ZEB Turns 4!

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This is free Post for September 12, 2010

Thanks for making the last four years an excellent ride! I've been writing my newsletter for four years this month and have been pleased with the quality of interaction and analysis that the subscribers have brought to it. I learn by teaching and the subscribers have taught me quite a lot in the process.

Year 1 was free to the world to build up interest in my corner of the internet.  My objective was to create a place where people could rationally discuss energy ideas ... basically the opposite of your usual message board. 

Year 2 we went pay for subscription and membership was surprisingly strong and high quality.

Year 3 I started tracking my performance for stocks and opened up a SEP account as every tax fearing self-employed person should do.  I started focusing more on the long term with stocks being the bigger focus than options for the site.

Year 4 has been a water treading year for options but another good year for the stocks.

I research and invest in energy related stocks in a number of portfolios, primarily but not limited to  the Exploration & Production realm. Oil Service, Coal, Refining and the Majors also make occasional appearances in the portfolios. While I do trade options they represent only a small wedge of my energy focused assets, about 10 to 15% at a given time, as options trading is a tricky game where market forces and timing is as important as being right on the name in question. When options trades work that's great, but they are the icing - not the cake. 

The cake is the The ZLT, (Zman Long Term Portfolio).  It is a stocks only, longer range portfolio. Below please find returns for Portfolio A and Portfolio B.

  • Portfolio A is a taxable account and run with a little more of a buy and hold strategy. It has had a total 17--- trades (entries and exits), including the initial five to get it invested, over the last 26 months. 
  • Portfolio B is a non-taxable account but has been only slightly more active. 
  • Generally the portfolios have held between 4 and 7 positions at a time.
  • All of the stocks in the portfolios have been listed on Zman's Energy Brain and emailed to subscribers as ZTRADEs in the ZLT at the time they occur.
  • Both Portfolios were started in mid 2008, just after the peak in the broad markets and what turned out to essentially be the all time highs for crude oil and natural gas.
  • The returns are not modeled. They are mine. 

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The following is a sample of a Thursday post from July 2010:

Market Sentiment Watch: Volatile. Months ago people were worried that Ben didn't have an exit plan. Now they are worried that he won't need one. Yesterday, Bernanke's testimony can be summed up as: 1) we don't know if the economy will improve or not but that's forecast (3 to 3.5% = GDP growth),  and 2) if the economy instead goes down, we have tools to combat that, however we have not examined which tools we might use (which may signal that he's not yet worried about it that much because again, there's that growth forecast). Today, Eurozone PMI was better than expected (largely on the back of Germany) inspiring confidence in European markets, the Euro which is challenging the key 1.30 level from below, and U.S. futures are rebounding.  Tomorrow, the results of the Eurozone's stress tests will be released. Surprises outside of the PIGS will be unwelcome.

Ecodata Watch:

  • Jobless Claims were 464K vs 450K expected and 429 K last week
  • We get leading economics indicators (F = -0.3%) and existing home sales (F = 5.1 mm) at 10 am EST

BP Spill Watch:

  • BP, weather permitting, may attempt a static kill (same as top kill but you have the cap in place) over the weekend.
  • Relief well operations suspended. BP has put a storm plug in place and is mulling moving the rigs off location depending on the weather. They have not yet cemented the last string of casing but are within 60 feet vertical and 4 feet lateral of intersecting the target.
  • CVX, COP, XOM and Shell start $1B oil spill containment fund.

In Today's Post:

  • Holdings Watch
  • Commodity  Watch
  • Stuff We Care About Today - NFX operations update, CLB earnings and some other odds and ends.
  • Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

  • $7,400
  • 71% Cash
  • Positions are updated on the ZCAT, ZIM, ZLT
  • Yesterday's:
    • BP – Added (10) BP August $45 calls for $0.29 with the stock at $36.28. Thinking that as we approach the weekend and the relief well inches closer to its target, we will see a speculative move in the name. Going for high leverage on it and don't need the stock to get close to the strike for the trade to work. May add more in next couple of days.

ZIM (Zman Inefficient Markets portfolio)

  • $2,400
  • 6% Cash
  • Positions are updated on the ZCAT, ZIM, ZLT page.
  • Yesterday’s Trades:
    • ECA  – Added (10) ECA August $34 Calls for $0.30 as the conference call starts. See post for details on the quarter. The stock came off a little over 4% pre call on the higher spending plan. My sense is they will flesh this out on the call to the Street's satisfaction. See the site for further comments as the call progresses.

ZLT (Zman Long Term portfolio)

  • SSN – Out on half of my position at an average cost of $1.30, up 110% to my average cost. Stock could still travel higher and may if they get their acreage sale at the high end of the range by July 26th but the recent action in the name has discounted much of the move and at the present time it seems prudent to take some profits.

Commodity  Watch:

Crude oil sank $1.02 to close at $76.56, after the EIA reported a build in crude inventories. The Build was driven by imports and crude started to make a recovery as gasoline showed renewed signs of demand but sell back off later in the day as the dollar rallied on Ben's words of uncertainty. This morning crude is trading slightly higher.


