04
Jan

Monday Morning – Welcome To 2010

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Market Sentiment Watch: Commodity prices set to jump out of the gate on the open along with Chesapeake in major shale JV (see Stuff section below) should put energy in the spotlight as the year's trading kicks off. I expect news flow to reawaken as the week unfolds. There are also a couple of energy conferences later this week. Note below that at week's end, the Payrolls report is expected to be in the plus column which may spark more talk about a sooner than expected end to free money from the Fed. Note also that over the weekend, the Fed's Vice Chairman Kohn pointed out that "tightening policy to head off a perceived threat of asset price misalignment could be expensive in terms of medium-term economic stability." For myself, I will have energy sector tables out (for oil service, coal, etc) as the week progresses, always good have at hand as we move into a new year. Look for some opportunistic trading around the (CHK) deal and the GS ratings changes today as well as possibly from some news out of (MCF)

 

The Week Ahead:

  • Monday 1/4: ISM (forecast 54%), Construction spending (forecast -0.6%)
  • Tuesday 1/5: Factory orders (forecast 0.8%), car sales (forecast 11.2 mm)
  • Wednesday 1/6:  EIA Oil Inventory Report, ADP employment, ISM non-manufacturing (forecast 51%),
  • Thursday 1/7: EIA Natural Storage Report, Jobless claims
  • Friday 1/8: Non-farm payrolls (forecast +10,000), unemployment rate (forecast 10.1%)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today - (CHK) JV, MCF operations update, overnight mailbag
  • Odds & Ends

Holdings Watch:

  • $10KP II:
    • $20,800
    • 61% Cash.

Commodity  Watch:

Crude oil inched up 1.7% last week to close at $79.36. The 12 month crude strip is now trading at $82.33.  This morning crude is trading closer to $81 on the colder forecast in North America but also on cold weather in Europe and Asia (Beijing seeing subzero temps for the first time since 1980s). There is also probably an increasing terror premium in crude as the U.S. and Britain close their embassies in Yemen.

 

Natural gas eased 2% last week to close at $5.57 after the EIA reported another a second disappointingly low natural gas storage withdrawal. The 12 month strip is now trading at $5.87. This morning gas is trading up 20 plus cents on the cold.


  • Weather Watch: Cold ... Damn Cold.

    • Week Before Last: 207 HDDs which was just short of normal but which saw a 122 Bcf withdrawal probably due more to the Christmas holiday than increased supply although that does play a role as well.
    • Last Week: 239 HDDs vs a prior forecast of 222; that's up against 220 normal and only 187 last year. That's also the coldest weather of the season to date.
    • This Week's Forecast: A massive 264 HDDs. Normal is 224 and last year was 201. No holiday this week so we see a return to storage surplus erosion soon. 


 

 

Stuff We Care About Today

Weekend Mailbag Watch:

Can NG go up in this environment if oil were to start trading down? That’s a pretty huge run in oil the last 3 weeks. ~ Baylor

  1. I don't think natural gas has a lot of room to run up in the near term based on its own fundamentals. We could see some winter weather related spikes like in days of old but those are generally fleeting.
  2. While oil going up makes it easier for natural gas to rise, the two have become less linked of late.
  3. Were oil to sell off back to the start o the recent run (low $70s or even high $67s if you go to the last of the seller's exhaustion phase) gas might full the pull of that decent but I think weather and storage results are going to be far more important.
  4. I think what's more important for the way I play natural gas is an end to prices spiralling lower that was much of the story of gas in 2009. As I like to tell people "I don't need them jumping, I just need them to stop falling."  Better for hedging, better for cash flow as both volumes and costs fall at the names in which I frequently traffic options and invest in the common.

CHK In $2.25 B JV with TOT in the Barnett Shale.

  • Terms:

    • $800 mm up front cash
    • $1.45 B in carry through through 2012
    • TOT gets a quarter interest, gives them reserves of 750 Bcfe
    • Works out to $3.00/Mcfe if you put all the deal value on the acquired reserves which is probably fair as the the acreage is Core and Tier 1 making it likely that the rest of the drilling capital is going to develop the Proven Undeveloped reserves. 
  • Nutshell #1- For CHK. Positive: This is similar in structure to other deals CHK has penned with European firms in the past in U.S. shales. TOT will have the right to go along with CHK in newly acquired Barnett acreage at the 25% working interest. This is a good price for CHK for the 750 Bcfe and should make investors/analysts happy that once again, CHK is able to monetize assets in a timely fashion. CHK also pointed out that they are in talks with TOT on a JV in the Eagle Ford and about some shale plays in Canada.
  • Conference Call: Today, 10 am EST.
  • Nutshell #2 - For The Gassy Shale Stocks In General This Is Also Positive. Another data point on reserves pricing and another large, industry player, dabbling in the U.S. natural gas market. does not hurt the bullish cause at all.  Not as big a deal as XOM buying XTO but it goes to credibility of the North American natural gas market being a place worth venturing into. The comments about TOT's interest in other U.S. shales and Canadian shales should help put the spotlight on some other domestic E&Ps as well (EOG for instance at Horn River and any number of names in the Eagle Ford). 

