10
Nov

Thursday – Oil and Natural Gas Inventory Reviews

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Market Sentiment Watch: It's Veteran's Day which means the bond market is closed, there are no economic data releases, and stocks are probably in for a quiet day. Thanks much to all our veterans out there. This morning equity futures are being negatively impacted by CSCO's weak forecast.  My sense is that the market is due for a pause but would note that Nicky's comments re the 1205 level are still intact. 

Housekeeping Watch: Our new servers arrived yesterday and we are in the process of getting a test site up and running. I do not know if or how long we will be down or if the transition will simply occur quietly over the weekend. In the meantime, if this site goes down, please refer to the backup site:

www.zmanbackup.wordpress.com

If we're not here, we're there.

In today's post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Inventory Preview
  4. Stuff  We Care About Today – CXPO
  5. Odds & Ends

Holdings Watch:

ZCAT (Zman Catalyst portfolio):

  • $5,100
  • 98% Cash
  • Yesterday’s Trades: None

ZIM (Zman Inefficient Markets portfolio)

  • $6,400
  • 1% Cash
  • Yesterday’s Trades: None

Commodity Watch

Crude oil rallied $1.09 to close at $87.81 yesterday, a 2 year high and a base break out on the weekly chart, after the EIA reported a bullish looking inventory report (see Oil Inventory Review below). This morning crude is trading up slightly.

  • China Watch: Chinese oil demand hits record high, up 12% YoY in October to 8.92 mm bopd. Production also hit a record but is well short of demand at 4.18 mm bopd.

Natural gas closed off 4% at $4.05 despite EIA reporting a smaller than expected injection to storage. Perhaps the rollover occurred due to traders noting that gas in storage is now at record levels. This morning gas is trading up slightly.

  • Tropics Watch: Nada.

Natural Gas Review

ZComment: Smaller than expected injection still results in new peak level for natural gas storage.Gas initially moved higher on the smaller injection but the euphoria was short lived as traders noted that "oh yeah, this is the most gas we've ever had in storage. Ever. Meanwhile production is at record levels as well. While some parts of demand appear to be recovering in the industrial space, more than full storage should make for a squishy winter, especially since the forecasts are still calling for a mild one. 

 

Oil Inventories Review


ZComment: Bullish.  Bigger than anticipated inventory declines generally make bulls happy. The crude number was largely a function of another dip in imports. The real story of the last few weeks has been the marked improvement in distillate demand which has eroded bloated distillate inventories to levels that are now 5% below year ago stocks and only 15% above the five year average for this week of the month. I suspect exports are ticking up again but EIA data on exports is lagged and remains flat. My somewhat anecdotal read on trucks on the road continues to point to a recovery in diesel consumption as well. While products are not out of the woods yet their continued move towards and into YoY deficit territory is likely to support RBOB and HO pricing which will help support crude. I continue to think however that the recent move in crude is a bit "too far too fast" and that we will see short lived but sharp profit taking prior to year end. My year end target, which is a pretty meaningless one to have but I get emails so I might as well spill it, is $90.

Stuff  We Care About Today

CXPO Reported OK Quarter

Highlights:

  • Comments on the quarter:
    • Basically in line on the bottom line, top line slightly short ... the effect of them coming in light to Street expectations.
    • They missed my 40 MMcfepd number but I don't know where the Street was at for an average but it would make sense that it too was slightly higher than the 36.8 MMcfepd number they reported
    • Costs were in line
  • Guidance:
    • 4Q guidance is set at 40 to 43MMcfepd
    • Management commented that October average production was 42.4 MMcfepd
      • Triangulating on 4Q volumes:
        • 2 more mid Bossier San Augustine County wells due on production at the end of November, the Gobi #1 (70% WI) and the Halbert Trust #1 (29% WI). Assuming gross production of 10 MMcfepd apiece that should add at least another 8 MMcfepd net.
        • So October was 42.4 MMcfepd,
        • November would see declines of maybe 3 to 5% so call that month 41 MMcfepd
        • And December sees another 8 MMcfepd bump from the two wells so call it 47 as they are going to be only slightly declining in the first month as they will be produced on restricted choke.
        • Leaving us with 4Q volumes of 44 MMcfepd, ever so slightly higher than their guidance. For conservatism and assuming not everything goes as planned I'd be within their 4Q numbers if I were publishing estimates for a bank.
        • Note that this is lower than the 50 MMcfepd I was looking for yesterday. I don't get too worked up about things like that with the little names. First, I wasn't being all that conservative here and had modeled a couple more wells as onstream by now than currently are. I also put a little wedge in December for an Eagle Ford well which just isn't going to happen now. To me, that little bit of slippage is not a big deal. Doesn't mean I won't sell either as I'm not overly enamored with this story other than from a "little guy turns the corner on production and may have some Eagle Ford and Niobrara upside" angle. So I may sell but not until I hear the conference call and I would still keep an eye on it for the upcoming catalysts. .
  • Other Operations:
    • Mid -Bossier - another well scheduled for completion at year end
    • Eagle Ford - both Bee County, HK operated Eagle Ford Shale tests are at total depth. First is a mid December planned completion with first sales around New Year's. Second is on track to be completed mid to late January. The waiting game for Eagle Ford results continues.
    • Niobrara- Not mentioned.  Look for questions regarding the plans for their 12,000 net acre position on the call
  • Other - no new color on why a private investor paid $5 for a sub $3 stock. Expect questions about what they saw that made them chose to pay so much for a board seat.

