25
Jan

Monday Morning

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Market Sentiment Watch: Ben, Ben, Ben.   Bernanke's term expires at the end of the month and fears of his ouster propelled markets lower on Friday. His chances at keeping the job look more certain at present and I would expect the markets to react favorably to his confirmation later this week. If he isn't confirmed I'd guess we are in for some sustained broad market weakness. President Obama will address the Nation Wednesday night, not expect much more there than the recent populist rhetoric reaching a fever pitch. On the earnings front Service sector gets busier this week with a coal name and a refiner thrown in for good measure. Look for E&P earnings to start dribbling out next week.

 

The Week Ahead:

  • Monday 1/21: Existing home sales (Forecast 5.85mm)
  • Tuesday 1/22: Cash-Shiller home prices, consumer confidence (F 53.5), FHFA home prices
  • Wednesday 1/23:  EIA Oil Inventory Report, New home sales (F365K), FOMC announcement (expected to stick to 0 to 0.25% range)
  • Thursday 1/24: EIA Natural Storage Report, jobless claims (F 445K), durable goods (F 1.7%)
  • Friday 1/25: 4Q GDP (F 5.5% - a function of inventories), Chicago PMI (F 57.9%), consumer sentiment (F 73)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Energy Earnings Calendar - Week 1
  • Stuff We Care About Today - HAL earnings
  • Odds & Ends

Holdings Watch:

  • $10KP II:
    • $18,300
    • 44% Cash.
  • The Holdings tab has been updated for the quick view.
  • Friday's Trades:

Commodity  Watch:

Crude oil fell 4% last week to close at $74.54. The 12 month crude strip is now trading at $77.34.  This morning crude is trading down a quarter.

Natural gas inched up 1% last week to close at $5.75 as a second consecutive larger than expected withdrawal from gas storage fought off declines in other markets. The 12 month strip is now trading at $6.02. This morning gas is trading down a dime after a late week rebound last week.


  • Weather Watch: A return of winter.

    • Week Before Last: 221 HDDs which was warmer than last year but still drove a whopping 246 Bcf from storage as of last week's report.
    • Last Week: 180 HDDs vs a prior forecast of 176; 224 last year and 225 normal. This should yield significantly smaller draw from storage this Thursday.
    • This Week's Forecast: 201 HDDs as the cold air starts to return.


 

Energy Earnings Watch


I'm only long HAL amongst the names reporting this week but will be listening for tidbits from a several of these calls as they pertain to plays I plan to be in and out of later this quarter, especially VLO and ACI.

 

 

Stuff We Care About Today

HAL Reported Slightly Better Than Expected Results

The 4Q09 Numbers:

  • Revenue of $3.7 B vs $3.633-B expected
  • EPS of $0.28 (ex items) vs $0.27 expected

Highlights:

  • Second sequential quarter of revenue growth
  • Departing from last quarters comments, they now see operator spending rising in 2010, however they see spending being back end loaded.
  • Not a lot of forward looking detail in their press release so will be looking for hints on margins for 2010 on the call.

 Conference Call: Today, 9 am EST

Odds & Ends

Analyst Watch:

  • ROSE - Upped to Outperform at Wells Fargo
  • DRYS upped to Buy at Cantor
  • EGLE upped to Hold at Cantor
  • GNK cut to Hold at Cantor
  • SLB upped to Outperform, price target increased from $85 to $96 at FBR
  • SLB cut to Sell at Argus

Interesting Reading Watch:

 

169 Responses to “Monday Morning”

  1. 1
    zman Says:

    Analyst Watch: Scotia picking up another 11 names this morning, SWN and RRC at sector perform, WLL at underperform, HK at Outperform.

  2. 2
    zman Says:

    HAL call in 10 minutes.

  3. 3
    BirdsofpreyRcool Says:

    TechTrader out with a 60/40 SHORT call today, as the best odds of a day-trade that works. Doesn’t mean we close red. Just that we will see volatility today.

    HeadTrader thinks where the market goes today depends on what BHO says today. That is why talk of “politics” seems to find it’s way onto an “all-energy” site. Because — more than anything else — it’s politics that is driving the economy these days. That insures that Volatility will continue to Reign Supreme.

  4. 4
    zman Says:

    HAL CC Notes 1

    NAM – starting to get some price increases as utilization picks up, poised for a better 2010, requires a sustained increase in nat gas drilling, need to see storage in line with historic levels, and a pickup in industrial gas demand.

    Mexico – some pickup, PEXEX spending will be flat 2010 vs 2009, more offshore.

    Bias for Latin America will be more challenging from a margin perspective due to overcapacity in the region. Brazil continues to look strong…

  5. 5
    zman Says:

    HAL – 38% decline in the number of uncompleted wells in the Barnett. Last quarter these guys put the uncompleted well count at 1300 to 1500 wells, with most of it in the Barnett.

  6. 6
    PackMan Says:

    SWN … someone keeps offering shares at 45.60 pre-market; they are getting bought; but the offer keeps coming back.

  7. 7
    zman Says:

    HAL – Q1 to see 7 to 10 cents of non recurring items, plus they see a currency hit from Venezuela. Probably won’t be a good day for the stock although given the move of the last 3 days it should be muted. 2010 still looks brighter than 2009, not rah, rah brighter but better. Stock called down a buck plus pre open.

  8. 8
    BirdsofpreyRcool Says:

    Credit Market — interesting price action this morning. Opened up to a pretty strong rally (- 3.5 bps in IG, +5/8 in HY), but now back to unch’d for the day. Also seeing energy names a touch weaker than unch’d. Bonds will probably take their cue from stocks at open. If they don’t follow a rally, stock will probably not be able to hold onto any significant gains.