MCF Operations Update

  • Nautilus Successful - (Ship Shoal263) - 70 feet of pay, high porosity, expecting 20 MMcfepd net production by mid year 2010 (this alone boosts current production levels by 25%).  Would like to know reserves here and if it goes into the 2009 bookings.
  • Onshore Cotton Valley progressing
  • 2010 Capital Plan

    • $74 mm for 6 wells (3 Dude series wells that are 100% WI, 3 others that maybe farmins)
    • $14 mm for development of Nautilus (platform, pipeline)
    • $24 mm for onshore CV activities and other Texas wells
  • Nutshell: No debt, operational success continues, as does capital discipline. Could have some running room on the stock in here as it, like its other offshore peers trades at a steep discount to 2010 bottom line numbers; numbers which should now be going up. I'll be looking at some opportunistic trading here as well in the near future.

 

 

Odds & Ends

Analyst Watch:

  • (UPL) bumped to Buy and put on the Americas Conviction Buy list at Goldman
  • (CHK) cut to Neutral at Goldman
  • Refiners upgraded at Deutsche:
    • VLO and SUN go from Sell to Hold
    • FTO, TSO, DK go from Hold to Buy

 

 

159 Responses to “Monday Morning – Welcome To 2010”

  1. 1
    zman Says:

    Thanks Tom, will be having a look at their presentation and listening to that call. Should be positive for all the gas shale names. GS taking the opportunity to cut CHK and boost UPL. I’d venture RRC and SWN rally nicely as well.

    The online WSJ crediting the equity futures rally to Ben and Kohn comments over the weekend that suggest rates will stay low for quite some time. How this is news I do not know.

  2. 2
    1520sbroad Says:

    Z – happy new year! Have you done a piece on RRC recently? I have gone through the links on the upper left and got a few key pieces of info on them. Any opinion on mgmt there?

  3. 3
    zman Says:

    1520 – I’ll look for my last blurb on them, don’t think it was very large, just the basics, may have been the 3Q and 4Q notes. Will check. Management is solid.

  4. 4
    zman Says:

    The link on the reports tab has the 1Q and 2Q notes which was the basics I was talking about:

    http://zmansenergybrain.com/2009/07/16/rrc-notes/

    The 3Q and 4Q would have been in regular posts, will check.

  5. 5
    zman Says:

    Crude up $1.90 at 81.25

    NG up 27 cents at 5.84.

    It’s 24 and snowing here which I can tell you is pretty rare. All schools closed with less than 1/4 inch of snow, lol. Friday the low here is forecast to be 8.

  6. 6
    1520sbroad Says:

    thanks – i followed them for a while a few years ago and they (unfortunately) have dropped off my radar.

  7. 7
    zman Says:

    1520 – Hear ya, big day shaping up.

  8. 8
    bill Says:

    yes!!!

    z You broke the news to me

    YES!!!

    If this doesn’t move it, nothing will.

    Funny, I sent them a question last week about the progress and got silence

    I think the thing climbs to 55 within weeks

  9. 9
    PackMan Says:

    Happy New Year all….

    Z – where do you think CHK can trade to near term ? 27.27 pre market.

  10. 10
    zman Says:

    Pack – maybe $30. Should be a boon to the other shales more than it is to it. This only takes debt down a $0.8 B off a $12.1 B base (3Q09). It does help silence the continual string of analyst naysayers who keep saying CHK can’t close deals. I’m amazed that after the string of deals they have closed (>$10 B) in the last 18 months that Wall Street seems still so doubtful.

    Crude up $2 now. NG up 31 cents. Cold, damn cold.

    Baylor, did you see my response to your question last night in today’s post?

    Nice news for Bill and RMD on the MCF. Still feels like a stock and not an option play to me.

  11. 11
    zman Says:

    We get today’s eco data at 10 am EST, same time as the CHK call.

  12. 12
    zman Says:

    Itsy bitsy FPP buying a sliver of acreage in the Bakken (and making a press release out of it). That name can get the hype machine behind it and move. I will not be a buyer, just pointing it out.

  13. 13
    PackMan Says:

    IRAN threatening large war games exercises

  14. 14
    Jerome Blank Says:

    MCF has an interesting chart…MCF is currently on a P&F sell signal, but has reversed back into x’s…I like the way MCF looks on the traditional daily chart holding support at the 20 day SMA, with a couple of nice basing “hammers”…MCF goes back on to a buy signal with a print of $50, but runs right into P&F trendline resistance in a zone between $50-$51, things should get easier for MCF once this area is cleared…

  15. 15
    bill Says:

    MCF

    On previous presnetations, they were hoping to hit on 1 well out of 3. Hitting on the first one gives them more confidence on the next 2.

