10
Sep

T.G.I.F.

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Market Sentiment Watch: China showed strong import growth overnight fueling futures around the world. Today should be another slow summer Friday as we have a number of holidays coinciding and traders have a shot at another long weekend if they so choose. My sense activity begins to rise next week and in energy land we have not one but two conferences to look forward to which give a number of our most trafficked names an opportunity for a well timed operation update.  Also in energy land, a massive fire south of San Francisco due to a gas main explosion would appear to be an unfortunate accident that may get some anti-energy spin in the press and in D.C. The economic calendar is clear today aside from wholesale inventories at 10 am EST which are rarely a market mover.  

In today's post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Inventory Review
  4. Oil Inventory Review
  5. Stuff  We Care About Today – BEXP ops update
  6. Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

  • $5,200
  • 100% Cash
  • Yesterday’s Trades: None

ZIM (Zman Inefficient Markets portfolio)

  • $4,900
  • 16% Cash
  • Yesterday’s Trades: None

Commodity Watch

Crude oil fell $0.52 to close at $74.85 yesterday after the EIA reported inventories that we OK but not great in it's weekly report. This morning crude is trading up $1.40.

  • IEA Watch: The Paris based energy think tank increased its global oil demand figure for 2010 by 50,000 bopd to 86.6 mm bopd and sees 87.9 mm bopd in 2011. The group said it sees a 60,000 bopd hit to this year's Gulf of Mexico oil volumes growing to a 100,000 bopd loss next year due to the Moratorium.

Natural gas closed fell two cents $3.80 after EIA reported an injection that was in line with consensus.  This morning gas is trading up slightly.

  • Tropics Watch: Gaston remnants continue to threaten to reorganize in the Caribbean and elsewhere conditions remain ripe for speedy tropical formation.

Natural Gas Review


ZComment: Roughly two months until the end of injection season. Inventories are elevated yes, but not as badly as they were last year thanks to a hot summer. I expect gas to peak near 3,750 Bcf in late October which leads to range bound think, probably between $3.50 and $4.50 barring weather related events. A potential move higher beyond this range is likely to be several months away as shale drilling slows.


Oil Inventory Review




Crude:

Gasoline:

Distillates:


Stuff  We Care About Today

BEXP Operations Update

  • 4 more wells (included as the last 4 in the table below) including the second highest rate Ross area well they've completed to date.
  • 5 rig program (4 in Rough Rider and 1 in Ross) adds another rig, as planned in October in Ross.
  • 11 wells awaiting completion as frac crews are in high demand, access to additional capacity will let them complete 6 wells per month starting now.
  • They plan to add additional capacity in 1Q11 to bring completions to 8 per month.
  • Rough Rider Three Forks around the corner - drilling done at State 36-1 #2 ... very pleased with the cores (already mentioned that) and had shows during drilling (first I've seen of that). The well is on the frac schedule for late October / early November. Success here, and I see no reason at this point to think the well won't be successful/economic based upon nearby results of other operators will start to derisk 300 potential additional Three Forks locations in Rough Rider.
  • Rough Rider Downspacing Test In Progress. The Brad Olson 9-16 is getting 2 neighbors, the 2H and 3H. The 3H will be fracced in October and the 2H in late November.
    • This project will begin to tell the story of just how many locations we are talking about in the play.
    • Why care about that? Because BEXP currently has 555 net de-risked drilling locations across its Rough Rider, Ross, and Parshall/Austin/Sanish plays. Rough Rider's 147,000 net acres alone carries 344 of those positions but that is based on 3 wells per 2 section unit (1,280 acres). Squeeze in 2 to 3 more wells per unit in the Bakken, before you even get to the Three Forks and talking tremendous, and as of yet, unattributed value. This leads to better drilling economics (lower costs) and more stable cash flows as the play matures.
  • I continue to own the common in the ZLT. I may add a position in the ZCAT closer to well results in the Three Forks in Rough Rider.

BEXP's Long Lateral Wells to Date in Ross and Rough Rider

Odds & Ends

Analyst Watch:

  • OAS - Wells Fargo initiates with an Outperform rating

104 Responses to “T.G.I.F.”

  1. 1
    zman Says:

    test

  2. 2
    zman Says:

    We will be doing some testing over the weekend of the new software version, please ignore the post and comments before the wrap. Thanks.

