Wednesday – Thank You Sir, May I Have Another?!

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Note - We get oil data tomorrow, not today, due to the President's Day holiday.

Market Sentiment Watch: Better. Well, at least as far as the very short term sentiment reading goes. Last week we read that bearish sentiment was hitting a cycle high and as is nearly always the case, a rally ensued. The dollar is falling back away from 9 month highs as the Euro finally seems to have found firmer ground around the 136 level, a target for so many technicians. Once the Euro rallied (or the dollar faltered as the case may be), commodities were given the green light to advance and equities followed (pretty sure I have that order correct). At this point, crude has backed away from the recent brink by over 10% leaving many of the calls for $50 and even $40 crude a quiet echo. In other words, the big drop hasn't happened, in fact, quite the contrary has occurred and while we will surely see continued volatility, my sense is that tests of 1,100 for the S&P and $80 for oil are due in short order with levels for the broad equity markets from there to be set by technicians in the face of what turned out to be a not so bad earnings season. Do I think the crisis is over and that it's onward and upward? No, probably not but perhaps the things that made the last month feel like a crisis were simply not crisis-worthy.  The jobs picture is not great but less bleak. Manufacturing is getting stronger as shown by readings on industrial productivity, exports, and inventories. Things are slow but the economy is far from rolling back over either. OK, OK, I'll go back to my energy corner ... just letting you know where I stand. I started selling February calls yesterday into market strength and lightly repositioning for March. Expect more of the same today.

  • Eco Data Watch:

    • Housing Starts: up 2.8% vs down 0.7% last month. This was in line with expectations.
    • Import prices: up 1.4% vs up 1.1% forecast, with fuel prices leading the number higher.
    • Industrial production: Forecast at 0.9%, we get this number at 9:15 EST

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stuff We Care About Today - Enercom Conference, NFX 4Q earnings, CXPO metrics and operations comments, CHK Update, GDP, HAL
  4. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $16,800
    • 38% Cash
    • The quick view of the Holdings tab has been updated.
  • Yesterday's Trades:
    • BEXP – Sold half (30 calls) of the Feb $15s for $0.85, up 129%, with the stock at $15.85 (so the premium is pretty much toast as we enter the final week). I will hold the other half a little longer and I continue to hold the $17.50s (worthless) and the common.
    • BEXP – Sold another 20 calls for $1.35, up 271% with the stock at $16.35. That leaves 10 in to play for any further upside and the still worthless $17.50 calls and the common.
    • BEXP – Added (10 – starting small) $17.50 MARCH Calls for $0.80 (on the high side of the mid) with the stock at $16.45. See comments on the site today re potential catalysts 47, 48. I am likely to come out of the last bit of my Feb $15s today.
    • MMR - Sold the last of $15 Feb calls (10) for $1.50, up 34% with the stock at $16.45. I may roll longer soon.
    • NFX - Sold the 3 Feb $50s for $3.10, down 12%.  I continue to hold some $55 Feb strikes and the common.
    • NFX - Added (10) March $55s for $1.80 with the stock hovering around $53. They announce 4Q results after the close.
    • BEXP - Added another (10) of the March $17.50 calls for average of $0.675 with the stock at $16.10.


Commodity Watch:

Crude oil rallied $2.88 to close at $77.01 yesterday as equity markets soared and the dollar sank.  The 12 month strip jumped a similar amount ending at $79.42 and that chart now looks like this ... back from the recent brink. API plans to release its weekly stats today after the close, a day delayed like EIA. This morning crude is trading up slightly.

Early Read On Oil Inventories:

  • Crude: UP 1.6 mm barrels
  • Gasoline: UP 1.3 mm barrels
  • Distillates: DOWN 1.6 mm barrels

Natural gas fell $0.16 to close the day at $5.31 as a slightly warmer forecast inspired profit taking. This morning gas is trading fairly flat.

Stuff We Care About Today

NFX Reports Solid Quarterly Results; Guides To Stronger Growth in 2010

The 4Q09 Numbers

  • Production of 64.6 Bcfe (71% natural gas) vs a range of 63.3 to 65.3 Bcf, so high end of range
    • vs 65.5 Bcfe last quarter
  • Costs - they have been improving
    • LOE was $0.91 vs $0.81 last quarter. Guidance is a bit higher, bears some scrutiny as it looks like the international side is dragging it up a bit.
    • Guidance was $0.83 to $0.89
  • EPS of $1.40 (ex items) vs $1.35 expected
  • CFPS of $3.32 vs $2.99 expected


  • 2009 up 23% to 3.6 Tcfe
  • Market is valuing their reserves at $2.50/ Mcfe.
  • All in Finding and Development costs of $.50 / Mcfe including the impact of negative revisions due to prices, mostly in their PUDs. Without the pricing revisions, F&D costs would have been $1.18 / Mcfe. These are all over the map this year with the new rules so am not sure how much it really matters.


  • 1Q10 volume guidance: 62.6 to 69.2 Bcfe, as usual straddling the recent quarter's number.
  • 2010 volume guidance: 8 to 12% growth or 278 to 288 Bcfe; they generally inch up guidance as the year progresses. 
  • Food for thought watch: 2009 was 6 to 10% and last year they continually/habitually guided to the top of that range.


Operations Update:

Woodford Shale

  • Production reached 191 MMcfepd net recently (that's 27% of company total), a new record as they returned curtailed production to sales and added new wells.
  • Sees lateral length expanding to 6,000' average in 2010 vs 5,000' in 2009; longer laterals have equaled a cost effective approach to bigger per well reserves to date in the program.
  • 5 of 11 super extended wells came in > 10 MM/d; the others are completing. 
  • 50 wells planned this year with a 6 to 8 rig program.
  • They are drilling wells faster than before so don't be surprised to hear that the well count ultimately comes in higher than 50 with the low end of that rig range.

Monument Butte (Uinta Basin, UT):

  • Production hanging out at 17,000 bopd (14.5% of total co.)
  • Seeing some thicker than expected Green River sections and seeing some larger than normal IPs from step out wells (wells outside the proven area on their acreage). Could be some upside surprise potential here.
  • See growing that 15% this year via 275 new wells

Eagle Ford (Maverick Basin, Tx):

  • Drilling begins 2Q
  • Plan to spend about $100 mm which should pay for a dozen or so wells (split between the Georgetown and the Pearsall and Eagle Ford Shales).


  • Current production: 3,000 boepd net, or just 2.5% of total co. 4Q levels
  • 3 rigs for 2010; no well count given, but it should be at least 20, compared to their 14 wells drilled to date in the play.
  • Looking over their results the company is one of the few to drill consistently bigger Three Forks than Bakken completions in the Williston.
  • Their 30 day IPs look better than many I've seen as well with two of significant note:

    • IP of 1,328 boepd, 30 day average 1,114 boepd - this is the Gladys 1-9H
    • IP of 1,256 boepd, 30 day average of 1,010 boepd - the Wisness 1-4H
  • 150,000 net acres around the Nesson and west of it.

