19
Jan

Tuesday Morning Pause

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Market Sentiment Watch: We get a couple of energy names reporting this week and presentations from some of the small fry names in E&P at the IPAA conference today and tomorrow. This is another "data-light" week on the economic feedback front so look for big name earnings reports to hold sway over a market that has grown a bit more nervous as the new year has progressed. Five weeks remain until the next options expiration date.

 

The Week Ahead:

  • Tuesday 1/20: Home builder's index (due at 1 pm EST, forecast 16), 
  • Wednesday 1/21:  Housing starts (540K forecast), PPI (forecast -0.1%, core forecast 0.1%),
  • Thursday 1/22: Jobless claims (forecast 432K), Philly Fed (forecast 15), Leading indicators (forecast 0.7%), EIA Natural Storage Report (normal time of 10:30 EST), EIA Oil Inventory Report (delayed to 1 pm EST due to MLK Day),
  • Friday 1/23: no ecodata scheduled.

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today - Oil Service comments, MMR earnings,  IPAA schedule.
  • Odds & Ends

Holdings Watch:

  • $10KP II:
    • $26,700
    • 34% Cash.
  • The Quick view names on Holdings tab have been updated.
  • Friday's Trades:
    • none.

Commodity  Watch:

Crude oil fell 6% last week to close at $78. The 12 month crude strip is now trading at $81. This morning crude is trading off 60 cents after the Citi results failed to impress equity futures.

  • OPEC Watch: The Qatari oil minister commented that the Cartel is unlikely to raise production quotas in 2010. OPEC left its 2010 demand forecast unchanged this morning at 85.1 mm bopd, up 0.8 mm bopd from 2009 levels. 
  • IEA Watch: Group comments on possible demand weakening as stimulus funds decline.

Natural gas eased 1% last week to close at $5.67 as a warm 2H January forecast over rode a larger than expected storage withdrawal and the likelihood of further deterioration in the storage overhang as the rest of winter plays out. The 12 month strip is now trading at $6. This morning gas is trading off 15 cents as gas remains mired around the mid $5's.

  • Rig Count Watch: Roaring back but a long way to go. Good for drillers, not as much of a big deal for gas supply, at least in 2010, as the damage has been done to the conventional side of the equation which far outweighs the impact of rising production from hot spots like the Haynesville.

 

  • Chu On This Watch: From Reuters on Friday ~ US Energy Secretary Steven Chu said today that fracking could be done in a way to remove oil or gas that would not harm the environment and suggested Congress should not outlaw the practice.
  • Weather Watch: More warmth before winter returns.

    • Week Before Last: 269 HDDs which was much colder than normal / last year and yielded last Thursday's monster sized 266 Bcf withdrawal.
    • Last Week: 221 HDDs vs a prior forecast of 215; 256 last year and 226 normal. This still should yield a withdrawal north of 180 Bcf this Thursday.
    • This Week's Forecast: A very mild 176 HDDs vs 224 last year.


 

 

Stuff We Care About Today

OIH Update With Quick Thoughts:

ZComments:

  1. I'm still playing for the gassy North American recovery play; the preceding rig count recovery charts above point to the likelihood of increased pricing power. Need a rig that can drill in the Haynesville? Look to (HP). Need a play on that gassy recovery and want liquidity in the trade, then (HAL) has been the go to name and is a touch cheaper than (SLB) in the out years (though not by its historical margin). I'm planning on holding my (HAL) calls through this Friday's (SLB) call.
  2. (HP) - Going to be taking a closer look as the rig count does not appear to be doing anything but going back up. (NBR) as well.
  3. Offshore - I'm back in (ATW), will likely hold through their call. The name remains leveraged to continued strong demand in the deepwater and a firming in the international jack up market.

Earnings Watch: Energy earnings begin to trickle out this week before they begin arriving in earnest over the next 3 weeks. Today MMR, Friday SLB.

MMR Reported Satisfactory 4Q Results

The Q4 Numbers:

  • Production of 209 MMcfepd vs:
    • 215 MMcfepd guidance
    • and 215 MMcfepd for 3Q09.
    • 2009 production was last guided to be 204 MMcfepd, so it's slight miss at 202 MMcfepd.
    • Blame delayed recompletion activity
  • Revenue of $131.9 mm vs $138 mm expectations
  • EPS of ($0.11) vs ($0.26) expected
  • CFPS of $0.53 vs $0.67 expected
  • Nutshell: top line miss as production comes in light, but good cash build during the quarter and a bottom line improvement. I don't think people are going to make a big deal out of the quarter's miss as the stock awaits more information out of the Davy Jones, Blueberry Hill and Hurricane Deep tests.

Highlights:

  • Davy Jones - they've deepened the well by a further 400 feet to 28,603 feet and are preparing to log the additional section, planned TD is still 29,000 feet.
  • Hurricane Deep Side Track - drilling ahead below 16,100 feet on way to 21,750.
  • Blueberry Hill appraisal well  - drilling ahead below 17,000 feet on way to 21,850.  We should see some news here in the next 3 to 4 weeks.
  • 2010 Plans:
    • Guidance: 180 MMcfepd for 2010, down 11%
    • Capex of $240 mm (up from $138 mm in 2009) ... this will buy you tests at Black Beard East, Lafitte, and an appraisal well at Davy Jones.
    • Cash at 4Q was $241 mm vs 3Q09 end balance of $225mm
  • Reserves for 2009 of 271.9 Bcfe, excludes anything from Davy Jones, vs 344.8 Bcfe.

Conference Call: Today, 10 am EST

 


Conference Watch: IPAA OGIS  - Today and Tomrrow

  • Full Schedule
  • Interesting little names speaking today: (all times EST)

    • AEZ - 9 am
    • SFY - 10:50
    • MCF - 11:15
    • PQ - 11:40
    • EVEP - 2:05
    • LINE - 3:05
  • Tomorrow: KOG, FXEN, EXXI, IOC, GST, AXAS

Odds & Ends

Analyst Watch:

  • TOT upped to Buy at Collins Stewart
  • STO cut to Hold at Collins Stewart

Interesting Reading Watch:

185 Responses to “Tuesday Morning Pause”

  1. 1
    bill Says:

    do you have a link to ipaa ty

  2. 2
    zman Says:

    Morning Bill, I have a link to the schedule of presentations in the post, I don’t have a link to the presentations themselves, am planning to go to individual company websites if I don’t find one.

