Tuesday Morning – BEXP + Mid Cap Orange Charts

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Market Sentiment Watch: We may be in lull-lull land for the moment but catalytic news continues to trickle out. Today should be strong for BEXP, and I suspect we will see a news release out of MMR with regard to Davy Jones on Wednesday or Thursday. Lastly, I will start to get on taking some losses today and especially and have included a Max Pain Watch in the Stuff section below.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stuff We Care About Today –  E&P Mid Cap Orange Charts, BEXP Ops Update, Single Digit Midget Earnings and Ops updates GST, AXAS), I'll have AEZ in comments.
  4. Odds & Ends

Holdings Watch:

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

    • $10,800
    • 46% Cash
    • The Holdings Tab Is Updated for the Quick View portion.
    • Yesterday’s Trades:

      • None


  • ZIM (Zman Inefficient Markets portfolio)
    • $10,600
    • 93% Cash
    • Yesterday’s Trades:
      • None

Commodity Watch

Crude oil fell $1.44 to close at $79.80 yesterday, on a little pre OPEC meeting/strong dollar profit taking. This morning crude is trading up $0.50 after the Housing Starts data.

  • Early Read On Oil Inventories:
    • Crude:  UP 1.5 mm barrels
    • Gasoline: FLAT
    • Distillates: DOWN 1.5 mm barrels

Natural gas fell just under a penny to close at $4.39 yesterday. Imports are not enticed by these prices to come to the U.S. as you'll see below. This morning gas is trading up 3 cents.

  • Imports Watch: 7.6 Bcfgdp, down from 8.9 Bcfgpd from last week and last year.

    • Canada: Fell to 6.7 Bcfgpd, the lowest level of the year, down from 7.3 Bcfgpd from last week and 7.4 Bcfgpd from last year.
    • LNG: Fell to 0.9 Bcfgpd, also the lowest level of 2010, down from 1.5 Bcfgpd in the year ago week and from 1.6 Bcfgpd last week. 

Stuff We Care About Today

 BEXP Adds Rough Rider Acreage And Announce 3 More Big Wells

First, The Additional Acreage:

  • BEXP adds a little over 10,000 acres to it's Rough Rider play in the Williston Basin.

    • This is listed as Northeastern Rough Rider so it's probably in Williams County (see the blue oval in the map below for the rough ballpark of where this should be)
    • Note that this is near where they have drilled some big wells recently but should be relatively undrilled territory
    • BEXP thinks this adds 23 potential Bakken locations and maybe the same number of Three Forks locations if that play is proven to work here.
    • Based on the February 2010 North Dakota lease sale figures for Williams county (see post dated Feb 4th). I'd bet the purchase will cost them between $1,000 and $3,000 per acre and let's call it $2,000 per acre for argument's sake or $20 mm.
    • They have budgeted $15 mm for land and seismic this year so my guess is they are now ahead of that pace as this deals brings Rough Rider acreage to 115,000 net acres, up from 100,000 at year end.
    • They have ample liquidity to cover this transaction at $2 or $3K per acre, so I would not expect them to fire off a secondary just yet but I also would not be shocked to see one in conjunction with an accelerated rig program in the second half at a higher per share price, especially if their upcoming Montana Bakken test works.

As far as the new wells go, BEXP continues to report strong initial production rates

  • Ross area sees highest IP yet. The Jerome Anderson 15-10 #1H came in at 3,115 BOEPpd.

    • last 4 long laterals in the Ross Area had average IPs of 2,442 BOEpd
  • Two more Rough Rider wells:

    • Papineau Trust 17-20 with an IP of 3,042 BOEpd ... this is by far their biggest well in the southern half, and southern extremity of Rough Rider.
    • Kalil 25-36 with an IP of 1,586 BOEpd
    • USEG was in both of these wells
    • Average IP for the 12 long laterals completed to date continues to climb, now at 2,409 BOEpd

Nutshell: BEXP continues to report big wells every three to four weeks and should have at least 1 more well in the very near future to talk about although that may get lumped in with another 2 or 3 wells that are currently drilling. These wells are more than supportive of BEXP's growth targets of up 70% oil and up 35 to 45% total company volumes for 2010. Notably, BEXP continues to add acreage (potential locations) around it's new core area extending the play's running room without overstretching the balance sheet. 

The Orange Charts - Mid Cap E&P (a handy reference .... as always these are updated on the links at upper left)

Max Pain Watch ~ Max pains in red, note that almost all of them are short of current price levels.

AXAS Operations Update ~ Looking for Love In All The Right Plays

  • Operations Update:
    • Bakken:
      • permitting first 2 wells in McKenzie County - both with 9,000' laterals, one m. Bakken, the other Three Forks.
      • first spud expected in June
      • They also participated in with a 10% WI in a non-operated Bakken well in Divide County, blaming a host of issues for delays here.  Partially frac completed to date with the well flowing "significant" fluids. 
    • Granite Wash:

      • 8.3% WI non-operated wells in the Texas Panhandle, has been on for several weeks (no IP given) and is currently flowing a very respectable 17 MMcfgpd and 500 bcpd gross, or 200 BOEpd net to AXAS
    • Eagle Ford Shale: acquiring acreage but didn't say how much they have
  • Divest: Small non-core asset sale of $11.2 mm for debt repayment.
  • Nutshell: I see a management team chasing a lot of hot plays. I don't see focus. I do see a bunch of non news pressed together to form a press release about 3x as long as it needs to be. When I see a myriad of reasons for lack of performance I'm reminded of the phrase "It's a poor craftsman that blames his tools".  I continue to watch but am not interested in entering the name at this time.


GST Reports 4Q09 Results and Updates Operations ~ note that they delayed filing their 10K due to some accounting items regarding employee stock options so there are no earnings and cash flow numbers at this time.

The 4Q09 Numbers:

  • Production of 23.0 MMcfepd vs:

    • 23.9 MMcfepd in 4Q08
    • 23.3 MMcfepd in 3Q09


Reserves: 48.9 Bcfe at year end 2009, 73% proved developed, and down from 63.8 Bcfe at YE08. Downward revisions were mostly gas price based.

2010 Plan: Spend $58 mm on 3 lower Bossier wells, 1 Eagle Ford test, 2 HZ and 2 Vertical Marcellus wells, and up to 5 well recompletions

1Q10 Guidance: 20 to 21 MMcfepd.

Conference Call: Today, 11 am EST.


Odds & Ends

Analyst Watch:

  • BEXP - Target upped $3 to $21 at Thomas Weisel
  • SFY - Target upped $10 to $38 at UBS, rating Buy

Housekeeping Watch: I will be away on Spring Break the week of March 22 meaning I will monitor the site and post occasionally during that week.

