01
Mar

Monday Morning – Welcome To March

Print Friendly, PDF & Email

 

Housekeeping Watch: 

Introducing The ZIM. Today, I will be adding a new $10K portfolio, the Zman Inefficient Markets portfolio, or ZIM. The ZIM will  take a discipline, less predictive and more reactive approach for options and stock trades. This probably sounds exact ly opposite of what everyone tells you you should be as an investor. However, it's not like it will be focused on areas where we don't already have a finger or two in the market. I frequently see opportunities to take advantage of events which the market either doesn’t react to immediately or gets backwards.  This portfolio will wait for that “ah-ha” moment. It will also from time to time swing trade a string of red or green days when I think something has gotten out of whack or has gone too far too fast in one direction or the other. Likewise it will  play when the occasional macro impacting event (like an outlier gas number or a ship sinking in the Strait of Hormuz) moves the markets.

The $10 KP Becomes The  ZCAT: The current $10 KP II will be renamed the ZCAT and will focus on  catalyst driven stuff, waiting with options for those wells to come in, that earnings report to beat, etc. The Catalyst List will serve as the basis for many of the ZCAT trades in the future. 



Market Sentiment Watch: -Busy week from an economic stats standpoint. I commented below regarding stats that had resulted in sharp swings in the market over last few months and this week there are a number of them. I would imagine that things trade shakily into the week's end Payrolls figure.  ROSE should have a pivotal call for them today and we should get more natural gas supply data from the EIA tomorrow. 

 

The Week Ahead:

  • Monday 3/1: Personal Income (Forecast 0.4%), consumer spending (F 0.4%), ISM (F 57.5% at 10 am EST, this one has been a market moving of late), Construction spending (F -0.5%)
  • Tuesday 3/2:  Car sales (F 10.4 mm)
  • Wednesday 3/3:  EIA Oil Inventory Report, ADP Employment, ISM Services (F 51%, also a market mover of late)
  • Thursday 3/4: EIA Natural Storage Report, Jobless Claims (F 470K, market mover), Factory Orders (F 2.5%)
  • Friday 3/5: Payrolls (F -85,000, market mover), Unemployment rate (F 9.8%)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today - HK does a deal, ROSE earnings and operations update, KWK
  • Odds & Ends

Holdings Watch:

  • ZCAT:
    • $10,400
    • 27% Cash.
    • The Quick View portion of the Holdings tab has been updated.
       
  • ZIM:
    • $10,000
    • 100% Cash.
    • There have been no trades in this account as of yet.

Commodity  Watch:

Crude oil was essentially flat last week to close at $79.66. The 12 month crude strip is now trading at $81.35.  The dollar is soaring again as worries mount in Europe and the U.K.   This morning crude is trading relatively flat despite the dollar rally largely due to increasing tensions with Iran (see bullet) and to a lessor extent due to damage at 2 refineries in Chile due to the earthquake that will force the country to increase diesel imports for an unspecified time frame.

  • Doesn't Play Well With Other Watch: From newswires ~ "A senior Iranian military official said yesterday the country could make European countries suffer by cutting off energy supplies and can target any adversary with its missiles."

 

Natural gas fell 5% last week to close at $4.81. The 12 month strip is now trading at $5.40. I continue to see gas as range bound despite the past week's weakness. Gas in storage appears likely to fall below 1.5 Tcf by the end of March which should keep gas prices well above the low levels ($3s and for a short time high $2s) seen in the Spring and Fall of 2009.  This morning gas is trading flat.

  • Natural Gas Supply Watch: On Friday, the EIA published its 914 data, the gross natural gas production, for the month of December. This data showed a small but surprising decline in Lower 48 gross production. On Tuesday EAI will release the marketed natural gas supply figures, which should show a similar small decline.

 

  • Weather Watch: HDDs should be moving lower (as it warms seasonally) but cold forecasts persist for much of the country.

    • Week Before Last: 208 HDDs which was slightly colder than last year and normal and yielded last Thursday's 172 Bcf withdrawal report.
    • Last Week: 204 HDDs vs a prior forecast of 199; 183 last year and 180 normal. This should yield another 150+ Bcf withdrawal this Thursday.
    • This Week's Forecast: is not yet available by HDD reading however colder than normal weather is expected this week according to Accuweather.

 

This new fun weather link has been added to the Weather tab. Thanks Bill.

  

Stuff We Care About Today

HK Announces First Asset Sales for 2010

  • HK announces first of 4 planned asset sales for 2010 for a total of $175 mm.
  • West Edmonton Hunton Lime Unit (WEHLU) to be sold for $155 mm.

    • Associated reserves are $23 Bcfe (or a whopping $6.74 / Mcfe sale price which is, well, whopping, I would normally expect the sale to come off closer to the $2 to $4 range depending on remaining upside potential)
    • Associated production is 12 MMcfepd. Note that there is no change to guidance despite the removal of these volumes. 
  • Midcontinent division divests 7 Bcf of reserves and 3 MMcfepd production in 2 transactions for $20 MM ($2.86 / Mcfe).
  • These sales should help several analysts to upgrade their 2010 numbers as they "buy in" to the concept that HK can get the asset packages it has on the block sold for: 1) a good price and 2) in a timely manner. This should therefore let these same naysayers move their production growth forecasts closer to that of the company's 36% YoY (net of divestments) growth target.

ROSE Reports  Strong 4Q Results, Updates Alberta Bakken, Guidance Remains Same

Nutshell: Solid quarterly numbers, volume guidance remains unchanged at up 9% in 2010. We did not get an IP on their first horizontal Alberta Bakken test but that's not as off putting as it sounds (see below). Their Eagle Ford Shale program is about to kick up several notches into development mode. This may be one for the ZIM portfolio but I plan on waiting for the call. The Alberta Bakken results may also prove to be catalytic for NFX (221,000 net acres in the play) and KWK (93,000 net acres). Despite the recent appreciation, the names remains fairly cheap on 2010 CFPS of $3.85 (4.9x) and cheaper still on 2011 estimates of $4.92 (3.8x) which admittedly is pretty much a grenade toss at this point but the directionality is good and it's possible they get there. 

