Tuesday Morning – Gas Supply Slide Show For June Plus Some Other Thoughts

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Market Sentiment Watch: Another weak open for the broad markets is on tap as all eyes take notice of mid importance level economic data with a real focus on the Payrolls data on Friday. And the approaching three day weekend. By Friday afternoon you should expect three interns and an organ grinder to garner most of the trading on the NYSE. In energy land all is mostly quiet.

Ecodata Watch:

  • Case-Shiller home prices come out at 9 am EST,
  • We get Chicago PMI (F = 57%) at 9:45 am EST,
  • And Consumer confidence (F = 50.0) comes out at 10 am EST
  • This afternoon we get FOMC minutes for the August meeting.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Supply Slide Show - Not so bad as we have become used to.
  4. Stuff We Care About Today – Gassy players hedge protection, SSN, HAL
  5. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):
    • $5,200
    • 100% Cash
    • Yesterday’s Trades:
      • None
  • ZIM (Zman Inefficient Markets portfolio)
    • $5,600
    • 19% Cash
    • Yesterday’s Trades:
      • None

Commodity Watch Crude oil eased $0.47 to close at $74.70 yesterday, giving back part of Friday's bump up with a weak, weak, weak looking equity market. This morning crude is trading off about a buck with weak equity futures.

  • Early Read On Oil Inventories: (from the Bloomberg survey)

    • Crude: UP 1.5 mm barrels
    • Gasoline: DOWN 0.25 mm barrels
    • Distillates: UP 1.0 mm barrels

Natural gas rallied $0.11 to close at $3.81 yesterday. The rally came before the EIA 's release of supply data for the month of June (see below) and was sustained into the close of NYMEX and early overnight. The data can be summed up as "not so bad". This morning gas is trading up slightly.

  • Tropics Watch: No current threat. Hurricane Earl is now a CAT 4 storm and may wing the East Coast before heading to the north east Atlantic. Fiona is just getting started but is forecast to take roughly the same track. 

The Natural Gas Supply Slide Show

ZComment: Not a bad report. And it's been quite some time since I could say that.  First the quick and dirty slides, then the longer format slides with corresponding rig counts and more detailed commentary.

Key Points:

  • U.S. gas rig count has stalled after rising for months.
  • This has helped to slow supply growth and in the most recent month, curb it slightly.
  • I would not expect a sharp reduction in supply but more of a gently sliding plateau.
  • Production is still well in excess of where it needs to be to meet demand but price is taking care of that...slowly.


Stuff We Care About Today

Gassy Names (for reference)... musing about who may have a near term problem if gas prices don't recover much this winter.

  • I took a look at a number of gassy names as seen here:


  • SWN is all gas and as I wrote in comments yesterday they come to mind first when asked who suffers the most if gas prices are weak for an extended period. Note that they have one of the weakest hedge positions (see list below) among their peers and the current sub $4.50 strip would involve them reversing course on prior statements and adding volumes at levels that to date, management has not found palatable. I see them instead waiting for a storm or cold snap related rally before significantly adding to their 2011 hedge sheet.   I expect these guys to cut capex in the second half or at least show a deceleration in 2011.

  • Note also that 2011 is not as devoid of hedges as you'd guess and some names like HK, UPL, and RRC are ahead of the game in locking in next year's prices. Given the fall those names have had, I would not be looking at a short side trade there. RRC also stands to benefit from east coast pricing.



Other Stuff

  • Cash Is King Watch: SSN - at present, assuming the deal goes through a week from today, net cash (cash less debt) on the balance sheet will account for 57% to 75% of the current price of the stock. They have done' another small Bakken acquisition so it may be somewhere shy of that but not by much.
  • SSN - reported that their next Bakken completion, the Gary 1-24H, suffered a minor set back and will now be completed mid September instead of this week. It's non-news but since they are Australian they have to report it.
  • Catalyst List out tomorrow.
  • HAL Lands Another Iraq Contract. Not that we're counting but that seems like two contracts in as many weeks. This one is for Eni for multiple services in the Zubair field in southern Iraq. No contract terms ($ or length) were provided.

Odds & Ends

Analyst Watch:

  • Nada

157 Responses to “Tuesday Morning – Gas Supply Slide Show For June Plus Some Other Thoughts”

  1. 1
    BirdsofpreyRcool Says:

     z — thank you for the natty gas update.  One observation, however, either HK didn't do a very good job picking nat gas futures for their 2011 hedges at 55¢… or, there is a number missing there.  😉

  2. 2
    elduque Says:

    Great report. 
    Many thanks.

  3. 3
    elduque Says:

    BOP- you are so picky.

  4. 4
    BirdsofpreyRcool Says:

    elduque — i own some HK… so, don't think i'm picky enuff!  ha.

