Wednesday Morning – Natural Gas Supply Slide Show + EGY and SSN Comments

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Market Sentiment Watch:  Market in Neutral.  All eyes remain locked on the end of week payroll's figures so I expect the market to be much ado about nothing in this holiday shortened weak until then.  In today's post please find the Natural Gas Supply Slide show for the month of March. Natural gas bulls avert your eyes but know that your time is coming. Also find comments on MRO's $3.5 B acquisition in the Eagle Ford. Please also find operational comments on EGY and SSN.  The ZLT A & B and ZLT ESA accounts eased during the month of May. Nevertheless, the ZLT A, ZLT B and ZLT ESA accounts are up 43%, 32%, and 20% respectively year to date while the S&P 500 and XLE are up 7% and 13% respectively year to date. Please see a fresh month end ZLT table in the Holdings Watch section below.  

Ecodata Watch:

  • ADP employment,
  • ISM (F = 58.4%, last read 60.4%),
  • Construction spending (F = -0.3%),
  • Car sales (F = 12.45 mm, last read 13.2 mm)

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Supply Slide Show
  4. Stuff We Care About Today – EGY, SSN
  5. Odds & Ends

Click the link directly below this to ...


Holdings Watch:

  • See ZEB Positions tab. 



Commodity Watch 

Crude oil rallied $2.11 to close at $102.70 yesterday on a weaker dollar and stronger equity markets.  This morning crude is trading flattish.

  • Early Read on Oil Inventories:  (we don't get the inventory report until Thursday due to the Memorial Day holiday)

    • Crude: DOWN 1.8 mm barrels
    • Gasoline: UP 0.65 mm barrels
    • Distillates: FLAT

Natural gas rallied $0.15 (3.3%) to close at $4.67 yesterday despite the uglier than expected, at least by me, rebound in March gas volumes. Don't get me wrong, I expected a rally off the freeze up depressed February lows but I didn't expect a new cycle high for production.  This morning gas is trading flat.

Natural Gas Supply Slide Show

ZComments:  It's mostly in the charts but the concept of a declining rig count causing a decline in supply later this year is still a concept that shows few early signs of making the switch from drawing board to reality. Everyone pretty much expects a production rollover so I'm not alone in the thought but magnitude and timing are still very much up in the air due to a number of factors including 1) a drilled but not yet completed rig count of over 3,000 U.S. wells, 2) liquids rich drilling that is bringing with it additional gas volumes, especially in Texas, and 3) rich gas and condensate rich gas wells in the Marcellus that mean economic wells are being drilled north of $4 and that therefore means no decline in non-Haynesville and other drier gas resource plays. Texas showed a big bounce in volumes off the February low while there was essentially little change out of Oklahoma, Wyoming, and the Gulf of Mexico. New Mexico production continues to slip. Louisiana and the "other states" category scored new production highs. Louisiana production should roll over early in the second half of 2011.  EIA needs to start breaking out more states from the "other states" category but budget pressures will make that unlikely.  

Stuff We Care About Today 

EGY Enters The Williston Basin

  • EGY nibbles at another U.S. resource play in a small way by buying 5214 gross (3,650 net acres) ... in Sheridan County, MT
  • Financial terms not disclosed but it was almost certainly a sub $1,500/ acre deal for total value not exceeding $5.5 mm.
  • Seller not disclosed although it is an experience private so Slawson and Zavanna come to mind.
  • The partner will keep a 30% working interest in the gross position.  
  • I am not impressed by these rather timid moves (first the nail clipping of a toehold in the Granite Wash and now this postage stamp of a position in the far west, exploratory region of the Bakken). 
  • In their defense, they are being timid off the coast of Angola/Gabon and may still take a shot at a $30 to $40 mm well off Angola all on their own later this year should they not be able to secure a partner. But things move very slow over there and the company is doing it's part, also slowly, to head investor calls to doing something with their cash position, something that involves more drillbits turning to the right. Next catalyst will be the fraccing of their first Granite Wash well but again, given the small stature of their position, I expect the market to pay only fleeting notice unless it is 1) stellar and 2) accompanied by more leasehold acquisitions in the surrounding area. 

