21
Sep

Tuesday Morning

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Market Sentiment Watch:  Shell-shocked. Natural buyers seem rather scant in this market. Here's to wondering if people are afraid to chase this one higher given the lack of enthusiastic economic data and prospect of another cost cut driven (not revenue / demand driven) quarter. Oh yes, and it's September and moving into October, not exactly the most stable/cheery months of the market year. So it's natural that we see a little trepidation as the S&P breaks out of a  four month long slumber of a trading range.  The S&P is up 2% year to date and so far this year, all rallies into greensville have been met with returns to red in short order. The  widely watched XLE energy ETF is still down 4%  year to date while the XNG, XOI and OIH are down 6, 7, and 10% respectively.  So again, not surprising we are seeing a little bit of higher level on lower volume action, with everyone keeping at least one eye on the exits.

Which leads me to this.  They (people I read in the financial press) tell me it's a stock picker's market. I say, "when is it not?" The ZLT is at its all time high (see table below on the individual positions) and I plan to update performance on the two portfolios shown earlier this month at the end of each month from now on.  I continue to plunk away, day in and day out, seeking new stories and trying to better understand existing ones. So I want to thank you all, especially those who comment and those who email in your ideas and those of you who constantly challenge me on mine.  Two years of not only beating but absolutely trouncing the averages was not done alone. I would likely never have given EXXI or KOG a third or fourth look, TAT would have been of passing interest and someone whose name I can't remember to give credit to, pointed out no longer so tiny SSN to me, a name I did for a very short term "I'm-not-going-to-fall-in-love-with-it" trade, but got to know better and remain overweight in to this day. So again, you have my thanks.

Ecodata Watch:

  • August Housing Starts came in at 598,000 vs 535,000 expected and a previous 546,000.
  • FOMC meeting - no action expected but a new, cleverly worded statement should be available around 2:15 EST.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stuff We Care About Today – KOG
  4. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):
    • $5,200
    • 100% Cash
    • Yesterday’s Trades:
      • None - soon, just waiting on Catalysts to matter for more than an instant in this herd-line, all-or-none market.
  • ZIM (Zman Inefficient Markets portfolio)
    • $3,000
    • 25% Cash
    • Yesterday’s Trades:
      • MMR – Added (25) of the $16 October Calls for $0.62 on the mid with the stock in the $14.60s, to start. See site for news on MMR’s upped interest in the ultra deep and deep Shelf plays today  (see comments in Stuff section).

 

  • ZLT (Zman Long Term portfolio)

 

I'll be making one change here today. Planning to sell SWN and add to my TAT position which may have more near term upside potential due to an exploratory catalyst. SWN is good company but it is all U.S. natural gas, mostly unhedged, and is likely to see downward revisions in spending in the next few months as gas prices are unlikely to rally much in this time frame. Good story, just not for me, not now. I will return to them no doubt in the future but for now I plan to take the small but long term capital loss on name.

TAT on the other hand has been a slow starter in the portfolio but things appear to be possibly about to click. Aside from the Big Picture stuff here (Turkey is a great place to operate with a good royalty regime and strong gas prices and they have a large acreage position to take advantage of it) TAT is about to have results on their first big exploratory project, the Kaletepe-1 well, on Block 4175.  This is exploration so there are no guarantees but they are hunting a large anticline consistent with big productive fields across the border in both Syria and Iraq. We should know more around the end of September. 

Commodity Watch

Crude oil rallied $1.20  to close at $74.86 yesterday on the back of a surging equity market and a slumping dollar. This morning crude is trading off about a buck.

  • OPEC Watch: According to Bloomberg, the cartel plans to cut shipments by 1.2% this month due to a slower than expected global economy and the refining maintenance season in the U.S. and Europe.  This actually came out yesterday and may have been responsible for some of yesterday's strength in crude as well.
  • Early Read On Inventories:
    • Crude:  DOWN 1.6 mm barrels
    • Gasoline: DOWN 0.25 mm barrels
    • Distillates: UP 0.25 mm barrels

Natural gas tumbled $0.20 or 5% to close at $3.82 yesterday. I continue to see gas as range bound in the near term, fluctuating with the changing tropical forecasts. This week's storage number should show a lower injection, something closer to but above the historic average of 65 Bcf as we don't have a holiday to contend with and we do have increased cooling load. The early read from the Street is 79 Bcf.  This morning gas is trading up slightly.

