Wrap – Week Ended 03/05/10

195 thoughts on “Wrap – Week Ended 03/05/10”

1. Wunderlich initiates EXXI with a Buy and price target of $25 based on their forecasted calendar 2010 cash flow per share of $5.65 ($5.70/share fiscal 2010) multiplied by their 3.8 times peer group multiple. Firm says Energy XXI has been able to acquire, explore, and develop assets profitably and now has significant, oily production from its core fields. Additionally they say, Energy XXI has a significant position in the Ultra-Deep Shelf play in the Gulf of Mexico that has become more viable with the Davy Jones discovery.

2. Isle — thanks! I saw the headline and PT there and said that Mr. Dingmann must not be including anything for the ultra-deep. Aparently, that is the case.

   So, EXXI investment gets even better… 25% upside just based on current 2010 operations and cash flow… plus a FREE CALL OPTION on the ultr-deep stuff.

   You don’t get to see investments this good very often, imho.

3. z — thanks for your great comments this morning. As tough as it is to believe we are back up, TED was telling us all along that Greece was a merely a road bump on the Highway of Life. No that it isn’t important (along with it’s broader implications, which is why the Bears were able to emerge from their cave and take the field to scare people for a while), but that it wouldn’t (shouldn’t) affect the U.S. stock market.

   That said, Greece is now officially “old news.” The Bears will find something else Smelly and Ugly to waive in the Market’s face — sooner or later. It just won’t be Greece.

   We will watch what Our Little Friend, TED, has to say about the next crisis. But, keeping some powder dry to take advantage of market panics is a fundamentally great idea.

   Cash TED at 11.7 bps. Frankly, that is too low.

4. Thanks Isle and BOP

   WRES continues to hit snooze this morning…still no release.

5. z — reef pointed out that the tumble in ARD shares is probably overdone. He said he read thru the conf call transcript and believes the shortfall was from 20k (or so) of oil that the trucks didn’t pick up in the quarter. I don’t follow that name, but it sounds like it might be a $20 bill on the sidewalk. Care to take a quick look? (reef said i could pass along his comments.)

6. BOP – that also suggests Wunderlich is pretty comfortable with DJ given the pending news releases. MMR getting marked higher.

   WRES – still nothing. I’ll send my fourth “this is not how you treat the Street” email to them. Stop being a wall flower.

7. 6.. bop , I took a quick look and concluded it was an overreaction and bot shares at the close (see my post from yesterday) around 4 pm

   they canceled a trucking contract effective 1/1/2010 and the shipper got pissed and didnt pick up 3 days worth of production 12/29-12/31

   they also had some gas that was shut in as the processing plant was maxed out

8. z any commnet on balancing item from eia

   tph says The revisions are mainly book keeping which 1) don’t impact 2009 numbers and 2) don’t “clear up” the balancing item. The balancing item implies overstated supply (or understated demand) of 0.6bcf/day in 2007, 0.4 bcf/day in 2008 and ~2bcf/day in 2009. Note: the balancing item is a reconciliation between the implied inventory change (from supply, demand, imports) and the actual storage change.

9. ARD — thanks for the comments… TPH out with some luke-warm comments on the name this morning. But, i think it shows some whimpy-ness… i’ll let you decide…

   ARD Q4 follow-up – We’re not stepping up to buy even with ARD -18% yesterday. Why the plunge? (1) Production uncertainty – 4 rigs running expected to deliver 30+% 2010 growth, but downtime and well recoveries draw questions. (2) Downtime to continue another 12-18 months (3) Recurring downtime says ARD needs better risk management. (4) F-M PUDs booked at 28mboe/well, far south of 40mboe. (5) Waterflood PUD bookings feel aggressive given waterfloods on the drawing board for years.

10. BOP – saw a number of price target cuts there, have not had time to play. Happy to look at his comments.

    CRZO reserves look interesting.

    REXX pr looked boring, didn’t look at numbers vs Street though.

11. Bill – It’s a plug figure, I don’t generally think much about it. EIA is likely to revise numbers for last year with the next release next month.

12. TPH talking about uncertainties regrading ard and wrote about the name today and will write something tomorrow

13. Bill – just saw TPH comments, I agree that you see downward production revisions in the next report (they saw coming months).

14. HAL on my list of things not to raise cash in just yet, may double the $32 strikes this morning.

15. Rangel – leaving as chair of House Ways and Means

    ROSE gave me all weekend to ponder their press release.

    WRES giving me less than an hour until the call (and counting). Apparently they are still writing it. Item #2 on analysts hate list: no time to evaluate news before a conference call. Inexcusable.

16. WRES — CFO/IR should be forced to give up lunch money for a year. This is just Bad Form.

17. 15 lol

    Yeah, i see some companies releasing at 9.29, having a quick call, then filing the 10 k after the call like they are going thru the motions and dont want questions

18. 928 still no release

19. WRES – they are always late but this is really late. Lame.

20. Z: VNR out with some numbers today. Would love your take. Keep up the rants, love the passion.

21. WRES out, details to follow …

22. WRES – good 4Q production …

23. WRES — didn’t add 2008 non-economic reserves back…

24. WRES – 8 net wells in CA, that’s good, also some exploration, maybe 2, that’s good as well.

    Reserves in a second …

25. I think reserves never come back do they?

26. exxi off to another good start

    ard no bounce back as tph is cautious

27. WRES – no big bump in reserves, in fact they are off from Sept 2009 levels. Prices are a bit low to where I thought on oil but that should not be a problem as they are still above levels seen a couple of years back when reserves were much higher.

