19
Mar

T.G.I.V.

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Market Sentiment Watch: Market still tired and thin. Energy took a disproportionate hit yesterday on a dollar rally combined with profit taking after the recent run. The timing of that could not have been worse for my remaining March options however this kind of thing is fairly unpredictable and a reason why I constantly remind myself and others that the options portfolio is never above that 10 to 15% of invested capital range. The stocks in the ZLT are doing quite well.  I go into next week with high cash levels in the options accounts after the recent run, the recent beating and with D.C. taking center stage over the weekend. I'm also on vacation next week so I'll be monitoring the site and the market infrequently from the beach. 


In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Stuff We Care About Today - WHX thought review
  5. Odds & Ends

Holdings Watch

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

  • $11,700
  • 74% Cash
  • Positions for the quick view are updated on the ZCAT, ZIM, ZLT page.
    • Yesterday’s Trades: None

ZIM (Zman Inefficient Markets portfolio)

  • $9,800--
  • 87% Cash

    • Yesterday’s Trades: None

 

Commodity Watch

Crude oil retreated $0.73 to close at $82.20 yesterday as the dollar attempted a recovery. This morning crude is trading off 50 cents on the April contract which expires today. May is trading just under $82.


Natural gas dropped $0.21 to close at $4.08 yesterday after the EIA reported a much smaller than expected withdrawal from storage (see below). Welcome to the shoulder season. I'd bet we have one or maybe two more smallish withdrawals before the injections start. This morning gas is trading down 2 cents.

Natural Gas Storage Review


ZComment: The withdrawal season is drawing to a close. We should get one slightly large withdrawal with next week's report and then we are likely to start refilling storage. The pace of refills will determine where gas finds a bottom.


 

Stuff We Care About Today

WHX Trade Thoughts Recap:  (augmented version of comments from yesterday)

Yesterday in comments I tried to lay out my thoughts on WHX but I felt that I did a poor job of it and wanted to expound a little today.  My simple model for calculating distributions is at the bottom of this section.

Production:   Declining but nothing drastic.  I'm modeling 4% sequential quarterly declines in production going forward.  The company believes production will decline at a rate of 14.6% per year between 2010 and 2017. So I'm a little more conservative in my model than that. Note that oil averages about 58% of total volumes each quarter and I model it as such for simplicity and because it will probably stick close to that level.

 

Realized Prices on $/ BOE basis for the same period.

 

 

Note: Average differential to NYMEX oil was $11 per barrel last year (so $11 less than NYMEX average price); average differential for gas was actually all over the map but the simple average was = $0.60.  In my model I'm using a $12 oil differential and $1 off on natural gas.

Operating Costs per Boe - staying pretty much in place, for forward looking purposes I'm using $21 / BOE (that's lease operating and production taxes combined)

 

Distributions - and the resulting distributions have been  ...

 

Model for 1Q10 Distribution:  (see assumptions at bottom)

My Thought Process: I plan to stay in this one for 1 or 2 years.

  • I see the gentle production decline which combined with macro view of prices for 2010 (stronger oil and flattish to higher gas prices later in the year) and think I’m going to get declined slowly but with oil staying up I’m probably going to get a yield of between 12 and 14% for 2010 based on those prices.
  • For 2011, I think oil and gas prices are higher, partially offsetting another 15% in production declines. Anyway, that’s what I’m thinking. Two years and out. Oil rising should help to keep the unit price up here, maybe a little bit of growth.
  • Ok, But what if I'm too aggressive on prices and production falls faster than I've (or the company) has modeled? Let's look at oil averaging $10 lower than I have it above for the rest of the year, natural gas being $1 lower in each 2Q-4Q and 6% production declines all year. These guys are highly hedged so the price impact isn't that awful. Under this scenario, I put full year 2010 distributions at $2.08 or an 11% yield on the current price.

Other Stuff:

  • CXPO conference call at 10:30 am EST
  • KOG swaps out CFO ... should be a minor positive. 

Odds & Ends

Analyst Watch:

  • UBS trimmed price targets across the board on oil service and drillers.
  • Opco starts BHI and HAL with Perform ratings.

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. 

159 Responses to “T.G.I.V.”

  1. 1
    tomdavis12 Says:

    Z: Went to MMS and downloaded block map of GOM. Just wanted to see where MMR bids were. Is there some kind of science as to where bids are made and how much companies are willing to pay? I notice they bid $205K for block 244 which is closest to their Lafitte site. They bid much more for other blocks. Can companies trades their leases like baseball cards with other companies? Last three times Jim Bob talked his stock was up on average 20%. He should give lessons to POTUS.

  2. 2
    BirdsofpreyRcool Says:

    z — concur with the “minor positive” comment re: KOG’s CFO swap. Mr. Doss earned his way out the door by visibily selling stock at the wrong time. Amateur move… he won that battle, but lost the war. We welcome the upgrade at KOG.

  3. 3
    zman Says:

    Tom – they look at seismic before they bid, the price is what they think it will take to get the high bid, methodology is all over the map but if you think others bid high, you bid higher. I’ve seen guys split all there bids evenly, or put the higher value ones with 666 at the end so they are easy to hear when called out. Usually you get a lease and you farm part of it out if you don’t want all the risk pre drill.

  4. 4
    zman Says:

    BOP – resume on new guy is decent, not sure what level he was in the foodchain at each but the shops are good ones. Slightly higher profile guy but not one that would make me think they are doing the shopping, maybe just being shopped.

  5. 5
    tomdavis12 Says:

    Z: Offshore is there a HBP component so they have a time frame like onshore?

  6. 6
    zman Says:

    Yes, and you can get extensions on the leases if you make an effort and then need more time to study the results but can’t produce by the end of the lease, like at Blackbeard.

  7. 7
    zman Says:

    This was in TPH’s piece this morning, made me laugh:

  8. 8
    Wyoming Says:

    Disagree (sort of)with #2. Having had Incentive and restricted options, I could see where the guy would dump a couple of thousand options. I don’t know the vestment period, strike (ISO) or expiration dates. I can see how it could be a dump ’em or lose ’em situation.

    Just saying.

