10
Feb

Thursday Morning – Oil & Gas Inventory Previews Plus Shale Comments

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Market Sentiment Watch: The U.S. market still remains hair trigger cautious. This morning futures are up slightly  after a big day in Asia after China reported lower than anticipated consumer level inflation and a rescue package for Greece appears to have been struck. The dollar was busy getting weaker early on the Greek news but a better than expected jobless claims report buoyed the index back to the 80 level.

Eco Data Watch:

  • Jobless claims came in at 440K vs 465K forecast.
  • Retail sales have been delayed as have the oil and gas reports so no summary of oil inventories today.


In Today's Post:

  1. Holdings Watch
  2. Commodity Watch - with a few thoughts on Shale production
  3. Stuff We Care About Today
  4. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $11,500
    • 25% Cash

 

  • Yesterday's Trades:
    • BEXP – added (5) more of the Feb $15 calls for $0.30 to get to an even (60), just nibbling in a weakish market.


Commodity Watch:

Crude oil edged up $0.77 to close at $74.52 yesterday as fear eased over Greece, the dollar backed away from recent highs and persistent cold in the northeast persisted. This morning crude is trading around the $75 mark.

  • Early Read On Oil Inventories:
    • Crude: UP 1.6 mm barrels ... recall API saw a massive build based on lower refinery demand.
    • Gasoline: UP 0.3 mm barrels ... this is a tough one to pin down this time of year and especially with such wide spread bad weather crimping demand. Production should be down as well so the number may come in low but odds are for a bit of an upside surprise here. No matter, inventories remain in check.
    • Distillates: DOWN 1.6 mm barrels ... with low production levels and continuous demand for the heating oil component of the demand picture we should see further increases in demand in the next few weeks.

 

  • EIA Short Term Energy Outlook Watch:  EIA issued the latest STEO yesterday. Some thoughts:

"The world oil market should gradually tighten in 2010 and 2011, as the global economic recovery continues and world oil demand begins to grow again," 

EIA sees higher oil prices in the second half due to recovery in the global economy 

They also better prices for natural gas this year ($5.37) and next ($5.86). Due to the weather we’ve been having they cut their end of March storage number from 1,734 in their last STEO to 1,644 Bcf in today’s report. I still think we have a good shot at dipping below 1.5 Tcf.


  • Nigeria Watch: Mid day yesterday MEND said "We are monitoring the unfolding drama and will react at the appropriate time," regarding a change of power in the country as President Yar'Adua temporary stepped down due to health reasons leaving Vice President Goodluck Jonathan in charge. This may result a resumption of the amnesty program that Yar'Adua started but which had been faltering. 

  

Natural gas closed flat at $5.29 yesterday despite consistently cold forecasts out into the beginning of March. This morning gas is trading up 9 cents in early trading.

 

  • Early Read On Natural Gas Storage:  181 Bcf Withdrawal based on gas-weighted heating degree days of 225.

    • Last Week: 115 Bcf withdrawal.
    • Last Year: 164 Bcf withdrawal.
    • 5 Year Average: 166 Bcf withdrawal.
    • 10 year Hi: 68 Bcf withdrawal.
    • 10 year Low: 254 Bcf withdrawal.

 

ZComment: Consensus for the gas number is now 181 Bcf. Next week’s will be bigger, should easily be 200+ as we have cold diving into the Gulf of Mexico with the potential for snow in NOLA.  This goes up against year ago numbers of 164 Bcf (for this week) and 44 Bcf (for next week’s comp). So we should be at or below 2 Tcf in storage by next Thursday with more cold dragging us toward a pretty supportive end of season 1.5 Tcf.

 

Simmons Watch: These guys do good work on compiling shale data. I took a look at their play by play numbers, compiled those with some state agency data and took it a step further by looking at U.S. production from the onshore,  sans the shale piece of the puzzle.

When you take a look at the tables below you can see that non-shale production (and I shy away from quite calling it conventional production as I've only backed out the shales and not coalbed methane or tight gas sands which are also non-conventional production) has reacted as expected to the last year's sharp decline in the natural gas directed rig count.

Moreover, you can see that as production from the shales has grown rapidly from just five years ago (when the Barnett was over 60% of all shale production) you can also see that this high decline rate source of production accounts for nearly 20% of U.S. onshore lower 48 state production.

Why does that matter? Simply because CHK and HK and a several of the smaller shale players are admittedly in a race to capture acreage ... either they get it "held by production" or their leases start expiring in a big way. So the decision to drill isn't based on the current price of gas as much as it is their hedges and their availability of capital to get that acreage held. By mid 2011, several of the big names including the two mentioned will have substantially captured their desired leasehold in the Hayensville shale where the race is most pressing. After that point, the decision to drill becomes more a question of prevailing prices and costs and if prices are not better than they are now, throttling back becomes a viable option.

As I mentioned before, shale gas is high decline rate in nature, though long lived. Many of the wells being drilled today will see production fall by 75 to 85% in their first year. So as that throttle is eased back production growth rapidly rolls over. We saw this in Texas this past year where rigs were slashed in the Barnett and where production quickly started to decline with Barnett production falling 9% in the 8 months since March 2009's peak. 

