Thursday – Natural Gas Preview and Oil Review

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Market Sentiment Watch: Tired. The rally has taken on a thin look and energy's participation has become spotty. Last night a Reuters story came out confirming that a land grab is on in the Bakken and other oil shale plays and naming potential targets AEZ, BEXP, and KOG. That's nice of them of to notice. OPEC did what was expected of them which is to have a cup of tea, say "everything's fine with prices and demand is rising and we probably won't make any adjustments this year". Looking at the oil inventory data here (see below) it's hard to disagree with them that current quota violations amongst nearly all of the OPEC nations are not leading to a supply bloat, at least in the U.S. They even delayed their September meeting until October out of lack of concern. My sense is that pinning action began last week or much of the group as thoughts of March Madness and Spring Break take center stage.  I took some profits yesterday and will be going into next week fairly lightly exposed as options go as 1) again, this rally looks about spent for the moment and 2) I'll be largely out of pocket on a beach and while it has wi-fi sand, water, and laptops don't mix although I do plan on taking the look at some Howard Weil presentations as time permits.  

Ecodata Watch:

  • Jobless claims fell 5K to 457K vs 455K forecast
  • Core CPI up 0.1% as expected
  • We get Leading Indicators (forecast 0.1%) and Philly Fed for March (forecast 17.8) at 10 am EST


In Today’s Post:

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


Holdings Watch:

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

  • $13,200
  • 63% Cash
  • Positions for the quick view are updated on the ZCAT, ZIM, ZLT page.
  • Yesterday’s Trades:
    • WLL – Sold the (20) March $80 calls for $1.30, up 35%.
    • HAL – Sold the (30) HAL March $32 calls for $0.87, up 3%.
    • BEXP – Added (10) APRIL $17.50 calls for $0.85.
    • WILDZTRADE - Very high risk - Added (60) BEXP MARCH $17.50 calls for $0.15 with the stock at $17.08.

ZIM (Zman Inefficient Markets portfolio)

  • $10,000
  • 80% Cash
  • Yesterday’s Trades:
    • None

ZLT (Zman Long Term portfolio)

  • Added WHX for $18.75 with a 13.6% yield at present. Easy enough to model and I had a need for yield. This is the first of two or three purchases here as I average in over the next couple of months.


Commodity Watch:

Crude oil rallied $1.23 to close at $82.93 yesterday, after the EIA released another positive set of inventory and demand numbers (see below). The April contract expires Friday so expect some increased volatility. The May contract closed at $83.21 yesterday and the 12 month strip is in slight contango, currently trading at $84.25. This morning crude is trading off $0.40.

Natural gas slipped 4 cents to close at $4.30 yesterday. I don't have a high degree of a confidence in the numbers given the squishyness of the season. This morning gas is trading off five cents.

Natural Gas Preview

  • My number: 30 to 50 Bcf Withdrawal. It's likely that we get a slightly bigger withdrawal with next week's report. 
    • Last Week: 111 Bcf Withdrawal
    • Last Year: 42 Bcf Withdrawal
    • 5 Year Average: 53 Bcf Withdrawal
    • 10 year Hi: 149 Bcf Withdrawal
    • 10 year Low: 14 Bcf Withdrawal
  • Street Consensus: 31 Bcf Withdrawal

EIA Oil Inventory Review

Crude:  Refinery demand is still low, down 240,000 bopd to this time last year and over 500,000 bopd to the five year average. However, crude imports are staying low to offset this lack of demand. While stocks grew, they did so at a slower pace than expected and we continue to see the YoY deficit expand and the surplus to the 5 year average contract.



Gasoline: Demand hanging in there and stocks showing improvement. Gasoline demand will be a key determinant of crude strength or weakness from here on out this year.





Stuff We Care About Today

CXPO Quick Look ~ they released results yesterday after the open and the stock ended the day down 4.5% at $3.37. Their conference call is tomorrow which is a bit of an oddball thing to do so demerits for management are in order for that one as well. I plan to get serious about the story below $3 and have been saying this since the share offering at $5.

The 4Q09 Numbers:

  • Production 34.8 MMcfepd  (71% natural gas) vs guidance of 37 to 40 MMcfepd:

    • 38.2 MMcfepd in 3Q09
    • 42.8 MMcfepd in 2Q09
    • 47.9 MMcfepd in 1Q09
  • Revenue of $26.2 mm vs $25 mm expected
  • Costs were slightly higher on a per unit basis but not egregiously so.
  • CFPS not given in their press release but EBITDA was in line.

Guidance: None given.

Other Operational Highlights: None given.


  • The Street has 2010 CFPS at $1.14 so on that basis the name is extremely cheap at ---x this year's cash flow.
  • TEV / Reserves = $ 2.35 / Mcfe, again, not hugely expensive.

Nutshell: Maybe there is another operational press release that comes out tomorrow -----that provides guidance as to when a newly invigorated 2010 drilling program will arrest the sliding production here. We know that they have a couple of tests in the Eagle Ford and else where that could prove catalytic to the stock and that management here are in fact not rookies and have proven track records. Maybe tomorrow's call will be more telling.  See the original write up from mid January here.

Conference Call: Friday, 10:30 am EST


Odds & Ends

Analyst Watch:

  • Lazard moves price targets and ratings around on many E&Ps (oily going up, gassy going down)
    • APC, COG, CHK cut to Hold
    • WLL price target upped $4 to $94, CXO target upped $6 to $60 and XEC upped $6 to $74
    • HK from $35 to $27 (but stays Buy) and

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 but will only be keeping half an eyeball on the market. 

