Tuesday Morning And There’s Lots Of News Out

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Market Sentiment Watch: Nice sea of green energy love yesterday. Today we have no data on the economic front to guide the market, a number of secondaries including the one I hypothesized about Friday afternoon at BEXP (see Stuff section below), and operations updates from ROSE (which was OK) and SSN (pretty good). I included a list of gassy E&Ps and their corresponding short interest for those in the camp that the EIA's admission to having botched the supply numbers may put some shorts in the "cover and seek other game" mode.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today – Gassy Short List, BEXP, ROSE ops update, SSN ops update, KOG, APC
  5. Odds & Ends

Holdings Watch:

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

    • $12,800
    • 46% Cash
    • Yesterday’s Trades:

      • MMR - Added (20) April $16 calls for $0.59 with the stock at $15.80. We should be very near an operational update on two of their wells (Davy Jones and Blueberry Hill) although there's no assurance they won't stay mum until they report earnings, they generally don't and the timing on the Blueberry Hill makes sense as it is well below it's original planned depth now.
      • SWN - Sold half of my April $41 calls for $2.30, up 175% since entry last Monday. See comment 105 on today's post for thinking here. I continue to own the common in the ZLT.
      • SD – Added (10) April $7 calls for $0.63 with the stock at $7.56, down 4% on the ARD acquisition today. See site for comments on that.
      • SD – Riskier, took (30) of the April $8 calls for $0.15.


  • ZIM (Zman Inefficient Markets portfolio)
    • $11,500
    • 47% Cash
    • Yesterday’s Trades:
      • None

Commodity Watch

Crude oil jumped another $1.75 to close at $86.62 yesterday, an 18 month high, again on strong equity markets and a slightly weakened dollar. Crude may be due some profit taking in the very near future along with the S&P 500 after this recent 5 day, 8% rally. OPEC is also making noises that it will increase flows modestly in an effort to keep crude in their so called sweet spot ($75 to $85) range for consuming and producing nations. This morning crude is trading flat.

  • Early Read On Oil Inventories:
    • Crude:  UP 1.7 mm barrels
    • Gasoline: DOWN 1.4 mm barrels
    • Distillates: also DOWN 1.4 mm barrels

Natural gas jumped $0.19 (4.7%) to close at $4.28 yesterday on early fallout (short covering) from the government's admission that it has been overstating U.S. natural gas production. The move is probably not done, is technical and probably makes a run on at least $4.50 if not $5 before we get those revisions at month end as shorts trim positions. This morning gas is trading up 3 cents.

  • Imports Watch: 7.8 Bcfgdp, in line with last year's volumes for the week.

    • Canada: 6.4 Bcfgpd, continuing to slip seasonally, down 0.3 Bcfgpd from last year.
    • LNG: 1.4 Bcfgpd, a bit of a bounce but still not a huge number. If the EIA makes sharp downward revisions to supply figures, look for prices to bounce and more gas to head to the U.S. as a partial offset.

 Crack Spread Update

Key Takeaways:

  • 1Q numbers are probably low enough to the group. Given where cracks are now, analyst may be feeling less pressure to trim out year numbers, especially the second quarter.
  • TSO was hit by a couple of downgrades following their refinery fire.  This is probably undeserved.
  • VLO and FTO are starting to interest me again as well.
  • Much depends on gasoline demand holding up and diesel demand from the transportation sector recovering. I'll continue to monitor both weekly.
  • More to come before earnings season.


Stuff We Care About Today

I'm Gassy And People Love To Short Me Watch:

Just thinking that the shocking revelation that the EIA has botched their gas production methodology, admittedly overstating supply (by how much we don't yet know) could inspire shorts to run for cover. So here's a list of gassy names along with their current short interest. Enjoy.


BEXP Files Secondary

The Deal:

  • With the shoe this comes to about 15 mm shares,
  • about 15% of current outstanding shares.

Capital Budget:

  • 2010 increases by $95 mm to $294 mm.

    • Rig count in the Bakken to double from 4 now over the next year; so 5th rig added May 2010, moving to 8 rigs by May 2011.
    • For this price they see getting 31 wells drilled this year, up from prior thinking of 25.7 wells, which is less than I would have expected given the level of increased spending.
    • You should see new, significantly higher volume growth estimates for 2010 shortly after the deal gets done.
  • 2011 set at $360 mm (97% apportioned to drilling)

Balance Sheet:

  • Prior to the deal, BEXP had > $100mm in cash and a $110 senior credit facility that was undrawn.

Nutshell: The last offering they did was in October at $10.50 and was received warmly by the market then, with barely a hiccup in the shares before they moved higher.  Thinking they may be trying the same hear although there may be some disappointment as the company's recent commentary has stressed available liquidity, cash on hand and cash flow could fund operations through 2011. Furthermore, with the addition of $95 mm in capex, the company is adding only 5 net wells in the Williston Basin during 2010. Even if we assume costs rise to $7 mm per well, it makes you ask how a small bump in leasehold and a couple of non Williston wells that they now plan to add to the program soak up the remaining $60 mm balance. Following the deal, it will be key to see where they take new guidance for 2010, which currently calls for 35 to 45% over 2009 with oil going to 70% of total volumes.