  3. 3
    zman Says:

    PXD on the tape with a 17 mm/d Eagle Ford well, in Live Oak County, good rate for the play, good for them, good for HK and others on the EFS list including ROSE. Says they are looking for JV.

  4. 4
    john11 Says:

    Here is link for IPAA presentations;
    http://www.vcall.com/customEvent/conferences/ipaa/20100119/agenda.html

  5. 5
    zman Says:

    Thanks john

    Re 3 – that PXD Live Oak County well is surrounded by EOG acreage in the neighboring counties, if you look on a Texas county map, you’ll see this is the middle county in what is thought will become the EFS fairway stretching from Maverick cnty in the West to Lavaca cnty in the northeast.

    With 30 minutes until the open, oil down $1 on a jump in the dollar, NG down 21 cents, just under $5.50 on the mild forecast.

  6. 6
    bill Says:

    http://www.chron.com/disp/story.mpl/business/energy/6818577.html

  7. 7
    zman Says:

    Re 6 – He ought to be more worried about EFS wells that look like they have the same pressure as core Hayesville wells.

  8. 8
    zman Says:

    PXD leading group out of the gate, no real desire to chase here other than for maybe a quick trade.

  9. 9
    zman Says:

    ROSE, SFY up on the PXD news, SM may be in the perfect spot as far as hot plays go this year with good sized positions in the EFS and granite wash.

  10. 10
    zman Says:

    EXXI up 5 cents, probably getting a boost from the MMR comment about more logging soon in the DJ well.

    The MMR call starts in 20 minutes, EXXI speaks tomorrow at IPAA.

  11. 11
    BirdsofpreyRcool Says:

    Very savvy old sell-sider pointed out SM a week or so ago… he is almost always worth listening to. Haven’t gotten around to it. But, given your comments, z, I think I’ll carve out some time.

  12. 12
    zman Says:

    BOP – And I’ve never been a big fan there but have listened to the last several presentations and taken note of the last couple of earnings reports …. worm may finally turning for the name at least in my mind. Stock performance has already been ok.

    ROSE through $22, still no news on the Montana Bakken group of wells or additional news out of their EFS efforts. That’s another name that’s in front of the right plays this year. Still say that NFX entering into the Montana Bakken (S. Albertan play) speaks to the importance of ROSE’s wells, rights on tribal lands.

  13. 13
    BirdsofpreyRcool Says:

    Yeah… ROSE is another one that was pointed out early in the game, that I missed. Can’t dance with everyone at the party.

    Speaking of dancing… HT and TT struggling with technical (computer) issues on the desk this morning. You don’t want to stick your nose in for an update until issues are resolved. Pretty ugly in there.

  14. 14
    zman Says:

    Did a little service group reading over the weekend, including some synopsized comments from Goldman’s round table meetings last week. In short, most analysts, including GS, don’t think the improving story is discounted in the numbers yet or in the stock price action. Watching HAL drift higher now; will be taking a look at HP.

    MMR call about to start.

  15. 15
    BirdsofpreyRcool Says:

    z — joining you on the MMR call. Bet it takes longer than an hour….

  16. 16
    elijahwc Says:

    Morning. I just recieved a “preliminary” corporate action notice for a reverse split on EXXI from MLFPS. It is being generated off the 12/11/09 meeting date. It also labled “unconfirmed industry data” on the fax. FYI

  17. 17
    BirdsofpreyRcool Says:

    elijah — thank you for that update. Wondered when we would hear the outcome of that reverse split vote.

  18. 18
    zman Says:

    BOP – re hour, roger that for sure, going through the slides while they walk through the financial yada:

    http://www.mcmoran.com/presentatn/2010/MMR_4Q09CC_JAN10.pdf

  19. 19
    BirdsofpreyRcool Says:

    Long weekends are tough on the MMR guys….

  20. 20
    BirdsofpreyRcool Says:

    MMR — quite the rebound in stock price this morning.

  21. 21
    BirdsofpreyRcool Says:

    MMR — would be surprised to hear that RS certified any “proved” reserves from Davy Jones prior to production testing. For any engineers out there… is this typical??

  22. 22
    zman Says:

    Re 20. Sell off was weak hands with light volume selling the production/revenue miss and maybe near lack of new “news”. I think the bounce is anticipation of Jim Bob and the S&P rally which is dragging the group up despite commodities. They haven’t said anything new yet.

  23. 23
    zman Says:

    BOP – My experience with Ryder Scott and Netherland Sewell would call it standard practice. Some of the others like a Degoyer (sp?) might let you have something for it, depending on what’s nearby. Given this is ultra-deep, targeting zones only seen before in the deepwater, I’m not surprised at all.

  24. 24
    zman Says:

    Slide 20 – good explanation of what they are trying to do with the ultra deep if you are new to the story. They have 15 of these shallow water, ultra deep prospects identified (Blackbeard, then Davy Jones were the first).

  25. 25
    choices Says:

    Eli-thanks for the comments on MMR pfd’s on Fri-did not get a chance to respond on Fri.

    Appreciate your followup as well, BOP.

  26. 26
    BirdsofpreyRcool Says:

    23 — a bit confused. So, you’re saying that RS or NS are happy to certify reserves, based only on well logs (and no production testing)?

    I have no idea… but that doesn’t sound like the prudent decision. Especially given the extreme depth of the productive intervals. Do they have production analogs to support the calibration of the logs at that depth? Just wondering.

  27. 27
    zman Says:

    Slide 26 – talking about a Davy Jones appraisal well, proposed 2.5 miles sw of DJ, allowing them to test the same sections 1,000 feet shallow to the discovery well. This would be the most important well they drill in 2010.

  28. 28
    zman Says:

    26. No, not at all. I’m saying they WOULD NOT book the reserves here without flowing hydrocarbons, especially given the depth, pressure, difficulty with the logs.

