Friday Brings Yet More Earnings

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Market Sentiment Watch: Suddenly PIIGS don't matter. We had a good day in the market yesterday with some opportunistic trading following what turned out to be a giant yawner of a gas supply revision out of EIA (see Natural Gas Supply Slide Show section below). We also had blowout performance and upped guidance from WLL that helped boost onshore oily sentiment just as the offshore names were wrongly sold off over Macondo.  After the close BEXP beat (good as we're long the common and calls) and SWN took guidance lower (OK because while I have a long term common position in the name I took puts after seeing the gas supply revision numbers). I even got an email telling me I was "on a roll". Thanks, always nice to get an attaboy.  But that brings me to the Friday Movie Quote Watch:

"Great kid, don't get cocky!" 

Words to live / invest by even if the script from much of that movie was often inane and/or trite.

Anyway, back to my point. I'd rather leave money on the table any day than worry over calling a top or catching a bottom in a stock. When I sell, that ticker comes out of that part of my marketwatch for current holdings (sections labeled TODAY, ZIM, ZCAT, ZLT)  and it leaves my head. I've got enough running around in there to get tangled up in shoulda, woulda, coulda, syndrome. What else? Oh yeah, I don't bump up the next position size because the last one worked well.  I only do that based on the merit of the new trade.  And lastly, I resist the urge to trade more or to get tangled up in day trading. I'm not a good day trader and I don't have much desire to be one of those guys.   But enough about my trading thoughts ... on to the post.


Ecodata Watch:

  • 1Q10 GDP of 3.2% vs forecast of 3.2%
  • We get Chicago PMI at 9:45 EST, forecast 60%, last read 58.8%
  • We get Consumer sentiment at 10 am EST, forecast 71, last read 69.5.
  • Next week's Ecodata calendar is much busier with stats ranging from consumer spending to the month payrolls data.

Earnings Watch: Next week will be very busy with just about all of the rest of our highly trafficked names reporting including EOG, ROSE, EXXI, KOG, and HK to name but a few. I'll have the full calendar out over the weekend on the Calendar tab.

In Today's Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Storage Review
  4. Natural Gas Supply Show - Nothing at all for gas bulls to get excited about
  5. Stuff We Care About Today - Earnings Watch: BEXP, SWN
  6. Odds & Ends

Holdings Watch

ZCAT (Zman Catalyst portfolio)

  • $12,500
  • 43% Cash
  • Positions for the quick view are updated on the ZCAT, ZIM, ZLT page.
  • Yesterday’s Trades:
    • None

ZIM (Zman Inefficient Markets portfolio)

  • $25,600
  • 86% Cash
  • Yesterday’s Trades:
    • ECA - Sold the (20) ECA May $32 Calls for $1.52, up 53% with the stock just over $33.

    • SWN - Added (10) May $39 SWN PUTS for $1.07 on less than bullish revisions to natural gas supply out of the EIA. This name reports tomorrow and this will be a quick trade but they remain largely unhedged this year.

    • OII - Added (50) May $70 OII Calls on the mid and easily at $0.40 with the stock at $65 following a good earnings report (see post) and comments that the U.S. has ordered the inspection of all deepwater rigs in the Gulf, something OII is well positioned for.

    • Sold (50) OII $70 Calls for average $0.57, up 39%, with the stock at just under even on the day.


Commodity Watch

Crude oil jumped $1.95 to close at $85.17 yesterday on the back a strong equity market and weaker dollar. This morning crude is trading up $0.50.

  • Refiner Watch: TSO is temporarily shutting their Anacortes, WA refinery in the wake of the fire there last month. This action should put a spring in RBOB pricing this morning.

Natural gas plummeted $0.37 to close at $3.98 yesterday after the EIA reported a larger than expected injection into gas storage (see below) and a supply revision that left traders yawning. This morning gas is trading up 5 cents. I expect gas to remain range bound between $3.50 and $4.50 for an extended period.

Natural Gas Storage Review

ZComments: Gas continues to be range bound in the shoulder season. Yesterday's larger than expected gas injection served to drive home the current supply / demand imbalance. The supply numbers delivered later in the day called into question much of a recovery in gas prices until much later in 2010 that I previously expected.

Natural Gas Supply Slide Show

EIA Supply Revision Watch: Much ado about nothing. The average month was revised lower by 0.4 Bcfgpd or about 0.5%. I and others think they still have got it wrong and if this is all we have been waiting for I have to sigh at my tax dollar's ability to be so squandered.  If we are to believe the new EIA data, February production hit a new cycle high with Texas rebounding due to the resumption of previously deferred well completions. The graphs and annotations pretty much speak for themselves.



Stuff We Care About Today

Earnings Watch:

BEXP Reports Better Than Expected Q1, Guides To Stout Q2

The 1Q10 Numbers:

  • Production of 5,420 BOEpd vs guidance of 5,100 and 5,400 BOEpd:

    • Oil production was 3,552 bopd vs guidance of 3,400 bopd
    • 65% oil vs 56% oil in 4Q

      • oil production was:
        • up 24% sequentially
        • and 84% over 1Q09
    • Total production was:
      • up 7% sequentially
      • up 1% YoY
  • Revenue of $29.5 mm vs $27 mm expected
  • EPS of $0.08 (ex items) vs $0.05 expected
  • CFPS of $0.18 vs $0.16 expected


  • 2Q10 - Volumes guidance of 6,200 and 6,800 BOEpd (or 14 to 25% sequential growth), with crude expected to make up 68% of volumes.
  • 2010, which calls for oil production growth of 125% over 2009 levels was not mentioned in the Pr. 

Operational Highlights:

  • 21 long lateral wells with average production of 2,543 BOEpd; record so far is 5,133 boepd.
  • 3 new Rough Rider wells are incorporated in the table below
  • Previously published Sorenson well (Ross Area) had 2,019 BOEpd in it's first 26 days on line. That is the highest 1 month rate I have found for the Bakken. 
  • 5th Bakken rig starts next week
  • East Montana Bakken well (Rogney 17-8 #1H) still being studied, plan to complete the well late 2Q or early 3Q. 
  • First Three Forks Sanish test in Rough Rider area (by BEXP) will also be completed late 2Q or early 3Q.


Nutshell:  Better than expected quarter. Guidance is strong. While new wells will provide catalysts on a rolling 3 to 4 week basis the next major potential catalysts for the name can be expected from EOG's earnings next week (Caret well in Montana may have news though I sort of think it will be too early) and then from BEXP regarding the TFS Rough Rider test and their East Montana Bakken test. Valuation remains on the high side of the group at present and while this release will prompt analysts to raise CFPS estimates it will not be enough to offset the recent multiple expansion. So the air is probably getting a little bit think as we cross the $20 level. Bakken partner USEG should also get some play out these results.

Conference Call: Today, 11 am EST

SWN Reports Beats On The Bottom Line, But Guides Volumes Lower.

The 1Q10 Numbers:

  • Production of 90.0 Bcfe vs 91 to 93 Bcfe guidance (weather and operational delays resulted in a short coming on well completions that will be recovered by 3Q)
    • up 41% YoY

  • EPS of $0.49 vs $0.46 expected
  • CFPS of $1.20 vs $1.14 expected


  • 2010 Volume Guidance Trimmed: SWN cut guidance to a range of 393 to 401 Bcfe from a range of 400 to 410 Bcfe (which would have 35% growth).
  • 2Q10 mid point guidance drops 5 Bcfe or 5% from prior estimates.

Operational Highlights:

  • Fayetteville Shale: the trend of higher IP's quarter after quarter has apparently come off the rails. SWN says "green completions" are the reasoning behind a change in the streak from a record peak average IP of 3.727 MMcfedp in 4Q to a 3.197 MMcfepd. This will get some questions on the call. SWN notes that it place about 50 wells on production at 3.6 MMcfepd in April.
  • Marcellus - Currently drilling second well, completion operations for both to being during 2Q with onstream expectation in June. 
  • East Texas- no news well data in the release, maybe on the call. Production looks fairly flattish 4Q to 1Q.
  • New Brunswick comments: quite excited but nothing new in the pr.

Nutshell:  Nobody likes to see production guidance fall for the shale players (or for anyone else for that matter but it's troubling in the shales as this is essentially a manufacturing operation). Probably just a hiccup in the road. I own the common in the ZLT but took puts in the ZIM yesterday and I would expect the shares to weaken in the face of this report.

Conference Call: Today, 10 am EST.

Other Stuff:

  • TAT said to be buying energy arm of Turkish firm Zorlu. I'll forward details when I get them.
  • TSO reported a bigger than expected loss.

