Merger Tuesday

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Market Sentiment Watch: Slow trading day yesterday continued the recent non-hot out of the gate trend of starting weak and ending strong in energy. Bakken player names continue to ramp production at rates in excess of current Street thinking. Last night's OAS release and the prior day's NOG numbers are examples with BEXP and WLL before that. I expect similar strong guidance from KOG in coming weeks. While natural gas is probably nearer the lows than a near term high I don't believe it is ready for a sustained rally and as such remain heavily weighted towards the oily side.   I do expect a pullback in oil at least to the low $80s on the next equity market swoon / dollar rally but am more than willing to look through the trough on the oily names, perhaps only taking profits in the trading shares in the ZLT. 

Merger Watch: Chevron acquires Atlas (ATLS) for $4.3 B. This is a long life (25+ years) gassy reserves (Marcellus) acquisition. As such we should some follow through on other names in this basin and in the gassy realm as it has gotten cheaper to drill on Wall Street than in the field. More of this to come. Notably, the reserves were valued at over $4 per Mcfe on a proved alone basis, but with infrastructure and a large potential reserves number (13 Tcfe vs 1.02 Tcfe proved) CVX was clearly looking to the future and a large position in a key play. Look for RRC and UPL to see big bumps today and then for all things gassy to get smaller pops all the way from SWN and NFX who have nascent positions in the Marcellus to CHK who is the land king in the play. 

Ecodata Watch:

  • NFIB small business index (last read 89),
  • Job openings (last read 3.2 mm)

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Crack Spread Update
  4. Stuff We Care About Today – NOG, OAS, Bakken $/Ac snapshot, EGLE, SB, GMXR, CRZO
  5. Odds & Ends

Holdings Watch:

  • ZCAT (Zman Catalyst portfolio):
    • $5,100
    • 98% Cash
    • Yesterday’s Trades:
      • None
  • ZIM (Zman Inefficient Markets portfolio)
    • $4,800
    • 0% Cash
    • Yesterday’s Trades:
      • None

Commodity Watch 

Crude oil inched up another $0.21 in quiet trading to close at $87.06 yesterday. I continue to think crude is due for a near term and short lived pullback on the order of 5 to 10%. I will just cut and paste that sentence into next several days of posts.  This morning crude is trading up $0.50.

  • Early Read on Oil Inventories:
    • Crude: UP 1.75 mm barrels
    • Gasoline: DOWN 1.0 mm barrels
    • Distillates: DOWN 2.1 mm barrels

Natural gas rose $0.15 to close at $4.09 yesterday. This morning gas is trading another 6 cents.

  • Early Read On Gas Storage: 28 Bcf Injection. This would take us to a record high. 
  • Tropics Watch: Nada and the hurricane season is winding down. 

Stuff We Care About Today

NOG Wrap

  • Good quarter, good guidance
  • So why did it trail off the early highs pre call and stay down there post call:
    • 1) it's had a good run so a little profit taking isn't out of the realm of normal
    • 2) While the growth rate is good, it is not as high as it has been for the last 3 quarters.
    • 3) In my view, the 30 to 35% sequential growth that we have seen of late would not be a responsible goal to set for the entirety of next year but this is probably what some onlookers would have liked to have seen.
    • 4) There is more upside than down side in the current projection of 170% growth for 2011. This 6,500 BOEpd average for 2011 is largely driven by wells already drilled that have yet to be completed. If 2011 activity is higher than what we have seen in the continually rising rig count of 2010 then there is likely upside to the target.  

OAS Reports Better Than Expected Quarter With Volumes Based Beat; Acquisition and Strong Finish To 2010. 


  • 3Q production came in well above guidance of 4.2 to 5.0 MBOEpd
  • Costs were were on the low end of guidance. 
  • Guidance:
    • 4Q Guidance rises from a prior range of 5.5 to 6.5 MBOEpd to a new range of 6.0 to 7.3 MBOEpd. Note that 300 BOEpd of this addition comes from an acquisition detailed below
    • Cost guidance for 4Q is in line with prior 
    • No 2011 yet. 
  • 5 rigs running - 4 west of the Nesson, 1 east of it, up from 4 rigs total as of the 2Q call and in line with previously disclosed plans. 
  • Acquisition:
    • 16,700 acres and 300 BOEpd acquired for $48 mm
    • Without the production this would still be a pretty good deal at only $2,875 / acre. Take into account the production and picking a reasonable point on a flowing barrels basis and the acquisition comes in just over $1,000 per acre which is where the likes of both KOG and NOG have recently disclosed acreage additions. 
    • This results in a boost to 2010 capex of $58.5 mm or 22% to a new target of $328.5 mm. Note that the capex raise is solely based on the acquisition price + plus cash needed to drill a well there.
    • Where? In their Hebron area which is in Roosevelt County, Montana. 
    • This brings OAS' total Williston acreage to 308,700.
    • On a Market Valuation (TEV/Ac) this puts OAS at $5,800 / acre, which is the low end of the range amongst the Bakken players list (CLR, WLL, BEXP, NOG, KOG, OAS) (see next section).
    • Well highlights: none but we did note a number of nice wells in recent NOG results including one that came off the Confidential list on Monday, east of the Nesson, the Berry 5493 well, with an IP of 2,410 BOEpd on Monday. 
  • Balance Sheet:
    • Still no debt
    • $270 mm in cash


Nutshell: Great quarter, based on better than expected/guided volumes at the top line and lower than expected costs. Going into the quarter I was hesitant to add an options position as I'm still getting used to management's guidance style. My concern was that the top end of their guidance would generate a slight short fall in my model relative to Street estimates. Given that they completely bagged the Street on guidance, besting the top end of their range by 10%, I now have a better idea of what kind of guys we're dealing with. Notably they did not provide 2011 guidance now, as is practice with many E&Ps for their 3Q numbers. I expect them to provide guidance between December and the year end call and am looking for triple digit growth at that time. I continue to hold a half sized position in the ZLT after scaling back twice, and may add an options position and/or a trading shares position to this cheapish looking Bakken player name.  OAS currently trades at 27.4x,  12.2x, and 7.4x current Street CFPS estimates for 2010, 2011 and 2012 respectively and I expect all three of the denominators here to migrate northward in the next few weeks.    