  • Gas and Water Don't Mix Watch: CHK has been ordered to inspect 171 Marcellus wells after methane was found in well water. CHK says the inspection will take 60 days.

Stuff We Care About Today

KOG Williston Basin Update

  • 5 wells awaiting completion
  • Their 14th well, MC #13-34-28-1H well,  IP'd at 1,906 BOEpd and has produced 1,008 BOEpd average in its first 19 days. Not gangbuster for a long lateral but definitely strong. This is an offset well to a 2008 well  that IP'd at 2,055 BOEpd so these appear to be solid results for a denser spacing pilot. 
  • Sounds like wells #15 and #16 will be completed by the end of September and mid October respectively
  • The other 3 wells are part of a 4 well pad which will be completed once the 4th well there, currently drilling, is at TD.  One of those wells is a Three Forks test. Expect completion by year end.
  • Nutshell: Decent update, nothing jumps off the page from it but they are executing and we have not seen further frac crew availability induced delays in their completion schedule.

SSN Niorara Deal Closing #2

  • No word yet. Should hear something today.

Other Stuff

  • EGY - insider buying showing up

Odds & Ends

Analyst Watch:

  • JP Morgan initiates on Oil Service:
    • NOV, CAM as Top Picks
    • DRC, DRQ with Overweight
    • FTI , EXH at Neutral
  • CRK upped to Buy at Ladenburg
  • NBR - Goldman adds to Conviction Buy List

123 Responses to “Tuesday Morning”

  1. 1
    zman Says:

    Analyst Watch:

    PXP – target upped 3 to 44, rating Outperform at RBC

  2. 2
    zman Says:

    Front and Center Watch:

    MMR – for its ability to follow through on yesterday's move

    TAT – looking to enter more shares as outlined above

    KOG – for a move off of today's news

    SSN – for news of the second closing

  3. 3
    BirdsofpreyRcool Says:

    West — you are one of the Treasures on this board… so pleased to hear I can make you smile, once in a while.  And very happy you are in CIGX.  I know people must think i'm over-the-hedge on this one… but, at one point, aspirin seemed "too good to be true" too.
     
    TED is beginning to scare me… he is getting too complacent… clocking in at12.9 bps this morning.  If/when he gets sub-10, i get nervous jitters.
     
    Thx for the KOG summary, z.  Lynn and the Boys are just plugging (and perfing) awaying there, it seems.  Slow and steady… and sitting on a newly-minted pile o'cash… so, just let that antelope graze away.
     
    Mmmmmmmmmmm…. other than that, some other stuff… but it ain't energy this morning.  So, enjoying the slow news day… will go back and get the JimBob Geology 101 Lesson this morning.  Love that stuff.

  4. 4
    zman Says:

    Morning BOP – did you see the WLL senior deal last night? Any thoughts on those?
     

  5. 5
    BirdsofpreyRcool Says:

    WLL debt is just a little too classy for a bottom-feeder like me… rated B1/BB, current issue is trading around 5.25%.  But — for once — these bonds will be issued under a current shelf registration… so "normal people" can buy them.  It won't be a "benchmark bond" (with mandatory inclusion in the HY Index), but the fact that is it nicely-rated and public, makes up for that.  Would guess the bond comes with a 7-handle… but that is just a guess.  It's going to repay senior bank debt, so interest expense may tick up a bit… but leaves availablity for WLL to fling around cash, if something good comes up.  So, overall this is great for stockholders, methinks.

  6. 6
    john11 Says:

    Huge size offer on KOG at 3

  7. 7
    zman Says:

    Re 5. Thanks much, I'd consider 7% from them a good bet.

    WLT – off early as a Chinese official mentioned the words "housing" and "bubble" in the same sentence.

    WHX – interesting to see it ticking towards $21 on softish oil and a flat market.

    SSN opening slightly higher despite a lack of news on the deal – thank Cramerica for this last little pop or at least the street.com

     

  8. 8
    zman Says:

    Market probably going to be boring until Fed, maybe during and after Fed too. Not a whole lot of news to sink ones teeth into today. No happy pop off the housing data, but maybe they just need time to regroup. Market still looks thin.

