20
Oct

Wednesday – Oil Preview + KOG + Earnings

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Market Sentiment Watch: Yesterday was all about China tightening (dollar up, crude down) and the BAC debacle. Today is back to energy earnings.   In terms of ecodata, we don't get anything until Beige Book late this afternoon.  NFX reported earnings and an operations update just before post time which should surprise everyone as the call is still set for Thursday morning... will sort through those numbers and an accompanying operations update as the morning gets rolling. 

In Today’s Post:

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

Holdings Watch: ZCAT (Zman Catalyst portfolio):

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

ZIM (Zman Inefficient Markets portfolio)

  • $3,100
  • Positions (MMR - 3 positions (Nov. $17 and $18 calls, January $22.50 calls), HAL Nov. $36 calls, WLL Nov. $100 calls)
  • 2% Cash
  • Yesterday’s Trades:
    • WLL - Bought 1 WLL $100 calls for $3.90 with the stock down 5.4% at $99.40 as the market retreats.

ZLT (Zman Long Term Portfolio)

  • SSN – Added more shares at $1.17
  • MMR – Added more shares for 15.78

    Commodity Watch:

    Crude oil tumbled $3.59 to close at $79.49 yesterday, blame a one day reversal in the dollar that brought all commodities lower and the weak equity market. After the close, the API released a mixed bag of an inventory report (see below). This morning crude is trading up nearly a buck. 

    • Mexico Watch: According to WFT, activity in half of Mexico's reservoirs is essentially shut down at present. Not they are not producing but new drilling and workovers are nearly at a standstill in some areas. 

    Natural gas edged up $0.08  to close the day at $3.51 yesterday. This morning gas is trading up slightly. 

    • Slow Boat To China Watch: LNG (the company) - re-exported a cargo from Sabine Pass terminal yesterday to China. The LNG tanker is expected to arrive in China on Dec 27.

    Early Read On Natural Gas Storage: Street is at 86 BCF for tomorrow’s report.

    • Last Week: 91 Bcf Injection
    • Last Year: 23 Bcf Injection
    • 5 Year Average: 58 Bcf Injection
    • 10 year Hi: 85 Bcf Injection
    • 10 year Low: 18 Bcf Injection

    Oil Inventory Preview


    API Watch: 

    • Crude: UP 2.3 mm barrels
      • Cushing was shown down 757,000 barrels 
    • Gasoline: DOWN 83,000 barrels
    • Distillates: DOWN 854,000 barrels

    Stuff We Care About Today

     

    KOG Bites Off More Bakken
    • Bought: 14,494 net Williston Basin acres in 2 new areas.  This is core Bakken acreage, not is moose pasture.
      • Location:
        • Smokey (Bear): McKensie County, ND - 11,742 net acres - located between their acreage on the reservation and their newer Koala Project area and just to the west of the southern tip of the Nesson anticline.  This area includes 4 producing wells with net production of 500 bopd. This is in an area NFX is currently active in (what they call Aquarium / Watford) and where they've drilled some 2,500 BOEpd IP wells.
        • Polar (Bear): Northern Divide County and southern Divide County - 2,752 net acres - Aptly named, this new area is just north of BEXP's Rough Rider area.  CLR has 3 rigs running here and NFX is active just to the west. 
        • The acquired acres and wells come from a private firm, almost certainly Peak based on the position. 
      • Paid:  Total value of $110 mm or $7,600 per acre, paid in two pieces:
        • $99 mm in cash
        • and another $11 mm in stock in the form of 2.75 mm shares issued at $4. 
    • The Simple Math:
      • KOG now has 72,000 net Williston acres; 35,000 in the FBIR and the rest in its less developed areas.
      • Using KOG's assumptions for 3 Bakken and 2 Three Forks Sanish completions per 2 section unit, this puts KOG's potential locations at about 280. 
      • To be conservative put the Bakken well EUR's at 600,000 and the TFS wells EURs at 400,000 BOE.
      • That comes to a grand total of 146 mm BOE in potential reserves, almost all of it oil
      • Assume only 3/4 of it works for one reason or another; that comes down to 110 mm BOE.
      • Compare that to their booked proved reserves at YE2009 of 4.5 mm BOE and you have what's known as considerable upside.
      • Put $15 per barrel as an in the ground acquisition prices and you have $1.645 B in value
      • Compare that to the company's closing TEV last night (pro forma this deal) of approximately $625 mm and you have a bargain.  We won't get there all at once unless they get bought but over time, this figure, which equates to a share price of $10.70 represents an upper bound based up the EURs and risking used. In generally, I expect the EURs to climb as they come up the completions learning curve. 
      • Note that some players like WLL and BEXP have concluded that the well count per unit may be a lot higher than 5 and you would have even more value.   
    • Balance Sheet Impact: For once KOG is taking on a little debt which isn't always a bad thing, in fact, it's sound financial structuring and in this case both overdue and easily managed. Given management's past aversion to it, I think it goes to management's increasing confidence regarding their performance in the play. After considering the impact of the recent deal and the newly issued equity, KOG's net debt to equity is still low, about 11%, with net debt of about $20 mm. 