Other Stuff 

SSN Operations Update

  • Earl #1-13 H update (their 5th Bakken well in North Stockyard Field). Got the parted tubing string out of the lateral, now in vertical, flow on the well increased to 1,200 bopd and the crew stopped work for Memorial Day. I'd bet they have it on full production in another 2 to 4 weeks. 
  • The sixth well, the Everett #1-15 is about ready to frac, look for that in late June.
  • SSN  also commented that they paid off their remaining debt facility, as expected, and that their cash balance now stands at $61.2 mm.  Look for Williston acreage acquisitions to be announced in the near future. 
    • The following is an updated back of the envelope table for SSN. A couple of comments are worth making:
    • I have given them no value for their other asses including a little acreage with Bone Springs potential in Texas. 

      • Niobrara: Those I used a seemingly high valuation in the Niobrara this was the number CHK used in their deal with CNOOC but I risked the acreage position by 75% to account for potential mis-steps, a learning curve, and most importantly, some non-naturally fractured parts of the play. 
      • Bakken: The 1 mm barrels essentially stems from a 500,000 BOE gross reserve number per well average for six wells, net to SSN's 31 to 32% interest in these wells. The wells have been improving and they will be downspaced. So this should prove quite conservative in time.
      • The company has no debt
      • Cash and prepaid items account for 25% of the current stock price

Other Stuff:

MRO Acquires Eagle Ford Position from private Hilcorp Resources

  • 141,000 net acres in Atascosa, Karnes, Gonzales, and DeWitt counties, TX
  • Production of 7,000 BOEpd net, 80% liquids

    • with expected exit rate of 12,000 BOEpd
    • and increase to 80,000 BOEpd by 2016
  • MRO is calling net resource potential $400 to 500 mm BOE
  • Price Tag: $3.5 B. That works out to

    • a whopping $24,822 / acre on a straight dollars for acreage basis
    • If we back out current production at $100,000 per flowing BOE, then the acreage price dips to a still lofty $19,858 /acre
    • And using the exit rate we get to $16,312 / acre
  • Recent deals have been done for around $20,000 per acre
  • Other names that could benefit from the attention to their counties:
    • GEOI and MHR have acreage in Atascosa and Gonzales counties
    • HK's Red Hawk area is located in DeWitt and Karnes counties
    • ROSE has acreage in Gonzales county
    • EOG and PXD are along that entire range

Odds & Ends 

Analyst Watch:

  • TBA in comments. 

174 Responses to “Wednesday Morning – Natural Gas Supply Slide Show + EGY and SSN Comments”

  1. 1
    mattlee Says:

    Re: SSN
    "I have given them no value for their other asses"
    Good stuff.

  2. 2
    zman Says:

    Here is a handy cheat sheet for the Eagle Ford players showing their acreage and where it is and some other details (scroll down)


  3. 3
    zman Says:

    Matt – I also slapped their Niobrara acreage with a 75% risk factor and gave them probably half of the ultimate recoverable barrels at North Stockyard.

    Hopefully next week at RBC some of the larger Niobrara players will be more chatty, if not then then by 2Q reports. I know WLL will be reporting on their 2Q advice on a half dozen wells. And NBL has said really nice things about their Niobrara but mostly down in CO at Wattenberg. 

  4. 4
    zman Says:

    Analyst Watch:

    ESV – UBS ups to Buy due to deepwater exposure. 

  5. 5
    zman Says:

    GEOI – hey, if I swap out the $5,000 per acre figure in my back of the envelope NAV for $20,000 from this deal that takes my NAV from $35 to $47.50. Still going to sell it but want more for it. 

  6. 6
    zman Says:

    MHR – do the same as in #5 above and you get $500 mm for their EFS position, meaning you get the Marcellus, Bakken, other Appalachia (Weir, Utica) for less than $600 mm. Hmmm. 