Montana Bakken:

  • 221,000 acres in Glacier County Montana
  • 10 wells in 2010 (unchanged from prior comments).
  • 1st well to spud in April
  • This is where ROSE has 3 wells down but no formally disclosed production as of yet  and KWK may have 2 wells at TD as well.


Granite Wash:

  • First 12 wells average IP of 20 MMcfepd.

    • First 7 averaged 22 MMcfepd
    • Next 6 averaged 16.65 MMcfepd - people will want to read something into lower rates but note that these are Atoka dry gas wells that don't have the liquids components seen in 5 of the first 7 wells. NFX said it will be testing 4 to 6 new formations this year.
    • 20 wells planned for 2010 with a 4 rig program

Gulf of Mexico:

  • Production is expected to be up 60% in 2010. This is what I've been talking about with comments regarding their stair step production growth as development projects are brought online.
  • This will grow the segment from 7.5% last year to 11% of total company volumes
  • Exploration: 2 to 3 deepwater exploratory tests this year, two of these are in close proximity to current developments.


Capex and Liquidity

  • $1.6 Billion, about 1/3 of it on oil projects.
  • Management commented that spending is in line with projected cash flow for 2010.
  • No borrowings outstanding on its $1.25 B line of credit.
  • Net debt to cap of 41%.


  • 70% of 2010 gas hedged at over $6.60 (same % as last time, up a dime on the price)
  • 65% of 2010 oil hedged at $108.  (this was only at 40% as their last update so good hedging to them!)


Nutshell: Good quarter. Bottom line beat on EPS and CFPS with strong guidance for 2010 volumes. Costs look a little high during the quarter (that can be end of year stuff) and in the guidance (that could be management bagging the Street). With volumes set to grow 8 to 12% (and I had said it would be 7 to 13% on the site yesterday) and oil and gas prices remaining elevated to what they were last year (especially given NFX's strong hedge position), it's hard to see how Street numbers don't go ahead, with spoonfed guidance in hand, and rally from the current levels. At present the Street puts 2009 CFPS at $11.98 and 2010 at $11.29, it just won't stay that way.

Conference Call: Wednesday, 9:30 EST.


CHK Operations Update Highlights

  • 2009 volumes were up 8%
  • Sees 2010 volumes up 8-10%
  • Sees 2011 volumes up 15-17%
  • CHK had a number of play updates in the press release, and I won't repeat them all here but of interest were their Granite Wash completions:

 GDP Provides 2010 Guidance

  • 2010 guidance of 15 to 25%
  • Reserves grew 4.5% to 421 Bcfe
  • Short interest stands at a whopping 37% of the float here so this remains a good candidate for a squeeze.
  • Estimates are likely too low here given the new growth guidance with 2009 CFPS at $3.35 and 2010 down at $3.15 due to some low ball estimates. As these come up watch for consensus for 2010 to move above $4.

 HAL & Other Service Invited To Drill In Rumalia, Iraq

  • HAL, SLB, WFT, BHI, and others to drill 56 new wells in the super giant oil field
  • No dollar amount given but good for sentiment.


Crimson Exploration Issued Production Guidance, Reserves, Operations Update - Out mid day yesterday.

  • Just a few quick comments to add to the file on these guys; I plan on staying away until the name is more fairly valued, someplace below $3, probably closer to $2.50.  Current price is $3.58.
  • 4Q production of 34,800 Mcfepd
  • 2009 came in at 40,900 Mcfepd vs 52,600 Mcfedp in 2008; the drop primarily coming from reduced drilling activity
  • 2010 guidance of 35 to 39,000 Mcfepd; not exactly exciting as the low end implies flat levels with the 2009 exit rate.
  • 1Q10 guidance of 30 to 32,000 Mcfepd.
  • Reserves fell 19% from 2008 results to arrive at 97.5 Bcfe. Given the current total enterprise value of $288 mm, the market is still valuing CXPO's reserves at an all too lofty $2.95 / Mcfe, up from the $2.40 / Mcfe their 2008 reserve report would have yielded.
  • 2010 Capex of $50 to $56 mm vs estimated EBITDA of $87 mm

    • This gets you:

      • 7 Haynesville wells
      • 1 Eagle Ford well
      • 4 Yegua/Cook Mountain wells in southeast Texas
  • Operations Update:
    • Haynesville: Their much touted Kardell well in San Augustine county Texas, the so called highest rate Haynesville well with an IP of 30.7 Mcfepd has been on sales for 90s with an average rate approaching 11 MMcfepd. This is a small working interest well in an area of the Haynesville where others are seeing high rates as well and where CXPO has 12,000 net acres.
    • Eagle Ford Update: Vertical well drilled ... encouraging. Planning a horizontal well for the second half of 2010. This is a little later than I think people would like.
  • This section will be added to the CXPO Notes page. 

Enercom Conference

  • See full schedule for today and tomorrow here.
  • Wednesday's names of interest (to me at least): (all times EST)

    • EXXID -1:30 pm
    • GMXR - 1:55
    • LINE - 2:20
    • Presentation from Tom Petrie - pretty smart guy - 3:30
    • WLL - 4:30
    • ATPG - 5:20
    • FXEN - 7:00
    • CPE - 7:50

Catalyst List - I'll have a fresh one out for tomorrow's post.

SSN Review - tabled on account of earnings everywhere until Wednesday's post.

Odds & Ends

Analyst Watch:

  • WLL - upped to Overweight at Barclays
  • SFY - upped to Equalweight at Barclays
  • NFX - UBS raises target $2 to $62, remains at Buy

183 Responses to “Wednesday – Thank You Sir, May I Have Another?!”

  1. 1
    BirdsofpreyRcool Says:

    Good morning. Our friend TED proved (once again) to be a Guide thru the Tunnel of (recent) Darkness. At least he did for me. If TED wasn’t going bonkers over the PIGS (with an emphasis on the “G”), I could take comfort in the Bears leaving the playing field soon.

    Bears made a lot of $$ over the last couple of weeks. They know people are edgy, so they will be back. Last year, it was the banks. This year, Sovereign Credits are proving irresistable to the Ursine Crowd. But, fore-warned is fore-armed. Or something like that. The Bears will be back.

    Sorry I missed the action yesterday. Got caught up in non-energy stuff. But, almost snorted coffee, when I saw how Mr. Market treated little KOG. “What the heck??!!” Or, words to that effect. Well #10 couldn’t be lovelier! Huge 24-hr IP results. It’s a short-lateral well, so was never going to have 3,000 boe resuls. But, as a short lateral, it is almost comparable to those type of results. So, go figure. Who sold?

    z sent me a Raymond James commentary on the KOG operational update. I thought it captured the situation exactly. Perhaps he can post a few comments from the write up.

