Tuesday Morning – Groundhog Sees More Winter

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Market Sentiment Watch: Cautious. Energy led the market higher yesterday but the lack of significant volumes gave me enough pause not to add to February positions which have been beat up over the last couple of weeks. Natural gas traded higher on a combination of colder weather and short covering (best guess and comments I came across which were also probably someone's guess). The market itself took heart from a better than expect ISM number and closed at the high of the day, despite a cacophony of calls for the end of the run as we know it. This morning's economic front will bring pending homes sales data, car sales later in the day, and comments from  former Fed Chair Volker on his proposal to ban commercial banks from engaging in proprietary trading.  The real  economic meat will come at the end of the week with the payrolls data.  BEXP had a good pair of wells out after the close yesterday and speaks at the Credit Suisse Energy Summit today along with several of our other highly trafficked names (see Stuff section below).

Ground Hog Watch: 6 more weeks of winter.


In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today - BEXP, EXXI, APC
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $16,300
    • 48% Cash

  • Yesterday's Trades:

    • None

Commodity Watch

Crude oil rallied 2% or $1.54 to close at $74.43 yesterday with a firmer equity market and a weaker dollar. This was the third positive close for crude since January 11th. This morning crude is trading up $0.70, just above the $75 mark.

  • Early Read On Oil Inventories:(according to the Bloomberg survey, Platts shows a 1 mm barrel decline in crude stocks). 
    • Crude: UP 0.4 MM barrels - there is potential for a larger build here this week as Gulf Coast imports rally from a fog related slump in the prior week.
    • Gasoline: UP 1.25 MM barrels
    • Distillates: DOWN 1.15 MM barrels

Natural gas jumped nearly 6% or $0.30 to close at $5.43 yesterday. I'm fairly surprised by that in light of the less than bullish 914 data from Friday and the warmer than expected mid range forecast for mid February. DuPont posted stronger than expected results this morning potentially signaling a further recovery in industrial gas demand. This morning gas is trading up $0.07, blame the groundhog.

  • Imports Watch: 9.95 Bcfgpd last week, up 0.1 Bcfgpd from last year.

    • Canada: 7.95 Bcfgpd last week, vs 8.25 Bcfgpd last year
    • LNG: 1.6 Bcfgpd last week vs 1.2 Bcfgdp vs a year ago. The way this has been hinging on price, it seems that there is some amount of LNG anchored just off the U.S.

Crack Spread Update

Key Takeaways: Just watching, the VLO call was uninspiring last week.


Stuff We Care About Today

BEXP Announces More Big Bakken Wells; Updates Plans

  • Catalyst List strikes again and will be updated tomorrow.
  • Two more long lateral, 30 stage wells in Rough Rider with IP's of 3,540 and 2,513 BOEpd apiece.
  • Notably, the second well, the Owan-Nehring well helps to delineate BEPX's southwestern most acreage in its Rough Rider prospect area west of the Nesson Anticline.
  • Also notable, BEXP has a higher working interest in these two wells as they are not subject to the deal with USEG.
  • BEXP also announced IPs on a number of smaller working interest non-operated wells, primarily in Mountrail County.
    • Notably there is a 3,409 BOEpd IP that BEXP has 6.8% of. This is a WLL Bakken completion, as of yet undisclosed and would be their 6th largest completion to date in the Bakken.
  • BEXP's long lateral Bakken wells to date:

  • BEXP has five more wells either fracking or waiting on completion and another well drilling. We should get more details during their presentation today at Credit Suisse (9:35 am EST)
  • Their last well took 18 days from spud to TD, so like everyone else, they are seeing the wells get drilled significantly faster than just a few months ago (when the days to drill was in the 20s).
  • They continue with a 4 rig program and see bringing 4 gross wells on line per month in 2010.
  • BEXP also commented that more activity around their Rough Rider and Ghost Rider (Montana) is helping to derisk and prove up the plays.

 Credit Suisse Energy Summit Today

  • WLL - 9:35 am EST
  • NFX - 11:25 am EST


EXXI Reported 2Q10 Results - Roughly Inline

The 2Q10 Numbers:

  • Production of 20,900 BOEpd (68% oil)

    • this was roughly in line with thinking
    • 1Q10 production was 15,500 BOEpd
    • January production was 23,000 BOEpd
    • Current production is 26,000 BOEpd, with "productive capacity" of 27,500 BOEpd
    • End of February "productive capacity" is expected to be 30,000 BOEpd
  • Revenue of $124 mm vs $107 mm expected
  • Costs:
    • LOE: $18.23 / BOE
    • G&A: $7.29 / BOE, this number looks higher than usual but it may have some acquisition related items in it.

  • EBITDA of $66.3 mm vs $70 mm expected (Reuters), Bloomberg showed consensus at $67.5 mm. 

Highlights: Not much to go in the press release, production recovery from hurricane and other outages appears to be on track with prior comments, maybe a little bit soon than expected but nothing to write home about. Their comments on further data "cores and logs" at Davy Jones will put either zing or slouch in the shares today. Hopefully, they will run through their plans for the rest of their fiscal year as well.


Nutshell: Don't miss numbers right after a deal, it shows you can't guide the Street well. However,  really don’t think the numbers for this quarter matter all that much; if its a miss it’s minor. I think the more important stuff is the go forward and they are saving that for the call.

Conference Call: Today, 10 am EST.


APC Reported Ok 4Q Results.

Nutshell: I didn't see much to comment on with this one, especially not in it at the moment and both the press release and the operations update on their website appear to be solid if not unremarkable with plenty of previously announced highlights in the deepwater and onshore. Their conference conflicts with a number of other presentations today but I plan to circle back for the transcript later in the day.

