23
Dec
Wednesday – Oil Preview Plus Thoughts Through Year End
Market Sentiment Watch: Not a whole lot of trading going on so stocks just in Happy Drift Higher Mode. I raised a little cash yesterday and see doing more of that between now and mid next week. I have a short list of names that would look good for managers to own at year end which may give the names some up creep into New Year's. I'll have my 2010 thoughts and 2009 thought review out next week.
- Eco Data Watch:
- Personal income up 0.4%, in line with forecast,
- Consumer spending up 0.2% for November, short of forecast of 0.6%,
- We get Consumer sentiment at 10 am EST (forecast 74, last read 73.4),
- We get New home sales at 10 am EST (forecast 420K),
In Today's Post:
- Holdings Watch
- Commodity Watch
- Oil Inventory Preview
- Stuff We Care About Today - IOC, APC
- Odds & Ends
Holdings Watch:
- $10KP II:
- $21,100
- 60% Cash
- $21,100
- Yesterday's Trades:
- 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.
- BEXP – Added (10) January $15 calls (QBJAC) for $0.45 (0n the mid and easily) with the stock at $14.05.
Commodity Watch:
Crude oil bumped up $0.68 to close at $74.40 yesterday in volatile trading, shrugging off yet another rally in the dollar. After the close, the API released a fairly bullish looking set of data. This morning crude is trading up 50 cents as the dollar takes a bit of a breather.
- Nigeria Watch: Rebel Yell Over Late 'Amnesty Allowances". Former rebels are protesting the government's failure to follow through on promises to pay them not to be, well, um, rebels. MEND is getting restless. What a shock.
Natural gas inched up $0.05 to close the day at $5.71 reversing early losses as crude turned around. This morning gas is trading off a dime. Last week I wrote that further gains in gas in the near term would likely be capped without more data as the weather patterns, while still cold, have moderated from the temps that produced last weeks big kahuna storage draw.
- International Gas Watch: UK imported natural gas for the first time in November.
- Early Read On Natural Gas Storage: The Street is at 172 Bcf.
- Last Week: 207 Bcf withdrawal
- Last Year: 144 Bcf withdrawal
- 5 Year Average: 126 Bcf withdrawal
- 10 year Hi: 46 Bcf withdrawal
- 10 year Low: 167 Bcf withdrawal
Oil Inventory Preview
API Watch:
- Crude: DOWN 3.7 mm barrels
- Gasoline: DOWN 1.1 mm barrels
- Distillates: DOWN 0.7 mm barrels
ZComment: Directionality has been good between API and EIA results of late so that's positive for oil bulls given the across the board withdrawals API shows above. Magnitude however is a different story. If we get API's distillate number that will likely prompt some selling of HO and crude. I'll be looking for a continuation of the seasonal rally in demand we saw really get underway last week for distillates. Crude is anyone's guess as the imports ventured into "below range" territory last week and by all rights should improve with this week's report.
Stuff We Care About Today
IOC's LNG Plant Gets Go Ahead
- LNG Plant approved by Papua New Guinea government ($5 to $7 B cost to complete)
- First LNG production - late 2014 or early 2015 - in line with prior guidance upon approval
- PNG would have ownership of 22.5% in the deal which is not egregious and is in line with past thinking here.
- Near term catalysts:
- Testing the oil leg in the current well (Antelope 2).
- Sell down interest in Elk/Antelope structure to a Major or a NOC to fund the LNG project
- Condensate stripping project should yield liquids volumes beginning 2011.
- Nutshell: Should move the stock today as this is a major milestone in the story.
APC - Hits Keep Coming of West Africa
- Mahogany Deep 2 well (greater Jubilee area) a successful appraisal
- Encountered light oil in three intervals
- APC has 31% of the well in this growing field.
If I Were Running A Fund With Energy Exposure Coming Into Year End... and I wanted to look smart I'd want investors to see many of the following names on my books at year end: (Note also that these are not necessarily my favorite picks for 2010; those will be out next week although admittedly there is quite a bit of overlap and the format will look similar to this only expanded to add some less obvious names and colorful charts).
Focused Natural Gas Exposure With Growth: Theme - 2010 will be a better year for natural gas than 2009 so owning these tells them you can see the future.
- SWN - Fayetteville shale leader, emerging E.Texas, nascent Marcellus, big growth, costs that will surprise to the downside.
- RRC - Marcellus, Marcellus, Marcellus,
- UPL - Wyoming gas plus Marcellus
- HK - Haynesville shale core leader, Eagle Ford, Fayetteville,
Bakken, The Big U.S. Onshore Play: Theme: Every barrel of U.S. oil production is one less barrel of imported oil.
