Wednesday Morning – SSN, EXXI and other comments

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Market Sentiment Watch: Everyone is back from vacation and suddenly caring about Europe and D.C. again.  And the PIGS are front and center with debt spreads blowing out in Ireland, Portugal doing a debt deal in the nick of time and Greece looking like they lied about more debt deals than we all though they did. Ugh. Yesterday was, bar none, the slowest, most pathetic and definitely the most boring trading day of the year. I read on days like that. Last night we had news out of SSN that should propel the stock higher in the near term although there may be some confusion in the early going (see comments and new model in the Stuff section).  In BP news, the firm shared the anti-love today, with its report on the Macondo accident spreading the blame around, saying there was no single cause of the accident but instead citing a string of events and, not surprisingly, claiming that multiple companies are responsible.  Still no eco data this morning and no oil numbers until tomorrow but we do get the Beige Book later this afternoon.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today - EXXI, SSN, LINE, TAT
  5. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):
    • $5,200
    • 100% Cash
    • Yesterday’s Trades:
      • None - We're still not operating in a market where the market is anticipating good news out of the companies.
  • ZIM (Zman Inefficient Markets portfolio)
    • $5,500
    • 14% Cash
    • Yesterday’s Trades:
      • None

Commodity Watch Crude oil fell $0.51   to close at $74.09 yesterday with a distinct lack of backing from a weak equity market. This morning crude is trading flat.

  • Early Read On Oil Inventories Watch: (we get the numbers a day late due to the holiday)
    • Crude: FLAT
    • Gasoline: DOWN 1.0 mm barrels
    • Distillates: UP 0.85 mm barrels
  • Mexico Watch: One of five hydrotreaters at the third largest refinery in Mexico exploded yesterday. This is one of Mexico's primary producers of ULSD (ultra-low sulfur diesel). This may provide minor support for export distillate volumes this Fall as Mexico already gets a majority of its finished products imports from the U.S., specifically from the Gulf Coast region. No word on extent of damage or timing of repairs.

Natural gas fell 9 cents to close at $3.85 yesterday.  This morning gas is trading flat.

  • Tropics Watch: Nothing imminent but organized looking cloud piles continue to peel off of West Africa, and the next one already has a 70% chance of development in the next 2 days.

Crack Spread Update

Key Thoughts:

  • Margins are holding up better than I expected late in the third quarter, despite bloated gasoline and heating oil inventories and the prospect of seasonally declining gasoline demand after this week's report.
  • This is most likely due to the fact that traders are looking for a sharper than normal drop in refinery utilization this Fall.
  • 3Q10 refining group earnings should be in line with or slightly above 2Q levels as is normal for this time of year and better than 3Q09 results.
  • Stock performance remains abysmal ...  watching.


Stuff We Care About Today

SSN Reports Good News Regarding Niobrara Sale

  • Originally, SSN was attempting to sell 24,000 net acres of a 40,000 net acre position. Here's the deal as it now stands.
  • $63.7 mm today including the previously announced $10mm deposit for 19,451 net acres. This is in the bank and represents a per acre price of $3,275 and 0.77 per SSN share in cash.
  • 1,920 additional acres are expected to be sold for $6.288 mm on September 20th,
  • And with the approval of a drilling permit, which Samson expects to receive by the 20th, the sale of another 1,339 acres for $4.385 mm should occur.
  • Another 1, 056 acres have certain title defects that may or may not get resolved in time for the second closingl but if resolved would likely result in SSN receiving the upper end of the deal price band from when the deal was first announced ($79.1 mm).
  • Outside of the Niobrara, I would not be surprised to see SSN disclose sales of gas assets in Wyoming in the next 3 to 12 months and I've gone ahead and added that into my thinking as well, now that we have more recent promise and delivery action from management. There are still other areas, including producing (albeit small) assets in the Gulf Coast and in New Mexico (upcoming Bone Spring test) as well as other Rockies gas assets (Vermillion Basin) for which I am giving them no value as present.
  • Nutshell: I am pleased to see the transaction apparently closing near the high end of the expected range and definitely above the low end. Still no word on the buyer, probably either EOG or NBL. The shares had previously walked up to the low end of my NAV range of $1.39 to $1.75 and with the successful closing of this deal and the additions to the model mentioned above I am moving my target to $1.90.
  • See tables below for impact on my back of the envelope near term NAV.
  • I continue to hold an over-weighted position in SSN in the ZLT.

