Wednesday Morning

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Market Sentiment Watch: INTC posted strong results last night, in fact their best quarterly earnings and sales in their 42 year history and indicated that business demand, and not just demand from the consumer, is on the mend. The crowd then went wild and many stories were quickly penned about the start of a new bull market. Doubt it but  since the economy of the present and the market of the present are two quite different things I have to say we shall see. In energy land, things are relatively quiet still on the news front but I've included an updated Catalyst List in preparation for the onslaught of 2Q earnings beginning next week. I'll have a calendar out for next week's earnings on Friday. On the BP front, things are moving ever so slowly ahead and we expect a pressure test of the well today (fingers crossed).  I've also included an email from Aubrey McClendon which gives a view of his thoughts on the Blowout Act of 2010. I


Ecodata Watch:

  • Retail sales of - 0.5%, just below expectations of - 0.4%
  • Later today we get the FOMC minutes.

Nicky Watch: 1150 - 1200 looks on by end of first week in August.  16th -19th could be a high or a low.  Pullback should take us to between 1050 - 1075,

Blowout Prevention Act of 2010 Watch: The following came from an email from Aubrey to a "who's who" list from the E&P industry. I have confirmed its authenticity.

All:  Please note that the as drafted Blowout Prevention Act of 2010 covers offshore wells and any onshore well, whether on federal land or not, that “in the event of a blowout, could lead to substantial harm to public health and safety or the environment.”  The decision-maker on whether a well is a “High-Risk Well” or not shall be “identified pursuant to criteria establish by the appropriate Federal official”, who is further defined as any of the “Secretary of Energy, Secretary of the Interior, or Administrator of the EPA” as designated by the POTUS.

Seems like this is intended to cover virtually every gas well drilled in the US these days and so would therefore put virtually all gas drilling under new federal safety regulations.  Although the Act written clearly with offshore wells in mind, this little throw in definition of an onshore high risk well on pp 32 and 33, would make much onshore drilling impossible, if for example, the same requirements are followed as for offshore wells that would mandate dual blind shear rams and dual casing shear rams.  I am not a drilling engineer, but am not sure there would be room under any onshore drilling rig in America today for such a wellhead set-up.

Hope I am overreacting, but this looks like bad news for all of us….Aubrey


ZComment: Wow. Ugh. Sheesh. OK, I am responsible for putting certain parts of that in red but thought it could use the extra emphasis. This is an issue separate and removed from fraccing and opens up a whole new can of worms in terms of costs and feasibility. This Blowout of an Act leaves the definition of what a "high risk" well is open to interpretation by  someone in government .... that is too much authority to just had to one individual, that is the entire  This could mean that all drill sites in areas deemed high risk would need to dig down to place a BOP beneath the rig floor. Implications:

  1. Higher natural gas prices, possible significantly higher.
  2. Sideways to a modest negative for E&Ps as while they will have higher costs at least partially offset by those higher gas prices,
  3. Positive for equipment makers: CAM, FMC, NOV.  CAM and FMC for making and selling a boat load of blowout preventers onshore and NOV I guess for making
  4. Bad news for onshore rigs: NBR, BRNC, HP, PKD, PDS, PTEN, GW who would all be looking at 1) lower utilization and 2) stilts for their rigs? Sheesh and double sheesh.

Note: RRC said this morning it will disclose chemicals used in fracs of each of its Marcellus wells on its website.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today – Catalyst List Update
  5. Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

  • $7,800
  • 67% Cash
  • Yesterday’s Trades:
    • ECA – Sold half (15) of the ECA July $33 calls for average $0.8033, up 207%, with the stock at $33.55.
    • BP – Added (30) July BP $40 calls for for $0.23 with the stock just over $37. Thinking is that the stock will get a decent move when they choke down the new 3 ram cap placed on the well yesterday.
    • BP - Added a second set of (30) July $40 calls for $0.14, with the stock at $36.40, brings average cost to about $0.20. High risk trade, still waiting on well pressure tests to kick in.

ZIM (Zman Inefficient Markets portfolio)

  • $8,100
  • 21% Cash
  • Yesterday’s Trades: NONE

Commodity Watch: Crude oil rallied $2.20 to close at $77.15 yesterday, on the back of a surging equity market and the continuation of the recent slump in the dollar which is now at a two month low. After the close, the API released a bearish report but the sum of the parts are not intuitive this week and oil failed to move on the release (probably in part supported by INTC's news, see below). This morning crude is trading off slightly.

Natural gas eased $0.03 to close the day at $4.35 yesterday. This morning gas is also trading down slightly.

  • Tropics Watch: Still quiet.
  • Weather Watch: Forecasts appear to be a bit hotter than the already hot forecast posted Monday morning for this week, so look for the smallest injection of summer next week by far. 

Early Read On Natural Gas Storage: Street is at 81 BCF for tomorrow’s report which looks a touch high to me even with the holiday's impact on industrial demand.