    Stock is not going to be up on those reserve numbers, although the operations update and production and guidance won’t hurt it. I don’t see a big sell down here, just not the big reserves upside. I will decide during the call if I want to stick around due to the improved operations outlook alone, which was part of my original plan, or just toss it out, due to the lack of reserve re-growth.

28. Bill – they never get booked back through the income statement (offsetting a previous non-cash ceiling test impairment) but the reserves statement can see them back as a revision due to price.

29. WRES — pretty beige report. No reason to buy, no reason to sell. Blah… so, would go either way.

30. I’m obviously missing something as to why they don’t recognize the oil here.

31. z — i don’t get the WRES reserve report either… scratching at head madly right now.

32. WRES — operationally, tho… stock should not be down.

33. BOP – I’ve been patient with them for some time now, up about a third on it since last May. Plan to listen, then decide. Am going to ease out of some positions in the ZCAT today though. Market just keeps going higher. A TA market guy telling me that RUT, S&P look overbought but that the MACD says they could go higher for a couple of weeks, which I guess gets you to a retest of the high on the S&P. I would suppose if it doesn’t break that level, then all the TA types in the world will, in unison, scream “LOWER HIGH!!!”

34. BOP – yeah, operations looked very solid, plan looks good (as in they are actually able drill). They redetermine next month and are up near their limit now, wondering with reserves again 4% lower if they see a problem keeping the borrowing base at $120 mm.

35. EXXI en fuego!

36. EXXI analyst’s day tomorrow. We will have some insiders there on the ground. Should be a perky showing.

37. The Wunderlich analyst is a whimp. NO UPSIDE from ANY ultra-deep in his PT. My cat could do that “financial analysis.”

38. Morning all. No changes really to what I said yesterday. I still think we will get the 1128 level on the SPX – it is the 78.6% retrace of the fall from 1151 to 1044.

39. PXP and MMR the weak legs on the stool today. Hmmm. I have to believe the Wunderlich guy is comfortable with the current goings on at Davy. Hopefully he’s not just trying to scoop the analyst day and is in the dark on the well.

40. ZTRADE – ZCAT – BEXP

    Sold 20 (half) of the BEXP $17.50 March Calls for $0.85, up 16% (on the mid, a little slow) with the stock at $17.70. I continue to own the other half and the common in the ZLT.

41. it seems the reserve %’s are disproportionately weighted toward gas as opposed to the ongoing production levels on WRES…perhaps that has something to do with the reserve revisions being disappointing to us

42. Jivey – See the reserves switch over here due to price:

    http://seekingalpha.com/article/185658-wres-reserves-preview-some-food-for-thought

43. WRES call started by the way

44. Should 1128 be taken out then I am looking at 1133/34. I am hoping we pretty much work our way up to that level by the end of today.

45. Cycles ‘should’ turn more negative tomorrow but even then my preference is only for a correction. Likely 3 – 5 trading days.

46. Thanks much Nicky, that helps. Down side on that 3 to 5 day move?

47. HK – what the heck? Figures that it starts to move up when Nicky is looking for a broad market slide.

48. Z – most bullish count says SPX will only correct to 1105 – 1110. Medium bullish count says 1075 – 1085, more bearish says 1050 – 60.

    We should be able to narrow that down once the correction starts.

49. Thanks Nicky, is there a preferred count on those, that’s quite a wide range?

50. Z – if this is v up for the end of this move then don’t discount a sharp rally today or even after hours.

51. Nicky – thanks, I think Jerome referred to that as a shooting star last night.

    WRES – expect to fund 2010 budget with cash flow.

    Redetermination: has $90 mm borrowed on it, had not seen, that’s better than last quarter, which I think was $107 out of $120. They see at these prices continuing to pay it down. That’s good, means they can get that capex done.

52. Z – I would say my order of preference is 1. most bullish 2. medium bullish 3. more bearish.

    Cycles are leading me to believe that the pullback is not going to be huge.

    That said there are many that say we are making a far more significant top. One that will fall short of the previous high and then absolutely tank to the downside. Under this count we would be in ii up and about to embark of iii down. We will know it if it happens.

53. WRES – Operations Update

    Atlantic Rim – results of a workover project were mixed in their Sun Dog unit. 10 more wells here in the unit in 2H10. This is the gas part of the company.

    Whoa – big volume buyer coming into BEXP.

54. hk seems to be bouncing off low

    Jerome–how does the short term chart look?

55. ZTRADE – ZCAT – HAL

    Added 10 more HAL MArch $32 Calls for $0.85 with the stock at 31.95.

56. Bill – re HK, better late than usual.

57. mcf is breaking out on the upside for no good reason

    Im selling into the strength until I know more about their broken gas line. Half their production has been offline for a week. It’s costing them 200 k a day in cash flow

    maybe insiders know its no big deal but I have no clue

58. Z: Gov’t selling their BAC warrants. Dick Bove had very positive long term comments re BAC. Dividend back to $1.55 in time.

59. WRES – only 1 question on the Q&A. That’s lousy.

60. If anyone sees reports on VNR after the conf. call, I would appreciate seeing them. Thanks in advance.

61. ZLT TRADE – WRES

    Sold my position for $2.43, up 30% since last May. Results didn’t match my expectations on reserves. There are plenty of other fish in the sea.

