think of those guys like the “First Reserve” of NYC… i.e. pretty darn smart.

  97. 97
    Jerome Blank Says:

    Re: #94, don’t get me wrong, SWN is a buy, but, it’s a given that SWN has several great characteristics present, first the massive “bear trap” on 12/9, the huge move higher breaking, not only P&F trendline resistance, but the buy signal print wih the trade thru $46…WOW…but even champions need a rest, the probabilites are rising for a short term pullback, a trader buying into the rally here should consider a position size that can weather at least a three box healthy pullback, especially at a huge target point like $50 where there’s probably profit stops galore…

  98. 98
    zman Says:

    Hear ya on that Jerome, thanks much, caution noted. Up 50% on my $48s, holding. May add $50s the next downturn as I think it is a “must buy” for year end for some folks. I’d note that it fought off a downturn today and volume is improving. But is has some big gaps in place now.

  99. 99
    BirdsofpreyRcool Says:

    Jerome — EXXI… does it look like it’s finally over the wave of perpet preferred hedging? Seems to be popping out of it’s recent hole. Anything interesting on the chart there? thx!

  100. 100
    zman Says:

    On the BEXP, that one has news coming. SWN and WLL I doubt we hear from again before the 4Q calls in February.

  101. 101
    Dman Says:

    eli – #33 thanks for passing along the deep thoughts on POT. I was ready to buy on Monday but got gazumped by the GS pump.

    VTZ – Jim Rogers sez the dollar is strictly a short-covering rally. Short-term traders playing along of course.

  102. 102
    VTZ Says:

    RE 101 – Oh I know it is too. I’m not at all worried… looking to add my final chunk in my gold position.

  103. 103
    zman Says:

    Natural gas up a nickel, taking back half of yesterday’s loss.

  104. 104
    Jerome Blank Says:

    Re: #99 BOP…a picture perfect bounce off the redrawn lower ascending triangle trendline, this shows we have it drawn with the majority viewpoint now…I’d love to see it hold within the triangle body and go for a third retest of resistance at $2.50…

  105. 105
    West Says:

    Z what is tab for company picks?

  106. 106
    zman Says:

    West – are you looking for what I hold now, or the long term names I like, some of which I hold? Or the mini reports on companies?

  107. 107
    zman Says:

    Here are current holdings:

    http://zmansenergybrain.com/subscriber-data/holdings/holdings-wiki/

    Here is the long term thoughts page (which is about to get an update):

    http://zmansenergybrain.com/subscriber-data/long-term-names/

    And the reports are here:

    http://zmansenergybrain.com/subscriber-data/zeb-reports/

  108. 108
    West Says:

    I’m sorry, loooking for the companies picked for the takeover contest.

  109. 109
    zman Says:

    oohhhhh, just one second

  110. 110
    baylor3217 Says:

    Can we still submit for the takeover contest?

  111. 111
    zman Says:

    Baylor – yes.

    That table is on the Calendar page:

    http://zmansenergybrain.com/subscriber-data/calendar/

  112. 112
    West Says:

    Looks like Dave J already won.

  113. 113
    zman Says:

    Yeah, I should knock that off the list, just mindlessly entered it in.

    Dave J, gotta pick someone else.

  114. 114
    elijahwc Says:

    Okay, question on VNR. I noticed its legal structure is as an LLC which causes the pass through of income (and loss)and therefore the issuance of a K1 for tax purposes. Therefore it sounds like an MLP. The question is whether for tax purposes is is treated as one and whether the income stream is considered UBTI (unrelated taxable business income)which makes it inapporiate for tax free accounts (makes you file a return and pay taxes on amounts over 1,000). Or is it similar to MVO which is a structured as a Grantor Trust and therefore is suitable in tax exempt accounts?

  115. 115
    tomdavis12 Says:

    Z: Citigroup top ten ideas for 2010 includes APC with price target of $130

  116. 116
    zman Says:

    EXXI at $2.19 = Zman up 3%. Woo Hoo

  117. 117
    zman Says:

    Tom – That’s a hefty target for all that debt. Maybe they are thinking it gets bought. I like it too but wow.