    On top of this , they had good results on their first 2 cotton valley wells

    They also talk about getting involved in 3 GOM farm in prospects.

    They have cash and as one or our fine senators once remarked cash talks bullshit walks.

    Cash has increased to 70 m even though they spent 20 m drilling wells in the last qtr.

    Production is up to 81 mcf day and as you pointed out, the one new well will increase production 25 % to over 100 per day mid year

    This is a cash flow machine!

  16. 16
    jy Says:

    Re: todays post on MCF; “… Would like to know reserves here and if it goes into the 2009 bookings…”

    If my memory is correct Contango can book Nautilus reserves effective the date they have the information to estimate the volumes. In other words, the date they log the pay with logging tools that allow water saturation (resistivity) and porosity (neutron or density or sonic or MRI) estimates is the date they can book the reserves. Since they are announcing the well and development plans today, I’d guess they had the logs prior to Dec 31 and could book the reserves in 2009.

  17. 17
    zman Says:

    jy – right, would like to know what pre drill size was, did not see it listed anywhere.

    Good indications for many of the gassy shale names. SWN looking over $49. Gas tied HAL looking lively as well.

    I’d expect EOG to run up as well, perhaps quickly back to the recent $101 + area. Will be looking at small trade there shortly after open. Maybe in HK too depending on open. Nothing big, just opportunistic, near the money calls.

  18. 18
    zman Says:

    Analyst Watch

    DO picked up at Buy at CK Cooper with a $118 target

    ESV catching an upgrade by Weil, price target $62.

    NFX – Does anyone see news? I have a news indicator but no story? Thx.

  19. 19
    zman Says:

    Got the NFX news story. Goldman said that UPL, NFX, DVN, and STR “will benefit from emerging low-cost plays, exposure to shales like Marcellus and restructuring or consolidation opportunities”

  20. 20
    zman Says:

    BOP still MIA. EXXI at $2.50. Nice move there.

    HAL finally clearly through that $30.50 area at 30.80 but would like to see a close around there.

    BEXP up 6% leading the Bakkens higher today.

  21. 21
    elijahwc Says:

    Happy New Year all!

    Our friends to the North ring it in with the acquisition of Berens (BENLF, BEN.T) by PetroBakken (PBN.T) at C$2.70 a 35% premium. One less player in the Cardium (aka Bakken redux) with more to follow.

  22. 22
    zman Says:

    Thanks Eli, had not seen. Good to see M&A alive and well in the New Year. Helps to explain the Bakken run on the south side of the border this am.

  23. 23
    bill Says:

    mcf at 50 yesss

    might hit 55 today, lol

  24. 24
    zman Says:

    ZTRADE:

    SWN – Added (30) SWN February $55 Calls for $0.80 with the stock at $49.50.

  25. 25
    zman Says:

    SWN back up through $50.

  26. 26
    zman Says:

    ZTRADE:

    EOG – Added (5) EOG January $100 Calls as per comments in the post for $2.25 with the stock just under $100.

  27. 27
    zman Says:

    ROSE cruising towards $21, I’d bet we see news there in the next 2 to 3 weeks.

    BEXP up a dollar (7%). I am betting we see news there anywhere from after the close today to the next week.

  28. 28
    zman Says:

    NFX back up through $50, EOG back up through $100. Looks like it is time for the group to retest the pre Christmas highs.

  29. 29
    zman Says:

    CHK call in 5 minutes.

  30. 30
    zman Says:

    Jerome, can you look at:

    HAL
    NOG
    BEXP
    NFX
    SWN
    ANR

  31. 31
    zman Says:

    ISM of 55.9% vs 53.6% expected

    Nov construction spend in line with estimate.

  32. 32
    zman Says:

    Simply cannot get onto the CHK call.

  33. 33
    Jerome Blank Says:

    #30 Re: HAL, nice to see HAL finally get back into the triangle body and move back above short term resistance at $30.60…this price zone should now act as support in the intra-day time frame…from here the probability increases for another test at major resistance at $32…any pull back from reistance at or about $32 should ideally be shallow…

  34. 34
    zman Says:

    Thanks Jerome. I appreciate that. Was think to roll into Febs soon there.

  35. 35
    zman Says:

    Can anyone get to http://www.chk.com?

  36. 36
    bill Says:

    35 no

    i was just going to ask you

    seems like their web is down or they have 1,000’s trying to get it

  37. 37
    zman Says:

    Chesapeake’s site appears to be down.

  38. 38
    Gtinvest Says:

    Yes I am listening to call. chk hedged 52% of 2010 for 8.30 or so did not hear the exact price.

  39. 39
    bill Says:

    35 just got into chk

  40. 40
    bill Says:

    well almost in

  41. 41
    zman Says:

    GT – thanks much, that is huge, they were closer to 10% pre call. Trying to get in again now.

