14
Oct

Thursday – Dualing Oil and Natural Gas Inventory Reports

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Market Sentiment Watch:  The equity market rally feels like it's getting sluggish, and is probably due for a pullback soon. Look for a volatile day today on data and then boring, options expiry influenced trading tomorrow. In energy land, we get the natural gas report (probably a bummer and could be a record for this week and maybe a triple digit one at that) and then the oil inventory report and we have the third day of IPAA of with some interesting characters presenting (day 3 always brings out some weird ones) along with some we own. Oil has been strong of late on a weak dollar and inventories that while fullish are not overly so except on the distillates side. Today's OPEC meeting appears to be have resulted in no change in quotas as was largely expected but official word is not yet available. However, it has been decided that the OPEC presidency will shift to ... Iran, first time in 36 years they've held that post. 

Ecodata Watch:

  • Jobless claims came in at 462,000 vs 444,000 expected
  • PPI was 0.4% vs 0.2% expected, but was in line at +0.1% on core
  • Trade balance came in at $46.3 B vs $44.1 B expected. 

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Stuff We Care About Today  - CHK wrap, LINE, IPAA Day 3
  5. Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

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

ZIM (Zman Inefficient Markets portfolio)

  • $9,500
    • 4 positions
      • 10 BEXP $20 Oct calls,
      • 67 BEXP $22.50 Oct calls (house money there),
      • 100 CHK Oct $24 calls with a $0.25 cost basis and probably going out at $0, and
      • 10 MMR Jan $22.50 
  • 58% Cash
  • Yesterday’s Trades:
    • CHK - Added (40) more CHK $24 Oct. calls at $0.17 with the stock at 23.45 while listening to the analyst day. Overall position is still smallish at 100 contracts, sense is the early sell off this morning is not based on much more than piling on action before they get everyone updated. See post for additional comments. Obviously with just under 3 days until expiry this is a high risk trade.
    • OII – Sold the (20) OII Nov calls for $1.05, up 59% since taking them yesterday, stock moved faster than I thought but I didn’t like how the greeks were moving in the trade. Just not getting the move I’d like to see for the spread, premium, etc. Will revisit soon.

Commodity Watch: Crude oil rallied $1.34 to close at $83.01 yesterday, on dollar weakness and a strong equity market. After the close, the API released a bullish report (see below). This morning crude is trading up $0.40.

  • OPEC Watch: 157th OPEC Meeting Today. No official word yet but no change is expected. Ali Naimi, Saudi's OPEC minister expressed satisfaction with current oil prices yesterday.  Without Iraq who is still not subject to quotas, the 11 members of OPEC who are subject are producing about 2 mm bopd over the official quota of 24.85 mm bpd.  

Natural gas climbed $0.07 to close the day at $3.70 yesterday. This morning gas is trading off slightly as Paula veers to the east. 

  • EIA Watch:
    • Supply Rolling (Slightly) Over. EIA sees U.S. natural gas production growing 2.2% this year, up from its past estimate of 2.1% but also sees 2011 production falling by 1.5% due to low prices and a switch to liquids focused drilling. 
    • Demand seen up 4.6% this year but up only 0.1% in 2011 due to an expected mild winter. 
  • JV Watch: Dow Chemical late yesterday said it would be open to a JV for an oil and gas field along the lines of the CNOOC /CHK deal in the Eagle Ford Shale. This makes sense as the chemicals industry is the largest component of industrial natural gas demand (which accounts for about --% of an average year of gas demand) and gas prices are probably closer to their lows for this decade than they are to their highs. 
  • Tropics Watch: Hurricane Paula still looks harmless to Gulf production facilities. 

Natural Gas Storage Report: I'm looking for a 95 Bcf injection today. Street is at 91 BCF.

  • Last Week: 85 Bcf Injection
  • Last Year: 60 Bcf Injection
  • 5 Year Average: 65 Bcf Injection
  • 10 year Hi: 81 Bcf Injection
  • 10 year Low:  27 Bcf Injection

Oil Inventory Preview 

API Watch:  Mostly Bullish

  • Crude: Oil down 4 mm barrels

    • Cushing stocks also fell which would be a plus for oil after last week's sharp rebound.
    • Of late EIA and API numbers have been in directional agreement
  • Gasoline down 1.883 mm barrels. We normally see a much smaller draw here but this time of year there are often some pretty lumpy numbers. 
  • Distillates down 254,000  barrels. This would be a disappointing number, normally this time of year we see a bigger draw  close to 2 mm barrels.

Stuff We Care About Today

CHK Wrap and Other Takeaways

  • 2011 production growth maintained and the previously announced VPP had already been factored in
  • CFO leaving so abruptly ... says it's been in the works for some time and he and Aubrey have been talking about it for a week ... um, that's abruptly in my book. 
  • History of doing big JVs will continue
    • Sees a Niobrara JV around end of year
    • Sees the next big JV by mid 2011
    • Impact of EFS JV is that they now have a negative $800 mm cost in the land and still have 66% of their original purchased acreage. 

  • Has a new oil play with 1 mm acres in their back pocket, undisclosed location for now
  • Continuing to add hedges
  • Sees transitioning to more rigs in the EFS until they get to 40 rigs by the end of 2012 (and as they pull rigs off the Haynesville. 
  • GTL - Gas to liquids, working on a breakthrough on margins, believes we will see that happen in the U.S. Timeline? I'd bet on 2020+
  • CNOOC deal will be approved, not worried about opposition, point out a 2007 law signed encourage such deals. 
  • Nutshell: Good presentation, nothing earth-shattering. The CFO leaving on the same day breaks the attention span of investors and probably caused the stock to falter as there was nothing I saw in the presentation that would have done that. There was one point where you could say the stock legged lower on information in the call and that was when they said it's tough to make money in the Haynesville at $4.25 gas, even in the core. That's why people have hedges and that shouldn't be much of a shock to anyone. 

IPAA Day 2 Takeaways - I didn't get to listen to everything due to the length of the CHK meeting but many of them had been recently covered anyway at recent conferences.  Some exceptions:

LINE Thoughts

 

  • LINE saying capital budget will be 33% of 2010E EBITDA, that number was 36%, could be acquisition added to pro forma EBITDA, it’s not a move to lower capex. Could just be higher EBITDA due to outperformance on the top line due to higher than expected volumes. From what I understand, Granite Wash volumes are quite a bit better than they expected.
  • Wolfberry program – much higher IRR range now listed at 50 to 100% vs 40 to 60% in the past … this is largely due to higher strip price
  • No word on timing of distribution increases and it seemed to be less of a focus in this presentation than in other recent ones. 

IPAA Day 3

Other Stuff:

  • Bakken piece out tomorrow most probably
  • FSLR announces 2 new plants, 1 in US, 1 in Vietnam. Plan is to nearly double total company production by end of 2012 to 2.7 GW per year. For reference, a good sized nuclear facility in the US is usually two reactors with a combined output of between 0.9 and 1.2 GW per year.  
    • Note to the Administration: FSLR says the US plant will be completed in 2012 and at that time will create 600 jobs. These are the so called "green jobs". So it'll take over a year to get 600 people in the work force. Or the Administration could encourage more onshore natural gas drilling and help NG vehicles like they do electric ones with tax incentives and we could put 600 people to work each week, now through the end of 2012. But I just pay taxes, I don't get to decide how to spend them so what do I know?  

Odds & Ends

Analyst Watch:

  • HAL - RBC bumps target by $2 to $47, still Outperform.
  • WLL - Dalhman starts with Buy rating and $120 target. 
  • SM - Dalhman starts with Buy rating and $50 target.
  • TK - Dalhman raises to Buy.
  • KWK - Dalhman starts with Hold rating.
     

192 Responses to “Thursday – Dualing Oil and Natural Gas Inventory Reports”

  1. 1
    BirdsofpreyRcool Says:

    USEG — I met with management… "get" the story there.  Open to what they are doing (just LOVE bottom-feeder buyers who snap up outta favor assets… think "Wilbur Ross").  But, don't own the stock.  G&A is high… but i "get" that too.  Keeping an eye on what they are doing… they said they wanted to add cheap, outta favor nat gas assets.  So, we shall see.

