Wednesday Morning – Dualing Oil and Natural Gas Inventory Reports

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Market Sentiment Watch: Equity markets had their first small swoon in almost two months yesterday and it felt as if they simply ran out of steam on a thin stream of relatively inconsequential economic data and a lack of headline grabbing earnings plays. Yesterday's big M&A news gave gassy names, but not the entire energy sector, a boost but the gains were heavily faded by the close in almost all of the early morning jumps. Today we have somewhat better economic data and futures are flattish early. In energy land, we get both the oil inventory and natural gas storage reports today due to the moratorium on government data releases on Veteran's Day tomorrow. Otherwise, the news flow 3Q reports has slowed to a trickle and for the first time in 3 weeks I have no live quarterly reports to listen to.  First on the agenda today is 4.5 hours of HAL presentations (click here to listen) and then some presentations at the Bank of America Energy Conference. After that I will be circling back to a  select  few names that I missed on the bunched up call days in preparation for re-issuing the Orange Charts next week along with an updated Catalyst List.  

Nicky Watch:

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.

Ecodata Watch

  • Jobless claims came in at 435,000 vs 450,000 expected

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Oil Inventory Preview
  4. Natural Gas Inventory Preview
  5. Stuff We Care About Today – HAL analyst day (webcast 9am to 1:30pm EST), CXPO pre call thoughts, TAT ops update
  6. Odds & Ends

Holdings Watch: ZCAT (Zman Catalyst portfolio):

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

ZIM (Zman Inefficient Markets portfolio)

  • $3,900
  • 1% Cash
  • Positions (3 sets of MMR calls (Nov 17 and 18) and Jan 22.50s), 5 remaining NFX $65 Novembers, two sets of December KOG calls ($5 and the fat finger trade at $7.50) and 90 HAL $36 Novembers)
  • Yesterday’s Trades:
    • NFX – Sold half of the NFX Nov $65 call position for $1.90, up 392%, with the stock at $66.
    • HAL – Added 30 more HAL $36 November calls for $0.18 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.
    • HAL - Added another (40) HAL $36 calls for $0.08 with the stock at $33.40. Average cost here is now $0.26 ... long shot I know. 

Commodity Watch:

Crude oil eased $0.34 to close at $86.72 yesterday, in directionless trading. After the close, the API released an across the board bullish report (see below). This morning crude is trading flat.

Natural gas rose $0.12 to close the day at $4.21 yesterday. We remain range bound. This morning gas is trading up 3 cents. 

Natural Gas Storage Preview:

I'm at 25 to 30 for this week's number, the Street is at 22 BCF for tomorrow’s report.

Weather Watch: Gas weighted HDD's were 116 vs 108 in the year ago week. With 2 to 2.5 Bcfgpd more supply available than last year I'm coming in a little high to Consensus. 

  • Last Week: 67 Bcf Injection
  • Last Year: 25 Bcf Injection
  • 5 Year Average: 30 Bcf Injection
  • 10 year Hi: 54 Bcf Injection
  • 10 year Low: 82 Bcf Withdrawal

Oil Inventory Preview

API Watch: Bullish

  • Crude: DOWN 7.4 mm barrels
    • Cushing: DOWN 0.95 mm barrels- for the last 10 weeks, API and EIA have been in strong directional if not always proportional agreement. Last week API predicted a large Cushing draw and EIA reported a small one. With another big draw reported by API it is likely "catch up time" at EIA. Bullish.
  • Gasoline: DOWN 3.45 mm barrels
  • Distillates: DOWN 4.0 mm barrels

Stuff We Care About Today

CXPO Pre Call Thoughts:

  • Setting the stage: 2Q production was 30 MMcfepd.
  • 3Q best estimate is 40 MMcfepd
  • Early October run rate was 45 MMcfepd
  • 4Q Guidance: should get a sequential leg up due to:
    • a recently announced Upper Cook Mountain discovery,
    • another two completions that may be turned to sales by now in East Texas,
    • and potentially from volumes from their first Eagle Ford well.
  • In other words, volumes look to be attempting to turn the corner after a capex slumber induced slump earlier this year.

  • This first Eagle Ford test, the HK operated Windham #1H, may or may not be flowing back by the time of tomorrow's call. The well is in Bee County and is likely to be in the wet gas window (northern Bee - see map below). Bee County is not HK's typical stomping ground as it is east of Hawkville (LaSalle and McMullen Counties) and south and west of their Black Hawk wells which have shown good oil results (Karnes and DeWitt Counties).
  • This is in an area where PXD has drilled some big recent wells including one just north in Karnes County and they drilling another on the edge of Bee County now on trend with a string of 2,000 BOEpd IP wells.
  • CXPO has a 20% working interest in the well and has 1,160 net acres in the area if this works. The rest of their Eagle Ford acreage is to the west in Zavalla and Dimmit Counties (close to HK's Red Hawk area). 

  • The results during drilling (shows) were apparently good enough for the rig to be moved to a second location 2.5 miles away which should now be at TD. So maybe some drilling results on the first well, though that's the operator's call and a little color on the second well. 
  • Nutshell:  Not about to fall in love here but like I like to see an underdog fight higher as much as the next guy. It'll be interesting to see if they guide to my 4Q number of 50 MMcfepd as that would put them on track to make the mid point of guidance set out at the beginning of the year of 35 to 39 MMcfepd. Other points of interest on tomorrow's conference call will be the aforementioned Eagle Ford results, and their plans for their Niobrara acreage which is in close proximity to one of NBL's best if not their best well in the play to date. CXPO has 12,000 net acres that could be punted (and used to develop and acquire more land in South Texas ... a tough thing to accomplish given current lease prices) or partnered which would be my preference given that the they are largely HBP and could farm out an interest to neighbor NBL. Lastly, expect some Q&A activity centering on the recent Chinese capital infusion at $5 and what those guys saw that made them feel like paying a premium when they obviously didn't have to. 