  42. 42
    isleworth Says:

    Any refiners thoughts Z in light of upgrades today?

  43. 43
    zman Says:

    I guess its ongoing, would have dialed in had I owned it, will wait for the replay in a couple of hours at this point. GT that is what I suspect others have done as well, waited out this cold spell and hedged early 2010 volumes on the boosted prices.

  44. 44
    zman Says:

    isle – Yes, I’m not going to chase them. They may run for a bit and I have not seen DB’s note on it other than the headlines but I have read their refining research before and have never been impressed by it or their past calls. Given the timing I would imagine they said that things can’t get worse for 2010 than they were in 2009 or some such. Maybe he is thinking the same thing I am that as inventories come off and the economy picks up that margins will expand in the first and second quarters of 2010. Then the imports start to hit and the economy slows and things return to suckville.

  45. 45
    Gtinvest Says:

    chk can project production volumes and finding cost for years years in the future- aubrey

  46. 46
    zman Says:

    NOG at $12.50. Planning to roll out of the Janaury $12.50s before oil numbers this week as those are entirely too dangerous. Will then add to my Feb $10 position and maybe add some Feb $12.50s and await the next news.

  47. 47
    Gtinvest Says:

    tph- eagleford , High hopes for oil part of play, drilling 1st well now, persuing additonal acerage.

  48. 48
    zman Says:

    GT – Yeah, as long as he doesn’t change his spending plan he can get pretty close for 3 years out. Same on reserve adds.

  49. 49
    zman Says:

    Thanks for the running commentary GT, please keep that up.

  50. 50
    Gtinvest Says:

    tph question- How are you dividing the world, no specific on how to conquer and divide .

  51. 51
    zman Says:

    Jerome – thanks for the HAL comment, would like to see it close > $31 today. Any thoughts on the rest of that list when you get a chance would be greatly appreciated.

  52. 52
    zman Says:

    Anyone have a sense of what general market volumes are like. E&P and oil service appear to be on the high side as you would expect given the news and commodities. Just watching the S&P leg up again to a new high, above the recent range. Gotta be just killing the shorts that its moving up yet again.

  53. 53
    Gtinvest Says:

    Gas macro question- eia 914, Any flaws in data? aubrey things numbers appear high. gas pipe line system pressures up and hides some of excess production in the past. Now undwinding of excess production from this summer. production not represnetative of capacity but rather demand. 914 data does not really address this problem.

  54. 54
    choices Says:

    z-no hurry on this one but this appeared in NY Times over the weekend and “may” affect drilling in the Marcellus-CHK per article already has voluntarily decided not to drill in the watershed.

    http://www.nytimes.com/2010/01/02/opinion/02sat2.html?scp=1&sq=ny%20watershed&st=cse

  55. 55
    Gtinvest Says:

    will have addtional vpp sales this year.
    mabye some in virginia, actions will be all over. lease hold sales will exceed acquisions this year by 1.3 to 1.7 b this year

  56. 56
    zman Says:

    Choices – CHK said on the 3Q call they would not be drilling in NY. Good news for gas prices.

  57. 57
    Gtinvest Says:

    midcontinent, another place for jv,
    barnet could get another 100,000 acres.
    depends of xom. thru xto, joe allman asking questions.
    No comment on canada, being coy. Hanesville , best production, barnet good, everything doing well.

  58. 58
    Gtinvest Says:

    hedges? realize prices of hedges above strip. they take call premium and roll it in to calc. mark roland says, produce gas for less than 1.50 and sell gas in out years for 7 to 8 bucks. 8.20 is the number. z can explain better.

  59. 59
    zman Says:

    GT – How would you say the tone of the analysts is?

  60. 60
    Gtinvest Says:

    using decay in time value of call works for them in selling gas in out years. since they now have predictable production costs. Seems like less of a wildcatter and more of a gas factory.

  61. 61
    Gtinvest Says:

    Giving total first rights to jv in texas in future. Granite wash excluded.

  62. 62
    zman Says:

    GT – no question less of a wildcat, nearly all manufacturing at this point, much like the coalbed methane guys used to be but with better returns.

  63. 63
    zman Says:

    Coals all ripping higher. I’m only in ANR at present but am likely to add some WLT and BTU later this week.

  64. 64
    Gtinvest Says:

    another vpp in texas somewhere. The analysts seem principally constructive. Early quesions about controlling impulses later much more granular. Even joe alman was not antagonistic . pardon spelling. gs up now. questions on tight curve. cycle times improving. doing better over time. should show solid impovement in eur’s. not extreme but consistently better results. No loss in eur’s.

  65. 65
    zman Says:

    Thanks GT, you’ve almost got me sold on buying a slug for the post call move. Mulling.

  66. 66
    Gtinvest Says:

    Alot of people on call. now on marcellus. might sell off some but no rush. Joe back. service costs flattened out. Global search for shale. refered him to stat oil conf in feb. thank god its over.

