Sentiment Watch: Equity futures are trending a little lower this morning although retail sales appear to be coming in better than expected for many. Jobless claims came in at 434,000 vs a 410,000 forecast. I have been raising cash and moving out of January calls and will continue to do so with the goal of being mostly out of January expiries before the Payrolls data tomorrow. I would expect the market to be somewhat subdued today ahead of that Payrolls data.
In Today’s Post:
- Holdings Watch
- Commodity Watch
- Natural Gas Preview
- EIA Oil Inventory Review
- Stuff We Care About Today - Catalyst List update, RRC, Pritchard schedule
- Odds & Ends
Holdings Watch:
- $10KP II:
- $36,800
- 58% Cash
- The Current View of options held on the Holdings Tab has been updated. I continue to shift to more cash and less of the front month options.
Yesterday's Trades:
- HAL – Sold (20 – all) of the HAL $31 January Calls for $1.51, up 104%. Will likely punt the $33’s soon and look for a point in the next few days to roll longer but with no real rush on that.
- NFX – Added (10) February $55 calls (NFXBK) for $1.25 (easily on the mid) with the stock at $50.95. I’m thinking they are overdue for an ops update, and last year they gave guidance mid January. I continue to hold my Feb $50 position here and the common.
- ANR - Sold the (5 -all) January $45 calls (ANRAI) for $5.30, up 247%, with the stock at $50.20. I plan to reload in another coal name or two either after Payrolls on Friday or next week.
Commodity Watch:
Crude oil rallied $1.41 to close at $83.18 yesterday, despite the release of some pretty lackluster numbers by the EIA. The front month contract now looks like this. I am mildly surprised by the rally yesterday in the wake of the EIA data (more on that below along with some things that can stall the rally at least in the near term). This morning crude is trading about 50 cents lower an hour before the open on weak equity futures and a rally in dollar.
Natural gas jumped 37 cents to close at 6.01 yesterday, the first time gas has closed north of $6 since October. Gas now looks like this but the period above $6 may be limited to the time below normal temperatures in the U.S., Europe and Asia. Today's storage number is probably less important in this support than is next week's as it contains the New Year's Day holiday. This morning gas is trading flat.
Natural Gas Preview
- My number: 145 to 150 Bcf; should be 200+ next week.
- History:
- Last Week: 124 Bcf withdrawal
- Last Year: 67 Bcf withdrawal
- 5 Year Average: 75 Bcf withdrawal
- 5 year Hi: 20 Bcf withdrawal
- 5 year Low: 171 Bcf withdrawal
- Last Week: 124 Bcf withdrawal
- History:
- Street Consensus: 150 Bcf
EIA Oil Inventory Review
ZComment: On the whole a bearish looking set of numbers. If I had to come up with a bullish bit of sentiment it would be, and this is for the very near term, that distillate demand just about has to pick up next week. We have heat oil demand and we have inventory restocking (trucks are going to be rolling) that are going to have to be consuming distillates. Gasoline? Probably not. In fact, in the near term, demand probably stays flat or inches lower. My sense is that all the pre holiday unemployed were out shopping and now they are sitting around, looking for work online, and/or playing xbox (and not driving). The domestic refining group is doing a really good job of keeping utilization low and this likely means crude will continue to pile up at Cushing. There should put a short term limit on further price gains for WTI but I've been saying that for awhile and the market seems not to care.
CRUDE OIL
GASOLINE
DISTILLATES
Stuff We Care About Today
Pritchard Energy Conference Day 2
- Link to presentations
- Of note today: (all times EST)
- MCF - 2:50 pm
- RRC - 3:15
- KOG - 3:40
- PXD - 5:20
- CLR - 7:35
RRC Updates Financial Position:
- YE 09 Debt at $1.71 B, down $83 mm from YE 08
- Hedged for 69% of expected production with $5.53 floors
- Makes it one of the better hedged, at least in terms of quantity if not in terms of price, gassy E&Ps so far this year.
Odds & Ends
Analyst Watch:
- BEXP - cut to Hold by Natixis
Site is moving really slow this morning, working it.
Bill put this on yesterday’s post:
Jack Gerard, president of the American Petroleum Institute, the industry’s dominant trade group, said the decision would make it more difficult to produce domestic oil and gas and would be a setback for the economy. “Under the guise of offering certainty for investors, Interior Secretary Salazar has taken steps to further delay and limit American energy resources for all Americans,” Mr. Gerard said in a statement from Washington.
He said that in the year the Obama administration had been in office, federal revenue from oil and gas leases in the region known as the intermountain West had fallen by more than 80 percent.
What concerned me more than the changes to the lease lengths is the decision by the BLM to decide where leasing will occur. Instead of offering leases on Federal land as usual, there will be another level of review (think jobs creation program right there) which will make sure that current drilling is nearer to old drilling. Want to go do a big step out, find something new? Good luck.
NG seeing a little profit taking, down a dime now, in advance of the storage number. Can’t really fault traders on that as this week is likely to be a lackluster result despite the weather and it was up 40 cents + if you count the overnight session.
FST on the tape with 2010 guidance. This was strong yesterday so I’d say they were a little leaky on the news front. Production guidance is q409 to q410 of 10 to 12%, or 0 to 2% YoY which is ok.
Budget breaks down about 1/4 each to Granite Wash, Haynesville, Alberta. Over 50% on horizontal, not surprising. Still no info on the 3rd GW well mentioned in the Catalyst list.