Stuff We Care About Today

Random Thoughts Watch: Waiting in the Weeds on CXPO

CXPO – off another 7% yesterday to $3.40, I get more interested around $2.75 to $3.00, plus by then we should be closer to some stock moving catalysts.

  • Two published estimates for CFPS for this year, one at $1.72 which looks like a large stretch to me, the other at $1.15.
  • At either of these numbers, the stock is no longer expensive on a forward cash flow basis

Odds & Ends

Analyst Watch:

  • (CAM) upped to Overweight at HSBC
  • (PXD) initiated at Buy with a $58 target at CK Cooper
  • (RRC) started at Neutral at UBS

Interesting Reading Watch:

136 Responses to “Thursday Morning – Oil & Gas Inventory Previews Plus Shale Comments”

  1. 1
    elduque Says:

    One index that is showing an orange light.

    BDI index: -55 2575

  2. 2
    zman Says:

    No specifics out of the EU on Greece lead to unimpressed futures. CNBC says don’t expect anything specific until Monday or Tuesday.

  3. 3
    zman Says:

    Eld – yeah, been watching it… not very pretty.

    http://www.dryships.com/pages/report.asp

    SEA has been resilient however, and wondering if that lasts.

  4. 4
    BirdsofpreyRcool Says:

    TED Spread widening out a little, as LIBOR Rates stay flat, but UST yields fall from their recent highs. TED still telling us — “nothing to see here, business as usual” with a 14.8 bps reading.

    Credit is backing off somewhat from it’s early morning rally. But still slightly “green” for the day.

    IG 101 -0.75 bps

    HY 95 3/16 +1/16 pts (basically unch’d)

  5. 5
    BirdsofpreyRcool Says:

    TechTrader out with a 60/40 SHORT call for the best odds day trade.

    HeadTrader reminding us that it doesn’t mean the mrkt falls, it could end up 200 pts, it’s just that the best odds trade today is from the short side. Personally, HT thinks mrkt is still too choppy to pick a side. He is watching and waiting.

    Getting crowded, in the weeds, here. But, need to find a direction. With all the bearish sentiment (and positions) on out there, and eco data and company earnings “not so horrible,” the odds this will bounce back are quite high, imho.

  6. 6
    zman Says:

    BOP – market still playing opposite to dollar which is up on better jobs and so good date = down market. Greece thing still up in air and not a lot of news as DC is still shut. I happen to agree that the broad market turns higher soon but its going to be bumpy. S&P at 1065 now.

  7. 7
    BirdsofpreyRcool Says:

    EXXID out with an 8-K stating their revolving line of credit was officially amended, raising the borrowing base to $350mm. The bank is giving EXXI credit for the reserves they acquired in the Mitsui deal. With cash on hand as of 12/31/09 plus new availability, EXXI has total liquidity of $209mm.

    CRT reminding us that GoM producers typically keep $150mm or more of cash and availability to guard against hurricane-related production outages. Risk of shut-ins for onshore producers is much lower, so they don’t typically hoard this much cash.

    Also, EXXID will revert back to the more user-friendly EXXI ticker on March 1st.

  8. 8
    zman Says:

    Bakken minis (KOG, NOG, AEZ) doing a whole lot of nothing which is a good thing at the moment. I still say NOG didn’t get enough credit for having an IP of a single well boost production of the whole company by a third. Yes I know that will be a 10% boost in about a month but its the kind of things that a non operator, low working interest own should get credit for.

  9. 9
    zman Says:

    Adding to 7, I think they only need $40 mm this year over cash flow to make their capital program …. as they said before several times, no equity deal needed.

  10. 10
    Dman Says:

    I trust everyone is dutifully cowering under their beds, as we have been instructed to do by assorted pundits, awaiting the much-dreaded “punch” from Iran.

    Minyanville was positively breathless with Iran-punch-anticipation yesterday. Naturally, it’s sad to to see anyone’s hopes dashed, but on the bright side, well, the day isn’t over yet. It’s only 6pm on Tehran, so I guess they could still get their act together. If they don’t, they’ll have a lot of very angry pundits to answer to. Charles Krauthammer himself will lead the 101st fighting keyboarders in a verbal attack on Iran which will leave them reeling. Well, it would do if their internet was turned on and they could actually read the blows from “the hammer”.

    Oh no, urgent update! According to the ever-reliable NYT, the very same NYT who told you *all about* Iraq’s nukes… the punch has arrived!

    Yes, the punch consisted of ….. words! Yes, words from the A-man himself. And unlike Iran, we *do* have out internet connected so we have no defense against this terrible verbal assault. So bad is it that I would certainly go and hide under my bed right now, but alas, I have a few things to attend to, um, so I’ll just have to run whatever risks await me.

  11. 11
    zman Says:

    Dman – What did the nutbag say now?

  12. 12
    BirdsofpreyRcool Says:

    Thanks, Dman! I feel much better now. ๐Ÿ˜‰

  13. 13
    bill Says:

    was offline yesterday. Z as you pointed out mcf getting a little respect as it moved up 2 bucks yesterday. Motley fool article on mcf hit the tape yesterday afternoon.