Conference Call: Today, 10:30 am EST

Acreage In The Bakken: A quick, simple look at valuations:

Other Stuff 

EGY Reported Strong Quarter

  • EPS of $0.22 vs $0.19 expected
  • Conference Call: Today, 11 am EST

GMXR Reports 3Q Results ... Swing and A Whiff


  • 3Q came in at 4.65 Bcfe vs guidance of 4.6 Bcfe. 
  • Guidance: None
  • The gas price induced deceleration continues. Currently looking to sublease a third rig and continue one of their subleases so they are moving to a 1 rig program. Frac dates continue to be difficult to obtain which along with lower activity is probably the reason for the lack of guidance.  
  • Reserves:

    • up 24% since year end 2009 to 442.3 Bcfe
    • move is not based on commodity prices but on drilling and new PUD booking rules. 
    • TEV / Reserves moves to a paltry (and probably-too-cheap-to-stick-around-if-the-big-caps-start-hunting-in-gasland-on-Wall-Street) $0.56 / Mcfe
    • Notably their numbers for Haynesville work to date are higher than those of their reserve engineers. They point to this as proof that they are moving in the right direction. I'd say they probably need to take a more conservative read on their well EURs until they can convince the third party engineers to go along for ride. 
    • The 442 Bcfe is however signed off on by Degoyer, which is no slouching reserve firm so I view the reserves mark up in a positive (read credible) light. 
  • Balance Sheet:
    • Net debt to Cap: 36%
    • Cash: $36 mm
  • Hedges: 

    • Second half was about 75% hedged at $6.50
    • New hedges for 2011 and 2012. This is up from 0% hedged recently. Puts are now in place for what looks to be almost all of their production at $6.14 and $6.08. While this looks pretty good at first glance not that they've also sold puts that will reduce the floors substantially should prices remain weak (Below $4.22 and $4.13 in '11 and '12 respectively)
  • Short Interest:  Largest in class at 33% short. 

Nutshell: I don't own it, not yet. I will continue to watch it fall.  Asset value is clearly there but with the drilling program screeching to a halt for now this becomes even less sexy and I'd say let the momentum guys who used own the stock capitulate. Given the low $/Mcfe for the reserves and the relatively low operating expenses here one could see a name like LINE, who has recently voiced an interest in gassy over oily plays begin to snoop around. If I were LINE I'd let them fall by another third. Chart sort of looks bottomy but I'll leave that to JB.  

Conference Call: Today, 11 am EST


EGLE reported a beat

  • The 3Q numbers:

    • Revenue of $72.8 mm vs $63 mm
    • EPS of $0.13 vs $0.08
  • Highlights:
    • Utilization 99.9%
    • Results driven by demand for minor bulks and grain shipping
  • CC: Today, 8:30 am EST


SB Reports Shortfall

  • The 3Q numbers:

    • Revenue of $40.8 mm vs $40.2 mm
    • EPS of $0.33 vs $0.39
  • CC: Today, 9:00 am EST

Odds & Ends 

Analyst Watch:

  • ROSE - Wunderlich ups target from $28 to $35. 
  • RAME - Upped to Outperform at Rodman

190 Responses to “Merger Tuesday”

  1. 1
    zman Says:

    CXPO reports Wednesday AH for a Thursday call. 

  2. 2
    zman Says:

    Please make sure you bookmark the backup site:


  3. 3
    bill Says:

    ng stocks seem poised to soar today. Hh up 5 % pre market
    Is this for reals?

  4. 4
    bill Says:

    soph the ceo of egle sounds like Neidermeyer in Animal House. "is that a PLEDGE PIN"

    I mean that as a compliment, slow, very clear, and consise

  5. 5
    zman Says:

    re 3.  Usually the M&A day pop has little to no follow through. However, we have been expecting M&A to pick up going into year end and with the buyer being a Major the move could have a bit more staying power. I do not think we are at an inflection point in the gassy group yet. I think M&A helps but we'll also hit a record for gas storage this week and gas production has resumed climbing on a monthly basis. So we may be at the low but I'd expect a U shaped moved, not a V. 

  6. 6
    bill Says:

    on ng- returns similar to hatian real estate

    when money managers across the world were looking at the spectrum of YTD returns across global asset classes, right next to Haitian Real Estate they saw NG Futures at -29% in the constant prompt contract, -39% for the DEC 2010 outright.

  7. 7
    bill Says:

    5 agreed, dead cat bounce all you can say about it ..the product is cheap in an inflationary world.
    It won't stay cheap forever as consumers will switch over to the product

  8. 8
    bill Says:

    hk is indicated to open up 7-8 %

  9. 9
    bill Says:

    8 sorry thats a 2 day move

  10. 10
    milepost_43 Says:

    TGA   re-listened to CC to clarify when news may be coming…have noted a couple of questions I have asked IR
    Price still well outside upper BB…$15ish vs $14ish….but should only take a couple of more days for upper BB to meet price…..looking for some consolidation @ +-15ish..maybe into midQ update??….looking at the June calls to be sure to catch Nuqra exploration wells IF we get a more substantial consolidation…
    two presentations coming before midQ update
    Event…………………………………… Date
    The Advisors MoneyShow, Orlando, Florida November 17-19, 2010
    Canaccord Genuity Conference, Miami, Florida Nov. 30 – Dec. 1, 2010
    historical midQ update
    midQ update should come before Dec option expiration on Dec 19. am long Dec and very long Mar calls
    With an additional deeper target on currently drilling Safwa #2 exploration well, wonder if results will be available by midQ update??
    Using Ross' word.."BIG" Yemen basement tests should be available by Feb 1 @ latest.
    2 Nuqra exploration wells are 30 day wells and Ross said results by mid-March.
    If successful, wonder when they will drill the "big" one…Raghama 162MM….if rig is gone to West Gharib…
    Historical reserve report dates

  11. 11
    bill Says:

    Egle talking about moving into coa's and leasing in ships. This adds more risk to their business model. They have maxed out credit line and this provides area for growth. It also adds risk to business model. I'd avoid the name for now..too much debt and rates have weakened and I dont like where they are going.

  12. 12
    zman Says:

    Front and Center Watch

    OAS – headlines calling the quarter mixed. My butt it was. Call at 10:30 EST. 

    EGLE – looks ready to move a bit, let me know if he gives an outlook

    Gassy stocks pre market:

    GMXR up 5% – chart looks like a bottom has formed. I can't get thrilled about them throwing in the drilling towel but it is ripe for being bought.

    HK – also ripe.

    RRC, SWN, and UPL all to run hard.

    Interesting pre open on KOG

    NFX – I'll be punting those $65s today or tomorrow.  

  13. 13
    zman Says:

    GST going back over $4 pre market, talk about gassy. 

    CXPO should get marked up too into earnings on Wed night. 

  14. 14
    zman Says:

    Product Watch: Toshiba Satellite laptop. Thumbs way down. 