  3. 3
    BirdsofpreyRcool Says:

    TED Spread down to +15.2bps this morning.  The credti market has literally been on fire.  Issuance has been massive massive massive for this time of year… with no signs of Buyer's Fatigue in sight.  Deals are getting done.  Even the Much Dreaded Asset-Backed Bonds.  Bwaaa-ha-ha-ha.  That was the Scary Stuff (mortgage-backed securities) that blew up the market in 2008… so, pretty significant that it's back.  Not in the same form, of course (sans the toxic Sub-Prime Sh*t)… but back, nonetheless.
     
    This is why I felt it was a "good bet" to take a short-term position in ATPG.  In this environment, they will get their Titan platform monetization done and bring in a slug of money.  Management is willing to borrow against every asset the company has, in order to keep all the upside they expect from exploration/development in 2011.  ATPG's EBITDA is expected to double in 2011.  That would be a Big-Wowsters, in my book.  Anyway, don't just take my word for it…
     
    Comments from XACS#1 this morning —  http://www.capmarkets.com/ViewFile.asp?ID1=144257&ID2=438429145&ssid=1&directory=6571&bm=0&filename=09.10.10_We_Felt_Alone.pdf

  4. 4
    elduque Says:

    BDI basically unchanged, up just a little.

  5. 5
    zman Says:

    ATPG – next week or two should see announcement of a significant additional development well being placed on line, not news but positive and goes to the fact that things are not at a complete standstill in the Gulf. Of course, if you listened to Shiller, it's much easier to get his kind of drilling done than it is for the deepwater crowd at the moment.

  6. 6
    skimo Says:

    Z, in your first chart under Natural gas is it possible to include ng consumption for each of the periods or averages of periods to provide perspective? 

  7. 7
    zman Says:

    Ski – I can do it on a monthly, not weekly basis, with the most recent data being June. The best way to look at that is vs the supply data, thinking along the lines of the equation (P + I) – D = S.  Production + Imports – Demand  = Storage. It doesn't quite work out that due to modeling error (especially on the demand side), gas effectively stored in pipelines, etc which leads EIA to post a "balancing" each month that is quite large. But yes, I'll see about working something up that gives you a flavor for, albeit on a lagged basis, what's going on with consumption.  I do every so often include the broken out by sector demand data, but I get the sense that you'd like to see demand over a time frame or on a seasonal chart like these so you can gauge storage during the recent time frame vs demand, is that right?

  8. 8
    zman Says:

    BOP – Your boys at Madison appear to be out with a number of E&P initiations today.

  9. 9
    BirdsofpreyRcool Says:

    z — yep.  New analyst and his team initiated on a number of our names.  Put a "buy" and a $26 PT on EXXI.  Concedes that EXXI could drop back to moving averages of $18.90 or $17.50-ish and that they would be aggressive buyers, if that happens (as would I).

  10. 10
    elijahwc Says:

     
     
    Here are  the rest of the names as noted on breifing:
    Madison Williams initiates coverage of the U.S Exploration and Production industry

     
    Madison Williams initiates coverage of the U.S Exploration and Production industry saying bigger exploration and production companies with access to capital and services seem the best positioned to quickly transform portfolios from gas to more liquids-rich ones. Thus, they do not see now as the time to buy smaller "beta" names. Firm says smaller companies may still be attractive takeout candidates, but if asset buyers aren't paying a lot for unbooked potential, companies wishing to sell need to generate positive operational mojo in order to facilitate their exit plans. The firm initiates Cimarex Energy (XEC) tgt $84, Petrohawk Energy (HK) tgt $20, PetroQuest Energy (PQ) tgt $8.50, Continental Resources (CLR) tgt $54, and Energy XXI (EXXI) tgt $26 with Buys. They also initiate Brigham Exploration (BEXP) tgt $20, GeoResources (GEOI) tgt $17, Oasis Petroleum (OAS) tgt $19, QEP Resources (QEP) tgt $38, and Ultra Petroleum (UPL) tgt $49 with Neutrals.

  11. 11
    skimo Says:

    Z,  "is that right" is the question I'm raising. Thanks for the explanation. I know that all of the numbers shown are estimates and not necessarily precise and a weekly number would be overkill, but I am looking for directional flavor and perspective rather than debits equal credits. I appreciate and value your efforts in educating the board. 

  12. 12
    blackgold39 Says:

    CHK coming across the wire for a while with some deep vertical monsters in Washita county, OK

  13. 13
    zman Says:

    Ski – Let me noodle on how to present it. I used to show a supply-demand "wave chart" like the one in the graph E but it was too hard to really make out. Perhaps a high-low-avg-recent like chart A, inserted as chart B will be better looking. Thanks for the prompting question. I really like those. 