  9. 9
    zman Says:

    I would just as soon not have Cramer or the Street.com know of the existence of SSN. Wrong kind of money.

  10. 10
    BirdsofpreyRcool Says:

    Actually, it's good for the mrkt to be down, before the Fed.  Typically means it ends higher.  Up before Fed means ending lower.  So, good day to chew around the edge of a few things, with an eye toward higher close. 

  11. 11
    BirdsofpreyRcool Says:

    KOG = doing it's typical "sell the operations update" dance.  Nothing unusual about that.  Those guys will never light your tail on fire with one of their PRs.  Just ain't in their Playbook.

  12. 12
    BirdsofpreyRcool Says:

    Man… you just can't spell H-A-T-E without EOG.  sheesh.

  13. 13
    zman Says:

    ZTRADE – ZLT – TAT

    TAT – Added more shares for $3.02, see today's post for reasoning, but in short, they should have potentially catalytic news coming in the next few weeks.

  14. 14
    andy Says:

    z    – i notice there is a widening diff between wti crude and brent crude. could u give me possible reasons, and will imported oil be diverted to the higher price d oil in the future??

  15. 15
    zman Says:

    BOP – true, re 10.

    KOG – I think they should do a better job of telling people why the offset well is important. They left it to the reader to intrepret a short lateral with a bigger IP and a long lateral drilled nearby with a lower IP. Not a great move on their part. Why bring it up if you aren't going to better explain it? Also, hammer home the current total company rate and the expected exit rate again.

  16. 16
    BirdsofpreyRcool Says:

     I know this isn't a popular statement… but i'm really hoping for a mrkt pullback… to add to some stuff. 

  17. 17
    blackgold39 Says:

    Z – to what do you attribute the meteoric rise of PXP above its peer group?  I know it hasn't beaten everyone, but they must be doing something(s) right….

  18. 18
    blackgold39 Says:

    Whoops, meant PXD

  19. 19
    bill Says:

    PXP traded a direct interest in wells to an indirect interest,ie (23 % of MMR)
    So it stands to reason that whats good for MMR is good for PXP no ?
    The benefits going forward,
    No additional cash cap ex reqt..They have enough unhedged gas coming from their 20 % CHK Haynesville holdings
    Secondly, any liability from gom spills in any of those deep wells they were participating in
    With MMr up almost 10 % yesterday, it makes no sense for PXP to trade lower, imho.
    The stated consideration of  818 m went up 51 m to 869 m since MMR moved up yesterday
    I accept the really good news was the statement of confidence that mmr is doing by doubling down in those assets and getting the financing in place..

  20. 20
    zman Says:

    Re 17/18. I was just about to give you the name of my optometrist. PXD makes more sense. Spraberry/Wolfberry success, Eagle Ford success and the fact that it was at what seemed like a permanent discount to the group and had that going for it as well. They went to 0 rigs last year and then ramped quickly this year with oil prices so that got noticed too, a willingness to not outspend cash flow. I also hear Tunisia could be interesting.

     

  21. 21
    zman Says:

    Andy – I notice it in passing when I update my crack spread numbers. I'm not sure of the current reasons, could be an assumption of lower than normal utilization in the US this Fall.

  22. 22
    zman Says:

    WLL breakout continues.

  23. 23
    zman Says:

    I think the sellside and buyside are getting past their fears of quarterly revisions for the Bakken players. Fear has been the differentials were widening due to higher output and then due to Enbridge's little problem. Also frac schedules continue to be problematic. So estimates have come down slightly for the 3Q, which held everything back. Now noting NOG and OAS trying to move, WLL definitely moving, KOG has been and BEXP is just sitting there waiting on Three Forks news to get moving.

  24. 24
    zman Says:

    Tropics Watch: Hello Lisa

    TS Lisa formed in the Atlantic – track is anyone's guess at the moment, with the models splayed out in 180 degrees from due west to due east.

  25. 25
    bill Says:

    robry has +68

  26. 26
    zman Says:

    Thanks Bill – that seems about right to me, still don't have my imports numbers for my model yet for last week.

