12
Oct

Tuesday Morning – Lots of pre quarter news

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Market Sentiment Watch: Yesterday's action was fairly rudderless without the benefit of guidance from bonds and new economic data. While we had two large deals in the Eagle Ford shale the market wasn't in the mood to really pay attention, driving a handful of smaller players there somewhat higher (MHR ruled the day advancing 9% on the news while CHK, who scored $2 B+ from China on one of the deals, had barely moved by the close). My sense is that the market will take CHK higher into their annual analyst meeting tomorrow. In energy land today, IPAA kicks off and I've listed the presentations I'll be tracking in the Stuff section below. Again, the conference is spawning pre 3Q press releases.

Ecodata Watch:

  • NFIB small business index came in at 89, last read was 88.8.
  • We get the FOMC minutes at 2 pm EST today

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today – SSN, CLR, NOG-
  5. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):
    • $5,200
    • 100% Cash
    • Yesterday’s Trades:
      • None
  • ZIM (Zman Inefficient Markets portfolio)
    • $11,500
    • 4 positions (10 BEXP Oct $20 calls, 67 BEXP Oct $22.50 calls (house money), 60 Oct CHK $24 calls, 10 Jan MMR $22.50 calls). 
    • 47% Cash
    • Yesterday’s Trades:
      • CHK – Added (30) October $24 CHK Calls for $0.33 with the stock at 23.75, backing off after sealing what looks like a good deal in the Eagleford over the weekend with the Chinese National Offshore Oil Co.
      • CHK – Added another (30) CHK October $24 calls for $0.25 with the stock at $23.55.

Commodity Watch

Crude oil eased $0.45 to close at $82.21 yesterday amidst aimless, holiday sluggish trading.  This morning crude is trading off a quarter. 

  • Early Read on Oil Inventories: (we get inventories on Thursday due to the holiday, but we may still get API tonight)
    • Crude: UP 1.45 mm barrels
    • Gasoline: DOWN 1.25 mm barrels
    • Distillates: DOWN 1.075 mm barrels

Natural gas fell another nickel to close at $3.60 yesterday. The front month contract now looks like this:

My sense has been that most of the downside in gas is now done however the weather is not cooperating (it is very mild to hot down here and around the country) and we may see a short bit of downward spikiness until some real cold weather sets in. This morning gas is trading down 2 pennies. 

 

  • Early Early Read on Natural Gas Storage: 86 Bcf. That's ugly. The five year average for this week of the year is 65 Bcf. 
  • Tropics Watch: Hurricane Paula formed south of the Yucatan last night and may go into the Gulf of Mexico. Tracks at this point are mostly pointing to Cuba and then the Atlantic however some of them are pointing northward to the Gulf. 

Stuff We Care About Today

 

IPAA Tuesday Schedule

SSN Operations Update

  • Bakken Project:
    • The Earl #1-13H (their 6th Bakken well) encountered strong oil and gas shows from the m Bakken. The well should be at TD in a few more days, guessing it gets completed late November. 
    • The Rodney #1-14H (their 5th Bakken well) is "tentatively scheduled" for frac on November 5th. We have seen repeated delays.  
    • The Gary #4 (their 4th Bakken well), has had a first 17 day average of 1,248 BOEpd (76% oil), a better result than their previous wells. The well was producing 1,636 BOEpd shortly two days after IP. 
  • Hawk Springs Project (Goshen County, WY - Niobrara)
    • 3D 90% permitted
    • Expect to begin shooting by end of October
    • Cost should be about $2.3 mm
    • They will use this data to select the first two candidates for horizontal tests in 1Q11
    • There was no update on the final $4 mm owed by CHK.
  • Nutshell: Pretty routine, and the stock is resting on the routine, waiting for more interesting news. I'll be listening to the Rockies portion of the CHK call to see if I can glean anything regarding their recent acreage grab from SSN and their thoughts on drilling on that land as at least 2 wells were immediately spud.

CLR Operations Update:

  • Guidance:
    • 2010 stays the same at up 17%
    • 2011 established at up 30%
  • Budget:
    • 2011 established at $1.36 B with 92% of spending going to the Bakken and the Woodord. Somewhat surprised they are giving the Woodford such high billing with gas prices where they are ... just how much liquids are these guys thinking they will see from the Cana play in the area? Interesting for NFX too. 
  • Also mentions Niobrara and we will be hearing more about this play on 3Q conference calls. 
  • Nutshell: OK, there is a well update in the press release as well and I'll have more to say about these guys tomorrow. 
NOG Operations Update
  • Getting Busier ... Now expecting to drill 24 net wells, from a prior expectation of 18, this year.  This is what happens when you have a good sized acreage position and you are non-operated in a play where the rig count is soaring (NOG put it at a current 155 rigs in N.D.). 
  • ... With A Higher Interest.  Working interest participation is definitely stepping up. They are drilling or completing a laundry list of over 20 wells at present and didn't provide WI% average on them but I will spread it and circle back to you. A generally eyeballing shows that we are getting away from the 1 to 5% wells and moving towards a range > 20%.  
  • Adding Acreage. NOG has added 38, 864 acres since the beginning of the year for an average cost of $1,086 per acre. On a market value basis, NOG trades closer to $8,000 per acre.  Need to get an accurate total acreage count to be sure. 
  • Nutshell: Good stuff, more details in a little while. 
 

Other Stuff

  • No Bakken update today, doing a little more work on it, thanks for your patience.

Odds & Ends

Analyst Watch:

  • To be added in comments. 

Housekeeping Watch: M&A Contest.  Let's start fresh. Submit in comments (no emails please) your acquisition pick with the word CONTEST in the comment and if it gets bought by year end, get a free mug and a free quarter's subscription to the site. 

178 Responses to “Tuesday Morning – Lots of pre quarter news”

  1. 1
    bill Says:

    CONTEST- exxi

     

  2. 2
    BirdsofpreyRcool Says:

    Credit markets back in biz, after lazing away yesterday.  So far, looking flat to a tad green-about-the-gills… so will probably take its cue from where equities open.  Lazy Credit Market.  Not taking a stand this morning.
     
