05
Oct

Wednesday Morning

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Market Sentiment Watch: Suddenly everything is at a five month high. OK, not everything but the S&P 500, oil, and gold (well, actually another record in that case) but you get me, things are moving in tandem. The financial press is all hot and bothered about Dow 11,000. What a meaningless target that is. I've seen enough October, this-time-it's-different-starts, that are suddenly and sharply reversed to be cautious.  A smallish correction in the stocks would see the ZLT just ride it out and maybe sell some calls against positions that have really run but for the options portfolios I plan on getting more and more to the sidelines except for short term trades. The ZCAT has been there for some time as this is still not really a catalyst driven and much as it is a market driven environment. The ZIM has been making up ground lost during the summer. 

Ecodata Watch:

  • ADP employment came in at -39,000 vs +20,000 expected.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today 
  5. Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

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

ZIM (Zman Inefficient Markets portfolio)

  • $7,000
  • 55% Cash
  • Positions (4) are updated on the ZCAT, ZIM, ZLT page.
  • Yesterday’s Trades:
    • 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.
    • WLL - Sold the 4 WLL $95 calls for $5.80, up 70%.
    • WLL - Sold half of the WLL $100 calls for $2.35, up 57%.

Commodity Watch:

Crude oil traded up $1.35 to close at $82.82 yesterday, moving in sync with a strong equity market.  After the close, the API released a mixed bag of a report which on the whole was bullish for products (see below). We are at the upper end of my comfort level and should pull back unless OPEC decides to get serious about compliance, which becomes less likely as the meeting approaches and prices remain firm. This morning crude is trading flat.

Natural gas moved up $0.02 to close the day at $3.74 yesterday. This is noise, we remain range bound. This morning gas is trading up 2 pennies.

  • NGA Watch: The Natural Gas Association sees growth in winter gas demand of 2.4% due to a combination of higher gas fired electricity consumption and returning industrial demand. 

Early Read On Natural Gas Storage: Street is at 76 BCF for tomorrow’s report.

  • Last Week: 74 Bcf Injection
  • Last Year: 68 Bcf Injection
  • 5 Year Average: 71 Bcf Injection
  • 10 year Hi: 91 Bcf Injection
  • 10 year Low: 41 Bcf Injection

Oil Inventory Preview

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

Stuff We Care About Today

BEXP Presentation Wrap Notes

Volume Growth: Strong, as expected:

  • 143% growth in oil production for 2010
  • > 100% growth in oil volumes in 2011

Density Pilot Could Mean A Lot More Wells On Their Land. Suspicion is they will be able to drill more than 3 wells per unit per member so the number of locations on their 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.
  • BEXP may drill 4, 5, or 6 well density tests in 2011. That could mean up to 12 wells per 2 section unit (1,280 per unit).

East Montana Progressing 

  • They did a lot of science on the first well including during the frac which may have led to a less than optimal completion,
  • Encouraged by a number of nearby wells including one from nearby ZEnergy well nearby that was a 1,200 boepd and their own 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,

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

 

Johnson Rice Energy Conference Schedule


Some pre game thoughts on the presentations

  • CRZO - They should have spud 3 horizontal Niobrara wells last month, looking for details on where and timing of results which expected some time in the 4Q.
  • NFX - looking for more Bakken and Eagle Ford details
  • OAS - looking for more color on this triple digit grower (2010 and 2011). They've only presented a handful of times since going public and they've provided scant details on their well results.
  • SM - SM is drilling 2 more Granite Wash wells and their second Niobrara well (maybe too early to know much, the first well IP'd over 1,200 BOEpd and I'd like to hear more about that one in relationship to the new spud).
  • EXXI - Looking for additional color at Black Beard East and Davy Jones 2, should at least be able to tell us where they are in the wellbore, and given that they are logging while drilling additional information on what they have seen so far. MMR is the operator but it still should be interesting.
  • KOG - more commentary on the recent well results and flavor on just how high over the official exit of 2,500 BOEpd they are comfortable with.
  • GST - Color on the Streater well, which was about average for a middle Bossier completion and hopefully a mention of their progress at their first Eagle Ford shale well and their second Glen Rose oil test.

 

WHX Revised Model

Price deck for 3Q10 lowered - I marked the 3rd quarter to market , this took oil and gas prices down and effectively reduced the 3Q distribution from $0.61 to $0.57.

  1. My sense is that with the other conservative assumptions in the model they should beat the $0.57 number.  The Street is at 0.72.
  2. I've also trimmed oil and gas price realization expectations for the next 5 quarters to reflect something closer to the strip for natural gas and an average of $87 for oil (5 quarter average through the end of 2011)
  3. No changes have been made to the model's cost assumptions.
  4. The NTM expected distribution is now $2.25 equating to a forward yield of 10%
  5. We should get the distribution announcement around November 5th and I really expect my number to be the downside case. 

Other Stuff:

  • GMXR Provides Quick Update

    • Falling Guidance

      • 3Q miss. Expects 4.6 Bcfe, below the guidance range of 4.7 to 5.0 Bcfe
      • Full Year guided lower. Was 17.5 to 19 Bcfe, now 17.1 Bcfe
      • Company blaming frac delays. 
    • Capital Spending coming down ... again
      • Now plans to sublease 3 of 4 rigs, up from 2 previously, so will run a 1 rig program from Nov 10 to June 11.
      • 2010 spending remains the same at $175 mm
      • 2011 spending falls $23 mm (13%) to $152 mm.
    • Nutshell: Full me once, shame on me. Last month they cut spending without cutting volumes. Well hear ya go again. Management needs to do a better job on the under promise game.
  • HK IR Upgrade - ROSE loses a good officer, 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.
  • Overnight Emaibag - BOP, will get clarifications from you today on what your looking for with your Bakken question last night and insert either today or in tomorrow's post.

Odds & Ends

Analyst Watch:

  • SD - Keybanc starts at Hold
  • PETD - Keybanc starts at Buy, target $40, cites Niobrara potential

214 Responses to “Wednesday Morning”

  1. 1
    zman Says:

    Analyst Watch:

    PXD – Key also picked them up with a Buy and $90 PT

  2. 2
    BirdsofpreyRcool Says:

    z — thanks for a great morning post.  The last part of the day at Johnson Rice was tailor-made, just for me…. looking forward to it.
     
    Thanks for refreshing the Bakken Beauty Contest Constesant List for me… any time in the next week is just greeeeeeeeeeeeeeat. 

  3. 3
    zman Says:

    Thanks BOP, started cobbling together several items last night and had questions as to what you wanted to see, will relay later today via email.

    Me too re JREC today, I hold NFX, OAS, GST, EXXI, KOG.

  4. 4
    zman Says:

    Futures pulled back but it feels like the market wants to go higher.

  5. 5
    BirdsofpreyRcool Says:

    ADP Number may have disappointed some… but the Credit Market continues to march higher. At a fairly fast pace.

    IG sub-100 now. wow! Offered around 98.5, about 3/4 of a basis point tighter.

    HY clawing it’s was back up to par (100). At 98 13/16, up a smidge of an 1/8th point.

    Institutional investors continue to reach for yield. Good time to be a corporate treasurer. Along those lines, AINV issued their first-ever fixed debt… priced wide (in their opinion) at 6.25%. But they are pioneers in issuing fixed debt in the Biz Development Company space, so had to pay a bit of a “First Date Premium.” I am a buyer of that stock on any weakness.

