15
Jan

T.G.I.F.

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Market Sentiment Watch: Intel and JP Morgan posted strong results but cautious comments from JPM's Dimon  point to lower equity market open. I'm likely to have 3 or perhaps 4 scuds this expiry including my position in BEXP January calls which were, although on the catalyst list, and a potential winner, a loser due to my own poor timing (aided by 3 downgrades and only one upgrade last week).  That's a pretty typical scud count for me and aside from that, the week went extremely well. The market is closed for Martin Luther King day Monday so have a peaceful three day weekend.


Ecodata Watch:

  • CPI came in at 0.1% with core inflation also up a benign 0.1% vs forecast 0.2% and 0.1% for core,
  • Industrial production comes out at 9:15 am EST (forecast 0.5%),
  • We get the Consumer sentiment reading at 10 am EST (forecast 75 vs last read of 72.5).

 

FYI: Today is the estimated tax payment deadline for quarterly federal taxes.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today - CXPO
  5. Odds & Ends

Holdings Watch

  • $10KP II:

    • $30,900
    • 30% Cash
    • I will update the $10KP tab over the weekend.
  • Yesterday's Trades:

    • SWN – Added (20) Feb $55 Calls for $0.43 with the stock off 2% after natural gas retreated in the face of a strong storage withdrawal of 266 Bcf. See site for further details on storage today.
    • NOG – Added (10) February $12.50 Calls (NOGBV) for $0.75.

Commodity Watch

Crude oil eased $0.26 to close at $79.39 yesterday. This morning crude is trading off 50 to 75 cents on a stronger dollar.

  • Goldman Price Watch: Goldman Sachs kept its 2010 crude price forecast at $90 while raising its 2011 forecast to 2011.
  • IEA Oil Demand Watch: The group puts 2009 global demand at 84.9 mm bopd, down 1.5%; 2010 forecast is 86.3 mm bopd up 1.7%.

Natural gas fell $0.15 to close at $5.59 yesterday despite the EIA reporting a larger than expected withdrawal from storage (see below). This morning gas is trading up slightly and I continue to think gas will be range bound for the next several weeks.


Natural Gas Storage Review


ZComment: Big draw of 266 Bcf with a 5 Bcf downward revision to last week's number effectively reducing storage by 271 Bcf and bringing it within 3.7% of last year and 4.4% of the five year average (see graphs B & C below). I've added a couple of graphs to the standard list below. Graph F)  shows a view of the comparisons to 2009 withdrawals and you can see that the contractions to historical levels are going to get a bit more difficult given our warming trend over the next 3 to 4 weeks. Graph G) takes historical withdrawals and current storage and compares them to the five year average. This graph is showing more past winter results would now put storage below average by the end of the withdrawal season than it did a few week's ago.

 

Stuff We Care About Today

 

CXPO - Crimson Exploration Quick Look

The Basic Story: Texas minnow sized E&P, operating on a tight budget through 2009 due to high debt and low natural gas prices. Production is largely onshore natural gas sources from South Texas. Spice is added via a small acreage position in the East Texas segment of the Haynesville where the company participated in one of the biggest announced Haynesville wells to date (30 MMcfepd operated by DVN). The company also has acreage that is prospective for the Eagle Ford Shale. In mid December, they raised roughly $93 mm to pay down debt (more than tripling the share count in the process) and gear up for a capital program in 2010 that should arrest declines and potentially provide for a small uptick in production later in the year. At present Street coverage is nil but I'd expect them to at least get the underwriters on board with reports in the not too distant future. The stock has fallen 20% since the deal. 

Capital Spending:

  • 2009:Like many of the micro cap, indebted E&Ps, the year saw them rein in capital spending due to low prices, as a result, production began to slip accordingly.
  • 2010:
    • plan calls for $56 mm (within expected cash flow according to them)
    • 64% East Texas - Haynesville Shale
    • 24% South Texas - Liberty county gas targets
    • 5% South Texas - Eagle Ford Shale; Zavana county oil EFS might make this story a little more interesting later in 2010.
    • 7% land and seismic
    • This gets you 12 gross or 6 net wells

Production:  Not a great record of meeting guidance.

