22
Oct

T.G.I.F. + SLB, + Bakken Update 2

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Market Sentiment Watch: No economic data today so market is free to trade on technicals. I've included Bakken update part 1 (updated) along with Bakken part 2 (more company specific) in today's post.  See comments in the Natural Gas Storage Review section on gas prices and thoughts for the near term. 


In today's post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Inventory Preview
  4. Stuff  We Care About Today – SLB, Bakken Update 2 (with revised and augmented charts for Part 1)
  5. Odds & Ends

Holdings WatchZCAT (Zman Catalyst portfolio):

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

ZIM (Zman Inefficient Markets portfolio)

  • $2,500
  • 4% Cash
  • Yesterday’s Trades:

    • WLL - Sold the WLL $100 Call for $4.90, up 21%.
    • NFX - Added (10) NFX $65 November Calls for $0.37 with the stock up about $0.90. See site for details on the ongoing earnings call. 

Commodity Watch

Crude oil fell $1.98 to close at $80.56 yesterday in erratic trading. This feels like a bit of topping action to me. This morning crude is trading up 80 cents.


Natural gas closed off $0.17 at $3.37 after the EIA reported another fat injection due to mild weather. This morning gas is trading up slightly.

  • Tropics Watch: Tropical Storm Richard is headed to the Gulf ... maybe. It will weaken over Mexico and may not reform.

Natural Gas Review


ZComment: Chili Cookoff Postponed On Account Of Heat. Natural gas is in for considerable headline risk over the next four weeks if we do not see cold invade a good portion of the U.S. in short order. While gas is still closer to a bottom than a top, I see risk down to a $3 test in the next few weeks. 

Graph A) Note the recent change in the slope of this year's storage graph, accelerating when it should be moderating. I had projected 3,600 to 3,700 Bcf at peak storage at the end of October but the mildness has cause inventories, especially in the eastern consuming region to really pile up.

Graphs B and C) Note that the YoY deficit has almost entirely been eroded. Last year was the worst case scenario for storage but now we are in danger of 2010 setting a new record ... it could happen if the weather stays hot.

Graph D) A third week at record injections for this time of year ... that's not just weak heating demand ... that's proof that supply still remains too high. 

Graph E) Pretty self-explanatory but in case you're wondering, that 2009 peak is 3,837 Bcf. 


Stuff We Care About Today

SLB Reports As Expected Quarter

The 3Q10 Numbers

  • Revenue fo $6.85 B vs $6.83 B expected
  • EPS of $0.70 (ex items) vs $0.70 expected

Highlights:

  • Like with HAL, North America was a life saver for the quarter. 
  • Oilfield service revenue (the lions share of SLB sales) was up 2% seq and 12% YoY, Andrew will be able to say that the bottom is firmly in place.
  • Outside NAM, activity was "mixed" - no shock there either. 
  • Sees strong activity in 4Q in NAM, elsewhere less certain including Mexico.

Nutshell: In line quarter, things improving but at a restrained pace on the international front. Sources of strength still Russia (although 4Q will see seasonal pullback) West Africa, Asia, Middle East, Latin America partially offset by Mexico North Africa. Mentioned a nice contract for their seismic sub. Call should be interesting.  

Conference Call: Today, 9 am EST

 


Bakken Update Part 1 - revised and augmented. This will all be copied to a report on the Reports Tab today for future reference.  The text in part 1 is almost entirely verbatim from Monday because I wanted the two pieces to be in the same post for easier reference. Part 2 has more company specific comments. 

Bakken Update – Part 1 - where the rig counts are soaring weekly and the play is expanding west and south.  This update does not include all the players in the Bakken, only the 6 names on the U.S. side of the border where the Bakken is key. So I left out some of the big boys who play there (notably EOG and HES) as well as the smallest of the single digit midgets. This is simply a statistical update with a few comments thrown in for extra color.  

First, The Most Basic Metric, The Forward CFPS Multiples - Note that at this time of year the buyside generally begins to care less about the current year (it's 3/4s toast at this point anyway) and steps their thinking out to the next out year. So no more 2010/2011, instead 2011/12.  The clear winners (cheap guys) here are WLL and KOG (highlighted numbers are the 2012 multiples).  Note the great number of names here that are moving to what I'd call "traditionally expensive" to bargain basement. As the market gains more faith in the out year numbers, and that in most cases will be up to oil prices and not up to the players as much themselves, look for the discounts to erode (prices to rise).  

Who's Oily?  In short, all of the them. Note that WLL and CLR have big pieces of production that are not derived from the Williston but their growth is largely coming from the Bakken and to a much lesser extent the Three Forks … and as a result even their production (and they're the two biggest guys in this little study) is moving up and to the right in terms of oiliness. 

And Since No One Seems To Care About Natural Gas These Days, Just How Fast Is That Oil Production Rising.  In short this chart shows kind of what you'd expect. Oil is growing but at a much bigger pace for the smaller guys. At points in their life cycle, some of the smaller guys take a pause before ramping back up (reference KOG now and then check back in a few quarters). The big jumps of late have been with BEXP, NOG, and OAS. NOG almost cavalierly talks about sequential growth on the order of 30 to 35% through next year and while their non-operated model is somewhat unique among Bakken players, it is the nature of the play and that ramping rig count and the price of oil that is making that kind of growth not uncommon. 

Production per Share … Growing?  All things are relative so it's good to see how these guys have managed to finance their growth.  Here you see what the impacts of being a serial equity offering offender are (hello BEXP, I'm talking about you here), or are not, as in the case of KOG who simply is blowing away numbers on the production per share metric, albeit, they're just getting started.  See the notes at the bottom of these charts as each chart is custom tailored.   In general, all the of the names are moving in the right direction (fingers crossed on BEXP) but you have to applaud the amount of production behind each WLL share. 

Market Value / Williston Acre - this is probably not that useful other for a quick sanity check. As you get names like WLL in the mix that have other non Bakken play assets, things become skewed. Obviously not all of the value in Whiting is attributable to the Bakken (they'got two waterfloods and some other assets including Rockies gas and maybe Niobrara) which helps to skew the $/ Acre numbers. The same goes for CLR and even BEXP who still

Post was chopped off - will reconstruct over the weekend. 