    Sequently mcf earnings were up 50 % from .83 to 1.21. Interestingly, q2 earnings exceeded last years earnings when ng prices were twice the current qtr’s numbers.

    Reserves did not take a hit for the new sec rules

    Most consider MCF a ng company and it it, but they get a good portion of revenues from higher margin NGL and oil. In q2, their acerage selling price for ng was 4.44 but their pre tax cash margin per mcf was over 5.00. This qtr, i think its save to say ng will avg higher than 4.44, maybe with a little luck a buck higher and another 1 dollar per mcf will fall to the bottom line in q3. Nautilus comes on line in the summer increasing production from 86 per day to 106 and the company is plowing 125 m of cash flow into a number of areas. the main risk is oversupplied ng and a lower ng price as they do not hedge

    Easy earnings comparisons for q3 and q4 are coming as well. pre tax cash flow will exceed 11 per share so at 50, its trade at less than 5 times ebitda ..hell at 55 its 5 x and this doesnt include nautilus or all the cotton valley wells coming online

    its biggest problem is how to reduce its tax liability. Peak considers the irs his largest partner

    It so illiquid, that 60,000 shares traded pushed it up 2 bucks so institutions have no way to establish a position but the little guys can get it

  14. 14
    bill Says:

    i see eroc getting sued for screwing its shareholders

  15. 15
    zman Says:

    S&P just can’t catch a break here.

  16. 16
    bill Says:

    Here is the fool interiew in case you missed it

    http://www.fool.com/investing/general/2010/02/10/interview-with-an-oil-and-gas-contrarian.aspx

  17. 17
    zman Says:

    Thanks Bill – saw CRT mention SD had been unfairly dropped in this move.

  18. 18
    jiveyjr Says:

    damn snow making it hard for me to get to Oaklawn Park…but I’ll make it soon…gotta try that pizza jt. Z commented on at the end of last season

  19. 19
    bill Says:

    sd almost pushing 7 handle. i suspect they will have a massive write down due to sec rules

    does this get banks nervous if the company has a negative net worth or is it cash flow that matters or both??

  20. 20
    Dman Says:

    Crude and S&P disappointed in A-man. Punch not heavy enough. Apparently he claimed that their 20% enrichment has actually started. I.e. they claim to have some non-zero amount of 20% enriched stuff.

    The NYT says quotes the A-man as

    ” .. saying his country had produced a first batch of uranium enriched to a level of 20 percent, taunting the West by declaring that if Tehran wanted to build a nuclear bomb, it would say so.”

    http://www.nytimes.com/2010/02/12/world/middleeast/12iran.html?ref=global-home

    But the NYT complains that A-man’s claim can’t be independently verified. No kidding! Since it’s probably a load of &%#$!

    Anyway, since when has the NYT bothered with “independent verification” of wild claims about WMD? Looks like they are going soft on us.

  21. 21
    BirdsofpreyRcool Says:

    bill — banks like cash flow… but they LOVE hard asset protection. There is probably some “tangible net worth” provision in SD’s bank agreement that will give the banks the ability to step in and act fusty. SD will probably have to pay a fee to get a bank waiver and then everyone will be back to being friends. However, this creates some undertainty, as a member (or two or three) os SD’s bank group may take the opportunity to step away from their commitment level. This probable won’t happen, but it’s a risk. So, Equity Rule #1) when in doubt, sell.

    I’m with you, think the selling and fear is overdone. But, the equity mrkt just HATES uncertaintly. And it REALLY HATES anything to do with “bank and debt stuff.” For a variety of reasons… but mainly b/c they don’t understand what it involves. Which brings me to Equity Rule #2) if you don’t understand something, sell (see Rule #1).

    Here’s the thing… i actually think SD has some bonds that are looking pretty juicy here. Not the yields of EXXI 10s, but on a risk-adjusted basis, not too shabby.

  22. 22
    BirdsofpreyRcool Says:

    Credit indices turning greener now, fwiw.

  23. 23
    Dman Says:

    I have a lot of respect for Minyanville, but they have lost their minds on the Iran “punch”. Their link to the NYT article (see #20) is labelled “they’ve produced their first batch of weapons-grade uranium”.

    The article says nothing of the sort, unless 20% is a secret NYT code for 90%.

  24. 24
    zman Says:

    Apologies, was on phone.

    Bill – re 17, they’ll take price related revisions into account with a not so sharp axe. I would bet SD can book a lot more PUDs now and while that may note completely offset the poor pricing, it could and I stress the could keep them out a big swing on their credit line (although their availability may slip a bit). I am going to take a look at it down here as a stock play. I have been watching it slip and it is discounting a really bad gas price for this year at this point in my book. I will wait for the reserves to hit to act.

  25. 25
    zman Says:

    Ha, I saw 21 after I wrote 24, that’s better than mine.

  26. 26
    zman Says:

    Sitting on hands on trades … watching the S&P tick around for now reason, very dicey could go either way.

  27. 27
    bloodystupidjohnson Says:

    Z: NOG had 36 fac stages. At what point does the cost of the added fac stages counter the increase of income from the well?