  118. 118
    baylor3217 Says:

    So do we have to pick someone that no one else has picked?

  119. 119
    zman Says:

    Baylor – yep.

  120. 120
    baylor3217 Says:

    CONTEST CONTEST CONTEST

    HK

  121. 121
    baylor3217 Says:

    oh ok…I saw some on their picked twice so I figured we could pick the same one.

  122. 122
    zman Says:

    EOG is screaming to be on that list.

  123. 123
    zman Says:

    If CHK gets it they both win because I missed that but no more dupes please.

  124. 124
    baylor3217 Says:

    BEXP breaking out huge!

  125. 125
    zman Says:

    New wine pick for the holidays:

    California Karma – $15. Big, bold, red.

  126. 126
    zman Says:

    Baylor – 1 or maybe 2 wells before New Year’s to press release, habit has been after the close. Today would be a good day for that so I guess people are thinking the same thing.

  127. 127
    tomdavis12 Says:

    Z: Do you want to put out a top 10 dance card for 2010 or is your updated long term names the way to go?

  128. 128
    bill Says:

    bop or z do you have a copy of the new exxi research

    ng and oil now green stocks appear to be lagging with hk down more than 1 % on the day..strange

  129. 129
    zman Says:

    NOG looks like its about to pull a BEXP here as well although the volume is pretty light.

  130. 130
    BirdsofpreyRcool Says:

    bill… i sent it to z…

  131. 131
    zman Says:

    Bill – I will forward you email to BOP if that’s ok? I know she has it.

    Tom – working it up, will be ready next week.

  132. 132
    bill Says:

    everybody is running to the bahken (stocks)

  133. 133
    bill Says:

    sure..thanks z

  134. 134
    zman Says:

    Can I send your email to BOP Bill?

  135. 135
    bill Says:

    and ty bop

  136. 136
    Jay Says:

    OK EOG for the list! Could use a break!

  137. 137
    BirdsofpreyRcool Says:

    what i like about the UBS EXXI initiation piece is that they get to their $3.50 PT without recognizing any upside from the deep shelf wells. That is what I was hoping… and frankly, they see upside to that just based on where energy prices are headed. So, i thought it was a pretty good report (even if they did lead the last underwriting).

  138. 138
    bill Says:

    do you think exxi splits the stock and would you view thats as a positive/negative or a non event.

    I assume some institutions will not invest in a sub 5 dollar stock

  139. 139
    zman Says:

    Gotcha Jay.

  140. 140
    BirdsofpreyRcool Says:

    bill — everybody knows that a reverse split is normally a death spiral for a stock price. But, i don’t think that is the case here. Given that EXXI is a fairly highly-leveraged company (with lots of bank, notes, and now preferreds to play with, in addition to the stock), there are lots of HFs that would own EXXI (or own more of it) if it was marginable. I would have liked to see them get the stock price up the old-fashioned way (like BEXP did), but I think Schiller has in mind being a $20 stock… and that ain’t gonna happen organically for a while. So, i’m ok with a reverse split here… if it happens.

  141. 141
    zman Says:

    Re 138 – I had not heard anything about them doing that. I know some won’t tackle a penny name but this one has size production and a good asset base, just a low price per share. I generally don’t like splits of either variety as they change nothing fundamentally but I guess I wouldn’t be opposed to it if it got around some fund family’s rule. Most reverse splits that I have seen generally fall back to the pre split price but in this case it might work. Still, would rather not see them do it…just a stigma thing.

  142. 142
    zman Says:

    BOP – was writing while you were. Great minds and all, LOLOL…

  143. 143
    zman Says:

    Coal names whipping higher again today.

    BTU break out probably tomorrow, maybe this afternoon.

    WLT is already there

    ANR looking to extend

    MEE extending

    ACI is the laggard, they’ve had some technical issues, long wall mining problems but those should be factored into lower production for now. Might be interesting.

  144. 144
    Dman Says:

    The dollar advance has now become rather glacial .. it’s trying to bore us into submission. But that approach isn’t getting much respect from crude, sugar or the SPX.