    Janet Yellen did INDEED talk about "taking away the punchbowl."  All the more remarkable b/c she is considered one of the Dove-ier members of the FOMC.  And she is Vice-Chairman… so, people listen.  Go, Janet.  Professional Fed Watchers i know think she is pretty good.  Until I learn to think differently, I'm going with their recommendation.
     
    TED at +16.9 bps.  Widened out a bit a few days ago.  Have to admit being a lot happier with TED around 15, than TED tightening down to sub-12.  Need to leave a little room for error… a little slack in the system… some skepticism on the table.  If you don't, you get "surprised by the unexpected."  (Which has always struck me as odd… if you don't expect it, isn't that the definition of "surprise?"  But, I digress…..)
     
    Read Duane Grubert's report on MMR (and — to a lesser extent, EXXI) last night.  Good stuff.  Near-term favors EXXI, long-term (5 yrs or so) favors MMR.  Reasons to own both.  So, mulling picking up some MMR someday on weakness.

  3. 3
    TEXWS6 Says:

    Re Cana Shale/CLR:
    Even with HORRIBLE differentials you can't drive down I40 between OKC and Amarillo and seen dozens of frac spreads that are working companies such as Devon, CHK, or CLR that are targeting the Cana.  CEO of CLR spoke at a meeting here in OKC last week and mentioned that the Cana shale will rival the EFS, who knows.

  4. 4
    BirdsofpreyRcool Says:

    ATPG — as of Sept 30th, doesn't look like many shorts left the party.  Too bad.  Think it will get pretty toasty in that room. 

  5. 5
    elduque Says:

    CONTEST- SD

  6. 6
    zman Says:

    TEX – Thanks much for the color. Yeah, have been hearing things about an important but not all that talked about NFX position there too.

  7. 7
    zman Says:

    Front and Center Watch:

    CHK for a run into their analyst meeting tomorrow. Also, hats off to Cramer for his overnight pump job last night. I may just take profits if that rally to $24 holds a few minutes past the open and then either reload of not as the day progresses.

    Still thinking HK needs to play catchup.

    Will have NOG expanded comments in about 30 minutes.

    Paula – if she veers gulfward she would be in a position to become a bad storm quickly. Two of the tracks show her roaming through the heart of offshore production in a few days. For gas my play would be SWN. For oil services it would be OII.

  8. 8
    bill Says:

    ELDUQUE- I almost picked sd

    they will have to find a jv partner friendly merger etc or dip financing. Debt is way to high

    They have a 8 mcf cost structure and earning 2.50 on ng

  9. 9
    bill Says:

    CHK will have the funding to keep drilling in a low ng price enviroment.

    Peak said you have to see NG companies puking before progress can be made longer term

    Who are the strongest? Who are the weakest?
    With CHK you are getting scale, hedges and partners

    I cant think of a name more overexposed than sd

  10. 10
    john11 Says:

    Contest-KOG

  11. 11
    zman Says:

    Front and Center watch cont.

    IPAA presentations listed above. Especially GST and EXXI (post close).

  12. 12
    zman Says:

    re 11, should have put NOG in that list as an especially watched name, going through some details of the pr now.

  13. 13
    elijahwc Says:

    Here is the orginal dealbook article which set off the ATPG spec at Seeking Alpha. Why insert the link? EXXI mentioned. Nice pick Bill. I’m will to give some points to bet the name.

    http://dealbook.blogs.nytimes.com/2010/10/08/g-e-keeps-shopping-for-energy-assets/?

  14. 14
    ram Says:

    CONTEST ATPG

  15. 15
    elijahwc Says:

    CONTEST RAME

  16. 16
    jiveyjr Says:

    Contest – BEXP

  17. 17
    elijahwc Says:

    Opps Strike #15. That was implusive.

  18. 18
    zman Says:

    CHK holding up after the open a bit better than I thought, volume over 3 mm is strong.
    Holding 60 $24 strikes.

  19. 19
    ram Says:

    You can sense if there was no S&P ball and chain, CHK would run much higher.

  20. 20
    elijahwc Says:

    CONTEST = MMR Maybe by FCX

  21. 21
    BirdsofpreyRcool Says:

    Credit Market still unch’d. Don’t think we stay red… but will go check in with HeadTrader.

  22. 22
    Jason Says:

    Contest = BBG

  23. 23
    BirdsofpreyRcool Says:

    HeadTrader — looking at foreign mrkts, thinks we close in the red today for stocks. “mrkt goes up and down… today is down.”

  24. 24
    ratberto Says:

    contest RRC

  25. 25
    zman Says:

    re 19 – agreed.

  26. 26
    Nicky Says:

    Morning all. Getting the expected down day with the cycles. Support at 1157 and then 1148 – 52. As long as the spx does not close below 1147.60 then I anticipate higher highs later in the week. If it breaks then likely the top is in for the 45 day cycle and we are headed down into the 19th – 15th October.

  27. 27
    tomdavis12 Says:

    Contest: CLR

  28. 28
    cargocult Says:

    I missed the contest but assume its the next takeover, I choose CHK.

  29. 29
    zman Says:

    NOG Update

    Slight correction to comments in the post, the WI% went down, not up. They are taking some bigger shots with even a 60% participation in one well but the shear number of wells is keeping the WI% just barely in double digits as they get AFE’d on so many 1 and 2% WI wells.

    The recently completed 61 wells with an avg working interest of 13%.

    They are in the process of drilling or completing another 91 with an avg WI of 11%.

    That gets them to the 21 net wells drilled so far this year, 3 more than originally expected, and they will drill another 3 net wells (probably participating in about 30 gross wells) by year end…. Busy, busy, busy.

    Hedges:
    Note that they have almost 100% of their 2Q10 oil rate hedged for 2011 now at just over $80. That is about 40% of 2011 volumes though since they are growing at a 30+% clip per quarter.