  • Last Week: 78 Bcf Injection
  • Last Year: 88 Bcf Injection
  • 5 Year Average: 80 Bcf Injection
  • 10 year Hi: 108 Bcf Injection
  • 10 year Low: 53 Bcf Injection

Oil Inventory Preview

API Watch:

  • Crude: UP 1.7 mm barrels despite a big reported drop in imports
  • Gasoline: UP 1.7 mm barrels
  • Distillates:  UP 3.1 mm barrels


  • Crude - I'm looking for a bigger than Street expectation draw down of crude stocks today, possibly substantially bigger.
  • Gasoline - Normally this time of year we see rising demand lead to falling stocks, and I expect a small decline in inventories with today's numbers and small boost in week to week gasoline demand.
  • Distillates - looking for a build but no where near as big as API.

Stuff We Care About Today

Catalyst Watch Update ~ new stuff / changes highlighted in yellow.

Other Stuff

  • SSN - Operations update
    • frac dates and ultimately production being pushed back on its next Bakken wells.
    • It's Gene well in the Bakken is performing admirably, producing 510 bopd at the end of its first 3 months is not too shabby.

Odds & Ends Analyst Watch:

  • Nada

133 Responses to “Wednesday Morning”

  1. 1
    zman Says:

    Off topic: FBR did  a big initiation piece on the real estate sector this morning, if you have access please forward to zmanalpha@gmail.com. Always looking for a little more yield. Thanks. 

  2. 2
    zman Says:

    SSN getting a pop off last night's news … probably unwarranted but its the second day someone is trying to manipulate the stock higher with a small amount of cash. Traded as high as $1.09  this morning.

  3. 3
    ram Says:

    Speaking of yield, in the energy space, is LINE your favorite grower+yield?  What I mean is that LINE might not be the highest yield, but it's current yield and its potential growth over time could be a good place for conservative income.

  4. 4
    zman Says:

    Ram – yes. LINE is run more like an E&P company than the other yield names in my opinion. They've done a much above average job of selling high and buying low but also have an organic growth component to their profile that many of the other names don't. They do seem to react better to changing situations and have made a bet against gas prices before they tumbled and for the long term so they are conservative guys who locked in what they need to keep the distributions coming. 

  5. 5
    ram Says:

    Site is sssssllllllllooooooowwwwwwwwwww……………

  6. 6
    PackMan Says:

    Nicky …. 1050-1075 or 1150-1200 ??  or both ?   :>)

  7. 7
    zman Says:

    Ram, I know.

    An email has been sent regarding activation of the backup site today:


    Pack – she means both.

  8. 8
    elduque Says:

    Baltic keeps on falling
    TED staying around 37 – 39

  9. 9
    zman Says:

    Not quite the open one would have expected listening to all the INTC hoopla last night.

    SSN hanging out at 1.05 on very strong opening volumes (> 500,000 shares)




  10. 10
    zman Says:

    OAS also ignoring the red day so far.

    Pretty amazing how volatile / unpredictable this market is, at least for the talking heads, who uniformly expected a huge rally to begin all rallies today on INTC last night. And now the market is off half a percent with most sectors in retreat.

  11. 11
    zman Says:

    BP saying they delayed the test 24 hours from yesterday afternoon. Says they wanted to forestall the possibility of an inconclusive result. Rather unlike what they did when they were trying to complete the well in the first place and more along the lines of measure twice, cut once.

  12. 12
    zman Says:

    SSN question: Anyone have their 75% allocation showing yet?

  13. 13
    Jerome Blank Says:

    Re: #12 Not yet….

  14. 14
    zman Says:

    SSN looking at an instant 79% gain based on the current price from the offering price. Given that the deal was not a pro rate allocation based on shares you held before the offering but was instead a cash based offer A through D deal and that most probably went for as much as they could afford, we could still see a significant hit to the shares when they unlock. Temping to sell a piece of what I’ve got and then take the new shares thus keeping my same position size.

  15. 15
    zman Says:

    Thanks JB, didn’t think so. According to what I have gleaned from their oddly worded press releases, we should get allocated this week.

    Oil numbers in 30 minutes, oil holding pretty firm at down 50 cents since the open.

  16. 16
    zman Says:

    How to read the EIA Oil Inventory Report – or at least, how I read it quickly, then more in depth later.

    The big numbers (Inventories for Oil, Gasoline, and Distillates) can be found in the text of the paragraphs in this new page from the EIA:


    You can also get a look at imports and utilization in that one that lets you know if a big draw or build in crude stocks is a function of demand for crude or just a function of it coming in (or not so much) to the country.

    Imports based beats (where imports fall off causing a big draw on crude) are less important than demand for crude by refineries needing to make finished products.

    The next important numbers are:
    Gasoline demand
    Distillate demand
    Cushing stocks.

    Those can be found on this page:

    The quickest way to find the numbers is to type supply into the search bar at the top of the PDF (same for Cushing).

    In general, I look for progress vs the five year average in the demand figures and for Cushing stocks to stay within reason.