ROSE Updates Operations

  • Eagle Ford Shale:
    • 9 wells spud during the first quarter, 2 completed and the rest in progess
    • average IP of the 2 wells is 8.2 MMcfepd, with a 80% liquids cut. Their first 2 wells came on at 5.2  and 3.5 MMcfepd so we're seeing some good improvement here so far, much like other operators in the play have experienced. 
  • Alberta Bakken:
    • Continues to evaluate logs, nothing new on the data front.
    • Plan is to frac and test the vertical portion of 3 wells, so pretty slow going here.
    • Acreage in the play now at 280,000, up from 254,000 acres at last mention.
  • Guidance:

    • 1Q delayed by rig access issues, volume guidance now 120 to 125 MMcfepd, down from 128 MMcfepd in the fourth quarter.
    • but full year stays the same as the company reiterates prior range of 145 to 155 MMcfepd, up 9% over 2009 levels.

Nutshell: OK report, nothing to really whistle about in terms of incremental data just yet. The well results in the Eagle Ford are better than they expected but not out of line with what many peers have seen to date. 1Q volumes are light of guidance which may cause some indigestion in the stock today or it may get ignored as people just take the more back end loaded nature of this year's production profile in stride.  I continue to own the common shares here.

Samson (SSN) Updates Bakken Operations:

  • Gene #1-22H (30.6% working interest) - SSN reported initial production of 1,112 BOEpd from a partial frac (5 of frac 16 stages completed so far).
  • At the end of 26 hours the rate was down to 948 BOEpd
  • The plan is to clean up the well and complete the remaining stages this week, with a final whole lateral completion IP to be released after that.
  • Based on 320 acre spacing, SSN should have seven remaining well locations on its small Bakken acreage position.
  • Nutshell: That's a good rate for a partial frac for their first time out with a horizontal with a medium length lateral ... market should like it, I'll see how far it runs before deciding if I wait on the remain frac stages to be completed before taking it out of the ZIM. I'll hold it in the ZLT a little longer.


KOG - Acquires More Williston Basin Acreage:

  • acquires 4,531 net acres in McKensie County, N.D., on the border of the Williams County and west of the Neeson Anticline. Potentially adds 12 to 18 drilling locations.   Terms not disclosed but I'd guess this cost them between $13 and $18 mm. Plans to drill at least one well here in 2010.
  • Adds to working interest in Grizzly Project, also Mckensie County by 25% to 87.5%. Terms also not disclosed but already closed and funded out of cash reserves.
  • KOG is likely to do a deal soon and no one could blame/fault them for it given the rapid rise in the shares here.

Other Stuff:

  • APC has 7,500 bopd test off Brazil, should drive shares this morning.

Odds & Ends

Analyst Watch:

  • JPM starts Oil Service group with a longer term bullish stance. HAL named top pick.
  • BMO cuts targets on a number of gassy E&Ps including SWN from $56 to $50 and HK from $33 to $30.


133 Responses to “Tuesday Morning And There’s Lots Of News Out”

  1. 1
    elijahwc Says:

    SD – RBC says prove up the new portfolio and lowers SD target to $10 from $14.

  2. 2
    elijahwc Says:

    FWI – BOP’s CIGX indicated above $3 in premkt

  3. 3
    elijahwc Says:

    SD/ARD – Capital One Southcoast says stock deal drives rating change:

    We are changing our ARD opinion to NOT RATED from ADD following the company’s announcement Sunday that it has agreed to be acquired by SD in a 96% stock deal (pending shareholder approval). Post transaction, ARD shareholders will
    own almost 50% of SD. This is a big transition for ARD shareholders: ARD is going from a debt-free, oil-levered stock to a higher risk, financially levered, more gassy stock with
    exploration upside.

    Oil-levered names to buy: As we mentioned yesterday, we recommend that small-cap investors looking for oil exposure buy ME (150K net acres in the Permian) or REN (oil represents 85% of current production).

  4. 4
    elijahwc Says:

    Finally SD/ARD – Wunderlich Securities says:

    Lowering Price Target; Arena Taking the High Road and Selling Out

    We were surprised to hear Arena Resources (ARD) announced Sunday it was being sold to SandRidge Energy (SD-NR) for $2.50 in cash and 4.7771 shares of SandRidge stock. Based on Monday’s closing prices, as well as the fact that there is no collar on SandRidge’s stock price, the deal appears to be a 13% premium to last week’s close. We are lowering our price target to $40.00 from $45.00, as our price target multiple falls to 8.9x from 9.9x to fall in line with more balanced commodity names. Upside to our Arena price target going forward is dependent on the movement in SandRidge stock and our forecast that a higher bid is not announced given the breakup fees involved in the deal.

    Key Points

    Arena soon to be a part of SandRidge. If approved, Arena shareholders will own just under half of SandRidge. We do not label the deal as good or bad, but rather a change in structure. While Arena production was nearly 90% oil, and the company grew production through relatively no debt, pro-forma SandRidge will initially produce mostly natural gas and the company will have a debt-to-market capitalization of nearly 50% (and a debt-to-book capitalization of 66%).