  9. 9
    BirdsofpreyRcool Says:

    SWN — wonder if that is just some short-term trading… given that last week was warmer than usual, setting us up for a smaller nat gas number this week.

  10. 10
    BirdsofpreyRcool Says:

    AKS up strong in pre-mrkt on better than expected steel sales and pricing.

  11. 11
    zman Says:

    HAL getting dropped now by $2 pre market, comments about charges in 1Q not going over well…

  12. 12
    BirdsofpreyRcool Says:

    Why do we care about AKS? Because their main customers are the auto industry. And the auto industry is one of the drivers of the manufacturing industry. And the manufacturing (and steel) industries use a lot of energy. So, might be seeing a bit of industrial demand return for nat gas consumption. For now, anyway.

  13. 13
    jat Says:

    HAL, yes, this is not really the beat I was hoping for.

  14. 14
    zman Says:

    HAL – “outlook for 2010 remains fluid”, much more cautious tone than I was expecting. Jat – not hearing a lot new in his comments. I don’t the sell off pre market is warranted but there it is.

  15. 15
    BirdsofpreyRcool Says:

    PQ raised to “strong buy” from “add” at Capital One Southcoast.

  16. 16
    zman Says:

    ROSE – looking particularly strong on that Wells upgrade, anyone have a copy of that piece? Strange that they should wait to upgrade it this late in its run. Up 10% now.

  17. 17
    zman Says:

    Jat – HAL well off those lows.

  18. 18
    zman Says:

    ROSE over $23, new high, better not disappoint on those Montana Bakken tests.

  19. 19
    jiveyjr Says:

    BEXP outta the gate well this morning…

  20. 20
    zman Says:

    Re 12 – Good point. Second largest identifiable piece of industrial gas demand is metals (chemicals #1).

  21. 21
    PackMan Says:

    SWN shot out of a gun on the open …

  22. 22
    zman Says:

    Jivey – should see news there this week, looking for another 2 wells any day now.

    Nice to see upward moves in SWN, NFX, PXD after a “market just don’t care” move lower last week.

    ROSE – back down to 22.25, good to see a new high and then a gap fill.

    I will say that opening volumes in most cases are pretty light so I wouldn’t bet on these early highs extending much more unless you get a bounce in crude which should give the group more confidence.

    WLL up $2 on a downgrade, go figure.

  23. 23
    zman Says:

    HAL Q&A going a lot better than the call. Analysts looking for upside.

  24. 24
    zman Says:

    Jerome – any new thoughts on MMR chart? Nice of it to have filled the little gap at the top of the chart these last few days, now looks higher?

    TexW – HAL reiterating that shale plays grind up equipment much faster than other plays, good for getting rid of over capacity. Any thoughts on that putting upward pricing pressure on services?

  25. 25
    elijahwc Says:

    GDP upgraded to Strong Buy at CapOne Southcoast along with PQ

  26. 26
    Dman Says:

    Anyone see news on CRESY? It’s an agriculture ADR that I’m eyeing & it’s down 7% for some reason.

  27. 27
    zman Says:

    LINE – down 4%, big volume, don’t see news, but am guessing downgrade.

  28. 28
    zman Says:

    Gas Macro Watch:

    At end of Q3 they thought there were 1,300 to 1,500 drilled but not completed.

    They think 400 to 500 were knocked out in Q4 with more knocked out in January.

    Not evident that wells are being drilled but not completed now.

  29. 29
    zman Says:

    Re 26 – HSBC raised their target from $14 to $18, not sure why that drops it a buck.

  30. 30
    Dman Says:

    thanks Z

  31. 31
    zman Says:

    EOG – starting to move back up well.

    Crude up 45 cents now, to $75

    NG off 9 cents.

    HAL – We also have been surprised by how well natural gas production has held up. Working through the drilled but not completed backlog is a one time event and they see it as a net positive. They’re afraid it’s anyone’s guess at the moment.

  32. 32
    zman Says:

    RMD – saw your comment re Fayetteville Shale oil over the weekend. I’d be highly dubious of anyone saying anything about greenfield refinery capacity in the U.S. at this time. Putting the oil in a pipeline and shipping it? No problem. But building a new refinery for it? Can’t take that seriously unless the crude is off a special oddball type like a black wax.

  33. 33
    BirdsofpreyRcool Says:

    Southcoast out with a cautionary note on MMR/EXXI Davy Jones well. I absolutely agree with this. Until they complete and producion test that well, we will not know for sure what kind of discovery it is. Early results are certainly encouraging… but, need to physically measure the hydrocarbon molecules.

    Could Davy Jones be Mega Mata revisited? CRZO reminded Southcoast of its Mega Mata prospect onshore South Texas, which was announced as a dry hole back in 2006. This well was drilled below 21K’ to the Wilcox with encouraging resistivity logs. CRZO was unable to get a successful completion. Davy Jones is also a Wilcox test that has had encouraging resistivity. Until Davy Jones is completed later this year, the well still is fairly high risk.

  34. 34
    zman Says:

    HAL call over. Tone – optimistic about 2010, especially the back half. They set the bar for Q1 results at a very low level.

  35. 35
    zman Says:

    BOP – what’s their rating on MMR/EXXI? We likely won’t get a production test until the end of this year. So there’s not an immediate possibility of failure there unless they junk up the well trying to drill deeper.

  36. 36
    BirdsofpreyRcool Says:

    z — yeah… I think Southcoast is being a bit Sour Grapes about the whole thing… i mean, it’s kind of a Blinding Statement of the Obvious. But, figured I’d point it out, as I do recognize the risks in this well.