  28. 28
    bloodystupidjohnson Says:

    Coal: I see the ceo of Coal India says they may invest $2 billions over the next four years to buy stakes in overseas coal assets.

  29. 29
    BirdsofpreyRcool Says:

    Not so sure it’s the cost of the marginal frac stage that is the issue… it’s the added probability that something will screw up the well. That’s the answer i’ve gotten, when i’ve asked Bakken operators, fwiw.

  30. 30
    zman Says:

    BSJ – At $70 oil, with big fracs like that bringing in about 1 mm barrels, they are certainly economic. As far as whether or not adding more messes up the well I can say that several operators are pulling them off fairly hitchlessly. Wyoming or TEXW or Reef could comment better than I on the added risk of the incremental stage. What I can say is that other things like multiple laterals are definitely riskier from a mechanical standpoint.

  31. 31
    zman Says:

    EU just jerking the markets around with their detail-less plan. Didn’t they learn from Timmy’s learning curve that you can’t announce a idea and call it a plan?

  32. 32
    zman Says:

    BSJ – costs of incremental fracs have fallen over time:

    See page 17 in here:

    http://www.bexp3d.com/IR_pres.pdf

  33. 33
    Jerome Blank Says:

    NOG charts and comments posted…

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

  34. 34
    zman Says:

    Re 33. Wasn’t sure if you are positive or negative there. I see the bullish PO of $21 but on the next page I see the support back in the $10s, thanks, but not sure I’m understanding your thoughts on this one.

  35. 35
    bloodystupidjohnson Says:

    EOG: Z, I just read the conf call transcript. It seems to me that you will have to wait for the April 7 anaylsts conf to get any real info out of Papa.

  36. 36
    BirdsofpreyRcool Says:

    EXXID VP/CIO/Chief Acctng Officer Menown just threw some of his lunch money into his own stock. On the tape with a 515 share buy today at $18.95.

    Still, no one likes to lose lunch money (brings back bad playground memories).

  37. 37
    PackMan Says:

    Dman — thanks for Iran update.

    Anyone: wassup w/ SD ?

  38. 38
    bloodystupidjohnson Says:

    Fracs: thanks — There is a old saying that more is better intil it isn’t any more. I was just wondering where the law of diminishing returns kicks in.

  39. 39
    zman Says:

    BSJ – ha, ha very funny. He should have just run that as a banner ad on their web page and canceled the call. Ok, it wasn’t quite that bad but I thought he was much cagier than his usual cagey self.

  40. 40
    zman Says:

    BSJ – The spacing of the fracs is key and they don’t need to be too close. And you aren’t going to drill beyond 10,000 feet (across 2 sections) or at least I don’t see that being allowed. So we’re probably going to settle in the 30 to 36 land as optimal.

  41. 41
    bloodystupidjohnson Says:

    Pet peave rant: I hate when companies have conf calls that really don’t tell you much but tell you to come back in 2 months to get the real dope. No one has a higher regard for Papa than me, and EOG is not the only company that have done this. But I really don’t care for this.

  42. 42
    Jerome Blank Says:

    Re: #34 NOG…sorry, I’ll add a few more comments…NOG looks really good, currently holding a P&F buy signal, NOG is testing topside triangle resistance, if bullish on NOG, a pullback to $11.50 would be a point to consider a long, or the easist spot to manage, if it gets there, is a long try at about $10.50, stop below $10.00…

  43. 43
    sunshine Says:

    Voted, thanks. ๐Ÿ™‚

  44. 44
    zman Says:

    JB – hey man, never apologize, love your work, I just need help understanding it sometimes, my head doesn’t work (technical analysis) that way naturally like yours.

  45. 45
    TEXWS6 Says:

    10,000′ laterals will probably be the mechanical limit to cleanout/drillout frac plugs after we’ve fracced the well (too much pipe on pipe friction). I think the closer spacing you get the better, think of how much gas/oil you are leaving behind that is trapped in between those clusters! We are getting tighter and tighter spacing in the Haynesville and making better wells!

  46. 46
    bloodystupidjohnson Says:

    Energy deal — First Energy is going to buy Allegheny in a stock swap. Each share AYE get .667 share of FE. Deal worth 27.65 — The only reason I posted this is that this computer and my home is being powered by First Energy — lol

  47. 47
    zman Says:

    TEX – Can you say, ballpark, how tight you are. In the Bakken I think they are doing 350 to 400 feet apart.

    Green market, take a photo of your screen now…

  48. 48
    PackMan Says:

    What did I do ? (SD)

  49. 49
    tomdavis12 Says:

    Z: Just a quick thought about the change in the tax ruling for your names. Any names particularly adversely effected, positively effected or all equally effected

  50. 50
    zman Says:

    Tom – which tax ruling, the PA severance tax?

  51. 51
    tomdavis12 Says:

    Z: The proven reserves and PUD numbers.

  52. 52
    john11 Says:

    Another EXXID insider buy, Ben Marchive Sr. VP Operations. 8800 shs at avg of 19.14 this morning. $168,000!