  14. 14
    zman Says:

    BG39. Can you elaborate? That's east of where I think about wash wells, assuming you are talking a wash play. 

  15. 15
    zman Says:

    Oh, right, Colony Granite Wash.

  16. 16
    zman Says:

    LINE has a bunch of acreage in Washita and Caddo counties, not thinking they have a well there yet, they're playing in Stiles Ranch over in Wheeler Cnty, TX.

  17. 17
    zman Says:

    BP Spill Watch:

    BP has delayed their 3Q, no reason given

    HAL, CAM, and RIG moving higher. Spoke with an E&P analyst yesterday who has been talking to the boys at CERA who say the cement job is at fault in the well. My fist thought is that that is pretty obvious, but it doesn't mean HAL, who is not responsible for testing it's own cement job, is at fault.

  18. 18
    elduque Says:

    Where did you see the info on CHK?

  19. 19
    zman Says:

    SSN flushing out a few more sellers but volumes are pretty low at this point, thinking it may be about cleaned up on the downside. They should have some Bakken well comments next week and then the closing of the rest of the Niobrara acreage the week after that. We should finally learn who the buyer is which may or may not be important to the story here.

  20. 20
    zman Says:

    I think he is speaking of the Kliewer well here:

    http://www.newsok.com/oil-and-gas-friday-september-3-2010/article/3491365?custom_click=pod_headline_oil-gas-activity

    5 mm/d + 300 bopd.  Mongo rate for a vertical, wonder how many stacked pays it hit.

  21. 21
    elduque Says:

    Re KOG- is there any catalysts for the stock, or should we expect 2.75 to hold it for the time being?

    Thank you for taking the time to answer all my questions.

  22. 22
    zman Says:

    Thanks BG – those are some nice wells, checking to see exactly where abouts they are in the county, LINE acreage is sparce through the middle of the county but has a nice concentrated wedge of acreage on the northwest corner. Those are pretty deep wells.

  23. 23
    zman Says:

    Eld – no trouble at all. Could be sooner but I think we get results from wells 14 and 15 on the 3Q call, so maybe Nov 1 to 15.   Before that I don't see much unless they do something unexpected.

  24. 24
    tomdavis12 Says:

    BOP: If you agree with your XACS#1, are you starting to think some of the near term surprises in the market will be to the upside. The amount of liquidity being added to corporate balance sheets lately is quite remarkable.

  25. 25
    bill Says:

    Every barrel that non-OPEC is unable to produce will then become an OPEC barrel – which is most often long haul in nature, thereby good for tankers.
    Omar the Aggie:

    "Despite risks highlighted in last month's oil market report, the IEA has maintained its oil demand growth forecast for 2011 at 1.3 mb/d. Non-OPEC supply growth is expected to remain up to 1 mb/d short of the forecast, still implying an increased call on OPEC for next year."
     
    tonmiletrader.com

  26. 26
    zman Says:

    Tom – Agree re balance sheets. More cash on the 2Q S&P 500 balance sheet than in history. Period. E&Ps and Majors balance sheets are in much better shape than the last time gas prices and oil prices were depressed. I smell M&A in the Fall.

  27. 27
    BirdsofpreyRcool Says:

    tomdavis #24 — exactly!

  28. 28
    BirdsofpreyRcool Says:

    To use the Dog Analogy… the Head of the Dog (US Treasuries) is being as nice as it could possibly be.  Thinking Happy Thoughts and singing "All right, now, Baby it's all right now."  The body of the dog is growing fat and happy and rolly-poly with all this low-cost corporate debt.  However, it's not "bad" fat, as the assets behind the issuance are (for the most part) solid.  Think of it more as "stored energy" than saturated trans-fats.  The Dog is rarin' to go play.  The Tail… it isn't so sure.  It's watching the Master's Body Language (Govt Policy) and feeling confused and abused.  Nothing to get all "waggy" about.
     
    However, if the Master changes his tune (or has his tune changed for him), the Dog will feel empowered to Hit The Dog Park with a fury.  And the tail will go along for the ride, wagging furiously.
     
    So, that is where we are right now.  Loading up and storing energy… waiting for the Go Play! signal.