Nutshell: OK, not great numbers. But this isn't really a numbers story just yet, it's a turning the corner story and that they seem to be doing with a number of near terms drilling catalysts in the next 6 to 10 weeks to boot. In the very near term I'd call it dead money until then but color on the call will help to determine if that description is appropriate.

Conference Call:  Today, 10:30 am EST

Other Stuff:

  • Bank of America Energy  Conference today and tomorrow. I don't have a full schedule at this point but will be listening to some presentations later in the day including EOG.
  • Secondary Watch: AREX completed an upsized offering last night, SFY announced one to fund capex, look for more of this activity across much of the group as move closer to year end.

Odds & Ends

Analyst Watch:

  • BEXP - Jefferies raises target from $20 to $32.
  • HAL - FBR maintains Neutral
  • NFX - Ticonderoga ups target from $65 to $75, maintains Buy rating
  • PETD - Stifel raises target from $38 to $45

158 Responses to “Thursday – Oil and Natural Gas Inventory Reviews”

  1. 1
    bill Says:

    disaster of the day in shipping is anw. Look like it will open down 6.50 40 % on a 25 c earning miss
     
    ccall going on now
     
    http://phx.corporate-ir.net/phoenix.zhtml?c=195297&p=irol-eventDetails&EventId=3478117&WebCastId=1059269&StreamId=1585153
     
    6.50 down move is ridiculous imho on a 25 cent miss

  2. 2
    zman Says:

    Thanks Bill. I guess if they care a 20+ forward multiple it makes some sense but yeah, seems like a big blast. When you get a chance would you mind summarizing your current thinking on the bulks? 

  3. 3
    bill Says:

    My feeling on the bulkers is mostly driven by bulker rates. Bulker rates are lower and new deliveries are happening day after day adding supply to an already well supplied market. Given that, I'm cautious to negative. I'm selling all my bulker holdings. I have a little dsx left that i well sell by Monday.
    I still like DSX an NM in the sector and Balt if rates improve.

    Id sell over levered names including EGLE who will have some balance sheet issues next year as they need permanent and higher cost financing for its fleet

  4. 4
    bill Says:

    Back to anw. They were at last 25 qtr and suffered a 40 % drop to 15 with a miss so this is the 2nd slap to the head.
    The qa should be fun, Peter the ceo gets kinda arrogant at questions, lol, which doesnt help.

  5. 5
    bill Says:

    Looks like a 7 dollar drop, WOW almost 50 %

  6. 6
    ram Says:

    ZMAN – Can you add the U.S. consumption of oil on top of the Chinese in the first graph?

  7. 7
    elijahwc Says:

    TRGL / HES Watch:  Paris Basin kicks in as TRGL announced that partner, Hess  has arranged for the provision of drilling and related services for the initial six firm wells targeting the Liassic shale oil source rock system. The first well in the series  is forecast to be spud in January 2011.  HES picks up the tab for these six.

  8. 8
    bill Says:

    Anw blame pricing problem on excess supply of bunker fuels as refineries are producing lower quality "residuals". Does that make sense?

  9. 9
    elijahwc Says:

    MHR – Pritchard sums up last nights EPS announcement along these lines:
     
    "MHR reported adjusted EPS of ($0.02) vs. PCP’s ($0.03) and consensus ($0.04). The company did not give production results and plans to discuss Q3 production during the conference call, we are modeling ~1.795 MBoe/d (66% liquids). As of November 10, 2010, MHR had approximately $22 million of liquidity and believes it has adequate resources to fund its remaining 2010 capex budget. The company’s first operated EF well in Gonzales County, TX IP’d at 605 Boe/d and after ~30 days is producing at 398 Boe/d. MHR currently estimates the well’s EUR to be ~362 MBoe. The company’s 2nd well in Gonzales County is currently drilling and is scheduled to frac in early December while a 3rd well was just recently spud. MHR also successfully drilled 2 EF wells in Atascosa County, TX. One well was completed with 15 frac stages and while it continues to clean up is producing 188 Boe/d and 1008 Bbls/d of load water. The company expects the well to IP in the 500 Boe/d range. The second well is currently completing a 14 stage frac and MHR anticipates having the well on production on or before November 20, 2010. MHR has ~23,704 net acres in the EF and is actively leasing additional acreage as well as evaluating JV opportunities. MHR plans to have 4 EF wells on production by YE 2010 and drill a minimum of 15 wells in 2011. "

  10. 10
    elijahwc Says:

    ATPG – Pritchard also raising PT from $18 to $20

  11. 11
    elijahwc Says:

    MMR – Will have an additional 10.7 million shares out as a result of the 'mandatory conversion" of its 6 3/4% come Monday.

  12. 12
    bill Says:

    2 & 3
    One company I like (not bulkers) is a small lng shipping company GASS. Assets are worth 10 or more and the stock is in the 4's. i own that one..they report next week and i expect better earnings

  13. 13
    zman Says:

    6 – added to post

    8 – yes I think so, given residuals are in the distillate category and been overstocked for some time now, not sure about the "quality" part of the comment though as I don't track that.

    11 – thanks, was just about to mention.

    SSN small buyer before the bell is giving a boost. Haven't seen much pre bel action in awhile but they are due for an operations update (just Bakken) in the next several days. Also expect to hear about Niobrara 3D ongoing 3D shoot, potentially a JV there and added acreage in the Bakken.

  14. 14
    zman Says:

    CLNE priced 3mm shares at $13.25. If they keep doing things to make their stock fall I may actually buy some.

  15. 15
    zman Says:

    Re 12 – thanks much. LNG business very active despite the lack of volumes coming to U.S. shores.

