Market Sentiment Watch: Nervous market but not this morning due to strong manufacturing data out of China and the U.K. Congress is back from now to probably December 17th for the lame duck session so look for them to be grabbing face time in front of cameras and lobbing trial balloons into the market place like its grenade practice in North Korea. In other words, prepare for sloppy trading sessions. The market should still be focused this week on the Friday's payrolls numbers but for intraday market mood swings do check the headlines out of FARC for truly laughable (and not laudible) D.C. action. In energy land today we have some of our favorite names speaking at energy conferences and said conferences have indeed inspired more news flow.
Ecodata Watch:
- ADP Employment
- Productivity (F = 2.3%),
- ISM (F = 56.8%),
- Car sales (F = 12.2 mm),
- We get the Beige Book later this afternoon.
In Today’s Post:
- Holdings Watch
- Commodity Watch
- Oil Inventory Preview
- Stuff We Care About Today – GDP, KOG
- Odds & Ends
Holdings Watch: ZCAT (Zman Catalyst portfolio):
- $5,300
- 99% Cash
- Yesterday’s Trades: NONE
ZIM (Zman Inefficient Markets portfolio)
- $7,100
- 6% Cash
- Yesterday’s Trades: NONE
Commodity Watch:
Crude oil fell $1.62 to close at $84.11 yesterday, in poorly behaved end of calendar month trading with a strong dollar calling the move. After the close, the API released a mixed bag of a report and I suspect we will see a bigger draw on crude stocks due to a renewed slump in imports in today EIA report (see below). More importantly, we are likely to get another build in stocks at Cushing, despite higher refinery utilization and this will likely begin to act more and more like a governor on crude prices, especially early this month. By year end, I still expect crude to be ticking around near $90. This morning crude is trading up $1.25.
- China Watch: China's PMI rose in November, it's 21st consecutive monthly increase. Good and bad for crude prices. Good in that consumption is up due to the factories pushing up utilization. But bad in the sense that the Chinese are even more likely to hike rates again.
Natural gas eased three cents to close the day at $4.18 yesterday. Without sustained cold and probably very high profile public announcements of curtailments I don't see gas avoiding a number of trips below $4 this winter. This morning gas is trading up a nickel.
Early Read On Natural Gas Storage:
Street is looking for a 29 BCF withdrawal for tomorrow’s report.
- Last Week: 6 Bcf Withdrawal
- Last Year: 2 Bcf Injection
- 5 Year Average: 41 Bcf Withdrawal
- 10 year Hi: 13 Bcf Injection
- 10 year Low: 100 Bcf Withdrawal
Oil Inventory Preview
API Watch:
- Crude: DOWN 1.14 mm barrels but stocks at Cushing were seen rising another 0.6 mm barrels
- Gasoline: UP 1.069 mm barrels
- Distillates: Up 0.224 mm barrels
Stuff We Care About Today
Jefferies Global Energy Conference (names we care about today - all times EST)
- CLR - 9 am
- NFX 9:30 am
- GDP or HK at 10:10 am
- UPL - 10:40 am
- SFY - 11:10 am
- OII or CHK at 11:40 am
- HAL or SM at 1:20 pm
- EXXI at 2:20 pm
- BEXP at 3:00 pm
- CLB at 4:00 pm
KOG Releases Quick Operations Update
- Previously announced Williston Basin acquisition closed. The full post from this acreage announcement on October 19 can be seen here. Note that originally the deal was to be done in cash and stock but it instead closed as an all cash deal, reducing my thoughts on share count here by 2.75 mm shares or almost 2%.
- Excluding the acquired volumes, the exit rate range straddles the prior 2,500 bopd target. KOG notes that the 4 well pad will be fracced by year end with first production in January; I'm not going to sweat timing of the 4 well pad coming on just after as opposed to just before year end.
- 4Q volumes are higher than I was looking for at 2,100 BOEpd vs my 2,000 BOEpd target.
- KOG says they will provide 2011 capex and production guidance in the next few weeks, won't be surprised to see triple digit YoY production growth for 2011.
- I would not be surprised to see an equity offering to set them up for 2011 operations in the next few months, especially if the shares continue to rally, but there is no great rush:
- This acreage deal had a net cost of $108.6 mm, and as previously stated, they issued no shares to the seller, a deviation from the original plan.
- As of 9/30, KOG had $62 mm in cash.
- They currently have $50 mm available on their new revolver (up from $20 mm prior to this deal).
- And a senior secured second lien term loan with an initial commitment of $40 mm
- That leaves them with liquidity of about $43 mm before considering cash flow which is rapidly growing.
- When their budget for 2011 does come out I would not be surprised to see it at $100 to 125 mm +, given the $75 mm they will spend this year. I expect them to have cash flow in excess of $75 mm next year, and approaching $100 mm but that will depend on the level of activity and favorable oil prices. That cash flow along with the spare liquidity capacity will go a long way to funding them well into 2011.
- But my sense is, that if the shares continue to perform, a secondary around the $5.50 to $6.00 mark to recharge the balance sheet will be easily justified by management, especially given that the last one was done in August at a paltry $2.75. My sense is that such a deal would not be poorly received by the market, as has been the case with many recent Bakken name secondaries as investors seek oily names and abhor the land of the gassy.
- What do they mean by "Smart Money" Watch: Since Morgan Keegan and Stifel Nicolaus downgraded KOG on October 27th, the stock has done little but go up. The stock closed at $4.33 that day.
- I continue to own the shares of KOG in the ZLT along with some calls in the ZIM.
Overnight Emailbag Request - GDP Presentation Review
- I do not own the name at present
- GDP is gassy (98% of production) and leveraged (65% net debt to cap) and not well hedged (less than 40%) for 2011. They're focused on Louisiana and Texas, mostly Haynesville and Bossier drilling, but with Eagle Ford tests starting to add up. So what's new?
- South Texas:
- Eagle Ford Shale:
- 40,000 net acres in the La Salle and Frio counties, Tx, in the oil window
- La Salle is where CRZO just punched to 1,000 Bopd IP wells announced yesterday
- They have only a Bcfe booked in the area so far (well under 1% of total reserves
- 1 well completed IP of 667 BOepd (kind of average around this part of the play prior to the CRZO wells)
- Two more EFS wells will be completed in 4Q (will add to the next Catalyst List), one of these is fairly close to a CHK well that IP'd at 1,220 BOEpd. .
