Thursday Morning Pause

Posted on by zman

 


Market Sentiment Watch: Tense.  My approach to this earnings season is going to shift from "in before the beat and all the good news" to a more "go with a token position, waiting out the reaction" as I've seen a number of decent results met with tepid reactions and confusion over the new reserve rules. So look for me to be lightly in my favorite names for the remainder of earnings season with an eye towards adding (or not) after results are out. WMT's outlook was lower than expected setting a more cautious

  • Eco Data Watch:
    • Jobless claims: 473K vs forecast of 447K and 440K last week,
    • PPI: 1.4%(core 0.3%) vs forecast of 0.9% and a core forecast of 0.1%,
    • We get Philly Fed (forecast 17) and leading indicators (forecast 0.2%) at 10 am.


In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today - CHK, WLL, APC
  5. Odds & Ends

Holdings Watch:

  • $10KP II:

    • $16,400
    • 42% Cash

 

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


Commodity Watch:

Crude oil inched up $0.32 to close at $77.33 yesterday. After the close, the API released a slightly bearish looking set of numbers; crude saw an unexpected draw down, gasoline was in line with Street thinking, but distillates were unexpectedly up (see below).  API has been directionally in line with EIA of late. If crude stocks were lower due to a small recovery in refinery utilization it might explain the distillates product build, however this time of year, we need to be tunneling through distillate stocks, not building them up. We still have not seen any sort of recovery in distillate demand but given the winter weather AND the ongoing restocking of inventories one has to think its a matter of when and not if.  The EIA will release oil inventories at 11 am EST today. This morning crude is trading of $0.60+ after the jobless numbers.

API Watch:

  • Crude: Down 63,000 barrels
  • Gasoline: Up 1.428 mm barrels
  • Distillates: Up 1.283 mm barrels

 

Oil Inventory Preview


Natural gas rose $0.08 to close the day at $5.39 ... and we continue to be range bound. The EIA is set to release inventories at the regularly scheduled time of 10:30 am EST today. This morning gas is trading $0.05.

     

  • My Read On Natural Gas Storage: 195 to 200 Bcf withdrawal.  Imports were flat with the prior week and gas weighted degree days were up slightly week to week at 239, and much better than the year ago reading of 143 HDDs which prompted the weak 44 Bcf withdrawal last year.
    • Last Week: 191 Bcf withdrawal
    • Last Year: 44 Bcf withdrawal
    • 5 Year Average: 154 Bcf withdrawal
    • 10 year Hi: 228 Bcf withdrawal
    • 10 year Low: 24 Bcf withdrawal
  • Street Consensus: 190 Bcf withdrawal

 

  • Bastardi Watch: I know it's early but Accuweather's Bastardi is out with a prediction of a busier hurricane season. Joe was very good this winter with his December To Remember and Frigid February calls so it's probably something to keep in mind as the season approaches.


Stuff We Care About Today

CHK Wrap

  • The numbers were solid once you pull out all the non cash items.
  • I'm not going to run through the quarter as they had preannounced production and guidance (see yesterday's post for their guidance). The call is always worth a listen, both for CHK company specific takeaways (I still own the common) and for Aubrey's gas macro comments regarding rigs, production, and initiatives like the Natural Gas Act.
  • Nutshell: CHK, much like smaller look-a-like HK, is in the doghouse with the Street regarding capex vs cash flow this year, as leasehold requirements (drilling it up to get it held) takes precedence through probably mid 2011 over whether or not certain territory is economic or not at the moment.
  • Conference Call: Today, 9 am EST.

NFX Wrap Comments

Nutshell: 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. Valuation: Just to keep score, the Street has 2010 CFPS at $11.30 and I see that number moving north of $12 in fairly short order. Consensus for 2011 is $11.52, also a number that will have upward momentum.   Even at the current low ball estimate, NFX is trading at 4.5x 2010 CF, low to its mid cap peers.

Windjammer Prospect:

  • The well has been drilled to 14,000' , expected TD is 18,100'
  • 480 net feet of natural gas pay and counting
  • APC operates with a 43% interest.
  • This may give the stock a decent boost today...it's their first well off Mozambique in APC's burgeoning deepwater Africa program (but this time around the Cape from its efforts at Jubilee) it provides further evidence that APC's deepwater skills honed in the Gomex are paying off in its international efforts.
  • When you look at this map of the area, you can see APC is just getting started with this first test of seven different play types. Note the next prospect they will test, Collier,  is at the far southern end of their exploration block from Windjammer.


Enercom Conference:

WLL Presentation Comments From Enercom Yesterday:

  • 30 day average Bakken rate: 866 BOEpd from their 106 wells drilled to date in Sanish and Parshall fields.  This is skewed lower by the early, shorter lateral, less than optimally completed wells. Look for this average to come up with results next week.
  • Increasing frac stages: their first 25 stage frac coming this quarter (but not by next week's 4Q press release). Recall that these guys have been putting up bigger IPs than their competitors with long laterals but with fewer stages. Good ground to hold.
  • Louise & Clarke project kicking off the new year a little early, as a rig that was expected to be in the field in April is drilling ahead on the first of six wells now.  This is where they had the nearly 2,000 bopd Three Forks test last November, far and away from their core Bakken acreage.  They added that this program may be accelerated later this year.
  • CO2 projects - update coming  with the quarter - "you will like what you see"-
  • Valuation:

    • CFPS 2009: $9.92 7.3x
    • CFPS 2010: $15.79 4.6x
    • Debt to cap as of end of 3Q of 25%
  • I own the common and some March calls

 SFY Conference Call, 10 am EST - just looking for an update on their Eagle Ford Shale ops in the western Maverick Basin.