  6. 6
    BirdsofpreyRcool Says:

    z — I forgot you dipped your toe into the GST pond. Good. Snaps one’s attention to it. Thing is, if their EF and GR wells prove economic, stock takes off. If those wells are just pfffffftttt, then stock wallows around about where it is. Love that. Like EXXI was at 18 or so…. current operations support the stock price, but significant upside if new play(s) show promise.

  7. 7
    BirdsofpreyRcool Says:

    Today’s Top Stories

    · Stocks continued to move higher this morning amid little news, as more speculation of QE gave equities another leg up.

    · In Japan, the Nikkei surged off the back of yesterday’s US rally and on talk that the country could implement an add’l stimulus package in the coming months. China remains closed for trading b/c of Golden Week – its next trading session will be this Fri Oct 8.

    · In Europe, stocks moved higher on more talk of QE and mostly in line eco data (although Euro-zone consumer spending was a bit light).

    · Greece – The European Union’s statistical office will this month revise upwards Greece’s budget deficit and public debt figures for 2006-2009 (Reuters)

    · FX wars – 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).

    · Ireland – the government’s plan for Anglo Irish may trigger payouts on the co’s CDS; the country is trying to ensure that junior debt holders “share some of the burden” of the bailout. However, forcing losses on junior holders could trigger a technical default – Bloomberg

    · Bank earnings – yet another neg. press article – “Wall St downbeat on bank earnings” – Wall St’s sentiment towards GS and MS has turned “sharply bearish” over the past few months. The article doesn’t really have any new information…really recaps all the neg. sell-side research that has hit in the last few weeks. This same article has been reprinted in one form or another in all the major papers in the last several days. FT

    · Fed speak continues to point towards more QE coming on Nov 3….Fed’s Evans (mid-day on Tues) gave a pretty dovish interview to the WSJ…but some investors are starting to think Treasuries have seen their best days – according to a DJ article (hit mid-day on Tues), Steve Rodosky, head of Treasury and derivatives trading at Pimco, said Tuesday that he has stopped buying Treasurys since July…..”The best day in Treasurys is probably behind us,”

    · Retail – WSJ and FT both have optimistic articles on ’10 holiday sales; both articles cite a new forecast from the NRF which calls for 2.3% growth in sales this season (which would be the strongest growth in 3 yrs). Says while sales will pick up, discounting will be major theme of holiday season. ICSC on Friday estimated that Holiday SSS will be +3-3.5% (the best performance since ’06). The next catalyst for the group will be the same-store-sales releases Thurs morning.

    · COST – Reports Q410 earnings 2c ahead of print ests. driven by stronger GMs; Sept. SSS inline w/St. Note that expectations high heading into the print given the recent rally in the stock

    · YUM – Reports Q310 Earnings, Q beats by 1c w/higher tax weighing by another penny; China SSS stronger while US/YRI inline; guidance raised to encompass the St. at the high-end.

    · Tech profit warnings – Autonomy on the tape today talking about cutting its full year guidance by ~3% and EQIX last night said it would miss revs slightly for the Q and year (EQIX said it would raise its EBITDA guidance) – both stocks were severely punished on what look like relatively minor misses (shows how high expectations are)…keep in mind this has been a very neg. tech preannouncement season (warnings from AMD, INTC, GLW, POWI, PMCS, etc).

  8. 8
    BirdsofpreyRcool Says:

    Houston Ship Channel just reopened.

  9. 9
    jat Says:

    z, did you find a webcast for johnson?

  10. 10
    zman Says:

    Thanks much BOP, had to step out for an intern matter. No call until 9:15 CST (CRZO) for me. Kinda quiet otherwise.

    TAT moving nicely last few days, up again this morning, could be Thrace Basin frac news leakage.

  11. 11
    zman Says:

    Jat – no, just been going to the individual company sites.

  12. 12
    john11 Says:

    Just noticed…
    HOUSTON, TX–(Marketwire – 10/06/10) – Mr. Ronald D. Ormand, Executive Vice President and Chief Financial Officer of Magnum Hunter Resources Corporation (AMEX:MHR – News) (AMEX:MHR-PC – News) (“Magnum Hunter,” or the “Company”), will present today at 10:35 AM Pacific Time to the Deutsche Bank 2010 Leverage Finance Conference

  13. 13
    john11 Says:

    Mr. Ormand will update investors on the Company’s recently filed $250 Million Universal Shelf Registration Statement and the Company’s outstanding “Series C Perpetual Preferred Stock Issue” (non-convertible) with current outstandings of approximately $30 million and plans to increase total outstandings up to $100 million.

  14. 14
    elijahwc Says:

    CHK: Yesterdays rumor of the deal with India’s Reliance falling apart turns out to be true. This of course begs the question of whom Reliance court next in the EFS. They seem pretty committed to a significant presence in every domestic gas shale.

  15. 15
    zman Says:

    Front and Center Watch

    BEXP – looking for some follow through on the stock there to help my short term call trade. The contracts held number is high but the amount of $ is low. I continue to own it in the ZLT and consensus from what I’ve seen out of the sellsiders is a $2 to $4 bump to NAV bringing most of their targets into the mid $20s. It is not cheap on CFPS of EBITDA for 2011 at this point but it is rarely cheap and the group can skew the normally acceptable forward multiple to the above the high end of the range.

    WLL – broke trip digits yesterday. Looking for an exit on my remaining calls but may exit and then re-enter before they speak at IPAA next week. Stock has had a good run but it remains at the lower end of the valuation range and I expect 2011 and 2012 estimates to walk up.

    MMR – Holding the $17 calls for the 3rd time in three weeks, looking for comments from EXXI to be a driver late today, early tomorrow. Will be an interesting ultra deep update there.

  16. 16
    zman Says:

    Eli – saw that, best guess would be PXD or HK. Wonder if they are able to get $10K/acre pricing.

  17. 17
    zman Says:

    FYI – Nicky said 1163 topped it yesterday and she expects weakness today and tomorrow and potentially a final high Friday.

  18. 18
    elijahwc Says:

    If HK it would be one of those CAT type things.

  19. 19
    BirdsofpreyRcool Says:

    TPH out this morning with a short list of faves…

    Oily = BEXP, NBL, OXY, DVN

    Gassy (for patient investors) = XEC, HK, QEP

  20. 20
    zman Says:

    Market trying to shrug off ADP … I’d doubt oil and gas really move until after oil inventories.

  21. 21
    BirdsofpreyRcool Says:

    ATPG — still sitting in this event-driven trade. Thinking we won’t hear about the Telemark well (#941) until next week… until then, just day-traders pushing on stock in both directions. Company is very tight-hole right now. So, don’t believe any “rumors.” Just waiting on an official PR. Next Monday? Tues? Wed?….

  22. 22
    jat Says:

    This will likely be a stupid question, but why would Reliance be INCREDIBLY eager for more Eagleford with CHK given their existing relationship with PXD?

  23. 23
    zman Says:

    Jat – dunno but the foreigners have had big appetite for gas … maybe they plan on exporting it since Asian landed LNG prices are north of $10/Mcf.

  24. 24
    crysball Says:

    A positive outcome on BEXP Pilot Density Projects would have large positive implication for USEG if recall serves correct on their PSA with BEXP in Roughrider.

    USEG’s new project in Kentucky seems like a joke funding a cash starved E & P.

    Plan to talk with Reggie today. Will also get update on Mt. Emmons Moly project.