- Other well results from other operators have been OK in the area.
- Buda Lime
- 2 wells completed so far in the Buda, just underneath the Eagle Ford, average of the 2 IPs was 520 Bopd.
- These are cheap, high IRR wells, would like to know the plan for 2011 here as well.
- Eagle Ford Shale:
- Nutshell: Valuation is high on 1 P reserves at $4.28 per Mcfe, lower on their estimates of 3P of course. I'll start watching it again but am not interested in nibbling just yet, again given the current gas exposure, leverage etc.
Other Stuff:
- SFY Completes Secondary, With Overallotment:
- Just another name in E&P in high demand, likely due to its South West Texas Eagle Ford potential.
- CRZO - My read on CRZO's announcements yesterday in the Eagle Ford and soon from the Niobrara and Marcellus are a bigger deal than was reflected in yesterday's trading action. The Street would seem to agree as price targets jumped into the high $30s and mid $40s as analysts updated their models. I plan to be long here for next year, just watching for now.
Odds & Ends
Analyst Watch:
- TBA in comments.
Really Dumb Reading Watch:
GAO Reports On US Gas Flaring - They're worried about $23 mm in lost royalty revenues for the government due to flaring. We have over a trillion dollar deficit and are dependent on sometimes hostile governments for imported crude but congress is worried over a scrap of flared gas that if not allowed would reduce U.S. production of crude ... funny how the report doesn't address the royalty loss of not producing the associated crude.
ADP comes in at 93K, above 70K estimate. Futures move higher. SP Fut up 15 now
Gary Evans / Magnum Hunter today 1:40 PM Eastern Time
4th Annual Canaccord Genuity Global Energy Conference live webcast for those interested:
http://www.wsw.com/webcast/canaccord3/mhr/
z — KOG = great overview of the acqtn closing and analysis of future cash flow. As — for whatever reason — they chose NOT to issue stock with the land deal, I agree… makes sense to issue shares at some point. Probably after they frac, test, and report the 4 wells they have teed up. So, could be a January event.
MMR rebounding a bit after y'days hideous close. Looking for some news here, sooner than later.
U.S. productivity just reported. In as expected, up 2.3%. Interestingly, Unit Labor Costs were DOWN 0.1% (in contrast, once again, to Obama's "freezing" Federal salaries… the rest of the U.S. is still seeing wages go down. Just something to keep in mind for lively conversations at the local bar…)
Thanks Z
How many wells are you basing the KOG capex estimate on?
robry changed his # to -18. He was -29 and enercast others settled on that number. proves to me all they do is parrot robry
Last year was warm , so yoy there is a deficit.
Calling for a 15 cent gas tax..im suprised they havent called for a dollar or 2 hike
KOG — thinking about next yr's program in the Bakken…. they have 2 of their own rigs + a 3rd rig in the XOM/XTO JV. So, depending on how long it takes to drill a well, how far ahead of the completion crew you are comfortable getting (although hearing that HAL is treating KOG with special respect), and what the weather restrictions/regulations are… bet you can drill what, 8 wells per rig per year? The "net wells drilled" would be lower, due to net ownership… but it's just a production/engineering project at this point.
December 1st… and it's snowing. Neat calendar trick!
chenaire (lng) at 6.00 pre market. i thought that name was headed for the dust bin
http://finance.yahoo.com/news/Cheniere-Signs-MOU-with-Gas-prnews-395180822.html?x=0&.v=1
Why should Russian behemoth Gazprom worry about Cheniere Energy, a minnow struggling under a debt nine times the size of its $317 million market capitalization?
Cheniere runs a liquefied-natural-gas import terminal in Louisiana. The opening of shale gas reserves obviates the need for LNG imports, so Cheniere wants to build a new facility by 2015 to export LNG. It has signed memoranda of understanding with three potential customers: Morgan Stanley and two Chinese and European gas distributors.
Tuesday demonstrated why such companies might be interested. With snow falling, U.K. gas prices spiked to $9 per thousand cubic feet, $5 above U.S. prices. Paying, say, $3 for liquefaction and shipping would still leave a nice profit. Export costs to China are more like $4, but then LNG contracts there command about $12 per thousand cubic feet, says Citigroup.
Whether highly leveraged Cheniere can pull this off is an open question. Notably, hedge-fund manager John Paulson last week sold nearly half of his stake after a rally sparked by the signing of the agreements. But even if Cheniere doesn't, the economics mean someone else could.
Gazprom's profitability rests on selling gas to Europe at prices linked to more expensive oil. For the first 10 months of this year, Gazprom's contracted gas cost 44% more than U.K. spot-market gas, according to Sanford C. Bernstein.
America's sudden gas riches mean LNG cargoes destined originally for itself can supply Europe, eroding Gazprom's market share and forcing it to adjust contract terms for some customers. Should America start exporting LNG, it would further undermine the old model of captive regional markets paying oil-linked prices. That is great for customers; Russian gas monopolies, not so much.
Thx for 7.
S&P Areas of Interest for Wednesday An short term road map.
1201.75 Major Resistance. Expect any breakout here to work to 1204.50
1199 Near Resistance. Market turned away on last 4 attempts.
1193.50-1196.75 Current area of acceptance in overnight session. Expect chop in this area.
1191.75 Minor support
1190 Near Support
1187 Major Low Volume area.
1179 Major support
http://www.charthub.com/images/2010/12/01/FT71_ES_Composite_2
Ok, back from intern duties …
re 4 – no problem. And as BOP reminds us every now and again, when gas turns, you want to be in the financially levered gassy names so GDP qualifies there.
re 5 – guesstimate is drill and complete 15 to 20, I won't firm things up until they do but assuming decent results and what they will enter the year at gets me to about that CF number. I'll publish that model shortly after they give their 2011 plan. I don't have anything in there for significant land capex.
re 6. Thanks, agreed, although I'll admit the shoulder season is tough to get close to right. Who is calling for this tax?
BOP – re 7, ha, we're on same page.
Zorg – thanks much for the levels, really appreciate that.
CQP & LNG: They also have an export MOU with CHK I believe. CQP sports an 8.5% yield.
BEXP at 3 pm CT, not EST, checking others.
Analyst Watch:
BEXP – Howard Weil ups target to $32 from $25.
OK, those times in the post for the Jefco call are Central, not EST.