Odds & Ends

Analyst Watch:

  • XEC target upped from $62 to $66 at UBS, rating Buy
  • XEC target upped from $59 to $68 at Lazard, rating Buy
  • DVN - target trimmed $2 to $70 at Credit Suisse, rating stays Neutral

187 thoughts on “Thursday Morning Pause”

  7. CHK –

    Eagle Ford – how active? First well not fully tested yet, looks promising, they are in the northeast part of the play, because in their view they didn’t need more gas (no kidding) so they are working on the combo, oily part of the play.

    Bossier – won’t begin aggressive development until the Haynesville is into HBP status in 2011.

    Plan is to get Barnett, H.S., Fayetteville into HBP and then transition rigs to the oilier plays.

    …

  10. Nicky – the reversal there comes on the back of gasoline, up double %-wise crude, anybody see any refinery fires, news, etc?

  11. WLL-West Texas CO2 is VERY prolific play for them and they have thousands of acres yet to flood. They have a system that no-one else utilizes in CO2 flooding, and it allows them to have CHEAP lifting costs, CHEAP!

  14. For the Canadian interested – PWE earnings out this morning. Viking and Cardium plans outlined for 2010. I’m still workgng thru the details in their release.

  16. CHK – not disclosing counties in EFS, not saying exact plans, sounds like a testing year this year, probing the oily window, then ramping next year.

    TEX – Her comment comes on the back of a 15 minute, $1.50 rally on a down equity market, up dollar day. I see a lot of volatile new Iran rhetoric, (well not new but its out there again), but no bombs.

  17. To me its just a spike and is completely unsustainable. Looks like a v. We will see but I suspect today will mark the top.

  18. Epperson on CNBC saying it’s an odd oil move … so probably no big news out or someone would have told her. Move is pretty moot in front of the oil inventory report. She also pointed out that MasterCard survey showed gasoline demand was at its lowest level since October 2008 …. I doubt that will be reflected in the EIA numbers. That Spending Pulse survey is hinky.

  19. Nicky – definitely coming from gasoline, which has been trailing off. As the dollar fell back to flat a few minutes back, gasoline shot up 1.5%, dragging crude up. Again, odd in light of the MasterCard numbers.

  21. TechTrader with a low conviction 55/45 SHORT day trade today.

    HeadTrader is thinking he would buy dips.

    TED is still showing stability, with a 15.7 bps read

    Credit Markets are slightly green.

  22. EXXID — never put a stop loss on that one… trades with wild swings and large bid/ask spreads. Guess that is a by-product of the 5 for 1 split? Don’t know. It is one jumpy puppy tho.

    Just in Wait Mode for the last Davy Jones assesment. Think this Friday would be too soon. Could be Monday. But watching and reading the tea leaves there.

  25. NFX – anyone see fresh numbers/comments from the Street today, that looks to be inching back up, see my wrap thoughts above.

    CHK comment:
    When plays get into Held by Production:
    2010 – Fayetteville
    2011 – Haynesville
    2012 – Barnett
    mid teens – Marcellus

    They have already cut their F.S. rig count in half and on this time line will be cutting rigs in the big gas shale plays and moving them to oil drilling. The slight boost in 2010 and 2011 spending represents a net decline in gas spend and an increase in liquids focus.

  27. KOG — those well #10 results were — in a word — Fabulous. Why the stock traded down and seems to be stuck in neutral? Don’t know that one either. But, once the market gears engage there, KOG should move up.

    Was someone disappointed in KOG’s TFS timetable? They are waiting (wisely) for results from a Peak Energy well located a coupla of miles west of KOG’s acreage. KOG has a well-log sharing agreement with Peak… so, it only makes sense to wait on drilling the TFS until they get a look at Peak’s results.

    Understand that Peak’s well had some delays… but, for this to be a reason to diss KOG’s recent operational update? Sheesh. Well #10 was great. No reason to believe Well #11 (drilled from the same pad) results (by end of Feb) will be much different.

  29. BOP – I think the KOG flatness is just that we didn’t get 11 with 10 and things seem a bit slow compared to some other more active names in the play. Agree good IP on that well.

    BEXP approaching $17.

  31. FYI for you Holy Trinity people: Jim Bob will be making a speech today at the Houston Petroleum Club around 11:45am to the Society of Independent Professional Earth Scientists (SIPES). The meeting size had to be cut off at 375 people due to the overwhelming requests to attend….

  35. Jerome — both KOG and EXXID are oily names. KOG has no debt. EXXID is loaded to the gills with debt. However, both will be nicely able to fund all their 2010 drilling programs from internally-generated cash flow. KOG is totally unhedged, at this point. EXXID has some hedges. If oil tanks, both these names are going to go down. If oil stays in this range, both should go up on improving reserves and cash flow.