199 Responses to “Tuesday Morning – BEXP + Mid Cap Orange Charts”

  1. 1
    skimo Says:

    Z, Is the short interest graph for XEC really showing over 100%?

  2. 2
    zman Says:

    Nope, bust, will repost shortly.

  3. 3
    milepost_43 Says:

    Max Pain Watch in Stuff section???

  4. 4
    zman Says:

    MP – not done yet, will be out shortly.

  5. 5
    elijahwc Says:

    Merrill reinstates coverage of the small and mid cap E&P sector.

    Reinstates Range Resources (RRC) tgt $56, GMX Resources (GMXR) tgt $10, Bill Barrett (BBG) tgt $37, Cabot Oil and Gas (COG) tgt $46, and Cimarex (XEC) tgt $66, with Underperforms. The firm also reinstates Continental Resources (CLR) tgt $51, Forest Oil (FST) tgt $37, Newfield Explorations (NFX) tgt $62, Petrohawk Energy (HK) tgt $26, Pioneer Natural Resources (PXD) tgt $64, Quicksilver Resources (KWK) tgt $20, St. Mary (SM) tgt $47, Whiting Petroleum (WLL) tgt $95, and Mariner Energy (ME) tgt $18, with Buys. The firm initiates Exco Resources (XCO) tgt $21, and Southwestern Energy (SWN) tgt $45, with Underperforms. Firm initiates Questar (STR) with a Buy and a $51 tgt. They are initiating coverage of SandRidge Energy (SD) with a Neutral.

  6. 6
    zman Says:

    Thanks Eli. Post updated for 1,3.

    BEXP old high for this cycle was $18 on 3/2. Stock bidding 17.85 now. Prior all time high was June 2008 at $18.29. Continued success of this nature and maintenance of oil near these levels is likely to push it through the oil high.

  7. 7
    zman Says:

    Crude up $1.10. NG down a penny now.

  8. 8
    BirdsofpreyRcool Says:

    Stuff on The Triad —

    Contrary to the blaring headlines about the subsurface blowout at Hurricane Deep being the cause of MMR/PXP decline yesterday, we have some concerns that was not really the driver. It “looks” like the driver. But hearing that it may actually be concern over the Blueberry Hill well. This is also an MMR/PXP-only well. So explains why EXXI went relatively unscathed.

    The concern is that MMR is saying they are within 2-300 ft of TD at BBHill. There are NO secrets in this biz… if that well was good, we should be hearing some buzz about it… given how close we are to TD. Not saying the well is bad. But, just reading the usual signposts.

    Look for any details about BBHill in the next MMR update. That may be what is driving the boat here.

  9. 9
    AAA Says:

    Sorry, what is max pain?

  10. 10
    BirdsofpreyRcool Says:

    TechTrader is 60/40 LONG today.

    HeadTrader is kidding me about all the socialist programs we will be paying for soon. So, tells me, he is going to play today by ear.

    Old Guy in Industry reminds me that “seasonally, it is the wrong time to be a hero” in this biz.

  11. 11
    zman Says:

    BB Hill – it was within 100 feet of TD last Monday. Should have another update by noon today on this site:


  12. 12
    zman Says:

    re 9. Simply put, max pain is the price at which the majority of outstanding options will get killed. Stocks are thought to be manipulated in this direction just prior to expiry. I don’t entirely buy into it but have seen it work often enough to respect it.

    Better explanation here:

  13. 13
    tomdavis12 Says:

    Z: Was going over the EXXI slides last night. Excuse my rookie-ness questions but I am learning. On that monster blowout. 1. Isn’t there a blowout preventor, why not work in this case? 2. If the trend is toward smaller diameter choke like HK, wouldn’t that make these blowouts more preventable. 3. Why did take so long to stop? ( did they need Red Adair ) 4. Damage to rig or any of the people on the rig. I have other questions but will stop here.

  14. 14
    zman Says:

    It was an underground blowout, not uncontrolled production at the surface. 2-4. I think they just plugged and abandoned the well and will redrill in the future, no indication at all of damage to the rig or people, that is reported immediately. Didn’t take a long time to control it, they just didn’t press release it.

  15. 15
    BirdsofpreyRcool Says:

    TomDavis — those are great questions. Other than seeing Red Adair’s boat cruise by at the Galveston Yacht Club once (yes, it was bright RED)… that is about as close as I’ve ever been (or want to be) to a blowout.

  16. 16
    BirdsofpreyRcool Says:

    z — i think TD is referring to the “2.5 hr unscheduled ‘production test'” that occurred at DJ.

  17. 17
    zman Says:

    Market waiting on the Fed. Could care less on much of anything at the moment. That was more good news out of BEXP and it’s getting ignored. Notably they have their first 3,000+ boepd completion in McKensie county in south Rough Rider, area is relatively undrilled but is looking like with long laterals and high frac stage count it works like the rest.

  18. 18
    zman Says:

    Tom – are you referring to the flare slide?

  19. 19
    zman Says:

    Considering a ZIM trade on BEXP. That’s good news and the stock is down now.

  20. 20
    tomdavis12 Says:

    Z: 14 So this Flare did not happen at their DJ well.

  21. 21
    zman Says:

    Tom – to clarify, they flared gas to the surface at Davy Jones.

    Hurricane deep had a problem underground and had to be junked.

  22. 22
    BirdsofpreyRcool Says:

    The flare did happen at the DJ well.

  23. 23
    BirdsofpreyRcool Says:

    Hence, the good (albeit technical) question. Why does it take 2.5 hrs to extinguish a flare?

  24. 24
    BirdsofpreyRcool Says:

    Or, is the MO just to let the escaped hydrocarbons burn off, because the well is otherwise contained? Just interesting to know, that’s all.

  25. 25
    zman Says:

    Hurricane deep is not at all the big play at MMR. It’s a deep shelf well, not an ultradeep. Difference in reserves is that the deep shelf’s are going to be in the 250 to 500 Bcfe range. The ultra deeps are in the multiples of Tcf range.

  26. 26
    tomdavis12 Says:

    Z: 14 So they did not have to plug and abondon DJ.

  27. 27
    BirdsofpreyRcool Says:

    TomDavis — NOOOOOOOOO. To put it simply.

  28. 28
    zman Says:

    BOP – maybe they wanted to draw down the pressure and then see how fast it built back up or they couldn’t find a camera.

