08
Mar

Quiet Monday

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Market Sentiment Watch: Two weeks left until March expiry and I will be transitioning this week to more cash and longer dated options. Very quiet week on the economic data front until week's end and of late, days without data have been red ones. Next week contains a lot more pertinent data for markets to digest. Also, we are now in that lull time between earnings seasons where there will be less news and more worry over the shoulder season for the gassy names. My sense is that the oily names of the Bakken players will be in greater demand for a time relative to the gas shale names and I've included some thoughts below and updated table of Bakken players and their acreage in the Stuff section.

The Week Ahead:  Very slow. Friday's releases probably contain the most market moving items.

  • Monday 3/8: No economic data release scheduled
  • Tuesday 3/9: No economic data release scheduled
  • Wednesday 3/10:  EIA Oil Inventory Report, Wholesale inventories, Federal Budget statement,
  • Thursday 3/11: EIA Natural Storage Report, Jobless claims (forecast 460K, last week 469 K), trade balance (forecast -$41 B)
  • Friday 3/12: Retail Sales for February (forecast 0.0%, 0.2% ex autos), Consumer Sentiment (73.5 vs 73.6 at last read), Inventories (forecast 0.1%)

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today - NOG surprise earnings, Bakken thoughts
  • Odds & Ends

Holdings Watch:

ZCAT (Zman Catalyst portfolio, formerly the $10KP II):

  • $21,200
  • 40% Cash
  • Positions are updated on the ZCAT, ZIM, ZLT page.

ZIM (Zman Inefficient Markets portfolio)

  • $12,900
  • 100% Cash (No positions)
  • Positions are updated on the ZCAT, ZIM, ZLT page.

Commodity  Watch:

Crude oil rose 2% last week to close at $81.50 and looks like this. The 12 month crude strip is now trading at $83.48.  This morning crude is trading up slightly towards $82.

  • OPEC Watch: Next meeting is March 17th. I and others expect no change at this meeting in terms of official quotas nor do I expect the Cartel to discuss reining in recent cheating which has left compliance with quota curtailments below 50%.

-

Natural gas fell another 5% last week to close at $4.59. The daily chart on gas just pierced support while the  longer term view looks less dire with $4 an obvious target for the Spring shoulder season. The 12 month strip is now trading at $5.18. This morning gas is trading off nearly a dime on mild weather.


  • Weather Watch: Rapidly warming will be replaced by rapid cooling by the end of this week for much of the U.S.

    • Week Before Last: 204 HDDs which was colder than last year and normal and yielded last Thursday's 116 Bcf withdrawal report.
    • Last Week: HDDs for last week are not yet available but the forecast was 171 vs 183 last year and 170 normal. This should yield a withdrawal between 60 and 75 Bcf this Thursday.
    • This Week's Forecast: 113 HDDs which is much warmer than normal and much warmer than last year.


Stuff We Care About Today

Bakken Player Thoughts

 

  1. The top three I don't typically play in and while they have significant Bakken positions, in light of their size, the impact of any one well or groupings of wells won't have a material impact on the company.
  2. EOG I do play in and they have seen above performance in their Parshall operations. They are exploiting their Bakken Lite territory at the current time and I don't expect to see anything stock moving out of them until we see the Three Forks Sanish results from their East Montana test by 2Q release.
  3. Most of the other names in the middle grouping above are ramping their activity levels in the play this year and branching out to new portions of the play. No one is more catalyzed by news from the play than BEXP in this set of names and they will be targeting the Three Forks in their Rough Rider area and the Bakken in their Ghost Rider area in eastern Montana.
  4. WLL remains the cheapest name in the middle list of names and is also drilling the "biggest" wells in terms of IP's in the play.
  5. In the last grouping we have 3 names with significant acreage. KOG continues to hone its skills in the FBIR area with a 1 rig program, NOG continues to see larger wells in its partnerships with Slawson, EOG and others and while it remains a low cost, non operator in the play it also continues to raise its working interest with time. AEZ remains the little guy with no debt, big acreage for it, and first well news on the near term horizon.

NOG Reports 4Q Results 

Note that NOG did not pre announce when earnings would be so I while I was planning on being long calls prior to the release I currently am out of the name. Revenues and bottom line numbers look light to estimates so it may be a good thing I'm out at the moment. There is no conference call scheduled.

Highlights:

  • Production:
    • 2009 production was 773 BOEpd
    • Year end exit was 1,508 BOEpd (this is well below guidance of 2,000 BOEpd provided in the 3Q release, probably a completion timing issue,
      • (the 3Q exit rate was 1,200 BOEpd)
    • The company did comment that an additional 3.45 net wells are in the process of being completed which will more than double current production (adding nearly 2,000 BOEpd net) on an initial production basis.
  • Windsor Program: Wells completed going forward in their 60 well, Slawson operated, Windsor program will carry a 20% working interest. Slawson is running 5 rigs in the program at present and is planning higher frac stage count wells compared to earlier efforts (18 to 22 stages vs 9 before). They are seeing better average IPs over a longer period than before as well.
  • Three Forks: NOG participated in 2 Three Forks completions (1 with BEXP, the other with EOG) that help delineate Three Forks potential on its acreage in Mountrail county.
  • Williston acreage now at 104,000 net acres (higher than what I have listed in the table above); about 1/4 of this position is in eastern Montana (and they are drilling a well currently in NW Montana).
  • Guidance:
    • In 2010 NOG expects to drill 15 net wells targeting both the Bakken and the Three Forks.
      • see gross cost per well at $4.5 mm in 2010.
      • See funding 2010 capex of $52 mm with cash on hand, cash flow, and their credit facility (currently undrawn)

Reserves:

  • 6,109 MBOE at YE 2009

    • 95% oil
    • 61% proved undeveloped

Nutshell: I'm still reading and will be watching it closely on the open.