    Southcoast has EXXI as an “add” with a 1/6/10 $3 PT and MMR as an “add” with a 12/30/09 $10 PT. So, as I said, kind of a sour-grapey comment on their part.

  37. 37
    zman Says:

    TRGL giving back a little, no merger Monday for them today.

    BOP – thanks, just checking on their motivations and I appreciate you bringing it up. If people don’t realize that kind of thing they shouldn’t be in any exploration stock, ever.

    Existing homes sales down 16.7% at 5.45 mm, less than expected. Weakness makes sense as the government had not yet extended the timeline for the buyer’s credit yet. Existing home sales are counted after closing, not the date they are actually sold, so there is the looking, deciding, signing, and closing to get through before sale gets counted. I’d bet new home sales later this week look better as those sales are counted on the day the sale occurs.

  38. 38
    TEXWS6 Says:

    Z,

    You sure you’re not a closet completion engineer? Yes, we are getting hit with “extreme pressure” pumping charges. We are tearing up fluid ends on a daily basis (50-70k/end, one fluid end per frac pump, 20 frac pumps per stage). Does WeirMesa/SPM or GardnerDenver trade? Might be something to look at. Email me when I need to comment on the board.

  39. 39
    bloodystupidjohnson Says:

    Back from Barrett Jackson, man was the weather terrible. I am always surprised by some of the more money than brains bidding on some of the vehicles. However, if you are a car guy, it is heaven. What beautiful cars!

  40. 40
    Wyoming Says:

    Re 24; Worn out equipment is from poor operation. I think it is their swan song to raise prices. I have run many frac operations at high rates and high pressures for many years. The wear and tear is normal and believe me, their revenue should cover replacement. If anything, I would argue that the reduction in activity has reduced the cost of fluid ends, power frames, transmissions and in a rare event, an engine. BTW, some of the equipment is covered under a little known purchase clause called a warranty (engines and transmission).

    Log Data – logs are a real good indicator of potential in exploration wells. Almost a slam dunk in development wells. There are many zones which can be deceiving as far as looking good (Ericson in Wamsutter, WY) and poor performance (what looked like gas flowed water). 3 D seismic interpretation is just a model, I have seen dry holes where the G&G says it is there. Where do you think the buzz term “proof of concept” was derived? In the case of Davey Jones, they could try a DST type of log (Dynamic Testing) but it still has the risk of getting stuck and forcing a costly sidetrack. Not to mention the difficulties if a nuke gets left in the borehole. SLB’s RFT tool was nick named the Repeat Fishing Tool but the latest generation has come a long way. I have not followed the steps in the Davey Jones well so my words should not be considered definitive, just raising points for those who do.

  41. 41
    zman Says:

    TEX – thanks much, I just reread my notes from last call last night and then they harped on the punishing environment aspect of it again today.

    Gardner Denver is GDI on the NYSE. Will have a look.

    BSJ – I see those shows on TV, unreal what they pay for those cars.

  42. 42
    bloodystupidjohnson Says:

    I see where http://www.mcdep.com has add WLL to its coverage. Many people follow this site, so I am not suprised at the early morning price action. Site think WLL is worth 78.

  43. 43
    1520sbroad Says:

    Z – good morning. No info from my SWN contact on oil possibilities. Agreed on greenfield refinery as the ultimate pie in the sky. I remember that CHK bought up a mothballed refinery a few years back and was going to run crude thru it – not sure what ever happened to that idea. I think that was in OK somewhere.

    Ever run across a company named EnerNOC – ENOC is symbol. Electric grid management. Has piqued my interest.

    Any knock on RRC management in your opinion? they were the subject of my weekend research reading.

  44. 44
    bloodystupidjohnson Says:

    AKS had good things to say about business. This should, and has, helped the met coal stocks.

  45. 45
    zman Says:

    Wyoming – They are highly scared of damaging that hole, I think they took some side wall cores or maybe a different kind of core I don’t remember the name of now but its newer, I think they plan to complete and flow it, not DST.

    On the HAL comments, they seem to think the shale at depth causes the wear and tear, especially on equipment that is not as well maintained. If you guys get a chance, you might think about writing a treatise on how this might be. From my drive bys of rigs I can snap photos but little else and its been a long time since I was in the field and then I was wearing a tie, lol.

  46. 46
    bill Says:

    I’m suprised McDip hasnt picked up on EXXI,MMR,PXP or any ng players

  47. 47
    BirdsofpreyRcool Says:

    Wyoming — one of the bearish comments, making the rounds, is that with downhole temps at 425-degrees or so, the logging tools are not accurate at Davy Jones. Given the price to run those tools, it doesn’t make sense to me that MMR would stop to log, if they thought the measurements would be bogus. But, would love to hear your thoughts on that matter. It’s one of the Bears “more plausible” arguments, at this point.

  48. 48
    VTZ Says:

    In the fwiw category, I’m not convinced that the dollar is going to rally from here. It sure doesn’t look all that strong and with a Ben re-confirmation, how bullish can you be?!

  49. 49
    zman Says:

    1520 – ENOC rings a bell, will look through stacks o paper and get back to you. I think I have a presentation somewhere. Or I could just look online, anyway, nothing to add at the moment.

    RRC – Solid. They strike me as a bit “salesmanish” but have backed it up with results. I think they get bought as the company would make someone large a nice Marcellus unit and I don’t think gas prices on the east coast are going to lose their premium any time soon. Was reading about a new pipe to Manhattan being planned, funny how they don’t want drilling in their watershed but they want the gas (from drilling in someone else’s)

  50. 50
    zman Says:

    NG retracing the morning’s losses.