  • 1Q08: 52.6 MMcfepd
  • 2Q08; 53.127 MMcfepf
  • 3Q08  54.126 MMcfepd
  • 4Q08: 50.0 MMcfepd - started pulling back on spending here.
  • 1Q09: 47.9 MMcfepd
  • 2Q09: 42.825 MMcfepd (guidance was 44 to 48 MMcfepd, was then reduced to 42 to 46 MMcfepd)
  • 3Q09: 38.271 MMcfepd (guidance was 37 to 41 MMcfepd)
  • 4Q09E: Guidance of 37 to 40 MMcfepd

Reserves:

  • 120 Bcfe as of 9/30/2009,  73% natural gas

Hedges:

  • 2010:
    • 16 MMcfgpd @ $7.71, so about 73% if they hold produciton flat.
    • liquids largely offset, about 700 bopd or nearly all of their oil production at $83 per barrel.
  • 2011:
    • 16.6 MMcfgpd @ 7.32
    • 300 bopd at 66.50

 

Balance Sheet:

  • Net debt to total cap: 49% after the recent offering and a subsequent asset sale in East Texas.
  • Interest coverage should be adequate following the debt paydown and they are currently in compliance with their covenants.

Valuation:

  • TEV / EBITDAX: probably trading at 7 to 8x 2010 levels.
  • Market's valuation of reserves: $2.49 / Mcfe


Nutshell: In a word ... pricey. Not big enough to be a good target candidate in any of its areas .Given the market's pricing of its proved reserves at $2.49/Mcfe.  The drop from the extreme dilution the original shareholders absorbed is not surprising. On the plus side, several members of management have good track records with good firms and the name will have a number of catalysts in 2010 including more big target drilling in the Hayneville and perhaps two Eagle Ford Shale tests which could drive the shares higher later (from a lower level). My sense for now is that the stock needs to fall further to get in line with some semblance of valuation reality. I'll keep an eye on it for now.

Odds & Ends

Analyst Watch:

  • Jefferies raises oil service targets

    • HAL goes from $35 to $42, maintains Buy
    • DO $88 to $97, Hold
    • NE $53 to $55, Buy
    • RIG $91 to $100, Hold
    • BHI $54 to $67, Buy
    • raises SLB to Buy
    • and cuts ratings to Hold on HERO, RDC, PDE, SONG
  • PVA cut to Hold at SunTrust

125 Responses to “T.G.I.F.”

  1. 1
    zman Says:

    CFTC proposes setting new position limits so high that only 3 large traders in the last 10 years would have been affected by them.

  2. 2
    reefguy Says:

    thanks for the cxpo analysis!

  3. 3
    skimo Says:

    FYI charting article BHI, confirming your comments above
    http://www.thestreet.com/_yahoo/story/10660330/1/baker-hughes-charts-up-move-has-legs.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

  4. 4
    bill Says:

    Nice write up on cxpo

    MCF is producing twice cpxo rate, has 3 times the reserves, no debt, market value of reserves a little over 2 mcf without Nautilus and trading at 5 times ebitda.

    the ceo is on a selling plan where he sells 15,000 shares every month on the 15th. Yesterdays volume was 30,000 shares

    TPH out with a bullish position for Ng

  5. 5
    milepost_43 Says:

    From IV MB

    Weather Model Update
    Just a quick one here.

    The models have basically undergone a massive shift today. All major models have backed off an extreme warm up for the next 10 days – while still warm its not excessive. For near term models to shift that far in one model iteration is pretty amazing inside of 10 days forward.

    Afterwards is where the divergence really appears. The three main models:

    1. Euro, by FAR the coldest model. Has a decently cool first week of feb, though not overtly so (normal midwest, NE cold – cold elsewhere). This model is pushing the -AO idea the most aggressively. Its slightly warmer tonight than this afternoon. The Euro tends to be on average the most accurate over this time period although notoriously poor to pick pattern changes.

    2. The Canadian model. Warmish to normal compared to average overall, with decent cold potential Has a -AO, but neutral NAO limiting the cold.

    3. GFS, basically end quite mild across the US, primarily driven by a strong pacific jet stream forcing warm air into the country. Its been very consistent with this outcome, and has been the most accurate and least volatile model the last week.

    Additionally the Euro monthly outlooks came out today calling for serious cold though Feb. To be fair its been saying this for 4 weeks now, so its accuracy has been right and wrong. Brett Anderson should show this tomorrow on Accuweather (his report will look the same as the last two…)

    So some pretty divergent outcomes, that have actually become more divergent today. UK gas is down quite a bit today.

  6. 6
    zman Says:

    Thanks Reef! I got about 30 minutes into that one and started thinking “why bother?” so I didn’t tackle the plays themselves thinking I will if it falls by half.

    Hear ya Bill, I wouldn’t put the two companies in the same ballpark although CXPO isn’t without managerial talent…time will tell.

  7. 7
    bill Says:

    Agreed. I like looking at valuation metrics.