150 Responses to “Thursday – Natural Gas Preview and Oil Review”

  1. 1
    zman Says:

    FST on the tape with a new play for them, the Canadian Deep Basin Nikanassin Play, first 10 wells average IP of 14 MMcfgpd (ranges from 6 to 32 MMcfgpd).

    Also 3 Granite Wash wells average IP of 24 MM/d

    and a 20 MM/d Haynesville well.

    Stock probably moves on this. Analyst meeting today at 1 pm EST

  2. 2
    bill Says:

    ng producers need to cut production and cut it now

    I dont know why they want to sell sub 4 ng

    if they all cut back 10 % they would be selling 90 % of normal production at 5.

    chk and others need to take the lead.

    Chk needs to hold leases and satisfy partners so damn the torpedos full speed aheaad

    Sd has no problem cutting back and just selling what they have hedged but was punished for lack of production growth.

    swn is rewarded with high multiples for production growth but selling at 4 hardly helps the bottom line

  3. 3
    john11 Says:

    18-Mar-10 09:11 ET

    Energy XXI initiated with a Mkt Outperform at Rodman & Renshaw; tgt $25 (19.70)

    Rodman & Renshaw initiates EXXI with a Mkt Outperform and price target of $25. The firm notes that EXXI is a small-cap E&P company operating primarily on the GOM Shelf. While the stock has had a nice run as of late, the firm notes that it is still trading at only a slight premium to their proved-only NAV. As such, the firm feels that at current levels the stock is essentially offering a cheap option on the company’s upside potential, including its recent discovery at Davy Jones as well as its high-impact exploration portfolio in the ultra-deep Shelf. The firm adds that while their target price gives some credit for Davy Jones on a risked basis, it does not currently include any value for the remainder of the company’s ultra-deep exploration portfolio, so future drilling success in the trend has the potential to drive their target materially higher.

  4. 4
    BirdsofpreyRcool Says:

    john11 — thanks for posting.

  5. 5
    BirdsofpreyRcool Says:

    TechTrader plans to spend the day locked in serious bellybutton gazing… he is 50/50 for the day. So going to let the affects of GREEN BEER gently waft away today, as he sits on the sidelines.

    HeadTrader says he would “buy the dips.” He isn’t actually seeing many people DO that. But, that’s what he would do, if he actually did anything.

    The Duldrums are more exciting.

    But we have morphed from a “buy the Beta” market to a “look for Alpha” market… good old fashioned stock picking. That is where visits to this site and some good old fashioned due diligence will pay off. Picking through the rocks and rubble, looking for that diamond in the rough.

  6. 6
    bill Says:

    interesting article


    suggest that chk wants to get oiler,

    (like sd did)

  7. 7
    BirdsofpreyRcool Says:

    hmmmmmmmmmmm…. oily…..

    that would be KOG and EXXI. 😉

  8. 8
    zman Says:

    Thanks BOP

    Bill – that’s the article I was talking about in the top of the post that mentions AEZ, BEXP, KOG as potential takeouts.

  9. 9
    zman Says:

    … and which is driving KOG and AEZ on up today.

  10. 10
    zman Says:

    TPH saying the big fear on HK is that they are a buyer of assets, not a seller, mentions the private transaction that’s out there for sale (Common Resources) that Floyd specifically said “we are not buying” the other day. Pretty thick headed thinking here as Floyd all but promised to not visit the equity markets in 2010 AND 2011. And he’s selling his asset packages off for good prices at a faster than expected pace. And he’s highly hedged. Thick headed fund managers and analysts.

  11. 11
    BirdsofpreyRcool Says:

    so, they aren’t going to IPO Common?

  12. 12
    zman Says:

    How much do people not care about big gas discoveries? FST flat after all that listed in 1. The stock has had a very small move up from it’s second announcement of success in the Granite Wash.

  13. 13
    zman Says:

    BOP – I’m hearing it’ll go to a mid cap E&P. Assets in Eagle Ford and Haynesville so it makes sense people were worried it would be HK but could be lots of people take them. HK said it will not be them.

  14. 14
    BirdsofpreyRcool Says:

    Kinda surprised. Mngmt team there has all worked at public companies before. Lots of followers. I think the Head of Exploration is just about the best “oil finder” there is.

  15. 15
    zman Says:

    BOP – just rumors, probably because nothing is on file with the SEC.

  16. 16
    zman Says:

    BOP – this one’s for you: Sunday Vote:


  17. 17
    BirdsofpreyRcool Says:

    z — i am praying for a miracle.

  18. 18
    zman Says:

    KOG at $3.20. Bakkens mostly green although all with less enthusiasm today than the KOG.

  19. 19
    Nicky Says:

    Morning all. CNBC ramping every bit of info they possibly can. Interesting that every trader they have on is less than enthusiastic about the rally. That of course, is proving to be very bullish, but the volume isn’t there and when they take this down it is going to be huge.

    It looks like it needs one more high. The magic 10800 maybe for the Dow. SPX not confirming this move up. Then I think iv down starts but there is still another wave up after that which I think will take us into the early April fib date turn.

  20. 20
    zman Says:

    Leading indicators in line at 0.1%.

    Philly Fed at 18.9, better than expected.

    Market flattish post numbers.

  21. 21
    zman Says:

    Nicky – resistance levels same as yesterday for this most unbelieved and despised of rallies?

    Saw one of those traders call this rally dumb earlier today. Another said he’d been out for awhile. Lot of folks in the “I missed it” camp.

  22. 22
    Nicky Says:

    Will be interesting to see if they start to sell the market on all this ‘good’ news.

    Z – my view is that we are going to start ‘working’ on a top. Not everything is in place yet with the indicators so it is likely to take a couple of weeks. During that time we will see wave iv down. This I think will go no lower than 1127 (where we have a gap) but maybe only to 1136. Will take most of next week. Then we will see wave v higher into the first week or so of April. Target area for that depends on where this one tops and how deep the pullback is but my thoughts are likely to be the 1228 area. Then we are going to see a bigger pullback imo.