  2. 2
    BirdsofpreyRcool Says:

    ATPG — Note out this morning == MKM notes ATPG mgmt yesterday relayed in their IPAA presentation slides that 3Q10 production was 21 Mboepd, about 6% shy of their 22.5 Mboepd est. However, the low end of the 4Q10 production guidance range of 30 Mboepd to 40 Mboepd offered in the same set of slides exceeds by more than 18% their prior 4Q10 est of 25.4 Mboepd. While that production guidance range is remarkably wide, they believe it should be so in order to reflect the lack of clarity available regarding deepwater GoM drilling operations.

  3. 3
    zman Says:

    Thanks BOP – I just wanted to listen to USEG and couldn't think of a better reason why than you liked them. 

    Re 2 – wondering if MKM had an assumption of 3Q volumes for Telemark well still in their numbers. It originally was a prior to end of 3Q event. Wondering what their base decline looks like now, know it is steep with most but not all (EXXI) of the Gulf players. 

     

  4. 4
    zman Says:

    editor off

  5. 5
    zman Says:

    Analyst Watch

    CHK – Ticonderoga stays at Neutral following analyst day. Says their attitude toward acreage spending in 2011 = “more of the same”. Says the market has clearly disagreed with managements value creation assessment. Maybe so but that doesn’t make the market right. They say it is clearly undervalued but they see nothing to change the markets mind about that so they are staying at Neutral. Gutless is a word that comes to mind.

  6. 6
    zman Says:

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

    Note Hyperdynamics is first up today, interesting tiny cap in Africa.

  7. 7
    elijahwc Says:

    Pritchard Capital Partners, LLC –

    Analysis

    CHK – Chesapeake Meeting Takeaways
    Impact: positive. What’s new? Operational improvements across the board, new play discussions in Permian/Anadarko, further details on Niobrara, demonstration of positives underlying VPPs and acreage JVs overshadowed by CFO departure caused underperformance yesterday. 100% of rigs active in the Haynesville are targeted to holding acreage vs economics. Progress towards investment grade being made, although rating agencies highly skeptical on natural gas. Impressive results for 30-day rates relative to year ago in Barnett (now 2.7 mmcfpd) and Colony Granite Wash play (7.8 mmcfpd). Look for outperformance as investors look to rotate into “gassy” names to some degree (at least for a trade) despite relatively weak fundamentals in 2011. 700 and 1,200 bpd wells drilled in Niobrara which bodes well for JV marketing process (data room is open). Running 27 rigs in Marcellus, rising to 34 in 2011. Increased EUR to 5.25 bcf per Marcellus well. Over 19,000 locations remaining (75 wells online). Six rigs running in Cleveland/Tonkawa oil shale, rises to 9 next year. Production at 8K bopd (net). CHK sees $36/bbl oil price needed for 10% ROR. 500 mmbbl potential prize. Mississippian play in northeastern Oklahoma also seen with several hundred million bbls of potential upside. $52/bbl breakeven oil price in Mississippian oil, though is earlier in its life and efficiency gains likely. More meat on Eagle Ford than we have seen before. 10 rigs currently running, will exit 2012 at 40. Best example of what CHK land machine can do given what they were able to put together after play was discovered. Niobrara heating up with 175 permits issued, 20 rigs running in play. CHK acreage outside currently envisioned fairway but more data on way soon. (Deacon)

  8. 8
    elijahwc Says:

    Boenning & Scattergood Inc.

    Analysis

    Chesapeake Energy Corp. (CHK-NYSE, Neutral): Annual Analyst Meeting Highlights

    Investment Conclusion: We have a cautious outlook on the E&P sector as we believe that the current risk/reward for the group is fairly balanced. Our Neutral rating on CHK is based primarily on our cautious outlook on the group.

    Key Points:

    · CHK provided a bullish outlook at its analyst meeting highlighting the substantial opportunity set that it has built in its unconventional liquids-rich plays (2.9 million net acres/3.7 billion BOE of risked potential), which it believes will provide decades of future high margin production growth. CHK plans to increase its current liquids production of 56 MBbls/d to 100 MBbls/d by YE ‘12 and 200 MBbls/d by YE ‘15.

    · CHK is “acting with a sense of urgency” towards acquiring additional acreage in other potential domestic unconventional liquids rich plays because it believes that the land grab for acreage in these plays will be largely over by the end of 2011. CHK is currently working on acquiring another 1.0+ million net acres in additional liquids rich plays. CHK’s goal is to recover in proceeds (cash and carries) from potential additional JVs the amount that it spends on new lease acquisitions in 2011, although it indicated that leasehold spending in 2011 is unlikely to be as high as 2010.

    · CHK plans to open a data room regarding a potential JV on its 750,000 net acres in the Niobrara liquids rich play in late October with a deal expected to close in Q1 2011. CHK is also targeting closing a JV on a potential new liquids rich play (which it is currently working on) near mid-2011. Importantly, CHK believes that interest in participating in potential JVs in unconventional plays remains high.

    · Otherwise, CHK continues to work with a potential industry partner regarding its previously-announced planned monetization of a 20% interest in its Marcellus Shale operations, although the potential partner until recently had been busy working on another deal.

    · CHK announced Marc Rowland’s planned departure as CFO to become President of Frac Tech Services, LLC (CHK owns 26%) and the planned promotion of Nick Dell’Osso (current CFO of CHK’s wholly-owned midstream subsidiary Chesapeake Midstream Development) to CFO.

  9. 9
    elijahwc Says:

    Dahlman Rose & Co, LLC

    Initiates Coverage: Buy – Price Target: $120

    WHITING PETROLEUM CORPORATION (NYSE:WLL) Near Term Picture Great, Inventory Now Growing Again

    We are initiating coverage of Whiting Petroleum with a Buy rating and a $120 price target. The company’s two-year growth profile is one of the most attractive in our coverage. Its NAV increased materially, after positive results at the Lewis and Clark Bakken area expanded, de-risking its inventory.
    Initiating coverage of Whiting Petroleum with a Buy rating
    We are impressed with Whiting’s near-term production growth and encouraged by its growing inventory. Whiting’s recent successes, in its Lewis and Clark area and in the Three Forks formation, have expanded its inventory significantly. We estimate that it currently has 4 years of drilling inventory identified in its two core Bakken fields (Sanish/Parshall) and at least another 3-4 years of inventory in its Lewis and Clark Prospect.
    Bakken and Enhanced Oil Recovery (EOR) drive oil production growth
    While the EOR fields in West Texas and Oklahoma provide a stable slow growth base of oil production, the Bakken (highlighted by its Sanish/Parshall area and now its Lewis and Clark area) provides the spice to the story. Whiting (WLL) is a near-term story with 160 Bakken wells planned in 2010. Operating at a similar rate, we think it can grow its total production over 11% in 2011, primarily driven by the Bakken. Whiting continues to struggle with a widely dispersed group of “other” assets, but these two core areas now provide 67% of production (up from approximately 45% in 2008). The company is one of the oiliest in coverage, with 82% oil production.
    Valuation remains compelling as Lewis and Clark fills in back end of portfolio
    WLL shares trade at 5.3x our 2011 EV/EBITDAX estimates. The valuation is compelling with 11% production growth and 5% free cash flow yield in 2011 (after maintenance and growth CAPEX estimates). This near-term profile is one of the most compelling in our space, but we have some concerns with the company’s NAV which we estimate at $115/share (currently 11% above market value). This split in valuation indicates that a front-end loaded inventory, with highly economic wells in the next two years, is followed by less visibility in later years.

  10. 10
    zman Says:

    Re 7 – That Ray Deacon is a smart guy… and not just because he happens to agree with me.

  11. 11
    1520sbroad Says:

    not much new out of SWN at IPAA yesterday. I wasn’t there so don’t know how the breakout session went. Slides frot heir presentation were the same ones from september. corridor resources/Apache Canada are currently fracing a horizontal well near SWN’s acreage in new brunswick.

  12. 12
    zman Says:

    WLL getting another bump from a new analyst to hit an all time new high. No options at present but I still hold the common in the ZLT.

  13. 13
    zman Says:

    Thanks 1520, last couple of presentations they did not talk much about New Brunswick, is that still a 2011 first spud event?

  14. 14
    1520sbroad Says:

    #13 – as far as i can tell. They have been gathering data all summer. I think they are watching that corridor/apache well closely to see where they site well #1. I would bet they may even wind up using that rig too. SWN does have a team on the ground up there.