  9. 9
    tomdavis12 Says:

    Z: Negatives for NG pointed out by CSFB analyst. With lower prices we are now at cap ex budgets @ 140% of cash flow. 2011 hedges @ 11% industry wide. I assume you would expect 1st Q CC’s to start to cut back off on some capex. Are there any companies that will have a harder cutting back besides CHK or most probable for an equity deal? Looks like this sector might be in penalty box for a little while.

  10. 10
    zman Says:

    Tom – agree penalty box sentiment towards the gassy names although they have already discounted a very sloppy spring price. I think you see some capex trimming on the 1Q calls but not a significant amount. If gas prices stay low into May / June then I think it’s the 2Q calls that signal a pullback. These guys look at the strip, not the front month and a lot of analysts fall into the trap of watching just the front month and making dire prognostications. I can tell you we are going to hear about low LNG imports for months now (due to price) and we are going to hear about coal being displaced by gas for electricity more and more later this Spring.

  11. 11
    zman Says:

    Robbanks – lemme know if that WHX stuff made yesterday’s Q&A session more clear or not.

  12. 12
    tomdavis12 Says:

    Z: Heard strip in Euro Zone lower than here. Is there any website to monitor strip around the world?

  13. 13
    zman Says:

    Tom – Maybe not strip but prices for the front month on the internet, let me see if I can track it down.

  14. 14
    VTZ Says:

    Gold hanging in there waiting to make a move when the dollar breaks down.

  15. 15
    john11 Says:

    Adding MMR here.

  16. 16
    zman Says:

    Energy group getting disproportionately whacked again, very much “baby and bathwater” action. No differentiation, volumes not as light as they have been, which could be expiry but also could be some rotation out of the group. I’d say it’s gas weighing on the group but even the oily names are taking it on the chin.

    John – I may take a little more April MMR late in the day as well.

  17. 17
    choices Says:

    Just noted the SLB started at outperform at Oppenheimer.

  18. 18
    choices Says:

    OIH very weak last couple of days.

  19. 19
    zman Says:

    CXPO – no webcast, only phone, very rookie.

  20. 20
    Nicky Says:

    Good morning to all.

    As you spoke VTZ gold dropped 20 bucks! Some odd stuff going on here. Indices are not typical for expiry which tend to have a bullish bias. But we did get the gap up I said could be a possibility yesterday and they are very slowly selling it now. Commodities may be leading the way. Same support levels as yesterday. Key is the 1157 area. I think if it goes many could hit the sell button.

  21. 21
    zman Says:

    EXXI – especially weak today.

  22. 22
    VTZ Says:

    LOL takedown and a half…

  23. 23
    VTZ Says:

    so rigged… Friday low volume… out of nowhere… no news… no reasons…

  24. 24
    VTZ Says:

    COMEX paper market manipulation at its finest

  25. 25
    Alhambra Says:

    India raising rates due to accelerate inflation

  26. 26
    zman Says:

    Thanks Nicky.

    Listening to CXPO, nothing interesting so far.

  27. 27
    BirdsofpreyRcool Says:

    Been on some calls. Kind of an ugly day. But good for those on who timed the “rise and repeat” correctly.

    MMR is being pummeled on lack of an update on BBHill. I don’t this the stock deserves to be treated this way. But shorts having a lot of fun here. Longs… not so much.

    That said, we don’t have to wait long. Indeed, it is Tuesday that MMR is presenting it’s story at Howard Weil. I really think we see some sort of operational update on Monday or Tuesday morning. Will be looking for one anyway.

  28. 28
    bloodystupidjohnson Says:

    Trusts: the most important thing in buying a trust is who is the trustor? If you buy into a trust run by crooked or shady trustor, they will “screw you” everytime. Trouble is many times one does know if the trustor is bad intill the damange is done.

  29. 29
    zman Says:

    BSJ – hear ya but you’re not suggesting that that applies to WHX, right?

  30. 30
    zman Says:

    CXPO – delays and cost over runs. Stock looking squarely at $3. Will be interested to hear how the Q&A goes.

  31. 31
    bloodystupidjohnson Says:

    RE: 29 NO! That is the best thing you have going with WHX is that WLL is the trustor, it owns about 25%(?) of the trust, and the trust has its name on the title (don’t pooh pooh that, for public companies it is important).

    As RMD brillant observation the other day when we where talking about the Cohens, whose side are they on? On your side or their side? I think without question WLL (trustor) is own your side (WHX).

  32. 32
    Dman Says:

    BOP – agree with your rinse & repeat notion. I’m finding that if I get a quick 5% move in a stock, it’s time to sell or hedge. Difficult market for calls. Wonder if now is the time for SPX puts.

  33. 33
    Nicky Says:

    I still can’t believe anyone would want to be long ahead of Sunday. If 1157 fails it could be very bearish. I hate Jim Cramer but he said last night if the bill passed we would see a market crash. I do not think we see a crash but I think either way the market falls.

  34. 34
    elduque Says:

    would it be safe to say that the front month of the futures contract is dominated by speculators. Price action vs. fundamentals would suggest that. At least the way I see the fundamentals. Storage levels are better, LNG won’t be coming here and you could probably come up with a few more.

  35. 35
    zman Says:

    Nicky – looking at the group, I can’t disagree with you on longer before the vote. I like a few special cases for news but the overall market looks troubled.

    Oil down $2 now on this dollar move.

    CXPO – drilling an operated offset to the big DVN Haynesville well they always talk about. That’ll be catalytic to the stock. Will wait that out, guessing next month on completion.

  36. 36
    zman Says:

    Eld – it’s definitely more controlled by specs that commercials.

  37. 37
    BirdsofpreyRcool Says:

    Dman — smart colleagues all saying we are in a “melt up” market. That might well be the case for the mrkt as a whole, but energy was out in front over the past year. Seems to reason, we lag the mrkt here for a while and bounce around in a range. But with $80 oil and even $4 nat gas, I don’t think we fall off a cliff and go bust.

    Bouncing around in a range means, buy on red and sell on green days. And don’t chase. You will get another shot at it. The other way is to wait for energy sell offs like we have now, buy the ones you are comfortable with, then don’t sweat the volatility, I think prices will be higher in a year. That stategy begs for adding income producing securities too, as is being discussed on this board.