Odds & Ends

Analyst Watch:

  • HK - UBS bumped their target $2 to $30.
  • APC - Lazard raises to Buy from Hold
  • XOM upped to Buy at B of A


189 Responses to “Tuesday Morning – Groundhog Sees More Winter”

  1. 1
    BirdsofpreyRcool Says:

    EXXI — Major i-Bank Debt Analyst Comments [nothing particularly earth-shattering… except I have no idea where they got their EBITDA estimate… it is probably the one that pulled the “consensus” too high]

    First Take: EXXI 2QFY10 results slightly below expectations on higher than expected costs

    1QFY10 EBITDA of $68 mm was below our $74mm estimate, driven by higher than expected G&A costs
    Production was 3% above expectations
    Realized pricing was 2% above expectations
    Total costs were 11% above expectations on higher than expected G&A and LOE
    Debt/boe fell to $15.43 from $16.16 and leverage fell to 3.8x from 4.1x last quarter
    Net debt of $796mm was above our $750mm estimate
    Production is currently averaging 26,000 boe/d (vs. 21,000 in 1Q); the company expects production to exceed 30,000 boe/d once hurricane-affected properties are restored
    Energy XXI is funding 14.1% of the exploration to earn a 15.8% working interest in the Davy Jones project
    Conference call Tuesday February 2 at 10am EST

  2. 2
    bill Says:

    >once hurricane-affected properties are restored

    what hurricane??, how long does it take to recover?? i hate that excuse

  3. 3
    bill Says:


  4. 4
    BirdsofpreyRcool Says:

    bill – the hurricane damage from Ivan took a long time to repair… there was a massive amount of work to be done. I know it sounds like an excuse, but it’s a real one.

  5. 5
    BirdsofpreyRcool Says:

    Happy Ground Hog Day!

    6 more weeks of winter — hurray!!

  6. 6
    andy Says:

    z – BEXP – WLL at same time??? if so, which one will u listen too, as i”ll listen to other one?

  7. 7
    john11 Says:

    Just a note Re BEXP I have them presenting at Credit Suisse conf on Friday at 7:35 mountain time.

  8. 8
    BirdsofpreyRcool Says:

    to add to #4… I like the fact that they are bringing on 3mBOE/d of additional production that was shut in for a coupla years. If you think about the timing, they “missed” selling all that production at lower prices. Plus, they got “business interuption insurance” proceeds to help cover the lost revenue. So, it actually works out for little EXXI.

  9. 9
    zman Says:

    EXXID – bid up slightly. MMR taking their time, which is typical for them, with any press release, if one is coming re Davy.

    BEXP – 18 days spud to TD, able to drill and complete a well in 1 month with 1 rig. My kingdom for KOG being able to pull that off. BEXP included a number of 30 day rates.

    I’ll be on the WLL call as you are right, thought it was odd but sometimes conferences have dueling presentation rooms. Thanks for figuring that out. BEXP is on Friday.

  10. 10
    zman Says:

    Analyst Watch: CRR picked up at Outperform with an $84 target at H. Weil. CRR, the proppant company, reports later this week.

  11. 11
    BirdsofpreyRcool Says:

    Both TT and HT out with daring market call today…

    TechTrader = 55/45 LONG. But that’s not a lot of conviction.

    HeadTrader = choppy mrkt with no catalyst.

  12. 12
    zman Says:

    WLL presentation starting now:


  13. 13
    BirdsofpreyRcool Says:

    Who tied a rocket to AEZ this morning??

  14. 14
    zman Says:

    Aside from BEXP, group opening flat to slightly red. EXXID marking time until their conference call. MMR trading a little redder on no release.

  15. 15
    zman Says:

    Re 13 – Brigham.

  16. 16
    BirdsofpreyRcool Says:

    z — thx

  17. 17
    BirdsofpreyRcool Says:

    OK… here comes the “choppy” part of the mrkt…

  18. 18
    zman Says:

    WLL presentation – just going through the yada, yada right now. Nothing new so far, in the post I did note that BEXP outted them on their 6th largest IP in the Bakken to date. Results there continue to consistently strengthen.

  19. 19
    zman Says:

    BEXP going for $15, old high is $15.70. I will very likely trade out of the $15 Feb calls soonish, leaving the $17.50 calls on the table in case it shoots higher.

  20. 20
    VTZ Says:

    Suncor getting hammered because of the former Petro-Can gas assets on their earnings today.

  21. 21
    zman Says:

    WLL presentation notes: 303 wells in Sanish ultimately, only 60 on now, not really new but notable. $5 mm well cost.

    Thinking Bakken EURs 750K to 1.0 MM BOE

    Three Forks Comment – Lewis & Clark – rig moves in in March, 9 wells 2010, recall they drilled a nearly 2,000 bopd IP well in November. …

  22. 22
    zman Says:

    V- saw that, was thinking soon on that one.

    WLL – adding acreage in the Bakken, won’t say where.

  23. 23
    Dman Says:

    GMXR up 7%

    Anyone know anything?

  24. 24
    zman Says:

    Switching over to the EXXID call, nothing new on WLL, all good there.

  25. 25
    jat Says:

    SU also soft on production guidance. Lotta noise with divestitures etc.

  26. 26
    john11 Says:

    09:41 ET 2/02/10 GMXR GMX Resources upgraded to strong buy from add at Capital One Southcoast – wires (pre-open)

  27. 27
    Dman Says:

    thanks John

  28. 28
    zman Says:

    Pending home sales up 1% for December.

  29. 29
    VTZ Says:

    RE: 25. Yeah, the noise will likely continue as well with more divestitures likely to come. Petro-Can’s gas assets will be Suncor’s piggy bank.

  30. 30
    zman Says:

    EXXID – “I can assure you there is more good news to come with this project” ~ re Davy Jones.

  31. 31
    zman Says:

    EXXID – likely to remain on the sidelines for deals, no need to sell down interests or sell equity to develop Davy Jones.

  32. 32
    BirdsofpreyRcool Says:

    HA!! won’t issue equity for DJ. Yep… lots of cash flow!

  33. 33
    zman Says:

    Still have CF left over after regular operations and ultra deep development.

  34. 34
    bloodystupidjohnson Says:

    SU: Time is on the side of true investors. If one bought SU at this price, and held it for a number of years, I don’t see how you could lose money in it.

  35. 35
    BirdsofpreyRcool Says:

    We are headed to a 20-handle on EXXID, on just these statements alone. Very strong CF statemetns.

  36. 36
    zman Says:

    EXXID – my sense is it trades higher post call. Financial review divergences were one time, like the G&A I had figured was deal cost. LOE to move back lower as well and given their oiliness, I’d bet its a slow drift. Should not be a surprise there.

  37. 37
    bill Says:

    exxid moving on ccall comments

  38. 38
    zman Says:

    Yeah BOP – Schiller was quick to say, forget about the quarter which we figured last night and I’d bet the analysts are ok with that as its not representative.