- WLL - Clear winner in IPs,
- CLR - Mid Cap name with leadership acreage position,
- BEXP - Emerging player (but only for the higher risk types)
Gassy But Getting oilier, With Deep Value Reserves:
- EOG - look for more oil plays in 2010, plus better Bakken returns and mid 2010 China gas play announcement.
- NFX - 5 deepwater projects coming on line in next 12 to 15 months plus better Bakken results, offshore China, Malaysia, and big gas from the Granite Wash.
Gulf of Mexico Shelf: Theme: Multiple Expansion on Product Price Stability
- SGY and or ATPG - Because the Shelf-trinsic should
Oil Service - I'll expand on this next week.
- Into year end I think they own the bigger names (HAL, SLB, BHI)
Coal - Theme: Higher demand and prices for thermal and met coal next year.
- BTU, WLT, ANR, and even ACI and MEE
CXPO - Will have a quick look at this IPO next week
Odds & Ends
Analyst Watch:
- SLB - Upped to Overweight at Barclays, target bumped from $64 to $73.
Interesting Reading Watch:
Pritchard out with a morning note, upping their PT for BEXP from $14 to $17.
These guys are quick! Considering the stock is already at $14.57…
December 23rd, 2009 at 8:48 amInteresting:
http://sentimentrader.posterous.com/this-rarely-happens-in-the-options-market
Thanks BOP. They probably have a director of research who watches price targets as a way to get his guys to publish. “Can you justify raising the target price?” If yes, do so with a 1 or 2 sentence blurb, if no, ya gotta right a valuation downgrade piece. The yes one is easier to write just before vacation time, especially if the stock has some momentum and catalysts on the way.
December 23rd, 2009 at 8:51 amz — great perspective. Thank you for sharing. Makes sense… lol.
December 23rd, 2009 at 8:52 amReef- Congrats on your continuing shepherding of the IOC story around these parts. Good call.
December 23rd, 2009 at 8:53 amBOP – It would be interesting to see if there are numbers behind their justification that actually hit the bottom line. Or did they just say, “good stuff on the way, increasing our NAV” (which is a pretty soft reason as NAVs and stocks prices often have little to do with each other until you get acquired) or the even worse “we think it’s worth 15x next years CFPS instead of the 13x we previously saw as a forward multiple target”. Love to hear it if you have it.
December 23rd, 2009 at 8:56 amStory in Business Week saying HAL said there are 1,500 gas wells left to be completed in North America. This runs directly opposite to what EOG and others said on their 3Q calls, that the inventory of drilled but not completed wells has been substantially eaten through.
http://www.businessweek.com/news/2009-12-23/gas-price-recovery-may-be-slowed-by-backlog-of-unfinished-wells.html
December 23rd, 2009 at 9:05 amz #5 — if there is more to the PT upgrade, then they aren’t putting it in writing. Just stuffed it in the morning note saying “increasing price target from $14 to $17.” If there is more, I don’t see it.
December 23rd, 2009 at 9:09 amreef — Major Kudos on your IOC call… you have been persistantly correct on this one. Nice.
December 23rd, 2009 at 9:10 amBOP – LOL. I left that possibility out. The “because we say so in a table full of data, it’s Christmas, leave us alone, and give us our bonus checks” reason. Bet they upped their NAV and didn’t feel like explaining it.
December 23rd, 2009 at 9:12 amIOC bid 75.05.
December 23rd, 2009 at 9:12 amCrude back over $75 on the dollar and thoughts that year end tax issues may yield continued crude and product drawdowns.
HAL may coat tail that SLB upgrade through the resistance at 30.50 this morning.
December 23rd, 2009 at 9:13 amBOP – saw the TPH comment on APC and I agree, underperformance relative to the big cap E&Ps is undeserved and should/could reverse on the Mahogany 2 results.
December 23rd, 2009 at 9:15 amTMR gobbled up by Alta Mesa holdings, a private company. Will be interesting to see if we see Alta Mesa come public in due to time as it plays in the E.F.S. See ya TMR.
December 23rd, 2009 at 9:17 amTudor has a love hate with sd.
Today they are out with an accumulate and a 20 target. In the last 3 months they went from a buy to a sell to a hold and now back to a buy.
They mentioned that fst is up 24 % with sd flat on the latest 800 m asset purchase from fst for 80 mboe .. half of which is oily.
Market pundits say they got a steal to they overpaid for the asset. Put PXP ceo in the former as he pointed out how smart they were at a recent industry presentation.
I have to admit i lost some of my bullishness in the name when ward sold stock and issued more shares.