    Just a few thoughts… as i (and the mrkt) contemplate going into a “Slaughter Weekend.”

  38. 38
    Nicky Says:

    spx at that 1157 watershed point

  39. 39
    Nicky Says:

    I suppose if 1157 goes and we end around 1150 today then it sets us up to be under 1140 on Monday, but I am ahead of myself. 1157 could still hold it and a new high still out there! currencies and commodities make me think otherwise at the moment.

  40. 40
    tomdavis12 Says:

    Z: The two sides of the knife are it passes everyone hates it. It doesn’t pass and we have a lame duck POTUS. Market likes leadership. I don’t see much.

  41. 41
    zman Says:

    CXPO talked themselves into a $2 handle during the call. Watching and waiting in the weeds since $5 now.

  42. 42
    RMD Says:

    CXPO call impressed me as one wiff after another. Sad prediction: stock finally bottoms when the pvt. investor who is “up to his waist” in the stock but “buys everyday” finally sells it (or gets a margin call).

  43. 43
    bloodystupidjohnson Says:

    When the health care bill passes, it will be like watching a tidal wave. The water leaves the bay and sometime in the future it will return with revengeance.

    For what I understand, the bill will not take affect for 4 years, and then it will not affect every one. (it won’t affect many union members). So it will be like watching a train wreck or that tidal wave in slow motion. It won’t immediately affect the economy but it will over time.

  44. 44
    zman Says:

    RMD – man that was painful to listen to. I went from sort of interested below $3 to sort of interested at $2.25 to $2.50 during the span of the call. Stock at $2.90 now, down from their deal at $5 just 3 months ago. Yikes. The 4 analysts who were largely underwriters have big CFPS estimates for this year. I ran the numbers back at $5 and didn’t get close to what I’m seeing them show for 2010 EBITDA now. I recall people were fired up about this one. Sometimes my best trades are the ones I don’t make.

  45. 45
    choices Says:

    MMR bouncing with relatively low volume, small 100-300 block trades but some buying coming in now @14.70 FWIW.

    EXXI-some buying now in EXXI @18.18 but small blocks

    Waiting for news.

  46. 46
    PackMan Says:

    BSJ; you’ll see and feel the tax increases first …

    Can’t stand this guy going on TV and lying his a$$ off trying to sell this pile of doggy doo.

  47. 47
    zman Says:

    Baylor – please check your email.

  48. 48
    PackMan Says:

    just turned the sound off; enuf of that !

  49. 49
    BirdsofpreyRcool Says:

    Pack — It sounds like a rally for Hugo Chavez. The promises sure sound good, the people (mainly college students) are screaming their heads off, the emotion is running high. People are being deceived.

    We don’t learn. History repeats.

  50. 50
    zman Says:

    BOP – so much reminds me of highschool class president speeches. Free cokes for all at lunch. Vote for me and get a date with a cheerleader. Want less homework? I can deliver that. It was horse pucky then too.

    KOG back below $3, it’s not the stock, it’s the market.

  51. 51
    isleworth Says:

    Z – In your view, what are potential catalysts out there for NG pricing to firm as we head into and through injection season?

  52. 52
    choices Says:

    FWIW: http://www.intrade.com/#

    FWIW: The count now: (216 needed to pass in House.)

    current count of 193 yes-208 no, with leaners 203-211-count will change today and Saturday.

  53. 53
    BirdsofpreyRcool Says:

    z — exactly. What’s so “tough” about a speech like that? You just vote to give people “free stuff!” Why is that “heroic?”

  54. 54
    zman Says:

    Isle –

    End of month supply reports.

    Weekly rig count looks – if they start to flatten for several consecutive weeks.

    Heat – lots of heat.

  55. 55
    zman Says:

    I would think Governors would be more vocal about the increase in medicare costs their states are going to be burdened with. Or does the 3.8% “unearned income” tax cover that?

  56. 56
    baylor3217 Says:

    Purchased some SPY 116 April puts this morning.

    One way or another Obama has to get something or he knows he loses everyone. He’s trying to cling to his fringe base at this point. Never had the conservatives and he’s lost the independents. Getting nothing pulls a terminally fatal trifecta.

  57. 57
    baylor3217 Says:

    Z – I responded to your email

  58. 58
    zman Says:

    Baylor – saw that and thanks much.

  59. 59
    BirdsofpreyRcool Says:

    baylor — i don’t buy that. He could have gotten “something” with a fair vote, if he cut it back to something reasonable. He could have even gotten bipartisan support for a lot of incremental stuff. It isn’t about that. It’s about a completely different vision for America.

  60. 60
    RMD Says:

    CXPO #44; big oddsbet they slow capx as service costs are up and gas prices are down, so hitting cash flow guesses is a real stretch. I wonder how they got their acreage and whether it was at johnny-come-lately high prices?

  61. 61
    zman Says:

    RMD – good question and I don’t the answer. You’ll note that the positions they have a very small so not a lot of running room. If they cut capex there is not going to be a lot to stop the fall here. This kind of name, people are going to be wanting to stem those declines.

  62. 62
    baylor3217 Says:

    I think the whole thing is analogous to not drilling for oil off the coast or in Alaska. It artificially props up prices and allows pockets to be lined.

    Same thing with insurance and medicare. So many deals have been cut through the years to get people paid off (on both sides of the aisle) that in the end, we all end up getting screwed and the only people it helps is the people who really don’t pay into the system or contribute much.

    Having several people in my family in medicine, it makes for some very interesting conversations.

    Who is John Galt?

  63. 63
    bloodystupidjohnson Says:

    RE 59: How about the economy? Obama and his followers said the economy has the worst since the great depression. What has he done to improve the economy? All he has done is make it harder for small and mid size business, the job growth engine in the US, to form and operate.

  64. 64
    zman Says:

    Does anyone have a Howard Weil schedule?

    ROSE flat today. Hmmm. I continue to hold the common, no options there. They could announce 6 or 7 more Eagle Ford wells soon but I think they wait for the 1Q call.

  65. 65
    bloodystupidjohnson Says:

    Z: do you think SWN holds that support at 36 or not? At the first of the year, did you think anyone wonder that in March?