    Ops Update:

    Current 26,000

    Fastball – that’s NFX, repairs by April 1, should not hurt NFX very much, CVX had a line leak.

    Hurricane Ike repairs – mid Jan saw 1,075 bopd net of production return,

    Two more adding 3,000 bopd net by mid Feb

    Where to go from here …

  39. 39
    bloodystupidjohnson Says:

    BEXP: This company really surprises me. Lets face it, before the Bakkans, they were never know for their management and operational excellence. However, in the Bakkans, they hit homerun after homerun. It not that they have good wells, they have great wells. I find that turn around really remarkable.

  40. 40
    zman Says:

    EXXID –

    not a lot of activity between now and June, as capex was front loaded for their Fiscal year.

    Well hedged for 2010, will consider adding more.

    Nothing on Davy on the formal comments.

  41. 41
    bill Says:

    20 has been achieved

    congrats bop and others!

  42. 42
    BirdsofpreyRcool Says:

    “Significant amount of free cash flow.” Best sentence in the English language.

  43. 43
    zman Says:

    BSJ – Me too. I was never a fan and I lived in the same town, but didn’t cover them. We always thought of them as the keystone cops of E&P.

  44. 44
    zman Says:


    Cored 30 feet, 25′ recoverd ratty sands, siltstone. 2 to 3 weeks from perm / porosity data.

  45. 45
    zman Says:

    MMR getting dragged up by the move in EXXID. I may take that swing position back off as I could see some negative analyst comments re 44.

  46. 46
    jat Says:

    Re 34, I agree. I just feel like every SU quarter since the dawn of time has been along the lines of “well, this one was messy, but look what we’ll get to in a few quarters!” And down a few percent on the day /flat is a good result. Don’t get me wrong, I am a LT holder and bought shortly after the PCA merger which saved the business and transformed the cash costs. You do need to be patient with them however.

  47. 47
    BirdsofpreyRcool Says:

    EXXID — face it… no incremental info from the core. It’s a non-event. Didn’t core in the productive zone. Too bad, but that’s what happens when you core section you haven’t drilled yet.

  48. 48
    zman Says:

    Davy Jones – next thoughts …

    SLB RFT tool should allow them to get pressures and samples, will let them tell how much liquids they have with the gas (condensate), also some permeability data. Mentioned having more detail for the March 4th analyst meeting.

    Back drilling, did 150 feet last night, so we are not far from td at 29K, no mention of where there are now, Wilcox likely, heading towards the Cretaceous.

  49. 49
    zman Says:

    Great question about seeing a well with this kind of porosity without permeability.

    Schiller said they are seeing a nice spread on the resistivity, up to 10 feet out, and you don’t see that kind of spread if you have tight rock.

    Preparing people for the smaller tubing this well will have a smaller rate, since it was a re entry, than will the development wells (expected to be 100 MM/d each given the pressure).

  50. 50
    zman Says:

    This would be a new closing high for MMR for this Davy inspired move.

  51. 51
    VTZ Says:

    RE 34/46: The bottom line is that at some point down the road they are going to have 500 kbbls/day and eventually 1 Mbbls/day from 300 k now and oil price will be xxx $/bbl. It’s not hard to do the math and they have no exploration risk.

  52. 52
    zman Says:

    BEXP through $15

  53. 53
    zman Says:

    MMR’s Blackbeard East to spud mid April, 6 to 9 month well, don’t know EXXID’s WI%, you BOP?

  54. 54
    zman Says:

    ATW drifting up into their quarterly release, sticking with my $40 strikes, may add a few of the $35s or $40s after the numbers are released.

    EOG – looking to add to my $100s prior to Feb 10 release.

  55. 55
    skimo Says:

    no big equity dilution deals for EXXID sounds great

  56. 56
    BirdsofpreyRcool Says:

    EXXID — love the fact they intend to protect the stock price. Will only do acqnts with debt and free cash flow. This is just wonderful to hear. Their stock is CHEAP, and they know it. Think 2010 will be a nice yr for EXXI.

  57. 57
    BirdsofpreyRcool Says:

    skimo — great minds! agreed.

  58. 58
    zman Says:

    Timmeh speaking in front of Congress.

  59. 59
    BirdsofpreyRcool Says:

    #53 — having to listen with just one ear… missing some info. DK the % ownership there. Will find out.

  60. 60
    zman Says:

    ROSE looking ready to move up again.

    BOP – no worries BOP, I can flip to it…

    Crude up $1.45 to 75.90, wow, two green days in a row.

  61. 61
    BirdsofpreyRcool Says:

    Big, fat, continous sands. A geologist’s dream formation.

  62. 62
    Wyoming Says:

    RFT is dead, Repeat Fishing Tool. New (Relatively) tool is the MDT, Modular Dynamic Testing tool. Takes Samples, reads pressures, has in-situ fluid analyzer ….

  63. 63
    Dman Says:

    Z – could you expand on #45 second sentence?

  64. 64
    zman Says:

    Why Blackbeard East – lower miocene target, not Wilcox, like the seismic, this is the more traditional deep shelf target, not the ultra deep.

    After that they will be probably looking at the ultra deep Lafitte prospect. I thought it would be John Paul Jones, hmmm.

  65. 65
    zman Says:

    Damn – I sold half my MMR $15s for $1.60 and then bought it back for $1.10, at the time calling it a swing position (10 calls out of 20), now its back to $1.55 to $1.70 or so and I am thing to maybe tap back out and trade that again.

    Wyoming – I’m just using his words. I have a lot of faith in Schiller as I was around when Nansen and Boomvang were dreams, not the 100 mm barrel cums that APC put in their press release last night. Anyway, he’s probably just using the old acronym.

  66. 66
    zman Says:

    EXXID – test on this wellbore they expect 30 to 40 MMcfepd, limited by 3.5″ tubing. With the normal size of a development wellbord, they’d be at 4.5″ tubing, so bigger flow. Anyway, that’s probably 9 to 12 months out.

  67. 67
    zman Says:

    Jerome – does a $15 print make you more bullish on the BEXP chart?

  68. 68
    Dman Says:

    Z – what do you think of HK here?

  69. 69
    dij Says:

    Anyone have old priceing for EXXI? Current 19.8 is old resistence at about 3.96?