    Positives. Though we do not cover SandRidge, the company appears to have numerous long-term prospects with over 2,700 identified locations coming from the Arena acquisition alone (Arena had previously identified approximately 1,400 locations on the same properties.) Unlike most other E&P companies, SandRidge owns its land rigs and has the majority of its oilfield service costs locked in this year.

    Issues. Though Arena was in discussions with SandRidge since January, the deal ended up being nearly an all-equity deal that was completed essentially at a price approximately 12.5% below where Arena’s stock was not long ago. The high debt level and hedge position of SandRidge gives the company a much different look than Arena previously. Despite a move toward oil, the current company is still more levered to natural gas.

    All eyes will be on Arena management. Arena senior management plans to take a very limited role at SandRidge with no one joining the board and Chairman Tim Rochford taking a non-affiliate role. However, the key will be how long management holds the new SandRidge shares. We will also be watching to see what Rochford does next. …

  5. 5
    zman Says:

    Thanks Eli

  6. 6
    bill Says:

    good stuff eli

    unless sd moves up to 7.75 to 8, i see ard shareholders voting no

    Key for me

    >This is a big transition for ARD shareholders: ARD is going from a debt-free, oil-levered stock to a higher risk, financially levered, more gassy stock with
    exploration upside.

    40 is fair price but is sd fairly valued at 7.75 per share

    with ng over 6 i felt sd was worth 10 or more

    with ng at 4 and no hedges in 2011, i think they are worthless…and so does tom ward

  7. 7
    bill Says:

    ty for the 2 new names as well me and ren

  8. 8
    rseidman Says:

    Where is BOP?

  9. 9
    zman Says:

    She’s traveling through today.

  10. 10
    zman Says:

    KOG bid up on leasehold acquisition that had to cost them a pretty penny. A secondary would be well timed given this run. We used to talk about $3 being the threshold for one and we’re at $3.80.

  11. 11
    zman Says:

    SSN bid $0.70

  12. 12
    Dman Says:

    A second day without BOP?? I’m supposed to understand the market by myself for another day? Without BOP telling me what the bond ghouls are doing? Not that I really understand what she tells me, it’s just that I can usually figure out if it’s good or bad.

    So Z, since we’re in deal city… any likelihood of WLL dropping one on us?

  13. 13
    zman Says:

    BEXP – watching the bid price walk up this morning, at 17.35, that’s really not bad and harkens back to their last deal in October where, if you take a look at the daily chart, you can see that the impact of the deal was fleeting.

    The stock is more expensive on a cash flow per share basis now than it was then (although it wasn’t cheap then either) but their results are markedly better now. The 30 day IPs are running strong on these new extended lateral length, high frac stage wells and the IPs continue to walk higher including yesterday’s Bakken record setting one. I think they have a good chance of upsizing this deal. My only concern/question would be the low number of net well adds for 2010 relative to the ramp in their budget.

  14. 14
    elijahwc Says:

    On SD/ARD: Bill, last night I was thinking that SD had done an end run around the capital markets on this deal and decided to review old notes, specifically the last financing. Ran across this item as posted back then by BOP:

    “Tom Ward is also selling 2 mm shares. I really don’t like that. Nutshell: I know they want to get oily and quick but this is a big piece to bit off given their balance sheet. The debt holders will actually like the big share deal but not the small preferred offering. I can’t say how much I dislike seeing management tack on personal shares in a secondary, especially near the lows for the stock. Ugh”

    Perhaps Tom Ward does believe SD to be worthless. Perhaps those that supplied the capital the last time opined to the same. Certainly everyone would tell him that not selling any personal stock holdings would be a condition precedent to any hint of capital market access.

    If they can’t get the juice fixed on ARD’s then maybe they are worthless.

  15. 15
    Dman Says:

    Cautionary note for the broad markets: Kevin Depew at Minyanville has been bearish for essentially all of the run since March 2009. Yesterday he appears to have capitulated by saying that a new bubble was now being inflated and it could be a long time before the market gets its long overdue comeuppance. Or something like that anyway. From a contrarian viewpoint it worried me a bit.

    But maybe we have to wait for uber-deflationist Prechter to throw in the towel and tell us that crude might not get to $5 anytime soon.

  16. 16
    zman Says:

    Dman – so the rest of us are chick liver? Wow. That hurts. I may go back on vacation.

    WLL – the likelihood increases as it marches higher, like with all stocks. That obvious point being made I’m not thinking they do one just yet since oil prices have marched higher giving them an even better cash flow cushion. I think they may decide to accelerate Louis and Clark and if that happens then a deal is possible.

  17. 17
    zman Says:

    KOG bidding $4.01

  18. 18
    zman Says:

    SSN – trading at 0.71, pretty much got what I wanted for the ZIM as the market inefficiency has largely played out now, will hold in the ZLT for the second announcement on their Bakken well.


    Sold the 5,000 SSN for $0.70, up 64%.

  19. 19
    zman Says:

    SSN – on its way to one of its biggest volumes days. I continue to hold it in the ZLT and think it could run further. Again, not falling in love here as they have limited running room on their current acreage and may seek additional capital to add land.

    Group now more than 50% green and continuing to green up.