  16. 16
    ram Says:

    Thank you very much.

  17. 17
    zmaw Says:

    If you are new to the site please let us know how you heard about us by sending an email to zmanadmin@gmail.com. Thanks.

    Ram – no problem, meant to include, got lazy.

  18. 18
    ram Says:

    Did GS reiterate or move up PT on HAL to $42?

  19. 19
    BirdsofpreyRcool Says:

    z — I see your CXPO write-up got posted on Seeking Alpha.  It was a good analysis.  Might be more ears on the conf call this morning… it's all about the forward guidance and well-completion schedule.

  20. 20
    bill Says:

    cxpo 3.35 bid- 3.54 ask so it doesn't look too bad with market set to open 65 down on the dow

  21. 21
    BirdsofpreyRcool Says:

    GS upped their PT on HAL from $40 –> $42

  22. 22
    tomdavis12 Says:

    CSFB went to $50/sh for HAL

  23. 23
    ram Says:

    So, in the last 20 years the oil consumption in the U.S. has gone up by 10% while the Chinese consumption has gone up 350%.

  24. 24
    zman Says:

    re 21, 22. Thanks much. As long as GS didn't put it on the comically named "Conviction Buy List" I guess I'm OK with it.

    Re 19 – Didn't see that it made the cut, thanks.

  25. 25
    bill Says:

    cxpo opened at 3.74 wow

  26. 26
    zman Says:

    Re 23 – something like that although those figures are what EIA calls "petroleum" which includes everything from gasoline to jet fuel. You can see the recessions impact on US consumption. Reason we have high oil prices now is quite simply the thought that with China at new highs, any recovery in the US/Europe + 2nd world will outstrip OPEC/Russia/Canada/Mexico/Brazil/Europe/US ability to supply it.

  27. 27
    zman Says:

    re 25 – yeah, a bit surprised by that. Call there in an hour.

  28. 28
    zman Says:

    HAL up a nickel, surprised given the market, could work into one of those "strong gets stronger" days should the market bounce into the close in front of tomorrow's Fed buys.

  29. 29
    bill Says:

    oil and ng stocks even or up with down down 90

  30. 30
    zman Says:

    S&P at 1207, eying Nicky's 1205 level. Held it beautifully yesterday. Here comments from yesterday's post:

    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.

  31. 31
    zman Says:

    OAS back through $24 and approaching its all time high. So much for all those downgrades, lol. I continue to own my half position in the ZLT.

    Analyst Watch:WLL – Credit Suisse bumps target from $100 to $111. Um, almost there fellas. I continue to own a full position there in the ZLT but am not opposed to adding a trading position on top of that on the next big bad market red day.

  32. 32
    zman Says:

    HAL on the move, just cresting $35. Watching closely for an exit on the $36 strike November calls in the ZIM

     

  33. 33
    john11 Says:

    AREX…wow

  34. 34
    zman Says:

    re 33. No kidding. Missed that one, at least for now. Nice call RMD. 

  35. 35
    crysball Says:

    Canadian Baaken
    Here  is an interesting  (and well don) analysis  by Macquaire  of  the Canadian Baaken for those interested  in identifying first movers.
    http://resourceinvestingnews.com/files/2010/06/Macquarie-Equities-Research.pdf
    p.s  continue  to accumulate   SSN.
    p.p.s. AREX  is flying……….any reason?

  36. 36
    zman Says:

    re 35. Thanks.

    BEXP at $25. Continuing to hold a full position in the ZLT. Eying a sale of those trading shares picked up at $21.19  a couple of weeks back.

  37. 37
    jiveyjr Says:

    BEXP got legs a few mins ago

  38. 38
    ram Says:

    JB, there is a blue dotted line and a tan area on a HAL chart about where the price is now – resistance or something else?

  39. 39
    zman Says:

    Jivey – that would be Subash Chandra at Jefco pounding his $32 pt on it. 

  40. 40
    Jerome Blank Says:

    #38, ram…near term resistance, added new 30 min chart…

  41. 41
    BirdsofpreyRcool Says:

    HT saying that a "boutique firm" suggests swapping HAL for KEG. 

  42. 42
    zman Says:

    Thanks for swooping in JB, most helpful. One thing I have trouble with here is headline risk in the immediate term, be it out of the White House or EPA. Good if you like the stock long term as a buy oppy but tough on options. 

    CXPO call about to start. 

  43. 43
    zman Says:

    CXPO call a dial in …. so 20th century.

    Those interested in participating in the earnings conference call may do so by calling the following phone number: (800) 768-6544, (International (785) 830-7990) and entering the following participation code 7755984.

  44. 44
    ram Says:

    Thanks JB.  If HAL does overcome the forces of this "boutique firms" selling pressure and breaks resistance, is there a price objective?

  45. 45
    zman Says:

    Bakkens running hard (BEXP, KOG, OAS, WLL, all but NOG which is just flat and has had a good run). Also pricier name CLR not really running. 

  46. 46
    zman Says:

    re 41. Probably not a bad idea to generate commish. Wonder if they listened to the analyst day yesterday and didn't like the coolaid. 

  47. 47
    zman Says:

    re 41, did he happen to say which bucket shop boutique it was?

  48. 48
    BirdsofpreyRcool Says:

    Buckingham. 
     
    who??

  49. 49
    BirdsofpreyRcool Says:

    Seeing the comments now… Bucky is thinking that HAL may make a bid for KEG, based on what they heard at I-Day yes'day.