  67. 67
    Jerome Blank Says:

    Re: #30, NOG,BEXP, ANR…all on P&F buy signals in x’s…the charts look really good…all three stocks are pulling away from their respective moving avgs (20,50,200)…and… moving avgs are all pointing higher together, no crossovers…starting to look like a trend…my only caution is if a trader is going to buy up now…position size for normal pullbacks to at least 50 day moving avg support, at some point the swings are going to pull the stocks back to re-test…

  68. 68
    zman Says:

    Thanks much JB.

  69. 69
    zman Says:

    Anyone have the Pritchard conference schedule? Also, I think there is another energy conference this week but can’t put my thumb on that.

  70. 70
    zman Says:

    Having no luck splitting spread on BEXP calls.

  71. 71
    zman Says:

    Thanks for the play by play on the CHK call GT.

  72. 72
    zman Says:

    BEXP up 10% and looking like it wants to break higher. Should have news this week or next. Gave up on trying to split the spreads on February calls, will likely let it dip back from here and buy some on the offer later today.

  73. 73
    Gtinvest Says:

    Z nobody can do it like you can but I hope it helped. p.s. Chk will go up about the time ny harbor freezes sold and Gs employees are ice skating to work!

  74. 74
    zman Says:

    Reef – Do you suspect we could get gas condensate news on IOC this week or next?

  75. 75
    bill Says:

    listening to the chk replay as i missed the first 20 minutes

    z you mentioned that reserves are figured with last 12 months of prices

    this is worse than the old rule which was ye point in time

    we ended 2009 where we began around 5.70

    However, the last 12 months, ng averaged 3.86

    aubrey mentioned that chk reserves will take a hit has ” a negative impact on puds so that means more 1 time write offs

  76. 76
    zman Says:

    ZTRADE – WildZ

    High risk but with time on it’s side. Expensive name but it’s already expensive.
    Should have news out either this week or next.

    BEXP – Added (20) of the February $17.50 calls (QBJBW) for $0.40 with the stock at $14.90. I hold the January $15s as well but plan to sell them this week. I also hold the common from $7.71. The delta here is about 0.2 so a $1 move to the upside on news, should that happen, would be rewarding. Again, high risk and I don’t expect the stock to get to that strike in the near term but it does not need to for these to work.

  77. 77
    bill Says:

    he actually said “pretty big impact”

  78. 78
    bill Says:

    prithard conf

    http://www.pritchardcapital.com/news/upcoming.html

    mcf is on the list as well as many others

  79. 79
    zman Says:

    Bill – right but sense everyone knows it, the impact will probably mean people just discount the reserves that are in the price revisions column as no big deal.

  80. 80
    zman Says:

    Thanks for that link, did anyone else recall another conference this week? Too much eggnog for me.

  81. 81
    bill Says:

    there another one next week in orlando ipga

  82. 82
    zman Says:

    Kyle – got your email this morning, you were correct in your assessment. Please let us know if their is an alternate email address we can try.

    Bill – thanks, don’t know that one. Was thinking to go to the one in Hollywood Florida on the 19th but probably won’t now.

  83. 83
    bill Says:

    sounds like chk got 2010 swap price up by giving seller out year calls between 7.50 and 8.00 for 2011 thru 2013 and bundled the whole thing together

    Seems to me you would have to unbundle for reporting but wthdik

  84. 84
    zman Says:

    Bill – at least it doesn’t sound like they are messing with knockout swaps anymore.

  85. 85
    bill Says:

    82 yes hollywood not orlando

  86. 86
    bill Says:

    z mentioned cold weather.. maybe we get positive suprise this week and next

    Its amazing how fast (the glut) can disappear with cold weather

    we had a couple of low withdrawal rates last year as you pointed out so the yoy glut should come down fast

  87. 87
    zman Says:

    IOC at $80

  88. 88
    bill Says:

    calculation of reserves ie pricing

    the govt tried to help producers with using avg prices and getting away from point in time seems like they screwed them

    I think they should use forward prices not backward prices

    you are trying to come up with a valuation for reserves at a point in time ie 12/31/2009 and using low avg last 12 months avg ng prices

    maybe they should use a 4 year average 2 backwards and 2 forward

    this has pl impacts and even though the sophisticated ignore them the unsophisticated dont

  89. 89
    reefguy Says:

    IOC-I have heard a story, they will announce a second LNG plant. Not another trane, another plant…attempting to confirm

  90. 90
    bill Says:

    z

    do you know where cotton valley is relative to granite wash?

  91. 91
    zman Says:

    Reef – I’d be surprised by a second plant. If you have the logic on that versus putting 6 or 8 trains on the first plant I’m all ears.

  92. 92
    reefguy Says:

    bill CV in East Texas…Granite Wash in Anadarko Basin

  93. 93
    zman Says:

    CV will be E. Tx. Granite wash is Ok and Tex panhandles.