  70. 70
    elduque Says:

    Listening to EXXI, what do you think the stock should be trading at?

  71. 71
    bill Says:

    70- 40 in a few years with success at davy jones

  72. 72
    bill Says:

    short term 25

  73. 73
    dij Says:

    Oh, nevermind re 69. I see fidelity’s charts are updated. The adjusted 1.20 high was 20.05

  74. 74
    zman Says:

    Dman – watching it, get back to you on that in a bit, getting Rodney Dangerfielded after yesterday’s press release and a upgraded target today and lots of upgrades by the Street of late, so maybe it has a size seller or more than one gunning it down here. If the market firms I think its a move back into the $26 level soon.

    Eld – pretty tough to say, higher, but where, CF multiple needs to expand for the shelf guys and this one should be at a premium due to the potential for a big pile of probable reserves at Davy. I’ll put a comp table in the post tomorrow.

    NFX going to see an add by me there in a minute, new presentation up for the CS energy conf.

    EXXID – marginal utility of the call has cratered, good call, time to end it.

  75. 75
    BirdsofpreyRcool Says:

    bill — agree with your short and long-term EXXI price targets. thx.

  76. 76
    zman Says:

    From Nicky re S&P

    Resistance is at 1097 and then 1103/05. I am thinking this is the A leg of something. Still not sure whether its a iv or ii. The A leg should be getting close to completion and then maybe we see a pullback to the 1085 level.

  77. 77
    Dman Says:

    EXXID – Analysts still asking Q’s?

  78. 78
    BirdsofpreyRcool Says:

    ending now

  79. 79
    zman Says:

    NFX – presentation at CS in 20 minutes, mentions the next 6 granite wash wells as currently completing, results this month. They report on the 17th, just before expiry.

    I will be adding some Febs and Marchs soon.

  80. 80
    BirdsofpreyRcool Says:

    Something to keep in mind on these ultra-deep wells… it’s not like they are “high-deline rate, shallow GoM wells.” It is expected that something like DJ would see wells produce about 75% of their potential production at a flat rate before seeing any decline. Wonderful, glorious, continuous cash flow, from those kinds of wells. Don’t have to run as fast, just to stay in one place.

  81. 81
    bill Says:

    short term catalyst:

    mcf bouncing off recent lows

    They report next monday or tuesday and im looking for this light trading stock to bounce on better than expected q2 earnings and operational updates. Trading at 50 , worth 80 imho.

    est was raised from .92 to 1.06 which i think is too light. My est is 1.25.


    ng up 1 % other ng stocks flat

  82. 82
    BirdsofpreyRcool Says:

    Actually, today seems to belong to BEXP and AEZ. Nice job, to those who are in those names. I missed the boat there.

  83. 83
    zman Says:

    Thanks BOP – Can’t blame you on the BEXP, it is a pricey beast.

  84. 84
    zman Says:

    Anyone know when Volker speaks?

    Other than that we have car sales which are expected to be good which might force a move on 1100 before days end. Anything else?

    NG creeping up 4 cents in a damn odd move between yesterday and today, not that I’m complaining.

  85. 85
    zman Says:

    NFX presentation in 5 minutes.

    Interesting slide 15 in presentation on the Alberta Bakkan:


    They are showing 5 wells by industry in the area. West, 3 of these are ROSE, wondering who the other two are, maybe privates, maybe KWK?

  86. 86
    zman Says:


    NFX – Added (10) Feb $55 calls for $0.95 with the stock at 52.07 and their presentation about to begin at Credit Suisse.

  87. 87
    milepost_43 Says:

    Volker, Geithner, Orszag testify Tues……… —

    Former Federal Reserve Board Chairman Paul Volker will testify Tuesday at 2:30 p.m. before the Banking panel on the so-called “Volker Rule.”

    Treasury Secretary Tim Geithner will testify three times this week on the administration’s new budget. Geithner will testify Tuesday morning at 10 a.m. before the Senate Finance Committee, Wednesday morning at 10 a.m. before the House Ways and Means Committee, and Thursday at 10 a.m. before the Senate Budget Committee.

    White House Budget director Peter Orszag has an even busier week before Congress. He will testify Tuesday at 10 a.m. before the Senate Budget Committee and at 2 p.m. before the House Budget Committee,

  88. 88
    zman Says:

    86 brings my position in the $55s to 20, average cost is about $1.10

  89. 89
    zman Says:

    Thanks milepost

  90. 90
    scoop006 Says:

    Z, Don’t you think its time to sell your BEXP Feb. $15C’s now?

  91. 91
    BirdsofpreyRcool Says:

    HeadTrader hearing that someone bought 120k March 20 puts on the VIX…

  92. 92
    zman Says:

    NFX Notes:

    Getting oilier, paying down debt.

    Saluki prospect in first half in the international program needs to be watched.

    Looking at some divestments in the Gulf Coast area.

    Scoop – yep, probably so, feels like a “what’s strong gets stronger day” to me and that would be at the top of the list for getting stronger as long as the broad doesn’t crap out. I have lunch out today and will likely punt that one before I go.

  93. 93
    bill Says:

    sandridge with a new presentation


  94. 94
    zman Says:

    NFX notes:

    lot of talk on the Woodford as always,

    Notable that 2009 they thought EUR was 5 Bcfe per well, now thinking 5 to 7 Bcfe.

    Thinking that you get about 1 Bcfe per completed lateral in the Woodford (so 5 to 7,000 foot laterals this year).

  95. 95
    zman Says:

    BEXP at 15.73 just took out the old high. Wonder how many more analysts want to come out and downgrade it now.

  96. 96
    zman Says:

    NFX – once they figured out the Granite Wash play, the first horizontal well averaged 30 MM/d for the first 60 days. That’s just monster, didn’t know it held up that well, just knew the first 6 wells had an average IP of 22 MM/d. They will announce 6 to 8 more of these week after next.

  97. 97
    skimo Says:

    fyi http://seekingalpha.com/article/185979-the-century-for-natural-gas-what-this-means-for-investors?source=yahoo
    soft piece but nice message.

  98. 98
    BirdsofpreyRcool Says:

    EXXI — someone just checked on current short position in the stock. Looks like the ones who were going to cover were done last week. Makes sense. Once the reverse split didn’t go the way they thought, time to exit the trade. So, price move is on long-buyers. Good stuff.