    Offtopic: Ms Paul’s FishSticks. Say FishSticks 3x real fast and you know what I think of them. Thought they’d be a fun thing for intern #2 to eat over the weekend and tried a few myself. Not sure my inside will ever be the same. Intern is fussy but ok.

  51. 51
    zman Says:

    Bill – Is McDep stuff any good?

  52. 52
    1520sbroad Says:

    Let me know if you come across any ENOC thoughts. I’ve looked at them pretty hard. They have entered the big leagues recently with several analysts picking them up.

    It is clear that the need for nat gas in NYC/NJ is not going away. I have watched my local nat gas utility grow by leaps as they convert heating oil users. The number of complaining NIMBY folks is incredible.

  53. 53
    zman Says:

    Bastardi predicting big snow storm from Texas to DC.

  54. 54
    Wyoming Says:

    I don’t mean to come across as bearish. 425 is hot, there are a few vendors who have these types but usually everyone says that only SLB will do. I don’t believe it is a matter of bogus or not but rather risk/reward. They probably captured some resistivity, porosity and maybe a couple others like elemental capture. Sounds like they ran an MSCT (sidewall coring tool. So they should be able to send those in to get processed for confirmation of the logs. If my memory is correct, the main breakdown at these temps is the tools solder. Not sure if I spelled it correct, digging deep in the memory pan here.

    Summary – risk / reward. Get the data that lets you estimate where to shoot and test it coming uphole. There are also risks in cased hole too, plus you would want to set it up where your completion does not require another rig visit.

  55. 55
    BirdsofpreyRcool Says:

    Wyoming. Thank you for your answer. I understand about 85% of it… so, that’s pretty good for me. But, it makes sense. You run what you can, to know where to come back and perf later (if i got your drift correctly).

    Do we know is MMR is using SLB to run the logging at DJ?

  56. 56
    Wyoming Says:

    Have they overspent their AFE?

  57. 57
    zman Says:

    AFE went out the window long ago.

  58. 58
    BirdsofpreyRcool Says:

    Given the unusually high impact that Washington has on Main Street these days, I guess we will just drift around until the State of the Union speech on Wednesday night. Hearing there will be more Goodies for the Middle Class passed out in the speech. From the sound of that, doesn’t look good for debt reduction.

  59. 59
    BirdsofpreyRcool Says:

    By the way, I am still long every single share of EXXI I ever bought. Kinda surprised to see it trading back to $3.35. But maybe Southcoast is trying to shake the tree, prior to revising their price target.

    I continue to think EXXI should be around $4+ based on their low-risk reserves and production alone. Davy Jones is upside, at this point.

  60. 60
    Wyoming Says:

    SLB is on location! 🙂

  61. 61
    bloodystupidjohnson Says:

    I see where Chanos was on CNBC this morning laying out his short thesis on China. I happen to agree with his arguements, however one could go broke waiting for it to finally happen.

  62. 62
    VTZ Says:

    RE 16: Is there a summary of his points anywhere? I can’t find it.

  63. 63
    VTZ Says:

    RE 61 I meant BSJ

  64. 64
    bloodystupidjohnson Says:

    I think you can go to CNBC and probably find an audio link to his interview.

  65. 65
    zman Says:

    Bastardi comment ~ “Folks from Dallas to DC will have their coldest winter day of the season thus far by this time next week and the set up for a brutally cold major winter storm is on the table.”

  66. 66
    zman Says:

    Re 58 – pretty much sums it up, yes.

    NG going green after a 15 cent opening loss. Cold is on the way.

  67. 67
    BirdsofpreyRcool Says:

    Wyoming — thanks for #60. Music to my ears!

  68. 68
    bloodystupidjohnson Says:

    If you want nat gas usage during cold weather, then you DO NOT want to have a major snow storm at the same time. Why? — because with a storm, schools close, some business shut down, and after work functions close down. You want cold weather, but those places staying open.

  69. 69
    Wyoming Says:

    65 – thanks for the heads up, I’ll tell her to bring my coat to the airport.

  70. 70
    zman Says:

    BSJ – yes and no. He’s talking 6 inches for most of the swath which down here shuts things down for a day or two for schools, basically a big area with snow. The coldest temps of the season bit will outweigh.

  71. 71
    Wyoming Says:

    http://www.marketwatch.com/story/statoil-buys-into-conocophillips-chukchi-sea-lease-2010-01-25

  72. 72
    zman Says:

    HAL – sense is that analysts retool their models for some unexpected 1Q costs, maybe propping up the back half of the year to nearly offset and come away with no rating change. Call was definitely more optimistic than the SLB one, just less than I and the Street wanted. I think it will being to move up again soon as the rig count in NAM continues to advance. A good gas supply number at the end of this week would be a help as well.

  73. 73
    zman Says:

    BOP – here’s your middle class incentives

    http://www.marketwatch.com/story/obama-targets-middle-class-with-aid-proposals-2010-01-25

  74. 74
    bloodystupidjohnson Says:

    Funny, when I was at Ft Polk during AIT, it snowed a few inches. It was the first snow in six years at Polk. It was so funny watching the Drill Sgts running around like the world was going to end — lol

  75. 75
    tomdavis12 Says:

    Z: Cold blasts have caused a shortage in salt in Northern Hemisphere, especially UK. Don’t know what to do with info other than be not surprised.

  76. 76
    zman Says:

    Salt shortage? Hmmmm.

    In light of the “middle class” tax stuff today, I bet we see something on the job creation front tomorrow.