  25. 25
    zman Says:

    NOG at another all time high, no conference presentations for them this week or next. I own the common in the ZLT and think that one will see numbers rally into year end.

  26. 26
    zman Says:

    GMXR – down 7% … no plans to touch that one until they stop it with the over promise pitch.

  27. 27
    zman Says:

    Thanks Crys

  28. 28
    BirdsofpreyRcool Says:

    crys — ask Reggie which nat gas play they are most interested in or focusing on. They say they are patient contrarian buyers… and said they would probably buy into a nat gas company, when i met with Keith and Reggie a coupla weeks ago. Thanks for your info here!

  29. 29
    ram Says:

    Re 23 – Why would a foreign E&P have more success than a domestic E&P to take advantage of foreign markets?

  30. 30
    BirdsofpreyRcool Says:

    ram — not more “success”… just more patient, methinks.

  31. 31
    zman Says:

    re 29 – If they are already set up receive LNG it would be easier for them. Big learning curve there as EOG found out with Trinidad.

  32. 32
    zman Says:

    WLT attempting to break on out of its recent flag formation. Guidance was cut over a technical glitch a few weeks back, stock has now recovered all of that and more and they continue to sell all the met coal they can produce.

  33. 33
    ram Says:

    Why isn’t PTR, SNP, or CEO chasing JV’s?

  34. 34
    tomdavis12 Says:

    Z: Based on your WHX comments this morning. Are you thinking of lightening up a bit and buying into any street perceived disappointment?

  35. 35
    zman Says:

    Tom – mulling but no decision yet.

    Re 33. Tempted to say because they would have trouble getting a deal done because of who they are. They are pursuing deals all over the world, from the Middle East, to Africa, to South America, Cuba and Canada. The U.S. has acted in the past to block acquisitions by Chinese state controlled or sponsored energy firms on national security grounds. It’s nutty but it’s a factor.

  36. 36
    zman Says:

    Analyst Watch:

    WLL – Susquehanna raises PT by $2 to $112 and says the firm “may become a takeover target at a premium to its target price”.

    That isn’t a nutty statement. With the potential for a new core area being proved up as we speak and with the stock not yet fully reflecting that I would not be surprised to see them taken out at all. They are trading at about 5x CFPS for 2011 and 4.6x 2012 estimates. Both of those estimates are likely to grow. Stock is still cheap.

  37. 37
    BirdsofpreyRcool Says:

    Susquehanna analyst = Da Best. (just a reminder)

  38. 38
    BirdsofpreyRcool Says:

    (not as good as z, as sell-siders can’t be as independent as they like… but Duane tends to be an outta the box thinker)

  39. 39
    zman Says:

    Thanks BOP

  40. 40
    BirdsofpreyRcool Says:

    Question… how many times can ATPG hit it’s head on $14-ish this time around, before breaking through? This is #2 attempt….

  41. 41
    tomdavis12 Says:

    Z: I would like to nominate myself for the first annual ZSite “Crappy” award given to the worst performing energy idea in a given year. My nomination is for Noble – NE down 17% YTD. Their recent rig report was not a thing of beauty. This quarter’s report will be a kitchen sink quarter. I have my model numbers but even I don’t care so much. If given this award, I would like to thank the Academy and all those Obominators out there that made this award possible. Anyone else in the running for this award?

  42. 42
    john11 Says:

    BOP..please remind me..what is Duane’s target on EXXI?

  43. 43
    BirdsofpreyRcool Says:

    john — $35. But he admits he is being conservative… 🙂

  44. 44
    zman Says:

    Tom, tom, tom. You gotta let that kind of thinking go man, I think the BP swan event is to blame. In the words of Spicolli, “think positively dude”

  45. 45
    john11 Says:

    BOP ..lol, thx.

  46. 46
    zman Says:

    Waiting on the CRZO call to begin, things moving slow in NOLA today.

    Oil numbers in 10 minutes

  47. 47
    BirdsofpreyRcool Says:

    Tom — I second z’s comment. (and i eat grass all the time myself… comes with the territory… if you don’t make mistakes, you aren’t trying hard enuf to find winners!)

  48. 48
    tomdavis12 Says:

    Z: Just thought poking a little fun at oneself is cathartic. If you like the concept, I will put up the trophy that can be passed from year to year.

  49. 49
    zman Says:

    Tom – I believe you have to remember all of your losers but not harp on them. Trade done, out of my head. No need to have a trophy for that. Would much rather have one for the idea that worked best.

  50. 50
    zman Says:

    EIA – oil flat before the number

    Crude up 3.1 mm barrels
    Gasoline down 2.6 mm barrels
    Distillates down 1.1 mm barrels

  51. 51
    reefguy Says:

    26…Speaking of losers…finally dumping them at a major loss

  52. 52
    zman Says:

    more EIA

    Demand:
    gasoline: down 400K bpd to just under 9 mm bpd, as expected for this time of year

    distillates:dipped slightly from last week.

  53. 53
    BirdsofpreyRcool Says:

    wow. IG Credit index is now 2 1/4 bps tighter on the day. wow. Very strong, positive move… especially as it follows a week or so of strong, positive moves. wow.

    IG 97 bps -2.25 bps

  54. 54
    zman Says:

    Cushing moved back up as refining demand came off. This again matched API’s read from last night, going on 6 weeks of good matching there.

  55. 55
    tomdavis12 Says:

    Z: OK you win. I will go for more therapy. PS Very unusual option activity in EOG this month. When covered call writers sell Oct 120’s & 115’s they usually like to but back early @ .05 so they can sell more premium for outer months. You can buy the 120’s now but not the 115’s with only 7 days left. 17% premium. Unusually bullish for the last three weeks.

  56. 56
    zman Says:

    Could the new version of Firefox be worse? Hmmmm. Almost makes me want to go back to the Microtards. Naahhh.

  57. 57
    BirdsofpreyRcool Says:

    ATPG — going for another knot on the old bean… gonna bump into 14 again…

  58. 58
    BirdsofpreyRcool Says:

    ATPG — so… is Lucy gonna pull the footfall away again? Or does Charlie Brown finally get to kick ATPG through the $14 goal post. Developing story….

  59. 59
    BirdsofpreyRcool Says:

    You guys are pretty quiet this morning… so, heres to you, Mrs. Robinson —

  60. 60
    Nicky Says:

    Morning all. So far the strong resistance at 1163 has capped the rally but consolidating up here is still bullish for higher highs. We have support at the 1150 area which doesn’t look like its going to be tested at this rate. There are two minor cycles which are not likely to top for another day or so. The longer cycle is starting to look very extended so its difficult to see exactly how this is going to play out. However I would say I am looking for a higher high between now and Friday and then we likely roll over. If we can get above 1163, then look for 1168,1172 and then 1177.

  61. 61
    BirdsofpreyRcool Says:

    Interesting intra-day comment from XACS#1
    —————————————–

    The reemergence of potential LBO candidate lists supported the usual suspects on Tuesday. Supermarkets were a big winner…and AZO has clearly benefitted from the ability of Mr Lambert to raise cheap cash through a Sear’s debt issuance…. As we have said numerous times, the tightening of credit spreads plus the low treasury yields will help close the bid/ask price difference between companies looking to buy businesses and management teams willing to sell. “Cash and Carry” pricing is being squeezed out of the corporate market..