  27. 27
    zman Says:

    Anyone see any sellside comments on MMR post deal?

  28. 28
    blackgold39 Says:

    I would be really interested to see some chart analysis on NFX. 
     
    Strange 1 Yr chart, can't figure out where it is going from here.  I know what the catalysts are, just not understanding the stock movement, it doesn't appear to be all that correlated to natl gas, but maybe I am wrong.

  29. 29
    zman Says:

    Those WLL Bonds took a BB rating from S&P

    Re 28. I'll leave that one to JB but will say NFX is always a bit of an out of sync with the group trader.

  30. 30
    zman Says:

    Moody's on the other hand took WLL's debt ratings up.

    Stock putting on a show, coming up through $98.

     

  31. 31
    tomdavis12 Says:

    Any time frame for when the WLL bonds will be available for us peons?

  32. 32
    BirdsofpreyRcool Says:

    tomdavis — you can call your broker and leave an order with him/her… see if you get any at issuance.  they are registered, so NO REASON your broker can't snag some for you… if they are on the underwriting team.  Otherwise, will have to wait for the break…

  33. 33
    zman Says:

    Greenpeace boarded drillship Stena Carron in deepwater off the Shetland Islands.  Two of them are now handing off the ship on climbing platforms.  

  34. 34
    Pati Says:

    SSN:  From YahooFin msg. SSN msg board:  lots of speculation CHK is jv
    Weekly Spud
    Reporting Period 09/14/2010 – 09/21/2010
     
    49-015-20191
    SAMSON OIL & GAS USA INC
    INTREPID US 22 STATE No. 1-16H
    SE SE Sec 16 T23N R63W 300 FSL & 300 FEL
    Received 07/02/2010 Approved 07/21/2010
    Contractor CYCLONE RIG 11 Spud Date 09/20/2010

  35. 35
    tomdavis12 Says:

    BOP: If you come up with the cusip I would appreciate. No urgency. Thanks.

  36. 36
    zman Says:

    Thanks Pati. Maybe so,  that would be on their remaining acreage and would be a definite uptick in the story. I found same on an Aussie bulletin board.

  37. 37
    zman Says:

    MMR giving back a little today, not surprising but would have liked to see some notes from the Street on their thoughts and so far have not. Seems like it rolled negative slightly and then gained some profit taking momentum, volumes are light.

    WHX eying $21

    NOG back to $16

    Day still a very mixed bag out there.

  38. 38
    zman Says:

    NG up 4.5%, what a yo-yo

  39. 39
    BirdsofpreyRcool Says:

    tomdavis — i don't know how to get a CUSIP for a "when issued" corporate bond… do they even exist yet?  Guess they do… anyway, i would call your trading desk and put them through the exercise… shouldn't be tough for them… it's the only bond that WLL is issuing this week. 
     
    Underwriters are BofA, JPMo, and Wells Fargo.

  40. 40
    zman Says:

    Took at a look at the Wyoming O&G site:

    They had the London Flats (re-entry approval) listed and now (as of 9/13), the Hall No 24-63 19 #1H well approved, also Goshen County, Niobrara formation. They've said for awhile now they'd busy themselves with drilling around year end, they are getting with it.  Can't see what CHK had before or if the name/well changed hands, but do see three other Niobrara wells they have permitted, all in Goshen.

  41. 41
    zman Says:

    EOG has 3 wells permitted targeting the Niobrara in Goshen county as well.

  42. 42
    zman Says:

    and NBL has 5 wells permitted in neighboring Laramie county.

  43. 43
    zman Says:

    OK, third permitted well now popping up on the map page of the Wyoming site, Intrepid well, listed as a Niobrara target, just south of the Hall and London Flats wells in Goshen. It has a spud date of 9/21/10 listed on it and the permit was approved as of 9/13.  That would just about have to be a JV well.   Or they have money in hand from the sale and were able to grab a rig. SSN has been saying they would spud their next Niobrara attempt after they farmed down their remaining interest.

  44. 44
    zman Says:

    You can click here to see permitted wells on the map, just click operator, show operator, enter Samson, then click state wide plot. Their Hawk Springs project in Goshen shows up as 3 red dots (permitted wells):

    http://wogcc.state.wy.us/

  45. 45
    tomdavis12 Says:

    BOP: Called desk. Not priced yet.