  50. 50
    zman Says:

    CXPO Notes

    Gobi #1 – 70% WI – currently being completed mid Bossier, on prod mid November

    Halbert Trust #1 – 29% WI – flow to sales soon

    both will be restricted rate wells (eye towards max EUR)

    Bengal, Blue, Kodiak wells on the way, first by year end, then mid 1Q complete and Kodiak well  – this should be Sabine county.

    EFS Update – 

    20% working interest in both wells operated by HK. First well should have prod early Jan, then the other follows with prod in Feb.

    Capex Strategy:

    Focused on finalizing 2011 capital program, should have it out in the "very near term"

    Want to hold leases in E. Texas but also want to prove up reserves in EFS and Niobrara and the Madisonville area.

  51. 51
    zman Says:

    I think HAL may make a bid for CLB based on what I heard at I-day. 

  52. 52
    choices Says:

    #35-excellent report, Crys-thanks!

  53. 53
    zman Says:

    CXPO Notes 2

    Chinese investor watch: worked with them for over a year, started as looking at a JV in some unconventional opportunities. The investors got excited about the whole company instead, hence the investment. 

    Moving into the financials….

  54. 54
    zman Says:

    MMR free to move about the cabin after conversion news hit. 

  55. 55
    zman Says:

    OAS going for $25. 

  56. 56
    zman Says:

    CXPO Notes 3

    52% oil liquids 4Q hedged at $83

    Missed the gas number but it was high

    Current quarter G&A took the whole year's bonus into account, about $700K high, Bill I saw you note this last night, that's part of why it looked bloated, still a bit high if you ask me on a $/MCfe basis but perhaps they grow into that.

    $27 mm out under their revolver, leaves $68 mm of availability. Redetermination in November, thinking it will be very close to the current one now … in other words, it's going to fall slightly.

    Q&A about to start… 

  57. 57
    zman Says:

    CXPO 

    Rodman ? – Looking at 2011, what's plan with Niobrara and oily EFS? 

    Answer: Be active in the Eagle Ford (Karnes County will get at least one well), then Zavalla County (that's HK's Red Hawk) 

    They may sell down interest

    Niobrara plan – checking into rig and equipment access up there. … sounds like they are looking to drill a well but he didn't confirm that. He did not mention monetizing their land. 

  58. 58
    zman Says:

    CXPO Q&A 2

    East Texas formation ?

    Woodbine focus, lot of smaller names are seeing good success there. 

    Reef – did you say CHK's next big thing was Woodbine? 

  59. 59
    elijahwc Says:

    #35 – thx Crys
    MUR & REXX mentioned in Macquarie Research as active

  60. 60
    bill Says:

    56 gas hedged about 48 % in q4 at 7.78 next year lower volumes @ 7.32 so margins compress next year

  61. 61
    zman Says:

    Analyst Watch:

    HAL – Canaccord reiterates Buy rating, $45 PT, everyone is talking up HAL deserving multiple expansion towards a more SLB like forward multiple. A number of sellsiders brushing off Macondo concerns as overdone. 

  62. 62
    bill Says:

    cxpo filed their 10 q already
     
    http://phx.corporate-ir.net/phoenix.zhtml?c=205282&p=irol-SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDA4MTM3NzktMTAtMDAwMDQzL3htbA%3d%3d

  63. 63
    zman Says:

    re 60 – thanks. I think I am a holder for another 6 to 10 weeks here based on what I am hearing but I may sell half up here. They have a number of wells to talk about just around year end  and before that, their budget and just maybe some guidance. 

  64. 64
    irongate Says:

    re 3, Bill… love the depth of your summary here.   just curious…
    considering that BALT  is esentially debt free (post offering),  would it not make a good paired trade against EGLE (short)…?
      my thinking is that overcapacity is going to compress charter rates… in this scenario… only the UNLEVERED players will have positive margins…. while the over-levered names will see their margins disappear… in fact to the point of BK.  Thus by the time the cycle turns… the only players left will be unlevered guys like BALT who could have some pricing power.   

  65. 65
    zman Says:

    Email from Reef confirms that Woodbine is what will be CHK's next to be announced mystery oil play. Hmmm. 

  66. 66
    bill Says:

    they are paying a high rate for 150 m (over 10 %) Wondering out loud if this can be refinanced
     
    >We also maintain a second lien credit agreement dated May 8, 2007 (the “Second Lien Credit Agreement”) with our lenders, including an affiliate of OCM GW Holdings, LLC (“Oaktree Holdings”), our largest stockholder.  The Second Lien Credit Agreement provides for a maximum loan amount of $150 million which we borrowed in a single draw
    Is there a market for small cap debt , BOP

  67. 67
    BirdsofpreyRcool Says:

    bill #66 — don't understand the question.  "Small cap" refers to equity?  Or TEV?  Or size of the debt issue? 

  68. 68
    zman Says:

     

    IG – got thoughts on the equity markets willingness to front run tomorrow's POMO later today?

    CXPO – talking flat costs from last quarter in east Texas. It is interesting to hear that from them but also from others this quarter when you also hear how tight the market has gotten for frac equipment.

    CXPO – tone of call is positive, analysts sound pretty satisfied that they are turning the corner. Buysiders on a name like this always sound happy after a move like yesterday so I highly discount their softball questions and back patting.  