  2. 2
    BirdsofpreyRcool Says:

    Credit Market Benchmarks —

    TED Spread (cash) 15.12443 bps

    IG CDS Index 96.5 -1 3/4 bps

    HY CDS Index 96.25 +7/8 pts

    So, rally in credit across the board. And oil futures (on my delayed screen) looking spiffy. Perhaps KOG will get some of the credit they deserve, for posting great Well #10 results yesterday.

    By the way, this speaks to our recent pronouncements that “there ARE no secrets in the Bakken, Sifu.”*** It is totally unlike Lynn to post single-well results. But, if you can’t keep it quiet, it’s better to put out the facts yourself… then to let the Rumor Mill spill the beans for you.

    ** lightly lifted from “Kung Fu Panda”

  3. 3
    zman Says:

    Dollar bouncy this morning, giving crude some reason for caution, still headed lower by my way of thinking however.

    KOG – he basically said there was some confusion of timing on drilling this year. As I read it and outlined in yesterday’s post, things are a bit slower than people had been looking for. People thought they’d get well 11, with well 10. The rate was very good for a short lateral. I really think he should stick to announcing 1 to 2 items and at a time and communicating with the Street more frequently. I’m not saying you have to report well by well forever and I understand he doesn’t want to be a hypester but Lynn has a $2.50 stock he’d like to be a $10 stock and the only way to do that is to communicate the plan often and loudly until people are not confused by the results.

  4. 4
    West Says:

    ATP is currently releasing the Ocean Victory after completing the AT 63 #4 well. The well was tested from two zones at a combined average rate of 10.7 MBoe/d (87% Oil). The well will now be tied into the ATP Titan in preparation of first production later this quarter…..


  5. 5
    bill Says:

    is 4 new news

  6. 6
    zman Says:

    Re 4, was just about to repost for you. That is a big well, 100% WI, on a current production base of less than 20 m boepd, very fast hookup due to existing infrastructure tie back. I’ll be taking a trading position this morning.

  7. 7
    sunshine Says:

    Higher ops costs making NFX pre-market weak?

  8. 8
    zman Says:

    Re 7 – Probably.

    The quarter was a beat.
    The cost guidance is always conservative. The growth guidance should have been about what people were thinking.
    The stock remains cheap to its peers.
    The call starts in 10 minutes.

  9. 9
    Nicky Says:

    Morning all. SPX has resistance at 1097, then 1103 – 1106. Today is a fib turn day although they need to be given some leeway. I actually think they can keep this rally going another week but there are several possible counts on the table here. Under any of the counts once this tops we should see a move back towards 1080 on the spx.

  10. 10
    jat Says:

    Re 8, some people making bones about capex guidance.

  11. 11
    zman Says:

    From TPH this morning:

    “What’s good for the CHK goose is good for the SWN gander as CHK’s Fayetteville results impress.”

    CHK’s long laterals in the southern part of the play have been bigger than what we’ve seen out of SWN yet, so results at SWN are likely to continue to walk up as they just haven’t gotten down there as much yet.

    WLL marking up on the Barclays upgrade.

    GDP – could be a squeeze day.

  12. 12
    zman Says:

    Jat – yeah, as in dollars bigger than we expect so where’s the production guidance. They need to realize they are being bagged by the company, that the company will raise estimates all year long on them.

  13. 13
    zman Says:

    Couldn’t grab anything at that sub $50 level on the open in NFX, just a stupid seller down there.

  14. 14
    zman Says:

    NFX call starting. Stock fell $4 at the open, now down 80 cents.

  15. 15
    zman Says:

    Industrial production came out in line.

  16. 16
    zman Says:

    NFX Comments:

    Future stuff:

    $1.6 B capex. Includes investment costs in the TXCO acquisition.

    35% of budget directed to oil plays

    more than half of 2010 revenues will come from oil; despite being a 70% NG production company.

    waiting on them to address operating costs…

  17. 17
    zman Says:

    NFX TXCO – South Texas, Maverick Basin

    > 300,000 acres in Maverick and Dimmit Counties.

    Ranges across the dry gas, wet gas, and oil windows.

    3 rigs running by early summer.

    All 300,000 acres prospective for EFS. Over 200K are 90%+ working interest.

    167,000 acres are prospective for the Pearsall (encouraged by recent drilling by others)

    Q&A on the way…

  18. 18
    BirdsofpreyRcool Says:

    To Do List for Today — Get EXXID to close over $20.

    We could be just a couple of days (I’m thinking/guesstimating Monday) from an update on the results of the last logging suite from Davy Jones. News about the estimated net feet of pay zones, possibly information about the nature of the pay itself (from direct formation testing), plans for completing and timeschedule for production. Then, where the drilling rig will move to next on the prospect, what the location and target zone will be. Amount of money that will cost. (Preview — lots.) What the geologic implications are for the other ultra-deep shelf prospects.

    Yep. Unless something nasty happens downhole, I’m thinking we get the full Davy Jones Report Card early next week. And I don’t expect to see any failing grades.

  19. 19
    zman Says:

    EXXID speaks in a bit at Enercom, maybe they give a little advance color.

  20. 20
    BirdsofpreyRcool Says:

    z — not sure there is a heck of a lot to add, verbally, at this point. However, Schiller’s body language should be downright perky. He’s a Happy Guy these days.

  21. 21
    sunshine Says:

    Second chance on NFX sub 50….. Apparently Q&A not so good.

  22. 22
    zman Says:

    S&P hovering beneath 1,100. If it breaks that I’d look for another smaller leg up, maybe to the 1108 level at the 50 day sma.

    Group pretty mixed so far this morning.

    Sunshine – Q&A still ongoing, nothing on it I’d call a detraction from the story, just noise.

  23. 23
    zman Says:

    Noise in the share price that is.

  24. 24
    Jerome Blank Says:

    MHR…if MHR prints $2.50, that adds a new box that’s taking forever to reach, there might then be some profit taking, next support on a pullback is at about $2.19, just under trendline support and at the 20 day SMA… this would be a first good spot to consider longs…any fundamental reason not to consider on the retrace?

  25. 25
    bloodystupidjohnson Says:

    Z: you can give VTZ my email number or I can just write it here — your call

  26. 26
    zman Says:

    ZTRADE – WildZ – Higher risk trade

    NFX – Added (15) Feb $50 calls for $1 with the stock at 50.05, off 5% during the 4Q conference call. See today’s post for details on the quarter and outlook. Obviously I’ll be pretty fast on this one.

  27. 27
    bloodystupidjohnson Says:

    VTZ: interesting about Viking — you know who is big there? — PWE

  28. 28
    VTZ Says:

    Yeah there’s lots of mature production there and it’s a big play similar to Cardium.

  29. 29
    zman Says:

    Those are the same strikes I sold yesterday for $3.10.

  30. 30
    zman Says:

    BSJ – I will send it to you.