Odds & Ends

Analyst Watch:

  • BEXP - Thomas Weisel ups target $3 to $24.
  • FBR cuts HAL and RIG on oil spill liability. HAL target cut from $44 to $35; RIG target cut from $110 to $87
  • ATPG cut to Hold at Wunderlich, target cut from $25 to $20
  • MMR cut to Hold at Wunderlich, target cut from $16 to $12
  • EXXI cut to Hold at Wunderlich, target cut from $25 to $18
  • WTI cut to Hold at Wunderlich, target cut from $16 to $10
  • WLL - Lazard raises target from $94 to $106, rating Buy
  • COG - BMO raises to Outperform


245 Responses to “Friday Brings Yet More Earnings”

  1. 1
    tomdavis12 Says:

    Z: CSFB bumped up numbers for OII. TP $53 top $68. ’10 $3.25 to $3.45

  2. 2
    tomdavis12 Says:

    that is to not top

  3. 3
    rseidman Says:

    I’m curious as to what was Wunderlich’s reasoning for the downgrades. Any ideas?

  4. 4
    john11 Says:

    All of Wunderlich’s commentary referred to the negative publicity hitting anyone in the offshore group as a result of the BP spill. Expectation that multiples will be reduced as a result.

  5. 5
    ram Says:

    Wunderlich’s cuts seem to target the minor offshore guys. Is there a sense of offshore weakness for a while?

  6. 6
    jat Says:

    Blasting through hyperspace ain’t like dusting crops, boy.

    It’s Episode 4: ANH, send me the t-shirt.

  7. 7
    zman Says:

    I think the offshore pendulum will swing too far and quickly so. I will consider adding to the Shelf and deepwater guys next week but I’d like to see what comes out over the weekend. White House advisor Axelrod just said no new drilling would be permitted in the Gulf until they find out what happened here. Not sure what he means by that but it sounds like no new spuds anywhere in the Gulf. That is absurd but it would not surprise me as govt. loves to react instead of foresee and has no thought to the unintended consequences. Way to jack up oil and natural gas prices fellas.

  8. 8
    zman Says:

    Jat – very good padawan. Email me your address. You want a mug or a “Got Bakken?” T?

  9. 9
    zman Says:

    Can anyone see the 6K SSN has filed, I can’t get it to download?

  10. 10
    zman Says:

    BEXP – TPH has a $28 NAV with nothing for TFS in Rough Rider or Montana Bakken in their number.

  11. 11
    john11 Says:

    The SSN 6k here are the contents, nothing new.
    99.1 Quarterly Report for Quarter Ended 31 March 2010
    99.2 Press Release, dated April 25, 2010: Samson Oil & Gas Advises on Niobrara Formation Project
    99.3 Press Release, dated April 29, 2010: Samson Oil & Gas Enters Trading Halt

  12. 12
    zman Says:

    If the U.S. is temporarily banning all new offshore drilling it will be crushing to the shelf guys. Especially if that includes workovers. Need details of what D.C. is saying on this, have not yet found. The Shelf guys are on a short R/P (reserve life) tread mill so no drill = rapid production decline. If they have to wait 3 to 6 months for an investigation (just my guess knowing D.C. types) that would send many names with leveraged balance sheets spiraling lower.

  13. 13
    zman Says:

    John11, OK, thank, hmmm.

  14. 14
    BirdsofpreyRcool Says:

    Tough to think that anyone is going to wake up this moring and say “Honey, I think I’m going to buy me some of those offshore oil producers.” Nope. Au contraire. I am worried about somebody(s) waking up and saying “Son-of-a-b*tch, this don’t look good, get me outta anything offshore.”

    Market sure hates uncertainty (who doesn’t). And there is just a lot of uncertainty revolving around what is a horrendous, oily disaster brought to us by those Paragons of Safety, BP.

    Ugh. Only question is, how low does the likes of EXXI/MMR/ATPG/PXP/APC and friends go and how long do they stay there. Eventually, this too shall pass, but probably not today… not Monday… given the magnitude of the oil spill, the headlines and pictures are going to be with us a while. Here’s HOPING that booms, flaring, dispersants, and wind can keep that oil from the environmentally-sensitive marshes and swamplands. Beaches too (oil on the beach looks bad, but beaches are not the nurseries for baby fish and shrimp and egrets). Ugh.

  15. 15
    zman Says:

    More on 12. This likely means more funds withing E&P will slosh from the offshore to the onshore plays, especially the oily ones. Hello Bakken.

  16. 16
    zman Says:

    Re 14. How long does new drilling get suspended for and does that mean workovers. If its a month or more guys like SGY and EXXI and the rest will see their CFPS estimates get whacked. Stocks will get whacked before that.

    “No additional drilling has been authorised and none will until we find out what happened,” White House adviser David Axelrod told ABC television.

    That’s a pretty open ended statement.

  17. 17
    1520sbroad Says:

    One bright spot in the SWN report (at least to me – long time shareholder now wondering what to do) was the revenue line from their gathering system. A good source of revenue for them going forward.

    Well cost was down slightly from 3.0mil to 2.8mil

    Not much new hedging from them.

    The green completion idea will likely get some questions as you said Z. As I understand it that sort of completion gets more gas to the sales line sooner without having to flare it? I think you need to have the sales line hookup available immediately though and have the ability to seperate gas from flowback fluids etc.?

  18. 18
    zman Says:

    And if you go back 6 days ago:

    White House: Oil Spill No Reason To Stop Drilling


  19. 19
    BirdsofpreyRcool Says:

    z — #16 — tough to see Washington squashing all shelf drilling operations… think they are just refering to “frontier” drilling. But, it’s a moving target right now… and I don’t know if “frontier” includes just deep water and Florida… or if it will also include ultra-deep targets. Plus, Washington = Gorilla with a Gattling Gun… who knows who/what/where/when they mow down with that thing.

  20. 20
    baylor3217 Says:

    Now a good time to put on some EXXI put protection or flat out short the stock?

  21. 21
    baylor3217 Says:

    GDP at 3.2

  22. 22
    BirdsofpreyRcool Says:

    TechTrader is 50/50 today. Won’t call the best trade as it’s the end of the month… and strange things can happen.

    HeadTrader would continue to buy quality names on weakness.

  23. 23
    bill Says:


    look for all the names to get slaughtered as people will sell first and ask questions later

  24. 24
    baylor3217 Says:

    BEXP bid up .50 on the open…market looking flat

  25. 25
    zman Says:

    re 23. Yep.

  26. 26
    zman Says:

    SWN taking it on the chin on the production downward guidance.

  27. 27
    BirdsofpreyRcool Says:

    I kinda think $17.50 is the low for EXXI… but, if people want out, they will get out at any price. Will be interested if any of the big holders decide to exit the playing field today…

  28. 28
    baylor3217 Says:

    do we think this selloff in the off shores will pull down the likes of someone like WLL and other non-impacted energy stocks?

  29. 29
    bill Says:

    people will demand offshore production when gas goes to 5 bucks a gallon

    but thats what washington wants

  30. 30
    zman Says:

    BEXP trading back to flat on the day, see my nutshell comments. I think it picks up later today along with the rest of the Bakken and other oily onshore names and I’m likely to add some in the ZIM. I’ll hold what I have in the ZCAT into the call unless it really jumps.

  31. 31
    baylor3217 Says:

    BOP – regarding E21, is the main concern there that they will have to cease operations for an extended period of time or does litigation play a part here as well?

  32. 32
    baylor3217 Says:

    I closed my BEXP call position at 2.20 this morning and will look to reload on any pull back.

  33. 33
    zman Says:

    Re 28. I do not, no. If anything, one area being impacted by D.C. is likely to help other areas.

  34. 34
    BirdsofpreyRcool Says:

    baylor — can’t think of any litigation involving E21. Everyone’s insurance (those who self insure) and drilling costs will almost certainly go up. But, that is a rising tide that will lift all boats (and energy prices along with it). I think it is just the fear of the GGG. No idea what is going to be decided over the next few days. And when in doubt, people sell first and ask Qs later.

  35. 35
    VTZ Says:

    Gold has now broken all resistances and will retest the highs (and probably make new ones).

  36. 36
    ram Says:

    Why is all energy on sale when Bill’s people in D.C. just cut supply?

  37. 37
    BirdsofpreyRcool Says:

    meant to say (except those who self-insure)

  38. 38
    baylor3217 Says:

    I’m kinda surprised BEXP is trading down here. I know expectations are high, but negative doesn’t seem to make much sense.

  39. 39
    baylor3217 Says:

    BOP, are you an e2ToThe1 buyer here?

  40. 40
    baylor3217 Says:

    Also, BOP, what is GGG and why are they fearing Graco? 🙂

  41. 41
    baylor3217 Says:

    EOG performing nicely this morning.

  42. 42
    BirdsofpreyRcool Says:

    baylor — i was going to save some bullets to buy E21 this summer (on hurricane fears) at $17.50. But, it appears summer has come early this year. Yes, i would be a buyer down here. But, no idea how low is low… asset- and cash-flow-wise, tho, it’s a cheap stock. Unless the GGG puts a moratorium on all offshore operations. But, a buyer with a longer time frame would do well, adding today… Monday… next Wednesday… just don’t think we get a quick bounce.

  43. 43
    zman Says:


    BEXP – Added (20) May $20 calls for $0.70 with the stock flat on the day after posting better than expected earnings. See site for details on that. Conference call at 11:00 am EST. I may add more here. I continue to hold this same position in the ZCAT and the common in the ZIM.