Natural gas fell 8 cents, reversing the prior day's gain to close at $4.51 yesterday. This morning gas is trading up slightly.

  • Water Watch: COG given 60 days to "permanently fix water supplies" affected by their drilling in Susquehanna County, PA.
  • Tropics Watch: That wave north of Hispaniola and east of Cuba and targeting the Gulf for this weekend is now given a 70% chance of development in the next 48 hours.  Another possible storm is cropping up in the south western Gulf (Bay of Campeche) but should not be a threat to anything as it develops while moving ashore in Mexico. Season is heating back up and it is still very early days.

Natural Gas Inventory Preview:

I'm at 47 Bcf for today's number. Weather: HOT

  • 93 Cooling Degree Days vs 88 in the prior week,
  • 73 CDDs last year when we saw an injection of 70 Bcf and
  • 80 CDDs reported for the week of 6/26/10 which produced the lowest injection of this year so far at 60 Bcf.
  • Note that the forecast for this week is 101 CDDs so look for a smaller injection next week.

Imports: Up slightly week to week but not enough to matter.

    • Last Week:  78 Bcf Injection
    • Last Year:  70 Bcf Injection
    • 5 Year Average: 52 Bcf Injection
    • 10 year Hi: 87 Bcf Injection
    • 10 year Low:  (7)  Bcf Injection

The Street is at 51 BCF today.

Oil Inventory Review:

ZComment: A surge in imports drove a higher than expected crude inventory number. Main concern for oil is stock levels at Cushing which shot up again. Gasoline demand recovered as expected and that should start to filter through to inventory levels in the next few weeks.

Crude oil: Gasoline: Distillates:

Stuff We Care About Today


Earnings Briefs:

CLB Reports Strong Earnings The 2Q Numbers:

  • Revenues of $198.9 mm vs $189.5 mm expected
  • EPS of $0.75 ($0.79 ex currency issues) vs $0.72 expected


  • 3Q Guidance: EPS $0.76 to $0.78 vs Street at $0.76 (range of $0.70 to $0.87)
  • Special dividend of $0.65 per share
  • CLB sees increased Reservoir Description from international arena in 2H10
  • Production Enhancement division revenues and profits continue to surge (up 53% and 91% respectively YoY), strength from US and abroad completions and fracture diagnostics. Not a shock from the U.S. when you look at the horizontal rig count. Saw particularly strong demand from the Bakken and Eagle Ford shales.
  • Reservoir Management - still small relative to the other two divisions but growing as they take on extended studies in newer plays (mentions Montney and Eagle Ford shales this quarter)

Conference Call: 8:30 am EST. I don't own it but listen for industry updates. NFX Issues Strong Operations Update

  • Earnings due out Friday.
  • Pre-releasing 2Q10 production of 73 Bcfe, at the top of the range 70 to 73 Bcfe
    • up 9% seq. and up 13% YoY
  • Maintaining 2010 guidance of 283-288 Bcfe which was expected given shut in Malaysia announced earlier this month. Interesting that they dropped the language about coming in at the bottom of the range and just said we're maintaining the range.
  • Play Update:
    • Williston Basin (Bakken):
      • Current production > 4,000 BOEpd, first time I recall them putting a number in print
      • Exit rate target is 6,500 BOEpd
      • Activity in the basin is stepping up, 13 wells in 1H going to 18 wells in 2H10.
      • To date drilling has been short laterals; over half of 2H10 wells will be 9,000 feet + wells
      • A number of nice short lateral wells to report, IPs ranging from 1,232 to 3,816 BOEpd with an average north of 2,400 BOEpd.
      • Putting EURs at 500 to 700,000 BOE
    • Uinta Basin (Monument Butte)
      • Production hits another record at 22,600 Bopd for the quarter, up 30% this year
      • Exit rate target of 25,000 Bopd
      • Drilling their post holes faster and faster here, new record 2.8 days from rig up to rig release. Lots of running room left here.
    • Montana - Southern Alberta Basin
      • 2 wells at total depth, 6 more planned in their assessment program.
      • 230,000 net acres
      • Hopefully they'll be more forthcoming on the call
    • Eagle Ford Shale
      • Completion of first well next week
      • Already moving to a 4 rig program with plans to drill 15 wells by year end. Must have liked what they saw while drilling but also liking what they see out of their peers.
      • > 300,000 net acres
      • They had this listed under "Oil plays"
    • Granite Wash
      • Seeing more liquids as the test more zones of the play (few things beat stacked pays)
      • 85 MM/d net from 23 wells drilled to date
      • 46,000 net acres
    • Woodford Shale
      • Segment to get hit by reduced drilling due to low gas prices
      • 4 rigs running now down from 9 at the beginning of this year
      • 220 MM/d net vs 210 MM/d net last quarter
    • Deep Water Gulf of Mexico -
      • Little to no impact on 2H10 development operations
      • NFX essentially pointing out that "hey, it's only 10% of our ops"

Other Stuff

  • DO misses, reduces special dividend - CC at 10 am EST
  • ESV misses - CC at 11 am EST
  • OAS - waiting on initiations to begin
  • SSN - waiting on acreage sale confirmation, due by July 26th.
  • NFX and SLB report after the close with quarterly calls tomorrow.