Z — BOP – thanks for update on KOG following release. All around great work on KOG over the last 2 years or so.
"Smart Money" ?? Hmmm.
That $23m lost in gas royalty revenue would cover the Jet A for about a week for Air Force One and the fleet of jets flying congress around.
Which means NFX is starting now
re 20 = LOL. I just can't believe they wouldn't look at the oil side of the same equation. Oh, no, wait…. yes I can.
EXXI/MMR – I think yesterday was end of month shorty shenanigans as BOP supposed yesterday.
Headlines coming across saying cuts to Social Security are part of the deficit reduction plan.
KOG taking the confirmation of exit rate and the slightly altered funding of the acquisition plan in stride, at $5.10.
June '08 high = $5.18
June '07 high = $6.50
Of course, there were a lot few shares then so this is the biggest cap this name has had.
From Madison Wms moring blurb —
MMR/EXXI– hearing a lot of "no news is bad news chatter" bc there has been no recent news on Blackbeard East and Blueberry Hill. I understand that thought process on Blueberry, but still too early to hear news on BBE. Expect to hear add news once BBE is TD…
pxp getting nailed today for slip in offshore sale and putting hedges on
Analyst Watch:
NOG – Howard Weil ups their target from $20 to $28 … better late than not at all.
At $23.50, that's a new all time high for this one.
re 27 – Saw the headlines, didn't bother to read. I'm ignoring them for now but if they get cheap enough I will probably continue to ignore them. Just not convinced they are making any of the right moves.
KOG — just like I remember where I was the day Kennedy was shot (elementary school)… I recall the flavor and feeling of the day KOG hit 16 cents. I actually know someone who bought shares that day. Just musing….
z – BSIC????
PXP = can't ignore them… best contra-indicator out there!
re 26 – that last bit does not jive with what Schiller said on the call last Monday. If I recall correctly, they had reached a casing point at around 28,500', had tripped out to pick up a logging package and were going to log something like 4,000' feet of potential pay. Is that what you recall? Or should I just go grab my notes as this NFX call still has not begun.
BSIC = Holy cow. I have no idea but at up 80% I'm glad I did not punt, going to check to see if BEXP has a comment.
BEXP's latest presentation for today's post close speech at Jefco is up on their website.
http://www.bexp3d.com/IR_pres.pdf
Tooling through it now.
z — #33… i think you got it spot-on. Thinking MadWms trying to calm the market a bit on the names. But, i think MMR would have the results of that BBE logging trip in-house… and "no news is NOT good news." Maybe they are thinking the pay zone is just a little bit lower… a little bit further… Still… tough to put a positive spin on this news void.
re 36, or it's just taking longer to log it due to a mechanical …
BSIC trading $2.10, still reading BEXP presentation, some pretty new slides but so far nothing pertains to BSIC
Z
wow! Thanks for BSIC.
Don't quote me but the acreage BEXP bought off BSIC's partner who was idling it looks to contain one or maybe two wells listed as completing in the new presentation, checking notes as BSIC never divulged the names of those.
BSIC not able to answer the phones at the moment, left a message
Getting that hectic, hair on fire sensation that says the group is overheated. If your name has not done a secondary they just about have to be considering it here.
Please note, the Search function is not working properly, we are aware of it and will try to repair it late today.
BSIC primer from September, just after I entered:
http://seekingalpha.com/instablog/53637-zman/96958-earthstone-energy-inc-bsic-bakken-minnow-with-big-fish-dreams-part-1
ISM at 56.6 vs 56.8 expected
MMR …. the bloodbath ain't over yet.
MMR unable to shake the red even today, definitely fear out there.
Read BEXP slides last night. Looks like very impressive growth to me.
Here is link to Cannacord presentations today, including ATPG MHR REXX TAT among others
http://www.wsw.com/webcast/canaccord3/
WLL crossed its all time high
OAS at $27+ = wow, faster than I would have thought but still cheapest in terms of dollars per raw acre.
Tom – it is.
BSIC Followup – Just took at look at the Banks field on the NDIC mapserver, within the greater Rough Rider area, and I show NO rigs by BEXP on site at the moment which is what I would think would be driving BSIC. Stock coming off a bit now. The closest rig we care about is KOG's Koala area well that should be near time to be completing.
Thanks much John.
Z: OAS Nice call.
BSIC – more followup – according to a yahoo msg board the reason for the ramp is a paid subscriber site jumping into, something called NIA, the National Inflation Association? Sounds fishy to me. I'd rather see them get wells on than get hyped by some group.
bahhken beyond frothy
REXX the rocket.
West – have you checked out FPP, minnow with Bone Springs exposure in 2 wells with XEC?
ZTRADE – ZLT – BSIC
BSIC – Sold half at average cost of $1.81, up 59%.
BSIC normally trades about 10,000. Today, 660,000 and counting.
neat
Hey guys, got this email from NIA this morning… I think they wanted over $1000 for their last picks list, the price for this one is yet to be determined. I'm new to the forum so I'd also appreciate any input as to the tools you're using when you ferret these out. I've been going through the forum looking at old posts and the solutions and have been unsuccessful in arriving at the correct solutions.
As you know, NIA's latest stock suggestion U.S. Silver Corporation (TSX Venture: USA) gained 196% in 35 trading days after we suggested it. Our previous stock suggestion Canadian Zinc Corp (Toronto: CZN) gained 111% in 47 trading days after we suggested it. Our previous stock suggestion before that Pyramid Oil Company (PDO) gained 57% in 3 trading days after we suggested it. Our previous stock suggestion before that Coeur d'Alene Mines Corporation (CDE) gained 47% in 137 trading days after we suggested it. Our previous stock suggestion before that Revett Minerals Inc (RVMID) gained 135% in 177 trading days after we suggested it,
On Tuesday, November 30th at 8PM EST, NIA will be announcing its top 7 stock suggestions for 2011! This report will only be made available to a small exclusive group of NIA members who are willing to make a contribution to help fund our organization. We will be announcing the details about how you can submit your contribution on Monday, November 29th at 5PM EST. You will have 24 hours to submit your contribution starting on Monday, November 29th at 5PM EST. If you make the required contribution, the report will be emailed to you on Tuesday, November 30th at 8PM EST.