  53. 53
    zman Says:

    Tom – stocks are generally not going to key off reserves this year in my opinion. Reserves just too apples to oranges. If you have a high component of unconventional reserves you have the option of booking more PUDs than in the past. Some see this as a bad thing, but the rule applies in my understanding only if they are converted to PDP in a five year period. I really think there’s less good than bad on the whole to come out of it but I don’t see anyone getting savaged over their reserves due to the changes. Some will see big negative price revisions, that’s a bit hard to calc for a guy of my limited staff but the market isn’t going to kill you for a $3.87 avg gas price last year if it believe that you will get all those reserves back at under the current strip.

  54. 54
    zman Says:

    Re 52 and BOP early …. they are trying to telegraph to the market their confidence. Good idea.

  55. 55
    bloodystupidjohnson Says:

    RE:53 unless its WRES — lol lol!

  56. 56
    BirdsofpreyRcool Says:

    john11 — #52 wow. That AIN’T “lunch money.” Managers at that level (VPs) don’t buy to telegraph… they buy b/c they think they are going to make a lot of $$ in the near-term. jmho, of course.

  57. 57
    zman Says:

    re 55. Right, yeah, well that one is a special case. If they find a reason not to add back those oil reserves I’ll be gone.

  58. 58
    PackMan Says:

    you need to make sure that’s a real buy, and not a stock grant.

  59. 59
    zman Says:

    CXPO down another 6%. I only point this out because 1) it amuses me and 2) I plan on buying them lower.

  60. 60
    zman Says:

    Pack good point:

    says 8,800 shares bought at $19.15, the guy now holds 188,821 shares

  61. 61
    bloodystupidjohnson Says:

    RE: 55 — I like said before and regard less of the outcome by Mr Market, I thought it was an excellent analysis. Logical and well thought out. Besides I am a sucker for those special situations.

    It what I call a good bet. You can lose money making good bets, but over time by making more and more good bets, one is going to come out ahead.

  62. 62
    zman Says:

    BSJ – thanks man, glad you liked it.

  63. 63
    bloodystupidjohnson Says:

    RE: 58 — from http://www.insider-monitor.com — it looks like the real McCoy market purchase and not a stock grant.

  64. 64
    zman Says:

    Jerome – feeling a little pinned (a week early) in BEXP, just can’t crack $15

  65. 65
    BirdsofpreyRcool Says:

    MIDDAY OVERVIEW

    Market Update โ€“ US equities putting in a strong session so far today. Hard to pinpoint a specific catalyst. Technically we did hold 1060 this morning. The jobless claims did show a nice drop, allaying concerns around employment. On the Greek front, the European Summit is over (thankfully) and hopefully the headlines can stop; spreads tightened in Europe a bit although the Euro is weaker. While the final outcome wasnโ€™t everything the markets were hoping for, the message was enough to remove Greece as a risk/overhang for the time being at least. The strategic M&A deal (in utilities) also being looked at as a positive. There was some news in Washington today – Dodd is negotiating w/Republican Corker on financial regulatory reform and the two have agreed to shelve the consumer protection issue, although this isnโ€™t doing much for the financials (which are flat and underperforming the market). TSYs continue their sell-off, giving a boost to stocks as funds get reallocated (TSY yields at multi-week highs). Shorter-term focused investors accounting for a lot of the strength although vanillas starting to nibble around a bit more on the long side (still relatively inactive though); volatile/beta/momentum groups like the metals and semis are leading us higher. We are north of the 1071 level, a positive technically (although will have to see how we close).

    Equity Sectors โ€“ strength is pretty broad today. Despite the dollar strength, commodity-linked groups are very strong (energy and materials are both up >1%). Coal stocks are very strong today (CNX, MEE, BTU up 3-5%) and driving energy higher. Within materials, metal stocks catching a bid (X, CLF, AKS, FCX, ATI all up 3-5% and are some of the best performing stocks in the whole market). Rio Tinto is up 2% after earnings. In tech, the semis are leading the group higher (the SOX is up 2%). Tech led this market lower throughout the year so far but the desk has noted some buyers are starting to come back into the group ahead of a very busy week of earnings next Wed/Thurs (HPQ, AMAT, NTAP, ADI, NVDA all come next Wed and DELL is next Thurs). The transports climb 1.5% due to strength in the rails (CSX made sanguine comments @ the Stifel conf this morning โ€“ this is giving a bid to the whole group). Financials, which outperformed on Wed, are lagging today (the group is flat). Homebuilders are up >3% and one of the best acting groups in the market today.

  66. 66
    isleworth Says:

    Z- when do you expect the WRES redetermination re reserves?

  67. 67
    zman Says:

    Isle – probably March.

  68. 68
    Jerome Blank Says:

    RE: #64, updated the BEXP candlechart…still looking good….need a bit of a vol boost…

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

    #43, sunshine, thank you…

  69. 69
    Paul in Kansas City Says:

    wres; anyone have a feel for when they will release reserve value; will it even matter?? the stock sure says “NO” lol

  70. 70
    Paul in Kansas City Says:

    i missed above; thx

  71. 71
    zman Says:

    Re 68. So that would be back into the X’s on a $15 print?