  29. 29
    zman Says:

    Jim Bob starting his ramble.

  30. 30
    bloodystupidjohnson Says:

    Back from New Zealand after a brief vacation. If any of you every get a chance to visit New Zealand — GO. I think it might be the most beautiful country in the world.

  31. 31
    BirdsofpreyRcool Says:

    z — #26/28… good. OK, that makes sense. Thanks.

  32. 32
    zman Says:

    BOP – You’d think English was my second language sometimes.

    BSJ – congrats on that trip, see any Hobbits?

  33. 33
    zman Says:

    Jim Bob – making the point of how thin the salt is on the Shelf vs in the deepwater. Hard to image through salt, looks all fuzzy on 3D in it and often below it as the salt messes with the data, even reprocessed data. Yet another reason to drill for the ultra deep targets from shallower water.

  34. 34
    zman Says:

    SWN really not performing well at the moment. All that unhedged gas.

  35. 35
    zman Says:

    Wow, still listening to MMR call, noticing PXD now trading lower, after their big EFS well news.

  36. 36
    BirdsofpreyRcool Says:

    PDX price action does not make sense. A major holder must be making a strategy decision today.

  37. 37
    zman Says:

    Re PXD: Watching it, may take a piece later. Yep, it’s had a good run, not as cheap a name on TEV/EBITDA as it was a few months back but numbers should be coming up as they accelerate this play.

    MMR on Davy Jones, logging now between
    28,250
    to
    28,600

    Paleontology (bugs) telling them they are still in the Wilcox.

  38. 38
    zman Says:

    MMR – sounds like something more to report on Davy Jones in 4 to 5 weeks regarding more pay. That coincides with timing on Blueberry Hill and Hurricane Deep.

  39. 39
    zman Says:

    … and adding to 38, MMR is almost always later than you think with these.

  40. 40
    zman Says:

    BOP – PXD feels like a downgrade, you guys see anything?

  41. 41
    zman Says:

    PXD down could also be a result of that well being dry gas.

  42. 42
    BirdsofpreyRcool Says:

    z — PXD… nothing i can see…. will ask HT to nose around. yikes!

  43. 43
    zman Says:

    ZTRADE:

    PXD – Added (5) Feb $50 Calls (PXDBJ) for $2.25 for a quick trade with the stock off about $1 on a little selling following what appears to be solid drilling results from their Eagle Ford program. See comments from today’s post for further details.

  44. 44
    bloodystupidjohnson Says:

    RE PXD: I know this might come as a shock to some of you — LOL — but stocks do go down. PXD has gone from 40 to 54 in about a month. It deserves a breather.

  45. 45
    zman Says:

    Housekeeping Watch:

    If you are signed up for ZBLASTs and aren’t getting them, send an email to zmanadmin with FIXMYBLAST in the subject line. Thanks.

  46. 46
    zman Says:

    MCF speaking at IPAA, I’m still listening to MMR.

  47. 47
    zman Says:

    BOP – did you catch what dayrate MMR is paying for those RDC rigs?

  48. 48
    BirdsofpreyRcool Says:

    #47 — didn’t hear a number…. just that JB felt they had negotiated a good rate… seeing how everyone is going to benefit from “proof of concept.” Would set off a land- and equipment-grab, if/when one of these deep wells defines a huge discovery. So, everyone gets to piggy-back any success here.

  49. 49
    zman Says:

    BOP, JAT, anyone. Question, I don’t know the barge rig players well but Jim Bob is talking about using them in the future for these wells or maybe using them. I know who has barge rigs but don’t know who has the rigs with the hook capacity to pull off a 30,000 foot drill string well.

  50. 50
    zman Says:

    Jim Bob saying its 450 feet of unlogged hole, I think I indicated a range of 350 feet earlier.

    Thanks BOP for 48, agreed.

    Barge rigs – I understand the fleet is small, like 10 total units. And I thought I knew who had them but it’s not in my file, I think it’s scatter amongst the likes of RIG and DO but am not sure who has a the deeper capable units.

  51. 51
    Jerome Blank Says:

    WRES…charts and a few comments…

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

  52. 52
    bloodystupidjohnson Says:

    I noticed that the coo of GDP Turnham, has just bought 2300 shares at 21.82. GDP has been a real laggard in the gasser group.

  53. 53
    zman Says:

    JB – thanks for that, am still holding for reserve additions and their final 2010 plans; I have been fairly patient here, oil prices should be a help on the reserves but they still need to execute and get some more permits. I’d like to see them go ahead and drill some of their sinusoidal horizontals in California this year (those are the porpoising wells going after undulating channels of sand).

  54. 54
    zman Says:

    MMR call – wrapping up. BOP gets the “understatement of the decade so far” award with her bet it goes longer than an hour comment before the call. Jim Bob is doing his usual good job of portraying a bright future for the ultra deep. Wish government folks had been on the call for the lease conversation … it’s a portfolio and you want it in hand BEFORE you release well results due to a little thing called competition. At call end stock at $14.38, up $0.44.

  55. 55
    BirdsofpreyRcool Says:

    Haven’t been on a JimBob call for a long time. Normally, just wait for the transcripts. But, this was one of his shorter calls, wasn’t it?

  56. 56
    zman Says:

    Yep, 1 hour 48 minutes. Nutshell, ok call on results, miss on top line pretty easy to explain as timing on one well work of the 6 at Flatrock, reserves, um, a bit of a disappointment for the Street there, and good stuff re the ultra deep. Sounds like news in 4 to 5 weeks, could be two months, could be a little less.

  57. 57
    BirdsofpreyRcool Says:

    unless the mrkt punks out, I wouldn’t be surprised to see MMR go out at HOD. good call. lots of stuff to dream about.

  58. 58
    zman Says:

    12 est
    Crude down 25 cents
    NG down a dime now, been down $0.25.

    Stocks mixed, XNG up a little better than a %, OIH just slightly red, XOI flat … and then boredom set in.

  59. 59
    bloodystupidjohnson Says:

    Goldman Sacks Group, on 1/18/10 says that oil shortages to reappear in 2011 as supply will fail to keep pace with a recovery in demand.