    Here's all of the above in a convenient pocket sized table...



    Nutshell: It's not a bad price to pay for acreage in the heart of the play especially in light of the four existing wells helping to prove up part of the larger piece and the proximity of the acreage to BEXP's and AES's prolific efforts in northern Divide County as well as CLR's even closer and recent activity ramp. It gives KOG more running room and probably casts them more strongly in the lights of those shopping on Wall Street for Bakken barrels.  I continue to own KOG in the ZLT and my last addition was at $2.94 in mid September following their last secondary. 


     
    ECA Reports Strong Results; Guides Slightly Lower, Trimming Capex Due To Low Gas Prices
    The 3Q10 Numbers:
    • Production of 3.3 Bcfgpd, should be in line with most analyst thinking for the quarter
      • 97% gas
      • Gas production was up 17% yoy, driven by a leap in Haynesville Shale production
    • CFPS of $1.54 vs $1.39 expected

    Highlights:

    • Guidance: 2010 volumes guidance coming down 3.365 to 3.315 Bcfgpd, or 12% growth over 2009 levels; "we will not pursue growth at any cost" ... how refreshing.   But then they go on to talk about capacity restraints in Louisiana and E Texas forcing them towards lower volumes. So it's not all voluntary.
    • Capex drops $200 mm as well (deferred into 2011).
    • Plan is still on track to double production per share from 2009 to 2014 but will adjust to stay within cash flow during this period if low gas prices persist. 
    • In the Haynesville they are calling "lease retention obligations near completion". 
    • About 1/3 of expected 2011 production hedged at $6.33 

     

    Conference Call: Today, 1 pm EST. 


    Other Stuff

    • Look for the Bakken Part 2 piece in tomorrow's post. 

    Odds & Ends

    Analyst Watch:

    • TBA

    110 Responses to “Wednesday – Oil Preview + KOG + Earnings”

    1. 1
      bill Says:

      Frontline was downgraded to sell along with fellow tanker titan Euronav due to some “nasty surprises” in the third quarter and fading hope of a fourth quarter rebound.
      Martin Korsvold, an analyst at Pareto, said in a note to clients this morning: “Q4’10 began on a very weak note, similar to last year, but we believe that any seasonal rebound is unlikely on fundamentals alone, because the driver of weak rates this year is tonnage oversupply, not weak demand which was the case last year.”
      A brisk pace of newbuilding deliveries and a decline in the number of VLCCs on floating storage contracts has led the analyst to cut his rate forecasts for the fourth quarter and for 2010.

    2. 2
      tomdavis12 Says:

      Z: Thanks for the KOG info. Great work! 😉

    3. 3
      zman Says:

      NFX – strange move to report a day before the CC. Nice beat on the volumes, still reading.

    4. 4
      zman Says:

      Thanks Tom, have to step out for 15 min, back with more NFX then

    5. 5
      bill Says:

      Teekay , a competitor to fro>> if you own fro sell it and buy tk
      Shares will be repurchased in the open market at times and prices considered appropriate, the US-listed tanker player said.
      “The timing of any purchases and the exact number of shares to be purchased will be dependent on market conditions,” it said.
      “We have a lot of assets sitting up at the parent. In addition we own shares in the daughter companies,” outgoing chief executive Bjorn Moller told US network CNBC.
      “That value is about $48 bucks a share and we are trading at $28, $29. That’s why we announced a stock buy-back program.”
      “Between 2004 and 2006 we bought back 24% of our stock when we had a lot of excess cash flow,” said Teekay Corp chief executive elect Peter Evensen.
      “We are now moving into another period of excess cash flow. So when our trading window opens in November then we are going to start to buy back aggressively.”

    6. 6
      zman Says:

      NFX

      on reporting early – IR tells me "it's good to shake up the lemmings"

      – 3Q prod … 71.4 Bcf vs range of 70 to 74 

      – FY prod guidance – they brought up the low end of the range, kept the top the same

      Costs looked in line to good. 

      – EPS was $1.10 vs $1.05 Street estimate

      – CFPS was $2.94 vs $2.69 Street estimate

    7. 7
      zman Says:

      Just going through the NFX ops update now.

      Notable for KOG, two more 2,500 BOEpd well drilled by NFX in their Aquarium area (KOG's new Smokey area), both wells were short laterals (4,000 feet with 16 stages).  Two more NFX particapation short laterals in the area IPd at 1,532 and 1,841 BOEpd. 