  29. 29
    zman Says:

    SSN green. First time since the closing of the deal announcement. I think long term there but I do watch the action in the near term as well because of the potential for flippers from the rights offering and the BTRSTN effect can break any chart. In this case, so far so good and the selling was light and didn't do any technical damage in my humble opinion.

    EOG stilling acting like it wants to shape up. They should have good presentations next week.

     

  30. 30
    zman Says:

    You really should teach a course in economics with all dog analogies. Or write a book on it. I'd buy one.

  31. 31
    BirdsofpreyRcool Says:

    ha!  right.  Except the chapters on 2007-2008 would gross people out… 😉

  32. 32
    cargocult Says:

    I love it when you talk "doggy".

  33. 33
    zman Says:

    WLL – Should be 3 wells announced in Lewis & Clark by end of September, may be sooner as in next week at presentations but that may be cutting it too close. This is TFS territory as the m Bakken is pinched out here. Just reviewed the 2Q transcript and noted that on the call they had said they'd be upping the acreage count before year end and they have already added some.  The first long lateral has done 330 bopd for 6 months with a nice, already flattening tail.  The addition of 3 more strong wells, having added acreage to the play and another rig soon will likely provide a good impetus for the next leg up which would be a run on $100.

  34. 34
    zman Says:

    Stocks certainly don't feel like oil is up $2 and natural gas is up $0.14.

    Dear Wells Fargo – please don't bother covering my stocks.

  35. 35
    pwdrhound Says:

    Trying to figure out what to do on WLT.  I have some Sep $75 calls that I should have dumped last week. Wondering if it will get a continued bump into next week.  Or if I should cut my losses and close out today.

  36. 36
    BirdsofpreyRcool Says:

    cargo — wuff wuff!  🙂
     
    Just to add… the tail (equities) won't wait until the Dog is let off his leash to run freely.  It will sense any small change in the Master's face and demeanor and start to twitch.  As the atmosphere becomes a little more clear, it will start to pick up a bit more.  So, you don't have to get all the way to the Dog Park for the tail to start wagging.  It will start before that, on any hint that there is a "Good Doggy" about to come from the Master.

  37. 37
    zman Says:

    Because it's Friday Watch: I'm the guy in the white shirt on the far side just above Billy. If he comes to your town, go see him, he still sounds great:

  38. 38
    zman Says:

    Pwdrhound – I plan on coming out of my $80s early next week.  I'm still getting to the options trading here, volatility is a monster on it, so it obviously pays to be quick. These days you have no idea if China is going to say good or bad things while you sleep. So no idea what it does next week. So far, I much prefer just owning the common.

  39. 39
    zman Says:

    RMD – please check your email.

  40. 40
    zman Says:

    NBL continuing to breakout. JB, any thoughts on chasing it here. I very much like the story, feeling like I missed the easy near term trade, looking for a pullback.

  41. 41
    BirdsofpreyRcool Says:

    POTUS on TV, talking about the economy.  Let me know, if anyone "feels better" after watching his body language and hearing his tone and listening to what he has to say.  He is our current Cesar Millan.

  42. 42
    zman Says:

    BOP – thanks for the heads up, was just looking for a reason by the S&P lost momentum, lol.

  43. 43
    tomdavis12 Says:

    Z: Re strength in RIG today. I did talk to my NE contact today. I have nothing absolute. RIG is clearly undervalued but the total question there is a legal one. I have no contacts there. If the street starts to believe their liability is insignificant, you can see more days like today. I will be trying to attend the Barclays energy conference next week in NYC. May find some nuggets. There have been 7 tenders from CHV in Thailand recently. Pemex wants to increase crude production. Dayrates are only stabile and utilization is mixed.     

  44. 44
    zman Says:

    Thanks Tom. Saw Pemex talking about adding JU's but also saw they are underfunded by I think it was 30% by their Congress to what they asked for in FY11.

  45. 45
    zman Says:

    And keep us posted if you make it to the conference. I will be listening to a lot of calls next week.

  46. 46
    tomdavis12 Says:

    Z: Pemex is like us, what they say and what they do can be be totally different. Don't have a good dog analogy.

  47. 47
    zman Says:

    Did the POTUS say much about future plans on the economy, tuned in late and he was already fielding questions about the Mosque and a Palestinian State and Mid-East peace.

     

    JB – also noting that WHX fell after the last distribution back to the 200 day and seems to be bouncing off of it and is back above the 50 day.

  48. 48
    zman Says:

    HAL walking nicely higher.