TAT Operations Update

  • Deal details for recently announced $100 mm purchase of Thrace Basin Natural Gas - no surprises, $100 mm and they get five rigs and the 35% of the company's current gas production.
  • The big news of the quarter is probably the first successful frac in Turkey of a gas well in the Thrace Basin resulting in excess of 4 MMcfepd. This was a re-etry and they plan 3 more of these before year end.
  • Although the filing of the Q is delayed due to the acquisition, production for the quarter was just under 2,000 Bopd and 5.6 MMcfgpd. Well below where we thought we'd be at the beginning of the year but in line with more recent comments.
  • Current gas production is now 10 MMcfgpd net, with another 10 MMcfpd (still) awaiting pipeline hookup.
  • Current oil production is now 2,152 Bopd as they continue to drill new wells at Selmo but have not apparently refracced any more wells at Arpatepe.
  • Hunting Bigger Oil Target: Bakuk-2 well re-entry planned, deepening to test for an oil leg and should know something in a couple of weeks.
  • Mentioned a new well in Morocco for the first time in ages but this region and Romania remain on the backburner.
  • Conference Call: Today, 8:30 am EST.


Other Stuff:

  • MHR and CXPO report after the close for conference calls tomorrow.
  • WHX - off another 4%, now down 9% since "missing"  their quarter. I continue to look to re buy the name in the upper teens later this month. 
  • Bank of America Energy Conference (all times EST)

    • EOG: 3:35 pm

Odds & Ends

Analyst Watch:


165 Responses to “Wednesday Morning – Dualing Oil and Natural Gas Inventory Reports”

  1. 1
    john11 Says:

    GST announced a 59,000 acre Marcellus acquisition.

  2. 2
    zman Says:

    Whoa, did not see, will look

    HAL analyst call starting now

  3. 3
    zman Says:

    HAL Notes 1 – no questions on Macondo will be entertained due to pending litigation.

  4. 4
    RMD Says:

    SIMM notes massive growth in frac horse-power coming from new builds.

  5. 5
    zman Says:

    GST – 59,000 Marcellus acres in a purchase and sale agreement. No $ value given. Tested a well on it prior to leasing. JV partner in the Marcellus can participate in these new acres.

  6. 6
    zman Says:

    re 4 – yeah, but you have to ask where we are and how much is a net add when you consider that the shales are very hard on equipment (although the Eagle Ford appears to be less so than the Haynesville).

  7. 7
    zman Says:

    Reef – any thoughts on the GST acreage add?

    HAL going over what they will talk about today. Stock up 2% pre market.

  8. 8
    BirdsofpreyRcool Says:

    GST — that news is actually bettern you think, at first glance.  First, it is NOT in Pennsylvania (which is going all Freaky Friday over "nat gas in our well water!").  Second, it's in the AMI… so may get JV Partner to pick up a bit more than their Fair Share (depends on what's in the AMI contract…).  Third, GST has adequate liquidity on their undrawn revolver to fund 100% of the acqtn with no add'l equity raise.  Fourth, they recompleted a test well on the acreage, so de-risked, prior to acquiring.  Fifth, there are some surface assets that come with the deal (41 miles of gathering pipeline), a saltwater disposal well, and 7 producing conventional wells.
    Overall, this is a pretty cool acqtn…. for a mngt team better know for "disappointing" than achieving greatness.  Nice!

  9. 9
    zman Says:

    Thanks BOP, very good points, I just wish they'd put a price tag on it.

  10. 10
    BirdsofpreyRcool Says:

    z — they didn't put a price on it b/c they have to get an answer from their Korean JV Partner first.  And think there may be a bit of an "acreage arb" there, that benefits GST. 

  11. 11
    zman Says:

    Here ya on the JV thought. What do you think they paid for non-core Marcellus acreage? My thoughts go back to recent comments from them that were that we've been up against the balance sheet before and we don't like it. Seems like they have enough on their plate unless this is pretty well priced.

  12. 12
    BirdsofpreyRcool Says:

    Guessing it was "well priced."  But, that is a bit of cart-before-the-horse… as it is just a guess.

  13. 13
    zman Says:

    HAL Notes 2:

    HAL – highest margins globally. Leader in NAM, second largest provider with high margins in international.

    Talking about their competitors loudly talking about catching them on margins

    They are cutting costs and putting more local offices in place globally (like Brazil and now Iraq)

    Goal is to drive margins up into the mid 20% range in the near term. That's pretty heady but in line with some musings on last 2 conference calls.

  14. 14
    zman Says:

    Analyst Watch:

    BEXP – Raymond James downgrades to Outperform. Don't know what rating they have above that one.

  15. 15
    zman Says:

    HAL Notes 3

    HAL continued to invest in new tech and equipment through the 2008 downturn. Paying off now as things recover, not just NAM, with more than 50% of spending having gone to International segment. International is just starting to gain momentum (it's been moving more slowly than expected but moving well now).

    HAL still trades at a forward discount to SLB, partially due to Macondo but as margins improve and activity rises, either the forward multiple has to compress more or the stock has to move up. Jat's out today so I'm going to go ahead and take the bull stance on this one. 

  16. 16
    zman Says:

    Noting that gassy names that popped yesterday on Atlas are not getting a lot of follow through so far this morning. RRC SWN UPL flat.