  15. 15
    BirdsofpreyRcool Says:

    Wild open…. “flopping around like a landed fish,” is what comes to mind.

  16. 16
    zman Says:

    S&P should roll over on today’s ugly set of data. So far oil not paying much attention and group only marginally red. Uptick on PPI probably makes Fed a little more nervous. Trade balance just out of whack. If they rally this market then the technicals must be large and in charge. There is so much money on the sidelines that needs to make up ground they’ve missed out on that’s it’s a distinct possibility we keep quickly reversing the dips.

  17. 17
    BirdsofpreyRcool Says:

    (and perfectly happy to have EXXI pinned to sub-25, going into tomorrows options expiry)

  18. 18
    zman Says:

    Thanks 1520 – planning to listen to that replay this morning before the live shows start.

  19. 19
    zman Says:

    re 17. I suspect they rally into the close for the MMR call on Monday. You could buy them back ya know.

  20. 20
    BirdsofpreyRcool Says:

    #19 — those shares get called away from me, youbetcha i’ll be looking for the oppy to buy them back. Knowing FULL WELL that “something BIG” is in the works… Something that will involve debt and equity issuance. Maybe that is the re-entry point. We shall see…..

  21. 21
    zman Says:

    ZTRADE – ZIM – MMR

    MMR – Added (5) November $18 calls for $2.20 with the stock at $18.40. Earnings Monday should provide an interesting operations update.

  22. 22
    BirdsofpreyRcool Says:

    ATPG — what a fun stock. It can make you look like a Goat and it can make you look like a Hero… all on the same day!

  23. 23
    zman Says:

    LINE making a move on $34. The story continues to become more compelling from an organic growth standpoint, not just the Granite Wash but also the Wolfberry.

  24. 24
    zman Says:

    re 22 = LOL

  25. 25
    zman Says:

    SWN Notes from yesterday’s call

    2011 Capex probably just under this year’s level of $2.1B

    East Texas
    Still have 10,000 acres of Haynesville/Bossier and then 100,000 acres with shallower rights (Petit Oil, James Lime)
    Now > 80 MMcfepd from JL, building

    They will likely monetize that 10,000 acres, needs $6.50 gas even in the better
    acreage in the E. Texas Haynesville.

  26. 26
    zman Says:

    SWN Notes 2

    Marcellus notes:
    151,000 net acres
    4 different parts of NW PA
    1 rig running,
    Recent well was announced as doing 4 mm/d, cleaned up the well, now doing 7 to 8 mm/d
    Will add more rigs late 2011/2012
    Avg acre cost $600 per acre

    New Brunswick
    license for 2.5 mm acres (3 yr exp lic.)
    Avg cost $2.50 per acre
    Two existing fields are sitting on top of a large shale,
    If half of this works it will replace the Fayetteville Shale.
    The local gas price is NYMEX + $1.25.

  27. 27
    zman Says:

    SWN – good exercise in how to get your finding costs down.

    Lateral lengths triple over time (from start to now), production and EURs jump, and the wells were drilled in half the time, resulting in cost per well staying flat.

  28. 28
    zman Says:

    SWN notes

    In 3Q, they drilled 5 wells in 4 to 5 days. These used to take 17 wells. In October, they drilled another 10 wells in 5 days.

    The 5,000 foot laterals are looking well over 4 Bcfe recoverable reserves, look for big reserve adds here this year, next, etc.

    They need a $4 gas price flat over the life of the well to get what they are looking which is a 22% IRR.

  29. 29
    BossmanG Says:

    BOP, any comments on credit markets? i.e. bank cds spreads? Thanks!

  30. 30
    jiveyjr Says:

    FWIW….there’s a good bit of energy in the buying of SPWRA this morning…stock has almost 25% short interest and is amongst the solar group…picked it up in my chart piddling

  31. 31
    zman Says:

    Thanks Jivey, FSLR also got the group jumping today.

    SWN call – very confident “we don’t need no stinking oil” tone. Not much in there about hedges and the capex budget will produce a bit more debt on the balance sheet next year but they continue to get their costs down and reach out to the new ventures division. If gas is close to a bottom here than SWN probably is too.

  32. 32
    zman Says:

    Feels like the market wants to go higher so bad data only giving it indigestion and not something decidedly more negative. Same thought applies to energy group with NG data due in 15 minutes (Street now at 92 Bcf injection which would be a record for this week of the year) followed by the oil data at the top of the hour. NG data should be a yawner for equities. Oil data, if it comes in like API last night, could help the energy sector to one last boost before end of options contract pinning sets in in earnest.

  33. 33
    tomdavis12 Says:

    Z: Any name(s) on your dance card as most undervalued? Anyone you might try to be long prior to earnings for a trade?

  34. 34
    zman Says:

    Tom – working on that. I’d say EOG off the top of my head but more often than not there is a chance on earnings day to buy them cheaper than the previous night’s close. They are reporting after Halloween this time which is late for them so they could be planning an ops update around data they don’t yet have. I’m long MMR for earnings but not for the story, not the numbers of the quarter, although I do see them as long term undervalued assuming they can produce gas from 30,000′ down. Let me get back to you in a week to 10 days with a list.

  35. 35
    zman Says:

    MMR going green. For all you fast traders I say, can EXXI be far behind?

  36. 36
    zman Says:

    91 Bcf

  37. 37
    zman Says:

    NG was down 7 cents pre number.

    Oil numbers in 30 minutes, oil down a dime.

  38. 38
    RMD Says:

    MCF release can be misread, as I did. CORE, the gold co. is not trading as of yesterday and won’t trade separately until ~ late Nov. This was an accounting gimmick for some institutional (read: hedgies) holders.

  39. 39
    blackgold39 Says:

    MMR firing off

  40. 40
    bill Says:

    38

    what was the accounting gimmick?

  41. 41
    BirdsofpreyRcool Says:

    BossMan #29 — using BAC as a proxy for bank CDS and looking at the CDS curve today and a year ago… spreads have blown out considerably. The cost to insure a 5 yr BAC bond is now about 180 bps, vs about 115 bps a yr ago. But a year ago, the CDS curve looked normal (gently sloping up and to the right). Today it looks like a weird, kinky thing, with 5 yr CDS much more expensive than 10 yr. This is indicative of Monkey Business… and not Business Risk. What CDS is supposed to do is to hedge against “default risk.” Well… the risks of BAC defaulting have not gone UP over the last year (au contraire). Talking to XACS#1, what he thinks we are seeing is “credit migration,” as opposed to a higher risk of default of BAC bonds. Also, he is thinking that mo-mo risk traders have piled into the banking names and pushing out the spreads. So, institutionals and hedge funds playing games in the Rare Air of CDS. He does NOT think it is indicative of “higher risk” in BAC bonds.

  42. 42
    zman Says:

    WLL continuing to run. Being 90% of the way through my Bakken update I can tell you I’m not selling until it is quite a bit higher. I may add some trading shares on the next dip day for the group however as I just funded my SEP for the year. By the way, tomorrow is final tax day for 2009 returns.

  43. 43
    blackgold39 Says:

    easy NFX, dont get carried away!

  44. 44
    snuhart Says:

    re 30, 31 YGE too

  45. 45
    zman Says:

    re 43 … wow, the elusive 60 handle has been broken.

    Volumes are pretty low out there, even with some good moves in the likes of WLL, LINE, KOG, ATPG and more, need oil #s to confirm and would expect a small swoon in the group just before them.

  46. 46
    zman Says:

    re 41. thanks for poking your head and making that comment, your color helps.

  47. 47
    blackgold39 Says:

    It met with some fierce selloffs yesterday. Auto trading

  48. 48
    BirdsofpreyRcool Says:

    Bossman — more follow up on your timely question from XACS#1…. i’ll post the link to his report at the end.
    ================================

    In the first paragraph of today’s report we wrote “WFC 5-year CDS has increased from 92bps to 199bps in the past 2 trading sessions.” The 199bps is a mistake..119bps is the correct number. Also wanted to bring one other point up….The widening in bank CDS, in our opinion, can be classified as a change in market risk or simple credit migration…and not proof that we are re-entering into another credit crisis. The latest foreclosure story line is likely to delay positive credit rating agency announcements due to uncertainty as well as increase the cost of some foreclosure proceedings…but it is not a default concern. Bank of America’s 1 – 5- year credit curve has steepened with the widening in 5-year CDS…the foreclosure narrative only becomes a truely distressing or a default concern or even fundamentally important if short term bank CDS spreads begin to quickly rise…and their CDS credit curves invert. That does not appear likely at this point….therefore…the weakening in bank equity and spread widening remains a tactical trading decision and not fundamentally based.

    http://www.capmarkets.com/ViewFile.asp?ID1=146215&ID2=444281369&ssid=1&directory=6571&bm=0&filename=10.14.10_Warning_Signal_Goes_RED_Go_Underweight.pdf

  49. 49
    zman Says:

    BOP – I’m putting the Bakken thing out on Monday. Who wants to look at a bunch of tables and charts on the Bakken player list on a slow boring Friday anyway?