  7. 7
    Zorgnak Says:

    S&P Futures  8:40 am S&P Futures are trading down to the major 1337 acceptance area in overnight trading. I'll be watching how
                 the immediate support and resistance areas are treated in the early going but I don't see a clear move setting up
                 in either direction. Edgeless for me.

    1246.75    Resistance, Minor CLVN

    1342.75    Resistance, CHVN

    1340.25    Resistance, CLVN

    1337       Acceptance, CHVN, Major MCHVN

    1334.75    Support, CLVN             
    1330.25    Support, CLVN, NVPOC                       
    1327.50    Acceptance, CHVN

    1324.50    Support,  Major CLVN

    1322.25    Acceptance, Minor CHVN

    1320.50    Support, CLVN


  8. 8
    italyinvestor Says:

    Z – Back in the states as of late last night.  Actually slept in my own bed.   I was able to catch a few nuggets over the past year and look forward to following the excellent discussion that happens here daily.

  9. 9
    zman Says:

    re 8 – Thanks doesn't seem like enough but thanks all the same. Glad you are back. 

  10. 10
    Zorgnak Says:

    #8 Welcome back . I know how that felt for me and I'm happy for you.

  11. 11
    zman Says:

    In honor of your return, SSN paid off their debt and popped their stock. 😉

  12. 12
    italyinvestor Says:

    Was dreaming of a massive short squeeze on NOG but I'll take what i can get.  good luck to all.

  13. 13
    zman Says:

    ADP up 38,000 … lousy

    Futures not happy about that. 

    Eagle Ford players should however outperform today –

    see HK near $27 pre market

    GEOI up $2,

    ROSE up $3.50

    the whole list is in the link in #2 above. 




  14. 14
    bathtime Says:

    Welcome back italyinvestor!
    OT: Excuse the off-topic, just wanted to throw out a quick feeler to BOP to see if she heard any scuttlebutt, positive or otherwise, from the CIGX cocktail party. Thank you.

  15. 15
    BirdsofpreyRcool Says:

    bathtime — good morning!  Just emailing back-and-forth with a friend who is at the Roskamp event.  Said last night's cocktails and dinner was uneventful.  However, said that there are a lot of doctors at the event today.  And if they are convinced about the science, they will buy the stock.  It's what doctors do (when they are not seeing patients).  Tour starts at 11.  Then lunch.  Then the CEO kicks off the speaker line-up at 1pm.
    By the way, we have a member of this board who was able to sweet-talk his way into the event today.  So will have another reliable set of eyes and ears on the ground to share the experience.  Should be interesting… that's the bet, anyway!

  16. 16
    1520sbroad Says:

    New Brunswick news last night – Apache will not continue their JV with Corridor in New Brunswick.  They had drilled and fracked a couple of wells with very little success.  Not sure what this means for SWN and their position up there that is still in the very early planning/ information gathering phase.  Post on the Corridor website looks like they think there is plenty of gas there just a question of how to get it out with a different frack technique.  Link is here:  http://www.corridor.ca/  – see press release in the lower right hand corner.

  17. 17
    BirdsofpreyRcool Says:

    Musing to self… wonder how much leverage KKR will be able to inject into Hilcorp's balance sheet.  Guessing about 4.5x EBITDA…
    May was a record month for corporate debt issuance.  Let the debt-financed M&A Games continue!  (this will all end badly… but not for a year or two at least… make hay while the sun shines)

  18. 18
    BirdsofpreyRcool Says:

    Musing to self… KKR sold Hilcorp to MRO… silly me. 
    Too much vacation time, methinks.  Back to the Real World now.  (so ignore #17)

  19. 19
    BirdsofpreyRcool Says:

    (except for the 2nd part of #17… didn't get that one back-assward)

  20. 20
    zman Says:

    re 12 – Hear ya, acreage in the Basin getting tighter, thinking bigger names have to be circling their too. It sure won't cost $20K per acre to get a big piece now but it might in a year or two. 

    It hasn't gotten much attention but LINE added 16 mm boe of proved reserves in the Willistion Basin, all non-operated Bakken, for $22 / BOE.

    In total LINE spent $359 mm buying 17,000 net unoperated acres, for a $/ac figure of $21,117.  

