Tuesday Morning – Conference Brings News Flow

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Market Sentiment Watch:  Market is not in panic mode over the turn of the calendar, just a weird sort of fade yesterday over renewed euro fears. Today, futures are gaining back some of the lost ground but I would not expect big runs before tomorrow's ADP report and Friday's payrolls figures. In energy land, the Johnson Rice energy conference kicks off (see partial schedule below) and with it we have news flow out of BEXP and COG so far (see Stuff section below).

Ecodata Watch:

  • We get non-manufacturing ISM at 10 am EST, forecast is 52.3%, last reading was 51.5%.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stuff We Care About Today - Johnson Rice Conference day 1, BEXP, COG, PXP
  4. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):
    • $5,200
    • 100% Cash
    • Yesterday’s Trades:
      • None
  • ZIM (Zman Inefficient Markets portfolio)
    • $5,300
    • 27% Cash
    • Yesterday’s Trades:WLL – Added (5) More of the October $100 calls for $1.25 with the stock at 97, takes my average costs to $1.50. I continue to hold the $95 strikes here as well. See today’s comment section for additional color.MMR – Back in again. Added (10) October $17 calls for $0.93 with the stock at 17. Partner EXXI speaks at an investment conference on Wednesday and again at IPAA next week.

Commodity Watch

Crude oil closed off 11 cents, largely ignoring the weakness in the equity market to end at $81.47 yesterday. This morning crude is trading up $0.40.

  • Early Read on Oil Inventories:
    • Crude: UP 1.0 mm barrels
    • Gasoline: DOWN 0.25 mm barrels
    • Distillates: DOWN 1.0 mm barrels

Natural gas eased another $0.07 to close at $3.73 yesterday. This morning gas is trading up 2 pennies.

  • Tropics Watch: Pretty calm with only a single potential storm just east of Hispaniola.

Stuff We Care About Today

Today at Johnson Rice

  • APC -  worth a listen for comments on west Africa operations (Ghana development and exploration, Mozambique exploration, Sierra Leone exploration), Niobrara (drilling now on 500,000 acre position), Eagle Ford (upcoming JV)
  • BEXP - see below
  • NBL - Israel gas, Niobrara program, Granite Wash program, Gulf of Mexico deepwater
  • EOG - worth a listen for preservation of guidance, Eagle Ford economics comments, Bakken and Barnett combo comments
  • VQ - Monterey Shale results
  • PXD - comments on W. Texas (Spraberry, Wolfberry), Eagle Ford Shale, updated guidance
  • GDP - comments on Haynesville drilling
  • KEG - because I don't know them well

BEXP Hits Three Forks Pay At Rough Rider

  • First Rough Rider Area Three Forks Success:
  • The State 36-1 #2H had an IP of 2,356 BOEpd, this a very good first result from the TFS.  Note that this well was drilled from the same location as the State 36-1 #1H well, a Bakken test, completed in January of 2010 which IP'd at 3,800 BOEpd.
  • BEXP has 152,800 net acres at Rough Rider and this sets them on a path to opening up an additional 362 net locations.  Each location should be in the 500,000 to 750,000 BOE reserves range based on my eyeballing of the results. Notably, Rough Rider leasehold is up 6,000 as of this press release and I'd bet it's the donut hole acquired from Panther in south central Rough Rider where BSIC has leases.
  • This is a higher rate than most Three Forks wells drilled to date in the Williston, an apparent record west of the Nesson, and compares favorably to the two Three Forks tests BEXP has drilled at Ross to date.
  • Ross Area Sees Another High Rate Well
  • The Domaskin 30-31 #1H IP'd at 4,675 BOEpd, BEXP's second largest IP to date,
  • This is the 4th highest IP Bakken well (for anyone) in the Williston Basin.
  • BEXP has another Ross area, 38 stage frac completing now about 6 sections due east of the Domaskin.
  • Ross area Bakken well IP's now average 3,835 BOEpd
  • Nutshell: Very strong results. This is one of the key wells BEXP has been waiting on and having a rate of this size is key to driving the stock to the next level. Aside from the potential reserve repercussions, production growth in 4Q and going into next year is set to best current guidance as these were high working interest wells and the Three Forks wells was not in company guidance for the end of the year. As the results came a month earlier to my thinking I'll be playing in the ZIM here today. I continue to own the common in the ZLT.  

BEXP's Long Lateral Willston Results To Present

Other Stuff

  • COG Operations Brief:
    • Eagle Ford Shale - 2nd Eagle Ford well completed, strong IP of 926 BOEpd, 82% oil (they said oil, not sure if that's really not just NGL's and condensate). Either way it's twice the rate seen in their first well.
    • Marcellus - 2 new wells exceed 20 MMcfgpd ... good for them, probably bad news for natural gas prices as these are the 2nd and 3rd wells in the last week to break the 20 MMcfgpd level in the last week following EQT's well last week.
  • PXP Acquires Eagle Ford Acreage

    • 60,000 net acres for $578 mm or $9,633 per acre
    • Oil window focused
    • 1/3 of acreage in joint operating area with EOG
    • Deepwater bids for the sale of their assets due in by October or November
    • Nutshell: Pricey, but they always seem to be late to the next hot game. Implies steep valuation on land. Not going to play even if it rallies which it may as at least they are positioning the company to benefit from the current oil / gas price disparity. 
    • Conference Call: Today, 9 am EST.
  • GST Borrowing Base Increased
    • Returns to $47.5 mm from a previously reduced position of $40 mm.
    • Says not to expect this facility to be heavily drawn on in the near future due to their JV proceeds from the Marcellus. 