Odds & Ends Analyst Watch:

  • WFT - Raymond James raises price target from $17 to $20.
  • ECA - UBS cuts to Neutral
  • CLB - FBR reiterates Outperform/Top pick rating
  • BEXP - Initiated at Stifel with Buy and $24 target

Addendum - added for reference due to the LINE news

142 Responses to “ZEB Turns 4!”

  1. 1
    zman Says:

    Getting on the CLB call

  2. 2
    zman Says:

    CLB, as usual, holding a class on financial discipline before getting down to the operation items.

    Analyst Watch:

    NFX – FBR reiterates Outperform, comments that Bakken is surprising to the upside (bit of an understatement).

  3. 3
    zman Says:

    Claims have not pulled futures back much.

    Crude up up 50 cent+

    NG moving on storm potential

    CLB – still not confident enough to forecast for the full year 2010.

    Says that we will see a dual long lateral in the Bakken this year with 60+ frac stages.

  4. 4
    zman Says:

    COG on the tape raising guidance to 21 to 25%

  5. 5
    zman Says:

    Analyst Watch:

    HK – Oppenheimer initiates with a Perform rating. If anyone has that I’d appreciate seeing it. Email to zmanadmin@gmail.com. Would like to know what is causing them to go with a neutral opening (lack of banking potential, lol) given the historically cheap positioning of the stock.

  6. 6
    zman Says:

    re 5 – Actually she’s testing her domain email today so send to petra@zmansenergybrain.com. Thanks.

  7. 7
    zman Says:

    JB – want to see a sick chart? Check out the CLB. Has historically been hard to trade with options but I really let this one fall of the plate. Service analysts are a bit apprehensive up here but I would not call them negative by any stretch. Growth is accelerating, they are talking some big growth 3Q and 4Q international side.

  8. 8
    elduque Says:

    TED going lower now at 34.77

    Baltic up 4 days in a row. Although the increments are small.

    Natasha B. of Cantor on Bloomberg last night. Likes spot oil tankers and chartered dry bulkers. Mentioned NM specifically.

  9. 9
    ratberto Says:

    today’s NYT: “BP Sparring with Partners on Well Costs”

    APC spokesman referred reporters to the agreement with BP, “which places liability solely on the operating partner in case of gross negligence or willful misconduct.”

    BP expects reimbursement from its partners for their respective shares of the $20B fund, even though it was created through private agreement between BP and the White House.

    Law Prof. Coffee of Columbia “noted that the case [between BP and APC and MOEX] was likely to end in private arbitration, and that the penalty for Anadarko and MOEX not paying was that they would probably forfeit their interest in the well – ‘which all now recognize has liabilities that dwarf their revenues.’ ”

    Stanford law professor Grundfest said that “There seems to be little down-side to saying ‘no thank you’ to BP.”

  10. 10
    zman Says:

    CLB Notes:

    Not worried about competitors, saying they are running alone in some of their lines.

    Expect production enhancement growth to outperform the U.S. rig count due to liquids intensity.

    Perforating the toe of the laterals is a delicate procedure, they have a coil-tubing conveyed perf system, can due 8 stages at once as they are coming away from the toe. Saying this new tech is being widely accepted, used. It allows portion of the well that is normally done with CT (instead of wireline) to be done more efficiently with less risk to the well.

    Says you will see this done in Iraq. That’s a big statement given that Iraq is the Service sector big kahuna prize in 2011/12.

  11. 11
    bill Says:

    Webinar or drybulk at 930 am


    nm looks to open higher.. Stay with it

  12. 12
    zman Says:

    Thanks Jat, we got it.

  13. 13
    Jerome Blank Says:

    #7 CLB, if only all the charts looked that good, it should be noted that the P&F price objective has been reached at $83, I would not be surprised to see a bit of consolidation or pullback, especially if the mkt weakens…but this stock was going up when just about everything else was going down…

  14. 14
    zman Says:

    CLB – sees the moratorium costing them 2 c per share 2Q through 4Q. Already in the estimate for 3Q.

  15. 15
    zman Says:

    JB – thanks and agree, too high for an entry for me. Looking at it as a takeout, still surprised it hasn’t been bought yet.

    Anyone see a Street comment on WFT?

  16. 16
    bill Says:

    Robry still showing 55 but he was off by 10 last week. He shows a y-o-y -100 bcf lower as of today

    NG has to go up with this


  17. 17
    zman Says:

    CLB – just mentioning that they have shipped a large order of perf guns to the Iraqi national oil co. They think the country has seen extensive reservoir damage that will keep the big numbers talked about by others of a return to Iraqi greatness in the oil realm from actually happening. Says Iraq will probably not be a big mover for them on revenue soon.