  99. 99
    Nicky Says:

    Morning all.

    There is an inverted head and shoulders target of 1103/05 on the SPX if it can push up there on this run.

  100. 100
    zman Says:


    BEXP – Sold half of the BEXP Feb $15 Calls for $1.00, up 221%, after an 11% run in the stock. I continue to hold the other 10 calls and some $17.50s just in case it runs further.

  101. 101
    zman Says:

    Thanks BOP and Nicky

    NFX call solid, uneventful.

  102. 102
    zman Says:

    NFX – last comment, not much to add on Alberta Bakken, Q&A hard a question about them having shut in and rested some wells, think he was talking about some of the Granite Wash wells, and having them come back at significantly higher rates. Will go back and relisten to the Q&A when they put up the replay.

    ROSE inching up, now up 3% at 21.73, old high at 23.10. Results there any day up through the 4Q release (maybe late Feb/early March).

  103. 103
    zman Says:

    Ford January sales up 35%.

  104. 104
    bloodystupidjohnson Says:

    For NASCAR fans — since GM supplies Chevy teams with support, and us tax payers have supplied GM with cash, does that mean we (US taxpayers) owe a part of those Chevy teams? — lol

  105. 105
    bloodystupidjohnson Says:

    Ford is in the sweet spot — trouble with Toyota quality (did anyone every think people would be talking poor quality and Toyota in the same breath?) bail out back lash against GM and Chrysler, and new products.

  106. 106
    zman Says:

    I figure the Tesla IPO runs like GOOG did. Expensive price point but people love those and the price will come down with scale.

  107. 107
    zman Says:

    MMR walking higher here, $16.40 would be a very good closing level for the name.

    Missed my low entry on WLL, still looking, but it’s up on oil up $2.20 now.

    S&P at 1,100.

    Coals not up yet, still red for them.

  108. 108
    BirdsofpreyRcool Says:


    Stocks extend their rally for the second consecutive session (first time SP500 has been up back-to-back days since 1/13-14). A handful of pos. earnings releases (see LXK, DHI, EMR, CMI), along w/developments around the “Big 3” overhangs (see below) helping sentiment. Encouragingly, whereas Mon’s strength for the most part came on the back of short covering, today the buying participating is broadening a bit (so a bit more vanillas picking spots on the long side). That said, similar to Mon, its mostly a “sellers strike” that is permitting stocks to levitate (i.e. the large vanilla sellers and shorts that hit the market last week haven’t showed up Mon and so far Tues).

    Some clarity/developments on three of the market’s 3 biggest overhangs: 1) Greece – the EU tomorrow morning is expected to bless the Greek budget proposal; investors think this could remove Greece as a major sovereign risk story ; 2) Washington – people feeling a bit more comfortable w/headlines out of DC. The Obama budget laid on the table much of president’s policy proposals for the next year, removing this as an overhang. The 15bp bank tax is still being pushed, although adjustments are being made in response to industry feedback (i.e. exempting repos, as was discussed in the FT this morning). The “Volcker Rules” will be discussed at a hearing today (2:30pmET), but the market is starting to think this will be the worst case scenario and any final law will prob. be more watered down than what is currently being talked about (also – given Volcker already published an oped and his views on this are well known, there prob. won’t be anything too incremental this afternoon). The Geithner budget testimony (has been ongoing all morning) has been more conciliatory in tone. Away from Washington but in a similar vein, the decision in Australia this morning (when the RBA unexpectedly stayed on hold) is relieving some market worries that central banks would embark on a tightening campaign irrespective of market events. 3) China – there continues to be reporting out of China each morning about actions taken by the government to engineer a cooling in economic growth, but the market is hoping for this headline risk to cease w/the Chinese New Year (the week long holiday starts 2/14).

    Equity Sectors – health care, capital goods, energy, and telecom services climb 1% and lead the market; utilities, materials underperforming (but both still in the green); financials trading inline w/SP500 but SP Bank index flat-to-dwn. SP500 Industrials are the market’s best acting group, up >1% (within that, capital goods are up 1.5%). EMR +8% and CMI +7% after earnings and leading the group higher. Homebuilders are up >4% on back of DHI’s earnings (DHI is up 9%). Within transports, airlines are strong, up 2% (CAL kicked off monthly RASM reporting last night – CAL is up 2%). Energy stocks extend their rally from Mon, w/the group up another ~1% (DNR is up 5% and best performing stock in the group). Materials are lagging – AA climbs 2% on the Citi upgrade but DOW is off 2% after earnings….DOW is well off its lows though). Tech lagging (but still up on the day) as strong moves in LXK, WFR are offset by declines in AMD, CPWR, QCOM. Financials are pacing inline w/the SP500, but the SP Bank Index is actually flat-to-down (for the first time in a while, the regionals are for sale as money rotates into the larger money centers/brokers).

    Best Performing SP500 stocks (From Bloomebrg): DHI, LXK, EMR, CMI, WHR, PHM, EK, S, DNR
    Weakest performing sp500 stocks (from Bloomberg): DOW, ETFC, JEC, MEE, PCS, CNX, BTU, AMZN, CBS, WYNN

    Earnings out this morning: HSY, AMSC, COCO, MPEL, UPS, LXK, AMB, CPO, ADM, TNB, PNR, GRA, MAN, AXE, BEAV, ADP, EMR, SMG, ARM, DHI, DOW, CMI, PBG, TDW, NVO, MRO, Munich Re, BP, ARMH, SU, WHR

    Commodities: Commodities are stronger across the board as equities move higher and the dollar weakens. Oil is up over $2, nearing $76.50 and trading at its highs of the day. Natural gas is also stronger, up about 1 pct to $5.50. Gold is up over 1%, near $1118 and at its highs of the day. Copper is lagging today, up just 0.2% and near its lows of the day amid continued worries out of China.

    FX: USD (DXY) is off 0.25% today and trading at its lows of the session. The dollar is off 0.2% to the Euro, flattish against the Pound, and off -0.2% against the Yen. The Euro is flattish against the Yen.

    Corp Credit: Corp credit is performing slightly below the tape as HY gains 7/16 of a pt and IG spreads narrow ¾ of a bp.