      Those first two bigger IPs had 30 day rates of 526 and 683 BOEpd, pretty good. 

    8. 8
      milepost_43 Says:

      #2 ditto…..KOG analysis more than worth the price of admission…….thanks….

    9. 9
      zman Says:

      NFX Operations Update:

      Williston (Bakken): Prod now more than 5,000 BOEpd, up from 4,000 at mid year, says exit will be 6,500 BOEpd. 

      EFS – no real new data

      Southern Alberta Basin – completed a horizontal, no data

      Granite Wash – 31 wells drilled, 26 producing, 5 completing, agg prod of 115 MM/d up from 85 MM/d last quarter 

      Woodford – Activity still slowed due to prices, prod now 190 MM/d vs 220 MM/d net at mid year.

    10. 10
      BirdsofpreyRcool Says:

      z — love the simplicity and clarity in which you lay out the value proposition underlying KOG stock.  In other words, you rock!  thank you.

    11. 11
      zman Says:

      Thanks Milepost_43, don't be surprised to see that quote used in some marketing material!

    12. 12
      zman Says:

      Thanks BOP but you found this puppy, I only work here. 

    13. 13
      zman Says:

      NFX- People liking the guidance and update early. 

    14. 14
      BirdsofpreyRcool Says:

      KOG — what I like about them is that they do what they say they will do… and they don't try to get all cute about it.  Lynn said that there is acreage available from the smaller players who can't fulfill drilling commitments on time… he said he would be buying up that acreage.  That is what he is doing.  And love the use of both debt and pre-placed equity.  That is smart balance sheet management. 
       
      At one point, KOG could be had for fairly cheap.  Lynn didn't get his asking price, so he did the only smart thing he could do… stick around and grow the company.  I admire that.

    15. 15
      crysball Says:

      Z,    re Forthcoming  SDM analysis.
      Would  request  you do a SLICE  &DICE  analysis   on them  similar  to  KOG and  advise  how  you evaluate them [going forward] as  a land play vs. reserve  play
      Your  KOG  anaysis is superb!

    16. 16
      RMD Says:

      6  about shaking up the lemmings is so true, though I thought it was only the smaller co.s who thought the lemmings were "not getting it". This is why AREX went to NYC.
      BOP: 2 more thoughts.  EP will devote 10 min on their 11/3 conf. call to their new area.  I don't know if EOG is going to talk about their efforts in the area, but someone might ask.
      Z it takes ~9 weeks for an LNG tanker to get from Sabine Pass to China?

    17. 17
      zman Says:

      If you like maps:

      New KOG presentation:

      http://www.kodiakog.com/pdf/KOG_Oct2010.pdf

      Slide 7 shows their new positions along with the old

      If you take that map and cross reference it will the ND map server here:

      https://www.dmr.nd.gov/OaGIMS/viewer.htm

      You can see pretty plainly the activity around their new stuff and that they most likely bought this from Peak. 

    18. 18
      zman Says:

      Funny – ECA had a great 2Q and no one like it because they didn't take  up production level guidance. And it falls to just about where we are today. Then they have a good 3Q but act on discipline and the stock falls further. Mgt has to be asking if the Street knows what it wants. 

    19. 19
      BirdsofpreyRcool Says:

      KOG has a data-sharing agreement with Peak… so they know exactly what they are getting.  And since Lynn has said that he would be willing to pay up to $10k/acre, he got that acreage at his price.  Nicely done, methinks.

    20. 20
      zman Says:

      BOP – Believe me I would have harshed on him had he paid up in an XTO like fashion. He's conservative. It shows from the IP reporting to this buy. I like it. RMD style confession – I own plenty. 

      WLL getting a nice bounce after going sub trip digits yesterday due to their huge backlog of bad foreclosures, oh right, that wasn't them, they just produce oil. Silly market. 

    21. 21
      zman Says:

      BOP – have you (or anyone) seen anything on MMR. If I was a hot young analyst I'd be offering to take these guys on the road (NY, Bost, Philly) for some one on ones about now. 

    22. 22
      zman Says:

      JB – thanks again for the read on HAL last night, I was thinking it was in support. Will go vote now. 

    23. 23
      zman Says:

      Voted, you can too here:

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

      Bill – thanks for the TK comments, any of these guys pay a good dividend?

       

      Oil numbers in 30 minutes. 

    24. 24
      bill Says:

      vlccf is paying 50 cents a qtr  10 % yield

    25. 25
      zman Says:

      Bill – thanks, think it is sustainable/growable? I have not paid a good deal of attention to rates. That story that VLCC's are getting turned into drybulks reminds me of stories from a couple of years ago. This time it sounds more likely to happen. Wonder if that puts upward pressure on rates in a year or more?