62. RMD – I plan to be on that call in 30 minutes.

63. Crude up 4.1 mm barrels
    Gasoline up 0.7 mm barrels
    Distillates down 0.9 mm barrels

    Gasoline demand remained strong at 8.882 mm bpd

    Dist demand up again, good reading at 3.829 mm bpd, still low but better than it has been

64. EIA report:

    Crude imports were stronger for a second straight week, at 9.2 mm bopd.

    Cushing was up 100,000 barres (flat)

65. NFX attempting to break out for the fourth time from the current range.

    ROSE flat, after the rally that one has had, that’s pretty impressive that no one wants to take profits.

66. No reason not to expect oil to join in this rally now the data is out of the way.

67. Nicky – yeah, it was good data from a demand standpoint. Not sure what’s up with the two weeks of higher imports but it could have something to do with cashing in tanker loads prior to OPEC on the 17th that have been serving as storage at sea. Just a thought.

68. RE:WRES — still Z it was a nice piece of work.

69. Thanks BSJ

70. As this move can top out anytime here then a move below 1116 would confirm its done.

71. BSJ – What’s gotten into TRGL? Reflex rally or news I missed.

72. Warmer weather coming this weekend into next week. Maybe ng will move up on warmer weather, lol, cause it went down on colder weather

73. Z: In your years in the biz, can you think of any other company that has gone from one of the worst operators to one of the best over night like BEXP? I mean it was light a light switch. One sec a joke then next sec a king. I have been in the investment game a long time and I can not remember such an extreme and rapid turn turn around of a company.

74. BSJ – ROIL, later REM, on the shelf.

75. RE:71 — With lower cap stocks like TRGL, just one person buying or maybe stop selling can really push the price of the stock around.

    However my guess, which is worth NOTHING, is that maybe the secondary is finally been digested into stronger hands, and two, people are starting the hunt for shale plays around the world, (like the TLM and the Baltic basin) I posted yesterday), and are taking a flyer on a potential major shale play in the Paris basin.

76. z – what was the link u gave us a few days ago showing all the stks in an industry’s performance on the day?

77. RE:73 for me the story for the year has been the turnaround of BEXP. I mean Jim Bob had a hot hand in with the Flatrock area so Davy Jones was not a hugh reach. But BEXP and their success in the Bakkens is a hugh surprise. These are not merely good wells, but best of breed wells.

78. BSJ – management over at ROSE is very smart, thinking they are on the tip of the oilberg.

    VNR call starting.

    Andy – http://finviz.com/map3d.ashx

79. NFX – Jerome – Know you are busy but I would think you would find that chart to be highly interesting. If it closed here at 53.60, that would be a high close on a 4th attempt at breaking above the $48 to $53 range it has been in since mid December.

    VNR going through the press release….

80. ROSE is not really a surprise. Once they got the Calpine problem behind them they could start doing what they are good at, and that is finding stuff. The people over at FPA Capital have been major holders since they help fund the original buy out of the Calpine energy assets and those guys at PFA really know what they are doing.

81. That MEE for PCX rumor must be getting debunked today.

82. VNR press release:

    On 1/27/09 we filed a demand for arbitration against Oppenheimer & Co., with the financial industry regulatory authority. The arbitration demand sets forth our claim that Oppenheimer & Co., provided us with negligent investment advice and breached its fiduciary duty to us when it improperly purchased auction rate securities for our account. We are seeking damages in excess of $2.5MM (two million five hundred thousand dollars).

83. ROSE – wasn’t saying surprise, just saying I don’t think that stock is near done yet.

84. Whoops, sorry, wrong stock.

85. And I wish the guys BEXP uses for completions would do the upcoming ROSE wells, lol.

86. ARD taking it on the chin for another 8%. Getting more interested.

    VNR still going through the yada, yada.

87. mcf at high of the year

    i think this is a short covering rally

88. Noticing that MCF is tapping on $55, patience pays, nice call Bill.

89. Bill – promise I was typing at the same time, lol.

90. Z – Wunderlich is valuing EXXI at 3.8x CFPS.

    Do you agree with a multiple like that as being valid?

91. Just drifting off on the VNR call, watching the SGY go through $18, sort of still interested but not by much.

    Rigs all moving, RIG update last night was I think favorable.

    My OII, the ROV and subsea work and umbilicals, etc, guys are moving on up without me.

92. Jerome — EXXI printed a 21.00 then fell back. So, does that mean anything?? thank you.

93. Euro shorts getting squeezed big time, dollar longs not happy-hooray, Greece is over, on to Calif.

94. ARD is falling on its face again

95. Im happy to see HK finally coming off the map.

96. Rob – good question. It’s at the high end for the shelf players for a target for a forward multiple of CF, assuming that’s off 2010, consensus is a little lower at $4.87 but some guys are going to be over $5. I think you get torn between current valuation and what the multiples for a given group should be and upside potential in 2011 and beyond if DJ and some of the other DJ analogues work.

97. re 95… waking up from a nap.

98. For those interested in Canadian warrants, and who isn’t, here is a link to a great site. http://canadianwarrants.com/values/current.htm

99. ARD – don’t know the name well at all. My take a look here, this VNR call is putting me to sleep.

100. Anyone see any reasoning behind the Susquehanna upgrade of SLB today? Thanks.

101. z — it’s at the high end… but EXXI is an oily-shelf-player. Not a high-IP, hi-decline nat gas treadmill runner. JMHO, of course.