  5. 5
    zman Says:

    Ooops. Corrected. $5.55 for 2011.


    Case Shiller – prices up 1% vs last month, up 4.2% YoY.

  6. 6
    bill Says:

    Robry showed flatish production increase for June but it soared in August growing more than 3.6 bcf suggesting producers can turn on the spigot to meet increase demand .

    He shows a leveling off in August last 3 weeks

  7. 7
    bill Says:

    chk manufactured 2011 hedge position by buying ( in essence) puts at 7.60 and selling tons ( 1 tcf worth of calls for 2014 to 2020 to pay for the put premium
    Takes the issue of the table for them for 2011

  8. 8
    BirdsofpreyRcool Says:

    bill — your accounting insights are invaluable.  thank you for pointing all that stuff out.
    you thinking about ATPG?  It scares the dickens outta me…. but if they can get money in the door for Titan, i figure they just bought a year. 

  9. 9
    zman Says:

    Re 6 – I just don't see that happening. There has never been that kind of real world behind pipe capacity just waiting to be turned on outside of a hurricane and we didn't have one of the those.

  10. 10
    BirdsofpreyRcool Says:

    Why it is tough to turn too bearish here… from a morning summary —
    Bond Market Update – Today is the last day of August and new bond issuance for the month is about $70bn so far. August is usually the second slowest month for issuance (December is the lightest) yet this year August issuance exceeds that of the prior 5 months. Despite this, there are a couple of reasons to believe issuance in the next couple of months will be heavy. 

  11. 11
    bill Says:

    Funny, i was in ATPG at 18 and not in it at 12
    It scares the dickens outta me too.
    Its a race to see what happens first, running out of cash or getting the oil out of the ground to keep everyone happy.
    Wildcards..new govt rules..can an underfunded pipsqueek play in the gom?
    Your analogy of a few weeks ago like driving 100 m per hour and not running into a ditch is a good one
    Monetization is good and bad. good they have something to monetize.. bad they had to do it.
    On the Gomez pipeline they monetized 50 %. The investor GE, gets 13 % guaranteed and  atpg keeps 100 % of the operating cost. What kind of partnership is that?
    Interest exp is 64 m per qtr and atpg is forecasting 5.0 m to 6.0 boe production for last 6 months of 2010 At 5.0 m int exp is over $ 25 boe.
     Gross revenue mix between gas/oil is less than 50. so half the rev is going to cover int expense
    These hi debt companies you have to look at free cash flow not EBITDA
    i think you told me the debt was trading for 18 %. They got lucky getting the last deal done days before the BP disaster
    Oilis getting weaker now low 70's and they are not fully hedged. I think MMR exxi pxp wll are better plays
    Now all that being said, they have alot of fans and any news on monetization or drilling rules getting better atpg pops but as you said not marriage material more like a one night stand, lol

  12. 12
    BirdsofpreyRcool Says:

    #10 is also why the ATPG Titan monetization will get done too.  Lots of cash, looking for places to perch in the fixed income market.

  13. 13
    bill Says:

    9 appreciate the comments, trying to understand it myself..if he is overstating supply then he is overstating demand as he ties it all out in the storage numbers

  14. 14
    BirdsofpreyRcool Says:

    bill — you summed up the situation perfectly with your 2nd point "Its a race to see what happens first, running out of cash or getting the oil out of the ground to keep everyone happy."  Says it all.
    GE got 13% for that pipeline cash???!!!  Wow.  Let the lung rippage begin.  Think my 12.5% assumption on Titan may be low.  Nice for GE, tho.  wowsters.  ATPG 144a Sr bonds trading around 17.5%

  15. 15
    zman Says:

    Odd action in WLT early.

  16. 16
    BirdsofpreyRcool Says:

    #15 — it's month end… suspect we see some weird (pricing) moves in stocks today.  Given that the Big Boys (HFs) actually added to their E21 positions in 2Q, would not be surprised to see them try to goose pricing into close.
    Just a little game hedgies play, when they can.  Helps the marketing pitch in Sept.

  17. 17
    BirdsofpreyRcool Says:

    … and — on the reverse side of the pricing game coin — would not be surprised to see ATPG go out at the low today.  Given the huge short interest involved.

  18. 18
    BirdsofpreyRcool Says:

    … 'course, I reserve the right to be completely wrong… about everything.  There just aren't many rational humans manning the trading desks at this point (as z pointed out first thing this morning).

  19. 19
    zman Says:

    Yeah BOP, very mixed bag out there today. I'd rather keep the market lowish into numbers on Friday and then get the slightest beat providing a pre holiday thin volume rally.


    WLT up 4%. Almost all the coals up strong, but not that strong. Must be some China comments out there.

  20. 20
    BirdsofpreyRcool Says:

    CIGX prediction… will end near the low of the day too.  Short more active than longs right now.

