19
Feb

Discount Rate Friday

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Market Sentiment Watch: Touchy But Not Panicked. The Fed boosted the discount rate by 25 bps to 75 bps yesterday after the close. While not a surprise as the Fed has been talking about this since at least Feb. 10th, the dollar rallied sharply after hours sending equity futures and commodities lower. The timing is a bit odd as I'm accustomed to seeing these combined with other actions taken at the Fed's monthly meeting but this came on the heels of a short busting rally over the last week and while it should have been priced into the markets, apparently it was not. Well,

1) it's out of the way now, so no longer "a worry",

2) it's not a reflection of the near term Fed Funds rate (that's stuck at free for medium term and the Fed reiterated this by including in its statement yesterday "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." ), and

3) I'm of a mind to believe that the market shrugs this off faster than other recent fears and focuses on just what positive things the Fed might be seeing down the road to put this little toe of de-easing in the financial waters. 

Moreover, upping the discount rate is a signal that banks are more willing to lend to each other again which is a positive step in my book, and one confirmed by the growing scarcity of demand at the discount window. It won't have a glimmer of an impact on growth and yet widening the spread to Fed funds (back to it's normal level) says "crisis avoided, time to think about moving forward under your own power".

Other Fed Stuff to Watch Watch: In a speech last night, Dennis Lockhart, Atlanta Federal Reserve bank president, said, "he was worried the recovery may sputter and the unemployment rate may remain stubbornly high. The current ultra-low stance of interest rates is necessary to support a recovery that in is in an early stage, and, in my view, still fragile,". ZComment: I reiterate my belief that they will not be raising the Fed Funds rate any time this year. I think the Fed head is more political than ever and will not risk deferring, let alone derailing, such a "fragile" recovery, especially in light of mid term elections.

Earnings Next Week: Very busy. I'll have a fresh earnings calendar for the week out on Monday but the owned or high interest names reporting are: LINE, RRC, SGY, FSLR, GDP, HK, WLL, CLR, SD, SWN,  PQ, BEXP, and GMXR (pretty much in that order). I'm sticking with my plan of treading lightly or not at all in my favorite names, adding to positions (or not) if results and outlook merit.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Preview
  4. EIA Oil Inventory Review
  5. Stuff We Care About Today
  6. Catalyst List
  7. Odds & Ends

 

Holdings Watch:

  • $10KP II:
    • $16,500
    • 49% Cash
    • I'll have a fresh $10 KP II spread sheet up over the weekend.

Yesterday's Trades:

  • 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.
  • EXXID – Added (5) 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.
  • 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.
  • NOG – Sold the 5 FEB $10 Calls for $2.45, up 18%. I will reload before earnings which have yet to be announced.

 

Commodity Watch:

Crude oil rallied $1.73 to close at $79.06 yesterday, after the EIA released a mixed bag set of numbers, the most important of which was a draw on distillate stocks (see below). This morning crude is trading off $0.70 after the discount rate hike.


Natural gas fell $0.21 to close at $5.17 yesterday after the EIA released an in-line storage report (see graphs and more comments below).  Gas continues to be range bound. This morning gas is trading down $0.07.

Natural Gas Review

ZComment: While the in line number this week failed to impress traders in the face of a warmer forecast, I'm still targeting 1.5 Tcf for end of withdrawal season storage, which should be supportive of gas prices (save for a little squishiness for a few weeks in the shoulder season which will be highly dependent on how quickly the injection season gets underway in earnest). Note that inventories relative to year ago and five year average levels are at nearly their best levels in about a year (graphs B and C below) and that we should move into YoY deficit territory with next week's withdrawal. I've included the regional graphs after traditional weekly charts to show the power of a colder winter in New England and Mid Atlantic (East Region) on storage.

 

EIA Oil Inventory Review


ZComment: Demand for finished products remains anemic as does demand for crude to make them. Crude inventories remain in check as low imports are more than offsetting low refinery throughput. Gasoline gets a "get out of jail free pass" on the bigger than expect builds this time of year due to wintry weather but demand will need to pick up in the next few weeks to be supportive of crude as the focus on heating oil wanes with warmer temperatures.

CRUDE OIL:

 

 

 

GASOLINE -  I think the decline in gasoline demand this past week is the culmination of several harsh weeks of widespread winter weather. We need to see a sharp snap back in the next couple of weeks or crude will become concerned.


 

DISTILLATES:

 

 

 

Stuff We Care About Today

SLB said to be in talks to buy SII

 

Catalyst List (yellow shows changes)

 

 

Odds & Ends

Analyst Watch:

  • ATW - Cut to Underweight at Morgan Stanley
  • Morgan raises targets on RIG and ESV by $10 to $140 and by by $7 to $72 respectively
  • PXD - Cut to Neutral by Credit Suisse

 

160 Responses to “Discount Rate Friday”

  1. 1
    zman Says:

    Will be swapping the HAL calls for Marches today

  2. 2
    BirdsofpreyRcool Says:

    Rhetorical question — who is smarter? The Bond Market? Or the Stock Market?