    If there is someone out there at less than 2 on proved producing reserves, Id like to know it

  8. 8
    zman Says:

    Bill – I’ll get you a list.

    Great T. Boone ad running today on CNBC.

  9. 9
    BirdsofpreyRcool Says:

    KOG looks to open above yesterday’s closing price. On no “new news” that I can dig up. Curious…

    TechTrader is 55/45 LONG for his best trade of the day.

    HeadTrader pointing out that INTC was good and for the most part JPM too. JPM not as “good” as people hoped. But, if I was Jamie Dimon, I wouldn’t be talking the Happy Talk, with Washinton slapping me upside the head right now.

  10. 10
    zman Says:

    CXPO up 5% on 250 shares, lol. I would imagine they get some coverage next week (month from the deal) but not sure.

  11. 11
    zman Says:

    HK – Anyone have news? Stock has been moving ok and I have a news ticker but no story today.

  12. 12
    zman Says:

    Sub $2 / Mcfe

    BBG cheapest on that basis (people still not that enthusiastic about Rockies gas)

    Others from my usual suspects: BRY, SD, PXD

  13. 13
    zman Says:

    Market may get one last reason to move for the week with consumer sentiment, otherwise expecting a boring trading day for expiration.

  14. 14
    BirdsofpreyRcool Says:

    HK — I see that Jeffereis is out with an updated “buy” and $26 PT on BB. Somehow, I think that update is a bit cattywhompus, as the price is already over $26…. ??

  15. 15
    zman Says:

    Thanks BOP.

  16. 16
    BirdsofpreyRcool Says:

    west — did Peak complete their TFS well in the middle of KOG’s acreage? The one where they had only gotten 1 frac stage off.

  17. 17
    choices Says:

    Monday is US holiday-may have effect on closing today.

  18. 18
    bill Says:

    12 thanks z

  19. 19
    bill Says:

    is market open on monday?

  20. 20
    choices Says:

    cattywhompus?? heh-been a while since I have heard that descriptive term.

  21. 21
    zman Says:

    Bill – no, MLK.

  22. 22
    zman Says:

    NG up 9 cents plus, despite lower oil and equities. Storage next week should still see a respectable drawdown, probably in the 160 to 200 Bcf range as an early read. Gas not ready to fall out of bed on what probably will be a 2 to 3 week warm spell.

  23. 23
    bill Says:

    Unions to get a break on health care plan. Doesn’t seem constitutional to me.

    Everyone else with a cadillac plan (whatever that means) will have to pay taxes on their insurance.

  24. 24
    zman Says:

    73.8 consumer sentiment, a little light as the number had come up as the week progressed.

  25. 25
    zman Says:

    Market hinging on JPM conf. call comments/stock.

  26. 26
    italyinvestor Says:

    Z: A question about allocation – perhaps a weekend type question if it doesn’t breach the advice prohibition. What percentage of non-retirement, investable equity oriented assets do you or would you allocate to 10kp type trades? I have mentally capped myself at 10% but looking at my trading history I actually heve never gone over 3% with my average in the 1.5% range. I guess this percentage would be heavily based on individual risk tolerance, transaction costs, etc.
    Also, I’ve been able to monitor (well – more like mooch off of)this great board and I’d like to thank all for the outstanding comments and perspective.

  27. 27
    cargocult Says:

    What’s the news with KOG? Strongly green in a sea of red!

  28. 28
    BirdsofpreyRcool Says:

    bill — #23 Unions AND Govt employees. But, that is a redundant phrase, I know. How govt employees were ever allowed to “unionize” is beyond me. Who is the nasty, selfish owner who says “NO” and creates unfair workrules for govt employees? sheesh.

  29. 29
    tomdavis12 Says:

    Z: HK did you see article from Smartmoney.com?

  30. 30
    zman Says:

    Italy – 10% for me. Any more and I don’t sleep well and since I don’t sleep much that’s not good. Honestly, you can have a black swan event over a long weekend and, through no bad research of your own, end up with a market that takes all of your positions to 0 (either on the long or the short side). Where abouts are you these days? Stay safe.

    Cargo – they speak next week at IPAA, as BOP hinted there may be a completion by a private in their area, or maybe they have something to talk about on wells 10 an 11 but I think its far too early on that. Little stocks often see lemming technical buying as well.

    Tom – No I did not. Those are usually puff pieces, anything new there?

  31. 31
    zman Says:

    Want a read on the market today? Overlay the S&P and JPM minute charts.

  32. 32
    tomdavis12 Says:

    Z: Email it to you. Nothing you don’t know.