  44. 44
    skimo Says:

    Z, thanks again, another happy reader just sold Volero May $21’s for a buck! Probably could call me close to a pig on that one, but hey.

  45. 45
    BirdsofpreyRcool Says:

    GGG was my term for the actions of the U.S. Govt during the Credit Crisis. You never knew what they were going to do, but it usually wasn’t what they should have been doing… and it hurt a lot of private money investors. Like if you gave a large animal a powerful weapon and let him lose in the middle of a crowd. “Gorilla with a Gattling Gun.”

    Graphic, but gets the point across.

  46. 46
    zman Says:

    JB – any more thoughts on SWN here? Thanks.

  47. 47
    bill Says:

    for cargo


    exm looking good

    some risk to 2011 ..

  48. 48
    zman Says:

    Silly Analyst Watch: RBC raises WLL target from $74 to $90. Maintains Outperform. Hello, it’s above your target. Isn’t that a Hold rating. Sheesh, wake up man.

  49. 49
    zman Says:

    WHX racking up another new high as it breaks through $23. We should get the distribution notice mid May, looking for $0.61+.

  50. 50
    baylor3217 Says:

    EXXI appears headed for sub-17

  51. 51
    zman Says:

    SLB getting hit today as well on the prospect of not doing much work in the Gomex in the next couple of months. I’m not sure the govt. comment is limited to frontier. He said no new drilling in new areas so it could be that new areas means frontier but since Macondo was not in frontier I don’t really see how his comment would make a difference.

  52. 52
    zman Says:

    SWN trying to break below $38, as it approaches the conference call in 5 minutes. I am mulling adding to those puts taken yesterday in the ZIM or simply pulling them off the table. The stock is testing what looks like pretty good support.

    Consumer sentiment 72.2, forecast was 71

  53. 53
    newbomb182 Says:

    Hi All,
    New to the room….here is something to consider:
    RIG is down about $20+ since the spill was announced. They have about 335 MM shares out. If the clean up costs are $8BB, nearly that much has been burned out of RIG’s market cap.

    I am not advocating catching a falling knife, but at some juncture you have to ask “is the amount of the sell off now 4-5x greater than the likely total costs?”

    BP, CAM, HAL and RIG have taken it hard.

    Ones to put on watch. A bounce could be coming.

  54. 54
    baylor3217 Says:

    wow exxi with another leg down. paralyzed at the moment and mulling adding.

  55. 55
    dij Says:

    Z, Any interest on OII again? May 70’s selling at .5. Your mornings comment, don’t go back to the trough.

  56. 56
    ram Says:

    ZMAN – Is it too early to use the phrase “dead money” to EXXI?

  57. 57
    zman Says:

    SWN call started, they’re reading the pr at the moment. Listening for “green completion” comments.

  58. 58
    VTZ Says:

    Nicky – We might have been right when we said the dollar is ready to roll over. Could be a really bullish run coming for energy.

  59. 59
    dij Says:

    re #55. The perceived picture may be diminished OIH activity in general, until the picture is clearer. That is easily 1 -2 weeks.

  60. 60
    bill Says:

    wondering out loud

    can the recent winners in the gom lease sale say they arent paying for newly acquired leases since govt wont allow drilling

  61. 61
    zman Says:

    re 56. Yes, I think so, as for me, that term is a pretty long term one, like 6 months more and I don’t think that’s the case here. But there is a selling frenzy in the Shelf names at the moment so valuations, oil/gas profile, hedges, balance sheets are baby and bath watered.

  62. 62
    isleworth Says:

    PNG new IPO today – nat gas storage

  63. 63
    zman Says:

    re 60. I can tell you the answer to that as I have seen it before. Absolutely not.

  64. 64
    ram Says:

    O.K. thanks.

  65. 65
    isleworth Says:

    Z – do you expect higher nat gas prices with the offshore drilling ban by POTUS?

  66. 66
    zman Says:


    SWN – Sold the 10 May $39 PUTS for $1.80, up 66%. Stock may go lower but this seems a bit greedy and their are mitigating circumstances to the lower IPs mentioned in the post.

  67. 67
    1520sbroad Says:

    Z – i can’t get on the SWN call – too many other balls in the air at the moment. Please post any interesting comments from them – thanks much

  68. 68
    baylor3217 Says:

    Oddly enough, HAL $29 calls are basically flat for the day. Other call strikes with high volatility.

  69. 69
    zman Says:

    Isle – not enough details to comment on 65. It’s a big slug of gas as you can see in the post and it probably declines at 30% per year. I can’t imagine they would keep new drilling shut down for very long but then I can’t imagine a lot of things that come out of that place.

  70. 70
    zman Says:

    KOG benefiting from the onshore love fest. I think BEXP pulls higher into their call in 45 minutes.

    SWN Notes:

    Not a lot of new operational details on the call, especially little on new ventures. I think next quarter we get more on Marcellus and E. Texas.

  71. 71
    baylor3217 Says:

    could the gomex events bring bankruptcy into the picture for someone like exxi?

  72. 72
    zman Says:

    Baylor – Not likely at all.

  73. 73
    RMD Says:

    BOP:People playing HOS for the GOM cleanup; does HERO get helped?

  74. 74
    zman Says:

    Got asked in email about BP going into ex div next week. I just can’t do it. I think you’ll have pictures of oil on beaches all weekend and Congress going ape nuts.

    OII getting hit hard. Not planning to revisit for the moment.

  75. 75
    BirdsofpreyRcool Says:

    #71 — trying to come up with a scenario where that could happen. Can’t piece it together. E21 is not involved in as many high-decline-rate nat gas wells as others. So, they would not be first to go, if a COMPLETE stop was put to all drilling offshore.

    GGG can do some pretty gawd-awful stupid things, but completely stopping all drilling offshore just seems beyound the reach of even this bunch.

    This reminds me (a little) of the FEAR that the GGG would nationalize the banks. That FEAR hung around for longer than it should have… but made buying BAC sub-$3/share a tasty meal.

  76. 76
    BirdsofpreyRcool Says:

    RMD — don’t think HERO would see more work/higher rates on this. HOS is up b/c people think they will have to use more boats to ferry people around, i guess. I mean, all those reporters need to get out there for their photo ops…

  77. 77
    baylor3217 Says:

    EXXI may have found a bottom around 16.20…nice bounce there. I just missed adding on a limit order at 16.24. I may end up being happy I missed it

  78. 78
    DrLink Says:

    .on TAT i hear there is 1mil for sale…..there is going to be a big print shortly

  79. 79
    zman Says:

    SWN Notes:

    Green completions – this is essentially putting the well to sales more quickly, before it has finished cleaning up, basically it’s “green” because you don’t flare some of the gas that you normally would during completion. This reduces IP’s but it means more gas is captured for the long term. This year alone, the green completions will add 7.5 Bcf to production, not insignificant when total production is about 400 Bcf.

  80. 80
    RMD Says:

    76 when the reporters get back onshore, do they practice their dancing at Rick’s?

  81. 81
    zman Says:


    Added (20) more May $20 Calls for $0.75 (on the mid and it took awhile) with the stock just under $19.30. Conference call at 11 am EST.

  82. 82
    cargocult Says:

    Bill, Thanks for keeping my silly infatuation with shipping companies in mind.

    I think the talk about prohibiting drilling in the GOM is just talk because it is what the public wants to hear right now and it beats just watching this mess expand with few present options for limiting it. The news that is sure to appear sometime is that the industry record for drilling has really been quite good. Or am I mistaken? To my mind it’s buy locally or ship our dough to the Saudi’s who have gotten enough already.

    But then again I own FRO and SFL and we like to keep those VLCC’s rolling.

  83. 83
    zman Says:

    SWN Notes:

    Got permission in December to drill wells across sections, can do it administratively, cuts red tape, helping them to hold sections.

  84. 84
    Jerome Blank Says:

    EXXI and SWN stabilizing on the 30 min…I’ll try to get charts posted soon…EXXI printed a nice 30 min hammer on high vol, EXXI is now on a P&F sell signal, but with this panic sell-off, as crazy as it seems, EXXi should probably be on a “bear-trap” watch

  85. 85
    zman Says:

    Thanks JB, took my SWN puts off the table just over $38. Not hearing anything on this call to make me want to be short the name.

  86. 86
    BirdsofpreyRcool Says:

    DrLink #78 — heard that seller has been lurking around for a few days. Heard they won’t take less than $1.70 for their block. But, that was yesterday… and today is a whole new day, it seems. (For now, anyway.)

  87. 87
    zman Says:

    Jat – what color of ringer T “Got Bakken?” shirt do you want?


  88. 88
    1520sbroad Says:

    thx for SWN notes

  89. 89
    zman Says:

    re 86 … ya mean $3.70, right, lol?

  90. 90
    bill Says:

    exxi hit 15.89 today


  91. 91
    zman Says:

    SWN Notes:

    Green completions will take IP down 5 to 10%. Minimal to no effect on the 30 day average rate over regular completion and none at all on the 60 day average rate.

  92. 92
    BirdsofpreyRcool Says:

    #89 ha. yes. oops.