  29. 29
    zman Says:

    TPH thinking BEXP paid less than $20 mm for that acreage. Sounds low to me but if so, good news, less pressure down the road to do an offering which has to be on the minds of some.

  30. 30
    zman Says:


    BEXP – Added (10) $17.50 April Calls for $0.95 with the stock at $17.10, off a dime, after reporting another good set of wells and making an acreage acquisition. See today’s post for more details but suffice it to say that I think market conditions and not the news here are moving the stock at the moment. The company continues to report improved completions and de risk it’s acreage systematically and I expect more catalytic news in the near future.

  31. 31
    zman Says:

    Crude up $1.37 now at $81.17; oily stocks considering waking up.

  32. 32
    Nicky Says:

    Morning all.

    Oil heading back to test the broken uptrend line. That comes in at 82 today.

    Indices – more of the same. I am expecting a sell off but most likely from higher levels. Resistance at 1153 -56, then 1158,1161.

  33. 33
    zman Says:

    Nicky – got resistance?

  34. 34
    zman Says:

    Was typing 33 before saw 32, lol.

  35. 35
    baylor3217 Says:

    why did BEXP roll over hard? Am I seeing misinformation?

    Down almost $1 from the morning highs…

  36. 36
    zman Says:

    Baylor – may be fear that they will do a deal up here to pay for their increased land position. I think that is unwarranted as per comments in the post and so I bought some for the ZIM (the after the news comes out portfolio).

  37. 37
    tomdavis12 Says:

    Z: Before I ask some more questions, let me add some info. PBR rig tenders (9) have been pushed from Mar to May. PBR wants proved rigs from Brazilian manufacters. They are pushing back because it is an election year. It is RIG’s contention that this will not be easy. A benefit for RIG, DO & NE. This has NOT been PR’ed but NE’s hurricane damage insurance deductible has gone from 10 Million to 25M.

  38. 38
    baylor3217 Says:

    I added to my FCX short position here on the pop this morning as well.

  39. 39
    tomdavis12 Says:

    Z: So back to 14. If there was a flare from DJ with no significant damage my next set of questions. 1. How does that effect the logs. 2. Were the logs done before the flare? If after does that effect new logs? 3.Is it harder to condition the well if the release came from higher sands? 4. Can they tell where the relese came from? All for now still have others

  40. 40
    dij Says:

    Max Pain # for ARD is 35, for those who are believers

  41. 41
    zman Says:

    Tom – not no significant damage, just no damage. Flares happen when the mud weight in the well is insufficient to keep subsurface fluids back in the formation. In this case they traveled up the well bore where they are purposely flared at the surface (since the well is not yet hooked up to a production line).

    1) does not affect the log, 2) log probably done after but don’t know for sure, should not matter. 3) don’t think see that that would affect it.

    Flares happen, unlikely to be a big deal. They didn’t lose the well or damage the future potential. Bigger risk is not having hydrocarbons to flare in the first place. Casing being set is positive. Should know more in days.

  42. 42
    tomdavis12 Says:

    Z: Just wanted to apologize to the site and BSJ. Did not mean to dominate site or questions. If I commit any special capital to special situations, I want to understand the bear components as well as possible. BOP does an OUTSTANDING job at showing us all the bear story. I just like to do my own homework so I can only blame myself. Must own my ideas.

  43. 43
    zman Says:

    MMR off another 5%, into top of support at $15 to $16. One would think they’d be writing a pr for tomorrow night or Thursday morning.

  44. 44
    zman Says:

    Stocks look to be on hold for Fed, OPEC, healthcare, financial reform bill etc.

  45. 45
    Nicky Says:

    Looking at some possible wave counts and trying to align them with the voodoo ie cycles.

    This COULD still be wave iv and if so we are in b of iv (up) with c of iv down still to come. If so I would expect to see the SPX back to yesterdays lows and possibly as low as 1130 to complete ivC. Then we would get v to the upside.

    The alternative is that we are already in wave v.

  46. 46
    elduque Says:

    Tom- no need to apologize for me. It is all a learning experience for me as well. What I don’t know is infinite.

    Thank you one and all for contributing.

  47. 47
    VTZ Says:

    Gold is telling us that the extended period is here to stay.

  48. 48
    dij Says:

    #43 MMR pretty clear trendline, 10.21 high, then 1.19, 2.8 and 2.23 lows. Bounced off this morning.

  49. 49
    tomdavis12 Says:

    Z: Forgot to add to 37. RIG announced new tender with Exxon in Black Sea. New contracts off Norway picking up.

  50. 50
    Nicky Says:

    Agree VTZ – The most likely outcome today at the FED will be no change in rates, and no change in the free money forever statement… The net result will be larger scale selling of Treasuries by foreigners, especially China the next week.

  51. 51
    zman Says:

    Tom – don’t be silly, no need to apologize.

    Getting on GST call right now. Gotta be a first, we’re having an earnings call to discuss the earnings we have not been able to release. Sheesh.

  52. 52
    zman Says:

    Oil up $2+, stocks starting to green but only barely. Market moving higher, oil service moving higher, not sure what gives with the E&P stocks today and yesterday. Did the White House declare hydrocarbons to be unfashionable?

  53. 53
    VTZ Says:

    And the long end of the curve rising.

  54. 54
    dij Says:

    MMR, 16 is the MP#. No buyers at this price?

  55. 55
    Nicky Says:

    Watching oil at this level as we are now close to the broken uptrend line. If its going to fail then this is likely the area. But as I noted yesterday we had a clear 3 waves down which was corrective and therefore it is quite possible that new highs are ahead.

  56. 56
    zman Says:

    Dij – I think the main problem is fear of losing big gains that many have and that recent buyers (late to the party don’t have and losses they don’t want). I think people see a bad well at Hurricane Deep (and they aren’t done there and no, it’s not at all related to the ultra deep Wilcox/Cretacious of the Blackbeard, Davy types (Davy didn’t get down to the Cretacious or Tuscaloosa but that will be seen in future ultra deep tests). Also there’s the time that’s gone by with no release. Antsy, antsy, antsy, plus you have shorts who like to live by the lie.

  57. 57
    Nicky Says:

    CNBC adding to the ramp by confirming that S & P have announced they are taking Greece off the watch list.

  58. 58
    Nicky Says:

    no volume on the move up. if we are in v up then this is iii of v. It could go something like iii of v completes at 1160, pullback for iv of v to 1156, and then v of v to 1165.

  59. 59
    zman Says:

    Nicky – current chart of the S&P has quieted all those stories regarding lower shoulder double tops.