    Does anyone know where they would most likely peg this for options expiry tomorrow. I had heard that 1060 was maximum pain (yes 1060) which unless we get a terrorist attack is not remotely possible. But someone earlier said 1150 and 1175 – wondering about that latter number.

  23. 23
    elijahwc Says:

    FYI: DBLE, I ran across this in my mornig reading.

    Niobrara formation is Rockies leasing target —

    EOG and CHK have set off a land rush in the Rockies for the oily Niobrara formation in case it could become something akin to the Bakken. It underlies the coal bed methane in WY-CO, giving some hope to the out of favor gas producers who have been helped but not saved by the Rex Pipeline eastward. DBLE is a case in point with interests in two of the lowest cost gas plays in the country, the Pinedale and the Atlantic Rim in Wyoming where their finding and development costs are $1.00-1.50/Mcf, yet they languish at $4.31 presently, two times estimated 2010 cash flow. The Niobrara underlies the Atlantic Rim, according to DBLE on their recent call.

  24. 24
    Nicky Says:

    If 1163 gets taken out with some force wave iv may be underway.

  25. 25
    jiveyjr Says:

    re: 23…Atlantic Rim is one or WRES big low cost gas fields too…could they be sitting on something that could change the game for them?….doubt it and don’t own it at the moment

  26. 26
    jiveyjr Says:

    page 7 of the WRES 10-K mentions 72,500 net acres and says their interest in the Catalina unit is operated by Double Eagle….hmmmm

  27. 27
    zman Says:

    Eli – thanks, never really followed those little guys. I think Lew has a list of Niobrara plays, I have been looking at PETD a little.

  28. 28
    bill Says:

    11 ughhh

    ng heading for the 3’s

    avoid all ng stocks

  29. 29
    zman Says:

    Gas storage: -11 Bcf. Short but this is the shoulder season. Next week’s number should be a bigger withdrawal at this point.

    Natural gas off 18 cents.

  30. 30
    zman Says:

    Gas in storage now at 1,615 Bcf

    Down 2.4% from year ago levels

    Up 4.7% on the five year average

  31. 31
    bill Says:

    im baffled why these guys sell at these prices. Id sit on it

  32. 32
    Nicky Says:

    Next level after 1163 is 1156. If we stall there then this may still be a simple ABC correction off yesterdays high.

  33. 33
    zman Says:

    Bill – They need the cash flow. Through about mid 2011 to secure leases. I don’t expect the gas rig count to go much higher than current levels in the second half of this year. Conventional drilling will again decline at these prices. In 2011, I expect the shale players to throttle back en mass as their leases become HBP. There are conventional curtailments in place now in several regions and some shales are curtailed as well again. But the alternative is to walk away from billions of dollars of leases taken in the gas shale rush of 2008. The longer view would be to muddle through, drill a well on a section to hold it, and then come back and development drill/downspace in 3 or 4 years when prices are higher.

  34. 34
    skimo Says:

    Kog showing a little stren44gth perhaps due to :

  35. 35
    zman Says:

    CHK tried being a hero one last time in late 2008 and everyone else failed to really follow them. So they didn’t bother in 2009 and can’t in 2010 (not if they want to get Held) so I think their mode now is to keep their head down, get leased and back off in 2011 once their obligations are largely fulfilled. On SWN, who is 15% hedged and largely held, am not sure why the drive to drill as much as they are at these prices but they have stated they may ratchet things back if prices are too low. They bet wrong with their light hedge position this year in my book.

  36. 36
    skimo Says:


  37. 37
    Nicky Says:

    re #32 – if the 1156 level were to hold then we could be looking at a move up to the high 1170’s before rolling over likely middle of next week.
    I am basically trying to work out whether iii is yet complete and as its been such a slow grind its very difficult to see internal waves. Its possible that we are still in iii and working on iv and then v of iii before a deeper wave IV retracement to be followed by V up.
    Sorry to be so confusing. Probably suffice to say watch the 1156 – 58 level as its the bottom of the trend channel.

  38. 38
    zman Says:

    Nicky – thanks for your work on this, love it.

  39. 39
    zman Says:

    BOP – since you prod me from time to time for a thought on selling those things which have rallied in the extreme I have to ask what you are thinking of KOG in this rarefied air of $3.20. I sold some lower for a nice profit a couple of months back and I could see again scaling out of some small but adding back on a pullback. I’ll probably wait out the weekend and see if I can get my beach laptop on it Monday or Tuesday.

  40. 40
    zman Says:

    Corona and Lime Watch: For those of you who don’t read the post (you know who you are) I will be largely out of pocket next week. I won’t be trading (actively) and I certainly will not write that much but I will monitor the site and respond to questions mostly like in the afterhours.

  41. 41
    1520sbroad Says:

    #40 – enjoy.

  42. 42
    VTZ Says:

    I need a break… but no daylight ahead.

  43. 43
    bloodystupidjohnson Says:

    Interesting triva — Michael Burry, the subject of Michael Lewis new book, was once a regular poster at Silicon Investor.

  44. 44
    choices Says:

    CLNE is up over 4% today in the face of this massive NG collapse-not sure of the implications but hope springs eternal-I know hope is not an investment strategy but it “could” indicate that CLNE’s business is is strong or even getting stronger-have not seen any news re CLNE.

  45. 45
    bloodystupidjohnson Says:

    TOM: re Tues 42 — Tom you never need to apoloaize to me for anything. I understand your sentiments perfectly. You are asking questions, debating, trying to get your hands around a situation. You are doing what all good investors should do.