  15. 15
    zman Says:

    White House Spill Panel Watch: BP, HAL, RIG all had cultures of complacency. These guys need some prozac. One day they slam HAL, then they say its basically human error, that money didn't compromise safety and that the well design was not flawed and now this comment. Seems to change depending on whether or not the preceding night's media criticized them. Grow a pair, take a stand and stick to it. 

  16. 16
    bill Says:

    im suprised gmxr is up with lousy qtr

  17. 17
    bill Says:

    lol agreed on 15

  18. 18
    mimster90 Says:

    woo hoo ATLS!!!

  19. 19
    zman Says:

    re 16. It's probably the 24% hike to reserves. These guys look to be playing the new proven undeveloped booking rules to the limit or close to it. Remember a year ago when everyone at the big caps said reserves would become less apples to apples with the new rules as some guys booked all they could and others stuck with a more conservative tack. Well here we have a guy booking reserves that they can technically book but he's basically shutting down his drilling program. He's also in disagreement with his 3rd party engineer on the EUR of his wells but this number would be a combo of the two, the company's and D&M's. D&M should be the biggest piece, almost all of it so that makes it more conservative, but the fact that they are booking these at 3Q end isn't exactly what I'd call a conservative take on thing. These are the guys that 2 years ago in presentations told you why their stock should be at $400 … not $4. I may buy it and tuck it away for the day it gets bought as the reserves are apparently there, even if they don't have the balance sheet and cash flow to go after them now. 

  20. 20
    ram Says:

    Congrats mimster90.  Site is the fastest I have ever encountered – like going from a 16 bit to a 64 bit processor.

  21. 21
    BirdsofpreyRcool Says:

    mimster — Good for you!  Now… you have to show us your Happy Dance.  πŸ™‚

  22. 22
    zman Says:

    Decidedly muted pre open indications to oily names. 

    Gassy names continue to vault higher: UPL up 4%, SWN up 3%, RRC who is probably the go to name as Marcellus pick is up 7%. HK is up 3.6% and while they are not in the Marcellus they are extremely gassy and low cost with a strong, long lived portfolio. 

  23. 23
    zman Says:

    Winner Winner Chicken Dinner Watch: Mimster with a free quarter of ZEB. 

  24. 24
    snuhart Says:

    pre mkt HK 18.40-45

  25. 25
    zman Says:

    Ram – you mean this site?

  26. 26
    zman Says:

    White House Spill Panel Watch: BP, HAL, RIG all made egregious mistakes relating to Gulf Spill. Sounds like someone got a phone call from India. 

  27. 27
    mimster90 Says:

    I did a double happy dance since I also own it. Everyone at work thinks I am crazy. The only ATLS they know is the java Atlas library.

    thanks zman for the free quarter. I forgot what the prize was.

  28. 28
    ram Says:

    Uh, yes.  Refresh and moving about the site is lightning fast.

  29. 29
    zman Says:

    Mim90 – No problem, good job. Will have admin go look up when you roll. 


    BEXP tearing higher, through $24. Not even gassy but it loves the smell of mergers in the morning. 

  30. 30
    BirdsofpreyRcool Says:

    #26 — exactly.  Gotta give the Trial Lawyers something to CHEW on.

  31. 31
    zman Says:

    Re 28. Thanks. But we have not made the switch yet. Out of the kindness of their hearts, and only after I told them I was leaving, my host decided to leave me up … at least for the time being until our servers are in a cold, dark room in Austin. Please bookmark that back up site. 

  32. 32
    zman Says:

    CRZO – beat, didn't get to do their earnings, up 11%. Part of that is their small cap stature in the safe old Barnett. 

  33. 33
    zman Says:

    Oil not being left out, just not moving as hard. BEXP and OAS at all time highs. WLL at its 52 week high with an eye on the all time at about 112.

    LINE – wow

    WHX – inching lower 

  34. 34
    mimster90 Says:

    On a tactical note, ignorng taxes, is there any reason not to sell my ATLS holdings at this point? It seems unlikely to me another suitor will offer more for it.

  35. 35
    zman Says:

    BOP – what was the name of that firm you mentioned that picked up coverage of SSN?

  36. 36
    VTZ Says:

    RE: Gold/Silver for anyone who cares. 1420 is the last level of resistance before 1440. At 1440-1445 I expect that there will be a battle and if the bulls succeed I think it will launch us into another wave higher that could take us as high as everyone's end of year/ 6 month targets at 1600-1650 in essentially a straight line (much like the last $250. If the sellers manage to hold the line at 1440 then we are likely to see some consolidation, but at this point I doubt we see any big selloffs, too many people got caught out of the market and have been waiting for a dip since 1224.

  37. 37
    zman Says:

    Mim – to me the question hinges on two things, 1) as you point out, the likelihood of competition (which I'd bet is low too) and 2) the way the deal is paid for and if stock, how likely the buyer is to appreciate.  A few months back I tossed my AEZ after it was acquired by HES since I don't closely follow HES. HES has since moved up and AEZ is probably 15 to 20% higher than where I sold it as the deal is still not closed. So there is that to think about. 

  38. 38
    mimster90 Says:

    The ATLS deal values the acerage at what price in the Marcellus? Is the JV with Reliance adding value to ATLS?

  39. 39
    Fiveanddimer Says:

    VTZ — great earnings from SLW!  One of my favorites also.

  40. 40
    zman Says:


    NFX – Sold half of the NFX Nov $65 call position for $1.90, up 392%, with the stock at $66. 

  41. 41
    zman Says:

    Analyst Watch:

    BEXP – Credit Suisse ups target from $21 to $24 … way to go out on a limb. 

  42. 42
    zman Says:

    MCF reported and I didn't even notice it. Stock banging on all time highs. 

    Revenue was $55mm vs $41 mm exp

    EPS of $1.21 vs $0.84 exp


    Production for the quarter was 102 MMcfepd, which is in line with recent comments by them, and still strong. No call, no ops update. 


  43. 43
    elduque Says:

    Good morning.

    Nat gas on Nov 19, 2009 was at 4.157 — ran up to 6.11 on 1/8/10.


  44. 44
    bill Says:

    lol 42 i didnt see it either. Peak ignores the street

  45. 45
    BirdsofpreyRcool Says:

    EGY just touched $7.00.  Conf call at 11 est today… will be on that.

  46. 46
    bill Says:

    mcf is the only ep company i know thats paying taxes. They should buy sd and turn it around

  47. 47
    zman Says:

    You'll have some seasonal action for sure but the stocks largely discount those moves as they are short lived. 

    re 44. Right, good idea for him so far. Seeing if can kick self in head over the oppy at low $40s I missed there. 

    EGY – nice call, will be on OAS, may be able to catch the Q&A.