    The reason I chart this stuff each week is not to fill up the Thursday post but instead to keep track of all the relevant moving pieces (as you can see from the PDF files, there are a lot of moving pieces and I look at some of those too including U.S. production and imports of finished products but I don’t chart them every week as I’d put you guys to sleep). Maybe I already have.

    El D – does that address your question? Ask more if you have them.

  17. 17
    zman Says:

    Given the market defying move in OAS, I’d bet the recommendations that are on the way are going to be pretty glowy.

  18. 18
    elduque Says:

    Mahalo Z. As I have said before. You are invaluable.

  19. 19
    zman Says:

    Eld – was hoping you were able to get on the site this morning as that hard line we had run to the islands was no cheap ticket 😉

    Oil numbers in 8 minutes. Crude holding 76.70.

  20. 20
    zman Says:

    APC off the most it’s been in several days. Could be time to nibble. Not until after numbers though for me at least.

  21. 21
    zman Says:

    EIA Inventory Report

    Crude: DOWN 5.1 mm barrels – better
    Gasoline: UP 1.6 mm barrels – worse
    Distillates: UP 2.9 mm barrels – worse


  22. 22
    zman Says:

    Imports retreated to 9.3 mm bopd, not unexpected.

  23. 23
    Geno Says:

    Z- a little info on John Wright and the BP situation.


  24. 24
    zman Says:

    More EIA

    Gasoline demand – big drop, down 9.08 mm bpd. Post holiday slump a lot bigger than I would have expected

    Distillates demand – also a big drop after last week’s strangely outsized bump, this makes some sense as a reversal.

  25. 25
    zman Says:

    More EIA

    Lower 48 oil production off slightly week to week, blame Alex and TD 2 for that.

    Cushing stocks – ticked back up 300K bo to 36.1 mm barrels. OK, not great, not disastrous.

    Crude actually up a touch from pre report at 76.81.

    If you don’t have live crude quotes you can always watch this:


  26. 26
    zman Says:

    More EIA:

    Nutshell: Not a great report but no where near as bad as the API report last night which as I said in the post made little sense when you look at the sum of the parts.

    The big crude drawdown is getting the attention of traders at the moment and it is not a completely low quality draw (which would be just the result of a low imports number) but is bolstered by a higher refining crude through put figure.

    All the usual charts and comments in the morning post.

  27. 27
    zman Says:

    Re 23 – thanks much.

  28. 28
    elduque Says:

    JB. I have HK consolidating and breaking up out of a down trend line from June.

    Do you confirm?

  29. 29
    zman Says:

    People are front running the OAS reports. If you see one tomorrow and I have not mentioned it, please forward.

  30. 30
    zman Says:

    Group grudgingly greening.

    Crude just over $77.

    NG – I think the Street is a touch high on the injection for tomorrow.

  31. 31
    zman Says:

    Refinery utilization was 90.5%, highest since 2008. I don’t think this is a sign of confidence on the part of the refining crowd regarding the state of demand and the economy but more one of “let’s take the money while we can” due to the high high margins. That’s not great really as it can quickly lead to more bloated product inventories.

  32. 32
    tomdavis12 Says:

    Z: Just back from Maine. Had to have a little Chowda and Lobstah Rolls. Nice trade on BP while I was away. My quarterly number for NE is $1.08 which is a little lower than street numbers. It will be out 8/21 after the close. Will report back after the CC 8/22. The latest rig report had some new contracts in the North Sea but the down days are more than what most WS models are showing. My earnings range for all of ’10 is $4.50 – $4.60. I expect ’11 to be slightly higher and ’12 to 10 – 15% above ’11 and above $5.00/sh.

  33. 33
    zman Says:

    Tom – Saw a comment yesterday saying NE is cued up for a 2Q miss, think it was TPH but can’t recall.

  34. 34
    tomdavis12 Says:

    Z: Those NE earnings dates are July not August. My two biggest under performers for this year are NE and HK. I am solely responsible for the NE problem. I do blame gov’t intervention ( moratorium ) for much of the under performance with NE. Would you put HK in that camp as well. The black cloud of fraccing and this latest new moratorium. If you do, will the 8/3 earnings numbers be strong enough to offset some of our gov’t headwinds?

  35. 35
    zman Says:

    Tom – HK I’d put on a combo of management’s past behavior which has caused what seems like infinite mistrust of their capital discipline, then gas prices which is partly a function of their own success at finding gas, and lastly various govt’s who like the tax revenues but not the concept of them coming from hydrocarbon extraction. Tom – I honestly think between the Blow Out Act (which blows) and the Frac Attack and Moratorium 2.0 plus higher taxes proposed for the recovery fund we will see higher long term natural gas prices. And a lot lower federal lease auction proceeds.

  36. 36
    md Says:

    Lower distillate demand makes sense as less trucks miles on holiday. The low gas throws me off for same reason.
    reminder about your post to discuss writedowns and writeups.

  37. 37
    tomdavis12 Says:

    Z: Also saw some interesting comments from SDRL where they believe that with the new requirements from the spill, they expect 20 – 40% of the deepwater fleet to be obsolete within 2 years. They expect to invest into new rigs, needless to say.