  46. 46
    zman Says:

    Thanks 1520, plan to come back, um, re-energized.

  47. 47
    andy Says:

    z – what beach??

  48. 48
    zman Says:

    Gulf Shores, AL.

  49. 49
    Nicky Says:

    Lost internet connection briefly. Just wanted to add that as we appear to be working on new highs now (Dow already there) then all we are actually looking for is a move to or above yesterday’s highs to complete wave iv (1169.84 on SPX). What we then need to be watching for is the move to be reversed quickly. If this happens in the next hour or so then we can start to work back towards 1150 in time for expiry tomorrow.
    I am seeing signs of cracking elsewhere -euro is breaking down, metals looking like they may roll over and oil….everything looks to be on the edge.

  50. 50
    tomdavis12 Says:

    Z: Selling some more naked calls in energy-land today. Agree with tired tape.

  51. 51
    BirdsofpreyRcool Says:

    z — #39… never a bad thing to book profits. especially if it’s a tax-free account. If not, would consider holding thru the end of this year.

    I think we might get a chance to buy some cheaper KOG shares if/when they do a combo with Peak.

  52. 52
    Nicky Says:

    re # 49. sorry i was typing to fast. It should have said ‘highs to complete wave v’.

  53. 53
    BirdsofpreyRcool Says:

    EXXI/MMR… ka-POW on the chin. ouch.

    Both are presenting at HW on Monday. MMR for sure, EXXI i think it will be monday. MMR has promised to show a video on DavyJones “that will knock your socks off.” Wonder if that is a snide reference to the 2.5 hr flare. THAT would certainly knock MY socks off.

  54. 54
    DrLink Says:

    My daughter who attends TCU is currently on spring break at Gulf Shores…probably nice and quiet next week compared to this week!

  55. 55
    zman Says:

    Yeah, should be quiet, cold water but have to wait for the interns to mature a bit before we get out of the country.

  56. 56
    zman Says:

    Re ka-Pow. Lot of small profit taking in energy today, looks like noise given the lack of volume. In EXXI you’ve got to figure you have people who bought into a penny stock who never would have paid $19.50 for the shares because they don’t get the concept of math and are now thinking it’s time to leave simply because the stock is resting.

  57. 57
    bloodystupidjohnson Says:

    Z: how do you account than WHX tracks oil when it is not really that oily (split on last 10K was 56/44)? Note: my def of really oily would be 75% and up.

  58. 58
    bloodystupidjohnson Says:

    RE: 56 — yeah, alot of people never hear of market caps or EVs they only look at price per share — lol lol

  59. 59
    john11 Says:

    It may be wrong but StreetAccounts schedule for Howard Weil has MMR set for 3:30 tuesday and EXXI at 2:15 wednesday. Also has KOG at 11:10 thursday.

  60. 60
    zman Says:

    BSJ –
    1) While the production split 58% oil in the 4Q (based on 6:1), the revenue split was 81% from oil production.

    2) Simply because most things in the energy space track the broad equity market and then oil. The market has been trading with oil for a long time. Natural has less of an influence on stock prices. Most 90%+ natural gas names are either up a little or down slightly on the year for instance, despite the much bigger sell down in gas.

  61. 61
    bloodystupidjohnson Says:

    RE: 60 I think you are spot on gassers tracking oil and not nat gas. This was first brought to my attention 4 or 5 years ago by Mark Sellers at a value investing conference. It seems crazy but it is true.

  62. 62
    BirdsofpreyRcool Says:

    thanks, john. I was told Monday for MMR at HW… but i don’t have the schedule. Maybe that is the night they are hosting dinner in their office… will get the details.

  63. 63
    ram Says:

    Zman, have you emailed anything to me lately?

  64. 64
    zman Says:

    BSJ – especially the ones with hedges. SWN is 100% and is off this year so some do give a nod to gas but for the most part the market and oil are the lead influences. So understanding that I try to pick guys with growth without going over cash flow by much, with good balance sheets, falling operating costs, repeatability, catalysts, and middling to somewhat lofty valuations. Wait a minute?! That last may be counter-intuitive you say. Or just wrong. Well I’d say there’s cheap and there’s cheap for a reason. The latter outnumber the former by a large margin. If I think I want to wait I buy stock and hold for a year or too. On the options side I have little interest in buying the seemingly overly cheap names as they can stay that way for a long time unless we are at a market inflection point, say, a lift all boats moment. But even then, liquidity of the big and mid caps in options will often trump the illiquidity of the options plays.

  65. 65
    bloodystupidjohnson Says:

    RE: 57 I brought it up because somethings trusts, that are really just a depreciating asset, will track a little different than a strict gasser. It might be the runoff characteristic of the trust.

    I think one think you have going for you with WHX is that not alot of people know of its existance. It probably comes up on yield screens, but the runoff might turn some people off. Which is crazy because all US trusts are really just in a runoff mode — lol.

  66. 66
    RobBanks Says:

    z – was looking at WHX last night and I’ve got to admit that I don’t see the attraction.

    The trust zeros out when they’ve sold 8.2mm boe, and 2.77mm have been sold. If they continue at last year’s rate of production, this trust lasts another 4.14 years, then it’s worth nothing.

    Even if they slow production, distributions will drop. The only real hope I see is hugely higher oil/gas prices. Otherwise, I’m not sure the distributions will keep up with what should be, in theory, a rapidly declining unit price.

  67. 67
    zman Says:

    Ram – yesterday, it as a ZBLAST.

  68. 68
    bloodystupidjohnson Says:

    ROB: I think that is part of the trade off Z has to make. Does he buy a MLP at a lower yield of say 10% or so (ENP for example) that has an unlimited life or a trust, esp a trust with a set vol runoff, for a higher yield?

