19
Feb

Wrap – Week Ended 2/18/11 (in progress)

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Three day weekend in progress...

Energy Earnings for the week ahead ... busy    


On to the wrap


66 Responses to “Wrap – Week Ended 2/18/11 (in progress)”

  1. 1
    crysball Says:

    BOP,
    Curious if you lightened your EXXI position on Fridday PM based on what you ‘heard’?

  2. 2
    BirdsofpreyRcool Says:

    crys — I did not. I have decided not to play cute with my EXXI shares. It’s not about one or two wells for me… it’s about the whole package (except for David West Griffin, of course). I am holding for the longer-term. I think we see $40 when Schiller has his arms fully around the XOM actqn and ‘splains it to the adoring crowd on EXXI’s Investor Day in May.

    Did you sell any?

  3. 3
    crysball Says:

    BOP,
    Wavered for a few minutes, but also decided this was a transitory event, and want to be present as the EXXI catalysts begin to build.
    When you ‘push the envelope’ of drilling technology there are going to be hickups along the way.

  4. 4
    zman Says:

    Thanks Paul in Kansas, saw your comment on the Friday post.

    Market closed Monday, have a nice long weekend. I’ll finish the wrap Sunday or Monday.

  5. 5
    BirdsofpreyRcool Says:

    crys #3 — “When you ‘push the envelope’ of drilling technology there are going to be hickups along the way.” Bingo!

    I said that exact same thing to another EXXI investor… only I didn’t put it quite as well as you did.

  6. 6
    Zorgnak Says:

    I’m doing some homework using an index made up of the stocks in Z’s holdings and others mentioned in this room. My intent is to try and capture the price, volume and breadth action of stocks that typically trade in this room and see what, if anything, might suggest an trading edge.I’ve already found a couple of ideas that look worth following up.
    The stocks that I have in the index now are
    APA APC ATPG BEXP CEO CLR CRZO CXPO DO ECA EGY EOG EXXI GDP GST HAL HK KOG LINE MMR NBL NFX NOG OAS PBR PETD PXD PXP REXX RIG ROSE RRC SLB SM SSN SU SWN TPLM TRGL WHX WLL XEC XOM CRZO

    What other fairly liquid stocks am I missing that might be interesting going forward?

  7. 7
    zman Says:

    April Crude up a buck on Libya

    http://www.barchart.com/detailedquote/futures/CLJ11

  8. 8
    zman Says:

    ZORG – some thoughts.

    In large caps I’d DVN

    Mid caps
    BBG, SFY, FST, SGY, CXO, XCO

    I’d take TPLM out if you want liquid names
    also I’d lose WHX as that’s an RT and RT’s and MLP’s are different animals. LINE maybe too although that is one of the biggest E&Ps out there, MLP or not.

    RMD’s AREX probably ought to be in there too.

  9. 9
    zman Says:

    Very busy week ahead on the earnings front for E&P land, lots and lots of our highly trafficked names reporting. I’ll post the calendar table for the week either later tonight or Monday.

  10. 10
    Zorgnak Says:

    Libya Oil Stats
    http://www.eia.gov/countries/cab.cfm?fips=LY

  11. 11
    Zorgnak Says:

    Al Jazeera: Eyewitnesses: Brigades from the military and the commando forces announce that they have joined the protesters in Benghazi
    1 HR ago

  12. 12
    zman Says:

    re 11 – good. 

    Added the earnings calendar for this week to the post. It's going to be a busy one. My kingdom for a service that helps these mid-caps coordinate their call schedules, Thursday at 10 am is nuts. 

  13. 13
    Zorgnak Says:

    Silver Futures up 2.38% now over $33….we live in interesting times…

  14. 14
    js4712 Says:

    Zorg, Few others I might add to #6 list are GMXR, MHR, AXAS and USEG.

  15. 15
    zman Says:

    The nut doesn't fall far from the nutbag watch:  Gaddafi's son says if there is a revolution, Libya will split in two, the oil will run out and bread will be as expensive as gold.

    http://www.businessinsider.com/gaddafi-son-2011-2

  16. 16
    zman Says:

    Lots and lots of stuff on Libya on twitter now:

    "Head of zawi tribe in Libya, largest there on AJA: if attacks on people don't stop we will attack the oil pipelines tomorrow "

  17. 17
    crysball Says:

    Interesting  Bloomberg  article  on the  LNG  Shipping business:
    http://www.bloomberg.com/news/2011-02-16/lng-tanker-rates-seen-doubling-as-ship-glut-disappears-freight-markets.html
    Not  that  I'm a  buyer, but an interesting   apparent sea change.