  31. 31
    bloodystupidjohnson Says:

    VTZ: PWE is an interesting stock. It is has refocus into a four or five plays. Getting rid of some of the excess stuff they bought through the years and is paying down debt.

  32. 32
    VTZ Says:

    and a great yield.

  33. 33
    Jerome Blank Says:

    EXXID…updated 5 min chart…


  34. 34
    zman Says:

    NFX – call over, good tone, no harping on the capex on the call, none on the higher LOE guidance either. 2010 bigger than 2009 and setting up bigger 2011. Maverick basin will get lots of capital for a long time. Same goes for Granite Wash. Wells completing now there are in the condensate window so bigger rates coming from the play again next quarter. I’ll hold the longer stuff and trade out of this recent entry on any kind of a bounce towards $51 today.

  35. 35
    BirdsofpreyRcool Says:

    JB — thanks. Voted.

    So, as long as EXXID closes at or above 19.80 today, we remain in that ever-narrowing, flag-formation pattern. And that is a “bullish” pattern, right?

  36. 36
    zman Says:

    ATPG – “news” seems to have been already disseminated via rumors over last few days so not having a big impact today, however, given the size of the run, the size of the well, and ATPGs still pretty low valuation irregardless of the balance sheet which will improve more this year, I don’t think it has run enough and is just resting.

  37. 37
    zman Says:

    Thanks NIcky – just saw #9.
    BSJ – sent email.

  38. 38
    zman Says:

    Market sloshing about in front of Fed minutes at 2 pm EST.

  39. 39
    bloodystupidjohnson Says:

    RE: 37 — got it Thanks VTZ and thanks Z for being postman.

  40. 40
    Jerome Blank Says:

    Re: #35 BOP, thank you for the vote…the ascending triangle is a bullish pattern…since we are looking at a 5 min, this is intraday support and resistance..as I write this it looks like EXXID is breaking intraday trendline support…let’s see if if it quickly bounces back into the pattern or if $19.70 acts as resistance here…

  41. 41
    zman Says:

    Doing a little reading, hears to the FOMC minutes giving the market an afternoon wakeup call. Lots of things look like they are starting to think about getting pinned already but this is too soon for that and we still have oil and gas inventories tomorrow would should shake things up.

  42. 42
    Nicky Says:

    Dollar strength and oil strength looks very odd to me. In fact everything is shrugging off this move in the dollar today. Not sure that can continue.

  43. 43
    zman Says:

    Not sure I get why the dollar is bouncing this much …. housing data?

  44. 44
    Nicky Says:

    re 43 – on the thought that rising interest rates are inevitable I would guess.

  45. 45
    zman Says:

    ATPG well Milepost mentioned a couple of days ago, don’t see a press release, just the presentation slide. Stock just about flat on the day now.

  46. 46
    zman Says:

    Nicky – hear ya on 44, someday sure but not a day near us I think. My guess is the dollar rolls over when the FOMC minutes give the dollar bulls nothing to bite on. I’d think those guys would pay attention to building permits and not just housing starts but maybe not. Raise rates now and you ensure the double dip.

  47. 47
    Nicky Says:

    The house data was not good imo. We don’t need to be building more homes. We already have a huge oversupply.

  48. 48
    VTZ Says:

    RE 44: Respectfully Nicky, you’re crazy if you think rates are going up anytime soon other than a token quarter point and then a freeze for a looooong time.

  49. 49
    VTZ Says:

    RE 47: I agree with ya, housing starts increasing should be a bad thing… it means that market isn’t getting the right indicators.

  50. 50
    zman Says:

    V – Crazy was how the U.S. women’s team lost to Japan in Curling.

  51. 51
    Nicky Says:

    VTZ not saying they are just saying the market may be worried they are which is why the dollar is on the move.

  52. 52
    zman Says:

    Agree wholeheartedly with 51. This market has the collective memory of a gnat. I don’t see any hikes in 2010. After each set of Fed minutes, which I do bother to read, I read other guys, much smarter than myself in that arena, that say no hikes in 2010. I have seen nothing to change their opinion yet in the data or in the Fed speak.

    Larry Nichols of DVN will be on with Cramer at lunch talking about the future of gas in the U.S.

  53. 53
    zman Says:

    I also agree with the housing comment. We have too much as it is. Lumber prices have been shooting up of late,


    call that a rebubble.

  54. 54
    zman Says:

    EXXID – hmmm, not acting all that great in front of the meet and greet at Enercom. Probably price action is moot in front of further Davy news. Even though the story isn’t all about DJ, right now it is.

  55. 55
    BirdsofpreyRcool Says:

    EXXID — funny thing, it stayed green, even as the other two in the DJ Triad (MMR, PXP) turned red. So, who knows. Would like to see it achieve (and hold) $20. But, until DJ results are out, it’s really just a random bouncing ball.

    However, DJ final report card coming out soon.

  56. 56
    Nicky Says:

    SPX may have just finished a small wave iv with the gap fill to the 1095 area. If so we have a possible target area of 1105 for wave v and the end of this rally. Cycles look weaker tomorrow.

  57. 57
    bloodystupidjohnson Says:

    Z: I was at your current stock holdings. Do you think that on a total return basis, that your best performer was LINE — a MLP?

  58. 58
    zman Says:

    Well good news, Cramer calling the current environment in commodities a boom, lol.

    BSJ – I don’t give entry dates on there as I really don’t see the point, but LINE would be just behind the Bakken names, like KOG and BEXP on an annualized basis even with the dividend.

  59. 59
    choices Says:

    FWIW: (emphasis on W)

    This “may” be a contrarian indicator-I cannot remember when she has been right on the market.


  60. 60
    bloodystupidjohnson Says:

    Last year it was really breathtaking the moves of the entire mlp sector. Even stocks like MWE and NGLS had hugh price swings and stocks like XTEX or APL where off the charts.

  61. 61
    Nicky Says:

    OMG Choices – she is possibly the greatest contrarian indicator. Love it.

  62. 62
    zman Says:

    Market set up to break one way or the other off those numbers….very very quiet in advance.

    Choices – she’s a well paid pumper at least, lol.

    BSJ – Some day, when yields do move back up you can bet some cash parked in the MLP’s will come back out rather swiftly.

  63. 63
    Jerome Blank Says:

    EXXID trying to find support at the 50 perod SMA on the 30 min, if we can get a consolidation here the test for the day wil be to get back above intraday resistance now at about $19.70

    EXXID 30 min chart added
    EXXID 5 min updated…


  64. 64
    zman Says:

    Oil acting very much like it doesn’t believer the dollar move and/or that distillates demand has to creep up as industrial production rises for a 7th month, more houses get built, and more inventories get restocked.