  60. 60
    zman Says:

    BSJ – and meanwhile the U.S. government has voiced it’s concern to the Chinese that they are buying up all of the available crude plays. Chinese have got to be just laughing.

  61. 61
    zman Says:

    MMR at HOD post call at 14.70.

  62. 62
    BirdsofpreyRcool Says:

    Chinese can’t believe their good luck… bet they are secretly voting in Massachusetts today too.

  63. 63
    Jerome Blank Says:

    #34 SWN continues to be a difficult trade to manage in that wide channel…updated chart and comments…

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

  64. 64
    BirdsofpreyRcool Says:

    #49 … wonder if you can use “inland barges” on shallow shelf? HERO has the “largest inland barge fleet in the GoM”

    http://www.herculesoffshore.com/about_overview.html

  65. 65
    zman Says:

    Jerome – ROSE through major resistance, approaching minor resistance at it passes $22?

  66. 66
    bloodystupidjohnson Says:

    RE 60: I think many in the Dem parties environmental wing are secretly glad to see this. What better way to wean the country from oil, if you don’t have it in the first place. It might wreck the economy, but then they will be around to put it back together.

  67. 67
    zman Says:

    Listening to Bastard’s long range forecast today … still calling for “nasty February” based on the dissolution of El Nino and past history.

  68. 68
    elijahwc Says:

    http://www.intrade.com/ = maybe

  69. 69
    zman Says:

    BEXP continuing to back off recent move, back into high $12s now. CLR and WLL backing as well. I would expect news any day from BEXP on 1 or 2 more well completions. If only 1 it should be a central Rough Rider well, long lateral with a lot of frac stages (28 or 30) and should be fairly low risk as it’s really not much more than an offset to a good producer announced late last year.

  70. 70
    zman Says:

    Asked Nicky if her S&P resistance was 1,149 earlier via email.

    Her response:

    To me looks like we will make a double top or new high. Resistance is around the 1144/45 area ie where we are now….

  71. 71
    zman Says:

    Crude green due to the pull of the equity markets most likely.

    NG still off a dime.

  72. 72
    zman Says:

    Thanks for that Eli. If this whole energy trading thing doesn’t work out I might be looking at the Tiger trade, lol.

  73. 73
    bloodystupidjohnson Says:

    Eli: I went over the last few weeks posts, and I am glad you are keeping this site abreast of the Cardium happenings.

  74. 74
    bloodystupidjohnson Says:

    RE: 72 — Woods will be back as soon as he gets his teeth fixed — lol

  75. 75
    zman Says:

    Cardium

    As a general rule, I don’t follow Canadian companies. This guy appears to:

    http://oilandgas-investments.com/oil-stocks/cardium-oil-play-valuations-setting-up-big-year-for-ma-in-2010/

  76. 76
    bill Says:

    Just quickly glanced at mcf presentation–nothing new except this …

    Inconvenient truth- world is getting colder

  77. 77
    Jerome Blank Says:

    #65, ROSE…from a technical perspective ROSE is just amazing…ROSE is in a very strong trend with no indication of any immediate concerns…however, the price objective on the current buy signal on the P&F chart is right above us at $23, although I don’t put a great deal of emphasis on PO’s, after an incredible run like ROSE has had, the PO can at times act as resistance and of course the longer we run without any materal pullback, the higher the probability…if a trader is going to buy up here…from a technical point of view it’s a set your stops and “close your eyes and buy” proposition…

  78. 78
    bill Says:

    On site reporting from Massachusettes..

    Just came back from the polls.

    The Scott brown signs outnumbered Coakly 2 to 1. I saw 5 hand made signs for Brown on the drive over

    Turnout is heavy even though we have light flurries today.

    A heavy turnout is supposed to favor the Dems. but I was sensing that suprising things may happen today.

    In a seat usually won by democrats 75 % – 25 % , we may have a race go the other way.

    I predict Brown wins and wins by 5 points or more

    The President visited yesterday to support Coakly

  79. 79
    bloodystupidjohnson Says:

    Thanks Z, but I have that article. But thanks for the trying. The Canadian brokerage firms like Peters, BMO have done a nice job in following this play. They have real nice primers on whose who and what what.

    With all the activity up there, I am surprise in the US, it has not received as much attention. I am really SHOCKED that Canadians posters are not talking up the play more. They have a natural advantage over US based investors in that they can get research material much quicker.

  80. 80
    bill Says:

    If 78 happens market rallies 100 points or more tomorrow

  81. 81
    BirdsofpreyRcool Says:

    bill — thank you for doing your part. A huge swath of this country is waiting, and hoping, and holding their breath… thank you for that update.

  82. 82
    zman Says:

    30 minutes until Panhandle Oil and Gas (PHX) speaks of which I am not familiar but hear about in passing from time to time. Am going to listen as you never know.

  83. 83
    cargocult Says:

    Jerome, Thanks for your awesome charts!

  84. 84
    zman Says:

    The republican was in the lead yesterday, correct? Just looking for a reason for today’s rally other results at C and PH.

  85. 85
    zman Says:

    1 est

    Crude up 36 cents, trading back over $78

    NG 2 cents

  86. 86
    zman Says:

    Homebuilder index 15, forecast 16. Confidence drops in all regions.

  87. 87
    bloodystupidjohnson Says:

    RE 84: yes, the republican was in the lead. Why this race important — it takes Dems below 59 seats. Need 60 seats to stop a fillbuster — however the Dems can still use that “LOON” Sanders who claims to be an Ind, to help break a Rep fillbuster. So it might not be as important as the street thinks.

    What is really important, a victory in Mass, might but the fear of God in many House members that even though they thought they where safe, maybe they are not. So alot of the stuff coming in cap and trade, union cards, etc.. might not be the slam dunk that some people once thought.

  88. 88
    BirdsofpreyRcool Says:

    MIDDAY OVERVIEW

    · Equity levels: SP500 is up 11.60 to 1,147.63 while the NAZZ rises 1.15%. For the SP500, people are watching Thursday’s close of 1,148 and the intraday high of 1,150 as key points of resistance.