102. VNR – thought I just heard they think borrowing base reduction on the way but that it won’t hurt their 2010 plans.

103. BOP – good point, longer reserve life correlates with multiple. Oiliness helps these days as well.

104. 96 – Wunderlich’s CF estimate for 2010 is $5.65.

     Sounds like that is higher than other analysts, and combined with a slightly high multiple it gives that $25 target.

     So maybe the DJ option isn’t quite “free”, but pretty cheap.

105. Rob – avg was $4.87, range is 3.80 to 5.50, this morning.

106. Any thoughts about trading out of a long position in CHK into ROSE or another?

107. ARD-volume still relatively heavy today but trades appear to mostly 100 sh size.

108. VNR – maintenance capex in line with capex this year, at $13 mm ish, sounds like a touch more needed. Good question.

109. Oil chart looking very spiky. Looks like a v and topping in line with the broader market.

110. 99 ARD has no debt..not too many EP companies can make that claim

     They scaled back drilling in 2009 to conserve cash and production is falling off

     Cap ex is being directed to its oil opportunities

111. Cargo – I already own ROSE shares but am considering adding more, I’d like to see a pullback in this market before I do it but I may not get that.

     CHK is such a different animal (essentially a gas Major) and I’m there for the long term so probably not a swap between the two. There are faster gas horses that I’m in as well (SWN, HK) so I feel like I’m pretty covered for a long term appreciation in gas prices when it occurs.

112. I really need to listen to the ARD call, thanks bill.

     Oil hitting $81, a bit above my comfort level. Stocks acting like they don’t buy the move; buying interest waning.

113. Re: #54 bill…added an HK 30 min chart with shorter term perspective…

     #79 Zman, I agree…very interesting chart…updated the NFX daily…looking good.. broke out of the descending triangle, near P&F resistance at $54 as I write this…

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

114. Davy Jones well #1 update… they are still conditioning the hole, prior to setting pipe and cementing. They are being very very careful… and it’s making for slower going than we guesstimated. Think that pushes off any Davy Jones Report Card into next week. But, so far, things going well, for a technically very difficult, very deep hole in the ground.

115. Thanks JB, I own the common and some $55 March calls which are coming back to life after that earnings release which I still argue was not at all bad. NFX probably moving on the ROSE Alberta Bakken comments, as KWK is as well.

116. Thanks BOP, from an MMR perspective that would allow them to be at TD on their BB Hill appraisal well. So could pr three wells at 1 time, the botched Hurricane Deep attempt and the BBH and DJ wells.

117. Z, did you make it to the end of the VNR call?

118. … and with thought in mind could see the DJ Triad drifting higher into the weekend, with little regard for the market’s machinations around Friday payrolls.

119. Yes, that last guy asked some good questions.

120. Adding to the argument as to why EXXI deserves an above-average multiple to it’s shelf-drilling peer group…

     EXXI is now —

     #4 GoM shelf oil producer, behind Apache, Chevron, and ExxonMobil (in that order)

     68% of production + 64% of proved reserves are oil

     Proved reserves of 76.1mm BOE divided by an estimated current 30,000 BOE/day production, gives them almost 7 yrs of reserve life.

121. z = bop -am confused by this map of sheridan county, montana.found on NOG’s website. KOG said they were going to spud their first well in mar. doesn;t this map indicate more/??
     http://www.northernoil.com/leaseholds.php?area=sheridan

122. RMD – bet maintenance capex is $15mm, they do so many deals its hard to ever see with these kind of guys an organic rate. I was a little confused on what he said on the borrowing base, sounds like it will fall?

123. #116 — from a PR standpoint, makes sense to bury the HD failure with the BBH and DJ success.

124. VNR is hurting me today. I think the statement in their PR that they have good access to the equity market telegraphs a secondary at some point, which shouldn’t surprise anyone, but something must be causing this 5+% hit.

125. Montana KOG would be Red River, I think, will check.

126. RE: TRGL — of course one reason the the increase in price could very well be that people are confusing it with TRLG — LOL!

127. Re: #92 BOP…EXXI, the $21 print was huge…EXXI now back on a P&F buy signal…just for a benchmark, the P&F price obj is now $29…I’ll be looking to buy pullbacks (now that I can trade it again…lol)….I added a 30 min chart perspective…

     The only thing that has me a bit cautious overall about jumping in too aggresively is that overbought $NYMO, it’s probably going to be even higher after today, getting a bit overheated…I find it to be a good indicator for shorter term pullbacks…

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

128. That map shows an acreage block with 3 oil wells on it, those are Red River wells, nothing like a Bakken in terms of production, good bread and butter, but not steak.

129. VNR: I understood the maintaince capx answer to be $13mm in ’10 is below, but close to, their guess about necessary capx to replace production. My feeling was they had not really calculated the #; in light of their comment in the letter accompanying the 10-K, “Our business strategy is to maintain our cash flow by developing our existing asset base…”, I grade the answer as weak.
     Answer about growing production/share dependent on share price and price paid for acqs. = duh.
     Answer about offsetting zero hedges in ’12 and ’13 by making more acqs. totally lost me. Maybe time for more coffee.

130. 127 – I hear your caution and am, on the whole, raising cash.

131. RMD – should have been an “off the top of head” answer, agree week. I came away less enthusiastic. I know I have to think different with the MLP and RT crowd re acquisitions but I’m not sure in this environment, after the run they have had, that they don’t see a little unlocking effect.