The 4Q09 Numbers:

  • Production of 128 MMcfepd which would been at the high end of the expected range.
  • Revenue of $76.5 mm vs 69 mm expected
  • EPS of $0.19 vs $0.18 expected
  • CFPS of $0.87 vs $0.78 expected

Guidance: Unchanged

  • Production: 145 to 155 MMcfepd, up 9% on the mid from 2009's 138 MMcfepd
  • Capital budget up 107% to $280 mm, from 2009's heavily constrained spending level

    • A majority of the budget will go towards developing the condensate rich portion of their Eagle Ford shale acreage as well as delineating other parts of the play.
    • According to ROSE they can get this done via internally generated cash flow with prices at $70 oil and $6 gas but they do plan to sell their Gulf of Mexico Shelf and Texas State waters properties which are no longer considered core.

Operations Update:

Eagle Ford Shale: 3 Areas at present, acreage continues to expand; the company has drilled on two wells to date in the play but is ramping activity to a 4 rig program this year.

  • 61,000 net acres in total, up from 52,000 acres at last check:

    • Gate Ranch area, 29,000 net acres in this condensate rich portion of the play. They've drilled one gas well with a good oil cut and high btu gas. They plan to keep three rigs busy here this year, like everyone else, chasing the liquids in the play.
    • Springer  Ranch area, 14,000 net acres, 1 dry gas well so far.
    • Undisclosed area, 18,000 net acres.

 

Alberta Bakken:  (northwest Montana on the Blackfeet Reservation), 254,000 net acres, up from 230,000 at last check.

  • 3 wells drilled to date over a wide range of their acreage. All three were logged and cored (so we have a good idea of porosity and permeability) and the 1st of these was taken horizontal.
  • In this first well, the Tribal Gunsight #31-16H, in Glacier County, Montana, they had a problem with the completion, only getting 20% of the frac placed in the target zone (Bakken).  The company comments that it is "very encouraged" by the "implied production rate".
  • Some other thoughts:

    • they calculate the original oil in place (OOIP) at 12.5 to 15.3 million barrels which is higher than what you find over in the Williston Basin in the traditional Bakken play (there you see closer to 9 mm bo by some estimates).
    • In all three wells they encountered 4 potential producing zones:
      • (Lodgepole (limestone),
      • Bakken (black shale - higher organic content),
      • Three Forks (green and red shale - lower organic content),
      • and the Nisku (not sure if this is still limestone or if it has been dolomitized ... dolomite interbedded in the middle Bakken over in the Williston Basin has yielded some of the best wells in that play ... I've found old data calling the Nisku both a lime and a dolomite ... dolomite should auger for higher porosity and permeability than limestone),
    • The wells were spread over a large area of their acreage, which gives you greater confidence that they weren't just drilling into an isolated sweet spot.
    • It's overpressured which can lead to better production rates.
    • Would have liked to have had a production rate and I'm sure they will get asked what it was on the call.
    • This Bakken is much shallower than the Williston Basin, probably just under half of the North Dakota Bakken wells we normally talk about. This should be closer to 4,500 deep.

Other Stuff

Reserves:

  • 351 Bcfe,  85% natural gas, 75% proved developed (so not a lot of offsets (undeveloped) locations in their total proved reserves number which has been a bone of contention with many analysts this season.
  • EV / Mcfe = $3.42 / Mcfe ... not cheap on a proved reserves basis but not expensive either.

Balance Sheet:

  • 32% net debt to total cap.
  • Liquidity: Cash of $61 mm and borrowing capacity of $160 mm ... so I don't see a deal close at hand given expected cash flow this year and their proposed budget.

Hedges:

  • Up from the last mention, the company has about 20% of expected volumes hedged over $6.50 / Mcfe in the first half of 2010, growing to nearly 40% hedged just over $6 / Mcfe in the second half.

Conference Call: Today, 11 am EST.

Chesapeake Midstream IPO

  • IPO filed earlier this month.
  • Will be an additional source of financing for the parent, CHK
  • Have not yet seen exact deal timing here.

KWK Reports 4Q09 Results - Details Later

The 4Q09 Numbers:

  • Production of 324 MMcfepd (note 2009 was up 23%) but guidance for 1Q10 eases back to a range of 310 to 320 MMcfed
  • Revenue of $234 mm vs $217 mm expected
  • EPS of $0.27 (ex items) vs $0.25  expected
  • CFPS of $0.89 vs $0.65 expected

Nutshell: I don't own this one right now but think the call is worth listening to for a couple of reasons, the first being that its always good to hear them gauge Barnett Shale activity and second, I'd like to hear what their plans are for the Alberta Bakken play in Montana. As it conflicts with the ROSE call I'll be listening to the replay. The company sees production rising over 20% this year as they complete more wells than they drill as they play catchup with their inventory of drilled but not completed wells (100 at year end) in the Barnett.

Conference Call: Today, 11 am EST

I'll have the Orange Charts out later this week.

 

Odds & Ends

Analyst Watch:

  • WLL - target raised from $74 to $80 at Credit Suisse
  • DNR - raised to Buy at Keybank

Interesting Reading Watch:

169 Responses to “Monday Morning – Welcome To March”

  1. 1
    BirdsofpreyRcool Says:

    Good morning. Credit markets and futures all green this a.m. March feels like a blank sheet of paper.. don’t know what will be written on it yet. Maybe we will start to shift focus from Greece to Californina… that is potentially a larger (and arguably closer to home) fiscal problem and market impact.

    If one wants to go looking for problems, one doesn’t have to go far. There is still a whole haystack-full, right in our own backyard.

    “ZIM”… like it! Sounds like the “Fat June Bug” portfolio to me. Or “Slow Moving Antelope.” Either way, it should be able to generate some nice lunch money. Helps if we gang up on conf calls and post ZIM info as we hear it.

  2. 2
    BirdsofpreyRcool Says:

    TechTrader not convicted, with a 55/45 LONG call for today’s day trade.

    HeadTrader just doesn’t see a catalyst for today… thinks we are in for another low volume, directionless drift.