  94. 94
    reefguy Says:

    A floating plant….

  95. 95
    zman Says:

    CV are going to be small IP, probably all verticals in the case of MCF. Granite wash is the big stuff that NFX announced a few months ago, followed by Forest and others. I have a table worked up that I will put in the post tomorrow on the Wash acreage holders.

  96. 96
    zman Says:

    Reef – a FLNG, oh. Brazil, Russia, middle east all working on those. Pricey but also longer life, potentially mobile. That would goose the stock.

  97. 97
    bill Says:

    ty, appears the cv is hitting singles

    low cost wells , low (relatively) production

  98. 98
    zman Says:

    Reef – I’m glad these guys like to think small. A ship full of gas that dwarfs an aircraft carrier? Nice.

    http://images.google.com/images?q=floating%20lng&hl=en&ie=UTF-8&client=firefox-a&hs=WMr&rls=org.mozilla%3Aen-US%3Aofficial&tab=ni

  99. 99
    zman Says:

    Headline from Accuweather.

    Winter 2009/2010 Could Be Worst in 25 years.

    http://www.accuweather.com/news-top-headline.asp?partner=accuweather&date=2010-01-04_17:27

  100. 100
    zman Says:

    Bill – true, but good economics, and about impossible to mess up.

  101. 101
    andy Says:

    z = try larata10@hotmail.com

  102. 102
    zman Says:

    Imports Watch:

    LNG was 1.4 Bcfgpd last week, up 0.7 bcfgpd from year ago levels. So still no tsunami.

    Canada was 7.7 Bcfgpd, down 0.6 Bcfgpd.

  103. 103
    zman Says:

    re 101. Ok great, thanks.

  104. 104
    nifkin Says:

    ND Crude Begins Shipping to Okla. By Rail
    2010-01-04 18:00:19.181 GMT

    By JAMES MacPHERSON
    Bismarck, N.D. (AP) — A Texas company that’s the No. 1 producer in North Dakota’s oil patch has begun shipping rich Bakken crude to Oklahoma by rail.
    EOG Resources Inc., of Houston, said the first shipment from its new terminal in northwestern North Dakota is due in Oklahoma on Monday, after a four-day trip. The company has said the terminal near Stanley is capable of loading 60,000 barrels of oil onto one 100-car unit train each day.
    Crude from North Dakota’s oil patch will be unloaded in Stroud, Okla., and sent through a new 17-mile pipeline to a terminal in Cushing, Okla., the company said in a statement.
    EOG officials did not immediately return telephone calls Monday. The company’s statement said the North Dakota loading facility will employ up to 45 people, and the unloading facility in Stroud, Okla., will have about 35 workers.
    Crude from the rich Bakken shale formation in the western part of the state now is discounted more than $10 per barrel because of difficulty in getting the oil to market, said Lynn Helms, director of the state Department of Mineral Resources.
    EOG’s new rail facility, along with Enbridge Pipeline North Dakota LLC’s pipeline expansion project that went on line last week, will increase the shipping capacity by about 110,000 barrels daily, Helms said. The state is producing about 250,000 barrels each day, he said.
    North Dakota sweet crude was fetching $68.63 on Monday, about $12 less per barrel sold on the New York Mercantile Exchange.
    Helms said EOG’s new rail facility combined with Enbridge Pipeline’s expansion should have an immediate affect on North Dakota crude prices.
    “We should see that improve by $3 to $4 a barrel, which is good news for everybody,” Helms said. “This takes a major risk factor out of Bakken drilling economics.”
    Helms said EOG is the biggest player in North Dakota’s oil patch at present. He said the company produced an average of nearly 47,000 barrels of day in October, the latest figures available. ConocoPhillips recorded the second-highest average for the month, at about 26,000 barrels daily, Helms said.
    “EOG is the No. 1 producer and growing fast,” Helms said.
    “They are highly motivated to do things like this rail facility.”
    The company also is working to capture natural gas, a byproduct of oil production. Pecan Pipeline North Dakota Inc., a subsidiary of EOG Resources, has announced a mid-January completion date for a $45 million pipeline that will feed North Dakota natural gas into an existing line that moves the gas to a Chicago hub.
    The Prairie Rose Pipeline will transport some natural gas from the state’s oil patch that is being flared, state officials said.

    -0- Jan/04/2010 18:00 GMT

  105. 105
    zman Says:

    Thank you Nifkin, had not seen that. Right on time. Can’t remember if it was the NOG or the BEXP guys who had toured it but its an indoor loading, state of the art, loading facility. Very much agree on the $3 to $4 shrinkage of the differential, very good to have it working for all the Bakkens.

  106. 106
    VTZ Says:

    Canadian Utica shale players up a lot on the CHK sale. QEC for example up 17% currently.

  107. 107
    Jerome Blank Says:

    CHK is currently on a P&F sell signal, but in a long tail of x’s, CHK needs a print of $30 to perfect a triple top buy signal breakout…

  108. 108
    zman Says:

    MCF – continuing to drift higher. Could see mid $50s there in short order.