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Company #2: An oil and natural gas company with a market cap below $20 million that has been profitable every single year for over a decade. They have a large cash position and no debt. A multi-billion dollar company just acquired the property they have an interest in. If you annualize their net income last quarter and give the stock a P/E ratio of 20, it would be worth over 200% higher than its current price.
Company #3: A mining company that is positioned to become the first primary producer in the U.S. of a commodity that is used in many of our latest electronic devices. Americans currently consume over 50% of the world's total annual consumption of this commodity, yet almost none of it is produced here. Production is expected to begin Q4 2011 / Q1 2012. Once in full production, annual revenues from the mine could exceed $90 million (based on current metals prices). The current market cap of the stock is approximately $60 million. Besides owning 100% of their mine, they also own a production facility that would cost over $70 million to reproduce in today's dollars
re 57 – yeah, that's what I saw too. Those kind of things make me nervous. Very pump and dump. The logic is bad on the price target reasoning.
OK, got the right time zone now, getting on the NFX call.
EIA
Crude up 1.1 mm barrels
Gasoline up 0.6 mm barrels
Distillates down 0.2 mm barrels
…
More EIA
Imports fell by almost 600,000 bopd but utilization pulled back sharply which I didn't see coming
Demand:
Gasoline – flat with last week which was low for this time of year
Distillate – pulling further back… should head back north with this weather but not great as we had been making progress on eating away at inventories and that has halted the last couple of weeks.
…
bill thanks for explanation in 10; saves digging for an explanation. Russia is still the bad guy.
More EIA
Cushing – up 900,000 barrels. Not a great thing for prices as we are quickly moving back up to the top end of the range. See comment in post on pricing thoughts.
Local paper saying Arkansas O&G commission is seeking a temporary moratorium on new disposal wells while they investigate recent spate of small earthquakes. I should cheer this on, it means high gas prices. Probably not great for SWN's growth plans though.
Headline – Govt won't end drilling ban off Florida coast for at least 7 years.
Listening to NFX, nothing really new so far.
NFX Notes
Williston – 4 rigs now, going to 5 at beginning of 2011, will announce the results of their first 9,000 foot lateral by year end.
…
Z , I will have to hit u back on the FPP off to the real world.
i cant believe mmr trading
I can – its one of the reasons I keep 15 to 20 names in the portfolios that make up the ZLT.
are you familair with abax?
No, do you mean AXAS?
Z-is REXX in your sights?
zman – EXXI/MMR still O.K. long term? I did ask this similar question yesterday.
OAS up 10%.
KOG moving well again as well.
Cargo – I watch it, it's been up here a couple of times, I think they had a soft 3Q which pulled it down some, still learning there.
Ram – as far as I know.
ATPG – starting now
zman – HAL still is tracking the overall market.
GDP and HK both appear to be not webcasting from Jefferies.
re 77. Yes, I'm currently not playing.
#57 hmmm … I owned some Impact Silver IPT.V (ISVLF) until I found it was up 34% today for no apparent reason. I figured some guru or other must have juiced it. Maybe the same guys who juiced BSIC, since they seem to like miners.
Z: VNR has been breaking new highs. I assume you have not revisited that name.
One more day and I'll take some of the WLL calls off the table. They speak tomorrow at Jefferies, we're overdue by 2 weeks on a pr there in the Lewis and Clark, so the timing is right for one now to go with the presentation.
re 81. No, I have not.
Dman, ref 80: I own it too. Sold a quarter of my position on this bounce.
FPP: This might be part of the reason it started lifting 11/18
http://www.otcjournal.com/Field-Point-FPP-Little-Company-Really-Big-Drill/af/archive/20101118-1/
Is there a story behind the OAS move today?
Eli – FPP's Ray Reeves was a friend of mine about 10 years ago, very hard working, pretty savvy for a minnow, and often found in the field doing his own workovers. Lost touch with him when I quit the "real" world,. Last I checked he owned a ton of the stock. Unfortunately I also understand that he doesn't have deep rights on anything would get him into the Eagle Ford play. But the Bones Springs may be the thing that moves the needle for him. Note the high working interests in the 2 XEC wells and then note that his whole company only makes 300 boepd, lol.
Just got off the phone with BSIC. Did not learn enough to keep me long on this pop. I may miss a further hype rally but that's not why I do what I do.
JBIMJ – I think it is a function of their growth target and their low for the group $/Acre in the play.
See link here,
http://zmansenergybrain.com/2010/11/30/tuesday-morning-natural-gas-supply-slide-show-plus-other-stuff/
Scroll down to the bar graph in the Stuff section under OAS.
ZTRADE – ZLT – BSIC
BSIC – Out second half of my position at an average cost of $1.80, up 58%. Stock moved further than I expected, much more quickly than I expected. I may miss out on some further move here but the fundamentals don't, in my view hold name here. I plan to track it and revisit as developments warrant.
Z and BOP – Do you think KOG will be doing a secondary soon?
Oil drilling ban in the eastern Gulf of Mexico, other areas to be maintained
An earlier report in the Washington Post noted sources who indicate the Obama administration will announce later today that it will not allow offshore drilling in the eastern Gulf or off the Atlantic and Pacific coasts. The announcement is said to be part of a drilling plan for the next five years. In addition, Reuters is reporting that according to a congressional source, the administration won't hold oil lease sales off the Alaska coast until 2012. http://voices.washingtonpost.com/post-carbon/2010/12/obama_administration_will_ban.html?hpid=topnews
S&P Through resistance 1204.50 next level…..expect it to slow here
Next upside target is 1208.25
Support now 1196.75
re 91 – I really should cheer them on.
Thanks again Zorg.
Isle – see comments in post, I think I said it best there for my part.
TAT about to start at Cannacord
http://www.nytimes.com/2010/12/01/nyregion/01fracking.html?_r=1&hpw
NY may join the anti-fracing hysteria-drillers need to get out in front of this.
J – thanks for the reminder, will jump on that.
What distance does Cuba have to maintain from Florida coast for drilling?
XLE at level not seen since September of ’08
re 98 – not enough.
#92,93-POMO works-have not turned on CNBS but evidently tone is giddy.
… in the event of a spill of any size.
Sorry Z – somehow missed that great post!
#91 How does this effect MMR
John – do you have TAT as started?
md – Not at all, not their area. Only one with real interest there that I know of is Shell who has a big block of leases off Florida that they bought in a leasesale pre Florida ban. Nice, buy it, then can't use or sell it.