  48. 48
    bill Says:

    loe .52
    ga .27
    avg sales price 5.85 without hedges

  49. 49
    Alhambra Says:

    re 36: I know the banks (JPM and C among others) had large shorts on silver… unwinding?   …yeah, tastes like iron, don't it boys

  50. 50
    zman Says:

    HK one of the few names lower on LOE. 

  51. 51
    zman Says:

    re 49, hahaha. 

    Goldman now officially a contra indicator on EOG – Conviction buy at 100, off conviction buy list at 88. Nice job there. 

  52. 52
    zman Says:

    OAS zooming higher now, 6% … you'd think they were gassy looking around today. 

  53. 53
    zman Says:

    Can anyone post notes from the BPZ call at 11 am EST. 

  54. 54
    zman Says:

    GMXR has officially turned into a scoop chart. Not that the two are anything alike but the plan to go to 0 rigs and then rebound activity when prices do reminds me of what PXD did in the Permian.  

  55. 55
    BirdsofpreyRcool Says:

    ATPG — flopping around like a landed fish… until they get their two drilling permits.  Might see those within a week or so… hope to, anyway.  Bummer has actually approved several deepwater wells in last few days… slowly, slowly… but approving, nonetheless.

  56. 56
    zman Says:

    Gassy names slicing up through their 200 day average, HK case in point. Will need to see that hold for a bit for me to think this isn't simply bottoming action and a short term, short lived pop on M&A.

  57. 57
    zman Says:

    BOP – did they say on the call it could be that soon?

  58. 58
    Popeye Says:

    I had to look up LOE and found it means lesbians on ecstacy or lease and operating expense.

  59. 59
    zman Says:

    WHX settling into the typical trade off for several days on the "miss" pattern. Here's to rebuying at $17 or so. 

  60. 60
    BirdsofpreyRcool Says:

    ATPG answer from the call transcript —
    <Q – Stephen Carpell>: Great. A couple other ones – if you look at what your – what you're on oil – where you are on permits, I was a bit confused on the press release. What have you exactly done on Telemark, on the third well, for filing permits, and where are you? What's the status, and what have you received back in terms of response given the safety procedures you've already put in place?
    <A – Leland Tate>: It's Leland again. I'll be a little more broad here on answering the question because it's probably going to coming up several
    times. The permits are problematical for us – for everybody in the industry,
    though I think we're ahead of the curve on the ones that we have. We have
    actually filed the APM, or the permit to drill, if you will, permit to
    modify, with the BOEM. It's been in for a couple of weeks now. It has all of
    the qualifications in it from to NTL5, NTL6, and the new existing rules that
    – existing interim rules that were put out. So we have complied with every
    change, every rule and every change of rules that we know of. And we've been
    – we're working on 10 to 14 days now of that actually being in.
    We're continuing to monitor it and asking, when is it going to get approved?
    What do we need to file in addition? And what we get back from the BOEM is,
    in some cases, silence; in some, we're still working on it. I believe
    personally that the rules are still changing a bit. And so, as a result, it's
    a bit difficult to justify exactly how long it'll take. However, I think
    there's reason to be optimistic because we have a subsea intervention device.
    It's a known reservoir. It is an oil field, and these are surface wellheads
    with fully pressured maintaining risers. So this should be the best of the
    best for them to be able to approve.

  61. 61
    Alhambra Says:

    Are people able to short WHX?  My broker told me he is unable to so

  62. 62
    zman Says:

    Looking around, the gassy name rally is largely a mid cap affair. Micros and single digit midgets are barely budging so far. 

    Popeye – LOL

    Getting on OAS Call

  63. 63
    bill Says:

    nog down on the day

  64. 64
    andy Says:

    61 –  i shorted it at scottrade and merrill-boa    fidelity told me no

  65. 65
    zman Says:

    New OAS Presentation:


  66. 66
    bill Says:

    >And what we get back from the BOEM is,
    in some cases, silence; in some, we're still working on it.
    that gives you a warm and fuzzy

  67. 67
    Popeye Says:

    HK with 7M volume already this am.

  68. 68
    zman Says:

    OAS Notes

    Thinking Montana (Hebron area) will be 400 to 700,000 barrels oil per well EUR (no gas included)

    Contracted a 6th rig to be dedicated to Hebron.

    Well costs are $6.8 to $7.2 mm CWC for a 28 stage well – service costs are moderating despite the fact that the Williston rig count is now 160.

    Confident they will be able to get frac slots to complete their wells in a timely manner.

    Still working on the completion mix (#frac stages, amount of sand etc)

  69. 69
    Alhambra Says:

    Thanks andy… wachovia nixed me

  70. 70
    zman Says:

    OAS Notes 2

    Burke county well – 5 mm pounds sand, 28 stages, completed for $6.2 mm. That's cheap.

    Georgestadt well (west side), near the Angel well, fist 7 day average 1,600 bopd.

    East Nesson wells coming in within in the expected EUR range, better in the mid to southern part of the play.

    36 stage well (Ernst) also done for $6.2 mm (shallower).

    LOE – down due to increased oil production in the Bakken, more efficient than their older Madison well production. So look for this LOE reduction to continue.

    Also some one time charges in G&A for coming public and staffing up to be public.

  71. 71
    zman Says:

    OAS – presenting 2011 review to board in mid December, then will make public. Sounds like a pre Christmas press release for 2011 guidance. Should be in excess of 100% volume growth. 

  72. 72
    zman Says:

    OAS Q&A about to start

    NOG – I may add some more common close to $20.

  73. 73
    VTZ Says:

    RE 49: HSBC and JPM are both going to get sued for manipulation of the markets. A Goldman guy outed them. It's been argued by GATA for a long time.
    Many people have been crying foul but it's even better to see them feeling the pain of their huge shorts.

  74. 74
    BirdsofpreyRcool Says:

    EGY — some companies take their disclaimer comments WAY too seriously.  Bobby G reading the SEC code now….

  75. 75
    zman Says:

    OAS Q&A

    2Q11 – couple of catalyst list items

    1) downspacing test, probably in an adjacent unit but closely spaced to an existing well. This way they get to test infill potential while still working to hold their land.

    2) first Three Forks test. Probably drill 3 to 5 TFS tests next year.

  76. 76
    zman Says:

    OAS Q&A

    Spud to first production is 90 days … same as before. This is what NOG said yesterday. Sounds like BEXP's timeline plus a few days.

  77. 77
    BirdsofpreyRcool Says:

    The hardest part about following EGY is figuring out what their Gabon income tax will be.  Basically, when company is investing in capex for field development, income taxes go down.  When they are just pumping and selling, taxes go up.  It's like depreciation in the U.S., only more complicated.  Just a comment….