  66. 66
    BirdsofpreyRcool Says:

    Small businesses and start ups rarely (if ever) employ union labor. I think a large part of the agenda is to expand the rolls of anything that can be unionized. That is the thread that makes any sense here.

    So, larger govt (union), larger healthcare sector (service union), larger IRS, save the union jobs at the automakers (and screw the private capital). Give illegals a path to citizenship and they will vote dem. It’s a pretty clear agenda, actually.

  67. 67
    zman Says:

    Marinoniman please check your email.

  68. 68
    choices Says:

    Not sure if this adds or detracts from the discussion of the “merits” of the bill but here it is (warning-it was posted on a librul site, which has opposed this bill because it does not go far enough)

    http://fdlaction.firedoglake.com/2010/03/19/fact-sheet-the-truth-about-the-health-care-bill/

  69. 69
    zman Says:

    BSJ – depends on if NG holds $4 in March. No, thought it would hold up better and that they would hedge Spring more during the winter if the rig count jumped and EIA supply numbers didn’t come off more.

  70. 70
    bloodystupidjohnson Says:

    RE: 66 — then you won’t have any job growth, and unemployment will stay high, much higher than it should. High unemployment in Nov and when Obama runs for reelection will matter more than all the other crap that is going on.

  71. 71
    kaman Says:

    Its like watching the Hindenburg today.

  72. 72
    zman Says:

    ng8990 please check your email.

  73. 73
    BirdsofpreyRcool Says:

    choices — thanks for point out that article. Reforms ARE needed. !! But this “bill” seems to have taken the worst ideas that both sides have come up with… at the same time it completely ignored the good ideas that both sides have.

  74. 74
    tomdavis12 Says:

    Z: Is there a guesstimate as to % NG -crude breakdown at the DavyJ or does that take much longer to figure out? Or is it almost always one or the other and rarely a combo?

  75. 75
    RobBanks Says:

    z – thanks for the detail on WHX.

    I just can’t get past the idea that by your model, another 20% of the remaining oil disappears while you collect a 14% distribution. It’s fine as long as the unit price stays where it is, or even declines 5 or 6% over the next year. If oil goes up as you forecast, unit price will probably hold. But it will mask a serious decline in asset base.

    Another metric I look at is, what are we buying when we buy a unit. By my math, with WHX, we are buying .4 bbl in the ground for $18.50. And it’s not a real bbl – 45% of it is NG at a 6:1 ratio, so in reality, it might be closer to .35.

    MVO, on the other hand, one unit is .76 bbl, 98% oil, for 23.49. So by my math, you get a barrel in the ground more cheaply with MVO. Hedges hurt this year but it goes unhedged at the end of the year. And the trust goes until 2026.

    I’m not saying WHX won’t work out splendidly – I’m saying I think MVO (which is really the only comparable vehicle) looks much better to me over time.

  76. 76
    bloodystupidjohnson Says:

    RE: 70 — However all the indicators are pointing to an improved econ. Not through any help from Obama. Check out the temporary help stocks. They all seems to be in solid up trends. So it looks that there will be some job growth, even if it is much more anemic than it should, just around the corner.

  77. 77
    elduque Says:

    bop – I notice both HYG and JNK are off today. Just noise or is there something different happening in the high yield market?

  78. 78
    cargocult Says:

    I know this is an energy site so I resist adding comments not related to oil and gas, but as a spouse of an MD I can tell you that the current medical insurance system is NOT WORKING! The uninsured are receiving their medical care at the emergency rooms, the most expensive way to provide it. Those of us who have insurance are already paying for the uninsured by way of increased costs.

  79. 79
    bloodystupidjohnson Says:

    Hey Rob: there is always ENP — lol. Esp after seeing if the DNR poeple will be good shepards like the Brumley family was. — lol

  80. 80
    baylor3217 Says:

    KOG with a big move down with the rest of the sector. I sold most of my position on some profit taking for me earlier this week (and a little too early I might add).

    Looking for a new entry point.

  81. 81
    BirdsofpreyRcool Says:

    The high yield index is off just a little over 1/2 point and the high grade index is off just a little over 2 bps. So, directionally, credit is down. But not by much.

    It is clear we are in an economic recovery and the stock market is pushing higher. I like the “melt up” phrase that my colleague is using. Means you may not feel it’s right, you may not think it’s justified, but — gosh darn it — this mrkt is going to do what this market it going to do. Whether you agree or not. [The appropriate Washington Analogy inserted here]

  82. 82
    Patipati Says:

    Re IRS, my CPA said audits have increased exponentially and the auditors seem “stupider” than ever.

  83. 83
    Dman Says:

    #50 I think the way it works is: you vote for him and then *he* gets the date with the cheerleader(s). Consult John Edwards for details.

  84. 84
    BirdsofpreyRcool Says:

    Midday update from a NY Trading Desk

    Industrials/Materials/Energy

    Industrials: Industrials are mixed on the day, outperforming equities as the tape sells off. Almost all of today’s outperformance has been in the aero/def space following a production rate increase from Boeing. Aero/def names are all up 2-4% on the news. Multi industry and machinery stocks are all lagging the tape as investors take profits on the higher beta names that outperformed all week. Waste is outperforming E&Cs as the lower beta names rally while oily E&Cs move lower on weaker oil. Education and business services names are mostly lower on the day after rallying for the past few days.

    Transports: Transports are lagging the tape today after outperforming all of this week. Rails are off around 1% on average despite positive comments and price target increases from JP Morgan. Freight is weaker today following yesterday’s outperformance on FDX’s earnings. We are seeing investors beginning to move into a long freight/short rails trade with UNP as the preferred short given its outperformance. Truckers are mixed today, with LTLs lagging a bit, possibly following FDX’s earnings which indicated their LTL industry would remain weak for the better part of 2010. Airlines are all lagging today despite lower crude after CAL issued a lackluster 1Q update.

    Homebuilders: Homebuilders are off 1-2% today, not surprising given the market weakness. All eyes will be focused on KBH and LEN as they report earnings Tuesday and Wednesday, respectively. Seems this group has not really responded all week and with constant chatter of potential rate hikes coming we think folks are trimming fair amounts of their profitable longs.

