Traveling Wednesday

Posted on by zman

I'll be back to the office later today, so bear with me for one last short post. It has been suggested that me going on vacation is a reason for out-performance. Ap0logies but you'll just have to deal with the 2 weeks a year I go beach hopping.

  • Commodity Watch:
    • Oil moved up another 1.5% to $82.55. I don't like oil being up here. The gradual rise to the upper end of the range is something we have seen 4 times over the last 10 months. The decline from the high of the range has more often than not been rather swift.  There is no reason looking at the U.S. data for oil to start the advance into year end just yet.  And I don't need oil at $85 or so to justify higher levels on the oilier profile stocks.
      • Inventory Watch:
        • Crude:Down 1.65 mm barrels
        • Gasoline: Down 1.0 mm barrels
        • Distillate: Up 1.0 mm barrels
    • Natural gas fell 1.6% yesterday to close down at $4.64. Very hot weather is being offset by a tropical season that so far lack umpff.
      • Early read on tomorrow's injection: 31 Bcf.
  • Holdings Watch:
  • WLL – Sold the 2 WLL August $80 Calls for $13.40, up 88%.
  • LINE – Sold the 50 LINE August $31 Calls for average $0.63, up 152%.
  • LINE – Sold the 10 LINE August $30 Calls for $1.75, up 238%.
  • I continue to own LINE units and WLL common in the ZLT.
  • BP Spill Watch:
    • Macondo static kill began last night; today says objective reached of mud holding oil back.
    • Deep water moratorium now looks to be dying before the Nov 30 deadline.
    • BP sold oil interests in Columbia yesterday as it continues to punt assets of $25 to $30 B
    • U.S. says most of oil spill has been collected or is gone.
  • Brief Earnings Briefs:
    • BEXP Reports A Bakken Good Second Quarter; Montana Works But Capex Upped May Limit Rally
      • The 2Q Numbers Quickie:
        • Production of 7.7 MBOEpd way ahead of guidance of 6.2 to 6.8 MBOEpd
        • Revenue of $41.4 mm vs $38mm expected
        • EPS of $0.16 vs $0.09 expected
      • Highlights:
        • Montana Bakken? Check.
          • BEXP had a 909 BOEpd IP with the Rogney well (shorter lateral, 9 frac stages)
          • And  a minority interest participation with Zenergy in a nearby well with an IP of 1,200 BOEpd
          • BEXP has enough acres in the surr0unding Pale Rider area which they hope to make a new core area (adding to Ross and Rough Rider) to add 340 Bakken and Three Forks locations.
          • Plans are to spud another well in November.
        • Rough Rider update:
          • 2 more middle of the road wells but the Sedlacek well which was the furthest  southeast  corner RR well to date.
          • BEXP added 52,800 net acres bringing the North Dakota total t0 358,200 net acres. If you want to put $5,000 per acre on that for kicks it comes to $1.8 B or 83% of their TEV of $2.15 B.

          Guidance:

          • Capex upped: by roughly a third which normally I would frown upon; this has been cause for pause this quarter but in their case I find it more acceptable given the oiliness of the targets and the non-late-to-the-play nature of the spending.
          • 3Q: 7.9 to 8.4 mboepd
          • 4Q: 9.5 to 10.5 mboepd
          • This is strong guidance
        • Note that unlike others who are complaining about having rigs but waiting on fracs, BEXP is working to secure additional frac crews as the accelerate their shale efforts.
        • CC at 11 am EST
  • Other Stuff:
    • Tom - most excellent notes on the HK call.
    • Energy Bill on permahold. Really that amounts to a dead bill so new per barrel taxes will have to find their way into some other piece of legislation ... don't see that happening before or after November either.

123 thoughts on “Traveling Wednesday”

  1. Z or BOP: I see BEXP added to their Williston Basin acreage. Is this a plus for WLL?

  4. I always think Aubrey says the right thing. The market still doesn’t like him though.

  5. CHK clearly laying out goals/objectives

    has 3 b in carries, commits itself to enter more jv’s to offset leasing costs

    chk stock has been beaten down so much , it only has one way to go

  7. bill — I met with USEG the other week. Interesting situation and collection of assets. They consider themselves deep-value, contrarian buyers… and I believe them. They are currently thinking about picking up an operating company focused on nat gas… as that is the contrarian play, at the moment.

    Worth watching these guys. A multi-generational Family Office type stock, but sitting on a nice pile o’ cash and fungible assets.