Odds & Ends

Analyst Watch:

  • Nada.

 

147 Responses to “Quiet Monday”

  1. 1
    BirdsofpreyRcool Says:

    File under FYI — EXXI’s investor day in NYC brought some new attention… and new buyers too. I had 2 friends there, they overhead cell-phone conversations… one went like this “buy 100,000 EXXI…. no, wait… buy 150,000 shares”

    This week, we are waiting on MMR to put out an update on DavyJones. The timing is such that they might put out info on Hurricane Deep and Blueberry Hill too. Should be this week, unless there are problems with operations. Haven’t been, at least that we’ve heard. It’s just slow going with such a deep hole and mega operational scale.

  2. 2
    BirdsofpreyRcool Says:

    Credit following overseas rally… which is following the rally in the U.S. on friday. Futures are green. Don’t know if it holds, in the face of no data… and BHO’s mind-numbing push for his Healthcare Bill at 11 a.m. today.

    Reading that some districts are thinking about having only 4-day school weeks. People better start to talk about the cost of govt employees and their massive benefit packages soon. It’s the next killer app. And the healthcare bill would only multiply that problem times 10.

  3. 3
    nifkin Says:

    BEXP some insider selling Friday

  4. 4
    bill Says:

    >cost of govt employees and their massive benefit packages soon. It’s the next killer app.

    agreed…and you think it will have to affect the markets sooner or later if not the health of the US economy

  5. 5
    zman Says:

    Thanks Nifkin had not seen. Chariman sold 275K but still owns a boatload at 2.3 mm.

    Been watching the NFX guys dribble out shares.

  6. 6
    BirdsofpreyRcool Says:

    IG credit index now a full 2 1/4 bps tighter at 83.5. I think the tighest we got in January was 77 or so.

  7. 7
    BirdsofpreyRcool Says:

    So, why do we care? Lower yields on debt help companies with their bank negotiations and refinancing existing debt. Lower yields force banks (and investors) out the curve and up the risk spectrum. This is normal, at this point in an economic recovery.

  8. 8
    zman Says:

    Thanks for the comments BOP, hear ya on the EXXI/MMR, waiting for my well to come in on those, lol.

    Any word from HT/TT?

    Crude through $82 now as equity futures mildly strengthen.

    What’s the POTUS doing at 11?

  9. 9
    bill Says:

    I’m looking for oily ard to come back after a 11 dollar hit on earnings last week.

    Earning’s for q1 should be .37 from last yr .17..yes thats a double. Production is expected to grow 30 % and oil makes up 90 % of the revenue.

    ARD VOL high low close CHANGE

    5-Mar-10 1,787,300 34.10 33.10 33.60 0.88
    4-Mar-10 2,113,200 32.78 31.60 32.72 0.81
    3-Mar-10 6,676,500 34.99 31.65 31.91 (3.31)
    2-Mar-10 6,362,100 40.76 34.32 35.22 (7.47)
    1-Mar-10 426,400 43.11 41.54 42.69

  10. 10
    zman Says:

    MCF on the tape exploring for gold. The yellow kind. Hmmm.

  11. 11
    BirdsofpreyRcool Says:

    POTUS is taking to the airwaves, again, to “make the case for his healtcare reform bill.”

  12. 12
    PackMan Says:

    BOP #2 … damn right !

  13. 13
    PackMan Says:

    #11. His selling point now to Dems is said to be “if the bill goes down, so does my presidency”.

    Not exactly a position of strength.

  14. 14
    bill Says:

    Peak has too much money sloshing around

    i dont like this….

    http://finance.yahoo.com/news/Contango-Announces-an-bw-1062428522.html?x=0&.v=1

  15. 15
    zman Says:

    Bill – re 14 – goes to weirdness, not really material … but definitely an oddball move.

  16. 16
    tomdavis12 Says:

    Z: Went through the slides put out @ EXXI. Many of existing finds had 2D instead of 3D seismic. Is that because of cost? CHK is always very proud of how much 3D seimic they have. Did any of the log chart make you excited. They look like my EKG’s and I have no clue what the lines mean. If you are not a geologist half their slides go over my head.

  17. 17
    zman Says:

    Stocks and market taking a breather.

    HAL pushing for a breakout. I continue to think they are one of the first names people circle back to when they think of improving NAM drilling metrics. With the horizontal rig count leaping weakly, stocks probably need to get rolling.

  18. 18
    tomdavis12 Says:

    BOP: Any junk bonds in energy-land trading near par where the fundamentals are not getting any worse. Income in demand these days.

  19. 19
    tomdavis12 Says:

    BOP: Looks like a little profit taking in EXXI for the reasons you spelled out Friday. Good call.

  20. 20
    zman Says:

    Tom – they didn’t put the 3D in the presentation.