    Mirror’s my “blank page” comment above. So, be on the lookout for what may move this market, in either direction. On low-volume days, weird stuff can happen.

  3. 3
    bill Says:

    other portfolio names

    ZAP

    ZOOM

  4. 4
    zman Says:

    BOP – good points both.

    HK may be in the running for a quick move as they say, “look ma, we can get asset deals done and fast”

    ROSE called up, should be a most interesting conference call. “So your Bakken has 2 productive zones eh? Well mine has 4.”

  5. 5
    zman Says:

    Bill – LOL. CPC forecast page is broken this morning.

  6. 6
    BirdsofpreyRcool Says:

    EXXI back to its normal, 4 letter ticker.

  7. 7
    zman Says:

    Nice bid ups on the DJ Triad this am.

  8. 8
    BirdsofpreyRcool Says:

    EXXI — wow. Just sold my EXXI trading shares at 19.50. Hold a fistfull still, tho.

  9. 9
    zman Says:

    ROSE leaving the gate pre call

  10. 10
    zman Says:

    Nice swing trade BOP.

  11. 11
    BirdsofpreyRcool Says:

    It was stupid at 17.35. Then with the ticker change, the market makers were temporarily confused. Wow. Didn’t think it would work that well. Nice June Bug Trade. Got lucky. And HeadTrader helped a lot.

  12. 12
    BirdsofpreyRcool Says:

    EXXI — that said, i fully expect to blow past 19.50 soon. Probably this week. But, may try to trade the vol.

  13. 13
    zman Says:

    ZTRADE – ZIM Portfolio

    ROSE – Added (50) $22.50 Calls for $0.20 with the stock at 20.10, up 7%, prior to their conference call. See the post for details on the earnings and ops update released on Friday. Also see the post for guidelines on the ZIM (Zman Inefficient Markets portfolio). I expect ROSE to provide additional detail on the call today on their Alberta Bakken position and tests and may add a second tranche of options later in the day. I own these in the other options portfolio already and I own the common.

  14. 14
    bill Says:

    ng is finally trading up

    will sd follow–investor day tomorrow

  15. 15
    bill Says:

    i notice alot of names up at open then they drift lower.

    i wonder if its index buying

    exxi opened at 19.51 trade as high as 19.75 now in he 18’s

  16. 16
    West Says:

    ATPG continues to trade as though someone is trying to cover at least part of their short.

  17. 17
    bill Says:

    I sold my atpg calls this am,. Will buy back on dips

  18. 18
    BirdsofpreyRcool Says:

    Nice bill. Sell on up days, buy on down. Seems to work.

  19. 19
    zman Says:

    WLL – about $1.50 away from breakout here, continues to move nicely, continues to be a cheap forward CF name.

    XEC – nice call West.

    Watching the BEXP gather more steam, that’s a nickle short of it’s recent high. Not cheap but catalysts abound.

  20. 20
    bill Says:

    Rose has a nice move today

    Thanks bop

    sometimes they never go up, lol like sd

  21. 21
    zman Says:

    Bill – not to be hypester as you know I don’t do that but ROSE could take out the old highs if they have the right kind of comments about porosity, perm, on the call. If they have four oil laden zones at have the depth of the Williston Bakken, spreads over a large area and have as of yet nothing booked for it, well, that’ll mean a lot to the 2010 reserve report, not to mention production in coming years.

  22. 22
    zman Says:

    BEXP through that high, approaching $17. The $17.50s in the ZCAT are waking up.

    NFX also taking a look at recent high, with the $55 calls starting to show minor signs of life. Recall that NFX is in the Alberta Bakken (only acreage so far but in a big way) too.

    If the ROSE call goes well I may take that second piece of Alberta Bakken leverage via NFX or KWK which have better spreads.

  23. 23
    zman Says:

    Somewhat shocked that HK isn’t moving better on its deal news, I don’t want to be too tradey in the ZIM but that just seems odd. Could be fear over natural gas prices although those are actually up now so not sure what the hang up is.

    Nicky – got levels? Thx.

  24. 24
    zman Says:

    ISM by the way came in at 56.5% vs a 57.5% forecast but market seems to not care.

  25. 25
    zman Says:

    Just flipping through the morning TPH piece and they make some good points about the 914 data

    1) data looks goofy. Good word that goofy and I agree, it doesn’t square with the storage numbers which, pound for pound with the weather shouldn’t be showing withdrawals like this if production is that high (unless demand has come back considerably on the non heating side of things)

    2) March is when the EIA makes heavier revisions (when they release the January data) for the prior year, so maybe there are some big, and bullish looking true ups coming in next month’s data release.

  26. 26
    tomdavis12 Says:

    Z: GS upgrades ESV today. As a reminder that the magic number for offshore guys is $6 NG. At that level JU demand jumps. Yes HK will be good performers as your other E&P names @ $6. Just want to remind you some of the offshore guys have better balance sheets.

  27. 27
    zman Says:

    Tom – hear ya but the whole jackup thing is global and harder for me to get my head around than HAL seeing higher NAM utilization if gas is at $5 than $4 let alone $6. HAL divergence with rigs (which jumped again in the U.S. as of Friday for both oil and gas) continues.

  28. 28
    tomdavis12 Says:

    Z: Understood.

  29. 29
    jiveyjr Says:

    WRES inching…don’t want to whore like Soros et al, but that looks like a cinch to me, barring some really inept mgt. manuever or manurek, which ever way you wanna put it

  30. 30
    Nicky Says:

    Morning all. At some stage this week, I think we are going to test the 1128 – 1148 area on the SPX.

    I did say Friday look for us to test 1110 today and stall. Well we are a bit higher. Resistance is at 1112 and then 1115. Support is at the 1090 – 94 area which I also think is likely to be seen this week.

    Everything would point to weaker stocks but it isn’t happening ie the dollar, metals, energy – but maybe stocks are just delayed.

  31. 31
    zman Says:

    Jivey – I expect them to have the reserves pop and to talk about a more active year (like everyone else) with some sinusoidal horizontals getting drilled on the west coast (try saying sinusoidal horizontal 3x real fast, you just can’t). If I don’t get all that I’m going to punt. Not the fall from grace on the monthly chart with oil and then the only smallish return with oil vastly outperforming.