  11. AREX reserves up 27% from 12/09: 278.3 Bcfe vs. 218.9B, on a substantial revision in way they report a liquids deal which expires 4/11. EV ~$218mm or .78/m.

  12. 7 thanks for that.. i figured they were up to something as they just raised 75m..i assumed it was for more drilling partnerships

  14. andy — hang in there… they really are trying to pull off a few things. Problem is, they have been trying to do it for years. I thought they were close, when I dropped the name on the board… turned out, there were some more legal rows to hoe. But, it’s a call option. 100% downside, multiples of upside.

    Paid showed up as the manager of Barry Drinkwater’s website… GlobalMerchServices.com THAT is what kick-started the stock y’day. If we are truly closing in on anything “real,” I would expect to see some Form 4s exercising warrants from the stock’s low on Monday.

  18. Will try to be on bexp call

    Thanks guys. There’s theory and there’s the real world and never the twain shall meet. Why I sold those yesterday.

  19. Listening to Exco 2Q call. These guys sound really relaxed. Planning to raise their Haynesville prod from 500MM/day gross now to 900+MM/day at year end.

  21. has anyone else looked at WRES’s report today. bot some on the close yesterday and trying to decide whether to let it go this morn. looked pretty good to me, but i am no Z about digesting it. thks

  22. z — kudos on your Kick-@ss Swap outta EXXI and into OAS. Huge relative outperformance. Nice job, guy!

  23. (P.s. I did not follow you into that swap… sorry, of course. But, great move, nonetheless.)

  24. USEG on a P&F sell signal in o’s, but above long term P&F trendline support, reverses into x’s from here on a print of $5.50, first resistace at the 100 day SMA just below the three box reversal at $5.40… first support at about $5, charts added…

  25. Intermittent post ability at present.

    Bexp should lift

    Note eog responding to the montana well news. Will be long probably 110s by the time of their call. Not for numbers but for news. We should get Montana bakken. China onshore tight gas and go or no go. and niobrara news.

  26. Z: If you want to put an offshore driller name on your radar, I am hearing ESV has newer equipment than most. Gov’t likely to require double blind shears for the upgraded BOP’s. If moratorium lifted, will likely include capital and equipment constraints. FWIW

  27. HeadTrader pointing out that the mrkt drop corresponds to the headlines that the Chinese govt is going to require their banks to “stress test” balance sheets with a 60% drop in home prices. HT’s comment “sure… it’s all about the Chinese govt, right? lol”

  31. #28-ATPG has run from 9.05 on 23 Jul to current level, 13.35-unfortunately, I just sat on my hands and watched.

    thanks, JB, voted

  32. Thanks Tom. I took an unofficial trade in esv calls last week on the spike was looking like unusual activity in the name. Haven’t sold yet. Liked the last two calls of theirs.

  35. BOP – re: CIGX. Any whisper number out there as to the share price once the test market is launched?

  36. ftc88 — purely speculative… there are a lot of shorts in the stock. So it will be volatile, whatever it is. But thems who speculate, are speculating that CIGX runs to a 3-handle on the announcement that the product has been launched. And has a 5-handle by the end of this year.

  37. Morning all.

    Support at 1114 – 1117. Resistance mid 1130’s. Still looking for a high early next week.

  38. Nicky – Don’t know if you’re following gold but this is the reason why I stressed to buy a chunk at ~1180 and not to sell and hope to buy at 1145.

    The move below 1175 was a complete shakedown for anyone who was overly technically inclined and it also caused the July 27 1200 options to expire worthless.

    Now that we’ve regained the 1200 mark and some of the MAs I expect that we could continue higher to challenge the 1224-1228 after a little churn.

  40. Hi VTZ – yes following gold. yes agree there is not much chance of a big pullback. Could really take off again in the fall imo.

    Oil looking a little overdone…

  41. re: 38…I added a bit more to my gold holdings down there…was a tough thing to do, but it is only buyable in my view when those traps are set.

  42. BOP: Thanks for for your great “master of ceremonies” during Z’s beach tour again this year. You do a fantastic job. Never heard a confirmation of a Zshirt or hat from last year. If you put your picture up on his site in your shirt, you would likely boost sales. 8)

  43. Nicky – WILL really take off again 🙂 New highs are a given in my books. Just a matter of how high.

    Oil is overdone in my books as well.

  45. RE 41 – For me I could not justify buying in between 1145 and 1175-1185 however the ~1165 did represent a ~100$/oz discount to the recent highs and someone probably thought it was a good time to pick some up.