    Treasuries: Treasures are little changed today as 2s yield 85 bps and 10s stay at 3.65 pct. The 2-10 year spread stayed unchanged at 280 bps.

  109. 109
    baylor3217 Says:

    KOG with a nice move the past 4 or 5 trading days.

    Sure wish SWN would get back in the game or I have a couple of scuds waiting for me on 2/19.

  110. 110
    zman Says:

    Baylor – SWN moving higher would save me a bit of a headache this expiry but I don’t see a fundamental reason for it to move up without a group move, weather not cooperating, timing of the 4Q results after expiry, so unless it’s the broad market or group based or technical I’m not holding my breath on the $55s at all, maybe the $50s have a shot at a little life in coming days, though.

  111. 111
    zman Says:

    Jumping out for lunch, back in an hour, keep the market up for me.

  112. 112
    baylor3217 Says:

    yeah I hear ya Z. I got a little greedy plowing some profits into SWN recently and will probably learn a good lesson this time around.

    Every trade is a new opportunity to learn.

  113. 113
    baylor3217 Says:

    a 5-bagger in BEXP didn’t hurt though but the losses elsewhere caused me to pull the rip cord and lock in the profits.

  114. 114
    Jerome Blank Says:

    #67 BEXP redrawn chart and technical comments…if BEXP breaks out on the close today I will reframe the chart, this chart assumes that resistance holds on the daily…

    No votes??, …not feelin’ the love…


  115. 115
    sunshine Says:

    Voted 🙂

  116. 116
    BirdsofpreyRcool Says:

    voted. thank you!

  117. 117
    skimo Says:

    voted-keep up the great work!

  118. 118
    ratberto Says:

    I voted

  119. 119
    bondbuddha Says:

    Voted, thanks for your excellent work

  120. 120
    john11 Says:

    Voted, awesome charts, thank you!

  121. 121
    DrLink Says:

    voted, thanks!

  122. 122
    elijahwc Says:

    🙂 voted thanks

  123. 123
    BirdsofpreyRcool Says:

    MMR doing it’s Taco Bell imitation now… running for the border.

    Wonder if we get new news any time soon? There was another 400 ft drilled… could be some additional pay zones.

    Hearing they are still drilling… but that it’s going quickly. That is something that happens when you are in porous sands. More good stuff.

  124. 124
    Nicky Says:

    1101.75 spx is a 38.2% retrace of the fall.

  125. 125
    BirdsofpreyRcool Says:

    Nicky — so does that mean we stall here? Or if we pierce that ceiling, we are headed higher?

    Oil seems to be on a tear. People are talking about manufacturing and the positive ISM report… but I have a sneaking suspicion that rumblings from the Middle East are pushing oil prices up too.

  126. 126
    Jerome Blank Says:

    #115-#122, I’m feelin’ the love again!….thank you, sunshine, BOP, skimo, ratberto, bondbuddha, john11, DrLink,elijah..

  127. 127
    reefguy Says:


  128. 128
    Patipati Says:


    I voted; really appreciate your charts!

  129. 129
    choices Says:

    voted-thanks for your work.

  130. 130
    zman Says:

    Re 123 – yep, good point.

  131. 131
    Popeye Says:

    I voted but did not see HK. 🙂

  132. 132
    zman Says:

    Crude up $2.70 at $77.11. I’m thinking we see that snapback on imports tomorrow, could be a disappointment to some on the crude inventory headline number. Dollar looks to be rolling over here.

  133. 133
    BirdsofpreyRcool Says:

    Hearing “aye, aye, aye, mee, mee, mee” on CNBC right now. POTUS must be on.

  134. 134
    VTZ Says:

    Gold was a leading indicator for the dollar rollover again.

  135. 135
    zman Says:


    ATW – Added (5) Feb $35 Calls for $1.85 (on the mid and easily) at $35.70. The report earnings after the close tomorrow. I continue to hold the currently near worthless $40 strikes as well.

  136. 136
    Jerome Blank Says:

    RE: #127, 128, 131, thank you Patipati,choices,Popeye…I’ll try to add back HK…the problem is keeping the JAVA charts accurate and updated all the while trading at the same time…it can be a challenge to update everything at night…I also wanted to try and get back to HERO…CPE and others

    As I write ROSE looking much better today, back above the 20 SMA…

  137. 137
    zman Says:

    Jerome – thanks for all you do. You asked me the other day about the time it takes and I will reiterate, only do what you can man, I would not update the charts every day, just not necessary.

  138. 138
    zman Says:

    Driving gasoline higher by almost 5% today and thereby oil as well:

    Fire at VLO refinery in Quebec.


  139. 139
    tomdavis12 Says:

    Z: Where do you think some surprise declines in NG production can come from? Canada? In ’03 & ’04 even when CHK, SWN & XTO were showing 30% production increases, the big boys XOM, CVX & BP were showing good 10%/yr declines. Have not seen too many declining places.

  140. 140
    zman Says:


    MMR – Sold 10 (half of my position) of the MMR Feb $15 calls for 1.75, up 59% since entry last week. These are the ones we have been swing trading on the moves in MMR. I continue to hold the other 10 and the $17.50 strikes and will be looking to roll to March with my next purchase to get ready for news at Davy Jones, Blueberry Hill, and Hurricane deep, all expected in the next 3 to 4 weeks.

  141. 141
    zman Says:

    Tom – In the U.S. near term I think the Gomex has that shot and I think we see revisions at Wyoming taking their production back down. Texas should flatten in Dec-Jan but then start dropping again, best guesstimate. As to Canada, I expect WCSB will decline given their lack of activity and Horn River is not the answer to that riddle.

  142. 142
    tomdavis12 Says:

    Z: Are you still in a somewhat rangebound camp for NG? Wonder what the Aubrey call will be.

  143. 143
    zman Says:

    Tom – Yes, very much so. I think he’s there too.


    ROSE – Added (10) March $22.50 calls for $1.50 with the stock just over 22.15. I continue to own the Feb $22.50s and the common.

  144. 144
    RMD Says:

    Heard APC for PXP rumor. My uninformed reaction is PXP could be split up and parts sold = good. APC likes to be the operator = bad. FWIW.

  145. 145
    zman Says:

    RMD – why do you say bad on APC being the operator?

  146. 146
    zman Says:

    APC for PXP makes some degree of sense as APC wants to ramp exposure to shales, although I don’t know about their desire for California stuff, that would be an odd move for them. I’d much rather see them take out an HK.