    One could argue that the stock market affects more people… but that argument would be wrong. The fixed income market (in all it’s flavors, govt and private) is the basement, foundation, and first floor of a working economy. The stock market is just the walls and windows that we see every day. Without the foundation, everything else doesn’t matter.

    So, what is the bond market doing today, in the face of the Fed easing back on one of it’s Emergency Support Systems (note the use of the word “emergency” telegraphing that we are no longer in Code Red Mode)… it’s rallying. Yes. And rallying hard.

    One could argue (and one would be right) that much (or even most) of the rally is short-covering. However, a scared short is a future long. Or something like that.

    So, buckle up and if you have cash to put to work, go wait in the weeds and watch for your Fave Antelope to wander too close. It’s gonna be Lunch Time, people.

    IG 92.5 minus THREE whole basis points!!

    HY 97.5 plus almost a WHOLE point!

    People are selling some of their “risk insurance.” This says they were too worried about the economy. At least, for now.

  3. 3
    bill Says:

    Exxid in the 18’s pre market

  4. 4
    BirdsofpreyRcool Says:

    And what does HeadTrader say about all this??

    — first it is a good sign that Fed thinks they can do this….second it aint the feaking Fed Funds rate….3rd it doesnt affect all banks…4th its a return to normalcy….5th the disc rate (i think) is historically 50 bps higher than Fed funds

    — and yes…buy any hard sell off

  5. 5
    BirdsofpreyRcool Says:

    bill — i thought about selling one of my non-energy holdings yesterday, to roll into more EXXID today. I had no idea (of course) that the Fed would give me a lay-up.

    Woulda, coulda, shoulda!! Will have to let someone else snag that antelope. Sadly.

  6. 6
    zman Says:

    Oil already thinking about going green…I’ll shopping today.

  7. 7
    Nicky Says:

    BOP Peter Beutel was on CNBC this morning talking about oil. Your comments referring to the Middle East (Iran) were referenced. He seemed to think there was now a pretty tight window for Israel to do something ahead of Russia closing the door.

  8. 8
    BirdsofpreyRcool Says:

    Who knows were we go today… maybe we close red. Stock market might take a day (or an hour) to sort through all this. Just keep repeating what HT said “it aint the freaking Fed Funds rate”… “its a return to normalcy”

    IG now -3 1/2 points. That is a HECK of a rally!

  9. 9
    BirdsofpreyRcool Says:

    Nicky — ugh. The Iran comments y’day came from a savvy guy who talks to the highest level of smart people. I’m afraid it’s not a matter of “if”… just a matter of “when.”

    It’s that sort of stuff, that scares me. Not a 25 basis point hike in the Discount Rate. Ugh.

  10. 10
    BirdsofpreyRcool Says:

    From TPH morning note —

    Energy stocks about to find out whether rally is bull or steer – Fed raises discount rate 25bps. Time of easy money drawing to close; recent history suggests reaction will be dollar up and crude (thus equities) down. Dollar/crude correlation -0.57 last six months, -0.70 for last month. Dumb guy analysis says run away, but investor psychology funny thing – markets may ultimately decide increase positive data point. Message still same – buy favorites when down.

  11. 11
    zman Says:

    Crude green.

    HAL bid higher on the M&A potential on Monday in Service.

  12. 12
    Nicky Says:

    HT’s comments would be somewhat more comforting if the Fed had someone at the helm who had a friggin clue what they were doing!

    For the millionth time where is the recovery??

    That said the overnight news is no big deal.

    Technically I am looking for a minor correction to play out into early next week. I doubt the spx falls below 1090 -1092 but there is a gap at 1079 which may need to be filled at some stage.

    It may be that today they pin it at 1100 due to expiry.

  13. 13
    zman Says:

    BOP – tell HT thanks and please send him the top of the post today.

  14. 14
    BirdsofpreyRcool Says:

    oil futs green now…

  15. 15
    zman Says:

    TPH rightly pointing out that KWK had a stellar reserve report. Big reserve adds as they adjusted their average EUR curve higher. Very low finding costs (sub $1 / Mcfe when you pull out gas price revisions). This removes another hurdle to me buying back into the name, worry over how that report would come out. They’re drilling Montana Bakken….may have 2 wells down, checking into it. They would move strongly with good news out of ROSE on their first 3 wells. ROSE announced March 1.

  16. 16
    Nicky Says:

    Oil spiking up yet again. Shows what a joke any trading restrictions were.
    I never asked you Z but I know from your comments that you are bullish oil – what in your opinion is a fair price at this moment for oil?

  17. 17
    zman Says:

    BOP – About a $2 reversal on oil since midnight.