  50. 50
    BirdsofpreyRcool Says:

    #49 me me me me!

    But monday is fine too. Thank you!
    (and I know at least one large HF mngr would would luuuuuv to see your work… so, it will not go undiscussed…)

  51. 51
    zman Says:

    Cool – just didn’t want you to think I was shining you on!

  52. 52
    bill Says:

    http://www.firstenercastfinancial.com/e_news.php?cont=39925

  53. 53
    BossmanG Says:

    BOP, thanks, much appreciated.

  54. 54
    BirdsofpreyRcool Says:

    Bossman — you are asking all the right questions. Thank you for getting that conversation going.

  55. 55
    bill Says:

    with egleford going for 10 k an acre, what does that do to the HK valuation analysis

  56. 56
    bill Says:

    oil pushing higher even though inventories at all time hi..go figure

    [Dow Jones]–Total US company-held stocks of crude oil and refined petroleum products are expected to stand at 1.094 bil bbls at the end of 2010, the highest end-year level since 1984, the EIA projects in its Oct Short-Term Energy Outlook released Wed. Stocks would be 4.2%, or 44 mln bbls, above a year earlier, and 4.6%, or 53 mln bbls, below the level estimated at the end of 3Q, when stocks were the highest for that time of year since 1981. Stocks are expected to drop 24 mln bbls to end 1Q 2011 at 1.07 billlion bbls, which would be about 20 mln bbls below the 27-year high at end 1Q 2009. End-year crude stocks are expected to be 350.1 mln bbls, the highest level at that time of year since 1981. But at the end of 1Q 2011, crude stock are expected to be 362.3 mln bbls, or below the 19-year high hit in 2009. Distillate stocks (diesel/heating oil) are expected to be 166.4 mln bbl at year-end, the most since 1982. Despite an expected drawdown of about 20 mln bbls in 1Q, stocks of 146.5 mln bbl would be the highest at the end of Mar since 1981. Gasoline stocks, at 223.2 mln bbls at year end will be little changed from a year earlier and are expected to dip to 220.9 mln bbls at the end of 1Q 2011. That would be the lowest level at that time of year since 2007.

  57. 57
    zman Says:

    re 55. Well if you just flatline it and call all of their acreage $10K per you are left with $3.6 B of value. I think you can ‘t do that as they are in several areas along the play, some in the dry gas, some in oil and some in the mix. But with the EV of the company at $7.5 B it means they are getting nowhere near full value for something in their portfolio. Reserve growth there this year is going to be strong and they will go from being pricey on $/Mcfe of reserves to the cheap end of the scale.

  58. 58
    zman Says:

    Crude numbers in 1 minute

  59. 59
    zman Says:

    EIA oil inventory numbers

    (MM barrels)
    Crude down 0.4 mm barrels
    Gasoline down 1.8 mm barrels
    Distillates down 0.3 mm barrels

    Crude up 25 cents pre #

  60. 60
    zman Says:

    More EIA

    Imports were off big, down 800,000 bopd week to week

    Cushing was flat

    Demand
    Gasoline off slightly week to week
    Distillates flat

  61. 61
    bill Says:

    ng needs a catalyst

    like the us getting behind ng for auto’s
    or exports

  62. 62
    zman Says:

    More EIA

    Refinery utilization was off sharply, now at 81.9%, that should be close to the low for the season. Should see crude demand from refineries stabilize around the 14 mm bopd mark.

  63. 63
    elduque Says:

    re 61- I talked to an energy lobbyist a month ago and he couldn’t figure out why the administration was so reluctant to do anything about Nat. Gas. I can’t figure that one out either.

  64. 64
    BirdsofpreyRcool Says:

    elduque — this is gonna sound cynical… but look at the evidence. The O&G industry is not unionized. No union, no campaign contributions. No “you scratch my back, i’ll scratch yours.”

  65. 65
    zman Says:

    MMR – all it needed was a little push from some pretty OK numbers for oil inventories. EXXI waking up too. BEXP now green which is also good as I still have some $20 strikes to punt.

  66. 66
    zman Says:

    BOP – re 64. Combine that with the frac fear thing and the “it’s still a hydrocarbon thing” and I think you have it. Cynical or not, it is what it is.

    We need a war on joblessness now. Sure, more and better education matters from votech on down … down the road but we need a big bandaid on jobs now. I can think of nothing better for it than gas as a transportation fuel … a nationwide effort. From building cars (the only one available here is from Honda by the way although Ford makes them for sale in other countries and I think GM does as well), to building infrastructure for selling gas at home and at gas stations, to the new rigs that will need to be built to add it, to the staffing up at E&Ps and in the fields to meet the demand. This guy just doesn’t get it. Solar and wind are skyblue pie in the sky on a jobs created comparison. This is a resource that is under our feet, even China knows that. No apologies for the rant.

  67. 67
    BirdsofpreyRcool Says:

    #66 This guy doesn’t get it… and the LAST guy didn’t get it (ethanol as The Solution? sheesh and double-sheesh). All we can do is keep chipping away and educating, i guess.

    I met a very very old-school farmer in western PA about 3 weeks ago. He has 116 acres near Bradford. He is SURE that fraccing will contaminate his water supply. He is a true entrepreneur (and about 85 yrs old, so he has seen a lot)… so clearly, more public education needs to be out there. And not just the “Inconvenient Truth” type of education. That said, I think the “scientific community” has done GREAT damage to their public reputation in the last 10 yrs. No one know which “expert” to believe anymore.

    just ranting…

  68. 68
    bill Says:

    64,66

    Pickens mentions that battery cars need to be charged with electricity and half of electricity comes from coal so electric cars arent that green

    we know the dems dont like nuclear with a 0 co2 footprint

  69. 69
    zman Says:

    snuhart – please check your email

  70. 70
    bill Says:

    67 It’s a good rant. there is so much bs out there it’s unbelievable

  71. 71
    zman Says:

    re 68. He also mentions that batteries do not provide enough kinetic energy to start a fully loaded 18 wheeler rolling. It can keep them rolling but not start it, not with current tech and the weight of the batteries themselves. Diesel can obviously. So can NG and at a much lower cost. 1 Mcf = 7 gallons of diesel. Math is pretty easy to figure out on that one.

  72. 72
    zman Says:

    Wizard, please check your email.

  73. 73
    zman Says:

    Oil up 84 cents now to 83.85 but group eying the precarious position of the S&P.

    NG up 4 cents.

  74. 74
    elijahwc Says:

    OT – With the big financials being foreclosed upon today, you might want to do something nice for the kids and pick up a little WFCprL. Trading 1002 for a 7.5% yield w/conversion ratio 32.0513

  75. 75
    zman Says:

    Thanks for the tip Eli.

  76. 76
    BirdsofpreyRcool Says:

    elijah — thank UUUUUUUUU.

  77. 77
    choices Says:

    http://www.c-span.org/Watch/Media/2010/10/07/HP/A/39089/US+Energy+Association+Annual+Energy+Supply+Forum.aspx

    re:61,63 link is to energy forum Oct 7 I mentioned previously-at about time point 1:33 of PM session, Chairman of Fed Energy Reg Commission (FERC) speaks-compares costs of elec production-does not appear that he fully appreciates advantages of NG-using data ~2 years old for NG costs-strongly inclined toward heat waste recovery, efficiency-one thing that really stood out is there is no comprehensive plan to replace aging coal plants (he speaks to need to replace), replace aging work force, implement leaps in technology-his talk is worth a listen, approx 15 minutes, maybe on weekend.

    My personal opinion, admin and demos have no base in O & G industry (BOP’S point), only in alt energy sources, but that does not excuse the almost criminal negligence in not putting together a comprehensive plan.