  18. 18
    bill Says:

    nmm raised divy

    next step a secondaary

  19. 19
    zman Says:

    Thanks Bill, and maybe I’m light.

    The HK initiation basically said 1) they are gassy and 2) they are outspending cash flow. Stock won’t move back up until gas is over $6. That’s overly simplistic but since there is no equity deal flow here, the guy has no reason to go out on a limb now.

    CLB call wrapping up. Very solid. Worth a listen if you never have. Next time this one really slumps I plan on adding the shares to the ZLT for the long, long term.

  20. 20
    skimo Says:

    This note from schwab on my query regarding SSN refunds:
    “The last note I see from that company regarding the cash reimbursement is dated 7/15/2010. It states that checks will be mailed this week.”
    Sounds like somebody is enjoying float a little too much.

  21. 21
    zman Says:

    Re 16. I never saw the heat wave leave but thanks for that weather girl.

    Ski – checks on slow boat from Australia I guess.

  22. 22
    zman Says:

    Oil knocking on $78 again with the run in equities and the re-decline of the dollar.

  23. 23
    tomdavis12 Says:

    Z: WFT was a tout from Cramer last night.

  24. 24
    zman Says:

    NFX running away. Wish Campbell had waited another day (last quarter his ops update was out the day before earnings). I think the call will be interesting for them on a number of fronts: Bakken short and now long laterals, SAB in Montana, and their unflinching willingness to trade rate for economics in the Woodford due to low prices. Not going to add for now as they have stolen their own thunder but will as always be on that call and listening for that which can take the name back to recent highs.

  25. 25
    zman Says:

    Tom – thanks much. Tout is exactly the right word.

  26. 26
    zman Says:

    ECA got no love from UBS but I think they are out to lunch on the name. Frankly, I was unsatisfied by the way they addressed the expanded capex. However, given their balance sheet and long term position and given that it is almost August, adding the money late in the year simply means look for the resulting ramp in production in 2011, not 2011 (although that was upped form 10 to 12%). Downgrade here seems short sited. Stock starting to recover a bit although that could simply be market.

  27. 27
    tomdavis12 Says:

    Z: He also had CEO of CLB on. Said there was an unfavorable report re ECA from GS. Did you see? I do not have access.

  28. 28
    skimo Says:

    LINE granite wash well

  29. 29
    Nicky Says:

    Morning all. Well the close above 1065 last night has kept the 10 day cyle pointing higher although I must admit my confidence was faltering. Resistance is now at 1088 – 90.
    Bernanke speaking at 10 and housing starts. Probably give us a pullback and I think many think we may double top and he will send us back down like yeterday. I don’t think so. But we do need to push onwards and upwards here….

  30. 30
    zman Says:

    Thanks Tom, have not seen it. GS is bullying all the gassy names so I’m not surprised.

    re 28: Wrote this in comments yesterday

    “I think you have a very small shot at small bump to the distribution rate in the next 3 to 6 months. In the very near term you will have some granite wash well results, which could make them the most interesting of the normally humdrum yield plays.”

    How’s 1 day for very near term, LOL?!

  31. 31
    skimo Says:

    Very nice Z, glad I didn’t ditch the stock at close yesterday.

  32. 32
    blackgold39 Says:

    APC may start receiving benefit of the doubt on stiffing BP for their share of cleanup costs.

  33. 33
    zman Says:

    Holy smokes that is the biggest well onshore in the US this year and in quite some time. 60 MM/d, over half liquids. Wow. Reading.

  34. 34
    skimo Says:

    re 30 and 33, are you thinking about an options play/

  35. 35
    zman Says:

    LINN Energy, LLC (Nasdaq:LINE – News) announced today results from its second operated horizontal Granite Wash well in the Stiles Ranch area of the Texas Panhandle. The Company owns a 63 percent working interest in the Black 50-1H well, which tested at a 24-hour production rate of 27.0 MMcf/d of natural gas and 3,190 Bbls/d of condensate at 2,150 psi flowing surface pressure. The natural gas production has a heating value of 1,316 Btu/cf, and when processed, should yield approximately 3,530 Bbls/d of natural gas liquids. Including estimated NGL recoveries and shrinkage associated with processing the natural gas, the Black 50-1H well produced approximately 60.2 MMcfe/d.

    “The outstanding results from this second well are considerably above what we expected. We believe this is the highest rate well reported in the Granite Wash trend. The liquids content of over 6,700 Bbls/d represents more than 65 percent of the production stream and we anticipate pay-out on this well in as little as two months. The well is located in an area where LINN has a large concentrated acreage position. As a result, there are numerous follow-up drilling opportunities,” said Mark E. Ellis, President and Chief Executive Officer of LINN Energy. “Our operating team has continued to drill horizontal Granite Wash wells in less drilling days and at lower costs than expected. The Granite Wash area is a major component of our drilling program and is expected to provide significant organic growth for the Company.”

    Wondering who the partner is. Stiles Ranch is NFX country either way.

  36. 36
    zman Says:

    Yes, on NFX. Stiles Ranch is their baby.