  69. 69
    RobBanks Says:

    Well, I just don’t see the value, I guess. How can a 14% yield make up for a 25% decline in asset base? Seems to me the yield should be more like 35% to make this worthwhile, but I’m probably missing something.

  70. 70
    zman Says:

    Rob – I hear you. I plan to be out of it in a year or two.

    Looking at production the last 4 quarter which gets us through a low price and high price for oil:

    1Q09 3.946
    2Q09 4.138
    3Q09 3.844
    4Q09 3.796

    So a fairly gentle slope, down 4% start to finish.

    Looking at distributions:
    1Q09 .68 ($35 oil / $4.50 gas)
    2Q09 .61
    3Q09 .61
    4Q09 .66 ($64.40 / 3.50 gas)

    If you step back another quarter to 4Q09, the distribution was $0.79 with $54 oil but $5.76 gas. Production was only 4.05 mmboepd which you’ll note was lower than 2Q’s production listed above.

    My thought process goes like this watch: So I see the gentle production decline and take my world view of prices for 2010 (stronger oil and flattish to higher gas prices later in the year) and think hmmm, I’m going to declined slowly but with oil staying up I’m probably going to get a yield of between 12 and 15% for 2010 based on those prices. In 2011, I think oil and gas prices are higher, offsetting another 5 to as much as 10% of production declines. Anyway, that’s what I’m thinking. 2 years and out. Oil rising should help to keep the unit price up here, maybe a little bit of growth and I get paid double digits to wait that gain on the units out.

  71. 71
    zman Says:

    Also, I don’t think you can assume that what they’ve produced so far and what they have on the books at present will translate into a straight-line decline.

  72. 72
    RMD Says:

    Listened to AXAS conf. call in a triumph-of-hope-over-reason moment. Lots of hope in the presentation including a new stealth Hz oil play, and buying acres in W. MT near ROSE and NFX: ‘would you tell us how many acres you have there? No.’ Yellow card for Thanks-for-Nothing.
    2 pvt. investors got on who have owned the stock for 7 yrs (HOPE) and said essentially “you said proven reserves were the measure but you have never delivered. Why?’ Answer was the verbal 2-step and one guy finally said, ‘well maybe you’re right, and maybe I’m right’. Exchange between them and co. was really funny; I feel sorry fot the 2 guys who don’t understand the red tickets are printed up so you can Sell stocks too.

  73. 73
    bloodystupidjohnson Says:

    RE 70: Z image what us poor slobs had to do in the 1970’s without a spread sheet — lol

  74. 74
    zman Says:

    AXAS – RMD – I have pitched them deals in the past. They were chasing the hot plays then (late 90s), and from what I wrote up yesterday, nothing has changed with them.

  75. 75
    PackMan Says:

    Health Care: This CBO score thing is such nonsense, they manipulate the bill to manipulate the CBO score, which is not a be all end all anyway, and is full of caveats.

    How bout this one:

    Although CBO completed a preliminary review of legislative language prior to its release, the agency has not thoroughly examined the reconciliation proposal to verify its consistency with the previous draft. This estimate is therefore preliminary, pending a review of the language of the reconciliation proposal, as well as further review and refinement of the budgetary projections.

    This suggests that the CBO has been trying to score a moving target, with Democrats making frequent tweaks to whip votes and/or hit deficit targets. So the CBO isn’t sure they’ve scored the final bill — hence they are calling this a “preliminary estimate.”

    Congress Daily’s Anna Edney reports that a final CBO score will come out Saturday or Sunday, a most unfortunate bit of imprecision considering the vote on the bill will occur on the latter.

  76. 76
    PackMan Says:

    BEXP; so far have 2 falling knives sticking in my chest today on this one !

  77. 77
    zman Says:

    BSJ – yeah, everything moved more slowly then in the market too.

  78. 78
    PackMan Says:

    Blinky Pelosi on TV now … cantstandja … all these bald faced liars in Congress.

    Spending like crazy and claiming that they are being fiscally responsible.

    Can’t wait til this thing blows up in their face this weekend !

  79. 79
    BirdsofpreyRcool Says:

    PackMan — i stand aghast at what passes for “govt” these days.

  80. 80
    zman Says:

    Pack – they are woodshedding the group at the moment. All but KOG getting tossed and hard. No buyers.

  81. 81
    bloodystupidjohnson Says:

    You know Z, your decision on mlp vs trust would be made alot harder if mlps, as a group, where not fairly valued, as I think they are now.

    For my money, I think mlps, esp one with a good parent, are a better investment vehicle than a US trust. But that is not to say that on a asset vs asset basis one could not find a good trust. I think your biggest positive for WHX is that WLL owns a sizable interest in WHX and is the operator of those well.

  82. 82
    BirdsofpreyRcool Says:

    Pack — you think it blows up in their face? or ours, this weekend…

  83. 83
    jiveyjr Says:

    re: 51..I saw one poster say they’d doubled down on KOG yesterday and thanking JB for his chart on the stock…if you go to the chart book you will find a chart where he comments that if the stock breaks over the $3ish area it could start a nice run…I didn’t double down but I added yesterday at 3.04 on account of that

  84. 84
    bloodystupidjohnson Says:

    RE: 77 You might just think they moved more slowly unless you where are the wrong side of a trade — lol.

  85. 85
    RobBanks Says:

    re 70, thanks for the detailed response.

    I just assumed the straight-line decline to get a handle on things. I do think being out in a year or two will work out fine.

  86. 86
    BirdsofpreyRcool Says:

    Short sellers have MMR in their teeth right now… and they are shaking it pretty hard. No one seems to want to step in and break up that dog fight. And it’s noon. A notoriously great time to pick a fight. Plus, US$ stronger.