  18. 18
    zman Says:

    Nicky – I don’t do point estimates on that. I believe in ranges and right now I’m comfortable with $65 to $80. Much above $80 and the volatile down swing gets more attention than the move to that level did in most cases. I’m look for that range to drift up to $75 to $90 later this year with a breach of $100 becoming the occasional thing early 2011.

  19. 19
    Nicky Says:

    Thanks Z. I am not sure that our fragile economy can deal with anything over $80. $100 oil is really going to be a deal breaker.

    The April contract is almost at $80 this morning.

  20. 20
    zman Says:

    Wondering if people will look for HAL to post a competing bid with SLB for SII. Deal terms not out there yet, it’s just a WSJ story for now. I kind of don’t think so and some Service analysts don’t either. I will be swapping into the March HAL calls either way.

    Also looking at BEXP adds on weakness today for a run into their news next week. RMD, I ran the reserves question by Lew with my doubtfulness cast upon it and he came back with the same thinking on that, which is that a lot of people in the Bakken would also be forced to show per well reserves lower than expectations if BEXP does, including WLL and that’s unlikely. I was not able to get anything specific about Bakken EURs out of my looking at the EOG stuff, CLR hasn’t reported reserves yet, but I’m still looking around.

  21. 21
    zman Says:

    TAT reports Monday Reef.

    HAL waking up, will take my March’s soon, and kill off my Febs after.

  22. 22
    Nicky Says:

    Here’s a link to the major revision in how 2010 CPI is reported, ordered by Ben Bernanke, to keep the “official” number much lower than the actual rate… http://www.bls.gov/cpi/cpichg2010.htm

    You have to go back to the 1970s to find an instance when an economic recovery was immediately greeted by a huge jump in the inflation rate.

    Inflation rates are climbing monthly, as are default risks as the Treasury piles on unpayable sums of debt in auctions every few weeks.

    Without Ben massaging today’s data the CPI would have been closer to 1%.

  23. 23
    zman Says:

    ZTRADE:

    HAL – Added (10) March $32 calls for $0.97. Will sell my Feb $31s in a little while.

  24. 24
    zman Says:

    Anyone have a link to consumer spending figures, looking for the aggregate U.S. consumer spending per month?

  25. 25
    BirdsofpreyRcool Says:

    Here’s a thought… i think we end the day up over 100 pts on the Dow.

  26. 26
    zman Says:

    ZTRADE:

    HK – Added (20) March $25 Calls for $0.45 with the stock at $22.83 and earnings next week. Stock has been overly beat down given strong production growth, good cost control and a penchant for raising guidance. Most of the operational cat is out of the bag as they preannounced both volumes and highlights but they may have more information on the timing of potential monetizations on the call, something which is acting as a governor on this well hedged name.

  27. 27
    zman Says:

    BOP – I like it when you talk green.

    Cramer out with an article saying Obama is trying to derail natural gas.

  28. 28
    BirdsofpreyRcool Says:

    Yeah… no Unions in the nat gas industry. Go figure.

  29. 29
    BirdsofpreyRcool Says:

    HeadTrader would endorse my Go Green by 100… if it wasn’t option expiry day. Adds its own layer of vol and makes it tougher to call. So, might have to wait until Monday.

    Yeah, yeah. I know. Hedging my bets.

  30. 30
    zman Says:

    Volatility already slamming down in typical expiration style.

    SFY call yesterday was good, stock keeps moving up.

    WRES – drifting sideways as we approach reserves and plan for 2010 (Mid March best guess).

  31. 31
    zman Says:

    Could be the market just drifts all day or keys from TA levels. S&P sitting below 1102 and no news but U.S. vs France in Curling to move it from that level. Hmmm.

  32. 32
    zman Says:

    Thinking oil service is more the place to overweight for awhile. Rig count keeps going up, earnings have turned the corner or at least stopped falling, and the stocks have been stalled for awhile now. CHK clearly indicating it’s not slowing down, even when the leases are held by production, as they will transition to more oil drilling.

  33. 33
    RMD Says:

    Briefing says Canaccord upgraded PWE.

  34. 34
    milepost_43 Says:

    24
    http://www.bea.gov/newsreleases/national/pi/pi_glance.htm

  35. 35
    jiveyjr Says:

    WRES…there has been a lot of relatively quiet accumulation reflected in several SEC filings…I’m trying to study how much they’ve improved their hedging to improve realizations as we speak and I bought more this morning

  36. 36
    zman Says:

    HAL – planning to sell my Febs close to $32, maybe in conjunction with the noon rig count reading.

    Doing some reading, here if anyone has a question or rock to throw.

  37. 37
    VTZ Says:

    Nicky RE 22 I agree wholeheartedly that the CPI quoted by the govt is a joke ever since they started changing it.

    Shadowstats is the best alternative to see what the old metric inflation would be quoted at.

  38. 38
    zman Says:

    MP – thanks, looking for the dollar total, doing a couple of other things at the moment but wanted to make a comment with it on 19.

  39. 39
    zman Says:

    Maybe Tiger boosts the market or at least ELY, Nike etc, lol.