    EOG actually moving the best… now that GS has taken them off the Conviction list.

  17. 17
    redjack Says:

    what is with EXXI?

  18. 18
    zman Says:

    TAT – note to management. A little notice would be nice if you are going to delay your quarterly report, then drop an ops update and call an early morning CC. Unless you don't actually want people to be on that call.

  19. 19
    BirdsofpreyRcool Says:

    redjack — just seeing that… nothing i can find.  There was a Form 4 from a director, but he acquired shares y'day at $22.50 (probably board fees).  Other than that, can't account for the move.  Yet.

  20. 20
    zman Says:

    EXXI and MMR – dunno, probably just noise. I see a director making an open market buy which is always good to see these days if somewhat rare. Could have news any week now on DJ2 and on Blackbeard East.   Also, we are waiting to see what they are going to spend that recently raised cash pile on.

  21. 21
    BirdsofpreyRcool Says:

    EXXI — maybe the dealers placed the last of the 2ndary shares y'day… so not supporting it anymore.  Maybe one of the convert holders is locking in gains and hedging against equity risk.  When you have PCPs on your Balance Sheet, weird stuff can happen sometimes.

  22. 22
    zman Says:

    Actually make that 4 directors adding 3,333 shares at $22.50 each.

  23. 23
    zman Says:

    Make that 5, looks like they are all made open market buys yesterday.

  24. 24
    zman Says:

    Analyst Watch:

    OAS – Raymond James cuts to Market Perform

  25. 25
    zman Says:

    re 24. I'm sure the will enjoy upgrading that again from a higher level.

  26. 26
    zman Says:

    HAL Notes 4

    Shocking Statement Watch: The Eagle Ford has the same proven oil reserves, done in just the space of 2 years, as Prudhoe Bay.

    Says there are more of these and Avalons, and Niobrara's and Granite Wash type plays out there.

    Longer laterals with more stages to come.

  27. 27
    zman Says:

    HAL Notes:

    Interesting new tech they are using now

    Eagle Ford – using new tech to frac only the productive rock in a lateral

    They have been working on tech to reduce days of non-productive time per well.

    Commenting on the Niobrara with an undisclosed operator, they have been there since the first well, guess is NBL, says they have linked seismic, micro seismic geology and resulted in 20% higher EURs so far.
    Wondering if HAL rumor to involved with SSN bears out.

  28. 28
    zman Says:

    Listening to HAL's discussions on fracing, talking about getting better logistically. This is Wyoming and TEXw's world, talking about getting the time to rig up and rig down down.  Interesting. Talking about getting costs down for fraccing by 2012 by 25%, same for time required.

  29. 29
    tomdavis12 Says:

    BOP: Looks like directors are following your buy limits $22.5. How's this for a rumor Schiller will become Pres of MMR, companies will merge, Jim Bob can ease back a little. Rumor came from Forbes article. Didn't Pres Glenn Kleinert of MMR retire and has not been replaced. 

  30. 30
    zman Says:

    CXPO trading up 5% into earnings on a very red day.

    WHX getting a small bounce after the two day 10% fall. I think it is noise, waiting on more analysts to cast hate on it before I rebuy.

  31. 31
    BirdsofpreyRcool Says:

    TomDavis — heard the rumor months ago about MMR + EXXI = Schiller CEO and JimBob COB.  Makes sense.  And then, FCX comes in and buys them all out for cash in a coupla years.  Where there is smoke, there is usually fire.  But not all fires turn into bonfires.  Most get doused or fizzle out over time.  Time will tell.  Thx for posting!

  32. 32
    BirdsofpreyRcool Says:

    z — someone(s) musta read your great CXPO pre-release note this morning…. and noted the turning point on the production profile.  Thank you for doing that work.

  33. 33
    Dman Says:

    BOP – FCX ??

  34. 34
    zman Says:

    BOP – thanks but its not out in the public domain so unless it was one of us kids I don't know about that. Maybe I should toss that piece to yahoo finance.   I think they probably do 41 or 42 MM/d this quarter but 40 and 50 are nice round numbers…. not sure where the Street has them for the quarter on volumes.

    Market not very happy at the moment. We are at Nicky's max downside now.

  35. 35
    zman Says:

    Oil inventories in 5 minutes. NG #s at 12 EST.

  36. 36
    tomdavis12 Says:

    Z; The major difference in the market for WHX is that there is not the same amount of fear as last time it went to $16 – $17. I don't think it will get below $19.5 – $20. I do bow to you because you are the absolute axe on this stock for sure. Just a thought.

  37. 37
    TEXWS6 Says:

    RE HAL Comment:
    Their new technology is only utilized by operators that are severely lacking any technical or operational expertise.  But nowadays, that's quite common in the larger companies.  HAL and other companies are also holding their frac crews ransom if you don't utilize other services such as wireline logs, downhole tools, directional services, cement, drilling mud, etc.

  38. 38
    tomdavis12 Says:

    BOP: You nibble at any EXIXF? I had limit in at $275 but lifted going into today. Looking to put lower limit on for few more days and if I catch lighten on some common. 

  39. 39
    BirdsofpreyRcool Says:

    Dman — FCX had a large hand in the capital raise that MMR just did… yes.

  40. 40
    zman Says:

    Tom – thanks and it may not fall that far but last time it took a couple of weeks for the 3 analysts to chop block it completely. One key difference is oil being about $10 higher at present than it was last quarter so that helps to mitigate my expected drop. Notably their pricing is lagged a quarter so the 4Q production and prices come from the span of 3Q calendar stats.  Production will be lower as usual and prices were flat (actually 10 cents lower on NG and $2 lower on oil vs 2Q levels).