  46. 46
    zman Says:

    Something is trying to get organized to the north of Venezuela, 20% chance of development in next 48 hours.

  47. 47
    BirdsofpreyRcool Says:

    tomdavis — no… it's not priced yet… but if you want to try to get it as a "new issue" (like getting shares in an IPO), then you have to put in for it, before it is priced.
     
    Otherwise, wait until it is priced and trading… then there will be a CUSIP.

  48. 48
    zman Says:

    BOP – you in TAT?

  49. 49
    zman Says:

    re listening to SSN call to see if I missed anything re what looks like a this week spud in the Niobrara.

    http://www.wsw.com/webcast/rrshq18/ssn/

  50. 50
    BirdsofpreyRcool Says:

    z — re: TAT… yes.   But not in a big way.  Need to either add to the position or boot… thinking about adding.

  51. 51
    zman Says:

    BOP – I added today, going to add some more in a bit I think. Exploratory catalyst, won't take long to find out (2 to 4 weeks) if it is a game changer.

  52. 52
    tomdavis12 Says:

    BOP: I hear you. Not part of syndicate. My problem. Trying to get my market maker to bid some. If I can get near 7% I'll be a happy camper.   

  53. 53
    zman Says:

    Crude down almost $2. Much ado about the end of the October contract and not much else.

  54. 54
    zman Says:

    From Eli via Email

     

    I looked up the SSN mention on theStreet.com and it turns out to be borrowed content from Louie Navellier the old ringleader of mo-mo U and the only person faster on the pedal than William O'Neil.

    The good news is that Louie has a following. The bad news is that Louie has a following.

    Da list follows for da names. Can anyone say LEI?

    http://www.investorplace.com/stock-picks/5-penny-stock-energy-plays.html

  55. 55
    BirdsofpreyRcool Says:

    tomdavis — not seeing any price talk on the new WLLs yet… but current (3 yr) bonds are trading at a spread of around +440bps.  So, with the 10-yr at 2.66% and adding 4.40%, you just might get the new WLLs priced at 7.00%.  Problem is, the corporate debt market is stupid-crazy right now… new issues are trading up 2+ points on the break.  So, maybe you can get 'em at 6.75%.  Will be interesting to watch….

  56. 56
    BirdsofpreyRcool Says:

    Fair warning… i am not going to let EGY fall back to $5.10 again without picking some up.  So, come to Mama, little EGY…. here boy!

  57. 57
    zman Says:

    Thanks to an email, just got a listing of 3 more Niobrara wells SSN has staked but I didn't have a record of, bringing the total number of wells to 5 plus the London Flats re-entry. Add the Courageous, the Gleam and the Enterprise (you can tell the SSN president just got his US citizenship last month by these names) to the Hall (most recent submission), the Intrepid and the London Flats wells.

  58. 58
    zman Says:

    SSN – OK, just re-listened to their Rodman presentation. At the presentation they said they'd be shooting 3D seismic and then drilling 2 Niobrara tests after that in 1Q. This conflicts with this from the Wyoming site:

      Current SAMSON OIL & GAS USA INC
      INTREPID US 22 STATE No. 1-16H SE SE Sec 16 T23N R63W
    Display All Records Approved 07/21/2010   Spud Date 09/21/2010
  59. 59
    choices Says:

    MMR-S & P has notes on the wire, reaffirms rating but has negative ???? outlook on increased exposure to high risk deep drilling-not sure what that means-ratings stay the same but with negative outlook-do not have access to full note, just headline.

  60. 60
    zman Says:

    Choices, saw that only see the short paragraph, basically saying they are getting more exposed to an unproven play. Duh. I would suspect once the placement is closed they will be off negative but maybe not. I note they also said the deal has no impact on PXP. Hmmm, they get upside exposure according to the ratings agencies but the fact that they are a big shareholder in MMR is not a problem if MMR fails? This is one of the reasons I think people don't like ratings agencies.

  61. 61
    zman Says:

    Have a note in with the CEO of SSN for commentary, giving that 50/50 odds on a response.