  69. 69
    bill Says:

    64 Thanks. i dont like to short but if I were into paired trades I like your approach. That would be a good trade long balt or dsx and short egle or some other name.
    On the tanker side, Nat is like Balt and its price, while down, has held up pretty well against the other more levered names.
    Egle needs to raise some cash and they will be quick to issue stock if the price gets to 7 or 8

  70. 70
    bill Says:

    67 sorry , "Small cap" a  teeny weeny company like cxpo is relying on shareholders for financing and paying a pretty penny. Is there room ie interest for a conv pref offering from cxpo that would/could be priced like 5 to 6 % rate, (rather than 11% from insiders for straight debt)?
    Cxpo debt cost seems high to me given how much money is floating around

  71. 71
    zman Says:

    Bill – what, EBITDA / Interest ratio (TIE ratio) of 3 bugs ya, LOL?  It is somewhat tight to be sure. Of course, as BOP often says, you want the debted up names when gas does rise. 

  72. 72
    zman Says:

    HAL attempting to fight higher, still watching close. Smart move for me would be to punt calls acquired yesterday at $0.18 and $0.18 for $0.50. 

  73. 73
    RMD Says:

    64 which counties are the Woodbine in?

  74. 74
    bill Says:

    71
    II guess what im getting at , has the risk profile changed enough to reposition the debt to achieve a lower rate. Someone likes them at 5. Maybe, Im a year too early and the hedges will roll off ,so maybe the risk is the same or worse now

  75. 75
    RMD Says:

    opps 65.

  76. 76
    cargocult Says:

    Tell me again why ROSE is a hold?

  77. 77
    BirdsofpreyRcool Says:

    bill — CXPO is in a bit of an odd position, wrt it's cap structure.  Their largest shareholder (Oaktree) is also their largest lender ($150mm 2nd liens).  It makes more sense for CXPO to replace 2nd lien debt with senior unsecured public notes, at some point.  $150mm can be done in the bank loan mrkt… or, they can wait a bit, grow the company, then do a $200+mm high yield offering, when the 2nd lien matures in May 2012.  Until then, Oaktree (as equity holder AND 2nd lien lender) has no incentive to replace their debt.  It's a good deal for Oaktree.
     
    I don't know how Oaktree got the CXPO assets… would not surprise me if they came by them in a b/k situation.  11% debt is the price you pay, to work your way out from under a situation like that.  At some point, it will be refinanced.  Don't know the early retirement covenants… maybe CXPO can't replace the 2nd liens until they mature.  Oaktree is clearly in charge here. 

  78. 78
    RMD Says:

    on conf. calls so late on scuttlebutt on AREX:
    deal focused attn on co. who had paid NO attn before;  homework came back very positive on Qingming Yang (head geologist), much better than the "he's smart " read I'd gotten.
    way lowballing 25% production increase guidance for '11.
    fraced John Ely well last weekend with new technique, results pending.
    comments from other cos on Permian (like APA's) excellent, focus att'n on few small cap plays available.
    vertical recompletes big IRR, don't really need horizontals–though hz's are mostly what the St. asks about.
    Deep Throat got all the stock he wanted, I got shut out; (shows where I rate but I'm used to that).

  79. 79
    bill Says:

    >  It makes more sense for CXPO to replace 2nd lien debt with senior unsecured public notes
    That's exactly what i was getting at. It matures anyways in 2012 so it will be addressed in the next 18 months one way or the other.

  80. 80
    cargocult Says:

    Bill-it seems to me that both NM and DSX are enjoying a cautiously upward trend since June. Why bail into this direction?

  81. 81
    zman Says:

    JB – going to go vote now … thanks for the HAL charts with blobs 

    http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280&cmd=show%5Bs213863376%5D&disp=P

    I assume the October intraday high of 35.89 is next resistance?

  82. 82
    ram Says:

    I was also assuming the same for 35.89 and, it appears HAL roams higher after.

  83. 83
    zman Says:

    ZTRADE – ZIM – HAL

    HAL – Stock moving well post analyst call. Out on 50 of my 90 November HAL $36 calls for $0.59, up 124% to my average cost of $0.26 with the stock at $35.47.

  84. 84
    bill Says:

    80 – I like both names but I like my EP stocks better. There is nothing wrong with dsx as they have low relative debt and long charters. Nm has also have long charters that are insured. But the group tends to move together, and  low rates cause the BDI decline and people react to that selling the good names as well as the bad. (Just like if oil suddenly went to 75, I guarantee all the oily names would be down hedged and unhedged, levered or unlevered)
    Just think its dead money at the moment but I certainly like those names NM, DSX &BALT would be my fav's

  85. 85
    bill Says:

    This is when the 150 m 2nd lien for cxpo came into existance
     
    >
    On May 8, 2007, we acquired the STGC Properties from EXCO for total consideration, as of the January 1, 2007 effective date, of $285.0 million in cash and 750,000 shares of Crimson common stock valued at approximately $4.6 million on the closing date. After reduction for applicable adjustments for the net results of operations between the effective date and the closing date, and other customary purchase price adjustments, the cash portion of the purchase price paid at closing was $245.4 million, which is subject to a post-closing adjustment. After considerations for typical closing adjustments, $229.0 million of the purchase price was allocated to proved properties and $28.6 million of the purchase price was allocated to unproved properties. The properties acquired include over 200 producing wells in over 30 fields, are 90% natural gas and are approximately 80% proved developed producing by value. We have an average 50% working interest in the properties and operate more than 80% of the value acquired. The cash portion of the purchase price was financed through an amended and restated $400.0 million revolving credit facility and a new $150.0 million second lien credit facility. The acquisition was accomplished by way of conveyance of 100% of the membership interests of Southern G Holdings, LLC (“SGH”), a wholly owned subsidiary of EXCO, from EXCO to us.