  49. 49
    elduque Says:

    FBR has a report out on potential liabilities of both RIG and APC. I don't have it.
     

  50. 50
    zman Says:

    Eld – I have a couple of summation paragraphs from them. It says that the legal liability is likely to be far less than the $6 to $7 B discounted in the stock of RIG, but that the issues involved are complex (no duh). FBR also makes the point that BP doesn't have much of a financial incentive to go after RIG as RIG could "hand over the keys" and it wouldn't make much of a dent in BP's liability.

  51. 51
    zman Says:

    Bipartisan cooperation is not the same thing as people agreeing with you.

  52. 52
    zman Says:

    Still listening to the POTUS but for a presentation on the economy they seem to be asking about everything but the economy.

     

    And before I only thought they were smoking dope, had no idea they were actually smoking dope:

    http://blogs.wsj.com/washwire/2010/09/08/boxer-staffer-quits-after-pot-arrest-at-senate-building/

  53. 53
    zman Says:

    President has stopped talking. Market free to bounce now.

  54. 54
    BirdsofpreyRcool Says:

    Can't say the President's third-ever press conference inspired a lot of confidence.  When he says things like "**I** will turn around the economy"… it's just a little tough to believe him.

  55. 55
    zman Says:

    Interesting, better than group move in EOG, by no means out of woods but it feels like a change in trend in the offing.

  56. 56
    tomdavis12 Says:

    Z; FBR Capital analyst Robt Mackenzie said today that he thinks RIG and BP would settle for 1 – 2 B instead of the 6B that is expected.

  57. 57
    BirdsofpreyRcool Says:

    tomdavis — any reason CAM is so perky today?  Is it b/c BP didn't target them in their internal report?

  58. 58
    tomdavis12 Says:

    57: My dog ate my homework. Haven't seen anything.

  59. 59
    BirdsofpreyRcool Says:

    Well… i've got CAM in a long-term buy-and-hold account… so, works for me.
     
    thanks!

  60. 60
    skimo Says:

    PWE seems to be taking yesterday's divvie reduction and conversion in stride-up yesterday and today.

  61. 61
    tomdavis12 Says:

    BOP: If the raising of the BOP from the floor saw that the deadman switch was the problem, then maybe if ALL BOP's out there have to be refurbished then CAM could go to the moon.

  62. 62
    BirdsofpreyRcool Says:

    tomdavis — yes.  That was part of the original investment thesis.  I bought CAM too early.  But I bought it with increased sales in mind.
     
    Haven't seen any Susquehanna comments/updates on EXXI yet… but see that Duane reiterated his "positive" with a $35PT y'day. 

  63. 63
    BirdsofpreyRcool Says:

    HeadTrader called today's rally.  He thinks Monday we see a sell-off.  Unless some fundamental news gets in the way… like M&A Monday.
     
    Wonder what tomorrow (9/11) will bring…?

  64. 64
    zman Says:

    Was on phone, Yes on your supposition re CAM.

    4 dead, 15 acres burned near San Fran. Where's the boot on the neck of PG&E? Shouldn't we declare a moratorium on piped gas? Apologies for the rant.

  65. 65
    zman Says:

    EOG now up $2+ on decent volume for this time of day.

  66. 66
    tomdavis12 Says:

    Z: Got many emails that tomorrow EVERYONE should fly the flag somewhere.

  67. 67
    BirdsofpreyRcool Says:

    tomdavis — that is a great idea.  Whatever her flaws (and there are many, I agree), I am still proud to be an American. 
     
    A little old fashioned dose of American Self Esteem is healthy.

  68. 68
    Jerome Blank Says:

    #40 NBL..has had a great run higher, but noticed that vol seems to be dropping off at new highs, the probability appears to be increasing for a pullback, especially if the broad mkt pulls back…posted a 30 min chart, thinking that a pullback near $74.50 would be the spot to try a long…
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280
      

  69. 69
    zman Says:

    Thanks much JB, good stuff, will go vote. Would you put WLL in the same category. It has a catalyst for a move higher at month end but it seems to bounce off those tops to the downside.

  70. 70
    tomdavis12 Says:

    Z: 55 Good call on EOG.