Longer term, sd should do well assuming ng prices dont crater
December 23rd, 2009 at 9:20 amMorning Bill – long term, and by that I mean 2011 its probably a double. I managed to sell at the low there. Twice. That’s my problem, not theirs and I won’t let it jade my view of them. However, I think they need higher NG prices to help the stock and at some point they have to look at all that debt.
December 23rd, 2009 at 9:24 amZ…Do you plan on increasing your January BEXP exposure?
December 23rd, 2009 at 9:25 amsd- i like that one at this price
December 23rd, 2009 at 9:27 amK – If you mean before year end, no, I’d rather wait on a pullback. I added leverage yesterday with the high strike calls and don’t plan to add to them or to be greedy with them. Jerome was pointing to a need for a pullback and I think we get another piece of news by year end which at this point may turn into a BTRSTN event given the run we’ve had. Although, I do plan on holding these for the news unless it jumps quickly through $15 as the well that’s on the way I think is a 32 stage frac and we could see another big IP number out of them. As to the common, I plan on holding that for a while longer.
December 23rd, 2009 at 9:28 amReef – Any sense of timing on the oil leg test?
Any sense potential interest sell down partners? I’d guess Exxon goes for it.
December 23rd, 2009 at 9:29 amWhere do we think the IOC announcement will take the stock near term?
December 23rd, 2009 at 9:33 amCrude up a buck now.
NFX outperforming early. Chart looks like it wants to breakout into year end. Still cheap with CFPS of $11.15 next year which is more than likely to rise. I own nothing but the common at present.
EOG – onward towards $100.
December 23rd, 2009 at 9:35 amBaylor – I don’t have a good sense for that on this one. I think getting the deal done was a necessary step in the process. I think getting the oil leg tested at Antelope 2 is the next catalyst and that there are a lot of believers in the name going much much higher given massive reserve potential as they have a lot of prospects (40) outside of the Elk/Antelope structure which will become the basis for the LNG plant. So while this announcement is positive, I don’t know what it adds to the shares. Terms look as expected and getting it done before year end should please everyone and allows them to maintain their previously stated LNG timeline.
December 23rd, 2009 at 9:39 amNOG breaking out of its little flag formation to the upside. I can get to some pretty strong numbers for share price there, easily double current based on their results to date and acreage.
December 23rd, 2009 at 9:40 amFirst Dst is lower gas leg with high Condensate yield. That before year end, maybe tomorrow. Oil leg is about 30 days out. I think we see a new investment house pick up coverage before YE.
December 23rd, 2009 at 9:41 amexxi still strong up 20 % in 6 days at 2.25 now. No one wanted it last wek at 1.87. Latest research calls for 3.50 to 6.00. Amazing what a research report can do for a name
MMR is starting to show some life.
USEG must be chomping at the bit to make new investments in the energy sector with its successful partnership with bexp. It moved its stock up from the 2’s to 6 and helped it raise new money
December 23rd, 2009 at 9:41 amRe 24. Roger, thanks much.
December 23rd, 2009 at 9:42 amBill – I have to protest. My second EXXI buy was $1.88, so at least I wanted it, lol.
Re USEG – Pretty sure they are going to option another 6 wells with BEXP I think all in the Rough Rider area.
December 23rd, 2009 at 9:44 amEXXI — not so sure it is a research-driven move entorely. There are a lot of wannabe funds out there, who watch what the Rock Stars do. With both Mt Kellett and Omega Advisors filing 13Gs on EXXI in the last coupla days, I wouldn’t downplay the effect of the “Me toos!”
December 23rd, 2009 at 9:45 amEOG approaching $99. Jerome?
December 23rd, 2009 at 9:46 amAEZ doing a very impressive impression of a Complete Rebound… following their 2ndary at $3.50 the other day. Too bad I’m not smart enough to own that one anymore.
December 23rd, 2009 at 9:47 amwhats up with HK, down again
Then again, the gassy names arent doing much
December 23rd, 2009 at 9:47 amIOC looking very overbought technically for short term – technicians?
December 23rd, 2009 at 9:48 amBill – you said it best in 31. Mixed bag in the group today. I’ve been thinking about adding HK back but am still waiting, just holding the common.
December 23rd, 2009 at 9:49 amBill – here’s my thought on AEZ
It’s like a biotech with a drug in phase 1 clinical trials.
KOG is closer to phase II
Then you have EOG, CLR, WLL, BEXP,NOG in phase III with more areas in Phase I and II.
Phase I is easy, just keep moving forward, get it all rolling. That phase II is the toughest as you have to actually produce results.