EXXI Reported Solid 4Q Earnings

The 4Q Numbers:

  • Production of 25,300 (the pre-announced this in August); 68% oil.
  • Revenue of $139 mm vs $140.24 expected
  • Operating Cost:
    • LOE per BOE of $17.96 for the year remains respectable for an offshore operator and is essentially flat with year ago levels.
    • On a quarterly basis LOE is flattening out.
  • EBITDA of $78.8 vs $78.3 expected
  • EPS of $0.20 vs $0.07 expected


Operational Update:  Nothing New.

  • Davy Jones production expected 2H11 ... this is unchanged from their last progress report, just waiting on long lead time equipment.
  • Davy Jones #2 drilling ahead below 15,000', with a planned TD of 29,950'.
  • Blackbeard East drilling ahead below 21,500 feet, "encouraged" by what they have seen so far, also planned TD of 29,950 (expect them to take both wells deeper if they are still in section). At BB East they are looking for sands seen in the initial well BB West at a shallower depth.


Valuation: Not expensive, especially given the upside offered by a relatively small capital cost investment in the ultra deep Shelf.

  • FY2011: TEV / Est EBITDA = 4.6x
  • FY2012: TEV/ Est EBITDA = 3.9x

Nutshell: The numbers should not be the focus of today's call as they were partly pre-announced although a guidance range is noticeably absent but that's not surprising for them. The call should be a bit more informative.

Conference Call: Today, 10 am EST

Overnight Mailbag Question:

Is there a chance LINE will spring a secondary on us for this latest acquisition? I know they said it would be funded by their revolver, but ya never know. Is their cash/revolver position such that this won’t make too big a dent?

ZComment: Yes , as you said, ya never know. But I think that a potential future secondary offering is at a higher price than here and for a bigger deal than this one which is pretty runt of the mill for them. I think the focus now is on making accretive deals (easy to do when it's all cash) and growing the organic side as well via the Granite Wash with an eye towards getting back to distribution growth as soon as possible.


Other Stuff

  • A report on GST was tabled until the Thursday post.
  • TAT Upcoming Catalysts:
    • results of the first frac in the gassy Thrace Basin - probably with 3Q results.
    • Exploration target on License 4175 drilling now - this could be game changer for them, end of the 3Q10 for results

Odds & Ends Analyst Watch:

  • GDP - Added to Focus List at Johnson Rice

144 Responses to “Wednesday Morning – SSN, EXXI and other comments”

  1. 1
    john11 Says:

     LINN Energy, LLC (Nasdaq:LINENews) and its subsidiary, Linn Energy Finance Corp., announced plans to commence a private offering to eligible purchasers of $750 million in aggregate principal amount of its senior unsecured notes due 2021

  2. 2
    zman Says:

    John – yeah, all the more likely to not do a secondary after that.

  3. 3
    zman Says:

    Front and Center Watch:

    SSN for obvious reasons. If it dips on either Buy The Rumor, Sell The News or on disappointment that they didn't get the high end of the deal (both of which would in my opinion be silly) I will add. Dip being something like down to $1.20.

    All the BP Spill names – BP, RIG, HAL, CAM to see how they react to 194 pages of BP's explanation of the Macondo accident.

  4. 4
    zman Says:

    Analyst Watch:

    WLT – Goldman starts it at Neutral.

  5. 5
    BirdsofpreyRcool Says:

    TED = steady as he goes… clocking in at +16.1 bps.  Nothing to see here.  (+10 bps = too low… + 20 bps = too high… so +16 = just right)

  6. 6
    zman Says:

    Analyst Watch: Wells Fargo

    HAL, RIG, RDC, and PDE – coverage resumed at Wells Fargo with Outperform rating

    DO, ESV get Market perform ratings.

  7. 7
    zman Says:

    Morning BOP and thanks. I'll have GST out with the Thursday post, got busy with the SSN stuff last night and who wants to read really long posts anyway?  Any thoughts from HT?

  8. 8
    ram Says:

    ZMAN – Do you think the SSN sale at that price will move stocks that have acreage in the Niobrara?

  9. 9
    elduque Says:

    BDI still moving up. Seems to either go straight down or straight up. Hmmm!