 

151 Responses to “T.G.I.F. + SLB, + Bakken Update 2”

  1. 1
    zman Says:

    Front and Center Watch

    Probably boredom as the market has tended to drift about on days with no economic data releases … especially on Friday's with no release.

    Will be on the SLB call in 20 minutes. 

  2. 2
    zman Says:

    MCF on the tape with an update

    $40 mm revolver now in place, all unused, $60 mm in cash

    Drilling ahead on their recent spud (shouldn't be long now on this one).

    89 MMcfepd offshore and 11 mmcfepd onshore … may raise a little concern as on Oct 7th offshore production was 102 MMcfepd and there's nothing in the release to indicate a mechanical issue for the rapid drop. 

    Peak commented that it could be another 6 to 12 months before natural gas prices rise to $5, high enough to earn what he says would be a 10% return. 

  3. 3
    zman Says:

    SLB call about to start:

    http://web.servicebureau.net/conf/meta?i=1113194687&c=2343&m=was&u=/w_ccbn.xsl&date_ticker=SLB

  4. 4
    zman Says:

    Also on the front and center watch

    CLB had a bad day following earnings yesterday … give me one more of those and I nibble. 

  5. 5
    snuhart Says:

    Z
    RE Today's comment   WOW
    Many Thanx

  6. 6
    zman Says:

    re 5 – thanks, I will find a place on the Reports page for it and update it from time to time. 

  7. 7
    zman Says:

    SLB Notes:

     

    we expect to be aggressive with our stock buyback going forward.

  8. 8
    zman Says:

    SLB – new tech to eliminate the need for a vertical spudder hole on a horizontal by building angle faster than is now possible in the hole. 

  9. 9
    zman Says:

    SLB Notes

    New down hole reservoir testing equipement that is a much shorter (1/4 length) package. Still think these guys grow that biz best by buying CLB. Or maybe HAL buys them. 

  10. 10
    tomdavis12 Says:

    Z: Your reports are so much better than the sell siders I have access to. Keep up the good work. 

  11. 11
    zman Says:

    Way too kind

     

    SLB – Pemex business will remain uncertain until next year … yeah, what part of next year?

  12. 12
    redjack Says:

    re EXXI…this may have already been posted here….
    http://www.ogfj.com/index/article-display/3054286123/articles/oil-gas-financial-journal/volume-7/issue-10/cover-story/low-risk-high-return-development-wells-help-fund.html

  13. 13
    BirdsofpreyRcool Says:

    z — thank you for lining up the contestants in the Bakken Beauty Contest.  Especially love hearing your opinions on the various players in the Swim Suit Competition.  Super!!

  14. 14
    snuhart Says:

    Hey- Fellow boarders. Better be careful praising Z.
    Subscription's apt to go up

  15. 15
    ram Says:

    Was the WFC downgrade based on price only and not taking into account improving forward CF?

  16. 16
    elduque Says:

    Subscription price is the best value that I know of.

    Mahalo Z.

  17. 17
    snuhart Says:

    eld
    14 intended as a joke

  18. 18
    zman Says:

    Ram – good question. All I see is a paragraph. They mentioned "Bakken still has operational hurdles" but nothing in the paragraph I have explains what they mean. The stuff in the paragraph specific to WLL was talking about the price run and the risk/reward being neutral. My sense is they are making a call not based so much on valuation of the shares as they are price of the shares if you get me. Makes sense as the momentum came out of the name in the last week or so, all of the names in the Bakken really. It doesn't sound like they have anything there they necessarily don't like about the story so much as they are saying take profits and as they do live to generate commission for their troops, that makes some degree of sense. The operation hurdles headline I think does not pertain to WLL any more than any one else in the Basin. Things like takeaway capacity and frac crews come to mind. In those areas WLL has demonstrated an ability to get the oil to market efficiently and get their wells completed in a timely manner. 

  19. 19
    zman Says:

    re 16. Thanks much for the market intelligence. Nixing plans for subscription holiday as I listen to this SLB call. 😉

  20. 20
    BirdsofpreyRcool Says:

    redjack — #12 thanks for posting.  Lays out the case for EXXI in plain English.  Anyone who is long this stock should print it out and tack it to their office wall.  When doubts creep in, just pull down the article and re-read. 
     
    "Time Arbitrage."  I believe it will work well with an EXXI holding here.

  21. 21
    redjack Says:

    there goes the 34.5 resistance on HAL

  22. 22
    zman Says:

    re 21… they can thank SLB for that.

    Andrew of SLB sounds more than usually cautious on Iraq. Saying the structure of the contracts tries to put a lot of risk on the contractors. They will be aggressive on the small projects and cautious on the bigs.

    Analysts for the most part sound pretty happy with the call so far. 

     

  23. 23
    zman Says:

    and SLB is 5%. 

  24. 24
    bondbuddha Says:

    Very nice Bakken report, good work Z

  25. 25
    tomdavis12 Says:

    Z: Forgot where on your beauty scale you would fit GST? Could not find anything in your small cap comments.

  26. 26
    zman Says:

    Broke the comments section for a few minutes there, should be fixed now. 

    Tom – will go find you the GST report, it should be on the reports tab.

  27. 27
    zman Says:

    GST primer was in tis post from late September:

    http://zmansenergybrain.com/2010/09/09/thursday-dualing-natural-gas-and-oil-inventory-reports-gst/

  28. 28
    zman Says:

    SLB call over, positive but not sure it was this positive, Jat?

    Can anyone post a test comment, just trying to make sure its working again. Thx. 

  29. 29
    BirdsofpreyRcool Says:

    KOG up over 6%… they put out a PR last night about their earings call on Nov 5th… but, don't think that is behind the move.  z's comments perhaps????

  30. 30
    BirdsofpreyRcool Says:

    KOG — must say… lookin' GOOD in that Bathingsuit Lineup!  😉

  31. 31
    zman Says:

    BOP – dunno, maybe the $10 comment, lol. 