Analyst Watch:
BMO cuts BEXP to Underperform from Market Perform.
Geitner story drawing significant attention: (this is a fwd fro CS) AIG said in a draft of a regulatory filing that the insurer paid banks, which included Goldman Sachs Group Inc. and Societe Generale SA, 100 cents on the dollar for credit-default swaps they bought from the firm. The New York Fed crossed out the reference, according to the e-mails, and AIG excluded the language when the filing was made public on Dec. 24, 2008. The e-mails were obtained by Representative Darrell Issa, ranking member of the House Oversight and Government Reform Committee.”
Geithner been in the hot seat but has retained support of the administration. This will be spun as a concerted cover up of backdoor bailout of Goldman Sachs (and others) through the New York Fed. Given the current political climate you have to think there is a good chance Obama backs away from Geithner. I doubt that will be good for markets, at least initially. The stock market did very well on his announcement and although it stumble after his vague February 2009 “plan” was released, the bull market started with his more detailed version laid out in march. This will also put more pressure on the Bernanke reappointment. The uncertainty generally should only add to the case for steepening/more term premium. The front-end could do relatively better if risk assets get nervous about this.
Thanks JD
BOP – any HT and TT color?
CLR……———- Press Release below
———————————————
Continental Resources Continues to Improve Initial Well Production
Rates in the North Dakota Bakken
Hendrickson 1-36H Sets New Company Production Record for Bakken
Company-Operated 4Q09 Three Forks/Sanish Wells Average 1,242 Barrels
of Oil Equivalent per Day
ENID, Okla., Jan. 6 /PRNewswire-FirstCall/ — Continental Resources,
Inc. [CLR] today announced a 29 percent increase in initial production
rates for fourth quarter 2009 wells completed in the North Dakota
Bakken Shale play, compared with initial well rates for the third
quarter of 2009.
Continental participated in completing 17 gross wells (6.3 net) in
North Dakota in the fourth quarter of 2009. They produced an average
980 Boepd (barrels of oil equivalent per day) during their initial
seven-day test periods, compared with an average of 761 Boepd for the
third quarter of 2009. The Company noted that final well results for
the fourth quarter of 2009 may vary slightly when it reports year-end
results, because data from a few additional wells are still being
collected and may be reported as fourth quarter 2009 completions.
On a year-over-year basis, the 980 Boepd initial production average
for these fourth quarter 2009 wells was 80 percent higher than the
average of 546 Boepd for wells completed in the fourth quarter of
2008.
All initial production period results in this press release are seven
consecutive day averages.
Continental-operated wells produced even stronger results for the
fourth quarter of 2009. Continental completed eight gross wells (4.6
net) in North Dakota during the quarter, with six gross wells
targeting the Three Forks/Sanish (TFS) zone:
— Hendrickson 1-36H (95% WI) in McKenzie Co. – 1,990 Boepd; —
Simmental 1-21H (59% WI) in McKenzie Co. – 1,271 Boepd; — Hartman
1-28H (37% WI) in Dunn Co. – 1,225 Boepd; — Tande 1-23H (47% WI) in
Williams Co. – 1,148 Boepd; — Schroeder 1-34H (53% WI) in Divide Co.
– 915 Boepd; — Cuskelly 1-7H (47% WI) in Dunn Co. – 901 Boepd.
“These are outstanding results, with our TFS wells averaging 1,242
Boepd in their initial production test periods,” said Harold Hamm,
Chairman and Chief Executive Officer. “The Hendrickson 1-36H in
McKenzie County established a new single-well record for Continental
with initial production of 1,990 Boepd.”
In terms of the Continental-operated wells, completions involved 18
frac stages and approximately 100,000 pounds of sand and proppant
injected per stage. In addition, the Company noted that its two
strongest wells for the quarter, the Hendrickson 1-36H and Simmental
1-21H, are in northeast McKenzie Co., an area in the Bakken where the
Company acquired additional acreage in 2009.
Continental’s drilling efficiency for the fourth quarter of 2009
remained in line with its third quarter 2009 results, averaging
approximately 24 days from spud to rig release.
Continental’s dual-reservoir development in the North Dakota Bakken
play continued in the fourth quarter with the completion of the Omar
2-1H (46% WI) in Williams County.
The Omar 2-1H targeted the Middle Bakken zone and produced 694 Boepd
in its initial test period. It was drilled parallel to and offset from
the Omar 1-1H, which was completed as a TFS producer in the third
quarter of 2008. The Omar 1-1H has produced a cumulative 137.3 Mboe as
of year-end 2009.
The Company also announced the completion of the Traxel 1-31H (74% WI)
well in Mercer County, an exploratory test on the southeastern
perimeter of the Bakken play, where there has been minimal drilling
activity. The Traxel 1-31H was horizontally drilled and completed in
the Scallion limestone zone, which is located immediately above the
Upper Bakken shale zone, and produced 71 Boepd in its initial test
period. The Company initially tested the Middle Bakken shale zone, but
did not encounter significant oil shows.
“This discovery in the Scallion limestone establishes the potential
for another producing reservoir in the Bakken petroleum system of the
Williston Basin. Productivity would have to increase for it to be
economic,” Mr. Hamm said. Continental plans to monitor activity by
other operators in this part of the play before drilling additional
test wells.