    Looking at logs: Think of a log as snap shot of the well from top to bottom. This is a look at the rocks and fluids as you move to the bottom of the well. On a two track log, on the left side you’ll often have spontaneous potential (SP) which helps you see where you have reservoir rock (rock from which you can extract oil and/or gas). You want to see this “kick” to the left. On the right hand side, you have resistivity (which determines if the fluid in the rocks is a hydrocarbon (can’t tell oil from gas) or water. Hydrocarbons have greater resistivity than salt water and so you want to see this track kick to the right. When you have the track on the left (SP) kick left and the track on the right (R) kick right at the same level (depth) then you are in business.

  21. 21
    tomdavis12 Says:

    Z: So would you say 3D has been done on all their existing and future prospects? Did see one significant right kick.

  22. 22
    zman Says:

    Tom – they have it on this one and many others, all future prospects, no.

  23. 23
    bill Says:

    Sold out my mcf, nibbling at ard and exxi

  24. 24
    zman Says:

    NOG trading slightly green on the completion/production commentary. No official guidance, no conference call kind of puts the breaks on the news though, wish they’d hammer it home. I am not in at present.

  25. 25
    zman Says:

    All POTUS and no data make the market a dull boy.

  26. 26
    cargocult Says:

    Lets cut back on education. That’s a good place to for our society to save money. Anyway, with the emphasis on education in India and China they can take up the intellectual slack for a change. Then we can become low cost manufacturers again and make cheap products for the rising Asian middle class.

  27. 27
    zman Says:

    HAL – thinking it takes a shot at $35 in the near term, breaking through recent resistance today. Stock has been lagging the service group of late and service is up triple the S&P year to date.

    BEXP toying with $17, news most likely next week, could be this week as well. I’m holding March 17.50s with a swing position on that I will punt on the next bit of strength. I continue to hold the common.

  28. 28
    elduque Says:

    any thoughts on CHK’s swap land for stock? Where is the land?

  29. 29
    zman Says:

    Watching the offshore rig guys drift higher. ATW marching back up, not a lot of conviction in the trading though.

    WHX – what I get for waiting is a $1 higher stock. I’ll be adding this guy soon.

    LINE – also inching back, I continue to hold.

  30. 30
    bill Says:

    exxi making a comeback off lows

  31. 31
    bill Says:

    28 is old news

    Chk used stock to add land in core areas like Haynesville

  32. 32
    zman Says:

    Eld – From what I saw they said they were not considering any more of those deals. Don’t know where the acreage was, guess would be H.S., Marcellus, or E.F.S. but just a guess. Don’t know when in 2009 it was done either.

  33. 33
    zman Says:

    Bill – yep, watching MMR do same.

    Got a snippet of note saying EXXI won’t get full credit on Davy until they do a flow test in a year. I agree they won’t get full credit but they will get more credit and I’d add, it won’t take a year to get a production (not flow) test done. Silly analyst, think Oct to January on that one. The note also said they think EXXI is getting credit for a 4 Tcfe story with the comment that there could be significant upside in the stock should it prove to be a bigger discovery. No kidding.

  34. 34
    jiveyjr Says:

    little KOG nice and perky this morning….

  35. 35
    BirdsofpreyRcool Says:

    TomDavis — I will send you a shopping list of energy bonds. It’s from 3/1, and bonds have rallied since then, but it’s a good start.

    what is your email address?

  36. 36
    zman Says:

    Just send it to me BOP and I’ll forward.

  37. 37
    BirdsofpreyRcool Says:

    jivey — i think KOG has a couple of good things they can say, when they post 4Q earnings after mrkt close on Thurs.

    but, if the stock runs too fast and too far, you can be sure there are “m&a whispers” in the air.

    As mentioned last week, KOG was a TW last week gave some people the warm fuzzies again.

  38. 38
    BirdsofpreyRcool Says:

    #36 — good. prefer that. thank you.

  39. 39
    BirdsofpreyRcool Says:

    #39 — ha! oops…. 😉

  40. 40
    tomdavis12 Says:

    Thru Z is always good

  41. 41
    scoop006 Says:

    Z #36 Can I get that bond list too?

  42. 42
    elduque Says:

    did some comparing of mid caps over the weekend and HK is trading right along with SD and GMXR for solid underperformance over the last year. Not sure they should be thought of in the same light. Am I wrong?

  43. 43
    Patipati Says:

    Jerome — re #2 on Sat., ANR, thank you very much.

  44. 44
    zman Says:

    Eld – not even the same league.

    Pati – check your email.

  45. 45
    BirdsofpreyRcool Says:

    EXXI — nice trading, TomDavis! Caught yourself a Fat Antelope this morning. Way to wait in the weeds, man.

  46. 46
    zman Says:

    Housekeeping Watch: I will be on Spring Break the week of March 22. Very light posting during that time.

  47. 47
    zman Says:

    Gas-weighted, pop-weighted HDDs came in at 182 last week, vs a prior forecast of 171. Last year degree days were 192 and we had a pull from storage of 111 Bcf.

    I continue to expect a withdrawal in the 50 to 75 range this Thursday and a much small number next Thursday. Gas isn’t exactly getting crushed, off 9 cents now and soon it should start trying to find a home in the $4 to $5 range for the next 6 to 10 weeks. This is an improvement over year ago levels and only stinks if you failed to hedge the Spring, like SWN and a few others.