    KOG has near-term events of announcing results from well #11 and putting a new revolver in place (Key is their banker, but they have also been talking to Paribas). EXXID has Davy Jones results pending, of course. I do not expect negative news on any of these fronts. That is the story there, fwiw.

  36. jat #31 — thanks for the head’s up there. JimBob has single-handedly rewritten the geologic concepts of the GoM shelf. I would stand in the back of the room, to hear him talk about the geo-picture he has put together.

  37. BOP – Don’t mind seeing Paribas in there since KOG’s balance sheet is pristine. But for those who don’t know, those guys will yank you around terribly if prices are low, they have very little patience and apparently like to force BK’s.

  42. BEXP reports next week, thought it would be the week after. Look for another 4 or maybe 5 wells, including the long lateral, high frac stage count Ross well, as well as an update on guidance. Don’t look for a financially barn burning quarter. Many of the recent high rate Bakken completions have been part of the USEG JV which keeps their % of the flush production keyed down until payout. But, with 1Q we should see stairstep growth in volumes throughout 2010. I expect them to maintain a 4 rig program in the Bakken with spud to TD to press release times falling as the year progress and to at least growth oil production by 100% from 4Q09 to 4Q10. We should also get an update on the timing of a Three Forks Test at Rough Rider and the timing of a Bakken Test at Ghost Rider (east Montana)

    Gas inventories in 10 minutes.

  44. If we get a big gas number I’ll be looking at SWN (largely unhedged) but also UPL and RRC for a quick gas trade. A little trickier than usual today as you have oil #s 30 minutes after the gas report.

  45. SFY – plan to complete 2 more E.F.S. wells in 1Q10, one will be with their partner in McMullen Cnty (APC).

    SWN – dropped like a stone in front of gas numbers.

  50. we now need to break 1095.50 on the spx to confirm that we have completed an ending diagonal and that this move up this moving was not a leading diagonal of a greater move to the upside.

  52. Gas off a dime now, not a big reaction to an in line number. 5 or so more weeks of winter, still no trouble getting to 1.5 Tcf which I feel would be supportive of gas through the shoulder season.

    No quick trade on gas from me yet as the number is fairly blah and the POTUS is still talking the market lower. And we have oil numbers in 30 minutes.

  53. SFY Notes:

    Eagle Ford
    2 – 100% WI wells about to complete
    3rd well, 50/50 with APC drilling
    (will complete and test all 3 in March)

    2 rig program all year on their 100% acreage.

    Analyst meeting next week (been to this a number of times, good overview, and in front of what should be a good year as they resume operations in a number of areas where they had constrained activity last year)

  55. Re 49: I haven’t had a chance to read through yet but I plan to.

    Is there any highlights in their capital plan update for 2010?

  56. Crude spike…hadlines possible coup in Niger (bbg headline said “Nigerien” which is very close to “Nigerian”) some confusin around that..also , crude expiration on Friday and Dollar related trading.

  57. Coup Attempt Launched in Niger
    2010-02-18 14:39:01.352 GMT

    By Mike Pflanz, West Africa Correspondent
    Feb. 18 (Telegraph) — Elite guards are fighting to put down a suspected coup attempt against President Mamadou Tandja in the uranium-rich African country Niger.
    The sounds of machine-gun fire and heavy weapons were heard from the government district of the capital Niamey, and smoke was rising from the presidential palace.
    It was not immediately clear who was behind the apparent attempt to oust President Tandja, who changed his country’s constitution in August to allow him to stay in power.
    “We heard automatic gunfire and then large detonations. The house was shaking. It lasted about a half hour, non-stop,” Claire Deschamps, a French national living in Niamey, told the AFP news agency.
    Soldiers were blocking the road near to the prime minister’s office, and all other streets nearby were said to be deserted, with shops shuttered.
    The president was not thought to have been injured during the first bout of sustained gunfire.
    A member of his personal staff at the presidential palace told the Reuters news agency that “for now everything is alright”.
    But tensions have been rising in the vast West African country on the southern fringes of the Sahara, since the constitutional amendment two months ago.
    Mr Tandja forced the change through by claiming that “his people” wanted him to stay past his prescribed two term limit in order to “finish the work I have started”.
    At the same time, he dissolved parliament and awarded himself extra powers, moves which drew international criticism and sanctions from neighbouring states.
    Mr Tandja won elections in 1999 and 2004 that were widely seen as free and fair.
    Niger produces close to eight percent of the world’s uranium, traditionally in partnership with French and Canadian mining firms.
    In the last two years, it has signed deals with two Chinese state owned companies to extract uranium and pump oil from new wells. One of the Chinese deals, agreed in June 2008, is worth £3 billion.
    Niger, where the main religion is Islam, is one of the countries in the region where Al-Qaeda in the Islamic Maghreb – the network’s North African affiliate – has become active.

    -0- Feb/18/2010 14:39 GMT

  58. Nifkin, right thanks, saw the Epperson comment, always get odd trading in front of witching should have mentioned. Others talking about dollar having popped up to but failed to exceed its recent high and then quickly backed off. Stocks coasting in front of oil numbers.

  61. Wow that EIA data is completely different to the API data. Looks bearish on the face of it but they can use distillates as an excuse to run it I suppose.