  78. 78
    zman Says:

    WILDZTRADE – ZIM – MMR

    Playing with fire but I like the way the name is holding up in a weak tape with earnings due Monday, could be a sign of a run up prior to the weekend.

    MMR – Added (10) October $19 MMR calls for $0.56 with the stock at $19.18, up 2.5%. Obviously high, high risk, but small money trade.

  79. 79
    zman Says:

    snuhart – thanks, please check for new response.

  80. 80
    cargocult Says:

    I’m shocked to hear the call for government action on NG transportation when this is a job for private capital. Next you might want to redistribute my income for subsidies to agriculture or housing. Oh sorry, we already do that.

  81. 81
    elduque Says:

    I know it is off the topic, but. Does anybody have any opinion on the foreclosure mess. Banks are taking it on the chin today. I assume that is the reason.

  82. 82
    tomdavis12 Says:

    Eli: Did you see the new Citi prfd that was just issued. CprN. It floats at 6% above libor at the end of 5 years instead of the usual 4%. Of course it went from $25 to $26 in a blink. Another miss for me.

  83. 83
    choices Says:

    Art Cashin quote: bulls on hopium-heh

  84. 84
    VTZ Says:

    RE 81 – How would you feel if someone owed you interest AND your investment isn’t yielding anything AND you can’t access the collateral because the security you bought was created fraudulently AND the asset as collateral was decreasing in value?

  85. 85
    VTZ Says:

    I forgot the kicker… AND part of your collateral might not even be there… Suddenly your mountain of derivatives might have a bad marked value?

  86. 86
    RMD Says:

    TVA closing 9 coal plants in W. Va- KY area, Progress Energy closing 11, Duke closing 18. First TVA gas plant will use 160,000mcf/d.
    Lots of MS gas demand on the way.
    This comes from NGAS IPAA presentation, slides 18-19.

  87. 87
    elijahwc Says:

    TD Yes & thanks for the reminder as I forgot to put it on the screen.

    In the C structure I like CprZ which is a Capital Trust @ $24.50 to yield 7%+ with its $1.737 Divi(really an interest pymt)

    On things that float over libor, still trade busted, and have the 4% floor I own the following:

    GSprA, BMLprL, MSprA, ORHprB, METprA,BACprE, HBAprG

    Now back to Oil & Gas

  88. 88
    zman Says:

    Thanks RMD

  89. 89
    BirdsofpreyRcool Says:

    Mukesh Ambani, his wife and three children will host a housewarming party in the luxury Mumbai pad—believed to be the world’s most expensive, later this month.

    Suppose Aubrey and his wife are invited??

    http://www.nydailynews.com/news/world/2010/10/14/2010-10-14_mukesh_ambani_indias_richest_man_builds_first_billiondollar_home_in_mumbai.html?r=news&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+nydnrss%2Fnews+%28News%29#ixzz12LmDZqJZ

  90. 90
    cargocult Says:

    VTZ-and we thought bankers were a cautious lot.

  91. 91
    elijahwc Says:

    TD I forgot to add that I believe the CprN to be a buy even here at 26 although closer to 25 protects against call after ’15 when the Tbill and Libor both should be around 18%

  92. 92
    zman Says:

    BBG presentation in 20 minutes, pretty technical dudes worth my time to listen, another gas play that is seeing better times/margins and yes, they have some Niobrara.

  93. 93
    VTZ Says:

    Yeah, circling back to the comment earlier about lost credibility in the science community I guarantee that if you asked the public about who has done the bigger disservice to their profession, finance would easily win hands down with probably 999 people out of 1000.

  94. 94
    tomdavis12 Says:

    Eli: Thanks for your thoughts.

  95. 95
    BirdsofpreyRcool Says:

    VTZ — ha! I was not proposing a “Beauty Contest” for the worst reputation. But it’s always good to be reminded where you stand on bankers. I forget sometimes… 😉

  96. 96
    BirdsofpreyRcool Says:

    (didn’t mean anything derogatory by the comment, just couldn’t resist… ok?)

  97. 97
    VTZ Says:

    Not derogatory at all. It’s not slander if it’s true right? I’m more upset that you sometimes forget where I stand on the topic, haha.

  98. 98
    skimo Says:

    Off Topic-
    It probably stinks to be St Joe Company management, the subject of a David Einhorn presentation. Management confirmed his observation in my opinion by their desperation move-suing BP for their loss of land value in FLA.
    http://www.gurufocus.com/news.php?id=109420

  99. 99
    blackgold39 Says:

    In other news….

    http://www.current-movie-reviews.com/politics/2010/10/14/first-black-president-obama-related-to-sarah-palin-and-rush-limbaugh/

  100. 100
    BirdsofpreyRcool Says:

    VTZ — your calls on gold have been stellar. I NEVER forget where you stand/what you think. “Making money” has a way of commanding attention.

  101. 101
    Dman Says:

    elD – I’ve been trying to figure out what the new-old foreclosure mess might mean for us. If all those debts (home loans) turn out to be nonexistent due to fraud, then that means instant deflation … $$ are more scarce than we thought because a whole lotta banksters who thought they have some $$ actually have zip.

    So I thought that this new-old mess might put a bit of a temporary bottom in the DX.

    BUT, of course, by now everybody knows how the script works: banksters in trouble, government prints money & hands it over to banksters. Deflation problem only lasts as long as it takes the Fed to electronically extend their balance sheet a little further. A trillion here, a trillion there & pretty soon you’re talking confetti, … er I mean, um, real money.

  102. 102
    zman Says:

    BBG notes forthcoming

    Energy space not really giving ground with the market although there are some weaker points at the moment including CHK which just can’t recover.

  103. 103
    VTZ Says:

    RE 101 – I will give you the VTZ guarantee that QE2 will be designed to specifically address that problem, however it is also going to be a huge blackhole of cash. Which means…

    ..expect QE3, QE4 down the road..

    Everybody and their dog is calling for a bottom in the dollar however I would not discount the possibility of a breakdown to 72 before that happens. Even then it will just be a dead cat bounce.

  104. 104
    BirdsofpreyRcool Says:

    EGY — for those of us who keep a standing appointment at the local Beauty Parlor, it’s time to rinse and repeat on little EGY. Buy at $5.30-ish… sell at $5.80-ish. And then do it all over again.

  105. 105
    zman Says:

    WILDZTRADE #2 – ZIM – MMR

    Same caveats as the previous one on risk.

    MMR – Added (10) more October $19 Calls for $0.33 with the stock at 18.83.

  106. 106
    zman Says:

    BBG – same Niobrara as you hear about from others, 110K net acres, legacy position so they had it cheap already, they have 3D on most of their position, will spud 1st horizontal early next week.

  107. 107
    zman Says:

    Sign of a slow day, I’m going to listen to GTE.

  108. 108
    bill Says:

    ffa report

    Tone: Healthy buying post index on back of stronger physical takes q4 through resistance of 36k and remained
    well bid heading into the close. Panamx levels dipped early q4 trading as low as 20500 before seeing good
    buying into the close.

    bot some dsx stock and options

  109. 109
    Dman Says:

    BOP – I’ve been thinking about this government-doesn’t-get-NG thing and I realized I was being a bit silly. Because I was treating it as a substantive issue and wondering which part of the logic of the energy situation they couldn’t seem to understand.

    Then I thought about some of the conclusions I’ve drawn about this administration in other policy areas and it all became clear to me.

    The substantive issues simply don’t matter. This government is not about substance. To them, all that green energy talk was just some stuff they had to talk about to make some of their “base” happy in the vicinity of an election.

    The idea they might actually *deliver* on any of it never even occurred to them. Because they know perfectly well their base never punishes them for non-performance, so why should they bother? Who are the green energy folk going to vote for? Palin?

    I don’t think it has anything to do with unions. The simple fact is that the Dems get the vast majority of their funds from corporations and billionaires with agendas, just like the GOP. The unions are just chumps who get told to get out the vote every few years.

    I don’t have a nice table of funding data at hand, so I can’t prove that point, but I will say that modern elections campaigns are so expensive that only corporates and billionaires can provide the kind of money required. I read somewhere that Senators spend 80% of their time soliciting donations on the phone. The people they call for money have a *lot* of it.