  48. 48
    bloodystupidjohnson Says:

    EXXI: Here is a link to a top notch fund on why they bought the 10% senior notes due June 15, 2013 http://www.thirdavenuefunds.com

    Go the the 1st quarter letters to shareholders and the Third Ave small cap value fund run by Curtis Jensen. Third Ave is overseen by Marty Whitman a value investors value investor.

    I hate mentioning anything about EXXI, because it is getting like a cult around here — LOL — But those interested in Third ave rational here it is.

  49. 49
    bill Says:

    robry has last wek at -110

    and current levels at 1599

    02/26/10r.-15.4…-11.6…-12.4…-15.8…-20.5….-19.9….-20.4…-116r…..-125….-116……..-128
    03/05/10r.-18.3…-14.6…-15.3…-13.9…-16.0….-17.6….-14.7i..-110i……-110i……………….-110
    03/12/10r.-14.3i….-5.2i….-4.8i…..-3.6i…..1.0i……0.9i…….1.2i…..-25i…….-25i
    Estimated EIA-Weekly based storage (As of 03/08/10)…….1599 BCF
    …………………………………………………..(As of 03/08/09)…….1691 BCF…(-92 BCF YOY Deficit)

  50. 50
    BirdsofpreyRcool Says:

    EXXI — if anyone has a $1B market cap stock with more material upside (backed by real hard assets) over the next two years… bring it on!! Would love to add to the general discussion.

    Don’t see opportunities like EXXI come along very often. That said, I’ll shut up now.

  51. 51
    zman Says:

    Bill – He had it closer to 75 Bcf last week, wonder what changed his mind, must be mix of the degree days. That’s good news, his model is a good one.

  52. 52
    bill Says:

    Looks like production is off 1 bcf/day

    02/19/10….69.76….69.78….69.74….68.82….69.44….68.76….67.12….483.43
    02/26/10….66.58….67.32….67.79….65.67….67.78….68.85….68.14….472.13
    03/05/10….66.97….66.76….65.39….66.10….66.71….66.68……………..398.62i
    __________________________Year_Ago________________________

  53. 53
    bloodystupidjohnson Says:

    Bill: MCF — I am with you! What the hell is Peak thinking?

  54. 54
    tomdavis12 Says:

    BSJ: If you can bring the bear story or any out of the box thinking re any of Z’s names, I consider it a personal favor. None of us or our ideas are not open to criticism.

  55. 55
    bloodystupidjohnson Says:

    In the and you think you have it hard dept: At the 2006 Barret Jackson auction a 1970 SS 454 LS 6 Chevelle convertible, in spirited bidding, went for 1.2 mill.

    At the Sept 2009 RM Auction, this VERY CAR was sold for $264,000.

    Losing a million in three years! I wonder if Barrett Jackson, or the talking heading televising the auction, will bring up the downsize in some of these buys?

  56. 56
    zman Says:

    Energy with yield almost uniformly up today, everything else just a bit red. Notably outlier KOG, earnings there later this week.

  57. 57
    bloodystupidjohnson Says:

    TOM: no bear story for EXXI. It is just that every other posts seems to be about EXXI. It was refreshing last week the talk about ARD.

  58. 58
    zman Says:

    57 – Simply untrue.

  59. 59
    zman Says:

    CLNE looks like it is finally breaking out.

  60. 60
    tomdavis12 Says:

    BSJ: I would bring what you wish. Z is equal opportunity.

  61. 61
    bloodystupidjohnson Says:

    TOM: the bear story would not be for EXXI, but MMR and the Davy Jones project. Not that there is not hugh amount of gas or that it will be developed, but that these are really deep and very complicated wells. It will probably take much longer and be more expensive to develope this field that some bulls might think.

  62. 62
    choices Says:

    I will go with a “cult” if it makes money-obviously, any legitimate negative information or better ideas are always welcome-emphasis on legitimate.

  63. 63
    choices Says:

    Z-please send BOP’s bond list to me also.

    Many thanks.

  64. 64
    BirdsofpreyRcool Says:

    POTUS on TV…

  65. 65
    bloodystupidjohnson Says:

    Funny I guess you’all picked up on the cult remark and not the favorable link to the reason why a top notch value fund bought the bonds of this stock and their optimistic view of the company. Funny how people want to read what they want to read.

  66. 66
    tomdavis12 Says:

    BSJ: We can’t all kiss every boy and girl on Z’s dance card. That is why I have much more in NE and EOG. I am more of a balance sheet geek. I love to hear what else is out there. Don’t buy the single digit midgits. Not my style.

  67. 67
    tomdavis12 Says:

    BSJ: I embrace any thing you want to bring to the dance 🙂

  68. 68
    ratberto Says:

    53 – re gold: Peak thinking he needs an excuse to be in AK to check on the prospecting,

    during salmon runs?

  69. 69
    bill Says:

    65

    Actually, bsj post adds fuel to the cults fire, lol

    we are “determined” in finding value wherever it may be.

  70. 70
    zman Says:

    I was responding to the “every other comment” comment. EXXI had an analyst day last week so naturally it’s going to get more attention that usual.