Odds & Ends

Analyst Watch:

  • ----

129 Responses to “Tuesday Morning – Conference Brings News Flow”

  1. 1
    zman Says:

    BEXP up 3+% pre market, the news is significant and I would expect a retest of the Spring highs before it started to rest. They a high density spacing test (wells 2 and 3 in a section) at Rough Rider with results expected either later this month or in November. If those wells work well we should see an increase in the potential locations and reserves in the play. More bang for your acre.

  2. 2
    zman Says:

    Editor off

    Front and Center Watch:


    MMR – for trading purposes and tomorrow as EXXI gets set to speak, could be news pre speech there.

    WLL – also for trading purposes, impact of BEXP’s news may rouse interest in the Bakken E&P group today.

    EOG – speaking this morning, mentioned in joint operating area with PXP this morning. So far no reduction in estimates. Will be looking at their new slides to see if they shifted mixed again. Estimates have come off sharply in the last 3 months, doubt they miss and if they don’t reduce estimate now could be setting up a beat as 2Q’s completion activity could actually lead to a 3Q upside volume surprise. No one on the Street is currently looking for that and I’m not saying it is likely but it’s a possibility as their production is lumpy from the S. Texas assets.

  3. 3
    BirdsofpreyRcool Says:

    Today’s Top Stories

    · Asia – In Japan, the Nikkei was very strong today after the BoJ unveiled a $418B easing program and cut rates to near zero. China remains closed for its Golden Holiday week. Australia was slightly lower today after weak eco data (retail sales and trade surplus) weren’t enough to offset the surprise move to leave rates unchanged in the country.

    · In Europe, stocks are higher across the board, bouncing back from yesterday’s losses thanks to a better than expected Euro-zone output and UK services PMI, although Euro-zone retail sales fell slightly more than expected.

    · Bunch of important macro headlines on the tape this morning – all of them would in theory give a boost to the dollar, but the DXY is in fact off ~50bp this morning and hitting fresh lows again

    · On the CB front, both the RBA and BOJ made unexpected decisions (the RBA left rates unchanged vs. the market expecting a hike while the BOJ went much further down the easing road than the market forecasted). The AUD is getting hit (off 0.7%) but the yen is basically flattish (the yen spiked overnight after the BOJ news first hit but has rallied back).

    · On the FX front, both Brazil and South Korea are taking incremental action to cap their surging currencies – the real is off 0.5% and won is down 0.7%.

    · The Euro is up 0.6% on the day (despite Moody’s placing Ireland on watch for a downgrade and hitting new highs). The Eurozone Services index did come in better than expected (54.1 vs. the St 53.6) which is helping the euro.

    · US$ bottom Line – all these actions would in theory help the dollar (dovish RBA, BOJ + FX controls from Brazil/S Korea)….but instead the DXY is hitting fresh lows. Anticipation of more QE to come at the Nov 2-3 FOMC meeting is weighing on the buck – remarks from Fed officials in the last several days are reinforcing the view that further asset purchases will be announced (NY Fed’s Dudley on Fri, NY Fed’s Sack and Bernanke both on Mon).

    · Global investment banks shifting towards more “staid” strategies as capital standards are toughened. WSJ

    · Dems making modest improvement in polls from their summer lows ahead of the Nov 2 mid-terms, although Republicans still ahead. Democrats have cut in half the GOP’s early-September advantage on the question of which party’s candidates voters say they will support on Nov. 2. Despite the progress, Dems still at a major disadvantage heading into Nov. Washington Post.

    · Bush tax cuts – “Obama’s promise to end tax cuts for rich unravels”….” it seems almost certain now that Barack Obama will be unable to fulfil his pledge of reversing George W. Bush’s tax cuts for the wealthiest Americans” FT

    · AIG – the official at the Treasury in charge of restructuring AIG thinks the government will wind up getting all its money back. Washington could in fact wind up making ~$13B on its AIG position. The Treasury thinks the common stock will act well “once investors understand the government’s plan to exit its investment over time”…the Treasury is anticipating a large influx of institutional investors into the stock. NYT

    · Disk Drives – cautious Digitimes article – HDD makers could see Q4 shipments fall 1-2% Q/Q as weak BTS demand has created a pileup of inventory among PC players. Q3 shipments were only flat Q/Q.

    · China TV sales – pos. indications – Based on the sales data from the first three days of China’s national day holidays, TV sales in China are projected to increase 150-200% from a year ago, according to Suning Appliance, the country’s largest IT and consumer electronics retail chain. Digitimes

    · MSFT – second downgrade in as many days – Janney cuts the stock’s rating Buy to Neutral

  4. 4
    jy Says:

    anyone have a link to the Johnson Rice conference schedule/webcasts?

  5. 5
    zman Says:

    JY – I have not yet found one, here is APC on now:


  6. 6
    jy Says:

    Couldn’t find one either- tks

  7. 7
    zman Says:

    APC notes in a minute

    BEXP bidding up more

    WLL looking to break $100 today.

  8. 8
    zman Says:

    APC mentioned Bone Spring and Niobrara (drilling a well now, very excited about huge position) but gave no further details. Typical of these big ones to talk in 10,000 foot views of projects.

  9. 9
    zman Says:

    S&P fut up 7 points now, strong. Still have ISM to contend with today.

    BEXP call starts at the open.

  10. 10
    zman Says:

    BEXP call in 1 minute


    There is a fairly easy argument to be made that last night’s results were game changer in nature for them.

  11. 11
    zman Says:


    BEXP – Added (10) October $20 calls for $0.50 with the stock at about $19.80. See site for details. Company about to present at an investment conference.