  10. 10
    tomdavis12 Says:

    Z: I see Barclays Capital is having an energy conference 9/15 in NYC. Don't know if that was the conference you were asking about yesterday.

  11. 11
    zman Says:

    Ram – It is a good price. If it could move the needle on any one of them I suspect it would be SM. NBL and EOG are in close proximity but they are such big companies that I'd doubt the market pays much attention in their cases.

  12. 12
    zman Says:

    Tom – thanks much, I was thinking it was Rodman Renshaw this week but it too is next week.

  13. 13
    BirdsofpreyRcool Says:

    HeadTrader gearing up for another slooooooow day. 
    With Labor Day Monday and the Jewish Holidays starting Thurs… think this week is just a Black Hole in the Universe of Time. 
    Looking forward to the E21 conf call at 10am. 

  14. 14
    zman Says:

    BOP – me too thanks.

  15. 15
    zman Says:

    Ram –  Acreage in the Niobrara

    NBL – 750K

    APC 500K

    EOG and CHK – 400K each

    MDU – 80K

    PETD – 70.5 K

    CLR  – 59K

    CRZO – 58K

    REXX – 39.1 K

    SM – 25 K – I mentioned them because their acreage is very close to SSN and they would be more levered to it than EOG

    VYOG – 24K

    SSN – 16 or 17 K depending on how much gets sold

    AXAS – 15 K

  16. 16
    BirdsofpreyRcool Says:

    Another day it Sucks to Be Short ATPG.
    Also, EGY moving up smartly.  Back toward the 5.80 sell point.  Anyone take advantage of that rinse and repeat cycle? 

  17. 17
    BirdsofpreyRcool Says:

    File under "I Really Don't Get Options Sometimes" = EXXI Sep c22.50s are actually down today.  Huh?  Guess the theta decay is kicking in.  Sold some covered calls there at 50¢ on my trading shares ('cuz didn't want to sell 'em outright).  Guess call buyers were looking for a drilling update with the earnings release.  Conf call at 10am… they still might get it.

  18. 18
    zman Says:

    SSN – I have a little cash on the sidelines and am mulling adding a touch more to my SSN position. I like what I see there and think it is time to start looking a little longer term. There is a big jump from acreage pricing to per barrel pricing and they have not yet done the work in the Niobrara to warrant the switch. Yet. They are shooting an 80 sq mi 3D shoot to understand the orientation of the natural fracturing and will sink two holes down the road, probably in 1Q11.  Meanwhile EOG and NBR and SM will have results in the area which will either validate valuations or not. The upside if things go as they see them eventually going would yield a $10 stock with their remaining acreage. We are far from that number.  But getting the deal done speaks to management credibility and the balance sheet is now rock solid.

  19. 19
    zman Says:

    BOP – often you see the premium come out of the options after a known news date event, like earnings or analyst conference as the implied volatility of the underlying issue drops.

  20. 20
    zman Says:

    WLL attempting to break out of that quadruple top.

  21. 21
    BirdsofpreyRcool Says:

    #19 — that would explain it.  Thank you.

  22. 22
    elduque Says:

    Re GST- have you done enuf work to have either a negative or positive bias.

  23. 23
    reefguy Says:

    EXXI- Blackbeard East
      Designed as a subsalt d test(that is the salt would be a "canopy" over the Middle Miocene and deeper, has drilled into the upper miocene without passing through salt.  Salt is apparently absent with the weld being a glide plane fault.  Does this mean more trap integrity risk?? 

  24. 24
    ram Says:

    Thanks ZMAN.  I'm fishing to see if there are under valued names tied to Niobrara.

  25. 25
    BirdsofpreyRcool Says:

    reef — as BBE is structurally higher than BBW, makes sense the salt has migrated off the high.  Guess it's up to the shale layers to provide the seal here.  Adds an element of risk.  On the other hand, the absense of salt supports the notion that it is a higher-high, don't you think?  So, give a little (no salt), get a little (more closure).

  26. 26
    zman Says:

    ElD – positive with caveats that will be in the Thursday post.

    Reef – JB didn't seem concerned about that at Enercom but he's not one for caution, is he, lol. 

  27. 27
    zman Says:

    re 25 – that's a much better response than my glib answer. Call starting in a couple of minutes.

  28. 28
    BirdsofpreyRcool Says:

    Adding to #25 — i defer to Reef's working knowledge as a geologist… i'm just trying to pull out old data from the memory banks. 