  32. 32
    tomdavis12 Says:

    Z: Thanks for the GST.

  33. 33
    zman Says:

    Re KOG, dime short of the 52 week high at $4.34.  If you look at those production growth per share figures, they really have not diluted us much despite the big share issuance. And early on, I'd rather be diluted than steeply indebted.  

  34. 34
    zman Says:

    And Tom – GST and beauty are not going to be used by me in the same sentence. They have been an "also ran". The next couple of quarters could see than change (Eagle Ford, Glen Rose oil, Marcellus all get off the ground…maybe). Their production is largely tied to a handful of wells so when you look at that link and see production go from 25 mm/d to 15 mm/d in a single quarter, note that that's largely the impact of 1 well being offline during the Q. That's what I call high risk. I own it for the things mentioned above however and will give them the 6 months needed for that to being to play out. If they run early I will punt. If they fail to get the job done at both the EFS and the Glen Rose I will punt. 

  35. 35
    zman Says:

    KOG – up 8% now. Can you say Merger Monday? I can but I'm not saying it. But like I said in the piece that has a link in the KOG section above, I do believe that getting larger in the play, with basically no debt and a big proven area, before they have evidence that the TFS really works on it should make these guys a better target than they were before. AEZ died too young, going to HESS for cheap dollars. Here's to Lynn getting $10. That won't happen Monday, too much of a premium for most buyers to try to justify to their shareholders. 

  36. 36
    andy Says:

    snuhart – maybe change your name to jokester!!  is that u buying KOG??  Think u shud re-read that GST report, pretty interesting.
    z – excellent stuff on our bakken boys.  thks

  37. 37
    zman Says:

    Thanks much Andy.  If GST makes the EFS work, and I was told that EFS wasn't even under their acreage at one point, then the story is, um, greatly improved. 

    $2 bluelight special on WLL.

    NFX back over $60, other people liked the call/#s too.  FBR took their target from $65 to $72. 

    JB – any more thoughts on HAL, as was pointed out earlier, they are going through the 34.50 level you noted previously? Thanks.  

     

  38. 38
    andy Says:

    z – GST that 35k acres reef said were in CHK's mystery area., are those included in your report?? 

  39. 39
    zman Says:

    Re 28. I think I have all of their acreage in the report, they really don't have that much, see the Hilltop acre count. If the mystery area is there then that would be it I think. Unless GST has something not yet disclosed? 

  40. 40
    zman Says:

    KOG – interesting weekly chart if you go back far enough. The 4.350ish level was a top in 6/2008 and then 4.34 was in Spring 2010. Now we are at the 52 week high. Story is a lot more proved up and bigger than it was in Spring with oil prices about the same. As far as comparing it to June 2008, you have no where near the oil price but the story is more of a prepubescent teen than the toddler it was back then.  

  41. 41
    scoop006 Says:

    Z =Do you see any reason for APC,  November calls being so popular today

  42. 42
    BirdsofpreyRcool Says:

    scoop – yeah.  APC is my pick for the M&A contest. 🙂
     
    Seriously, think the CNOOC acqtn of private Kosmos Energy turned the spotlight of attention on APC's West African assets.

  43. 43
    zman Says:

    Scoop – nothing comes to mind, they had a good find off Mozambique this week so maybe that gets them a little more attention, earnings are not until Nov 1 so its probably not that. That leaves takeout rumor for Monday which I have not yet seen but I often don't see rumors until later in the day than this.  

  44. 44
    zman Says:

    Re 42. Yeah, what she said!

  45. 45
    scoop006 Says:

    #42 T.Y. BOP

  46. 46
    zman Says:

    KOG up 10%, new 52 week high. 

  47. 47
    zman Says:

    NOG pulling back up. 

  48. 48
    BirdsofpreyRcool Says:

    Got my Dad to buy more KOG and initiate on MMR last Friday.  MMR down (a LOT) for the week… but KOG is savin' my bakken (so to speak).  Thank goodness my Dad is a big believer in patience being rewarded.  After all, it took tiny KOG a long long time to get any respect.  But when it happens, ya never own enuf, do ya.

  49. 49
    jiveyjr Says:

    BOP thx for the additional late nite comments and the Motley Fool article…
     

  50. 50
    BirdsofpreyRcool Says:

    OT:  I will enter the Confessional and state that my purchase of BAC this week was premature and overly-risky.  Too much headline risk associated with Countrywide.  In the end, BAC will go up… but, trying to be a Hero Contrarian on that one only ended up in my eating more grass.  Bahaaaaaaaaaaaaaaaaa….
     

  51. 51
    zman Says:

    SWN – falling on a mostly energy up day. It will be an easy target for analysts to pick on over the next 4+ weeks

  52. 52
    BirdsofpreyRcool Says:

    jivey — thank you.  My pleasure.
     
    I just love the concept of "Time Arbitrage."  So many (KOG, EXXI, MMR) of the CEOs of companies staring Greatness in the Face are lamenting the lack of patience and understanding in their investor base.  "Patience" being defined as "greater than two weeks," by the way.

  53. 53
    kaman Says:

    Volume on KOG…short covering underway?

  54. 54
    zman Says:

    KOG – noting that volume is very strong for this time of day (more than a full days trading and then some), and a 440,000 share block a few minutes back.  

  55. 55
    zman Says:

    Kaman – was typing while you were, short is up since a week ago when I checked, still 8% of outstanding but there are now just over 10.3 mm shares short. You can bet they are nervous and some are covering today. 

  56. 56
    kaman Says:

    I'm inclined to think you had it right earlier…someone's leaked word of an M&A.

  57. 57
    tomdavis12 Says:

    BOP: 42 Two of the offshore drillers mentioned that pricing was very firm for the high spec JU rigs off W Africa. Also CLB loves that area. It seems like if believe in that area APC is a good place for kiss off money. I just have no feel for the potential negatives (politcal – social etc) 

  58. 58
    zman Says:

    Tom – the countries they are working with have been pretty friendly/helpful, both off the west and the east coasts. 