December 23rd, 2009 at 9:52 amswn trading volume 600,000 shares
mcf trading volume 930
Obviously, apples and oranges. Sooner or later I am going to learn that unloved value stocks stay that way
December 23rd, 2009 at 9:54 amz-Of those gassy shale names, one has a CEO who is a serial seller. Do you know which one?
December 23rd, 2009 at 9:58 amWhich gassy names, the ones in the post?
December 23rd, 2009 at 9:59 amyes..
December 23rd, 2009 at 10:00 amFloyd?
December 23rd, 2009 at 10:02 amHint: He owns 3.365MM shares
December 23rd, 2009 at 10:03 amAt a $30 take out price that’s an nove round $100MM. I am betting their next
December 23rd, 2009 at 10:03 am#29 EOG adds another x box with the trade thru $99…EOG is now a “15” box bullish tower of power…WOW…but the oxygen is getting a bit thin up here…I would expect a good deal of profit stops at $100…I think you really need deep pockets to buy and hold the stock up here and weather the inevitable retrace, as the probabilites continue to increase for a pull back, especially as we get to $100…
December 23rd, 2009 at 10:04 amSee 39
December 23rd, 2009 at 10:04 amFloyd Wilson owns 1.12% of HK
December 23rd, 2009 at 10:05 amThanks Jerome
December 23rd, 2009 at 10:09 amHe hasn’t sold any since May that I see. But before that, yeah, he chucked some.
December 23rd, 2009 at 10:10 amJerome – PF question. On the lower price names, are the boxes in smaller increments than a dollar?
December 23rd, 2009 at 10:11 amNot shares- Companies he builds
December 23rd, 2009 at 10:11 am…Adding to 47, is there a cut off in terms of $0 to $10? $10 to $50 etc? Or does something else dictate box size?
December 23rd, 2009 at 10:12 amCrude getting stronger as we approach the numbers. A bit odd, usually it backs off. 20 minutes to release, crude up $1.30. Gasoline and HO up 2+%, presumably the strength in gasoline is API.
December 23rd, 2009 at 10:13 amLINE just under $27.
December 23rd, 2009 at 10:17 amAnyone see news on SWN? I see a news bug nut don’t have access to the story or the headline?
That one is approaching its October high fast which is $50.61 with the all time high for the stock just $2 above that.
December 23rd, 2009 at 10:24 amThoughts on eog puts or shorts?
December 23rd, 2009 at 10:26 amSince I’m long EOG at present and wrote about it as a play through year end I assume you don’t mean from me? Besides, the oil numbers are in two minutes. If it gets hit on those I may sell and then add them back later.
December 23rd, 2009 at 10:29 amEIA Inventory Review
Crude pre report: 75.60
Inventories:
Crude: DOWN 4.9 mm barrels
Gasoline: DOWN 0.9 mm barrels
Distillates: DOWN 3.1 – that’s big
Demand
Gasoline: 9.045 mm bpd, solid
Distillates: 3.988 mm bpd, very solid
BULLISH
December 23rd, 2009 at 10:31 am#47, #49, P&F box sizes are one of the nuances of P&F charting, and there are exceptions and debate to the following, but generally speaking:
0 to $5 1/4 pt box size
$5-$20 1/2 pt box size
$20-$100 1 pt box size
$100-$200 2 pt box size
Above $200 4 pt box size
Most charting servces will make the proper adjustments when a stock trades between price zones, it can become a pain to try and do it by hand…
December 23rd, 2009 at 10:33 amMore EIA
Imports fell a little further, very low even for this time of year, so that explains the crude draw.
Cushing was up again, puts a bit of a damper on a big crude price rally. Overall however we are getting to levels of crude that are not excessive.
December 23rd, 2009 at 10:34 amZ: Your LINE and VNR wicked good. Take a bow.
December 23rd, 2009 at 10:34 amThanks much Jerome!
December 23rd, 2009 at 10:35 amThanks Tom, only a half bow as I have not done anything on the VNR except watch it rally. I think the reasoning on the rally is sound though, distributions likely higher in 2010 so they crimp the yield back in advance of that.
December 23rd, 2009 at 10:36 amNG green.
December 23rd, 2009 at 10:37 amNot much of a reaction in stock land to the numbers. Feels like not a lot of people playing or wanting to chase things up here. Just took a risk for the week off the table with those demand figures though. Sitting, watching.
December 23rd, 2009 at 10:41 amWLL at $73. At $15.32 Street CFPS next year, it’s still not expensive (at 4.8x).
December 23rd, 2009 at 10:51 amSince you’all seem to be giddy with excitment over the rise in energy names, maybe one should look at the laggard in the sector. How about the deep water drillers? DO, RIG, ATW, and ESV have not really kept pace with this rally. If one believes in this upswing, then they should play catch up.