    · Stocks strong out of the gate, helped in large part by a very strong health care tape (HC up >2% in anticipation of a Republican win in Massachusetts today). Some decent earnings (PH rallies 4% after its #s) and M&A deals (the TYC and WMB transactions and others; also the WSJ is reporting that MET is nearing a deal to buy AIG’s Alico for $14-15B) also helping equities. There isn’t a ton of conviction/volume behind the rally today (outside of HC) as investors largely sitting on their hands ahead of a very busy two weeks of earnings, although similar tone to the tape (there remains buying demand on any pullback – Fri’s weakness not prompting follow-on selling today but rather bringing in buyers). Also note that credit is actually weaker today.

    · Equity Sectors – health care is by far the market’s best acting group as investors anticipate a Republican win in MA today (the HMOs rally ~2.7% and hit fresh new highs; HUM and CVH are the best acting HMOs, both up >6%; hospital stocks lag as they are viewed as beneficiaries of reform – THC dips 3%). Tech is up 1% and the second best acting group (desk says the group is better to buy across the board; AAPL is up >3.5% and the best acting large-cap tech stock after confirming a product launch event on 1/27). Telecoms rally 1% (this remains the market’s weakest group on a YTD basis) as some view the worst of the pricing headlines as coming to an end (following AT&T’s announcement Fri night); that said S falls close to 5% on back of a downgrade from Bernstein. The financials are tracking about inline w/the broader sp500, w/strength coming from the REITs (up 1.6%); C opened in the red but is now up ~1.5% as the call moves on. Energy is the one major S&P group in the red (off small).

    · Best Performing SP500 stocks (from Bloomberg): WMB, EP, JDSU, CVH, HUM, SNDK, LLY, AET, UNH, X

    · Weakest performing SP500 stocks (from Bloomberg): S, THC, EK, PXD, PWR, KEY, ETFC, AKS, SWN

    · Commodities: Commodities are mixed today as metals move higher while oil and natural gas sell off. Copper is up nearly 2 pct today despite a stronger dollar. Gold was slightly positive, up $3 to $1,133. Oil was down slightly, off its lows of the day, trading just below $78. Natural gas fell over 3 pct amid reports of warmer weather in the next week or so.

    · FX: USD (DXY) is up just under 0.75% and near its highs of the day. The dollar continues to move higher against the Euro, up 0.8% and at its highs of the day (dollar benefiting from very strong TICS data this morning – Net foreign purchases of long-maturity U.S. securities totaled $114.5 billion in Nov, the most since May 2007 – and continued worries around Greece. The dollar is off 0.15% to the Pound and up 0.35% on the Yen. The Euro is off 0.45% against the Yen.

    · Corp Credit: Corp credit is lagging the tape today as IG spreads widen 1.5 bps and HY falls ¼ of a pt.

    · Treasuries: Treasuries sold off across the board today as 2s now yield 89 bps and 10s moved to yield 3.70 pct. The 2-10 year spread was unchanged today at 281 bps.

  89. 89
    zman Says:

    KOG giving back 6% … noise, profit taking.

  90. 90
    bloodystupidjohnson Says:

    RE:87 — sorry about the lousy grammer — but I was listening to flight info as I was printing that.

  91. 91
    BirdsofpreyRcool Says:

    Need to keep an eye on this… the Russian Default in 1998 sent a lot of very unpleasant ripples through global markets…

    A Greek default would dwarf those of Argentina and Russia and risk a “vicious circle” of contagion in Europe, according to Jim Reid of Deutsche Bank AG. Greece has double the debt that Russia and Argentina had combined when they defaulted in 1998 and 2001. Portugal and Ireland also have levels of borrowing that may leave them vulnerable, according to data compiled by Bloomberg. “The numbers involved are far greater than the Russian and Argentine defaults,” said Jim Reid, head of fundamental strategy at Deutsche Bank in London. If Greece’s position continues to deteriorate, Europe is “risking a vicious circle similar to what we saw in finance prior to the banking bail-outs,” he said. European Central Bank President Jean-Claude Trichet’s warning Jan. 14 that no euro-region member can expect special treatment from the Frankfurt-based lender’s funding rules fueled speculation Greece will have trouble getting access to cash. The cost of insuring against a loss on Greek government bonds using credit-default swaps climbed to a record. Contracts on Greek debt rose to an all-time high of 344.5 basis points last week, according to CMA DataVision prices. An increase in credit-default swaps signals a deterioration in perceptions of credit quality. Greece has 254 billion Euros ($365 billion) of debt outstanding, compared with the 51 billion Euros Russia defaulted on and the 57.2 billion Euros on which Argentina missed payments.

  92. 92
    Jerome Blank Says:

    Re: #89…KOG…dialing down to the 30 min intraday chart, there is a nice support zone at about the $2.65 level, if you are bullish on KOG and missed the breakout, this might be a good place to consider…position size for stops below $2.50…

    #83 cargocult…thank you

  93. 93
    BirdsofpreyRcool Says:

    The next milestone for KOG will be the completion results on well-pair 10 & 11. Should get those results in early Feb. Hope KOG puts out an update on them, even though Lynn is loathe to issue “individual well results.” KOG still too tiny and the impact of well-pairs too great, to act like the mrkt should wait, imho.

  94. 94
    zman Says:

    JB – thanks as always.

    PHX CC starting, don’t really care but staying awake for the later stuff is important and you never know.

  95. 95
    zman Says:

    PHX – very low cost, 17 employees, even has a slight yield. Hmmm.

  96. 96
    john11 Says:

    LINE ipaa presentation slides are up,

    http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9MzY1MDQwfENoaWxkSUQ9MzU5NTE5fFR5cGU9MQ==&t=1

  97. 97
    choices Says:

    SWN climbing back over 48, off now less than 1% with NG’s small recovery.

  98. 98
    zman Says:

    I have to miss the LINE call due to a schedule conflict, will look through the slides now, don’t expect to see much in the way of stock moving items.

  99. 99
    BirdsofpreyRcool Says:

    Jerome #92 — thank you for the update.

  100. 100
    zman Says:

    Jerome also had a good update over the weekend on UNG.