    26. 26
      BirdsofpreyRcool Says:

      Bank stock pummelling continues.  It was overdone y'day afternoon… it's more overdone this morning.  That's all I will say about it.  Back to energy….

    27. 27
      milepost_43 Says:

      much of #14 applies to TGA…..earnings PR coming Nov 4……..had a blue light special yesterday…..added some more Mar calls….

    28. 28
      zman Says:

      Your tax dollars at work on World Statistics Day – energy quiz.   

      http://www.eia.doe.gov/energyexplained/resources/energy_quiz/question_01.cfm?featureclicked=1&

      20 questions but strangely they left out: 

      "How can the U.S. become energy independent?"

    29. 29
      tomdavis12 Says:

      Z: Are you still mulling lightening up on WHX prior to div announcement?

    30. 30
      zman Says:

      EIA Oil Inventories:

      Crude: up 0.7 mm barrels

      Gasoline: up 1.2 mm

      Distillates: Down 2.2 mm barrles

      Crude was up 80 cents pre report

    31. 31
      zman Says:

      Tom – yes but only if it is through $24.

      more EIA

      Imports were up but are still running seasonally pretty normal to a little light

      Refining utilization appears to be bottoming in the low 80%s

    32. 32
      zman Says:

      more EIA

      Stocks of oil at Cushing, OK fell sharply, as described by API but bigger, down 1.1 mm barrels to 34 mm barrels. That's pretty supportive for crude prices in the US

      Demand:

      Gasoline: slight uptick

      Distillates: Nice uptick, bouncing back into that recently elevated range … seasonal move but good to see … easily bests year ago levels. 

    33. 33
      zman Says:

      Crude coming off a bit post numbers, not sure why, could just be noise, could be the headline number on gasoline. Stocks are shrugging it off and moving with the S&P. 

      HAL and MMR both showing a little bit more green now. 

    34. 34
      zman Says:

      Tom – scratch that answer, yes I'm still mulling. 

    35. 35
      tomdavis12 Says:

      Z: Option observation: EXXI Dec 30 trading @ .60. That is 30+% premium for 59 days. I would call that bullish for EXXI. Someone must be reading BOP's musings. Come in Duane.  

    36. 36
      zman Says:

      Tom – that is a good observation. I'd be happy to let them have EXXI trading shares at that price at that date. 

    37. 37
      BirdsofpreyRcool Says:

      RMD + AREX = WOW!

    38. 38
      Dman Says:

      Z – do you think crude is trading off the numbers?

    39. 39
      zman Says:

      D – I think the #s were largely a non-event, I think it is now free to trade with the S&P for the rest of the week, 

    40. 40
      zman Says:

      Bakkens getting back 1/2 to 3/4 of yesterday's downward move on a 50% retracement in oils move from yesterday. Like the resilience in the names. Especially liking the KOG bounce … up 3.4% on good volume for this time of day. Like that Peak took shares and not just cash. Could wish that it was a bigger % of the deal but you can't have everything. 

    41. 41
      cargocult Says:

      I just reviewed my FRO holdings and observe that I am about even on the stock since my first purchase in 07 if I consider all the dividends as worthless. There is something to be said for not reinvesting dividends.

    42. 42
      zman Says:

      Tom – more on WHX

      Just checked the estimates. Consensus for the quarter is $0.72. Range is $0.68 to $0.78.

      Last I saw, none of the 3 analysts who follow it like it. They think the price is too high. I think they are way too high on their estimates and this, in the case of the really high one, is either stupid or deliberate to create a miss.  Last couple of Qs they have been disappointed, first by a miss that the trust could not have made under very good circumstances, then by being beaten last quarter (not sure why they didn't like that but they didn't).

      Recall that this thing is a brainless oil production animal. It's not actively managed but simply producing out. It will continue to trade largely with oil prices and it's yield will vary with them to the extent of the piece of production that his not hedged.  

      Production was higher than expected last quarter, probably due to the timing of oil production being out of kilter with oil being sold in the prior quarter. This made last quarter look like the production had declined at a shallower rate than is normal. Could this happen again, sure? Did it? No idea. I adjusted my 3Q production to carry production lower from 1Q as if it were a normal decline. I am probably a bit light at $0.57 … maybe they do $0.60 or even $0.65 in the quarter. Much more and they'd have to have gotten better prices than they should have for the quarter or they'd have to have another big production quarter. Either way, it looks like they are setting up for a "miss".

      Do I care?  Not really, I own it for the yield and am well above my cost in the name at present. There is probably an opportunity to sell pre numbers on Nov 6 and buy it back afterwards and I am still mulling whether or not I want to do that. If it continues to run, I will likely do that and buy it back as soon as those analysts yell about it.   If they fail to sink it I just buy it back and take the dividends as they come.