  37. 37
    zman Says:

    Leading economic indicators off 0.2%, expectations were off 0.3%.

  38. 38
    zman Says:

    Existing homes sales at 5.37 mm vs 5.1 mm expected.

    Market bounding higher

  39. 39
    zman Says:

    NFX has 20% of that well.

  40. 40
    bill Says:

    line well unbelievable

    who else plays in this area

  41. 41
    zman Says:

    Bill – lots of folks in the area, NFX dominates, have it from the company they are 20% of that one. Was probably part of what they were holding back from the press release last night to talk about on the call tomorrow.

  42. 42
    blackgold39 Says:

    NFX owns stiles proper

  43. 43
    zman Says:

    re 42. yep. I own the common of both names here. Mulling options play now.

  44. 44
    Nicky Says:

    We need to se 1097 taken out to really get the bullish party started.

  45. 45
    zman Says:

    Nicky – thanks much, as always, greatly appreciate your reads. We could see a market tripping event tomorrow with those Eurozone stress tests. No eco data in the U.S. to speak of for the rest of the week.

  46. 46
    Nicky Says:

    Z – could be but also the market could breathe a sigh of relief they are out of the way.

  47. 47
    zman Says:

    Nicky – Listened to one account early, early this morning as I was pulling away the cobwebs and the results seem to be less of a worry than the underlying methodology that goes with them. Spain, Portugal etc all expected to be bad, but if the standards are tough enough, and weakness isn’t seen much outside the PIGS then they expect that sigh of relief. If the standards are weak though, then the opposite as it will be perceived as falsely confident.

  48. 48
    zman Says:

    CHK, FST also right around this well, in Wheeler County, TX

  49. 49
    zman Says:

    JB – can I get an updated read of the FST chart, been watching the name since last quarter fall with all else. Looks ready to run fundamentally, popping over the 50 day yesterday and then held it this morning.

  50. 50
    elduque Says:

    Nice 10% in 3 days on NM. Thanks Bill

    I would never have touched without your prompting.

  51. 51
    zman Says:

    FST earnings Aug 2, mulling.

    From my list of Granite Wash acreage holders, FST has biggest reserves leverage to the play.

    List as follows:

    This is sorted by reserve potential relative to current reserves and acreage in the play.

  52. 52
    zman Says:

    Gas number in 1 minute

  53. 53
    zman Says:

    51 Bcf – spot on with the Street, a touch high to me.

  54. 54
    zman Says:

    NG pared back earlier gains, up 9 cents now.

  55. 55
    skimo Says:

    JB voted, thank you for your work.

  56. 56
    bill Says:


  57. 57
    choices Says:

    ANR, WLT up >5%
    excellent read, Z.

  58. 58
    zman Says:

    Thanks choices.

    Added my Granite Wash players acreage table to the bottom of the post for reference

  59. 59
    blackgold39 Says:

    Not sure there is a ton of running room around these one-off successes recorded by FST and LINE. 

  60. 60
    elduque Says:

    GDP up 7%, is there any reason or just NG being up?

  61. 61
    zman Says:

    ZTRADES – ZIM – BP Swap to LINE

    BP – Sold the $37.50 calls for $1.81, up 29%. Will let the ZCAT continue to play in this name.

    LINE – Added (50) LINE August $31 Calls for $0.24 with the stock at 29.90 (tried to split the spread and failed). LINE announced the highest IP to date in the Texas Panhandle portion of the Granite Wash play at 60 MMcfepd, over 50% of that being liquids. See site for further details on LINE's leverage to the play as it ranks against the other participants. My sense is that this kind of performance not only makes LINE more interesting amongst the E&P style yield plays but may afford the opportunity at some point down the road to increase their distribution. It should certainly help with their distribution coverage ratio.

  62. 62
    zman Says:

    FST has 9 wells on line now, and 97,000 net acres.

    LINE – this is only their second well, but they are an MLP and this kind of well is not seen from that group of buy and exploit names. They have 73,000 net acres in the play.

    So I'm not sure I follow on the lack of running room comment.  Can you elaborate?

  63. 63
    zman Says:

    WLL still walking away from me. Not feeling like chasing for now.

  64. 64
    blackgold39 Says:

    Sand lobes for the zone they drilled are not large (wide), and mineral acreage is fractioned out between NFX, APA, LINE, FST, CHK, SM, etc. among others.  It should be impactful for smaller leveraged names like FST & LINE, but I would not expect much repeatability.

  65. 65
    blackgold39 Says:

    I supposed small is a relative term, both are still good sized operations.

  66. 66
    zman Says:

    Gotcha BG, thanks. Can't tell from their presentations where all of their acreage lies. Got sent this well on a map and it is just to the southwest of where NFX has been been pretty successful, well west of CHK's smaller results.

  67. 67
    bill Says:

    we continue to see the declining year-on-five-year storage surplus as an indication that the market is tightening week by week, leaving the market that much more vulnerable to a hurricane disruption

  68. 68
    zman Says:

    Bill – was just about to post those numbers

    Storage down 1.8% YoY, still up 9.9% to the five year but that half of where it was in April.