  101. 101
    zman Says:

    DVN call starting at IPAA, biggest company there I think. This January conf is always the small one, a lot more mid cap and some larger names at the Fall version.

  102. 102
    BirdsofpreyRcool Says:

    bill — when do the polls close in MA? 8pm??

  103. 103
    zman Says:

    DVN showing EUR’s in the Barnett at 2.48 Bcfe which is the highest of all the producers in the play for an average recoverable reserve. Some of the recent CHK wells would be a multiple of this number. So the big cap E&Ps continue to say it is a big play despite some of the pesky indie geologists saying it is smaller. Given that many of the wells are older here and have produced well over the initial EUR claims in the play, I’m inclined to side with the companies on it and not with the oddball naysayers.

  104. 104
    zman Says:

    DVN talking up Cana play in Canadian cnty Oklahoma. NFX is going to emerge as a big play in this play.

  105. 105
    zman Says:

    DVN planning to get busy in the Horn River (good as a driver for EOG who has made some big gas wells there). DVN planning 10 wells there in 2010, has drilled 5 to date, don’t recall their IPs there.

    Oil up 70 cents, NG down 3 cents.

  106. 106
    john11 Says:

    Amazingly Brown up to 85 on intrade.

  107. 107
    zman Says:

    VTZ – interesting production per well pair on slide 29. Shows Jackfish doing well on a steam applied vs crude produced basis which I’d bet translates into a lower operating cost per barrel.

  108. 108
    zman Says:

    VNR getting over last week’s deal fear. Lemme know if anyone sees a comment there. I’m strongly considering adding them to my yield area (I’ll be keeping LINE for awhile I think).

  109. 109
    BirdsofpreyRcool Says:

    john11 — #106 lol. I just looked too…

  110. 110
    zman Says:

    EVEP comment – Our partner in the Austin Chalk, APA, looking for the Eagle Ford, not had a lot of luck yet, “I’ve been told that’s why they call it exploration”. Our you could just have the wrong acreage; their looks pretty far east to me.

  111. 111
    zman Says:

    NG selling off into the close of NYMEX, down 12 cents. Oil still up 84 cents and climbing.

    We don’t get oil numbers tomorrow due to the MLK break. Expectations now are set pretty low with builds expected in oil and gasoline stocks and no change expected for distillates.

  112. 112
    zman Says:

    Crude topping $79 at the close of the NYMEX, moving with the equity market. NG, which has more of a fundamental uphill battle, to, um, battle is looking to close of 14 cents.

  113. 113
    zman Says:

    ROSE just keeps moving higher. No longer a bargain, I can say with all honesty, don’t disappoint on those Bakken wells fellas. I hold a little Feb $22.50 call position and the common. The longer they delay releasing Montana Bakken results, the more I like the prospect of continuing to own the common but ditching the calls if it looks like they are going to save the news for the 4Q CC.

  114. 114
    zman Says:

    SWN dipped back to the top of a gap in the chart from mid December and bounced. If it does not re establish $50+ in the very near term look for me to reposition my calls here, at least the higher strike ones.

  115. 115
    zman Says:

    Samson speaking tomorrow at IPAA, SSN, interesting name, has a couple of granite wash wells, not far from the big strikes made by FST last week. A true single digit midget with all the accompanying fleas at 27 cents.

  116. 116
    BirdsofpreyRcool Says:

    SSN is an Australian company with U.S. assets?

  117. 117
    zman Says:

    BOP – yep, yep.

  118. 118
    zman Says:

    Stepping out for 30. Keep the day slowly greening for me.

  119. 119
    jiveyjr Says:

    wow…MMR moving up..en fuego

  120. 120
    zman Says:

    Re 119. Agreed.

  121. 121
    elijahwc Says:

    nice pick on pxd this am

  122. 122
    zman Says:

    Eli – I like those guys, despite having done work for some of the crotchedy ex management in the past. I do think they are getting on towards fully valued at present but given their oilyness and their EFS stuff and some things working overseas I could see the pendulum swinging to more than fully valued before their run is done.

  123. 123
    bill Says:

    91>A Greek default..

    alot of those loans are tied to shipping

    basic model was 35 % finance 65 %

    problem is asset prices have fallen 50 % or more

    Everyone of those shipping loans are underwater

  124. 124
    bill Says:

    102 yes 8 pm

  125. 125
    BirdsofpreyRcool Says:

    z — where are your PXD calls you bought for $2.25 this morning now?

  126. 126
    zman Says:

    Bill – and yet the SEA ETF continues to outperform this year.

  127. 127
    BirdsofpreyRcool Says:

    bill — that is a long time to hold one’s breath… but i’m trying to do it.

  128. 128
    zman Says:

    re 125 – up 16% on the bid, no great shakes that. Wasn’t too sure why they were coming off, probably the lack of liquids in the wells, as the total equivalents production was above the upper end of most people’s hopes there.

  129. 129
    BirdsofpreyRcool Says:

    PXD — never saw a good reason why the stock sold off… “dry gas” is as good as any, I suppose. Still, sell-off was not warranted today.

  130. 130
    baylor3217 Says:

    Call your shot…Does Brown win in Mass. tonight?

  131. 131
    bill Says:

    When BHO came up her to campaign for Coakly he bashed the evil banks. It’s amazing to me that he would take that tactic. This revision crap makes me sick

    I guess if you tell a lie big enough and keep repeating it, people will eventually come to believe it…but then again some people will say BS!

  132. 132
    baylor3217 Says:

    On a side note, I picked up some FCX Feb $85 calls ahead of earnings on Thursday.

  133. 133
    baylor3217 Says:

    Re 131, bill, this is all out of the Stalin playbook. Two of his infamous quotes:

    1) If you tell a lie long enough, it becomes the truth

    2) It doesn’t matter who votes, it matters who counts the votes

    I find it near impossible to believe the Democrats will lose that seat. This is similar to the Clinton machine losing to an unknown Obama.

  134. 134
    BirdsofpreyRcool Says:

    Trading Desk hearing some comments about PMs “not being long enough” going into tomorrow… hope? Still holding my breath…

  135. 135
    zman Says:

    MMR up 9.4% to a new high post the DJ announcement last week. Some analysts could swoop in for a downgrade on the lack of 2009 reserve growth or the risk or the lack of catalysts (actually they have 3 catalysts in the next month or so). My sense is that that sort of downgrade would be met with buying.