  38. 38
    zman Says:

    Md – thanks will do.

    Tom – again, good for NOV, CAM, FTC

  39. 39
    elduque Says:

    Dollar rolling over

  40. 40
    zman Says:

    BP digging out a bit now.

    HAL defying max pain so far.

  41. 41
    zman Says:

    Having a lot of trouble getting on board with the refining trade … still … yet … again. They are their own worst enemy. Just looking over the production numbers, it is obvious they are all over producing gasoline which results in over production of distillates where inventories are really, really elevated. This will end badly for them. They should put up good 2Q and maybe 3Q EPS numbers but then what?

  42. 42
    zman Says:

    Tom – anything else striking you as interesting on the service/rigs side right now?

  43. 43
    zman Says:

    SD – at $6.50. Vote tomorrow. I bet shareholders approve the merger with ARD. Good for SD, maybe runs to $8 in coming weeks as they lay out the new plan for the Street. Not as good a deal as I originally though but should be a positive.

  44. 44
    zman Says:

    Oil punching higher, now 77.83, on the back of the weak dollar:


  45. 45
    md Says:


  46. 46
    tomdavis12 Says:

    Z: My problem is timing. I can convince myself that things are cheap, I can’t feel confortable with the concept that the gov’t will get out of our way. Therefore, can we trade on normal good news? Have some bullets left but don’t know when to use. I will forward some of the latest sell side service/rigs comments. CSFB did have MRO on their list of 23 Contrarian Ideas put out today.

  47. 47
    Jerome Blank Says:

    Re” #28, Eld, sorry for the late reply, I’m not in front of my charts at the moment, I will check asap, hope it will still be of help…

  48. 48
    zman Says:

    Tom – I understand you on that. My non timed stuff, the ZLT, is doing just fine and is at the high of this year today due to a number of names working there of late including LINE, OAS and even little SSN. On the other timing has been better in the wait for the news to come out, see how everyone is taking it and then either buy or don’t. The Catalyst List is helpful but has been nothing of a guarantee of performance since about April 25th.

  49. 49
    zman Says:

    In other words, a very tough trading market. *

  50. 50
    zman Says:

    SWN looking more and more poised for a break out.

  51. 51
    zman Says:

    How to kill jobs in the U.S.

    US House Natural Resources Committee adopts language that would bar BP from getting new US drilling leases, permits for 7 years.

    I gotta say that is just bull.

  52. 52
    zman Says:

    re 51. That is so arbitrary I’m just about speechless.

  53. 53
    zman Says:

    What if it had been Exxon or Chevron or Conoco. No one is going to want to look for oil here if this is the outcome.

    Higher tax structure than most of Africa and Latin America, unlimited liability, criminal boot on neck charges. Wow. It’s safer to deal with Chavez.

  54. 54
    crysball Says:

    Re : Marcellus Hor. Drilling Techniques

    In a discussion with Atlas… they are experiencing a double whammy (better IP’s & lower decline rates) when they run laterals on the very bottom of the Marcellus formation. See attached Table. Note the formation thickness where they are doing this is 100’~150′ and seems independent of lateral length and and/or # of stages. This may not have applicability in other Shales, but it seems to be working for them.


  55. 55
    zman Says:

    This should bring a challenge from Great Britain and from BP. They hold leases that will expire while they can’t get permits? That’s just theft.

  56. 56
    tomdavis12 Says:

    Z: What is the latest time frame for John Wright to complete his kill? Is that a tradeable event or is that already in the stock?

  57. 57
    zman Says:

    Thanks Crys – will stop ranting and look.

  58. 58
    zman Says:

    Tom – I think a successful kill is not in the stock, I think that is a 10% move higher. Time frame is anywhere from July 25th onward.

  59. 59
    elduque Says:

    It is ok JB, I was just pointing HK out, in case anybody cared. It is behaving different today. Instead of opening up and falling, it is doing the opposite.

  60. 60
    zman Says:

    OAS outperforming as we approach lunch. Should see coverage beginning either tomorrow, Friday, or Monday. Other onshore oily names working fairly well save KOG which a big low on volumes today.

    Eld – to my layman’s eye, HK does look more interesting now.

    Thinking 75 Bcf tomorrow, Street at 81, one more number to round up.

    BP update: pressure gauge on the outlet at 0 so test not started yet, not comments from BP or the Coast Guard to alter the latest “Wednesday afternoon” comment.

  61. 61
    zman Says:

    EU suggests ban on new deepwater drilling. OPEC heard laughing over the horizon.

  62. 62
    bill Says:

    52, the oil industry should get together and say they wont bid on leases until there is a regime change

  63. 63
    bill Says:

    53, funny everybody thought there was risk in dealing with chavez..US just as bad if not worse

  64. 64
    zman Says:

    Bill – Interior already canned the next offshore lease sale. I guess they figured out that no one is going to pay a dime for anything at the moment.

    I should just be happy about the bans on drilling as that will lead to higher oil prices and I like them going up as much as the next oil investor but honestly, a fair stable price is what the global economy needs and cheering on such bans makes me want to take a shower.