  59. 59
    BirdsofpreyRcool Says:

    TomDavis — I trust the African Kleptocrasies more than the Dopes in Washington, DC. 

  60. 60
    BirdsofpreyRcool Says:

    At least a Kleptocrasy KNOWS it's not supposed to KILL the Golden Goose, in order to extract value.

  61. 61
    BirdsofpreyRcool Says:

    KOG is another one of those "head-scratcher" shorts… like CIGX.  Using backward-looking financial data, these companies look way expensive on any financial metric.  But, with both KOG and CIGX staring Greatness in the Face, methinks it will end badly for the computers who recommended shorting those stocks. 
     
    Bad Robot!  😉

  62. 62
    tomdavis12 Says:

    But if you look at the difference between how Norway and Mexico have handled their crude wealth you could teach a class about the VAST difference.

  63. 63
    zman Says:

    BEXP getting a nice bump today. 

    Wait a moment: 

    BEXP up 3%

    NOG up 4.7%

    OAS up 4.6%

    KOG up 10.6%

    WLL off 50 cents now from $2 earlier due to the downgrade.

    Hmmm, deal mania ensues. 

    CLR up 1% but as you saw, I said they were pretty fully valued in the piece and they'd be a big expensive bit for most players to take and turn into something readily accretive. 

    Surprised CXO which has a toehold isn't moving.

    Noting that CRED is, both of those not on my list as the focus isn't there as much. AXAS falling off so at least the market isn't completely irrational. Hmmm.

  64. 64
    tomdavis12 Says:

    Z: Leave CLR alone, that's my pick. 8 )

  65. 65
    zman Says:

    Wondering if EOG is seen as a potential buyer of Bakken assets in this swirling rumor mill. The stock is off some, I would not expect that to happen.  

  66. 66
    RMD Says:

    MCF's comments: 2 parts strike me.  1.Credit line allows dividend among other things.  2. another straw-in-the-wind that gas pricing is rationalizing itself, albeit slowly.

  67. 67
    andy Says:

    z – GST  u were correct.  hilltop area included leon county and according to reef that's the mystery area. i think that adds to already good story.

  68. 68
    zman Says:

    RMD – The only gripe I have about MCF (well, other than not having bought it when it retreated into the low $40s recently but that's really a gripe about me and not them) is that they don't provide a lot of operational color. Production being off over 10% in two weeks in the offshore is easy explained (workover, pipeline issue, other maintenance, recompletion of a new zone) but they just put the numbers out and leave it at that. The news junky in me needs more. Same goes to their presentations and SEC filings, almost entirely financial, little to no color on the plays. 

  69. 69
    zman Says:

    re 76, great, thanks. 

  70. 70
    zman Says:

    Hmmm. Good to know I can work from anywhere. Real Estate still coming down.

    http://news.yahoo.com/s/time/20101022/wl_time/08599202693400

  71. 71
    zman Says:

    Or maybe the buyer is thought to be CHK, who could use a higher profile oil play. CHK just can't catch a break since the analyst meeting. 

  72. 72
    zman Says:

    SSN = completely ignored today, volume of 59K is well below average. No catalysts on the extremely near term horizon. They are on the tape announcing a stock holders meeting in November and should have something to say about Bakken wells in the next 2 to 3 weeks but nothing should be available to comment on out of the Niobrara until late 1Q11 from them … other data points will of course continue to flow from the likes of names like CHK, NBL, EOG as the earnings season plays out although it will likely be too early for CHK to say anything about its 2 ongoing tests Niobrara. 

  73. 73
    zman Says:

    Thanks to a little bird for sending along the note regarding curbing enthusiasm for refiners. I had none, however, to curb. Sheesh, what a boring bunch of names they are. 

  74. 74
    RMD Says:

    CHK: maybe investors read the LAZ report and are upset about capx ~$7.6b and cf ~$4.8b;  yeah, I know there are positive offsets but there are other negative offsets in 2H12.  Just musing…

  75. 75
    RMD Says:

    Hearing rumors about a regulated utility  signing a long term gas contract with an E&P awaiting PUC approval. Id guess CHK.

  76. 76
    zman Says:

    re 74. Yep, yep. They want to see Cash Flow from Operations = or > Capital Spending. No JV's, asset sales, or VPPs to help on the Cash Flow side. I think it is a completely naive argument. The same kind of argument that says the best capital structure is one with $0 debt. But that's what the Street wants.

    The Street would also rather see Aubrey let a massive amount of leasehold expire, which would mean laying down a lot of rigs, which would mean, to their way of thinking, that gas prices would rise. This is not necessarily the case as Aubrey is only of many who will continue to drill to capture leasehold.

    I would tell the Street to be patient. That mid 2011 is not that far away and that the rig count should come off then and if it doesn't that there will be plenty of time for public floggings then. The Street's motives are far from pure here as they don't have the best interests of CHK shareholders in mind but instead are looking for a quick fix to the shale success syndrome. Not gonna happen. The Street has the patience of a gnat.  My job is to not let them get in the way of me making money. So for now, its easier for me to not own, watch it fall off and then buy it, hopefully at the point where maximum disdain for the name intersects with improved but ignored fundamentals.  

  77. 77
    RMD Says:

    GPRE conf. call a real education in ethanol spreads and the overall ethanol market. Conculion is positive. ( Realize there is probably 1 here that cares, but I own REX.)

  78. 78
    milepost_43 Says:

    WPRT…NG engines…..might be time for a look……back to support?? I think……nice uptrend from $4 to $20ish–2009 to now….. am holding Dec calls…..
    ran across this from SE article  http://seekingalpha.com/article/230462-why-clean-energy-fuels-should-benefit-from-a-lame-duck-congress
    Senate Majority Leader Harry Reid introduced legislation under the Natural Gas Act just before the recess on $4.5bn of incentives to aid the deployment of natural gas–fueled vehicles and refueling stations (there are also some incentives for the electric car). These are the measures that were lost when the debacle over the oil-spill related legislation jammed up any further progress. A key procedural vote on the Natural Gas Act has been slated for November 17th – two days after Congress returns from recess.
    Earnings Nov 1….