  72. 72
    TEXWS6 Says:

    Z,

    30-60′ cluster spacing per frac stage. There can be anywhere from 4-6 clusters per frac stage. Baaken is completely different as they are not cementing their casing in, or last I heard it wasn’t a common practice.

  73. 73
    zman Says:

    Thanks Tex, figured as much on the difference. How tight do you think they will get. And what’s a extra stage cost you these days. Thought I recalled $20 or $30 K per.

  74. 74
    TEXWS6 Says:

    Extra stage in the Haynesville? Really depends on what your proppant is (ceramic vs sand). But figure atleast another 150k$/stage and the smaller guys are paying 250k$/stage. Yep, this Haynesville is EXPENSIVE!

  75. 75
    Jerome Blank Says:

    RE: #71, BEXP, we actually need at print of $15.50, a third test of triangle resistance to go back into x’s…

  76. 76
    TEXWS6 Says:

    They’ll get as tight as they can afford (goes back to stage spacing) but I figure 50′ is about the point of diminishing returns!

  77. 77
    zman Says:

    Jerome – Thanks and I hear ya on the volume comment. Looks like 3 guys and a monkey trading in the group today, passing around the SI swimsuit edition in their spare time.

  78. 78
    zman Says:

    Thanks much Tex …. man that’s pricey. No wonder some CEOs are talking about $5 being iffy on economics outside the core.

  79. 79
    zman Says:

    Hey TEX, one last one … in the Hayensville are overall service costs moving up slowly or fast? Any issues with tubulars, bits, mud availability, etc?

  80. 80
    milepost_43 Says:

    Nice to see my portfolio generally green BUT no vol..makes me nervous…snow?? or ?? thanks.

  81. 81
    zman Says:

    MP – we get a lot of data tomorrow. Retail sales, consumer sentiment (I think), both energy reports, and there are going to be Greek protests (riots?) overnight. I know said “up” this morning but I don’t trust this at all. Not adding to anything on these snow-day volumes. If we get another leg up tomorrow I’ll have to pare some things back and take some losses. Will hold the MMR and NFX for sure into next week, maybe the BEXP or part of it, same goes for the near term NOG, the rest is pretty troubled at this point but some of it like the lower strike ATW may recover. That’s the option stuff. On the stock side, I’m still considering punting the BEXP and going long NOG which has more leverage. I may add some VNR here pretty soon.

  82. 82
    choices Says:

    Copper up today, FCX, PCU strong

    Two Asian indices (China)seem to have stabilized.

    http://stockcharts.com/h-sc/ui?s=$HSI&p=D&yr=1&mn=0&dy=0&id=p24910402817&listNum=16&a=191213615

    http://stockcharts.com/h-sc/ui?s=$SSEC&p=D&yr=1&mn=0&dy=0&id=p34896083269&a=169079550&listNum=16

  83. 83
    zman Says:

    Choices, thanks for that chart, my good friend JD, who pokes his head in here from time to time on POT and IOC and others has been telling me the HSI-HK has been leading the market, which is why I was pointing out the rally last night on the Chinese data.

  84. 84
    zman Says:

    … and its good to see that index over 20,000 psychology wise, if you are bullish on equities in general during this precarious point in the charts.

  85. 85
    zman Says:

    From Nicky’s comment at the top of yesterday’s post:

    “We have resistance on SPX at 1077 (as happened Tuesday) and then 1083. Support is now at 1060. I actually think its likely to chop about this week and I still think we have another low out there before the bottom is in. Likely around the 1030 area in the SPX.”

    SP at 1078 now.

  86. 86
    Jerome Blank Says:

    $spx…updated chart added with a closer perspective of the potential significance of 1080 level resistance…notice the channel line…

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

  87. 87
    zman Says:

    86 – thanks, only 1 point to go so at least we won’t have long to wait to find out.

  88. 88
    zman Says:

    S&P tapped 1079.99 and fell away like a stone.

  89. 89
    Jerome Blank Says:

    Re: #87…$spx…amazing!, I have the high right now at 1079.99, a print of 1080, and it must print 1080 exactly…1080 reverses the $spx back into x’s…is this spot being watched or what…??

  90. 90
    Jerome Blank Says:

    $RUT…good sign for the bulls, $rut back into x’s, now we need $spx to break 1080, the last thing we need is the ambiguity of a divergence between big and small cap…be nice to have everything pointing in one direction…

  91. 91
    Jerome Blank Says:

    EOG…making an effort to break back into the lower channel trendline…

  92. 92
    zman Says:

    Epperson on CNBC making a good point that the IEA’s demand forecast for oil which calls for growth at a higher pace than EIA and OPEC is all derived from emerging market demand. She says that thought is spilling over into the copper market today.

  93. 93
    zman Says:

    NFX trying to fill the gap today or tomorrow, chart still looks different (better) to me than the group, earnings next week, everyone looking for big numbers from their granite wash wells.

  94. 94
    dij Says:

    Jerome,
    Any tech comments about the SPY triangle, downtrend from 1.19 and the uptrend from 2.5? Convergence looks like maybe 4 -5 days away.