  86. 86
    zman Says:

    ZTRADE – ZLT – BEXP

    BEXP common – Sold my trading position taken on 11/2 at $21.16 for $25.66, up 21%. I continue to hold my core position in BEXP but did not expect the name to run this quickly following earnings and don't need to be "over-overweight" there.

  87. 87
    BirdsofpreyRcool Says:

    #85 — thanks, bill.  That is the sort of transaction that is backed by pricy 2nd lien notes.  But if CXPO is successful, those notes will be refinanced, as you mentioned.  It's kind of unusual to see in a publicly-traded company… but, it's like a bridge loan from the equity sponsor.  And 11% is not an usual rate for those.
     
    Nice for the lender, for sure.

  88. 88
    zman Says:

    Gotta go pickup a sick laptop, back in 30 minutes. 

  89. 89
    bill Says:

    And Oaktree owns 40 % of the outstanding shares—

  90. 90
    BirdsofpreyRcool Says:

    #89 — yes.  Part of what makes this unusual, for a publicly-traded company.
     
    If CXPO whiffs and can't pay it's interest or roll it's debt, Oaktree loses on it's 40% equity stake, but takes 100% of the company in a b/k situation.  So, they are truly in a win-win situation. 
     
    **I** want a deal like that!!

  91. 91
    choices Says:

    God bless our wounded and disabled veterans-prayers to all returning soldiers and their families for a speedy recovery and a reintegration into society.
    This is the real cost of war:
    http://www.huffingtonpost.com/2010/11/10/salute-to-service-justin-_n_780765.html

  92. 92
    bill Says:

    cxpo dda rate is kinda high
     
    >In 2007, we tripled our reserve size through the acquisition from EXCO Resources, Inc. ("EXCO") of producing properties in the South Texas, Southeast Texas and Southwest Louisiana regions, adding an aggregate of approximately 95 Bcfe to our net proved reserves at a cost of $2.50 per Mcfe of proved reserves as of the effective date.  We added 21 Bcfe to our South Texas proved reserves through the Smith Production Inc. ("Smith") acquisition in 2008 at an average cost of $2.82 per Mcfe of proved reserves as of the closing date.

  93. 93
    bill Says:

    90 wow great observation
    i wonder if their hedges ,(which they put on in 2007) help them avoid impairments. As hedges roll off…
    Well its non cash, that doesnt matter 🙂

  94. 94
    bill Says:

    If you were Oaktree what would you do
    ride it out or
    try to monetize the whole thing

  95. 95
    choices Says:

    Z-how close do you follow ROSE and NFX-do you have any insight into MUR's activities and potential?
    Thanks!.

  96. 96
    BirdsofpreyRcool Says:

    let's see…. if i was Oaktree… i am getting 11% on my fully secured loan and just enticed another equity investor to come in at 75% over the price (at the time of the announcement).
     
    Seems to me, i'm paid to wait and ride this one out.  I would NOT want someone else to come along and take away my punchbowl here.  Still too much good stuff left to quaff.

  97. 97
    RMD Says:

    92  those acquisitions seem expensive per m.

  98. 98
    bill Says:

    97 they were done in 2007 higher pricing enviroment

  99. 99
    bill Says:

    they have really hunkered down
     
    cap ex by year
    2007  313 m
    2008 207m
    2009  25 m
     

  100. 100
    Geno Says:

    Re:65 they are also leasing in eastern Ohio for the Utica Shale.  Maybe this could be a contest.  Kind of like wheres Waldo.

  101. 101
    RMD Says:

    Geno 100:  oh boy, interesting tidbit because LINE mentioned the Utica as a throw-away line on the cc about the acq up there and has not brought it up since.  Also EVEP talks enthusiastically about Ohio: they and Evervest have massive acreage there.  I stopped paying att'n to EVEP when the GP's backin got activated and the GP gets 25% of the action now, but I may have to tune back in.  (On the last cc there were NO questions, maybe a screwup by the operator, maybe the St. is paying attn elsewhere.)

  102. 102
    RMD Says:

    forgot to complement you on Where's Waldo idea!  I'm thinking..

  103. 103
    irongate Says:

    bill –  thanks for your take on paired trades..   and the idea of a similar trade in products guys like NAT
    zman – great run in your HAL trades… I didnt do the ops… but i made enough in the common to pay for a years subscription when my 3mo trial runs out.   Thanks.

    re POMO?  well… today is the ONLY day in the next 9 days that there is no POMO.  So yes I have been buying all morning in the commodity space.  i made that decision last nite when the China data came out….I think  CSCO's earnings were a gift to get in on a down day… right b4 fed pumping at the same time that the China miracle story has only been confirmed even more.  

    I hesitate however, in that i am not the only rocket scientist that knows about POMO's effects… so one of these days it will stop working.  But I figure the risk is likely to the upside since we KNOW we have liquidity coming in concurrent with china news.  i just think it would be tough to have a selloff with these factors in the next few days. 
    I will only add.. that if this mkt closes positive after this CSCO bomb…. we r likely going much higher quickly…. and then I would step aside late next week.

  104. 104
    irongate Says:

    for you Uranium guys (as if the news couldn't be better)… URZ might be in play

    Normal
    0

    http://www.resourceinvestor.com/News/2010/11/Pages/Why-the-US-Needs-Uranerz-Energy.aspx
    excerpt:
    It could well be Uranium One is considering acquiring URZ because its properties could supply feed for their Christensen Ranch ISR facility. But Uranerz’s management is fully capable, in this author’s opinion, of transforming URZ into a uranium production company. In either outcome shareholders would be the beneficiaries. Uranerz and its potential to be a major player in the supply of US mined uranium should be on all investors’ radar screens.