    Will be looking for their presentation today to get an updated acreage count.

  30. 30
    zman Says:

    Rules for the contest are in the bottom of the post.

  31. 31
    zman Says:

    Thanks Nicky.

  32. 32
    BirdsofpreyRcool Says:

    HeadTrader pointing out that banks are holding in here… thinks we might see a healthy bounce (up). “bob and weave, boys, bob and weave… and avoid the punch.”

  33. 33
    reefguy Says:

    Contest- LEI

  34. 34
    zman Says:

    Got asked if it can be an acreage deal, answer is no, we are talking a whole company acquisition, land deals don’t count.

    re 33. Interesting.

  35. 35
    tomdavis12 Says:

    BOP: Any energy bonds in your sites? Our usual cast of characters are getting expensive.

  36. 36
    zman Says:

    So market waffles about until FOMC minutes this afternoon.

  37. 37
    tomdavis12 Says:

    Z: You would still put CLR in the expensive camp, correct. I know you will have more to say tomorrow.

  38. 38
    BirdsofpreyRcool Says:

    TomDavis — no cheap bonds left. Been pretty picked over. Would buy the ATPG 11 7.8ths, but they aren’t registered (so us little guys can’t buy ’em… thank you, SEC).

  39. 39
    zman Says:

    re 37. Yes.

  40. 40
    DrLink Says:

    Contest- VYOG-Voyager Oil & Gas

  41. 41
    BirdsofpreyRcool Says:

    TomDavis — OT… but bought IVR the other day (after the 2ndary announcement) for the income (and cap appreciation). Also like AINV.

  42. 42
    TEXWS6 Says:

    What is the link to the IPAA? Approach is talking at 10CST and they are right next to all the acreage El Paso just paid a pretty penny for in West Texas.

  43. 43
    BirdsofpreyRcool Says:

    HK waking up. Wonder if GE is talking to them (just joking). But nice to see a 17-handle again… fixin’ to go to 18.

  44. 44
    RMD Says:

    TEX #42 I don’t think AREX is going to say much (though I will be listening) as they have an analyst day next Mon. in NYC. My sense is it’s very undervalued and hopefully they will reveal a bit of sizzle to the acreage story. Slides on website; not much changed in them except to show EP’s new acres immediately to the north.

  45. 45
    zman Says:

    IPAA

    http://www.ipaa.org/meetings/pdf/102010ogissfpresentationschedule.pdf

    I’ll list to Approach.

  46. 46
    zman Says:

    Re IPAA – that link is just the PDF schedule, does anyone have a link to the webcasts?

  47. 47
    TEXWS6 Says:

    Re: #45

    Give me your thoughts Z, I have 750K acres right next to them (East and SE).

  48. 48
    zman Says:

    OII – interesting chart.

  49. 49
    zman Says:

    Tex – will circle back, when I find that link but RMD is probably right, it will likely be a “I don’t want to spill the beans” presentation if they have an analyst day next week.

  50. 50
    skimo Says:

    Contest GDP

  51. 51
    BirdsofpreyRcool Says:

    Interesting… still, waited too long. Don’t think lifting now will recapture any lost votes. Still, this “moratorium” has gone on long enough.
    ================================

    Obama Administration May Lift Drilling Ban This Week (Update1)
    2010-10-12 14:56:35.38 GMT

    (Updates with quote from Gibbs in second paragraph.)

    By Roger Runningen and Julianna Goldman
    Oct. 12 (Bloomberg) — The Obama administration likely will act this week to lift a moratorium on deep-water oil and gas drilling, White House press secretary Robert Gibbs said.
    “We’re getting close to having in place something that would likely allow us to lift that moratorium,” Gibbs said at the White House. “This process I believe will wrap up very soon.”
    Administration officials have held meetings over the past few days that are closing in on establishing new safeguards to prevent a repeat of BP Plc’s Gulf of Mexico spill, the worst in U.S. history, Gibbs said.
    A lifting of the six-month moratorium, in place since May 27, means oil drilling can eventually resume in waters deeper than 500 feet (152 meters) after BP’s Macondo well off the Louisiana coast blew out April 20, killing 11 workers.
    “Rules were put in place a couple of weeks ago” that will allow the moratorium to end, Gibbs said. He cited a permitting process where companies would certify they have containment strategy for a worst-case spill.
    An early end to the moratorium, which was to expire Nov.
    30, comes amid pressures of the midterm elections Nov. 2 and complaints from industry and lawmakers of economic damage to the region, including fishing and tourism. Senator Mary Landrieu, a Louisiana Democrat, blocked President Barack Obama’s nomination of Jack Lew to lead the White House budget office until the moratorium is lifted.

  52. 52
    zman Says:

    Will be interesting to hear SWN speak tomorrow, wondering if they cut capex, may take a little on a Paula play.

  53. 53
    zman Says:

    Thanks BOP, that explains RIG, OII action.

  54. 54
    zman Says:

    ZTRADE – ZIM – OII

    OII – Added (20) November $60 calls for $0.65 with the stock at $53.65. This is a play on storm fears from Hurricane Paula and possibly on an early end to the deep water moratorium.

  55. 55
    zman Says:

    Can’t get on the AREX call

  56. 56
    zman Says:

    re 54. This is a bit of a higher risk play but I gave myself time with the Novembers and expectations for 3Q are not elevated after the government enforced downturn in business.

  57. 57
    tomdavis12 Says:

    BOP: Thanks for the income ideas. Your ideas have been so hot you should take a weekend trip to Vegas. The EU is also going to make a comment tomorrow about extending their deep water drilling ban.

  58. 58
    zman Says:

    Bud Brigham on the tape selling 250K shares.

  59. 59
    zman Says:

    re 57. The UK said yesterday there was no need for that but the EU will apparently move ahead with it.

  60. 60
    RMD Says:

    AREX website, Investors tab has link.

  61. 61
    RMD Says:

    nothing new so far on AREX.