  60. 60
    elijahwc Says:

    ATLS – WSJ says 1 bil + JV with Reliance on their MShale

  61. 61
    zman Says:

    Analyst Watch: BEXP

    Canaccord also ups target by $3 to $20.

  62. 62
    Nicky Says:

    VTZ – a guy on CNBC right now talking about China and the risks with holding rates down here.

  63. 63
    Nicky Says:

    Z – I never could see a double top playing out. It didn’t fit the wave pattern.

  64. 64
    dij Says:

    Thaks, Z, that is super clear. Looking back three years, there is actually overhead resistence in the 17’s from February -March of ’08. It may take awhile to work through.

  65. 65
    zman Says:

    Thanks Dij, good catch.

    WLL creeping up on it’s cycle high with oil rising here.

  66. 66
    BirdsofpreyRcool Says:

    TomDavis — i had to step away… but just saw your apology. Never apologize for asking questions and making statements.

    I learned some stuff about flares too. Thanks for your questions.

  67. 67
    VTZ Says:

    I agree with Santelli that they should raise the rate to 1% today and take away the punchbowl from the big banks. His argument was that it helps nobody except them.

  68. 68
    tomdavis12 Says:

    MMR option trades do not look out of whack. Some leap type activity.

  69. 69
    zman Says:

    Nicky – re 63, thanks I know, but there were an awful lot folks who did think it would happen.

  70. 70
    zman Says:

    GST – nothing really different from the press release so far in the call. The accounting stuff is minor, not operational, shouldn’t hurt them. Q&A about to start.

  71. 71
    elijahwc Says:

    ATLS – this is going to be fun as Reliance is an Indian company. Last I looked SNP and the rest of the China Oil’s are still very interest in a “going out policy” and have struck recent deals with Swiss, Canadian, Brazilian and African Cos. Tell me again, how did this play out the last they came calling?

  72. 72
    bloodystupidjohnson Says:

    RE: 60 Eli — ATLS, which I own, is like a mimi MLP fund. For example it just bought back ATN, it owns shares in AHD, which is the general partner of APL, etcc

    This company is part, for better or worst, of the Cohn family “conglomerate” — REXI (which ATLS was originally spun out from), RSO RAS, REXI, AHD, APL.

    ATLS is a C corp.

  73. 73
    bloodystupidjohnson Says:

    Does anyone follow Compton Petroleum?

  74. 74
    RMD Says:

    AREX marketing in Boston today.

  75. 75
    elijahwc Says:

    Political intrigue aside, the obvious takeaway from ATLS today, CNX’s buy of Dominion’s (D) Marcellus properties yesterday, and the XOM for XTO is that shale assets have become way too cheap on an asset basis for natural buyers, current prices be damned.

  76. 76
    zman Says:

    CMZ – some of the flotsom that’s been rising.

  77. 77
    bloodystupidjohnson Says:

    RE: 75 I have another take on this. CNX wanted to get more and more into nat gas. They talk about constantly on their conf call.

    ATLS, which just bought back the rest of ATN, is always looking for ways to lessen their capital at risk. They and all the other Cohen companies constantly are doing this.

    In the case of these two shale sales, I think they are very company specific.

  78. 78
    bloodystupidjohnson Says:

    Z: re 76 — I was just curious about CMZ. They have been paying down debt, getting their house in order and insiders have recently bought over a million shares (for about a buck fifty in cash — lol).

  79. 79
    RMD Says:

    BSJ #72: I tried to figure out the Cohen conglomerate a while ago and couldn’t figure out if they “were on my side” or not, and which one to own if they were on my side. I see Ruane and Omega own REXI so I suppose there is value there, but the conf. calls I was on did not illuminate the story (at least to me). Would appreciate your thoughts.

  80. 80
    zman Says:

    BSJ – paying down debt by bought deals and secondaries …. maybe better to be a bondholder, lol. Production declining, WCSB based, I think mostly gassy, came across awhile back, not sure what drives higher here …. deep value?

  81. 81
    zman Says:

    WLL – new high for this cycle just made. Looks like one of those flag formation breakouts about to occur. Any thoughts JB?

  82. 82
    elijahwc Says:

    #77 Coal for gas. Perhaps a policy change out of D.C.? As to ATLS having company specific reasons I defer to your better understanding of the principals involved. Do you think Reliance will want a “legislative fracking out clause” as did XOM?

  83. 83
    tomdavis12 Says:

    Anyone buying energy patch “income” ideas at today’s prices?

  84. 84
    bloodystupidjohnson Says:

    RMD: I think you hit the nail on the head with your post! They are a very “incestous” group. They do try to make a habit out making things complicated. But your point about whose side they are on is a good one. I figured they where on their side, but if I saw some value there, I would hold my nose and buy. ATLS was the easiest to value on a sum of the parts basis.

    I also figured that Ruane and Cooperman are pretty smart operators, so at least I had some company — lol.

  85. 85
    choices Says:

    China, Japan slowing their buying of Treasuries-it has only just begun.


  86. 86
    zman Says:

    TAT bouncing back up again. No news on the wires, not a lot of volumes, seems easy to push around.

  87. 87
    skimo Says:

    FYI http://finance.yahoo.com/news/Continental-Resources-Inc-prnews-3500190449.html?x=0&.v=1

  88. 88
    bloodystupidjohnson Says:

    Z: re CMZ — just turning over rocks, you never know what you might find –lol

  89. 89
    zman Says:

    BSJ – hear ya on that, I gave it another 5 minute pebble turn myself.

    Thanks skimo, wonder what’s with the mid day pr.

  90. 90
    Nicky Says:

    Choices re #85 – I agree. Compound that with a brewing trade war with China and we have a perfect storm.

  91. 91
    bloodystupidjohnson Says:

    RE: 82 — I don’t think DC coal vs gas had anything to do with it. A couple of years ago they tried to buy back the rest of CXG. Over the last 3 or 4 years, they have said that the gas business was more profitable than coal and easier to run, or at least implied this on their conf calls.

    I could be dead wrong on this, it wouldn’t be the first time, but that is just my impressions of CNX management.

  92. 92
    zman Says:

    Re CLR press release: well they took a shot at BEXP with this one:

    “These volumes were produced through permanent facilities over a 24-hour period, rather than simply flowing through test equipment and extrapolated.”

    Which I assume is there way of explaining why their wells continue to average about 1,000 BOEpd less than the BEXP wells. They should probably concentrate on operations and not rock throwing, pr did not mention if the 10 wells drilled this year that make up their 1,345 BOEpd 24 hour IP were short or long or a mix of shorts and longs. I continue to own the common in CLR but don’t see a big reason to get exciting here, will go and look and see how long these laterals are. There is good further mention of a lack of communication between m Bakken and TFS in the press release, will go do a little digging.