    43. 43
      tomdavis12 Says:

      Z: 42  Thanks.

    44. 44
      zman Says:

      Tom – here's another think on the WHX estimates. I show they have not changed markedly in the last 60 days. Lazy, lazy, lazy analysts. You mean to tell me you pegged where oil and natural gas prices would be for the quarter? Exactly, because, I mean, this name is not 100% hedged. More likely, you simply didn't bother to do your quarter end mark to market (trading out the estimated number for the actual prices) in your model yet. …. lazy, lazy, lazy. 

    45. 45
      zman Says:

      Market looks sleepy, energy looks sleepier. 

    46. 46
      tomdavis12 Says:

      Z: WHX their NG – Crude mix?

    47. 47
      zman Says:

      re 46. Their mix is 58% oil, 42% gas. Last quarter it was 60%, again, a timing of production vs sales issue. Should be back to 58%ish this quarter. 

    48. 48
      zman Says:

      KOG up 6% … warm reception. 

       

    49. 49
      1520sbroad Says:

      good work on KOG – I have raised my "rinse" price.  They still have some wells to report on at some point?  i thought they had a couple they were waiting on completition crews for??

    50. 50
      andy Says:

      nicky –  u here today??  what u think?

    51. 51
      zman Says:

      re 49 – the pr have said "7 wells to complete before year end", I think we see a couple on the upcoming report. There are two wells that may get completed in time for the 3Q press release in the FBIR (from a common pad) and then two wells way over in their Grizzly area near the border with Montana – one is flowing now but no rate in the new slides, the other is set to complete any time now. So maybe we get 4 news by the 3Q pr. 

    52. 52
      zman Says:

      re 50 – I have an email in with her, should be in shortly. 

    53. 53
      zman Says:

      AREX up 10%, nice RMD, nice. 

    54. 54
      bondbuddha Says:

      JB's the best, voted from my chemo chair!

    55. 55
      RMD Says:

      Z are you at soccer tonight?

    56. 56
      zman Says:

      re 54. That's gotta be a first. 

      HAL moving higher but have to say, while energy land is green, the move looks reluctant in light of oil and the S&P being up so much. Heck, even NG is up. Looking about E&P land and not seeing much in the way of volume today.  Glad to see EXXI and MMR hand in hand higher today but again, big woop given the recent drop. 

    57. 57
      zman Says:

      re 55. Yep unless you plan to taunt me about AREX. 

    58. 58
      RMD Says:

      53 might make a few folks listen to what they actually said.

    59. 59
      Jerome Blank Says:

      HAL…thank you all much for the votes, it's appreciated…
      HAL holding up…if you look at the 30 min chart you can see the confluence of intraday moving avg resistance which coincides right at the gap down resistance zone on the daily…if HAL can get back and hold above $34.50, this zone would then be considered support, potentially bringing in more technical buyers…. 

    60. 60
      Jerome Blank Says:

      KOG…trying to break back into that steep bull channel

    61. 61
      Nicky Says:

      Good afternoon all.
      Well it was interesting that as 1162.50 held the close we have seen a reversal.  Its tricky here as there are several potential counts.  Next resistance level is 1183 and then if we blow through there look for 1186 or 1192 to halt the rally.  We really are due to see further weakness into around the 25th October.

    62. 62
      zman Says:

      Thanks again JB. 

    63. 63
      Jerome Blank Says:

      BP…really looks good…nice ascending triangle forming on the daily, BP looks like it really wants to break out above $42, support right below at the 20 day SMA $40.70…updated the chart, if you trade BP put this on your radar….

    64. 64
      zman Says:

      Way to call it Nicky! 

    65. 65
      RMD Says:

      ECA saying ethane pricing does not appear to be a problem on their cc.

    66. 66
      RMD Says:

      ECA also suggesting E&Ps and service co.s may take an adult (my word) approach in the HS and drilling will become more of an economic proposition there, ie, drilling will fall off into '11.

    67. 67
      zman Says:

      Re 65. Yeah, and if Ethane no trouble then hard to believe heavier NGL's are a problem. 

    68. 68
      zman Says:

      Beige Book out. Slow pace of growth, slow return of consumer confidence seen. 

    69. 69
      RMD Says:

      ECA cc. addresses iea to cut gas capx, use $ for buyback about 1:00PM CST worth listening to again.  Cliff notes: stock cheap but really cheap vs.long term opportunity, so will consider later in '11 if things don't change.

    70. 70
      zman Says:

      RMD – agree with thoughts in 69. I think it's your pure gassy play that can ratchet growth up or down with prices and be OK, lot of value Hayensville, Canada, Bakken, elsewhere. 

    71. 71
      zman Says:

      HAL trying to break 34 as S&P heats up again post BBook.