  62. EIA Oil Inventory Report

    Crude up 60 cents at 77.90 pre report

    Inventories:
    Crude up 3.1 mm barrels
    Gasoline up 1.7 mm barrels
    Distillates DOWN 2.9 mm barrels

    Imports: 8.5 mm bopd, up slightly

    Demand
    Gasoline 8.521 mm bpd, not great, OK
    Distillates 3.787 mm bpd, up, good to see

    Not a bad report …

  63. ng stuck in a trading range of 5 low and 6 high

    last 30 days

    high of 5.804 on 01/22/10 and a low of 5.060 on 01/28/10

    today low around 5.25 while fundamentals getting better.

    East and producing below 5 yr averages and we get another 190 next week

  65. Cushing stocks fell again, so again, supportive of crude.

    Gasoline was off a little more than I’d like to see but again, they will forgive some of that over all the snow. Inventories of gasoline are no longer high so not a big deal.

    But very good to see the distillate draw down as those have been missing. Will pull the YoY but demand is not in the same big double digits down as we have been seeing with this report.

  67. Nicky – right, API missed on the distillate number, they’ve been in line of late, but not today, as EIA is looking at a big ramp in demand (finally). Took a look at the YoY, still down 13%, my bad memory on that comment above, not quite there yet. Still good to see the big draw which goes against an 800,000 barrel draw last year but is in line with the 5 year average.

    Oil up 70 cents, HO a little better than pre report, RBOB lower than it was.

    Stocks will pay more attention to the broad market from here on.

  68. Bill – your MCF looks to be quietly breaking out.

    ATPG getting no follow through from their presentation yesterday, watching.

    PXD popping up, but too little too late for me at this point.

  69. ZTRADE:

    ROSE – Added (20) more March $22.50 Calls for $0.45 (high side of mid) with the stock at $20.12. Looking for Montana Bakken and Eagle Ford results from them in the next 3 weeks. Stock has recently pulled back with the group.

  70. tempest in a teapot or worth something?? thanks
    Weld oil discovery has officials bracing for drilling-lease rush
    The Denver Post
    Posted: 02/18/2010 01:00:00 AM MST

    A rig belonging to Anadarko Petroleum drills in the Wattenberg Field area in Colorado. (Denver Post file photo )

    GREELEY — High-quality sweet crude oil has been found in a formation in northern Weld County that until now has had little activity, sparking interest from oil companies and causing officials to brace for a rush of drilling leases.

    Ed Holloway, chief executive of Synergy Resource, described a new production well in an area known as the Niobrara Formation as a gusher. During a 24-hour test, the well produced 1,770 barrels of oil with 367,875 cubic feet of gas. A typical well in the area produces 100 to 150 barrels a day.

    “It’s just going to spark off one heck of a drilling activity, oil and natural gas,” Holloway told the Greeley Tribune.

    The field sits along the Colorado-Wyoming border just beyond the long-established oil- and gas-producing Wattenberg Field. The Associated Press

    Read more: http://www.denverpost.com/headlines/ci_14422192#ixzz0fuBAFY8g

  71. Newfield Exploration (NFX Quote) numbers increased at Goldman. NFX estimates were raised through 2012. Company can deliver double-digit production and free cash flow growth. Buy rating and new $63 price target.

  72. Thanks Gary, what did they take their CFPS numbers too?

    Thanks much MP- been trying to find the source of a big rate Niobrara well for someone!

  73. RE:55 I did not see anything different from what they have been saying since their anaylsts day last Oct.

    Hey Z, how about a little love for PWE since it also looks likes its breaking out — lol Traded today at a new 52 week high. I know you don’t follow those Canadians — lol

  74. WLL – slipping higher in front of earnings next week. It’ll be interesting to see how much metrics on the CO2 side improve with the new numbers. Also, getting the L&C area moving quicker than expected speaks to me, especially the willingness to do it with winter full on.

  75. 72..another Niobrara well
    Published in the Denver Business Journal this morning:

    The possibility of a big oil discovery in northern Colorado’s sprawling Denver-Julesburg basin, according to industry sources, has many in the state’s energy industry talking about the area’s potential.

    The basin sprawls across northeastern Colorado and has produced oil — and natural gas — since the 1950s, but oil production has petered out over the decades.

    That may change if the first official production numbers of a well called “Jake 2-01H” hold up over time.

    The well, run by Houston-based EOG Resources Inc. (NYSE: EOG), produced about 14,000 barrels of oil in eight days during October 2009, according to state records and industry sources.

    The math works out to 1,750 barrels per day — more than 10 times the amount of oil that wells in the basin typically produce, according to industry experts.

    But EOG is saying little about the well, or its activities in northern Colorado.

    EOG spokeswoman Elizabeth Ivers quoted EOG’s chairman and CEO Mark G. Papa’s statement when asked about northern Colorado during a conference call on Feb. 10. “EOG doesn’t discuss areas where we are still leasing acreage,” Ivers said.

    And Ward Polzin, a Denver-based energy analyst for Tudor Pickering, Holt & Co., a Houston-based energy investment and merchant bank, and others cautioned that the first few days of information are just that.

    “It’s only one week’s worth of data, but if it works, it could be widespread,” Polzin said.