    WLL continues to move on up into earnings.

  40. 40
    Popeye Says:

    SII up 12% ???

  41. 41
    reefguy Says:

    gas going below $5

  42. 42
    elijahwc Says:

    MHR update:

    Last evening during the Enercom presentation G Evans let slip (???) that coverage from three more firms (aka bankers) would be showing up very shortly. I don’t think that they will be started with anything less than a buy them till your head explodes. I also don’t believe that the vaunted Chinese Wall is preventing any customers from getting in ahead of the initiation of coverage and hence the steady climb.

    Now, I do believe that the price is well in advance of any current fundamental metric and while I won’t be adding any here I would not be surprised to see a move north of $3 in short order. At that point I expect the deal to show up, so this is either a trading opportunity or a liquidity event.

    For me, it will be a liquidity event with a chance to reposition into deal related weakness. Hopefully to leverage the return since I still believe in $5 by year end. Never underestimate the power of financial engineering. But now is not the time.

    Since I’ve been somewhat long and loud on MHR I though it only fair to relate that I’m now will to go the other way.

  43. 43
    Nicky Says:

    Finally seeing the move up I was expecting this morning. Just somewhat delayed.

  44. 44
    Nicky Says:

    It looks like v of 2 unless I am way off base.

  45. 45
    zman Says:

    Popeye – it’s the SLB deal

    Reef – Quickly warming to the TAT story.

  46. 46
    choices Says:

    OT-Chinese hackers

    http://www.nytimes.com/2010/02/19/technology/19china.html?hp

  47. 47
    bloodystupidjohnson Says:

    Z: many companies are copy cats of others, what do you think will happen in the service space if SLB does buy SII? Maybe you should start a new contest which will be the next service company to go — lol.

    If SLB does buy SII then at least SLB didn’t buy a computer company — lol

  48. 48
    zman Says:

    BSJ – I don’t see a big swath of buys in here, still a lot of caution, others have mud, bits already.

  49. 49
    bloodystupidjohnson Says:

    Z: since the McClellan is really oversold, is this effecting your positioning for your next batch of March option buys?

  50. 50
    zman Says:

    I don’t look at McClellan.

  51. 51
    Jerome Blank Says:

    Re: #42, elijah, thanks much for that very helpful note on MHR…I’m watching this stock. it had a great triangle breakout…thinking of buying some on a retrace to trendline support and holding it for a time…

  52. 52
    RMD Says:

    Z, what makes you suddenly warm to TAT other than the chart looks higher?

  53. 53
    Jerome Blank Says:

    RE: #49, #50…$NYMO, overbought oversold levels in the McClellan have been imho extremely reliable for shorter term timing…as of yesterday the $nymo was approaching overbought levels….

  54. 54
    zman Says:

    RMD- reading.

  55. 55
    zman Says:

    Ok, a little more on TAT

    I’m interested in an upcoming Zagros fold belt test near the border with Iraq among other things.

    No debt, not hugely overpriced to CF estimates for 2010 for a little company, big growth expectations out of the name between now and 2011, and I could use some overseas diversification. Good prices on gas in Turkey as it’s an import market from Russia with $8 prices, etc, etc, etc.

    Stock is up a little from Reef’s mention (which I take with no small regard) the other day but is still well under recent higher is in the upper $3s. They report Monday.

  56. 56
    choices Says:

    Another OT-world wide hackers-be careful “out there.”

    http://www.washingtonpost.com/wp-dyn/content/article/2010/02/17/AR2010021705816.html?nav=hcmodule

  57. 57
    RobBanks Says:

    Z – did you see the MS note on Newfield?

  58. 58
    zman Says:

    Iran launches destroyer:

    http://news.xinhuanet.com/english2010/world/2010-02/19/c_13180174.htm

  59. 59
    zman Says:

    Rob – No, please send to zman@zmansenergybrain.com

  60. 60
    RMD Says:

    GST: under the heading of Persistence Pays, or fool’s folly, stock has the CHK at 24 kind of P&F chart; probably triangulating CHK’s comments that the Bossier is one of the Big 6 shales.

  61. 61
    zman Says:

    RMD – PVA indicating they like the Bossier very much in last presentation.

    Getting ready to pop off those Feb $31 HAL calls.

  62. 62
    zman Says:

    ZLT TRADE

    Sold a portion of my KOG at $2.47, up 138%.

  63. 63
    ratberto Says:

    Russia delays delivery of S-300 missiles:

    http://www.timesonline.co.uk/tol/news/world/europe/article7031284.ece

  64. 64
    Nicky Says:

    I am not getting this commodity move with the dollar rally. Can someone enlighten me.

  65. 65
    VTZ Says:

    Dollar is falling off, has no reason to be strong in the first place, people realizing the move last night has nothing to do with the Funds rate. Probably an expectations the dollar might turn with no drivers to be bullish in the near term? How much more weakness can you expect in the Euro?