    72. 72
      DrLink Says:

       SSN & sea.ax/sdcjf.pk –  Niobrara getting popular….the Japanese are buying….

      Oct 20, 2010 (Close-Up Media via COMTEX) —
      Fidelity Exploration & Production Company, an oil and natural gas exploration and production subsidiary of MDU Resources Group, Inc., said it has signed an agreement with JD Rockies Resources Limited, a 100 percent-owned U.S. subsidiary of Itochu Corp., to sell a 25 percent working interest in approximately 88,000 net acres in the Niobrara oil shale play in southeastern Wyoming.

      According to a release on Oct. 14, the transaction is expected to be completed in early December, when all conditions precedent to close the transaction are satisfied. Terms of the sale are confidential and will not be disclosed.

      "Fidelity acquired its Niobrara leasehold position earlier this year and interest in the play has continued to increase with multiple oil and gas companies entering or expanding their position," said Terry Hildestad, president and chief executive officer of MDU Resources. "Leasehold costs in the play have also increased since the beginning of the year and selling down a portion of the position to a well-capitalized partner helps manage Fidelity's overall portfolio risk and capital requirements." Drilling of the initial Fidelity operated wells and subsequent production in the Niobrara play is likely to begin in 2011.

      Itochu is involved in domestic trading, import/export and overseas trading of various products such as textile, machinery, information and communications technology, aerospace, electronics, energy, metals, minerals, chemicals, forest products, general merchandise, food, finance, realty, insurance and logistics services, as well as business investment in Japan and overseas. Annual revenues exceed US $34 billion.

      MDU Resources Group, a Fortune 500 company and a member of the S&P MidCap 400 index, provides value-added natural resource products and related services that are essential to energy and transportation infrastructure, including regulated businesses, an exploration and production company and construction companies.

    73. 73
      VTZ Says:

      So much for the dollar rally yesterday?

    74. 74
      zman Says:

      DrL – thanks, too bad no $ figures in that. 

       

      VTZ = LOL, you knew that was a dead cat bounce. 

    75. 75
      zman Says:

      I complained to SA for their snubs of late of my pieces … 

      So second story down under KOG

      http://finance.yahoo.com/q?s=kog

    76. 76
      zman Says:

      BTU recovering from yesterday's pullback, WLT more than a little recovery after yesterday's downdraft. Will await the quarterly call to rebuy.

    77. 77
      VTZ Says:

      Can anyone answer this?
       
      So, we've all been told how the foreclosure issue is blown out of proportion. If BAC is getting 47 B worth of demand letters, how is this not just the tip of the iceberg considering Countrywide was certainly not the only one to manage their MBS process this way?
       
      Also, how do any of the companies with claims against them expect to reasonably defend themselves against any future litigation? I'm sure that lots of these cases will be settled out of court because people won't want to show the true depth of the fraud, but that still seems like it would be way too much capital.
       
      The other question is that there's obviously a lot other non-performing assets so once one of these cases gets resolved, what's to stop it from opening the floodgates?
       
      I know I don't understand the complexities, but if nobody can answer the simple problems then maybe it's more than a hiccup?

    78. 78
      zman Says:

      V – I agree, it can't just be then, wondering why the NY Fed sent a letter (as part of the consortium) to just them. There just about has to be more to it. 

    79. 79
      Nicky Says:

      Okay I am going to try and expand on the two counts I am looking at here.
      I will start by saying that cycles indicate weakness into the 25- 27th October but that I expected Wed and possibly Thursday of this week to be positive.
      Now to the two EW counts.  The first one has us in a triangle.  In that triangle we are in the b wave which should top out  around 1183.  Then we would see a c wave down to around 1163.  If its an expanded flat we would see it probably go as high as 1191 and then retrace in c to 1159 again.
      The other possibility is more bullish and has us in  1 of 5 of 3.  Again topping out in this area, followed by a pullback to the 1171 – 75 area before more much higher.
      There is a more bearish alternative but that is really going to require than we start to fall apart again in short order so I will come back to it if we see that happen here. 

    80. 80
      tomdavis12 Says:

      Z: 75  Even the KOG message boards are thrilled with your article. 

    81. 81
      VTZ Says:

      The other related thing I'm curious about is what those non-performing assets are marked at on the balance sheets of those companies. It should now be extremely low considering they are in default, but I wonder if the reason why more of these letters have not been issued is to keep the marks higher than they should be so that it doesnt ruin their earnings.

    82. 82
      zman Says:

      re 79, thanks much, that's going in the morning post for reference. 

      re 80. Cool. Those guys hate everything, lol. 

    83. 83
      Nicky Says:

      re # 82 I see an error in #79 – second to last paragraph should say 1171 -75 area before moving much higher.