132. ZTRADE – ZLT

     TAT – Added a second tranche for $3.27, brings average cost to $3.11.

133. I’ll probably call mgt later; will update. Notice yield 50BP lower than LINE’s. No one asked about increasing distribution given 1.3X coverage for ’10 vs. making the next acq.

134. # 125 Red River ARD comment, When I listened to cc I heard them say that the Yates Gas is not economical at current prices. This was one of their growth engines going forward. Fuhrman Mascho area development has exceeded capacity and it will take 12 to 18 months to build infrastructure to handle current and future production from ARD, BTA and EAC in this area. Local coffee shop talk is that they recently drilled a well on the wrong 1/4 section that they did not have a valid lease on place. They have been buying old leases in the area and some have lapsed for non production and have been top leased by other operators. Probably a legal battle , but not the kind of due diligence you would like to see from a company that already has execution problems…………………………ATPG, Spoke with investor relations this morning and that will be releasing 4th qtr results either M-T or Wed not sure. My gut is that they are waiting on 1st production to be hooked up and deal on titan to announce at the cc. The representative was very upbeat (which is his job) but went on to tell me that they were looking for upbeat news from Telemark. This stock is definitely not for the weak at heart, high beta. Risk reward play is that they have production from Telemark hooked up and they are able to monetize Titan for about 342 million this should put a little pressure on shorts. That said with the % short at present time I would not expect them to go down without a fight. Yesterday I bought some April 19 at 1.75 and April 20 at 1.20, with the thesis being the good news moves the stock 10 to 15 %.

135. RMD – yield now vs yield later, lol.

     West – thanks much.

     Dollar index back below 80.

136. on ard from ard

     – Oil sales in December were approximately 21,000 barrels less than expected due to the previous oil purchaser failing to pick up and transport oil the last three days of December.

     So this slips into q1 2010
     q3/09 q4/09
     revenue 36.1 42.4
     eps .31 .24
     expectations .27 .35

     ———————————

     q1 2009 q1 2010
     revenue 20.2 45.0
     eps acts/exp .17 .42

     ———————————–

     Oil prices are firm, they are 80 % oil no debt and if you can thold out to next qtr revenues and earnigs should double y-o-y

     The problems yesterday was caused by the earnings miss caused in part to deliveries slipping and sec adjustments that were treated like operating expenses

     They also mentioned on the call they want to buy out llc partners in current producing wells (thus getting proved producing wells on the cheap)

137. Expecting the ZCAT to add NOG calls soonish for earnings I guess next week, would like to do it on a big bad red day since they are somewhat thin.

138. re 136 – oil lifting timing issues are easy to forgive. Happens to big and small players (NFX and APA report it from time to time overseas, just part of the business and its just shifted).

     Ok, going to listen to ARD replay now.

139. #127,130 – jobs number on friday may provide a short term pullback. Lots of weather influence may mean an ugly number. That pullback may not last long if the market gets convinced it is a one time blip…

140. Lots of weather influence could also lead to trepidation going in but easy forgiveness once the news is out.

141. West great color on ARD.

142. SD = another day in purgatory. Watching.

143. ard

     94% of those capital expenditures in 2009, were related to Arena’s Fuhrman-Mascho property in Andrews County, Texas

     The 2010 budget will support the drilling of 300 or more wells at Fuhrman-Mascho compared to the 176 wells we drilled in 2009. We will continue to focus on the development of our existing oil assets in the Permian Basin and Oklahoma

     all this means is they will not be spending money in colorado or anywhere else for that matter. Maybe they spin off thoses “hot” colorado leases

144. 140 – true. I like trepidation followed by forgiveness.

145. ARD, think this probably a good place to pick up some for long term appreciation. I bought earlier so looking for bottom fishing here. Interesting on the cc that they said they had been looking at the Bakken for possible expansion but nothing to report at this time.

146. ARD – still listening to the call, looks like the bottom on the stock will be a TA level, either here, near $32 or perhaps just under $30.

     I have not yet heard a rationale behind the jump in future development costs, is that essentially the re offitting of the Furhman-Mascho field?

147. the move off the top looks corrective so I am expecting everything to move higher yet.

148. was considering shorting WRES and found it was not shortable. out of curiosity looked up ATPG, EXXI, KOG, MMR., which also were not shortable on fidelity, which is usually able to short when other are not

149. Still listening to ARD and reading notes on the call as they come in, thanks for those.

     EXXI – profit taking has it red on the day and down a buck from $21 high.

150. Thanks Nicky.

151. BARCLAYS STARTS XCO

     We are initiating coverage of XCO with a 1-OW rating and a $29 price target. XCO combines a liquid balance
     sheet with acreage positions in both the Haynesville and Marcellus shale plays which, we believe, positions the
     company to be a top-tier growth company in coming years.
     􀂃 After repositioning the company’s asset base and balance sheet last year, 2010 could mark the beginning of an
     aggressive growth profile driven by the Haynesville and Marcellus shales. 4Q10 volumes could grow 50-60%
     over the ’09 exit rate.
     􀂃 Current development plans could generate 30% CAGR production growth over next five years.
     􀂃 Haynesville–~54k net acres concentrated in DeSoto Parish sweet spot where first 26 completed wells averaged
     22 MMcfe/d initial rates.
     􀂃 Marcellus–~186k net acres concentrated in central PA. Completing 1st horizontal well in coming weeks;
     expected to be meaningful growth contributor in late 2011 and beyond.
     􀂃 Assuming $5.50 gas in 2011 through 2014 and company’s latest 5-year plan, program could be funded from
     available liquidity and cash flow.
     􀂃 Believe asset base warrants growth premium. Execution in H’ville and Marcellus are critical

152. ZTRADES – ZCAT – MMR

     Sold the 20 MMR MARCH $17.50 CALLS for $1.30, up 71%, with the stock at 18.20.