  65. 65
    1520sbroad Says:

    #51,52,55,61 – how quick do we get to $4.00+ gasoline and all the associated complaining?  Is there any better way to make OPEC the only game in town?

  66. 66
    bill Says:

    60 why do you expect coverage any day now on oas

  67. 67
    zman Says:

    re 63. Yeah, those boys in Iowa put the wrong socialist on that billboard. The Hitler image is pretty dumb for a quite a few reasons but Chavez would have been a good choice.

  68. 68
    bill Says:

    I saw an article that cape owners are considering laying up their ships until the rates go back up.. the rates are around break even 20 k per day

    If you want to invest in this sector look for company with low debt and long term charters in place

  69. 69
    zman Says:

    re 66 – 30 days from the IPO, all of the bankers should initiate.  Not that's not normally some pretty "grain of rice" type material just after they did the deal but given that the stock is up only a bit from the offering, they should be more bullish than not. I'm mostly interested to see what kind of guidance on growth and costs the company has been feeding them in the intervening quiet period since the deal. I know of 1 Bakken producer that was a sizable IP (> 3,400 BOEpd) that's come off the confidential list in the last 2 weeks that's near BEXP's operations at Rough Rider. My simple model had put sharp declines on a much lower average IP so it will be interesting to see if the Street is down there with me or if the company has spoon fed them something higher in terms of rates. 

  70. 70
    ram Says:

    Why then has gas at the retail level, in the South, droppped at least 15% while oil has come up to the high for the year?

  71. 71
    bill Says:

    Lazard trims Baltic view ie Balt
    Analyst tips cape rates to stabilize in August as plunging spot market leads to reduced profit forecast for Balt.
    they are tied to spot market

  72. 72
    zman Says:

    Bill – thanks, been meaning to talk to you about the bulkers. Still liking NM and DSX? I saw some broker dump coverage of the group the other day and then, when you look at all the stocks, it's sort of easy to see why. Brokers kill coverage after a sector has been flogged.

  73. 73
    zman Says:

    Ram – Two thoughts: 1) It trails, sometimes by a lot and 2) the Gulf Coast and East Coast regions are more overstocked for finished gasoline than the country as a whole is.

  74. 74
    ram Says:

    Thanks. I have been seeing fuel prices being lowered every couple of days while oil keeps rising.  These last couple of weeks has been the exception to the rule of oil up, then retail gas up.

  75. 75
    zman Says:

    Ram – It should rally again the first time we get a spinner in the Gulf.

  76. 76
    bill Says:

    page 5 is bulker demand

  77. 77
    ram Says:

    What's with the spinner talk again?

  78. 78
    zman Says:

    Thanks Bill, that's helpful. We are in the doldrums.

    That's a nice graph on page 4 of EIA, IEA, OPEC global oil demand forecasts. Personally I think OPEC is deliberately low balling their growth numbers (notice how quiet they've been of late).

  79. 79
    crysball Says:

    Scientific Study ………perhaps descriptive  of Analysts?
    A study many now find hard to believe revealed that if people are asked to focus on a video of other people passing basketballs, about half of watchers missed a person in a GORILLA suit walking in and out of the scene thumping its chest.

  80. 80
    bill Says:

    I'm in nm and balt at the moment–and wishing i didnt get back in, lol.
    The report in 76 says steel prices have fallen and the factories tend to run down inventory in response. The Chinese do a very good job locking in prices at the lows.
    Future rates for bulkers were in backwardation now are in contango so i expect them to go up sooner or later
    Nm under 5 is a buy, imho risk is rates stay low uneconomical forever

  81. 81
    zman Says:

    re 77. Well it is that time of year. Right now things look pretty calm through this week. Did see Bastardi say that he expects the tropics to heat back up before the official models do.

  82. 82
    RMD Says:

    OAS:  tlaked with one broker who owns stock, thinks no reports can come out before next Thursday, fwiw.

  83. 83
    WB Says:

    Speaking of the gorilla suit video.  When I saw it for the first time, the gorilla was the most obvious part of the whole damn film.  I could not and cannot believe how many people reported never seeing it and then look so astounded when the video played again.  I know that sounds a little bit self-righteous or something, but dude, it's a gorilla playing basketball with people.  It really was not that difficult to see.

  84. 84
    cargocult Says:

    I propose everyone take a cold shower. Politicians need to sound like they are doing something so they spout off in ways they think the public wants to hear. Big surprise. In reality long term interests usually prevail in spite of the talk, and in this case we need oil or the music stops. That said this has been a wake-up call for everyone as we, once again, see how interconnected we all are. We are here on this site to find ways to profit from events, both bad and good, that are out of our personal control. So how do we do this? My $0.02.

  85. 85
    zman Says:

    re 82.  The rule was 30 days unless it has changed. They IPO'd on June 17th. I just counted the days and that would be Monday. Either way, should be good Street commentary within a week.