    ROSE got some attention too as I recall (hey look at me patting my own back). As did BEXP, HAL, TAT, NFX, WLL, MMR etc.. and those were just from me.

    What I don’t want is for people to attempt to discourage discourse on the site. If it’s not for you don’t read it. I too get tired of rah rah from time to time on certain names … especially if I didn’t go long said names.

    For the most part, last week was about noodling on the new stuff on EXXI, especially with regard to Reef’s input since he was actually at the meeting.

  71. 71
    BossmanG Says:

    Z, re: bops list, if bop doesn’t mind pls send.
    thanks.

  72. 72
    bloodystupidjohnson Says:

    Gee, I can’t win for losing. On one side I have people upset at the “cult” reference. On the other I have the owner of the site upset over the word “seemed”.

    I feel like it is the 1970’s again, and I am back being a devils advocate at a mutual fund, and having people “hating” me for being a critic of their ideas.

  73. 73
    zman Says:

    Reef – On EXXI, did you come away with a sense of whether or not they were going to run cased hole logs after the casing is cemented in and before they mobe the rig to the appraisal well location?

  74. 74
    zman Says:

    BSJ – Not upset, just don’t want to discourage discourse.

  75. 75
    tomdavis12 Says:

    BSJ Nothing but this here 🙂

  76. 76
    bill Says:

    everything rolled over at 11 am

  77. 77
    bloodystupidjohnson Says:

    Well then Z, a question about HK. Do you feel that the market is not really happy about 67% of its reserves are in PUDs. PUD are now given a 5 year window of drilling. If HK is to do all this drilling with their current cash flow, things might get kind of tight. It is possible they might have to do another secondary to get the cash to do the drilling. What are your thoughts on this.

  78. 78
    BirdsofpreyRcool Says:

    I feel like I’m back at a mutual fund, too… having to pester the PM to act on my idea (buy OR sell). But, if you believed, you kept at it… and at it… and at it. Otherwise, you weren’t worth the overhead.

    So, no worries. Good ideas stand up to scrutiny and discussion. Bad ideas are outted by scepticism. Besides, no one has a crystal ball. Just have to do the best we can, with the data we get ahold of.

  79. 79
    zman Says:

    Bill – shocker! Post earning lull + no data + the President in shirt sleeves on TV ranting over HC. Dollar came at same time pulling crude down below $81.

    Time for a little profit taking there most likely, doubt it gets out of hand, maybe $75 at worst next few days. A lot depends on gasoline demand showing firm levels into Spring.

    HK – Not sure that the PUDs are the biggest concern. You have 5 years if you can drill them up in that time frame, they could have booked more offsets if they wanted to as I recall.

    I think the big concerns are gas prices and getting the remaining monetizations done to amount to about $1 B (for all 4). I think the stock came off with the rest of the gassy names and remains in the penalty box despite the improved balance sheet and strong hedges because the name is very gassy and hard to find catalysts for at this time. They did not make as big a deal about transitioning to a higher percentage of liquids like many of their peers although much of their EFS stuff is liquids rich. The reasoning to not make a big public gong banging about oil is that they grew production so rapidly last year (nearly all of it gas) that making a dent in their gassy complexion is much more difficult to accomplish at this point. I also think they suffer from the perception (and this is a partially true one) that they have to drill at a high pace this year and well into next, almost regardless of gas prices, if they want to hold the majority of their leasehold in the Haynesville. They don’t have this pressure elsewhere but like CHK, for the next 18 months or so, they have to keep turning to the right or they will sacrifice some expensive ground.

    My sense is that they will get the deals done in time, maybe they come up a couple of hundred million short to target if the deals drag into late summer and gas has not started to turn. I don’t think the stock really bounces until you see that or an oil discovery in W. Texas which they are working on now (don’t know anything, just know they are working it). I hold a little right now with the thought gas settles out shortly and the gassy names will see a little bounce but I’m not planning to add more at the present time.

  80. 80
    zman Says:

    Just re read that last part, I don’t think they do a secondary here, I think they will be hard pressed to sell their existing shareholders on that need and the stock would get punished.

  81. 81
    elijahwc Says:

    tomdavis12 – FWIIW, MHRpC is going X and you might be able to pick some off slightly below 25 in the next few days. Ugly credit but it will pay. 10.25% current yield at par. Terms and link to IPO prospectus below:

    http://www.quantumonline.com/search.cfm?tickersymbol=MHR-C&sopt=symbol

    You might want to bookmark the site. It’s pretty handy and free.

  82. 82
    zman Says:

    Bored. Going back to listen to the replay of the PETD call.

  83. 83
    BirdsofpreyRcool Says:

    Here is a $900mm mrkt cap industrial with exposure to the international horizontal drilling market through its manufacture of downhole drilling motors. Anyone ever run across RBN?

  84. 84
    bloodystupidjohnson Says:

    RE: HK I know the below sell off in nat gas might be a concern however compare HK with RRC. Both quality lower cost gasser companies. But RRC is holding up in the face of lower future prices and HK is not.

  85. 85
    zman Says:

    BSJ – then reference the other items mentioned.

  86. 86
    zman Says:

    RRC is a lot more expensive on a forward cash flow basis. I’ll have the Orange charts out later this week making it pretty easy to compare.

  87. 87
    bloodystupidjohnson Says:

    RE: 85 what items?