     Added (30) MMR MARCH $20 CALLS for $0.35, upping my leverage and risk to future news.

153. ON ARD

     they said

     jan was running 7500 boe day and feb was 8000 day
     assuming march runs the same and we hold to same pricing as q4 (its higher now)
     i get 46.7 m in rev for q1

     JAN 31 7500 232,500
     FEB 28 8000 224,000
     31 8000 248,000
     704,500 46,745,076

154. EXXI, nice 30 minute time frame “hammer” right at first support…

     HK still holding up back within the daily triangle…

     NFX continuing to press against P&F resistance at $54…

155. Bought some DUG and TWM-trying to check if my record of total misses will remain unblemished in betting against this market.

156. Bill – thanks, having to listen to this call in broken up fashion, they’ve lost some credibility with the Street on letting the field operations deteriorate as much as they have. My sense is, and its early for me to have an opinion is that it gets a dead cat bounce soon but that it is relatively dead money until their as of yet undated analyst meeting.

157. Where can I get a listing of P&F terms on the internet?

158. tph said it best

     Stock thoughts – Was a 17.5% hit too much yesterday? We’re still staying away as conference call details added quite a bit of uncertainty around the near-term prospects for production and longer-term valuations based on reserves. If there is one thing the market doesn’t like, its uncertainty

     imho, there was an over reaction

159. A few places I read are calling for a break of support in the USDX at 79.70 and if it does then a significant break below 79.30ish could it goes all the way to the mid 76 range.

     Would be pretty bullish for oil.

160. Bill – I looks like it but now near all the coming quarters there is going to be an asterisk by the earnings estimates, fear that they brick on production. If these things were one time and not somewhat randomly recurring until they are really fixed I’d be in right now given the reserves, balance sheet, decline in the stock. I could see a couple of hold out analysts cutting it later this week or next as they fail to get assurances out of management. I’d like to play it for a bounce but I’m not there yet.

161. One last thing, ( I promise)

     tph questioning whetether than can grow
     30 % this year

     well, if last year was 2,000,000 then 30 % is 2,600,000

     based on yesterday conf call they are doing 720 k boe for q1 and 4 times 720 is 2880 so what the hell is the problem, lol!!

162. Re: #157 stockcharts has a good outline of some of the terms and patterns…

     http://stockcharts.com/school/doku.php?id=chart_school:chart_analysis:pnf_charts

163. KOG, here is article from Rocky Mountain Oil Journal about KOG’s offset operators STR development wells. If you go to recent STR presentation and look at slide 16 they have 80,000 acres with most of it under the Lake. Of interest is the acreage horseshoes around KOGs and they want to increase their oil footprint. Of course no one wants to overpay and KOG doesn’t have to sell……………………………….Current Issue – Vol. 90 Num. 9 – February 26, 2010Questar Commences Three Forks Operations
     McLean, Mountrail, and Dunn Counties, North Dakota
     Salt Lake City–based Questar E&P (QEP) has commenced operations at a Three Forks test in the tri-corner area of Mountrail, Dunn, and McLean counties, North Dakota, 4 miles northwest of established horizontal Bakken production at Heart Butte Field. The company has moved in a spudder (Majors rig No. 27) and is drilling surface hole at the MHA #2-06-01H-149-92, se-se 6-149n-91w, Dunn County. Bottom-hole location is expected to be in the sw-nw 1-149n-92w, beneath the waters of Lake Sakakawea. This is the first of two prospects that QEP plans to drill off the same pad. The other proposed test is the MHA #1-06-01H-149-92, se-se 6-149n-92w. This wellbore is planned to evaluate the horizontal Bakken.

     As previously reported in the RMOJ, this activity by QEP is part of two, 1,280-acre laydown units created by the company to evaluate both the Bakken and Three Forks. These new drilling units include sections 6-149n-91w, 1-149n-92w, 31-150n-91w, and section 36-150n-92w. Plans call for the company to drill two tests utilizing the same drilling pad for each unit, for a total of four prospects. Each unit will have one Bakken and one Three Forks attempt. Should these tests become commercial, they would be incorporated into Heart Butte Field. QEP also released the following reservoir, fluid, performance, and economic data regarding the Bakken/Three Forks potential:

     Reservoir Data

     Reservoir pressure:
     5,680 psi

     Gas/oil ratio:
     500 scf/bbl

     Porosity of net pay:
     4.5%

     Thickness of net pay:
     24’

     Water saturation:
     35%

     Reservoir temp.:
     200°F

     Drive mechanism:
     Solution gas drive

     Permeability:
     Unknown

     Bubble point pressure:
     Unknown

     Acreage:
     1,280 acres

     Fluid Data

     Oil gravity:
     43° API

     Pour point:
     –40°F

     Gas gravity:
     0.9809

     Gas BTU:
     1,500 dry

     Performance Data

     OOIP:
     4,854 mstbo

     Oil EUR:
     450 mstbo

     Gas EUR:
     225 mmscf

     Recovery factor:
     9.3%

     IPF oil/gas:
     920/460 bopd/mcfgpd

     Pertinent Undiscounted Economics

     Well life:
     31.58 years

     Oil price:
     $56 bbl

     Gas price:
     $6.30 mcf

     Total revenue:
     $20,365,332 (gross)