  147. 147
    VTZ Says:

    SU at low of the day, getting abused. I’ll probably take a piece tomorrow if they get beat down again with oil up.

  148. 148
    zman Says:

    NFX only a buck away from its old high.

    Couple of catalysts I thought up over lunch for SWN. 1) playing catchup. The other gassy names have fared better here and are higher multiple (though also better hedged), that could prompt a bounce). 2) EOG reports next week and may/should have interesting things to say in their E.Texas stuff where SWN is now getting busy. That last could help HK as well.

  149. 149
    zman Says:

    Thanks V, keep on it.

  150. 150
    zman Says:

    Coal names turned before I got back from lunch from my prior comments. Going to take small position in WLT for the Thursday call.

    PXD reports tomorrow, I’m still holding my $50 strikes there.

  151. 151
    zman Says:

    From the last WIOWIO on ATW:

    # Small rig portfolio (9 rigs), so each unit is significant to the whole
    # EPS growth in the sector is unmatched through 2012 as they add 2 more deepwater newbuilds.

    * 2009: $3.89
    * 2010: $4.14
    * 2011: $4.83
    * 2012: $6.12

    # Near term EPS upside could come from the return of 1 of their warm stacked rigs to service; we should find out about that on the 1Q call on Feb 4.
    # I own some Feb calls here and am likely to slowly add more prior to earnings.

  152. 152
    zman Says:

    RMD – send me your phone number.

  153. 153
    zman Says:

    I’ll have a new Catalyst List out tomorrow.

  154. 154
    RMD Says:

    #145 it hurts the merger chances (bad for the liklihood of a merger) if APC wants to be the operator and PXP operates very little.

  155. 155
    bill Says:

    exxid and mmr up 5 %, pxp up peanuts

    cheap way to get davy jones exposure

  156. 156
    zman Says:

    RMD – ahhhsoooo. Misunderstood you, true enough.

    NFX within a stone’s throw of that high now, wish I were a TA guy as I’d be pretty happy with that chart.

    ROSE – nice move there, am just moving into the longer dated in case they are slow. Heard they told that little paper reporting well production numbers to stop it.

  157. 157
    BirdsofpreyRcool Says:

    bill — #155 funny you should mention that… just picked up a few PXP shares.

  158. 158
    BirdsofpreyRcool Says:

    PXP presents at CS on Thurs, around 8:30am EST… will be webcast.

  159. 159
    zman Says:

    WLT just ran away from me. Probably turn to ANR tomorrow.

  160. 160
    zman Says:

    Hey BOP – do you have the full schedule for that conference?

  161. 161
    zman Says:

    Good to see the market closing near HOD.

    Beerthirty, here’s to a bigger than expected draw on distillate stocks in today’s API numbers.

  162. 162
    BirdsofpreyRcool Says:

    If things continue to heat up in the economy and/or the Middle East, I want to be positioned in some nice, warm, oily names. Like EXXI, KOG, and PXP. More “long-term positioning” than short-term calls.

    I thought you had the sched, z. I’ll look around.

  163. 163
    zman Says:

    BOP – what I got was a link that didn’t work, thanks for looking. SU got beaten into the close, was down 4% much of the day, fell to down 5.3% at the close. Talk about an oily name.

  164. 164
    zman Says:

    Bill – ATPG was on the tape just before the close with an update.

  165. 165
    nifkin Says:

    ATP Oil & Gas updates production/operations ($15.89 +$0.37)
    The company announced a recent production increase in 2010 of approximately 32% over Q4 2009 and a reserve replacement ratio of appx 376% for 2009.
    The company’s current producing rates are averaging between 17.0-19.0 MBoe/d, an increase of appx 32% from production during Q4 which averaged 13.6 MBoe/d.
    The increase is primarily due to a recompletion at Mississippi Canyon Block 711.
    Additional contributions to Q1 2010 production levels are expected at Canyon Express and Telemark.
    Estimated production for 2009 was 3.4 MMBbls and 15.1 Bcf or approximately 5.9 MMBoe
    Oil continues to comprise the majority of ATP’s production volumes representing 57% of total 2009 production volumes.
    Through performance driven volume revisions, extensions and discoveries, the company added 22.1 MMBoe of proved reserves during 2009.
    The company estimates year-end 2009 proved reserves of 135.2 MMBoe and a PV-10 value of $4.0B while year-end proved and probable reserves are estimated at 211.8 MMBoe and a PV-10 value of $6.4B using strip prices as of 31-Dec, 2009.

  166. 166
    elijahwc Says:

    Really informative/interesting article from Oilweek Magazine

    The Fab Five: Why the Horn River, Montney, Cardium, Lower Shaunavon and Bakken plays give producers reason for optimism

    Read more:



  167. 167
    zman Says:

    API – big build as I suspected, the snapback in imports no doubt. But drawdowns for both products should help with the headline crude pain.

    Crude: UP 4.7 mm bbs
    Gasoline: DOWN 1.159
    Distillates: DOWN 1.022

  168. 168
    jat Says:

    API out

    Crude build 4.723
    Gasoline down -1.159
    Distillate down -1.022

    Crude Imports jump 322 from 8.149 to 8.471
    Refinery utilization flat at 78%

  169. 169
    zman Says:

    PXD on the tape … deets in a bit.

  170. 170
    zman Says:

    Thanks Jat, Eli.

  171. 171
    zman Says:

    PXD came in 1,000 boepd above the mid point of guidance, EPS of $0.18 vs Street of $0.05. The stock is still lower than where it announced that 17 mm/d Eagle Ford dry gas well a couple of weeks back.

  172. 172
    elijahwc Says:

    ATPG really under the gun after hours. Is it just the convenant issue or more? For you tech types its very close to closing a 14ish gap back on early Sept ’09. If it does, I want to be there. Thoughts?

  173. 173
    bill Says:

    atpg out with an update..

    Looks like q4 will be way down from q3 which was a loss

    Stock down in after hours

    Selling a piece of this and that to keep banks happy as well

  174. 174
    zman Says:

    TSO – bricks, “suspends dividend for the foreseeable future”. So glad to be on semi-permanent avoid of the independent refining group. Stock off 6% AH.