  62. 62
    BirdsofpreyRcool Says:

    choices — #59 basically, it means that S&P is in "show me" mode.  If MMR does what they say they will do, ratings don't change… but S&P is showing a public dose of skepticism.  "Negative outlook" doesn't mean all that much… the next step would be to put them "Credit Watch"… that is when S&P calls the company in and asks them to do a complete financial explanation.  Then S&P decides whether to downgrade (or upgrade) the company (or not). 
     
    So, merely a warning shot across the bow… "we've got our eye on you."

  63. 63
    BirdsofpreyRcool Says:

    JB — what was the buy (or add) level on EXXI?  Was it $21? 

  64. 64
    choices Says:

    Thanks, BOP, Z!

  65. 65
    BirdsofpreyRcool Says:

    For oil down, kinda big, day… the Energy Kids are not acting out, all that much.  Really behaving themselves. 

  66. 66
    BirdsofpreyRcool Says:

    JB — i found it… note #64 from y'day on EXXI.

  67. 67
    Jerome Blank Says:

    #63, BOP…EXXI add at $21

  68. 68
    zman Says:

    BOP – re oil, its just expiry move, should be close to done on the downside as November takes over as prompt month, thinking a low maybe down to $70 and then back to middle of the range.

  69. 69
    BirdsofpreyRcool Says:

    z #68 — thank you for the 'splanation.

  70. 70
    zman Says:

    That's my best guess and I'm sticking to it, lol.  Odd EOG action.

  71. 71
    BirdsofpreyRcool Says:

    EOG — about the only thing i can think of is that $90 is an unstable price for a stock.  It's either headed to $100… or to 80.  Guess EOG can't figure out which party it belongs to yet.

  72. 72
    tomdavis12 Says:

    Z: I have Nov crude $75.47. Is that about right.

  73. 73
    zman Says:

    BOP – agreed. Everyone expects them to cut numbers near term for 3Q production. Even if they do that is not a big deal in my book, as it has been a timing issue, not a productivity of play issue. There is some commentary on a reduction in IRRs of their EFS wells as shown in their presentations due to higher costs. That's a separate issue from productiveness. Still highly economic.

    Tom – yes.

  74. 74
    bill Says:

    60
    >Hmmm, they get upside exposure according to the ratings agencies but the fact that they are a big shareholder in MMR is not a problem if MMR fails?
    Its a one time non cash charge that is ignored, kinda like asset write downs due to lower ng prices..i think you told me no one cares about those things  šŸ™‚

  75. 75
    bill Says:

    That being said, pxp is getting crushed
    When mmr goes up it goes down and
    when mmr goes down , it goes down more

  76. 76
    zman Says:

    Bill – I hear your LOL but people do seem to care when you have a big identifiable slug of stock in the marketable securities line on your balance sheet. 

  77. 77
    zman Says:

    re 75. Hear that too, would it help if I tell you I expect MMR to rally near term? šŸ˜‰

  78. 78
    mimster90 Says:

    article "The Natural Gas Crisis of 2011"
    " I discovered that if domestic production continues to decline in conventional natural gas producing basins, imports from Canada continue to dwindle and LNG imports remain at the subdued levels, production from unconventional gas producing basins will not be sufficient to keep US supplies even close to current levels."
    It's always sketchy when the authors name is "Stargazer".
    http://www.pinnacledigest.com/blog/stargazer/natural-gas-crisis-2011

  79. 79
    zman Says:

    Mim – I have been saying that all along ya know. That conventional production is about 80% of total (used to be a lot more) and slides at something like 25 to 35% per annum depending on the basin, but that it is being overcome by flush production. I think the issue is that you won't need to use the word crisis. There is enough readily reachable gas that any spikes of length will be hit with a ramp in drilling and then offset by the ensuing new volumes. So the market will tighten as low prices enforce capital discipline after land is held by production. I also think 2011 is probably the wrong year to be look for a big price spike, maybe a stronger price level in the 2H and late in the year, but not a "crisis" in my book.

  80. 80
    zman Says:

    Fed statement largely unchanged. 

  81. 81
    zman Says:

    Pimco's Gross saying Fed is about to cut its forecast from 3% to 2% and this will keep inflation up and open the door for QE2,

  82. 82
    zman Says:

    Cloud pile north of VZ upgraded to a 50% chance of development in the next 48 hours.