    The wildcard is what happened to the normal production tax number which was high … total LOE is creeping up. That could be a gripe for an analyst who is paying attention and lead to lower estimates for 4Q.   The trust did it's part to help by taking a smaller admin fee but that is a drop in the bucket. I still show estimates of $0.74 for 4Q … um, no way. Doesn't matter if oil rises sharply into year end for that quarter as again, it is lagged.

  41. 41
    BirdsofpreyRcool Says:

    z — why not happy?  CXPO up big, on a red day.  Also, mrkts climb Walls of Worry.  Can't sustaing a rally on all UP days.  So, cool with the back-and-fill here.  Allows people to buy securities at better prices (as opposed to chasing them on the way up).
    TomDavis — may add some EXXI PCPs in a managed account.  Beats money mrkt returns and still have upside from the stock. 

  42. 42
    zman Says:

    EIA Oil Inventory Report

    Oil down 3.3 mm barrels

    Gasoline  down 1.9 mm barrels

    Distillates down by 5.0 mm barrels

  43. 43
    Dman Says:

    The broad market is due for a rest, to put it mildly. If the dollar manages a counter-trend rally, stocks will fall and drag things like WHX down… I'm willing to wait to for Z's price on it. 

  44. 44
    zman Says:

    Sorry for the delay, was answering Tom and missed the EIA release

    More EIA…

    Cushing down 1.7 mm barrels  = bullish. See note in post re this being a catch up week there relative to API


    Gasoline: flat with last week at 9.056 mm bpd, still strong for this time of year

    Distillates: bounced back up to 4.394 mm bpd, very resilient, really breaking the down trend of the last 2 years here

  45. 45
    bill Says:

    takeover speculation
    nice timely article on cxpo, Z Good job

  46. 46
    zman Says:

    HAL on a 20 minute break. Analysts must be happy as their first phone home oppy of the day has the stock up a buck now.

  47. 47
    bill Says:

    29– Thats a helluva rumor and makes sense. JimBOB rambles on and on-a genius however..

  48. 48
    zman Says:

    Thanks Bill – I don't give a lot out to the outside because you guys pay and I like that and if word gets out that a pirate has gone soft then its work, work, work all the time. But in this case I'm hitting send.

    BOP – Oh I'm happy, just wanted your two cents, I think you're long there?

  49. 49
    zman Says:

    Those HAL's taken at $.18 and $0.08 yesterday are trading at $0.25 to $0.27 which is breakeven to my average cost in the 90 contracts. Waiting but not much longer. Dangerous game. Like I said, high risk trade.

  50. 50
    zman Says:

    HAL could do without the steel and kodo drummers to introduce each one of their VP's.   If I was in the liberal media it would be so easy to come up with a lead in like "Hail to the Thief" for the 1 minute drum roll the HAL President got when this thing kicked off.


    Oil up 30 cents now after a brief post numbers dip.

  51. 51
    BirdsofpreyRcool Says:

    CXPO = yes.  Went long when you did.  Like that someone bought in at $5/share (with stock below $3).  Don't see THAT happen very often. 
    Well… actually, never.  I've never seen that happen before.  So, caught a seat on the train before it left the station.  Don't intend to ride to the last stop, however… but fun ride, while we're on it.  Great work.  Thanks again.

  52. 52
    Dman Says:

    BOP  – oh right, first they sell it off, then buy it back years later!   Might be a bit confusing for FCX holders who are used to a pure copper & gold play. 

  53. 53
    BirdsofpreyRcool Says:

    Split up…. consolitate.  Split up again…. reconsolidate. 
    If companies didn't constantly do that, what would i-bankers sit around and talk about all day?  hmmmmmmmmmmmmmmm???  😉

  54. 54
    zman Says:

    re 51. Maybe the price was lost in translation, lol. Doubt it though. Expect that to be a hot topic on the call. Re not ride forever, me too, happy with $3.50, $4 would be nice, $5 is pie in sky, doubt any time soon.

  55. 55
    zman Says:

    Bill – it is an interesting rumor. Would make an interesting, go to name for the Street for the ultradeep. Unlike MCF's Peak, Jim Bob and Schiller care very much about what the market thinks and I could see them selling the concept very well.

  56. 56
    bill Says:

    cxpo up 12 % on a red day, impressive

  57. 57
    Dman Says:

    #53  & I love the way it's always presented as a completely novel idea. Wow, look at the synergies! I guess that's why we divested them last time!  Better to be  a pure player… no wait, better to be diversified  …. no  no, we need to simplify ….

  58. 58
    zman Says:

    re 56, yeah, was just wondering what's up with that. Going to go check the usual rumor mills.

  59. 59
    bill Says:

    cxpo outright blow out upsurge
    Did your article do that?? lol 
    PS Can you tell me hats on the agenda for tomorrow? Please update MMR lol

  60. 60
    BirdsofpreyRcool Says:

    Dman — absolutely!  ref:  PosterChild, Tyco.  lol.

  61. 61
    zman Says:

    re 59. Ha, not likely my stuff. Re agenda, now where would be the fun in that? Listening to CXPO and MHR and some Bof A presentation, maybe a little soccer in the afternoon with a pint on the porch if the weather is nice. 

  62. 62
    BirdsofpreyRcool Says:

    ummmmmmmmmm…. CXPO?  Rumors?  Shorts?  MBO?  Stocks don't just scoot up 15% on the attractiveness of their 4-letter ticker… whassup?