    Materials: Materials are down with the tape today as a stronger dollar hits commodities. Metals are all lagging, down 2-4% on average as their respective commodities move lower. Chemicals are weaker as well today, with fertilizers taking most of the hit on continued worries from OTR’s negative comments yesterday morning. Paper/packaging stocks are also lagging after outperforming on Wednesday from the box shipment data.

    Energy: Energy shares are the weakest in the market today as oil loses nearly $2 and heads towards $80. Integrateds are mostly off with the space, down 1.5% while servicers and drillers lag for the second straight day. Refiners are off 2-4% as crack spreads narrow. E&Ps and coals are all off 2-5% despite a small move higher in natural gas. Shipping/tanker stocks are all weaker today as the Baltic Dry Index continues to move lower since Tuesday. Solar stocks are all off 3% on SPWRA’s earnings last night (SPWRA is off 15%).

  85. 85
    cargocult Says:

    I’ve done well with MWE. Current yield is over 8%.

  86. 86
    RobBanks Says:

    BSJ – still waiting on the ENP secondary, to see if it will be oily and accretive.

    When I say MVO is the only comparable vehicle to WHX, it’s that they both have a specified drop dead production quantity (altho MVO will go on to June 2026 even if they hit the specified production quantity earlier, which they won’t).

  87. 87
    zman Says:

    re 74 – It should be almost entirely gas in the case of Davy Jones. Normally, in more shallow, less hot Gomex Shelf wells you get a mix of oil and gas. Rumor here is there is some condensate but I’d be a little surprised if that’s the case.

  88. 88
    Dman Says:

    Sugar is down about 40% from its peak. I figured now was a good time to nibble on some SGG.

  89. 89
    zman Says:

    Ram – are you in the sunshine state?

  90. 90
    john11 Says:

    Howard Weil Energy Conf
    New Orleans , Sheraton

    Time,ET Companies
    22-Mar-10
    9:00 AM SLB
    9:25 AM COP
    9:25 AM DVN
    10:15 AM RIG
    10:40 AM APA
    11:05 AM NOV
    11:30 AM APC
    11:55 AM BTU
    12:20 PM MRO
    12:45 PM CHK
    1:10 PM BP
    2:15 PM EP NBL TDW
    2:40 PM ACI CXO HP
    3:05 PM COG CRR MEE
    3:30 PM ANR CRK WFT
    4:05 PM DRC FST WLT
    4:30 PM HERO SM WG
    4:55 PM GDP MDU OIS
    5:20 PM BBG DRQ ICO
    23-Mar-10
    9:00 AM BHI RRC
    9:25 AM RDC SWN
    9:50 AM FTI NFX
    10:15 AM PXP SPN
    10:40 AM NBR SD
    11:20 AM EQT OXY
    11:45 AM NE XCO
    12:10 PM ME OII
    12:35 PM DO PXD
    2:15 PM BEXP KEG WMB
    2:40 PM ESV GMXR STR
    3:05 PM DK PTEN PVA
    3:30 PM EGN MMR PDE
    4:05 PM CLB NFG SGY
    4:30 PM ALJ ATW PQ
    4:55 PM GIFI SFY XEC
    24-Mar-10
    9:00 AM HOS MUR
    9:25 AM CAM CLR
    9:50 AM HK PDS
    10:15 AM CRZO GOK
    10:40 AM FTO UPL
    11:20 AM EXH KWK
    11:45 AM BRS CNQ
    12:10 PM ATPG CPX
    12:35 PM NOG TTI
    2:15 PM EXXI
    2:40 PM MCF TTES
    3:05 PM HAWK TLM
    3:30 PM BRY PKD
    4:05 PM CPE TESO
    4:30 PM LUFK WTI
    25-Mar-10
    9:30 AM HAL
    9:55 AM ROSE
    10:20 AM ATLS
    11:10 AM KOG
    11:35 AM HNR
    12:00 PM GST
    12:25 PM EPL

  91. 91
    zman Says:

    Thanks John, I think they are NOT webcasting, correct?

  92. 92
    john11 Says:

    Sorry about how that came out, but there’s the info.

  93. 93
    john11 Says:

    Correct

  94. 94
    BirdsofpreyRcool Says:

    Howard Weil does not webcast. Howard Weil does not let anyone into the conf who does not do the “appropriate level of business” with HW during the year. This conf is HW’s Prize Posession.

  95. 95
    BirdsofpreyRcool Says:

    HeadTrader sent over this blog from Cramer today. HT does not get emotionally involved in politics… which is why he is so good, i guess. But, he sent this, so I will post.

    JPMorgan increases its estimates for the major railroads. Boeing (BA) ups production and suggests 2011 could be a big, big year. Demand is much stronger than expected. We’re seeing many reports about how the auto build in this country is about to explode upward. Ford’s (F) having the quarter of a lifetime, DuPont (DD) suggests a return to extremely strong growth. Lumber prices are getting stronger and stronger. California housing prices are turning.

    And health care’s going to cost a fortune, a fortune that will be taken out in stocks and in a reduced standard of living.

    Washington vs. Main Street. Washington vs. the consumer. Washington vs. the stock market. Washington vs. everyone but those who do not have much capital and the illegal immigrants (because it looks like amnesty’s in the queue next after the health care package).

    Is that litany too strong? Is that too “right wing”?

    Oh, please. Let’s just tell a little truth here.

    The tug of war is amazing. If it weren’t for the drag of President Obama, you could see employment in this country exploding. Instead, if someone would just tell the darned truth in Washington, small business will be frozen … and small business is what creates jobs.

    They all know this. But they don’t dare say it because the health care legislation would be killed immediately.

    So the tension is stark. The desire to own everything is tempered severely by the notion that stocks can’t really track the fundamentals because of Washington.

    But they will try.

    Jack be nimble, jack be quick, Jack jump over the Washington stick? I say, wait until we see. We will know on Monday.

  96. 96
    zman Says:

    DJ Triad coming off the lows, others looking a little less sloppy, but nothing to right home about.

    BOP – yeah, I went once, good conference, better food.

  97. 97
    ram Says:

    Yes.