  47. Z: I would like to revisit an age old Zsite question. CHK vs HK? In the first quarter of ’09 CHK was lets say $24 and reeling from Aubrey’s margin call (Oct ’08) and the BOD’s gift to him. Of course the gunslinger label was front and center. HK had the gunslinger label as well but as I recollect they had a slightly better balance sheet with a faster growth curve. At the time HK was $23 or approx $1/sh lower. I know you look at these companies as very different now. Why the outperformance from CHK and which would call more undervalued today? Thanks as always. You can answer when you are back and settled, not time sensitive.

  48. Z – I’ve been thinking for a while that crude may have been accumulating a bit of an Iran premium. It doesn’t seem to respond much to specific Iran news, but the steady drumbeat of pieces falling into place could be influencing traders. It is also possible that traders are anticipating a reversal of the recent Chinese cool-down policy.

    If crude can’t get below $70 when the economy is muddled at best and there is no actual shooting at Iran, then traders might be inclined to ask, “what if China steps on the accelerator and some of the Iran rhetoric solidifies into action?” So testing the upside here makes sense.

    I still think we are going to be stuck in an economic vise: any real lift-off in the economy will spike crude, which will kill the economy again in short order. Then the Fed will put pumps on full and gold will take off again.

    Good for cyclical trading with upmoves of a couple months at a time.

  49. FST 46: my notes to myself were:
    10% increase in well cost from just fracing and proppant; HS “frenzy” will slow into ’11 (CHK mentioned having HS HBP in 1 yr.); doing science project (like HK?) on changes in frac design; paid avg. $1,000/acre in 2Q10, finished buying in Nikanassin; not increqasing EURs in GW until see variability of stepouts; TLM and ?? have nearby Utica wells, evaluating seismic and await industry results until 4Q10; ignoring dry gas locations like Morrow; cum. production from restricting IP-flow breaks even in about 90 days (may have commented that restricting flow signif. decreases decline rate).

  50. N.Y. Senate Approves Drilling Halt on Gas From Shale (Update1)
    2010-08-04 16:33:07.609 GMT

    By Jim Efstathiou Jr.
    Aug. 4 (Bloomberg) — New York moved a step closer to a temporary state ban on drilling for natural gas from shale that would delay companies led by Chesapeake Energy Corp.
    The state Senate approved a measure late yesterday that would suspend drilling until May 15 in the New York portion of the Marcellus Shale formation pending further environmental studies. The moratorium passed 48-9. The Assembly has yet to take up the measure.
    To extract gas from shale, companies use hydraulic fracturing, or fracking, in which water, sand and chemicals are injected deep underground to break up rock and allow gas to flow. The New York-based Natural Resources Defense Council says greater safeguards are needed to ensure that fracking chemicals don’t contaminate drinking water.
    “Not only did they pass it but it passed overwhelmingly,”
    Assemblyman Robert Sweeney, a Democrat from Suffolk County who sponsored his chamber’s version of the bill, said in an interview. “That opens the way for us to do to the bill in the Assembly where I would expect it to pass with similar overwhelming numbers.”
    Drilling for gas using fracking has proven to be environmentally safe, said Brad Gill, executive director of the Hamburg, New York-based Independent Oil and Gas Association, which includes Chesapeake Energy and Talisman Energy Inc. New York will miss out on new jobs, tax revenue and drilling fees if the suspension is approved, Gill said.
    “It would be irresponsible to see lawmakers cave to scare tactics of radical opponents,” Gill said in a statement. “It would be a slap in the face to landowners, New York taxpayers, all the people of the Southern Tier.”

    Drilling Revenue

    The suspension will give New York time to learn lessons about fracking from neighboring Pennsylvania, where more than 1,000 wells have been drilled in the Marcellus Shale since 2005, according to Senator Antoine Thompson, a Democrat who sponsored the bill. Drillers in Pennsylvania have been cited for 1,435 violations since 2008, 952 of which may affect the environment, according to a report this week from the Harrisburg-based Pennsylvania Land Trust Association.
    Issues listed in the report include improper construction of waste-water compounds used to store fracking fluids and violations of the state’s clean stream law.
    “New York can be the first state to protect residents’
    health and the environment before drills break ground, setting an example for the rest of the nation,” Kate Sinding, senior attorney with the Natural Resources Defense Council, said in a statement.
    Jim Gipson, a spokesman for Oklahoma City-based Chesapeake, didn’t immediately reply to a request for comment.