  21. 21
    BirdsofpreyRcool Says:

    Consumer confidence bettern expected.  Well… knock me over with a feather. 

  22. 22
    zman Says:

    Consumer confidence jumped in August. Hits 53.5 vs a forecast of 50.0. Now that's odd.

  23. 23
    tomdavis12 Says:

    Z: Thanks for your overnight NG chart work. Great as always. Is there any signal that would get you to try and make money from the short side. I know you are not negative. Crude below the 70.76, S&P below 1038, or negative call from Nicky?

  24. 24
    jat Says:

    Re 19, what are you seeing?  I'm not.

  25. 25
    zman Says:

    Jat  – I see nothing, but stock up $4 (6%). Odd. I own some in the ZLT but no options. Just a little strange it's running that hard.

  26. 26
    zman Says:

    Tom – I'm pretty wary of the broad market at the moment. On energy I'm pretty oily but I do see a coming trade 1) offshore and 2) in natural gas. I have a distinct feeling NAM service has an up move of moderate size before a bigger downward move next year. Re puts, I have been thinking more about that and I think that comes out of Nicky's work and of paying closer attention to what the Street is liking vs what the Street is abhoring. 


    For instance, I should have gone puts on EOG (due to the capex bump)  instead of calls (due to the increasingly strong long term picture). But I figured the market would sort through the spending hike, see how it was different than others and weight that against projected cash flow and their balance sheet and get over it. This market is not that contemplative. 

  27. 27
    zman Says:

    Very lackluster trading. Oh, I see the U.S. Open started.

  28. 28
    cargocult Says:

    I'm still waiting to make my 2nd half purchase of EOG. Glad to hear you think they have an "increasingly strong long term picture". Like to hear more about that. Fortunately(or not) I'm better at averaging down than up.
    Bill- shouldn't the  shippers be showing some improvement given the upticks in the BDI and strength in coal and iron ore? My NM and DSX has really been dead money.

  29. 29
    zman Says:

    Cargo – there was nothing wrong with that quarter that people who track the company didn’t know about. The oil volumes being on the low side was part of completion timing, and they should have known about that. The long term picture there remains strong, probably 19% production growth for 2011 and 2012, more liquids rich than ever in their history and still a strong balance sheet with <= 25% debt to cap. What more do you want than that?

  30. 30
    cargocult Says:

    Dislocations in the market make for opportunity, there is just this quirky thing called timing.

  31. 31
    zman Says:

    Hear ya on that. Market not giving much credit to those confidence numbers.

    NBL gave back most of it’s bounce yesterday, continuing higher today. Thanks JB for your comments there.

  32. 32
    zman Says:

    VQ – trickling higher, despite its statehood.

  33. 33
    ratberto Says:

    STRATFOR’s current views on Iran:


    Rethinking American Options on Iran is republished with permission of STRATFOR.

  34. 34
    zman Says:

    Thanks ratberto

  35. 35
    bill Says:


    Check out this site daily to get a feel for the dry market


    Yes, it has been dead money

    Factors impacting the dry bulk stocks are

    1. Overall stock market
    2. Fundamentals in sector
    3. catalyst in stocks
    4. To some extent debt levels (leverage)

    1.the overall market has been down
    2.Rates last few days have been flat to 3.down, good news off their lows.

    The best relative rates has been in the smaller sizes. EGLE is a pure play in this segment

    The capes need to be above 40 k , currently 33 k

    Now companies like NM and DSX get killed due to market moves ie reasons # 1 & 2 even though as NM ceo put it, rates could go to zero and it wouldnt affect thier operating performance in 2010 as they locked in 99 % of the available days.

    DSX ( I don’t own) is a bargain in the 12’s, imho.

    There is a good supply of ships and more are being delivered

  36. 36
    bill Says:

    current commnetary

    Drybulk market tracking Chinese domestic steel prices, weekly decline continues. Domestic steel prices in China have declined for a second consecutive week, signaling the market continue to be well supplied..Chinese steel inventories currently are at 81 mt vs 90 mt at all time high earlier this year. This equals an inventory turnover of 1.2 months compared to the 25 days said to be a normal level.

    so they seem to be well supplied..

    Urs Dur: Dry Bulk: A stall here awaiting new quarterly iron ore pricing. Chartering of Capesize ships stalled August 25th (for loading early/mid September) and pricing for spot Australian 62% Fe content iron ore began to drop from near $150/ton. We would expect the quarterly price for iron ore to be set at ~$120/ton and we feel that loading any higher-priced ore today ahead of 4Q may look less attractive, especially as Capesize ship spot rates have surged of late. We expect a stable-to-softening BDI for the week ending September 3rd. With any nearer-term softness, we like strong balance sheets with extensive contract cover to weather any storm and offer long-term upside exposure to the world’s developing economies. Favorites for next week in the dry bulk space are DSX (no debt) and NMM (high-yield,

  37. 37
    crysball Says:

    RE: ATPG
    How does ATPG mgmt. get away with not reporting material issues like prodcution, or lack therof, etc.