    PXD down slightly on BTRSTN action, but it is driving a 4+% gain in ROSE and SFY today (no I’m not in SFY but I watch them).

  136. 136
    baylor3217 Says:

    Thoughts on how far that KOG may fall here? Recent resistance for a few weeks was around $2.45.

    I had to take profits on the recent run up as I was getting piggy and my position was just too big as a part of my portfolio.

  137. 137
    zman Says:

    beerthirty, will try to squeeze the MVO into tomorrow’s post.

  138. 138
    zman Says:

    EXXI – end of day trading strong.

  139. 139
    VTZ Says:

    RE 107 – Steam consumption is almost directly proportional to costs in insitu operations. “Cold production” is lowest cost then any incremental steam increases op costs.

    I think I have a curve somewhere that shows different technologies and bbls steam per bbl of bitumen in each technology. If I can find it I’ll forward it along if you’re interested.

  140. 140
    tomdavis12 Says:

    Z: Would you call today’s HK relative weakness more due to Floyd’s sales than fear about upcoming PR’s or earnings?

  141. 141
    BirdsofpreyRcool Says:

    EXXI — someone finally remembered that they are in the DJ well too… and that they present at IPAA tomorrow.

    All eyes on election results tonight…

  142. 142
    skimo Says:

    Baylor, 133 2) already played out in MN, unfortunately likely outcome in MA as well if vote is within a percentage point.

  143. 143
    bill Says:

    mmr wow

  144. 144
    zman Says:

    Tom =- the $6.4 mm sale, might have had passing interest for some seller but honestly gassy names came off and then rebounded slightly on the day, I attribute the move to noise more than anything else. I don’t think anyone has cause to be worried about 4Q results. I expect them to beat on gas volumes and hopefully to get a non core monetization out the door and still not reduce 2010 guidance for the production that goes along with it.

  145. 145
    zman Says:

    IBM off slightly on results

  146. 146
    bill Says:

    133>I find it near impossible to believe the Democrats will lose that seat. This is similar to the Clinton machine losing to an unknown Obama.

    its bigger than that..its huge

    -all congressman democrats
    -both senators democrats for 40 years
    -brown a no name state senator and out numbered by 34 Democrats to- 5 Republicans –
    dems outnumber republicans 3 to 1

    boston globe behind the democrat

    the president campaigning for democrat

    I dont think the hot button is health care

    i think its govt taking over everything and being out of control

    The issue is jobs– we need more private industry jobs and we need govt to work with companies/industries to enable that.

    instead they
    bash oil
    bash banks
    bash insurance
    bash any company making a buck .. remember companies can put off profits for a while

    Im a throw back lol, the business of america is business

  147. 147
    BirdsofpreyRcool Says:

    y’know… i was thinking about mentioning IBM a/h reaction. But, really, the race in MA will set the tone and over-rule everything else tomorrow, i would think.

  148. 148
    BirdsofpreyRcool Says:

    Jefferies’ New Oil and Gas Wildcatters ETF to Begin Trading
    2010-01-19 21:13:01.531 GMT

    By Asjylyn Loder
    Jan. 19 (Bloomberg) — Jefferies Asset Management LLC’s new oil and natural gas wildcatters exchange-traded fund will begin trading tomorrow on the New York Stock Exchange.
    The ETF is based on the Thomson Reuters/Jefferies CRB Wildcatters Energy Exploration & Production Equity Index, which rose 90 percent in the past 12 months. The index covers 55 companies, including Brigham Exploration Co., Carrizo Oil & Gas Inc. and SandRidge Energy Inc.
    “An investment in natural gas is an investment in the future of American energy independence,” Adam De Chiara, co- president of Jefferies Asset Management, a subsidiary of Jefferies Group Inc. in New York, said today in a statement. The ETF will provide an investment in an “underexposed” area of the market, he said.
    Small exploration and production companies provide investors with a “pure play” on the underlying price of oil and natural gas because their stock prices hinge on the price of fuel, Jefferies said in its marketing material.

  149. 149
    zman Says:

    There’s IBM and also CSX, down after numbers as well. You also get housing starts and PPI in the morning.

  150. 150
    baylor3217 Says:

    Re 146, just take a quick spin through Ayn Rand’s Atlas Shrugged…

    It’s all playing out before our very eyes.

    Well we shall see if we get the Cramer rally if Brown wins. I know with the socialists running things, I have been managing my money a little bit differently. In some ways appears to be the 1930s all over again.

    We recovered well from the 1929 crash only to REALLY collapse in 1933 and 1937.

  151. 151
    bill Says:

    If brown wins look for a vote on health care before he is sworn in.

    i predict a 5 point brown win and maybe the moderate dems get a clue all imho

  152. 152
    sunshine Says:

    Re #137 – Thanks.

  153. 153
    nifkin Says:

    NFX Newfield Exploration reports gross operated production of 323 mmcfe/d from Woodford Shale play.
    NFX achieved record gross operated production of 323 MMcfe/d (184 MMcfe/d net) from the company’s Woodford Shale play in the Arkoma Basin of southeastern Oklahoma. Production in early 2010 is expected to continue to benefit from the ongoing completion of about 20 wells drilled in late 2009. Based on drilling to date and 3-D seismic data that covers the entirety of Newfield’s Woodford Shale acreage, the company estimates that approximately 25% of its Woodford Shale acreage will ultimately be developed with SXL completions. The company has applied to unitize a large portion of its acreage to facilitate drilling more SXLs. Approval of the unit would increase this estimated percentage to approximately 33% of the acreage, or 55,000 net acres. Newfield expects to run 6 – 8 operated rigs in the Woodford Shale in 2010 and increase Woodford Shale production by approximately 20% over 2009 levels.

  154. 154
    bill Says:

    any baseball fans remember the red sox world series?

    the bloody sock?

    the hero curt schilling?

    http://www.thedailybeast.com/video/item/shilling-responds-to-coakley-gaffe

  155. 155
    zman Says:

    re 153. Thanks but kind of a no news press release as most if not all of that was in the @NFX update last week for the Goldman conference.