  65. 65
    zman Says:

    Jerome – I was walking through BEXP charts with a friend who is a more of a TA guy than myself by a long shot. He said normally that’s one he’d say was up a lot and due for a pullback but upon looking at MACD and RSI (which has been elevated for awhile now) he thinks it could go on up a couple of bucks from here. In my book, the forward multiple is already stretched but I doubt the handful of analysts who have cut it to Hold go so far as to cut it down to Sell. The rest are milking it higher and talking about the next sets of wells that test a new area in Montana and the TFS in their Rough Rider area. So I could see it go higher in the near term as they drop another big lateral at Ross on the market, possibly next week, definitely within the next 3 weeks. Any thoughts?

  66. 66
    zman Says:

    And I should add that it is acting particularly buoyant in light of yesterday’s outperformance and the group action today.

  67. 67
    zman Says:

    … And now I remember why I don’t listen to CNBC. The DVN interview was pretty worthless. The Fast Money guys think exactly the opposite of what I think on the dollar and said that the dollar / market relationship has changed so its ok. I don’t buy that.

    NFX edging up here. Planning to sell those FEB calls taken this morning around the time of the FOMC minutes.

  68. 68
    zman Says:

    Notes from Enercom:

    Just a general comment, jackup building cycle has largely run its course – a positive for the likes of DO, RIG, ESV, RDC, NE who all have a shallow water segment. Deepwater to remain very strong all year, from Brazil, GOmex, emerging markets. Calling this a year of transition with 2011 looking very good for offshore.

    Mentioned Davy Jones – despite the potential, the analyst doesn’t see drilling activity on the Shelf ever getting back to its old levels (70s through 90s)

  69. 69
    bloodystupidjohnson Says:

    RE: 67 — If the fast money guys know so much, how come they go on TV, in the middle of a working day, and give away trading positions and ideas for free?

  70. 70
    zman Says:

    BSJ – exactly

    Listening to DWSN geo presentation at Enercom. I can never get into the geo stories but like to pay attention.

  71. 71
    Jerome Blank Says:

    #65 BEXP, a few additonal thoughts along the lines of #65, so I thought it might be easier to post a chart…

    BEXP vew#2 daily….


  72. 72
    bloodystupidjohnson Says:

    Could you image working for Cramer? He was know for throwing things like telephones, key boards, etcc at the walls and at some of his assts. The first time Cramer did that to me I would have kicked his ass. No job is worth that.

  73. 73
    zman Says:

    Thanks JB will have a look.

    BSJ – no way, no how.

    DWSN saying the Barclays E&P capital spending survey is out. Saying it sees 11% YoY growth for 2010 spending. That’s pretty strong but jives with what I am seeing (at least) out of my companies. More good news for service companies.

  74. 74
    isleworth Says:

    z- interested to hear your thoughts on Dawson. I own competitor TGE…….

  75. 75
    zman Says:

    DWSN CEO ~ If there is a link between climate change and human activity WE are it. Everywhere they put a crew it snow. Says to please call if you need seismic shot and you live in a warm sunny area. They are very busy.

  76. 76
    RMD Says:

    BSJ: remember at this time last year the MLPs were yielding 20-30% in the face of an about-to-be contraction in yield and risk spreads (as BOP has so helpfully chronicled). That lead to the monster MLP performance. Now they seem to be busy buying assets rather than raising their distributions. Longer term it is very unclear to me that they will increase production/share as an acquisition immediately is followed by a secondary. If true, performance from here is dependent on what yield the market demands from them.
    (This is my quick reaction.)

  77. 77
    Jerome Blank Says:

    Re: #71 BEXP…. one more thing… to addd to the complexity, the punch above resistance yesterday did ultimately break 50 day MA vol, so, as Zman pointed out, the breakout looked good…

  78. 78
    zman Says:

    Isle – I listen to their calls occasionally and I recall the troubles they have had. Sounds like they are looking at a better utilization rate year this year.

    RMD – I can’t argue with that, I see mine as an annuity stream and as long as the bottom doesn’t drop out oil and gas prices I’m happy holding and getting paid. I may add a VNR position as I still think they can add to their dividend again.

  79. 79
    zman Says:


    NFX – Sold the 15 Feb $50 calls bought earlier today, on the mid, at $1.45, up 45%, with the stock at $51.

  80. 80
    isleworth Says:

    Z- do you know what Barclay’s E&P survey had projected for 2009?

  81. 81
    Nicky Says:

    Joe Terranova says buy oil looking for $90 due to the geopolitical risk.

    Well all I can say to that is if the dollar continues to move up he is going to need to actually see some of this geopolitical stuff. Sounds like a speculator talking to me.

  82. 82
    Jerome Blank Says:

    Re: #77 BEXP one more follow-up…for another positive note….if you check out the 30 min chart…BEXP has held the first area of support at the 20 period SMA…(see micro trendline)…

  83. 83
    zman Says:

    Isle – I don’t recall, it would have been very low, so it would have gotten beaten as the year progressed.

    “Speculator” ~ not that there’s anything wrong with that.

  84. 84
    Nicky Says:

    Z – he doesn’t care what he says as long as he ramps his trade. So he’s long. Why anyone would follow him I don’t know – he seems to get whipped in and out of every trade he gives.

  85. 85
    zman Says:

    Ah, now that’s a touter, and yeah, there’s something wrong with that. I agree, the guy has no footing for his comments most of the time.

    Venoco about to start.

  86. 86
    zman Says:

    LINE – asked not to webcast. That stinks.

  87. 87
    BirdsofpreyRcool Says:

    EXXID up in 23 minutes. KOG not snorting coffee so much now…

  88. 88
    zman Says:

    JB – not quite clear to me if you have an opinion of whether it goes higher in the near term but I did vote!

  89. 89
    elduque Says:

    z- my take on the dollar is fundamentally I can’t conceive why it isn’t a lot lower. However, it is the ultimate super tanker hard to make it change directions on a dime. For now the direction is up and until it rolls over I wouldn’t assume it is going in the other direction.

  90. 90
    zman Says:

    Venoco I think also asked not to be broadcast. Looking forward to EXXID. Was thinking he could shed some light (maybe a glint) on the logs they have in hand now and what the new bit of hole, think its down to 29,100 looked like. Don’t think they have any fluid samples just yet, last test as I understand it, the RFT.

  91. 91
    isleworth Says:

    Z – you still liking LINE?

  92. 92
    elijahwc Says:

    GEOI: Cheap, obscure, and presenting at Enercom shortly after ATPG.


    Know it?

  93. 93
    zman Says:

    Seem to have top ticked the NFX and if it falls back to $50 again before the minutes are out I just may do it again. That was not a bad quarter and if analysts can’t figure out that the spending is tied to the strong cash flow afforded by $6.50 gas and $108 oil and higher production that is already built into the front half of the year via delayed well hookups and the abatement of curtailments and then through the deepwater development projects and an acceleration of their international ops and that that will allow them to beat estimates all year long, quarter after quarter, well, I just can’t help them.