  78. 78
    BirdsofpreyRcool Says:

    EGY — commencing a shallow water Gabon seismic program… interesting.  Looking for more bumps.  Must be feeling pretty good about geology and govt outlook.  "Leave no barrel behind!" — EGY's rallying cry, as crys pointed out. 

  79. 79
    zman Says:

    Adding some more HAL exposure in the ZIM with the stock just under $34. I don't need the name to recover back to $36 for that to work. Stock is continuing to shrug of WH Spill Panel comments, staring another strong several quarters in the face.

  80. 80
    zman Says:

    OAS call over, positive tone in line with today's post. Look for a press release with strong guidance in the second half of December.

    Getting on the EGY call.

  81. 81
    BirdsofpreyRcool Says:

    EGY getting together with its offshore Gabon Partners (about 10 parties) to figure out how to proceed.  Keep production capacity at 25k/d, take it to 30k…. 50k…. will get back to us in 1Q11.  So, moving up, just don't know how much yet.  Sounds good.

  82. 82
    BirdsofpreyRcool Says:

    $100mm cash to spend at EGY.  Just a matter of what, when, and how much.  Looking at domestic shale gas plays…

  83. 83
    zman Says:

    ZTRADE – ZIM – HAL – high risk trade

    HAL – Added 30 more HAL $36 November calls for $0.1 with the stock at $33.83. I continue to look for reason regarding the fundamentals to overcome some of the fear of the BP Spill Panel in this name. I don't have to get to $36 for this trade to work.

  84. 84
    BirdsofpreyRcool Says:

    EGY — something to keep in mind… of the $7/share stock price, almost $1.80 of that is cash.  If/when they DO something with that cash, you can put a 3-4 multiple on it…

  85. 85
    zman Says:

    re 82 … just tuned in. Same as last quarter, looking for an acquisition but the wording was almost the same so I get the sense that they are'nt imminent on it. But I missed the first part  of the call .. does it sound any sooner than it did last quarter?

  86. 86
    choices Says:

    EOG Resources, Inc. (NYSE: EOG) (EOG) is scheduled to present on Thursday, November 11, 2010 at 3:35 p.m. Eastern Time at the Bank of America Merrill Lynch Energy Conference. Loren M. Leiker, Senior Executive Vice President, Exploration, will present on behalf of EOG.

  87. 87
    zman Says:

    Thanks Choices, had not yet seen that conference listed. Papa sending Loren as he doesn't want to get hit with a pie I suspect. Lots more conferences at the beginning of December.

  88. 88
    BirdsofpreyRcool Says:

    #85 nope.  No hurry.  Nothing imminent.  Looked at another African play… decided not to.  Cash not burning a hole in their pocket.  Like that.

  89. 89
    BirdsofpreyRcool Says:

    HAL = Investor Day tomorrow, just fyi.

  90. 90
    zman Says:

    re 88… agreed.

    re 89 … yep, 1/2 day, thanks.  I think they get to reiterate a lot of stuff from the 3Q call. NAM to slide next year but not as much as people think and Int'l to continue to turn the corner.

  91. 91
    kaman Says:

    Just logged on and made quick scan of comments…anybody else watching AXAS today?

  92. 92
    ram Says:

    At what price was the HAL options purchased?

  93. 93
    zman Says:

    Typo – should have been $0.18

  94. 94
    zman Says:

    Kaman – not by me, probably by Eli or RMD

  95. 95
    scoop006 Says:


  96. 96
    zman Says:

    re 95. She is busy

  97. 97
    scoop006 Says:

    Hope she is doing well

  98. 98
    zman Says:

    GMXR up 15% now, their call should be over. Chart looking very scoopy. Will listen to replay, not tempted to chase at the moment.

  99. 99
    choices Says:

    Z,do you have a good map of the Bakken to include the Southern Alberta Basin with acreage holdings/drilling activity-ROSE and NFX mentioned in Q3 update.

  100. 100
    zman Says:

    re 97. Agreed, always.

    Other than MCF, gassy rally not translating to offshore gains. Difference is reserve life.

    S&P looks tired. Putting brakes on the group into lunch.


  101. 101
    zman Says:

    Choices – I have something somewhere on that, shows old fields, not sure it has acreage of them displayed, will see what I can dig up. Drilling activity is quite limited in the new play and those are verticals. Lots of well control here though and old oil shows on the way to deeper formations.

  102. 102
    zman Says:

    PETD down 5% today after a strong rise on a good quarter. Canaccord Buy reiteration apparently no help.


    Big volume in HAL of a sudden, big seller, don't see the news yet, probably the spill panel folks.

  103. 103
    elijahwc Says:

    Silly silly prediction.  In the spirt of buying low in order to sell higher one ought be positioning Natty stuff right now.  Particularly the doggie names.  Its a simple case of follow the leader XOM for XTO, CHV for ATLS, China for CHK, Reliance for everybody.  And, as many have given upon maybe a policy change in D.C.  Two things are for certain in my opinion:  These names aren't going out of business no matter how mismanaged as the asset has long dated value if not so currently.  And, if the current commodity' all thing real rally continues then the lagging asset class will come back and outperfom the leaders with a vengeance.  Your names:  CHK GDP SWN HK MHR SD and the concept guys that will attract the mo mos, CLNE WPRT and CIM.  But you have to take the first bite of the apple before the turn. 

  104. 104
    elijahwc Says:

    #99 MUR is sneaking in there big.

  105. 105
    zman Says:

    re 103. JC- how did you get in here again? πŸ˜‰

  106. 106
    zman Says:

    CSPAN2 – conducting a course in hypotheticals on Macondo. Pretty interesting, kind of like science fiction.

  107. 107
    zman Says:

    One of the big reasons I like HAL in the medium and long term:

    Slide 21


    NAM has 25% of the world's unconventional reserves and 75% of the pressure pumping capacity.

  108. 108
    zman Says:

    HAL Watch: Ah, the sell off just after I bought was in response to an EPA subpoena. Story says EPA reached out to 8 service companies who all expect HAL to cooperate with subpoena which is an odd statement. Story says that HAL failed to provide the necessary information related to the Macondo well explosion.  Weird.  

  109. 109
    choices Says:

    #104-thanks, Eli

  110. 110
    elduque Says:

    which one is slide 21?


  111. 111
    choices Says:

    #108-I caught portions of CSpan yesterday-commission is asking BP, HAL, RIG to agree to subpoena-all indicated (obviously) that they needed to go back to superiors to obtain consent-evidently, subpoena power was initially blocked by some Senator(s)-not sure if related.
    Lack of subpoena power was repeatedly mentioned in hearings.