    Their debtors are obviously in possession of the material information on production to make loans and continue to hold ATPG’s paper.

    The absence of transparency to the retail investor in this climate of market & regulatory uncertainty would seem to justify the short case.

  38. 38
    cargocult Says:

    Bill- thanks for the continued insight in shipping. I guess I’m long term in DSX, like it or not. Luckily it is a good company. Prices of these shares will likely move when they increase dividends again since many of us bought for that reason.

  39. 39
    elduque Says:

    In some respects the drybulk market is like the nat. gas. market. Both suffering from a current oversupply and a perceived oversupply into the future.

  40. 40
    zman Says:

    Likely to take a shot at NBL later. Still going through analyst day materials.

  41. 41
    elduque Says:

    How long does KOG remain in the dead money category? Or another way of asking the question, is when do we get some catalyst to move the market.

  42. 42
    cargocult Says:

    It is astonishing to consider that many of the new buildings in China are empty and they continue building. The Great China Real Estate Bubble. And we are all connected to it one way or another.

  43. 43
    BirdsofpreyRcool Says:

    crys — #37 is why JohnsonRice dropped coverage on the company. (And partly why I didn’t hear any positive comments on mngmt… or their working relationship with The Truth.)

    On the other hand, they do have some production tigers by the tail and are trying to hold on, by any means possible. And a couple of directors bought some token amounts of stock at the beginning of june.

    Yep, these guys are driving 100 miles an hour… but they have their equity holders in the backseat blindfolded. Makes the ride even tougher. Bankers get to sit in the front seat and stare out the window. But the fact that bankers demanded 11% on their 1st lien money means they holding onto the dashboard with both hands.

    Getting Titan money is the difference between staying on the road and lights out, for ATPG… but given the credit environment, I do think they get the funding. It’s only a matter of how many pounds of flesh they have to give up to get it. Methinks it will be a lot.

  44. 44
    VTZ Says:

    Gold has broken far enough above 1245 that I’m confident that a new alltime high is imminent.

  45. 45
    tomdavis12 Says:

    Z: Did you see any confirmation of the Israeli newspaper report that their Mediterranean discovery is expected to be 4.2 billion barrels. This is NBL news. Was supposed to be out yesterday.

  46. 46
    nifkin Says:

    re 41: KOG into the russell 2k index tonight on the close- expected to generate 1.9M shares to buy on the close (index funds who track the index must buy)

  47. 47
    crysball Says:

    BOP,……..re ATPG:

    Great Analogies………you missed your calling as a ‘WRITER’ and ‘AUTHOR’.

  48. 48
    zman Says:

    Re KOG – thinking it’ll take a little more time and bouncing oil. The rest of the Bakkens are taking a pause as well.

    NBL – No confirmation, will get back when I get to the Israel section of the operations review. I had heard something about an oil leg there before but nothing of that scale.

  49. 49
    zman Says:

    WLT just keeps rallying, anyone see a broker note there?

    Thanks Nifkin

  50. 50
    nifkin Says:

    NBL links – one is Delek (partner int eh well) other is the Isreali press article (both yest) http://ir.delek-group.com/phoenix.zhtml?c=160695&p=irol-newsArticle&ID=1464492&highlight http://www.globes.co.il/serveen/globes/docview.asp?did=1000584716&fid=1725

  51. 51
    choices Says:

    EOG-cargo, you prob have seen the latest EOG presentation (8/5/2010) but here it is:

    -couple of things really stand out for me:slide 4-Bakken, Eagle Ford, Barnett Combo prob rank #5,#6,#17 resp of all US giant oil fields-EOG has been early in all three
    and as Z has pointed out, shifting to crude production growth, slide 7-looks like they have pretty much given up on NG out thru 2012.
    FWIW: EOG price has been tracking the NG flush for the last several weeks-BOP’s idea yesterday:


  52. 52
    zman Says:

    Re 50 – Just listening to the portion of NBL analyst conference from June that covers Leviathan. They have not spud a well yet and they were characterizing the deeper target that may be oil as “very low probability”. So first, there is nothing to confirm as we haven’t begun turning the bit to the right yet.

  53. 53
    jat Says:

    looks like bhp settled some met contracts with nippon steel

  54. 54
    jat Says:


  55. 55
    Alhambra Says:

    VTZ 44- What time frame are you thinking? Would appreciate your short-term (couple months) and longer-term views. TIA

  56. 56
    choices Says:

    #51-disclosure:I’m up to my eyeballs in EOG at much higher prices but I am not bailing-maybe sell some calls.