The Company has begun drilling its first operated well in western
Williams County, North Dakota, where other operators have recently
reported strong well results.
In the past six months, Continental has acquired an additional 70,000
net acres in leases strategically located on the western and eastern
edges of the Nesson Anticline, as well as expanding westward into
Williams County. Continental currently has 483,000 net acres leased in
the North Dakota Bakken.
Mr. Hamm noted that Continental’s drilling program is accelerating
rapidly, as planned. “We increased to 12 operated rigs overall at year-
end 2009, with seven of those in the North Dakota Bakken,” Mr. Hamm
said. “We plan to increase to 23 operated rigs by mid-2010, at which
time we plan to have 15 in the North Dakota Bakken. Six rigs will be
focused on ECO-Pad development in the play.”
The Company’s ECO-Pad(TM) concept consists of a single drilling pad
located on the shared boundary of abutting north/south, 1,280-acre
spacing units. Four wells will be drilled from each ECO-Pad, with one
Middle Bakken and one Three Forks/Sanish well each into the north
unit, and a similar pair of wells drilled into the south unit. The ECO-
Pad approach is expected to reduce well cost and to allow for a longer
horizontal bore in each well, generating higher initial productivity
and reserves.
“We’re very excited at our opportunity to grow production and proved
reserves in North Dakota in 2010. With continued strength in crude oil
prices, we look forward to accelerating our activity and setting the
stage for additional growth in 2011,” Mr. Hamm said.
BOP confirms the BMO guy has been behind the ball the entire journey on BEXP. Target is $10 and has been single digits for some time and market perform rating forever. So miss the ride and then try to get some notoriety for your lateness by telling people to sell what you failed to tell them to buy.
West – what am I looking for in that CLR press release from yesterday?
Since I’m in here by myself today, I’ll be quiet too. Listening to CRZO call from yesterday, will go listen to some others before today’s presentations start in a few hours.
Watching BEXP come in to the mid $14s on these two downgrades.
Thought that was a little long , about half down they talk about Traxel well that is south of KOG’s #9 and the Scallion Limestone or Lodgepole formation above Bakken. Just an fyi for those with a interest. Lots of other infor on Williston Basin. Had this already been posted?
Do you think the CLR update will support BEXP from dropping too far.
West – No, just saw the pr yesterday. Missed the Traxel comment.
Ram – No.
If investors still want to be in a small bakken, would they jump out of BEXP and move into NOG maybe?
Perhaps. This is just knee jerk selling in a soft market.
BEXP has filled the gap up from yesterday’s news.
If Cushing is getting bloated, why do refiners still buy imports versus draw from cushing?
Re 20. Different facilities require different grades of crude. Cushing is in Oklahoma and is only a small piece of overall storage. It is only connected to midwest refiners via pipeline. But it is the price point for U.S. crude.
O.K. I was just thinking that at some point with more domestic oil coming on line, the economy still soft, that there would be a move to slow down imports.
Imports have been running low for awhile now. It’s the second chart in the Thursday post in the EIA oil inventory review section. Despite all the OPEC cheating, that extra oil is not coming to the U.S.
Gas numbers in 10 minutes.
Was away this am, now back
a few interesting companies today at pritchard
gmxr,mcf,rrc,kog,atpg,wres,ioc, etc will keep me busy
It will be intersting to see what the ng number is. I read somewhere a weekend day is 30 bcf less demand than a mid week day. Last week was 1 less holiday so 30 more than 124 would be 154 weather being held constant.
The yoy inventories should fall fast with the cold weather.
I will probably do one more WildZ on BEXP as I think the shares still have some upside in them as do some analysts. They have further near term catalysts in the form of more wells which could be out this month, possibly as early as next week.
If the gas number comes in higher than say, 160, I’ll be looking at a quick trade in SWN.
Sounds like TPH is looking for mid 200 Bcf withdrawal next week and the week after, which is what I was looking for with my brief comment in the post.
I was reveiewing your catylst list.
Regarding HK and other ng companies,
does low (2009 ng avg price) affect reserve levels ie will this drive lower reserves due to price revisions?
adding to 26, and in HAL.
Bill – It will for some yes, not HK as the raw growth there should get them something akin to 60 to 70% reserve growth, or nearly 1 to 1 with production growth. I still say people will give companies a pass on bashing them for price related reserve revisions, especially this year.
sears up 11 to 100 today–wow
i might have to diversify , lol
EIA Gas Storage
NG just before the report: Down 11 cents at $5.90.
Withdrawal: 153 Bcf
Gas immediately comes back to even on the day and then backs slightly. Sigh of relief heard from gas bulls.
153 seems ok
agreed- i feel the same sigh of relief
in fact i think the stocks will rally
ZTRADE: WILDZ
Added (20) BEXP $15 January Calls for $0.40 which is my average cost in the position, with the stock at $14.65.
Anyone have some thoughts on POT in the near term? It has had a huge almost 15% run in the past 4 days and broke through what seems to be near term resistance.
I’m thinking about taking a position in January calls on the put side.
NG up 2 cents and back above $6.
If we do 200 + next week, then the yoy surplus is way down to about 140 bcf surplus from about 400 at the high
Baylor – I sent JD a note, he’s been good with the POT for awhile now.
Thanks Z
I dont follow pot but its a so called “commodity” stock that runs hard and fast
looks like the ng stocks rallied anywhere from .5 % to 1 % on the news
Re 39
Storage surplus just took a ding with these numbers.