  77. 77
    BirdsofpreyRcool Says:

    EXXI — back up from 3.35… guess Southcoast got all the shares they wanted down there. Wonder when they come out with their upgrade?

  78. 78
    bloodystupidjohnson Says:

    Z: porfolio management question — in your total porfolio, stocks and options, do you ever buy any puts, maybe way out of the money puts, as insurance?

  79. 79
    TEXWS6 Says:

    Wyo,

    You in Big D?

  80. 80
    zman Says:

    BSJ – yes, in the option portfolio but not in the stock portfolio, as that is pretty buy and hold (until I sell type stuff). I don’t consider buying puts there for earnings either as I don’t generally buy a stock for an event (earnings or a catalyst) as I do for a string of them. On the option portfolio, I do take puts from time to time, less of late as since March the market has drifted up and to the right on my screens making puts something that only work from the peaks and only for a few days at a time. I’m just not that good of a timer to predict when the hot money will take a vacation so I’d rather throttle back on the names than bet against them, unless I have a something negative about a name, like we did with the DPTR hit awhile back.

  81. 81
    Wyoming Says:

    Yes, not far from DFW work/home.

  82. 82
    bloodystupidjohnson Says:

    Z: I am implying more of an insurance function. For example you buy life insurance hoping you don’t use it. One might buy out of the money puts to hedge against the unforeseen event. Some porfolio managers do this and some don’t. I was just wondering what camp you where in. It is like using FX to hedge foreign stocks. Some foreign money managers hedge their FX exposures and some don’t.

  83. 83
    zman Says:

    Re 82. I hear ya, my hedge is cash for the options portfolio and riding through it on the stock side.

  84. 84
    zman Says:

    President speaking on jobs / middle class now. I wonder if the workplace IRA proposal is costly to small businesses. There was talking of it being like a 401K with a required match by employers, if that’s the case then that is no way to generate jobs.

  85. 85
    zman Says:

    VLO – reports later this week, mulling a small long. Expectations are on the ground and the industry has done a good job of keeping utilization on the ground as well.

  86. 86
    bloodystupidjohnson Says:

    Z: some poor unfortunate money managers can’t go to cash, but must be fully invested at all times — lol! I understand why they do it, but it is a tough way to manage money.

  87. 87
    zman Says:

    Natural gas backing again, down 6 cents, its nothing if not volatile.

    Stocks paying much more attention to the broad market as we are pretty uniformly up nearly half way (and one Obama speech) through the day.

    Anyone having GDI research lying around feel free to send it to me. I’ve heard the name before but that’s about it. Looks interesting, Jerome, any chart thoughts?

  88. 88
    zman Says:

    BSJ – re 86, been there, done that, didn’t sleep well.

  89. 89
    bloodystupidjohnson Says:

    Obama rant: When Obama got into office the economy was bad. Just listen to him and he will tell you how bad it was. But in one year what has he done to improve the economy? Outside of cash for clunkers – lol – nothing. It is worst. Small business, the growth leader in jobs, have more regulation, more uncertainity with health care, cap and trade, etc than ever before. The big jobs that gov’t should do like infrastructure, are still on the back burner. There is a highway bill still stuck in Congress. So the only thing Obama has done is complain about how bad the economy was, but he has done nothing to improve the situation.

  90. 90
    zman Says:

    S&P back to 1100. Guy on CNBC calling for a 25% correction by March/April. I didn’t hear a good fundamental reason, only technicals, although he did expect the economy to firm by mid year…whatever dude.

  91. 91
    zman Says:

    HAL down a whopping 17 cents now.

    NOG, KOG, AEZ all slipping a bit here, counter to E&Ps and bigger Bakkens.

  92. 92
    Wyoming Says:

    Must .. not .. post .. political ..

    http://www.economist.com/blogs/gulliver/2010/01/aircraft_sale_some_water_damage

  93. 93
    bloodystupidjohnson Says:

    RE 92: this will be at the next barrett jackson auction — lol

  94. 94
    Paul in Kansas City Says:

    I just read the free updates from McDep; but the reasoning appears sound and the modeling is helpful when looking at individual positions. Used in this fashion it is helpful in a long term strategic sense; but it was not helpful last spring; HGT goes down from $15 to $7 and change ($25 November 2008) and let’s face it we could argue Henry Hub going down means this is going down; but no one easily could pick a floor in that. However; if you understood what a roylaty trust is and looked at the info/modeling on reserve life, cash flows, capex and volumes you would more likely be a buyer rather than a seller in the panic IF you believed supply demand equilibrium meant higher nat gas prices over time. I bought some shares around $8 and it was terrifying to say the least!

  95. 95
    Wyoming Says:

    Aw heck; 7:30 pm here and by rule, politics is allowed. Heading out to the drillers hotel, his birthday. In search of a lost monkey for drinks. BSJ, for you #89

    http://www.americanthinker.com/2009/08/another_failed_presidency.html

    failed emotocon ;-(

  96. 96
    baylor3217 Says:

    Thoughts on kog here at these levels – 2.42ish?

  97. 97
    zman Says:

    Thanks Paul

    Hour to the Nymex close, crude up 60 cents, NG down a dime, SP hugging 1100. Watching a little CNBC and doing some reading today.

    Not going to bite on the political side though I did type something up before deleting it.

    ANR hit my $44 level on Friday and is bouncing with the rest of the coals now.

  98. 98
    BirdsofpreyRcool Says:

    EPM — Evoluion Petroleum… anybody ever run into this name?

  99. 99
    Paul in Kansas City Says:

    LINE and VNR price action; wish i had insight!