December 23rd, 2009 at 10:55 amZTRADE:
SWN – Added (5) January $50 calls (TKQAJ) for 1.65 with the stock at $49.85. Plan to add more today or tomorrow. Also plan to punt my lower strike $48s soon, maybe before the gas numbers tomorrow.
December 23rd, 2009 at 11:05 amZTRADE:
EOG – Added (5) EOG January $100 Calls (EOGAT) for $2.20 with the stock at 98.40. Will likely punt my $95 calls soon.
December 23rd, 2009 at 11:07 amBSJ – not giddy. Just talking to myself in here on a slow day. I like the ATW out of the group best.
December 23rd, 2009 at 11:08 amZ: You list of names this morning does not include the offshore drillers like your ATW. Is this sector further down on your wish list? If you had to choose between PBR and APC, which makes the cut?
December 23rd, 2009 at 11:11 amAPC without a doubt.
Regarding the drillers, I was being pretty specific about my must own through year end. All the names have size to them and are the easy, obvious ones. If you had to pick on that basis, and you aren’t a energy only fund, as was my thinking there, then you buy a HAL or an SLB way before you get down to an ATW or an OII. If you wanted a driller to note on your list by year it end it would probably be NE, RIG, or DO. They might be in there too but the bigger names are a must. Much of this buying has already been done to be sure. I was just thinking of the names that could drift on up into year end, a short term play for sure. I’ll have the 2010 list out, which includes much of the same but also little guys like NOG in the Bakkens and ROSE sometime next week.
December 23rd, 2009 at 11:18 amWarning: The following section may contain a hint of giddiness.
LINE at $27.09. Officially up 99% on the name, not counting the yield. Not really thinking about selling either until I hear the Fed get serious about raising rates.
SWN through $50. TA types should be enthusiastic about that chart.
December 23rd, 2009 at 11:21 amZ: are you going to send someone at XOM a Xmas gift? — lol — That buyout could have could have happened AFTER
December 23rd, 2009 at 11:26 amRE: 71 AFTER option expiry — lol
December 23rd, 2009 at 11:27 amTrue enough. Got lucky. I plan to buy gasoline from their stations only in 2010.
December 23rd, 2009 at 11:27 amBut we also have Oil pulling back from the brink of a price step down and the big rally in natural gas to thank.
December 23rd, 2009 at 11:28 amRE: that’s true, but your options only had 5 days to run, and they need something big to prevent a major skud attack.
December 23rd, 2009 at 11:32 amBSJ – Part of the game I play. That’s why the options are the small part of the puzzle that is ZEB.
December 23rd, 2009 at 11:34 amI’m adding MWE to the giddy list.
December 23rd, 2009 at 11:35 amHelp me here, I can buy low but can’t seem to sell high.
December 23rd, 2009 at 11:36 amCargo – Is that midstream? Sounds like a midstream name?
December 23rd, 2009 at 11:37 amSorry Cargo – other than them being in RRC with some stuff I don’t know thing one about them.
December 23rd, 2009 at 11:38 amBSJ – Also, you’ve had a number of things happen off the catalyst list which have served as individual stock drivers.
December 23rd, 2009 at 11:39 amPOT hit high of 113 today, pulled back and is mounting another move upward.
I expect it to run to the 116 to 118 range
December 23rd, 2009 at 11:41 amSlightly off topic. I’m amazed by the number of free next day air offers from retailers. Not good for retail margins but great for fuel demand. I can get a just about anything sent free, overnight to my house if I order by 3 today.
December 23rd, 2009 at 11:42 amDon’t know if this has been mentioned previously but Cobalt Energy “CIE” did an IPO of 63,000,000 shares last week. They are a GOM deepwater and offshore west Africa focused group populated by folks w/backgrounds at Ocean Energy and BP chiefly. They have 142 deepwater GOM leases and 3 concessions ofshore Gabon & Angola. Don’t know if there is any coverage of them yet. They could be one to watch.
“…Cobalt said it expects to start commercial production from its Gulf of Mexico properties between 2012 and 2014, and from its African properties between 2014 and 2016. Cobalt International has development agreements with French oil concern Total SA (TOTF.PA) SA and Angola’s national oil company, Sonangol, and plans to use the IPO’s net proceeds to fund its drilling and exploration program through 2011.
Cobalt was founded in 2005 by a group of oil industry executives and private equity investors. Its chief executive, Joseph Bryant, had previously been chief operating officer of oil and gas exploration company Unocal Corp.