  93. 93
    bloodystupidjohnson Says:

    RE: 92 Z, I have written more than once that the biggest surprise with BEXP was their going from a bad operator to a great operator almost overnigh. Do you think that CLR is saying that they think something is “fishy” with some of BEXP wells?

  94. 94
    zman Says:

    Analyst Watch: BEXP

    from Raymond James this morning (they have a $23 target)

    * Revisiting our NAV. Following the company’s 10-K filing and after adjusting for certain assumptions, we are increasing our total company NAV to $30 (from $23). Some of the biggest changes include: using well costs of $6.8 million (up from $6.25 million, service costs have crept up), 650 Mboe EURs (up from 630 Mboe, bigger wells), and giving the company credit for 433 unbooked and de-risked Bakken and Three Forks locations (up from 293, downspacing from two wells per 1280-acre unit to three). Our total company NAV estimate currently gives Brigham no credit for its Ghost Rider potential (83,600 net acres), Mercer potential (32,400 net acres), or Rough Rider Three Forks potential (245 potential wells).

    * Brigham remains one of our favorite stock ideas given its significant organic growth potential and leverage to the Bakken. In addition, we are extremely bullish on the company’s ability to improve efficiencies and grow margins through technological advancement. 2010 will be another exciting year for the company which has plenty of Williston Basin exploration still available. Some large upcoming catalysts include drilling an initial Three Forks test well in the Rough Rider (1H10), an initial Bakken well on its Eastern Montana acreage (1H10), and an increased density well in the Rough Rider (2H10). We reiterate our Strong Buy rating and our 12-month price target of $23, which is a 25% discount to our new total company NAV estimate of $30 (highlighted on page 2) and is also the value of our total company NAV estimate using current strip pricing ($85/bbl vs. the Raymond James forecast of $100/bbl long-term).

  95. 95
    VTZ Says:

    RE 90: First sign of a trade war will be the first signs of a breakdown in the long bond.

  96. 96
    zman Says:

    BSJ – I think it’s sour grapes. They can make the contention about the 24 IPs but BEXP is also showing the plots of these wells in their presentations. They are making big liquids totals at the 21 and 30 day average as well.

  97. 97
    nifkin Says:

    KOG- insider selling. CATLIN JAMES E,C.O.B.,SELLS 100,000 ON 3/12/10 OF KOG

  98. 98
    zman Says:

    More analyst watch:

    * Brigham announced that it has added just over 10,000 net acres in the highly prolific northeastern portion of its Rough Rider acreage. The northeast portion is where Brigham drilled its best well yet, the State 36-1, which IPd at 3,807 Boe/d. The company now has 115,000 net acres in the Rough Rider area and this bolt-on acquisition adds 23 low-risk Bakken drilling locations and 23 potential Three Forks locations. Since Brigham continues to actively lease in the area, the company did not disclose lease terms. For reference though, acreage has been sold most recently for less than $2,000 per acre.

    Their $2K is in line with my thinking as per the post.

  99. 99
    zman Says:

    re 97, leaving him with 1.533 mm shares.

  100. 100
    bloodystupidjohnson Says:

    RE: 93 — of course it just be “sour grapes” on CLR part. Note I am NOT big fan of Hamm.

  101. 101
    BirdsofpreyRcool Says:

    re: BEXP IP rates… other operators have hinted that they believe BEXP is being somewhat disingenous with their reported rates. However, no one I’ve ever talked to will say more than just “IP tests are not always an apple-to-apple comparison.” Meanwhile, BEXP made it’s holders a lot of money, while I watched from the sidelines.

  102. 102
    DrLink Says:

    RE: 86 TAT perhaps because of ……..TransAtlantic Petroleum Ltd. (TSX:TNP – News) (AMEX:TAT – News) announced today that it has scheduled a conference call for Wednesday, March 17, 2010, at 8:30 a.m. Eastern, 7:30 a.m. Central. The purpose of the conference call is to discuss results for the Company’s fiscal year ended December 31, 2009. The call will be open to the public. Instructions to access the call are located at the end of this announcement.

  103. 103
    bloodystupidjohnson Says:

    My beef with Hamm is I thought, last year, he “stole” Hiland Partners from the public holders. Hamm was the largest holder and during the bad times during the spring lowballed an offer for the rest of HLND. HLND was an mlp.

  104. 104
    zman Says:

    Thanks DRL, need to go look but think they are talking at the end of the month as well.

  105. 105
    zman Says:

    Street looking for a 35 Bcf withdrawal on Thursday. Yesterday I wrote that the weather last week “should yield a fairly small withdrawal this Thursday, probably in the 20 to 50 Bcf range.” Maybe leaning away from 20 and a little higher now that I’ve seen the wimpy looking imports.

  106. 106
    zman Says:

    See the original TAT piece here:


  107. 107
    BirdsofpreyRcool Says:

    Rumors are just that…. rumors (unconfirmable). However, file this one under “It Will Happen, Sooner or Later.”

    Hearing RUMOR that MMR close to announcing a deep-pocket partner in the Ultra-Deep Play. Maybe the Hurricane Deep disappointment has upped the schedule on that. Would have liked to see MMR hold out until they had a flow test at Davy. But, 1) maybe they can’t wait that long… or 2) maybe they got an offer they can’t refuse.

    Either way, this would be positive for MMR and REALLY positive for the partners (including EXXI EXXI EXXI).

  108. 108
    1520sbroad Says:

    BSJ – Cohen conglomerate – I’ve followed the Cohens for about 10 years. Keep an eye on RAS – the guy running it now is sharp. Scott Schaeffer is his name – he has been there a long time. I own the RAS preferreds. The guy running APL has done a good job too.

  109. 109
    zman Says:

    CLR flat on their Bakken press release which was a pretty ok press release.

    P/2010 CF: 10x

    BEXP flat on what I would call a strong press release.

    P/2010 CF: 18x (granted they are growing production rapidly compared to the others)

    WLL – no news but accelerating drilling in new areas, occasional release of some very big IP wells in different areas. Stock making new highs for this cycle.

    P/2010 CF: 4.8x

  110. 110
    1520sbroad Says:

    It is worth noting that the entire Cohen conglomerate got hammered due to over leverage.

  111. 111
    bloodystupidjohnson Says:

    RE: 108 I have always favored RSO over RAS, but you might be right that have finally got things turned around at RAS.