    On your comment about people not knowing which scientists to believe:

    Would you believe a scientist being paid by XOM or the Koch brothers to tell you global warming isn’t real? Would the source of their funding and the effort put into concealing that source bother you in any way? Do you think real scientists are going to take such people seriously?

    No more than they will take seriously the “experts” from Philip Morris telling you that smoking won’t hurt you. Oh wait, they had to give that game up and change their name, but still it worked well for several decades. Several decades of extra profit before the game was up. That’s all it was about and it’s the same with XOM, to say nothing of the Koch brothers.

    The main aim of this corporate funded “science” is to muddy the waters so people don’t know what to believe. Well, they succeeded and you’re complaining about it!

  110. 110
    BirdsofpreyRcool Says:

    hmmmm…. if it gets fugly enuf, just might buy back the EXXI 25 calls I wrote. Book a small gain, keep the trading shares… what’s not to like?

  111. 111
    bill Says:

    86 good stuff– i will go listen

  112. 112
    bill Says:

    98 i wouldnt want to bet against einhorn

  113. 113
    bill Says:

    89 sorry

    einhorn went long gold in the 900’s and bot a ton of atpg in the 8’s

    shorted lehman before bk

  114. 114
    bill Says:

    jeez 98 lol i was right the first time

  115. 115
    BirdsofpreyRcool Says:

    Dman — “academic science” aint no bettern corporate science, in a lot of cases. Just follow the money. “Academics” need to fund their lifestyles too.

    But — that’s my point — who can you believe? Al Gore? Who got filthier richer by drumming up a global warming frenzy and then investing in it? Or — what’s his name who headed the UN Climate Counsel — who gets to “fund” his own research institute. Following the money is usually a great place to start, agreed.

  116. 116
    Dman Says:

    #103 V – yeah, just looking for a temporary bounce in the dollar. I haven’t yet consulted my dog about it, but that is the next step, fer sure.

    But all I want to do with the bounce is use it to get a bit longer in silver etc. And I figure I’m not the only one, so … if everyone is just waiting for the dollar to bounce to sell it every which way, it ain’t going to bounce far.

  117. 117
    bill Says:

    damn, one person science is another persons junk

    You like the science that supports global warming, i like the science that disputes it

    Before mankind ever arrived the earth was warm then cold then warm

    Al gore is a billionare with subsidy’s provided by uncle sam. His latest venture is a battery operated sports car. I bet 1,000 dollars its a flop

    And if you buy into global warming , you should buy into nuclear power with a 0 co2 footprint

  118. 118
    bill Says:

    damn / dman lol and i havent had anything to drink

  119. 119
    zman Says:

    GTE – interesting, reminds me of BPZ, called themselves “over capitalized”

    CWEI up next, see post for thoughts, something like 12 mm shares out and 300 in debt so about a $1B company with bigger reserves than I would expect but they have been falling for the last 3 years due to prices, should reexpand this year according to their story. Looking for color on their first 2 EFS wells, probably not great wells given the silence on them so far but a 3rd is drilling.

  120. 120
    BirdsofpreyRcool Says:

    “damn”… had me ROTFL too. you guys are BOTH cute! 🙂

  121. 121
    1520sbroad Says:

    #87, 91 – good stuff. I bought a small position in GSprC during the dark days – wish I had bought more.

    RASprA,B,C are my favorite non-floater preferreds. Still available under $20. magnificent coupons.

  122. 122
    andy Says:

    BOP – EXXI looked up the 25’s and thot they still pricey, so i sold a few 27.50 which i thot would be worthless for beer money

  123. 123
    Dman Says:

    BOP – XOM scours the globe looking for anyone with a PhD willing to dispute global warming, whether or not they actually do any research into it. That’s not science, it’s just PR, also known as “professional lying”. Of course there is plenty of good science done in corporate labs. But if the scientific question is “should the company be allowed to do X” then the company scientists have a conflict of interest, to put it mildly. So obviously you would look outside the company for advice.

    As for academia, well there are lots of funding problems there too. For example, almost all medical researchers accept money from big pharma to run drug trials. The companies sometimes decide to prevent publication of results. Is that they way science should work? I would say no, but I’m not in that field.

    There is an aspect of the “lifestyles” of academics that you seem ignorant of. They spend most of their time working, so the most important part of their “lifestyle” is what they do at work.

    Most competent academics can earn far more working in the private sector or for the military than they can at universities. If they chose to be at universities it is because they value the freedom to do research without interference.

    If you work in the military or in a corporation, there is interference from start to finish. That’s just the way it is.

  124. 124
    cargocult Says:

    And now there is no requirement to disclose just where all those dollars to Congress are coming from. They are coming from those folks with special interests to protect, and i don’t blame them for wanting protection. I would like to know who they are, however since they are giving to public office holders. SCOUS doesn’t agree with me.

  125. 125
    zman Says:

    EOG one of the few spots of green at present, go figure.

    Will relisten to this CWEI presentation, breaking up a bit, lots of acreage

  126. 126
    BirdsofpreyRcool Says:

    Dman — i respectfully disagree. I’ve lived, worked, and been in the academic area… lived the lifestyle, traveled for “conferences,” begged for funding dollars, had the freedom to show up at work at 11am (and stay until 3am). Not everyone gets paid a lot… but some get paid amazing amounts… AND they get to “consult” for 3 mos outta the year. Yes. I do know about the academic lifestyle. I may be ignorant about a lot of things… but not that.

  127. 127
    zman Says:

    TGA also nicely green, well done on that one Milepost.

    WLL was also able to hang onto the morning gains, would do a wildz on that for a gain on a market recovery if I was more sure the S&P would roundtrip this weakness because in those instances you get into a “strong gets stronger” position. With the MMR Wildz, I’m looking for more of a stock specific based run once the market stops dropping for any length of time and going into tomorrow’s close especially. Time will tell.

  128. 128
    zman Says:

    CWEI – Wolfberry

    “Drill down 11,000 feet, out 4,000 and frac the hell out of it.” Can’t believe he didn’t become president, lol. Loves the Fuhrman Mascho as well, though smallish acreage there.

  129. 129
    cargocult Says:

    Z-what are your criteria when determining how much to pay for an option? Sorry to be on topic.

  130. 130
    BirdsofpreyRcool Says:

    (cargo — LOLOLOL. GOOD one!)

  131. 131
    zman Says:

    Clayton Williams parting shot “I would be in danger of being very seriously remiss if I didn’t mention we need to think about the future of our country, we are in danger of losing it”

    Cargo – LOL, hahaha. A lot of feel involved in the following answer.

    1) it depends a lot on the underlying issue. How it trades from a volume and price moves standpoint. I’ve going to pay more for more time, more volatility, and more volume in the underlying.
    2) I don’t like big spreads so if it is a big spread name I generally will split the spread leaning bid side and go deeper into the money. I also don’t do those short term.
    3) I don’t use most of the greeks but do look at delta (move of underlying vs move of the option) and gamma a bit. I also check to see how the IV looks. Generally I want to see a delta that will give me 30 to 50% return with a small move in the stock.
    4) I don’t mind paying for premium at the beginning of the week because unless I am pretty wrong, pretty fast, the premium will stay in play. In some really strong premium stocks, I’ve made money on the long side with the stock going slightly down but oscillating pretty quickly. That’s oddly fun.
    5) I don’t like paying for high premiums before weekends and over expiry weekend as those are often attacked on Monday morning.

    Just some thoughts from having done literally thousands of options trades, read a few books which I have since burned and taken a class back in college where they made me memorize black-scholes (sp?).

  132. 132
    cargocult Says:

    A couple of large sellers of TAT this morning.

  133. 133
    VTZ Says:

    Z – I hold a small company QEI (Venture) that is drilling on leases in Columbia. Do you follow the Columbia story at all? There have been some extremely high rates historically and recently in nearby areas.

  134. 134
    Dman Says:

    BOP – what’s wrong with working from 11 to 3AM? If it gets the job done?

    What’s wrong with doing consulting? If you have multiple income streams, you can be *more* independent, not less.

    If a scientist is doing consulting for the military (very common) or for industry and also doing their own line of research at university, that seems OK to me. Whether there is a conflict depends on details like how much overlap there is between the research topics.

    I forgot to answer one of your questions about Al Gore etc. As far as I know, Al isn’t a research scientist, so why would I ask him about science? As for the UN guy, I’m always suspicious of someone who calls himself a scientist but seems to aspire to heading some massive intergovernmental bureaucracy. I mean, what scientist wants to do that with their time?