  69. 69
    tomdavis12 Says:

    Z: 51 Very helpful

  70. 70
    bill Says:


  71. 71
    VTZ Says:

    FST management is underrated in my opinion. They seem to get their noses in lots of plays ahead of the curve. Why aren't they more recognized as compared to some of the other players?

  72. 72
    zman Says:

    VTZ – don't know, thinking same thing. Could be they are a bit scattered, could be lack of interest in the sector. Their reputations individually are good, so really not sure.

  73. 73
    ram Says:

    Line MM pretty stubborn.

  74. 74
    zman Says:

    Ram – agreed, decided to eat the spread and look for Street to support into earnings with comments about the distribution, the well, etc. Have not seen a Street comment yet.

  75. 75
    zman Says:

    Hey Tom thanks, we try.

  76. 76
    zman Says:

    2 month payout on that well …. good work if you can get it, LOL. I recall buy working interests with a 3 year payout in OK several years back. 2 months … sheesh.

  77. 77
    bill Says:

    as much as i like the name, q4 earnings will not be good. Some ng was shut in and lower realized prices coupled with a dda charge for lower reserves and a dry hole charge in excess of 20 m
    The one analyst following the name has q 4 (6/30) at 45 m and q1 at 49 m
    has earnings of .98 and 1.04
    I think revenue will be flat with previous qtr or around 36 m then 54 m
    Earnings will be break even or a loss in q4 and then 1.25 to 1.50 in q1
    So you have to get by the headline risk of a big miss.
    If it craters like ARD did , load up the boat.
    If you can look beyond the next qtrs earnings report , i see the name back in the 50's

  78. 78
    ram Says:

    ZMAN – Were you thinking of the NFX AUG 55's?

  79. 79
    zman Says:

    MCF – who is the analyst?  If he's not using CFPS and is using EPS then I'd bet he's not E&P and more of a generalist (and therefore won't have much impact on the name).


  80. 80
    zman Says:

    Ram – yes, but went with LINE calls instead.


    FYI – Yahoo is down and my site is up. Now that's a first.

  81. 81
    tomdavis12 Says:

    Z: 75 Always like updated dance card names  as events unfold. Who is gaining and losing popularity with you.

  82. 82
    bill Says:

    sd with a new presentation

  83. 83
    zman Says:

    Tom – let me mull that over.


  84. 84
    zman Says:

    Scratch that comment re not seeing where LINE's acreage is, I forgot about their GW presentation here:


  85. 85
    zman Says:

    SSN in holding pattern, waiting on news.

  86. 86
    elduque Says:

    I take it from the silence that GDP move is just short covering

  87. 87
    zman Says:

    Eld – that would be my guess, can be poppy in front of a storm.

  88. 88
    zman Says:

    From the last LINE conference call:

    "Along with an active acquisition program, we view our Granite Wash acreage as a key element of our future growth strategy. We believe our strong performance and attractive growth prospects through both acquisitions and Granite Wash development helped drive our very successful capital market transactions."

    By the way, the current volume guidance going forward including GW wells coming on at a first 30 days gross rate of 8 mm/d. They will drill 18 of these this year, as they go from 1 rig to 2 and then to 4 rigs (that plan may get upsized). This well could prompt them to up production guidance however they may play it cool and bag the Street for another quarter.

  89. 89
    elduque Says:

    NM breaking up thru a downtrend that has been in place since late April.

    Looks like next resistance at 5.75

  90. 90
    elduque Says:

    I read over two reports and listened to FCX conference call. For all of you using the gold stocks as an inflation proxy, I would "strongly" suggest you take a hard look at this company. Credit Suisse has a $95 target.

  91. 91
    cargocult Says:

    Can anyone refresh my memory as to why ATPG is so awful? And is there any light in this tunnel?

  92. 92
    Nicky Says:

    1097 is still resistance.  1085 – 88 is support and further support if needed at 1080.

  93. 93
    zman Says:

    Cargo – the very brief would be; moratorium stalls part but not all of their deepwater activities, increases worry about future liability while they sit on a good chunk of debt (over 60% debt to equity if memory serves). The downdraft in the stock looks like an over-reaction and is quite a bit larger than the average offshore player sell off from the April peaks. 

  94. 94
    zman Says:

    TD 3 formed near the Bahamas.

  95. 95
    tomdavis12 Says:

    90 ELD did Fcx break down their revenue streams? Last I remember it was 60% copper, 30% moly & 10% Gold. 

  96. 96
    zman Says:

    re 94, track is central Gulf skirting Florida across the keys and well north of Cuba.

  97. 97
    zman Says:

    End of track is LA/TX border which is crammed full of refining capacity. As of yet, the models are not predicting development beyond a Tropical Storm. Still, time to fill up the cars.



  98. 98
    DrLink Says:

    Elduque   Re 90   My mother and brother toured the FCX Grasberg mine in Indonesia last week and said it was a site to behold………they were impressed by the sheer size and extremely smart and competent on site management. It was a lifetime experience.