    BEXP – Added (100) October $22.50 calls for $0.05, at the same time as the above. High risk trade although the stock does not have to get that high for me to turn a profit.

  12. 12
    zman Says:

    BEXP call starts at 10:30 EST, got my time zones mixed up.

    WLL through $99, past the post Lewis and Clark “sell the news” zone.

  13. 13
    zman Says:

    NOG hitting all time high, no calls there, just ZLT shares.

  14. 14
    elduque Says:

    BDI up big today.

  15. 15
    zman Says:

    Nice shade of green to things, market feels quiet.

    Thanks Eld – waiting for Bill’s BALT to get their deal done, also just watching DSX, and EGLE.

  16. 16
    zman Says:

    Crude up a buck at 82.50 / NG flat.

  17. 17
    zman Says:

    Bill – PXP liking the guidance and the buy in to the EFS.

  18. 18
    zman Says:

    OAS up a buck (5%), another new all time high, thank oil and the BEXP news. BSIC should be up on that news too as Three Forks working in Rough Rider is another indication that the play keeps on giving. KOG should have a good day when it gets its first TFS completion done during the 4th quarter assuming the results are similarly positive.

  19. 19
    zman Says:

    ISM at 53.2, better than expected.

  20. 20
    zman Says:

    S&P hanging out at 1150. Testing, testing, this thing on?

    BEXP call in 20 minutes

  21. 21
    elijahwc Says:

    CLNE – Appears to be an impt announcement


  22. 22
    zman Says:

    Thanks Eli – that Littlefair was in management at Mesa before Boone got forced out by the Rainwaters. He is no dummy. The press release needs a bit more teeth to it though as sending something to DC is far from having DC act on it. Flying J is a big operation but the pr lacks details on scale of the rollout and timing.

  23. 23
    zman Says:

    Market got back all and a little more of yesterday’s loss so far but volumes look very light in the group. No one really playing until Payrolls data. Ugh bored, good to have a conference to listen to.

  24. 24
    zman Says:

    Analyst Watch:

    BEXP – Raymond James ups target by $2 to $25, stays at Strong Buy.

  25. 25
    choices Says:

    #2, Z, EOG estimates have indeed come down-just got note from TD Amer using Wall Street on Demand earnings alert service that consensus has just been reduced $0.057 to $0.22-maybe setting up for a beat-been more than cut in half over last couple of months.

  26. 26
    zman Says:

    BEXP call starts in 5, new slides are up, showing 952 locations in the Bakken, putting 600,000 BOE on each and a PV10 per well (average) of $9.3 mm, which comes to $8.85 B of PV10 value. Forgetting the other assets for a moment and compare that to BEXP’s TEV of just over $2 B. Hmmm.

  27. 27
    zman Says:

    Thanks Choices, yeah, kind of what I’m thinking. Analysts getting into the under promise game.

  28. 28
    West Says:

    Authors: Sonnenberg, S.A. Weimer, R.J.

    Abstract: The Silo field is located in the northern part of the Denver basin.^Production is from the fractured Niobrara Formation at depths ranging from 7,600 to 8,500 ft (2,318 to 2,593 m).^Cumulative production from 40 vertical wells at Silo is in excess of 1.3 million bbl of oil.^Two wells have produced 437,000 bbl of oil.^Two wells have produced 437,000 bbl of oil.^Recent drilling success with horizontal wells suggests much greater future production.^Initial potentials from the new horizontal wells range from 500 to 2,000 bbl of oil/day.^The dominant lithologies of the Niobrara are limestones (chalks) and interbedded calcareous and organic-rich shales.^Four limestone intervals, averaging 30 ft (9.2 m), and three intervening shale intervals occur regionally and are easily recognized on geophysical logs.^The lower limestone is named the Fort Hays, and the overlying units are grouped together as the Smoky Hill member.^The fractures are concentrated in the more brittle limestones.^The intervening shales have high organic matter content and served as source beds.^Open fracture systems are essential to Niobrara production because little matrix porosity exists in the limestones.^High resistivities are observed in limestone beds at Silo.^These resistivity anomalies appear to be realted to the presence of a large hydrocarbon accumulation delineated by isoresistivity mapping.^Factors present at Silo will serve as a model for future Niobrara produciton in the Rocky Mountain region.^These factors include (1) mature source rocks interbedded with brittle limestone; (2) open fractures to form the reservoir; (3) resistivity anomalies indicating accumulation; and (4) technology to efficiently produce the reservoir

  29. 29
    blackgold39 Says:

    I’m playing the BEXP call also. Might try to go longer term with it in the options, but taking some near term positions also.

  30. 30
    BirdsofpreyRcool Says:

    JMHO, but slapping a 600k boe EUR on all those wells is a tad optimistic. Not all BOEs in the Bakken are created equal. Some BOEs have more gas included than others. Gas that is flared or sold at a lower price. BEXP is doing a good job of promoting their stock, however. Can’t argue with the great gains you have made. Just picking at mngmt a little….

  31. 31
    zman Says:

    BEXP has a decent chance of doubling reserves over 2009 levels. Probably 80 to 110% of 2009’s 27.7 mm barrels.

  32. 32
    BirdsofpreyRcool Says:

    West — thank you for posting! Do you know what county Silo Field is in? thx.

  33. 33
    zman Says:

    re 30. I hear ya. It’s a range from about 400,000 on the low end to a high of 900,000 BOE. They feel comfortable with a 500 to 700 average range and go with a 600 mid point on that. I don’t think they will be far off as they’d get bbq’d if things don’t tie up with their reserve engineers at year end. Their wells have been upwards of 80% oil. By the way, WLL puts a high number on their wells.