    Index credit spreads have steepened…indicating that the overall market is expecting, and positioning themselves for, an increase in leveraged buy-out activity. NEVERTHELESS, THE SPREAD PERFORMANCE OF SUPERMARKETS AND AZO CDS (CDS Curves) INDICATES THAT THE CREDIT MARKETS DO NOT BELIEVE THESE SPECIFIC COMPANIES OR INDUSTRIES ARE POISED TO ANNOUNCE A SLEW OF LBO DEALS. We believe the credit markets are positioning themselves for the eventuality of a leveraged transaction volume increase while they wait to figure out which sector/industry will lead the charge.

    That said, we expect that the first large leveraged (LBO-type) transaction will fuel a significant sympathy rally in the equity of industry peers as well as cause the credit spreads of their peers to widen and steepen.

    We would expect many of the weaker homebuilders and advertising media companies could prove to be attractive targets_especially if you believe (1) the book value of their housing assets and land will be bolstered by Fed activity, (2) that the legislative agenda in Washington will continue to keep corporate political advertising growing, (3) that the relative stability of media revenues through the recession provided debt investors comfort regarding the degree of leveraged transactions the sector can support. MJ

  62. 62
    Dman Says:

    Z – what is Firefox doing to you?

  63. 63
    zman Says:

    Had to reboot BOP

    Thanks much Nicky for the levels, will put in the morning post.

    Group is a big mixed bag at the moment.

    NFX call up next at JREC, in about 45 minutes.

    Other interesting calls a bit later.

    WLL playing about $101, rest of the Bakkens pretty flat

    Oil just over $83, net net that was a pretty good report. We have distillate stocks now even with year ago levels, which is only the 3rd time they’ve been that “low” this year. They are still 21% over the 5yr however and we are going to need some better demand soon to sustain prices. I don’t like crude up here. It has a habit of falling more sharply than it rose. The Cushing number was up but not alarming yet but I would bet it rallies for the next several weeks as midwest refining retreats.

  64. 64
    bill Says:

    gmr a tanker company and sponsor of balt is having cash problems

    cut dividend and got a waiver on equity raises. stock is at a yearly low

    http://finance.yahoo.com/news/General-Maritime-Corporation-prnews-1360109451.html?x=0&.v=1

    http://www.tradewinds.no/tankers/568112/loan-forces-genmar-sales

    tanker rates stink right now

    not good for fro, tk,nat,tnp,osg,gmr

    Indirectly bad for balt as they have to stand on their own 2 feet..cape rates have improved last week.

    i think balt want to report q3 results and divy and see if that will help its price and they cant float the secondary

  65. 65
    zman Says:

    re 62. Hanging up and then crashing altogether.

  66. 66
    zman Says:

    Thanks for the bullet point update Bill, got all I needed in 30 seconds!

  67. 67
    Nicky Says:

    If we still need another wave up and this is a wave iv then look for boring sideways chop. Typical retracements are 1156 (23%) and 1151 (38%).

  68. 68
    zman Says:

    Nicky – yeah. Lots and lots of money on the sidelines or in bond funds which are overpriced at this point. Thinking equities feel the flow from both as we go deeper into 4Q. But choppy action as a lot of “I missed the run and don’t want to chase it, OK, now its even higher so it must be even better” trading action takes place.

    Kind of like when the Street.com said to buy SSN the other day because it was cheap and has been going higher. I don’t get that mentality at all but what do I know?

  69. 69
    zman Says:

    Reef – I hear ya on GMXR, they got me too higher. Will grain of salt all claims about reserves or growth from them ad infinitum

  70. 70
    zman Says:

    Crude at 83.36. Stocks not buying it.

  71. 71
    reefguy Says:

    z- adding to gst here

  72. 72
    zman Says:

    Thanks for the heads up Reef. Any word from the field on the second Glen Rose well? I thought the Streater was a little light to their average for the mid Bossier and the stock pulled back at that time. That’s a non event difference with what they have going on.

  73. 73
    VTZ Says:

    Gold stocks not responding either… they have also recently just broken above longterm resistance at 520 on the HUI, although they might retest the former resistance as support before moving higher.

  74. 74
    john11 Says:

    Here is next weeks IPAA schedule, for planning purposes.
    http://www.ipaa.org/meetings/pdf/102010ogissfpresentationschedule.pdf

  75. 75
    elijahwc Says:

    #64 Bill is SFL in the universe of shipping names of interest?

  76. 76
    zman Says:

    Coals moving best today, from WLT and ANR on the met coal side to MEE and PCX and despite a downgrade on the last one. BTU not moving but its had a good run already.

  77. 77
    bill Says:

    speaking of lbo’s

    does reliance have the cash/debt to take a run at chk?

    they could get 100 % of 5 basins for 15 b better than 20 % of 1 basin for 1 b

  78. 78
    zman Says:

    BEXP just biding time.

  79. 79
    bill Says:

    sfl, yes but they put their ships out on long term charter so less of a problem for them..more of an issue for spot players.. or players that need cash to finance purchases

    gmr got a bridge loan with a promise to pay 23 m in december. they had planned to issue shares and apparently, gmr doesnt want to dilute shares at 4 handle so they have to cut divy per the terms of the loan

    tanker rates generally get better in the winter as charter activity picks up

    the other wild card is contango incentivizes storage on tankers and they need a dollar a month before that becomes profitable for traders

    I dont follow sfl too closely

  80. 80
    BirdsofpreyRcool Says:

    ok… sorry about #59… was just feeling lonely. ahhhhhhhhhhhhh.

    Anyway, if we just tread water until Friday’s report, that seems about right to me. Don’t like oil prices spiking to $85. But that seems to be the range, $70 when OMG-We-Are-Never-Gonna-Grow-Again! $85 when The-Future’s-Looking-Brighter-With-All-This-QE-Pouring-Into-My-Lap.

  81. 81
    Nicky Says:

    oil in a wave v. of what degree I am not sure. but should get a correction at least soon.

  82. 82
    zman Says:

    Crude running on $84.

  83. 83
    bill Says:

    one thing that turned me off on sfl

    in the good old days, they sold a tanker and had a huge gain. Did the gain go to sfl? Nope, FRO scooped it up. How did they do that? Sfl terminated the long term charter with fro, and fro got all the spoils in termination fees. sfl is controlled by JF of FRO.

    So heads fro wins and tails sfl loses

    In a period of oversupply, fro will just let the charters run their course and sfl is stuck with the residual value issue

  84. 84
    Dman Says:

    V #73 – I suspect the correction will be from higher levels. I saw a Cramer headline saying “don’t miss the gold rally”, which is a bit of a worry. But maybe we need him to be pounding the table with bulging eyes on morning TV (causing visible discomfort to whichever money-honey drew the short straw) before it becomes a sentiment indicator.

  85. 85
    zman Says:

    Can’t split spreads on BEXP calls today, sitting on what I’ve got, feels like a run is out there but if they are watching oil then it won’t last long.

  86. 86
    zman Says:

    WLL breaking into new highs as oil does.

  87. 87
    bill Says:

    One final thing, if tanker rates stay low for a long period, sooner or later sfl will have to cut divy

  88. 88
    RMD Says:

    Firefox goes through spurts where it crashes for me too.

  89. 89
    RMD Says:

    re 29 & 31: note CHK just added a new BofD member with an LNG background.

  90. 90
    zman Says:

    PETD – missing it

  91. 91
    elijahwc Says:

    Bill thank on SFL and particularly the data point in #83. You’ve gotta do business with honest mgmt and did not know they pulled this.