  29. 29
    zman Says:

    Editor switched off

    EXXI conference call starting now:


  30. 30
    BirdsofpreyRcool Says:

    E21 — won’t have to wait flow test DJ#1 … NS will allow E21 to move reserves from contingent to proved with formation data from DJ#2. This has a LOT of Postitive implications. For E21 and MMR.

  31. 31
    zman Says:

    EXXI Notes:

    Black Beard East @ 22,300′
    made 1,300′ feet in the last 2.5 days
    could be 8,000 feet of column

    Davy Jones #2
    @ 15,125′
    should be able to get fluid samples and cores soon to get their reserve engineer to upgrade the reserves here.

    2011 Program – $250mm
    22 projects – 62%
    10 recompletes – 8%

    26 to 27,000 BOEpd capacity, adding 4,000 BOEpd over the next 6 weeks.

  32. 32
    zman Says:

    EXXI Notes 2

    FY2011 Guidance, ha! Bar chart with no scale and no number, somebody throw me a ruler, LOL. Looks like 26 or 27,000 BOEpd which would be 21% on the mid.

  33. 33
    BirdsofpreyRcool Says:

    “remaining within cash flow”… love that statement!

  34. 34
    zman Says:

    EXXI Notes 3

    Permit for LaFitte well still in progress, should spud next week. Good, still rolling, BOEMer not holding them up too much.

  35. 35
    BirdsofpreyRcool Says:

    whoa — getting a tax account lesson here. Yikes. Debits and Credits. I still have nightmares about sitting thru an entire sememster of “Problems in Financial Reporting 402.”

  36. 36
    Popeye Says:

    Do you have rain Z?

  37. 37
    zman Says:

    EXXI Notes 4

    Have you looked onshore to do anything in light of offshore permits difficulties?

    They just don’t need a lot of permits so not really.

    Popeye – Lots, I guess these are storm bands.

  38. 38
    BirdsofpreyRcool Says:

    Analyst trying to beat on DavyJones 1st production. With the formation testing planned at DJ#2, makes a good chunk of the data from actually flow-testing DJ#1 moot-ish.

  39. 39
    zman Says:

    EXXI holding flat, wouldn’t be surprised to see some positive reactions from analysts post call.

    Caller asking if DJ is slipping, he’s getting too specific on timing, these things can easily slide a quarter.

    BB East – any comment on rock properties? Based on the bugs it looks like they popped out of the salt weld at 22K’ (think I heard that right). Still in middle miocene where they want to be. 600′ per day drilling, yikes that’s fast.

  40. 40
    BirdsofpreyRcool Says:

    “drilling at a pretty good clip”… spells p-o-r-o-s-i-t-y.

  41. 41
    zman Says:

    BOP – Vuggy dreams.

  42. 42
    BirdsofpreyRcool Says:

    perky-talk about the economics of the Ultra-Deep vs other opportunities… think RMD and Reef are onto something here. Maybe Schiller takes Flores out of his partnership share in MMR Ultra-Deeps? Depending on price and how they pay for it, could be a very happy thing.

  43. 43
    zman Says:

    Not that it will happen but 2 more weeks at the per day rate and they’d be at TD. It will slow down with depth.

  44. 44
    zman Says:

    EXXI Notes

    Only 1 well out of their $250 mm 2011 program will require a permit. The rest is sidetracks and recompletions.

  45. 45
    zman Says:

    Shiller mentioning that 70% of wells drilled on the Shelf not requiring permits as they are drilled out of existing slots. Something not to forward to the Obama administration.

  46. 46
    BirdsofpreyRcool Says:

    FY2011 production will be 65-70% oil.

    Just love saying that.

  47. 47
    zman Says:

    WLT erasing the downgraded production news from last week. Above the 200 day.

  48. 48
    zman Says:

    EXXI Q&A

    What was JB so happy about at BB East at Enercom?

    The well is where they thought it would be in relation to the other well.

    Saw sands with porosity and hydrocarbons in them. So your trap is working and you are where you need to be. Popped out of salt at 21,250, they are logging while drilling. Says they will let us know about anything material as they come to it. So we could see a PR any day from MMR.

  49. 49
    BirdsofpreyRcool Says:

    #48 — erratum… “why was JimBob dancing on the ceiling?” Pretty descriptive.