    Revenue Source

    The measure would postpone a potential revenue source for the state. Drilling revenue in New York could reach $1.9 billion in 2015, according to a study from Laramie, Wyoming-based Natural Resource Economics Inc.
    Chesapeake, Calgary-based Talisman and closely held Vertical Resources Inc., based in Sugar Grove, Pennsylvania, have filed a combined 58 applications for drilling permits in New York. The proposals are on hold while the state Department of Environmental Conservation reviews guidelines for gas drillers.
    In April, the state agency said it would offer guidelines for drilling in the watersheds for New York City and Syracuse that are tougher than planned for the rest of the state. Water feeding both cities is so clear it is exempt from federal filtering requirements.
    “There’s no such thing as 100 percent safe in anything, but you can do an extreme amount of due diligence to take as many safety precautions as possible,” Thompson said today in an interview. “We cannot leave that responsibility solely with the DEC.”

    Doubling Reserves

    Since 2007, discoveries of unconventional gas including shale gas have more than doubled the estimate of North American reserves to 3,000 trillion cubic feet, enough to meet 100 years of demand, according to energy consultant IHS Cambridge Energy Research Associates in Cambridge, Massachusetts. The Marcellus Shale formation, which extends from West Virginia through Pennsylvania and into New York, may contain 50 trillion cubic feet of gas.
    Revenue from Marcellus Shale lease payments, royalties, taxes and pipeline and plant construction in Pennsylvania and West Virginia totaled $5.8 billion in 2009, according to the July 14 study prepared for the American Petroleum Institute, a Washington-based group that represents oil companies.

    City’s Watershed

    New York City Mayor Michael Bloomberg has said drilling in the portions of the Marcellus Shale beneath the city’s watershed “must be treated differently.”
    The most-populous U.S. city receives 1.3 billion gallons
    (4.9 billion liters) a day of water through a network of gravity-fed aqueducts from 19 reservoirs as far away as 125 miles (200 kilometers). It’s the largest unfiltered water- delivery system in the U.S.

  51. MIDDAY OVERVIEW

    Equity levels @ 12:20PM – SP500 up 4.46pts to 1,124.92, DJIA up 38.72pts to 10,675.10, NAZZ up 14.10pts to 2,297.62, Russell 2000 up 6.04pts to 661.70
    Market Update – the SP500 is up a few points heading into the afternoon on a very quiet and slow day. The market overall is showing signs of fatigue – from both buyers and sellers. There were a bunch of opportunities to sell the market yesterday – weak eco (income/consumption), earnings (PG, DOW, BHI), auto sales (F), and overnight w/European banks (Unicredit, Standard Chartered). However – selling pressure was relatively benign (both in the US and Europe). The same is true on the upside – there were decent eco #s today (ADP labor, ISM), earnings (media results – CBS/TWX, along w/PCLN), and BP (static kill successful and a report says that 75% of the spilled oil has been removed from the GOM), but tape is having a tough time rallying. The China headline on BBG helped knock the sp500 to the flat line earlier today but we have since bounced back (BBG said China regulators are telling banks to stress test for a 50-60% home price decline under worst case scenario vs previously saying to use a 30% decline). Technically, sp500 has been running into the 100day MA all week (keep in mind this was also the peak of the June rally too) – the 100day now stands at ~1127 (on the downside, the 200day MA at 1114 is watched as the next support level). The tone of the tape remains positive, w/dips being viewed as buying opportunities and sellers/shorts reluctant to be too aggressive. There are 2 major events left for the week – ECB Thurs morning (for the first time in the last 3-4 ECB meetings, tomorrow morning should be a relative non-event in that the stress tests have been published, euro money markets have calmed, and no new policy moves are anticipated) and BLS Fri (data points have been pos. for jobs, inc. ADP and the jobs component of this Mon’s ISM – BBG consensus still calling for 90K private adds)