  71. 71
    milepost_43 Says:

    PA Marcellus Shale Production
    Beginning August 1, 2010 all Marcellus Shale Well and Waste Production Reports
    can be entered online and must be completed by August 15, 2010. This report must
    be for the 12 month period of July 1, 2009 thru June 30, 2010. Thereafter, reporting
    for Marcellus Shale well production must be done every six months.
    Operators should register for the new Online Reporting System at:
    http://www.marcellusreporting.state.pa.us
    On November 1, 2010, all production information reported to DEP will be publicly
    available online.
    http://www.dep.state.pa.us/dep/deputate/minres/oilgas/OGRE_Production/ogreproduction.htm

  72. 72
    zman Says:

    re 70 – Not yet, but thanks. I've been long and wrong there of late. Don't care about that on the smallish initial stock position but on the options it is no bueno.

  73. 73
    choices Says:

    #66,#67-100% agree-love the flag and the principles upon which this country was founded, it is just the guberment and the political system that is ___ up.  As Churchill said, Americans usually find the right solution but only after they have tried everything else.

  74. 74
    BirdsofpreyRcool Says:

    choices — that Churchill guy was one funny (clever) dude! 

  75. 75
    Jerome Blank Says:

    #69, Zman, thank you much for the vote..added a WLL 30 min, looking a bit heavy intraday with the forming descending triangle, with first support at $90-$90.50, if the 100 period SMA breaks, I could see a break to daily support at $88.50, but on the daily this would be yet another higher low, probably a very good spot for a long try if WLL actually trades there, the intraday pattern is negated with a break back above $92…
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280
     

  76. 76
    1520sbroad Says:

    #60 – PWE – I think merely the clarity from PWE and their go forward plan has brought some money back to the name.  I think they are basically off the avoid list now.

  77. 77
    1520sbroad Says:

    Volume is pretty terrible on a market wide basis. 

  78. 78
    zman Says:

    Barclays on the tape saying to buy EOG before their conference begins next week, so blame them for the pop. They are saying EOG needs to convince investors that Eagle Ford volumes have been in line and not sub par to get the stock moving higher. Jefco said the same thing about 2 weeks ago and themselves said the results of EFS tests were misunderstood by the Street and were in fact better than the Street thought they were. Barclays says 50% move higher in the stock is warranted by historic multiple of the 2012 bottom line numbers.

  79. 79
    zman Says:

    Barclays also says to buy QEP and avoid RRC, SWN, UPL. So they are aiming the hate rays at the gassiest of the gassy.

  80. 80
    elijahwc Says:

    CQP:  Potential game changer down the line.
    document.write(makeLinkSmaller(‘http://online.wsj.com/article/SB10001424052748704644404575482231234593238.html’));  http://online.wsj.com/article/SB10001424052748704644404575482231234593238.html
    p.s. TRGL continues it's tour de force breakout.  HES and TRGL now seen quite often holding hands and cooing softly in Paris.  
    It's a slow day.

  81. 81
    elijahwc Says:

    document.write(makeLinkSmaller(‘http://online.wsj.com/article/SB10001424052748704644404575482231234593238.html’));  http://online.wsj.com/article/SB10001424052748704644404575482231234593238.html

  82. 82
    elijahwc Says:

    http://online.wsj.com/article/SB10001424052748704644404575482231234593238.html
    Hope this worked the third time……sorry

  83. 83
    zman Says:

    Eli – re 81, oh the uproar there will be.

  84. 84
    zman Says:

    Rig Count Watch:

    Oil down 2, NG up 3, Horizontals up 8. Go HAL Go.

  85. 85
    zman Says:

    Thanks for the links Eli.

  86. 86
    BirdsofpreyRcool Says:

    ATPG — hearing it's down b/c POTUS did not talk about lifting the DeepWater GoM moratorium early.  But that is more of a psychological impact on ATPG at this point, than a physical one. 

  87. 87
    zman Says:

    Can't see that ATPG is going to either energy conference next week, you? They used to be covered by Barclays, last rating I see is underperform. 

  88. 88
    PackMan Says:

    Hey all; been a bit absent here but have been checking in.
    BOP – credit – I think the guy may have it wrong b/c the credit strength is not due to fundamentals, rather simply a flight to bonds and avoidance of equities.  This is not a normal environment or cycle.  That said; we'll see …
    BOP – I could not agree more about BHO's culture of "I"
     
    9/11 … the History channel had a couple of excellent programs on last night; maybe they repeat them tonight…. one was about the head of security for Morgan Stanley at WTC who died getting his people out; and the other about what went on at the Gov't, FAA, etc.  Lots of interviews w/ Card, Rummy, Condi, FAA folks; also some widows of Flight 93 people and a couple of people who had miraculously gotten out; one guy got stuck in an elevator on the floor where the 2nd plane hit and somehow made it out alive; another group of firefighters got caught in the stairwell of the 2nd tower to fall and just b/c of where they happened to be did not get crushed by the falling building.  Amazing stuff if you can catch a replay.