    PXP question…. depends on whether Flores splits up the GoM assets. Sounds like that is not yet decided…. ??

  50. 50
    zman Says:

    Shiller comment on Flores/PXP sale of Gomex. If PXP sells all of it to one buyer there are no pref rights. If he pieces it out, then pref rights come into play. Common knowledge but its interesting they mention it, sounds like he’s hoping to up his working interests.

  51. 51
    BirdsofpreyRcool Says:

    “can complete with 20k lb psi equipment”… keeps repeating that. Good. This was a MAJOR sticking point with most of the Ultra-Deep nay-sayers.

  52. 52
    zman Says:

    By the way watch:

    S&P back over 1,100.

  53. 53
    Geno Says:

    Z & BOP regarding SSN, what do you really think about this stock?

  54. 54
    zman Says:

    Slides show CAM building a 25,000 psi unit at 450F. Rated 30K psi at 350F.

  55. 55
    zman Says:

    Geno – on the EXXI call. See comments in post, and comment 18 above.

  56. 56
    BirdsofpreyRcool Says:

    Geno — i think i’m sorry i didn’t buy it. z’s right. Completing the asset sales (or most of them, anyway) puts a big PLUS in the management cred column. That is huge. As far as asset valuation… z’s your man there.

  57. 57
    BirdsofpreyRcool Says:

    SEE-MORE Pierce… why does that name just crack me up?

    “Drilling shed-u-al”… oh those Brits!

  58. 58
    Geno Says:

    sorry, should have looked, thanks

  59. 59
    zman Says:

    Geno – no trouble at all man. Just have to listen to this stuff from your world carefully or I’ll get it wrong.

  60. 60
    zman Says:

    ATPG just keeps on keeping on. Me snoozing there.

  61. 61
    cargocult Says:

    Can you share your thinking re:owning EXXI vs MMR? when you have time.

  62. 62
    zman Says:

    Cargo – I like owning EXXI, oilier, probably less risky than MMR. I like trading MMR options for the volatility. Both are likely to jump on news out of this well. But over time, I think EXXI has the more stable production base while you wait on the ultra deep stuff to work, so less strong cash flow and less volatility.

  63. 63
    zman Says:

    Call ended, positive tone, stock giving back 1.6%, looks like its taking a rest here, there were no surprises in the quarterly numbers as they pre announced most of the big ones. Stocks had a good run, could be time for a consolidation and there could have been some folks in it just for the news potential of today, which really didn’t add much to what was out there.

  64. 64
    zman Says:

    Choices – FYI, I tucked TAT comments into the end of the post.

  65. 65
    BirdsofpreyRcool Says:

    EXXI = oily production; core production = low risk (and did i mention oily?); nice diversification of existing fields (mostly around Lousiana; good regulatory environment); hurricane risk = largly past now; FY2011 Capex will come out of cash flow; left over cash flow will reduce debt; no need (unless asset purchase) to raise capital; Schiller having been thru a near-death experience with debt will be relatively-prudent (for a triple-C debt issuer, lol); decent hedging program; growth in core production (oily!); valuation justified by current production and outlook… withOUT any contribution from the Ultra-Deeps.

  66. 66
    zman Says:

    re 61. Yeah, what she said!

  67. 67
    zman Says:

    TS Igor just formed in the far east Atlantic, just after coming off Africa.

  68. 68
    BirdsofpreyRcool Says:

    EXXI — what i hope for = Stock to drop back to $18.50. Have some accounts who need to buy/add. But if (when) ultra-deeps prove out, this stock is a double or triple from here (over next 2 yrs). Pretty happy with that outlook. Made it possible to live through this horrible summer.

  69. 69
    zman Says:

    SSN and EXXI digesting news today, often hard to overcome the initial trajectory. No worries on either at the moment.

  70. 70
    BirdsofpreyRcool Says:

    CIGX — it’s gonna Suck to Be Short that stock too… someday soon. Looking forward to a nice Christmas Present there.

  71. 71
    zman Says:

    Anybody see a reason for this bump up in the S&P today? Beige book anticipation or just because yesterday was down?

  72. 72
    BirdsofpreyRcool Says:

    Headlines just say that stocks up b/c european debt crisis concerns down.

  73. 73
    BirdsofpreyRcool Says:

    Portugal sold some bonds overnight that were 2.6x subscribed. Also, Poland’s 5-yr bond auction went well.