  100. 100
    BirdsofpreyRcool Says:

    Wyoming — #95… interesting that the article was written last August. Very prescient. Thank you for posting.

  101. 101
    Jerome Blank Says:

    KOG holding the daily 100 day SMA…still looking good “enough” and holding up within triangle support…EXXI intraday chart update…

    MMR 30 min chart added with comments…

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

  102. 102
    zman Says:

    Jerome – ROSE tapped your $23 resistance level on the open today.

  103. 103
    zman Says:

    My source for imports is out again this week. Anyone who gets gas daily and wants to send over those numbers I’d appreciate it.

  104. 104
    zman Says:

    HAL Green. Ahh. Free to move on now with the markets and gas prices.

  105. 105
    BirdsofpreyRcool Says:

    baylor — #96 just seems KOG is stuck in a bit of a rut… until next time it decides to really scoot again. We should get 10 & 11 well results in 2-3 weeks. Then the next important catalyst will be their TFS well. Think the market holding it’s breath until they can prove the TFS potential on the Rez.

    Also, want to get a better understanding of the value of some of their non-FBIR acreage. At this point, anything they find there is pure upside.

  106. 106
    zman Says:

    BOP – sounded like the Three Forks well will be sooner than the previously thought mid year as originally stated, no? Also, I think there is a potentially big Peak well going down just west of their acreage now. And I think we will see another large well, again to the west of them in the next few weeks which may give a little boost to the Bakken group as a whole.

  107. 107
    jat Says:

    Re 72, I think that’s pretty much right on HAL. Everything I’m reading now from the post-call write-ups is pretty much latching on to the NAM performance which was impressive. International performance was disappointing, but not really different from what they were guiding. Will be interesting to see what the rest of the group reports regarding Mexico over the next few days.

  108. 108
    Jerome Blank Says:

    Re: 102, ROSE pulled back right at the P&F price objective…

    ROSE 30 min chart with comments…

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

  109. 109
    zman Says:

    Jat – my sense from SLB and HAL call on Mexico is that Pemex will ultimately go with optimized hole vs cheap hole, just taking them awhile to come to that conclusion. I don’t think they can afford to wait too long or they will be a net importer in 3 years and not the 5 I suspect.

  110. 110
    RobBanks Says:

    Z- took a quick look at VNR over the weekend. Last bought it at $5.50, sold at $13, so I’ve missed the last $9 – ouch.

    It’s getting oilier, now 61% gas as opposed to 78% gas last I looked. Nice hedges on oil and NG. Very good distribution coverage. They will announce a divy increase soon, but I have no idea how much it will be.

    One thing I didn’t like by management on the last acquisition and secondary:

    Before the market opened, they announced an accretive secondary to be funded by existing LOC. Stock shot up 4%. That VERY SAME DAY after the close, they announced a secondary to pay down debt!

    That kind of stuff turns me off somewhat, but still, seems like a good outfit.

    As for these daily up and down swings of 4-5%, I have no clue as to what is going on.

    Seems a little high priced yielding only 9%. The oilier ENP and LGCY are yielding more.

    As for LINE, I think we’re seeing a combination of Cramer saying don’t buy it (last Friday) and many – including me – expecting a secondary as soon as the dividend is out of the way. I own LINE and was going to buy puts as soon as it went ex-div, but with this big hit, I don’t know if the odds are all that good anymore.

  111. 111
    RobBanks Says:

    I meant accretive acquisition above for VNR.

  112. 112
    BirdsofpreyRcool Says:

    z — #106… yeah. Checking back through my notes. Can’t recall if the KOG TFS well would be #14?? I’ll find out later this week. The first Peak TFS well in the middle of their FBIR acreage was economic, but no great shakes. Don’t know if there were issues with the completion there (i seem to recall something didn’t go exactly to plan). The 2nd Peak TFS well is just west of KOG’s acreage. They were trying to complete this well in bizzard conditions and i think only 1 of 12 (?) frac zones got off. I think we are still waiting to hear about that well.

  113. 113
    Paul in Kansas City Says:

    very helpful Rob. thank you

  114. 114
    zman Says:

    Rob – given their distribution coverage ratio I suspect their dividend increase is going to be more than a slight, annual bump.

    LINE – this big a hit? We went into the $28s and are back into the high $25s, I hold it long term for the yield and don’t call that a big hit. Another secondary, maybe, but asset prices are still cheap and they have a very good track record of buy low and optimize high. So not worried, standing pat. But I also tend to get a bit more complacent when I’m doubled in such a short amount of time on a yield bearing instrument (it’s yielding 18% to my cost and I don’t see a way to replace that at present other than maybe VNR if they crush back their coverage ratio).

  115. 115
    BirdsofpreyRcool Says:

    Reading that the GOP is rejecting BHO’s latest tax breaks (which he will outline in Wednesday night’s speech).

    Gridlock in Washington is usually very good for stocks.

  116. 116
    andy Says:

    bop – re KOG three forks is #14

    z -#106 KOG believe lynn told me early summer. my notes are at home.

  117. 117
    zman Says:

    BOP – if that compulsory IRA went into place I can’t see how that’s good for small business employers, and for consumer spending.

    Thanks Andy. Sounds like a may spud, june completion.

  118. 118
    BirdsofpreyRcool Says:

    andy — following are some of your notes, as they pertain to your discussion with KOG in the IPAA breakout session… thank you for sharing. Very helpful!!
    —————————————-

    any word on Peaks nearby well?/ only 1 stage of 12 successfully fracced, mechanical issues were currently being resolved, had good oil shows in first stage. What # is 3 forks well?? 14 to be drilled in sw corner. 10 and 11 to be completed in early feb, 12 and 13 in april, may.