  34. 34
    zman Says:

    On BEXP call yet, should also mention they are not pulling all of those 360 TFS locations into development cat just yet, need to spread some rigs around the play before that.

    Thanks West, that 437,000 is the same number or very close to it that SSN has been using for future horizontal dev of their remaining Niob acreage.

  35. 35
    BirdsofpreyRcool Says:

    I’m probably just spitting out seeds from eating sour grapes. Don’t own BEXP, and sorry i didn’t buy, once they got the balance sheet in order. Oh well.

  36. 36
    zman Says:

    See Silo on the Niobrara map on slide 16, Laramie County, WY


  37. 37
    zman Says:

    BOP – you’ve had plenty of winners without it. I understand the historic skepticism re these guys as being warranted.

  38. 38
    zman Says:

    BOP – SM playing about in Silo area, I think APC also, and CHK. SM would probably be the biggest leverage. That’s a pretty old field as I recall. Not sure how the stratigraphic column compares to the north, haven’t found one to look at at Goshen.

  39. 39
    BirdsofpreyRcool Says:

    One thing we know, you can’t compare the Niobrara to the Bakken. Much spottier. But, everyone already knows this already.

  40. 40
    zman Says:

    BEXP Notes:

    143% growth in oil production for 2010

    more than double expected in 2011

    saying their 4 and 5,000 BOEpd wells will pay out in about 7 months.

    The Domaskin well was the first of 3 38 stage Ross wells, mention one of the others in the post.

  41. 41
    zman Says:

    BEXP Notes 2

    State Well (TFS) – nearby CLR came in and gave them good data but they used their completion recipe to better apparent effect.

    7 wells currently completing in the Bakken

    Density Pilot – (mentioned in comments above). Suspicion is they will be able to drill more than 3 wells per unit so the numbers on the acreage could be going up if the density pilot works

    Brad Olson #3 fraccing this month, then 30 days later will frac the Brad Olson #2, will do microseimic to determine how efficiently they are draining the area.

    May do 4, 5, or 6 well density tests in 2011.

  42. 42
    zman Says:

    BEXP Notes 3

    Montana – did a lot of science on it, watching the ZEnergy well nearby that was a 1,200 boepd, and then their Sedlacek well just across the state line into ND.
    They will drill 2 wells in 4Q, saying EOG has a tremendous amount of activity just to the north and west of them, CLR (again slapped at their results saying it was pretty good given “how they went about it”

  43. 43
    choices Says:

    #40-that IS huge-need a red day to try to get in.

  44. 44
    zman Says:

    Choices – yeah and it has a gap up about 2 weeks ago in the chart, next bad streak for oil and it may go fill that. The 2010 comment is not new, the 2011 is the first I recall but the Street probably was thinking something close to that. That’s just oil, not associated gas. What I don’t want to see them do is an equity deal to meet the current plan of ramping Rough Rider activity from 4 rigs to 8 by next summer.

  45. 45
    zman Says:

    BEXP – very aggressive in terms of hedging, banks now allow them to hedge up to 65% of projected volumes

    2011 – 2.3 mm barrels with fl of $66 and ceiling of $99. That’s a big chunk of 2011 production.

  46. 46
    zman Says:

    WLL trading all over the place, bizarre.

    OAS rally continues, well through $20 now.

    BEXP Q&A
    Reserves ?

    “Look for a dramatic uplift in the proved development category” – that’s the 38 net wells drilled this year,
    Also have opportunity under the new SEC guidelines to book more proven undeveloped locations around this year’s 38 wells. Still will be conservative.
    The PDP adds alone will be not quite a doubling, then you add the PUDs and you are near the top of my 80 to 110% reserve growth range.

  47. 47
    elijahwc Says:

    SD on the leading % gainers list. Again. Will go through 6 in next couple of days if this keeps up.

  48. 48
    zman Says:

    BEXP Q&A

    Whoa. Their density comment applies to each formation. I was think up to 3 wells per unit from the Bakken and up to 3 wells from the Three Forks. They are thinking they could be looking at that but also upwards to 4, 5 or 6 wells in each unit, or up to a total of 12 wells in each unit. This is pie in the sky type stuff at the moment and we are many months from proving that potential. But at last check I was thinking they were saying a max of 6 wells per unit and I’m pretty sure the Street was too. It will vary across the Basin but that is more “potential” upside that I did not foresee.

  49. 49
    zman Says:

    EOG call starts in 4 minutes


  50. 50
    BirdsofpreyRcool Says:

    Leading (larger cap) energy gainers = OAS, SD, PXP, BEXP. Pretty well covered and followed by various people on this board. Nice going!

  51. 51
    zman Says:

    No change to EOG growth estimates. So if they are missing the 3Q guidance they must be making it up in 4Q. Hard to believe them, being the conservative guys they are, presenting at a number of conferences of late, with estimates in the presentations, and then bricking those numbers. Don’t really see anything new in the presentation, still paging through it as I listen.

  52. 52
    zman Says:

    Anyone have the best IP rate of a PXD Eagle Ford well to date?

  53. 53
    zman Says:

    TAT continue to impress post exploratory dry hole and deal, now $3.24. Perhaps this is a little leakage regarding their frac efforts in the Thrace Basin, should be getting news in the next month or so.

  54. 54
    VTZ Says:

    For anyone who cares, I’m willing to concede that gold could be approaching or near a short term top around these levels. I am considering taking some small trading profits here and will be watching the action in the next couple days.

  55. 55
    VTZ Says:

    I also think that gold is acting as a strong leading indicator for oil, considering the renewed relationship between gold and USD devaluation. If gold turns, I think oil will be turning not long after.