    During November 2009, the well produced 20,460 barrels of oil — which works out to 687 barrels per day.

    But Polzin said there’s not enough information yet to determine whether the well’s production fell quickly, or if it was shut off for a time during November.

    Jake is turning heads for several reasons, Polzin said.

    • The Niobrara formation is a sheet of shale rock deep underground that’s found in northern Colorado and across the state lines in Wyoming and Nebraska.

    • EOG has experience working in other shale plays across the nation.

    • It produced oil.

    “It’s oil, not natural gas,” Polzin said. “That’s exciting today because natural gas prices are volatile.

    “If I’d pick any recent activity in the state of Colorado that has people excited in the oil and gas industry: This is it.”

  76. unknown… was on “the street.com” analyst upgrade/downgrade daily story.. also, bhi, hal, fmc, cam, and others, want me to cut/paste all??

  77. Crude up a buck now, again, not a bad inventory report but the stocks are keying off the broad market now and the S&P is stuck in neutral.

    Gary – nah, thanks, I’ll track it down.

  79. Z – I just can’t see this continuing. Oil is on borrowed time imo unless the market rallies hard and I just don’t see that happening here. Dollar is rallying again. Something has to give as they say.

  80. ATPG: There is inferential commentary out there that they caused some concern with bad body language in the Enercom breakout.

    “I attended ATP’s presentation and breakout session, and noted this:
     
    Titan
    This will not be producing until last half of March.  Clearly emphasized in the breakout.  And they feel very very confident, yet also noted that shit happens.  I think there was an uneasy feeling about the startup timing, among listeners, but Al and George were kind of hamming it up, and explaining that it was just like renovating your home, where there are endless little bugs and a punch list that never ends.  I pray that they don’t try to cover failure with some phrase on March 31 like ‘..in the beginning stages of commencing the production process”

    http://www.investorvillage.com/smbd.asp?mb=2831&mn=1092&pt=msg&mid=8609383

    On the other hand, I ran across an extremely detailed model that leads to a 500% price objective by year end. Will email for your inspection Z.

  81. Nicky – as you know I’m happiest with crude in the mid $70s for now, until we see product demand come up or more signs that it’s about to. What I do find interesting is the sustained low level of imports to the U.S. since the U.S. refiners don’t need the crude, juxtaposed with the ever increasing cheating of OPEC (next 4 week look from the tanker trackers shows continued trickle up). So most of that incremental crude is being absorbed by Asia (the Iranians have 3 sour tankers storing oil now and may add more). So hold oil in this $65 to $80 range until U.S. demand comes back which will be largely tied to jobs and consumer spending.

  85. Eli – yes. I read the guy’s 500% price objective as being for 2012. His column headings change near the bottom, going from Q2, q3, Q4 2010, to 2010, 2011, 2012, so it’s a little confusing. But if he’s right, wow.

  89. Tv just said it houses fbi, cia, and irs

    I think its intentional, maybe not terrorism, but some guy mad at irs or anti govt type.

    As a pilot of a small plane its very unlikely hed hit a bldg sqaure unless the pilot had a heart attack
    and even then unusal it would hit the irs bldg

  90. My wife’s office is in the office park. She telecommutes from LR to AUS, my tech guy (works at her firm) saw the plane hit.

  91. if i had a problem id land on the highway or field. This is going to be bad for small aviation as thats one area the feds hasnt touched since 9/11

    In the 90’s some guy crashed into the white house causing little damage

  92. ZTRADE:

    EXXID – Added 10 March $20 calls for $1.20 (on the mid and took quite awhile) with the stock at $19.15. Expecting Davy Jones news in the near term.

  96. Probably not a terrorist’s first choice:

    http://cirrusaircraft.com/sr22/

    Market on hold.

    EXXID – I think the name gets a little Friday volatility as everyone expects news next week. I added small in case the news is clearly good but if it’s a something like a stuck tool or the logs are less than perfect, I can add more on the ensuing dip.

  97. Housekeeping Watch: For those of you who missed it or are new, we added new search features to the site. Use the search bar at upper left to find tickers or other search terms mentioned in posts and now in comments. If it’s in the post, it will be highlighted. If in comments, you can go to the post and then use the find bar on your browser to track it down.

  98. Z – presentation in the highly valued slot following beerthirty. Noticed that they are developing street credability have been mentioned this am by Zman in the street events section. Thanks

  99. pilot was Joseph Stack

    He set his house on fire used to live in california and flew to georgetown about 6 months ago

    He owns a piper cherokee

    serial number N2889D

  100. MHR has been on the road, the last couple of days, doing 1-on-1 “non-deal meetings” with the buyside. That could explain the warm fuzzies they are feeling today.

  103. BOP – As always you are spot on. RMD was kind enough to email Global Hunter Securities institutional sales note this am which begins “We spent yesterday marketing with Gary Evans and Brad Davis of MHR and came away very excited about the stock.  Here is a why:” , and later ends with …”and I believe,  will continue to announce creative deals that will significantly grow their asset base and production in the next 6 months.  True, the company will have to walk a tight rope as it will take money to grow the company but I believe new money will be raised at significantly higher equity prices and the stock will continue to climb as management proves they are judicious and resourceful with new money raised.”