  62. 62
    zman Says:

    RMD – thanks, yeah, mine just won’t load in chrome.

  63. 63
    skimo Says:

    Article In IBD- ND first state to actually experience expansion of employment due to the energy boom there!

    Drill, North Dakota, Drill

    Recovery: While states like Nevada wallow in recession, tiny North Dakota becomes the first state rated as expanding by a leading service. Could it be the state’s burgeoning energy industry?

  64. 64
    john11 Says:

    Bud Brigham 252,400 sh sale of stock on the 7th.

  65. 65
    john11 Says:

    link to GST if anyone having a problem.
    http://www.vcall.com/IC/ClientPage.asp?ID=161688

  66. 66
    RMD Says:

    GST presentation not on their website that I can find. Ugh, great IR.

  67. 67
    Popeye Says:

    “Remember those 30 new nuclear reactors the US was slated to build? Those plans have been halted. A few years ago, it seemed like a really good idea to build a bunch of nuclear reactors. The environmental impacts of other energy production methods were becoming well known and the economy was tanking. Well, natural gas is now much cheaper, and as a result it looks like building a single nuclear reactor in Maryland is such a risky venture that Constellation can’t reach an agreement with the federal government for the loans it needs to build that reactor.”

  68. 68
    zman Says:

    Their IR does stink.

  69. 69
    john11 Says:

    MCF active this morning.

  70. 70
    zman Says:

    ATPG too.

  71. 71
    blackgold39 Says:

    re 3: Devon and Cimarex are very hot on the Cana Woodford (Canadian Co.) and have been for 3 years, DVN moving to 24+ rigs in short order according to their released statements. CLR also with a 200k+ acreage position, about half of which looks prospective. Spoke to a Marathon corp. dev. guy with 60k acres and he says their position is fragmented, but prospective (North Cana, non-op) and they are looking to add acreage.

    Play economics exceed several other shales, but production is predominantly wet gas (60%), NGLs (35%), then oil bringing in the remainder of the stream.

    Money is being made in this play because of prodigious wet gas production from depths of 12,500′-14,000′. IPs on the order of 7-8 MMcfepd ranging higher, with shallow declines, probably owing to depth. 8-11 Bcfe type curves not unusual.

    Play has the potential to be enormous, as it covers the entirety of Central Oklahoma and is probably ~180 miles long. XTO and smaller other players (GHK) have been making a quiet play in the Ardmore basin Woodford as well (Johnston, Marshall, Carter counties).

    All of this is public data at this point, as the play has been under assessment for 3 years.

  72. 72
    zman Says:

    Thanks for the color BG, appreciate it.

    GST – not hearing anything new, not on frac schedule yet for the EFS well, hope to have it completed by year end.

  73. 73
    zman Says:

    GST – again hinting they’ll beat guidance on 3Q.

    With JV closure they will have no debt, excess cash

  74. 74
    BirdsofpreyRcool Says:

    HT saying he is hearing that there will be announcement on deep water moratorium tomorrow at 1pm EST.

  75. 75
    zman Says:

    WLL presenting in 10 minutes

  76. 76
    BirdsofpreyRcool Says:

    john11 — thank you for the GST link.

  77. 77
    zman Says:

    BOP – awesome, thanks! 😎 =;)

  78. 78
    BirdsofpreyRcool Says:

    So far, not seeing that in print… but HT pointing out that DO is running too.

  79. 79
    zman Says:

    Yes John, thanks, I was doing a bit of cussing until you came up with that one. Wondering if I keep it open if it will just play all the presentations in order?

  80. 80
    BirdsofpreyRcool Says:

    ATPG now bumping it’s noggin against 16. Just a matter of time and a dose of patience… wait for it… wait for it… heh heh heh

  81. 81
    zman Says:

    RIG, DO, OII, several of the offshore E&Ps. It’s a good bet CAM moves too.

  82. 82
    zman Says:

    Paula – no real good idea where she goes yet.

    http://media.myfoxtampabay.com/myfoxhurricane/

  83. 83
    john11 Says:

    to get to webcasts on IPAA use this link and put in the ticker symbol in the upper right
    http://www.investorcalendar.com/IC/ClientPage.asp?ID=161686

  84. 84
    john11 Says:

    here’s WLL
    http://www.vcall.com/console/ConsoleFrameset.asp?ID=161689&brand=PCS&ClickType=&playerID=1&urlID=159874&sessionID=78220F775CA44344&email=jfgeer@comcast.net&tck=WLL

  85. 85
    zman Says:

    WLL about to start:

    http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=147759&eventID=3431740

    Worth a listen if you never had, almost always a good presentation, should be some good color on L&C.

  86. 86
    zman Says:

    Thanks very much John

  87. 87
    BirdsofpreyRcool Says:

    BOOM!! ATPG hit 16 and crashed on thru.

    Just for you, Shorty-Pants…

  88. 88
    BirdsofpreyRcool Says:

    (ATPG… may not hold onto 16 handle here, but it will at some point. And then — as HT says — it could be a whole new ballgame)

  89. 89
    BirdsofpreyRcool Says:

    From HT —

    Headlines crossing that Germany’s Weber saying rates could be lifted before emergency measures end and bond purchases should be phased out permanently; very bullish for the euroNote: Weber tends to be one of the more hawkish ECB members but this is certainly an uptick in rhetoric.

  90. 90
    BirdsofpreyRcool Says:

    WLL — that microseis map is way-cool! Haven’t seen that before.

  91. 91
    choices Says:

    CONTEST: XEC

  92. 92
    zman Says:

    WLL Notes 1

    Roosevelt County, Montana – Starbuck, new acreage as of a couple of months back, have not yet heard when they drill a well here.

    Lewis and Clark
    9 rigs by mid 2011
    $6 mm now, will be $5.5 mm, 350 to 500,000 BOE reserves

    Really not much new in the presentation so far.