    APL was one of the those gas gather/processors that really benefited from the frac spread (high liquid – low nat gas). AHD is a general partner of APL. Funny, last year, some of the analysts thought APL was on the street to bankrupucy. Nice call guys.

  112. 112
    zman Says:

    107 – thanks, let me know them when you hear them.

    WLL looking more and more like a clear cut breakout. Volume somewhat perky for this time of day.

  113. 113
    bloodystupidjohnson Says:

    RE: 110, yeah, they had to merger AFN into an entity now called Cohen and company (COHN).

    I always think when a Cohen child becomes of age or a new person marriages into the family, they just start up a company for them to run — lol lol lol

  114. 114
    1520sbroad Says:

    #111 – i think APL was well on their way to bankruptcy until they sold off a bunch of assets. They had the quadruple whammy – big debt load, pricing worked against them and blew up their hedges, they had a complicated ownership scheme and every big holder of MLPs was dumping units to raise cash, they canned the distribution. They violated just about every covenant they had with lenders at one point. analyst wise – Tysseland at Citi has been on top of them for the most part

  115. 115
    1520sbroad Says:

    #113 – bingo – there are a lot of Cohens out there…

  116. 116
    zman Says:

    Waiting on the Fed news, market drifting sideways.

    This guy saying technical market backdrop is constructive.


  117. 117
    choices Says:

    Some light weight “analysis” for a somewhat slow day


  118. 118
    zman Says:

    Choices – saw that last night, could not tell if he is joking or if he has lost his marbles.

  119. 119
    BirdsofpreyRcool Says:

    z — could you post the offshore lease sale link again? can’t recall the day (and i’m challenged to get the “search” thingy to work well for me)

  120. 120
    zman Says:

    Here ya go:

    North Dakota Lease Sale Brief:

    You can query the results the results here by county:


    A quick breakdown of high bids:

    * Billing County: little activity, primarily Slawson and (ME)
    * Burke – a little better, not pricey
    * Golden Valley – ditto
    * McKensie County – Pricey – ranged from $700 to $4,000 per acre, avg. probably close to $3000 per acre
    * Mountrail – Pricey – $4,000 to $7,000 in the core
    * Williams – 500 to $4,500, notables present CLR, Slawson

  121. 121
    BirdsofpreyRcool Says:

    sorry… meant the GoM version… thx

  122. 122
    BirdsofpreyRcool Says:

    wooo-hooo! I got Bakken info (and summary) for free, tho. THANKS!!

  123. 123
    zman Says:

    It’s been point out to me that BEXP should be pretty happy with one of the CLR wells, the Obert 1-13H, a Three Forks Sanish well located on the northwest edge of Rough Rider. CLR’s well IP’d at 896 BOEpd … from the Three Forks. One of the big catalysts that can unlock value for BEXP is proving that the Three Forks works over in Rough Rider, as they have done in Ross. BEXP’s first TFS well should spud very soon and will be highly watched. Having this offset acreage well come in should be deemed pretty positive here but so far, due to the type of market day we are having, no joy. I will add more in the ZIM soon as again, this is a case of inefficient markets.

  124. 124
    zman Says:

    BOP – Take 2:


    I put a map in yesterday’s post which should tell you which SMI blocks to listen for on the broadcast tomorrow. They used to play these on the radio, not sure if they still do.

  125. 125
    zman Says:

    Re 123. Will await Fed comments in the next few minutes before pulling trigger.

  126. 126
    BirdsofpreyRcool Says:

    ha!! i remember listening to them on the radio in Houston. bet they still broadcast them there. wow. Brings back memories….

  127. 127
    zman Says:

    Me too but in Austin. Bids a lot smaller these days.

  128. 128
    BirdsofpreyRcool Says:

    The DEflation argument wins.

  129. 129
    BirdsofpreyRcool Says:

    #127 — so were nat gas prices…

  130. 130
    zman Says:


    BEXP – Added another (10) BEXP April $17.50 calls for $0.95 with the stock flat. Additional news from CLR should be helping derisking future drilling targeting the Three Forks Sanish in the company’s Rough Rider area. See comment #123 in post for further details.

  131. 131
    zman Says:

    re 129 – I was thinking early 2000s, late 90s. People were busy bidding on deep (not ultradeep ) Shelf, and in the deepwater.

  132. 132
    john11 Says:

    Re 124 when do they actually announce results of those lease sales for GOM. TIA.

  133. 133
    jiveyjr Says:

    those orange charts are really a good piece of information….

  134. 134
    zman Says:

    Jivey – I think they are a decent starting point for quick reference, glad you like them. I probably ought to go ahead and add cash margins at the bottom to go along with the cash cost structures.

  135. 135
    zman Says:

    re 132:

    They put out the preliminary sale stats the day before, almost always I think.

    They read the bids out loud tomorrow.

    Then they will have blocks receiving bids out later tomorrow and then final sale stats will take a couple of months.

  136. 136
    zman Says:

    Many of the operators participating the lease sale will put out a short pr the day after the lease sale.

  137. 137
    john11 Says:

    Thx Z, I’m glad I asked, that’s good info!

  138. 138
    benbobby Says:

    Z,Why is DVN getting gored?Are you anticipating rolling the Apr75 calls down? tks

  139. 139
    zman Says:

    BB – My best guess is the Street does not like the go forward plan there. I will punt the position as soon as we get an all up day in the group. I had thought the better than expected sale price of the assets would move the name higher … I was wrong.

  140. 140
    skimo Says:

    139 don’t worry you are not alone!

  141. 141
    Nicky Says:

    possible v waves up complete from yesterday’s low at 1141. We would need to take out 1145 for confirmation.

  142. 142
    Nicky Says:

    If the SPY can manage another up day today it would be 13 in a row which I believe is a record. Cycles tomorrow look volatile which of course is fairly typical of a Wednesday. So tomorrow we may see our reversal. Thursday looks down.

  143. 143
    zman Says:

    I have stumped the state of Louisiana.

    Anyone know what a CBU on a Scout ticket?

  144. 144
    zman Says:

    Nicky – Monday was down 0.25.

  145. 145
    benbobby Says:

    Z, as was I…. not to worry made some money on them in the past when they were subject to takeover rumors after the XTO buyout

  146. 146
    Nicky Says:

    SPX was down but not the SPY

  147. 147
    RobBanks Says:

    Z and everyone – sorry for this off the wall question. BEXP, EXXI, and KOG are all up 600% to 1500% over the last 12 months.

    I know this kind of thing isn’t really the focus of ZEB, but are there any prospective 5 to 10 baggers out there? I realize that any potential 10 bagger comes with lots of risk.