No i don't, have the slides but no talk, don't know why.
98 point taken , china cuba can drill off florida but us companies cant
calif is teetering on bankrupcy and no offshore there either
Just started
re 108. Add to that that Cuba has been talking about using an Iranian drilling company to spud the wells off the Florida coast and you have the whole craptastic picture.
http://www.businessinsider.com/bill-gross-says-us-is-choosing-easy-street-2010-12
And we keep supporting Chavez/OPEC.
Well done, Obama! Sorry, enough spouting.
re 109 = TY
are you getting 2 conversations on tat call?
yeah
TAT Notes
Turkey:
Selmo – 2,200 bopd, drilling times falling.
Arpatepe wells – EUR of 400,000 bo each avg. … did acid job on first well, (nothing new here), #1 went to 500 bopd after acid, now at 300 bopd. Why not acidize other two wells? They are finishing up 3D, then will begin drilling.
Bakuk 2 well – trying to find oil leg (still).
Exploration:
Strat trap test before year end – just glossed over it.
Romania – why not sell this? Oh, shales.
Morocco – completed the HR33 well – flowed oil, shocking news. Not in a big way but it will keep them after the country. Shallow oil, have 3D over it. Will be re-evaluating over the coming months.
Q&A coming, not a lot to bite on this presentation … slow, slow, slow.
BEXP – another pennant breakout. Next catalyst will be news from their RR downspacing (still listing the 4th well in the pilot as completing on slides but that could change at any day) . Other news around year end from 1 well in Montana. And then probably 4 more RRider wells and another Ross area well.
Normal
0
this is unreal…………… U.S. WOULD BE READY TO BACK LARGER EUROPEAN FINANCIAL STABILITY FUND VIA INCREASED IMF COMMITMENTS – U.S. OFFICIAL
Normal
0
gold goes higher… USD in freefall. guys… better own some guns
http://www.zerohedge.com/article/madness-lost-society
pxp is suddenly moving up hard
please god mmr next
Briefing says PXP just caught an upgrade at a Tier 1 firm
PXP upgrade to a buy from neutral at Goldman
re 117. Wow.
HK,rrc,swn up 2 to 3 % today chk flat after a 4 % hit yesterday on Argus sell– 7 % or about 1 b in market cap– I wonder if Aubrey ever talks to these guys again
If you were him, would you answer points publicly, privately, or ignore them?
Bill
Oldest child called last night and pitched me DHT.
Said Dbl Hull VLCCF co w/9 ships all on long term k's. 1st lease doesn't come up until 2 yrs from now. 4.00 Book vs 4.39 price. Just reinstated the divi @ .40 at the bequest of some hedge fund his firm knows.
Is this one of your names?
re 122. Probably ignore them. He's answered them directly and by way of performance (buy low $/ac, sell at higher $/ac and get a carry) that he must be blue in the face addressing it.
Bulker update from fearnly's
Capesize
Hard times for owners as levels – physically as well as derivatives – have
dropped drastically across the board. Spot demand is simply not enough to absorb
the massive number of new entries that come in addition to the existing fleet.
Average spot earnings down close to 25% w-o-w, coming in at around usd 26k.
Pacific is hard hit in particular, with rates for rounds falling by almost 35%
to usd 18k. Atlantic is holding up better, as the ballasters from Far East take
most of the general beating
Housekeeping Watch: Our new billing software will limit access to the site again beginning this weekend. So if you can't get in you probably know why. Contact me at zmanalpha@gmail.com if you have any questions about this.
I thought you were still married to Petra?
She's out of town at the moment.
Also know that password sharing which is prohibited by the Terms and the Conditions of the site will be monitored by the new software. What to do if you are sharing yours: Don't. The system will block you if you exceed the IP threshold allowance. Email me if you have questions about group rates.
http://www.zerohedge.com/article/goldman-jumps-shark-fundamentally-shifts-its-bearish-outlook-economy-goes-bullish-hikes-outl
Not sure if Abby Cohen had anything to do with this-if she did, I'm going short up to my eyeballs.
What if we access at different locations? Each location will have different adresses.
Z – SSN seems quiet. Quick update on your views there?
The IP max is set high enough to address that issue.
re 131 – No change in my views, still positive, still holding. I don't see it moving much in the next couple of months. They have had some completion delays in the Bakken. The Niobrara is the real story here and there will still be 1 well drilled in 1Q by them. CHK has drilled a couple of wells in what SSN sold to them and has a royalty interest on and we should get news about those with CHK's year end call. I'm a holder here, probably a buyer 10% lower and a seller of part of my pos over $1.50.
#133 thanks Z. Main reason I asked is that it has traded contra to crude lately & I'm guessing that will change.
D – I expect it to flatline for awhile until something actually happens on the fundamental side. If the stock falls before news comes out that just means that more of the share price is represented by their cash hoard.
PXD is just soaring. These Permian plays are where I am underexposed. Currently small in NG pure plays (HK, SWN), overweight in the Bakken (holding 5 of the 6 key players in the pure play or nearly pure names) but I don't have exposure in a big way to the Permian. Hmmm. Probably time to rejuggle a bit. CRZO, PETD, AREX, REXX, XEC all on my to look at more closely list for the ZLT, may take two or three of those, not yet sure.
Is the Permian the new Bakken?
re 136…request you also consider PXD
Not geologically but market wise, people have definitely warmed to it. I'm late there but would still like exposure, especially as some names in the Bakken get, um, fully valued.
Yeah, PXD should be in the running too. Toyed with them in calls a couple of times this year but didn't take the common.
Are there other options besides paypal?
123 dht-
i am familar with name–stock is around 4.40 currently pays out 40 cents
The good:
Long term charters
Divy appears safe for 2 years
Valuation: you have to be careful as book reflects historical costs. As rates have fallen so have the value of the ships, offsetting that is the long term charters.
Letting an interest hedge expire so in shrt term will help earnings 8 m per year , adds to risk if interest rates rise
rates are weak so long term cover covers you for a while
So short term ok if all you want is divy yield.
Could be problems a few years out
By the way Nm thinks tankers are bottoming and making investments thru nna, Nm own 60 % of it
other similar companies are NMM and vlccf
136 sd is in the permian and they have bone springs acreage too
re 140 – Google checkout, check by snailmail, softdollars, mosey, and one other I don't remember at the moment.
re 142 – I know re SD but I have issues with management I guess you would say. They could be bought and forgot for awhile by me I suppose. Don't know, would need to get comfortable with all the parts. Story got kind of complex I thought.