  93. 93
    RMD Says:

    contest WLL

  94. 94
    zman Says:

    OII took out the top end of a base that has been forming since the beginning of August. Approaching 200 day but move through it today will likely require Fed minutes to say the right things. If not, then an end to the moratorium should do it. I agree about the prospects of that garnering many (any?) votes however. Too little, too late.

  95. 95
    choices Says:

    http://www.washingtonpost.com/wp-dyn/content/article/2010/10/12/AR2010101202326.html

    moritorium=very soon, maybe this week

  96. 96
    zman Says:

    Most stuff offshore running now, from MCF to SGY to ATPG. MMR tried but was hit by profit taking. Probably needs a rest and some actual data, which we should get next week.

  97. 97
    blackgold39 Says:

    How much room to the upside does OII have Z?

  98. 98
    ram Says:

    ZMAN, the Bud Brigham sale give you some concern?

  99. 99
    zman Says:

    re 97. I’m thinking over the next few weeks another $5 or so. EPS guidance is $3.20 to $3.40, Street is at $3.40 still after listening to them at Johnson Rice. Estimates have been rising swiftly of late as they fell to hard after Macondo. So for OII, on current year EPS, it is not expensive. With things getting back on track including a backlog of deepwater projects to complete which will need a wide variety of their services/products from ROVs returning to work to installation of their subsea trees and umbillicals, both of which are seen growing into the future, it stands to reason the stock will get a relief rally on the end of or at least into the approach of the end of the moratorium. Their repair business has been off for some time now too so the prospect of a bad spinner in the Gulf can make this one jumpy as well. Right now estimates for 2011 are $3.60 and have not really been moving.

  100. 100
    zman Says:

    re 98 – Not unless he strings together several sales. He still has over 600 K shares and is selling them high and given that the stock was $2 two years ago it’s hard to blame him.

  101. 101
    zman Says:

    Interesting to see CHK continuing to trade around the $24 mark. Street comments on the CNOOC EFS deal have been mostly positive.

  102. 102
    RMD Says:

    Lazard’s rel. bearish piece on CHK calculated cash flow shortfall fpr ’13 when drilling carries roll off of $2.5B ($8.1B capx for E&D-5.6B of cash flow. Calculating EFS productivity less than expected. ( LAZ probably is not planning on being in CHK’s next financing…oh, I forgot, they are living within cash flow now.)

  103. 103
    BirdsofpreyRcool Says:

    Catalysts to Watch

    Deepwater drilling – the Interior Dept to make an announcement later today 1pmET today; there was speculation (on Reuters) that the government will unveil an end to the ban today.

    The Q3 earnings season will get into full gear in the coming week. For tech, the highlight will be INTC Tues night (not a lot of anticipation for Q3 given they have warned and investors are looking for Dec revs up MSD) and GOOG on Thurs. In the transports, CSX starts things off Tues and LSTR is on Thurs. JPM is the first financial to report (although the bulk of bank earnings don’t come until the week of 10/18). The big highlight of the week will be GE’s results Fri morning.

    Looking at the Fed, we will get the minutes of the Sept 21 FOMC meeting on Tues Oct 12. Also to watch from the Fed – Bernanke speakes 2x – Wed after the close at 4:10pmET and on Fri morning @ 8:15amET at the Boston Fed Conf. The expectation is that Bernanke will prob. echo a lot of the same sentiments from the Jackson Hole address).

  104. 104
    zman Says:

    CHK – Citi pointing out that CHK acquired this EFS acreage in 2010 for $2,500 per acre vs the sales price to CNOOC of $10,800. I know people have bones to pick with Aubrey but he does have a habit of doing that kind of deal.

  105. 105
    zman Says:

    The Bakken piece will likely be in the Thursday post, still tying up a couple of loose ends.

  106. 106
    blackgold39 Says:

    RE 3: (again)

    “Continental is hosting an investors’ day in OKC today. The presentation slides and webcast can be found at http://phx.corporate-ir.net/phoenix.zhtml?c=197380&p=irol-presentations ; pages 15-30 address the Anadarko Woodford.

    In their press release of Monday, 10/11/2010, they disclosed the following on their latest well, the Dana 1-29H:

    Continental also announced that it recently completed a strong confirmation well in the Southeast Cana area of the Anadarko Woodford play in Oklahoma in the third quarter of 2010. The Dana 1-29H flowed at 2.5 MMcfpd natural gas (million cubic feet per day) and 88 Bopd (barrels of oil per day) in its initial one-day test period. This was Continental’s third and most productive test well completed in the southeastern portion of the Anadarko Woodford play, validating the productivity and scope of the play from Dewey County in the northwest through Canadian County to Grady County in the southeast, a span of approximately 100 miles.

    “The Anadarko Woodford is an enormous, liquids-rich shale resource play,” Mr. Hamm said. “We and other operators are just beginning to understand the productive potential of this play.”

    The full press release can be viewed at:

    http://phx.corporate-ir.net/phoenix.zhtml?c=197380&p=irol-newsArticle_print&ID=1481274&highlight=

  107. 107
    zman Says:

    CLR down 6% today.

  108. 108
    zman Says:

    OK – Lazard does not like the deal, sees a big funding gap for CHK after 2012. I may take half off the table by the close. I do expect new guidance tomorrow will include higher liquids production assumptions that the current ones which should be view favorable. Flipside would be them showing a their typical spend levels vs cash flow at different commodity price decks with a bigger spread between them. One thing that I do know is that Lazard and others on the spending angle won’t be satisfied until the debt is lower and there is excess cash flow which has not been the norm here. The story is better with the JVs than without them though.

  109. 109
    BirdsofpreyRcool Says:

    Ban Lifted… drillers must meet new rules and regs (posted in the Federal Register). US estimates new rules will cost about $183mm per yr….

  110. 110
    Jerome Blank Says:

    CHK…nice consolidation triangle formation on the 5 and 30 min, CHK pressing topside resistance…new charts posted…

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  111. 111
    blackgold39 Says:

    re 91: Solid pick

    re 27: Tom, also a good choice

    CONTEST: NFX

  112. 112
    Jerome Blank Says:

    CHK 5 min…the 20 period SMA that had been acting as very short term resistance most of the morning now appears to be acting as support…

  113. 113
    zman Says:

    BOP – saw a deal on it the other day saying the proposed rules would add about $90K per well in the shallow water, obviously quite a bit more in the deep … but not onerous to the economics.