  32. 32
    zman Says:

    Thanks Nicky. Every time I think the dollar is due a rest and especially when data comes out that points to more govt support will be needed, it rallies further because some other place like Greece looks worse.

  33. 33
    zman Says:

    Asleep at the wheel analyst watch:

    BEXP – Canaccord raises target to $17 from $14, maintains Buy. Um, dude, wake up, we’re there.

  34. 34
    Nicky Says:

    Z – euro action is odd this morning when they are talking about the Greek bailout being back on the table. Sterling being absolutely destroyed but apparently thats due to the fear of a hung parliament at the next UK election.

  35. 35
    zman Says:

    Re 34 – I wonder if the dollar would have the same reaction if Congress were hung.

    ROSE went to its 50 day sma and stalled, at about $20.25.

  36. 36
    zman Says:

    ROSE and KWK calls in 15 minutes. I’ll be on ROSE.

  37. 37
    jiveyjr Says:

    thx for that input on WRES…I agree it hasn’t shown much run, but sinusoidal or no, the sob just broke out

  38. 38
    Dman Says:

    Z – I think the overhang of distrust of HK’s tendency to drop the secondary bomb is slowing things up. Even tho it does look like HK has got the message.

    Changing topics: several months ago Jim Rogers was talking up cotton as a cheap way to play oil. So I was watching it closely in the recent correction, waiting to pounce. Thought it might correct a little more …Doh! Check out the BAL chart.

    Maybe it is *still* a cheap derivative play on oil play… ?? Anyone know anything about the price of cotton?

  39. 39
    bloodystupidjohnson Says:

    Z: I see people are starting to line up for that WRES reserve report and are bidding the shares higher.

  40. 40
    VTZ Says:

    RE 32: The same reason gold will continue to stay strong in the face of the rising USD.

    Gold is a lock for 1300-1500 by this time next year.

  41. 41
    zman Says:

    WRES – yeah, better late …

    ROSE call starting, don’t see a new presentation.

    http://www.rosettaresources.com/

  42. 42
    Dman Says:

    Z – so how did HK get the whopping prices for assets?

  43. 43
    Dman Says:

    Can’t help noticing two possible meanings in the 1st line of #35

  44. 44
    zman Says:

    ROSE Call, 20.60 at call start, up about 10%.

    HK – must have had a whopping load of probable reserves on it, don’t recall how much acreage that was but they used to talk about the play, not all that long ago, as something with high potential.

  45. 45
    zman Says:

    Dman = 😉

  46. 46
    BirdsofpreyRcool Says:

    ROSE — not reporting 2 and 3P? Why?don’t like that.

  47. 47
    BirdsofpreyRcool Says:

    Just reinforces that the mrkt doesn’t really give a company much credit for probs and possibles. Stock up nicely from where you snagged it this morning, tho. nice!

  48. 48
    zman Says:

    Re 46, it’s optional. I like to see it too but some abuse it (pie in the sky).

  49. 49
    zman Says:

    BEXP breaking out.

    ROSE going through the yada, yada stuff

  50. 50
    Nicky Says:

    re # 35. LOL at the thought of Congress being hung!

    One thing that may be playing out here is a large wave iv triangle. If this is the case then look for this rally to stall around 1115 which is the B leg, then down to the 1070 area for the C leg. We may then still need to see a D and E leg but ultimately off the low we should see a big rally for wave v (likely starting in late March) which will target the 1200 area in May/June.

  51. 51
    zman Says:

    ROSE Call

    They noted the low PUD %, good as it’s conservative, they could have booked more in the Eagle Ford, not sure what they booked but I think that’s true and I’ve met with these guys in their former lives, they are conservative by nature.

  52. 52
    BirdsofpreyRcool Says:

    ROSE sounds perky tho… stock responding nicely.

  53. 53
    zman Says:

    ROSE Call

    We continue to have a bias for living with our means for capital spending but we want to drill up the condensate window in the EFS (Gates Ranch area) and the Bakken.

    We would be willing to draw on our revolver to fill the gap if prices don’t hold up in the short term. They didn’t mention equity and from what I understand, that’s not in their game plan now.

  54. 54
    choices Says:

    Informative site: too bad Congress does not read.

    http://energytomorrow.org/Industry_Jobs.aspx?utm_source=website&utm_medium=banner&utm_content=27&utm_campaign=Industry%2FJobs

  55. 55
    zman Says:

    ROSE just walking through the quarterly financials, ops update up next. Stock at $21.

  56. 56
    zman Says:

    Re 50 – so more downside than upside near term from here, lol?! Thanks much Nicky, love the levels!

  57. 57
    BirdsofpreyRcool Says:

    EXXI — nice to see it hold onto the $19 handle. That dip to $17 the other day was just nuts.

    EXXI hosting their investor day in NYC on Thursday. Anyone going?

  58. 58
    zman Says:

    ROSE Call – Operations Update

    2009 – majority of drilling was in the Lobo of S. Texas. Not this year.

    Legacy programs

    Note in the pr that they basically did workovers and nothing else in the Sac basin and it was flat YoY. That’s a nice big chunk of their production that is low maintenance from a capex standpoint. Workovers test a bunch of bypassed pay intervals. For $2 mm capex they added 5 Bcfe of reserves this way and added 8 MMcfgpd (which basically kept the field flat on the year). They’ll continue this in 2010, so little drilling, holding flattish production. This about 40 MM/d of their 128 MM/d of production.

    DJ Basin – planning 100 wells (not sure I heard that right, will check)

    Pinedale – also a optimatization and bypassed pay year

    moving on to reserves. They are saving the emerging plays (Eagle Ford and Alberta Bakken) for the end of the call.

  59. 59
    reefguy Says:

    57- i be there

  60. 60
    BirdsofpreyRcool Says:

    reef — i have a non-energy investing friend (who bought EXXI) who might join you. What time does it start?

  61. 61
    zman Says:

    ROSE Call – Emerging Plays

    I won’t repeat the stuff that’s in today’s post, just the incremental.