    BEXP down 3% since the open is not bad at all in my book. I would imagine they try to price the deal at $17, maybe plus a few pennies at the close today.

  20. 20
    zman Says:

    JB – any thoughts on the TA of SSN now?

    They should have a pr out either Friday or Monday on the remaining stages and full rate of this Bakken well.

  21. 21
    elijahwc Says:

    Z the folks at briefing have decided to pick up the SSN release. Congrats, I think your remaining shares actually go north of a buck if enough eyes focus on it.

    SSN Samson Oil & Gas higher after providing operational update on the Gene #1-22H Well (0.71 +0.17)

    Thinly traded SSN is up over 25% in early trade after the co provided an operational update on the Gene #1-22H Well. Operations to fracture stimulate the well commenced on and Stages 1 and 2 were pumped on April 1; this was followed by Stages 3 through 5 which were pumped April 2 and 3. The completion design is for a 16-stage fracture stimulation so this initial operation amounts to approximately a third of the stimulation program. Operations were suspended because of the Easter Sunday holiday and the well was flowed back whilst the service company crews were off site. The initial flow back results from the first 5 of a planned 16 multi-stage frac were undertaken on April 4. The rate at 0600 hours on Sunday was recorded at 913 mscfd of gas and 960 bopd which is a combined rate of 1,112 boepd. The flow back continued into Monday, April 5 and was recorded at 0800 hours on that day, at 650 mscfd of gas and 840 bopd which is a combined rate of 948 boepd. The forward plan is to clean out some residual sand that was left in the well after Stage 5 using a coiled tubing unit. This interim clean out is planned for April 5 and the balance of the frac stages (Stages 6 through 16) will be pumped during the balance of this week. Following this, the well will be flowed back and the market will receive further advice on the results of the flow back of the entire well.

  22. 22
    zman Says:

    Eli – hear ya on that. For the inefficient markets portfolio (the ZIM) I though it had done what I set out for it to do after their gas well was a dry hole. For the ZLT I plan to milk it.

  23. 23
    elijahwc Says:

    Z – Denver Post has a story out saying that SSN along with EOG and Jonah just got approval for 21 of 25 sought permits to drill horizontals in the Niobrara.

  24. 24
    Jerome Blank Says:

    RE: #20 SSN…huge gap, added two P&F boxes this morning…pressing the highs now, it’s either close your eyes and buy it or dial down to an intrady chart and gamble on a consolidation pullback…I would think many swing traders would consider taking profits up here, especially if you bought the break below the triangle…

  25. 25
    zman Says:

    Thanks Eli, good find. Watching PETD still. Didn’t see SSN was doing a “me too” there, will look into it.

  26. 26
    elijahwc Says:

    SSN correction: The wells are not partnered and as one would expect EOG is the leading force here. Interesting story:


  27. 27
    zman Says:

    Thanks JB, milking it big time in the ZLT. Nothing like a 45% gain in a stock in a day to put a little zip in your day.

    TISDZ moving up again, notably EXXI back to $20 and MMR back above $16. Will get an update re MMR’s Blueberry Hill well today. If that’s ready to go it could be combined in a pr with Davy Jones news as they generally like to release ops updates on multiple wells.

  28. 28
    zman Says:

    Thanks, so SSN received 1 one of those permits, that sounds about right given their size.

  29. 29
    Dman Says:

    Z – #16 part 1. Well mostly the board here is about *stocks* and that’s what I try to learn about here.

    For the market as a whole, I seem to depend on BOP’s unique angle, even if it would be an exaggeration to say I understand it.

    Actually, it may amuse you that I’ve concluded that my understanding of your trades is a contrary indicator. They seem to work best when I *don’t* understand them. I think this is because if *I* can understand them, then so can everyone else and the market inefficiency/opportunity isn’t there. SSN is a classic example. There is no way I had the time to understand it before acting. So I need to act first and understand later.

    Actually, maybe I should just ditch the whole understanding concept altogether. It’s only my scientist’s ego that makes me want to understand things. Maybe I shouldn’t let that get in the way of a good trade.

  30. 30
    bill Says:

    sd bouncing back

    good option buy z

    you have a great sense for timing!

  31. 31
    zman Says:

    Popeye, I do hope you didn’t punt for that extra penny on SSN yesterday, up 54% today.

  32. 32
    VTZ Says:

    Z – Just as a FYI, there are a number of trusts here on the TSX that are issuing new units/equity this week as well.

    Seems like a lot of top callers?

  33. 33
    zman Says:

    Thanks Bill. That one you really convinced me on. I don’t know that I’ll get more involved than Aprils and I don’t know if the deal gets done. It would be a big scoop for them if it does though. ARD management on the other hand may have the word “sellout” added to all their middle names. I personally don’t get their reasoning for punting unless they think that combined, the SD shares will haul tail for them more than their own ever would have. Would have been better to see ARD management integrated into the board. But no matter, good deal for SD.

  34. 34
    elijahwc Says:

    Bill we need to diss Tom Ward some more and juice Z’s SD calls

  35. 35
    bill Says:

    34 lol, i think ward made a great move

    and ard too if ng rebounds

  36. 36
    zman Says:

    V – Thanks for the heads up and agreed.