  79. 79
    RMD Says:

    76 is what I'm lying in the weeds waiting for. I hope the big, fat, slow antelope waves or something, so I recognize that "this is IT".

  80. 80
    zman Says:

    re 79 . yep, yep, yep. 

     

    MP – interesting, CLNE too.  

  81. 81
    zman Says:

    Stepping out for lunch, back in 45

  82. 82
    BirdsofpreyRcool Says:

    RMD — #79… just love it when you talk all wild-animal-ish!  😉

  83. 83
    RMD Says:

    79 I was thinking of you!

  84. 84
    cargocult Says:

    And here I get excited by childrens story book stuff like little dogs wagging their tails.

  85. 85
    BirdsofpreyRcool Says:

    aaaaaaaaaaahhh, cargo — you are such a sweetie. 
     
    Good news, the Dog wants to Play!  Just waiting for a nod from The Master… and for The Master to put down that big club he is poorly-hiding behind his back.  With a consistant message, the Dog Park will be open for business!

  86. 86
    ram Says:

    ZMAN – Did you create a map of the bakken that showed where, by different colors, the energy players own real estate or % interest?

  87. 87
    zman Says:

    re 86, nope, no resources for that but I do have a lot of maps, from the countries and elsewhere that give me pretty good flavor for it. 

  88. 88
    BirdsofpreyRcool Says:

    We said the US Treasury would make $$ buying those mortgage securities… it's the auto and Fan/Fred "investments" I worry about —
     
    PPIP Funds Surge 36% on Average in First Year, Treasury Says
    2010-10-22 04:01:00.15 GMT
     
    By Christopher Condon
    Oct. 22 (Bloomberg) — A U.S. government program aimed at reviving the mortgage-backed securities market returned more than triple what stocks or bonds gained in the past year.
    The eight funds created under the Public-Private Investment Program, or PPIP, reported net internal rates of return averaging 36 percent through Sept. 30, the Treasury Department said in a report this week. That compares with the 10 percent return for the Standard & Poor’s 500 Index and 8.2 percent for the BarCap U.S. Aggregate Total Return Index of bonds.
    "The first year has been out of the ballpark," Jeffrey S.
    Phlegar, who heads the PPIP fund run by New York-based money manager AllianceBernstein LP, said yesterday in a telephone interview.
    The Treasury is an equal equity partner in each of the funds and provided debt financing for the $29.4 billion program.
    The government has gotten $215 million of interest, dividend and other payments, and the funds have more than $1.5 billion in unrealized gains. Under the wider Troubled Asset Relief Program, or TARP, the government has earned $25.2 billion on its investment of $309 billion in banks and insurers, an 8.2 percent return over two years, according to data compiled by Bloomberg.
    "While the program is still in its early stages, we are certainly pleased with its performance for taxpayers thus far,"
    Treasury spokesman Mark Paustenbach said in an e-mailed statement.
    GE’s 52% Gain
    The PPIP fund managed by GE Capital Real Estate, a unit of Fairfield, Connecticut-based General Electric Co., and New York- based Angelo Gordon & Co., had the best return at 52 percent, the Treasury said. Oaktree Capital Management LLC, based in Los Angeles, had the lowest return at 19 percent.
    The 36 percent average isn’t asset weighted.
    The eight fund managers raised $7.4 billion from private investors, which was matched by the Treasury. Government debt financing totaled $14.7 billion.
    The figures reflect returns only on about $18.6 billion of invested capital. The funds have yet to draw the remaining money.
    "Returns are not a function of better fundamental data,"
    said Phlegar of AllianceBernstein. "It’s largely a function of compression in yield premiums," he said, meaning buyers are willing to accept a lower return in the current bond market, bringing prices up.
    Phlegar’s fund, which targeted 12 percent to 15 percent net returns, gained 41 percent.
    Wilbur Ross, a PPIP fund manager and chairman of WL Ross & Co., a unit of Atlanta-based Invesco Ltd., said the funds have helped stabilize the market for mortgage-backed securities.
    ‘Boost’ for Traders
    "The funds gave the trading community a boost in knowing there would be a buyer," Ross, whose fund returned 34 percent, said in a phone interview.
    James Hirschmann, chief executive officer of Western Asset Management, a Pasadena, California-based unit of Legg Mason Inc., said his firm’s 37 percent return was "higher than anyone was expecting."
    "It’s difficult to predict the markets, but we still think the valuations are compelling," he said in a phone interview.
    The funds are in the early stages of their three-year investment periods, and returns so far may be disproportionately affected by structuring and transaction costs and each manager’s pace of capital deployment, the Treasury said.
    The Public-Private Investment Program was introduced by Treasury Secretary Timothy Geithner as a means of helping banks weighed down by mortgage securities whose value had collapsed during the credit crisis. Managers were selected in July 2009 and the funds began investing as early as that September.
    The Treasury was criticized in an Oct. 7 report from a government watchdog for unnecessarily favoring the biggest money managers when it selected PPIP participants. Neil M. Barofsky, special inspector general for TARP, said officials may have hurt taxpayers by rejecting or deterring qualified, smaller managers.

  89. 89
    zman Says:

    BOP – just got back, see email.

  90. 90
    zman Says:

    NOG doing its best to alleviate those concerns from yesterday, no $15 additional buys available for the time being.

  91. 91
    Dman Says:

    Z – I gather someone downgraded WLL.  Details anywhere? 

  92. 92
    zman Says:

    Dman – yes, Wells Fargo – see comment 18.

    I see that the post is truncated today, that is pretty unfortunate as it probably cannot be recovered. Will work to reconstruct it over the weekend. Ugh, double ugh. 

  93. 93
    Dman Says:

    Thanks z. I knew it must be there somewhere.  Not sure what you mean by "truncated". Seems like a long post to me.

  94. 94
    ram Says:

    That's where I saw something that resembled maps.  I can't believe I stopped drinking for no good reason.