    84. 84
      bill Says:

      anyone here follow cwei
      i dont own the name but it appears to me they are about to have blow out numbers

    85. 85
      zman Says:

      Bill – listened to the last CC, no feel for the numbers but they have a lot of irons in the fire at the moment. I had comments on them during the day on Oct 14. 3 EFS wells to be talked about soon. 

    86. 86
      zman Says:

      Nicky – I fixed it for the morning post, thanks. 

    87. 87
      zman Says:

      NFX up nicely now, glad to hold the common, don't want to play in options there simply because I've never been good with it and the spreads are generally fat. CC in the morning.  

    88. 88
      zman Says:

      Market / group softening into the close but not horribly so. Good to see SSN trying to wake up a bit. More thoughts on that in the morning post.

    89. 89
      Pati Says:

      VTZ, have been wondering about this.  From reading some of the comments on ZeroHedge, it appears there was a lot of duplication of insurance on the tranches.  Seems AIG will have something to say about this at some point.

    90. 90
      zman Says:

      Beerthirty

    91. 91
      Pati Says:

      #89, correction — insurance on th e loans.

    92. 92
      Dman Says:

      V – are you saying there might be some kind of problem with zombie banks sending each other zombie paperwork on their fraudulent zombie loans?
       I mean, what could possibly go wrong?

    93. 93
      Dman Says:

      Oh, but no problem, it will all be fixed up by the zombie government, using (no prizes for guessing) freshly printed zombie dollars!
      I mean, it's all so simple, why didn't anyone (apart from Zimbabwe) think of this before?

    94. 94
      zman Says:

      Crys – Got a list of SDM's you want sliced and diced?

    95. 95
      RMD Says:

      bill  CWEI  I've listened mostly to find out about their Wolfberry but really don't know it.  They are up in Andrews Cty (near CHK I suppose).  Also starting to test San Andres horizon.  They have high yield debt o/s also.

    96. 96
      choices Says:

      http://www.niemanwatchdog.org/index.cfm?fuseaction=ask_this.view&askthisid=481
      Black and Galbraith have been very critical of the mess the financial oligarchy has created-one point I particularly agreed with in article, why no prosecutions-I would like to see some of these guys do the perp walk, starting with Fuld, Mozila,Lewis, former execs at IndyBank, former execs at Citibanketc, etc.
      We need a strong banking sector, we just do not need these fraudsters who are or were in the banking sector.
      A very concerned citizen.

    97. 97
      choices Says:

      #93-to Dman's analogy of Zimbabwe, I would add Boris Yeltsin's Russia in the mid-1990's, where I lived and worked at that time-it worked until it did not work and Russia defaulted and the Ruble collapsed.

    98. 98
      bill Says:

      89/95 Thanks CWEI
      They guided volumes up for q3 and q4. (for oil) Looking for more oil and less gas. Even though total volume looks flatish, about 10 % more oil will replace 10 % less gas, therefore , realized prices will improve. Operating costs will be lower as they paid down debt and guided lower ga and int expenses
      they only  have 12 m shares outstanding, so with top line higher for more oil and operating expenses lower, i see eps up 75 cents from last qtr to about 1.75
      (i didnt tax effect it so call it 50 cents)
      Analyst have it about 1.00 so either im missing something or they are
      Anyway, if you are bullish on oil, it appears to be a good bet. Im going to keep an eye on it

    99. 99
      VTZ Says:

      RE 96/97 – I agree that I'd like to see some of these CFOs or CEOs do the perp walk, but I somehow doubt it with the SEC/Government gleaming record of incompetence.
       
      I've seen comparisons between the market crash and the ensuing rally in the US to Russia in the 1990s. There equities rallied by a factor of 6 or something like that but the ruble was worth 1/6th of what it was at the market low after the initial crash if I'm remembering the factors correctly.
       
      Doesn't seem like any answers are going to be available to the public until there's another major issue. Even if the issue goes away from the headlines, it doesn't give me any comfort that it's resolved or that people are even asking the right questions.

    100. 100
      VTZ Says:

      RE 89 – Several issues created from the same asset was rampant Pati. That was my comment the other day about people all expecting to be secured by a given asset that might not even be there anymore because there's:
      a)No paperwork to prove that you have access to the collateral
      b)No guarantee that the collateral is still there because of all the fraudulent documents
      c)No income from lots of the non-performing properties
       
      The kicker is that the Fed is loaded to the hilt with this crap too.

    101. 101
      Dman Says:

      V – Jim Rogers was on CNBC saying nobody has any idea what the book value of any of the banks is, least of all the banks themselves.  And it certainly wasn't just Countrywide that was up to these shenanigans. I don't understand the details of this stuff, but we do know there was massive fraud and that the "fraudulators" were then given huge bailouts. So it would be a bit embarrassing if all this was just admitted at this point "Oh yeah, we bailed out the gamblers and fraudsters but it turns out their assets were even more zomboidal than we thought, so we've gotta bail them out again … with your money".