    Equity sectors – Discretionary is the top space in the market, up over 1.25% on strength in non-retailers (PCLN up 22% on earnings and EXPD up 5% in accord). Media stocks are also helping discretionary thanks to earnings out of CBS and TWX. Industrials are outperforming as well, up on strength in builders (PHM’s earnings) and multis/machinery (SPW’s earnings). Healthcare is up around 0.5%, continuing to build off yesterday’s outperformance on strength in managed care and pharma off PFE’s earnings Tuesday morning. Energy is in line with the tape as gains in services/drillers on news that the moratorium would be lifted much earlier than expected are being capped by continued weakness in BHI. Also helping energy is strength in E&Ps (SGY, APC, CHK, DVN, XEC, and XCO) off earnings. Staples are slightly below the tape, lagging a bit on weakness in grocers off WFMI (earnings). Materials are slightly below the tape as well as strength in gold stocks, steels, and ferts are offset by weakness in DOW (earnings Tues morning) and NEU (earnings today). Tech is up 0.35%, lagging a bit on weakness in MSFT and DELL, although ERTS and MOT are outperforming. Financials are up slightly, lagging on weakness in a few regional banks on UNM’s earnings. Utilities are off 0.6%, one of the weakest spaces in the market, on weakness in AYE off earnings. Telecom is off 0.75% and is the worst space in the market today, lagging on weakness in VZ and T on a readthrough from LEAP’s earnings.

    Commodities: Commodities have strengthened along with the dollar this morning. Crude Oil came off its lows when DOE U.S. Crude Oil inventories came in at a smaller build than anticipated. Natural Gas has gained ~0.8%. Gold is trading north of $1200 while Copper is up ~1.3%

    FX: USD (DXY) has rallied this morning, with the ISM coming in better than expected. The dollar is trading near its highs of the day on all crosses.
    Corp. Credit: Corp Credit is mixed with IG 14 tightening ¼ bps while HY 14 has given back 3/32 of a pt.

    Treasuries: Treasuries have weakened this morning and are trading near their lows. The 2s are yielding 0.566% while the 10s are yielding 2.937%; the 2-10 spread is yielding 2.371%. Some news in TSYs today: the Fed drained ~$180MM in a “test” repo op – the NY Fed says this doesn’t mean anything as far as monetary policy goes (which remains unchanged); also – the Treasury announced the size of next week’s auctions (overall inline w/expectations) – they are selling $34bn 3s on Tues, $24bn 10s on Wed, and $16bn 30s on Thurs.

    Europe: The Euro Stoxx index finished with a small gain while the indices within Europe were flattish/mixed (the DJ Euro Stoxx swung ~1.7% peak-to-trough today). Within the Euro Stoxx 50 – financials and industrials lagged while healthcare outperformed. The FTSE lagged with the UK Services PMI coming in weaker than expected (DJ) and prices of non food items were dn. 0.6% in June (Bloomberg) The Swiss market index is one of the strongest indices in Europe; the Swiss National Bank increased its foreign exchange holdings by 4x in order to slow the Franc’s rally. [Bloomberg] Best performing stocks in the Swiss index included: Transocean, Swatch Group, Compagnie Financiere Richemont, and Adecco.

  52. Why isn’t BP popping on the news of the mud pie? Don’t they know I’m still holding Aug 40’s?
    apbd

  53. EOG Carat well Montana from OGI, 8-4-10. IPed at 2598 bo, 1.36mm and 2956 load water. Average rate for 30 days: 259bopd, 135mcfpd and 296 bw……..ROSE, by IHS,IP rates: #419 Gates, 3700′ lateral, 5.8mm,340 b condensate (62.9o); #707A Gates, 4,000′ lateral, 4.29 mm, 332bc,615bw; #1287 Gates, 4,300′ lateral, 4.62mm, 611bc, 769bw.

  55. 50 ny ban

    its nothing but a shake down by the politicians for more payoffs, simple as that

    i guess that helps the supply /demand picture

    chk is in other areas. i think names like cog and rrc would be impacted more

  56. i dont know who is selling ng into Florida but whoever it is , is making a killing

    11.18 today

    FGT Citygate $9.65-$13.00 $11.18

  57. USEG – Some are claiming the Family is using the company as a piggy bank – bought themselves a plane with company money, for example, substantially impacting earnings (obviously needed to go see all these potential acquisitions).

  58. Anyone have any thoughts on BEXP calls? BEXP pulling into intrady support, fundamentals appear good….thinking the underperformance is temporary..

  59. occam — good info. The problem I have with USEG is that it is currently being run by the sons of the founder. They are grooming the next (3rd) generation to take over. As we get further and further from the entrepreneurial founder, the more and more the heirs tend to treat companies as piggy banks and the desire to work hard becomes less and less.

    There are exceptions to this scenario, of course.