  95. 95
    zman Says:

    re 93. I just stopped in mid sentence in the Bakken update part 1 , if you see all the way down to odds and ends on your post, feel free to copy and paste and send in an email. 

  96. 96
    zman Says:

    re 94. Funniest thing I've seen all day. 

  97. 97
    jim bob is my jesus Says:

    forgive me if this has been posted, but the reason for bakken rally is a forbes article today
    http://www.forbes.com/forbes/2010/1108/anschutz-qwest-leiweke-bieber-staples-behind-curtain.html

  98. 98
    zman Says:

    JBIMJ – fantastic if for no other reason than I'd always wondered about some of the well shots in the Hellfighters!

  99. 99
    zman Says:

    NOG now outperforming KOG on the day … interesting. 

  100. 100
    zman Says:

    CLB down $6 and change since earnings, still watching it fall back. 

  101. 101
    zman Says:

    Do nothing market as expected, pleasantly surprised by the moves in the Bakken names, and some oil service off the SLB call today. I'm here but contemplating a cold Salva Vida. 

  102. 102
    zman Says:

    RMD / West / Others – from all your gleanings from company comments etc, do you have thoughts on Wolfberry, Wolffork EUR range and cost per well range? 

  103. 103
    zman Says:

    add to 102 – and Wolfbone?

  104. 104
    choices Says:

    thanks, JB, for continued updates-voted.

  105. 105
    Dman Says:

    Oh yeah, part 2 is somewhat missing…  oops.

  106. 106
    zman Says:

    Analyst Watch:

    CLB – RBC lowered target by $3 to $95, stock just under $80 now.

    The reduction just about has to be on the slightly lower than Street estimate 4Q guidance. Operational margins to remain at all time highs during that quarter, just short on the top line to Street. Given the noted activity and the slight miss to revenues on the 3Q, the 4Q number seems like it was created to be beaten slightly. Stock down almost 10% in 2 days. Hmmm. 

  107. 107
    zman Says:

    Dman – yeah, I will have a wrap post out probably Sunday morning and then a Bakken Update (parts 1&2 together) by Sunday night. Part 2 will be slightly different since apparently the final version of the draft no long exists.  

  108. 108
    italyinvestor Says:

    Z – question from the front.  In the ZLT names, how do you allocate?  Do you grab even percentages across the board and then overweight certain issues or do you use some other method?  Any other general "portfolio allocation or management" type thoughts worth sharing?  Or for that matter anyone else on the board?  I can't participate in the ZIM tactics over here and am looking to get a better handle on my long term stuff which is not very organized at the present.  Thanks for any thoughts.

  109. 109
    zman Says:

    Italy – will try to address in a minute. How's the war going?

  110. 110
    Dman Says:

    jimbob #97 –  I have a hard time believing that the Forbes article is behind the Bakken pop today.  Looks like some pretty serious takeover rumors, with potential acquirers (EOG) being hit.    Apparently nobody thinks WLL is a target … (??)

  111. 111
    Dman Says:

    … but speaking of JimBob  and Jesus,  MMR  looks like it's trying for a resurrection.

  112. 112
    BirdsofpreyRcool Says:

    MMR…. MMR… Inner Peace…. Inner Peace…. Time Arbitrage… Time Arbitrage…
     
    The Long-Term Holder Mantra.

  113. 113
    italyinvestor Says:

    Z – been doing a number on the TB down here.  We have dropped SIGACTS (Significant activities such as direct fire attacks, indirect attacks, IEDs, etc) by over 80 % in the past month as we have started pushing south.  Additionally, we are ever increasingly initiating contact with the enemy.  In June we initiated 22% of the contacts, in July 27%, in Aug 23%, in September 47% in October 61 %.  Of course when we initiate contacts we hit them with some pretty lethal and accurate fire so there are not too many surviving these contacts.  We are starting to see enemy morale in our area plummet.  We've bee doing up tempo operations for the past month and the enemy is on the run.  So all is going pretty well for this phase.  Key will be the hold and build phases.  I will drive the hold phase, the Afghans will have to step up in the build phase, so it's the wild card now.  Look for us to be in Mullah Omar's home town soon…..

  114. 114
    BirdsofpreyRcool Says:

    italyinvestor — wow, man.  That is such a WONDERFUL update.  I feel priviliged to hear it straight from you… GOOD LUCK and BEST WISHES for continued success.  Thank you for all you do for us!!

  115. 115
    zman Says:

    ZLT allocations

    The ZLT is comprised of a handful accounts, some tax advantaged, some not.

    In general, each account has up to 6 or in 1 case 7 of the names in the list of ZLT stocks. So the positions are a much larger percentage than you'd find in a sanely run mutual fund. However, given that it is all in energy and almost always close to fully invested (upwards of 80% long in my book is close enough to be just about all in the game but also to have firepower for taking advantage of opportunities) I find that 5 stocks well chosen are better than 50 that you may or may not know so well. I've had a number of friendly debates about this with money managers who often end by telling me something quippy like "live by the sword…" and I understand that sentiment as well. 

    In generally, I try to buy a stock 3 or 4 times during the life of the holding. Not that a holding can't have several lives being sold entirely but bought back again at a later date … but in general, I like to dollar cost average into positions in thirds or quarters.  

    I do believe in the core position with trading share positions and am endeavoring to be a little more active on that front. Right now, KOG is bigger than it would otherwise be due to an addition made just after their last quarter. I plan to sell those soonish, especially if it fails to break out but have no plans to dump the core soon. 

    I do, from time to time, take a extra piece that is very much overweight, not on charts but on the disbelief in what I'm seeing relative to the fundamentals and this is usually done after some event that ended in selling the news. I happily take cheaper shares once the bird is in hand.

    Feel free to ask me to elaborate further on any of those points.   

  116. 116
    Dman Says:

    BOP – I must have missed the original time-arbitrage reference … can you define it for me?