  105. 105
    choices Says:

    MCF:
    FWIW-may have already been discussed.
    http://seekingalpha.com/article/236083-contango-ore-an-intelligent-gold-and-rare-earth-speculation?source=article_sb_picks_5

  106. 106
    ram Says:

    ZMAN – Did you see the put activity in NFX NOV 65's?  Thoughts?

  107. 107
    RMD Says:

    105 I wonder if that's why MCF is up today overcoming   His Dudeness on the negative side.

  108. 108
    zman Says:

    Well that took long than I thought …

    Re 95 – I have followed NFX for a little over decade. I have friends that work there and I keep up with what they up to. I don't model it is I don't see a need to reinvent their guidance. I own for it for the long term and the sad day that they will be bought.

    Re ROSE – I'm thinking it is fully valued but want to hear what they finally have to say about the SAB, probably get that data first half 2011.

    MUR – no insight other than Chip and Cindy have a very nice home with a block long yard not far from me. Great people but I'm no value add there. From time to time I play it but it has been a couple of years. I don't, as a rule, give much time to tracking the mini-majors (HES, MUR, OXY etc)

     

  109. 109
    zman Says:

    IG – thanks, was thinking the same on POMO. Once something becomes a trending topic on Yahoo the rules on the Street tend to change on it.

    Re 106. NFX – no, had not seen that, guessing someone thinks its going to fall since I don't see any size trades further out for a calendar spread. It has had a great run since earnings and I still have a half position I need to sell in the November $65 Calls if you want them by the way.

  110. 110
    ram Says:

    Thanks, I guess.

  111. 111
    bill Says:

    I wish cash rich mcf would meet cash poor cxpo and work out a deal. Peak hates paying taxes more than dry holes

  112. 112
    zman Says:

    Re 110 –  No problem RAM. How do you like the HAL trades by the way?

  113. 113
    zman Says:

    Geno / TEXW / Wyoming – do you have any thoughts on the plethora of "costs are starting to level out" comments E&Ps are making about the Hayensville and S. Texas.

  114. 114
    occam Says:

    $100 billion China investment in Canada:
    http://www.financialpost.com/China+deal+worth+106B/3806565/story.html

    Probably helps Canadian loonie and commodities companies if it happens.

  115. 115
    elijahwc Says:

    SDCJF – This is one of West's names and a new shale.  Anybody ever hear of the Pawnee Prospect, located in Kansas?
     
    Dorothy? West? Bulher?
     

    Sundance Energy (ASX: SEA) has initiated a new oil and gas development project  called the Pawnee Prospect, located in Kansas, USA, which will focus on developing conventional targets as well as an unconventional shale target which it believes to be very prospective.

    The company’s wholly owned US subsidiary, Sundance Energy, Inc., joined its long time joint venture partner, McElvain Oil & Gas Limited Partnership, in the play by acquiring 25% of McElvain’s interests, or approximately 4000 net acres to Sundance.

    A 3D seismic has been shot across a small percentage of the acreage and has high graded several drillable prospects.

    The company said access to the unconventional shale will require the application of horizontal drilling technology and suits Sundance's focus on resource plays while giving it excellent exposure to very economic conventional reserves as well.

    Jayme McCoy, managing director, said “we are very excited about opening up this new, very prospective play which we believe fits our business model perfectly.”

  116. 116
    zman Says:

    Thanks Occam, good thinking, will likely help support multiples on both sides of the border. Standby E&P favorite there has been TLM. Not a Bakken/Card play, just a large main line E&P.

  117. 117
    mimster90 Says:

    out of all my HAL 36 options now. Thanks zman

  118. 118
    BirdsofpreyRcool Says:

    Cramer on CNBC saying "gold to 2k in 2yrs." 

  119. 119
    zman Says:

    re 117 – your welcome Mim, glad it worked a little better than I thought, I'm milking my last 40 calls I think until tomorrow. Liking how the S&P held Nicky's level to the point and then turned higher. She is the best E-waver I have ever seen. 

  120. 120
    BirdsofpreyRcool Says:

    EXXI nicely on the road to recovery from it's recent bout with "secondary-itis."  Lots of headline risk from here through the end of this year.

  121. 121
    occam Says:

    Thoughts on MMR with this run up?

  122. 122
    zman Says:

    BOP – headline risk to the upside too though. MMR also making the trip back up. I have some Nov 17 and Nov 18 calls that are starting to wake up from zombieville now. 

  123. 123
    ram Says:

    ZMAN, I'm glad you did well with the HAL options.

  124. 124
    zman Says:

    Occam – my best thought there is that the decline in the stock was related to water in the zones in Blackbeard East. You say water in a well and people get pretty freaked out.  But this is a pressure depletion environment, not a water drive reservoir. The water level will not move as the gas is produced. Takes time to shake the image of a well full of water I guess. That is my sense of what has been holding the name down, that and Schiller's antics over at EXXI which seem to rub off on MMR despite the fact that more cash for EXXI is a good thing for partner MMR. So now they are moving up in tandem having insider buys at EXXI the last few days, and the conversion announced this morning to dilute us, yes, but to lower the cost structure as well, and finally, you have the passage of time. We're going on 4 weeks after the MMR earnings call… they had 4,000 feet of hole to drill in BB East and they should now be in section at Davy Jones 2. So you have the possibility that they pop a press release with feet of pay from an LWD tool, and recall, they are getting lower temp and pressure readings than in the first 2 wells so it may just work this time.  