    “Six months”, deal or financing?…nahh, couldn’t be

  104. Nicky – Just got through all my inventory charts/looks at different metrics. Have to add that demand remains thoroughly unimpressive. Gasoline especially needs to pop back up in the next week or two and I think the strength in it today is the market giving it the benefit of the doubt that all the snow piled up in the MidAtlantic and the South led to the small draw. I think that’s what it is too. But we’ll need to see that rebound.

    Checkout guy talk is always interesting. Listening to the bagger at the local grocery store talk about how gasoline at $2.60 is “not that bad really” is somewhat heartening.

    Considering flipping my HAL Feb. Calls for Marches now, may wait until tomorrow. Same goes for rest of BEXP.

  105. elijah — thanks for the assist there! Actually, I think MHR might be interesting… but, I also think the price may have gotten a bit ahead of the story there for now. Will attempt to bone up on the subject and then go wait in the weeds.

    By the way, there is cross-ownership between MHR and GlobalHunter. Not that there is anything wrong with that!!… just something to keep in mind.

  107. good find.. the press keeps saying he stole a plane even though he owned the same type of plane that crashed. i suspected he had a beef with the irs

    People are at their braking point and i suspect its going to get worse before it gets better

  108. BOP, WOW on the cross-ownership. Didn’t know this but it certainly helps explain the adjectives in the sales note.

    Agree with you on price as I understand that more than one deal is ready right now and we might as well see the terms,financing and mkt response.

    Wonder if any of this will come up at Enercom?

  109. Oil creeping back towards $79, up nearly 2% post report. Meanwhile, natural gas into fairly heavy profit taking, down 4+%. Stocks mixed leaning to the downside but paying more attention to the maneuvers of the S&P than anything else, looks to be cleaning up a bit, but has that pinned feeling to it.

    About to listen to PVA at Enercom.

  111. 106

    there is alot there in the guys farewell letter

    economic problems
    tax problems
    divorce
    money

    Press is saying domestic dispute..real story guy lost his mind over time and reality was at his wits end and problems with the irs was the last straw.

    As an aside he was an independent contractor (not an employee)

    I used to be a controller of a software firm. The independant contractors got rates at 150 to 200 hr but no benefits. This caused problem (jealousy) from full time employes toiling away at 75 k a year.

    At companies like apple, microsoft ,google employees became millionaires that had stock options causing jealousy among the independants. Lawsuits occurred ..

    Anyways the guy went thru a few and boom and busts

  112. PVA – RMD is that one of your names? I seldom pay attention to these guys, always at a discount like NFX, a bit more focused though, balance sheet improving, in the right plays including Granite Wash, L Bossier, horizontal CV, Marcellus. Interesting.

  113. Z:

    Did CHK conf call discuss their capex budget for 2010? Also, how does that relate to their projected cash flow for 2010?

    This has been one big negative for CHK where they are always dipping into shareholders pockets for a secondary (similar to HK). I read your summary of today’s call but did not see any color on this item.

    I own common and am looking to sell covered calls here. Thanks.

  118. re 104 – thanks Z. Its very difficult to justify this move from 69.50 to 79 in 5 trading sessions. Its quite clear that they are playing commodities and that is what is driving this move and not the fundamentals. All the markets looks as though they are in ending diagonals right now. Volume in the indices has been pathetic all week and no doubt expiry is playing its part. The economic data we have seen this week should be very worrying for the market. The SPX could run to 1118 – 1122.

  120. Z – I am afraid I am in the camp that thinks $50 is too high! Although I will concede that on the charts I thought 69.50 looked like overkill to the downside for that move. That said the economy is still in the most terrible state – no way is $80 oil justified.

  121. Z;

    One more question about NG consumption. You had put together an extensive set of charts for domestic NG consumption in mid-Dec 09 if I recall correctly.

    It appears that NG pricing is suffering from a lack of catalyst on the consumption side (except for residential heating which is entirely weather driven and short term). All other demand side point to continued weakness for NG.

    Electricity demand continues to be weak. In addition, if solar power subsidies pick-up as expected in states like, CA, it will take away some more demand. Finally, NG competes with coal and becomes competitive only if NG prices decline below $4. Even the industrial demand is very lackluster.

    Given that no new initiatives exist from our Congress for NG demand and with all the huge supplies coming from the developed wells (shale gas) ready to come online over the next 2-5 years, how is a bullish posture justified for NG or NG stocks?

    This is a layman’s question (30,000 feet high) to all the very knowledgeable on this site. What am I missing here?

  124. I will admit that technically this is a very bullish close for oil. That said if they carry on pushing it like this and we go above 80 then we are all toast.

  126. Nicky – Not going to defend the price to you other than to say non U.S. markets are consuming more oil now than when the U.S. was at its peak. If you look at the refining through put, which I put in each Thursday post (Friday this week due to the holiday), we’re really not off that far from then either, in terms of raw barrels. So with OPEC producing significantly less vs 2 years ago and the U.S.

    Now 13,722 M bopd going into refineries

    1 year ago 371 Mbopd more
    2 years ago 692 Mbopd
    3 years ago 648 Mbopd

    OPEC production is down more than any of these. Meanwhile, Mexico’s production is down due to Cantarell, Russia and Canada are up a bit. And you have emerging market growth in India, China, and the Middle East itself.