    OTOH commodities that went crazy of late (gold, platinum, copper) are taking a downside breather. But I’d hardly call the gold decline panicky at this point. I mean, metals are supposed to trade volatile.

    Which reminds me: Marc Faber observes that in other long-term liquidity driven bull markets (i.e. driven by money-printing), nominal asset values rise enormously but so does the volatility. So in that context, the recent gold selloff makes perfect sense.

  145. 145
    zman Says:

    Good points D. I noted the dollar fade on the GDP revision (we have to print more to get/keep the economy going) but then it rallied apparently with the existing home sales numbers. This last makes little sense to me as the housing sales were the result of a government pump job and not because everyone feels safe and wanted to trade up. They say the pendulum always swings to far and maybe it did with the dollar to the downside but the reasons for the current rally are thin and getting tired.

  146. 146
    zman Says:

    Nabbing a quick lunch, back in 15.

  147. 147
    PackMan Says:

    EXXI; now that is completely weird, right.

    Big upgrade but stock flatlines at $2 until exactly 1 pm, where it rockets for 1 hour to 2.20, then retreats.

    I had a feeling that someone short was holding it down; covering; accumulating and then it might go higher; but that kind of price action is bizarre.

    Anyway; cashed out all of my EXXI for now; got in a bit early the day before and day after the 2ndary. Still did ok.

    Thanks BOP, Z, etc.

  148. 148
    RMD Says:

    96 BOP: thanks for Yorktown background. They largest holders of AREX.
    114 Ej: if it is imp’t, website has a tax section and IR dep’t happy to talk to people.

  149. 149
    BirdsofpreyRcool Says:

    PackMan — very happy you made $$ on EXXI. Way to go! Thx for sharing.

  150. 150
    BirdsofpreyRcool Says:

    RMD — those Yorktown Boys typically know what they are doing… and they are LONG TERM holders… not your typical PE flipper. They also have a great reach into the energy community (managers, directors, CEOs)… which is highly unusual, given that they are not in TX, OK, CO, or LA.

  151. 151
    Popeye Says:

    CHK = HOD
    HK = LOD

  152. 152
    zman Says:

    Popeye – yeah, noisy day. Perhaps for me to get back long HK from an options standpoint but I’m going to hold off a bit.

    BEXP up 7%. Leaky, leaky, leaky is my bet.

  153. 153
    zman Says:

    Street looking for modest draw on crude and modest build on gasoline tomorrow. Also looking for a 2 mm barrel draw on distillates which is a bit out of character for this time of year unless you have the weather we’ve been having.

  154. 154
    BirdsofpreyRcool Says:

    #151 Just got spammed in my email with a Cramer piece. Says CHK is the number 1 pick by PMs as the next take-over target.

    I don’t agree… but, who knows.

    By the way, XOM was rumored (from some who was in the position to know) to be going after XTO over 2 yrs ago (which is when he told me)… it was just about the time XOM got out of their Barnett holdings. So, something to keep in mind, when one is searching around for examples of “glacial slowness.” Big things happen, but not always as quickly as we think they should. (Note to self…)

  155. 155
    zman Says:

    Hear ya BOP, I don’t think it is next. I honestly think the Majors will be slow to respond so it will be a large cap for a mid or a mid for a small that’s next. EOG gives a Major a lot more diversity if they want to go U.S. than does CHK.

  156. 156
    RMD Says:

    152: BEXP’s State 36-1 is the closest public co. well to the south west corner of AEZ’s acrage, so if it is good, AEZ should play. (Reminder, I’m long.)

  157. 157
    zman Says:

    Baron’s pick was DVN last weekend, fwiw.

  158. 158
    zman Says:

    re 156 – that should be this week or next:

    http://zmansenergybrain.com/subscriber-data/e-p/catalysts/

  159. 159
    zman Says:

    Housekeeping Watch: If you think you have something to add to the catalyst list please send it in before the next Monday.

  160. 160
    zman Says:

    Crude diving lower after the close of Nymex.