  87. 87
    PackMan Says:

    How come CNBC doesn’t disclose that John Harwood (cheerleader for democrats) is dating a Democratic Senator ?

  88. 88
    PackMan Says:

    BOP … theirs; not ours.

  89. 89
    PackMan Says:

    79 – BOP – ditto

  90. 90
    bloodystupidjohnson Says:

    PACK: come on man! The main stream media fessing up how conflicted it is or how in bed it is with the Stalist party? Now way — lol lol lol

  91. 91
    PackMan Says:

    BOP; any intraday price to buy EXXI look good to you ? 19.30 ish, or lower ?

  92. 92
    PackMan Says:

    BSJ — call me an idealist ! Keep hope alive. LOL.

  93. 93
    BirdsofpreyRcool Says:

    They are now proposing a 3.8% “tax” on “unearned income.” This just keeps getting worse and worse. The lies are a mile deep and a mile wide.

  94. 94
    BirdsofpreyRcool Says:

    Pack — i think 2 years from now, we will all be sorry we didn’t buy more EXXI today. You are getting current production at almost 70% oil for a fair price + an almost free call option on the ultra-deep play. I just don’t know where else to look, to find anything of value close to that.

  95. 95
    zman Says:

    If it were a normal weekend, I’d probably add the longer data HAL and some WLL back but given Sunday’s planned events, I’m just going to go on vacation. OIH down 3%.

    So is the dollar rallying on the CBO comments on deficit savings? That would be in a word, nutty.

  96. 96
    zman Says:

    or is the dollar just up on Greek backstop failure fears resurfacing.

  97. 97
    ram Says:

    Would “unearned income” be like income from an MLP or trust?

  98. 98
    zman Says:

    “the new tax would apply to income from interest, dividends, annuities, royalties, capital gains, and rents for individuals who earn more than $200,000 and joint filers reporting more than $250,000.”

  99. 99
    ram Says:


  100. 100
    zman Says:

    Reuters put out a little slash piece on BEXP. It has no teeth in it, all speculation and analyst sour grapes over missed the move. Sounds like the 2 negative analysts in will be long lower and would like to see it fall so they can upgrade. I’ve said the shares are pricey but anyway, this is what’s pushing it down, along with the group action, today.


  101. 101
    cargocult Says:

    I can’t wait until I earn that much.

  102. 102
    BirdsofpreyRcool Says:

    yeah… a lot of people who “earn” that much actually employ other people…

  103. 103
    BirdsofpreyRcool Says:

    … and don’t get to actually use all that nasty income b/c they have to plow it back in the business.

  104. 104
    zman Says:

    102/103 Bingo!

  105. 105
    Jerome Blank Says:

    EXXI…quickly added a close up daily view…if bullish on EXXI, there are 3 reasonable points to consider longs, the most aggressive being right here at about $19…then, the inner channel line at $18 and the most conservative at $16.50, which corresponds to major trendline and P&F buy signal support, almost nothing to think about at that price…


  106. 106
    occam Says:

    Z- What’s your take on HP? Off 20% from recent highs.

  107. 107
    Jerome Blank Says:

    BEXP…broke below the short term supporting triangle this morning, now hanging between the $15.50 support level and the topside channel trendline…watch for long opportunities between $15.25 and $15.50 if it gets there…ie: intraday reversals within this support zone…

  108. 108
    bill Says:

    87 How come CNBC doesn’t disclose that John Harwood (cheerleader for democrats) is dating a Democratic Senator ?

    i didnt know that

    i knew he was a mouthpiece

    he does a better job than gibbs

  109. 109
    zman Says:

    Occam – There has been a fear that NAM rigs will rollover due to low gas prices so it is roundtripping the recent mood and looks technically weak to me. Today is a broker downgrade, maybe time to start sniffing.

  110. 110
    zman Says:

    Occam – it went into the S&P, caught some broker upgrades and still, as you say, it’s nothing but lower. Need to look at valuations there. I was interested in the stock a month or so ago as I recall mentioning it, I think in conjunction with the rising horizontal rig count and with their earnings for the 4Q. Will go check.

  111. 111
    zman Says:

    CHK now thought to have 600,000 acres in the Niobrara … and still the stock faces headwinds and couldn’t break $30 on this recent run. I’m a long term guy with my stocks but that is somewhat trying. I may finally punt, not today, but soonish and reposition those dollars in the ZLT.

  112. 112
    choices Says:

    #-87-which one, Barbara Mikulski-heh

  113. 113
    PackMan Says:

    JB 107 – no 15 puts trading for tomorrow; so doesn’t look like a press lower is in the cards. BEXP.

    No one wants to gamble even a nickel on a run at 15; to me that indicates 16ish should hold ….

  114. 114
    PackMan Says:

    Spinning the CBO “news”

    House Budget Committee Ranking Republican Paul Ryan responds to a query about the news this morning: “The Congressional Budget Office has confirmed that there is currently no official cost estimate. Yet House Democrats are touting to the press — and spinning for partisan gain — numbers that have not been released and are impossible to confirm. Rep. James Clyburn stated he was ‘giddy’ about these unsubstantiated numbers. This is the latest outrageous exploitation by the Majority — in this case abusing the confidentiality of the nonpartisan Congressional Budget Office — to pass their massive health care overhaul at any cost.”

    “This CBO reporting this morning really is remarkable to me — the news is simply what Steny Hoyer says it is.”

  115. 115
    zman Says:

    CBO has a preliminary estimate out here dated today:


  116. 116
    Jerome Blank Says:

    Re: #113, PackMan, thanks…the 30 min bounced at $16, we’ll see if we get a basing flag here into the close…if BEXP does break $16, I’d sure like to be a buyer in that lower support zone…

  117. 117
    choices Says:

    Interesting comment on Govt from another site.