    NOG's non-operated acres are trading at $7,500 / acre. 

    If you back out the production at $100K/BOE on those LINE acquisitions it takes you to a per acre number of $6,400.

    Of course, if you take NOG's current production of about 5,000 BOEpd (95% oil) then its acreage would trade for about $4,200 per acre. Keep it down here until they are at 10,000 boepd (early next year) and you have their acres trading for under $1K / ac. 


  21. 21
    zman Says:

    Re 16 – given that SWN failed to mention it in new ventures last quarter I'd say they are on hold too. 

  22. 22
    zman Says:

    MHR set to pop on this MRO/ Eagle Ford buy. 

  23. 23
    snuhart Says:

     This  morning  a SA commentator  reports NOG short interest at 43 %. Last I saw T rowe Price and Fidelity  had a combined interest in about 25 % of the float w/ other large holders and institutions bringing the total to over 80 %. Where the heck are they borrowing all this stock  ? 
    Is there a fly in the ointment , ie something like the Frankfurt bear raids we read about in recent years ?

  24. 24
    zman Says:

    Sundance dancing higher

  25. 25
    zman Says:

    Snu – the 43% would be of the float and that German thing is what they have hired a lawyer for to help them get delisted from an exchange there they never agreed to be listed on.

  26. 26
    1520sbroad Says:

    #21 – agreed – SWN has spent a relatively small amount of money upt here so far.  Very much the watch, listen, learn approach.

  27. 27
    BirdsofpreyRcool Says:

    Sundance doing a tango with Samson.

  28. 28
    zman Says:

    Glad to see Sundance getting a bounce, wrote up a follow up there last week. Stock has been doing the financial equivalent of a walkabout for the last two months despite improving fundamentals. 

  29. 29
    Zorgnak Says:

    Z, thanks for the poke on MHR

  30. 30
    zman Says:

    Zorg – no problem, it probably has the most leverage to the acquisition area within the EFS. HK doing well too. Funny how well PXD and EOG are doing, yes it matters to them but not nearly as much leverage as the little guys have to their respective stories. Market has been in and is in safety in size mode. 

  31. 31
    zman Says:

    Hard for me to understand watch:


  32. 32
    BirdsofpreyRcool Says:

    Ugly eco-numbers just hit

  33. 33
    zman Says:

    ISM 53.5 vs 58.4% expected. Wow, the confidence this week's giant eco number misses must now inspire in Friday's nf payrolls estimate. 

  34. 34
    bloodystupidjohnson Says:

    If one listens to any of the EOG earnings conf calls, or any industry presentations, Papa gushes more over Eagle Ford than any other of EOG's positions, including the Bakkan.

  35. 35
    DaveH Says:

    GLNG +7.03% today 🙂

  36. 36
    zman Says:

    re 34 – I listen to all of Papa's earnings calls and many of his presentations and that's very true.  I'm just saying that bigger valuation in an EFS transaction means more to a little guys with a couple of different plays in terms of valuation leverage than it does to a big name like EOG or PXD. 

  37. 37
    crysball Says:

    Z, Re :EGY  and Angola
    My understannding  of the Block 5 drilling  plan [2   semi-sub wells with the first beginning in late November…….drilling tender  closed  in May]  and Angola's  [Sonangol]   role  is  somewhat different.    If   Snangoll  has not  selected  a drilling  partner  in  time, my understanding  is Sonangol  will  bring  the 40% to the table as cash (not just as a carried  intererest].       There  is  a shallow offshore Etame concession   exploration prospect  in Gabon  which   needs  a semi-sub [Elilli] which might be tagged  on  to  the   semisub   drilling plan, but it will require  the approval  of  the Etame  concession partners  and  would  not  involve  Sonangol………Vaalco  working  interest   30.35%.
    After  Vaalco had found  a  partner acceptable  to  them,  Angola  [Sonangol]  came in and wanted   to introduce  some  new  players, so they  held  the data  room  open  longer  to please  Sonangol, but Sonagol  had  the decency to step  up and  make  the verbal offer about  fronting  the  Block 5 drilling $, since  they  had  caused  the  added  time delay  by  introducing   new  candidates.
    Vaalco   lifting  5/31/11
    707,000+ barrels…………at  Brent  prices…….Vaalc received  30.35% of  the average May Brent  Price……….this follows  a lifting  of  slightly over 800,00 barrels  in April.