YoY was 13.1% last week, now 10.1%
Vs 5Yr was 13.6% last week, now 11.3%
Next week should be that 200+ coming up against last year’s 94 Bcf.
bill – if we do 200 next week and 200 the following week, what does that do to the surplus?
Bill – also note, crude rallied off its lows with the number. Gives that market a lot of hope that next week distillate demand jumps. Especially after last week’s lousy numbers.
Andy the numbers will be bigger than 200 Bcf most likely, but using those that takes the YoY surplus down to 6%. If both numbers are 250 Bcf withdrawals, then you are down to a 2.4% YoY surplus.
Missed both my HAL and SWN quick trades on gas, not feeling like chasing unless for a day trade, not with Payrolls tomorrow.
Curious as to people’s thoughts on Payrolls. Has anyone seen anything on what happens to the dollar if we get positive jobs tomorrow. Does it rally since the economy is more on the mend, or fall because the Fed will have to print more to keep it on the mend. I would guess that if the number comes in negative the market may fall back a bit but the dollar would too. Just musing while listening to yesterday’s conf calls.
West coast conferences should get out of bed early for the rest of us. I doubt anyone in NY is going to listen to presentations at 7 pm tonight.
the next 4 weeks from eia
the surplus is 10.1 % or 3123 vs 2837 = 289
so 2 weeks of 200 would be 180 less and it could be better.
94
176
186
195
——————————-
Maybe people will start talking about that.
I added to my sd calls, they fell too hard too fast.
I want to get back into HK , no one seems to be paying attention to them
Z- know you’re busy with Pritchard etc, but wondered if you had looked at CXPO prospectus and had any thoughts. Tks.
my math was off would be 130 less with 200 and 200 at 159. As z said about 6 %
z- re sd
3rd times a charm 🙂
I hope….
Isle – I have not given it my full attention yet. Am talking with some folks about it, will get back with something next week there.
catalyst list:
Of all the open items, which if hit would have the best impact?
Id say the mmr items and that has the biggest impact to exxi, would help mmr and pxp as well
Bill – yep, watching HK, I expect an interesting 4Q call, might be something out sooner. They should be drilling their new shale play north of the Eagle Ford fairway at present.
…and Isle, if HK comes with a big well at Red Hawk (Zavala Cnty, TX) that would be good for CXPO as well.
The first Red Hawk well may be at TD by now, it should have spud last month. This is an Eagle Ford oil prospect.
Bill – re catalyst list. Yes, probably Davy Jones. I think after that ROSE with a Montana Bakken and #56 above would be big.
NG back to profit taking, down 8 cents. Next week’s report is going to be very interesting.
Re HK, there was significant action in the march 27.50 calls about 2 weeks ago.
gmxr has no new slides on web and cant hear pritchard.
You have to wonder what the hell is wrong with them
Bill – Maybe they are saving themselves for tne BMO or Goldman conferences next week.
interesting symbol for rose feb 20’s
just in time for Valentines day
-RSEBD
62 = lol
61.. I assume it costs them money to attend and objective is to get information out, then……
Market looks pretty stagnant in front of payrolls tomorrow, probably no more trades for me today.
The company gets to go for free as do the brokerage clients (other than you have to pay them with commissions).
Baylor #37
Scotiabank’s monthly commodity price index and report is a quick read and does a decent job of covering all the commodities – including potash.
http://www.scotiacapital.com/English/bns_econ/bnscomod.pdf
mcf on now–
contango oil
Thanks Hoss
Bill – just tried to buy a little, just about impossible to split those fat call spreads.
Peak is, as usual, hilarious.
I’m sitting on the bid in the $15 Bexp jan calls if anyone wants to sell me some.
I beat you to it at 0.35.
But you got filled anyways.
ZTRADE: WildZ (high risk)
BEXP – added (30) more BEXP $15 calls for 0.35 with the stock at 14.50. This is a high risk trade at this point. I now have 100 calls at a little under 40 cents average cost. These could easily go to zero as they expire next week. If it does it certainly won’t kill me as its $3000 from here to $0. They should have more news this month and possibly next week.
NG back off 11 cents, same as before the number release.
Thoughts on EOG here?
On AEZ. Hi Z & checking in on your group of most excellent O&G mo-mo’s. Is this your group taking advantage of RMD while he is on the slopes? lol
Bill – great presentation as always from MCF. If I had a complaint I would say that it is a timeless presentation. It doesn’t change much and it almost doesn’t talk about their prospects or their current production base. Its all numbers, no hype, and very hard to argue with. But it would sound the same in a high price or a low price environment. Don’t get me wrong, I like it but he could stand to flavor it up with operations stuff and maybe cut the joke count by half.
V – Are you referring to my small call position or how I think the stock will do long term?
well he had a couple new jokes
Stressed the same themes,
Low cost provider
interests alligned with shareholders
Intent to grow company thru the drill bit
112 m cap budget will hold bach share repurchases but will get more active if ng prices fall
say he has no idea where ng wil trade
Eli – Re AEZ, good call on RMD’s part but I never bought a share (went with producing acreage instead via WLL, BEPX, NOG, KOG). AEZ is out with another barely newsworthy pr today though. Once they start drilling in the Bakken I’m sure we will get updates when the driller hits the head.
