04
Mar

Wrap – Week Ended 3/4/11

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Holdings Watch: Closed trades, all from the ZLT, no option trades closed this week

 

  • SSN- sold the trading position for $3.89, up 77% for the position taken on 1/28 and up 48% on the position taken on 2/1. 
  • SSN – raising a little cash into this move, sold about 20% of core at roughly $3.77, up 396%.
  • NOG – Sold a small piece of my NOG core position for $31.48, up 62% to balance positions after the recent run and to add to TPLM.  We added this back as a trading position in addition to the remaining core shares during the short lived bit of weakness following the earnings release. 

 

 

Thoughts For The Wrap:

  1. Stocks languished in the face of higher oil and a mixed set of data. My week was better than the index returns would suggest. Earnings season is about to draw to a close next week and conference presentation is gearing back up. The Catalyst will be updated again mid next week and I would suspect that companies that show "March" for catalysts and who announced a couple of weeks back will use the handful of coming conferences to to press release operations updates. In general though, news flow for the next few weeks should be slack compared to the last six weeks. 
  2. WTI / Brent spread narrowing. As expected but still keeping an eye on it. For the most part, our ZLT names are minting money at oil prices over $75 so while $100 is nice its not necessary. Oil projects are now competing for capital and have a near record advantage over gas projects. So, for the companies that made the switch to oil or are transitioning, I would not expect a late year rally in natural gas prices to say $6, to have any affect of the gas rig count.  I would point out that the Street really started banging the gong on the indie refiners in the last several weeks and now, they have run into the headwind of triple digit WTI. While finished product prices have advanced at a good clip so far, look for gasoline demand to be retarded by $3.25 / gasoline in the near term while kerosene demand will ease as airplane ticket prices soar. 
  3. Speculators Long and Strong Crude. As I've written in the recent past, the supply risk premium has returned to crude prices. Judging by the rapid build in the non-commercial long position (speculators) I would say others agree. Normally after big price changes you see these net positions shift in preparation for a corrective move. Not so far here. 
  4. Strong Start To The Year.  As always, the key for me is to keep the emotion out of the trade. I don't get cocky and don't mind missing some of the big moves in names I'm not all that familiar with. If I don't have time to get to know the story then I don't play.  Year to date the ZLT A, B, and C portfolios (each of which are stock only accounts (no options)) are up 68%, 63%, and 33% respectively.  I report performance monthly in the wrap post following the end of the month. 

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.... On to the wrap table ...

40 Responses to “Wrap – Week Ended 3/4/11”

  1. 1
    zman Says:

    Follow us on twitter, keyword:

    zmansenrgybrain  (not a typo) for notification of posts and closed trades (a bit late on the latter)

  2. 2
    zman Says:

    Editor off.

    If you are new to the site please let us know how you found us, drop us a note at
    zman@zmansenergybrain.com. And for that I thank you.

  3. 3
    zman Says:

    Housekeeping watch 3 and then I’ll cut it out. If you are new to the site or have been here a long time, do not forget to make an M&A target pick in the current contest. One lucky winner will get an 8 gig Nano. Just pick the name you think will get acquired next in the E&P realm and submit it in the comments section along with the word CONTEST. The list of what has already been taken is on the calendar tab.

  4. 4
    BirdsofpreyRcool Says:

    skimo — OT: I posted a reply to your question at the end of Friday’s post.

  5. 5
    David Says:

    Z: Couple thoughts, questions re TPLM.
    Friday 10:11am you posted this (excerpt re TPLM);
    “The first two of those show the valuation of what they have and then a hypothetical with them raising money as they have said they will likely do. I only bring this up because there is probably not a better time for them to pop off a secondary than on a price spike like this. If it were me I’d strongly consider announcing one next week.” #50 You then suggested that you thought they might issue 10mm shares for additional financing to acquire additional lease holdings and thereby strengthen the net value to lease (assuming I interpreted this correctly).

    Two news releases from TPLM on Friday morning:

    http://finance.yahoo.com/news/Triangle-Petroleum-Announces-iw-3289651620.html?x=0&.v=1
    [acquisition of additional lease holdings]

    then this one about an hour later:

    http://finance.yahoo.com/news/Triangle-Petroleum-Announces-iw-2053245798.html?x=0&.v=1
    [16.5 mm additional stock issuance]

    Prescient? Dang!
    You also mentioned selling some NOG to make an additional TPLM acquisition.

    TPLM is marginally down in after hours.
    The stock issuance announcement does not state when the additional stocks will be issued. Immediately? ie Monday?
    I was contemplating an additional purchase.
    Expect a further dip in the absorption of the additional shares? or impossible to predict? Or do not concern myself with that variable?
    Thanks
    David

  6. 6
    zman Says:

    re 5

    It is odd that my trading platform didn’t show that news, didn’t know about it until you spoke of it but I see a late morning time stamp on the story on yahoo finance.