  88. 88
    BirdsofpreyRcool Says:

    Midday Update —

    · Market Update – US equities pausing a bit to catch their breath following Fri’s melt-up rally (all the major indices are essentially flat on the day). Buyers not chasing stocks higher while sellers are non-existent for the moment – this standoff is causing flattish trading. Shorts remain reluctant to lay out fresh exposure given the resilient trading patterns. The desk is very quiet and this promises to remain the case for much of the week given the dearth of major scheduled events.

    · Equity Sectors – mixed action today. Health care, industrials, staples, energy, and materials are all down ~0.3-0.5%. Telecom is the big standout on the upside, rising 1% (S is up 4% and the best performing name in the group). Keep in mind that telecom is a big underperformer (the group is down 8% YTD). Some pos. comments from S this morning at the Raymond James conf helping the group. Consumer discretionary stocks extend their rally from last week (the space was one of the best performing groups last week after same-store-sales came in strong Thurs morning); MCD is up 2.5% after posting strong sales this morning and leading discretionary higher. Tech is up small on the day, led higher by the card networks (MA and V both up ~2%+). Financials are also up small on the day (up ~0.2%), w/AIG/MET leading the group higher post their deal (each up ~4%); C is also an outperformer. Materials are off ~0.4% on the day – while X is higher and outperforming post the Goldman upgrade, AKS, DOW, IP, NEM are all in the red today (AKS is down >3% after Goldman downgraded). Energy is lagging, but this is mostly due to some profit taking in the coal stocks (following their strength on Fri on back of the contract news and the Essar acquisition).

  89. 89
    jiveyjr Says:

    re:RRC…I’ve heard Stoneburner talk several times and he makes perfect sense as a scientist etc., but Pinkerton at RRC is, like Simpson at XTO, an accountant…it seems those two handle their relationship with the street much better, which one might expect accountants to do

  90. 90
    bloodystupidjohnson Says:

    RE: 87 — never mind. So you think the under performance is more company specific — lack of any immediate catalysts, lack of liquids, etc.. But that is why I used RRC as my example. Don’t the same issues that general issues that affect HK also affect RRC?

  91. 91
    zman Says:

    re 90. I think it’s gas, then not having the deals done to complete their capex which is a must drill.

  92. 92
    bloodystupidjohnson Says:

    Note: I am NOT favoring one company over another. Both are excellent companies in excellent plays, run by top flight people. I was just curious on the under performance of HK and was using RRC, which faces some of the same problems as HK, as an example.

  93. 93
    zman Says:

    BSJ – that’s my best cut at understanding the delta. I do think HK gets a bounce when gas prices stabilize but that may very well be from a lower level.

    CLR and WLL moving today, own the common in both, no options. The first expensive on CF, less so on acreage, the second, dirt cheap.

  94. 94
    bill Says:

    http://finance.yahoo.com/news/AGL-Resources-reports-missing-apf-960217474.html?x=0&.v=1

  95. 95
    zman Says:

    94 = no bueno.

  96. 96
    zman Says:

    Anyone have a list of upcoming conferences?

  97. 97
    tomdavis12 Says:

    Eli: Many thanks.

  98. 98
    1520sbroad Says:

    HK vs. RRC – share count for HK is almost double RRC (301mil vs 159mil). In my opinion – HK has been a serial secondary offender and has a lot of shares out there in johnny hotmoney type hands. RRC just doesn’t have the name recognition at this point. HK got onto a lot of radars with (Z correct me if i am wrong) 3? secondary issues in 2 years. Those same folks are just as willing to go short as they are long – hence the penalty box gets bigger for HK.

  99. 99
    reefguy Says:

    DJ- My thought is that they have to run cased hole logs under MMS guidelines ro show liner integrity and cement quality, etc. I don’t think cased hole logs will reveal anything that those numerous open hole attempts did not show.
    These Wilcox sands had good clean Gamma Ray response. Resistivities were between 10 and 20 ohms. Porosities are 14% or better in these zones. The only zone without a resistivity curve, or porosity log was that 40-60 zone about 300′ of bottom. I think it unlikely that this zone was wet given the geochemical model.

  100. 100
    occam Says:

    DNR is worth a look as a Bakken player.

    The EAC acquisition doesn’t appear to be reflected in the stock price. It closes March 12, giving DNR 300,000 Bakken acres. There are several long horizontal EAC wells in progress, that will show up as DNR news.

    One reasonable piece is:
    http://www.wikinvest.com/wikinvest/api.php?action=viewNews&aid=988180&page=Stock%3ADenbury_Resources%2C_Inc._%28Holding_Company%29_%28DNR%29&format=html&comments=0

    Heavy buying of April 17.5 options on Friday

  101. 101
    zman Says:

    Reef – thanks, so they could be in the “any day now” camp for a press release. You said on Friday, just a visual tally on sands was about 250 feet of pay, right?

  102. 102
    zman Says:

    Occam – thanks for the prompt to put it over in that camp, will do.

  103. 103
    tomdavis12 Says:

    Z: I am looking at the possible catalysts to get a name like HK moving as: 1. Another type of XOM – XTO merger. 2. Some bullish 914 data 3. Gov’t encouraging NG along the lines of the Boone Plan. 4. Hurricane in Sept. What am I leaving out. I am thinking the drawdown # is being offset by the higher rig count.