    I do not see how any Govt can function with so much disaffection-Jesse Ventura (heh) said we should destroy both parties and start over-has anyone watch C-Span lately in the House or Senate-all, not just one party, all are total idiots interested in just getting re-elected.

    Comment follows:

    “Govt’s view of the economy: if it moves, tax it, if it continues to move, regulate it, if it stops moving, subsidize it.”

  118. 118
    Nicky Says:

    Certainly the move today in the SPX looks corrective. We may still see a slightly lower low but I expect the 1157 area to hold if we haven’t made new highs first.

  119. 119
    Jerome Blank Says:

    MMR is sitting right on that supporting daily trendline, MMR holds the P&F buy signal until a print of $14.50, so from here, I don’t think a long is wrong until it breaks that level…this is probably a good zone to watch for a good low risk buy opportunity…

  120. 120
    Nicky Says:

    I had noticed that the Dow had been lagging the SPX the last few days. It is making up for lost time today and catching up with the count. Will we see them hold the market around here into the close and then gap it up tomorrow on the open to complete wave v? If so look for 1171 – 75 for the SPX and again if the top is in look for a very fast reversal.
    Who would want to go into the weekend long ahead of this vote on Sunday? I still maintain either way the result of the vote is going to be bad news. Its a lose lose imo.

  121. 121
    PackMan Says:

    Z – 115 – the Ryan quote was probably before that came out.

  122. 122
    zman Says:

    Pack – hear ya and I don’t trust CBO, prelim or not, to get this right.

  123. 123
    Jerome Blank Says:

    KOG continues to look good here in the last hour, pulling back and holding at the 20 period 30 min SMA…this could be the base for the next leg higher..it’s one of the stocks still showing strength on a tough day…

  124. 124
    zman Says:

    JB – how’s AEZ looking to you?

  125. 125
    BirdsofpreyRcool Says:

    This is quite the stick-in-the-eye to our Dear Leader…


  126. 126
    DrLink Says:

    Yesterday article on Jim Bob Moffett


  127. 127
    zman Says:

    BOP – KOG has about 35.5K acres on the FBIR, due they have another 25K prospective for Bakken elsewhere? I have them at 60K acres in one report on the Bakken and I used that number in my last acreage table. Need to confirm.

    Thinking is that AEZ is trading at about half the $/acre now so despite the run, if it hits a couple of wells which are stepouts just north of BEXP’s rough rider area, that it could have room to run. Right now I put KOG trading just over $6,000 / acre on an EV /ac basis, with AEZ trading at $3,600/ac which makes sense since they have yet to complete a Bakken well.

  128. 128
    BirdsofpreyRcool Says:

    z — not sure the non FBIR acreage is potential for Bakken. If it is, then the stock is too cheap.

  129. 129
    Jerome Blank Says:

    Re: #124, AEZ looks really good, strong trend, new highs…if you look at the daily chart, the last few days, including so far today, have resulted in a couple of “doji” crosses signaling a bit of uncertainty here…so I might be a bit cautious to buy up, but the pullback to the 20 period SMA the other day was strongly bought, so I would look to do the same thing at about $5.40….

  130. 130
    zman Says:

    Thanks DRL, BOP.

    Doing some digging on KOG acres, thinking about AEZ pre press release of Bakkens as well.

  131. 131
    zman Says:

    KOG – 10K shows the 60K net acres in the Williston.

    35,000 acres in Mountrail and Dunn counties, ND (that’s the FBIR)

    the rest of the acreage appears to Sheridan county, MT (that’s Red River, maybe Bakken too) and McKensie County (which is definitely Bakken/TFS). Would like to know how much of the remaining 25K acres is McKensie.

  132. 132
    zman Says:

    West or BOP or anyone, any word from the field on that EOG Sheridan county Bakken well. If that works you are looking at a potential upgrade in KOG valuation. Won’t hurt BEXP over there either.

  133. 133
    BirdsofpreyRcool Says:

    KOG refers to that non-FBIR acreage as “RedRiver” potential. Haven’t heard anything about Bakken mentioned there. But, it would be good news, of course.

  134. 134
    zman Says:

    BOP – I see the McKensie County stuff now in the presentation, as 2,700 net acres near the Montana border, with existing Bakken production (guess that’s non-operated)

    From the 10K:
    “Kodiak has three wells (two producing) in McKenzie County producing from the Bakken Formation near the North Dakota and Montana state line.”

    They’re sending the second rig here for a 1 well test before it heads to the FBIR.

  135. 135
    Jerome Blank Says:

    AEZ 30 min chart perspective added…


  136. 136
    zman Says:

    They are referring to the remaining 22,600 acres over in Sheridan, MT as Bakken/TFS Potential/ Red River/ Mississippi Canyon

  137. 137
    zman Says:

    Thanks JB – I think it and KOG are the very real takeout candidates in the Bakken.

    On Acres:
    KOG: $6,300 / acre
    AEZ: $3,600
    NOG $5,900 (may be one to consider too)

    there are many other small players but these guys have an acreage footprint that’s big enough to make a difference to a would be buyer.

  138. 138
    BirdsofpreyRcool Says:

    #134 — not trying to argue against my own position. But KOG mnmgt describes that well they are going to drill there as a Red River test. Bakken would be great too, of course.

  139. 139
    zman Says:


  140. 140
    jiveyjr Says:

    Bloomberg shows James Catlin, selling about 25% of his stock here…that’s a bit worrisome

  141. 141
    zman Says:

    I’ve heard them say it in the past most people have thought about it being red river. In their 10K they say they are monitoring what others are doing in the area in terms of Bakken / TFS which is a reference to EOG, and soon BEXP, and a couple of privates (forget the name of those but I was looking at a map the other day and the area is heating up for Bakken).