    Eli – oh please do.

    re 35 – yep, yep. Ironic that SD buys oil on the day EIA fesses up to not knowing how much supply is out there, only less than they think. But it may work very well for the ARD guys by mid year.

  37. 37
    VTZ Says:

    Gold moving up into the upper range of resistance even with the dollar up.

    I’m looking for a breakout to the previous high and potentially above. Would likely coincide with a euro bounce.

  38. 38
    Dman Says:

    V – #32 got a list?

  39. 39
    zman Says:

    MMR breaking back up through its 50 day sma.

  40. 40
    dij Says:

    Dman! #29. That is just the best analysis. Somehow it applies to life as well, does it not? Is that what you do with love? Thanks!

  41. 41
    Dman Says:

    V – I looked a chart of the SLV:GLD ratio going back 5 years. There is a downtrend that the ratio is now bumping up against. Wouldn’t surprise me to see silver continue the recent out-performance of gold.

  42. 42
    Nicky Says:

    Morning all. Move down (if you can call less than 1 point a move down) is corrective. We would have to take out the 1174 level to get something going on the downside.

  43. 43
    Jerome Blank Says:

    MMR…good example of P&F “bear trap”…one box sell print, with an immediate 3 box reversal off the lows…

  44. 44
    zman Says:

    MMR has logged Blueberry Hill. Then set cement plugs on a 350 foot interval.

  45. 45
    zman Says:

    Thanks, will go vote in a minute, while I’ve got you, take a look at the BEXP chart. See deal last October, looks very similar to that one in which the market absorbed it pretty quickly. This is 13% dilution without the green show (another 2%) so normally you’d expect the stock to be off more than 2.8%. More like 10%. Says to me they have this oversubcribed. Like I said yesterday, Jeffco’s institutional salesman are good to have on the case here, above average energy savvyness.

  46. 46
    Popeye Says:

    Z, I did not get filled yesterday but because I was so close at the end of the day I decided to pull the order. I’m out at .71 and not looking back. It paid for a couple of years of Z.

  47. 47
    Nicky Says:

    If we can hold above this mornings low and make a new high tomorrow that could complete wave v. Still looking for that 1190 – 1194 area really. I don’t think we will get to 1200 on this run but of course I may be totally wrong – I guess its just because everyone thinks its a dead cert.

  48. 48
    zman Says:

    Popeye – that’s what I wanted to hear!

    Nicky – thanks much. I always appreciate your looks! Any word on where Prechtor stands now?

    MMR up 3%, here’s that BB Hill link, see the 4/6 entry. Note that they got stock, got it free, then logged it. Should be news soon.


  49. 49
    zman Says:

    BEXP slipping higher, down 1.5% on the day. Seems like old times.

  50. 50
    VTZ Says:

    RE 38: NAE.un and PEY.un were some of the more recent ones… I don’t have a complete list. I’ll see if I can wrangle one.

    RE 41: I think it would be wiser to look at a longer term chart although I do see silver outperforming gold at some point which is why I love SLW so much (in combination with the leverage of the business model). Silver strengthening would be confirmation of an upmove, just like the HUI.

  51. 51
    bondbuddha Says:

    SSN, out at .80, tks Z, nice call, of course wish I had bought more, but fun little trade, and I am learning more about these ” stocks ” things, lol.

  52. 52
    bill Says:

    48 how do you handicap this?

  53. 53
    bill Says:

    pxp ceo bot 200,000 shares

  54. 54
    Jerome Blank Says:

    Re: #45, Zman, thank you for the vote…Re: BEXP…right now, I agree, technically holding up very well, still on a buy in X’s ( reverses into O’s on a $16 print)…dialing down to the 30 minute, BEXP traded down to close the upside gap from yesterday and is now trying to close the downside intraday gap from this morning…all in all looking good…sort of disappointing for folks trying to buy it lower…I was looking to buy it above $16 on a pullback to the major daily trendline, does not look like I’ll get that chance right now….looks like BEXP is on its way up closing the downside gap as I write this….

  55. 55
    bloodystupidjohnson Says:

    My prayers and wishes go out to the families in the MEE mine disaster. Even with all the new regs, underground mining is a very dangerous job.

  56. 56
    zman Says:

    Ram – you around, did you do the SSN?

    Bond – great.

    Bill – They logged it at just about the same depth as the discovery well, then they plugged it back to 22,000 feet, don’t know what they saw above 22,000 feet that they liked on the log but we could be looking at data from the in the next couple of weeks.

  57. 57
    zman Says:

    BSJ – roger that.

    I was going to write a bit about MEE falling and the other names getting an uplift off of it but that seems a little Machiavellian even to me.

  58. 58
    zman Says:

    Massive volume on SSN today and in the last minute.

  59. 59
    zman Says:

    Would one of you guys lift SD for me, thanks.

    Crude tiptoeing around $87.

    NG of a percent but after the two day run I’m not surprise. Gassy names for the most part are green, some suppressed by the BMO target cuts but that should have no lasting impact.