  83. 83
    BirdsofpreyRcool Says:

    Fed is pushing on a string.  Can't really do anything more… in spite of Bill Gross's book.  Need Fiscal Policy to kick in… Monetary Policy has spent all their bullets.

  84. 84
    blackgold39 Says:

    re 79 – There is not going to be any crisis in natl gas for a very, very long time.  Gas is only a drillbit away in most of these plays, and any move north above $6 will be followed by enormous leaps in drilling.  One of the only real X factors in my book is materials prices (steel, diesel) etc that drive drill costs, as those can get disconnected from natl gas prices. 
    I could envision a scenario where steel is too expensive to create because of oil prices and natural gas remains too cheap, so it could cause a short term supply issue, but the fundamentals will still allow people to go drill at the right price, and it isn't a true scarcity issue like it is with oil.

  85. 85
    zman Says:

    Bill – you have cooled at present on the drybulks, yes? What is the date to watch on BALT?

  86. 86
    zman Says:

    Market attempting to breakout, at 1144, Nicky's resistance just above at 1148-1150.

  87. 87
    zman Says:

    NOG as $16 again, story getting stronger by the quarter, looks like time for a breakout. Tomorrow oil will be trading $75 and we are expected to get drops in crude and distillates . Crude could be a big drop as we had a hurricane disruption of Mexico exports, if not this week then next. That goes up against big across the board builds in a stocks a year ago.

  88. 88
    zman Says:

    From Nicky:

    Resistance at 1150 – 55.  Of course support is now at 1131.

  89. 89
    zman Says:

    SSN – no news on the deal, but expecting it any hour now. Also should get a comment on what looks like the spudding of their next horizontal Niobrara well, the Intrepid and results of their next Bakken well, all this week.

  90. 90
    cargocult Says:

    Why fight the low gas prices. Who are the big beneficiaries of low NG prices?

  91. 91
    bill Says:

    Balt , anytime now now. I think they want to get it done by the end of this qtr
    Does a filing become effective after 30 days or do they have to wait for the sec to say ok?
    This was filed aug 10th
    http://secfilings.nasdaq.com/filingFrameset.asp?FileName=0001047469-10-007272.txt&FilePath=\20108\10\&CoName=BALTIC+TRADING+LTD&FormType=S-1&RcvdDate=8%2F10%2F2010&pdf=
    On 2nd thought maybe the first week of oct to keep it out of the share count in q3

  92. 92
    bill Says:

    utilities benefit from low ng

  93. 93
    BirdsofpreyRcool Says:

    cargo — i tried to go down that path before… looking for companies who benefit most from low nat gas prices.  Only ever found one… the rest (chemicals or energy intensive processes like making glass) just have nat gas as a high enough percentage of COGS to move the needle much.
     
    The only one I ever found?  I owned it off and on over the years…. TRA.  Gone now.  Bought up and out.

  94. 94
    BirdsofpreyRcool Says:

    meant to say "just DON'T have nat gas as high enough…"
     
    Bill's right.  CPN likes low nat gas.  But so much other stuff stirs the pot at utilities too…

  95. 95
    zman Says:

    Cargo – agreed. CLNE would be one. Steel makers, chemicals, foods like Campbells, bread co's etc.

  96. 96
    VTZ Says:

    RE 83 – I'll bet you there are plenty of more QE bullets on the way for years to come.

  97. 97
    VTZ Says:

    …at least into 2012… these are the people who had you believe they were going to stop for good in mid-2009. Surely they will do their best to hide it amongst a variety of programs but someone has to buy that debt. China has already demonstrated they have choices.

  98. 98
    jat Says:

    CRR benefits

  99. 99
    VTZ Says:

    Bonds look good when both they and the USD are rallying in the short term, in the intermediate term all those buyers are buried, including the Fed.

  100. 100
    zman Says:

    ZTRADES – ZLT

    Sold a small amount of OAS, up 10%, to fund an additional purchase of TAT at $3.08 this afternoon.

  101. 101
    zman Says:

    VTZ – please check your email. Thanks.