  93. 93
    zman Says:

    Bill – MCF is actually green now, basically off $4.50 for 2 dry holes.

  94. 94
    zman Says:

    Re 92. Thanks, someone would have to be hitting the Turkish Gold hookah pretty hard to sell it that low.

  95. 95
    Popeye Says:

    “Representatives of small and large property owners this month filed a class action lawsuit in the 19th Judicial District in East Baton Rouge Parish challenging state conservation Commissioner Jim Welch’s authority to force pool land owners and mineral owners into large units. They contend his actions are not in line with a state law that defines a drilling unit as the “maximum area which may be efficiently and economically drained by one well.”

  96. 96
    zman Says:

    SWN back over $39 and still bouncing. Some of the gas shale names are up on the day now, CHK, HK, both have earnings next week.

  97. 97
    skimo Says:

    How low do you think MMR will go on this news?

  98. 98
    bill Says:

    took advantage of exxi drop

    as bop has said in the past, its a good deal without the new drilling

    This might be a blessing in disguise, let the oil flow out of existing wells and delay ng drilling

  99. 99
    tomdavis12 Says:

    BOP: Love your “nationalize the banks” analogy.

  100. 100
    zman Says:

    BEXP call in 2


  101. 101
    zman Says:

    Onshore stuff still bouncing nicely, RRC finally having a day in the sun.

  102. 102
    zman Says:

    Skimo – I think that’s a good question for JB as it’s probably a technical call. I think I said the other day they’d gap fill but I bailed on my puts a little early.

  103. 103
    zman Says:

    OII – I may play that one again in a bit, still trying to assess what the White House is getting at here.

  104. 104
    zman Says:

    WLL onward up to a new high.

    WHX – guilt by association with the celebrity of the other Whiting? Frankly it feels a little too far to fast to me. I like getting paid to wait on the name but this is a little bit of an odd move. Not thinking about selling but not adding more up here.

  105. 105
    zman Says:

    BEXP still queuing callers.

  106. 106
    zman Says:

    New BEXP slides up:

  107. 107
    BirdsofpreyRcool Says:

    fwiw, I think E21 settles out around 17.50 and then slowly grinds back up on higher oil prices. But no doubt, volatility has increased. Might be a good day to buy/write some shares.

  108. 108
    zman Says:

    BEXP Notes:

    Derisked 164,000 net acres, up from 162 at last presentation.

    Well payout achieved in average of 1.4 years.

    Converts most of their acreage to HBP in 3 years with the new higher rig count post deal.

  109. 109
    zman Says:

    I’ll have a new Cat list out next week.

    BEXP Notes 2:

    1 well fraccing, 3 waiting on comp, 4 drilling (5th rig arrives May). Best guess is they have more well results in 3 weeks, including a 36 stage frac in Ross that offsets one of their big wells there.

  110. 110
    BirdsofpreyRcool Says:

    bill #78 — I hope you make a BUNDLE on those shares. Takes guts, conviction, and knowledge to make real money in markets.

  111. 111
    zman Says:

    BEXP Notes 3:

    “our early 24 hour IP rates have roughly doubled that of our peers”… talk about a hot point statement. IPs are a lot less meaningful than 30, 60, 90 day rates, wish he’d get off the IP hunt and onto the longer term averages.

  112. 112
    BirdsofpreyRcool Says:

    oops… #98 — having a little trouble with my handles today. 😉

    also, meant to add that you showed all 3 attributes, with that trade. nice.

  113. 113
    zman Says:

    BEXP Notes 4:

    I have to add that if they pull off a good well in E. Montana you are talking about a significant leg up to the shares. Timing there is late June/July. You may get a move next week if EOG spills the beans on their E. Montana test. EOG has said they will not be waiting on future drilling results in areas where they already have acreage which would be Montana.

  114. 114
    zman Says:

    BEXP Notes 5:

    CLR Three Forks well on west side of Rough Rider apparently IP’d at about 900 bopd. They don’t have anything for TFS results at RR, their test comes June / July

    In Montana: Cored all of the Rogney well (Lodgepole, Three Forks, Bakken and I think Nisku but not sure on that).

    At Ross, they will complete the 36 stage frac (biggest one to date) along with group of wells in 3 weeks.

  115. 115
    BirdsofpreyRcool Says:

    For those still following the CIGX situation… I think stock is moving up on expectation of company’s filing their appeal of the Jury Trial last June. It was supposed to be filed on April 5th, but got delayed for a month. I am NOT in this stock for any litigation outcome, but that is another way for CIGX to go up.

  116. 116
    zman Says:

    BEXP Notes 6:

    Continue to actively hedge oil and natural gas.

    Expect to close on the sale of w. Texas assets. Small, but this is the first step in their monetization plans.

    4 rigs now, 5 rigs by May, 8 rigs by May 2011.

    Look forward to the day they can take rig count to an even higher level.

    Cash plus unused credit gives them $480 mm. We don’t have a need for external capital through 2011 and possibly longer due to cash flow. They may monetize more assets but this almost sounds like a promise not to sell more shares (this from a company that has sold shares 3x in the last twelve months).

  117. 117
    zman Says:

    Nicky – got S&P thoughts?

  118. 118
    andy Says:

    bop – i’m getting a little tempted to lighten up KOG a little, but i know cc coming next week. any thoughts?
    also int in those EXXI bonds they are going to register. know the timing of that? thks much

  119. 119
    zman Says:

    BEXP Q&A:

    When could you sell down conventional gas.

    Actually have 2 wells teed up for Texas Vicksburg (wet gas) drilling.

    KOG at $4 by the way.

  120. 120
    BirdsofpreyRcool Says:

    andy — historically, KOG sells off, post-conf call. Maybe this time will be different, as they seem to have saved up some operational updates for the call (and not released during the quarter). They should have some things to say about timeing on their TFS test and plans to hook into a nat gas pipeline. That will certainly help.

    The EXXI 16s are already trading on a “when issued” basis. Or should be. You might want to try your bond trading desk and ask if they have a quote for the registered bonds. The actual registered bonds are listed as “settling” on next Monday, May 3rd.

  121. 121
    BirdsofpreyRcool Says:

    from a TPH intra-day email blast…

    Can’t confirm but allegedly from Washington Think Tank…

    Comments made by White House senior adviser David Axelrod said on “Good Morning America” today have been misconstrued by some to suggest that the Administration is banning exploratory drilling in areas currently open to drilling. This is false. Axelrod was referring to drilling in areas proposed to open under the Mineral Management Service’s proposed 2012-2017 drilling plan.

  122. 122
    zman Says:

    Thanks re 121. I heard him say it and could not tell exactly what he meant.

    OII off $3 now makes little sense.

  123. 123
    jiveyjr Says:

    re: 27 the hard part is to properly size a deal like this to where you hold enough to make some dough but not so much you get scared out.

    I like the upside potential immensely, but knew the heartburn that most likely would come.

    I sold a bunch at a nice gain, kept a little and had an old order in @ 17.38 that executed this morning. I’m still small but will get bigger as opportunity allows…would love more cheaper or at and around this level once the smoke clears…

  124. 124
    skimo Says:

    Why not sell some puts in EXXI and get paid to buy at a good price??

  125. 125
    zman Says:

    BEXP Notes:

    Last 4 wells cost about $6.5 mm each, seen a little cost creep they say but they thought it would be higher than that.

  126. 126
    BirdsofpreyRcool Says:

    jivey — there is a lot to be said about keeping some cash on the sidelines to take advantage of BIG MOVES, like today. Was talking with a hedge fund mngr friend y’day. He said that he has made the most money in just a couple of trades a year. Just to keep himself amused, he buys and sells stuff on a weekly basis… usually making more than he loses. But the really BIG BUCKS are made in just a few days on just a few trades.

    Key is to 1) have cash available, 2) don’t just buy b/c a stock is down, 3) wait for the Big Stupid Event to push your target into the “buy when there is blood in the streets (even if it is your own)” zone.

    Probably easier said than done. But conceptually, something to keep in mind.

  127. 127
    zman Says:

    BEXP Notes:

    Stimulation, bits, plus, swell packers, rig crews, mud, locked up, about 65% of costs locked in.

    They have pre-bought casing for all their well requirements through about mid 2011.

  128. 128
    zman Says:

    BEXP Notes:

    Pale Rider is Eastern Montana (Ghost Rider is the name of the 70 sq mile seismic shoot over a part of Pale Rider)

    Sweetman well is currently completing, they have a small interest in this.

    FH well in E. Montana. We have not been able to get the party there to share interest in it. FH is private.

    Hey West, have you seen anything on that FH well or the Sweetman well?

  129. 129
    newbomb182 Says:

    somewhat buried in the lengthy APA call yesterday there was mention of using bakken technology on old permian wells… particularly noteworthy were two horizontal wells drilled in the Permian Basin for 500 and 200 BOPD. While those rates aren’t that impactful on the company’s 300,557 bbl per day total, they are noteworthy because they were drilled in mature (very mature) San Andres waterfloods at the Shafter Lake and McElroy fields. Completion details weren’t available but i understand they were 6 to 8 stage frac’s using isolation packers…have identified RSOX.L and CFW as potential beneficiaries and of course ARD/SD…would love to hear any other thoughts as far as big beneficiaries-thx

  130. 130
    jiveyjr Says:

    thx for your insights BOP.