  142. 142
    BirdsofpreyRcool Says:

    jivey — i show that Catlin filed 100,000 of his 1,533,150 shares in KOG to be sold under a 10b5-1 plan.

    I don’t like selling either. But it doesn’t appear to be 25% of his holdings. More like 6.5%.

  143. 143
    occam Says:

    It looks like Catlin sold options that have just vested:

    That’s a fairly normal practice, and not a negative.
    As a regular practice, it helps the seller avoid insider trading problems.

  144. 144
    BirdsofpreyRcool Says:

    hmmmm…. looks like Catlin exercised and sold the 100k options AND registered to sell 100k under a 10b5-1 plan thru Merrill. So, make that 13% of his holdings.

  145. 145
    jy Says:

    Re 136: “….Bakken/TFS Potential/ Red River/ Mississippi Canyon”

    That should probably read; Bakken/TFS Potential/ Red River/ MISSION Canyon:)

  146. 146
    zman Says:

    jy – good point, must still have gomex on the brain.

  147. 147
    occam Says:

    ATPG picked up the lease on the Entrada field, which Callon abandoned last year, for $232k. It appears that Callon and partner had spent more than $100 before the lease was abandoned in January 2009. I am guessing the credit crunch combined with the 2 hurricanes and other setbacks in H2 2008 and low oil prices caused Callon to fail to file the development plan needed to keep the lease. Callon estimated oil reserves at 32 MMBOE Proved, 56.6 MMBOE 2P.

    Quite a steal, and ATPG beat a bid by COP by $14k.

  148. 148
    BirdsofpreyRcool Says:

    BedTime Market Strategist

    Euro Clash.

    The Euro’s weakness today helped keep a lid on activity here in the U.S. in equities and commodities. It made a quiet day even quieter. It figures that to find a group that makes Washington D.C. look like a well oiled machine, you only need to go as far as the squabbling and infighting among the political leadership in the Eurozone. If the EU leadership continues on its current course, they will manage to turn the Greek debt crisis into an all out currency crisis. The irony is that this is happening after the S&P removed the country from a negative ratings watch.

    This comedy of errors is almost impossible to believe. We find ourselves among those who attribute much of the escalation of Greek fears to speculative activity. That being said, speculators did not design the Greek budget, or any other European nation’s budget for that matter. Germany is willing to squander time and public money to use its “intelligence agencies” to start surveillance operations of hedge funds. You really can’t make this stuff up. With such a mindset, these politicians wonder how they wind up with deficits. Remember the Warren Buffett smell test for Lehman Brothers detailed in the Valukas report last week, “… Buffett did not like that Fuld complained about short sellers. Buffett thought that blaming short sellers was indicative of a failure to admit one’s own problems.” Sending out your spies to perform cloak and dagger surveillance of hedge funds is akin to complaining about short sellers, but actually taking it multiple steps further.

    The incompetence does not stop there. Yesterday, in a speech to German Parliament, German Chancellor Angela Merkel said “We need an agreement that as a last resort it’s possible to exclude a country from the euro zone if again and again it doesn’t fulfill the requirements.” When asked about the EU potentially expelling a member, ECB President Jean Claude Trichet said he would not comment on such “an absurd hypothesis.” That’s like Bern Bernanke calling something President Obama says “absurd”. With respect to Merkel’s statement, how can a group of nations come together for a single currency with standards, rules and restrictions and not have a mechanism to expel a nation? How can they police their members if there are no repercussions? Déjà vu? It is just like the regulators having resolution authority to wind down a systemic institution. At least the American excuse is that we have not had major financial reform in seven decades. The Euro is a relative infant.

    The silliness does not stop there. Now Germany wants Greece to go to the IMF. We equate the Greek debt situation to a “stress test” for the Euro currency. Honestly, it is also one that should be passed fairly easily if there were only the smallest bit of leadership. If the EU members cannot keep it together under these circumstances, then forget about it when a real challenge arises. Sending Greece to the IMF will be a failure, and will likely be the beginning of the end for the Euro. It won’t be the end of the world, but the end of the Euro. It may take time to unfold but who would want to be in a currency for the long term when the largest threat is political officials and infighting creates a currency crisis because of poor leadership?

    There is the chance this is political gamesmanship. This also brings back déjà vu of the weekend of the Lehman bankruptcy. Are Merkel’s statements the equivalent to Hank Paulson’s bluff when his office leaked to the media that there would be “no government participation” in a bailout of Lehman (although had a buyer emerged the government would have helped). This situation is different because these are different sovereigns, so one cannot expect that it is a bluff. If it is a bluff, it is truly irresponsible. In addition, we know Paulson’s hand did not play out too well.

    The scary part about these events is that the world usually looks to the Germans for leadership on financial matters. U.S. investors generally have more confidence in German Central Bankers than the Federal Reserve. German leadership on this issue has been inconsistent, unclear and irresponsible. The Bundesbank aura is quickly fading away. For all of those speculators out there, not only are the fundamentals of the Euro short on your side but (lack of) the political leadership this week risks creating damage to the currency that may be irreparable for some time. They are begging you to short this currency. (Caveat: Watch out for the spies, hope the Germans don’t use renditions, and although we won’t provide a lawyer, we will testify on your behalf.)

  149. 149
    PackMan Says:

    Good piece BOP … could lead to a Black Monday one of these days.

    Heres an update on the health care debacle: http://hopeychange.blogspot.com/2010/03/do-o-pelosi-have-votes-uh-maybe-not.html

  150. 150
    elijahwc Says:

    KOG eases out current CFO. Eases in old CFO.

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