  109. 109
    baylor3217 Says:

    Thoughts on sellih covered calls today? If so, what strike and duration would u suggest? I’ve never sold covered calls but have a very large chk position dca’d near these levels.

  110. 110
    baylor3217 Says:

    109 chk covered calls. Had an iPhone auo correct typo there

  111. 111
    zman Says:

    Baylor – Depends on if you care if you lose the stock or not. It is certainly better to sell them on rally days than after a dip. If you care that you might lose the stock then then you would want to go with the highest strike to not lose it, I don’t think get as high as $35 in the next couple of months.

  112. 112
    zman Says:

    NG fought off a little profit taking this morning, was up only 20 cents for a time, now up 28 cents. Crude up $2.06 with little time in the Nymex day left as well.

  113. 113
    zman Says:

    Close of Nymex

    Crude up 2.12 at 81.50
    NG up 31 cents at 5.89

    Not a bad way to start the New Year.

  114. 114
    zman Says:

    Jerome – got a name for that SWN daily pattern? Like a very short cup and handle?

  115. 115
    Jerome Blank Says:

    Re: #114, Yes…good spot…I see it on the daily traditional chart…the cup & handle pattern is considered by most TA’s to be a bullish continuation pattern…I usually look for them as a bottoming consolidation pattern…check out the formation developing in UNG…the rounded bottom cup, and the forming handle…the confirmation of the cup and handle breakout on UNG would be about $11…

  116. 116
    zman Says:

    Jerome – thanks. Did you see the continuous front month for gas vs UNG for 2009. Wowdifference in performance.

    WLL looks like the SWN pattern. A lot of things look like that with consolidation the week most people were out being completely offset with today’s trading and approaching the Christmas Eve highs.

  117. 117
    zman Says:

    Hopefully I’m correct with my opening statement today that news flow should continue this week and next as people get their budgets and projections out the door and then we have 4Q earnings to contend with.

  118. 118
    zman Says:

    Ram – don’t just comment on the red days man, lol.

  119. 119
    ram Says:

    I am here to reiterate the bad.

  120. 120
    zman Says:

    How’s that working out for ya?

  121. 121
    Jerome Blank Says:

    Re: #116, no question, front month futures outperformed on relative strength basis in 2009…taking a quick look at relative strength now, it looks like UNG is trying to find a supportive base from a relative strength perspective vs. futures, P&F relative strength comparison is basing… its interesting, today the movment in % terms are about the same…

  122. 122
    zman Says:

    Jerome – Have you looked at UNL?

  123. 123
    ram Says:

    O.K. Much better with commom than options. Or viceversa?

  124. 124
    zman Says:

    You mean on the short side? Or from the long term perspective with common relative to the boom / bust cycle of trading options?

  125. 125
    zman Says:

    Proof that there are still jerks in the New Year:

    http://www.wkrg.com/alabama/article/anthrax_scares_at_congressman_bonners_offices/617306/Jan-04-2010_1-05-pm/

  126. 126
    zman Says:

    30 minutes to the close, most of our names at or near HOD and approaching pre holiday highs.

  127. 127
    bill Says:

    on sept 14th mcf reported

    Our production is currently 75.0 Mmcfed, net to Contango. As of September 1, 2009, we had no debt and approximately $39.0 million in cash and cash equivalents.

    today they reported:

    Contango’s current production is 81 Mmcfed. We have no debt and approximately $70 million in cash and cash equivalents

    – so production is up 10 % from last qtr
    – avg selling prices are up 1 per mcf
    – will have no write downs for exploration costs
    – and cash has increased by 31 m after spending aprrox 20 m on Nautilus and 2 cotton valley wells

    Looking to hear more this week at Pritchard

    Z you asked what this will mean to reserves. They have about 360 bcf with 9 wells or 40 bcf per well. I assume this will be at least an “average” well or 40 bcf maybe as high as 60 bcf

  128. 128
    Jerome Blank Says:

    Re: #122, keeping an eye on it, but the vol is still too low to get involved…here’s something interesting, UNL is actually on a P&F buy signal, but this is most likely due to the timing of when the stock started trading, but what’s still interesting is that UNL is in o’s against UNG on a relative strength basis…although UNG is still on a sell signal, its actually performing better…

  129. 129
    ram Says:

    I don’t short or once in a blue moon I buy puts. Latter.

  130. 130
    zman Says:

    Bill – I don’t know if this was an average or a bigger or smaller, thanks though, will be watching at Pritchard and will meet with them if I decide to go to IPAA. RMD, you going, lot of little names at that one?

  131. 131
    bill Says:

    Z

    when you go to the conf do you just show up or do you get credentials?

    Sd cracked 10 today. Most ng stocks are up over 5 %, so mcf move really didnt get anything on the new well which imho is huge

  132. 132
    zman Says:

    Ram – Hear ya, that’s why I keep my leverage to options pretty small.