  18. 18
    crysball Says:

    Zorg,
    When  you make  up  your  new index  it  might be interesting  to  segment  them  into  large cap,   mid cap and small cap.  If  you blend  them all togehter  you   may    see  a much  different set  of #'s.

  19. 19
    Zorgnak Says:

    18 Agreed. Small, medium and large would be interesting to see. If you would put together a list of the different cap sizes I'll create the indexe and see what shakes out. The first one will hopefully  represent the Growth E&P names of interest and then see if there are enough names to split it into segments that  may be even more correlated. Besides cap size there might be something to see in off/on shore, shale areas, fracking equipment makers, drillers ect.
    Here are the companies currently in the  E&P Growth Stock Index that I'm working on.
    APA APC AREX ATPG AXAS BBG BEXP CEO CLR CRZO CXO CXPO DVN EGY EOG EXXI FST GDP GMXR GST HK KOG MHR MMR NBL NFX NOG OAS PETD PXD PXP REXX ROSE RRC SFY SGY SM SSN SU SWN TPLM TRGL USEG WLL XCO XEC CNQ PWE
    I am open to any and all suggestions for additions or deletions to this list. If someone would like to create another type of index that might be interesting to take a look at, please post a list and I'll see what I can do.

  20. 20
    zman Says:

    April crude up $3.83 at $93.54

    April brent on ICE up 2.31 at 104.85

  21. 21
    zman Says:

    Editor off

  22. 22
    Jerome Blank Says:

    #19 I’ll work on adding matching charts for stocks not already posted, I think the charts now update in realtime even for non- stockchart members…

  23. 23
    Zorgnak Says:

    Will Russia be the chief beneficiary of the Mideast Uncertainty?

    http://www.emergingmoney.com/bric/gazprom-ordered-to-share-its-pipes/

  24. 24
    Alhambra Says:

    Macondo article: http://news.yahoo.com/s/ap/us_sci_oil_spill_lingers

  25. 25
    Fiveanddimer Says:

    Big day for the precious metals. Silver trading a whisker below $34 and gold back over $1400.

  26. 26
    Zorgnak Says:

    22
    JB…Need help here. I only know enough about PnF to get into trouble…
    I’m setting up a Bullish Percent Chart on the Growth E&P Index.
    The parameters I’m using are the Log method with a 2.5% box size and 3 reversal boxes, which is a 7.5% P&F reversal.
    Does this sound ok?

  27. 27
    zman Says:

    April crude up 5.40 (6%) over $95.

  28. 28
    Zorgnak Says:

    yikes…just heard that BP is evacuating Libya

  29. 29
    zman Says:

    re 28 – yeah, sounds like civil war a good possibility. BP said over the weekend it would make the decision this week, not messing around.

    Morocco protests heating up.

    Inklings of protest in China but that’s unlikely to get a foothold of any kind.

  30. 30
    zman Says:

    Statoil, Shell, BP planning Libya evacuations

    REP, E, TOT say their production unaffected

    Reuters reporting 6% or about 100,000 bopd of Libya’s 1.6 mm bopd oil production has been shut down.

  31. 31
    zman Says:

    Reuters reporting warplanes bombing many locations in Tripoli

    http://af.reuters.com/article/libyaNews/idAFLDE71K2BK20110221

  32. 32
    js4712 Says:

    Zorg, Liked the #19 Growth index. With the caveat that I do not understand the effort in creating and maintaining new indices, I will be very interested in a index of predominantly gas companies. I am very intrigued by Zman’s theory that nat gas supply/demand will tighten and price will improve in second half (I think) and if that happens, it will be interesting to see when the stocks start discounting it.

  33. 33
    Steve Says:

    So as terrible as this is on the human side, how do we trade this in oil?

    I initiated a large position when it was around $85. What should we consider on exit Strategies for profit to not leave too much money on the table?

    The total % impact seems really small in the grand scheme o things to warrant a 6% move but of course there’s the concern of spillover, etc.

  34. 34
    Geno Says:

    Interesting reading on a developing oil play.

    http://avoyellestoday.com/bookmark/11467849

  35. 35
    zman Says:

    Steve

    1) I hear ya and I’m not particular callous, but since I just can’t stop hurricanes or wars I just do what I do.

    2) I’m already long plenty of oil exposure (Bakkens and elsewhere) that should benefit from a bit of a bounce in WTI prices.

    3) All energy may be up tomorrow, I’d be careful of the headfakes as the broad market may come off as Europe did today on the same news that takes oil up.

    4) Thoughts are that the WTI/Brent spread contracts some and the U.S. refiners come off after another initial rally in the morning.