  95. 95
    jiveyjr Says:

    thx re: the EXXID insider buying…I added little more…

  96. 96
    Jerome Blank Says:

    RE: #94, dij, SPY looks to be trading within an identical channel like $spx…but I do see the triangle your speaking of…

  97. 97
    zman Says:

    BEXP – bid on those $15s at $0.50, probably could split that with the stock at 15.20 now. Offer is up at 0.65.

  98. 98
    Jerome Blank Says:

    BEXP trying to get there…$15.50…

  99. 99
    Jerome Blank Says:

    SWN back into x’s with the print thru $44…

  100. 100
    zman Says:

    My PXD, which had a good quarter, is starting to recover.

  101. 101
    zman Says:

    Nice reversal today for EXXID off that red morning. Often these buying runs will be orchestrated with officers taking turns buying, would like to see more tomorrow.

  102. 102
    Jerome Blank Says:

    PXD reverses back into x’s on a print of $48…

  103. 103
    BirdsofpreyRcool Says:

    EXXI — i have a sneaking feeling those insider buys at EXXI were not orchestrated… but two of the VP’s who felt they didn’t have enough shares, given what they are hearing about Davy Jones.

    This could fall back next week. I think some people are expecting “big news” next Tues. When that doesn’t happen, maybe you give a little back. Don’t know. But i think the VP Ops and VP CIO/CAO buys at EXXI say a lot about how far the enthusiasm about the near-term has permeated. I mean, Chief Accounting Officers are just NOT known as Big Buyers of Risky Assets. It’s not in their DNA.

    nice buy, jivey. thx to john11 for the head’s up, here.

  104. 104
    Jerome Blank Says:

    EXXID 5 min visual…

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

  105. 105
    BirdsofpreyRcool Says:

    JB — ummmmm… breakout??

    voted. thx.

  106. 106
    VTZ Says:

    Gold has recovered it’s trading range and that should be considered a positive for broad markets.

  107. 107
    Jerome Blank Says:

    Re: #105 EXXID, BOP, here’s my thinking…we need to print $21, as can be seen from the P&F chart, this would be a “spread triple top buy signal”, huge… I think this would be the more significant breakout point…for folks looking for a place to get in, a retrace to $19.50 would be a point to consider…

  108. 108
    Jerome Blank Says:

    RE: #107 con’t… thanks much for the vote…

  109. 109
    BirdsofpreyRcool Says:

    HeadTrader thinks a close above $20 on EXXID would be a huge positive. Previous high close of $19.90. Either way, higher is certainly the nicer direction.

  110. 110
    jiveyjr Says:

    thx to you BOP for digging this thing up on EXXID….if it wasn’t you that originally put us on it……..I’ll either sing at your next wedding or contribute to your dowry, take your pick

  111. 111
    tomdavis12 Says:

    JB Voted ๐Ÿ™‚ You are moving up the list.

  112. 112
    zman Says:

    MMR waking back up as well.

  113. 113
    tomdavis12 Says:

    Z: Talked to NE today. They expect pricing to be range bound this year. The key will be utilization. Rigzone has a weekly updates and although their data does not have to be correct, more money will enter this space if you see int’l util gradually creep up. They think the line in the sand is 85%. After that they have pricing power. Right now 79%.

  114. 114
    Jerome Blank Says:

    Re: #111, tom, thank you…

  115. 115
    BirdsofpreyRcool Says:

    jivey — you are too cute! Frankly, it was the CRT analyst. I glanced at his reports on EXXI as they came in over the last year. But wasn’t until it looked like a pretty darn Done Deal with the debt restructuring, that I got interested. In both the stock and the bonds. Like BSJ, i really like “special situations.” And EXXI truly fit that bill.

    Then, when they did the Mitsui acqtn, I went ballistic on the potential there. EXXI is now one of the biggest independent OIL producers in the GoM… and that has attracted a whole flock of new analysts to the name. I think the downside here is $17.50. And the upside (which will take several years to play out) could be $60. I likes them odds!

  116. 116
    BirdsofpreyRcool Says:

    EXXI presents at EnerCom next Wed, by the way.

  117. 117
    zman Says:

    EnerCom Schedule:

    http://theoilandservicesconference.com/schedule2010.html

  118. 118
    zman Says:

    Dollar story:

    Read the headline, and then look at the dollar index quote in the story now. Head faked that author.

    http://www.marketwatch.com/story/dollar-gains-as-europe-pledges-support-for-greece-2010-02-11

  119. 119
    zman Says:

    Tomorrow we have a busy numbers day:

    Retail sales for January – my guess is there a miss will be viewed as weather related and given a pass unless its just horrendous, and better numbers will be taken more favorably than they otherwise would be.

    Also inventories, consumer sentiment, the budget balance and then the oil and gas reports.

  120. 120
    zman Says:

    HAL and service in general having another good day, better than E&P which I think makes sense right now. HAL in danger of breaking back up through its 50 day moving average.

  121. 121
    zman Says:

    Volumes picked up in the last couple of hours on many of our names, not back to average but that’s not surprising and I would not call them terribly light either.