If the day lasts long enough MMR might tip green.
I flipped out of my SD up a little from here. Do think it is worth playing at 5.20?
re 145 – can't say, no idea at the moment. Or were you asking bill?
MHR on now at Cannacord
I was asking Bill. The two of us seem to be on the same mind set on a number of stocks.
Cool, will go back to napping.
Will be on the REXX call in 3 minutes
Before you get too sleepy, it appears google checkout is the only other method I am familiar wih. with this ne suystem, will we get a notice prior so we are not cut off?
142_ as you know i was in it- I have issue with ward as well and debt level and am out now. Its not what he tells you that matters, its what he doesn't tell you like having 100 bcf basis hedge waha henry thats worth about 10 cents and he paid 75. waha cash today is 4.10 so gross rev is 3.35 mcf his cost abou 9 per mcf.
I dont think he can pump enough oil from the fst and ard acquisitions to cover the ng loses.
he likes to say he make 100 % roi on those wells and he still loses money qtr after qtr.
Permian tome by Canaccord is a good primer, if over wordy.
Italyinvestor – hope you are doing well. And hoping you get one of these:
http://news.yahoo.com/s/afp/20101201/sc_afp/usmilitaryweaponsafghanistan
re 151. Don't know, will check on that. I know that right now the PP option is the most automated one I have to assure that you are not cut off.
MHR very nice presentation, mentioned 10,000b/d by end of nxt year.
148– elduque im going to stay out until i see evidence they can go cash flow positive ..and even ward admits wont happen until 2013. TPH was right something is amiss at sd
I would also like to see them sell something somebody wants and not 100 m but a billion or more
i dont like wards comp plan, the lower he can drive the stock down , the more shares he gets and i dont like that there are no checks and balances..ward is chairman of bod and ceo so i dont think he is going to fire himself
All that being said, his move into the permian oil stuff trading his stock for oil was a brilliant move (for him)
152 – well said. Exactly why my eyes glaze a bit when the name comes up. It seems like such work to follow. I'm sure there is value there and it maybe even cheap but there are easier stories for me to dig about on.
Beige Book out – headlines say economic activity improving but employers want to see more of that before hiring.
153 permian tome–where can i find it
MHR – Evans on EFS " We've got the frac crews but damn we're paying for it"
Z, some of the Uranium stks are going straight up-do you follow, or have you seen anything to explain the sudden surge.
Thanks.
Bill: The argus piece on CHK was repeated in Barron's today. Re 142. I know SD is permian and I think you are correct about some bone springs.
re 161 – very rarely do I look in on them. I defer to Occam in the space.
Bill thanks for help on DHT
More MHR
2 wells flowing in Atascosa (surrounded by EOG) awaiting frac
Rig in EFS for all of 2011 and frac crew date for each month in place
!st well in Ohio MShale Liquid rich to be completed before end of month
Two other MShale welss drilled awaiting frac
Will enjoying very high ROIs in MS even with 4.00 gas
Looking at adding acquisitions in all three shales EFS MS Bakken
Instituions are showing up now that over five giving the production ramp going forward
another Bone Spring article (CXO)
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=554336&ven=yahoo
TAT – mentioned a successful oil well in Morocco without going into deets. Another presentation, another yawn of a reaction and on a strong day for energy. Patience wearing thin here.
Analyst Watch:
APA – Goldman adds to Conviction Buy List. That's probably code for sell, sell, sell. At least it was for EOG. Joking aside, and looking at the chart of APA, one has to wonder why they like it more now, as it is completely broken out, than earlier.
Bill – your prayers have been to be answer with MMR coming flat, lol.
REXX starting now
Thanks for all the comments on SD.
Listening to REXX and smiling – thanks West, will be following up there shortly
Looking at KOG stock price and smiling, thanks as always BOP.
ROSE call starting now at Cannacord
EXXI speaking at Jefco in 40 minutes.
Bop, I'd like to add my thanks for KOG as well. By the way are you ready to put them in the rinse cycle yet?
skimo — KOG, not yet. Don't think we run into a headwind until they announce a 2ndary… in mid-Jan, is my guess.
Emailed in from Nicky:
Resistance at 1207. I think we see a pullback to 1197 – 1200 from this area and then we move up to 1219 – 1222.
Need to do a ROSE back of the envelop NAV redo, very good presentation.
RE 163 – I follow fairly well. They've all just gone up because spot has increased from 40 to high 50s and there are those who are expecting another insane rise like the previous one where everyone was saying uranium $300!!
None of the stocks are currently making enough money to warrant the prices, it's all based on expecations for the future value of lbs in the ground. The stocks that have moved the most are the ones with small existing production and large known assets in the ground even if they arent currently making any money.
EXXI – moving up in front of presentation, should be interesting if he takes questions.
MMR stuck down 3 pennies.
GST breakout continuing, expecting news by year end on 3 wells, (2 Glen Rose, probably not gangbusters on the combined rate, and 1 deeper well which could be significant relative to total company production).
#177-thanks, VTZ-that has been my experience, go up like a rocket on expectations and then crash like a rock when expectations do not materialize.
Few more comments:
Rio Tinto came out the other day to say that the uranium market was balanced until 2020 or something like that however there are those who are expecting a shortfall in the next 5 years based on the growth in the number of reactors in China and the existing demand from Europe. The problem is that most of the development plans are heavily influenced by politics and regulatory bodies in the various regions. That being said, uranium is still a cheap energy source when compared to other fuels. The problem is the legacy cost of the spent material. For those reasons primarily, there is a wide spread when it comes to pricing the stocks.
#176-did not hear presentation but have the slides-this has been one strong stock within the group-unfortunately, I'm still standing at the station.
ROSE Comment – Southern Alberta Basin – one of the reasons they went with an 8 well program was to get a big enough program to make it worth the hundreds of miles a frac crew would have to come to do the work. Commented that if you have a 1 or 2 well program it will be hard to get anyone to complete your holes.
http://www.bloomberg.com/news/2010-12-01/hedge-funds-short-clean-power-as-goldman-reduces-superconductor.html
Not a good sign for alt energy.