Bill – he’s great, I just wish he’d do it in two parts, breaking down the wells and prospects after the Peak ratio stuff. 12 year R/P due to size, say more about that stuff man, give us the next string of fault blocks you are going to drill. At least talk about the 3 dude prospects coming up.
Listening to RRC
Not the immediate term but looking out in the next few months.
I think you will see them increasingly get the nod as a gas play turning into an oil play. There should be some more big Bakken well news from them including TFS news.
They should see higher rates out of the combo oil play in the n. Barnett as well
On the gas side, look for news only out of the Haynesville/E. Tx. I would not look for anything out of Canada this time.
Given where prices have gone, they should be able to announce that they will trough a little earlier than expected in North American gas as they have been letting it slide. This could be mean the 4Q release comes with a small bump in growth, but I do mean small.
The name has a very clean balance sheet, less than 20% net debt to total cap, and most of its actions are low risk. They are drilling in the EFS now but I doubt you hear about that until October.
CFPS estimates should march up this year making them less expensive as they stand still in the $90 to $100 range.
79> I agree 100 % I resisted the temptation to look ahead in the briefing.. as i was listening, I was pleading out loud, tell me whats going on with Contango!! Tell me some operations stuff!!
He is a steady as you go type of guy, not flashy and what you see is what you get.
On the other hand, its small and he isnt going to change his style…
4 gom wells ,1 done successful, 3 to go
3 farm ins (already announced , in negotiation)
and the 15 well package in the cotton valley.
The story was and still is, low cost, unhedged, and proved producing reserves. They will make money down to 2.50, and alot of money at 6 or more.
he had a slide with hypothetical numbers
75 mmcfe day 27 b per year at 5 bucks
well he is at 80 can go to 100 and ng is at 6 and the strip is 6 +
He is pulling in a half million a day in cash or over 11 per share so and trading at less than a cheap 5 x ebitda.
No options were awarded to him.. He is one of a kind, imho and thats why I like him and contango.
I appreciate your comments in 79.
RRC ok, not much new.
KOG in 10 minutes.
Ram – I would suspect some of the BEXP money is heading to the much cheaper WLL (at least on CF it is).
one final comment
One thing I do worry about with contango is thats its a value trap.
No one can buy shares as there is not much out there. Its thinly traded
So institutions cant build a position.
i was lucky to get some rosebuds at 1.60.
KOG call on
re 91 – good luck on those man.
KOG – see pressure on prices, services becoming more difficult to get.
Midday Update
Desk update – color remains consistent – there is a firm bid to the tape and any weakness being used as a buying opportunity; prices remain resilient (but people not chasing prices higher). Activity continues to pick back up although mostly on back of hedgies (vanillas still relatively quiet and waiting for jobs tomorrow and earnings next week). The big theme of the week remains tech vs. banks (banks up nearly 9% on the week vs. tech flat) = leadership shifting (which is being seen as healthy/encouraging for sustainability of the rally).
Equity Update – similar trends as Mon-Wed – financials catch a strong bid (esp. the banks – the bank index is up ~2.5% Thurs and is up 8.5% on the week alone); the overall sp500 financials are up ~1% today. On the flip side in tech, the space remains for sale, esp. the semis (the SOX is down 1.3% on the day); desk continues to see rotation away from tech and into fins (this has been the theme so far of ’10). Tech selling remains benign though and more profit taking vs. aggressive selling/shorting. Away from the fin/tech complex, retailers catching a bid on back of the strong same-store-sales – leading retailers today SHLD +11%, BBBY +9%, TJX +5.5%, ROST +4.6%. Materials are laggards, dipping ~0.7% (the China rate action, along w/Citi’s AA downgrade this morning, is weighing). Industrials up 0.5% (driving things there are 3%+ moves in MAS, BA, and GE). GE’s 4.5% rally getting a lot of attention (BA’s plane order #s could be helping….also GE moving in sympathy w/the financials). Builders are up ~5% on the day (on back of pos. earnings from the group). Trans off 1% – airlines are up further (up 2%) but some rails/truckers are weak.
BOP/West – KOG talking about Shell cores on their acreage that show oil in the Three Forks.
z — thanks! On KOG call now… hope Lynn can throw a little enthusiasm into it
NG down 20 cents now. Volatile.
KOG — TFS well in “late 1Q”… that would be great. Need to up the economics of their acreage.
KOG — will have ALL wells hooked up by EOY2010. That would be awesome. Didn’t know they were planning to hook up all wells. Need to capture the liquids from the nat gas they are flaring.
KOG — finally following BEXP up the # of frac stages ladder. Sounds like BEXP really did crack the code.
wish they would let us sit in on the Q&A… oh well. Thoughts on the KOG presentation, z?
On Shell cores one is offset to Mocassin Creek wells and the other is offset to wells 3&4 and Peak ND current 3Fks well.
Gotta say, looking at the stock price action, Lynn didn’t “wow” the crowd. But, it’s nice to hear KOG start to emphasize the dual production opportunities of the Bakken and TFS wells, drilled from the same pad. Should help up the ROCE overall.
re 102 – Fine, liked slide 9
Slide #9 is a billboard advertisement for more multi-frac’ed long laterals, I think. Again, BEXP figured that out before the rest.
IOC slipping
HT’s comments this morning were that the mrkt today would see “choppy, with intermittent opportunities for profits.”
Almost sounds like a weather forecast.
Basically, players mostly on the sidelines, ahead of tomorrow’s Jobs Number.