  98. 98
    baylor3217 Says:

    I just saw the S&P’s down 6.66 on the day.

    SELL SELL SELL!!!

  99. 99
    zman Says:

    Ram – panhandle?

  100. 100
    baylor3217 Says:

    Thoughts on CHK on this recent pull back?

    Seems to be trading in a slow cycle of $22-$29

  101. 101
    zman Says:

    CHK green, weird.

  102. 102
    ram Says:

    Nyet, MickeyMouseVille.

  103. 103
    baylor3217 Says:

    lol zman. was just noticing that which sparked my question

  104. 104
    elduque Says:

    yesterday you mentioned something abt. chk and the Niobrara. What is Niobrara?

  105. 105
    Dman Says:

    BOP – at the risk of quibbling with one of Mr Cramer’s personalities, I should mention that at least *one* stock seems to be happy: check out UNH.

    Also, at further risk of engaging yet another of his personalities: isn’t it possible that all the goodies he mentions (as reasons to buy stocks) might have something to do with the market’s giant move …i.e. the one it’s already had?

  106. 106
    isleworth Says:

    Thanks Z.

  107. 107
    baylor3217 Says:

    I’d be looking at adding some more WLL today but with government interfering this weekend potentially, I’m hesitant to apply more capital.

  108. 108
    BirdsofpreyRcool Says:

    Dman — i love “quibbling with one of Mr Cramer’s personalities” (nice turn of the phrase there!)… it can provide a full-time occupation, if you want it to.

    Just rare to see HT send over a Cramer piece. So, thought i’d post it.

  109. 109
    BirdsofpreyRcool Says:

    This weekend might not bring closure… a good long fight might be just the thing at this point.

    http://www.foxnews.com/politics/2010/03/19/fast-complications-drag-health-votes/

  110. 110
    RMD Says:

    MLPs: Been thinking about Jefferies comment about the massive premiums to asset value. Upstream MLPs only. Some thoughts may help on the trusts:
    1. theoretically they can grow as they reinvest cash flow or do accretive acqs. Given valuations (below)the story is all acqs for ’10. VNR and LGCY both are focused on acquiring enough production in ’10 to offset, with the added production and CF, both the effect of production declines and lack of ’12- ’13 hedges. VNR said bluntly they are delevering (“we don’t want to go through that again”, and won’t increase distributions meaningfully until we have the ’12-’13 production and it is hedged, i.e. ’08 distributions got out ahead of the balance sheet.
    Valuations: LINE, VNR, LGCY, EVEP
    (all 12/09)
    EV/proved: $2.98, 4.14, 4.45, 3.12
    EV/m/day: $22,160, 22,970, 20,000, 17,000
    EV/SEC PV-10: 2.9X, 3.3, 2.8, 3.2
    EV/yr. end PV-10: 1.7X, 1.8, 1.6, 2.6
    EV/strip: 1.4X, 1.3, na, 1.5

    (EVEP’s yr. end PV-10 only increases 26% from their SEC PV-10, while the other 3 increase 76%, 73% and 70% respectively. Have not looked into why.)

  111. 111
    BirdsofpreyRcool Says:

    hey z… can i post a wild-z type idea that has nothing to do with energy on this site? It’s friday… and a close friend of mine is the largest institutional holder of this stock. It is a very interesting situation. But, it’s not energy. At all.

  112. 112
    zman Says:

    BOP – of course. Corona and lime calling me.

  113. 113
    RMD Says:

    110: acquistions accrete because you are using equity at the above valuations and still cheap debt to buy boring, mature production at $2.00/m or less and flowing production at $10,000/m/d. Easy math.
    Valuations are high because the public chases yield.
    VNR and LINE are self managed so there is no promote via incentive units to the General Partner.

  114. 114
    RMD Says:

    Observation on the DJ Triad: TISDZ has not come off at all with the Triad…so far.

  115. 115
    BirdsofpreyRcool Says:

    It looks “pharma”… but it’s not. I’ll post this overview link. But really, anyone interested should read the 10K they recently filed. If nothing else… it’s a fun set of letters to put on your Market Watch Monitor.

    http://www.benzinga.com/markets/company-news/181161/james-altucher-s-favorite-under-5-stock-star-scientific-cigx

  116. 116
    BirdsofpreyRcool Says:

    Speaking of The Triad… EXXI holding up bettern MMR. Could be the oily nature of EXXI. Could be that EXXI can self-fund 2010. Could be that EXXI is not in Hurricane Deep or BBHill. Either way, I expect the two (MMR/EXXI) should be able to claw some of their way back next week. But I definitely view EXXI as the more “defensive” of the two stocks.

  117. 117
    zman Says:

    BOP – I’d agree with the more defensive statement. I think the BBHill appraisal well problem is not an issue. First, it appears to be unfounded and second, it’s an appraisal well so if they have a problem it’s not like they haven’t already found enough pay for it to be commercial and 3) it has not bearing on the big kahuna at Davy.

    CHK – still oddly green.

  118. 118
    zman Says:

    re 104. It’s the next big thing oil shale plays or at least that’s the hype. Total organic content is lower than the Bakken from what I can tell, still doing a little research on the plays but I think PETD is one of the players.

  119. 119
    Dman Says:

    BOP & Z:

    How about the *other* DJ triad member: PXP ?

  120. 120
    BirdsofpreyRcool Says:

    Dman — an old timer in the business (who owns PXP too) said the chart there is “classic.”

    He described PXP’s chart the other day as exhibiting the perfect “Flying Turd Formation.”

    I laughed so hard… well… coffee went everywhere.

  121. 121
    zman Says:

    re 119, see 120.

  122. 122
    PackMan Says:

    http://corner.nationalreview.com/post/?q=NGRjOTYyMWZlYTQ4NzZhNTU2YTcxMTVkMTQ3OGFkYWE=

  123. 123
    BirdsofpreyRcool Says:

    Dman — but i still own PXP…. so, laughing at myself too.

  124. 124
    RobBanks Says:

    Bot some KOG at 3 bucks for my dad’s account. He’s pressuring me to be less defensive (gee, at just the right time, huh?).

  125. 125
    RMD Says:

    120 – is the FTF in any way related to the SMFA (slow moving fat antelope)?