  94. 94
    zman Says:

    Isle – I still own it and plan to for as long as I see interest rates staying low. When rates turn higher I’ll probably look to one that has more leverage to higher commodity prices as LINE is pretty hedged out. That assumes I’m correct in my thinking that 2011 will be the year where prices average north of $90 oil and $7 natural gas.

  95. 95
    BirdsofpreyRcool Says:

    elijah — if you don’t need liquidity, GEOI is a great little one to have in your energy portfolio. You’re in Houston, right? You should stumble on up toward the Woodlands and meet with the CEO. A more “down-earth-guy,” you will never meet. The Anti-Aubry, if you will. But, boy, does Frank know how to create “shareholder value.”

  96. 96
    elijahwc Says:

    Jeremy Grantham’s, GMO staring a position in ATPG. Small for them but big enough to put them into the top 20. My experience with Jeremy’s shop is that the fundie’s are pretty well in hand before they go there.

  97. 97
    zman Says:

    Sunshine – did you play that one on NFX?

  98. 98
    elijahwc Says:

    Thanks BOP. If one believes the powerpoint they are at a 35% discount to NAV. Only four second tier firms in coverage, so Enercom will give them something to talk about. Thanks again for the people color. It is what I was hunting.

  99. 99
    zman Says:

    Eli – thanks for the reminder, that’s on my list of todo’s today, a shelf position I’ve been meaning to add this year. Will be doing options first, March’s.

  100. 100
    zman Says:

    EXXID call started.

  101. 101
    sunshine Says:

    NO 🙂

  102. 102
    zman Says:

    Do you want me to tell you how to change your call sign back?

  103. 103
    zman Says:

    You’re smiling because you missed a 2 hour, 45% gain? Hmmm.

  104. 104
    zman Says:

    EXXID – not hearing anything new.

  105. 105
    zman Says:

    BOP or Reef – do you recall if we have 4 or 6 sands now at DJ?

  106. 106
    BirdsofpreyRcool Says:

    EXXID — no. Nothing new. But love hearing the story. The geology lesson herer is just a complete game-changer. When Schiller talks about what we all “used to believe,” he is talking about my generation of geo-scientists. So, this stuff is just fabulous. Just like the Bakken defied previous geologic mental models (“oil from SHALE?”). This stuff is just a lot of fun… so much to learn. And you get to make $$ too!

  107. 107
    zman Says:

    Davy Jones TD’d at 29,112 feet

    Doing a well clean out now. Then will run SLB’s XFT – Extreme Formation Tester. Said he gives it a 50/50 chance of recovering a fluid sample (due to the depth, pressure, heat), just difficult.

  108. 108
    BirdsofpreyRcool Says:

    Schiller is trying to tell you that DJ is going to be a very productive well. Just listen to his geology lesson. There were a lot of little organic stuff that was deposited there, turned to oil, then gas and acid. Preserved porosity and is very organic rich. DJ should be nice.

  109. 109
    1520sbroad Says:

    Z – you going to listen to GMXR? any commentary appreciated…

  110. 110
    zman Says:

    Re 106 – agreed, very good lesson.

    Will spud the offset Davy Jones well in maybe 6 to 8 weeks.

    BOP – as I have it, the discovery well, due to smaller tubing size will be a 30 to 40 MM/d producer 8/8ths. Then you have 9 or 10 development wells to start, each designed for 100 MM/d.

  111. 111
    zman Says:

    1520 – yep, plan to. Don’t own it now but may again sometime soon.

  112. 112
    zman Says:

    BEXP just itching to break on higher, another good day on volume for this time of day, up 2%+ vs a red to flat at best group.

  113. 113
    1520sbroad Says:

    #111 – thanks – i own it and am debating my next move. I can’t listen to the webcast.

  114. 114
    BirdsofpreyRcool Says:

    z — 110 correct. That is why the development wells will cost about 25-28% more than this initial DJ well… they will start with 36” diameter casing. That is a heck of a big hole to drill, a lot of pipe to run, and a lot of steel to buy. But, bottom line, should pay out quickly with those sort of daily production rates. Another game-changer, for shore.

  115. 115
    zman Says:

    GMXR Notes:

    New wells are 50% higher IPs than year ago, probably a function of learning curve and of drilling more in the core.

    3 rig program

    FOMC out – talk of asset sales.

  116. 116
    Nicky Says:

    Fed officials mull 25 basis points discount rate rise.

  117. 117
    zman Says:

    GMXR –

    Reserves – 53 of 100 Bcf writedown, prudent to not count non-operated PUD locations. Calling it a non-event.

    They got not Haynesville PUD locations due to low gas prices, based on their average well size. The newer wells metrics were good enough that they could have booked proven undeveloped locations even at the low gas price ($3.86), but not the average well.

    Spud to sales are down to low 60 day range.

    Spud to TD is in the 20 range. That’s good and similar to other operators.

    They have 3 of their 4 HP flexrigs running now.

    TEXW – Do you use those guys? Have been thinking of tracking HP closer.

  118. 118
    zman Says:

    Re 116 – discount window is not a big factor, read a story on how its not much used these days, will see if I can find. I think they mentioned this before, a couple of weeks back, right?

  119. 119
    zman Says:

    Here’s that article:


  120. 120
    zman Says:

    GMXR – saying there is a market for the flexrigs at this point and they may sublet their 4th rig.

  121. 121
    Nicky Says:

    Yes agree Z and its factored in anyway I think that they could do this at anytime.

    Gold falling, oil rising – not quite sure which one is leading the way.

  122. 122
    zman Says:

    From that 2/10 article:

    Former Fed governor Laurence Meyer said last month that the Fed was close to raising the discount rate.

    He predicted that the Fed would not move the rate without an initial signal from Bernanke precisely because the market might misinterpret the move.

    Even with a higher discount rate, Meyer doesn’t see the Fed tightening until 2011.

    One reason the Fed wants to increase the discount rate well before it feels the need to tighten monetary policy is that the low discount rate has allowed something of a “carry trade” for banks, Meyer said. Banks have been able to bypass the market and borrow at the discount rate and then arbitrage into higher paying liquid assets.

  123. 123
    1520sbroad Says:

    #120 – interesting.

  124. 124
    zman Says:

    Nicky – Looking more bullish post notes


    $200 mm spend (flat spend)
    13.5 Bcfe (check this #–) for 2009 with an expectation 17.5 Bcfe for 2010.

  125. 125
    Nicky Says:

    GS and XLF are red Z. For now we are still in a consolidation pattern but….

  126. 126
    zman Says:

    Nicky – yeah, pretty touchy market, dollar stronger after FOMC notes.

  127. 127
    reefguy Says:

    DJ- Four Sands by my count… me thinks the XFT gets stuck 🙁

  128. 128
    zman Says:

    Reef – that a hunch based on timing or something else? Was wondering as I flipped through the cartoons on the sand as I saw one with 4 perforations, another with 6. I recalled 4.