  148. 148
    zman Says:

    Back in a few …

  149. 149
    Gmlgdc Says:

    zman #143 CBU, Circulate bottoms up”

  150. 150
    BirdsofpreyRcool Says:

    Gmlgdc — wow. Can you use that in a full sentence? Assuming that is an obervation from a field scout, reporting on an actively drilling well. But, could you ‘splain that a bit more? interesting stuff.

  151. 151
    Jerome Blank Says:

    #81 WLL…does look good, breaking above the ascending triangle which we detected on 3/13…CPE is just amazing, finally stalling here at daily double top resistance…

  152. 152
    Gmlgdc Says:

    ususally if you have a drilling break you stop and circulate bottoms up, so if there’s gas in the system (bubble) you circulate out thus keeping your mud in good shape. If your mud get’s too light it can create all kinds of problems at the surface. Also, when you reach total depth you make a wiper trip then go back to bottom and circulate bottoms up.

  153. 153
    BirdsofpreyRcool Says:

    Gmlgdc — thank you. So, basically, circulating the mud in the hole from the bottom up (to clear out the entire column) for any variety of reasons.

    Can you take on the question of the 2.5 hr flare at Davy Jones? How does that happen, how do they stop it (or does it just peter out itself), and what can it damage? Is it caused by not using a heavy enuf mud weight?

  154. 154
    Jerome Blank Says:

    KOG…nice consolidation triangle forming on the 30 min KOG chart with easy to manage points…


  155. 155
    BirdsofpreyRcool Says:

    RobBanks — if I come across one, I will certainly share.

    But the ones you cited didn’t look like 5-10baggers at the time. But they looked pretty darn cheap. At the time, people were scared (and rightly so). People are nervous now… but they aren’t scared. So, that kind of return may have come and gone for this cycle.

    It’s kinda like showing up to a party 3 hrs after it began and wondering if there are any more crab legs. The early birds to the party grab the good hors d’oeuvres. You might find a tasty one, but it will be under a pillow on the sofa somewhere. The stuff on a silver platter has been gobbled up already.

  156. 156
    Gmlgdc Says:

    BOP#153, you flare a well basically 3 ways. One way is what’s called a DST (Drill stem test) It’s when you go in the hole with two packers set at different depths, set one above and set one below your zone of interest and you simply flow the wellthrough a sleeve between the packers up the drill pipe through a manifold to atmosphere. The second way is to perforate the casing and flow the well up tubing or casing – my guess would be tubing and third would be an uncontrollable flow at surface (Blowout). I don’t think anyone DST’s offshore.

  157. 157
    zman Says:

    Thanks much JB.

    GMLGDC – there is space for you on the bios tab. Thanks.

    BB Hill drilled to 22,830′ (slightly below planned TD so either they were still in pay, were looking for more pay, or hadn’t found it yet (which seems unlikely as this well was targeted to come in high to the prior well).


  158. 158
    BirdsofpreyRcool Says:

    The DJ flare event was definitely of the “unplanned” variety. They didn’t call it a blowout. But that’s what it sounded like to me.

    Would assume they don’t DST offshore due to the high pressures? Would the second way you describe be a “production test”? Thanks for playing along. This helps!

  159. 159
    zman Says:

    Just for those who don’t ponder MMR stuff all the time, this Blueberry hill well is an offset appraisal well. They already have a discovery here. This test will help determine how big that discovery is and also test some deeper potential pay.

  160. 160
    bill Says:

    On Ard

    I got my hands on a research piece. The analyst has a 40 target at 70 oil.

    Well oil is 80 +, and his proforma value at 80 oil is 50 per share

    They stated “By our estimation, the stock
    is now trading at our proved reserve value plus cash under a flat
    perpetual case benchmark price deck of $70/BBL for oil and
    $5.00/MCF for gas. This implies current accumulation of shares
    secures free upside from a sizeable inventory of San Andres
    formation infill drilling locations at Fuhrman Mascho (FM), the
    firm’s main field of operation.”

  161. 161
    Gmlgdc Says:

    you know I saw the same pictures of the flare that you did. How big was it? Hard to tell, it could have been a flare associated with circulating gas out of the system which varies with depths.

    I think they now prefer taking FT’s due to the huge expense and risk of having mechanical issues at these great depths.

  162. 162
    zman Says:

    Gmlgdc – normally one of my no-no’s for a company is flare’s in the presentation. With these guy’s I understand. With IOC I very much understand as that was a monster. But normally, I don’t want to see that kind of hype in living color.

  163. 163
    BirdsofpreyRcool Says:

    Gmlgdc — you’ve got a handle that just rolls off the tongue, eh?

    If they want to flow test Davy, they won’t be able to do that until a 20k psi wellhead magically appears as the well site, do i have that right?

  164. 164
    zman Says:

    Actually, BB Hill drilled a 1,000 feet below PTD. Guess they were after that deeper objective mentioned before. I don’t think they had hit the intervals in the previous three wells as of their last update but they should have cut three sands more onstructure if their cartoon is right by now.

  165. 165
    zman Says:

    Energy stocks look largely stuck in place, waiting on OPEC to not ruin the party.

  166. 166
    jy Says:

    Re: #124 The MMS Central Lease sale bid opening will be webcast by the Offshore Oil Scouts Assoc. on their website http://www.oosa.com/

    Got to the “Lease Sale” tab, and there will be links to the webcast. Starts @09:00 CDT Wed March 17.

  167. 167
    Gmlgdc Says:

    zman, I’ve seen a flare that was calculated at 300 million a day. Burned the rig down in 6 hours and made about 3 BCF in 10 days. I imagine DJ with resterves of 100 to 200+ BCF was quite impressive.

  168. 168
    BirdsofpreyRcool Says:

    Rob — hope I didn’t sound dismissive. Didn’t mean to at all. I LOVE crab legs. Will keep looking behind pillows and under seat cushions ’til we find some more.

  169. 169
    zman Says:

    jy – thanks, hadn’t hunted that up yet.

    We have the TAT call at 7:30 CDT so full morning given how usually dull this time of the year is.

    Rob – re 147. I tend to think of 2 and 3 baggers as targets for the ZLT holdings, but it takes time.

    NFX popping up again after an unjust drubbing yesterday.

    S&P at 1,160+ ….where’s Prechtor now? What, no new book to sell?

  170. 170
    jy Says:

    Preliminary Sale 213 statistics released by MMS today:
    642 total bids on 468 blocks (there are a lot of single bids!)
    151 bids on blocks in 2000 m water depths.
    Details at MMS website.