Bloomberg article this morning… Jeff Rubin (former CIBC chief economist qui accurately predicted oil’s surge during the past decade) expects crude to reack $90/bbl this quarter and $100 by YE2010.
I personally agree with that outlook. Maybe we could start another contest, along with the M&A one, where we guess the price of oil at the end of each quarter. What do you think, z? I’ll go with Jeff R’s $90/bbl.
typo… qui = who
(appear to have been thinking in French for a sec there…)
man alive it’s cold here on Cowtown…24 degrees with about 12 degree wind chill
jiveyjr — it’s snowing here, in North Detroit… kinda pretty. No wind, just cold. This is good for nat gas, but tough on gasoline sales… who wants to drive in this weather?
re 109: I wrote this last week as part of my 2010 thoughts:
Oil Has A Better, More Stable Year As Well. Oil just had a pretty good year rallying 110% from start to finish. This of course came on the heals of its worst year in history. While natural gas is largely still a local fuel as far as North America is concerned oil is significantly more global and therefore less dependent on a strong recovery in the U.S. to drive demand higher. Asian demand shows few signs of abating. OPEC continues to cheat on quotas to supply this demand seems to have found a happy medium to keep prices firm while doing so. OPEC spare capacity remains higher and major capacity expansion projects are being pushed back in several countries. I expect OPEC to boost its official quota levels by mid year. Of the bigger Non-OPEC players, production is growing in the U.S., Canada, and Russia but declining in Mexico. While still positive, I expect the pace of Non-OPEC production to slow in 2010. Meanwhile, global oil consumption is likely to rebound by just over a percent without the benefit of growth from the West. So over the year, rising consumption meets slightly rising production and oil walks slowly higher. If the U.S. recovery is stronger than I now think it will be, then oil ends the year above $100.
You folks are wusses when it comes to the cold.
z –#114 damn, that’s good. Agreed. That’s why we pay you the Big Bucks here. Thanks!
V – How thick are the house walls up there. What’s your R factor on insulation? It goes to 10 here tomorrow and my heat will run round the clock to keep up with that.
VTZ — no argument from ME. I have NO IDEA how you live up there, at the North Pole.
Al Gore has a lotta square footage to keep warm. Wonder what he uses to heat the house… his speeches, maybe? 😉
BOP – what are you showing for consensus for payrolls tomorrow, last # I had was +10K.
Bloomberg consensus now shows -35k expected for tomorrow. Have not heard any whisper numbers yet.
I’m not sure of the R factor but I am sure that it’s as high as you can get… Some people double insulate their houses. The really rich and wasteful ones have heated driveways so they don’t have to shovel.
My furnace cuts in and out but when it’s -30C it’s going probably 70-80% of the day.
Do you guys use NG furnaces or other?
Thanks much BOP, market watch showing + 15K now.
Speaking of “North Pole…” I had no idea there really is a town of “North Pole, Alaska.” On Christmas Eve, I sat on a plane, next to an army guy who was flying back to be home with his family in North Pole, AK. The guy is a “cold weather survival specialist.” Basically, he trains pilots who might land in frozen wastelands how to survive for 3 days. I got a few tips… but, my basic understanding was “don’t make an unscheduled landing in the Frozen Tundra in the middle of winter.” I got frostbite just listening to the guy’s stories.
Interesting stuff. VTZ, don’t know how you do it, man.
In the south most things are piped gas. The more rural you get the better your chance of being on propane but that’s a low number. Out west you run into more electric which is not very efficient. Midwest and S. Atlantic you see mostly natural gas as well, Northeast is a mix of heating oil and natural gas although the gassification up there over the years has put a dent in HO volumes, lot less to mess with when you don’t have to have a guy with a truck come around and fill your tank.
+15k? Uh-oh… could be setting up Mr. Market for a disappointment.
HAL holding in very nicely today amidst all the red. Will punt the $33s and add some Feb exposure sometime tomorrow.
BOP was $10K before the ADP report. People seem to think you can add 80K or so to that to get to Payrolls. Probably not that simple.
Well it’s not North Pole yet where I’m at. If you think my cold is miserable then you’ll understand why costs and failures are common and more frequent in the oil sands in Fort McMurray which is, of course, much further North still.
I’ll bet the protesters don’t come up there this time of year.
It was kind of windy when Greenpeace was hanging from the stack and I would’ve been ok with leaving them up there a little longer.
Texw / Wyoming – any thoughts on quality of work from Boots?
Cold here too!
WRES presentation info. looks very good to me
CLNE just won’t pull back.
Jivey – unfortunately they aren’t broadcasting that one.
IOC does not yet have a new presentation up, may not and they too are not broadcasting.
re: 136…for me that may be good…I misunderestimated how good this one might be and am still buying
J – Hear ya on that.
Hears that Geithner story:
http://news.yahoo.com/s/bloomberg/20100107/pl_bloomberg/axivw4igkv38
he regulator decided that Goldman Sachs and more than a dozen banks would be fully repaid for $62.1 billion of the swaps, prompting lawmakers to call the AIG rescue a “backdoor bailout” of financial firms.
something stinks
Geithner angling for a partnership at GS upon “retirement” from his day job, it sounds like.
Strategy move… just swapped 1/2 my KOG position into the same number of EXXI shares. EXXI presents tomorrow morning…
BOP – that sounds kind of smart. Just watching MMR tick up in here….hmmm.