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    zman Says:

    LINE = inch by inch, $1 off highs now.

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    elduque Says:

    SD slowly moving back up. Can't help but think that they have to be one of the better take out candidates.
     
     
     

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    zman Says:

    There is speculation out there to that effect, nice call to Eli, buying on the lows last week.

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    BirdsofpreyRcool Says:

    PackMan — welcome back!  You were missed.  Thanks for the reminder(s) about what happened on 9/11.  I forgot about the MS security guy and those firefighters.  It was such a bleak, black, dismal hole in the National Psyche.  It's tough to recall parts of it now.  Not sure I can watch it again… yet.  Very tough memories and losses.
     
    With respect to the credit cycle… that is how it always works.  At the start of a downturn (or panic, or near collapse of the financial universe, like we had this last time), everyone runs to cash or govt bonds.  When the smoke starts clearing — and people are willing to take some form of risk, to get a return (b/c treasuries yields are so low) — they buy high-grade corporate bonds.  When the yield gets driven down on the high-grades and investors feel a bit better, the junk bond mrkt takes off.  That is where we are right now.  With junk issuance comes M&A and stock buy-backs and (ultimately) capex investment.  That, combined with yields that are driven down, will drive investors into equities.  The more equities head up, the more money gets sucked in there.  Until the "equity premium" is driven down too low.  At that point, companies SHOULD issue stock to pay down debt… because the whole cycle is fixin' to get going again.
     
    That is how the "business cycle" works.  It's really more of a credit cycle… but 99% of economists don't teach it that way.  You have to watch the bond market… if you don't, it's like trying solve a 1,000 piece puzzle, using only 95 pieces.  You just can't see the Big Picture well enough.

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    BirdsofpreyRcool Says:

    woooo-hoooo!  It's a Sucks to Be Long ATPG Day.  But, even (short) dogs have their day.  When BHO did not appear to be inclined to lift the drilling moratorium early, the shorts decided to go sit on ATPG's head.  In a low volume market, the side with conviction wins.  Today, The Shorts.  By the end of this month, I'm betting the Longs will be the ones doing the Happy Dance.

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    RMD Says:

    I'm hearing Keybank has sniffed out the AREX story:  basically the potential that the Wolfberry extends down into their acrage in Crockett Cty, which would provide some sizzle on a meatloaf kind of story.

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    zman Says:

    Thanks RMD, that one has fallen completely off the radar.

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    RMD Says:

    not for me; yippee yippee kind-of-day.  Sorry you not there.

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    BirdsofpreyRcool Says:

    RMD — ok… 'fess up… list your winners today.  I wanna know what i'm missing!

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    BirdsofpreyRcool Says:

    HeadTrader sticking to his "mrkt opens down on Monday"… but he adds that if it goes down enough (whatever that means), then he would swoop in and buy.

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    zman Says:

    beerthirty, have a fun, safe one.

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    PackMan Says:

    BOP – thanks.  I agree w/ your analysis historically; but not so sure this time.  And there is no doubt that even w/ the market going up, investors are fleeing equities.  So in that environment, I don't see how issuance helps b/c its competition for very scarce capital.  Who wants to buy IPOs or secondaries ?  And if they do, it means others are getting crowded out. 
     
    It will be interesting to see how this all shakes out.
     
    Have a good weekend everyone.

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    RMD Says:

    took the bet that  AREX was boring but getting better.  Every time I say "the price is right but the time is wrong", I find I should be a buyer.
    Think this dog is going to hunt.

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    elijahwc Says:

    Sofie hunt?
    A second helping of cheese grits please…….maybe…..lets see, Sofie go fetch another Mint Julip? 
    Yup, that one hunts.

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    mimster90 Says:

    zman, If you have time in the next few weeks can you please share any thoughts you have on ATLS. I have a bunch by way of owning ATN [for the divvy which has gone bye-bye] which was rolled into ATLS. They have since then announced a ~1.3 bilion JV with Reliance and say they will buy back $100 million dollars of stock ~%5. I now wish I bought more LINE instead, oh well.

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    RMD Says:

    Eli, touche.

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