    Eagle Ford Shale:

    Gates Ranch – NW Webb County, 75% NRI and operates, condensate window.

    8,300 feet deep, >350 locations on 80s,
    note the decline here was hyperbollic but five months in they are calling it stabilized, doens’t

    Getting busy with the bit:
    Wells #2,3, completing now
    #4,5 are schedule for completion next month,
    #6-8 are drilling now.

    So here come some catalysts as they drill the area all year with a 3 rig program.

  62. 62
    zman Says:

    Spring Ranch area – dry gas, second horizontal well drilling now. 1 rig program here.

    Other EFS: Undisclosed areas of total 18,000 acres, no info, may test this year.

  63. 63
    BirdsofpreyRcool Says:

    “oil saturated”… words you love to hear.

  64. 64
    BirdsofpreyRcool Says:

    “overpressured”…

  65. 65
    zman Says:

    ROSE – Alberta Bakken Program

    Drilled, cored, logged 3 vertical.

    Southern, northern, and downdip positions.

    All 3 wells were oil saturated. All 3 had the Banff (Lodgepole) and all 3 were oil saturated. Three Forks in all 3 were oil saturated. This is how a stock goes higher. All 3 are overpressured, system is sealed so the oil hasn’t just migrated across it, leaving oil.

    Nisku – see post – all three are oil saturated.

    Will not release details on cores, logs.

  66. 66
    BirdsofpreyRcool Says:

    ROSE talking about numerous stacked reservoirs. sure, they said it in the PR too… but, sounds better on a conf call.

  67. 67
    zman Says:

    OOIP – is big here, bigger than the Bakken. And we have 4 targets, not 2.

  68. 68
    BirdsofpreyRcool Says:

    ummmmmm… wow, Z.

  69. 69
    zman Says:

    ROSE Call – during the 4th quarter they took the first well horizontal.

    See post on the frac miss.

    Drilled the well into the anyhydrite below the Three Forks, tried to frac it, didn’t work well. Will not disclose rate. They were trying to frac the TFS, Bakken, and Lodgepole from below, didn’t work due to the low placement of the lateral. The lodgepole was not contacted at all, it did produce oil from the TFS and maybe the Bakken although the Bakken sounds like it was only grazed by the frac. So they won’t release the production test amount. I think that’s just fine.

  70. 70
    BirdsofpreyRcool Says:

    So, not sure you can frac across numerous producing zones. So, would be a horizontal for each zone? Anhydrite makes for good cap, but sounds tough to frac thru. That said, it helps with the over-pressured production and ultimate recovery, i would think.

  71. 71
    zman Says:

    Wondering if Cambrian shale is source, wondering just how charge the Nisku dolomite is, that’s a fat one.

  72. 72
    bill Says:

    rose up 14 % helluva a good call

  73. 73
    zman Says:

    The pay is thinner here, I think they think they could throw a big frac on get all three, I’m sure the CLR guys would tell them don’t try it but the rocks are different here.

    Analysts asking the wrong question so far.

  74. 74
    zman Says:

    Thanks Bill.

    They are being stingy now on further data.

    They aren’t giving the pay thickness … you can almost hear them leasing more acres in the background.

  75. 75
    reefguy Says:

    EXXI- At Waldorf at 8 am, presentations at 8:30..give him my e mail and I will give him my cell

  76. 76
    BirdsofpreyRcool Says:

    thanks, reef! will do.

  77. 77
    reefguy Says:

    TAT- buying on weakness today

  78. 78
    BirdsofpreyRcool Says:

    shorts not having a very “ROSE”-y day. Short interest here ticked up recently. Anyone who didn’t cover last week is not going to like their trading book mark today. ouch.

  79. 79
    zman Says:

    ZTRADE – ZIM

    ROSE – Sold half (25) of the March $22.50 calls for $0.60 on the mid and easily, up 187% with the stock at $21.70. Call going very well but time to play with “house money”.

  80. 80
    BirdsofpreyRcool Says:

    Oil quality… good question… sweet and light.

  81. 81
    BirdsofpreyRcool Says:

    ROSE — play sounds like it covers a gianormeous geographic area.

  82. 82
    zman Says:

    ROSE Call –

    Bakken: Minor bit of wax, don’t think it will be a problem.

    Nisku is normally pressureed.

    This is 4,800 to 6,000′ , not uplifted though.

    EFS – Booked were 42 Bcfe, that’s not a lot, sounds like this is a big piece of their very small PUD books, booked them at 4.0 Bcfe, which is low to other folks who are closer to 6.5 Bcfe, again conservative.

  83. 83
    zman Says:

    Thanks for 80, thought I heard but I was typing too loud with that trade.

  84. 84
    BirdsofpreyRcool Says:

    asking the multi-layer frac question… good one. helps the economics… a lot. think ROSE is going to be cagey here…

  85. 85
    zman Says:

    ROSE approaching $22.

    Bakken question – still haven’t received all core data back, they are encourage that all three of the reservoirs are overpressured but all have the same pressure gradient, making them think they can pull this off with a single well.

    Yes it was uplifted to …

    Analysts sound please as punch. Looking for upgrades tomorrow.

  86. 86
    bill Says:

    amazing move

    goes to show what good news and short covering can do

  87. 87
    BirdsofpreyRcool Says:

    the Laramide Orogeny…

    http://en.wikipedia.org/wiki/Laramide_orogeny

  88. 88
    reefguy Says:

    MMR starting to run

  89. 89
    zman Says:

    ROSE is going to be more active on the Catalyst List with a bunch of data points starting in April.

  90. 90
    BirdsofpreyRcool Says:

    reef — watching MMR…. thinking people are thinking they are thinking about annoucing soon. But, also think we are still a day or two or three away. thoughts?

  91. 91
    zman Says:

    Thanks BOP – I sent you two geo pieces on the Blackfeet reservation over the weekend. Stratigraphic columns, field maps, etc. Call over, my guess is that despite the run, the NAVs get cranked up and we see analysts pound the table and take targets higher.

  92. 92
    reefguy Says:

    DJ update…finished conditionong hole, will begin to run liner to TD and tieback. Maybe 48 hors from here to announcement?