  63. 63
    bill Says:

    from yahoo today
    fracing HAS begun on Gobi. Fracing has been completed on Fairway Farms and a pipeline is being completed. Rig still on location at Bengal. Pad almost completed on Blue which probably will receive the rig from Bengal. I am sure all of this will be reported after market close today and in tommorrows cc. Hopefully we will get an Eagleford update and 2011 plans for Liberty Co. and Madisonville and Niobrera.

  64. 64
    BirdsofpreyRcool Says:

    besides… "CXPO" sounds too much like  Cr@ppo …. just sayin…. 😉

  65. 65
    zman Says:

    HAL starting back, targeting new opportunities in the deepwater. They plan to grow their DW effort25% faster than the deepwater market itself.

  66. 66
    zman Says:

    Thanks Bill, was just poking around over there myself.

  67. 67
    bill Says:

    Obviously companies can get acreage cheaper then buying in the field. HK was a early mover in the efs.
    The price is cheap from a historical basis and the ceo doesnt really promote the company. What was loe .25 cents??
    This is a 3 bagger if ng ever moves up again

  68. 68
    zman Says:

    re 67 – yep

  69. 69
    Dman Says:

    BOP – before your #62, I just never thought about CXPO in that way. Never occurred to me. Now look what you've done! What were they thinking!! How am I supposed to take them seriously now??!! 
    Well, they are keeping my account green today, I guess that's a start   🙂

  70. 70
    scoop006 Says:

    Z- HAL stock up $1.10+ but the Nov 35Calls stuck at $.50. Is this MM manipulation?

  71. 71
    zman Says:

    re 70. I show them more as more than a double on the day, up 34 cents on the bid.

    My long shot $36 strikes are up 4x from yesterday's close but I do note they are not keeping up with the stock as well as they are so far out of the money that they will pop up and then bleed away quickly on short amounts of flat time in the stock .

  72. 72
    BirdsofpreyRcool Says:

    Dman — yep.  Kinda sticks in your head, doesn't it?
    If you think choice of tickers (or company names) doesn't count, you should hang out on a trading desk for a day.  You will never look at company names or ticker symbols the same way… kinda SCARS you for life, if you will.

  73. 73
    zman Says:

    Still listening to  HAL

    Thought on CLB. HAL mentioning only one other service name has equal ability in formation evaluation. They are going to increase their ability. "We are going to be taking more than our fair share in this space" as the Majors and E&Ps ramp deepwater drilling. I am still shocked CLB has been allowed to remain independent.

  74. 74
    zman Says:

    Re 72. So true. When talking I speak tickers and you tend to like names like NFX which has a good sound to it and is easily transformed into Newfie. For CXPO, I've come to call them Sexpo which sounds like a trade show in Vegas.

  75. 75
    zman Says:

    BEXP up 2%. Just keep downgrading them fellas.

  76. 76
    BirdsofpreyRcool Says:

    #74 — lololol.  Welp.  Guess they are more "Sexpo" than "Crappo" today, eh? 

  77. 77
    bill Says:

    last cxpo presentation
    92,000 acres  ev of about 325 m = acreage avg cost < 4 k per acre with 53 k of the acreage in EFS
    Z do yo have a slide that shows EV divided by acreage controlled

  78. 78
    zman Says:

    Still listening to HAL, all good, lots of examples of what they are doing, will pass along anything interesting.

    Re 76. It also helps if your ticker describes what you do. Like the condom maker BAGS used to.

  79. 79
    BirdsofpreyRcool Says:

    or MCF, if you will….

  80. 80
    BirdsofpreyRcool Says:

    or SPLT… a company that went bankrupt ("splat")

  81. 81
    zman Says:

    Re 77. See slide 4, only 9,300 of those net acres are prospective for EFS, the 53K net is all of their S. Texas. I have not taken a back of the envelop look here. I think acreage alone is not going to support the current price though, at least not yet as they are not in the high value piece of the EFS. Haynesville E Texas stuff is working well, so is Upper Cook. Niobrara you could probably sell for $20 to $40 mm without drilling a well. My sense is that you get there on proving up the new potential plays and by growing cash flow. This $/acre issue is part of the reason why I'm a little hesitant to add more. I've got a full position for a little guy and in the past management was a bit hypey for my taste. Let's see them get some production on the income statement and some more plays proved up. I have no trouble adding higher if they pull that off. I also have no trouble punting and forgetting about them for awhile if they brick on costs or guidance tomorrow. Volumes I think will be 40 MM/d or a little more.

  82. 82
    zman Says:

    MCF is excellent, unless of course there is too much of it around. Wanted to get that or CH4 as a license plate but they were taken in Texas.  

  83. 83
    BirdsofpreyRcool Says:

    Ken Salazar — embodies all that is BAD about this Administration… One-stop shopping, if you will. 

  84. 84
    zman Says:

    LINE tapping $37

    NFX running back to its highs, still sitting on 5  Nov $65 calls.

    TSLA missed on cars delivered and sold off but it gets an upgrade today  and runs back toward its 52 week high. It is amazing to me people chase this stuff because the President says we will have 1 mm electric cars on the road by 2015. Half powered by coal.  With an average price of 50K for the 4 door and 100 k for the two seater maybe every citizen should just be given one. Sheesh. Ugh.

  85. 85
    1520sbroad Says:

    +19 bcf 

  86. 86
    zman Says:

    HAL Notes

    Very cool shot of a typical deepwater multi-lateral wellbore, superimposed over the island of Manhattan.

    Boots and Coots head talking now.

  87. 87
    zman Says:

    Suddenly NG names getting more follow through on that gas number.