  112. 112
    elduque Says:

    Big reversal in Corn today

  113. 113
    elduque Says:

    Before anyone answers 110, I got the answer it is the one between 20 and 22.

  114. 114
    zman Says:

    Re 110 – slide 21 in the link provided above is a regional breakdown of where unconventional reserves are on the planet. They are largely in Asia, Europe, Australia and South America. And in those plays they are essentially untapped. You need more than rigs to get at them.  You need pressure pumping horsepower to complete these types of wells. In that same presentation, on slide 19, there is a good look at all of the Basins/Plays we talk about and the phenomenal growth we have seen in some of the new ones like 400% growth in Marcellus pressure pumping capacity in just the last 2 years. As the "shale" has become so common place now that some guys in my neighborhood are actually seen sporting "Got Shale?" and "Got Bakken?" t-shirts, so too will you see the same in China, probably in Mandarin.

  115. 115
    choices Says:

    May be of interest:

  116. 116
    zman Says:

    Experiencing some site slowness, backup site is up just in case:


  117. 117
    zman Says:

    Spill panel adjourned for lunch. Me too, back in 30 min.

  118. 118
    elduque Says:

    During the last year we have seen two majors buy nat. gas reserves. I think the major reason is not that they think that nat gas is going to go up. But by using the BOE of 6 units of gas makes up one BOE, it allows them to claim that their reserves are still climbing. It is a cheap way to fudge the books.
    It should mean that a company like CHK is worth a fortune to some major. Also given that SD has lots of reserves, it should make them attractive as well.

  119. 119
    zman Says:

    BOP – can you give me your best near and medium term thoughts on EGY when you get a chance? Cast of catalysts? Thanks.

    MP – Same questions to you on TGA.

    I am close to punting a couple of single digit midgets should they not bear fruit in the next 3 months. One of them is probably going to get tossed this week, making room for a new name.

  120. 120
    BirdsofpreyRcool Says:

    z — in all honesty, crysball runs circles around me on EGY… perhaps we can coax him to help out there… crys…. you game??

  121. 121
    VTZ Says:

    RE 118 – Shell also bought East Resources and is heavily gas weighted. Their CEO has been vocal about NG being the future.

  122. 122
    zman Says:

    re 118 – I think they have long term horizons on gas. With an economic recovery somewhere down the road, I have no doubt we will see $6 and then $8 and $10 natural gas again. Since the reserves in the ground are perhaps not economic at current levels but are at future levels, the buys make since to me. XOM also got a nice addition in the Bakken with that XTO purchase.

    9 year old red healer, free to indestructible home.

  123. 123
    zman Says:

    BOP – way to humble. But Crys, same ? question goes to you.


    LINE has repeatedly voiced comments that gas buys are more attractive than oil right now. Makes sense, especially when your shareholders want you to be an oil company and gas can be had on the cheap.

  124. 124
    zman Says:

    Thanks V. You should market some "Got Gold?" T's, lol.

  125. 125
    zman Says:

    These really do make a great Christmas gift for that brother-in-law that's too cheap to subscribe to this site:


  126. 126
    VTZ Says:

    I should just walk around with a "cash-4-gold" sign or a light up "cash-for-gold" t-shirt.

  127. 127
    bill Says:

    Interesting–lng exports

  128. 128
    redjack Says:

    Z…let the dog chase some cows…that was what he/she was breed for.

  129. 129
    zman Says:

    Too right, cows, cars, pizza delivery guys, small children … a variety of capabilities. 

  130. 130
    zman Says:

    Bill – right, they have reexported a test cargo or two. 

  131. 131
    bill Says:

    and this

  132. 132
    redjack Says:

    I used to have several blue healers…they were great. I had to return one because he wouldn't get out of the bed of the pickup.

  133. 133
    zman Says:

    RJ – I have 2 blues … awesome dogs. This red is a different deal. Good alone but the color is appropriate as he's the devil if in the pack. 

  134. 134
    crysball Says:

    EGY…………More  Agressive Going Forward……increased  production,  increased  reserves,   and    more  development  wells…..with  some large  exploration   upside potential drilling  toward the end of  2011.
    It  just  takes  them  longer   due  to  their  small size.
    On a near-term  [2011] basis,  Bobby  seems  fixed on the  middle case option   of the Etame study to expand   Gabon  Shallow   Offshore    production  on the FPSO  to  the 25,000~35,000 B/D……….even  this  will take   a protracted perod of time  [based on previous  negotiations  with  the  FPSO owner/operator].
    Presently, the FPSO  in nearly maxed out  at  29,200 b/d  offulids [capacity is currently 30,000 b/d fluids and  25,000 b/d of oil] The good  news  is all  the  increased  production  will  be  very low watercut, 
    ~Etame 7-H   is estimated at  4,000 b/d net increase by  late Dec.
    ~S. Tchibala [via Avouma platform]  net  increase of 2,000 b/d by late Dec.
    ~Ebouri   3-H [currently shut -in becasue they lack swichgear  will add  3,000 b/d  by end of Q1 2011.  
    ~They will  throtle backthe high watercut  wells  in Etame   to enable them to  max out the FPSO   at  its current limit  of 25,000 b/d of oil or 30,000 b/d of fluids.   Russ  stated  he  expects a 22,000 to 23,000 b/d exit rate  for   year end 2010 {currently  producing 19,000   to 20,000 b/d }.
    ~The  Etame  study  group   results  [due end of Q1 2011]   need   to be in hand  before  they can finalize    2011  Capex and drilling schedule….which will be back endloaded  to 2nd half of 2011.
    ~In the past  they  sold  their  oil at  about a 50 cent /barrel  discount  to Brent Crude [Rabi light]……..in 2011  they will receive approx. a 50 cent premium  to  Brent Crude[Rabi light] …….That   $1  swiing  goes  straight to the bottom line.
    The stars  seem  to   alinging   for   Vaalco [finally] ……..comments on 2011 drilling   plans  need t o  await  the outcome of  the the December  Omangou exploration well and the  Etame   Study Group Report.
    Thre should be   at  least   3 more   Vaalco  catalysts  ]in December]  prior  to year end:
    ~Etame 7-H goes on production  and  what  the reserve  addition will be…est.  4,000  b/d net prouction [after deducting E-1V  which will be shut down].
    ~South Tschibala well #2  goes  on production….et. 2,000 b/d net addition
    ~Results of drilling   Omangou exploration well.