The funds backing the company are affiliated with Goldman Sachs & Co, and private equity firms Riverstone Holdings LLC and The Carlyle Group…”
December 23rd, 2009 at 11:44 amhttp://www.reuters.com/article/idUSN1522469320091216
Z: All those points are true, but it seems to me that the XOM/XTO buyout, was the spark that causes people to take interest in all the other points you are making. It could be that maybe the group would have taken off without the buyout, the group was really oversold, but then again maybe not.
December 23rd, 2009 at 11:48 amThanks JY, had not seen, also saw another IPO yesterday, will look at both for next week.
BSJ – that’s a fair statement. I guess my megaphone about undervalued gas and E&Ps and coal is not loud enough to be the spark.
NYC urging no shale drilling in watershed. Where’s Wyoming, this is his favorite topic, lol.
December 23rd, 2009 at 11:52 amMy giddiness comment was the contrarian in me saying that this group, ex the deep water drillers, has had quite a run in a very short time. If you are playing Jan options, then be carefull out there. A correction would not be out of the question here.
December 23rd, 2009 at 11:58 amBSJ – Fair enough. If you like the unloved what about the refiners? VLO, TSO, SUN, HOC, WNR, ALJ. You can’t find less love for a sector in energy and probably not in the broad market. Analysts there resorting to cleaning the trading floor floors at night to justify their existence. Sad really. Anyway, a recovery in the economy of the U.S., should we see one would mean gasoline picks up and you could see the stocks move higher in early 2010 for a time. I think it’ll be a headfake as you have lots of capacity coming on in foreign lands that won’t be subject to any form of cap and trade and only half the burden by volume as it enters the U.S. giving it an advantage. So maybe an early year move on demand and then another trouncing in the second half.
December 23rd, 2009 at 12:03 pmRE: 88 — absolutely. If energy is going up because of an improved economy, then I can’t see how the refiners would not benefit. I don’t really follow the refiners, so I could not really pick one over the other. But I do like the basic premise.
December 23rd, 2009 at 12:15 pmRE refiners, on your list I don’t see FTO. Do you follow FTO too?
December 23rd, 2009 at 12:20 pmBSJ 87: you are not alone. HK (and the HS) were the momentum focus this summer; now it is oil and the Bakken. In July everyone thought BEXP mgt was stupid.
December 23rd, 2009 at 12:23 pmSeems to me few are now questioning things like
1.do long laterals increase EURs? Or do you just get it faster?
2. % acres prospective in TFS? EURs in TFS.
3. why are WLL’s results so different from CLR’s?
And so on.
Thinking there is a trading opportunity coming on short side and want to hedge my ROSE position.
I just grabbed some tickers off the top of my head. FTO is well run with a very small refining footprint (2 facilities). I’d be more likely to be long them in front of WNR and HOC for sure. If the names move then the big three VLO, SUN and TSO will be the early safe bets relative to the others.
December 23rd, 2009 at 12:24 pmRMD –
Re #1 Both. If your lateral stretches across two sections you are in touch with more of the reservoir.
2) Is still very much in question, don’t agree with the comment.
3) Sweet spot of the play vs scatter gun approach to acreage. There’s Bakken Core and Bakken Lite and the differences are large.
December 23rd, 2009 at 12:26 pmZ: general question — when companies announce their IP’s, some are one day, some are for a week, etc.. Do you think there should be a general standard? Do you find the more conservative companies are more carefull when reporting there IP’s?
December 23rd, 2009 at 12:30 pmI’d like to see consistency within a company and across a play.
As to your last question, yes. That’s doesn’t necessarily mean the bigger IPs are bad, they might be in a sweeter spot.
December 23rd, 2009 at 12:36 pmSold my KOG traunch that I purchased at 2.09
December 23rd, 2009 at 12:46 pmRMD: I agree with your comments about upcoming shorting opps. Are you looking at shorting the market in general or E&P’s in particular?
December 23rd, 2009 at 12:49 pmNice job, Baylor! Thx for sharing.
December 23rd, 2009 at 12:51 pmZTRADE
SWN – Sold the $48 January calls for $3.30, up 111% with the stock at $50.50. I continue to hold the common and the $50 strikes I took earlier.
December 23rd, 2009 at 1:00 pmMeanwhile, LINE is officially a double for the first time. Woohoo.
Getting ready to take my lower strike EOG s off the table.
December 23rd, 2009 at 1:03 pmZTRADE:
EOG – Sold the January $95 Calls for 5.80, up 104%. I continue to hold the $100 strikes I bought earlier today.
December 23rd, 2009 at 1:05 pmre drillers, I very much agree with Z’s thought concerning priority of buying on the service side. In general I think the Street is still way too high on all the driller estimates, think Jud Bailey’s work on the group is rock solid. I’m only playing drillers for pairs, no absolute longs for me in the short term.