    Thanks JB

  114. 114
    zman Says:

    Voted – grabbing lunch before the NOG presentation. Market still waiting on Fed.

  115. 115
    Jerome Blank Says:

    ATPG taking a breather off topside daily channel line resistance, daily chart updated…

  116. 116
    zman Says:

    Wow – not a lot of details from the Interior Dept. on the end of the moratorium. Says people can start drilling when they comply with new rules and when they have an adequate BOP.

  117. 117
    zman Says:

    From Reuters on the drill ban.

    http://www.reuters.com/article/idUSWNA179420101012

    There is no pr on the Interior’s department yet. They basically just punted. There is a comment on the wires about certain types of “risky drilling” that will not go forward until the end of the moratorium but very little detail out there. Did anyone see the press conference?

  118. 118
    elijahwc Says:

    “Buying into a joint venture with Chesapeake Energy, Cnooc Ltd. must have been looking over its shoulder for rabid U.S. regulators. But it is Moscow that should really be concerned.”

    http://online.wsj.com/article/SB10001424052748703440004575548140384311962.html?mod=djemheard_t

  119. 119
    Wyoming Says:

    Contest = FST

  120. 120
    BirdsofpreyRcool Says:

    No press conf… just a conf call with those Poster Boys of Drilling Expertise — Salazar and Bromwich.

  121. 121
    zman Says:

    Saw a headline scroll across saying the govt recognized one of the unintended consequences of the moratorium was a loss of jobs. How erudite of them.

  122. 122
    zman Says:

    Int’l Value Advisors advising that it has a 10% position in MCF.

  123. 123
    BirdsofpreyRcool Says:

    Deep-Water Drilling Ban Lifted by Salazar as New Rules Imposed
    2010-10-12 17:14:52.933 GMT

    By Jim Efstathiou Jr. and Roger Runningen

    Oct. 12 (Bloomberg) –U.S. Interior Secretary Ken Salazar said he is lifting the Obama administration’s ban on deep-water drilling, citing new safeguards intended to prevent a repeat of BP Plc’s spill in the Gulf of Mexico.
    ‘I have decided that it is now appropriate to lift the suspension on deepwater drilling for those operators that are able to clear the higher bar that we have set,” Salazar said today on a conference call with reporters.
    President Barack Obama halted oil and natural-gas drilling in waters deeper than 500 feet (152 meters) after BP’s Macondo well off the Louisiana coast blew out April 20, killing 11 workers and setting off the biggest U.S. oil spill. The moratorium was opposed by officials in Gulf Coast states, who said it only added to the economic devastation caused by the spill’s effect on fishing and tourism.
    Lifting the six-month moratorium, in place since May 27, won’t immediately lead to new drilling, Michael Bromwich, director of the Bureau of Ocean Energy, the Interior Department unit that oversees energy production, has said. Few drilling permits are likely to be issued in the month after the suspension is lifted as companies work to meet new requirements, Bromwich told a panel investigating the spill Sept. 28.

    $183 Million a Year

    The new rules will add $183 million a year to the cost of drilling on the Outer Continental Shelf, the Interior Department said in a notice to be published Oct. 14 in the Federal Register. Each new deep-water well that uses a floating rig will cost an additional $1.42 million. Shallow-water wells will cost an extra $90,000.
    The rules will add less than 2 percent to the cost of a deep-water well and 1 percent for shallow wells, the department said. Deep-water wells drilled from floating platforms typically cost about $90 million to $100 million.
    “The overwhelming share of the cost imposed by these regulations will fall on companies drilling deep-water wells, which are predominately the larger companies,” the department said. “In fact, 90 percent of the total costs will be imposed on deep-water lessees and operators where small businesses only hold 12 percent of the leases.”

    Permit Process

    “The really important thing is what does the new permitting process look like,” said Michael McKenna, president of MWR Strategies, an oil-industry consulting firm in Washington. “Until the lawyers and consultants and companies get experience with the permitting process as it actually happens on the ground, things are going to go very slowly.”
    Industry groups and officials representing Gulf Coast states have said the drilling ban penalized all companies for BP’s actions.
    Senator Mary Landrieu, a Louisiana Democrat, has said she will block Senate action on Obama’s nomination of Jack Lew to lead the White House budget office until the moratorium is lifted.
    Transocean Ltd., owner of the Deepwater Horizon, the rig leased by BP that exploded, rose $2.36, or 3.8 percent, to
    $64.28 at 1:05 p.m. in New York Stock Exchange composite. Noble Corp, the world’s third-largest deep-water oil and natural-gas driller, rose 61 cents, or 1.8 percent, to $34.15.

  124. 124
    zman Says:

    Thanks much BOP

    FOMC minutes sound like QE2 on the way (unless the economy suddenly strengthens).

  125. 125
    zman Says:

    NOG call in 15 minutes.

    Market so far going green on the FOMC minutes.

  126. 126
    andy Says:

    coNtest = AREX

  127. 127
    Bill C Says:

    CONTEST HK

  128. 128
    zman Says:

    Thanks, I think I have all the contest entries so far, will double check and post a table tomorrow.

    NOG call about to start

  129. 129
    BirdsofpreyRcool Says:

    hmmmm…. mkrt rallying b/c we are going to get QE2? Sheesh. And that is NEWS to anyone at this point?

    Just had to say that.

  130. 130
    zman Says:

    NOG Notes

    of their 115K net, 22K net is in the Bakken core, new additions have been in BEXP’s Rough Rider area.

    For 2010:
    240 gross wells, with a 10% WI or about 24 net wells.

  131. 131
    zman Says:

    NOG Notes 2

    740 net well minimum exposure on their leasehold.