  99. 99
    cargocult Says:

    Z-thank you
    Bill-any thoughts on EXM?

  100. 100
    bill Says:

    Cargo..im not following exm . If the bdi goes up, it will take exm with it.
    The key is the number of spot charters vs fixed charters and when do the ships need to be renewed, Clearly, right now is not a good time for renewal. I saw yesterdays cape rates were down at 12 k per day which barely covers operating expenses

  101. 101
    zman Says:

    Cargo – no problem

    WLL and WLT slipping away, not chasing, weird market.  I do own the WLL common in the ZLT and expect that over the next two quarters, oil prices being here, that one will tap on triple digits as the discount to its peers is eroded by positive developments in their EOR projects and in their Lewis and Clark TFS play.

    Grabbing lunch, back in an hour.


  102. 102
    bill Says:

    Re sd
    Looking at page 9, they show permian oil recently at 14.5 per day. Ward is on record as saying ard would bring up oil to 22.o boe/d per day.
    Ard in q1 was 8.0 per day so ard + sd is now over 24.5 per day = good news
    Looks like they avg 13,000 boe/d from the permian in q2

  103. 103
    elduque Says:

    How do you get a pdf file onto the site?

  104. 104
    Jerome Blank Says:

    Re: #49, FST, still on a P&F buy signal in X's above P&F trendline support, but lagging a bit today compard to others…holding quietly at the 50/100 SMA support zone, still trading within the longer term daily chanel with plently of technical upside…
    RE: #55 skimo, thank you…

  105. 105
    elduque Says:

     I have sent a copy of the report to z

  106. 106
    bill Says:

    I'm buying sd aug 6 calls around 50 cents
    The good> More revenue coming from oil than ng viewd as a ng play
    Oil hedge over 80
    Ramping up oil
    Ard margins start flowing (tax free)
    New Oxy plant coming on line saving them 20 m per year
    Bad– Hi debt
    No Ng hedges for 2011

  107. 107
    blackgold39 Says:

    APC streaking

  108. 108
    blackgold39 Says:


  109. 109
    cargocult Says:

    large call volume today on ATPG at $12.

  110. 110
    elduque Says:

    As a thought re "no natural gas hedges" for 2011. Isn't reasonable to assume that one of the reasons production hasn't dropped off as much as expected, is due to the fact that most cos. had hedges on. Z you can correct me but that is not the case for 2011. Therefore, wouldn't it be likely that production will drop.

  111. 111
    elijahwc Says:

    Boenning & Scattergood Inc.: Forest Oil Corp. (FST-NYSE, Outperform, T:$34): LINN Energy Announces 60 MMcfe/d Granite Wash Well

    FST: [WSS] – 07-22   10:47 AM

    [Contact: Institutional Trading – 610-862-5330] Investment Conclusion: We have a cautious outlook on the E&P sector as we believe that the current risk/reward for the group is fairly balanced. We have an Outperform rating on FST given potential catalysts in its drilling program with a $34 price target based on it trading at 140% of proven reserve LV.

    Key Points:

    · LINN Energy, LLC (Nasdaq:LINE- Not Covered) announced that an operated horizontal Granite Wash well in the Stiles Ranch area (Wheeler County) of the Texas Panhandle tested at ~60 MMcfe/d (including estimated NGL recoveries and shrinkage associated with processing the natural gas). The well tested at 27.0 MMcf/d of natural gas and 3,190 Bbls/d of condensate. The natural gas production has a heating value of 1,316 Btu/cf, and when processed, should yield ~3,530 Bbls/d of natural gas liquids.

    · We believe that this LINN Energy well is a positive for Forest as it further validates that Granite Wash play. Forest announced in early May that it had completed two Granite Wash wells in the Texas Panhandle in April with initial rates of 45 MMcfe/d and 24 MMcfe/d, each (60-65% oil and NGLs).

    · Importantly, the Forest well that tested at 45 MMcfe/d was drilled in a new Granite Wash zone, which was the first horizontal well FST drilled horizontally in that zone. As a result of the continuing successful expansion of the play, in terms of zones tested and aerial extent, FST announced in early May that it was increasing to 5 from 4 operated rigs on its 97,000 net acres in the play.

    · Forest will announce Q2 results (including an operational update) after the close on August 2nd

  112. 112
    zman Says:

    Re 110. Yes and No.

    The hedges this year for most of the shale players were intended to maintain their capital budgets so that they could drill regardless of price to hold acreage as they paid a lot of $ for it in 2008 and 2009 and don't want it to expire on them. Next year much of the necessity to drill to hold acreage will be satisfied by mid year (thinking CHK, HK and others). So while drilling to hold becomes less of a factor, it may be replaced by associated gas volumes in other plays like the EFS and GW where you will drill to get liquids, without too much concern over gas prices, as the gas just comes along with the liquids production. Also, cost of supply is stepping down with efficiency. So what may have needed a $5 price in some plays is possible closer to $4 now.