  33. 33
    zman Says:

    Thanks Tom

  34. 34
    italyinvestor Says:

    Z: Thanks. 10% or below makes sense. I guess I get tighter as the market or oil continue to go up.
    I’m still stateside. “Surging” to a hornets nest NW of Kandahar this summer. Should be interesting since I haven’t done ops in the Kandahar AO since 2003.

  35. 35
    italyinvestor Says:

    Correction since early 2002 – how time flies….

  36. 36
    apbd Says:

    Italy:
    We appreciate what you and all your comrades do for the USA. Our thoughts and prayers are always with you.
    From an old retired peacetime soldier.

  37. 37
    zman Says:

    Stay safe, kick OBL in the crotch for us.

  38. 38
    Nicky Says:

    Morning all. Next support for SPX is at 1130.

    I am debating whether oil is likely to stay weak ahead of a 3 day weekend and after quite a big move down. I can see them moving this back to 80 today but I may be totally wrong.

  39. 39
    italyinvestor Says:

    Z – Roger. If we could only find him. Got pretty close in 2001-2002. Lost a lot of friends and Soldiers so I’m personally motivated to get this thing done right, quickly. I’m also a big supporter of the Pickens plan from a counterinsurgency perspective – deny the enemy critical operational resources – $. I’m not really in a position to lobby though. Anyway, i’ll cut out and get back to reading you pros do some good.

  40. 40
    tomdavis12 Says:

    Z: Another NG lovefest on Cramer last night with CEO of UPL.

  41. 41
    zman Says:

    re 36, ditto that

    Nicky – not a bad bet on oil, don’t think its a big travel weekend as a lot of people don’t get it off but the pre 3 day weekend phenomenon may still carry it back up. I have no trouble with oil hold $75 for awhile.

    Tom, wonder why JC seems to like the expensive names. I often think he likes pure play stories with charts that look like that one, regardless of valuation.

    Z’s wild thought for Friday watch: COP or CVX for CHK on Merger Tuesday.

  42. 42
    West Says:

    BOP #16, I went back thru the NDIC well file and did not find anything on actual # of successfully completed stages . I remember Lynnn mentioning only 1 or 2 that were thought to have been successfully put away. The current theory is that when they move to new location just west of 10& 11 on the Moccasin Creek is that they will drill their first 3Fks from the same pad , probably end of March.Slide 11 from new presentation. There is also some talk that DVN might buy their interest in Wyoming outright which would give them a cash infusion ……………………………………Current Operator: PEAK NORTH DAKOTA, LLC
    Current Well Name: FREDERICKS 6-31H
    Elevation(s): 2346 KB 2305 GL Total Depth: 14760 Field: HEART BUTTE
    Spud Date(s): 12/28/2008
    Casing String(s): 9.625″ 2532′ 7″ 10928′
    Completion Data
    Pool: BAKKEN Perfs: 10928-14760 Comp: 3/6/2009 Status: AL Date: 4/18/2009 Spacing: E2
    Cumulative Production Data
    Pool: BAKKEN Cum Oil: 37144 Cum MCF Gas: 22333 Cum Water: 17298 [Interactive Performance Curve] [PDF Curve]
    Production Test Data
    IP Test Date: 3/8/2009 Pool: BAKKEN IP Oil: 465 IP MCF: 272 IP Water: 1202

    Monthly Production Data
    Pool Date Days BBLS Oil Runs BBLS Water MCF Prod MCF Sold Vent/Flare
    BAKKEN 12-2009 26 1807 1941 738 0 0 0
    BAKKEN 11-2009 30 1942 2180 1038 1501 0 1501
    BAKKEN 10-2009 22 2728 2517 1181 1891 0 1891
    BAKKEN 9-2009 30 2772 2557 1154 1757 0 1757
    BAKKEN 8-2009 31 3064 3118 1545 1880 0 1880
    BAKKEN 7-2009 31 3879 3862 1708 2627 0 2627
    BAKKEN 6-2009 30 4169 4546 1966 3066 0 3066
    BAKKEN 5-2009 31 5289 5303 2307 3447 0 3447
    BAKKEN 4-2009 27 4401 4251 2178 2050 0 2050
    BAKKEN 3-2009 25 7093 6185 3483 4114 0 4114

  43. 43
    choices Says:

    Sadly, another pretext to generate hysteria concerning nuclear facilities.

    http://www.valleycentral.com/news/story.aspx?id=402277

  44. 44
    zman Says:

    CHK drifting up, now up 1.4% in a sea of red names.

  45. 45
    choices Says:

    #39: You are also a pro big time in your own right, Italy. Keep your head down and best wishes to your family.