December 23rd, 2009 at 1:05 pmEXXI announcing an exchange on all $338.6mm their 16% (14% cash + 2% PIK) notes from 144a to registered securities. That means us “normal” people can buy those notes now, if we wish.
December 23rd, 2009 at 1:07 pmI just read this and didn’t know it:
Dave Rosenberg wrote this week; “We are not sure if this is a well known “fact”, but the U.S. government has a record $2.5 trillion of its debt, including bills, bonds and notes, rolling over in 2010. That, my friends, is 35% of the outstanding level of Uncle Sam’s marketable obligations having to be refinanced in one single year. “
December 23rd, 2009 at 1:08 pmNOG at HOD.
December 23rd, 2009 at 1:10 pmThoughts on ANR?
December 23rd, 2009 at 1:12 pmVTZ – I heard something 104 a couple of weeks back. Steve Leasman on CNBC said something like “talk about impetus to keep your rates low”.
December 23rd, 2009 at 1:12 pmRe 106 – Can you be more specific?
December 23rd, 2009 at 1:13 pmRE 107 – Yeah I guess it just means bigger bank profits as the short to long term spread widens more and more.
December 23rd, 2009 at 1:14 pmZ 108 – near term catalysts? It’s seeming to have a healthy move with the rest of the sector.
December 23rd, 2009 at 1:15 pmLeaseman was saying the Fed would have to keep rates down while they extended U.S. debt maturities or the interest would be crushing. Crushing my word, not his but it has the same ring to it.
December 23rd, 2009 at 1:16 pmre 110. I think it falls into year end window dressing. It’s also gotten a pump from Simmons as their favorite idea in the coal space for the reasons I was talking about a couple of days ago.
December 23rd, 2009 at 1:21 pmI wish the readers on this site a Merry Xmas and a Happy New Year. I also wish to our Jewish friends a Happy Hanukkah.
December 23rd, 2009 at 1:21 pmThey just might not have as much control over the longer maturity yield as they think.
December 23rd, 2009 at 1:21 pmBackatcha BSJ!
I will be here tomorrow through at least the natural gas numbers.
December 23rd, 2009 at 1:25 pmDollar getting hit a bit today.
December 23rd, 2009 at 1:30 pmZ 93, #1 question is how much more EUR will a 1280 have vs. a 640? Not much data here?
December 23rd, 2009 at 1:50 pmBSJ 97: thinking the Bakken stocks primarily.
In a perfect world, double the length, double the reserves.
December 23rd, 2009 at 1:51 pmBEXP – not playing today.
NOG approaching $12.
December 23rd, 2009 at 1:53 pmHAL glued to 30.50.
December 23rd, 2009 at 1:55 pmNo kidding on Hal. I’ve traded it for years and it seems to react to catalysts much less than slb
December 23rd, 2009 at 1:59 pmRMD… just guessing… but think the EUR for a 1280 will have about 80-85% of the EUR for two 640s.
December 23rd, 2009 at 2:02 pmBOP – that’s what I’ve heard some management’s guesstimate. Then it becomes of a question of which costs less.
December 23rd, 2009 at 2:09 pmDashing out for some last minute items, back before the close most likely.
December 23rd, 2009 at 2:15 pmz #123 — yes… cost PLUS the increased probablity of screwing up a frac stage that screws up an entire section. Which seems to be a risk attached to some companies more than others (and will probably diminish? over time).
December 23rd, 2009 at 2:45 pmIt’s OK in TX, LA, OK, and elsewhere… but NIMBY!!
City Agency Warns Against Gas Drilling Plan
2009-12-23 19:49:43.895 GMT
By SINDYA N. BHANOO
December 23rd, 2009 at 2:52 pmDec. 23 (New York Times) — New York City environmental officials said Wednesday that months of scientific research had indicated that hydraulic drilling for natural gas would contaminate the watershed serving the city.
The study, undertaken by the city’s Department of Environmental Protection, also showed that the drilling would damage infrastructure, including aqueducts, the officials told the city’s water board at a briefing. In a forceful letter to the state Department of Environmental Conservation on Tuesday, the city’s acting environmental commissioner, Steven W. Lawitts, called on the state to withdraw its draft regulations approving the drilling.
Yancey Roy, a spokeswoman for the state agency, said it had no comment.
The draft regulations apply to a type of drilling called hydraulic fracturing in the Marcellus Shale region of New York, which includes the city’s watershed region in the Catskills. A public comment period on the rules, released by the state environmental agency in September after months of discussions, ends on Dec. 31.
Already concerned about the watershed, the city’s environmental department had hired scientists and environmental engineers specializing in gas drilling to begin researching the potential impact of the drilling last January. The report argues that drilling is dangerous for several reasons.