  74. 74
    zman Says:

    re 72. Thanks. I guess the Portugal debt deal is it then. Sheesh, this market is like a leaf blowing in the wind.

  75. 75
    BirdsofpreyRcool Says:

    Also, US Treasuries down (yield up)… means some assets shifting out of “riskless” sectors.

  76. 76
    BirdsofpreyRcool Says:

    EXXI — Sep c22.50s… may buy them back, if they get to a nickel. Any update from MMR on BBE or DJ#2 and I could get my trading shares called away. Good conf call. No worries for me here.

  77. 77
    cargocult Says:

    Thanks for your pov’s on EXXI and SSN. Been working well so far.

  78. 78
    zman Says:

    Love the headlines:

    “Crude oil turns higher as global outlook recovers”

    I could swear I read the opposite headline yesterday from the same source. Come on guys. If you have nothing to say, just say that.

  79. 79
    elduque Says:

    I have nothing to say, nothing to say, nothing to say, etc.

  80. 80
    elduque Says:

    According to my technical work SWN is extremely cheap relative to peer group.

  81. 81
    zman Says:

    Eld – exactly. But not you, just them. I always want to hear about snow on the Big Island and such.

  82. 82
    choices Says:

    #64-TAT-thanks Z, got it-still mulling but prob will add on a down day.

  83. 83
    elduque Says:

    Z- after having spent a week in So Missouri, have you ever thought about moving over hear? This is truly a great place to live. All you need is a couple of spare bedrooms to handle the visitors.

  84. 84
    tomdavis12 Says:

    Z: The EXXI bonds are acting much better. The 10’s of ’13 are being offered @ 104.5. Bond types are less nervous.

  85. 85
    zman Says:

    Eld- too many distractions. I’d be in Hanama Bay (sp?) everyday.

  86. 86
    zman Says:

    …and then the volatility died out of the market. Back to wow-boring.

  87. 87
    andy Says:

    bop – lets not wish for EXXI @ 18.50 it’s been enuff of a roller coaster ride already!!!!

  88. 88
    BirdsofpreyRcool Says:

    andy — just keeping my eye on the long-run… can’t call the short run. But have to be mentally prepared to act (one way or the other) if a stock I buy goes down. In the case of EXXI, I would look at it as a Market Gift and add to my collection of Shiny Baubles.

  89. 89
    zman Says:

    This week’s training tip … the Cruyff Turn

  90. 90
    zman Says:

    Andy – she want’s $18.50 on EXXI again kinda like I want to see SSN for $1.20. Nice if it doesn’t attract follow on technical action and only for a short minute while I add, lol.

  91. 91
    BirdsofpreyRcool Says:

    to add to #88… there’s “short term stuff” (like ATPG) and “long term stuff” (like EXXI). When I buy short term stuff, i just want it to go up, so i can get out. When I buy long term stuff, i try to get to know it well. Sometimes, the more i get to know it (like EXXI), the more i like it. So, i actually want my long term stuff to go down occassionally… i can add to my position, as i add to my conviction.

    Just ‘splaining a little how my warped brain works.

  92. 92
    BirdsofpreyRcool Says:

    #90 — yeah… THAT’s the TICKET. A flash-crash in names i want to add too… where they don’t break the trade afterwards. Dreamin’…..

  93. 93
    zman Says:

    WLL through the Friday high, next stop, open air.

  94. 94
    1520sbroad Says:

    BOP – didn’t you have a money manager friend that was long URKA at one point. I hope they still are – lots of action in the ferts

  95. 95
    BirdsofpreyRcool Says:

    1520s — yes. He is one smart cookie. He is also the force to reckon with behind CIGX… just to put it all together.

  96. 96
    1520sbroad Says:

    #95 – nice

  97. 97
    ram Says:

    ZMAN – Does, Hal, Hal, Hal, (A few good men….), have an anchor attached via BP?

  98. 98
    zman Says:

    re 97. I don’t think so. Still thinking all the positive things that I wrote of last week are aligned for them at the moment. Another Broker (Wells) took it up today at Outperform, citing U.S. frac market giving upside potential to earnings.

    Also note that HAL has responded to the BP report by essentially telling them to pound sand.