    So I wouldn’t be asking those guys. It’s not hard to track down a real atmospheric physicist if you know their natural habitat 🙂

  135. 135
    BirdsofpreyRcool Says:

    Nothing wrong at all. Nothing at all. But most “non-corporate” companies don’t allow those sort of flex hours. Just one of the perks of academia lifestyle!

  136. 136
    zman Says:

    VTZ – I really don’t, the GTE guys sounded like they were about done there, expanding elsewhere nearby.

  137. 137
    zman Says:

    OAS at IPAA in 5 minutes:

    http://www.investorcalendar.com/IC/Search.asp

  138. 138
    zman Says:

    BOP – hey, we have those same hours around here, lol.

  139. 139
    BirdsofpreyRcool Says:

    oops. slipped on my own double-negative. “corporate.” non “non-corporate.”

    Just finished “Surely You’re Joking, Mr. Feynman,” Now THAT was a fellow who knew how to have fun!

    Yikes! Just lost my EGY trading shares at 5.87. Something’s probably up there… but still gots a core position. Go, Gabon!

  140. 140
    zman Says:

    TAT – I mused with someone yesterday about what great friends they must have to get the spot secondary done so quickly and then to recover the share price so fully after flubbing the exploration effort.

  141. 141
    bill Says:

    ngas has convertible notes outstanding

    n January 2010, NGAS retired $37 million of 6% convertible notes due December 15, 2010 in exchange for an aggregate of $28.7 million in new amortizing convertible notes due May 1, 2012, plus approximately $7.9 million in cash and common shares. The new notes have a 6% interest coupon and are convertible into NGAS common stock at $2.18 per share. Beginning June 1, 2010, the notes require monthly amortization of principal, payable in cash or common shares, at the Company’s election.

    —————————————

    with the stock at 71 cents a share, does this mean they get converted at 71 cents?
    Does anyone have a quote on these notes

  142. 142
    bill Says:

    takeover chatter PXP

    Plains Exploration & Production [PXP 28.53 0.21 (+0.74%) ]: More than 9,600 calls trading versus just 865 puts Thursday. That’s nearly full session volume in the first hour of trading. Shares trading up .5 percent and volatility up to 60 from 46 percent. That surge in volatility reflecting the uncertainty of chatter among hedge funds that Plains could be a takeover target.

  143. 143
    BirdsofpreyRcool Says:

    NGAS 6s of ’12 … no quote. Don’t trade. Private placement.

  144. 144
    zman Says:

    OAS Notes

    39 gross operated wells this year

    60 gross operated wells next year (5 rigs and have just gone to 5 rigs now)

    They are putting reserves at a range of 450 to 800 MBOE in West Williston, and 400 to 700 MBOE. Pretty comparable spread to their peers.

    West Williston: 6 wells in various stages of completion and 4 of their 5 rigs are here.

    Mentioned 2 BEXP wells, 1 west in Montana which is the Rogney well, talking about West Willistion expanding south and west.
    Also a BEXP well to the south, Jolley(sp?) well.
    ….

  145. 145
    zman Says:

    Nice moves on EGY BOP.

  146. 146
    crysball Says:

    EGY…….Something is up.

    Most likely one of the following events (not ranked in order of probability):
    ~Partner for Angola(and likely a drilling schedule),
    ~Drilling schedule for Mutamba [on-shore Gabon JV with total],
    ~flow data on Etame 7-H and new reservoir data on Etame 7-H .
    ~announcement about developlment plan on SE Etame [least likey].
    ~new US on-shore JV announcement [nest least likely.
    ~plan to increase in capacity of the offshore Gabon FPSO to above 25,000 b/d.

    IMHO would hold EGY shares tight between now and year end as multiple upside announcements are likely……….and no downside andticipated…..especially with Brent Crude prices where they are.

    p.s. BOP have followed your lead in ATPG, MMR, EXXI…….except sold calls on postiitions which will get blown out in OCT.

  147. 147
    zman Says:

    OAS

    Nothing new

    No debt, lots of cash, management from BR before they got bought by COP, lots of acreage, working on efficiencies, growing production from a small base by 100+% this year and next.

  148. 148
    elduque Says:

    RE Aubrey’s comments:

    What are your thoughts re his comment that we will have seen all the large plays within a year. That is, they won’t find anything new.

  149. 149
    Dman Says:

    V – the silver stocks are so drunk they haven’t noticed that the party ended a few hours ago. Cotton up 3.6 % …

    I saw a funny video by Peter Schiff where he listed all the household items (eg clothing and popcorn) that outperformed the Dow in September.

  150. 150
    BirdsofpreyRcool Says:

    crys — thanks mucho for posting the catalysts. I still have my EGY core position. But have to take some trading shares off the table sometimes. And if EXXI holds above 25 at close tomorrow, i’ll lose those trading shares too. But, that’s OK. Plan to repeat in both those names.

    crys — glad you will make a little coinage in those names. It’s been wild, for sure. Monday with MMR could be interesting too…

  151. 151
    crysball Says:

    re CHK new ‘mystery’ play :
    Is it the ‘Cana’ as suggested the other day?

    If so who else is in the ‘Cana’

  152. 152
    zman Says:

    Eld – To be clear he was speaking to the Lower 48 US only. I think he’s probably a bit early on that call. But it does justify his spending in 2011 on new land. I grew up hearing “all the easy stuff has been drilled”. Now we are drilling the really cruddy reservoirs but with new tech. That’s the funny thing about tech. It makes the improbable likely and the impossible only improbable. Whose to say someone doesn’t work out gas hydrates offshore or that someone doesn’t drill ultradeep onshore in a new region. I get what he’s saying though, and I have no idea if 2011 is “it” but I’d tend to doubt that it’s that cut and dry. Price has a lot to do with what’s viable as well.

  153. 153
    zman Says:

    Can is DVN and I think NFX and I think XEC.

    I don’t think anyone would give him credit for finding the undiscovered continent were he to claim the Cana or the Niobrara. It has to be something new … he did jokingly refer to Minnesota.

  154. 154
    zman Says:

    Pin setting in. Data tomorrow is normally market moving stuff from CPI to Empire State to retail sales to consumer sentiment

  155. 155
    BirdsofpreyRcool Says:

    TED spread at just under 15bps… in light of this latest bank crisis, will be interesting to see where TED opens tomorrow. LIBOR is banks lending to other banks… and who should be more worried about other banks, then the banks themselves. TED is a great mirror to be able to gaze into and get the true lay of the land.

  156. 156
    bill Says:

    id like to have my hand on thos ngs notes. they have a poson conversion feature which will kill the stock price

    for that purpose, they will be valued at the lesser of $2.18 per share or 95% of the 10-day
    volume-weighted average price of the stock ( VWAP ) prior to the installment date. In addition, under the true-up provisions of the notes, if the
    20-day VWAP following an installment payment in stock differs from the share value applied to that payment, any shortfall will be settled in
    additional shares. Accordingly, although the exchange notes are intended to provide a flexible repayment structure with the potential for
    replacing part of the convertible debt with equity at a premium to our stock price at the time of the exchange, the use of common shares to pay
    all or part of the note installments could be dilutive to shareholders

  157. 157
    BirdsofpreyRcool Says:

    EXXI acting weird.  Wonder if The Big Deal is close to being disclosed… keep tuned in…

  158. 158
    zman Says:

    Some high volume selling hitting MMR now

  159. 159
    andy Says:

    BOP –  u have any guesses what the "big deal "  might be.  EGY might be best acting stk, but i see no connection there.

  160. 160
    Dman Says:

    BOP -what's your take on the Mortgage Fiasco part two? 

  161. 161
    reefguy Says:

    151- Mystery play is East Texas Eagleford(Woodbine).  CHK buying heavy in Leon and Madison counties….

  162. 162
    zman Says:

    Thanks Reef. 

  163. 163
    BirdsofpreyRcool Says:

    reef — Knew you would know.  Care to tell us (again) who is the best publicly-traded vehicle there…..

  164. 164
    BirdsofpreyRcool Says:

    Dman — I think Michael Johnson's piece from this morning (#48) sums it up for me.  In the longer run, no big deal.  In the shorter run, it's another policy mess that foments uncertainty.  But don't think it will be a Show Stopper.