    5) Re the % impact, actually 1.6 mm bopd, out of the 86 mm bopd or so being produced now is not that small. There’s a good chance that pipeline and producing infrastructure will be damaged as well. If a good piece of the 1.6 mm bopd looks to be in jeopardy that comes out of OPEC’s spare capacity cushion of around 4 mm bopd in peoples thinking and that keeps crude elevated for awhile. Also, one more domino down means others are likely to try the same thing leading to further regional instability.

  36. 36
    Steve Says:

    Re point 5, thx for clarifying. I had in my head about 120mm bopd were being produced.

  37. 37
    zman Says:

    Libya denying reports Momar fled to Vz

    2 Libya pilots defect to Malta after being ordered to bomb protesters.

  38. 38
    Zorgnak Says:

    #32
    js…The index idea may or may not have any trading value. Over the years I’ve noticed that about 99.9% of the ideas I’ve tested don’t add enough value for me to actually use. Once in a great while something shows enough value to be added to the information mix without adding to analysis paralysis.
    We’ll see.
    A list of gas companies would be lovely..

  39. 39
    zman Says:

    re 36 – Also, Libya has quite a bit of light crude so it’s fairly valuable. I don’t think Saudi is in that much danger of this kind of revolt as the standard of living is higher. Nigeria however is another matter. Govt has cheated and lied to the populace there one regime after another for years and I would guess if we see the unrest spread to there that you’ll see triple digit oil in the states in a heartbeat.

  40. 40
    Zorgnak Says:

    39
    good point …forgot about those guys

  41. 41
    zman Says:

    Gassier than not:

    CHK and ECA for large caps

    RRC, UPL, SWN, HK, QEP for mid caps (all over 90% of production NG),

    then there are a ton of small caps. Most of the little ones are very gassy and trying to get less so so it’s probably a question of weedling the list down to the pure of heart gassy co’s. Maybe you add PVA, GDP, GMXR, CRK

  42. 42
    zman Says:

    Zorg – Nigeria production is highly light sweet crude production and many US refineries are geared for it.

  43. 43
    Jerome Blank Says:

    #26 Zorg,thinking it may be best to start with a traditional Bullish percent framework 2% 3 box, 6% reversal, then adjust as we gain experience with the index…

  44. 44
    Wyoming Says:

    Don’t forget that Nigeria is split with the Muslim / Christian divide. Muslim’s historically have been the power base and from the North while the Christian’s reside in the South which is where the oil resides. A similar rift exists in Indonesia where the Gov’t is in Java while the oil is elsewhere, they are all Muslim and probably more apt to stick together but their recent history has East Timor.

  45. 45
    zman Says:

    re 44 – Nice point.

  46. 46
    VTZ Says:

    Re Saudis – There are those that believe that there are up to ten middle eastern countries that could be at risk of similar situations.

  47. 47
    zman Says:

    Reuters story on Brent long / WTI short trade unwinding. I hate to say I …

    http://www.reuters.com/article/2011/02/21/markets-oil-idUSLDE71K0TK20110221

  48. 48
    Zorgnak Says:

    http://gregor.us/oil/spare-capacity-theory/

  49. 49
    BirdsofpreyRcool Says:

    #47… I totally agreed with you!  Something I have never done before… bought USO last Tues (see post #75).  Just thought there were two ways WTI could go up, higher oil prices + tightening the spread to Brent.  These are things I look for, securities with multiple ways to move higher.  Didn't factor in the Libya Nutbag Effect… but if it wasn't Libya, it would be something.  World's a dangerous place and everything the US is doing (or not doing) is working to push oil prices higher.
     
    Tomorrow should be interesting.

  50. 50
    zman Says:

    SP Fut called down 13 at the moment. 

    Oil up nearly $5.75, both WTI and Brent. 

  51. 51
    Zorgnak Says:

    On the gas stock index..here's what I have now. Any more additions?
    CHK CRK ECA GDP GMXR HK MCF PVA QEP RRC SWN UPL

  52. 52
    BirdsofpreyRcool Says:

    The Italian Stock Markt Index was down 3.6%… FTSE down 1.1%.  CAC down 1.4%.  Thinking we see a fair bit of red wash up onshore the U.S. tomorrow.

  53. 53
    mimster90 Says:

    maybe not in the US oil patch though

  54. 54
    zman Says:

    re 53, yeah, probably not by the close I'd guess, even if everything opens big down on light volume I would suspect the group gets quickly bottom fished. 