  88. 88
    bill Says:

    income players>> VLCCF
    vlccf  50 cents a qtr 2.oo per year
    mixed fleet capes and vlccf (large bulkers and tankers) on longer term charters
    JF has ownership

  89. 89
    bill Says:

    83 WOW
    If bush did that , they be calling for impeachment.

  90. 90
    zman Says:

    It's actually old news but it didn't ever get mainstream attention that I saw, good to see it circulate again.

  91. 91
    bill Says:

    81 thanks, I was just going to say that–misread the slide
    82 LNG comes to mind and DHT Double HULL Tankers, VLCCF Very Large Crude Carriers

  92. 92
    zman Says:

    JB – what was your target on HAL again? Thanks much.

  93. 93
    zman Says:

    For CXPO  really don't have a lot of running room on the EFS in this particular neighborhood of it. But they are tiny so even a handful of wells in Bee would be meaningful.

  94. 94
    BirdsofpreyRcool Says:

    z and bill — yep.   Think we pointed it out on this board… after the scientists posted a letter on line and it was covered by the WSJ.  But it NEVER went mainstream!  I have E&P friends in the biz (geologists, geophysicists) who never heard about it.  And if something like that was done under Bush, someone in Congress would have called up an Inquisition, just to interrogate those scientists on CSPAN. 
    As it is…. >>crickets<<….

  95. 95
    bill Says:

    Robry had +14 and 2 next week with y-o-y at + 1 as of today

  96. 96
    ram Says:

    I was perusing JB's wonderful charts and noticed that 35.22 and 35.89 are recent tops that are noted in his 30min chart.

  97. 97
    zman Says:

    re 94, 95 – thanks .

    HAL taking a 5 minute break and will then start Q&A. Stock up $1.50 going into that.

  98. 98
    zman Says:

    Thanks much Ram

  99. 99
    ram Says:


  100. 100
    zman Says:

    OAS coming flat after I guess the 4th downgrade in the last week on valuation.   Looking at $/ Acre they are not pricey compared to  their peers. They will be in with NOG and KOG on high, high YoY growth amongst the Bakkens. They also have more catalytic well news due by 2Q11, I could see it resting for a time but I'm not selling any more at this time.

  101. 101
    zman Says:

    HAL Q&A

    International – build up will be volume led first, then price led, then both.

    Talking about building up Boots and Coots biz by 3x to $2.7 B in revenues in 3 years.

  102. 102
    zman Says:

    TAT news getting completely ignored. Way to hide guys.

  103. 103
    zman Says:

    HAL Q&A ongoing. HAL trying to convince analyst crowd that they are misunderstanding earnings power. They are telling them that pricing is not the only lever they can pull. That costs are coming down quickly and that they will be in a position to make money at lower gas prices than before, allowing gas producers to also make make money in a longer term low gas price environment.  Sounds like they think estimates in the out years are too low. 

  104. 104
    zman Says:



    HAL on PEMEX

    Trying to maximize production but at the same time they wanted the wells down as fast as possible. Bad idea. They think PEMEX has learned from this.  Says that the local firms undercut the market, that won't happen again due to what happened. Contrasts this to Iraq where there is no local service industry.

  105. 105
    zman Says:

    Last question of the day for HAL, stock at HOD now.

    Looking for guidance on acquisitions in the future, nice try. Most are small acquisitions to fill gaps in tech, they have some large ones but obviously not going to talk about it but did say they are pleased with the acquisition pipeline.

    Call over, stock up $1.60.

  106. 106
    zman Says:

    CXPO up 17.5%, that's nutty.

  107. 107
    zman Says:

    grabbing lunch pre EOG presentation

  108. 108
    tomdavis12 Says:

    Z: Income idea. If your brokerage firm has structured product desk, RBC is offering a 3mo 14.50% (annual) return for NOG with an 80% knock out level. These are reverse conv.   

  109. 109
    zman Says:

    Thanks, you want to walk through how that thing works.

  110. 110
    tomdavis12 Says:

    Z; Minimum investment $10K. Prices 11/24. Lets say NOG is $20 on that date. If the stock does not go below 80% of $20/sh $16 for the months you get your $10K back plus 1/4 of 14.50% which is $362.50. So you get back $10,362.50 in 3 mos. If it goes below $16 you get $10,000 of NOG @ $20/sh or 500 shares. Very similiar to the covered call concept.  

  111. 111
    zman Says:

    Thanks Tom – do they build those for other names we track?

  112. 112
    tomdavis12 Says:

    110 Above average commissions for brokers, reason guys in the back office think these things up. You can also buy without and option agreement on file. 

  113. 113
    skimo Says:

    JB voted, thanks

  114. 114
    tomdavis12 Says:

    Z: 111 the bigger the name the more probable. Two weeks ago I bought some 1 year HAL for 12% and a 70% knock in level. The NOG offering is VERY unusual. Kind of why I showed it.

  115. 115
    tomdavis12 Says:

    Z: Since the Election and QE2 your space seems to be the best relative performer. Good for anyone trying to out manage an index.

  116. 116
    zman Says:

    Tom – thanks, I appreciate. Do those deals have cusips or tickers, are they tradable on the Street or only with the issuing firm?

  117. 117
    zman Says:

    On the tape, Fido owns 15% of NOG, up from 9% at last report.

  118. 118
    zman Says:

    Fed to buy $105 B in next month, 18 separate purchases.

  119. 119
    tomdavis12 Says:

    116 They are with firms that work together (syndicate buddies). Almost NO secondary market. The HAL cusip is 48124ax85. Mistyped it is 10% not 12%.