  99. 99
    andy Says:

    CIGX – early report from sample #1(the 2 pack a day smoker for 40 years) , and theoretically the toughest one. just called me “it works ,last 24 hrs i’ve had 5 cigs and 9 tablets, only negative is i have to find something to do with my hands, they’re so used to lighting up. next 24 hra should really tell as i have 0 cigs left. i need another pack of pills”

  100. 100
    BirdsofpreyRcool Says:

    ooooo… shorts having a swing at ATPG right now. Nothing moves in a straight line.

  101. 101
    ram Says:

    BOP – There is a bond fund/ETF (asian bonds) that is a single digit price and pays monthly – 3 1/2 cents. Any insight?

  102. 102
    BirdsofpreyRcool Says:

    andy — wow. hmmmm… has he tried quitting before? I understand the “hands” thing… that is one of the reasons why it won’t work on everybody. However, if he can go from a pack a day to just a couple, that seems to be huge.

    OR… if he doesn’t want to quit, but has to get on a long plane flight (or something), would he buy CigRx just to get by for a few hrs??

  103. 103
    BirdsofpreyRcool Says:

    ram — oh dear, thanks for asking. ‘Fraid you are out of my Zone of Opinion-Giving there. But I do appreciate your asking.

  104. 104
    zman Says:

    Tom – is NE buying back stock at the rate of 5% per year?

  105. 105
    zman Says:


    SSN – Adding a few more shares for $1.33. See today’s post and comment 18 today for more details.

  106. 106
    zman Says:

    OPEC production for August was 29.15 mm bopd, down 75,000 bopd from July largely due to the pipeline bombing in Iraq last month. This is the level by the complete OPEC including Iraq which is still not subject to quotas and is the lowest level reported out of the complete OPEC since January. There is still a lot of quota cheating going on as they are producing 1.96 mm bopd over quota at present.

  107. 107
    zman Says:

    EOG – good to see that having a group performance type day. Will be happier when it breaks back above the Friday level and starts to get some spine. GS and Jefco have been out making the rounds there the last couple of weeks with no luck on supporting it relative to the group. That one is chart driven at the moment but likely to really put on a move when people feel safer about the chart.

  108. 108
    zman Says:

    Crude back over $75 on the “we don’t care about Europe any longer” move in equities.

    Gold just biding its time for another leg higher it seems.

  109. 109
    Pati Says:

    Z, may already be on here, but heard SSN presenting @ Rodman/Renshaw 9/15 @10am.

  110. 110
    zman Says:

    Thanks Pati. I haven’t put the calendar together for next week yet. They are worth a listen and have proven to be honest on the presentations relative this deal and timing of results in the minute Bakken play. Should be some well news out of them there next week. Also should give a little color on the second closing date for the Niobrara deal outlined in the post. I recommend listening to the presentation but also reading the last Q, they have their fingers in quite a few other less obvious plays that have value as well.

  111. 111
    zman Says:

    Beige Book due out in 20 minutes.

  112. 112
    tomdavis12 Says:

    Z: 104 They have in the past. Lately they did the ROC dividends instead and the purchase of Frontier. They say their cash flow will pay for Frontier in three years and they will again be net cash positive. Good leverage if some of the risks come out of this space (gov’t moratorium)

  113. 113
    zman Says:

    Tom – thanks, so no room for a special dividend before year end and no buyback for quite some time from here then?

  114. 114
    tomdavis12 Says:

    Z: I think they want to digest their deal first. I think another accretive deal would be a higher priority than buyback or ROC dividend. The rocket fuel for this space could come from the sell siders consensus of moratorium lasting 12 – 18 months. Something less could change alot of models.

  115. 115
    zman Says:

    Thanks Tom. Someone sent me an article on them which pitched them as an effective 7+% yielder with 5% coming from the buyback. Easier to go to the source (you) than chase it down myself.

  116. 116
    zman Says:

    Beige Book:


    Limited inflation
    Growing at moderate pace but slowing.

  117. 117
    tomdavis12 Says:

    Z: There was a special dividend paid in August. If you add the last 4 quarters the income paid was about $1.00/sh. Most of that was special. RIG can’t even get permission from Switz for their quarterly. That 7% yield takes a buy back of shares from last year. Nothing has been done this year.

  118. 118
    zman Says:

    Thanks Tom, sounds like someone sent me some lazy research.

  119. 119
    zman Says:

    Obama on TV talking about the economy.

  120. 120
    tomdavis12 Says:

    Z: You will NOT get 7% in your pocket from NE over the next 12 months. NOT their style.