  86. 86
    cargocult Says:

    Bill, I'm shocked to find out that you are in NM. I have been kicking myself for months now for not taking your sage advise to exit drybulk shipping. I own DSX and SFL as well.

  87. 87
    zman Says:

    Cargo – I hear you and would note that my rants come with tickers attached. NOV, CAM and others today. But since I have friends in the business and I find the current environment more threatening and unfriendly than usual please excuse my excessive consternation.

  88. 88
    bill Says:

    robry has 88 for ng injections
    his model has been right on the money as of late
    . he had 77 last week vs 78 actual

  89. 89
    zman Says:

    Thanks Bill, I had 80 last week.   Don't know how the Street had gotten down to 72 Bcf.   At 88 Bcf he is giving a very large impact to the holiday, not saying the guy is wrong, just that that would be a very large number.

  90. 90
    bill Says:

    86, i got sucked in on the last run up of the bdi. Ive always liked NM, i think it can hit 10 in time. They are buying distressed assets (ie new capes at 60 m) when in the good ole days used ones were going for 130 m and up, and they have long term charters attached. The revenue is insured and their avg day rate will be higher in 2011 vs 2010 despite the current soft market. They are not directly exposed for the most part to the spot market.  The whole sector rises and falls with the spot market but i believe you need to look at individual companies and make your call.
    They pay for the new ships, in part,with cheap pref stock
    i would never buy drys regardless of the bdi due to the ceo. I have problems with exm and egle as well
    Someone mentioned BALT, I looked at it and like it. They also are buying cheap assets and putting them into the spot market. Low debt and relatively low asset prices. Bulker companies that bot at the high could have asset impairment charges coming that would/could wipe out shareholder equity

  91. 91
    bill Says:

    89 i was surprised it was that high too. The other thing surprising is that production hasn't rolled over as chk predicted and in fact is rising

  92. 92
    zman Says:

    Bill – just took a peek and yes he has been spot on. I just can't get there. Industrial being off a day shouldn't kill demand as much as his 88 makes it go down (according to my math). Imports were down slightly with low LNG levels

    and it was very hot.

    88 Cooling Degree Days is very hot. We saw a 60 Bcf injection back a couple weeks ago on an 80 CDDs number.  So even if we had 10% fewer degree days, the delta to his number is a whopping 28. But, again, he is good and holiday math gets weird sometimes. I'm at 75 Bcf.   Last week when I was 2 off I was hoping I had it wrong.

  93. 93
    zman Says:

    Bill – yeah, all those shale boys just can't keep from extending their laterals and improving the economics in here. Horizontal count keeps going higher as well and gas directed count is too strong. Mid next year that last one should falter.

  94. 94
    elduque Says:

    Bill did you ever find out what EURO country they were using to insure the debt at NM

  95. 95
    bill Says:

    fwiw, robry is showing production for July running 7 bcf per day higher than last year
    92 i hope he is wrong cuz if 88 comes in ng will go below 4

  96. 96
    bill Says:

    94 no, it doesnt reveal it but they pay a premium for it which shows up in their ga expense

  97. 97
    zman Says:

    His production # makes no sense, year over year should be close to 2 Bcfgpd higher for the lower 48. The only thing that could drive a bump like that would be storm related shut ins in the Gulf added to the growth of the shales. And we had no shut ins this time last year. If you take the YoY increases in Louisiana (Hayensvile) and the so called "Other States" (Marcellus, Fayetteville etc) and you get about a 3.5 Bcfgpd YoY increase as of April. But then you have to back out a Bcfpgd from Texas and some odds and ends here and there and you assume a little growth since April and you get 2 Bcfgpd to the plus side now, not anything like 7.  But still, the guy is good normally.

  98. 98
    Popeye Says:

    According to Smith International (NYSE: SII), the natural gas rig count was down by 11 this week, while the shale count was flat.

  99. 99
    Popeye Says:

    The Eagle Ford shale play has seen the most activity in recent weeks, up 4 this week to 74, and up 12 over the past two weeks.

  100. 100
    zman Says:

    Thanks Popeye – I use Baker but over time they move in the same direction. Rigs not tight in Eagle Ford but horsepower is getting there.

  101. 101
    zman Says:

    BP cap test stalled waiting on answers to questions from the government.


    My question would be this. Why have BP build the cap, knowing the plan all along, and then, at the last minute, and after they have taken off the old containment system so that oil is again gushing into the ocean, would you raise these questions? Why not raise them weeks ago if you were in effect Ceasar with his thumb stuck out sideways.  No response necessary, just pointing out that they are botching my trade. 



  102. 102
    zman Says:

    OK, now I see another story from with quotes from BP saying they are worried about casing damage potential from shutting it in. That's perfectly reasonable given what the well has been through safest course would be to hook it up and siphon and keep drilling the relief wells. My remaining July calls are likely to be scuds but I have no intention of sell the Augusts.