  135. 135
    redjack Says:

    We lost the female to a rattlesnake.  The family was so upset, I bought another in Kansas and had it flown in the next day. Ah, memories…

  136. 136
    isleworth Says:

    China’s Dagong Global Credit Rating Co. cut its credit rating for the U.S. to A+ from AA because of a Federal Reserve plan to purchase bonds to spur growth and inflation, according to Xinhua News Agency.
    The credit outlook for the U.S. is negative amid deteriorating debt repayment capability and a “drastic” drop in the government’s intention to repay debt, Dagong said, as cited by the state-controlled news agency. The Fed’s quantitative easing policy will erode the value of the dollar and is against the interests of creditors, the company said.
    “Serious defects in the U.S. economy will lead to long- term recession and fundamentally lower national solvency,” Dagong said, as cited by Xinhua.
    Dagong, seeking to become an alternative to Standard & Poor’s Corp., Moody’s Investors Service and Fitch Ratings, ranks China’s debt higher than that of the U.S. and Japan, citing widening deficits in the developed world. Global ratings methodology is “irrational,” Dagong ChairmanGuan Jianzhong said in July, and “cannot truly reflect repayment ability.”
    The credit rating company’s remarks follow those of Chinese government officials, who have expressed concern that quantitative easing will hurt the country’s economy.
    Story ran two hours ago on Bloomberg wire. Mkt seems to be ignoring………

  137. 137
    zman Says:

    BSIC – reports in the next week, want talk to me today as they are in their quiet period (which is pretty much the case all the time by the trickle of news they do let out). So I'll be talking with them post numbers release which I'm assured will have no operational color nor will there be a conference call. This is my most highly speculative play and I honestly have no opinion regarding the quarterly results other than they should make a penny or two of EPS. Whether or not BEXP has spud a well or two on their acreage we will have to wait to talk about after their numbers. If you missed the basic piece on this one you can read it here:


  138. 138
    zman Says:

    re 134. Thanks Much!

    Market taking a header of a sudden.  

    HAL on the tape saying it welcomes any court to look into its good faith effort to comply with EPA requests on frac fluids. 

  139. 139
    zman Says:

    Attempting to averaging down in HAL

  140. 140
    elijahwc Says:

    "It's the first actual case of a direct Atlantic arbitrage that I've seen," one UK gas analyst said.
    Thanks Bill
    The financial angle will eventually make these LNG export markets a feasibility

  141. 141
    zman Says:

    ZTRADE – ZIM – HAL – High Risk Trade

    HAL – Added another (40) HAL $36 calls for $0.08 with the stock at $33.40. Those ones bought earlier should have read bought at $0.18. Same thinking as earlier. 

  142. 142
    tomdavis12 Says:

    Z: Surprising strength for EOG today. See anything?

  143. 143
    zman Says:

    Tom – I see Barclays reiterating outperform. Other than that it is still gassy enough to be considered a takeout name on a day like today and I'd say that it would make a good add to COP or XOM in a pinch. The best fit I can think of would be APC taking them out. APC is not in the Bakken and could use some more US oil exposure, plus it would give them the largest (once combined) position in the Eagle Ford. 

  144. 144
    bill Says:

    I find 136 amusing..shows how much the usa has fallen

  145. 145
    BirdsofpreyRcool Says:

    crys — thank YOU for #134.  You are all over this one!!  πŸ™‚

  146. 146
    Jerome Blank Says:

    HAL…pulling back into what should now act as intraday support, 30 min chart updated, this would be a good spot to try…

  147. 147
    BirdsofpreyRcool Says:

    JB — very timely!  voted.

  148. 148
    Jerome Blank Says:

    EGY resistance zone= $7.25 to $8

  149. 149
    zman Says:

    JB – Voted


  150. 150
    choices Says:

    Director of BOP's BUMMER on CSpan2-says he needs 100 mil for fiscal 2011 to implement reform, new regs, new hires-Graham says to try to get it in increased permitting or leasing fees-Browich says congress not favorable to idea-therefore needs from Fed budget-they are still trying to hire up for permitting, hence delays in permits.

  151. 151
    zman Says:

    GMXR – up 15%. Wow. They should have ground things to a halt sooner.

  152. 152
    zman Says:

    Re 150 – "I'm from the government and I'm here to help"

  153. 153
    choices Says:

    #150 s/b Bromwich

  154. 154
    choices Says:

    Bromwich-a lawyer

  155. 155
    BirdsofpreyRcool Says:

    choices — yeah…. I want $100mm too!  And people think only the Private Sector (and bondholders, of course) are "greedy"??  It's about the money.  Always.  Public, private, U.N., Global Warming, Green Initiatives… always follow the money.  That is the direction of the underlying truth.

  156. 156
    BirdsofpreyRcool Says:

    At least PUBLIC companies have to publish financial reports every 3 months.  Who gets to peruse the $100 MILLION that Bummer wants to spend?  Anyone?  Anyone?  Bueller?  Bueller??

  157. 157
    choices Says:

    Latter part of article relates here-govt has not issued single permit since lifting of moratorium

  158. 158
    zman Says:

    re 157 … which is why its good to be someone like EXXI where they are largely re-entering well bores for recompletes and sidetracks and don't need fresh permits to maintain their current production.

  159. 159
    mimster90 Says:

    Other Buyers?
    “I wouldn’t be surprised to see another buyer emerge,” said Scott Hanold, a Houston-based analyst for RBC Capital Markets. “This values the company at about $9,000 an acre for a Marcellus position. Reliance paid about $14,000 an acre for the joint venture in Atlas’s core holdings. Investors are going to want some more.”
    Hanold rates Atlas Energy a buy and doesn’t own the shares.
    I guess i will hold for now.

  160. 160
    Alhambra Says:

    massive dump in SLW… (loving it, went short this morn) Hedge funds moved into this sector in big way for past 2 months and would not be surprised for fall, at least the 20 EMA. 

  161. 161
    ram Says:

    It seems all metals took a dive at the same time.

  162. 162
    zman Says:

    Welcome to 2 more new members today, please feel free to ask questions and thanks again for subscribing.

  163. 163
    bondbuddha Says:

    Ideas on shorting silver Sr Vtz would be much appreciated

  164. 164
    zman Says:

    We get oil and gas inventories tomorrow along with jobless claims due to Veteran's day being a govt release holiday on Thursday.

  165. 165
    ram Says:

    Quite the reversal today – trend or pause?

  166. 166
    zman Says:

    Feels like PT to me Ram. Big Fed POMO tomorrow, and key data on economy and our group. Maybe we test the 1200 and then 1189 levels. I'll send Nicky a note to see if she can chime in. 

  167. 167
    ram Says:

    Still, it seems coordinated as if GS or someone said boo.