LOLOLOL
“kinda smart”… i’ll take it!
re: 37 POT: mthly, wkly and daily charts all point higher. The daily RSI is near 80 which gets my attention, but the MACD has just turned upward from a relatively low level. POT looks as if it will go higher from here. Sorry for delay in responding.
CNBC reporting Reuters survey is now looking for unchanged on the payrolls number.
MMR – ticking up in anticipation of something, maybe comments from EXXI tomorrow. Note also how you see everyone else in E&P land selling insider shares as is customary at year end but not at MMR.
Z: I have seen a fair amount of insider sales at year end. Is this SOP in your mind? No cause for concern.
Tom – it is when the stocks are near 52 week highs. For many, these are end of year option grants they are exercising and selling either all or a portion of, like a bonus so that’s pretty standard. As long as people aren’t cashing big percentages of their holdings I tend not to worry about it. When I see an absence of selling at this time of year I start to take notice however.
MCF cruising higher.
From what I’ve read and heard, to me it sounds like unless the jobs number is horrid the market will catch a bid. Am I reading this like others?
kinda smart – just about to ask u if u liked EXXI or KOG better. i think u just answered for me
V – Not sure. Wondering about it’s impact on the dollar myself. Talk about something that has caught a bid.
Nobody is willing to pay 78.00 it’s been stuck below for most of the day. As I mentioned before I was looking to mid-78s for a potential reversal and it has approached it a few times and I would not be surprised to see the dollar rally slightly again tomorrow. This rally today has to be expectation based.
market not impressed with WRES presentation; but I need to reveiw closely. I’m not sure today’s actin means anything (one man;s opinion)
as a reminder Z’s back of envelope calculation for HGT are worth a reread; keep this in mind as you look at performance the last 3 months or so.
Keep in mind as well Z the huge speculative net long position that will either force the market up higher or need to exit once there is some market moving news.
Z: Did anyone else get 145K shares like Aubrey got at year end? And I thought shortstop for the NY Yankees paid well. Lol
Hey Paul, now I have to go back and read what I wrote.
V – Yeah, I think that is what we saw on Monday.
Tom – Take a look at SWN inside trades.
Z: Saw those also. 9MM in one week
i like HGT; debt free; un-hedged; and XTO has always appreared to run it well; it was one of the few things I had the guts to buy back in early March as it couldn’t go away!
143 and 147
ty for reminding me—added some more at 2.64
and bot some pxp and mmr for good measure
Paul – at least I appear to have gotten the dividend right, looks like its just about to start walking back up.
bill — i’m getting closer to joining you in PXP… closer, but not quite there yet.
andy — KOG vs EXXI from 10,000 feet. I think both stocks are worth close to $4 on just their low-risk production program alone (and $80 oil)…. but, you also get upside from EXXI’s participation in several of MMR’s deep wells AND a H-U-G-E jump in production coming on line now for EXXI.
EXXI is hedged, KOG is not. But EXXI has a lot of debt and KOG is debt-free. In a perfect world in a rally, you would want lots of debt and no hedges… it’s always a balancing act.
166 lol
Burn me twice and i love you
PXP has a piece of the apc discovery
Oil is rocking and rolling
If you like ng, the haynesville exposure
q4 ng was hedge at 10
and i think some oily reserves come back on that were lost last year due to prices
the more i think about it, the better i feel about exxi hitting 5 this year
and i still own 1/2 my KOG position… so, still like the risk/reward there too.
bill — the more i think about EXXI, the more I like the potential there. Key thing for me will be hearing anything they have to say about what they plan to do with all the new-found cash flow. Need to get a handle on their risk profile, going forward. What i WANT to hear is that Schiller will use his contacts and expertise to amass lots of low-cost, shallow-shelf, oily production with development upside. That is what I hope he says tomorrow… but, may have to wait for Dec quarterly update to hear that level of detail.
EXXI — and I still believe that issuing that perpetual convertible preferred was just about the stupidest bone-headed balance sheet move I have seen in a long time. That said, i sure wish i’d have backed up the truck on that security!
CLR presentation in 15 minutes.
Z – 161 – unless I’m reading it wrong, seems like mostly selling
CXO on the tape with an operations update, they are upping 2010 guidance, looks like Permian is behind it, comments tomorrow. Another name that may be rockin in the Bakken this year.
Baylor – It’s most options that are exercised and immediately sold.
CK Cooper put out a sell on NOG today based on valuation:
reserves 2.2mm (.7 at 12/08 plus 3 net wells @.5mm) X $25/bbl at $70 oil (used $17/bbl at $50) = $1.29/share.
Working capital adds $1.00 on 44mm shares.
70,000 acres at $6,445/ac. adds $451mm or $10.25/share.
$200/ac. for remaining 32,000 accres adds $6mm – $.13/share
Value = $12.68
Since this is the kind of logic which got me into AEZ I sold some today, and am thinking of shorting BEXP, but I have to sort through BEXP’s numbers. Don’t all yell at once, just thinking contrarily.
RMD — i just luuuv it, when you go all contrarian on us.
Nothing goes up in a straight line. Thanks for sharing your thoughts.
I take that back… nothing goes up in a straight line — except the stuff I don’t own! LOL.
Great call on AEZ, RMD… just super.
RMD – Told you not to hit the trees while skiing.