  126. 126
    BirdsofpreyRcool Says:

    RMD — LOL

    One is to be captured and savored… the other… well… 😉

  127. 127
    BirdsofpreyRcool Says:

    Dman — i think in the longer run, PXP should (honestly) be higher. It’s oily and has exposure to some really incredible plays (haynesville, ultra-deep, Lucius). So, why it persists in being a perfect FTF… I have to think it has something to do with not putting a lot of confidence in mngmt.

  128. 128
    BirdsofpreyRcool Says:

    z — so, how is this going to work next week? will you be checking in? I’ll post a morning commentary from HT, TT, and any mrkt updates during the day. Also, anything I get from the guys at the HW conf.

    Regardless of what happens this weekend, monday will be an interesting day. Just don’t know which direction-type-of-interesting.

  129. 129
    Dman Says:

    BOP # 127 hear ya. Maybe I’ll see if it gets to $28. I’m wondering if CHK is signaling the NG plays are too beaten-up here. CRK is tempting me.

  130. 130
    zman Says:

    re 128 …dunno, I was planning on playing it by beer.

  131. 131
    BirdsofpreyRcool Says:

    Dman — was just chatting about CRK. They are unhedged, as i know you know. And people are pretty negative on nat gas prices. That said, once everyone believes the same thing, the world has a tendancy to shift.

  132. 132
    BirdsofpreyRcool Says:

    z — i can see you already have you head in the palm fronds. Relax and enjoy. You deserve it!

  133. 133
    jy Says:

    Re #104
    The “Niobrara Formation” is an upper Cretaceous age (~85 million years old) limey formation that is often called a “chalk”. The Niobrara was deposited in the shallow western interior seaway that covered central North America at that time.

    The rocks are brittle (good for fracturing) and have relatively high primary porosity (good hydrocarbon storage capacity). The Niobrara is approx. age and rock type equivalent to the Cretaceous “Austin Chalk” of TX and LA which has undergone several drilling booms related to improvements in drilling & completion technologies.

  134. 134
    BirdsofpreyRcool Says:

    jy — isn’t there a Niobrara Reef somewhere?? Is it West TX??

  135. 135
    Dman Says:

    BOP – #131. You might be overstating my powers of recall. My thinking was “I think they are unhedged based on dim recollections from the last time I looked at them. Well, OK they must be unhedged given the price trend”

    I was lucky enough to lose my PXP to my call buyer when it was in the $33 range. So the $30 handle looks interesting. But it could get more interesting still 🙂

  136. 136
    zman Says:

    Beerthirty – BOP and Nicky are in charge of the show next week. I’ll be monitoring from the sidelines.

  137. 137
    elduque Says:

    Niobrara State Park is in Nebraska. Don’t know if that is the same place.

    Have a great weekend everybody.

  138. 138
    Nicky Says:

    Charts look poised either way at the close. If health care isn’t passed then we get our pop to a new high. If it passes we should gap down. Just imo!

  139. 139
    BirdsofpreyRcool Says:

    Dman — in the realm of PXP trading, you’re a Rock Star, man. Nice!!

    z — relax. Enjoy. We will miss you. But, could be a quiet week for energy. cheers.

  140. 140
    BirdsofpreyRcool Says:

    Nicky — wow. Pretty interesting. Charts don’t lie. Could go either way, for sure.

  141. 141
    RobBanks Says:

    Have a great vacation, z, and a good (and interesting) weekend to all.

  142. 142
    Nicky Says:

    BOP either way upside is on borrowed time here. We have some pretty major short term cycles rolling over. I think we could see a decent correction.

    I gather that most think health care will pass fwiw.

  143. 143
    Hoss Says:

    Q: North Dakota Well Production Data – the term “runs”

    can someone provide a brief interpretation?

    is that referring to a “spot sample” or “running sample” or the “run ticket” or something else?

    the “runs” number is usually close to the BBLs number, but may be either higher or lower.

  144. 144
    BirdsofpreyRcool Says:

    Tough to see where they don’t “pass” something. Comes down to the definition of “pass,” I guess. Also you have states already challenging the mandated insurance purchase part. Also, it’s not clear to me how they can pass new taxes, without a vote.

    Any way this turns out, it’s going to be messy and it isn’t going to be quick. Tough to see the mrkt melt up continue, given that backdrop.

  145. 145
    Dman Says:

    BOP #139 – well I assure you it was a fairly mangled trade, which I escaped from with a small profit thanks to my call buyer. If that’s Rock Star trading in the PXP world, well … I guess that says what I need to know about PXP. I sure don’t wanna find out what Bellhop PXP trading would look like 🙂

    Actually I realize I should have phrased my question a bit differently, i.e.:

    “Apart from management that everyone loathes, is there anything else in particular wrong with it just now, other than, well, the fact that it is PXP”

    That’s pretty much what you answered in #127.

    BTW, I took a starter position in your CIGX idea. Figured it sounds so weird it must be good. Or failing that, worth a spec anyway. I’m up 2 cents on it after hours!

  146. 146
    jy Says:

    BOP re: #134
    Not familiar w/any “Niobrara Reef” nomenclature. Chalks tend to be much more widespread than biohermal buildups (reefs) and are associated w/large areas of shallow, warm seas with very low sand and mud sedimentation rates. Those critters don’t like mud!

  147. 147
    Hoss Says:

    Re: Niobrara

    “This latest action by EOG is the second D-J Basin area wherein the company is chasing the horizontal Niobrara. Roughly 47 miles to the southeast, just south of the Wyoming border in northern Weld County, Colorado, the company is in the process of developing a Niobrara discovery at the Jake #2-01H, se-nw 1-11n-63w. Latest production figures supplied to the state show that this well made 14,156 bopd and 2.9 mmcfg for eight days in October. The company has drilled one stepout to this producer, spud-in another, and has plans to drill at least six more horizontal tests in this immediate area.”

    http://www.rmoj.com/

  148. 148
    bill Says:

    the eia numbers are meaningless..our govt at work

    NEW YORK (Dow Jones)–Nobody except a few government number crunchers knew it at the time, but for one day in September, oil traders the world over were chasing phantom barrels of crude.