  46. 46
    BirdsofpreyRcool Says:

    west — #42 thanks for your comments. Given that data-set, methinks it would be the DVN buying Wyoming properties that might have lit this fire. Right or wrong, there would be speculation that DVN might buy the whole company.

    In the past, when KOG has run up on “no news,” there have been behind the scene whispers about someone in the Head Office, kicking the tires. Many of those rumors have been true. But so far, KOG hasn’t liked the size of the ring offered by the various suitors. In time, some Prince Charming will show up and carry KOG off to the palace… that could be what is behind this latest price surge.

  47. 47
    1520sbroad Says:

    #44 – interesting.

    Italy – stay safe.

  48. 48
    zman Says:

    Sullenberger Flight Simulation

    http://www.youtube.com/watch_popup?v=tE_5eiYn0D0#t=109

  49. 49
    zman Says:

    Market looking very pinned.

  50. 50
    choices Says:

    Z-do you have a view on the service stks at this time, specifically HAL vs SLB?

    Thanks.

  51. 51
    zman Says:

    Choices – I’m long HAL calls now for improved visibility on NAM natural gas prices and for the SLB and HAL earnings and conference call comments.

    I’ve also got a little ATW. Other than that I’m out at present. The group had a good run last year and I’ll have a multiples sheet out on the OIH next week with more thoughts.

  52. 52
    zman Says:

    Bastardi calling for less of a thaw than expected next week.

  53. 53
    zman Says:

    and NG up 13 cents now, just short of offsetting yesterday’s oddball sell off.

  54. 54
    RMD Says:

    CXPO question: if they hedged 16MMcfgpd and production is about 38, wouldn’t the % hedged be 42%, not 73%?

  55. 55
    RMD Says:

    MMR Jan. 7.50 easy to sell in the middle of the spread.

  56. 56
    zman Says:

    RE CXPO:

    In 3Q09 they produced 38 MMcfepd (equivalents). Of that 25.8 MMcfgpd was gas.

    Guidance 4Q was 37 to 40, so I shaved the gas component a little to assume the lack of capex resulted in continued declines and then thought maybe they hold gas flat at that level (about 22 MMcfgpd) for 2010 as they dip further early in the year and then recover.

    16/22 = 73%

  57. 57
    bill Says:

    48 very nice

    In the last 10 seconds he actually picked up a little altitude as he was bleeding off airspeed

    I used to fly down the Hudson corridor at 1,000 ft in my Cessna 172

  58. 58
    bill Says:

    44 chk interesting takeover rumors??

  59. 59
    zman Says:

    Bill – not other than my wild Friday thought and I’m not one to start one, just supposing.

  60. 60
    RMD Says:

    56 thanks, knew there was a simple thing I was missing.

  61. 61
    bill Says:

    dsx investing 50 m

    http://www.tradewinds.no/liner/article551515.ece

  62. 62
    kaman Says:

    AXAS suffering mightily today.

  63. 63
    zman Says:

    NOG up a nickel. MCF up all day. And that’s about it.

  64. 64
    Nicky Says:

    so much for my oil bounce.

    spx needs to hold 1128 or we could be down at 1110 quickly. The cycles are still pointing higher into later in January but sentiment sure feels bearish today.

  65. 65
    Jerome Blank Says:

    CHK charts and comments…boy, that was hard to do on a tiny computer screen…please feel free to let me know if you want me to change the way anything is presented…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  66. 66
    cargocult Says:

    Bill,
    Do you recommend subscribing to tradewinds?

  67. 67
    zman Says:

    Nicky – thanks, agreed. And from a broad market perspective, we’re overdue for a dip and its healthy to dip. I think we’re just sliding because we can on expiry day. No reason to gun anything before everyone on the Street runs to the Hamptons

    Jerome – I wouldn’t change a thing. Thanks man for all your charting of late and the new addition of the graphs – pictures worth a lot of words .

  68. 68
    sunshine Says:

    Re – 41. It’s probably going to happen since I sold my CHK position to buy more EXXI – wow.

  69. 69
    bill Says:

    bastardi out with a new video

    im not sure if this was the one z was referring too

    http://www.accuweather.com/video-on-demand.asp?video=44795589001&title=February%20Will%20Make%20You%20Shiver,%20with%20This%20Idea%20I%20%20Deliver

    anyways he predicts a cold feb

  70. 70
    bill Says:

    66

    its too expensive imho about 1,000 a year for an individual. Yes , if you can get someone to pay for it

    i bought it once when i was heavily involved in shipping. Good paper

    You can read the headlines then go to the companies web site for more details. Sometimes they post free articles and they also let you click on daily rates

  71. 71
    bill Says:

    mcf picking up in volume too. I dont see many 100,000 + days

  72. 72
    zman Says:

    Bill – saw that one, also saw one where he was saying that its not going get as warm this weekend/next week as people thought.