  60. EGY will see an increased tax {Royalty rate to the Gov’ of Gabon} if Etame Concession daily rate exceeds 25,000 b/d oil, and this is a 2 way ratchet(if production falls below 25,000 day it reverts back to the old or lower rate).

    My understanding is the new royalty rate breakeven point is 27,600 barrels/day of oil.

    IMHO they will need to take it to a sustained daily rate over 30,000 b/d of oil, in part to justify the Capex to for madifying the FPSO.

    As a long term observer they are laying all the things in place in 2010 to accomplish this:
    ~rework of Ebouri 3-H well (which had 2 defective submersible pumps and had only produce for 3 days in 2009 when the pumps shorted out due to manufacturing defect by HAL) this well was brought on line in April and is also producing approx. 3,200 b/d oil and no water .
    ~Ebouri 4-H develpoment well drilled this year and brought on line in June to the Ebouri platform at approx. 3,500 b/d oil and no water.
    ~SE Etame Exploration Well & 2 sidetracks (so they can claim reserves thi year and get the SE ETame field declared commercial) .
    ~Currently drilling Etame 7-H which is in the same fault black as currently prodcing well Etame 1-V which is waxed up and only producing 800 b/d and a big water cut. The 7-H well with be an OHGP and they expect it to add a net increase of 3,200 b/d……..actually 4,000 b/d gross less -800 b/d when the shut-in Etame 1-V at the time they bring Etame 7-H on line…..expected completion date is Q4 2010.
    ~South Tchibala Development well to be drilled in Q4 and tied into the S. Tchibala platform.
    ~Omangou Exploration Well to be drilled in late Q4.

    IMHO it will be 2011 b4 they actually go over 25,000 b/d andcrank up the daily rate to over 30,000 b/d, becasue of modification required to the FPSO.

    My reasoning is simple…….they are bringing increased prodcution capacity on line which will easily take them well above 30,000 b/d oil allowing for depletion. Additionally, all these new wells are not showing water cut, which enables them to ckoke back the old wells which are showing water cut……..and potentially increase the EUR in the old fields (or euphenistacally, not sucking so hard on the straw).

    Additionally, if they wanted to stay at just under 25,000 b/d day they would have stopped drilling when they finised Ebouri 4-H and not spent all the capex to for the additinal wells (2 more development wells and 2 Exploration wells.

    p.s South Etame SWAG reserve callulation of 4 million barrels was a typo…….should have been 12 million barrels.

  62. crys — thank you for your EGY thoughts! You obviously know the company very well.

    One more thought, however. Since EGY’s Offshore capital account was used up, they needed to spend capex in order to maintain a tax-efficient operation. It’s not clear to me that they really want to get production from offshore Gabon up above 25k to 30k (with modifications to the FPSO) as that it would require a 2nd FPSO. Also, as the fields are on pump, they could increase reserves (and replenish the capital account) by drilling new wells… but maybe just cut back on the current production a bit (which you said, with your straw-sucking statement). Either way, increasing reserves and/or production is a value-creation proposition.

    They seem to have cracked the code in the area (actually, any closure in the Gamba seems to be productive… wonderful formation, that Gamba), no matter how low the relief. So, should keep them busy for years here.

    The Elephant In The Room with EGY is… “what are you going to do with the cash, boys??”

    At least they have shown themselves to be patient… and not overpay (like poster child Flores, at PXP… on whose board the COB/CEO of EGY sits… hmmmmm).

    Anyway, thanks again for posting your thoughts on EGY. I think it goes higher from here and have been a happy holder since the low-4s.

  63. USEG SG&A Expenses are ‘WAY ABOVE’ comparable E & P’s …..due to excessive salaries/bonuses to top mgmt.

    On the other side of the coin, they are not a typical E&P with their other assets [Moly Mine, Geothermal assets, and Real Estate].

    Q2 CC should be interesting.

  65. BOP,
    There is room on the deck of the EGY FPSO [Petrole Natupia] to increase fluid processing capability. The FPSO is rated to store up to 1.1 million barrels……….and they are currently doing 1 lifting/mo.

    IMHO they can modify the FPSO and just increase the lifting rate (once every 25 days for example) and still have plenty of headspace in theFPSO.

    Timworth owns the FPSO and has previously done one modification when the FPSO became a limiting factor.

    Finally, Vaalco has incorpoated watter processing capability on the Ebouri Production platform, and said they will do the same on any future proudction platforms, whic redcues the fluid processing worklioad on the FPSO.