  121. 121
    tomdavis12 Says:

    Z: 9/7 CSFB put out a report on MLP’s. (33 pages) Their recommended names are BWP 6.58% yield, ETE 5.99%, ETP 7.65% & PAA 6.11%

  122. 122
    VTZ Says:

    Gold is just consolidating pre-breakout… they are undoubtedly trying to see who they can shake out of the next move by stalling at resistance.

    As an update to my prediction of a breakout this week, I forgot it was a shortened week so we could stall just shy of the alltime high although we’ll still get another weekly close alltime high in my opinion.

  123. 123
    zman Says:

    Thanks again T. Those are midstreams so not my bag.

  124. 124
    zman Says:

    V – I don’t know about the short term but long term you have made an excellent call there.

  125. 125
    VTZ Says:

    Most of my shorter term trades involve a small portion of my long so I don’t concern myself with it too much. I just pick add points.

    The better call than the gold price call has been the equities calls like ANO, SLW and RBI. The best part is that the equities are just getting started.

  126. 126
    choices Says:

    Z, have you looked at the Alerian ETF, AMLP?

    Hard to tell what the distribution structure will look like.

  127. 127
    blackgold39 Says:

    re 78: Seconded.

    Focus on short term economy blips by inept media outlets is bound to keep crude undervalued in the intermediate term. Stupidity is going to provide some entry points for crude traders I think.

  128. 128
    zman Says:

    Choices – Only briefly, have not felt a rush.

    BG – having a better day in BP today.

  129. 129
    West Says:

    TAT, continue to add to position here. I like the idea of a place where they want you to increase gas production. Average selling price $ 7.20/mcf and 1/8th royalty. Probably one of the lowest royalty rates anywhere.

  130. 130
    zman Says:

    West – LOL. Turkey is a dream. They love to have you get gas out of their ground (vs being subject to the whim of kung fu master Putin) and show it with the royalty rate.

  131. 131
    choices Says:

    #129-thanks West

  132. 132
    zman Says:

    Drybulks doing a whole lot of nothin despite the BDI.

    Refiners doing same.

  133. 133
    BirdsofpreyRcool Says:

    West — N.MM the 3rd said that the Turkish govt was thinking about LOWERING the royalty rate, to get more drillers interested. N.MM the 3rd begged them not too. Said it was “low enough.” He doesn’t want the competition.

    Yes. If you can put up with the camels, Turkey is a very very good place to look for hydrocarbons.

  134. 134
    West Says:

    TAT….Gary Mize, Pres, bought 164,000 shares last month at average $ 3.00, so I figure anything less than that would have a good risk / reward opportunity.

  135. 135
    BirdsofpreyRcool Says:

    West — thank you for pointing that out.

  136. 136
    cargocult Says:

    BOP-Few camels in Turkey. Very old sophisticated society who consider themselves European. At one time they controlled all of N Africa, Middle East, and Europe up the the gates of Vienna.

  137. 137
    BirdsofpreyRcool Says:

    cargo — lol. Nicely put.

    I know. I just like the visual of Cowboys on Camels. It implies a slower pace… and THAT is a verity.

  138. 138
    zman Says:

    Lot of strange end of day moves on little volumes. All eyes on claims tomorrow. early beerthirty.

  139. 139
    reefguy Says:

    LEI- down 10% to $1.39 on no news

  140. 140
    BirdsofpreyRcool Says:

    This was actually a pretty good post on EXXI, over on the yahoo board. I don’t usually read that board (too polluted), but EXXI has some intelligent posters.


  141. 141
    john11 Says:

    Good demand for LINE sr notes. Upped size to $1 Bil at 7.75%.
    I can see them raising size of qtly distributtion and then following with an equity offering, late in the year.

  142. 142
    zman Says:

    Oilsands Quest on the tape saying it may not be able to carry on.

  143. 143
    zman Says:

    and GMXR on the tape cutting capex but not production guidance. Hmmm.

  144. 144
    RobBanks Says:

    z – thx for the comments on LINE.

    I won’t be around Thursday, but wanted to pass this on:

    ram (I think) asked BOP about an Asian bond CEF, single digit and paying 3.5 cents monthly.

    I’m pretty sure he’s asking about FAX, which holds Australian and SE Asian bonds. I own it in my father’s account, and it has done well.

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