  171. 171
    Jerome Blank Says:

    Why do people love CPE so much? New high on above avg vol…

  172. 172
    bill Says:

    Ok, time for me to ask a dumb question:

    >targeted to come in high to the prior well).

    if they target to come in high, doesnt that mean they could be “short” of the pay?

  173. 173
    zman Says:

    Bill – think of an underground mountain with layers of sands laid like blankets over it. The first well drilled and reached one of these sands, halfway down the side of the mountain. This new well is targeting the peak of the mountain so, it runs into the the same pay internval (sand) at a shallower depth.

  174. 174
    RobBanks Says:

    BOP – not at all, was just off talking to my son, I was not sitting here in stunned silence!

    Yes, fully understand that 12 months ago may very well have been a once in decades opportunity.

    I was just wondering if anyone’s got some gambling money in some little risky outfit, perhaps the kind that has a large land position and where a good well or two would really propel it upward.

  175. 175
    zman Says:

    Re 174

    “I was just wondering if anyone’s got some gambling money in some little risky outfit, perhaps the kind that has a large land position and where a good well or two would really propel it upward.”

    For me that is KOG. I think AEZ is KOG maybe 18 months ago. Current reserve valuations not withstanding I think they both can go higher. Easy money pretty much made.

    Also for me that is TAT. See that link above for growth of production they are targeting in Turkey. If they are successful with a test in Kurdistan, you are probably talking a very rapid double as one of those wells can do 15x+ (gross) what the company currently produces.

    I’ll think of some more …

  176. 176
    BirdsofpreyRcool Says:

    Rob — z’s recent TAT pick is worth looking at. I’m not in that one. But they claim they will increase production this year from 4mboe/d (if i recall correctly) to 10mboe/d. Comes with some sovereign risk, but funding is not an issue.

  177. 177
    BirdsofpreyRcool Says:

    yikes… posted 176 b/f seeing 175 up. oops.

  178. 178
    RobBanks Says:

    re 174 – not trying to get rich quick, I just like to have a few 1/2% positions that turn into 1 or 2 % positions on their own.

    Thanks for the responses.

  179. 179
    RobBanks Says:

    re 176

    BOP – thanks. I took a tiny TAT position in an IRA that was sitting in cash.

    I’m sure Mr. Market is thinking a surprise CC tomorrow AM can only be good news.

  180. 180
    BirdsofpreyRcool Says:

    Rob — nothing wrong with getting rich quickly. Just tough to do…

  181. 181
    VTZ Says:

    RobBanks – More Utica good well results could go a long way for QEC on the TSX. Keep in mind the last result was their first horizontal.

  182. 182
    RobBanks Says:

    BOP- Oh, I’m the patient type. I’ve held PAA for 11 years – a compounded 20% annual return has made it easy, tho.

  183. 183
    BirdsofpreyRcool Says:

    Rob — i echo z’s comment about KOG. Also, if they do buy Peak and, for some reason, the stock falls on that, I would redouble my efforts there. It’s such a straightfoward story. And almost 100% oily. Sleep-at-night kind of position.

  184. 184
    RobBanks Says:

    VTZ – thanks, will have a look. You might take a peek at Arcan Resources if interested – massive land position and I think one 600bod well.

    Also a “let’s see how horizontals work here” type of play.

    I’ll confess I have to look at Arcan more closely – it’s getting some pixels on IV.

  185. 185
    RobBanks Says:

    BOP, Z – thanks for KOG. Oily and debt free is a great combination.

  186. 186
    zman Says:

    API showing bigger than expected draw down on gasoline, draw on distillates, only small build on crude.

    Rob – AEZ, NOG – same re debt (actually cash) and oily. AEZ of course still early but big land position.

  187. 187
    milepost_43 Says:

    #154 thanks…….voted

  188. 188
    bill Says:

    Floods coming..Climate change to blame, says NOAA duh spring is here, lol

    We are looking at potentially historic flooding in some parts of the country this spring,” Jane Lubchenco, administrator for the National Oceanic and Atmospheric Administration, said in the conference call.

    Climate change is also being blamed for a long-term trend toward severe flooding, according to an Interagency Climate Change Task Force report issued today.

  189. 189
    BirdsofpreyRcool Says:

    Yeah… the North American Wooly Mammoths were really bummed about “climate change” too. Turns out, Climate Changes!!


  190. 190
    Jerome Blank Says:

    Good evening…a few updated chart perspectives and comments…

    #187 milepost…thank you…

    BEXP daily
    DVN 30 min
    EXXI daily
    MMR daily
    NOG daily
    PXP daily


  191. 191
    BirdsofpreyRcool Says:

    TomDavis — pointing out that MMR is asking shareholders to vote to authorize 150mm of common and 50mm of preferred shares in their proxy. He doesn’t think that is why MMR sold off (nor do I)… but after reading thru the K, here’s what I think…

    i think people sold b/c of the lowered production guidance + uncertainty about 2 high impact and 1 important delineation well. Also, the costs associated with bringing operations back up from 2008 hurricane season. They aren’t done spending on that and while most (all?) is covered by insurance, there is a lag to recieve the money.

    Add all that stuff together against a capital budget of $260mm (vs. last year of $138) and expected EBTDAX of $239mm and you see they might be stretched kinda thin, capital-wise. If DJ comes in like we are hoping it will, that will give them reserves to borrow against. But, cash-money is going to have to come from somewhere. Debt, equity, selling down their ownership in the ultra-deeps. But somewhere.

    Authorizing the shares isn’t the same as issuing the shares. But MMR is staging itself for huge huge growth. That is going to suck up capital, but should deliver on accretive earnings. They are going to need several degrees of liquity in order to meet the needs for that growth. That financial uncertainty + operational uncertainty + some negative rumors and headlines hitting during a slow trading period = sell off in MMR shares.

    I bought some trading shares today. But will be quick to pull the trigger, one way or the other, on any significant move.

  192. 192
    RobBanks Says:

    Jerome – thx, voted

    BOP – superb analysis

  193. 193
    BirdsofpreyRcool Says:

    One other thought on MMR… on top of needing additional capital on a declining producion base this year, MMR is 75% nat gas production. (vs EXXI, which is 70% oil). So you have the additional insult to cash flow injury of natty gas prices not keeping pace with crude prices. Heck, most days it seems, they are headed in oposite directions.

    All this said, if DJ comes in and proves up the ultra-deep prospects, MMR will march inexorably up and to the right over time.

    And thank you, Rob. You are too kind.

  194. 194
    Jerome Blank Says:

    RE: #192 Rob, thank you…

  195. 195
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  196. 196
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  197. 197
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  198. 198
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