  66. 66
    RMD Says:

    61 yup, that’s why GST is breaking out.

  67. 67
    zman Says:

    ZTRADE

    HAL – Sold my 20 Feb $31 Calls for $0.95, up 39% with the stock just under $32.

  68. 68
    jiveyjr Says:

    re: # 64…research piece I read yesterda said that dollar and commodity inverse relationship would change to direct relationship when the perception was that economic growth would drive commodities and dollar higher…not saying I agree, just another vantage point than we’ve been discussing on here…maybe Fed move makes people think they see more growth than some of us do

  69. 69
    Nicky Says:

    VTZ – the dollar chart is very bullish right now. I don’t disagree with you at all fundamentally with you on this as you know.

    Also playing devils advocate, if you believe all this recovery bs (which I know you don’t) then you could argue that the better economic data is a reason for the dollar to be stronger.

    Also I am noticing that oil is no longer keying off the dollar. It goes up whatever the dollar is doing!

  70. 70
    Nicky Says:

    jiveyjr – good point. Except that I am thinking 80 oil has priced in a pretty good economic recovery already.

  71. 71
    zman Says:

    VTZ – re 65 … if only people would have read the front of the post, lol, they’d get what you are saying.

  72. 72
    zman Says:

    “if you believe all this recovery bs (which I know you don’t) then you could argue that the better economic data is a reason for the dollar to be stronger.”

    you could oil into that sentence as well.

  73. 73
    West Says:

    I know that not to many here follow XEC (Cimarex) but they had an excellent 4th quarter call on Wednesday and have all the right pieces in place to have a great year. On the p&f chart they had a triple top breakout 2-17-2010. The Cana-Woodford and Yeagua are liquids rich gas plays and their Permian Basin plays are very oily. You may have to copy and paste to get this link to work: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=136094&eventID=2696015

  74. 74
    zman Says:

    Nicky – got resistance levels?

  75. 75
    zman Says:

    West – I saw it, got busy, thanks for keeping it on the radar, I just missed that one as it has been running. Good call.

  76. 76
    VTZ Says:

    RE 69: I do think that a lot of the “recovery” is bs.

  77. 77
    VTZ Says:

    RE 69 again: until you can take away 0% interest, asset purchases and still maintain a reasonable rate of growth and unemployment the recovery is bs.

  78. 78
    Nicky Says:

    Z – as I said dollar chart is very bullish barring short term pullbacks.

    SPX resistance is right here and now at 1111 – 1112. Then 1118, 1122,1127.

    Schiff on Fast Money – some sanity at last.

  79. 79
    Nicky Says:

    Joe Terranova up all night worrying about his oil position – what a laugh. He obviously has a great deal of confidence in his call if he has to stay up all night and worry about it!

  80. 80
    zman Says:

    Nicky – Surprised he’s that concerned. Yes he’s long oil in the portfolio but he has natural hedge of the oil in his hair. Thanks for the levels.

  81. 81
    Jerome Blank Says:

    #67, KOG, Zman why are you selling out of KOG…

  82. 82
    zman Says:

    Not selling out, just sold a piece. Nothing fundamental against them, just see a potentially shiner bauble elsewhere.

  83. 83
    choices Says:

    I’m not sure why this is “news” anymore because it is completely obvious but nevertheless it appears in “main stream” media:

    http://www.washingtonpost.com/wp-dyn/content/article/2010/02/18/AR2010021805387.html?hpid=news-col-blog

  84. 84
    bloodystupidjohnson Says:

    RE:79 what a minute, Joe is part of the smart money in the trade, or at least he and the other clowns on fast? money claim to be — lol

  85. 85
    zman Says:

    ZTRADE

    ROSE – Added another (30) March $22.50 Calls for $0.50 with the stock flat on the day (doubling position in front on March 1 earnings). I continue to own the common here as well.

  86. 86
    bill Says:

    mcf looks likes its drifting higher and sd languishes. On sd, The q4 non cash write down scares me but all this new production comes on line, ie the fst acquisition and later on oxy plant opens

    Jerome could you do your magic on MCF and SD. Thanks in advance.

  87. 87
    bill Says:

    Do i understand that the feds are proposing mortgage relief for one state Nevada??

    Is that even legal? Where does that leave the other 49?

  88. 88
    VTZ Says:

    Gold has recovered it’s entire drop and more since the Fed move. As of late that’s been a good sign for broad markets.

  89. 89
    bloodystupidjohnson Says:

    RE: 87 — Since when did anything legal stop Obama and the dems. They are much smarter than you or I. It just that we don’t see the big picture — lol lol lol.

  90. 90
    bloodystupidjohnson Says:

    RE: 87 — a good investment way to play this is to buy BYD. They carter to the local market so any debt relief should help them at their casinos — lol

  91. 91
    zman Says:

    Bill = I am thinking about SD after they release. Big cloud gone one way or the other. Agree MCF, continental drift up.