  60. 60
    Jerome Blank Says:

    #53 PXP 3 box reverses into X’s at $32…a “bear trap” reversal at P&F trendline support…

  61. 61
    Dman Says:

    dij #40 Your question is a little deep for my current caffeine levels, but I will say that trading & love do have one thing in common:

    Timing is everything & don’t let anyone tell ya different 🙂

  62. 62
    zman Says:

    re 44. Should not have mentioned the cement column height, was just typing off the sonris site where I get the data, that means nothing. They plugged it off at 22,000 feet so the logs must not have shown anything interesting below that level. The original intent was to hit the structure high to the discovery well which would have been above 22K and as they are still cleaning up the well bore I would assume they liked something at or near the original depth.

  63. 63
    ram Says:

    Zman – Yes, always lurking. I did purchase SSN at two different times. I am still hanging on. My 401K is doing great thanks to ZEB!

  64. 64
    elijahwc Says:

    Leon Cooperman coos favorably upon EXXI, ATLS and RIG in Fortune.


  65. 65
    zman Says:

    more MMR … and the stock is acting like news will be out soon. If they had not like something shallower than 22,000′, they probably just would have plugged and abandoned it.

    BEXP off just 8 cents now. Nice.

  66. 66
    zman Says:

    Ram – just checking and thanks!

  67. 67
    elijahwc Says:

    BEXP – Thomas Weisel Partners on BEXP —

    What’s New: Brigham Exploration announced it has commenced a public offering of 13mn shares
    to fund an accelerated Bakken drilling program. The company now plans to drill 31 and 45 net Bakken/Three Forks wells in 2010 and 2011, respectively.

    With the proceeds of the offering, the company has increased its 2010 capital budget to $294mn, up nearly $100mn or 48%, and provided a preliminary 2011 budget of $360mn.

    Why It Matters: Following the share offering, our NAV remains unchanged at $27 based primarily on accelerated Bakken development as the company plans to double its operated rigs to 8 over the coming year. Also, based on the success of the Sorenson 29-32 #1H, which IP’d at 5,133 Boe/d, a record for the 2,700 horizontal wells in the Williston Basin, we are raising our estimated ultimate recovery in the Ross area to 700MBoe, up from 600MBoe.

    We are changing our EPS/CFPS estimates to $0.33/$0.97 from $0.31/$0.98 for 2010 and to $0.75/$1.94 from $0.76/$2.05 for 2011 based on the higher share count partially offset by increased production.

    The company’s first Three Forks Formation well in Rough Rider (115,000 net acres) and its first Bakken well in Ghost Ride in Montana (83,000 net acres) could be catalysts in 2Q or early 3Q.

    Valuation: The shares are currently valued at a 3% premium to our peer group based on price/NAV and EV/2010E EBITDA. Notably, our NAV does not include any resource value for the Three Forks in Rough Rider or for the Bakken in Ghost Rider.

    Recommendation: We reiterate our Overweight rating and reiterate our price target of $21 based on a robust growth outlook and potential catalysts in the rapidly expanding Bakken and Three Forks plays.

  68. 68
    VTZ Says:

    Loonie worth more than a USD today. Need to go on some trips!

  69. 69
    zman Says:

    BEXP green at $18.

    That TW piece fails to ask the question of where the extra capex all goes. 5 more wells doesn’t cost half that much.

  70. 70
    zman Says:

    Traded emails with BOP on the road, she thought I should mention that the likelihood of a secondary from KOG was increased which I did in the post above but there’s her reiteration for ya.

  71. 71
    cargocult Says:

    You following SFL? Kicking ass lately.

  72. 72
    Jerome Blank Says:

    WRES continues to have an interesting chart…it was odd that it just kept hugging that lower trendline on the daily refusing to go lower…looking now for a decent consolidation pattern….


  73. 73
    zman Says:

    BEXP may be able to price that deal at $18 now. All time high for the stock is $18.29 from June 2008.

  74. 74
    Nicky Says:

    Z – re # 48. I haven’t heard anything new from Prechter other than what I said last week which is that again he was saying this was a great shorting opportunity. Sadly he has almost become a contrarian indicator. I think the guy is brilliant but his timing has never been great.
    This is starting to look like an ending diagonal….

  75. 75
    Nicky Says:

    Calif 20 billion $ budget gap…………..City Controller Wendy Greuel declared an “urgent financial crisis” and said the only way to continue paying bills in the short term was to begin to drain the city’s already limited emergency reserve. Greuel said the city would need to pull money from its $191 million in reserve funds immediately to pay its bills next month. She expects the city to be out of money, and probably in the red, by June 30. Some officials fear that using that money would not only leave the city without reserves in case of emergencies, it would also probably trigger another downgrade in its Wall Street credit ratings.

  76. 76
    zman Says:

    Thank you Nicky. I am not by the way trying to knock him in the least. Just curious to know as he was looking for a huge fall and they brought him on CNBC to pitch his latest book when the indexes looked particularly vulnerable.

  77. 77
    zman Says:

    Nicky – States next big crisis people are too happy to ignore at the moment. I read a lot of states are borrowing from various funds and pension plans or considering it. Then you have municipalities looking at bumping all sorts of taxes. Not pretty.