  57. 57
    zman Says:


    MMR – Added back the (25) September $15 calls for $0.36 with the stock at $13.80, taking us back up to (50) of the $15s. I continue to hold the $14 Septembers as well.

  58. 58
    zman Says:

    Thanks Jat.

  59. 59
    zman Says:

    NBL comment on one of their plays
    (the Aseng Field)

    Avg Porosity 26%
    Perm = 5 darcies.

    Sheesh. After looking at so many cruddy reservoirs that are the “shale plays” you get used to seeing much weaker numbers. Kind of like the difference between dribble and a fire hose.

  60. 60
    BirdsofpreyRcool Says:

    crys — #47… file under: Mutual Admiration Society. Your technical updates are da best!! Keep them coming. You are a great help to the site. Thank you.

  61. 61
    BirdsofpreyRcool Says:

    (i’d say “da kine”… but, have to leave that to our Hawaiian colleagues… I don’t have the geographic authority)

  62. 62
    BirdsofpreyRcool Says:

    crys — other than you and I… any other EGY-ers out there? Just curious…

  63. 63
    BirdsofpreyRcool Says:

    (KOG will rise from the ashes… it’s just underperforming EGY right now. But, no worries there. FWIW. Just need to get over the irritation of Bankers Exercising Shoes and Then Letting the Stock Crash. THAT will put a burr under ANYone’s saddle!)

  64. 64
    tomdavis12 Says:

    50 Thanks Nifkin

  65. 65
    zman Says:

    Listening to the NBL exploration presentation at the moment, which will cover the Niobrara.

    VTZ – Gotta say way to go on your gold call. Way to stick with it.

  66. 66
    VTZ Says:

    Alhambra – Could be as soon as next week that we make the new high and I think that the entire fall/winter looks really bullish for gold. Would not be surprised to see a move to 1350 by the end of the year or sooner.

    In the longer term I believe that by the middle of next year we may have seen 1500-1600. Before the end of next year we will probably also have the first significant pullback in a long time either down to around the ~1225 level or in a more unlikely scenario all the way to ~1040. However, I still don’t see gold ever falling below 1000 again (I was laughed at when I said that when India bought at 1040 and the last time I said it).

    I am expecting the equities to continue their August move and they still have a lot of catchup to do relative to gold price. Over the past several years gold equities have traded much higher in terms of HUI:gold price. Right now the equities could increase by 30% and they would not be overvalued in my books. The majority of my gold/silver-related holdings are in equities, in juniors and midcaps.

    I also think that silver has a big breakout at some point but then it will probably not appreciate as much as gold will. I still want exposure right now though until I see what the action looks like in the mid-20s.

  67. 67
    cargocult Says:

    ratberto-very interesting link to strafor research. You happy with your membership?

  68. 68
    VTZ Says:

    I also agree with those that say that 2000, or 2500, or *insert obscene number* is possible within 3-5 years.

  69. 69
    cargocult Says:

    VTZ- I own CEF which is a Canadian horde of silver and gold. Any thoughts on this as a play on the metals?

  70. 70
    VTZ Says:

    It’s the best if you just want exposure to the metals appreciation as safety, but I would recommend equities if you want to speculate that gold and silver are going to appreciate.

  71. 71
    Alhambra Says:

    Thanks VTZ, have you lightened your holdings in bullion for equities?

  72. 72
    ratberto Says:

    I think George Friedman and his STRATFOR gang do a nice job and are very thoughtful. I never got around to subscribing (I would rather subscribe to ZEB!); I just get the free emails. But have followed for about four years.

  73. 73
    BirdsofpreyRcool Says:

    research question… does anyone have access to the Oppy report on ANM (Canadian) from 8/9? Friend is asking about it…

  74. 74
    BirdsofpreyRcool Says:

    KOG at $2.50. That is an antelope just LOOKING to be picked off from the herd, imho.

  75. 75
    VTZ Says:

    RE 71 – I’ve always held more equities than bullion but all new money goes to equities. In reality I only have 15% of my metals position in bullion or bullion equivalents like CEF.

  76. 76
    zman Says:

    Oil off $2, not sure of the driver for that aside from fear. Dollar is actually off slightly.

    Obama Admin imposes new ethics rules for offshore inspectors. Whew! That’s a relief!

  77. 77
    andy Says:

    bop – EGY – am w/u.

  78. 78
    Dman Says:

    #33 a reasonable analysis. However I question the likelihood of such a subtle thought process occurring at the WH.

    Like the author, I see no sign of any drop in Iranian influence in Iraq. The government is and will be by the Shia and all Shia factions are heavily Iran influenced and backed. With US forces being reduced, how will the US counter Iranian influence? The only thing that comes to mind is getting heavily behind the Sunnis (i.e. Saddam’s mob) which would both be ironic in the extreme but also be very unlikely to succeed.