    102. 102
      BirdsofpreyRcool Says:

      Biggest bailed out mortgage originators in this whole mess — by FAR = Fannie and Freddie.  Nobody else comes close.  And they continue to suck down taxpayer money in massive doses. 
       
      When it is all said and done, Fed will have actually MADE money "bailing out the banks."  (Not the auto companies or Fan/Fred… but the original TARP money bank recipients.) 
       
      Not defending the banks.  Just trying to put some perspective on the attacks.

    103. 103
      zman Says:

      I was ambushed by RMD/AREX at soccer. I'll have something to say there probably next week. 

    104. 104
      West Says:

      Operator Name: APPROACH OPERATING LLC, Operator No: 028625
      Statewide Statewide
      Monthly Totals, Jan 2010 – Sept 2010
       

      Date
      Oil (BBL)
      Casinghead (MCF)
      GW Gas (MCF)
      Condensate (BBL)

      Jan 2010
      6,416
      66,575
      892,675
      19,397

      Feb 2010
      5,059
      51,567
      842,481
      23,813

      Mar 2010
      4,667
      52,176
      1,007,841
      28,168

      Apr 2010
      4,390
      47,428
      1,011,099
      27,475

      May 2010
      4,061
      45,673
      1,027,112
      25,685

      Jun 2010
      3,243
      41,080
      939,359
      20,188

      Jul 2010
      3,710
      43,629
      923,698
      22,424

      Aug 2010
      0
      0
      0
      0

      Sep 2010
      0
      0
      0
      0

      Total
      31,546
      348,128
      6,644,265
      167,150

       

        AREX, Missed this waiting for pullback on purchase of MHR's 10% interest. Good play RMD. From above production reports Wolffork has not shown up yet. FYI some companies will pay penalty and not file production reports for extended periods especially in cases where they continue to lease,i.e. EOG. 
      Operator Name: WILLIAMS, CLAYTON ENERGY, INC., Operator No: 924624
      Field Name: SPRABERRY (TREND AREA), Field No: 85280300
      County Statewide Onshore
      Monthly Totals, Jan 2010 – Aug 2010
       

      Date
      Oil (BBL)
      Casinghead (MCF)
      GW Gas (MCF)
      Condensate (BBL)

      Jan 2010
      31,492
      15,928
      0
      0

      Feb 2010
      41,805
      21,289
      0
      0

      Mar 2010
      54,537
      37,212
      0
      0

      Apr 2010
      54,615
      48,631
      0
      0

      May 2010
      46,856
      55,262
      0
      0

      Jun 2010
      49,941
      42,690
      0
      0

      Jul 2010
      66,501
      70,759
      0
      0

      Aug 2010
      0
      0
      0
      0

      Total
      345,747
      291,771
      0
      0

      CWEI, think Wolfberry

    105. 105
      Jerome Blank Says:

      BSIC…nice double "long tail hammers" at the 200 day SMA support zone, defending the bullish tone of the consolidation triangle, and on good vol…BSIC looks good…from here, support at. 98 , next major resistancve at $1.20… 

    106. 106
      Jerome Blank Says:

      WRES…that stock just continues to look good, on a P&F buy signal, breaking above long term P&F trendline resistance…the daily chart shows a nice consolidation flag, which from here breaks out at $4.40 and breaks down at about $4.15…chart #2 updated…. 
      http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

    107. 107
      West Says:

      #104 on CWEI that production is for Andrews County only………………Hey JB thanks for the great charts.

    108. 108
      zman Says:

      Thanks again JB, can only vote once a day or would do it again. 

    109. 109
      RMD Says:

      West  i think CWEI is mostly north of Crockett Cty and tomorrow I'll confirm tha t their purchases in the last UT lease were also up north.  My production numbers for AREX had May-July off a bi, but then up mo. -mo. from there.  I'll find those notes in AM. and share some valuation math I dreamed upat practice tonight.
      103 was not with guns and masks;  it was just seeking knowledegable confirmation…in  a gentle way.

    110. 110
      West Says:

      Hey Z here is address for Bakken Shale Discussion Group that post almost all bakken wells that come off Confidential List. There are a lot of them as you might expect. …Great write up on KOG today. I have kinda Xd off their acreage east of the Missouri River under present conditions as to low ROR for development. I'm sure that you noted that QEP 3fks well was shown with a good IP on northern end of KOG's property. I'm looking for about 50% of Bakken EURs with lower IPs but better decline curves in FBIR Missouri River Basin area…..Thanks for all the great information from you and all of your great contributors…..http://groups.google.com/group/bakken-shale-discussion

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