    They are the largest non-operated partner for all of the big players in the Basin.

    $1,085 per acre acquisition price. “Identical acreage on operated units costs > $10K per acre”. He’s not wrong. And the market still values the companies for the most part for less than that.

  132. 132
    AAA Says:

    Does contest stock have to be an E&P? If not, I pick CLB.

    Contest: CLB

  133. 133
    zman Says:

    Nothing really new on the NOG call. They process 5 to 10 AFE’s (authority for expenditure) per day. Pay the bill, shut their mouth, and get paid. They don’t have to have the expertise on staff to drill the wells themselves and are partnered with the best operators in the business. All they have to do is lease, again at a discounted price to what the big boys will play as they are not leasing big contiguous acreage blocks, in the way of the play. Very simple story.

  134. 134
    bill Says:

    >And the market still values the companies for the most part for less than that.

    less than 1085 or 10 k?

    > whats the implied value

  135. 135
    zman Says:

    Less than $10,000 per acre. The implied values range from about $6K to just over $10 K for on a market cap/acre basis for the ones where they don’t have other assets. NOG’s cap puts them at about $8000 per acre, KOG’s at about $10K. BEXP and OAS are just under $7K. BEXP’s balance sheet is now so clean up it’s TEV / Acre is slightly less than its Mkt Cap / Acre.

  136. 136
    zman Says:

    Re 132. I’m going to allow it but ask that we stick to “energy”.

  137. 137
    Geno Says:

    Contest=HK

  138. 138
    crysball Says:

    CONTEST CPE

  139. 139
    zman Says:

    Geno – sorry, Bill C beat you to it.

  140. 140
    bill Says:

    dnr sold some gas acreage

    http://finance.yahoo.com/news/Denbury-Agrees-to-Sell-bw-3466995303.html?x=0&.v=1

  141. 141
    zman Says:

    If you are in Cozumel now I would leave the swim up bar soon.

    http://tropics.hamweather.com/2010/atlantic/paula/trackmap_zoom1.html

  142. 142
    BirdsofpreyRcool Says:

    ‘Tis the Season… Schiller sold 50,000 EXXI under a 10b5-1 plan he set up earlier. It doesn’t bother me in the least, keeping in mind that he still owns 1,459,851 shares. So, not like he’s selling out. ha!

  143. 143
    BirdsofpreyRcool Says:

    adding to #142, sold ’em at $25.00 on Oct 8th.

  144. 144
    Geno Says:

    Sorry did not realize that you could only have one vote per company

  145. 145
    zman Says:

    Geno – my bad for not better explaining it. 1 per customer of you guys all glom onto one of BOP’s picks and then I don’t eat, lol.

    WHX through $22. LINE approaching $33.

  146. 146
    BirdsofpreyRcool Says:

    z — lolol. I am notoriously BAD at picking M&A targets. Kept me from ever trying out for the IBanker Team… so, no regrets. One has to know one’s limitations. 😉

  147. 147
    crysball Says:

    JB are you into Golden Crosses?
    Cameron [CAM] 50 day SMA appears to be crossing the 200 day SMA from the underside. MFI is also declining back toward 50.

  148. 148
    BirdsofpreyRcool Says:

    I also suck royally at going long options. So, rarely do that either. Just enough to lose money and remind myself why I don’t do it, occassionally. z is good at it… but not me.

    Stick to what you know and what you are good at.

    Credit Market is putting a firm floor under this economy. It may smell like a 10-day-old fish, but it IS a “recovery.” Seeing a lot of retail names adding staff for Christmas. Didn’t see this last year. The Death of the U.S. Consumer has been somewhat exagerated. Anyway, in conditions like this (at this part of the cycle), you can step out into some “Oh-My-GOSH, That-Is-An-Ugly-Balance-Sheet-You-Have, Grandmother!” types of stocks. EXXI, MMR, SD, ATPG… kids with lots of debt, but rounding the corner on having enuf cash flow to cover the interest due. We have taken “refunding risk” off the table for the next coupla yrs… until we do this whole cycle over again. They never look exactly alike, these cycles… but they do rhyme. History does indeed repeat.

    Off my soapbox now.

    Enjoying the smell of scorching Shorts around the ATPG bonfire. heh heh heh

  149. 149
    zman Says:

    BOP – Any sense of when think Shiller fires off another equity secondary? Big chunk of debt not due until 2013. But it’s been almost a year and several % points since the last one. I would do it on BB East news at 28 or so myself and use it to build cash for further tests, development work at DJ and to partially pay down the debt (debt to cap of 64%).

  150. 150
    BirdsofpreyRcool Says:

    z — Schiller doesn’t need any money to fully fund EVERYthing he has on his plate right AND pay down debt (and you wonder why I love EXXI so much??). However, John is not known to just sit back on his laurels. I think he does “something big” (like that Mitsui acqtn)… and when he does that, he will issue debt and equity. It will be interesting to see him dance around the 16s, as they are not callable until next June (2011), and the preferreds, not callable until December (2014). Maybe he tenders for ’em a bit early? Anyway, I don’t think Schiller issues stock without a whopping good reason behind it… Ha! EXXI might actually go UP on the news… recall how he did a 5:1 reverse split and the stock went UP?! That almost never happens.

    I don’t honestly believe that EXXI stock would go UP on a 2ndary announcement. However, I don’t think Schiller issues more stock just to have more stock.

    XOM has a package of shelf properties up for sale… betcha Schiller is taking a peek at those… just a thought.

  151. 151
    choices Says:

    VIX index, VXX 52 week lows, let the good times roll.

  152. 152
    Nicky Says:

    Looks like the low was put in at 1156 earlier and we can now push on up and make higher highs for the cycle. We need to take out 1172.98 on the upside to eliminate the ending diagonal possibility. Once that it is cleared I think we go up to challenge the 1185 -90 area over the next day or two. Just going to add that the risk is now starting to build to the downside with the 45 day cycle moving into extended territory.