  165. 165
    BirdsofpreyRcool Says:

    andy — did i imply a link between EGY and EXXI's Big Deal?  Didn't mean to, if I was confusing.  Two very different companies.  Both OILY tho!
     
    I think EXXI will do what they do best, acquire producing assets on the shallow GOM shelf for a good price.  And they may take down a larger share of the UltraDeep, by taking some of the PXP participation off MMR's hands.  Schiller was reminding the room at IPAA just how DARN GOOD they are at acquiring what-looks-to-be-spent assets, then making the acreage sing, all over again. 

  166. 166
    zman Says:

    MMR – heh, bigger volume came in to buy. 

  167. 167
    BirdsofpreyRcool Says:

    heh heh heh… picked up some mmr around 18.40…

  168. 168
    andy Says:

    BOP  = u no imply  – i was just looking for a stock up that EXXI  would acquire, since it sure appears they're going to acqire something.  if somebody's asset's tho don't think that would boost the seller price.

  169. 169
    RMD Says:

    Ouch, paper profits from TAT's deal at 2.80 disappearing fast.

  170. 170
    BirdsofpreyRcool Says:

    #163 — reef has already logged off and out.  So he said I could post the answer…. GST, of course.  They have about 35k gross and about 20k net acres in Leon County.  CHK now has the Leon Co leasing office all tied up… not letting anyone else thru the door.  hmmmmmmmmmmmmmmm…..

  171. 171
    BirdsofpreyRcool Says:

    andy — don't think it will be an entire company… and don't think it will be anything other than shelf producing assets.  Why should EXXI mess with a model that works so well for them.  XOM has a tasty package of shelf acreage, making the rounds right now…..

  172. 172
    zman Says:

    They've tried to buy more GST shares in the past only to be rejected.  They're partnered in many wells. 

  173. 173
    BirdsofpreyRcool Says:

    CHK should just lob a bid in for the entire company… put GST mngmt out of it's misery…. AND would boost the price on the GST shares CHK already owns…

  174. 174
    RMD Says:

    173 amen.  Funny but I think CHK would be averaging down.

  175. 175
    Dman Says:

    Here's that vid about all the household items that beat the Dow in Sept:
    http://peterschiffblog.blogspot.com/2010/10/market-update-gold-silver-gold-stocks.html

  176. 176
    blackgold39 Says:

    re 151:  I know CHK was leasing in Dewey county, which is a long way from Cana but part of the same play. 
    CHK is an ant to the picnic at this point in the Cana Woodford shale, which is not a common position for them.  I am sure their acreage position is probably large by virtue of the size of the play, but it is probably scattered, legacy, non-core, albeit some is going to be prospective acreage.  The prospective extents of this play are not yet know, but the geologic extent is enormous.
    The real players in Cana are DVN, XEC, and CLR.  DVN has 200kish and XEC w/ 150k ish, last I checked their presentations.  CLR has not drilled nearly as many successful wells as DVN and XEC, but they are getting heated up to the NW very quickly if you trust drilling permits, and they have over 200k acres based on their press releases.  MRO is a decent sized non-op player to the NW edge of Cana, the have about 60k acres, but will probably sell off to someone, despite claiming they want it to be a core position.

    This area of Oklahoma is probably held through this formation in a lot of prospective locations.  I say this because many areas there have been producing oil & gas for eons with very old leases.

  177. 177
    zman Says:

    Thanks much BG. 

  178. 178
    cargocult Says:

    Bill-the DSX chart does look interesting. Nice little upward trend since the middle of June. You have any specifics on this? I'm pretty underwater on this one but am hanging in. Same with FRO. If FRO goes up suddenly you will know I just sold.

  179. 179
    BirdsofpreyRcool Says:

    BOP — "you think the bank foreclosure thing is a big deal?"
     
    HeadTrader — "nah"

  180. 180
    zman Says:

    Beerthirty. KOG speaking at IPAA now, missing it, will circle back to it tonight. 

  181. 181
    crysball Says:

    EGY  up 8.2%  on  ' NO NEWS'   and  130% of normal volume.
    The MM   'shook the tree' yesterday  to  free up some  shares, however, institutions hold  some  80%  of the outstanding  shares, so  the  float  is  fairly thin.

  182. 182
    zman Says:

    GOOG out with a big #. Petra is happy now as she's not all energy all the time like me but an IPO shareholder there. 

  183. 183
    BirdsofpreyRcool Says:

    crys — i keep watching the scrolling headlines… i am sure we will hear something from EGY soon.  They have a lot of irons in the fire… at least one or two or three must be about ready for the forge.  Good stuff!

  184. 184
    zman Says:

    SSN on the tape… positive, details tomorrow. 

  185. 185
    PackMan Says:

    81 – elduque – my opinion – big mess.  Banks basically committed fraud using robo-signers which invalidate all these foreclosures.  Heads should roll.  Major penalties; possible jail time depending what gets uncovered.  Lawyers will have a field day.  This could have all sorts of unforseen consequences.  Everyone will fight w/ everyone … I banks, banks, bond pools, borrowers; etc. 
     
    I don't see how this gets rectified easily.  At the minimum, banks will have to re-start foreclosures all over again.  But that does not address who was damaged and what are the remedies.  Could have severe negative impact on housing market and title insurance, even for transactions unrelated to foreclosures.

  186. 186
    West Says:

    Have not seen this posted …..Sandridge retained RBC Richardson Barr to sell their Permian Basin properties with data rooms open until 11-3-10. This short period would tend to indicate that they already have serious interest and they are just checking the market for full value. The Delaware Basin properties have over 43+k acres and interestingly show 14+k acres HBP. These HBP acres most likely are old shallow fields that go all the way back to the 60's and probably have a Producer's 88 lease form that is a E&P friendly lease that holds all acreage that was originally listed on the lease form with production.  If you have looked at their presentation and CHK's recent slide show this is in a very desirable area with high IP offset wells that have recently been drilled. There are many potentionally productive zones that can be co-mingled to enhance economics….Their Wolfberry acreage is generally described as 3 different areas and might indicate willingness to sell these seperately and obtain best pricing. That being said I would look for 2 transactions and close to $ 500 million proceeds………WOLFBERRY ,I have not seen this much activity since the 80's, with the big difference being that every one of these wells is productive. Now that companies can co-mingle the different zones, with the Martin and Andrews Co. wells IPing as high as 500 bopd and some associated gas, lease prices have exploded to the upside. A bit of history here, most of the properties here are huge ranches that were originally deeded by the Texas Pacific Railroad , to finance construction with land granted to RR for each mile of tract layed by the state of Texas,and TPRR sold huge tracts in the 1880's for .25 to 1.00 per acre. One of the largest land owners was the  Scharbauer  family in Midland. About 18 months ago patriarch Clarence sold one of the ranches that started west of the city of  Midland to the Ector Co line and North to and including huge tracts in southeastern  Andrews Co and  southwestern Martin county and to the amazement of everybody, included all  the mineral rights for $ 500 million. There had not been a well drilled on this acreage since the 1980's. The new owner leased part of the the acreage for $ 4k an acre and EXL drilled discovery well by Midland International Airport and the play was off and running. Another player that owns large tracts in western Mdland and into Martin and Andrews Co was Fasken Oil and Ranch. Fasken is really exploiting their acreage and looking to build a gas processing plant on their acreage when they receive RRC approval.  Many independents such as Patriot , EXL, Henry, Endeavour (Black Gold fame Autry Stephens), Opal, Summit and many more.are all very active ……I think that the present rig count in the PB is 260 rigs and continuing to pick up  rigs from gas plays…………………Local color names  Wolfberry,  Wolfbone, Wolftoka and Strawberry

  187. 187
    bill Says:

    cargo 178
    dsx is picking up cheap assets and has a pristine balance sheet. No new catalysts other than i think the name is too cheap and cape rates are improving
    Fro is in tankers and tanker rates are really low right now

  188. 188
    zman Says:

    Ben speaking now, post out in 10 to 15 minutes. 

  189. 189
    bill Says:

    west good news on 186..they need to do something with idle assets to pay down debt

  190. 190
    zman Says:

    West – do you see any production data for the Pederson 10-3H well?

  191. 191
    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » T.G.I.F. – I Get By With A Little Help From My Ben Says:

    […] Link to late night reading from West […]

  192. 192
    stock Says:

    china Stocks

    Zman

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