  104. 104
    reefguy Says:

    Pay is at least that, four major sands totalling around 190′ a numerous 10 footers. No wet sands below pressure regression zone that could be seen between Sparta and Wilcox.

  105. 105
    zman Says:

    Tom – re HK. Further monetizations. Then they have a Zavala County, Tx oil test in the Eagle Ford Shale that should see the light of day in April or May along with a number of Eagle Ford gas and gas condensate wells.

  106. 106
    zman Says:

    Thanks Reef. I’d guess they mobilize the rig asap to the appraisal and pr that. Should also be close to down on BB Hill, nothing yet on the Sonris site this morning for an update.

    Mulling going to this:
    http://www.undeerc.org/wbpc/

  107. 107
    zman Says:

    ROSE – back to even on the day, slightly green, volume very strong for it. Tempted to go back to the well, may add some Aprils. I don’t think the name is done moving, feels like accumulation for one last leg into the upper mid $20s before it bases in anticipation of 1Q results which should show more data on the Alberta Bakken and 6 new Eagle Ford wells, a majority of which should be liquids rich gas wells.

  108. 108
    zman Says:

    ZTRADE:

    WLL – Added (20) March $80 calls (higher risk given the timing) for just under $0.95 with the stock at $77.75. My sense is that oilier names will outpace the gassier E&Ps during this post earnings season lull until natural gas finds a trading range during the Spring shoulder season. WLL is one of the cheapest names amongst the Bakken players despite the recent run there.

  109. 109
    zman Says:

    By the way, WLL speaking at Raymond James in 15 minutes.

  110. 110
    reefguy Says:

    106- Hard to get to Bismark, ND from the Capitol city….

  111. 111
    zman Says:

    WLL Slideshow is a bit updated over the last one, shows the pinchout to the east very well in a cartoon that illustrates why their wells IP bigger than say HES wells.

    Reef – no airport?

  112. 112
    zman Says:

    Just received from Nicky:

    Still hoping we are going to get to the 1142 – 1144 level before a very short correction.

  113. 113
    zman Says:

    WLL call in 2 minutes:
    http://www.wsw.com/webcast/rj54/wll/

  114. 114
    zman Says:

    WLL Notes:

    Q1 – sees discretionary cashflow over $200 mm, vs $185.5 in 4Q

    Proved: 275 mmboe
    Probable: another 89 mmboe
    Possible – engineered by 3rd party at 197 mmboe

    Their NAV at constants $75 oil and $6 gas of $99. They think they have another another $25/share of potential value determined by locations on acreage they hold.

  115. 115
    reefguy Says:

    actually not bad, i stop in denver

  116. 116
    milepost_43 Says:

    like Helene Meisler from RealMoney……
    moved a few stops up…..

    Sentiment
    3/8/2010 2:22 PM EST
    The Index put/call ratio is over 200%. In the past year we have had three other times this has reached over 200%. It turns out 2 out of the 3 times it was a short term top in the market. Or at least we went sideways for several days.

    Add to this the ISE equity call/put ratio is also over 200%. This is usually associated with a down day shortly thereafter.

    Thus I think I would say sentiment is no longer leaning ‘too bullish’. That’s a bit of a change.

  117. 117
    zman Says:

    WLL – saying at current budget, they are going to have excess free cash flow, may let budget creep up to meet it. Current budget is $830 mm, Street has cash flow at $838 mm, sounds like he thinks that’s a bit low.

  118. 118
    zman Says:

    Thanks Milepost. Wonder what the newsletters, who all go so bearish 3 or 4 weeks ago, are saying now.

  119. 119
    zman Says:

    WLL – Now 25% of the way through fully developing their Sanish Field (this is where they have add 99% of their Bakken drilling to date and on their acreage listed in the table above). They have a little over 200,000 net acres in the new play, Lewis and Clarke.

  120. 120
    elijahwc Says:

    BSJ – On Bellatrix (BLLXF, BXE-T) apparently Canaccord raised the target this morning to $7-9 CDN for BXE as a possible takeout following the West Energy deal. I’m trying to get a copy. RMD????

  121. 121
    zman Says:

    WLL – Lewis & Clark – 250 locations on 1,280 spacing. Looking for 400,000 barrels per well for $6 mm, so not as good as Sanish Bakken but still very good economics. This is a Three Forks play tipped off by EOG drilling. Planning to drill along the perimeter this year to prove up the acreage with 13 wells this year, accelerating to a 3 rig program by year end.

  122. 122
    RMD Says:

    I usually don’t see Canaccord.

  123. 123
    tomdavis12 Says:

    Z: Rig announced the signing of a 5 year udw rig the KG2. I can not find a price /day. Did you see anything?

  124. 124
    zman Says:

    Tom – saw the release, don’t have $ on it. Street seemed to like it and I think that’s what helped the group a bit earlier.

  125. 125
    zman Says:

    RMD – in your research on AEZ, did you catch why they are drilling the Ron Viall well where they are. That’s pretty much in a big undrilled area. Just curious.

  126. 126
    BirdsofpreyRcool Says:

    That brilliant (they are the 3rd largest holder of EXXI), ex-Goldman hedge fund — Mt Kellett Capital — just filed a 13G on SD. They have just about doubled their holdings in SD from 12/31/09. From 7.6mm to 13.3mm shares. That is 6.3% of the shares o/s and makes them (coincidently) the 3rd largest holder of SD.