  73. 73
    zman Says:

    FYI Watch: MMR reports Tuesday before the open. I’m going to continue holding my $15 and $17.50 Feb calls. It is possible they will have a little more data on Davy on that call, I would think not more logged pay but perhaps so more good q&a, comments on additional sands.

  74. 74
    Nicky Says:

    One thing worrying me here for commodities is that USD looks ready to launch strongly higher.

  75. 75
    Jerome Blank Says:

    EXXI has a nice bullish consolidation flag forming on the daily chart…I’d like to see it hold off the lows today…

  76. 76
    Nicky Says:

    5.7 earthquake hits venezuela

  77. 77
    choices Says:

    #74-dollar stronger today, also 30 yr bond, usually negative for S & P or vice versa-it seems strange to me that the bond is stronger but may be just temporary.

  78. 78
    zman Says:

    http://en.wikipedia.org/wiki/Richter_magnitude_scale

  79. 79
    BirdsofpreyRcool Says:

    #68 sunshine,dear…. now just you hold onto those EXXI shares and stop winge-ing. You should be very happy with that position by the end of this year (assuming oil stays north of $55 and nat gas doesn’t go to $3). Doesn’t mean that other positve stuff won’t happen to other stocks… but, you have to stop looking back over your shoulder. If it makes you nervous, sell 1/2 of your EXXI and roll that back into CHK.

  80. 80
    Nicky Says:

    Sovereign debt seems to be the fear behind the market today. ‘If’ we can get through the weekend then maybe we see a bounce Monday. Either that or we are in for one of those awful bank holidays where the rest of the market tanks ahead of the US.

  81. 81
    choices Says:

    BOP-MMR declared div’s on its preferred conv stks today but I cannot find listings-do you have any experience with those two stks, one @6&3/4%, one @8%.

    Thanks (if you have time)

  82. 82
    choices Says:

    BOP-BTW, bought some more of EXXI today @3.48-needs to hold in here.

  83. 83
    BirdsofpreyRcool Says:

    choices — i see both those MMR on bloomberg. What can I help you with?

  84. 84
    BirdsofpreyRcool Says:

    choices — if EXXI goes back to $3 or $2.75… i would just take that Gift from the Market Gods to buy more. But, agreed, it’s unnerving to have one’s stock tank.

  85. 85
    zman Says:

    Rig Count Watch:

    Oil down 2 to 425 vs 324 a year ago

    Natural gas up 30 to 811 vs 1235 a year ago. That’s pretty perky and another reason I don’t see a lot near term upside in natural gas prices. Given the adjustment weather has made to storage of the last few weeks, I still see gas as range bound, which is a far sight better than falling.

  86. 86
    choices Says:

    #83-what are yields and what is premium over conversion value.

    Thanks again.

  87. 87
    BirdsofpreyRcool Says:

    the 6.75% preferreds are trading at 104.69 and should be publicly listed under the ticker “MMR M”

    the 8.0% are also public, traded under “MCMOP.” Last trade here was 2304.888 +109.888 (Jan 14 trade)

  88. 88
    BirdsofpreyRcool Says:

    Face value on the 8.0% is 1,000. And is convertible into 146.1454 shares of MMR. So the yield is around 3.5% (again, based on yesterday’s price of $2,304.888).

  89. 89
    BirdsofpreyRcool Says:

    Face value on the 6.75%s is 100, convertible into 6.7204 shares. This is the more actively-traded of the two preferreds (not surprisingly). At last trade shown of 104.69, that would be a yield of 6.45%.

  90. 90
    choices Says:

    Thanks again-prob not all that attractive.

  91. 91
    RMD Says:

    JB: I’m intrigued that CHK has the same formation at $29 that it launched out of at $24. I have great success with those.

  92. 92
    jiveyjr Says:

    KOG moving up again…BOP you been off helping ’em size the proper ring???

  93. 93
    BirdsofpreyRcool Says:

    The 6.75s look to be trading at 94.35 of parity, or at an 11.3% premium to the intrinsic value of the underlying stock. So, not as attractive as some other fixed income stream securities we’ve looked at lately. On the other hand, if you want to buy MMR stock and are willing to pay up for some downside protection, then these preferreds would be a way to do that.

    Elijah, you’re the expert here… any thoughts??