  56. 56
    zman Says:

    EOG saying one of their Barnett Combo wells will be a 1mm boe EUR well, said the geology is a bit tricky but they are working through it.

  57. 57
    zman Says:

    Thanks V, I care.

  58. 58
    zman Says:

    WLL not over $99 and at the highest level since 8/08.

  59. 59
    zman Says:

    EOG skipped talking about the Niobrara. On their play list which show booked and potential reserves they continue to list it as “too soon” which is fair.

  60. 60
    zman Says:

    EOG – may need to temporarily relax the 25% net debt to cap ceiling next year. If there were to be a swoon in the minute chart today that would be the cause so far in the presentation.

  61. 61
    zman Says:

    S&P at 1156

    For reference, Nicky’s comment from yesterday:

    “Good morning. I personally don’t agree with a market meltdown although I do agree with a correction. The proviso to that first opinion is that the low of 1010 holds on the spx. If it doesn’t then yes the market is in big trouble.

    Short term I am looking for a top in the days ahead. We have serious resistance at 1163. Support remains at 1137.

    An indication that this wave has topped will be a move below 1123.

    I actually think we have another high out there above last weeks 1157 and then we see a correction for several weeks. However as long as 1010 holds I expect the end of the year to be very strong.”

  62. 62
    zman Says:

    VQ call in 5 minutes.

  63. 63
    choices Says:

    Z, EOG presentation-not sure how to weigh his comment, mentioned at least a couple of times, that qtr to qtr, earnings will be “lumpy”-understand general context but he did seem cautionary on short term Q earnings but he certainly was confident intermediate to long term-consensus needs very perceptive analysts but price may react.

  64. 64
    choices Says:

    EOG slides:


  65. 65
    zman Says:

    Choices – yes, same as my lumpy comment above on them. They have taken a lot of heat for a liquids miss in the 2Q numbers. My thought is that they would need to go ahead and trim 2010 numbers if they were in trouble of missing 3Q. I honestly don’t care as I’m just long common now and won’t be holding calls over the earnings release. I am more convinced of long term value here… happier to hold this than say a CHK.

  66. 66
    choices Says:

    #54-V, I care-I jumped out waaaay too soon-did not expect this strength in Euro and complete collapse of DX.

  67. 67
    zman Says:

    BEXP was not able to crawl over $20, but thinking it will next few days.

  68. 68
    john11 Says:

    does anyone have Johnson Rice schedule for nxt 2 days,./..been away..tia.

  69. 69
    VTZ Says:

    RE 66: I don’t think that this is not yet the complete collapse of the USD. After some sort of relief rally I’m quite sure the USD is on its way to 75 then 72.

  70. 70
    VTZ Says:

    Wow that’s some terrible grammar. You get the idea…

  71. 71
    zman Says:

    John – see post for today’s presentations, could not find all participants. Will have what I could find in tomorrow’s post for Wed/Thurs

    Wed names: CRZO, NFX, OAS, SM, EXXI KOG, GST

    Thursday names: CXP GMXR

    Also speaking at some point are REXX, SD, SWN, UPL, WLT

  72. 72
    zman Says:

    West, when does REXX present? Again, nice call there. PETD next?

  73. 73
    elduque Says:

    U.S. LNG imports hit 2 and a half year low.

    Wow, who would have thought that.

  74. 74
    zman Says:

    re 73. Well me for one. I’ve been saying “no tsunami” of foreign gas for the last several years, that I didn’t buy the presentations from the likes of LNG (the company) showing all that gas coming to their brand spanking new and pretty much so far unused facilities.

  75. 75
    elduque Says:

    With BEXP showing great stuff (now that is great English). What do you think KOG is worth? Still $4+

  76. 76
    zman Says:

    Eld – Tough question, rocks not as good or completion methodology not as honed. Need to work up something more formal before I’d put a number on it but higher than here by enough that I have not bothered yet.

  77. 77
    john11 Says:

    Comment made by BEXP about being buyer of choice certainly resonates with me. If I had a deal looking for an operator I would certainly have them way up there on my list and as a result I’m sure they pull off some very attractive deals.

  78. 78
    zman Says:

    WLL = $100+

  79. 79
    zman Says:

    John – yeah, which is part of what peaked my interest in teeny tiny BSIC. I don’t care if they partner with private Panther who may or may not have drilled wells next year. But BEXP buying them out means an experienced operator will now be running things.

  80. 80
    zman Says:


    WLL makes it to $100.

    Sold the 4 WLL $95 calls for $5.80, up 70%.

    Sold half of the WLL $100 calls for $2.35, up 57%.

    I continue to own the other half of those $100s and the common over in the ZLT.

  81. 81
    Nicky Says:

    Good afternoon all. So far so good. Now where does it top. I have resistance at 1163 as I said yesterday which is where I think we close today. I am looking for a high in this timeframe….Many things looking very toppy to me ie euro, oil……

  82. 82
    zman Says:

    Nicky – thanks. Couldn’t agree more re oil being toppy. It has little business being up here, even with the drop in the dollar I like it 5 to 7.50 lower.

  83. 83
    zman Says:

    Grabbing some lunch, back in 30 minutes. Get BEXP over $20 for me and MMR on towards $18.

  84. 84
    Nicky Says:

    What we may see is a pullback Wednesday/Thursday and then a final high Friday……

  85. 85
    tomdavis12 Says:

    Z: Be aware that BSIC is not “blue skyed” in all states. Your brokers may have to cancel the trade if it is not blue skyed in your state of residence. Ask before purchase.