  129. 129
    RMD Says:

    #76 further comment on MLPs not increasing production on a per-share basis: slide 6 on LINE’s presentation would dictate acquiring assets, not increasing distributions, given the large margins available in the acq. market.

  130. 130
    Jerome Blank Says:

    RE: #125, #126, to add to the mixture…$indu (cash Dow) and $ndx (nasdaq 100) back on P&F buy signals… four indexes now on buy signals $spx, $rut, $ndx, $indu…

    EXXID testing the intraday low now…

    RE: #88 Zman, thank you for your vote…

  131. 131
    zman Says:

    Oil up $0.33 cents on the close after the run we’ve had and with the dollar up a full percent. Very odd. Gold not really buying it either, only down $5 but I find easier to fathom than the oil move. Could be the distillates expectation is not calling for a big enough drawdown or that gasoline demand should bounce back post storms and that build is too big. Some traders are better that way as RBOB is up a percent itself.

  132. 132
    zman Says:

    RMD – that is their stated plan and with distribution coverage tight by their own historical standards and all the production hedged through I think 2013 you can really forget about anything but a token nudge higher to the distribution rate. On the flipside, they have been very good at buying properties low and selling high.

  133. 133
    zman Says:

    Contemplating selling my remaining BEXP FEB position later today and swapping the proceeds into doubling up my WLL March position. Just cheaper and I still have BEXP exposure, just not as much at these steep valuations. If it rolls lower into a sort of angled up trading range (higher low than the old $13 one, I may go to an overweight there again waiting on well news).

  134. 134
    bill Says:

    exxid is down .. i thought they had a good presentation

  135. 135
    Jerome Blank Says:

    Natgas went on a relative strength sell signal vs. oil today…

    EXXID…did anyone hear anything in the EXXID call that would make me not want to look for the right spot to buy down here?

  136. 136
    VTZ Says:

    I think gold is waiting to see if the dollar breaks significantly above 80.50 or fails to make a new high before breaking down.

    If the dollar cannot make a new high I think the gold bulls come back in force as the breakout above the bearish flag will hold and alleviate selling pressure.

  137. 137
    zman Says:

    Jerome – re EXXID – nothing in the press release but as Reef points out they have tripped out of the hole to clean it, then will run the tool that will give them pressure and sample fluid data. Schiller put the odds of that working at a coin toss. As Reef said, it could get stuck. Stuck is not the end of the world, it’s just very expensive and delays things and can generally cause lots of headaches and some selling in the shares depending on how stuck we’re talking about. They can try to jar it free or they can do other things (dunno, maybe sidetrack around it but not sure if it got stuck very low in the hole how much of an option that is at this depth. Don’t know how big that tool is, lots of them are pretty tall, expensive deals. Could you ream it out Reef? Sort of doubt it.

  138. 138
    zman Says:

    Jerome – thanks for the NG vs oil thought. If you don’t see a 200 Bcf + withdrawal tomorrow, it will become apparent in the price of gas as well. I’m at 210 to 220. 215 puts us at the 2 Tcf mark. Next week should be a pretty good sized draw and I see no reason to think we won’t come in around the 1.5 Tcf trough level which should be OK for gas this year.

  139. 139
    Nicky Says:

    I want to see a small sharp move up from here to complete v. It may take until early tomorrow.

  140. 140
    Jerome Blank Says:

    Re: #137, thanks Zman, I’m thinking I’ll take at least some add’l risk on that…

  141. 141
    zman Says:

    Interesting to see HAL and SLB flat but other service working higher now, especially HP, WFT. Guessing WFT could really use those Iraqi dollars mentioned in the post and HP is getting some play off Enercom comments.

  142. 142
    Nicky Says:

    re 139 – that was indices. But oil looks in the same place to me. One more push up to finish the move. Maybe the API does that.

  143. 143
    zman Says:

    Tom – HK just announcing their call for 4Q for next week, so it seems they will have one. I don’t think they have much in the way of earth shattering news unless they alter guidance or surprise people with early comments in the oily EFS Zavala county test. Really don’t see that happening. Best thing they could announce is a monetizaton and for that prospect and for the fact that its been overly beaten down I will take some March calls, small, in addition to the common I already hold. My Feb calls here are toast.

  144. 144
    zman Says:

    Jerome – Could I trouble you for a read on HK?

  145. 145
    AAA Says:

    Z, re DJ, what’s the point of this testing, particularly if there is a risk of fouling the hole? Why not just stick a straw in that milkshake and start slurping it up?

  146. 146
    jiveyjr Says:

    I just added a small amount to KOG..

  147. 147
    zman Says:

    AAA – interesting question. Reserves woudl be the short answer. Get fluid in hand with logs, and all the other data and you can book reserves. Also, as I understand it, they want a better understanding of fluid characteristics before the design their development program. Not everyone would do it this way. There is probably a financial angle to it too as logs are one thing but fluids are just short of proof. Get that in hand and you can book reserves, along with perm and porosity and you have higher stock prices all around from which to float deals (thinking MMR more than EXXID on that).

  148. 148
    zman Says:

    WLL apparently not webcasting from Enercom.

    ATPG on just after the close. Stock stuck all day.

  149. 149
    BirdsofpreyRcool Says:

    JB #135 — hope you followed thru there. I could hear of no reason for EXXID to be down, following Schiller’s presentation. Just the Push-Me / Pull-Yous of this current market environment, imho.

  150. 150
    BirdsofpreyRcool Says:

    MMR and PXP now up, EXXID down. Go figure.

  151. 151
    zman Says:

    WLL trying to go out at HOD.

    CFPS 2009: $9.92 7.3x
    CFPS 2010: $15.79 4.6x … pretty cheap for the potential here and the CF growth.

  152. 152
    zman Says:

    Re 149, 150. Yep, market noise.

    Fair warning on the BEXP Feb calls.

  153. 153
    Jerome Blank Says:

    RE:#144 HK…dailing down intraday, HK looks good today…HK closed a gap higher this morning but bounced and has been holding up all day…but HK is currently still on a P&F sell signal in o’s, currently trading a bit weaker than others, and trading below P&F trendline resistance, so we need to at least get HK back into x’s on a print of $24…if you check out the daily chart you can see that HK has a guantlet of moving avg resistance at about $24, so a break above this would be material…because of HK’s huge swings, I can easily see it testing channel line and P&F trendline resistance at $26, if the mkt is supportive and we get back into x’s…

  154. 154
    West Says:

    This is from Yahoo message board from person who is at conference……AT63 Flow update & Telemark production 17-Feb-10 02:09 pm The 10.7mboe/d is from the cleanup of E3 (24.5′ net oil) & E4 (39.6′ net oil). E6 (50.3′ net oil) has not been flow tested.

    E3 & E4 are to be produced together E6 will not be produced at this time so more production can come from Mirage & Morgus. E3 & E4 have what is termed a “Smart Completion” – Individual hydraulically operated openings so each can be controlled separately, 1 open 1 closed, both open, 1 1/2 open etc, to manage the individual pays for best performance.