    If you look at the price:
    today 79
    year ago 37.50
    2 yrs ago 93.28

    And all this time the cost of producing the newer barrels has gone up and the quality of the crude has gone down (on average).

    I think the futures market is keying on optimism about a long range demand pickup in the U.S. (for the U.S. is running at levels of capacity only seen when we’ve had a storm hit the Gulf) and that’s not likely to continue forever.

  127. 125

    Promises keep rising and benefits are better than whats offered in private industry. So liabilities are up and will continue to grow.

    On the asset side , they got wiped out like the rest of us

    There is a point where you cant keep raising taxes to take care of all the problems

    If gnp fell 10 %, govt has to trim 10 % just to keep rates steady

  128. I don’t know if anyone paid attention to the Barrick ABX spinoff today, but it should also be viewed as another bullish call on gold because they are looking for $$ to finance mines.

  129. Guru – It’s a good question.

    Solar won’t be a near term concern, takes time to build, only works during the day and has a long way to go towards having a real footprint.

    The shoulder season will be as usual pretty sloppy. But also recall that while you have flush production from the shales they decline quickly (75 to 85% in the first year) so you have to keep drilling them to keep growing production or you are left with the tales. Outside of the shales, some wash and chalk plays, you have a conventional, much larger wedge of production that is sliding due to inactivity. I think 2010 is a bridge year when you see higher than what is economic drilling to get land held. In 2011, if prices are not higher in the mid continent I think you see more of a focus on liquids rich plays and less and less on dry gas.

    On the demand side, coal prices have been coming up and with gas around $5 you will start to see more switching back to gas-fired generation in some areas. There is a lot of gas fired capacity sitting idle which comes on line at the right price and I think we are close to that. Demand on the industrial side appears to be inching up. Chemicals and steel industries. I’ll do a workup with more recent data and get it in a post near you soon.

    What’s with this spike in the S&P? Nicky?

  134. Z we are in iii of v of 2 imo. Both breadth and volume are decreasing as we move higher. When it breaks it will be hard and very fast. Don’t want to alarm anyone as there are potentially more points to be had on the upside but that will be the result when this move ends.

  135. 61.8% correction of the move down comes in at 1109. This is a classic fib retracement level for a wave ii.

  136. Z:

    126: Agree with your analysis. Per the data in 126, US refineries are consuming 5% less than the peak in 2007 (0.7 mm bbl per day). This has been more than offset by cut back in OPEC production by 3-4 mm bbld. The consumption in emerging markets is about the same as in the peak year of 2007. This has allowed the global bloated oil storage to get consumed over the last 18 months. It also explains why the oil contango has shrivelled since March 2009. It is no longer economic to store oil in huge tankers on the high seas.

    However, the NG story remains very weak (see 121 above).

  137. Ram – let’s just change that nickname back, eh?

    Nicky – I’m just glad to know the technicians are in charge. Good point on the Fib.

  138. Never got to PVA, though they are in the right areas.
    Anyone have an est. of what the STreet expects from the EURs in BEXP’s Rough Rider area?

  140. lng is coming!!

    LNG Imports to Continental United States Increased in 2009. Imports of LNG to the continental United States rose 29 percent or 100 Bcf in 2009 to a total of 452 Bcf, according to the U.S. Department of Energy’s Office of Fossil Energy. Five countries supplied U.S. LNG imports during the year: Egypt, Trinidad and Tobago, Nigeria, Norway, and Qatar. (See Figure 1, LNG Imports to the Continental United States, 2000-2009). Volumes from Egypt nearly tripled to 160 Bcf since 2008. Although imports from Trinidad and Tobago decreased by 11 percent to 236 Bcf, the country remained the largest exporter to the United States. Despite the overall increase in LNG imports compared with 2008, total volumes in 2009 were still well below the record of 771 Bcf in 2007. In fact, the total of 452 Bcf in 2009 was the second-lowest annual total since 2002. In the last couple years, higher prices for natural gas in other countries have diverted volumes away from the U.S. market, particularly during high-demand periods in winter months and the months leading up to the winter. (See Figure 2, LNG Imports to the Continental United States by Month, 2009). Distrigas’ regasification facility in Everett, Massachusetts, received the greatest volume of LNG deliveries of any of the 10 import facilities operating during the year. Distrigas received 156 Bcf, primarily from Trinidad and Tobago. El Paso Corporation’s terminal on Elba Island, Georgia, received 142 Bcf – the second-highest volume received by the terminals.

  142. from Market watch : Stocks gain steam as plane-related worries ebb Thursday February 18, 2010 15:04

    They have to be kidding me if this is all thats behind the rally!

  143. Re 129:

    Excellent summary. I look forward to your updated posts on the NG consumption.

    I am quite intrigued with your point that NG becomes competitive with coal even with NG at $5 per MM BTU.

    SPX spike, imho, driven by prep by hedgies for the Feb expiration tomorrow.

  144. Re 140. Thanks for the chuck, saw the headline, thought I’d have to write a big rebuke … but no, that’s taken care of in the story.