  161. 161
    elijahwc Says:

    #148 – On VNR tax status: Got to admit I was hoping that u would do my homework for me…haaa! It’s a true MLP and therefore should be held in taxable accounts.

  162. 162
    choices Says:

    EXXI 10’s: Bid 88.75,Ask 91, last trade 91,
    vol 9.49

    quite a day in volume!
    Again, excellent call, BOP.

  163. 163
    choices Says:

    #162: vol 9.49 mil.

  164. 164
    zman Says:

    There must be a trick to getting the Crimson Exploration symbol to work with my system.

  165. 165
    zman Says:

    CXPO – highest rate well in the Haynesville, that’s where I remember them from, IPO’d today. Will have a look tonight.

  166. 166
    BirdsofpreyRcool Says:

    choices — thank you for the update there… I know several people who tried to buy the EXXI bonds when you did and never got their order filled. That was a great buy!

  167. 167
    zman Says:

    Beerthirty. Shop hard, shop fast.

  168. 168
    Dave J Says:

    Change me to XCO as the next takeover cand.

  169. 169
    West Says:

    Question concerning AEZ.On slide #8 from 12-7-09 presentation they show large acreage position surrounding KOG’s leasehold on FBIR , does anyone have any information or links for data? Z have you done a write up or have information available?

  170. 170
    isleworth Says:

    Leon Cooperman files 13G for 5.5% ownership in EXXI…..impressive!

  171. 171
    BirdsofpreyRcool Says:

    oh, man… i LOVE Lee Cooperman!!!

    That makes my day.

  172. 172
    BirdsofpreyRcool Says:

    (the last time Lee and I owned a large chunk of the same stock, it turned out to be a 6-bagger…. NOT that I’m expecting that with EXXI… but, it was a nice experience… would be fun to repeat…)

  173. 173
    baylor3217 Says:

    I see IOC up 5% in ah trading. No news though on the yahoo site.

    Anyone got any info?

  174. 174
    BirdsofpreyRcool Says:

    baylor — nothing on Bloomberg…

  175. 175
    PackMan Says:

    149 … BOP — thx.

    Missing the rally on everything else post XTO however (HK, SWN, etc.).

    BOP … I think you have an email for me; can you forward EXXI report ? thx.

  176. 176
    PackMan Says:

    170 — must have bought the offering ?

    I met Lee Cooperman once last year; thought he was kind of goofy.

  177. 177
    BirdsofpreyRcool Says:

    Pack — I don’t seem to have your email address… can you post it?

  178. 178
    BirdsofpreyRcool Says:

    Pack — cool! where did you meet him?

    Some of the best money managers are goofy. They look at things differently than the rest of us… Economists and Strategists have to sound smart and serious, but that is b/c they aren’t measured on an absolute return index. Money managers are. And in person, they are usually very quirky people.

  179. 179
    PackMan Says:

    After a company presentation at some I-Bank conference in NY. Probably one of his biggest loser investments.

    Quirky would be a good way to describe him.

  180. 180
    BirdsofpreyRcool Says:

    He and I ran into each other in the HLSH food fight. I got there first, but when he arrived at the party, I knew I was onto something.

    Like EXXI, HLSH was another situation where there was dynamic tension (to put it mildly) between the debt and equity holders. Where debt intersects equity can provide some of the best returns (under the right circumstances, of course).

    What was his “loser” investment? (we all have them….)

  181. 181
    BirdsofpreyRcool Says:

    And yes, you are correct. Lee bought those EXXI shares in the 2ndary.

  182. 182
    PackMan Says:

    NRF; for some reason he owns (or owned) close to 10%

  183. 183
    zman Says:

    168 – done

    169 – will check but I think it was just a basic piece I wrote once RMD brought it up.

  184. 184
    RMD Says:

    169, West, I don’t have data that specific, but will inquire; I am not holding my breath though.

  185. 185
    zman Says:

    IOC on the tape – signed go ahead with PNG for LNG plant.

  186. 186
    roy pocock Says:

    roy pocock…

    […]Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Tuesday Morning – GDP Low, OPEC Status Quo, DVN Deal[…]…

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