    Re gold, yeah, same with oil.

  92. 92
    elijahwc Says:

    Z – would you be away from ATPG through the earnings in early March? I’m very much a longer term fan but willy nilly on execution risk short term and its had a nice little run. Anyone?

  93. 93
    zman Says:

    Eli – like it longer term, no opinion on earnings.

  94. 94
    bill Says:

    ngi reports

    From a trough of 17 drilling rigs last summer to a current rig count that stands above 40, natural gas and oil producers are flocking to the Eagle Ford Shale in South Texas, which holds the potential for a big nest egg of returns

  95. 95
    Jerome Blank Says:

    Re:#86, SD…bill, I managed to get a chart of SD posted…it has an interesting chart…

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

  96. 96
    RMD Says:

    T Weisel saying VQ fraced the E-8 well and improved production rate, but is early on their science-project learning curve and will take longer than assumed to reach development stage to unlock the onshore play. Target 16 to 14, no change in ests (’10 vs. ’09) of CFPS 3.14 vs. 2.77 and production of 121.5mmcfe/d vs. 123.7.

  97. 97
    zman Says:

    RMD – Interesting, how has Weisel been on that name?

  98. 98
    bill Says:

    92- I think it dips on earnings but i think it rises on first production of telemark

    I also think they will spin the q4 release and spend 1 paragraph and 25 words or less on the results and the rest of the press release will talk about telemark coming online. Perhaps it happens around the time of the press release,

    The ceo does a good job spinning the press release so any impact would be short in nature. With oil flowing more people will come back to the name.

    If you are risk adverse you wait (similar to sd approach)

    If you can look beyond, you start to nibble. I re-enetered atpg in the last few days by buying the march 15 calls

    On sd, with the one time (hehe) non cash write off, im afraid the will have a negative net worth. Ng prices were better in q4, they are 80 % hedged for 2010, gotten oilier, and production and cash flow will increase in 2011. they like atpg have a huge amount of debt that makes people(including me) worry

  99. 99
    zman Says:

    WHX announced distribution the other day, I had said based on oil and gas prices they’d be up from 3Q, came in up about 10 higher. Stock flat lining, with a 15% yield. Interesting.

  100. 100
    bill Says:

    95 thanks jerome but i dont see it on that link

  101. 101
    guru Says:

    REF 332:

    Z: the rig count for horizontal rigs (shale) keeps going up as players like HK and CHK race to reach “Hold for Production” levels sometime by end of 2011.

    Do you have a mid-cap player in mind (other than a large cap like HAL) who is mostly levered to horizontal rigs? Does WFT (severely oversold) qualify? Thanks.

  102. 102
    Jerome Blank Says:

    RE: #100, bill, its under SD right after ROSE…

  103. 103
    bill Says:

    i found it, disreagard 100

  104. 104
    choices Says:

    Thanks, Jerome-interesting possible divergence developing on SD-seems to want to hold above $8.

    voted.

  105. 105
    zman Says:

    JB – thanks again for the chart updates last night. Wondering if you’d throw up WLL sometime, not today, no rush. It is a Bakken I’ve followed for a time, trades well in the stock and the options less so but ok, think it could retest its old highs post earnings next week based on big wells, reserve adds, and the potential that they get their costs down on a per unit slightly.

  106. 106
    elijahwc Says:

    Bill and Z thanks for the feedback on ATPG. While the chart appears constructive I think those 25 words if not positive may invoke memories of a drive buy financing and insider sales earlier this year. While I believe this to be a layup longer term mgmt may have soom repair work to do with the street beforehand.

    On a different note here is one that is returning to inst fav status; CCJ. The Barron’s piece earlier captures this and may be worth a re-read for those interested.

    http://online.barrons.com/article/SB126645121170547391.html?mod=BOL_hpp_highlight

  107. 107
    zman Says:

    ZTRADE:

    BEXP – Added 20 more (doubled) of the March $17.50 calls for $0.70 on the mid (been there off and on at the $16.65 level for an hour, finally got picked off. Earnings next week and I plan to be half this size by the time of the call late in the week (so anticipating a pre call run up).

  108. 108
    bill Says:

    Floor about 8, ugly drop from 14 mid october and production about to turn corner

    Major negatives debt load, insider selling and overall ng pricing outlook

    i think its cheap

  109. 109
    Jerome Blank Says:

    Re: #104, choices, thank you…we need OBV to break above that trendline, then get SD back into X’s…

    …looks like I’m almost to 100 votes! …it’s nice to get votes…

  110. 110
    zman Says:

    Time for ROSE to bloom now.

    Anyone have Street research on WHX?

  111. 111
    West Says:

    Can u change your takeover pick,again ?

  112. 112
    zman Says:

    Yes but just you.

  113. 113
    Jerome Blank Says:

    EXXID 30 min chart update….