Car sales coming across, look very strong, double digit %s.
re 184. TAN and GEX ETF's, which I track in the weekend wrap, have been stinking up the joint all year long. I put them in there about when President Obama got elected as I thought maybe they would run. But they never really did.
#183-did they say anything about the results of their test wells in that area?
Thanks-I really was asleep at the wheel on not hearing the presentation-will try to pick up transcripts or archive.
BSIC – now traded 1.2 mm shares which is a lot for a normal 10,000 share a day trader. I wonder if a Form 4 will materialize as there has been little recent opportunity for the president, who owns 26% of the outstanding shares, to diversify. Stock well off the highs now and I don't have plans to add it back until it is lower.
Choices – nothing new, 8 wells by end of 1Q. The initial test results were quite positive. He basically told the Street to back off on worrying about how fast he gets this done. He said they took 5 year leases knowing it would take time to work it all out. He pitched the story as 65,000 net acres of really good looking EFS with SAB as the icing on the cake.
EXXI at Jefco in 10 minutes:
http://ir.energyxxi.com/eventdetail.cfm?EventID=89472
#188,.. Wonder if its legal to pay a newsletter with company money to pump stock and then to sell your own personal stock into the volume generated. Wouldn't surprise me.
#186-I'm sure Imholt with GE will have a few comments w/Obama (why did I back a failing effort) as to why he has not gotten behind the program in a stronger way-no one cares, everyone is even bailing on the ethanol program.
re 191. Unethical to be sure if that were the case. The SEC has catchall provisions that they could probably get someone who did that kind of thing with. And I'm not saying he's doing that, I have no idea. I'm just supposing that if your stock trades by appointment and you have 4 mm shares that would be hard to sell to say the least that you might take advantage of the rare high volume day such as this to make a little hay.
Re 192. My sense is that the stock market is sending the message that the answer is "it's the shale stupid" and that people are starting to wake up to that, even ones who think electricity in batteries comes from rainbow dew or unicorn tears.
http://www.marketwatch.com/story/house-democrats-plan-vote-on-middle-class-tax-2010-12-01
So if the Democrats pose this do the Republicans vote against it because it's not all in? Or do they accept it and then fight for the upper income tax cut?
EXXI starting
Think it's EXXI COO speaking… John is on the $700mm debt roadshow
BOP – who's this speaking for them?
Thanks – best hope on the call is probably to get a better read on log timing.
yep — Ben Marchive, VP Exploration & Development
Ben – just started to say and we should increase production off those properties but then stopped himself.
… I continue to say, great buy for them
EXXI = Just going over why the XOM shelf properties were such a good buy. And yet, stock lower than when that was announced… Speaks to MMR jitters, methinks. Short-term stuff (but hurts like the dickens, if you have a short-term trade on MMR, agreed).
That really was a great acqtn.
And it's OILY!!
Luv it.
That MP 73 Ashton prospect is pretty cool. Salt dome with the top separated from the stalk. A lot of accumulations are targeted under the overhang of the "mushroom" But if you think the cap as separate, above the stalk, then you have this prospect, with the sands running on up under the cap itself. Stacks pays where they previously though there was salt, neat trick.
They're barely going to get to the ultradeep in this presentation
The Exxon fields have always been Exxon fields… no other independent has been in there, mucking around… EXXI is first to get their hands on them. So, all that nice Exxon infrasture, well-maintained. Think there will be plenty to chew on for years to come, with these Exxon properties. YUM.
AREX pushing 19…upper channel of recent trades…on good volume
Davy Jones – "looking good, hopefully see some pay sands by the end of this month."
BBE – says they are drilling below 29,000 now, cased to 26,000. Jim Bob just requested an extension to take it to 31,500'. Well is having no problems.
Z – #194 um… has anyone ever considered that if electricity *did* come from unicorn tears, someone would have to make a lot of unicorns cry all the time??
EXXI – good slide 26 – 100+ Tcfe gross
40 Tcfe in the Davy Jones area,
25 Tcfe in the Lafitte area (drilling at 9,000 feet now on first well)
35 Tcfe in the Blackbeard area
total of 12 + prospects in these three areas
210 😉
My $.02
S&P has a toehold above 1204
Failure of 1204 then 1197 would be major support with areas of interest at 1202 and 1199
Next likely areas of resistance would be 1214.25 and then 1219.50
http://www.charthub.com/images/2010/12/01/FT71_ES_Composite_3
As far as MMR goes, not much there other than the wells are drilling with no problems which is no small thing. No comments on logs or data timing at BBE. Comment on DJ2 is "we'll be in sands by year end".
Re 213, thanks much.
Ok, soccerthirty for me.
Shout out if you see news on BEPX, WLL or any of our other highly trafficked names. Unfortunately I have to miss the BEXP call at the close but will listen to the replay tonight.
209 I'm glad Jimbob finally gets on into the deep deep. How are we going to know what's there otherwise? Go Big, JB.
FTK's John Chisolm interview. Bio-degradeable Green Fracking and general business improvement at end of interview.
ATPG…sandwiched between the 200 day at $14.40 and resistance at $15, if it breaks below the 200 day, thinking ATPG could test the lower daily channel line near $13, the P&F sell signal is tripped from where ATPG is trading now at $13.50,but unless you're looking at the shortest of time frames, consider holding, it's still above P&F trendline support on the sell print and there's interesting supportive symmetry on the weekly and daily at or around the $13 level…
BEXP…looks really good, ascending triangle break, the restest is at $25.50 -$26
EGY…looks like it's staging above the 20 period SMA for a move higher, strong on good vol…also holding above the long term weekly trendline, previous resistance is now acting as support…
EOG is interesting…there's a nice pennant on the 30 min right at the 200 period support line, it will be interesting to see what EOG does intrday tomorrow, EOG is trading right up against daily trendline resistance, and off a recent higher low, reversed back into X's, on the current sell signal, P&F trenline resistance at $93-$94, a consolidation in that price zone could set up for a break higher…
EXXI…you can see the developng ascending triangle on the updated chart, EXXI really looks promising here, similiar to BEXP formation….
more to come…
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280
Thanks again JB, voted.