  117. 117
    italyinvestor Says:

    BOP – Thanks.  The Soldiers are making this happen.  Also on the "non-kinetic" front, we've gone from no one talking to us to hosting a 300 man Shura (local council of elders), we've been able to get no one to work on local projects such as flood control, irrigation improvements, etc. to getting 200 people per day despite TB threats to kill them.  We've also cleared the IEDs out of the local school that the TB shut down for 3 years and we're getting close to the ministry of education approving the school to reopen.  On the negative side i've had 28 Soldiers wounded, 5 seriously wounded, and one killed in the process.  We are winning here, slowly but surely and the enemy senior leadership in PK is getting very concerned.

  118. 118
    zman Says:

    Dman – re WLL … well I do. 

    Italy – Strong work sir. You have all of our thanks I'm sure. Stay safe, kick OBL in the crotch for us, I never liked that guy.  

  119. 119
    BirdsofpreyRcool Says:

    italyinvestor — just thinking about the complexities and subtlties and alliances involved in trying to accomplish anything in that part of the world make my brain hurt.  It is amazingly positive to be able to move the football down the field, with so many players coming at you from all sides.  You have my complete gratitude!

  120. 120
    BirdsofpreyRcool Says:

    Dman — thanks for asking… see my last post of the day yesterday, re"  "Time Arbitrage."  A bit of an ackward phrase… but I totally embrase the meaning of it.  It is how I invest and how I can stand the daily, weekly, and monthly volatility in the names I have in my portfolio.

  121. 121
    italyinvestor Says:

    Z – makes sense.  I've gone to a macro allocation that is 60% index / 40 % ZLT names.  Your explanation will give me food for thought on how to manage the 30%.  I find my self buying full positions at once based on access to the internet  and don't have the time to do the core and trading shares, but so it is.  Thanks.  It's helpful to know or hear how others do the broad allocation.  When not deployed I was more like 60% index, 30 % ZLT and 10% available for various ZIM moves.

  122. 122
    RMD Says:

    Canaccord piece on Wolfcamp oil shale has base case of EUR 350mm boe, 30 day IP of 165boed, cost $3.5mm , 75% revenue interest, pretax PV-10 and IRR of $2.0mm and 22% at $80-5.00. Low case: 280m, best case 450m.
    AREX slides 30-32 and 38 cover their various choices, but a new Wolffork hz they est 353.6m EUR at $3.5mm on slide 38.
    RRC deepened 5 wels to the Strawn and avg.ed 588IP, F&D under $6, 100%IRR in April.
    CPE Wolfberryat JRCO: 100m , $1.5mm, F&D $20.
    PXD Wolfberry 120-150m but can't quickly find cost.
    BRY in 4/10 slide : Spraberry $1.16mm, gross EUR 110m, net 82.3m, $14.06 F&D.
                                 Wolfberry  $1.45mm, 160m, 120m, $12.08
    (gads, I have a lot of notes scattered about.)

  123. 123
    italyinvestor Says:

    oops 40%.  It's almost 1 AM here and i'm beat. 

  124. 124
    tomdavis12 Says:

    Z: APC maybe something on the legal front with BP? Just a stupid guess.

  125. 125
    reefguy Says:

    RRC reporting 400 BOPD Mississippian Ok well.  SD has 300,000 acres in that play.  Wells cost $2.8MM….. 

  126. 126
    zman Says:

    Italy – feel free to drop in anytime with question, do not attempt ZIM or ZCAT trades while hunting, ZLT however should be less of a distraction. If you need anything from Stateside I'd be happy to attempt to organize something. I know my IT guy raised $ for and sent wireless network equipment back in 2009. Just email me at zman@zmansenergybrain.com and we'll see if we get something done. 

  127. 127
    zman Says:

    re 122/124 thanks, that helps, still thumbing through the AREX piece, stock quite resilient. 

    Tom – could be, I've detached myself from the legal yammerings in that mess. 

  128. 128
    choices Says:

    Italy-thanks for the update-I have nothing but admiration and respect for your professionalism and for the grunts who are serving in your command-considering the circumstances and background, it sounds as if you are doing an incredible job-i just hope the body count syndrome does not creep back into use.
    Best of luck to you and your family.

  129. 129
    bill Says:

    >SD has 300,000 acres in that play.  Wells cost $2.8MM…..
    first time ive seen some good news on sd

  130. 130
    BirdsofpreyRcool Says:

    Anadarko Climbs 6% to Near 6-Month High on Jubilee Report
    2010-10-22 15:01:52.397 GMT
     
    By Arie Shapira
    Oct. 22 (Bloomberg) — Anadarko rises as much as 6% to highest since May 6, top performer in SPX Energy; broke above 200-day MA $58.03 yesterday.
    * Options: APC call volume 3.5x avg, call/put ratio 3.9; most
    active contracts (in order) Nov. $60, Dec. $70, Dec. $62.50,
    Nov. $65
    * Earlier, three ppl w/ knowledge of the matter told Bloomberg
    CNOOC, Ghana Nat’l Petroleum made $5b bid to buy Kosmos
    Energy’s assets in Ghana, including Jubilee stake
    * Simmons estimates APC working interest in Jubilee ~25%; says
    news is more confirmation of value potential in West Africa
    * APC hosting 1-on-1 meetings in Boston, hosted by Credit
    Suisse, according to theflyonthewall.com
    * NOTE: APC outperformed E&Ps yesterday, shrugging off Tullow
    Oil’s announcement of Onyina-1 well (between Tweneboa,
    Jubilee) encountering water-bearing reservoirs
    * APC up 34% since Sept. 1 vs EPX up 14%, SPX Energy up 16%
    Story: {NSN LAODEJ6JIJUO <GO>}

  131. 131
    RMD Says:

    italy, 119 says it well. Thank you and God speed.

  132. 132
    bill Says:

    Dsx bought its headquarters bldg from an insider and shares suffered a 5 % loss. Despite that transgression, dsx is looking good at 13.50. cape rates are over 40 k

  133. 133
    redjack Says:

    speaking of flyonthewall, KOG was to meet with Credit Suisse management on Oct 20.