  102. 102
    VTZ Says:

    The market hasn't done anything since the Fed stopped injecting significant liquidity into the system. The recovery must be booming. At least we can be assured of an equity rally in the short term. It's funny how a contrarian indicator like the Fed injecting more liquidity is a vote of confidence to the market.

  103. 103
    skimo Says:

    Z, is BP a dead story? I guess I thought once they had a final kill they'd get a small pop. Perhaps the stories about the disbursements being on steroids now that its being run by Feinberg has investors worried.

  104. 104
    zman Says:

    Skimo – I think it lost a lot of steam due to the govt. dragging it out so long. I still think it is undervalued but there is a lot of finger pointing going on and I see a new story everyday about oil hidden under sand or at the bottom of the Gulf. Hard to know so I'm just staying away for now.

  105. 105
    zman Says:

    Thanks Ram

  106. 106
    zman Says:

    Weird but not bad day. Here's to SSN getting it all off their chest today and tomorrow. Beerthirty.

  107. 107
    BirdsofpreyRcool Says:

    I'll 2nd that… weird day.

  108. 108
    BirdsofpreyRcool Says:

    WLL feeling the luuuuuuuuuuuuuuuuuuve… $350mm of 8 yr/non-call4, Sr Sub Notes priced at par with a 6.50% coupon.  Seeing notes already trading up on the break at just under 102.
     
    CUSIP 966387AF9

  109. 109
    bill Says:

    i feel his pain
     
    http://houston.bizjournals.com/houston/stories/2010/03/29/daily56.html

  110. 110
    zman Says:

    BOP – are you surprised by the 6 handle on those?

  111. 111
    ram Says:

    Thanks West

  112. 112
    zman Says:

    Bill – to be fair, part of the slide was BP's fault.
     

  113. 113
    zman Says:

    NBC reporting Larry Summers to "leave soon"

  114. 114
    BirdsofpreyRcool Says:

    z — re 6.50% WLLs?   yeah.  I'm surprised.  I've been talking about the strength of the corporate credit market… but the demand that the WLL notes imply (by being priced at 6.50) surprises me by about 25 bps.  Spread at issue was +425bps… vs the +450 I was guessing.  Good for WLL equity holders, though.  Very good.

  115. 115
    BirdsofpreyRcool Says:

    WLL… on the other hand, part of my mistake was looking at the wrong underlying US Treasury Note.  The WLL 6.50s were priced off the UST 4% due 8/18… (which have rallied since y'day and have a current yield of 2.15%).  Still, was expecting a spread of around +440 bps… not +425 bps. 
     
    Bottom line = Note to CFO/Treasurers… good time to issue debt.

  116. 116
    choices Says:

    #113 if true, at last-loooong overdue.

  117. 117
    choices Says:

    thanks, JB-voted-I like the EOG 30 min chart.

  118. 118
    choices Says:

    Taylor is a pretty sharp dude-check the chart out!
     
    http://www.johnbtaylorsblog.blogspot.com/
     
     

  119. 119
    choices Says:

    It is true-going back to Harvard-I'm sure the women on the faculty will be waiting for him with Molotov cocktails-heh.
    http://www.washingtonpost.com/wp-dyn/content/article/2010/09/21/AR2010092104828.html?hpid=topnews

  120. 120
    mimster90 Says:

    zman and all thanks for the clarifications. You hit the nail on the head "crisis"  is overly dramtic. My understanding of the general thesis is.. HBP drilling will wind down 2011 Q2ish and then the shale natural gas production will be curtailed until better natural gas prices, probably between $5 to $6 mmcf?

  121. 121
    Jerome Blank Says:

    Re: #117, choices, thank you much for the vote…EOG, I agree, the 30 min does look interesting, updated the 30 min chart which is now trading at the top of the intraday channel line…I also like that EOG held support at that last line in the sand on the daily at $88, possibly forming a higher low here…. there is also a nice grouping of base forming tails on the weekly…if EOG can trade to $91, this reverses the stock back into X's on the P&F chart….
    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280
     

  122. 122
    zman Says:

    GST announces JV in Marcellus.

  123. 123
    zman Says:

    SSN trading halt pending news on Goshen transaction, says trading will resume by Friday or on earlier announcement.

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