  93. 93
    BirdsofpreyRcool Says:

    z — so… wondering how much of ROSE’s 2010 and 2011 production will be oil vs gas.

  94. 94
    zman Says:

    BOP – hard to say without a full fledged model. More for sure even without meaningful Bakken production as they are whaling on the gates ranch area and as he close out saying those wells could be 60% liquids, or nearly half a million barrels of potential for condensate.

    Reef – thanks, my MMR $17.50s are alive and kicking!

  95. 95
    zman Says:

    Jerome – the PF chart on ROSE looks pretty interesting now.

  96. 96
    zman Says:

    S&P at 1115.5 … I just don’t get that?

  97. 97
    zman Says:

    Re 54. Yep. I guess they’d rather see them filling pot holes installing insulation.

  98. 98
    Jerome Blank Says:

    EXXI…locked out of trading exxi today…the stock is not trading under either EXXID or EXXI…just frozen…could not get a great answer out of “think or swim”…said it should be adjusted by tomorrow…anyone else having difficulty with the ticker change?

  99. 99
    BirdsofpreyRcool Says:

    JB — weird. I sold my EXXI trading shares at open today. I would give TOS heck, if i was you.

  100. 100
    zman Says:

    JB – I have it trading freely as EXXI. Stock is at 18.99 with 163K traded so far.

  101. 101
    jiveyjr Says:

    JB…just reviewed your chart book and voted…noted that BEXP broke against that divergence you plotted and that NFX has gotten above that key $52 area…thx for all your work

  102. 102
    zman Says:

    MRR popping up through $18.

  103. 103
    jiveyjr Says:

    MMR looking great again today

  104. 104
    bondbuddha Says:

    JB voted

  105. 105
    elduque Says:

    Is NG coming off because of weather or just the continued announcements of more shale plays being found?

    Best Guess???

  106. 106
    zman Says:

    ElD – Weather.

  107. 107
    elduque Says:

    do you wanted hazard a guess at what price does it hit bottom on the futures market. Low 4’s?

  108. 108
    choices Says:

    JB-agree w/BOP, #99-Interactive Brokers and TD Ameritrade (which owns TOS) has it trading freely as EXXI.

  109. 109
    BirdsofpreyRcool Says:

    MIDDAY TRADING DESK UDATE

    Equities strong out of the gate to kick off Mar, spurred higher by reports of an aid package for Greece in Europe (Greek CDS spreads are ~35bp tighter, Spain is 17bp, and Italy is 7bp tighter), a bunch of M&A deals (inc. Merck KGaA/MIL, and others), and earnings optimism (the SOX is up close to 3% and breaking north of its 50day MA following the upside preannouncement from SNDK). Technicals increasingly look favorable (the sp has broken above its 50day MA today) in the near-term w/many anticipating a test of the near-term highs of ~1150. Volumes still not great and larger vanillas reticent to make large commitments on the long side (there is some profit taking today on the strength); shorts increasingly nervous to lay out more exposure and are looking to cover on any dip; the risk is to the upside at the moment. The tape is resilient, continuing to shrug neg. eco #s (like today’s ISM), w/investors taking the Goldilocks view that the poor figures over the last ~1.5 wks is either: 1) largely due to weather (meaning we will see a snapback) or 2) will give the Fed more ammunition to stay accommodative for longer. As has been the case for a while now, investors are keyed on developments in the fixed income markets (the Euro is off ~0.8% while the GBP falls ~1.7%).

  110. 110
    Jerome Blank Says:

    Thanks for the feedback on TOS..at this point their not responding to my inquiries…not happy at all…really don’t need this type of grief when you’re needing to get actual work done…

    Also, UNG alert…I have UNG 1 tick off the $8.50 all time low…

    Re: #101,#104 jivey, bondbuddha, thanks much, nice to be near the top, especially when you’re in a bad mood…lol…

  111. 111
    elduque Says:

    JB- TOS works just fine at TD, have all the same features plus all the extras at TD. It is worth switching over.

  112. 112
    Jerome Blank Says:

    Re: #111 elduque, I was under the impression that their commissions were quite a bit higher? Thinking of switching to Interactive brokers…also have lower futures commissions…but hate to take the time to learn new software, etc…ugh!

  113. 113
    zman Says:

    Got an email from one of my old time oil types musing on the ROSE call going very well. My response.

    Yeah, that was on of the better calls I’ve been on in a year. Overpressured in the top 3 layers. That Nisku below is dolomite, with Cambrian shale underneath as a source (I’m guessing). I love the way he stepped through each zone with the comment that they were oil saturated in all 3 wells in all of them. So uniformity, porosity, and perm. If they pull off a frac that can drain the top three from one lateral effectively, could be a nice rate well with much better than Williston Basin Bakken economics. I think NAVs jump here with tomorrow’s first call notes.

  114. 114
    zman Says:

    RMD – you around, here’s to hoping you were in the ROSE as I think you were.

  115. 115
    zman Says:

    Reef – have you heard a TAT timeline for exploration on the Zagros Fold either in Turkey or across the border? I was thinking it was a 2Q thing, does that sound right?

  116. 116
    zman Says:

    HK – no trade from me there today, just not reacting liked I would have thought, maybe too small $ wise to get people’s attention yet. After all, the total package they want to punt this year is $1 B, so people may be thinking that’s still a long way off and in a difficult gas market.

  117. 117
    reefguy Says:

    115-correct

  118. 118
    zman Says:

    Reef – any thought if 1 rig drills both targets or if this is a second rig?

  119. 119
    reefguy Says:

    two rigs, one for each

  120. 120
    zman Says:

    Re 119. wow and thanks.

  121. 121
    elduque Says:

    JB- commissions are negotiable

  122. 122
    zman Says:

    Watching SD, reminds me of GMXR in here. Waiting for them to find a trading range before thinking more about either.

  123. 123
    zman Says:

    Oil down $1.10 as the market pulls back and finally notices the dollar.

  124. 124
    Paul in Kansas City Says:

    great ROSE trade Z!