     Capital cost:
     $6,500,000 (gross)

     Operating cost:
     $2,960,,000 (gross)

     Total sev/adv taxes:
     $2,342,013 (gross)

     Total BTAX cash flow:
     $8,563,321 (gross)

     BTAX payout:
     3.37 years

     BTAX return on investment:
     1.48

     Six miles west of the active MHA #2-06-01H-149-92, QEP continues to drill ahead at the MHA #1-06-31H-150-92, se-sw 6-149n-92w. This horizontal Bakken attempt, located near the McKenzie county line, is roughly 2 miles northwest Heart Butte Field and nearly a mile south of Lake Sakakawea. Representing the first prospect drilled by the company in Dunn County, the bottom-hole location for this sideways attempt will be one township north in the nw-nw 31-150n-93w, beneath the waters of Lake Sakakawea. Estimated length of this lateral will be approximately 10,000’. All of the current QEP activity in Dunn County is located within the confines of the Fort Berthold Indian Reservation

164. TSO – saw Cramer talking about it. Refiners all up today, it’s the demand being up again for distillate and the gasoline number not backing off much either, was mused about yesterday post. I’ll be watching to see if the group has any kind of follow through.

165. Beige book headlines read positive but market selling off.

166. Our perhaps it was the President’s speech earlier.

167. the sell-off followed the President’s speech. surprised?

168. ARD – NGL comment once they build their own processing plant, it looks like a $16 mm plant cost, takes them from slight discount to NYMEX to a big boost over NYMEX as the get to keep all of the liquids instead of trading them to the processor for their services. Sound like 2009 is a “take the pain” year that puts them in charge of their destiny. Hear and with the electricity shortage that it looks like they will have addressed in 12 to 18 months.

169. 167 – ha, no.

     BEXP seeing a bit of pt, not thinking to add it back unless it crunks through $17. Do plan to be long some (besides the common) for Monday just in case they pr some more wells. I do think however it will be the following week or two from now.

170. Ok, finally done with the ARD, just reading some comments on it as well. Best guess is estimates fall here for the next week or so, dead cat bounce of significant size, maybe 5% happens and then dead money until the meet and greet in Tulsa.

171. Market held 1116. That could have been iv C. Needs to get going back to the upside.

172. Nicky – Nice call.

173. CPC got back to me on the busted HDD forecast for this week, it is now available as 171, which is 1 HDD over normal and 12 short of last year’s level. This is data for this week, and put us in the running for about a 100 Bcf or just under withdrawal next week. This week, last I checked, was still at 131 Bcf withdrawal. Those two numbers get us to withing about 100 Bcf of the 1,500 trough with basically 4 weeks of winter left.

174. ARD down $3 to LOD. There are some trust issues here between management and the Street on guidance. The more it falls the more I get comfortable in a trade for a dead cat bounce here. There were a number of things on the call that said this is a big deal but that they are on it and will get it solved in a fairly timely fashion. This beating looks overdone.

175. Bill – any thoughts on shipping stocks at present, saw EGLE beat and DRYS was in line. Group seems to be moving a bit here.

176. CPE really on a rip today…I’ve been watching trying to get this on a decent pullback…

177. Wow, that is up. Don’t see news other than their release date next week. I had joked with Reef about that being the next big mover about a month ago. Then they got an mms settlement and off to the races.

178. i think CPE is being thrown in with the Ultra-Deeps. They could have acreage in some of the right places, just by accident.

     That said, they want to crawl out of the water and re-emerge as land-dwelling animals.*** Not sure they have the equipment to do that. It would involve evolving… not sure they can make the jump to being a higher Life Form. But, that’s jmho.

     *** sell their GoM interests

179. It’s kinda funny, really. Investors and analysts not willing to give EXXI much (or any) credit for the Ultra-Deeps… but, they are willing to drive the value of CPE up on that. We shall see if anyone wants to buy CPE out of their wet acreage… guess it depends on where it is.

180. BOP – I hear they are putting geos typse on task on their acreage on the Shelf for that purpose. Who knows, maybe they’ll take it private again.

181. Maybe. They are better as a private company anyway. That way, they only screw banks and bondholders.

182. Andy — was ARD available to borrow at Fido? Sure looks like the short-sharks are taking chunks out of their side right now. Ouch.

183. Speaking of screwing up, I will circle back to WRES in due time to figure out what I botched there. 30% up but was looking for better than that today. Good to see the operations working but when I go back in it it will be for the right reasons and not a transition to them.

     TAT looking to make a new closing high on the year, more work coming on that name.

184. Tempted to take a piece of the ARD, when it string together a few hours of sideways trading I imagine someone will try to burn those shorts back.

185. on WRES…I read the press release again carefully and noted that the change in pricing methodology from year end pricing to monthly avg. had the following effect:

     135.4 Bcfe $443.1 million using old price method..

     97.5 Bcfe and $241.3 million using new monthly pricing method….

     also noted that some gas reserves booked last year fell out because they were no longer economic….anyhow, was surprised by the big effect monthly pricing had and also surprised that they said reserves were now 50/50 more or less oil vs gas….

     thought the stock held up pretty sell today…I sold a chunk here at the office and also thought operationally things still sounded okay…just better places to be for now as Z said….

     not like we haven’t had plenty of winners….

     nite all

186. please explain why a 15 cent miss is worth 10 bucks and 1/2 billion in market cap. This analyst says its worth 7..