  168. 168
    zman Says:


  169. 169
    jim bob is my jesus Says:

    API's out bullish

  170. 170
    BirdsofpreyRcool Says:

    eep, EEP!  A secondary!!

  171. 171
    jim bob is my jesus Says:

    API reports crude inventories (7.398M) vs. Reuters +1.4M

    distillate inventories (3.995M) vs. Reuters (1.9M)
    gasoline inventories (3.448M) vs. Reuters (800K)

  172. 172
    BirdsofpreyRcool Says:

    U.S. Crude Oil Supplies Plunged Last Week, API Report Shows
    2010-11-09 21:34:37.730 GMT
    By Margot Habiby
    Nov. 9 (Bloomberg) — Crude oil inventories plunged 7.4 million barrels to 360.2 million, the American Petroleum Institute said today.
    Gasoline inventories dropped 3.45 million barrels to 216.3 million, the report showed.
    The Energy Department is scheduled to release its inventory report tomorrow at 10:30 a.m. in Washington.
    Analysts forecast that the government report will show stockpiles of crude oil increased 1.5 million barrels, according to the median of 15 responses in a Bloomberg News survey.
    Gasoline inventories probably fell 1 million barrels from the previous week.
    Oil-supply totals from the API and DOE have moved in the same direction 75 percent of the time over the past four years, according to data compiled by Bloomberg.
    API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
    Oil for December delivery fell 60 cents, or 0.7 percent, to
    $86.46 a barrel at 4:31 p.m. in electronic trading on the New York Mercantile Exchange. The contract traded at $85.87 before release of the report at 4:30 p.m.

  173. 173
    Dman Says:

    Silver stocks had been going up 10% per day for about a week. A lotta hot money only just discovered that silver exists… perfect conditions for a correction.
    BOP # 155:  The basic principles of global warming were discovered about a century ago before research grants even existed. Predictions made 30 years ago (that recently proved correct) about the Antarctic  ice shelves  were made before the issue had any political or financial footprint whatsoever.
    During the cold war, the Defense Dept spent billions on all sorts of research. Some of it let to the creation of the internet. So according to "follow the money", the military were conspiring  40 years ago to create Google.

  174. 174
    zman Says:

    Thanks JBIMJ

  175. 175
    zman Says:

    If you are new to the site (or just don't listen to me when I post this) please make sure to bookmark the back up site:


    Should this site become unavailable we will be over there. 

  176. 176
    BirdsofpreyRcool Says:

    Dman — never said "good research" could not be turned into Politial Control and Capital Capture.  Most govt agencies start out with "good intentions."  But money and power and money corrupt.  Just look at the U.N. Panel on global warming… or ANY U.N. Panel, for that matter.  What started out as a noble endeavor… well… 'nuff said.

  177. 177
    BirdsofpreyRcool Says:

    TAT delays filing 10-Q, citing Amity Deal.  ugh.

  178. 178
    VTZ Says:

    If you wanted to short silver you could use SLV, SLW just had good numbers so they might not have any good news in a while…
    My advice is of course not to short it but then again I'm talking my book and I'm also aware that silver just broke out of a 30 year consolidation cup. You are probably going to be short for the weak hand profit taking but make sure you get out after you make your pennies per oz because I'm going to be making dollars for a long time yet.

  179. 179
    Jerome Blank Says:

    HAL, intraday follow-up…slipped under the first channel support area, but held at the 200 period,  the intraday chart still looks good going into tomorrow…

  180. 180
    zman Says:

    Thanks again JB. Strong work on top of your day job 😎

  181. 181
    Nicky Says:

    Good evening!  Apologies for not updating for several days –  I hate to be so unreliable but its just circumstances at the moment.  I should be back a little more often starting next week….
    Meantime this is what I am looking at.  I think we are working an an abc wave correction for wave iv.  Today we completed or are close to completing wave a, (maximum downside should be about 1205), then we bounce tomorrow for wave b to around 1219 – 1222, then down to between 1187 – 1196 for c.  Then its back to the upside for new highs in wave v.
    There is a more bullish count which in fact says the low is in or almost in and we go straight up to new highs over the next couple of days.  What argues in favor of this count is the fact that we did not appear to complete five waves up today to the new high.  It looked like three.  If the bullish count is to play out then we are going to know about it pretty quickly tomorrow.
    Yes there is a more bearish count but it does not fit with the cycles so I won't comment on it yet.

  182. 182
    zman Says:

    Nicky – never apologize, thanks so much, best to you.

  183. 183
    Alhambra Says:

    VTZ- I agree with you and my little money going short is temporary. Thanks Nicky and all

  184. 184
    RMD Says:

    Items of interest from APA conf call:
    Leo Mariani – RBC Capital Markets Corporation
    I just wanted to get a sense on the Permian. Kind of where you guys thought you were in terms of evaluating some of these new horizontal plays out There. Is Kind of early days for you? Have you done some test wells? Can you give us a sense of kind of where you are there?
    John Crum
    Well, I gave you a few examples of some things we've done and I think, we have tested eight different horizons out there with horizontal wells already this year. And we're finding some interesting results. I got to tell you, I'm not ready to share all of that information because was obviously some of that's critical as we gather up acreage around our successes. But we have had good results we've shared with you, a somewhat surprising benefit horizontal in these old water plugs. We'll just continue to be amazed. We're drilling wells that come in at 400 barrels a day on fields that have been 60, 70 years old and had been water flooded and on 10-acre spacing. So we think the potential for horizontal drilling in the Permian is just unbelievable, really.
    I have been wondering why RBC got on the cover of AREX's deal.  My salesman has never heard the name.  Maybe the above has something to do with it?
    On LNG:LNG, for us, means the monetization of large North American gas resources at oil length prices.

  185. 185
    zman Says:

    RMD – I used to work with Leo. Smart, aggressive analyst who can move a stock. Ex banker too.

  186. 186
    RMD Says:

    His written work has not impressed me, nor has his color commentary.  Maybe he is a great Investment Banker's analyst?

  187. 187
    zman Says:

    His modeling is solid and he generally asks good questions. Does he officially cover AREX yet?

  188. 188
    RMD Says:

    Not yet.  Still I best I see on AREX is Key.  Tudor put a sell on it today, but have not seen reasoning.  I remember West (I think) syaing that if PXD succeeded with water floods in the Permian the results would be "staggering".  I think the stars are aligned for AREX, but talking my book.  Expecting some facts tomorrow.

  189. 189
    VTZ Says:

    I will agree that today could have been a blow off top in silver the more I look at the close, but consolidation is all thats coming, then watch out.

  190. 190
    scoop006 Says:

    Nickey; Thank you for your commentary #181

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