    The EGY Q2 CC on August 10 should be very enlightening on the direction they will take the company…..and how they will deploy the $100+ million in cash.

  66. JB — voted. But, could you give me your thoughts on the EXXI chart? Is this a breakout i see going on right now??

  68. crys — good point about the lifting frequency.

    What’s bothering me a tad is that I thought we would hear “any day” about the Onshore Concession Partner… like 2 months ago. On the other hand, there is NOTHING these days, that doesn’t take about 2-10 times longer than anyone thought it would take.

    Will be on that call. Looking forward to it.

  72. RE: #67, BOP, thank you much for the votes, I really like the way the EXXI chart is shaping up, looking much better, ascending triangles on both the daily and intraday, the 30 min finds resistanace at about $18, but I’m planning for a breakout soon via the daily…

  73. JB — i should have done the “nimble swap thing” with 1/2 my EXXI (like z did). But i didn’t. Doggedly held on. Guess i’m looking for Long-Term Cap Gains treatment here. ha.

    Anyway, thank you for your thoughts on the chart. Your (and Nicky’s) voo-doo have proved (time and time again) to be a most valuable asset on this site.

  74. Re energy service, SPN ceo David Dunlap just reported a large buy at the market, increased holdings by 50%.

  76. Now the bet is on, will relief well #1 TD on or before Aug 21? I’ll roll the dice and say yes.

    Z- What is your time horizon on the BP Aug 45s? holding on still? Could become more and more of a spec play toward the months end….

  77. One incredible developing “fry pan” bottom, the UNG daily chart, from 2008 to current…

  79. Re: #74, BOP thank you for the kind words, CIGX holding the breakout….I’d hate to be short here…no way, how much downside could there really be on a $2 stock?

  81. BP is looking Tired…. yet the NEWS is good……Approx. 75% of spilled oil is gone….(combination of man & mother nature)……Mudpie is working, and even POTUS is making clucking sounds……yet BP is down on low volume.

    What is wrong with this picture????

  82. Kudos ,
    a Merit Badge,
    and a Kewpie Doll
    to BOP
    for ‘MENTORING’ the board discussion in Z’s absence.

  83. SSN…Checks in the mail….Schwab said that they had not received check from SSN representative and yesterday had requested that they stop payment and wire transfer money to Schwab. Schwab rep said maybe a couple of more days.

  84. JB #80 — there is just as much downside (or short-profit) on a $2 stock as an $80 stock (100% profit, if stock goes to zero). However, the potential to LOSE YOUR SHIRT (and everything else) on the UPside is far greater for a $2 stock. I can’t IMAGE being short CIGX…. ’nuff said.

    crys — “buy on rumor, sell on news”… maybe that ‘splains the BP stock move.

  85. hey! just saw #83… thank you!! It was my pleasure.

    I just appreciate all the comments that everyone else made… it’s a good group, we have here on “Z Site.”

  86. BP had a news item about 11 billion suit re: toxic chemical spill at Texas City today….perhaps that has something to do with it

  87. re 98: jivey – guaranteed that is it, the have that hotshot Houston lawyer Buzbee filing suit against them for a Benzene release about 3/4 of a mi from my brother’s house in TC.

  89. Back in the office.

    Thanks West for the EOG confirm on the Carat well, sorting through the comments of the last 2 hours. Back in a bit.

    Normal post back tomorrow.

    BG – yes, still holding $45s. Will probably knock them out by early next week. I am not playing large there at the moment.

    Noted BEXP gave back all gains on day and went red earlier. I only heard the first 15 min of the CC before my phone went out so will listen to the replay tonight.

  90. re: 88…thx for that color…people are really freaked out about benzene leaks near DFW too….no drilling in Flower Mound re: it…nasty situation…land owners w/ minerals vs. residential owners many who have no minerals….

  92. OT — for anyone playing the (extremely speculative) PAYD game… watch for Form 4s, exercising 4c warrants. If we are truly pulling into the Final Stretch, the Monday low of 19.5c would be a great place for the CEO and COO to exercise warrants. They have a 48-hr “look-back” period… so, forms would have to be filed tomorrow or friday morning before open (at the latest).

    Back to your regularly-scheduled, all-energy, all-the-time, topics.

  93. Sd reports after hours.

    It will be interesting to see how the market reacts.

    At the moment, I can’t think of a company thats more hated than SD

    I think best case they meet.. They should have 1 time costs 20 m or so associated with arena.