  113. 113
    zman Says:

    BP Watch:

    From what I can tell, the Static Kill option is delayed pending cementing of the last section of casing in the relief well, something that won't happen until this storm passes. So no kill of any kind this weekend. BP has started pulling people off the rigs.

  114. 114
    blackgold39 Says:

    Non-essential personnel being evac'd out there today for BHP

  115. 115
    jat Says:

    Re 90, FCX is a wonderful company but it's rather like riding a tiger, so I would caution anyone (1) not truly long term (2) unfamiliar with the copper trade about it.  It's the equity play on copper and trades with it which trades with chinese sentiment like everything else in our sectors. NOT the same trade as Gold as copper is more linked to global economic growth, but I understand the hard asset/inflation cache.
    So pick what copper price you believe is reasonable and see where it prices on EBITDA, then decide where copper is going in the short-term and place your bets! That easy.  Today, copper is up for a few days with the A-shares so we're all in love.
    They were about 81% copper revenue, 13% cold, and 6% moly in Q1.
    Their cash costs at the peak were $1.30 per lb, and that was with diesel prices materially higher than they are now.  Copper troughed around $1.30 back in the day.  That was a lot of fun with FCX slashing their dividend to zero and throwing in a kitchen sink quarter that finally proved the bottom for the stock at $15.00.
    Today, assuming $3.00 copper, cash flow is just dandy of course.

  116. 116
    tomdavis12 Says:

    115 jat: Thanks for your thoughts. I have always found FCX to have great call premiums, so if you are a woosie like me and are happy with smaller returns, covered calls can give reasonable returns.  

  117. 117
    zman Says:

    Reminder NFX and SLB after the close. If SLB reiterates the sentiment towards pricing power in NAM and the 2H10 continued strength in international I would expect this to further aid my HAL position.

    On NFX, cat mostly out of bag, expecting further strength on more operational details on the call. Holding the common at present. FST and LINE could benefit from comments out of NFX's Granite Wash presentation.

  118. 118
    zman Says:

    RMD – guessing your guy was correct on the timing of the OAS coverage. I must not be able to count days on a calendar. I guess it's either tomorrow, which is not a great idea to initiate or Monday which would be ideal. Regardless, the stock continues to drift up on that expectation and on oil.

  119. 119
    zman Says:

    BP gets "indefinite authorization to keep well capped". Cap to remain on if they have to pull away for the storm.

  120. 120
    jat Says:

    SLB was underowned going into this but I think that's changed a bit today.

  121. 121
    jat Says:

    I dunno why they can't do least 0.72 after HAL/WFT

  122. 122
    zman Says:

    Jat – I don't have a good feel for it, Street at $0.68. If you just proportionately gross it up then I agree. If I were them I'd monetize the seismic, never understood why they bought it. 

  123. 123
    zman Says:


  124. 124
    milepost_43 Says:

    The U.S. Senate is shelving efforts to pass legislation that would limit emissions of heat-trapping gases linked to climate change, dealing a major blow to one of President Barack Obama's top priorities.
    Senate Majority Leader Harry Reid (D., Nev.) said Thursday that neither he nor the White House had persuaded 60 senators to support even a limited proposal seeking to restrict emission from electric-power companies. Mr. Reid offered no timetable for action on such a bill, but said Democrats would continue trying to build support for such legislation.

  125. 125
    bill Says:

    senate will do this instead
    remove the “cap,” or limits, on economic damages paid to residents and small businesses by oil companies after oil spills, according to Power.
    Reid & co. will also push for incentives to encourage the production and purchase of vehicles fueled by natural gas, and to fund various land and water conservation programs.

  126. 126
    bill Says:

    sandisk and amazon zap'd after hours
    i wonder if people are confused on ticker simple as sd is down 2 % ah on no news

  127. 127
    john11 Says:

    Think you're right Bill, re SD..took some..thanks for mention.

  128. 128
    zman Says:

    MUR to exit refining biz.

  129. 129
    blackgold39 Says:

    FST report from earlier in the day is somewhat misleading, and required quite a bit of field operations chicanery to get to their 60 MMcfepd figure. Suffice it to say, this well is not outside the scope of what has already been reported in the region by FST and NFX.

  130. 130
    zman Says:

    it was a LINE well. It was post vs pre processing. Should be about 45 mm/d pre as I understand it.

  131. 131
    blackgold39 Says:

    Ahh sorry, I get confused between them.  FST did the same thing about 4 or 5 months back

  132. 132
    blackgold39 Says:

    In any event, good well just the same

  133. 133
    bill Says:

    old bloomberg on shipping

  134. 134
    bill Says:

    Inconvenient truth>

  135. 135
    bill Says:

    kwk up 17 ah sold kwk gas 701 m

  136. 136
    zman Says:

    Hear ya BG39, it is a good point you make

  137. 137
    skimo Says:

    Kinder Morgan, the general partner of Kinder Morgan Energy Partners, is going public after being taken private back in 2007. It's the Dick Kinder yo yo company!

  138. 138
    PackMan Says:

    SD … great thought; if it opens down in the morning may be worth a spin !

  139. 139
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