    On Sept. 16, the U.S. Energy Information Administration reported nearly four million barrels of oil vanished from Cushing, Okla., in a single week, the biggest drop in at least five years. Oil prices jumped 2.2%. Some observers were skeptical, questioning how so much oil could have drained from the area so quickly. But the EIA is the most trusted source on U.S. oil supply and demand by a wide margin, and its weekly inventory surveys are extremely influential in the oil market.

    On days like Sept. 16, “everyone knows they’re wrong, but you have no choice but to react to it,” said Phil Flynn, an analyst with PFGBest in Chicago. At the time, he told Platts, an energy news service, “I don’t think the numbers add up.”

    EIA staff emails from that week, obtained by Dow Jones Newswires in a Freedom of Information Act request, show that half of the missing oil had been moved out of Cushing much earlier, but a storage facility owner had continued reporting its tanks as full. The large drop on Sept. 16 was the EIA’s attempt after discovering the company’s error to adjust its numbers without disrupting the global oil market.

    The incident illustrates both strengths and shortcomings in the EIA inventory reports, the weekly product of a monumental effort to tally the amount of oil held in thousands of facilities nationwide. The agency followed a procedure that has worked in correcting countless errors in the past, but was inadequate for a rapidly changing, heavily scrutinized hub like Cushing.

    The survey was designed in the early 1980s, when the oil futures market–centered around oil delivered at Cushing–was just getting off the ground. Since then, crude futures have grown to be the most heavily traded commodities derivative worldwide, and the release of the EIA’s weekly inventory reports are a keenly anticipated event in the market. Rapid expansion in tank capacity at Cushing was a source of errors on at least two occasions last year, as the companies involved failed to properly integrate the new tanks into the old reporting system, the documents show.

    A report by consultants at SAIC Inc. (SAI) commissioned by the EIA last year expressed concern about “critical vulnerabilities” in the weekly surveys, including a stretched staff with little time and inadequate resources to sufficiently fact-check the reports. Agency leaders have made pleas for more funding to address quality issues, and the EIA is slotted to receive an additional $18 million in the current version of the 2011 fiscal-year budget.

    Although the sheer scope of the survey means some data are occasionally misreported, an error of the magnitude seen at Cushing is “extremely rare,” said James Beck, who heads the EIA team that compiles the weekly oil inventory survey.

    Beck said the public inventory numbers are gradually adjusted after a mistake is discovered, to avoid exactly the sort of market reaction that occurred on Sept. 16. When the error is too large to massage into later reports, the EIA has issued public notices. In December 2006, for example, the agency reported an extremely large drop in Midwest oil inventories. About two weeks later, the EIA issued a statement highlighting the discovery of a company’s reporting error that had skewed the report.

    With the Cushing error, the agency tried the gradual approach, but overlooked the limited pipeline capacity available to carry oil out of the storage hub, Beck said. While inventories can easily rise by millions of barrels in a week, it would be extremely difficult to move more than two million barrels out of Cushing over the same period.

    The week the EIA added its 1.7-million-barrel correction, the actual drop in Cushing inventories was already approaching its limit. So what amounted to a relatively small decline in nationwide inventories looked like a giant plunge in heavily scrutinized Cushing.

    Several EIA staff members said there was no guarantee that they could have caught the error faster with more resources. But the market-moving correction could have been avoided if the agency had time to analyze the pipelines connecting Cushing to other markets.

    “You always have a balancing act between resources, timeliness and accuracy, Beck said. “This is not necessarily something if we had extra resources we would have caught.”

  149. 149
    BirdsofpreyRcool Says:

    For anyone interested in following the CIGX Saga… go back and read the 1st paragraph of the company’s PR on Nov 4, 2009. That is the next milestone to watch for. The final marketing agreement with inVentiv Health (VTIV) to be announced. That will be any time between now and June 1st. (But probably closer to “now” than June). Finalizing the agreement starts a 3 month test market in the Virginia area. This is not a pharmaceutical (and they have already run it by the FDA). It’s like a nicotine patch… only it looks like a tic-tac and it works.

  150. 150
    BirdsofpreyRcool Says:

    jy — for some reason “Niobrara Reef” just rolled out of my brain and onto my keyboard. But, you are so right. Reefs and chalk only resemble each other in that they are both composed of calcium carbonate. Just sounded familiar somehow. Thanks for your follow up!

  151. 151
    Paul in Kansas City Says:

    someone did a massive end of the day dump HGT; it is worth a look at $15

  152. 152
    zman Says:

    Paul – see also BPT, down $10.73 at the close at $85.05.

  153. 153
    Paul in Kansas City Says:

    Some mass dumping by a fund out there?? BPT looks like the bids were pulled and the end of the day someone just unloaded the rest of their holdings

  154. 154
    zman Says:

    Paul – must be a rumor out there, it trickled off all day and then doubled it’s losses after lunch, with bigger volume, like a bit of panic. Volume for the day was the highest in a long, long time and going back in time, this thing has occasionally dropped on high volumes surrounding oil spill settlements. Quick digging around found nothing in the news.

  155. 155
    Paul in Kansas City Says:

    i agree; or else a fund like a barclays (per yahoo major holders screen) just en mass sold. I find it hard to believe HGT will payless than 60 cents over the next 12 months so i don’t buy selling on a reason like that.

  156. 156
    Jerome Blank Says:

    Happy Spring equinox…lots of interesting chart updates to cover …and lots more to get to, so I thought I would post the updates as I make them…

    AEZ
    AEZ 30 min added
    AEZ daily #2 added
    ATPG
    BHI
    CHK-interesting technical clue as to the curious price action on Friday…

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

  157. 157
    andy Says:

    interesting comments on DPTR here
    http://247wallst.com/2010/03/18/whats-left-of-delta-petroleum-after-the-sale-dptr/2/

  158. 158
    Jerome Blank Says:

    Good morning…add’l updated charts and comments…

    CFW
    CLR
    COG
    DVN

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

  159. 159
    Jerome Blank Says:

    Additional updated charts and comments…with the recent pullback environment a number of our stocks are at very easy to manage P&F buy points…

    EOG
    MMR
    NFX
    PXP

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

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