  175. 175
    zman Says:

    Eli – watching it too, will read it tonight.

    PXD marking up a little in AH, looks like an EPS beat and a CFPS miss due to some items of size in the 4Q numbers. Guidance is as expected, costs were better. Nothing earth shaking in the PR.

  176. 176
    bill Says:

    I havent been following atpg as closely as i once was as the ceo and cfo dumped shares and the ye offerings dampened my enthusiasim. Still a good story if they can get telemark turned on.

    Might be worth looking at , the day they release lousy q4 numbers

  177. 177
    bill Says:

    172 id wait for the earnings release

    they have some language in todays release about their bank lines

    Recent Credit Agreement Amendment – On January 29, 2010, ATP and its Lenders amended the Credit Agreement associated with its Senior Secured Term Loan. The first piece of the amendment allowed ATP to recognize in its EBITDAX calculation for Credit Agreement purposes $123.1 million relating to economic gains associated with four previously completed monetizations. The four transactions will add $32.1 million in 1Q09, $35.8 million in 3Q09, $10.9 million in 4Q09 and $44.3 million in 1Q10 to ATP’s EBITDAX for Credit Agreement purposes. Each transaction resulted in cash being received by ATP, a reduction in ATP’s outstanding Senior Secured Term Loan and an economic gain to ATP that could not be recorded for GAAP purposes. The primary reason a gain could not be recognized for GAAP purposes was that ATP maintained a level of control or a continuing interest in the property after the monetization, a benefit to both ATP and its Lenders.

    A second piece of the amendment expanded ATP’s ability to issue unsecured indebtedness which would be structurally junior to its outstanding Senior Secured Term Loan. The provision allows ATP the right to issue an unlimited amount of unsecured notes provided ATP uses at least 75% of the net cash proceeds to further reduce its Senior Secured Term Loan. This new provision allows ATP to continue to reduce its secured indebtedness by inserting a more permanent level of unsecured long-term capital into its capital structure.

  178. 178
    bill Says:

    and they are selling this and that so no bank covenant problems.

    This is a presale of production and gets cash in early. I guess thats good if you need cash. Its bad if you have to do this cause you need cash


    ATP continues to monetize its assets. ATP executed an asset sale agreement in October 2009 for net proceeds of $15.0 million for a dollar-denominated limited-term override in the Gomez Hub. On January 5, 2010, ATP closed a $135 million transaction pursuant to which ATP conveyed a limited term overriding royalty and a perpetual overriding royalty in MC 711, MC 754 and MC 755. The transaction was effective October 1, 2009. On January 26th, ATP closed on an additional $5 million, effectively upsizing the original $135 million transaction to a total of $140 million.

  179. 179
    zman Says:

    Bill – yeah, I’m in no rush for more Gomex exposure though interested in SGY at the moment. Will continue to watch the ATPG.

  180. 180
    milepost_43 Says:


  181. 181
    milepost_43 Says:

    Good news for eastern Montana producers IF they don’t get preempted by the Feds.
    BILLINGS (AP) — Montana’s Public Service Commission says a Canadian energy company must seek common carrier status for a pipeline it wants to build through Montana — a move that could eventually lead to construction of a loading facility for oil produced in the state.

    TransCanada has proposed the 1,980-mile Keystone XL pipeline to carry Canadian crude oil to refineries in the Gulf Coast.

    It would pass through Montana for 280 miles. Gov. Brian Schweitzer wants that segment to include an “onramp” for oil producers in his state and neighboring North Dakota. That could improve prices for the region’s oil by making it easier to deliver to refiners.

    On Tuesday, the five-member PSC voted to tell TransCanada that it must apply for common carrier status. PSC Chairman Greg Jergeson says commissioners could require the onramp as a condition of approval.

  182. 182
    elijahwc Says:

    Bill THX

  183. 183
    elijahwc Says:

    Big article on RRC in the WSJ tommorrow. This link may get you there tonight.


  184. 184
    milepost_43 Says:

    “During its height in 2008, there was a difference of $23,” Continental Resources President Jeff Hume said.

    Currently, the price is much lower, Harold Hamm issuing a statement last week saying it is $8 to $12 per barrel, and that’s a price that adds up even with oil at a fairly steady price of about $70 per barrel.

    This difference means Bakken producers will receive $63 or so as compared to $73. Where the difference comes in is the lack of suffecient infrastructure for Bakken producers to ship their product to market. This means there’s not enough room in the pipeline systems, and not enough pipelines to easily ship the crude oil.

  185. 185
    BirdsofpreyRcool Says:

    EXXI presents at CS tomorrow at 11:45 am MST.

  186. 186
    RMD Says:

    Anyone remember who ATPG sold the over riding royalty to in #178? They probably got a deal.

  187. 187
    zman Says:

    The holdings tab is updated…

  188. 188
    PackMan Says:


    UPDATE 2-Tesoro suspends dividend, shares off 6 percent
    Tue Feb 2, 2010 5:28pm ESTStocks
    Tesoro Corporation
    3:00pm EST
    * Q4 net loss $1.30/share vs year-ago profit

    * Suspending dividend

    * Shares fall 6 percent in post-market trading

    * Q1 spending cut by $100 mln

    (Updates share prices, adds details, background)

    HOUSTON, Feb 2 (Reuters) – U.S. independent refiner Tesoro Corp (TSO.N) said on Tuesday it is suspending its dividend as it reported a fourth-quarter loss on weak fuel demand.

    The shares of the San Antonio company tumbled 6 percent to $12.26 after the close of regular trading.

    Tesoro and other refiners that process oil into fuels such as diesel and gasoline have suffered the double blow of falling demand and higher crude prices.

    “Depressed consumer demand for transportation fuels significantly impacted the company’s gross margins,” said Bruce Smith, chairman and chief executive officer of Tesoro.

    Net loss in the quarter was $179 million, or $1.30 cents per share, compared with a profit of $97 million, or 70 cents per share in the same quarter a year ago.

    To conserve cash, Tesoro said it is halting its quarterly payout to shareholders for the foreseeable future. The company also plans to cut capital spending in the first quarter by $100 million to $150 million. (Reporting by Anna Driver in Houston; editing by Bernard Orr and Andre Grenon)

  189. 189
    PackMan Says:

    133 — LOL BOP.

    I can only think of Seinfeld.


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