  125. 125
    zman Says:

    123 – Thanks me too, thought you were there as well given your interest in the chart. 

  126. 126
    zman Says:

    NFX out with an @NFX piece, substantially bolstering their gas hedge position in the 8 quarters of 2012/13

  127. 127
    ram Says:

    Common.

  128. 128
    zman Says:

    Ah, I have not done that yet.

  129. 129
    zman Says:

    GST walking higher while no one is paying attention. The trick is to keep the catalytic news just over the horizon. Don't like the results of one well, fine, just a drill a second one without telling people how the first one did.

  130. 130
    ram Says:

    No thank you on the NFX NOV 65 calls.

  131. 131
    BirdsofpreyRcool Says:

    "Headline risk" = in a good way, i think. 

  132. 132
    zman Says:

    re 130 – well I guess you're not welcome

    For you new folks, a lot of company specific pieces can be found here or on the Reports tab at upper left:

    http://zmansenergybrain.com/subscriber-data/zeb-reports/

  133. 133
    bill Says:

    bored
     
    chk in miami
     
    http://www.veracast.com/webcasts/bas/energy2010/id23700000.cfm

  134. 134
    bill Says:

    aubrey is ticked off that people  are saying they are spending too much on leasehold.

  135. 135
    tomdavis12 Says:

    Bill: always like to keep an eye on their NAV slide. Your link it was 37/47. NAV @ 65.62 @ $5.00 NG. One of these days CHK will be very undervalued.

  136. 136
    RobBanks Says:

    Z – are all the Bakken small cap comparisons in one easy to find place?

  137. 137
    bill Says:

    Chk says they have 1,000+boe wells in Niobara and hinting at a jv partner soon.
    Also another JV partner unnamed area by 6/11.
    Say what you want about Aubrey, he has done a great job with flipping land and finding 20 % partners that pay for the majority of the land
    Says he is working with Cheneire (LNG) to export ng. Also gas to liquids technology is coming

  138. 138
    RMD Says:

    CHK said 5,000 boe/d IP in EFS also.

  139. 139
    zman Says:

    Rob – No they are not. We lost that post a week back due to operator error here. I have been working on rebuilding it and will post an updated version of it tomorrow.  It's creepy though, almost like you were looking over my shoulder.

    Re Aubrey – its amazing to me that he can show the lease hold bought and sold prices and still people complain. He's the best landman out there.

  140. 140
    zman Says:

    re 137 – That's the first mention of Niobrara and production I have heard out of CHK, thanks much. That would be strong news for SSN as those wells have to be on the acreage they just bought from them. SSN thinks that what they kept is better than sold to CHK.

    Can someone send the BofA schedule along?

  141. 141
    zman Says:

    re 138 – why didn't he say this stuff last week at the analyst meeting?
     Is it that new?

  142. 142
    zman Says:

    HAL in a clear breakout on the daily chart.

  143. 143
    BirdsofpreyRcool Says:

    HAL — jat must be doing the Happy Dance.  I know I am. 

  144. 144
    zman Says:

    DIS posted a miss on their website by accident, then removed it.

  145. 145
    zman Says:

    Nice day. Beerthirty.

  146. 146
    Zorgnak Says:

    Nice call on HAL Mr. Z….Paid for my subscription in the first day 🙂

  147. 147
    zman Says:

    Zorg – thanks, glad it worked, got a bit luckier on that one than I was thinking. Dont' be a stranger in comments, ask em or contribute if you got em. Check out the Bios tab and if you want to send something similarly anonymous along, Petra looks pretty bored at the moment   zmanadmin@gmail.com

  148. 148
    elijahwc Says:

    FTK CC – Marvel at our own RMD being "spotted on" by the mgmt for asking all the right questions.  And making the HAL connection.  The Q & A  is worth a listen if you are long from last years discussion.  The fundamental turnaround that began last quarter is taking hold, green fracking fluid is flowing and a few potentially nice events loom large. The situation is fluid.
    http://www.videonewswire.com/VWP/VDAT/frameset.asp?e=74396&w0=590&h0=0&w=240&h=70&sh=235&sw=350&s=False&ch=False&sm=False&c=False&c1=False&mc=False&p=False&i=False&pp=False&cp=False&v=False&a=True&sid=134818&aid=136192&pl=&pr=&u=4398387&pid=1&pt=2&pc=False&qo=False&hs=&cuts=6&t=Flotek+Industries+3rd+Quarter+Conference+call

  149. 149
    choices Says:

    I was out this PM-anyone catch the B of A EOG presentation-I will try to get it from archive.

  150. 150
    choices Says:

    BTW, Z, crys post on Bakken has a couple of fairly good maps @ #35.

  151. 151
    Zorgnak Says:

    re 147
    Will do…just getting the drift here for a bit.

  152. 152
    ram Says:

    What happened to spook asia and S&P futures?

  153. 153
    zman Says:

    Fear of higher interest rates in China:
    http://www.marketwatch.com/story/chinese-shares-tumble-in-choppy-late-morning-trade-2010-11-11

  154. 154
    ram Says:

    Thanks, didn’t know if you were still up.

  155. 155
    zman Says:

    This is when I write.

  156. 156
    terapia psicologica en linea gratis programas descargar Says:

    terapia psicologica en linea gratis programas descargar

  157. 157
    Lee El Análisis Completo Says:

    Lee El Análisis Completo

  158. 158
    Mi pagina Says:

    Mi pagina

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