  92. 92
    bill Says:

    sfl peak divy was 60 cents a qtr it was cut in half

    http://finance.yahoo.com/q/hp?s=SFL&a=05&b=17&c=2004&d=09&e=6&f=2010&g=v

    stock was in the 30’s went down to 5
    and now back to 20 as people are reaching for yield

    http://finance.yahoo.com/q/bc?s=SFL+Basic+Chart&t=5y

    So the the major question for sfl is how long can they sustain that rate

  93. 93
    zman Says:

    re 89. Aubrey has been trumpeting the idea of exports for some time now, makes sense he’s moving on it. EOG has a lot of experience with LNG as well, first Trinidad (that and ammonia) and now Kitimat in Canada to be fed by Horn River.

  94. 94
    zman Says:

    Aubrey should buy EOG, they are under leveraged and now oilier than they are gassy. Would kill a lot of birds…

  95. 95
    VTZ Says:

    RE 84 – Yeah I’m still not selling and I could easily see gold at 1500 by year end, just commenting on the fact that the stocks are not yet playing along and are still staying cheap relative to gold price (in fact getting cheaper in lots of cases). Most of my holdings are in the equities so even with a pullback, I think they are the more attractive investment.

    Also just commenting on the fact that today the commodity price increases are not translating to the equities and that has signaled short term tops in the past (but I guess we have also had continuation rallies, that have caused big increases as well).

  96. 96
    elijahwc Says:

    and, Aubrey should export LNG through the CQP Sabine Pass Terminal. lol

  97. 97
    bill Says:

    91, i remember looking at it a few years ago, and before i bot it, they sold a tanker and fro got all the money so that turned me off.

    But looking at it from the other side,
    say you charter the tanker for 25 years, (not the case) who really “owns it” Fro considers it theirs and sfl is their banker

  98. 98
    zman Says:

    BEXP trying to take out yesterday’s high at 20.11.

  99. 99
    zman Says:

    NFX in 3 minutes:

    http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=63798&eventID=3404849

  100. 100
    bill Says:

    89/93

    the new bod director used to work at shell, left them and became ceo of excelerate energy, they were developing a ship that would take lng, park offshore and transfer to pipeline or ship to ship.

    They wanted to develop a facility of mass and really worked hard at it

    She does have an lng background

  101. 101
    zman Says:

    Thanks for the additional color there bill, thanks RMD.

  102. 102
    bill Says:

    here is sfl last report

    http://www.shipfinance.org/reports/134876/R/1440628/384996.pdf

    looks like they are moving into drybulk.

    also here is an example of a ship sale

    In April 2010, the single-hull VLCC Golden River was sold to an unrelated third party for a net sales price
    of approximately $12.6 million. Ship Finance received net cash proceeds of approximately $4.7 million
    after prepayment of associated debt and compensation to Frontline Ltd. (“Frontline”) for the termination of
    the current charter. We recorded a minor book impairment on the sale of the vessel in the second quarter

  103. 103
    zman Says:

    BEXP into new post pr territory, I only watch it so closely because of the limited time left on my calls.

    NFX – Steve Campbell doing the presentation, good guy, smart other than he hunts wild boar with a large caliber hand gun and dogs, former APC IR guy.

  104. 104
    zman Says:

    NFX slides:

    http://www.newfield.com/pdf/JohnsonRiceConf2010.pdf

    NFX Notes

    Only running 4 dry gas rigs in their entire program – all 4 in the Woodford

  105. 105
    zman Says:

    NFX Notes 2

    50% increase in domestic oil volumes from 1Q10 to 2Q10.

    Monument Butte – current production 23,000 bopd(water flood).
    $750K per well, turning a well to sales every day
    exit 2010 at 25,000 bopd, pushing 30,000 bopd next year.
    5 rig program
    No longer have a refining capacity issue, selling to 4 refiners, this is black wax so about $13 off WTI pricing

  106. 106
    zman Says:

    NFX Notes 3

    Williston Basin
    Bakken about 4,500 bopd now, exit at 2010 at 6,500 bopd.

    mentioned one of the BEXP wells yesterday that was about 3,000 BOEpd, that is right in NFX’s Catwalk area.

    good list of IP and 30 day average of all Bakken wells on slide 8.

  107. 107
    zman Says:

    NFX Notes 4

    Look for update on Alberta Bakken in early 2011.

    Malaysia flat in 2011, as declines offset by new wells
    then back to growth again in 2012

    Hedges
    75% of 2011 nat gas hedged at $6

  108. 108
    zman Says:

    WLL toughing on $102 now, will punt the remaining $100 Oct calls in a bit here.

  109. 109
    zman Says:

    That didn’t take long…

    ZTRADE – ZIM – WLL

    WLL – Sold the remaining October $100 Calls for $3.20, up 151% to my cost basis in that set. I continue to hold the common shares in the ZLT.

  110. 110
    Popeye Says:

    Clean Energy Fuels Corp. said Tuesday it will build and operate natural gas fueling stations for trucks around the nation.

    The company said it signed an agreement with Pilot Travel Centers LLC to place the stations at Pilot Flying J truck stops. Pilot Flying J operates more than 550 facilities in 43 states and six Canadian provinces.

  111. 111
    elijahwc Says:

    Thanks again Bill. That’s one heck of a value added insight there in #83

    I do not own it (SFL)….yet. Do recall the cut years ago.

    What interested me is two fold. One, the large majority are VLCCFs tied to a new lease structure that passes through profits above a base rate. Sort of like %rents in real estate

    Second, they have started to finance speciality drilling ships.

    Hard to get past self dealing however. Beware of Greeks..eh?

  112. 112
    zman Says:

    Pop – saw that, no teeth in the release in terms of details

     

    NFX – excellent conference call, I've had trouble playing in the options here in the past but glad to be shareholder.

  113. 113
    elijahwc Says:

    SD fixin to go positve on the neutral start at KeyBank cause "firm notes, SD's share price is up 27.7% over the last month, vs. peers up 6.8% and the S&P 500 up 2.9%."
    Goin higher KeyBank, goin higher

  114. 114
    BirdsofpreyRcool Says:

    elijah — you seeing any attrractive converts out there today?  My GDP 5s of '29 are diong nicely.  Looking for more like that….

  115. 115
    zman Says:

    LINE rested yesterday along with some other yield names. Today it's to a new high for this cycle and I fully expect it take out the all time highs from 2007 in the next several months, moving from the lower to the upper $30s as we get more news out of the Granite Wash play and a higher distribution. In the meantime, I get paid to wait.

  116. 116
    BirdsofpreyRcool Says:

    Yes.  Yield is Good.
     
    EEP.

  117. 117
    zman Says:

    My only coal, WLT, starting a breakout today, but needs more volume.

  118. 118
    elijahwc Says:

    A  pipeline company thats not an MLP with all the ugly associated tax issues (UBTI & K-1s).
    Pembina Pipeline converted from a trust to a corporate form and most importantly said that they will commit to 1.56 divi through 2013.
    I believe the new symbol to be PBNPF (US;OTC) and PPL on the TSE.
    Any north of the border types like this name?

  119. 119
    zman Says:

    EGY had Gabon well news last night, didn't get a chance to read yet, BOP, any thoughts?