  153. 153
    BirdsofpreyRcool Says:

    fwiw, the 52 week low for the VIX was 15.23 on 4/12/10… but we are getting back there… and that is always a tad worrisome, for sure.

  154. 154
    zman Says:

    Thanks BOP, Nicky

  155. 155
    zman Says:

    beerthirty

  156. 156
    Geno Says:

    Looks like SSN is doing a JV with Halliburton on some of the Niobrara acreage that was not sold to CHK. Interesting way to lock in services.

  157. 157
    Geno Says:

    How about ROSE for the contest

  158. 158
    Jerome Blank Says:

    Re: #147 crysball, thanks for asking, I am familiar with the strategy, but I do not generally incorporate it into my daily analysis…

  159. 159
    john11 Says:

    Geno re 156, where did you see that regarding SSN?

  160. 160
    tomdavis12 Says:

    Z: If the offshore guys run a little without the moratorium the biggest short position is DO. In the words of BOP love the smell of napalm and burning shorts in the morning.

  161. 161
    Geno Says:

    re 159 On the street talk

  162. 162
    RMD Says:

    Geno remember AEZ did a HAL farm-in and then got bought 6-9 mo. later.

  163. 163
    BirdsofpreyRcool Says:

    ATPG just filed an S-4 to register the $1,500mm 11.875% Senior 2nd Lien Notes due 2015. Once this gets approved by the SEC, us normal slobs can buy the notes.

  164. 164
    zman Says:

    Geno – gotcha down for ROSE. They have mentioned something with HAL before for the Niobrara, haven’t seen anything formalized yet. Will ask.

  165. 165
    zman Says:

    CHK stuff for tomorrow coming across the tape now.

  166. 166
    Jerome Blank Says:

    SWN…updated the daily chart…interesting ascending triangle base…could be staging for a move higher…

  167. 167
    zman Says:

    JB – thanks, that’s may play for a gas price recovery on options … HK for common and that as well. By the way, the Street still doesn’t believe HK will Not do an offering. I don’t see that happening until late next year.

  168. 168
    BirdsofpreyRcool Says:

    EXXI at IPAA… Schiller is warming up the room for his Big Acqtn, which is coming down the pipeline. Can just feeeeeel it.

  169. 169
    zman Says:

    CHK production range for 2011 expanded

    Was looking for growth range of 17 to 19%
    now looking for 16 to 20%

    Change stems from going to a range of possible oil production from a point estimate. The old point estimate is still the mid point of the new range.

    Per unit cost guidance remains unchanged.

    Operating cash flow falls slightly due to a lower gas price assumption. Their gas price assumption for 2011 went from $5.50 to $4.50.

  170. 170
    zman Says:

    BOP – I can’t listen, will circle back, can you post anything new?

  171. 171
    BirdsofpreyRcool Says:

    EXXI — nothing substantially new, that they are telling. Ran the first complete set of logs and cores at BBE. Now going to reteat to the lab and stick samples under the SEM to get a better idea of reservoir properties. Seeing pressures below 20k psi and porosities above 20% with nice perm. Also seeing “presence of hydrocarbons.” But no deets on that. Will keep going… objective, Tuscaloosa, it sounds like.

  172. 172
    BirdsofpreyRcool Says:

    Schiller sounded quietly confident. Think stock will reflect that tomorrow.

  173. 173
    mimster90 Says:

    CONTSET ATLS

    I will only enter something I own. All my other positions have been already been taken.
    I am probably the only person here who owns it, bought ATN for the yield during the meltdown, a wildmimster90 bet on ATLS.

  174. 174
    West Says:

    Looks like they got a good well in the EF. My pick for contest is ..MHR..

  175. 175
    Alhambra Says:

    Contest: SWN

  176. 176
    Alhambra Says:

    Tech Analysis from the precious metals:
    For the Week (number in the ( ) was the current price at the time analysis, and yeah these numbers are kinda old):
    Gold (1346): First support at 1322, second at 1302.  First resistance at 1374, second at 1405, overshot at 1436.  Weekly Momentum #'s: 1361 bull, 11325 trend down
    Silver (23.23): First support at 22.02, second at 21.17. First resistance at 23.46, second at 23.70, overshot at 23.95 Weekly Momentum#'s: 23.65 bull, 22.45 sell signal
    Platinum (1703): First support at 1673, second at 1659. First resistance at 1725, second at 1757. Weekly Momentum: 1724 bullish signal, 1681 bearish signal
    Palladium (587): First support at 575, second at 542.  First resistance at 605, second at 630. Weekly Mo: 603 Bullish, 569 trend down.
    For Wed (these numbers are not):
    Gold (1351): Support at 1348, then 1341. Resistance 1356, 1363, potential spike 1377.  Mo #'s: 1354 bull, 1340 bear
    Silver (23.36): Support at 22.90, then 22.69. Resistance 23.43, 23.53, potential spike 23.95. Mo#'s: 23.36 bull, 22.90 bear
    Platinum (1682): Support at 1658, then 1632. Resistance 1682, 1689, potential spike 1707. Mo#'s: 1692 bull, 1657 bear
    Palladium (583): Support at 576, then 568, Resistance 585, 593. Mo#'s 590 bull, 571 bear
    For the PPM's, last week we did not see any corrections on weakness, just a drift sideways- indicating the best strategy should be just buy because they are undervalued.  Although today (Tues) the PPM's did test daily support, without new buying.  This could indicate that they may need to move lower.  If the Fed hawks break the dollar lower, we could see a big move to buy the metals.  Agricultural commodities showed some good buying today and could be leading indicator that we are moving towards an inflationary spiral, which would be ok by  the Fed.  Given the overall fundamentals, we are pointing to 25.87 silver and 1400 gold, 1850 Platinum and 750 palladium should things continue. 
    Good luck to all!

  177. 177
    scoop006 Says:

    CONTEST= PQ

  178. 178
    elijahwc Says:

    West, One Gonzo thanks for tthe pick.  You mean we'd be willing to sell this time for less than a billion?

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