    Also, Friedman forgot to mention that is is usually assumed:

    – Iran would respond to an attack globally and asymmetrically, including in the US.

    – the idea of limiting the action to a land war is unrealistic. The only way of shutting down all the anti-ship missiles would be for a land invasion of Iranian territory near the Gulf.

    So the risks are very high. Obama is risk averse. Palin not so much I guess.

    The recent crescendo of war talk looked like it was building up to something. As it turned out, what it was building up to was … even more war talk in the form of a big article by Jeffrey Goldberg in The Atlantic.

    The blatant propaganda aspect of the article, in which Goldberg was simply a vehicle for Israeli psychological warfare, seems to have been so obvious that it took the wind out of the issue. Indeed the recent peak in crude more or less coincided with the Goldberg piece.

  79. 79
    redjack Says:

    BOP…EGY here

  80. 80
    BirdsofpreyRcool Says:

    andy — thank you for playing! (And reminding me.) You going for the whole cow, or just the filet, on this one? (Whole cow = hold into mid-6s, steak dinner = sell at 5.80.)

  81. 81
    Dman Says:

    VTZ – do you have any thoughts on Newmont Mining? I’m thinking of adding to a position there.

  82. 82
    BirdsofpreyRcool Says:

    redjack — thanks for putting your hand up. Looks like we are getting close to Steak Dinner level… after $5.80, all bets are off.

    But, I am holding here… too much cash on the BS and liking their JV with Total (and all that implies). And Crys does a superb job of keeping us up on the science and engineering. So, planning on hanging out for a while.

  83. 83
    zman Says:

    Finished listening to NBL. Mulling. Don’t feel like rushing about at the moment.

    Interesting, insightful comments D on the Iran/Iraq situation.

  84. 84
    zman Says:

    Barclays out with the four most vulnerable large cap producers to a continued slide in gas price expectations (I know right, what are the odds that he publishes it today?) …. ECA, RRC, SWN, UPL … Their worst case scenario has these stocks falling 20 to 60%. No mention of hedges in the blurb I have access to.

  85. 85
    Dman Says:

    Z – I’d like to think of a Star trek analogy for the Middle East but you’d need all the alien races to appear in a single episode, plotting and scheming against each other 🙂

  86. 86
    Dman Says:

    #85 Oh yeah and they would all be different, but somehow all look the same. Difficult for the scriptwriters.

  87. 87
    zman Says:

    85, 86. Afghanistan doesn’t sound much better. Will send a note to Italyinvestor to see how things are going.

  88. 88
    BirdsofpreyRcool Says:

    EGY — pass the A-1, baby’s gonna eat well tonight!

  89. 89
    BirdsofpreyRcool Says:

    Next up, KOG.

    Hey! batter batter batter.

  90. 90
    Jerome Blank Says:

    REX energy… REXX, up over 7% on above avg vol, interesting daily chart, breaking out above long term channel resistance…


  91. 91
    nifkin Says:

    JV with Sumitomo for Butler county acreage

  92. 92
    zman Says:

    JB – Thanks, that’s not one I have a great deal of affection for but it has been known to run hard and fast.

    Question for you when you get a chance. Part A) Can we get your top 5 charts in the energy space now? Part B) Of SWN, RRC, UPL, and ECA who do you like best from a TA standpoint?

  93. 93
    zman Says:

    MMR – looking at the minute chart that one wants to run again.

  94. 94
    DrLink Says:

    BOP I’m with you again on KOG, just hit a $2.50 ball to second base…..looking for another swing if it drops lower…..

  95. 95
    ram Says:

    Re 92, Best or Worst?

  96. 96
    zman Says:

    Ram – good of you to ask for a clarification. I meant “Best”. If Driscoll of Barclays, the biggest gas perma bear of them all, is going uber bearish than I figure it’s time for a bounce, probably in the commodity first and then the names.

  97. 97
    ram Says:

    MM will not let go at 2.50…still waiting.

  98. 98
    jat Says:

    fwiw, just met with a utility that does ~9mln tons of coal a year. Uncontracted on the met side, and they said met negotiations which typically happen in Oct/Nov for domestic steelmakers are happening earlier than usual this year, as the domestics want to lock it up, fearing a loss to export markets…

  99. 99
    ram Says:

    RE 96, thanks, I feel more relaxed now.

  100. 100
    ram Says:

    I must be waiting in line with others that want 2.50.

  101. 101
    zman Says:

    Jat – Do I understand you to be saying that domestic mills are looking to lock in prices now before big additional slugs of demand hit from China this fall? Thanks for the color.

    Re 99. Glad to be of assistance.