  119. 119
    zman Says:

    Notable Quote Watch:

    “We’re in an era when anyone who makes a lot of money is a war criminal” ~ Jim Cramer.

  120. 120
    RobBanks Says:

    re: 114

    <> Not long term (and I hold it long term for the same reasons you do), but it sure kills the upside of buying puts.

  121. 121
    zman Says:

    Rob – true enough.

  122. 122
    BirdsofpreyRcool Says:

    z — no. Don’t see how the compulsory IRA would boost hiring. If we can’t get people back to (non-govt) jobs, then forcing IRAs on small businesses seems pretty far down the list of “Things To Do Today to Boost Hiring Tommorrow.” IMHO, I think BHO slept through a few too many of his Economics 101 classes…

  123. 123
    tomdavis12 Says:

    Z: CLNE got a new contract from Dallas/Fort Worth Airport. I am still not long yet. Ugh.

  124. 124
    zman Says:

    Tom – Saw that earlier, think you will see more and more of that. Good way to get the egg rolling, before you tackle the consumer market.

  125. 125
    zman Says:

    Noting of late that several brokers are warming more to HK and becoming more neutral on names like SWN (odd given they aren’t overly expensive but are low hedged so maybe its fear of gas prices) and RRC and UPL (not so odd as their multiples are high). Anyway, TPH has been pounding the table on HK, Scotia coming with a sector Outperform today, and other buy ratings in the last two weeks. Taken together with recent comments from management it sounds like non core asset sale is likely on the 4Q call along with a production guidance beat, and upgraded guidance for 2010. Before that we should see strong reserve growth, on the order of 60+%.

  126. 126
    tomdavis12 Says:

    Z: Has HK announced their earnings date?

  127. 127
    zman Says:

    DD reports tomorrow morning, results may get a little notice in the gas markets.

  128. 128
    zman Says:

    re 126 – not yet. They often put out an ops update and a separate reserves update before the quarter, stealing their own thunder for the 4Q call.

  129. 129
    zman Says:

    Pretty low bar for crude inventories this week: (street estimate for Wednesday)

    # Crude: UP 2.0 mm barrels
    # Gasoline: UP 1.5 mm barrels
    # Distillates: DOWN 2.0 mm barrels

    Last week I suggested that the warm weeks are when you see the home tanks get restocked and this week we’d see a larger distillate demand number, probably goes for next week as well.

  130. 130
    zman Says:

    BEXP – looks like a lot of people are looking for a pr any day now. We are currently below the last two big IP well releases on the stock due to valuation downgrades. This central well is probably a fairly safe bet for a big IP, the other well is more of a gamble. Anyway, if they resume announcing 2,000+ BOEpd wells as routine I would be the stock resumes its march higher. I continue to own the stock and some worthless high strike $17.50 calls but may add more on news.

  131. 131
    zman Says:

    Jat – HAL up 20 cents, not exactly a big beat but it beats that $2 discount at the open, lol.

  132. 132
    zman Says:

    Was mulling a trade in BHI for earnings tomorrow, think I will wait. I don’t see how the macro hurts them near term in the U.S., comments from HAL were supportive of that at least. Reason to wait is market and the fact that initial reactions to earnings quarter to date have been sell and then recover.

  133. 133
    zman Says:

    ZTRADE:

    MMR – Sold 1/2 (10) of the MMR $15 Feb calls for $1.60, up 161%. I continue to own the other half of these plus the $17.50s.

  134. 134
    RobBanks Says:

    Z- I’m gonna shelf the long puts idea for LINE. Altho their distribution coverage is a little thin, they have shut-in production from their last acquisition that can be brought on line (or maybe they already have done so, 10mm cfe/d), and an acquisition that should close next week. That acquisition will close just in time to make a full contribution to the Q1 dividend.

    So while there may be a secondary soon, there may also be a dividend increase announced at the same time, limiting the short-term downside.

  135. 135
    zman Says:

    Rob – hear ya on that. I’m just not smart enough to time it right. LINE had better coverage, something like 1.3x to 1 when I bought in, now its little better than even if memory serves. Last I looked at VNR it was close to 1.7x to 1. I started talking about it at 17 and change and it went to $23 before I had bought any and I still have not, but I think that one has a good chance of upping the distribution by a significant amount this year. I’d bet any increase from LINE is smallish.

  136. 136
    RobBanks Says:

    Agreed. I think LINE figures it can run thin coverage because of its great hedges. Q3 report estimated Q4 coverage would be 1.0x. Hmmmm….maybe no increase after all.

  137. 137
    BirdsofpreyRcool Says:

    CRT update on EXXI — Big Stuff on the horizon…

    http://imageserv.blifax.com/images/logos/MarKes664/filelib_13191/EXXI_Update_01-25-10.pdf

  138. 138
    zman Says:

    AAPL – looks like giant top and bottom line beats. Bet no one talks about a windfall profits tax on that.

  139. 139
    zman Says:

    AAPL $3.67 vs $2.08 expected on revenue of $15.68 B vs $12 B expected.

  140. 140
    jat Says:

    CXO secondary.

  141. 141
    zman Says:

    CXO showing a decent sized bump in their reserve revisions due to the SEC rule changes. That helped drive a wild looking reserve replace figure of 780%. Makes one wonder if reserve growth, especially among the little guys is going to mean much this year beyond what would be expected from production growth.