  120. 120
    bill Says:

    Sfl stated book is roughly 800 m. Market cap is 1,560 almost 2 times face
    So sponsors , use these companies as a vehicle for financing their purchases. They can buy an asset for 100m , issue divys,and the market says its worth 200m. Now use the overpriced stock, issue shares, get money and repeat process.
    navious NM has NMM on drybulk side and newly created NNA
    gmr has started balt
    OSG sponsored dht then sold off all the shares
    NAT pays out all cash flow including depr so its like a liquidating trust. The divy supports a 30 prices assets are worth 20
    sfl divy looks safe and they are buy bulkers an drilling rigs now. Look for a secondary soon

  121. 121
    zman Says:

    EOG cracking its 200 day today.

  122. 122
    elijahwc Says:

    #114 BOP:  Only the one that got away.  Could have been had two short weeks ago in the low 80's.  Punch in SDRXP. 
     

  123. 123
    zman Says:

    Bill – MCF just keeps running away from me.

  124. 124
    jim bob is my jesus Says:

    Nicky- curious as to what makes 1163 a resistance level.. can you explain?

  125. 125
    elijahwc Says:

    #124: just noticed your handle.  Are you really T Boone Pickens?

  126. 126
    BirdsofpreyRcool Says:

    EGY — not really a lot new in the PR last night.  Like that they are going to drill the other exploration well, the ETOMG-1 in the Omangou Prospect.  Means all the partners are pulling together and giving EGY a "thumbs up" on their operating success this year.  So, while not really earth-shattering, the company is quietly doing what it should be doing.  I want to hear about Onshore Gabon (with partner Total) and shallow-water Angola (need to come up with a new partner there).  So, just waiting.  But these guys do what they say they will.  Gotta like that!

  127. 127
    zman Says:

    PETD speaks at JREC after the close, will have notes in the morning.

  128. 128
    BirdsofpreyRcool Says:

    elijah — yeah.  OUCH.  Recall you pointing that one out at the time.  Great call.
     
    Converts well outperformed bonds this year… that is another precusor to an equity rally.  Just sayin'…

  129. 129
    RMD Says:

    Z 94 is funny!  Given the different mgt styles, CHK would have to really overpay.

  130. 130
    bill Says:

    123 MCF
    I  dont understand the strength into ng weakness. I was hoping it would stay in the 40's
    Im convinced sd will have crappy q3 results,
    1. Oil hedges went the other way- I know non cash but 100 m loss doesnt look good cash or not
    2. they took off ng hedges when ng was 4.40, left on waha to henry basis hedge at 74 currently about 10
    3. they cashed in 2013 oil to have a settled gain in q3 to pay for some of their sins
    4. No word on century plant, and no word on asset sale.
    5. i think debt will be higher
    So all this means the stock will soar on Q3 results, lol
    Wild card, does someone with money make a play on them like oxy

  131. 131
    RMD Says:

    The SFL/FRO relatiinship is what bugs me about most of the MLPs which do drop-downs from the parent;  one side is in a weak bargaining position at all times.

  132. 132
    zman Says:

    re 129 – I just lobbed that out there to see if anyone was paying attention. Papa would have to retire so yeah, they'd have to overpay.

    re 109 How about that for a toptick on WLL? LOL.

  133. 133
    elijahwc Says:

    BOP here's some positive radio waves for ya. 
    Last Friday I offered out my very smallish EEXXF position @ 223.25  At the time it reflected an earlier trade that I thought was a bad print or odd lot headhanding slightly shy of this level.  See the conversion ratio of 8.77 vs common@ 23ish told me that this deep in the money convert should be trading 20 points above parity……but
     
    Nothing happened till the call at 3:01 with the fill.
     
    So, EXXI common going higher

  134. 134
    ram Says:

    ZMAN – What could specifically be said by EXXI that could help MMR later today at JR?

  135. 135
    bill Says:

    How do you feel about the PXP EFS purchase upon reflection?
    Looks like they increased expected proceeds from assets sales

  136. 136
    BirdsofpreyRcool Says:

    elijah — when you speaks, i listens.  And i luvs what you are sayin' in #133.  thanks!

  137. 137
    elijahwc Says:

    #133 correction "in the money convert should NOT".   Big difference there .ouch

  138. 138
    tomdavis12 Says:

    Z: Another great sale on WLL. Almost a top tick.

  139. 139
    bill Says:

    PXP
    The market punished them when they outspent cashflow and had declining production.
    Now, with all these deals, production will increase, and cashflow positive and they get more oily to boot with the upside mostly unhedged.
    i own it, and want more off it so i need a sanity check.
    Yes flores is all over the map overpaying for stuff at the top of the market. So is efs for real or worth what they paid

  140. 140
    zman Says:

    PXP – feels like they are always chasing hot plays. Wonder how the economics work if the bottom falls out of the NGL market. I think the near term for the stock will be OK, still not an owner, would like to see how much they get for the DW as I think they punted the shallows too cheap.

  141. 141
    BirdsofpreyRcool Says:

    #137 — ha!  guess i mentally put the "not" in there for you… i knew what you meant.

  142. 142
    elijahwc Says:

    BOP that issue as you know trades by appt and usually institutional size only.  So somebody had their Ninja's out hunting for it and for a reason.  EXXI goes higher

  143. 143
    zman Says:

    ZTRADE – ZIM – WLL

    WLL – Added (5) WLL October $100 calls back for $2.20 with the stock at $100.20 (the ones sold earlier for $3.20 with the stock at $102). Just doing a little trading with the name showing increased volatility and still not having fully discounted the recent news. 

  144. 144
    bill Says:

    140 agreed, Did TPH comment on it

  145. 145
    zman Says:

    re 144. Not today at least, they were busy reiterating their $15 NAV on GMXR. There is a lot of value in the name but they are not doing a good job of unlocking it.

  146. 146
    BirdsofpreyRcool Says:

    elijah — methinks we see EXXI at $30 by Christmas… so, agree with the Ninjas.

  147. 147
    zman Says:

    re 134. Just more color on what they've seen and how deep they are at Black Beard East. They have an LWD on so should be able to talk more about potential hydrocarbons in the wellbore as they go.  They were drilling quickly at last check up 2 weeks ago.  Depth on Davy Jones #2 which will give us an idea of when they be into potentially hydrocarbon bearing zones. 

  148. 148
    BirdsofpreyRcool Says:

    they have slowed the drilling at BBE, don't want to burn out motors as fast… but, sounds like it's nothing but sand, sand, sand, as far as the tool can see. 

  149. 149
    ram Says:

    Thanks. I did read today's post.  Since you weren't responding before, I was thinking you shrugged it off as being a stupid question.

  150. 150
    zman Says:

    Didn't know that I ever do that. I'm just rather busy.

  151. 151
    zman Says:

    They may also say they have spud Lafitte.

  152. 152
    zman Says:

    GMXR down 10%. Overpromise, get jackslapped.

     

     

  153. 153
    zman Says:

    ZTRADE – ZIM – MMR

    MMR – Added (15) MMR $18 calls for just under $0.34 with the stock at 16.70. Higher risk trade but the stock is trading away from the group and this set of options should still provide good leverage to a recovery in the name this week. I continue to own the $17s as well.

  154. 154
    zman Says:

    Hearing Kass has done a mea culpa and reduced the size of his book rather than fight the market. Smart fellow. Probably means the market is ready to roll over now, lol.

  155. 155
    elduque Says:

    Nat Gas doing better. Any particular reason, or just random noise?

  156. 156
    zman Says:

    re 155 – nothing on the tropical front, sub trop 17 formed but is bending back out to sea. It's cool here and we've turned on the heat so there is that but the Street isn't looking for a small number tomorrow and neither am I so it's probably just trading range noise. Maybe the pull of $80+ as well.