    They hedged 3 years of oil in the 80’s but prices ended the qtr 7 or 8 bucks lower than their hedged levels so im looking for a mark to market gain which could push bottom line to 30 cents or more but they adjust that effect

    The story will be morphing into an oil company.

    Big concerns for me is:

    -heavy level of debt
    -and outspending cash flow by 250 m
    – no ng hedges for 2011

    Baffling is sd reluctance to take on a jv partner

  101. SD — only 50.53mm short (on 348.17mm float)… but, guarantee that each and every one of them are not happy right now.

  103. well its kinda mixed bag

    I need to study numbers more, operating results better than expected but..

    outlook for the year cut from 130 bcf without ard to 120 bcf with ard and cap ex grows from 800 m to 875 m

    Aparently, sd is only producing enough ng to cover hedges written on ng (about 80 bcf) which on 2nd thought is not a bad business decision and plow every available penny into oil

    ard budget was 2.9 mboe for 12 months and q1 was 763 but sd only increased oil forecast by 1.2 m boe for 5 1/2 months

    ard was plowing back all ebitda 200 m into drilling ward is plowing back 75 m for 5 months or 15 m

    they dipped into their credit facility for 186 m ytd

    Their oil hedges are sweet unless oil goes to 90 or more

  104. Bill – not in SD at the moment now but saw the capex number and looked at my spread sheet with all the group’s numbers in it and stopped reading. Will get back to it tonight but it’s pretty typical of them.

  105. now 5.90 in a/h

    this is the 4th straight qtr where they lowered guidance so they have 0 credibility

    I had 20 m in ard expenses in this qtr and i dont see them in this press release, so they must be on the balance sheet and we can look forward to next qtr for that.

    Also the beat was caused by the oil hedges which i dont think they added back or in this case subtracted from the q 2 earnings

    Cash flow was 258 for 6 months so 500 to 600 for the year against 875 for cap ex so 325 in excess spending

    they will close a 140 deal in q3, but owe 180 to ard shareholders and they promise more assets sales

    debt is high and int exp is 64 m per qtr or 2.35 per mcf outlook had it at 1.90-2.09

  106. egle bulk beat 18 vs 10
    they deal in the supramax segment..might be a trading bounce tomorrow

  107. Bill – noticed they gave themselves until the end of 2011 to get those sales done. I think it will work out long term but that there are safer rides, more sure rides, for my money at this time. Ward reminds me with his actions too much of what I already have in CHK. Never saw a dollar he wouldn’t rather spend chasing the next deal and his balance sheet isn’t really improved that much and won’t until he gets his mind right.

    Thanks for the reminder on EGLE.

    Thanks to Ram for the questions on LINE yesterday as that reminded me to sell.

  110. Snuhart – Welcome to the chat area.

    UPL I watch and find interesting but am at the moment watching from afar due to who and what they are which is primarily a Marcellus gas player. The stock is perpetually on the pricier side of group valuations which isn’t enough to damn it in and of itself, especially given their growth, but at the moment I’m a bit full on gassy names and those are still outweighed by the oilier stuff. I also did not get to listen to their 2Q call or read the transcript yet as I was out of town when they reported. I will put it on the soon to review list.

  112. Z, listened to CAM CC replay and will write up notes and post tomorrow AM.

    Taking some BP money off table [bought back naked puts and sold stock], leaving calls on the table.

  114. Crys – thanks re CAM. Still see them as guilt fee with a bigger govt' imposed opportunity set soon to be in front of them in the offshore for sure and perhaps onshore as well.

    Re BP – I am very light on it as 1) I've been traveling and 2) it's well off the lows now. But I still think it has room to recover and that today's lawsuit news has a snowballs chance in recovering anyhwhere near a significant cash value let alone what they are asking. Bigger news coming in the near term from more asset sales and Kuwait will likely go ahead and up their stake. 

  115. z –    could u take a look at WRES for me and comment on their earnings.   thks

  118. SSN on the tape re the transaction, says on track for the deposit, will advise when funds have cleared in their account on Monday. Still says everything remains on track for the deal to be completed. Also saw good oil and gas shows in their latest Bakken well on its way to TD.

  119. re 115 – Z, agreed, doubtful that suit will have much bite despite the hit-and-run headline  
    I have actually worked in their Texas City refinery and was raised right by there……insights: 1) The refinery was and remains to this day quite unsafe (my experience was pre-2005 explosion). 2) I can tell you it's a love/hate relationship in that area with the British Pirates.

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