  86. 86
    West Says:

    Z, I haven’t found the schedule that shows REXX’s time. I had posted the information on the Silo Field earlier for information about the Niobrara formation. There was some discussion yesterday about whether production was from the shale portion of the formation. The Niobrara has up to 4 chalk (limestone) benches that are seperated by shale zones that are thermally mature and act as source rocks for hydrocarbons. The Nio B & C benches have been the most productive zones over the formation. Much of the leasing play in the northern part of the DJ Basin has been predicated on mapping high resistivity logs in the B & C benches, that indicate presence of oil filled fractures in these zones. The Silo Field and the area of SSN’s acreage have high resistivity already mapped and are shown in SSN’s recent presentation. Most companies are shooting 3D seismic to better understand fracturing orientation before drilling. With new multi-stage fracs companies should be able to frac selected zones and effectively stimulate these areas without having the frac go into an existing natural fracture without stimulating the rest of the productive zone. This is seen as a positive over single stage fracs that had been previously used in the Silo Field and probably still has by pasted potentional reserves…………………..NBL with it’s huge acreage position, existing production and knowledge of the play is probably the best large play for the Nio and you get all their other plays as well. I really don’t see this having much chart moving effect on other large E&P cos APC, EOG, CHK in the near term. REXX looks good here, and although I still wonder about this shakeup in mgmt, I think they should get a really good well in the Silo if they don’t encounter problems with the completion.PETD seems to be in a very good spot and their stepout towards the Jake well could be the cat that they need. The only knock that I have on them is the MM front runs most trades and volumes still remain relatively low. In the micro world SSN still has upside potentional but looks to wait till 2011 to drill their remaining acreage , probably on some form of carried interest deal. Another micro-mini with exosure in the Nio, DJ (southern portion) and Bakken is Sundance Energy (SDCJF) another Australian company. Word of caution on this one very thinnly traded so it is subject to extreme moves either way.

  87. 87
    choices Says:

    #69-got it-thanks.

  88. 88
    elijahwc Says:

    Strictly Rumor: CHK JV deal with Reliance in EFS may be iffy.

    Speaking of EFS , West, an further noise on MHR’s Gonzo Hunter?

  89. 89
    RMD Says:

    Is anyone going to the AREX presentation in NYC on Mon, 10/18/10? I was hoping to get a local to cover it for me, but I may have to go to hear what they have in the Wolfberry (nee Wolffork).

  90. 90
    zman Says:

    Thanks West, Eli

    WLL continuing to move up to $101. I will let the remaining $100 calls run for a bit longer.

  91. 91
    zman Says:

    EXXI over $24, nice one BOP. They speak at JREC just before the close tomorrow.

  92. 92
    West Says:

    Eli, I don’t have anything solid and reliable. There is a possibility that they may not report anything at this time until they have fracced their 2nd EF well. I’m still long here from 4.33 and waiting.

  93. 93
    milepost_43 Says:

    I’m getting REALLY NERVOUS…THIS does not happen in the real world….EVERYTHING I own is GREEN….Watchlists almost all GREEN…Gold +$24….Brent +$84..TGA almost $10….10yr/30yr steepest EVER….BOJ going to 0%….this is NOT going to end well….sure hope I can get through the door before all the fat men get there…sorry for the rant but I am here by myself…..

  94. 94
    BirdsofpreyRcool Says:

    milepost — the west coast 3-2-1 crack spread is down today. Does that make you feel a tad better? 😉

  95. 95
    zman Says:

    Analyst Watch

    BEXP – Pritchard saying derisking the Rough Rider area TFS could add $3 to $4 to their $24 NAV.

  96. 96
    jat Says:

    wonder how mr kass is doing

  97. 97
    elduque Says:

    Re West’s comment on NBL. Your thoughts on the stock please.

  98. 98
    zman Says:

    Re Kass. Haven’t seen anything out of him to suggest he covered, he was net short last week, including MCD and SLB. Guess he’s taking it in the cheeseburger about right now.

  99. 99
    zman Says:

    I like NBL quite a bit, waiting on a real pullback in the group. You have some pretty big news coming out of Israel in the next few months that may move the stock substantially. Also the Niobrara will get interesting for them. I agree with him from a potential move on a large cap that they are probably the most levered and they and EOG are definitely the busiest names there. SSN will likely react favorably to any good news out of the play that comes out of the 3Q calls.

  100. 100
    BirdsofpreyRcool Says:

    saw a headline scroll past on BB said that Kass was still short the DOW…

  101. 101
    VTZ Says:

    RE 93 – That’s what happens when you pump dollars into a fixed amount of assets. People stumbling over eachother to dump their money in first.

  102. 102
    elijahwc Says:

    #92 West thanks.

    #96 Mssr Kass does work for a firm I’m close to and he is not having a great year by any means. But over time he’s pretty good but waaaaay early.

    BTW his former boss and one of great asset managers of all time, Leon Cooperman was the guest on CNBC this am. I plan to download the video and save to my desktop so I can watch it over and over. You can take LC to the bank.

  103. 103
    zman Says:

    Eli – I by no means think Kass is dumb as you know. But I began to have a bone to pick with him when he became more of celebrity on CNBC, obviously attempting to move markets at critical points on the charts with comments that by my read seem to portray only his points and not the other side of some arguments. I follow him on twitter and he’s become a real fast switch hitter.

  104. 104
    elijahwc Says:

    Z – I agree with you on the fast switch hitter celebrity note, but he’s in the entertainment and asset gatering business.

  105. 105
    zman Says:

    BEXP finally chewed through the host of offers at $20, now at $20.10. Old high was $21.15, beginning of May. JB, any thoughts on this chart? Glad to see it near the HOD near the EOD and on pretty good volume.