  102. 102
    zman Says:

    FOMC minutes:

    Several members saw need for further stimulus.

    No member saw a big risk of deflation.

  103. 103
    skimo Says:

    ram, I got tired of waiting and cleared at 2.51 in nanoseconds

  104. 104
    skimo Says:

    of course then it goes down to 2.49 memo to board- follow Z don’t follow me.

  105. 105
    BirdsofpreyRcool Says:

    DrLink — just heard from a buddy who gave some CigRx to a smoking friend… “It works.” Is all he said. 🙂

  106. 106
    Dman Says:

    Z – notwithstanding your earlier comment about puts, do you think EOG is too beaten up here?

    Do you have their gassy percentage at hand?

  107. 107
    BirdsofpreyRcool Says:

    skimo — it’s not nice to pick bottoms in public. You did just fine! Thank you for sharing!!

  108. 108
    ram Says:


  109. 109
    jat Says:

    Re 101, that’s what this utility said. They’re a coal producer of course, talking their book.

  110. 110
    zman Says:

    OK, Thanks Jat. That price mentioned earlier sounded low by the way.

    Ram – congrats.

    D – Re EOG, it was 73% gas in the most recent quarter, on the way towards balanced in the next 2 years.

  111. 111
    BirdsofpreyRcool Says:

    ram — you GO, guy! Thanks for sharing.

  112. 112
    jat Says:

    nah the price is right bob:

    Quarterly contract prices for hard coking coal were concluded between the
    BHP Billiton-Mitsubishi Alliance and Japanese steelmakers late Monday at
    $209/mt FOB Australia for October to December, down 7.1% from $225/mt FOB over
    July to September, several market sources claimed late Monday.

    The price of $209/mt FOB would apply to BMA’s top brands, Peak Downs and
    Saraji, which are typically used as a reference in contract talks. This price
    is higher than most participants in the coking coal market had anticipated,
    but it is still about $5-10/mt below recent spot deals into China for such

    BMA’s slightly lower grade premium hard coking coals Goonyella and
    Riverside were reportedly priced at $205/mt FOB, hard coking coal Norwich Park
    at $195/mt, and semi-hard coking coal Gregory at $190/mt, sources said.

    Similar prices for the fourth quarter are now expected to be offered to
    other steelmakers in Asia, Europe and elsewhere.

    No official confirmation could immediately be obtained from BHP Billiton
    or Nippon Steel. A spokesman from JFE Steel declined to comment.

    Coking coal contracts with Japanese steelmakers typically have tonnage
    fixed annually, and prices negotiated bilaterally every quarter. This is
    different from iron ore, which is mostly sold in contracts which are linked to
    spot price indices. Iron ore is the other key raw material used in

    After falling almost continually since mid-April, spot prices have risen
    by around $12/mt, or 7%, over the past three weeks to reach $188/mt FOB
    Australia on Thursday, Platts data showed. This price relates to mid-vol

  113. 113
    zman Says:

    This market reminds me of this guy.


    The 12 pack he’s trying to buy represents more Stimulus.

  114. 114
    DrLink Says:

    Thanks BOP, we are on same wavelenghth, I mailed my cousin some yesterday, he is bad smoker…i should hear by Thursday

  115. 115
    zman Says:

    Thanks Jat, prices are little hard to come by. Is there a spot quote on bloom?

  116. 116
    zman Says:

    Re EOG – yes, I think it is overdone, as I did $10 higher than hear. As Goldman did (or said they did) at $100.

  117. 117
    jat Says:

    Nothing’s perfect on bloom for that. You can find a bunch of chinese prices per metric ton which appear slightly higher than the BHP ones, once you convert into USD, but I don’t really know what the differences in terms of grades etc are.

  118. 118
    BirdsofpreyRcool Says:

    #113 — Wow. Wonder if he rode his bike to the store….

  119. 119
    Popeye Says:

    I guess I was a little early on the KOG.

  120. 120
    zman Says:

    Thanks again Jat.

    BOP – I think it is safe to say he didn’t get there by walking, lol.

  121. 121
    zman Says:

    August NYMEX closed

    NG down 23%
    Oil down 9%

  122. 122
    RMD Says:

    MMR: an enthusiastic friend’s musing: days/ weeks to BB Hill and hen BB East. BBH “best sands” Jimbob ever saw; BBE 10,000 ft miocene sands with 25% porosity; BP’s well was Miocene with 80 ft. of pay, very sweet crude.

  123. 123
    BirdsofpreyRcool Says:

    Popeye — #119 right there with ya, bud. Still gots my $2.65 shares. But, you picks your price, you plays the game. EGY went down, before it went up too.

    Keep repeating, “this is a crazy market.” And this is also the lightest volume week of the year… on top of being a crazy market.