  120. 120
    choices Says:

    #107-z, EOG presentation tomorrow, 11 Nov

  121. 121
    zman Says:

    Federal budget deficit for October: $140 B.

    Budget deficit panel outlines $200 B in cost cuts. I assume the cuts are per year vs the October figure which is just one month's short fall. Sheesh.

  122. 122
    tomdavis12 Says:

    116 Biggest issuers of reverse conv are JPM, RBS and Barclays.

  123. 123
    zman Says:

    Choices – thanks much, I can take a nap now.

    Tom – that's great, and they are typically 3 month maturities?

  124. 124
    zman Says:

    Fidelity holding 10.6% of WLL, vs 8.2% last check.

  125. 125
    irongate Says:

    Here is the POMO schedule thru Dec 9th.  $105billion…. WOW
    Starts on Friday
    print it out guys… make your trades around these dates

  126. 126
    zman Says:

    Thanks for the schedule IG, market got an immediate lift when the budget and other fed headlines hit.

  127. 127
    tomdavis12 Says:

    123: 3 – 6 – 12mos. normally. You can sometimes even talk the issuer into something. It is up to them what they write. They are looking for where the demand is. In 2008 market can also smack you big time in something that seems cautious.  

  128. 128
    zman Says:

    re 127, roger that, thanks much.

  129. 129
    tomdavis12 Says:

    Z: No bond market Thurs for Veteran's Day. 

  130. 130
    zman Says:

    Yep, going to be quiet as we've gotten most of the eco data and all of the energy data out of the way for the week now.

  131. 131
    tomdavis12 Says:

    Z: If after you get the orange chart data crunched, I would love to see an updated dance card of your favorite beauties. With 20% moves I assume your favorities have to change somewhat.  

  132. 132
    Dman Says:

    Crude hit 2 year high (continuous contract) about an hour ago.

  133. 133
    zman Says:

    You mean you'd like a list short than the one on the ZLT page? That's updated as of a couple of days ago.

  134. 134
    irongate Says:

    I posted this once before, so i apologize for the clutter…. but since this is a major news item today I thought i'd post again:
    On the interplay between the FED and STOCKS: Since Sept 1 – when QE was becoming a mainstream focus if you only owned S&P on days when the Fed conducted Open Market Operations (in US Treasuries), your cumulative return is over 11%.  in addition, 6 of the 7 times when S&P rallied 1% or more, OMO was conducted that day. this compares to a YTD return of 5.8%.  the point: you would have outperformed the market 2x by being long on just the 16 days when – this is the important part – you knew in advance that OMO was to be conducted. The market's performance on the 19 non-OMO days: +70bps.

  135. 135
    tomdavis12 Says:

    133 That is very helpful. How often do you get to update that list. I know it is a hugh amount of work.

  136. 136
    ram Says:

    Re 125 – Between this Friday and next Friday the Fed is purchasing $40+ billion in Treasurys.  Is this implying a positive bias into next week?

  137. 137
    zman Says:

    re 135 – I was just thinking of the ZLT spreadsheet. The cost basis on those is updated, the current prices are a couple of days out of date. If you are talking about the Why I Own, What I Own stuff, I update generally on a quarterly basis. Planning to go through that process next week as well.

  138. 138
    zman Says:

    OAS giving the RJ downgrade the stiff arm. Up almost 2% now. BEXP as well, back to $24.

  139. 139
    zman Says:

    re 132. Yes, air is getting a little thin up here but at the same time we have had an undeniable increase in distillate demand in part from diesel demand that has put a big dent all of the sudden in once bloated distillate inventories. Imports to the US remain soft as they are going elsewhere (hello Asia) and Cushing stocks are well below their recent highs. Gasoline demand is robust and given the level of unemployment, surprisingly so. All of that is supportive of crude prices. I think I wrote a week or so ago that the market wants $90. And that the bounce off some level above where we were would be short lived but sharp and a painful affair for long call holders but that I was willing to look through that on the stock side.

  140. 140
    zman Says:

    KOG suddenly waking up… guess its the oil price.

  141. 141
    zman Says:

    NFX putting in new 52 highs, about $3 from the all time high set in 2008.  I'm going to punt the rest of my $65 calls but continue to hold the name in the ZLT. 

  142. 142
    bill Says:

    On Coal

    From Commodore: During the last few months, we have been writing extensively about robust electricity demand in China. We continue to expect that Chinese coal imports will set records in November and December. China imported 15.3 million tons of coal in September (the vast majority was thermal coal), an increase of 2.04mt (15%) from 13.26mt imported in August. Our conservative estimates anticipate that Chinese coal imports will total about 16.75mt in November and 17.25mt in December (coal trade figures for October have not yet been released). In the last few weeks, a very large amount of panamax vessels have been chartered to import thermal coal to China. China’s current monthly coal import record is 16.38mt imported in December 2009 (courtesy of http://www.commodore-research.com).

  143. 143
    zman Says:

    Irongate – any sense as to whether or not the equity market has begun to front run these days?

  144. 144
    tomdavis12 Says:

    BOP: Did get some EXIXF @ $270.  

  145. 145
    ram Says:

    ZMAN – Would expect HAL upgrades tomorrow?

  146. 146
    zman Says:

    CXPO going out near the HOD, HAL not far off of it. All in all, a strong day for the group.


  147. 147
    zman Says:

    re 145 – I would think over the next couple of days EPS estimates migrate somewhat higher for 2011 and 2012.

  148. 148
    bill Says:

    no beerthirty
    cxpo just released
    come back!!