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

  114. 114
    West Says:

    XEC

  115. 115
    jiveyjr Says:

    Jerome…I just voted and see you are now at 101…frankly I’m disappointed that we haven’t pushed you farther than that…c’mon guys/gals…let’s vote

  116. 116
    Jerome Blank Says:

    Broke 100!… thanks very much for the votes…

  117. 117
    BirdsofpreyRcool Says:

    JB — voted!!!!!!!!

    Thank you.

  118. 118
    zman Says:

    Jerome – you said back into the X’s for ROSE on $21?

  119. 119
    West Says:

    JB voted and thanks I know that it is a lot of work. ATPG looks like giant bull flag to me.

  120. 120
    zman Says:

    Somebody buying WHX? Popped just after I mentioned on volume. Still working it up, sheesh.

  121. 121
    Jerome Blank Says:

    Re: #118, Zman, ROSE is back into X’s on the standard box size on a print of $21…$21 also breaks above that flagging channel line on the daily candle chart…

    RE# 115, #117, jiveyjr, BOP, thanks much…

  122. 122
    bill Says:

    Bastardi calling for a cold march and perhaps a noreaster next week

    http://www.accuweather.com/video-on-demand.asp?video=67499599001&channel=VBLOG_BASTARDI&title=

    i think ng rallies next week of this weeks lows. I think ng is being held down by option expiration in ung

    I cant see any rationale for 5 dollar ng

  123. 123
    bill Says:

    jerome give me a link on where to vote

  124. 124
    jiveyjr Says:

    you do a great job Jerome…been thinking about spreading a rumor that all them people ahead of you is democrats…that’ll get this board votin

  125. 125
    zman Says:

    ZLT TRADE

    TAT – TransAtlantic Petroleum – Bought a “get know you” sized position, so about 25% of what I’d be willing to own. Company reports Monday with an early call. It’s a bet on management, plays in Turkey, Morocco, and Romania. Clean balance sheet, not a lot of Street coverage. Some high profile tests in Turkey this year (1 near the Iraqi border in 2Q10), and Turkey is a captive market for gas to the Russians giving them high prices. Romania stuff isn’t that interesting to me. Morocco exploration could be another catalyst. I’ll have a short piece out over the weekend.

  126. 126
    zman Says:

    BSJ – hey look, I own a Canadian!

  127. 127
    zman Says:

    Bill, it’s in the lower right corner when you go to his link. His link is archived on this site at up right under JB’s Charts.

  128. 128
    Jerome Blank Says:

    RE: #119, West, thank you…I see it, ATPG is really pressing that topside channel line…the more that the stock consolidates the greater the pressure build on that trendline….

    Re: #123, bill, I believe you go to the bottom of the first page and there is a button to vote, thank you…

    Re: #124, jiveyjr…that’s the first time in a while that I actually laughed out loud reading a post…literally…and, I don’t do that often (enough)…thank you…

  129. 129
    zman Says:

    From TBP

    Army,

    Washington, DC might have been hit with a record snowstorm last week but it’s not stopping us! We’ve had some great accomplishments I want to tell you about. More people are taking notice of our need to get off foreign oil and onto our own resources.

    Last week the Western Governors’ Association (WGA)—a non-partisan organization of 22 governors representing 19 U.S. states and 3 U.S. Territories—called upon Congress to make it a priority to pass legislation that would include incentives for the development and use of natural gas vehicles (NGVs) and NGV infrastructure.

    In a letter to Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi signed by WGA’s chairman and vice chairman, Govs. Brian Schweitzer (D-MT) and C.L. “Butch” Otter (R-ID), they wrote:

    “In addition to providing critical support for job growth in America, further development of NGVs and NGV infrastructure will help reduce our national trade deficit and dependence on oil from unstable and unfriendly regimes. Like members of Congress, we are concerned about how the staggering trade deficits impact America’s economic growth and prosperity, and a large portion of our nation’s trade deficit is attributable directly to the importation of oil. Every day the United States spends billions of dollars overseas in the form of oil payments that could be spent here, in America, employing our citizens and boosting the health of our economy. America’s continued dependence on foreign oil represents a clear threat to our economic health and security.”

    I couldn’t agree more. We need to act now.

    If you haven’t already signed the Energy Independence NOW petition, I encourage you to click here and sign it as soon as possible. Share it with your friends and family. Let’s keep sending the message to Congress over and over and over again until they finally hear us and pass legislation to end our dangerous dependence on foreign oil.

    I’ll be back in Washington next week to keep up the fight and will report back to you then. Thank you for staying with me. We’re going to get this done.

    — Boone

  130. 130
    Jerome Blank Says:

    EXXID…really trying to break above that descending 30 min triangle, a bullish rejection could cause the stock to break higher into the close…

  131. 131
    bill Says:

    punted my feb pxp 34 at a nickel and off the stock goes, lol arggg

  132. 132
    zman Says:

    130 – I think the action there is pretty moot in front of news.