  157. 157
    jat Says:

    In your mind, what's the catalyst for mmr this week?

  158. 158
    andy Says:

    z – u said NFX now only running 4 gas rigs.  is that a significant reduction from previously?

  159. 159
    zman Says:

    re 157, see 147. Add to that comments on pressure and heat being less in the BB East well than they were in BB West well and their drilling progress being much faster than the last well with excellent porosity and clean sands (assuming all of that still holds true).

  160. 160
    Nicky Says:

    Re # 124.  Hi Jim Bob.  Can you just elaborate on your question.  Are you asking specifically about the number 1163 or just a general question about what makes a resistance number?

  161. 161
    isleworth Says:

    Z – anything new on SSN…….not following the rally……opportunity?

  162. 162
    zman Says:

    Andy – if memory serves they got up to a dozen or so at one point in the Woodford. I think they will go lower, maybe down to 2 rigs to do a little lease holding although they are largely held already in the play. Focus shifted completely to oil there as it has at most companies that have that kind of portfolio.

  163. 163
    zman Says:

    Isle – no news, trickling lower as people think there is no catalyst for a time. Volume is smaller on the down days than the up days. Delay to the final closing is causing some to jump out. Gets kind of silly when you have CHK drilling your ORRI acreage and you've closed on $70 mm of the deal and are waiting on $4mm but people in SDM's more than in big caps are impatient creatures who often know little more than the ticker and the direction of the stock chart.

  164. 164
    jim bob is my jesus Says:

    Hi Nicky- specifically about the number 1163- usually something stands out- previous opens/closes, prior resistance levels etc..was wondering if it was a Fibonacci level

  165. 165
    zman Says:

    re 164 – she's an Elliot-waver, and in my experience a good one.

    OAS apparently not broadcasting, going through the slide show now.

     

  166. 166
    zman Says:

    OAS presentation, nothing new.  Still bang on sized growth, guidance unchanged, hedges look like they are up a touch.

  167. 167
    zman Says:

    LINE to present at DB Leveraged Finance Conf. tomorrow.

  168. 168
    jiveyjr Says:

    I was just awakened by the sound of an old order clicking off more SSN at $1.19….

  169. 169
    zman Says:

    SM call about to begin

    http://www.wsw.com/webcast/jr11/sme/

    Listening for Niobrara and other tidbits

  170. 170
    zman Says:

    Natural gas now akin to leprosy.

    SM opening statement. I can tell you that with our shareholders money we are not drilling any dry gas wells now. We are spending some other partner's shareholder's money drilling 2 wells in the Haynesville but none of our own. 

  171. 171
    RMD Says:

    i u/s the Permian is going to get a lot of focus next week;  first at the CHK analyst day, then a comprehensive report on the Permian and the co.s involved from Canaccord.

  172. 172
    zman Says:

    SM Notes

    NGL issues

    Saying products heavier than ethanol (propane, butane, isobuta etc) will keep their historic ratios with oil. That's good, not sure on the propane and butane but he should know better than I and it will show up in their prices so you can't exactly hide it.

    He says the the ethanol side can come off and not really hurt the economics of a Eagle Ford well

    Niobrara #1 was 1,075 bopd for first 7 days

    Niobrara #2 just TD'd , just south of Silo, will complete later this month,

    They have 25,000 acres, learning a lot and a lot to be learned.

  173. 173
    zman Says:

    SM Notes 2

    Spend about $1B next year and growth about 20%, almost all of spending is Eagle Ford and Bakken.

    Marketing 43,000 net acres in the Marcellus, data room opens Monday, hope to sell by Jan 1

    Also selling some non-op Permian acres in W. Texas

    Combined these two sales will plug the capex ex to cash flow gap for 2011.

    Debt to Cap of 19%, one convert out  there. Nothing on the revolver. Eli, how's that convert look?

     

  174. 174
    RMD Says:

    170 after thinking about 1.  that model from GHS about gas production peaking Jan. -June , 2. seeing gassy co.s cutting back capx (CRK and others, with more to come), 3. thinking HS leases hit their midpoint of 5 yr. term expirations around mid-summer of '11,  I am rereading some of the literature on the gassy names to have  one or two names ready when the mood hits me  CRK, XCO seem more off the radar screen than HK.  Thoughts?

  175. 175
    zman Says:

    re 174. not to preclude other comments. I am sticking with my HK and my half position in SWN for gas exposure. SWN is still barely hedged so if you are looking at a potential cash flow expansion that seems like the name to be on. Economics of the Fayetteville are not great compared to some of the other shales but they are making it work for them. I do think they cut capex for next year soon. CRK is interesting but I've been away and need to come back and see what's going on, have not like the way it trades in the past. UPL, RRC also on the interest list for gas, better economics out of Appalachia any day of the week anyway than from the Anadarko Basin. Anyway, I'm thinking gas is closer to the lows than some think but that it's probably a soft winter. I plan to stay oilier than not for the foreseeable future. Lots of U.S. supply coming on onshore should probably be more than offset by the Obamanation of the Gulf.

    SM's Raven area is near where BEXP's TFS well in Rough Rider. Lots of people pointing out how close they are to BEXP wells. Funny how people say they aren't into talking about IPs until they have to make a comparison of where their Williston pasture land is and then they mention a BEXP or a WLL well.

  176. 176
    isleworth Says:

    thanks Z……scaling in.

  177. 177
    Jerome Blank Says:

    SSN…if you look only at technicals, SSN broke below the daily 50 day support zone, so a lot of technical only traders are going to cover, technically speaking,  $1.27 is now near term resistance, would like to see SSN get above this level, if SSN continues to trade down,  I will consider adding at $1.15 if it gets there…  

  178. 178
    Popeye Says:

    I remember to vote when you mention something on my short list.

  179. 179
    zman Says:

    Isle – here's a quick handy way to look at it.

    At $1.22 the stock has a market cap of $101 mm.

    Backing out net cash of $63 mm leaves $37mm to cover their Bakken, Niobrara, Rockies Gas and other assets.

    Bakken – 6 sections with 6 wells (for now) with a net total of 1 mm barrels of oil prices at $15 /BBl in the ground is $15 mm

    Rockies Gas – 11 Bcfe – call that worth a buck an Mcf  to that's another $11 mm off the table

    That leaves $11 mm for the rest.

    $4 mm more coming from CHK soon.

    Now we're down to $7 mm for the rest.

    They have 17,000 acres in the Niobrara left

    They have a 3.8% ORRI in the stuff they sold which CHK is already turning to the right on … no cost to them, just open envelopes with check

    Now the 17K acres at the price they just received of $3000 per acre would be another $51 mm and the ORRI probably has a present worth of $30+. …. against that $7 mm. Hmmm, seems cheap to me.

    If you forget the ORRI and the other stuff and just say the market's value of $7 remaining vs the 17,000 acres then those acres are valued at $400 per acre.

  180. 180
    jiveyjr Says:

     finally got in BSIC…patience paid off

  181. 181
    bill Says:

    exxi slides are up
    i didnt see anything new other than they monetized ng hedges

  182. 182
    bill Says:

    exxi starting

  183. 183
    zman Says:

    Thanks much JB

    Getting on the EXXI call

  184. 184
    elijahwc Says:

    #179 SNN
    Z – Absolutely fab snapshot. 