  78. 78
    zman Says:

    BEXP at 18.30, trading in all time high territory. That’s pretty wow news considering the offering.

  79. 79
    Nicky Says:

    Its okay I know you aren’t knocking him. Trouble is he was so vocal about his amazing call to short the market and then subsequently he closed the short the week of the lows last March that I rather feel they want to see him fall flat on his face. He has been dead wrong with this rally.

  80. 80
    elijahwc Says:

    #69 judging from the price action in SSN & AEZ, BEXP will be taking a minority stockholder position with the excess proceeds.

    On a more realistic note I sense that we will see many of our Bakken names and some Canadians showing up all over the Niobrara & Frontier Shales shortly.

    Any thoughts on this? Or will it be a new set of entrants playing catch up?

  81. 81
    zman Says:


    Sold the 40 April $17.50 calls, up 45% to my average cost, with stock trading at all time highs around $18.30, despite the secondary offering announced last night. I continue to hold calls in the ZCAT and the common in the ZLT.

  82. 82
    zman Says:

    Eli – I think it will be a combination of names, don’t think you will see BEXP there but some others for sure from the Bakkens. I do think we need to watch the first results there very closely. Also need to watch U.S. production levels this year as they may rise again faster than expected and contribute to a little bit of slack (a very small bit) in oil prices.

    ZCAT – BEXP – holding remaining 10 calls up 402% at the moment to see what happens post deal. My sense is higher. The ZIM trades are going to always be faster to take profits than the ZCATs which may sit around a bit.

  83. 83
    zman Says:

    ROSE was flat most of the morning, then took off, now breaching $26. I hold the common but no calls at this time.

  84. 84
    jiveyjr Says:

    BEXP confounds me…lies around yesterday morning like a dog after a positive announcement…comes out with a secondary and takes off…sold mine into this FWIW…just too nutty at the moment for me…will buy it back if it ever pulls back again

  85. 85
    bloodystupidjohnson Says:

    GDP tops the chart on short interest. However there might not be as many real shorts as first blush indicates. GDP has almost 400 million in convertible senior notes. This might be the reason why GDP tops the charts. Note, GDP has had some recent (March) insider buying.

  86. 86
    zman Says:

    Good point BSJ.

  87. 87
    zman Says:

    MMR still acting like something’s up, up 5% now, best in group save SSN.

  88. 88
    bloodystupidjohnson Says:

    If memory serves, GMXR also has a slug of convertible debt. However this does not prevent either GDP or GMXR from seeing a big jump from a short squeeze. Both are oversold and both can really scoot when the stars line up in the right order.

  89. 89
    zman Says:

    This has gas back down 3% today as EIA says it won’t be that big of a revision.

    DOE May Revise Gas Production 1% Lower. The U.S. Energy Department this month may cut its estimate of natural gas output in the lower 48 states by about 1 percent as it starts using a new survey method to better account for gas from shale fields, a spokesman said. The biggest change in the monthly report will be seen in Louisiana production, said Gary Long, a petroleum engineer with the department’s Energy Information Administration production and reserves division in Dallas. (Source: Bloomberg)

  90. 90
    zman Says:

    And I think 89 doesn’t really make much sense, that’s not much of a revision and since they have been extrapolating the growth of the big caps onto the unsurveyed players, who CHK mentioned the other day, make up 50% of production, that 1% just doesn’t hold water.

  91. 91
    zman Says:

    MMR shooting for a high volume day as well.

    Thinking about adding a small EOG position in front of tomorrow’s analyst day.

  92. 92
    zman Says:

    Barclays out saying they think gas prices fall as well, they have been bears for a long time. They say the 50% number is a myth, that more like 70% of production is surveyed. Just giving the counterpoint here, gas off 14 cents now.

  93. 93
    elduque Says:

    How much do you think they over estimated production?

  94. 94
    zman Says:

    Eld – don’t know. I think 1% is a very small number though, given what they do sample (many large public companies that have more access to capital and hedging ability).

  95. 95
    zman Says:

    SD closing on $8.

  96. 96
    dij Says:

    Wither SD? Through the 3.23 high of 7.88. Now at 7.97 resistence from 12.8.09

  97. 97
    Nicky Says:

    FOMC minutes at 2pm. May give us our pop into the target area.

  98. 98
    zman Says:

    Thanks Nicky.

    dij – SD trying to break $8 now. I will not be in the name very long.

  99. 99
    dij Says:

    Z– not long because this move is predicated on an uncertain merger? As opposed to a certian merger that gives SD more oil?

  100. 100
    zman Says:

    re 99. Exactly. If I thought it would get past ARD shareholders for sure I’d be taking May $10s.

  101. 101
    zman Says:

    …and the stock.

  102. 102
    zman Says:

    FOMC minutes saying it can tighten when it wants despite the “extended period” language.

  103. 103
    Patipati Says:


    Sorry I cannot get a clickable link. New computer!!!