  142. 142
    BirdsofpreyRcool Says:

    Moody’s just upgraded EXXI’s corporate debt rating…. to Caa1. I think that is low, but Moody’s likes to see energy companies get much larger, before they get to move up much on the ratings scale. Anyway, it’s an upgrade and a move in the right direction.

  143. 143
    RobBanks Says:

    BOP – does CRT have an opinion on IOC?

    TIA

  144. 144
    BirdsofpreyRcool Says:

    Rob — checked CRT’s universe of energy companies covered. IOC is not listed. It was worth checking out, tho.

  145. 145
    RobBanks Says:

    Thanks for checking!

  146. 146
    Paul in Kansas City Says:

    On AAPL everyine is going to handwring over the accounting changes. Real Money will have some decent commentary in this in my opinion.

  147. 147
    cargocult Says:

    BOP-thanks for that nifty report on EXXI.

  148. 148
    bill Says:

    ty as well bop

    bloomberg the mayor not a fan of ng

    http://www.firstenercastfinancial.com/e_news.php?cont=35306

  149. 149
    BirdsofpreyRcool Says:

    cargo — EXXI… yeah… i like the part where he assigns $3/share of NAV for every 1T of recoverable reserves at Davy Jones. That number could get big. Offset is that we won’t have reliable production estimates until the end of this year.

  150. 150
    bill Says:

    ng stuck in a trading range

    http://www.firstenercastfinancial.com/index.php?cont=35298

    More rigs coming back..

    Maybe the producers need to get hit on the head twice before they cut back producing hands over fist.

    CHK blinked and hedge more ng for 2010

  151. 151
    cargocult Says:

    The water supply for 5 million+ people might be as important as ng exploration.

  152. 152
    elijahwc Says:

    Howard Marks: Howard Marks of OakTree, one of two best debt investors ever (the other being Dan Fuss @ Loomis Sales, and yes Bill Goss doesn’t even belong in the room with these two) has his market letter out on this site. It’s wonderful and of relevance to those considering what to do in an inflationary enviroment.

    http://www.marketfolly.com/

    How To Play Inflation From Oaktree’s Howard Marks

    Read more: http://www.marketfolly.com/#ixzz0dfl87da6

    Read more: http://www.marketfolly.com/#ixzz0dfl87da6

    Sorry, I’m so late in the day checking in with this but thought it might slip my mind tommorrow

  153. 153
    BirdsofpreyRcool Says:

    elijah — thank you for sharing

    (I luvvv your comments about who’s the Best… totally agree. Gross is a govt bond trader at heart… the other two have to actually understand company-specific issues).

  154. 154
    cargocult Says:

    Any thoughts on this commentary? Maybe in tomorrow’s post?

    We feel that the overall the oil market is headed down to the$40 a barrel handle over the next few months but at the same time you have to be careful and respect the wide daily trading ranges.

  155. 155
    zman Says:

    Bill – I think NG should be stuck in a trading range for a few months at least. Going to tack declines and lower than expected trough storage to support it nrth of $6.

    Cargo – I agree with the water supply being important, more important than NG exploration. I just don’t agree that NG fracking or exploration for that matter is going to hurt the water supply. Too much fear and loathing and not enough science in NY’s actions.

  156. 156
    zman Says:

    And for 154

    I think they are absolutely wrong. It would help to know who said it and at least their mindset on the global economy. I suspect it is someone like Phil Flynn.

  157. 157
    zman Says:

    Cargo – I’ll have more comments in the morning post and thanks for asking.

  158. 158
    cargocult Says:

    Yes, Phil Flynn who I don’t normally read but stumbled upon from another post.

  159. 159
    cargocult Says:

    I hope you have a treadmill close to your computer.

  160. 160
    zman Says:

    Re 158 – I figure, more comments tomorrow.

    Re 159 – nope, why?

  161. 161
    zman Says:

    Anyone know Madison Williams? Put out a Hold on BEXP after the close, late tonight?

  162. 162
    BirdsofpreyRcool Says:

    Madison Williams is the old SMH Energy Group (Michael Bodino and friends). They are usually pretty good. I don’t see the report, tho. Should get it in the morning.

  163. 163
    zman Says:

    Thanks BOP

  164. 164
    zman Says:

    If anyone notices that report in the morning it could case a little depression giving me an opportunity to buy in before their next set of news, much like JPM’s downgrade did a few weeks back.

  165. 165
    BirdsofpreyRcool Says:

    Futures looking a little ugly on China-slowing-growth concern. The Aussie and NewZealand dollars are down (commodity-driven economies, tied to Asian growth).

  166. 166
    zman Says:

    And oil is giving back today’s gains in the overnight session so far on a small upward move in the dollar. Still think U.S. markets will move on Ben, SOTU, earnings, and ecodata in the U.S. this week.

    President proposing 3 year budget freeze.

  167. 167
    zman Says:

    Partial budget freeze:

    http://www.google.com/hostednews/afp/article/ALeqM5gDc399IIOYp9sSTxVeBd8C6sxDyA

  168. 168
    VTZ Says:

    Hahaha. Why the hell are they even talking about 250 billion over multiple years?

    Is this before or after the next stimulus package?

  169. 169
    zman Says:

    V – what I’ve written about it for the morning post:

    Just taking a time out to say take a look at that link above. Note that the story is talking about a three year program but they quote a 10 year number for savings of $250B. Laughable in my book since the deficit is set to be 1.5 Trillion with a “T” this year alone. This plan saves a whopping $10 to $15 Billion with a “B” starting in 2011. Also note which departments are likely to get hit: agriculture and energy and transportation. But wait, the administration just raised royalty rates to give the EIA a budget boost. Hmmm, I guess that money is going elsewhere.

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