  103. 103
    bill Says:

    gas wells up 22 % this qtr!
    After posting a 22% first quarter decline in drilling activity relative to the same period a year ago, U.S. and oil and natural gas drilling staged a turnaround in the second quarter, with well completions rising 38% in the second quarter, according to a new report issued by the American Petroleum Institute (API). But natural gas, which has held the lead in drilling for most of the decade, is now lagging oil.
    An estimated 10,358 oil wells, natural gas wells and dry holes were completed in the second quarter, API reported. Of that total, about 4,396 wells were gas wells, up 22% from the comparable period a year ago.

  104. 104
    bill Says:

    the 6 month drilling ban reminds me when i was in grade school and the teacher kept the whole  class in detention due to one guy screwing up but what the hell do you expect from a guy that never held a job other than hanging posters on telephone poles. this is a disgrace
    Producers, oil service firms and end-users slammed the new moratorium on deepwater drilling in the Gulf of Mexico that the Interior Department issued on Monday, saying it was no different than the original moratorium despite hints from Interior Secretary Ken Salazar that he was considering narrowing the scope of the ban.
    Covington, LA-based oil service firm Hornbeck Offshore Services Inc., which challenged the original ban in court, said it was still reviewing the latest moratorium and had "substantial concerns" about whether it was consistent with a June 22 ruling by U.S. District Judge Martin Feldman, which granted Hornbeck's motion for a preliminary injunction barring the government from enforcing its deepwater moratorium.
    Feldman said Interior failed to justify its decision to impose the six-month ban on deepwater drilling in the wake of the explosion onboard the Deepwater Horizon rig, and essentially sought retribution against an entire industry for the actions of one company — BP

  105. 105
    bondbuddha Says:

    Hmmm time to buy more TAT, whatch think JB, Z ?

  106. 106
    zman Says:

    If you are a recent subscriber, please make sure to ask if you can't find anything. There are a number of useful tabs at upper left including the Reports tab which contains company specific highlights including the recent quickie intro piece on OAS.

  107. 107
    zman Says:

    Bond – heard they were in Chicago today, didn't wow people there obviously. I am thinking it is one of those range tradeable names and it is at the low end of the range at present.

  108. 108
    zman Says:

    Market rallied to flat in the closing minutes.


  109. 109
    bill Says:

    97, at first glance i thought the same thing..let me try something out on you
    hk mentioned that they are running their wells at min rates
    could it be that producers can crank up production when demand/prices rise in essences releasing shut in gas to capitalize on price hikes

  110. 110
    zman Says:

    Bill – they could but I don't think that is the plan. Their reduced rate plan, and a couple of others have followed suit, was aimed at maximizing recovery. It really only applies to the flush production in the first couple of months as the decline on the higher rate IPs equalizes to the lower ones within a short period resulting in cumulative production that is about the same from both over a 3 to 6 month period. Eventually, the theory goes, the ultimate recovery from the initial lower rate wells will be a smidge higher than the high rate wells that are in effect, blown down early. Makes sense, pull on a reservoir too hard and it bites you in the long run. Now is is possible they cheat if prices rise and produce some wells on a wider choke and no one notices for a time? Sure, but at present no such temptation exists.

  111. 111
    VTZ Says:

    Don't know if this was posted yet:
    Debunking "Gasland"

  112. 112
    zman Says:

    V – yes thanks, it was but awhile back. I went through a lot of their points as a double check to and found no major holes. They did a very good job of debunking. I also wasted a piece of my life watching that flick.

  113. 113
    zman Says:

    SSN – first close > $1 but still a single digit midget and trading like one. I never look a gift horse in the mouth and plan to punt some shares soonish that will be replaced by shares granted in the rights offering. I still see them as the next AEZ but they have a long way to go. Step one, close the acreage sale at the high end of the range on or before July 26th (which suddenly isn't that far away) to, I think, EOG. I'll have the Niobrara players piece out in tomorrow's post.

  114. 114
    bill Says:

    112, didnt see it and glad i missed it

    >“What I didn’t know was that the 2005 energy bill pushed through Congress by Dick Cheney exempts the oil and natural gas industries from Clean Water AcT
    Get to slime cheny and E&P with the same slur
    I never got it why the left wingers always  slimed Cheny .They slime bush every day and on the 1 day off slimed cheney for good measure

  115. 115
    zman Says:

    Fed's OK BP to conduct pressure test.

  116. 116
    zman Says:

    For those of you that like to play along at home, they are opening up the siphon connections right now, in preparation for shutting everything in.

  117. 117
    zman Says:

    Test starting, outlet gauge showing 2,000 psi, most of the oil is flowing freely at the moment from a variety of ports and the main riser connection. They need to those closed and the gauge over 6,000 psi to shut it in and have no leaks.

  118. 118
    zman Says:

    Main riser is not producing oil. Oil is now coming out of a number of the choke and kill lines.

  119. 119
    blackgold39 Says:

    Bet it is fully piped by Friday, that spec money on the July-10 $38s & $39s might be hot that afternoon.

  120. 120
    zman Says:

    BG39 – Welcome aboard. Fingers crossed but breath not held. Looking as good as can be expected now that they were allowed to start.