Thanks, JB, voted
Uranium and uranium stocks are interesting right now. After a high of around $140 a few years ago, the spot price was in the low $40s this summer. But it is now up 50% from that. There are two forces driving prices going forward, lots of new nuclear plants, and the end of the HEU agreement with Russia in 2013. HEU, highly enriched uranium, comes from weapons programs, and an agreement between the U.S. and Russia has resulted in a limited release of LEU (low enrichment) by mixing the highly enriched stuff with normal U. Also, the price has been controlled, so the deal has delivered uranium at below market prices for the last several years. Russia has lived up to its agreement, but the agreement will not be extended. Presumably, Russia will still make U available, but is obviously interested in getting higher prices.
Everyone knows that more than 100 new nuclear power plants will be built or nearing completion by 2010 (there are about 440 in operation worldwide today). Most of the fuel for existing and new plants is supplied under long term contracts. (Spot U is about 10% of the market, on average.) Key is the fact that annually, current production only supplies about 75% of annual needs. The rest comes from U stockpiled for decades, from when there was enormous over-production, and from the HEU program. It is not quite clear when the stockpiles run out, or exactly who has them (the U.S. government has some). But it is clear that within the next decade, the stockpiles will be exhausted.
The table is set for continuously increasing demand from producing mines in the next decade. This is exacerbated by the fact that each new plant needs 4 times as much U at start-up as a normal plant uses each year, since 1/4 of the fuel rods are replaced each year.
New mines take a long time to come on line. The permitting process insures that. There are lots of uranium juniors, but there is a long path from signs of uranium to a true producer, and many high potential plays don’t work out. Meanwhile there are only a few real producers. Also, in my opinion, the quality of management throughout the uranium industry truly sucks – nothing but wildcat prospectors trying to get rich. This means most of these companies are, or will be, mismanaged.
So, great demand coming, and great problems satisfying that demand. It will be a fascinating sector to watch, and investing must be especially carefully done, with a quick trigger when problems surface. To see what can happen, research the Rabbit Lake mine of Cameco.
That said, two to watch are Cameco (CCJ), the largest investable pure (almost) play, and Larimide, an Australian company traded on the Toronto exchange (LMD). Uranium One gets attention, but management has been an especially serious problem. BHP’s Olympic Dam is a major U resource, but there are still approval problems in expanding production (management, however, is way different than for the U-only companies). Given the upward pressure on all metals, that is a company I like a lot going forward.
Zman said: "My sense is that the stock market is sending the message that the answer is "it's the shale stupid" and that people are starting to wake up to that, even ones who think electricity in batteries comes from rainbow dew or unicorn tears. "
Well then, here's something we can all rally around as it appears Fiat might help make the decision for our policymakers.
http://www.bloomberg.com/news/2010-12-01/fiat-s-marchionne-bets-on-natural-gas-for-u-s-as-gm-toyota-go-electric.html
Heresy! MHR downgraded to Neutral from Buy at Global Hunter with a $6 target. How could they? I’m going to downgrade Globel Hunter and remove the red dot from their forehead.
Stephen Chu to speak on CNBC in a few minutes
MMR on the tape…
from streetaccount:
MMR McMoRan Exploration updates Gulf of Mexico exploration & development activities (14.85)
Shallow Water, Ultra-deep Exploration Activities:
The Blackbeard East ultra-deep exploration well commenced drilling on March 8, 2010 and is currently drilling below 29,000 feet
The well has a proposed total depth of 29,950 feet and McMoRan has applied for a permit to deepen the well to a new proposed total depth of 31,500 feet
In addition to deepening the well to evaluate additional targets, McMoRan is formulating plans to evaluate the 178 net feet of hydrocarbon bearing sands encountered in the Blackbeard East well to date
McMoRan's opportunities at Blackbeard East include 84 net feet of hydrocarbon bearing sands between 19,500 and 19,700 feet in the Upper Miocene, 54 net feet of hydrocarbon bearing sands on 15 feet of water at 24,200 feet in the Middle Miocene and 40 net feet of hydrocarbon bearing sands on 22 feet of water at 24,600 feet in the Middle Miocene
Blackbeard East is located in 80 feet of water on South Timbalier Block 144
McMoRan holds a 38.5% working interest and 30.7% net revenue interest in the well
Upon completion of the previously announced acquisition of Plains Exploration & Production company's (PXP) shallow water Gulf of Mexico (GOM) shelf assets, McMoRan would hold a 70.0% working interest and 56.2% net revenue interest in Blackbeard East
Other working interest owners in Blackbeard East include: Energy XXI (EXXI) (18.0%), W.A. 'Tex' Moncrief, Jr. (10.0%) and a private investor (2.0%)
On April 7, 2010, McMoRan commenced drilling the Davy Jones offset appraisal well on South Marsh Island Block 234, two and a half miles southwest of the Davy Jones discovery well
The well is currently drilling below 24,300 feet towards a proposed total depth of 29,950 feet. The offset appraisal well (Davy Jones #2) is expected to test similar sections up-dip to the discovery well, as well as deeper objectives, including potential additional Wilcox and possibly Cretaceous (Tuscaloosa) sections
Davy Jones involves a large ultra-deep structure encompassing four OCS lease blocks (20,000 acres)
McMoRan holds a 32.7% working interest and 25.9% net revenue interest in Davy Jones
Upon completion of the PXP transaction, McMoRan would hold a 60.4% working interest and 47.9% net revenue interest in Davy Jones
Other working interest owners in Davy Jones include: EXXI (15.8%), Nippon Oil Exploration USA Limited (12%), W.A. 'Tex' Moncrief, Jr. (8.8%) and a private investor (3%)
The Lafitte ultra-deep exploration well commenced drilling on October 3, 2010 and is currently drilling below 9,700 feet towards a proposed total depth of 29,950 feet
Lafitte is located on Eugene Island Block 223 in 140 feet of water
The well is targeting Middle and Deep Miocene objectives below the salt weld
McMoRan holds a 40.5% working interest and 32.8% net revenue interest in the prospect
Upon completion of the PXP transaction, McMoRan would hold a 72.0 percent working interest and 58.3% net revenue interest in Lafitte. Other working interest owners in Lafitte include: EXXI (18.0%), and W.A. 'Tex' Moncrief, Jr. (10.0%)
MMR bet… and I could be way wrong here… but think it won't trade up much on this news. Not sure a lot of people will really understand it and/or know how to read it. And they won't like the phrase "pressure drop." PR is not "bad" at all… but it's not all "YAY We are all RICH TODAY" type of PR. More like… "see some good stuff, a few questions to be answered, and will continue to plod ahead with our program."