  125. 125
    john11 Says:

    From Briefing…
    01-Mar-10 13:07 ET

    Rosetta Resources target raised to $30 at FBR Capital (21.49 +2.76)

    FBR Capital raises their ROSE tgt to $30 from $23 saying despite the lack of a very important link to the puzzle (horizontal well IP rate), they remain fans of the prospectivity of the Alberta Bakken acreage, and believe that, at current stock price levels, investors are paying only $3/share for $27.50/share of potential Bakken value. The firm says their assessment of potential is based on their understanding of Bakken’s depositional history, positive productivity implications of a 175 MMbbls conventional Cut Bank field close by, historical Bakken well results, and, now, additional well-level data from Rosetta’s three wells. The firm believes that Newfield Exploration Company will drill its first AB well next month, one well south of Rosetta’s first well.

  126. 126
    RMD Says:

    114: back in town. Was on ROSE call,don’t own enough. Bot some KWK to play ROSE.

  127. 127
    zman Says:

    Thanks Paul!

    RMD – I would have done that too but the dumb bunnies put the calls at the same time, will listen to replay in a bit.

  128. 128
    milepost_43 Says:

    rumor..shortage of frac teams??
    From Dan’s 16 forum…thought I would pass along….FWIW..probably not much…
    “Dan, I continue to hear stories of well holdups because of a lack of frac teams.This seems reasonable since both NG and oil e&p’s are trending toward horozontal drilling with long laterals and huge numbers of fracs. My question to you is,what is the best way to take advantage of a shortage of frac teams. Is there a company/companies that get most of their income from frac jobs-sure seems like they have pricing power. TIA j

  129. 129
    zman Says:

    BHI/BJS, also HAL. It’s going to be regional but I think those are your guys. Also sand in demand, CRR for ceramic sand, people like BEXP are using it in the Bakken.

  130. 130
    milepost_43 Says:

    seems I’m always a day late…CRR +3.5% today…thanks…have a new watch list…

  131. 131
    zman Says:

    I am working up a back of the envelop NAV for proved reserves plus conservative potential reserves in the Alberta. You can get over $30 very quickly. Using lower EURs for the 4 zones combined that you see many Bakken players claim using 1 zone (either the middle Bakken or the Three Forks) over in the Sanish. Would very much like to see a flow rate here but the thing is going to look cheap on NAV.

  132. 132
    zman Says:

    Nicky – nice call on the 1,115 stall.

  133. 133
    Nicky Says:

    Z – if we can move above it then look for 1120 by the close.

  134. 134
    zman Says:

    I have the sound down on CNBC as I’m playing with this NAV, what’s up with the market, why are we all happy, happy, joy, joy?

  135. 135
    zman Says:

    Regarding the ZIM – I plan to hold the second half of that trade through the close but will almost sell it tomorrow on the open, looking for some upgrades there, and don’t want to hang out in the position in that particular portfolio.

  136. 136
    zman Says:

    Tom – You had that ESV thought right when I was going into the ROSE call, meant to ask, did you see RDC upping their margin guidance? That they commented on Davy Jones in their press release as fostering more business?

  137. 137
    jat Says:

    Well, I would love to answer 128. The answer for large caps is HAL/BHI and the answer for small caps is SWSI. Of course, one of these companies hasn’t performed as nearly as well as it should given service trends.

    This is because a lot of idiots think that this company will buy WFT. It will not buy WFT, b/c the only thing it needs is the artificial lift division, which is a measley 17% of revenue, and WFT has a lot of hair on it in FCPA and other issues.

  138. 138
    zman Says:

    Tom – DJ talk from the rig guys seems a little early to me. Wondering if you if ESV has transitioned to a high weight load capable company. RDC’s gorillas can hang a lot of pipe which is kind of important when you are drilling down nearly 5 miles.

  139. 139
    zman Says:

    Jat – thanks much for adding to 129. What do think of the jackups now, anything at all?

    I continue to like the OII story but missed their call and have not been in it in some time. Comment was made the other day that dw rig balance is going to get tighter as PBR doesn’t have enough home grown rigs to fit the bill. All of those new build and existing rigs will need an ROV or 2.

  140. 140
    zman Says:

    SWN and SD pretty much holding dead in the water, the power of a poor conference call still lingering.

  141. 141
    West Says:

    JB thx for the XEC charts. voted

  142. 142
    elduque Says:

    any thoughts with playing the SD investor
    conference?

  143. 143
    VTZ Says:

    Shadowstats March 1st headlines:

    • 2009 GAAP-Deficit Narrowed to $4.3 Trillion
    • Total GAAP-Based Obligations of $71 Trillion at Five-Times GDP Level

  144. 144
    zman Says:

    Eld – I’ll be watching but not playing before hand, seems they have a lot of questions to answer.

    Watching BEXP trickle higher. That could/should have news in the next 2 weeks. I may scale back my $17.50s there which are breakeven and buy it back on a pullback.

  145. 145
    tomdavis12 Says:

    Z: Got a MS driller report with a great deal of info. Did not see any DJ discussion but they are more positive about the space than most. I will forward.

  146. 146
    zman Says:

    ROSE – just relistening to call, $3 to $4 mm per well vs $6 million for the longer lateral and deep wells in the Williston, still pretty good as they were doing a 15 stage frac.

    Sweet oil, 32 to 35 gravity.

  147. 147
    tomdavis12 Says:

    Z: I see ECA announced a JV with Korean Gas Corp. Helping KWK because of adjoining property.

  148. 148
    VTZ Says:

    Athabasca Oil Sands Corp. filed a long form prospectus on Friday for their IPO. This is the large large land holding company that is private but going public.

    PetroChina owns a large stake as a partner and is also loaning to the company.

    Haven’t decided whether or not to buy in.

    http://www.vancouversun.com/business/Athabasca+Sands+looks+public+after+PetroChina+deal/2628163/story.html

  149. 149
    jat Says:

    I don’t dislike the jackups, just like general service more at present. Earnings recover faster and 2010 grows over 2009.