    RMD – they also own a piece of a coal MLP that pays them a nice divi ($31 mm) every year. Big ramp in capex coming this year. High profile tests coming, interesting horizontal cotton valley stuff, they have lots of well bores through it on verticals so that’s a plus, pretty experienced guys. Will be adding it to the Catalyst List.

    RRC in 20 minutes at Enercom.

  145. Gure – don’t quote me just yet, just ball parking but it’s above $4 as coal has gone up. And I’m not getting regional with that enough to say if its a lot of gas or a little gas just yet, but I’ll run it through a simple heat rate calc when I do the update, nymex vs eastern bituminous.

  149. ZTRADE

    BEXP – sold the last (10) Feb $15 calls for $1.50, up 355%. I continue to hold some higher $17.50s (worthless), the common and some March calls.

  150. Look for this to finish at the wave iii high, drift overnight for iv and gap up for final v tomorrow. Just imo.

  151. RMD – Don’t know that any could say accurately. I’d just be guessing. Can ask that another way, let me know what you are trying to get to?

  152. Thanks Nicky, good stuff. Didn’t want to risk the gap the other direction just to kill all the outstanding callers on expiry day but I could see an up open and then the sell down.

  155. Just chasing down rumor BEXP has disappointing Rough Rider EURs due to a conservative engineering report.

  156. Oil spike… hearing rumblings… maybe something is about to “happen” in the Middle East (Iran)??

  157. Ahhh. Don’t see how the question relates to that, but I can guess what brokerage started the rumor. BMO first guess, JPM second. It could be disappointing. Hard to judge how the market will take any given report these days. Expected duration of a negative reaction to a reserve report: about 3 to 5 days.

  158. EXXID

    On June 8, 2007, Energy XXI Gulf Coast, Inc. (the “Issuer”), a wholly-owned subsidiary of Energy XXI (Bermuda) Limited (the “Company”), issued $750,000,000 of its 10% Senior Notes due 2013 (the “Notes”) in a private placement transaction. Pursuant to the terms of the indenture governing the Notes, the Company is required to file the Issuer’s unaudited quarterly and audited annual financial statements with the Securities and Exchange Commission. Pursuant to this requirement, attached to this Current Report on Form 8-K as Exhibit 99.1 is the Issuer’s unaudited financial statements as of and for the three months and six months ended December 31, 2009 and 2008, which financial statements are incorporated by reference herein.

    Unaudited Financials are posted for period ending 12/31/09

  159. re 156 – well an oil spike to say 100 would be the kiss of death to the broader market wouldn’t it? That said if I am thinking straight aren’t the markets usually bullish during the time of war.

  160. Interesting ROSE and KWK strong all day, Montana Bakken rumors out there again I’d guess.

    ZTRADE:

    NOG – Sold the 5 FEB $10 Calls for $2.45, up 18%. I will reload before earnings.

  163. BOP what slightly worries me is if there is any truth to these rumblings then a big move could start overnight. That is what I am sort of expecting when this rally tops anyway. ie it will happen when everyone is least expecting it and everyone will be caught.

  165. That said I will add that I am looking at a larger cycle which does not appear to top out prior to 25th February. We could see some weakness into early next week due to a shorter cycle topping out but the strength looks to oontinue after that. That said I am going to have to re-look at the EW count to make it fit! Possibly this is only wave i of v of C? Just a thought but if that was the case we would see a wave ii pullback once this tops out say early tomorrow.

  167. Z – did you get to hear RRC this afternoon? I didnt – curious if they had anything to say in front of earnings next week.

    I was in and out of meetings today – surprised to see the broad market up as much as it finished. Notably low volume to the move… hmm.

  168. 1520 – I tried but failed to find a way in, snooped through the slides, saw nothing new, just listened to them the other day so doubt anything has changed.

  170. Fed raised the Discount Rate by 25 bps to 75 bps.

    Futures off a bit. But, Fed has been telegraphing this move for a while. They actually said it last last. And they say it doesn’t change any of the rest of their “policy stance.”

  172. HeadTrader saying “it wasn’t priced in… but it should have been.”

    The USD should be a tad stronger. And it shouldn’t matter to the rest of the mrkt. But people are nervous… we’ll see what they do.

  173. Dollar rocketing… interesting timing to say the least.

    The discount window hardly matters anyways.

  174. Fed Reiterates that it will leave the main rate at low levels for an ‘extended period’ (=forever until final demand and jobs are back and 60% of state soverign debt is repudiated).

    On the theory that the first move is incorrect I would be inclined to fade in favor of the upside.

  177. that said I did say the charts were calling for something nasty and it was likely to be after hours and catch everyone!

  179. Interesting that GS were red all day and apparently fully loaded with puts by the end of the day.

  180. Well Nicky if 177 is true and it could be told from the charts it either means:

    a) the Banks knew ahead and were positioning in front (which formed the pattern suggesting news)

    OR

    b) the government saw the pattern and recognized an opportunity

    Either one is suspect.

  181. Gold still isn’t buying this BS.

    Soon the nonsense takedowns won’t work any longer and the central banks of the world will no longer be able to suppress the gold price in favour of the “strength and safety of the US dollar, the ultimate storehouse of value”

    Guaranteed China is hoping the USD rallies enough that it can pull a tradesies for the IMF gold.

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