    Skimo: as to selling puts…I think that’s okay for income but for taking positions I don’t really like to not know if I’m getting the shares or not..

  131. 131
    tomdavis12 Says:

    BOP: Do you have a cusip on the EXXI 16’s

  132. 132
    zman Says:

    Thanks New. PXD would be my first thought.

  133. 133
    BirdsofpreyRcool Says:

    No cusip yet on the EXXI 16 WIs. But the “BB Number” is EI2141121

  134. 134
    zman Says:

    Wyoming – if you get a chance, read the transcript or listen to the Q&A on the BEXP call. These guys have stepped up their technological game and it’s not the BEXP of 5 years ago at all. Very pro handling of frac spacing contraction question, frac wings, micro seismic.

    Re Sweetman well – long lateral, 22 fracs, small interest, not sure who operator is but this is Montana.

    Rogney well – getting a lot of science done, analyzing the core. Last June/e. July. This will be the most anticipated well of the year for them hands down.

  135. 135
    tomdavis12 Says:

    Z: I am hopeful my June 40 puts for NE come to me. Their position is they do not have any rigs in GOM. Their Pemex rigs they call int’l water. LOL 🙂

  136. 136
    skimo Says:

    Thanks Jivey. You’re right- if its a committed position I should just buy. I’m still a newby on how to best util;ize options. At least with the insight from this board, its a little easier to be on the right side of the trade more often. 🙂

  137. 137
    VTZ Says:

    SLW breaking out to all time high on heavy volume.

  138. 138
    zman Says:

    BEXP Notes:

    Mapping and monitoring some other plays where Bakken tech is applicable (read Niobrara) but have no plans at this time to build an acreage position.

  139. 139
    VTZ Says:

    RE 134 – I’ve been listening to the BEXP call too and I’m also quite surprised at how they are handling the technology questions.

  140. 140
    zman Says:

    BEXP Notes:

    We KNOW ceramic is preferable to white sand. CRR has got love the quarterly love they get from these and other guys making statements like that. Also talking ramping higher proppant concentrations, saying others doing 4 lb per gallon, they are going to go beyond 6 to 8 pounds. May do RCS but sounds like ceramic or something else non ceramic but strong (not sure what that would be but it’s not white sand).

  141. 141
    zman Says:

    BEXP call over, stock at 19.70 with S&P off 6.6 and looking weak into lunch.

  142. 142
    zman Says:

    V – what’s SLW?

  143. 143
    zman Says:

    RMD – Nice heads up on the HOS.

  144. 144
    VTZ Says:

    Silver Wheaton – mentioned it in the past a bunch to 1520s and others. I was just commenting because it supports my expectation that the dollar is going to roll over here (positive for energy). It has generally acted as a leader for metals.

  145. 145
    andy Says:

    skimo – i like the idea selling puts. in EXXI the may 17.50 can be sold for about a buck. so u either own it at 16.50 or make a quick point. both sound ok to me

  146. 146
    zman Says:

    JAT – Got Bakken? T on the way.

  147. 147
    zman Says:

    VTZ – thanks man.

  148. 148
    zman Says:

    S&P at LOD.

  149. 149
    zman Says:

    GS gets sell rating from S&P (gotta love those guys the last 2 weeks), GS off 9%.

  150. 150
    1520sbroad Says:

    VTZ – i made a small trade in SLW around the first of the year – it worked out well – it had fallen off my radar – wish i had held on a bit longer… I did the same with GG.

  151. 151
    elijahwc Says:

    APC – on the counterattack I making my first foray back into the GOM with the addition of APC. This way too high quality, successful around the world jewel is being offered out at prices it entered the year with, and has closed the Feb 16 gap, and ……….you get Jim Hackett.

  152. 152
    zman Says:

    Eli – all good points, assuming there’s no recourse to them for having a quarter of Macondo. West Africa hopping for them.

    Gengaro at Jefferies calling for a rebound at CAM. He’s a smart one.

  153. 153
    elijahwc Says:

    Z – not operator.

  154. 154
    baylor3217 Says:

    and7 – re 145, i’ve not sold puts in the past, but in your EXXI example, if the stock price goes below 16.50, you’ll be put the stock at 16.50 for a total of $1,650, correct?

    I’m not sure how ameritrade manages this.

  155. 155
    Gmlgdc Says:

    Re: 153 still have 25% of the exposure.

  156. 156
    zman Says:

    Hearing from a little bird via an energy banking firm that HAL was not doing anything new with the cement job as there have been some rumors. Basically BP and RIG were responsible for the casing integrity test, not HAL.

  157. 157
    Gmlgdc Says:

    Would have been BP RIG was just following orders

  158. 158
    DrLink Says:

    Just my attempt to give back to the board, I like Paramount Energy Trust PMG.UN , PMGYF
    At current price of $5 it is paying a 12% dividend. Per management they are converting from a trust structure to a corporate structure this June. They have said they will be able to continue the current dividend. Gassy with some Cardium and heavy oil upside…..http://www.paramountenergy.com/en/documents/pmt-apr_2010_cibc_presentation_final.pdf

  159. 159
    zman Says:

    Thanks GMLDC.

    DrL, thanks, not my cuppa stuff but Eli is probably all over it.

  160. 160
    VTZ Says:

    EOG picking up nicely now. Expectations for discussion the CC?

  161. 161
    elijahwc Says:

    #155: Help me out here. Do you mean economic loss or is there separate statutory liability that is particular to offshore drilling. Otherwise it is akin to being responsible for the bus drivers actions while riding in the last row. Unless there is a separate body of law (and I must fess up, I don’t know if there is).

  162. 162
    Wyoming Says:

    Z, Will try back at the room tonight.


    Vetco had the riser, my mistake, apologies for any confusion.

  163. 163
    elijahwc Says:

    156 – Here is what HAL is saying via the folks at briefing

    HAL Halliburton provides info regarding rig incident (30.36 -1.25) -Update-

    Co confirmed its continued support of, and cooperation with, the ongoing investigations into the Deepwater Horizon drilling rig incident in the Gulf of Mexico earlier this month. As one of several service providers on the rig, Halliburton can confirm the following: — Halliburton performed a variety of services on the rig, including cementing, and had four employees stationed on the rig at the time of the accident. Halliburton’s employees returned to shore safely, due, in part, to the brave rescue efforts by the U.S. Coast Guard and other organizations. — Halliburton had completed the cementing of the final production casing string in accordance with the well design approximately 20 hours prior to the incident. The cement slurry design was consistent with that utilized in other similar applications. — In accordance with accepted industry practice approved by our customers, tests demonstrating the integrity of the production casing string were completed. — At the time of the incident, well operations had not yet reached the point requiring the placement of the final cement plug which would enable the planned temporary abandonment of the well, consistent with normal oilfield practice. — We are assisting with planning and engineering support for a wide range of options designed to secure the well, including a potential relief well.

  164. 164
    zman Says:

    V re EOG – Big topics will be any Niobrara well results they care to share. Big for them and BEXP would be results from the e. Montana Caret Bakken well. Other than that they kind of gave all the punch away with the analyst day a few weeks back. Could be some more EFS results and maybe a San Augustine county Haynesville well mentioned as well.

  165. 165
    Gmlgdc Says:

    #161 If you are a working interest owner as they are you are on the hook for your percentage. Unless you prove operator negligence which is impossible.

  166. 166
    zman Says:

    Emailed from Nicky:

    Both bullish and bearish (short term) counts remain possible. Bullish count has us in a wave ii down of v up which could retrace up to 76% of the last two up days.

    Bearish count says we are now in a c wave down having topped in b yesterday. Support remains as before at 1175 and then 1168.

  167. 167
    zman Says:

    GMLGDC – thanks. Been a WI% owner, and bought a few sub pumps myself in Oklahoma (at least my %), but didn’t know about clean up obligation and legal liability for something like this (but that makes sense to me that they would be on the hook too) so thanks for the education. I’m more of a royalties kind of guy now, lol.

  168. 168
    1520sbroad Says:

    rig counts flattish

  169. 169
    Wyoming Says:


    They (HAL) balanced 2 cement plugs too while abandoning the well for production, as I understand. As I said yesterday, there are a lot of issues that went wrong to make a catastrophic event. BTW, the Coast Guard commander said something about this event not being cat yet, well, sorry but 11 people have died which makes it a cat event.

  170. 170
    zman Says:

    Wyoming – agreed.

  171. 171
    Wyoming Says:

    Elijah, thanks for 163, had not seen that. They said final plug, wonder if they did any of the initial plugs?

  172. 172
    zman Says:

    Thanks 1520:

    Oil count off 1 to 513 vs 196 a year ago

    NG up 2 958 vs 741 a year ago

    Horizontal up 12 to 765, vs 385 a year ago. Hmmm, numbers not jiving well this week.