    E6 has a mechanical completion so it is not planned to be opened until E3&E4 start to diminish.

    The flow was right within their targeted range so no reserve updates at this time, LT 6+ month production rates can indicate differences in reserve.

    All 4 wells will be completed as planned, contracts preclude postponing Morgus#2. Once Titan hits max production, more production will be shut-in to maximize production from Mirage & Morgus – the sooner these are drained the sooner Titan can be relocated.

    Upgrading Titan to the downstream max of 35Mboe/d & 75MMcf/day is possible (actually designed for 100MMcf/day – just needs a 2nd set of compressors).

    MinDOC-II is not off the table either if oil rises ($100/bbl) and additional reserves are found or upgraded.

    “If the economics are present to accelerate we will surely do” – ‘IF’ the biggest word in the dictionary, so whether it makes more sense to upgrade Titan or build another is purely based on future situations not current production profile or Oil price. Another factor that could make them go with MinDOC-II is if Vito ends up being tied back to Titan. It was also stated that it would be no problem to increase well beyond 35Mboe/d (max of 16 mile tieback), stated if the project needed it a 2nd tieback would be used as Shell’s Mars pipeline reportedly has plenty of space.

  155. 155
    Jerome Blank Says:

    RE: #149, thanks BOP…

  156. 156
    zman Says:

    Thanks JB. Was looking at those MA’s when I asked. I don’t see a catalyst to drive it higher other than the undue (my word) punishment it has taken for 40%ish growth that will see beat after beat as the quarters come out throughout the year. I say no catalyst in the form of well results … but if they get something sold or VPP’d then I think it jumps at least to $26+.

  157. 157
    zman Says:

    Thanks for the update West, planning on listening to their presentation.

  158. 158
    zman Says:

    Tonight we have API

    estimates are:

    crude up 1.6 mm bbs
    gaso up 1.5
    dist down 1.5

    Tomorrow we have claims, PPI, Philly Fed, and Leading indicators along with both the oil and gas inventories.

  159. 159
    reefguy Says:

    DJ- XFT- so when that thing gets stuck, we can push it to bottom and pay a big fee ($1MM???) to SLB, or we can spend about 300k a day for the rig to fish this bad boy out.

  160. 160
    reefguy Says:

    TAT- Transatlantic Petroleum…why does TBP own 2,000,000 shares? Even more strange, why does MSD(Michael Dell) own about 30,000,000???

  161. 161
    zman Says:

    Re TAT – don’t know reading his book now. As far as Michael goes, because he has a lot of cash, doesn’t need more of his own stock and missed out on the APPL ride.

  162. 162
    reefguy Says:

    160- Answer my own question. The chairman of TAT is from Amarillo, Malone Mitchell also a OSU grad….

  163. 163
    zman Says:

    Reef – TAT – Thanks for getting me started. So not my area. Closest I get to Turkey is PXD. Now I have something else to read about at night, great, thanks a lot.


  164. 164
    West Says:

    Reef, My understanding is that both were investors in Malone Mitchell III’s Riata that was sold to Tom Ward and became Sandridge.

  165. 165
    bill Says:

    chk out

    stunning loss


  166. 166
    zman Says:

    Bill – you know it’s non cash. That’s 77 cents vs $0.70 expected. EBITDA is $1.256 B vs $1.118 B expected.

  167. 167
    BirdsofpreyRcool Says:

    reef — a guy we both know is ALL OVER tat. He thinks MM walks on water. Thing is, he probably does… but it’s unclear if he can in Turkey. You don’t just roll into someone else’s country and assume you can understand the rules and regs well enough to duplicate domestic success. Anyway, have a couple of people looking that one up and down. No doubt, MM is very very good at what he does.

  168. 168
    zman Says:

    Found the link to WLL presentation, 15 minutes out.


  169. 169
    VTZ Says:


    The next shoe to drop will be when they try to sell those assets back to the market and realize they can’t sell them at all, or at least without demonstrating the value of all the toxic assets on the balance sheets of the financials. Good thing they don’t have to really mark-to-market anymore and they can mark-to-myth.

  170. 170
    isleworth Says:

    LINE slides from today’s presentation up on their website


  171. 171
    Nicky Says:

    VTZ gold selling off again after the close. I think oil joins it tomorrow.

  172. 172
    cargocult Says:

    What does the $11B impairment from CHK mean?

  173. 173
    VTZ Says:

    Could be Nicky. Dollar needs to make a new high then.

    RE 169 one more time: If they can’t sell those assets with that silly PPIP that takes away a tonne of the downside and gives most of the upside then how do they expect them to sell for equal risk.

  174. 174
    zman Says:

    re 172, have not yet looked, would assume it’s price based revision along with the five year rule on PUDs going into effect. It means that at the SEC’s gas price, those reserves are not economic. Flows through the income statement to the balance sheet but is non cash. The reserves are still there, just not according to the new rules.

  175. 175
    zman Says:

    API must have come in slightly bearish side.

  176. 176
    zman Says:

    WLL – doing a better than usual job with their presentation explaining why they get the big wells they do in Sanish vs Parshall vs everything else, talking about their dolomitic sandstone interbedded in the m. Bakken at Sanish.

  177. 177
    zman Says:


    Crude: Down 63 m barrels
    Gasoline: Up 1.428 mm
    Distillates: Up 1.283 mm

    API has been directionally right of late. Crude down would likely be a combination of higher utilization and lower imports, have not seen how API saw these for this report though.
    Gasoline in line is fine
    Distillate #, this gave oil a bit of a slip at the release but not a big reaction overall.

  178. 178
    zman Says:

    I’ll have WLL presentation notes in tomorrow’s post.

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    elijahwc Says:

    Gold: From breifing.com

    DJ reports the International Monetary Fund said it will soon begin selling to the market the remaining 191.3 metric tons of gold it has slated for release, though the sales will be conducted in phases to avoid disrupting markets. The sale of gold, currently worth nearly $6.9 billion, will begin “shortly,” the fund said in a brief statement. “In accordance with the priority of avoiding disruption of the gold market, the on-market sales will be conducted in a phased manner over time,” the IMF said. The IMF noted that central banks in Europe have said they can accommodate the fund’s gold as part of their scheduled sales in the Central Bank Gold Agreement. The IMF board approved sales of 403.3 metric tons of gold in September to create a more stable income model and boost support for low-income countries. About 212 metric tons have already been sold off-market to central banks of India, Mauritius and Sri Lanka. The IMF didn’t rule out further off-market sales, which would reduce the amount sold to the market.

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    VTZ Says:

    Of course it’s going to be off market… as if China is going to pass on 200 tons of gold. China succeeded in talking gold down for this exact purpose.

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    VTZ Says:

    If China pays more than India, the market is going to go berserk.

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    VTZ Says:

    You look right now Nicky.

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