  156. 156
    nifkin Says:

    Z- Looks like the wells are new on the NFX release. Both IP’d at 13.5mmcf/d

  157. 157
    zman Says:

    Nifkin – agreed, as is the aggregate rate which was “approx 300 MMcfepd gross” and is now refined to 323. But I would not get overly excited about the low teens IPs. Nice yes, but I have spoken with IR in the past there on the Woodford and they have seen many wells of that size, they happen in the regular laterals, just are well above average. If this becomes the new average then that would be a good thing … too early for them to make that call though I’d think. Ultimately it all boils down to $/Mcfe finding costs, if the super extendeds are worth the extra cost of the well vs multiple shorter wells on a recoverable reserves basis then more power to them.

  158. 158
    zman Says:

    More NFX – I’m guessing at this point they are saving the Granite Wash completions for the 4Q CC.

  159. 159
    zman Says:

    Fast Money running headline “Why a Coakley loss could lead to a stock market rally”. The guest just mentioned BTU. No kidding, if cap and trade hopes dashed/darkened, it’s good for energy, good for coal as he’s suggesting and good for the refiners.

  160. 160
    zman Says:

    Notes from a Deutsche Bank oil service comment today:

    Basically positive, see good valuations despite the run, see pent up demand for services and a counterseasonal ramp in 1Q10 as budgets increase off hard limits last year. See’s E&P budgets up 10% in 2010 and 10 to 15% in 2011. I can’t argue with that, just about all the names I watch are looking for up capex by at least that much, even while they promise to stay within cash flow.

  161. 161
    PackMan Says:

    did not get email blasts today; so FIXMYBLAST — LOL

  162. 162
    zman Says:

    Pack – yours rejected our email today, so put us on your white list or send us a different email to send them to, lol.

  163. 163
    BirdsofpreyRcool Says:

    Johnson Rice out with an initiation report on EXXI… Overweight.

    Not exactly clear what their price target is… but, their 2009 asset valuation without Davy Jones is about $5.00 and with Davy Jones is about $6.75.

    Asset values ticking up.

  164. 164
    zman Says:

    BOP – did they do that initiation after the close?

  165. 165
    BirdsofpreyRcool Says:

    Not 100% clear on the timing… but it looks like it was after the close.

  166. 166
    nifkin Says:

    COP Recap:
    E&P
    Total Q4 production on a BOE/per day basis, excluding LUKOIL, is anticipated to be approximately 1.83M BOE per day
    F09 production is expected to be 1.85M BOE per day, +3% y/y
    Exploration expenses are expected to be approximately $325M before-tax for the quarter.
    R&M
    Refining and Marketing results for Q4 are expected to be a loss, reflecting low worldwide market crack spreads, weak secondary product margins, narrow light-heavy crude differentials and low utilization due to turnaround activity and economic conditions
    Q4 turnaround costs are anticipated to be approximately $140M before-tax.
    The company’s average worldwide crude oil refining capacity utilization rate for Q4 is anticipated to be in the upper-70-percent range, while the domestic and international utilization rates are expected to be in the lower-80% range and upper-50% range, respectively
    Other
    The LUKOIL Investment segment results will include a $54M after-tax negative adjustment to align ConocoPhillips’ third-quarter estimate to LUKOIL’s third-quarter 2009 actual results
    Chemicals results are expected to be significantly lower than Q3 of 2009 primarily due to lower volumes and margins
    Midstream results are anticipated to be higher than Q3 of 2009 mainly due to higher natural gas liquids prices
    Also, during Q4, the company expects to record noncash impairments of approximately $575M after-tax.

  167. 167
    zman Says:

    Re 165 – muchas gracias.

  168. 168
    jat Says:

    Re: 126/123/92. I am not really a dry bulk / dirty tanker maven, but wouldn’t continued financial problems in terms of delivering new tankers improve the short-term rate outlook for the SEA etf?

  169. 169
    zman Says:

    Jat – perhaps. I was thinking of it from the other angle, that valuations for drybulks are low and that without a freely trading system for used hulls, the stocks won’t lift. But your angle may be a better one. Less gets built, less has to get scrapped, rates go up.

  170. 170
    bill Says:

    would you believe landslide for brown?

  171. 171
    bill Says:

    Do you believe in miracles?

  172. 172
    bill Says:

    boston talk radio for political junkies

    http://wrko.com/pages/681308.php

  173. 173
    bill Says:

    They say the polls are crowded

    Its a phenonomen!

  174. 174
    BirdsofpreyRcool Says:

    bill — the radio link didn’t work… what’s going on?

  175. 175
    bill Says:

    just worked for me

    click on listen live to the right under the red line and above talk insiders

    they might of been on an advertisement

  176. 176
    BirdsofpreyRcool Says:

    right… listening to a weight-loss commercial now… lol

  177. 177
    bill Says:

    http://politics.theatlantic.com/2010/01/annotating_coakleys_excyses.php

    now will they spin this (loss) as a bad campaign or something else

  178. 178
    bill Says:

    look at these numbers last 2 presidential races

    http://www.usatoday.com/news/politics/election2008/ma.htm

  179. 179
    milepost_43 Says:

    KOG…like the “long” candlestick tail today and close ABOVE yesterdays low..not to worry…YET….of course am talking my book!!!

  180. 180
    bill Says:

    at 9 pm, 5 point lead Brown 52 % in

    In the 495 belt (where i live) 2 to 1 in favor of brown

  181. 181
    zman Says:

    60% reporting:
    53 – 46 Brown.

  182. 182
    Jerome Blank Says:

    BEXP…a chart with a few thoughts…

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

  183. 183
    bill Says:

    ON 78

    I wish my stock picks were so prescient! lol

    Party time

  184. 184
    BirdsofpreyRcool Says:

    Congratulations, Massachusetts… I NEVER would have guessed this outcome would be possible. Thank you.

  185. 185
    PackMan Says:

    Z – my mailbox may have been full; just cleared it out; try it again tomorrow.

    BOP – 184 — ditto !

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