  94. 94
    BirdsofpreyRcool Says:

    jivey — lol. KOG is feeling pretty proud of themselves these days. Not having to turn over rocks and kiss frogs… they have the cash flow and control to wait for their One True Love. The one who shows up with a Very Big Ring.

  95. 95
    Jerome Blank Says:

    RMD, yes…I see it, great observation…I changed the chart to reflect your observation…

  96. 96
    BirdsofpreyRcool Says:

    Cross-Asset Strategist #2… great look-back with implications for the mrkt ahead. (Warning: Do not read, if you think Govt is the answer to keeping us “safe” from another banking debacle.)

    http://www.capmarkets.com/ViewFile.asp?ID1=336129&ID2=349562949&ssid=2&directory=11608&bm=0&filename=Getting_Up_On_Our_Soapbox_1-15-10.pdf

  97. 97
    zman Says:

    It’s 4th quarter estimated tax day.

  98. 98
    tomdavis12 Says:

    Z: VLO has hired UBS to help with the sale of its last east coast refinery.

  99. 99
    zman Says:

    Will be interested to see if they have any luck selling it or Aruba.

  100. 100
    bill Says:

    Shocking…Unbelievable”: Wall Street to Pay Record $145B in Bonuses, WSJ Say

    I think its shocking that arod makes 27 m a year

  101. 101
    bill Says:

    But hell, Im a Red Sox fan!

  102. 102
    zman Says:

    Hear ya Bill, I’m shocked people like Catie Kouric get $15 mm a year and then call other people Wall Street fat cats. Most people on the Street don’t make that kind of cheddar.

  103. 103
    jiveyjr Says:

    c’mon KOG breakout over $2.89

  104. 104
    skimo Says:

    BOP ref 96 Interesting, thanks.

  105. 105
    zman Says:

    Bill – just watched that Bastardi link and another one on the pro site. He’s still saying 2 weeks warm then week 3 and week 4 turn Feb into the coldest Feb in 30 years.

  106. 106
    bill Says:

    http://www.wbz.com/topnews/Obama-coming-to-MA-to-campaign-for-Coakley/6128192

    president coming to mass to campaign for coakly

    if brown wins it will be the biggest upset,EVER!

  107. 107
    bill Says:

    105 I hope he is right

  108. 108
    bill Says:

    102 good one!

    The negative rhetoric hurt the markets today,imho

  109. 109
    zman Says:

    KOG lining up for $3.

  110. 110
    skimo Says:

    If Scott Brown wins, it’ll kill the health bill,” Democrat Barney Frank, said, underscoring the stakes of Tuesday’s special election.
    If Brown’s campaign can show that quote as a commercial, it’ll seal the deal.

  111. 111
    bill Says:

    coming our way ty nancy pelosi

    http://autos.yahoo.com/articles/autos_content_landing_pages/1273/cheap-car-from-india-could-cost-8000-in-us/

    I want to see the administration arrive for a hearing in one of these

    I think buying a mini van today and selling it in 5 years at over face might be a good investment

  112. 112
    cargocult Says:

    bill re 111,
    I’d hate to see what a collision at 40mph in that car would look like!

  113. 113
    apbd Says:

    BOP: The other day you mentioned about trading the difference between KOG and EXXI. Can you explain that?
    TY
    APBD

  114. 114
    BirdsofpreyRcool Says:

    apbd — it’s completely non-scientific, but it sometimes works for similar stocks for long periods of time. It’s a kind of pairs-trading, if you will. I used to do it with CHK and CRK in the late 90s/early 00s. Those two stocks traded at almost the exact same dollar price. When one scooted too far ahead of the other, you could buy the cheaper one and ride the “catch-up-wave.”

    KOG and EXXI are both volatile mini-micro caps with high % oil exposure, so they tend to be owned by the same sort of investors (roughtly). Once you adjust for a valuation difference (like EXXI’s Davy Jones discovery), you can go back and forth between the two. For example, selling EXXI at $3.75 to swap back into KOG at $2.60. Once these two stocks get more than a buck apart, that differential will narrow.

    Not sure what the exact spread between KOG and EXXI should be… but, worth watching (and doing paper-trades) to see if you can play the spread.

    Not very scientific, I know. But, it can work well, over long periods of time.

  115. 115
    apbd Says:

    BOP:
    Thank you for the explanation and all you do for the blog.
    Have a great weekend.
    Bless you,
    apbd

  116. 116
    BirdsofpreyRcool Says:

    apbd — my pleasure.
    Enjoy your long weekend also!