  173. 173
    BirdsofpreyRcool Says:

    Notes on a conversation with HAL from an energy trading desk —

    Halliburton Co Provides Cementing Facts Regarding Rig Incident
    – Halliburton confirmed today its continued support of, and cooperation with, the ongoing investigations into the Deepwater Horizon drilling rig incident in the Gulf of Mexico earlier this month. Halliburton extends its heartfelt sympathy to the families, friends and our industry colleagues of the 11 people lost and those injured in the tragedy.
    – As one of several service providers on the rig, Halliburton can confirm the following:
    – Halliburton performed a variety of services on the rig, including cementing, and had four employees stationed on the rig at the time of the accident. Halliburtons employees returned to shore safely, due, in part, to the brave rescue efforts by the U.S. Coast Guard and other organizations.
    – Halliburton had completed the cementing of the final production casing string in accordance with the well design approximately 20 hours prior to the incident. The cement slurry design was consistent with that utilized in other similar applications.
    – In accordance with accepted industry practice approved by our customers, tests demonstrating the integrity of the production casing string were completed.
    – At the time of the incident, well operations had not yet reached the point requiring the placement of the final cement plug which would enable the planned temporary abandonment of the well, consistent with normal oilfield practice.
    – We are assisting with planning and engineering support for a wide range of options designed to secure the well, including a potential relief well.
    – Halliburton continues to assist in efforts to identify the factors that may have lead up to the disaster, but it is premature and irresponsible to speculate on any specific causal issues.

  174. 174
    elijahwc Says:

    DrL #158 PMGYF

    “They have said they will be able to continue the current dividend.”

    If this is what they are saying their business plan is post conversion then all you need is for the board to publicly ratify it and for you to be satisfied on the divi coverage.

    Some such as Bonterra BNEFF have very successfully done so, seen it reflect in the common share price, and even bumped the divi subsequent to conversion. Have a look at the chart. Pretty impresive when done right.

  175. 175
    elijahwc Says:

    #165, thanks, learned something today. That will make the cc call on the 4th interesting as APC hasn’t acknowledged any liability to the best of my knowledge.

  176. 176
    baylor3217 Says:

    I’d say BEXP and WLL have held up pretty well here given the broader market and the government’s smearing of GS

  177. 177
    zman Says:

    Agreed, plan to hold in both option accounts through Monday open as I expect upward NAV and price target revisions from the analyst crowd. BEXP may stick around until the EOG call in case those guys do talk about Montana.

  178. 178
    zman Says:

    adding to 177, caveat would be for the ZIM will take profits more quickly in most cases than the ZCAT and then rebuy if the Caret well comes in for EOG. In other words, if BEXP pops into the afternoon today I may punt and reload the ZIM next week on further news, if any.

  179. 179
    zman Says:

    RRC rebound continues. Part of that is probably the oddball pullback it had the last couple of days since earnings and the mistep on production guidance at SWN.

  180. 180
    Gtinvest Says:

    Where is a good site to see the actual or schematic process for pluging a deep sea well?

  181. 181
    BirdsofpreyRcool Says:

    Hearing from an energy sell-side desk that buy-siders are absolutely convinced that BHO and His Team of Merry Men (and Women) will do something to shut down production in the Gulf.

    Whereas I sure can’t blame them for being skeptical about decisions originating in the oxygen-depleted zone known as Washington D.C…. I do not believe that will be the case. The collateral damage (jobs, energy prices) would be too great.

    But them’s the thoughts we are up against — from professional investors today.

  182. 182
    Wyoming Says:


  183. 183
    Patipati Says:

    #158 — Dr. L, do you like Vermillion and Pembina?

  184. 184
    zman Says:

    BOP – hear ya and thanks and I agree, silly to shut it all down.

  185. 185
    Wyoming Says:


  186. 186
    zman Says:

    JB – looking at the PF chart on EOG, 1) that is a lot of X’s, 2) really a lot, 3) I don’t see a time where it has run that far before on your chart but am thinking back in 2008 it had a run on an Analyst Day that was fast as they announced the start of their oil play foray. So my question is, where do you see resistance, $115, $120. Thanks and voting now.

  187. 187
    elijahwc Says:

    ATPG – Mr Mkt saying ATPG can’t buy a break. Gets Titan out, signs pre-nups with Minerals Management and Coast Guard, starts up the Telemark hub, gets inital production going and refi’s everything.

    Now, is it going to be allowed to complete and hook up the next three to Telemark? Thoughts?

  188. 188
    zman Says:

    Wow, one of my passwords for JB’s vote was amaranth.

  189. 189
    BirdsofpreyRcool Says:

    Wyo — #185… yeah… you’re right. I still can’t get over the thuggery and theft involved with the Chrysler and GM bondholders. It was — quite frankly — against the law. But, guess “The Law” does not apply to some. So, given that as a history lesson, anything could happen.

  190. 190
    zman Says:

    Eli – from all we’ve pieced together I’d say they are good to go on that. It’s development drilling tied back to a hub, not under the “new area” comment from axlerod.

  191. 191
    baylor3217 Says:

    EOG rocking today. Trying to hang on into earnings without feeling piggy…

  192. 192
    BirdsofpreyRcool Says:

    too bad the new ATPG 11 7/8s are 144a… they are currently offered at 99.75 for any of you QIBs out there.

  193. 193
    zman Says:

    Baylor – re 191, it becomes easier for me when I look at the weekly chart and at the P/CF situation there.

    2010: $13.46 or 8.5x (getting up there but numbers likely to be going up after this quarterly release)

    2011: $19.81 or 5.7x (pretty reasonable)

  194. 194
    baylor3217 Says:

    I hear ya Z. I’ve had a few really decent trades the last month that I cut out on wayyy too soon and always trying to work to get better, but it’s never an exact science.

    Thanks for helping me feel more like a piglet than a pig re EOG..

  195. 195
    zman Says:

    or course, the steal in the Bakkens and for that matter in much of E&P onshore land remains with WLL

    2010 CFPS of $17.28 or 5.3x

    2011 CFPS of $20.92 or 4.4x (some analysts are at $24 CFPS here, median is $21)

  196. 196
    VTZ Says:

    Why doesn’t WLL get more of a premium in your opinion?

  197. 197
    baylor3217 Says:

    CHK trading nicely today counter to overall market trend. They haven’t been doing much at all the last several months.

    I remember aubrey in summer 2008 on cnbc saying it had a double in it when the price was $50. It did run to $72 or so and then armageddon occurred…

  198. 198
    Wyoming Says:

    BOP, it is just a sad situation . Problem is they don’t know what they are getting us into. We can only hope that the effect is only on replacing reserves (slowed down).


  199. 199
    zman Says:

    BEXP is the piggy choice.

    2010 CFPS of $0.93 or 21x (they may do $1.10 so not quite that expensive but that’s splitting hairs … it’s expensive on 2010 #s)

    2011 CFPS of $1.87 or 10.5x (could be $2.50 to $3.00 which keeps me from punting my stock)

  200. 200
    zman Says:

    Gold closing at a 4 month high at $1,180. Nice call V.

  201. 201
    BirdsofpreyRcool Says:

    #198 — wow. Govt dispatching a Team of Attorneys to “help” with the oil spill?? speechless….

  202. 202
    Gmlgdc Says:

    201 maybe they can plug the casing with them

  203. 203
    skimo Says:

    Now Holder is sending a team from the justice department to monitor the oil spill. Don’t these a******* have anything better to do -maybe go after terrorists or contemp;late their navels-
    It’s tough to be proud of your governement with this bunch in charge.

  204. 204
    zman Says:

    re 202. Thanks for the diet coke out the nose moment.

  205. 205
    DrLink Says:

    #183 No, I have not looked at those, the current income stocks I own are….



  206. 206
    BirdsofpreyRcool Says:

    #202 — thanks. I needed a good laugh today!

  207. 207
    elijahwc Says:

    #205 MVO – its structured as a Grantor trust so its cool in an IRA or ret plan.

  208. 208
    Garyinhou Says:

    Z… eog earnings Wed? I’m in same boat as Baylor.. may punt half

  209. 209
    zman Says:

    Gary – and don’t get me wrong, I’m not arguing against that at all, was just showing part of what keeps me from getting antsy on this move. If the clam up on the call and say, we have nothing to add to what we said on analyst day then I think it could see a significant pullback. If they say it’s too early on more Niobrara talk or we have nothing yet on the Montana Bakken as its still a science project, then same. I may sell have into earnings, depends on where the stock is the day before.

  210. 210
    zman Says:

    RRC continuing to climb, really was a decent quarter and they really are well positioned both in terms of hedges and on the growth portion of their plays, in the part of the country were gas garners a premium. Thinking to hold the ZIM calls through Monday to catch any NAV upgrades.

  211. 211
    zman Says:

    But I may kick out the higher strike ones as those are the most vulnerable to a market based pullback.

  212. 212
    Garyinhou Says:

    Hear ya Z… Those 110’s have made a trade intra day too many times to count as it is.. trippy

  213. 213
    zman Says:

    Roger that Gary, I’m in the $115s which have been what I would term volatile.