    The stock would be issued in the next couple of days, so yes, immediate. I’d expect them to use the pop in the shares to price the deal less in the hole than they would have otherwise. So probably prices between $7 and $8 as that is a lot of shares (16.5 mm vs my hypothetical case of 10 mm shares at $10 and the current filly diluted count 22 mm shares). This deal should not be a surprise to anyone who has been listening to them speak about their Bakken acreage acquisition plans.

    I’ll post the pro forma look at them in the Monday post.

    I did sell some NOG the day before earnings and added some more TPLM to the core position (now full) and with a trading position on top of it, but then also bought the NOG back following their earnings call. I added the last of the TPLM for $8.35 with an average cost of $7.49 in the core.

  7. 7
    zman Says:

    Saudi outlaws protests, grants police permission to use all necessary force to subdue protesters.

  8. 8
    Jerome Blank Says:

    BQI is coiling at its 200 day SMA, nice base consolidation triangle, this one is worth watching if looking for a day trade or short term swing….posted a daily going into tomorrow
     http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280

  9. 9
    zman Says:

    Voted JB, thanks. 

  10. 10
    Jerome Blank Says:

    Zman, thank you…also MMR daily still looks really good, coiling in a tight range up against topside triangle resistance, a lot of pressure building, i'm thinking of adding going into monday…  

  11. 11
    crysball Says:

    Lunatics  are  running  the Asylum   category
    http://news.yahoo.com/s/nm/20110306/pl_nm/us_usa_energy_reserves
    Anything  to  misdirect  the  populace   from   the ir   idiotic    policies  of  blocking   offshore drilling…….GOM  or  Alaska.  

  12. 12
    john11 Says:

    Re 5 and 6 looks like the reason we missed the TPLM is that they carried a 10:21 and 11:11 PM !! time stamp, interesting to release both of those late on a Friday night.

  13. 13
    David Says:

    Drilling Order: Interior Secretary Salazar alleges that the Federal Judge cannot infringe on Salazar's authority re his administrative defiance to the federal order!
    http://www.politico.com/news/stories/0311/50703.html
    If any judge ever agrees that an administrative agency trumps a federal court order….we are done. The little Russian Obama Admin Czars will run this country.
    Question: I couldn't find any thoughts on GEOI.
    Any opinions here?
    Thanks
    David

  14. 14
    Zorgnak Says:

    Voted JB…Thanks

  15. 15
    Jerome Blank Says:

    Zorg, thank you…I think you are in GMXR,  I really like the way GMXR is setting up, new 30 min chart posted…

  16. 16
    john11 Says:

    Charts are looking great JB, thanks from here also..voted

  17. 17
    zman Says:

    Thanks for adding GMXR to your weekend thoughts JB, I'm very much there as well. 

  18. 18
    zman Says:

    John – thanks, yeah that would explain it. I thought they'd wait until Monday to announce it but really there is no difference and if they can get their covering analysts on the phone over the weekend it will help those guys with a defense of the name tomorrow with some intelligent First Call notes. 

  19. 19
    chris Says:

    I thought the TPLM timestamp on Yahoo was 11:11 PM

  20. 20
    chris Says:

    and 10:21 PM

  21. 21
    Zorgnak Says:

    #15
    JB..I agree.To my eyes it looks like GMXR and  other gas stocks do look to have potential here. There was a shake out to some degree in the gas group on 3/1/11. 90% of the gas group were <  their individual 5 day moving price average and the aggregate down volume for the group was the most in the last nine months.
     On Friday though I noticed the group snapped awake on a down day with volume spikes near the close on a number of the gas stocks that finished well into the green.  I also noticed while doing my homework today that the longer term volume pressure measures in all of the gas stocks have improved  and in some cases is already positive after struggling for months. I'd expect to see support hold on pullbacks. ECA, a name not mentioned often here  looks poised to do some business. I'll interested in buying weakness in Z's top gas names. HK, SWN, GMXR. All look to be buys if opportunity presents.
     
     
     

  22. 22
    zman Says:

    Chris – that's what I show, when I looked at them earlier I thought they read as a.m. but was mistaken. Explains why I didn't miss them during trading hours. I'll have a post out on it in the morning, with a new pro forma TEV and acreage read as well as comments on the deal. 

  23. 23
    David Says:

    Chris re 19, you are right! PM
    Someone at TPLM management  is following ZMAN!
    David

  24. 24
    zman Says:

    Crude topping $105. 

  25. 25
    zman Says:

    Re 13 – thanks, that's hubris

    Re GEOI – try this link

    http://zmansenergybrain.com/category/geoi/

    The earliest dated one contains a quick snapshot of the company. I liked it then but didn't bite and have been waiting for a pullback that has not yet happened and probably won't back to those end of 2010 levels any time soon. 