  121. 121
    Jerome Blank Says:

    RE: #28, eld…HK, trading right at P&F trendline support, the consolidation on the 30 min looks good, I've updated the chart for perspective, looking at the 30 min and the daily, first support is at $17, the probelm is HK holds the P&F trendline until a print of $16.50, reversing back into O's, but this print is at or near the daily lower channel trendline at $16, so I can't see covering a long at this price zone just to see it rally off the lower support line, making HK a bit difficult to manage without wide stops from where it's trading here, Hk could easily get back to the topside channel line near $20….
    RE: #105, bondbuddha, TAT…I added a weekly chart…this level has got to hold, the daily looks troublesome right now with that closing candle at lower trendline support on the descending triangle, however if this level holds, the weekly still looks good, in other words we don't wont to see TAT closing below trendline support on the weekly….on the other hand, becase TAT is so close to action points, stops are very easy to manage…

  122. 122
    zman Says:

    Thanks JB

    You can see all of JB's charts in the links at upper right or here:


  123. 123
    zman Says:

    Inlet pressure holding 3,000 psi, plan is to slowly build it towards 6,000+ by closing ports. No obvious leaks in, below or above the BOP at present. Valves on the new hat still open except for the main riser.

  124. 124
    elduque Says:

    Thanks JB

  125. 125
    zman Says:

    If you are new around the site, there is a button at the bottom of the link in 122 where you can vote for JB.

  126. 126
    BirdsofpreyRcool Says:

    BedTime Market Strategist
    The Equity market displayed impressive restraint today posting a flat performance following a good start to earnings season. The weakness in Europe overnight and the soft retail sales prompted investors to take pause, and relieved them of any pressure to chase the market. The reading action resulted in a consolidation day for a market that is overbought in the very short term. Early tomorrow morning, JPMorgan will provide the first look at Financial sector earnings. Interestingly, the Financial sector has gone nowhere over the past 10 months. The S&P 500 Financials first rebounded to 200 last August, and that is where they are today. They have traded at best 14.7% above that level, and at worst 10% below, both occurring in the past 3 months. That is a great technical consolidation from which to breakout if news flow or data can get this sector moving.
    Knowing is half the battle.
    There is a great deal to be said about self-awareness. Investors dealing with the dreaded Obama multiple have to appreciate that the President now knows he is perceived as "anti-business." Despite the Administration's latest push to change that image, it is apparent the President still has a long way to go. A large portion of this country has been enamored with the President ever since the 2004 Democratic Convention when he came to the national spotlight. Until now, there has not been an issue on which he is diametrically opposed to the overwhelming majority of the American populace. A national poll conducted by Bloomberg over the weekend repoted that 73% of Americans believe the BP spill was just a freak accident and are opposed to the drilling moratorium. The irony is that the Administration issued a new moratorium this week after the courts struck down the first one. As this is unfolding, drillers have begun announcing that they are moving their rigs to other parts of the world. It is going to take more than inviting Warren Buffett back into the fold to start changing opinions that have moved beyond corporate America. The anti-business reputation is an issue that will only grow and pummel the Democrats in November unless the Administration can do some serious damage control quickly.
    Minute Minutia
    There was nothing major out of the FOMC minutes today. The FOMC and the staff took down their respective growth forecasts for the economy. The midpoint of the central tendency for 2010 GDP among the FOMC members is now 3.25%, down from 3.45% in April. In addition, the Unemployment Rate forecasts for 2011 and 2012 rose by .2 and .15 respectively. Not that it matters in the near term considering it is overwhelming consensus view that any exit strategy is on hold, but the Fed re-affirmed that the exit strategy will likely begin with interest rate hikes before asset sales. The Committee explained, "A majority of participants continued to anticipate that asset sales would start after the Committee had begun to firm policy by increasing short-term interest rates; such an approach would postpone asset sales until the economic recovery was well established and maintain short-term interest rates as the Committee's key monetary policy tool." Lastly, for a good laugh, you have to appreciate the wordsmithing used to explain the 10% drop in the S&P 500 between meetings. "Financial markets had become somewhat less supportive of economic growth since the April meeting, with the developments in Europe cited as a leading cause of greater global financial market tensions."

  127. 127
    bill Says:

    >The anti-business reputation is an issue that will only grow and pummel the Democrats in November unless the Administration can do some serious damage control quickly.
    its amazing to me that bho doesn't have advisors that can counsel him on this. He must of surrounded himself with like mind yes men and woman

  128. 128
    Wyoming Says:

    Have to love mainstream America;

  129. 129
    scoop006 Says:

    Guess their bus runs on CNG

  130. 130
    zman Says:

    BP test delayed … again. Leak in a valve, repairing, planning test for today now.

  131. 131
    zman Says:

    Thursday post is up

  132. 132
    zman Says:

    NXY – call starting soon.

    PETD – analyst day starts at 10:30 am EST.

  133. 133
    zman Says:

    BP replaced leaking hose on 3 ram stack, expects to start test this morning.

    NXY call starting, will pass along macro interest comments.

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