  214. 214
    john11 Says:

    BEXP Brigham Exploration upgraded to buy from hold at Natixis (timing uncertain) ($19.75 +$0.35)
    Target is $25.

  215. 215
    zman Says:

    Did someone have a comment re PXP and the Macondo effect?

  216. 216
    zman Says:

    Thanks John.

  217. 217
    Patipati Says:

    #205, $207, thank you very much.

  218. 218
    elijahwc Says:

    MS out on APC

    Anadarko Petroleum Corp. (APC.N)
    Research Tactical Idea

    We believe the share price will rise in absolute terms over the next 60 days.
    This is because the stock has traded off recently, making short term valuation much more compelling. APC has traded
    down on concerns surrounding the Horizon rig incident, resulting in the oil spill in the Gulf of Mexico. With a non-operated
    interest in the Mecondo well, we acknowledge the company may face adverse impacts from the incident. However,
    following a ~$10/shr decline in the shares (~$5 bn of value) we believe risk / reward is more skewed to the upside. In
    assessing downside for the stock, we see $64/shr of value on our NAV (assuming strip commodity prices) by removing all
    undeveloped deepwater Gulf of Mexico discoveries from our valuation (while including the Caesar-Tonga development
    which is nearing completion in 2011). This assigns zero value to discoveries at Lucius, Shenandoah, Heidelberg, and
    Mission Deep.
    We estimate that there is about an 80%+ or “highly likely” probability for the scenario.

  219. 219
    DrLink Says:

    Interesting that TISDZ is being shown some love towards the close….

  220. 220
    DrLink Says:

    219 spoke to soon, guess someone bailed

  221. 221
    tomdavis12 Says:

    Z: CSFB had a CC re the oil spill. The replay number is 800-642-1687 or 706-645-9291 ID# 73023288. I have not listened and I believe not available until 4:30pm EST. FWIW.

  222. 222
    choices Says:

    EXXI 16’s: not sure if this has been posted as I’m way behind in reading today but Interactive lists two EXXI 16’s

    EXXI 16, 06/15/14, conv-no, callable-no, puttable-no, CUSIP 29276KAH4, no rating, last price 111.63;
    EXXI 16, 06/15/14, conv-no, callable-yes, puttable-yes, CUSIP 29276KAG6, rating CAA1, last price 115.250

    Not sure why the difference in price other than possibly the difference in attributes noted above.

  223. 223
    zman Says:

    Thanks Tom.

    Paint drying action for rest of day. Declaring beerthirty early. Have a great weekend.

  224. 224
    BirdsofpreyRcool Says:

    choices — thanks! there are two tranches of the 16s issued, but they are really the same thing. Those would be the registered version of the private placement 16s, set to be official on Monday. If you can get them at, say 113, that is a 10% yield to worst on bonds that are secured and senior to the 10s.

  225. 225
    choices Says:

    #218-thanks,Eli, I like APC and at $62+, it appears to my untrained eye, it may have support at that level-will buy some, maybe with covered calls-have about 10 minutes to decide.

  226. 226
    West Says:

    Out of touch this week.I still like XEC a lot and DNR has major breakout pattern. Ya’ll have a good one this weekend.

  227. 227
    rseidman Says:

    BOP: On a closing basis EXXI is above your 17.50 low. So far, so good

  228. 228
    zman Says:

    re 107, way to call the ball.

  229. 229
    Dman Says:

    BOP #181 some observations:

    Most investment professionals tend to be Republicans. The figure I’ve heard is about 90%.

    This tends to interfere with their ability to predict the actions of Democratic governments. Leaving aside whether or not they *like* those actions, the job of an investment professional is to *predict* them and their heavy Republican leanings do seem to impair this.

    So you see, for example, that health insurers were trading for the first 6 months of the BHO admin as though they would go out of business. It took the market a long time to figure out that it was business as usual in Washington. The Democrats had no intention of implementing a public option and were very much for sale to the industry.

    Ironically, whilst BHO hoodwinked his own supporters (lets call them “progressives” for the sake of the discussion) when he explicitly promised a public option, it seems that investors also well-and-truly bought the line. They took a while to figure out that it was just verbiage.

    Similarly, investors who (like most on this board) heavily dislike BHO’s admin, may not have noticed that the people who actually got him elected are far from happy. The reason is simple: he has broken almost every promise he made to them. As far as I can see, the only important promise he has kept is to reinvade Afghanistan. And lets face it, that was one where progressives were hoping he was lying.

    Offshore drilling is a classic example. Progressives simply assumed he wouldn’t approve it. They were wrong.

    Now lets analyse *why* BHO has disregarded his supporters. In particular, given that an army of small-dollar donors actually got him over the line, why has he treated them with disdain ever since. Well it’s pretty simple:

    1. He knows they’ve got nowhere to go. What will they do, vote for “drill baby drill” Republicans?

    2. He knows he doesn’t need their money anymore. The advantage of incumbency is that corporate America has their checkbooks open and BHO has been ready to deal since day 1 in the WH.

    So on the GOM issue, a look at the track record suggests the following:

    1. There will be huffing and puffing. Gnashing of teeth, wringing of hands.

    2. This may go on for some time, because the complicating factor is that The Dems have a lot of (very oily) egg on their faces just now. As usual, they ignored their supporters and made the decision (to open up drilling) in accordance with industry/Republican views. But now it’s obvious that the opponents may have actually known something. Oops. Although I don’t actually recall anyone predicting catastrophic accidents, but they may have.

    Anyway, the point is that the Dems are very embarrassed and they will have to atone for this with lots of Serious Looks, Grave Pronouncements, Inquiries and endless huffing and puffing.

    3. But what will they actually do? Not much would be my guess. For the reasons BOP mentions.

    So I think EXXI will be a steal here at some point. Maybe some more pain which could drag out for a while. But a steal at some point.

  230. 230
    BirdsofpreyRcool Says:

    Thanks, guys.

    Step 1 of my Evil Plan accomplished (stock closes around $17.50).

    Step 2 will be continued headlines, discussions, speculation about Washington’s reaction. Hopefully, people will realize that they are not going to shut down all drilling in the GoM. But it is entirely prudent to step back, take a deep breath, analyse what went on with the Deepwater Horizon, and figure out what level of safeguards are necessary in very-deep water drilling. Like what happened with the Unocal Platform A oil spill in California. Unocal was in compliance with all regulations at the time of the Santa Barbara Oil Spill… but that spill was a wake-up call that more was needed. And everybody gladly went along b/c NO ONE WANTS THIS STUFF TO HAPPEN.

    Step 3 Anybody who wanted to sell on GoM drilling risk probably sold today. So, unless something outta Left Field comes out over the weekend, there should be more aggressive buyers (than sellers) on Monday. But, people have reawakened to the inherent risk in offshore drilling. So, don’t think E21 will bounce back up to $21, 22, and ultimately higher. But it will start to drift that way.

    Step 4. Oil prices stay above $80 and may migrate higher as people realize that we are in an economic recovery.

  231. 231
    BirdsofpreyRcool Says:

    Amazing what you can find on the internet… this is long, but I found it interesting.

    Unocal Platform A oil spill in perspective


    Just to put the Santa Barbara, Unocal Platform A oil spill in perspective to other oil spills.