  127. 127
    zman Says:

    RMD – same question for the Tong Trust, their first well, which on the ND map looks like a discovery. They must have acreage all over this area north and west of BEXP’s Rough Rider as I see them in a NFX well in that area as well.

  128. 128
    zman Says:

    Robert Murphy, explorationist at HLX is leaving as they punt their O&G division. If you see where he lands let me know.

  129. 129
    RMD Says:

    AEZ’s acres are roughly between the RR and the anticline. They are largely undrilled. As I remember, they picked those acres because they had siltstone and were the only place they could find siltstone other than the Elm Cooley – which was very prolific.
    Their issue is always short lease expirations and getting the capx $ necessary to get acrage drilled and HBP. This makes the Fetter sale significant.
    PS: my sale is looking less brilliant….

  130. 130
    RMD Says:

    Was Rbt Murphy good?

  131. 131
    zman Says:

    RMD – good color, dolomitic siltsone very good for Bakken.

    Robert is one heck of a gas finding dude on the Shelf. Wonder if Schiller nabs him.

  132. 132
    zman Says:

    Murphy was working deep gas on the Shelf (around 16K feet) way before that was popular.

  133. 133
    zman Says:

    NOG turning higher again now, tempting but I don’t trust the market in here very much.

  134. 134
    RMD Says:

    MCF: my impression is positive. Connotes confidence that he has excess cash flow in ’10. A $3-5mm “look” is sure cheaper than a $50mm well. Being a cagy ROI-motivated guy, maybe the grade they are seeing is in the “or higher” part of the .5 grams/ton or higher. I think I want Peak to take those bets with my money on a longer term basis.

  135. 135
    RMD Says:

    Would seems that any buyer of HLX’s assets might want Murphy as an investor, or at least a consultant.

  136. 136
    elijahwc Says:

    BOP – Mount Kellett Capital: Interesting because they are a Private Equity shop. Only filed 5 public positions a/o 12/31 with SD being the largest at 7.5 million shares (33% of their filing)which at year end was 4.5% of SD. What do you think a PE firms intentions might be?

  137. 137
    zman Says:

    Agreed. Weird that they said financial advisers engaged rather than saying who is selling the package. Guessing it’s Randall and Dewey as they have ties with Murphy although if he’s out who knows. If you see R&D attached to the deal look for a higher price / Mcfe.

  138. 138
    BirdsofpreyRcool Says:

    elijah — they may be private equity, but they appear to run a HF too (which is not that dissimilar of a legal structure, as i know you know). Anway… fascinating. I love funds like this… only their top 5 ideas. And all 5 are “special situations.” SD, HUN, AONE, EXXI, CIT.

  139. 139
    zman Says:

    Market closing essentially flat, gassy stocks 1/2%, OIH and oily stuff off very small.

    Beerthirty

  140. 140
    elijahwc Says:

    BOP – Fun article on your Goldfinger.

    http://www.vccircle.com/500/news/ex-goldman-goldfinger-raises-25-billion-fund

  141. 141
    BirdsofpreyRcool Says:

    elijah — thanks for sharing. Yep, he is good at spotting “special sits.” And with those paydays in his past, I’ll bet his office furniture is a grade or two better than mine. ha!

    I love special sits. Like when people say things like “why do you want to buy EXXI bonds at 84 when they are rated D?” Or, “that company has too much debt.” You just have to take it to the next level (or two) to understand the back story. Usually, they are right (run away!!). But, sometimes, you can ferret out that market inefficiency that will make you money. Lovely stuff, special sits.

  142. 142
    BirdsofpreyRcool Says:

    Just got my latest bond pricing sheet. The bad news, the E&P Yield Feast is over.

    The most attractive bonds are still the EXXI 10%, offered around 102 for a yield to worse around 9%.

    The SD 8.75s due 1/20 are also a yield hog, at 97.7 for 9%.

    I don’t follow the VQ credit, but they have some 11.5%s due 10/17 offered around 106 for a 10% yield to worse.

  143. 143
    BirdsofpreyRcool Says:

    The service guys offer more yield (but without the tasty assets) at this point in the cycle. Of them all, I like the HERO 10.5% Senior Secureds (!!) due 10.17, offered around 99 for a YTW of 10.75%.

    I used to follow Allis-Chalmers (yrs ago). They have a 8.5% Sr Sec’d bond due 3/17 for 86.50, YTW of 11.35%. But one would have to take a look at their cash flow after required capex, to make sure the interest is covered and what the business outlook is. If you like that credit, you are probably better off going into the stock there, at this point. But, I’m not up to speed on this name anymore.

  144. 144
    choices Says:

    #142,#143-thanks, BOP.

  145. 145
    PackMan Says:

    bsj #48 …. didn’t Marty Whitman finally retire ?

  146. 146
    RMD Says:

    BSJ: #55 upsets me as I have a 1959 Caddy “Big Red” which I need to sell because I just don’t use it enough. Sadly (or happily) it is not in the $250,000 class.

  147. 147
    zman Says:

    Reef – Recall about 6 weeks back when you asked me what the next EXXI was and I flippantly said CPE? Blind squirrel finds nut but then didn’t invest in the nut.

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