  104. 104
    zman Says:

    From MarketWatch ~ Federal Reserve officials do not believe their “extended period” pledge can be translated into six-months or any other amount of time, according to the minutes of the central bank’s March meeting, released on Tuesday. Officials said the expectation is contingent on the evolution of the economy “rather than on the passage of any fixed amount of calendar time,” officials said. Fed watchers have informally translated the “extended period” to mean six months. But Fed officials said pledge would not tie their hands, the minutes said. A few FOMC members warned against an early start to rate hikes, the minutes said. At the meeting, Fed officials noted the economy was strengthening while core inflation readings were weaker than expected. There was little new about the ultimate exit strategy. According to the minutes, there was a discussion of formulating and communicating the exit strategy, but no decisions were made.

  105. 105
    zman Says:

    Dman – BOP will be back tomorrow.

  106. 106
    bill Says:

    at 8 or higher the chances improve for a yes vote from ard

    on sfi, familar with name but not watching it lately, long term tanker charters protect divy. Any strength due to yield buyers

  107. 107
    isleworth Says:

    CXPO creeping up Z?

  108. 108
    zman Says:

    Isle – see it, not interested at this price.

  109. 109
    VTZ Says:

    RE 104: Jawboning to the max today! Got a good workout.

  110. 110
    zman Says:

    Oil shrugging off the FOMC’s dollar helping verbiage, moving on $87 into the close of NYMEX.

  111. 111
    zman Says:

    EOG starting to move, most of the large caps in the red today.

  112. 112
    zman Says:


    Added (2) April $100 calls for $1.75 with the stock at $98.05 and their analyst day tomorrow. I took a placeholder position for a start and may add more tomorrow.

  113. 113
    Nicky Says:

    No volume on this move.

  114. 114
    Nicky Says:

    Everything green, stocks, oil, metals, bonds, dollar….something has to give

  115. 115
    Nicky Says:

    Imo short term the market is now at the greatest risk we have seen since March 2009. In fact we are at the exact opposite of that move.

  116. 116
    zman Says:

    Nicky – I see similar risk for at least a modest pullback tomorrow with the EIA numbers. The bar is getting set a bit high for the gasoline number. While it is short of the draw seen in the five year average we come up short this week as you have demand pullback following the conclusion of spring break road vacations, and you have rising refinery output and my sense is another rise in gasoline imports. In short, I think gasoline inventories are at risk of not falling as much as the 1.9 mm barrels tomorrow. Not a big deal if it is due to stronger production as that should help the crude number come in in line excluding the impact of imports but if demand peels back we may see crude and products go into a short term bout of profit taking.

  117. 117
    zman Says:

    DJ Triad in play. MMR through $17, up nearly 7%. EXXI up 3%. PXP flat. TISDZ up 8%.

  118. 118
    Nicky Says:

    Watch for a break under this mornings low….not saying it will come this afternoon but I expect it by the end of tomorrow.

  119. 119
    zman Says:

    Thanks Nicky.

    Getting ready to pare back on some high beta positions in the portfolio.

  120. 120
    Nicky Says:

    The Fed has given the go ahead that it can raise rates at any time:


    For sure the FED understands the importance of the break out in long-term yields this week, if they don’t raise short-term rates now, the sky is the limit on the long bond rate, as is the devastating effect rising borrowing costs will have on the economy the next 3-6 months.
    Either we have a bubble or a growing economy being reflected in rising stock prices, either way the market is now high enough they can afford to take a breather.

  121. 121
    Jerome Blank Says:

    RRC has an interesting chart and is currently trading near important resistance…daily updated


  122. 122
    zman Says:


    SWN – Sold the April $41 calls for $1.65, up 97%, with the stock at $42.

    HK – sold the April $20 calls for $2, up 105%, with the stock at $21.93.

  123. 123
    zman Says:


    Sold half of my MMR April $16 calls for $1.30, 116% since entry yesterday.

  124. 124
    zman Says:


    Added 8 more EOG April $100 contracts for $1.55 with the stock at $97.55. Analyst day tomorrow. Webcast starts 8 am.

  125. 125
    zman Says:

    KOG gave back all of the day’s gain, gotta be some deal fear in that profit taking.

  126. 126
    zman Says:


  127. 127
    zman Says:

    CVX pipeline leaks 18,000 gallons of crude into Louisiana Wildlife Refuge.

  128. 128
    zman Says:

    Global Geophysical files for IPO. Been awhile since anything new came in the space.

  129. 129
    bill Says:

    on yahoo

    EIA expects the Henry Hub natural gas spot price to average $4.44 per million Btu (MMBtu) this year, a $0.49-per-MMBtu increase over the 2009 average, but a significant downward revision from the $5.17 per MMBtu projected in last month’s Outlook. The price outlook is lower primarily because of an average 2 billion cubic feet per day (Bcf/d) upward revision to the 2010 domestic natural gas production forecast.

    So there’s MORE gas coming than thought. Perhaps by some measure there isn’t an infinite amount of natural gas in the ground, but in the meantime, storage facilities are bursting at the seems, and pumping is increasing.

  130. 130
    bill Says:

    >storage facilities are bursting at the seems, and pumping is increasing.


  131. 131
    skimo Says:


  132. 132
    zman Says:

    Yeah, they really spilled the beans on the EFS, big growth in 2011 and 2012, going through the mongo presentation now.

  133. 133
    skimo Says:

    I’m not an expert, but everything looks pretty darn exciting here!

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