    On Jan. 28, 1969, a blowout on a Unocal rig six miles off the coast of California spilled 3 million gallons of oil into the waters off Santa Barbara. The blackened beaches and oil-soaked birds and seals became icons for the environmental movement and eventually brought oil exploration off the Atlantic and Pacific coasts of the United States to a halt.
    March 18, Cornwall, Eng.: Torrey Canyon ran aground, spilling 38 million gallons of crude oil off the Scilly Islands.
    Dec. 15, Buzzards Bay, Mass.: Argo Merchant ran aground and broke apart southeast of Nantucket Island, spilling its entire cargo of 7.7 million gallons of fuel oil.
    April, North Sea: blowout of well in Ekofisk oil field leaked 81 million gallons.
    March 16, off Portsall, France: wrecked supertanker Amoco Cadiz spilled 68 million gallons, causing widespread environmental damage over 100 mi of Brittany coast.
    June 3, Gulf of Mexico: exploratory oil well Ixtoc 1 blew out, spilling an estimated 140 million gallons of crude oil into the open sea. Although it is one of the largest known oil spills, it had a low environmental impact.
    July 19, Tobago: the Atlantic Empress and the Aegean Captain collided, spilling 46 million gallons of crude. While being towed, the Atlantic Empress spilled an additional 41 million gallons off Barbados on Aug. 2.
    March 30, Stavanger, Norway: floating hotel in North Sea collapsed, killing 123 oil workers.
    Feb. 4, Persian Gulf, Iran: Nowruz Field platform spilled 80 million gallons of oil.
    Aug. 6, Cape Town, South Africa: the Spanish tanker Castillo de Bellver caught fire, spilling 78 million gallons of oil off the coast.
    July 6, North Sea off Scotland: 166 workers killed in explosion and fire on Occidental Petroleum’s Piper Alpha rig in North Sea; 64 survivors. It is the world’s worst offshore oil disaster.
    Nov. 10, Saint John’s, Newfoundland: Odyssey spilled 43 million gallons of oil.
    March 24, Prince William Sound, Alaska: tanker Exxon Valdez hit an undersea reef and spilled 10 million–plus gallons of oil into the water, causing the worst oil spill in U.S. history.
    Dec. 19, off Las Palmas, the Canary Islands: explosion in Iranian supertanker, the Kharg-5, caused 19 million gallons of crude oil to spill into Atlantic Ocean about 400 mi north of Las Palmas, forming a 100-square-mile oil slick.
    June 8, off Galveston, Tex.: Mega Borg released 5.1 million gallons of oil some 60 nautical miles south-southeast of Galveston as a result of an explosion and subsequent fire in the pump room.
    Jan. 23–27, southern Kuwait: during the Persian Gulf War, Iraq deliberately released 240–460 million gallons of crude oil into the Persian Gulf from tankers 10 mi off Kuwait. Spill had little military significance. On Jan. 27, U.S. warplanes bombed pipe systems to stop the flow of oil.
    April 11, Genoa, Italy: Haven spilled 42 million gallons of oil in Genoa port.
    May 28, Angola: ABT Summer exploded and leaked 15–78 million gallons of oil off the coast of Angola. It’s not clear how much sank or burned.
    March 2, Fergana Valley, Uzbekistan: 88 million gallons of oil spilled from an oil well.
    Sept. 8, Russia: dam built to contain oil burst and spilled oil into Kolva River tributary. U.S. Energy Department estimated spill at 2 million barrels. Russian state-owned oil company claimed spill was only 102,000 barrels.
    Feb. 15, off Welsh coast: supertanker Sea Empress ran aground at port of Milford Haven, Wales, spewed out 70,000 tons of crude oil, and created a 25-mile slick.
    Dec. 12, French Atlantic coast: Maltese-registered tanker Erika broke apart and sank off Britanny, spilling 3 million gallons of heavy oil into the sea.
    Jan. 18, off Rio de Janeiro: ruptured pipeline owned by government oil company, Petrobras, spewed 343,200 gallons of heavy oil into Guanabara Bay.
    Nov. 28, Mississippi River south of New Orleans: oil tanker Westchester lost power and ran aground near Port Sulphur, La., dumping 567,000 gallons of crude oil into lower Mississippi. Spill was largest in U.S. waters since Exxon Valdez disaster in March 1989.
    Nov. 13, Spain: Prestige suffered a damaged hull and was towed to sea and sank. Much of the 20 million gallons of oil remains underwater.
    July 28, Pakistan: The Tasman Spirit, a tanker, ran aground near the Karachi port, and eventually cracked into two pieces. One of its four oil tanks burst open, leaking 28,000 tons of crude oil into the sea.
    Dec. 7, Unalaska, Aleutian Islands, Alaska: A major storm pushed the M/V Selendang Ayu up onto a rocky shore, breaking it in two. 337,000 gallons of oil were released, most of which was driven onto the shoreline of Makushin and Skan Bays.
    Aug.-Sept., New Orleans, Louisiana: The Coast Guard estimated that more than 7 million gallons of oil were spilled during Hurricane Katrina from various sources, including pipelines, storage tanks and industrial plants.
    June 19, Calcasieu River, Louisiana: An estimated 71,000 barrels of waste oil were released from a tank at the CITGO Refinery on the Calcasieu River during a violent rain storm.
    July 15, Beirut, Lebanon: The Israeli navy bombs the Jieh coast power station, and between three million and ten million gallons of oil leaks into the sea, affecting nearly 100 miles of coastline. A coastal blockade, a result of the war, greatly hampers outside clean-up efforts.
    August 11th, Guimaras island, The Philippines: A tanker carrying 530,000 gallons of oil sinks off the coast of the Philippines, putting the country’s fishing and tourism industries at great risk. The ship sinks in deep water, making it virtually unrecoverable, and it continues to emit oil into the ocean as other nations are called in to assist in the massive clean-up effort.
    December 7, South Korea: Oil spill causes environmental disaster, destroying beaches, coating birds and oysters with oil, and driving away tourists with its stench. The Hebei Spirit collides with a steel wire connecting a tug boat and barge five miles off South Korea’s west coast, spilling 2.8 million gallons of crude oil. Seven thousand people are trying to clean up 12 miles of oil-coated coast.

  232. 232
    PackMan Says:

    Wow: Didnt have time to be here during day; but caught a bit off guard on the EXXI thing. Knew about the downgrade; didnt expect such a dump.

    Got 18 at the open.

    Tried to load up in the 16’s. Missed due to lack of liquidity (damn ! lesson learned). Did get a bunch from high 16’s to 17.20’s.

    Was a wild ride if you got in near the lows.

    Thanks all for the running commentary.

    Hope this passes quickly.

  233. 233
    PackMan Says:

    BOP; you keep talking Economic Recovery; but the data says tepid tepid tepid at best and entirely dependent on govt and fed.

  234. 234
    BirdsofpreyRcool Says:

    PackMan — I don’t say it is a strong recovery. But it is a recovery, nonetheless. And I happen to respectfully disagree that the economy is dependent on the govt. Certainly, the low interest rates from the Fed is a windfall to banks… but the govt is actually standing on the neck of the private sector. That said, the private sector is trying to get up.

  235. 235
    choices Says:

    Interesting slide presentation re: cementing by HAL:


    Slide 10 of 25 has a notation about blowouts and possible severe consequences from the heat but I’m clearly over my head on the technical aspects/process of cementing-perhaps Z or some engineers/knowledgeable industry people could comment on the plausability of this presentation.

  236. 236
    baylor3217 Says:

    Anyone think the rig explosion was sabotage? Haven’t heard it discussed much here.

  237. 237
    PackMan Says:

    No offense by the way BOP.

  238. 238
    PackMan Says:

    GDP http://www.businessinsider.com/a-few-comments-about-q1-gdp-2010-4

  239. 239
    Wyoming Says:

    235, Choices,

    Where to begin. First I am not a Deepwater type but I was surprised how simple the engineering is in my well control course (bi-annual certification which I have expired). Side note, I guarantee that everyone in charge of the BOP’s on the Horizon’s rig floor was current on their certifications. Sub sea portion of the cert is additional. The process of Portland cement is an exothermic reaction (creates heat). The concern is that the temperature will de-stablize the Hydrates and release the gas. One of the factors is that deepwater wells are not that high in temps. For instance @ 3,000 m deepwater, the temp is ~ 10 C. Where I am at in North Africa (Land, the temp is about 100 C at 3,000 m. See page 9.

    The Shallow Water Flow Discussion is basically as cement turns from a solid to a liquid, the hydrostatic pressures are relived. At this moment of time, it is possible to allow an interval to become underbalanced. This of course is decremental in a gas zone. Keep in mind that a little gas becomes really big as it migrates up hole. The bigger the gas bubble becomes, the more fluid is displaced. The more fluid is displaced by gas, the less hydrostatic pressure on the gas zone. The less hydrostatic pressure on the gas zone, the more gas feeds in. Wash, rinse, repeat. Of course, the intial gas bubble could come from the de-stabilization of the hydrate.

    Two more comments. Why not just crank up the weight of the fluids and have extra to contain all the gas bubbles from forming? Because high hydrostatic pressures from the heavy fluids will “frac” the rock and now all the fluid is leaving the wellbore and entering some weak zone. As the fluid leaves the wellbore, the hydro pressure decreases and it is worse as you have a blow out and lost circulation from the frac’d zone.

    The compressive strengths of cement comes from the formation of crystals forming in the cement slurry in that transition time from liquid to solid. As a shear is applied to the setting cement, it breaks the crystals that are forming. Break crystals and you reduce the compressive strength of the cement. So, sis they have 1,000 psi in 24 hours? Who knows, the industry does not have a model for xtal destruction and reformation that I am aware of.

  240. 240
    Wyoming Says:

    Do not read this while drinking fluids. This dude must have been drunk or at least wearing a tin foil hat:


  241. 241
    skimo Says:

    Having given it much study and deep thought, Backtalk will be the star in the run for the roses today! 🙂

  242. 242
    BirdsofpreyRcool Says:

    PackMan — #237… thx. No offense taken. It’s a pretty sucky recovery, if you’re looking for a job…

    skimo — will be rooting for your pick, man. Have a mint julep fo me. GL!!


  243. 243
    BirdsofpreyRcool Says:

    Wyoming — You are invaluable. Thank you for your engineering lessons.

  244. 244
    choices Says:

    Thanks, Wyoming, for your comments.

  245. 245
    choices Says:

    #244-Wyoming-my quick response above did not do justice to your explanation, which reflected thought and the benefit of your experience. I’m trying to grapple with what effect this tragedy will have on deep water drilling. As is the rule, the politicians from both parties will pander, posture, grandstand, and bloviate and in the end will contribute nothing to the solution of the problem and to gaining insight into whatever the cause turns out to be. However, I am concerned as to seriousness of this possible link between the heat generated by the cement slurry curing and the methane hydrates on the ocean floor. (Again, I’m way over my head on this). We shall see-thanks again for your in-depth response.

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