  117. 117
    elijahwc Says:

    #81, 87, 93: MMR p M: Sorry I’m checking in late. Here is the deal. These are mandatory converts (not Perps) which means that you have the conversion decision taken from you as they will automaticaly convert into common on 11/15 of this year. The discount that you see is actually the present value of the remaing dividends. So, are you buying a coupon instrument on MMR? Nope, your coupons are part of the ticket. Also Mandatory Cvts has upper and lower strikes (prices on the common at which the conversion ratio changes). Here they are 6.7204 if the share price on 11/15 is => 14.88 and 8.0645 if =< 12.40. Unless you are running an equity income or dedicated convert account and this is the only way to play MMR you would be better off in the common stock.

  118. 118
    elijahwc Says:

    Errata @!*X: My favorite flea hotel, MHR picked up more coverage today, this time from Johnson Rice. That Gary Evans he does get around.

    They correctly point out that should the Triad acqusition close Magnum secures 47,000 net acres of Marcellus exposure and it will have 2.0x the concentration of Marcellus exposure of the next closest company on an acres per enterprise value basis in their coverage universe. Methinks a lot of the asset mgmt clubs research ends and the buy buttons are pushed on that alone. Add a couple of Marcellus Shale and a couple of Eagle Fords this year and………???

    JR was also kind enough to litter the cover of the piece with this tidbit: “New Magnum Hunter’s management team includes the CEO of the previous Magnum Hunter, as well as geologists, pipeline managers, etc. The previous Magnum Hunter grew proved reserves and production annually by 18% and 25% and was acquired in 2005 for $2.2B.

    On the road to $5

    Thanks JR&Co

  119. 119
    BirdsofpreyRcool Says:

    elijah — thanks for following up on those MMR convert preferreds. I just gave them a cursory glance, but knew you could tell us how to really evaluate those securities. As tough as bonds are, convertible securities are a whole ‘nother universe. Always something to learn. Thanks again for your comments.

  120. 120
    elijahwc Says:

    Hey BOP, I’m a generalist b-flat plain old asset mgr who just happens to have dealt in cvts over the years. So I learn lots here from the “out of state” experts. Just trying to give a little back from the abundance all of you have sent my way. Thanks

  121. 121
    bill Says:

    Hope
    Change
    New

    http://www.bostonherald.com/news/politics/view/20100114brown-out_poll_shows_scott_brown_trumping_martha_coakley/srvc=home&position=0

  122. 122
    BirdsofpreyRcool Says:

    Got a question from someone on the Davy Jones well… thought I’d share some thoughts here.

    Question — they have said they’re going to drill another 1000 ft or so. i would guess they quit to evaluate what they have and they must have run out of sand w/ porosity. Now what are they looking for??

    Answer — Simply put, the MMR/EXXI/PXP/Tex Team are looking for the Mother Lode… the extention of the Woodbine/Tuscaloosa formation offshore. The Tuscaloosa is Cretaceous in age (over 65mm yrs old). The Cretaceous was a wonderful time for global oil production (like the Eagle Ford Shale). Lots of happy plankton, floating around in a warm shallow sea, dying and falling to the bottom of a massive ocean that was like a giant lagoon, getting buried, compressed, heated, and turning into oil. The Cretaceous is home to some of the world’s best oil fields, including the East Texas oil fields (http://en.wikipedia.org/wiki/East_Texas_Oil_Field ).

    Lovely stuff, the Cretaceous. They don’t know how deep it is, at the Davy Jones well location… but they are going to drill until they either hit it, or can’t drill any more. However, the Huge News about DJ is that even without hitting the Cretaceous, they believe they have found enough productive intervals in the Eocene (http://www.priweb.org/ed/pgws/backyard/sections/southcentral/southcentral1.html) to justify declaring DJ an economic discovery. They won’t truly know, of course, until they set pipe in the hole, perf it, and production test the zones. This might take a year to do (and comes with wheelbarrel loads of execution risk). But – I have to admit – I didn’t expect the news to be this good.

    And to address your other assumption, they did NOT run out of sand with porosity. They stopped to log the hole, but when they recommenced drilling, they found that they are still in lovely sands. Sands, glorious, porous, thick sands. The stuff that brings tears of joy to a geologist’s eye. Stay tuned… Davy Jones is looking like a very important discovery… and it ain’t over yet.

  123. 123
    zman Says:

    Good answers BOP, wrap table up in a bit…

  124. 124
    Jerome Blank Says:

    AEZ…charts and a few thoughts…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  125. 125
    skimo Says:

    fyi, if not previously reported on this board:FT.com reported that the U.S. strategic petroleum reserve is now full as of Dec. 27, 2009

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