“We took a technical look at this and made a decision based on the science,” said Paul Rush, the department’s deputy commissioner, who presented the report at the briefing.
Extracting gas from the shale involves blasting water, mixed with chemicals into the rock at a high pressure, which causes the natural gas to flow out. The chemicals result in significant amounts of wastewater that can contaminate water supplies and damage the infrastructure, the report found.
Twenty to 50 percent of the chemicals used in extraction results in wastewater, for which the state currently has no disposal method, Mr. Rush said.
He added that the projected operating costs would increase water rates for New York City residents by at least 30 percent.
Mr. Rush said the environmental engineers and scientists hired by the department collected data from hydraulic fracturing in other states to draw their conclusions.
Citing data from drilling in Fayetteville, N.C., the scientists estimated that drilling in the New York watershed could result in hundreds of tons per day of fracturing chemicals seeping through the watershed over a 20-year period.
Massive industrial development would be needed to dig and maintain the 3,000 to 6,000 wells that would be dug in the watershed, the report said. Maintenance alone could result in up to 600,000 truck trips per year within the watershed’s boundaries alone, it said.
Responding to rising public concern, the Chesapeake Energy Corporation, which currently owns the lease to drill in the watershed, announced in October that it did not plan to drill in the watershed under its current lease.
Nonetheless, hundreds of New York City residents turned out in November to protest hydraulic drilling at a state hearing on the draft regulations.
Eric Goldstein, a senior attorney for the Natural Resources Defense Council and an advocate for protection of the watershed, said Wednesday that Chesapeake’s promise meant little.
“It’s nonbinding, it’s temporary and it only applies to one company,” he said at the water board’s meeting. “Other companies could take over the lease, or Chesapeake could choose to go in and drill if they renew the lease.”
Mehul Patel, a member of the water board, also spoke out against the drilling. “We’re trading off the most precious natural resource we have,” he said. “It’s appalling to me that the state would consider this.”
The watershed area under discussion spans one million acres and provides unfiltered drinking water to about 8.2 million people in New York City and one million people in Westchester, Putnam and Dutchess counties.
I’m just entertaining the possibility that the EUR is 1.5X or less, as this would jinx the cheery consensus.
December 23rd, 2009 at 2:54 pmNOG breaking out
December 23rd, 2009 at 3:24 pmMerry Christmas to ALL !!
I will be traveling all day tomorrow. Then checking in sporatically the week between Christmas and New Year’s. So… keep the hearth fires burning (nat gas!) and talk with y’all next week.
Cheers,
December 23rd, 2009 at 3:54 pmBOP
Hundreds Gather to Protest Global Warming
http://screencast.com/t/MGFmOTJlMWE
Click on the image to expand.
December 23rd, 2009 at 4:16 pmHave a good one BOP!
Catch you on the flip side
December 23rd, 2009 at 4:33 pmhttp://www.atimes.com/atimes/Central_Asia/KL24Ag07.html
December 23rd, 2009 at 5:07 pm#64 Giddy!??
I’ve been on this site for a fair while. Not sure I’ve ever seen Z giddy. Not about stocks anyway.
I think what you mean is “long”. Which happens to be “right”. But not giddy.
December 23rd, 2009 at 6:49 pmDman — a very special “Merry Christmas” to you! You and I fall on different sides of the issues, but we are both smart enough to know that z provides a great forum for ideas.
Here’s to making $$ in 2010!!
December 23rd, 2009 at 7:50 pmThanks guys and a Very Merry Christmas to you all. I will be here at least through the gas number tomorrow.
Wyoming – re 130 very funny. And if you want to expound upon costs of a dual lateral or an extended lateral versus two verticals with 5,000 foot laterals and the technical complexities of each vs reserve expectations I more than sure that that would be greatly appreciated.
December 23rd, 2009 at 7:53 pm#132-Wyoming-interesting article-thanks.
I personally observed Chinese operations when they came into Kazakhstan in 05 and purchased Petrokazakhstan (referenced towards the end of the article). They negotiated with a very difficult Kazakh Govt and a Russian company and ended up with a good supply of crude and pipeline at what now appear to be reasonable prices-they never lost focus.
December 23rd, 2009 at 9:55 pmVTZ and other gold bugs-You might be interested in this article by John Embry.
http://www.sprott.com/Docs/InvestorsDigest/2009/12_24_2009%20Gold%20bull%20has%20many%20years,%20thousands%20of%20dollars%20to%20go.pdf
December 23rd, 2009 at 10:04 pmWY 130: great picture, wonder who did them?
December 23rd, 2009 at 10:59 pm