  149. 149
    bill Says:

    Due to the addition of these wells, Crimson grew production from 30,100 Mcfe per day in the second quarter of 2010 to 36,800 Mcfe per day in the third quarter of 2010, a 22% increase over the second quarter, and to an average rate of 42,400 Mcfe per day for the month of October 2010, a 41% increase over the second quarter average

  150. 150
    bill Says:

    It appears to me they met on expectations. Also they sold shares and 3.m of it was advanced in q3 and sits in acc'ts payable so that helps cash flow by 3.m.
    With a few wells in final stage of completion 50 per day is not too far off

  151. 151
    bill Says:

    ga is very hi , imho, and it looks like they need to restructure the debt, which is costing more than
    10 % per year.
    Q4 guidance is

    Fourth quarter 2010 production
    40,000 – 43,000 mcfe per day


    Lease operating expenses ($M)
    $4,000 – $4,400


    Production and ad valorem taxes
    10% of actual prices


    Cash G&A ($M)
    $3,800 – $4,200


    DD&A rate
    $2.80 – $3.10 per mcfe

  152. 152
    irongate Says:

    CLNE stinkin up the joint with a 3mln share secondary just now

  153. 153
    zman Says:

    CXPO – OK, not great numbers, light to me on volumes which calls into question their base decline rate given what they had come on during the quarter but it also could be just when they had it come on. Revenues slightly light, EBITDA spot on with Street. The October rate was nothing new from the prior update.  Guidance is weak, should be easily beatable. Details in the morning post, wouldn't be surprised to see it come off 10 to 20 cents tomorrow. Not overly disappointed, 2 EFS wells still a catalyst on the not too distant horizon.

  154. 154
    elijahwc Says:

    More OK, not great numbers – MHR – finally updates Gonzo EFS 1st well – it's just OK – not swell.
    On the upside they have added land, have an agggresive plan for the EFS ,and parties in place to get it done.
    MHR Magnum Hunter provides Eagle Ford Shale drilling update (5.01 +0.01)

    Magnum Hunter's first well drilled in the Eagle Ford Shale oil-window is the Gonzo Hunter #1-H located in Gonzales County, Texas. The Patterson Drilling Rig #135 spud the Gonzo Hunter #1-H well on June 10, 2010 and was drilled ~9,750 vertical feet plus ~4,365 horizontal feet. An 11 stage frac job commenced on September 14, 2010. On October 11, the Gonzo Hunter's-#1-H well initiated production at an initial production rate of 605 barrels of oil equivalent per day and 412 Bbls per day of water. Currently, the Gonzo Hunter #1-H is producing approximately 398 Boepd and 110 Bbls per day of water. Magnum Hunter currently estimates the economic ultimate recovery for the Gonzo Hunter #1-H to be 362,000 Boe. Magnum Hunter is the operator of the well and owns a 50% working interest… Magnum Hunter's gross acreage land position across the entire Eagle Ford Shale has increased to 48,159 gross acres. "We plan to have four new wells on production by year-end with a minimum of fifteen wells planned for drilling in 2011. Our drilling rigs and pressure pumping services have been contracted for the next year in order to meet our projected 2011 capital budget. With an ownership interest of 50%-100% in all of these wells, each completion has meaningful impact to our Company's daily production and will, therefore, directly improve our future financial results."

  155. 155
    zman Says:

    Will take a look for the morning as well Eli … back to our regularly scheduled beerthirty already in progress

  156. 156
    BirdsofpreyRcool Says:

    Tomorrow not shaping up to be so hot…. CSCO whiffed their numbers… down pretty big in a/h.
    So far, Nicky has been spot on (as usual).  Guess we may test her next lows…

  157. 157
    elijahwc Says:

    DRATs…..now MHR has actual production from a shale.  Not stuff they bought back when they didn't have any money (this is a sure sign of genius).  Stuff they actually discovered. on their own  Double drats.  So goodbye virtual oil company and all the attendant gains of the last two years.

    Did I mention that Gary Evans said at an investment cofab way early this year that "by the end of the year we will be at $5 and issuing equity and everyone will be smiling and happy about it.  Humm…….seems the have a reason from the EPS release, "bolt on transactions".

    Keep thinking they have two in the hopper, one of which is ready to close prior to year end.  Way to go Gary. Let the dilution begin.  I'm smiling & thanks Gary.

  158. 158
    bill Says:

    What the frac?

  159. 159
    Jerome Blank Says:

    CIGX…added a weekly and P&F chart…CIGX should find support here at $1.78,  the 200 period weekly, looking at the daily, thinking CIGX could drop to the 200 day daily benchmark at $1.72, if it does and you are bullish,  this would be a spot to conisder longs, so major support at $1.72 to $1.78, key resistance at the topside weekly trendline at $2.02…charts updated
    Thanks all for the continued votes, it's much appreciated…

  160. 160
    Jerome Blank Says:

    I've updated a number of charts…
    KOG price action taking on the structure more of a consolidation traingle now, decending triangle negated…strong price action so far,  holding the daily 20 period at $4.17….  

  161. 161
    milepost_43 Says:

    160…thanks voted

  162. 162
    zman Says:

    AREX on the tape increasing the secondary size from 5 to 5.75 mm shares, priced at $16.25. It's nice to be in demand.

  163. 163
    RMD Says:

    SFY doing 3mm shares to fund '11 capx.

  164. 164
    Jerome Blank Says:

    #92 HAL…added a 30 min expanded chart to help with the calls referencing near term support and resistance…
    #96, ram, thank you for posting…

  165. 165
    braces Toothbrush Says:

    braces Toothbrush

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