  26. 26
    DaveH Says:

    Australian stock exchange is open and SEA showing bid/ask of 1.04/1.045 AUD.  Last trade 1.04.  🙂  Those are delayed quotes delayed about 25 minutes.

  27. 27
    BondBuddha Says:

    JB, voted and thanks for your charts

  28. 28
    West Says:

    http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=SEA#headlines             Link to Sundance ASX site . Of interest is new road show presentation and operations update… Looks like all systems are GO………………………………CRZO has completed their second Niobrara well in Weld Co, CO and it is reportedly a much better well than their first Nio well that is currently making 450 to 500 boepd…. SDCJF has 1,080 net / 5,400 gross acres surrounding the first CRZO well and has farmout agreement with NBL with schedule test well on this prospect before yearend… CLR is also now drilling the first extended 10,000 ' lateral in the Niobrara, in this  same area with spud date of 2-2-11. A lot of interest in this well with the possibility of the EURs matching the Bakken according to CLR's investor day presentation.    CRZO in a recent presentation said that their Niobrara play could yield IRR of 150% at current oil prices with an EUR in the 300 mboe range. This looks  be one of the Niobrara's sweet spots, with this area eventually extending southwest and connecting with the Wattenberg Field that is moving northeast.

  29. 29
    West Says:

    http://cogcc.state.co.us/infosys/Maps/LoadMap.cfm   you may have to download proper programs to use this map , hopefully it will work with the link. I will try after posting.

  30. 30
    West Says:

    On the Colorado state site checkmark  directional planned for view of most permitted horizontals.  CLR's long lateral surface location is in section 4-T9N-R61W.

  31. 31
    zman Says:

    Thanks much West, will have a look. 

  32. 32
    Wyoming Says:

    Not exactly sure what you were asking about on 160 Friday.  If I understand correctly;  I saw a project being proposed by a consortium of operators looking into a pipeline system for reclaimed water to be used in completions.  It died a quick death.  I also know of a Canadian outfit who had a working osmosis system.  Once again, the the costs were prohibitive, volume thru put was also an issue.  Until gas gets out of the doldrums; which it won't with all the lease holds/hbp drilling, uncompleted wellbores and gas being a waste by-product of the liquid plays, it will suffer.  I would argue that the industry is doing pretty good with the current environment and this administration.  Low supply will lead to higher prices eventually, not to mention the higher potential to increase demand (Pickins Plan for quick reference).  Keep the reserves in the ground for as long as possible.
    http://www.zerohedge.com/article/saudi-arabia-which-allegedly-hiked-output-just-raises-crude-export-prices-asia-and-europe

  33. 33
    zman Says:

    Wyoming – thanks, on Eli's comment I had assumed that company had something beyond a pipeline, some kind of process, but they apparently don't. I'd be wary of the level of interest by people buying stocks that they know little about beyond the ticker but think they solve an issue… which they don't. 

  34. 34
    Wyoming Says:

    The whole frac water, produced water issue is another potential problem for the uninitiated investor.  It could be another dotcom on a smaller scale.  I can see the same with hydraulic horsepower.  I leave early on Fridays and met up with an frac service friend of mine.  He was telling me that they are already seeing the hard times ahead, pricing, margins etc … they are basically concerned of the backlash on them will be extremely harsh, from the operators, in the near future.  I tried to reassure him that it will be.

  35. 35
    zman Says:

    Wyoming – Got any expo's in the near term in the LA/TX area that I should go to? Feeling the need for a trip that way in April/May.

  36. 36
    RMD Says:

    Wyoming re: 34  which co.s should we have on the list to short to play 34?  Simmons agreed with your bearish view, but has pushed out the crisis/crunch until '12 (as of about a month ago).  I'll update their view this week.

  37. 37
    bathtime Says:

    WSJ on CHK in Ohio Utica:
    http://online.wsj.com/article/SB10001424052748703752404576178740650203046.html?mod=googlenews_wsj
    "Chesapeake said it has spent about $1 billion acquiring mineral rights on more than a million acres from public and private landowners."
    Another reason I think Utica is CHK's secret play is Utica… if you look at the shale leasing forums online – where land owners discuss what deals to make – there's lots of Ohio related postings. If CHK had another secret million-acre play, there would likely be accompanying activity on these leasing forums. 
    http://gomarcellusshale.com/group/ohio

  38. 38
    Wyoming Says:

    I don't know of any events coming up but I will can ask around, DUG is the first that comes to mind.
    Shorts?  I know 1 or 2 but I am not at liberty to say or play.  I would look for the opposite of KOG (gas), who were in business when lease rights peaked at $24-25k/acre in their fields.
    I know everyone has been talking about Ohio, and I am sure CHK will find a way to spin it some international player. My suspicions are the Austin Chalk will be the soup de jour.  The deep play from S. Texas (Eagle Ford Shale) overlap to LA.

  39. 39
    zman Says:

    Thanks Wyo. 

  40. 40
    zman Says:

    The Monday post is up

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