    MMR looking constructive, gotta figure people are thinking something happens next week, maybe late next week.

    PXD did break back up through its 50 day.

  122. 122
    BirdsofpreyRcool Says:

    z — quite the pleasant surprise today. If it’s real (for now), we need to see it hold tomorrow. Then Monday is a mrkt holiday in the U.S. Would be nice to kick off next week with some juicy M&A announcement.

  123. 123
    tomdavis12 Says:

    Z: Merrill oil comments today. “While the macro envoirnment still represents a downside risk to our view, we see WTI prices supported above the $70 level and trading toward an average of $92 in the second half of 2010.”

  124. 124
    zman Says:

    BOP – agreed. Beerthirty

  125. 125
    jiveyjr Says:

    thx for all the great information everyone…good nite

  126. 126
    elijahwc Says:

    Checking in late and notice the EnerCom Schedule http://theoilandservicesconference.com/schedule2010.html has been posted in #117.

    Two observations: First, they have been kind enough to scheduled XEC and MHR back to back. Wonder who’s got bragging rights? Wonder if the next deal strategy will get mention between the two?

    Second, EnerCom is allowing Enterra Energy Trust to present. Do not go near the room unless your hand is sewn to your wallet with wire cable. You have been warned!

  127. 127
    Dman Says:

    Z – GMXR standing out & not in a good way. Do you think this is continuing fallout from the reserves announcement?

  128. 128
    TEXWS6 Says:

    Costs are going up EVERYWHERE there is not an open frac date anywhere in the country right now. Costs are going up for the smaller folks who didn’t keep the service companies busy during the slow times. The availability of 5.5″ casing is starting to get low due to the demand (everyone runs 5.5″ in shale plays). Other than that, just typical busy oilfield, hard to get good people because we laid them off 6 months ago…LOL!

  129. 129
    RMD Says:

    128: Ok, I haven’t paid attention to steel for years, which co.s make casing pipe these days?

  130. 130
    occam Says:

    BOP Shortsqueeze shows EXXID with 4.5 million shares short, up from 2.2 million. Do you believe that drop in the short position mentioned earlier?

  131. 131
    RMD Says:

    In the last day or 2 someone mentioned a news release about a relatively unknown co. buying Bakken acreage; it started with T (I think). Would you please repost? I meant to at least have a look, then forgot. Thanks.

  132. 132
    zman Says:

    re 129: TS, X

  133. 133
    zman Says:

    re 131

    Triangle Petro – tpe.v

  134. 134
    BirdsofpreyRcool Says:

    occam #130 — good catch. You are right… i am showing short interest on EXXID increased by over 2mm shares from January 15th to 29th. The decrease I reported earlier is from a Bloomberg Report of the top 25 increases and decreases. However, another Bloomberg report of the top 50 pegs it correctly… an INcrease of almost 2.3mm shares short. Clearly pays to check the source. Thanks again for the catch.

    Almost 10% of EXXID’s official float remains short. Just adds fuel to the fire.

  135. 135
    BirdsofpreyRcool Says:

    BedTime Market Strategist —

    EUnited and it Feels so Good.

    It appears the EU has chosen the route of jawboning as its first response to the Greek tragedy (or is it a comedy). A “pledge” to stand behind Greece was the least the EU could do, and that’s what they did. It appeared to be a typical political response, make a promise and hope that in and of itself is enough or that you don’t have to take your bazooka out. It had the appearance of being a situation where the officials publicly stated “we will respond if Greece requests aid,” but the implied message was, “you better not formally request aid.” Nonetheless, we believe the EU’s response is appropriate for now, especially if they believe a notable portion of the action is speculative. It is a high stakes game of chicken with the markets, but the EU is likely a Mack truck in this scenario. Substantively, today’s announcement did not offer much more than what we read in yesterday’s headlines, but at least the message was consistent and delivered by those with authority.

    Market Movements.

    It was a slow day here in the U.S. equity markets. It is good to hear the administrative backlog for Initial Jobless Claims is finally over, it only took a month. Between this and the benchmark revisions delivered last week, the Department of Labor is not really doing much to bolster confidence in its impaired credibility. The tenor of trading today was one of a lack of sellers, as opposed to enthusiastic buyers. Investors are waiting for signs that stability is materializing before chasing equities higher. The risk trade outperformed, as small and midcap indices posted solid performance. We suspect short covering helped fuel the move in a light volume environment. The S&P futures stopped reacting to every Grecian headline, which has led to both bad selling and bad buying over the past week. Considering this situation will not be resolved overnight, it is positive to see the panic reactions abating from the market. The 30 year bond auction was pretty sloppy, but trading activity following the auction exhibited a respectable recovery. All in all, it was a slow day with many moving parts. The S&P 500’s one percent gain gave Bulls an edge, but only a slight one. It could be a sign that after correcting 8% in the span of a few weeks, those who want to sell may have already done so. The S&P 500 closed just shy of the 1080 resistance. A close in the 1085-1090 level would repair much of last Thursday’s damage. On the support side, 1060 and 1040 are the levels to watch.

  136. 136
    RMD Says:

    I’ll Triangulate. Thanks.

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