  133. 133
    bill Says:

    127 got it..voted

  134. 134
    zman Says:

    Weekly chart on WLL looks very interesting. Stock working higher. Cheap so it should have a ways to run on a good quarter/reserve report/outlook.

  135. 135
    elijahwc Says:

    Bill West JB and Z, you have all done yeoman’s work scaring me out of my chicken little trade on ATPG. Maybe I should use a tight trailing stop instead.

    JB, I voted earlier today and I want you to know that I appreciate the comments on the dummy charts. Otherwise I might have to learn how to count X’s & O’s.

  136. 136
    West Says:

    XEC,for those with an interest look at option activity today.

  137. 137
    zman Says:

    West – Hope they get taken out.

  138. 138
    zman Says:

    President Obama Loves Las Vegas ~ CNBC. I feel better already, lol.

  139. 139
    Jerome Blank Says:

    Re: #135, elijah, thank you…

    Natgas relative strength really tanking (no pun) today vs. oil…

  140. 140
    VTZ Says:

    Re 138: Maybe it’s to make up for the comment he had a while ago that sparked outraged with the Senator where he said something along the lines of “well maybe now isn’t the time that people should be going to Vegas”

  141. 141
    VTZ Says:

    I have a feeling next week will be very telling for which way the market, dollar, and commodities are going to go.

  142. 142
    Nicky Says:

    It looks like either the whole way has topped which I do not favor or else the earlier high was iii with iv now underway to the previously mentioned 1092 area before heading higher again.

  143. 143
    Nicky Says:

    wave I mean

  144. 144
    zman Says:

    Someone certainly thinks XEC is a goner. Spreads out several months.

  145. 145
    zman Says:

    ZTRADE:

    MMR – Added (20) March $17.50 calls for $0.75 with the stock at 16.50. See today’s Catalyst List for reasoning.

  146. 146
    Patipati Says:

    Re Jerome’s charts, you may vote 1 X day.

  147. 147
    guru Says:

    Z:

    Any thoughts on #101?

    Incidentally, FSLR reported yesterday. The CEO said that solar power generation in US will be 500MW in 2010 and about 2,000 MW in 2 years. I suspect that most of it will be at the expense of power generated by NG. This may be another weakness (from a consumption viewpoint) in the bullish story for NG. However, I do no know how much is the total power generated in US from NG. Any thoughts on this NG capacity for power generation?

  148. 148
    zman Says:

    Guru – thought I put this earlier but must have not posted the comment:

    PTEN, HP, NBR

  149. 149
    VTZ Says:

    I’ve sat on the bid all day 0.05 under the ask on ROSE and only got partially filled once.

  150. 150
    zman Says:

    Ballpark:

    Coal is 50%

    NG produces between 20 and 25% of U.S. generation. Capacity is much higher.

    Nukes produce about 20%

    Oil is 2 to 3 %

    Water, wind, solar, biomass are the remaining small slice.

    2,000 MW or 2 GW is the size of 2 good sized nukes or 4 gas-fired plants. Tiny.

  151. 151
    zman Says:

    V – It’s thin although I would note that spreads have tightened since I started following it. Another way to play is via KWK, which will/should get some carry if ROSE hits it big in the Montana Bakken.

  152. 152
    zman Says:

    FSLR – already reported, was on the yahoo calendar on the wrong date. Happy to have sat out. Starting to think that one is a big fat short.

  153. 153
    guru Says:

    RE 148 and 150:

    Z – Thanks.

  154. 154
    zman Says:

    Guru – anytime, ask away.

    Beerthirty.

  155. 155
    zman Says:

    TAT brief out on Sunday.

  156. 156
    VTZ Says:

    http://www.bloomberg.com/apps/news?pid=20601087&sid=a0l1FpLq9lhQ&pos=2

  157. 157
    BirdsofpreyRcool Says:

    z — just saw #145… went long MMR today myself. Hope i didn’t jinx ya! Have a nice weekend.

  158. 158
    bill Says:

    avg ng prices at the well head–source eia

    Jan-2009 5.15
    Feb-2009 4.19
    Mar-2009 3.72
    Apr-2009 3.43
    May-2009 3.45
    Jun-2009 3.45
    Jul-2009 3.43
    Aug-2009 3.14
    Sep-2009 2.92
    Oct-2009 3.60
    Nov-2009 3.64
    Dec-2008 4.44

    Jan-2010 5.14

    note jan 2010 flat with jan 2009 and feb will be above 5.00 vs 4.19 last yr

    also note q4-09 avg vs q1 ytd 10 avg

  159. 159
    bill Says:

    Alliance Pipeline has completed construction of a new interconnect facility near Bantry, ND, connecting its system to Pecan Pipeline’s Prairie Rose Pipeline and providing a route for natural gas and natural gas liquids (NGL) to travel from the Bakken Shale to the Chicago hub.

  160. 160
    zman Says:

    Thanks Bill, had not seen. Good news for everyone in the area.

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