  106. 106
    zman Says:

    re 104. LOL, Aren’t we all? Doesn’t mean I have to have a bi-polar, self-deceiving trading style.

  107. 107
    zman Says:

    Adding to 106, since it’s a quiet day, that by self-deceiving I mean weighing both sides of argument and then making the trade. Not the other way around and choosing to ignore what hurts your theory. I read Kass’ brief comments on MCD and SLB and if those were the only things going on I’d say “yeah, short em” but he ignored some obvious items, which people outside of the know might not be aware of. He was attempting to bully the stocks with that celebrity status and using only half (or less of the facts) to do so. I find that to be self defeating over both the long and short runs. Of course, he has a bigger megaphone than I do and uses its differently.

  108. 108
    choices Says:

    JB-just noticed MMR’s P & F chart-PO of 34, about a double-X’s straight up-almost invites a correction-what do you think?

    Thanks-voted-you approaching celebrity status

  109. 109
    choices Says:

    #107-your last sentence “uses it differently” that is what sets you apart, Z-your comments are balanced and candid.


  110. 110
    choices Says:

    TAT joining the green group, up >4%

  111. 111
    zman Says:

    Thanks choices.


  112. 112
    skimo Says:

    re 107- if this is a quiet day, please sir may I have another! 🙂

  113. 113
    RMD Says:

    funny for the day: GHS trading comment on EOG: ‘big deal with PXP-good to be a seller with PXP on the other side…just ask CHK!!’

  114. 114
    jat Says:

    My thought re 113. If the CHK JV with Reliance is iffy, then Aubrey should just hit up Flores again. He’ll pay 10k an acre!

  115. 115
    zman Says:

    re 112/113 … too true.

  116. 116
    RMD Says:

    GHS then does some math on a serious note to answer: when does gas production in the lower 48 decline? With reasonable assumptions and keeping vertical and hz rig count flat, production peaks at 67bcfed in 4/11 (vs 64.4bcfed in 7/10) and starts to decline. If hz rigs decrease 10% over the next 12 months (6.5 rigs per onth), peak is Jan. ’11 at 66.6bcfed before declining.

  117. 117
    zman Says:

    ROSE loses a good name, HK picks her up. Ellen DeSanctis, who I’ve know since Vastar is in the IR slot or something similar at HK, big upgrade for them over their old IR. Makes me want to pay closer attention to HK aside from the catalyst list stuff they have going on. I continue to hold the shares in the ZLT.

  118. 118
    zman Says:

    CHK and Reliance end JV talks for Eagle Ford

  119. 119
    RMD Says:

    Wonder if Aubrey just wanted too much…greedy?
    Anschutx reported to have sold his 500,000 acres of the MS, and put his ND Bakken acres up for sale also. Hmmm..

  120. 120
    BirdsofpreyRcool Says:

     z — request… if you have the time.  Could you line up the major Bakken-Centric Players (BEXP, OAS, KOG) based on what you (or they, or whoever) is estimating for a yr end exit production rate?  Use the 4k for KOG.  THANKS.  (if it's not too much of a bother, that is)

  121. 121
    BirdsofpreyRcool Says:

    End of Day Overview:
    ·         SPX: 1160.72, +2.08% NASDAQ: 2399.83, +2.36% DJIA: 10944.72, +1.8%
    Market Update
    ·         Market Update – as impressive as the rally in the SP500 was today, the more significant news happened in the FX world.  There were a series of actions overnight ostensibly designed to in large part weaken the dollar and they nearly all (for now) failed.  The BOJ unveiled a much more aggressive set of easing actions than expected and while the yen was hit initially, it bounced right back and made small gains vs. the US$.  The RBA left rates unchanged in a surprise move and while this hit the AUD briefly overnight, the Aussie dollar climbed ~0.4%.  The Brazilian real surged ~1.6% today despite that country imposing new taxes on capital inflows.  Only the Korean won managed to dip, falling ~0.7% after the country talked about stepping up its audits of FX inflows.  Brazil’s lament last week that the world was in the midst of an “FX war” continues to prove accurate as countries take action to tame their surging currencies vs. the US$.  The underlying driver in FX (and the big albatross on the dollar) has been the widening policy differential between the Fed and the world’s other CBs, something that is expected to be reinforced this Thurs when the ECB meets (as a slew of Fed officials, inc. Dudley on Fri, Sack/Bernanke on Mon, and Evans today, signal more asset purchases to come in Nov, Market News Int’l reported that the ECB is currently split, w/some members pushing for tighter policy actions going forward).  Euribar rates rose today to the highest levels since Jul ’09, a sign of the tightening conditions in eurozone money markets (per the FT).  With so much attention being paid to FX, this Fri/Sat IMF/World Bank meetings could take on added significance, although if any global accord on currencies is to be reached, it prob. won’t be until the G20 Fin Min meeting later in Oct or at the G20 Leaders Summit in Nov (there have been calls in the press and from some int’l bodies for a global “truce” to this “FX war” and the FT said France is trying to goad China into a framework, although so far it doesn’t seem like any of the major global principles are heading down this path in time for the G20).  The by product of all this of course is further upside in metal money – gold jumped ~$25 today (2%) and as impressive as it’s move has been, silver surged nearly 4% (and is up 35% YTD).  Silver is up 25% since the start of Aug. 
    ·         While currencies dominated the headlines, some of the most interesting trading occurred in Treasuries today – despite all the talk of more QE (Fed’s Evans was the latest to make comments), 10 and 30yr Treasuries were flattish-to-dwn today (although 5s and 7s made gains).  There have been some notable cautious remarks made on Treasuries in the last few days – the WSJ reported overnight how Goldman, a big TSY bull, was turning cautious while the head of PIMCO’s TSY trading told DJ intra-day that TSYs had seen their best levels.  A Bloomberg article noted on Mon how Treasuries were already pricing in another round of QE.  While the dollar is responding to QE, Treasuries (for now at least) have stopped rallying (10yr yields are the same they’ve been since late Aug). 
    ·         Looking at equities today, stocks posted strong gains across the board (nearly all the major SP500 sub-groups were up more than 1% while the industrials, materials, and banks all climbed ~3%+).  There was a lot of head scratching as to what caused the ramp and many took an incredulous attitude towards the strength.  The prime culprit was the unleashing of liquidity around the globe this morning (Australia + Japan) and the expectation that CBs will continue to take action to prevent their currencies from strengthening (in the background is the FOMC Nov 2-3 meeting where a ~$500B-1T round of QE is expected to be unveiled).  On the economic front, the US non-manufacturing ISM was nice, but prob. on it’s own not enough to propel stocks (and if anything the ISM missed some whispers earlier today).  Looking at the corporate newsflow, things were very quiet (earnings season officially starts w/YUM tonight and the real volume of reports doesn’t kick-off until the week of Oct 18).  In terms of trading color, the real problem today was a complete dearth of selling pressure.  There was a lot of skepticism expressed towards this move and it seems like people aren’t as fully invested as they would like.  The consensus call was for a pull-back coming off the very strong Q3 performance and many thought Mon’s action was the start of that (when the sp500 dipped 0.8%).  However, there was no follow-through to yesterday’s selling and there continues to be an impressive bid on any material weakness.  Technically, we broke up through the 1157-1160 range (and people are eyeing how the 50day MA could soon cross back above the 200day MA).    
    ·         Equity sectors – Materials were the best sector in the market, rising close to 2.75% on strength across the board, but particularly in base / precious metals and other commodity-related names as more talk of QE sent commodities sharply higher. Industrials were up around 2.7% on strength in rails/freight, higher-beta machinery names (particularly engine makers such as NAV, PCAR, and CMI), aerospace names, and building products. Financials were up 2.35% on strength in both regional and large cap banks (BKX up 3.4%), although AXP continue to move lower on the antitrust case. Energy was up around 2.3% on strength across the board thanks to a jump in crude and a small bounce in natural gas prices. Tech was slightly ahead of the tape on strength in semis (SOX up 2.25%), WFR, LXK, and DELL. Discretionary was up with the tape on strength in HOG (pos comments from competitor), retailers, and EK. HC was up 1.8%, underperforming the tape a bit on weakness in managed care and facilities. Telecom was up 1.6%, lagging the tape a bit as investors moved out of the lower-beta group to put risk on the books. Staples and utilities were both up around 1%, lagging the tape as investors rotated out of the more defensive group to add beta.
    ·         Best performing sp500 stocks: HOG, JNPR, PXD, MI, FITB, JCP, IPG, ERTS, NOV, WFR
    ·         Weakest: IRM, CL, AXP, DHR, BIG, MU, PHM, THC, ROST, BMC
    ·         Commodities: Commodities finished near their highs as the dollar peeled back. Natural Gas came rallied off its lows in the afternoon to finish up ~1.1%
    ·         FX: USD (DXY) sold off in the morning and was weak throughout the session, closing near its lows, dn. ~0.8%.  Despite an initial sell off in the yen overnight, the yen strengthened and reached its highs late in the morning, though closed off its best levels (still up ~0.2%).  Elsewhere, the euro rallied to end the day near its highs (up ~1.1%) while the pound was flattish in the afternoon.
    ·         Corp. Credit: Corp Credit finished near its highs of the day – IG 15 tightened 6 1/2bps and the HY 15 gained 7/8 of a pt. 
    ·         Treasuries: Treasuries finished the day mixed as stocks melted higher. The 2s finished near their highs (almost yielding under 0.4%) while the 10s gave back some of its gains early in the afternoon to end with a small loss. The 30s came off its lows near midday, though weakened into the close. This morning, the Fed bought a total of $5.19B worth of treasuries, bringing the total to just over $40B since August 17th. (Bloomberg)

  122. 122
    zman Says:

    Re 120 – no problem

    Has anyone see all of the figures from API, I only saw a big build for the crude number.

  123. 123
    zman Says:

    rewind on 120, exit rates or growth rates on 2010 and 2011? Most don't give an exit rate, I model some but not all of them so they'd be educated guesses on the rest.

  124. 124
    Nicky Says:

    Z – out of interest did you get the API numbers?

  125. 125
    Jerome Blank Says:

    #105 BEXP…gap away break out on great vol…posted a new close up daily, if we get a weak mkt day, thinking a pullback to $19.25 would be an ideal spot for a long try….longer term the weekly is suggesting a target price at about $24…..
    #108,  choices, thank you…MMR, seems a bit lofty, but MMR did pull back a bit, just now enough to reverse back into o's…updated the daily chart, a nice consolidation bull flag…MMR still seems to want to go higher…

  126. 126
    zman Says:

    API Watch:

    • Crude: UP 4.4 mm barrels on a 2% drop in refiner utilization
    • Gasoline: DOWN 4.1 mm barrels
    • Distillates: DOWN 0.777 mm barrels
  127. 127
    zman Says:

    Thanks much JB.

  128. 128
    zman Says:


  129. 129
    Nicky Says:

    Thanks Z. 
    1163 capped it for today.  Strength should start to dissipate tomorrow and Thursday should be a down day.

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