Listened to CLR – IPs improving, rigs ramping. 4Q09 average 7 day IP will be 980 boepd, vs 700ish year ago.
He did not mention rising costs of drilling like KOG indicated. May just be a difference in timelines with KOG thinking of current pricing coming off the bottom and CLR thinking of just how far prices have fallen.
10 to 12% production growth this year, looks like 2011 will be stronger.
Targeting double of production and reserves in five years from current inventory.
The name still looks pricey to me.
BEXP:
Wild guess numbers using 270,000 undeveloped acres gets me to $4,400/acres valuation. Very back of envelope though.
RMD – How are you getting to that number?
Zman – Re 174, is the NOG assumption correct above?
Ram – That’s not the way I would look at that name.
No debt, lots of acreage and production (unlike some of the other little Bakken wannabes). I can work up an NAV but NAVs really aren’t worth that much after you have cash flow to talk about until the day someone else buys them. So how about using CFPS of $3.76 for 2010, on a $13.17 = 3.5x which is damn cheap onshore, U.S., oily, and in a hot play.
Thank you Zman. I’ll sleep better tonight.
re 182. Well I guess I’ve done my job then.
Temps moderating next week. Listened to Bastardi, sounds like he does not expect it to last long. He did say that he expects the vocal global warming forces to start pointing to this winter’s harshness soon saying that it was caused by global warming. Good slide show comparing this winter so far with 1970, cold and warm in the same areas, pretty similar patterns. Bastardi then talking about the whole Ice Age scare that the same vocal types were talking about in 1970. What a cynic that guy is, lol.
the global warming guys dont call it global warming anymore, it global climate change
Then, any climate changes will get their dander up. Why restrict yourself to just warm weather
does bastardi only come with the premium service
Bill – I think so re Bastardi.
just ran today’s comments..#143….
what time is EXXI presentation?…..
10s just keep on giving…$950…..thanks
EXXI = 11:25 EST
http://www.wsw.com/webscast/pritch2
Boots and Coots?
yeah, for snubbing ops in the shale?
what do you want to know about them? There are several snubbers out there, but Boots is the people we prefer in HPHT wells. Barnett and lower pressure plays will use smaller snubbing companies. FYI, snubbing is not all B&C offers.
Right, right, just listening to their call today, have been away for the story for a few years, they mentioned they were ramping business in the shale, natural progression from blow out control days, working with pressure control anyway, thanks for confirming they are the ones you’d use, that’s exactly what I wanted to know.
176 – exactly how I feel !
EXXI up 50% from 2 weeks ago. wow.
someone explain to me why oil is $80 +.
makes no sense except for the free money carry trade.
also explain how 80 or 100 dollar oil is or will be good for the economy and the consumer.
I do not get it.
Well crap. Texas just self destructing in Pasadena.
Pack, you really want to know?
honestly; all this chatter about oil going to 100 seems so 2007.
It really makes no sense and will pound the economy and the consumer.
Its good for oil co profitability; but nobody is considering its impact on company profitablility for users. Trannies for ex.
just venting.
As soon as oil goes back down through $80, many of the same voices who are saying $100 now will say $70 or even $60.
Still, I think its a very good question and I will put my thoughts on the matter in tomorrow’s post.
yes, i know LOL !
but even you are talking 100 !
we cant have recovery and 100 oil is my main point; or even 80 oil and $3 gas and 10% unemployment.
BEXP 174 revised #s as prior guess used 77mm shares:
99mm shs, Ev 1.75B – est pretax reserves of 325mm = 1.42B
$1.42b/270m acres=$5,259/ac.
This values whole 270m acres as “prime” while ND. acres are about 140m, and the rest you can value as you want. $325mm proven reserves may need adjustment also, but I’m doing this quickly during a timeout and having not studied the BEXP slides at great length.
Now be fair, what I said was, if the economic recovery is stronger than I think it will be, crude will be over $100 at year end. That’s 12 months away and I didn’t say how far over the century mark it would be. If the U.S. recovery is stronger than it now looks to me to be (say 1 or 2% GDP growth in 2010 goes instead to say 3%), then China can stay puffed up longer to feed a larger inventory restocking.
As to high oil prices crushing the economy back, higher taxes are a far worse thing for the economy. In the last run everyone was sure $100 crude would kill the economy. Instead it was something 99% of the land had never heard of. And the delta between $2.50 and $3.00 gasoline for the average driver is probably an extra $15 per month.
RMD – You using YE08 reserve figures?
Way to go Texas backup QB.
Wasn’t meant as a personal criticsm and didn’t mean to be “unfair” … reading thru comments very quickly tonite and watching ball game. You still da man !
Pack – didn’t take it that way at all. The internet is a very flat medium and I often leave off the LOLs. LOL. Besides, I have a thick skin. And I welcome the question because I think oil is a little rich at present. More things have to go right than are currently going right in the U.S. economy to get that extra GDP bump. So keep it up. Plus I’m not all that happy about the game.
’08 reserve figures adjusted, but I forget just how…it made sense at the time.
z- Freeze offs
Some are saying this will cut production. Im not familar with the term
Bill – You see it in the Rockies more than anywhere else, basically, it gets too cold and water produced in the gas wells freezes either in the wellheads or gathering system, “freezing off” production. Could be wider spread this week as it has been colder than normal in the South. Short lived, weather warms up and you get that production back, might be some minor repairs involved but this is just a temporary dip.