     Caris & Co. analyst Ann Kohler dropped her rating on the stock by one notch and cut her price target to $37, down from $44.

     Production problems related to electric outages increased significantly in the fourth quarter, and costs are rising, she wrote.

     “Given management’s near singular focus on production growth at the expense of understanding and addressing the infrastructure shortfalls, ARD has been placed in the ‘credibility penalty box,’ she wrote.

187. 175 I was on the egle call this am

     Id stay away from all names at the moment. Egle had a number of 42 m ships on order that are being delivered that are worth 32 m and no banks are lending, the other issue is management is grabbing all the earnings for themselves. i would not touch drys under any conditions as the ceo is a madoff type self serving crook

     Unlike the EP names, the shipping stocks havent taken their one time asset write downs
     + for vessals overstated on the balance sheet and the highly levered names really dont have a positive net worth.

     One name I like and feel is being well run is Navious NM but id stay away from this name and wait for a pull back.

     I think DSX is being managed by good mgt as well

188. 184

     Do institutions just dump when a name goes down? Maybe its margin related selling..Im baffled. TPH didnt give them a vote of confidence. i guess they need to raise some money to curry tph favor

     Ard had some operational issues, so what.

     The company is debt free and 90 % oil. How many E&P companies are debt free.

     I know of 2 names MCF and ARD

     In the conf call they stated

     that jan ran 7500 boe / day
     feb was 8000 boe /day
     and march was currently at 8500 day

     do the math thats 720,ooo boe and 48 m in rev for q1

     they will beat in q1 and beat big.

     unlike others, they live within cash flow

     They prudently cut back production when oi; fell to 30 bucks, that was a good move. At 80 its a cash cow

     I admit, I got into this name for a trade. it looks like Im going to be holding this for a while.

189. ty for 173

190. Question HDD and impact to withdrawals

     What is breakeven number?

     I see

     2/13 was 239 and we had a -190 then
     2/20 was 208 and we had a -172 then
     2/27 was 204 and the forecast is a -130

     Wait a second hdd only fell 4 and that impacts the weekly by 42??

     This week the forecast is 171,

     Z How do you model the HDD and the number tia

191. comrade salazar..

     While oil and natural gas producers, particularly independents, would disagree, Interior Secretary Ken Salazar Wednesday said that proposed onshore and offshore fees and taxes in the Obama administration’s budget for fiscal year (FY) 2011 “are not going to put anybody out of business.”

     Testifying before the Senate Energy and Natural Resources Committee, Salazar said, “We are not, as some people would claim, taxing the oil and gas industry to death.”

     Sen. John Barrasso (R-WY) accused the Obama administration of trying to “drive the [natural gas] industry into the ground” with new fees and taxes. He said revenues from oil and gas drilling in Wyoming were $93 million in 2008, and dropped to $10 million last year. Barrasso attributed the drop to restrictive Obama administration policies.

192. Good evening…updated charts with comments on…

     AEZ
     BHI
     CHK
     CXPO
     EOG
     SD
     SWN
     WLL

     Double “star” formation in the $spx…not able to hold on to the highs…

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

193. JB — thanks!

     is a double star bad??

194. Bill just a couple of thoughts on ARD. The management has to be viewed as not taking care of business and overwhelmed by problems that they should already have programs in place to resolve . I was recently in this area and it is amazing the amount of drilling, completions, pipelines and flaring of gas that is taking place. The Electric company use to be a Co-op and converted to a stock company and has been reluctant to make large capital investments and has had some financial problems during the recent downturn. So there will be no help from them in the near future. Several operators are in the process of building their own gas powered electrical generation plants but as ARD alluded to this is a regulatory nightmare and at least a 12 to 18 month process. Just the shear amount of capital that is being invested in this area and resulting increased production by independents and to name a few, CWEI, EAC, HES, EGN, CVN, WLL and ARD has overwhelmed the infrastructure. It takes less than a month to drill and complete a well. To design, engineer, obtain regulatory approval and build a gas gathering system can be as short as 6 months to years that evolves with the on going field development. In Texas the Railroad Commission will not allow you to indefinitely flare or vent large quantaties of gas. So if you don’t get hooked up you have to shut in well production. So as ARD has said they are 12 to 18 months away from a near term solution…………………………As for the stock action in ARD sure it was an overreaction to the down side but remember they are many people that want the price of stocks to go down. There were probably a tremendous number of stops activated with the drop adding even more selling pressure. Also many money managers were forced to sell their positions with a 25% drop in price, thats just part of their job to conserve capital. Just my opinion but they will not be in any hurry to get back in the stock after that type price action. If you have a long term horizon this is probably a good buying opportunity. I bought some yesterday thinking that the selloff was over done and was rewarded with an additional 10 % reduction in price today. I would have to say that their conference call was very uninspiring and unpolished which didn’t help the matter. Sometimes these engineers have a hard time with these CCs ……Price action looks like a well executed short shark attack or computer programs that kicked in and that kept working. Sometimes fundamentals don’t have anything to do with stock price, this is something that we all have experienced and didn’t enjoy. This will probably be daytraders paradise for the next little while so be aware.

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