  55. 55
    choices Says:

    Z, question on EOG:
    Papa said the following on the transcript, about third of the way down (from Seeking Alpha)
    "I'd also like to interject a comment here regarding using production growth as a measurement parameter. At the current 22:1 crude oil natural gas price ratio, I believe that production growth yardstick had become somewhat meaningless. In today's world, the metrics of liquids production growth and product mix change will be the focus since cash flow, returns and earnings will follow liquids growth and that's how we defined EOG strategy over the past few years. I'll discuss multiple new operational developments in several of our key plays, and I'll start with our oil plays."
    Not sure I fully grasp his meaning-obviously his growth strategy is being heavily weighted to liquids and this will show up in the 9.5% growth for 2011 but why "meaningless" and why bring in the ratio-if meaningless, what are we to use?
    Thanks.

  56. 56
    mimster90 Says:

    I have been thinking of the iranian ships going through the Suez canal. It appears if and when the iranian ships enter the suez canal they can be searched under the latest UN sanctions. The US has supposedly put a carrier group at each end of the suez canal.
    http://www.debka.com/article/20692/
    "By positioning the Enterprise opposite Iran's 12th Flotilla at the Red Sea entrance to the Suez Canal on Feb. 17 Washington has confronted Tehran with a hard dilemma, which was practically spelled out by US State Department spokesman P.J. Crowley a day earlier: "If the ships move through the canal, we will evaluate what they actually do," he said. "It's not really about the ships. It's about what the ships are carrying, what's their destination, what's the cargo on board, where's it going, to whom and for what benefit."
    This was the US spokesman's answer to the debkafile disclosure of Feb. 16 that the Kharg was carrying long-range surface missiles for Hizballah. It raised the possibility that the moment they venture to sail into the Suez Canal, the two Iranian warships will be boxed in between the Enterprise and the Kearsarge and called upon the allow their cargoes to be inspected as permitted by the last round of UN sanctions against Iran in the case of suspicious war freights."

    that scenario would heat things up.

  57. 57
    zman Says:

    CHK sells Fayetteville Shale to BHP for $4.75 B

    That's $9,750 per acre before you consider associated infrastructure.

    That's a good price for CHK and may or may not be a good one for purposes of SWN. First thought is it is way low to SWN's current valuation per acre. Second thought is that it's the second buy in the area in a very short time frame, so maybe good for them as XOM and BHP fight over who takes them out. 

  58. 58
    BirdsofpreyRcool Says:

    #53 — agreed, mim… not in our sandbox.  But that is why we all play here.  It's the best sector I can see to hang out in (being that i totally don't get gold… but we have VTZ to help out there).

  59. 59
    zman Says:

    Choices – yeah, he's been an advocate of using production growth per share for a long time now. I think he really should have said "dollar-revenue-weighted production per share" instead of just mentioning that the oil to gas ratio which is 6 to 1 on an equivalents basis is out of whack (and has been) for a long time. When you are gassier you don't bring that up. When you get oily, you do. He should have been really obvious about it and shown what revenue and EBITDA look like with the same production level (in BOEs or MMcfes) with oil making up the end of year target vs where it was in 2008 to really drive his point home. I get what he's saying but I don't think he'll have much luck getting people to not look at production growth, especially if other players are oilier already and growing as fast or faster. I don't just look at production growth but a combination of that, the oil/gas profile, the reserve life, the forward price / CF or TEV/EBITDA etc to see if anything is out of whack.  Then factor in LOE/BOE (growth is no good if you aren't growing economically) and finally all cash casts/BOE. My names are for the most part, higher growth, lower cost and lower mid to upper foward P/CF.   Sometimes they are cheap (like maybe GMXR on reserves ) but often cheap is cheap for a reason (and those guys are cheap for a reason as well). 

  60. 60
    Steve Says:

    Thoughts on the affect of the CHK deal to the stop price?  I picked up some calls for earnings.
    also, rich text editor is back on 🙂  I'm probably the only one that cares.  Sorry to be a nuisance.

  61. 61
    Steve Says:

    stock price not stop price

  62. 62
    zman Says:

    CHK price thoughts will be in the morning post but suffice for now to say that is a very healthy price for the asset by my way of thinking. 

    The editor was off most of the day but back on as I write the post for tomorrow, can't do anything about that. 

  63. 63
    zman Says:

    April WTI up $7.63 (8.5%) now at $97.34.
    Hey, Gino, good comment on BHP last week, where there's smoke …

  64. 64
    zman Says:

    Click on the title of the site to refresh to see CHK/BHP/SWN post. 

  65. 65
    zman Says:

    CHK/BHP/SWN post now up

  66. 66
    occam Says:

    Zorg – DNR, VQ, and I also like OXY, which I think of as an E&P, since the remainder is such a small part of the company.

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