  134. 134
    RMD Says:

    remember these are quesses as Canaccord points out, as of 12/09 there was 1 wel in the Woldcamp, and will be 8 by 12/10, though lots are drilling now or soon.  Early Days.

  135. 135
    RMD Says:

    134 is horizontals.

  136. 136
    italyinvestor Says:

    Choices – big thing here is that we believe that you can't kill your way to success in a counterinsurgency.  All that said, there are some die hards here that will not quit.  They are an obstacle to our progress but still a very deadly and comitted obstacle.  We would rather turn a TB against his former friends or get him to reconcile with the government.  If we cant influence him to do that, we try to get him to quit the field or capture him.  The last thing we want to do is kill.  Unfortunately, we are very close to the birthplace of the taliban (Sangsar and Diwar are 3km south of my current location) and some refuse to quit.  On the other hand we actually had 6 taliban come to our last shura to hear what we were talking about.  Its a start.

  137. 137
    redjack Says:

    Italy…thanks for the update, and mucho thanks to you and your buddies

  138. 138
    zman Says:

    RMD – who in your opinion is doing the best work on the Street in the Bone or Wolf? Canaccord calling the ball here?

  139. 139
    zman Says:

    Salva Veda thirty (best beer in Honduras if you can find it). I wonder what the best beer in Afghanistan is?

  140. 140
    Dman Says:

    #120 thanks BOP

  141. 141
    BirdsofpreyRcool Says:

    Dman — my pleasure. 
     
    Have a great Fall Weekend, all!

  142. 142
    bill Says:

    130 apc
    do they buy out partner pxp in GOM deepwater
    PXP also haspartnered with Shell Oil . I see Shell and APC as possible deepwater buyers..should happen next month

  143. 143
    RMD Says:

    just starting to read wholeCanaccord piece;  lots of background work was done!  But I haven't paid a lot of att'n to Bone Springs  so I don't know.  No one paid any att'n to the Wolfs up until Keybank a few weeks ago, and now Canaccord. BTW, JPM is AREX's banker and still has not uttered a word, but then again their comment on !Q10 was using 9/30/09 numbers so I don't expect much insight.

  144. 144
    bill Says:

    John Harwood doing his best to bolster Harry Reid, kinda like putting lipstick on a pig!
    Have a nice week end, everybody!

  145. 145
    choices Says:

    #136-thanks for the explanation!

  146. 146
    cargocult Says:

    600 Nov NM $5 call contracts traded for $1 today with a share of NM going for 5.94. At the same time 600+ $5 Dec puts traded for .20. What's up? Any thoughts?

  147. 147
    elijahwc Says:

    MHR: Pretty interesting
    http://info.drillinginfo.com/urb/eagleford/operators/2010/10/magnum-hunter-jv-what-can-drillinginfo-tell-us/ 
    Magnum Hunter JV, What Can Drillinginfo Tell Us?
    by csmith on October 19th, 2010

    There has been much discussion about the big Eagle Ford JVs and rightfully so.  Foreign supermajors such as Statoil, Talisman, Reliance and CNOOC buying in and spending BILLIONS combined is exciting news.  However, there also are smaller companies making moves to develop their acreage on much smaller scales.  Take Magnum Hunter for example.
    Magnum Hunter owns 22,864 net acres, much of it in the oil window.  They already have a few AMIs, 29,576 gross acres with Hunt and 2,100 gross acres with EOG, in Gonazales County.  Now they released new information regarding a 3,000 gross acre AMI with an undisclosed, independent E&P company.  The AMI is in Gonzales and Lavaca County.  The two companies will participate 50/50 in at least two wells, the first being the Southern Hunter 1H.
    This got me to thinking, what other information can I glean from Drillinginfo about Magnum Hunter and the other operator?  After all, this is one of the great uses of Drillinginfo, to identify the activity of smaller companies, both public and private that don’t give out as much information as the larger companies.  Lucas Energy is another such company until they recently revamped their website and began disclosing their activites in a more timley basis.
    Well, here is a map I generated from Drillinginfo after some quick digging (about 10 minutes).  This first map shows the Southern Hunter 1H (the first well in this JV) and the surrounding leases.  I am not sure who Energy Horizons is, but they look like a good candidate as the “other” private E&P company in the JV.  Also, maybe Cortez although their acreage doesn’t spill into Lavaca like Energy Horizon’s does.

    Magnum Hunter will spud the second well in this JV about 90 days after the evaluation of the Southern Hunter, according to the press release.  Check back early and often with this blog and the Eagle Ford DNA Unconventional Update.

  148. 148
    elijahwc Says:

    #147 link will display the map
    Also once again, I hear two acquisitions w/one prior to year end.
    Boots on the ground, anyone picking up any vibes about this?????

  149. 149
    crysball Says:

    SANDBAGGING………KOG  SLAMDUNKS  2010  EXIT  RATE OF 2,500 BOPD.
     
    A poster  on  Yahoo  has  pointed  out  the  new  land  aquistion  of  KOG  will be  adjusted  back  to August  1st  2010 as the effective date.
    This means  the 500  bopd  on these   NEWLY ACQUIRED   properties  will be  added  back at the time of  closing [projected in Q42010]………which will more than ensure  an  exit rate for 2010   of  2,500 bopd.
    In effect  the baseline  should be   3,000  bopd……………but who's  counting?
     

  150. 150
    zman Says:

    Crys – no joy there. The rate has to be organic for the Street to care. So if it retroactive the new exit rate will need to be about 3,000 bopd, don't know the decline of that new stuff so if Lynn is smart he'll break the two out. Coming out with a number like an exit rate of 2,900 BOEpd with no further commentary about the base and the new would be a mistake as it makes it look like you missed your target when instead it could have been that the new stuff was just declining normally. My sense is that for the market to be pleased at this point, and here I am thinking just in the short term for trading purposes, that the organic exit rate would need to exceed 3,000 bopd anyway, as the whispers out there are that they will easily best the 2,500 boepd rate. 

  151. 151
    property to rent in spain malaga Says:

    property to rent in spain malaga

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