    But, to be fair, I’ve had a long NE/short RIG rec on since November for the reason people are warming up now. JUs are early cycle relative to DW/MW. I liked NE given that it was a little more diversified than ESV/RDC and so felt more comfortable. Also have more experience with mgmt there. It is somewhat amusing for me to see RBC start to warm up to jackups today with the RDC upgrade. I was meeting with Kurt/Victor in December, I think, and they took a rather less than respectful view toward my long JU/short DW flair. I still have the presentation they gave showing that tsunami of uncontracted jackup deliveries. What happened to those, Victor?

    I haven’t updated my thoughts in a while, will probably take a good look given the recent upside quarters.

    Tom, beware MS analysts! Ole is a great guy and very smart, but his price targets won’t get you anywhere with less than a 100 year time horizon.

  150. 150
    zman Says:

    ZTRADE – ZCAT

    WLL – Sold the (5) March $75 calls for $3.20, up 109%. It’s been running which is nice and I continue to own the common but as for near term catalysts I’m sure I see one outside of it’s cheapness and a potential rally in oil. I’ll reposition this on the next pullback.

  151. 151
    zman Says:

    ZTRADE: ZCAT

    ROSE – Added ROSE APRIL $22.50 Calls for $1.10 with the stock off its highs today at $21.60. Looking for NAV upgrades in the morning due to the Alberta Bakken news and the Eagle Ford Shale program. The EFS will provide a series of catalysts this spring as wells are completed however the company has stated that it will be going back to quarterly operations updates so look for the next one around tax day.

  152. 152
    zman Says:

    ROSE walking back up as we approach the close.

  153. 153
    zman Says:

    BEXP acting like another ops report is around the corner but I think the earliest we could see one is next week.

  154. 154
    jiveyjr Says:

    WRES new high of day…will be interesting to see how it behaves around the secondary price of $2.60

  155. 155
    VTZ Says:

    Will we see upgrades in store tomorrow for ROSE or will it all be baked into the cake by the end of the day so it won’t matter anyways?

  156. 156
    tomdavis12 Says:

    Jat: Thanks for your input. I am long only NE. I am not an offshore expert. I just try to fill in some holes because I know that Z is primarily an E&P guy. There has not been much interest in the offshore guys here and I do not expect any.

  157. 157
    zman Says:

    V – Obviously some of the upgrades are out already. I think this is a pretty big deal which is either isn’t in the stock in a big way or is compressing the value of the legacy plays like the Sacramento Basin and DJ, Pinedale Anticline, S. Texas Lobo to sub market $/Reserve levels. Eagle Ford should be the only news of interest for a time as this Bakken is on hold for winter and even the EFS will be radio silent except for rumors until the 1Q10 call. As we were at a level higher than here when we only thought we had a good IP from 1 well (turned out to be false apparently) then I would think that having a 28 by 8 mile areal extent project with some degree of uniformity (same pressures at the 3 sites, oil saturated in 4 zones at the 3 sites) is better. They didn’t flow well (presumably because they aren’t releasing the rate) not because the oil has already been there and migrated higher, they missed the frac because they put the lateral low to target. Anyway, it was higher before and that leaves room for a number of analysts to feel comfortable in taking up their numbers knowing that its likely to move through the old level in the not too distant future. Also, the news from the EFS, about the 6 more wells in the not too distant future should be a pleasant ahead of schedule surprise.

  158. 158
    zman Says:

    I appreciate the effort Tom.

    Bill – this just in. Pemex reports negative equity on the balance sheet.

  159. 159
    zman Says:

    Beerthirty

  160. 160
    Patipati Says:

    TRGL up 10% today. Unfortunately not in.

  161. 161
    bill Says:

    eagle ford shale players may get a lift tomorrow

    A unit of BP plc is said to be close to completing a joint venture (JV) agreement with privately held Lewis Energy Group that would expand the London-based producer’s U.S. natural gas operations.

    According to published reports, the JV in the Eagle Ford Shale of South Texas is worth at least $160 million. It is to be officially announced Tuesday, when BP CEO Tony Hayward hosts a strategy update for the financial community. A BP spokesman told NGI he could not comment.

    Lewis Energy Group, based in San Antonio, employs around 350 people and focuses its core operations in South Texas. The private explorer claims to be the most active producer in Webb, LaSalle and Dimmitt counties. Rodney R. Lewis, the CEO and president, founded the company in 1983. The company also has operations in Colombia as well as Mexico.

    Sources said BP wants to take a half-stake in 80,000 acres in the Eagle Ford play for $4,000-4,500/acre.

    If the rumors are correct, it would not be the first time BP has taken a bet on domestic shale plays. BP is one of the leading gas producers in the United States, currently supplying an estimated 4% of total U.S. consumption of natural gas.

  162. 162
    Jerome Blank Says:

    Good evening…several changes to the charts and comments…

    RE: #141, West, thanks for the vote…

    $NYMO
    $spx-close up
    TAT-added the P&F chart
    TRGL
    UNG

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

  163. 163
    zman Says:

    Positions are updated on the ZCAT, ZIM, ZLT tab at upper left. It was a pretty good day.

  164. 164
    milepost_43 Says:

    162 thanks voted

  165. 165
    zman Says:

    Jerome – I think you need to extend the BEXP chart to a weekly to be meaningful here. We’re right up against the 2008 oil cycle highs.

  166. 166
    RMD Says:

    bill: #161 remember Lewis sold the “boring” intervals above the EFS to VNR in 2 separate deals in ’09 so they could focus capital on their EFS holdings (which are large). Maybe they have a lease expiration issue, or maybe $4,500/acre is too good not to sell some?? Just musing about “why”.

  167. 167
    zman Says:

    RMD – on the KWK, went back and read the transcript, they found Bakken-Exshaw in the Horn River Basin, they also have 130,000 net acres in Montana, some of it within a mile of one of the ROSE holes.

  168. 168
    Jerome Blank Says:

    Good morning…Re: #164, milepost, thank you…

    Re: #165 BEXP added weekly chart…

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

  169. 169
    zman Says:

    Thanks. No comments on that? It was a triple top breakout just a short time ago.

Leave a Reply

Zman's Energy Brain ~ oil, gas, stocks, etc… is is proudly powered by Wordpress
Navigation Theme by GPS Gazette

s2Member®