  185. 185
    john11 Says:

    Lafitte spudded last week

  186. 186
    bill Says:

    update on q1, great qtr, no negative suprises, no shutdowns, cost in line = record qtr coming

  187. 187
    zman Says:

    EXXI Notes

    Still no impact in terms of delays of permits on them due to the moratorium

    No problems due to weather this quarter

    Well costs off a bit from expectation due to the moratorium

    Lafitte (the next ultra deep test) spud last week

  188. 188
    BirdsofpreyRcool Says:

    EXXI — Schiller said it… this quarter was GOOD.  No bad surprises… no down days.  Production wells came in on or under budget and are producing as expected.  That is the base value for this stock…. Utlra-Deep = upside.

  189. 189
    BirdsofpreyRcool Says:

    bill — you're a lot faster than I am today… thx for the help!

  190. 190
    zman Says:

    DJ 2 at 18,500' now, at about 22,900' feet they could be in known pay sands, said Thanksgiving could know something. Talking about booking over reserves by year end.

    Black Bard East – went the salt at 19,400, seen nice sand package, in the process of logging, trying to get samples and sidewall core, then drill ahead. Recall this one was in sands about 6,000 feet high to the BB West well.

     

  191. 191
    zman Says:

    EXXI – has been adding $70 FL and $100 CL hedges as recently as this week. 

    They have monetized $48 mm of gas hedges in the last 3 weeks, saying they think gas is near a bottom. Hmmm, sounds familiar.

  192. 192
    BirdsofpreyRcool Says:

    Post-Balance Sheet Restructuring (which was about this time last year), have to say, I'm very impressed with Schiller's approach to risk management (other than the fact that he issued those ridiculously-cheap converts… but water under the bridge now)

  193. 193
    bill Says:

    bop ty for keeping this name at the forefront..i need some exposure to this name

  194. 194
    bill Says:

    pxp why did you sell arrggggh

  195. 195
    bill Says:

    flores has quite a record
    buy haynesville at 30 k acre at the high
    sell shallow water dj and bbe right before homerun
    buy efs at record highes
    cant get calif to approve offshore
    float stock at 19
    for all this board gives him multi million free shares

  196. 196
    BirdsofpreyRcool Says:

    bill — i have to say… of all the things Flores could have sold to raise cash, when i read he was going to sell the Ultra-Deep Play… well…. my jaw hit the floor.
     
    I will never, ever buy PXP again.  On the other hand, whatever Flores sells, i'll think about buying. 

  197. 197
    zman Says:

    KOG about to start

  198. 198
    zman Says:

    VNR secondary on the tape, proceeds to pay down revolver.

  199. 199
    zman Says:

    KOG Notes:

    Comfortable they'll get the 7 wells on and with the exit rate (unstated here), official is 2,500 boepd, BOP has said 4K boepd

    Said capex of $75 mm this year probably comes in at $75 to $80mm, then doubles or triples next year

  200. 200
    zman Says:

    KOG Notes 2

    They think short laterals were 350,000 boe a year ago, now north of 500,000, long laterals now thinking over 750,000 boe

    They are in a TFS well with STR that will be public on STR's quarter, Lynn said it was a very good well.

    Their TFS will be done soonish, look for that to be a key driver on the stock

  201. 201
    zman Says:

    Oops, make that QEP, the new company out of Questar

  202. 202
    zman Says:

    Lynn pointed out the BEXP TFS test as being 15 miles away, lol.

  203. 203
    zman Says:

    Lynn – making an important point about cost per acre. If you start talking about more wells per unit (and this relates to the post part about BEXP and the potential for a high number of wells per unit) then you can pay more per acre and still have your internal rate of return go up.

  204. 204
    zman Says:

    OK, soccer thirty for me, will listen to the GST replay tonight.

  205. 205
    elijahwc Says:

    #203: that would cause me some concern as it is preparing the table to in fact pay higher prices.

  206. 206
    bill Says:

    196 bop, lol thats the kind of sanity check i wanted
    i think they sell the whole thing when flores is ready to retire

  207. 207
    BirdsofpreyRcool Says:

    bill — sadly, Jim Flores is a relatively young man.

  208. 208
    zman Says:

    How was the GST call? Going to listen later.

  209. 209
    BirdsofpreyRcool Says:

    GST = nothing new.  BIG NEWS will be when they can get a frac team to complete their 1st EF horizontal.  I'm betting that won't be before the end of this year… other people are more optimistic…

  210. 210
    mimster90 Says:

    Great discussion today, thanks to all

  211. 211
    zman Says:

    Re 184 – very glad you liked it.

    Mim – I thought so too.

  212. 212
    Alhambra Says:

    Re: 95 and the gold/oil correlation – Thanks to Z and all for a very education, informative and rewarding site. I'm just trying to give a lil back to everyone, so thought I would post the following commentary and technical analysis regarding precious metals to help guide:  Until today we had seen rather orderly pricing in the metals, where prices move to support and then continue to ascend, although today we saw prices raise effortlessly without testing support; could be new money flows into the metals.  (Banks continue to roll their shorts forward in the metals (est ~220million),  watch the dec contract).  Thinks we are in a third wave up for this run; long term is way higher (could be higher than VTZ's 1500).  PPMs have some tremendous potential in them- Plat to 1760 and Palladium to 729 should be easy numbers for them to hit.  All in all, little holding back the metals until the election and Fed action (both coincide in beg Nov), as the bulls control the field.
    Silver (23.16) – first support at 22.58, second support at 22.44.  first resistance at 23.23, second resistance at 23.34, major resistance at 23.47.  bullish indicator is a close at/above 23.28. bearish indicator is 22.70 and could indicate a trend down. (there are silver stops are at/around 23.20 and 23.50; should these break shorts will be forced to close and could provide an easy path for silver to go to 24, 25, even 27 – most likely 25.87)
    Gold (1348) – first support at 1332, second support at 1328 and third at 1311.  first resistance at 1352, second at 1358 and major at 1371.  Bull number is 1353, bear number is 1337.
    Platinum (1712) – first support at 1689, second at 1664.  First resistance at 1710, second at 1718 with potential high shot to 1760. Bull indicator would be close at/above 1718 and 1695 would indicate trend down.
    Palladium (588) – first support at 582, second at 575, third at 569.  First resistance at 586, second at 598 (weekly resistance at 593).  Bull number 592, bear number 574.
     
    best of luck to all

  213. 213
    zman Says:

    Wow Alhambra, thanks very much. Glad you chimed in.

  214. 214
    jim bob is my jesus Says:

    MCF announced that the company has spud a wildcat exploration well in the Gulf of Mexico. The company's Galveston Area 277L prospect was spud in late-September 2010. The company will pay 100% of drilling costs, estimated to be approximately $10.0M.

    The company also announces that it has production tested its on-shore wildcat exploration well (Rexer #1) in south Texas. The well tested natural gas at a rate of 3.6M cubic feet per day and 15 barrels of condensate per day. The company has a 100% working interest (72.5% net revenue interest) in this well before payout, and a 75% working interest (54.4% net revenue interest) after payout. Production is expected to begin by the end of October 2010.
    Offshore production is currently approximately 102M cubic feet equivalent per day, net to Contango. The company's on-shore drilling program with its joint venture partner, Patara Oil & Gas LLC, is currently producing at a rate of approximately 5.5 Mmcfed, net to Contango, from 11 wells. As of 30-Sep, the company had no debt, approximately $50M in net cash and cash equivalents and $50M of unused borrowing capacity.

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