  124. 124
    BirdsofpreyRcool Says:

    JPMo announcing they are shutting down their commodities prop desk, to comply with the Volker Rule.

    Might have something to do with vol in the crude mrkts….

  125. 125
    zman Says:

    Thanks RMD, glad you made it in.

  126. 126
    zman Says:

    BOP – Interesting, they cut their target on crude for 3Q yesterday.

  127. 127
    BirdsofpreyRcool Says:

    #126 — ha! Guess the desk was net short….

  128. 128
    zman Says:

    BOP – thanks for pointing out 124, I had not seen it, I was just chaulking that one up to thin market volume weirdness and weak technicals.

  129. 129
    crysball Says:

    VTZ………Sliver Miner
    You might find FRMSF or FR.TO interesting. Currently own & operate 3 Mines all in Mexico, and more mines coming on stream. will produce 6 million Oz. of Ag this year.
    They execute well on their mining plans.

    IMHO have lots of upside, as they are increasing production steadily, and even mint their own bullion and coins (accounts for 10% of production).

    Well financed and growth financed out of generated cashflow.

    A ‘CLASSY’ Junior.

  130. 130
    VTZ Says:

    I hold some First Majestic and have also bought silver off their site.

  131. 131
    zman Says:

    MMR – late day institutional buying.

  132. 132
    BirdsofpreyRcool Says:

    ummmmm — z…. nice timing on those MMRs. Quite an end of day run.

  133. 133
    ram Says:

    Re 130, VTZ, is that the closest you can get to spot prices?

  134. 134
    BirdsofpreyRcool Says:

    MMR (and to a lesser extent, E21) should keep us in a constant state of amusement, from now through the end of the year. With 3 deeop wells drilling and one permit to announce soon, JimBob could be back to “one PR a week” mode. Never a dull moment, with those guys.

  135. 135
    cargocult Says:

    FMRSF had quite a run, you expect this to continue?

  136. 136
    VTZ Says:

    RE 133 – Sometimes they have “specials” if you register on the site and you can buy for a $0.50 premium to spot. That’s pretty much as good as you’re goign to get.

  137. 137
    BirdsofpreyRcool Says:

    Seeing some headlines about crude being down on end of month liquidations. If that is the case, should see a rebound tomorrow.

  138. 138
    VTZ Says:

    RE 135 – I expect all the equities to break out shortly… the HUI ended today bang on some long term resistance. Given a decent increase in metals prices the equities could break out in a serious way.

  139. 139
    Dman Says:

    Z – not looking good:


  140. 140
    zman Says:

    No, it looks very bad.

    You might know the Lt. Colonel in this article better as Italyinvestor:


  141. 141
    choices Says:

    What happened to TAT today? up>13%.

  142. 142
    zman Says:

    API was a mixed bag with oil up big but Cushing levels down along with gasoline and distillates. Oil up off the low close.

  143. 143
    choices Says:

    Interview with CEO of FR:

  144. 144
    zman Says:

    TAT – They closed their buy the other day and I saw a new credit line the day after that. Must have convinced some new blood on the story.

  145. 145
    skimo Says:

    Different spin on natgas storage

  146. 146
    Jerome Blank Says:

    #92, Hard to find 5 charts I'm really all that crazy about at the moment, but EXXI and MMR are two standout bullish favorites both with similar technical structures, both charts appear to be flagging for a breakout, also SSN continues to look good and appears poised for a breakout, NBL also looks strong, continuing to press the topside ascending triangle resistance line and 200 day SMA, good restest bounce away from the 100 day at today's low., LINE and CLB are also technically holding up well… with all the downward pressure recently the McClellan at -32.52 still is not severely oversold… 
    Added UPL to the charts…
    Of the 4 choices SWN, RRC, UPL and ECA, I don't see enough of a technical distinction between them yet…the P&F and traditional charts structures are all very similar, I will continue to watch them to see if one within the group starts to outperform….  

  147. 147
    bill Says:

    Uncle Phil with an interesting commentary

  148. 148
    zman Says:

    Post will be up at 9 am EST

  149. 149
    zman Says:

    Thanks JB, saw that last night,


    Skimo / Bill  – havent' looked at those yet, will after open

  150. 150
    john11 Says:

    Harold Hamm CLR ceo on cnbc squawk box right now

  151. 151
    zman Says:

    Harold Hamm on CNBC now

  152. 152
    ram Says:

    Is he saying good stuff about the Bakken?

  153. 153
    bill Says:


    He said oil  should / would be between 75-90 for the next year
    Mentioned that oil industry helping North Dakato..only state with a surplus

  154. 154
    ram Says:

    Thanks Bill.

  155. 155
    isleworth Says:

    Z- what do think of CLR?

  156. 156
    zman Says:

    will answer on today's post which just came up.

  157. 157
    isleworth Says:

    tks much

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