    Will have a complete update of the holdings tab later tonight.

  133. 133
    bill Says:

    given that mcf 9 wells are doing 80 mcf per day and this new one will do 20, it appears to be larger than average

  134. 134
    zman Says:

    Bill – I call them and tell them I’m a retired analyst and they give me a name tag and bag of goodies. And a free lunch. Had a Zman’s Energy Brain name tag last year in San Fran and I got a lot of smirks from the hedge fund guys.

  135. 135
    zman Says:

    Re 133 – They often decline off in fairly straight line fashion so with maybe a 5 year life. So were all those 9 wells new today, production might be double or more what it is. Hard to say without going back over their press releases. You get a lot variability on the Shelf. I’d need to look and see if Nautilus was a single target and if it derisks anything. If its not related to their upcoming dude wells (like in a separate fault block of the same structure) than it probably does nothing to derisk those wells. Nice note to start the year on though.

  136. 136
    VTZ Says:

    RE 134: That’s funny, but that’s what I would expect out of hedgies.

  137. 137
    zman Says:

    Bill – Here’s the registration link, still mulling myself. Note a huge load there I care about other than EXXI, MCF, PQ, KOG

    http://www.ipaa.org/meetings/pdf/102010ogisfloridageneralinfo.pdf

  138. 138
    Patipati Says:

    Zman, the MCF Jan. 55’s last traded at .10. What do you think?

  139. 139
    zman Says:

    V – If I go it’s just to hand out cards and ask questions in the breakouts. They can smirk all they want.

  140. 140
    bill Says:

    134 , lol i love it

  141. 141
    zman Says:

    Pati – that would be too much risk for my blood, maybe lightly in that and the Febs. I haven’t bitten at all there yet as I don’t have it worked up in my head as well as I’d like. But I do think that today’s news gets the name some follow through. Sure would be nice if E&P analysts on the Street covered it better.

  142. 142
    Jerome Blank Says:

    EXXI testing daily ascending triangle resistance for a third time, i’d like to see it close and consolidate above $2.50 this week…

  143. 143
    zman Says:

    Jerome – EXXI is why I may go to Florida. I’d really like to be in the breakout room. Jat if you are going I’ll jot down some ?s. You too RMD. RMD, you really should go. I’m told I have to take the interns and back office with me if I head to sunny Florida this time of year. I respond that the OJ crop is about to freeze but they want to go anyway.

  144. 144
    bill Says:

    138== i own some but dont think they will work unless we get another 10 % day

    I added to my core position with feb 50’s and sold the jan 45’s.

    there are no feb 55’s but i would like more time than 2 weeks for it (the option call) to play out

    I think you defintely want to be in this pre-next earning release and they have some easy comparisons coming up

    risk is daily ng prices and market values for stocks and energy names

  145. 145
    zman Says:

    Re 144. Agreed on all points.

  146. 146
    zman Says:

    Beerthirty

  147. 147
    reefguy Says:

    210 trading days at 6%/day is….

  148. 148
    zman Says:

    Reef – If only … lol. Strong close for the names. Nearing a double on my tiny IOC position, thanks for prodding me there.

  149. 149
    reefguy Says:

    ioc- now what to do???

  150. 150
    ram Says:

    Is there a belief that IOC is toppy at $80?

  151. 151
    zman Says:

    Reef – Good question, I’m just milking it. Bought 2 calls for 1200 when the porfolio was, um, skidding a bit. Now at 2,300 on those, I’ll probably cash in tomorrow or Wednesday as they are Jan’s and I’m into my cash a bit more than I wanted after today’s trading and I never trust early January moves in the broad market. Will likely see if the market can pull it down so I can go long some longer dated calls before the next news hits. I’m told the chart looks very extended.

    Gotta run to the DMV, good day up until now.

  152. 152
    baylor3217 Says:

    Re 134, why those hedgies laughing? No respect for the zBrain?

  153. 153
    zman Says:

    Not laughing just smirking. And hey, some of them are in here now.

  154. 154
    zman Says:

    Holdings page updated

    $10KP II and ZLT updated for today’s close and positions.

    $10KP II at $26,600; 31% cash.

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

  155. 155
    zman Says:

    SEC Filing Watch:

    APC buying TXCO’s assets. Apparently they outbid NFX for them. Nothing on the tape yet. Should be positive for the Eagle Ford Shale crowd.

  156. 156
    zman Says:

    Andy – Did you get the email sent to the alternate address?

  157. 157
    zman Says:

    Re 154 – apparently that did not update earlier. It is updated now.

  158. 158
    RMD Says:

    when is IPAA? I’m in NJ freezing my butt off, gale force winds, though I think LR is colder tomorrow than here. Burning mombo amounts of nat gas!

  159. 159
    zman Says:

    January 19, 20th.

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