  38. 38
    bloodystupidjohnson Says:

    RE: 36 I was not questioning your premise.  I was only pointing out that one of the best in the industry, Papa, places such a high regard for EFS. 

  39. 39
    zman Says:

    Thanks Crys … so it sounds like they won't possibly be going it alone after all then?  2Q call should be interesting as they will need to talk about when they will make a bigger move in the U.S. Wondering if they have 1st well in GW completed by then and if that's the hold up. I would think the efforts of offset operators would be much more important. 

  40. 40
    blackgold39 Says:

    yeah the eco numbers are taking their toll

  41. 41
    ram Says:

    Zman, is there a SSN equivalent in the EFS?

  42. 42
    zman Says:

    Re 38 – hear ya, agreed, he certainly does. Ironic since a decade ago he took such joy in talking about his 1's and 2's program where they would drill about for analogous plays and hit one well and then find another like it nearby.  

  43. 43
    zman Says:

    re 41 – um, hate to type it but maybe GST. 

  44. 44
    zman Says:

    or CXPO, they have 9,300 acres. 

  45. 45
    choices Says:

    Welcome back, Italy-did not say it earlier for obvious reasons but as you know, the last few weeks of the tour are always the toughest-You are back-that is the bottom line!  Now it is time for you to make some money and say hello to your family.

  46. 46
    Zorgnak Says:

    Bot back a bit of BEXP ..this 30 area was a breakout some time ago

  47. 47
    tomdavis12 Says:

    Z: I am going to a meeting with mgmt of LINE 6/6. Do you have a few questions you can throw out? Thanks.

  48. 48
    ram Says:

    Doh! At 3.32, does GST deserve another look?

  49. 49
    zman Says:

    BJS – that did sound snarky, didn't it? Apologies, sometimes I come off a bit abrupt/flat on the internet, not my intention. 

  50. 50
    bloodystupidjohnson Says:

    Z — EFS — doesn't it count what part of the play one is located?  EOG and MHR are to the west in the oily window.  In the middle are the liquids and to the far east the dry gas zone.

  51. 51
    Zorgnak Says:

    S&P…..at support and VPOC from Friday's session……

  52. 52
    zman Says:

    Tom – I'll shoot you a list.

    Ram – maybe but I don't think there is a lot of appetite for single digits unless they do something to break themselves out, now until say September. 

  53. 53
    zman Says:

    re 50 – yes it does. EOG and PXD largely in oil window, HK more of a mix with quite a bit of lease hold in dry gas area. That link in two above has counties for each name in the group on it, and can be cross reference vs one of EOG's slides showing their thoughts on where the various windows in the play lie:

    See slide 11 here:


  54. 54
    choices Says:

    FWIW:  MHR's Jul 5's have almost no premium if you  can get a fill at the mid.

  55. 55
    bloodystupidjohnson Says:

    RE: 49 — That is always a big problem with the internet, emails, etc… over face to face or voice replys.  Most of use are not professionaly writers, and even they have problems. 

  56. 56
    tomdavis12 Says:

    Z: I believe LINE has been to see some other firms. What would you say as the probability of a secondary soon. 

  57. 57
    bloodystupidjohnson Says:

    RE: 53 what part of that window goes CXPO or GST lie?

  58. 58
    zman Says:

    re 56 – they did one in February so pretty low I'd think. 

    CXPO – mixed oil and gas

    GST – I think would be oily, not sure, will check.

  59. 59
    bloodystupidjohnson Says:

    GST — yea, it looks light they are in the oil window.

  60. 60
    West Says:

    SSN……….Z ,  Help me out here…… 3/4ths of your value is based on northern DJ Basin acreage that has not had a reported well put on production that I can find.  CHK has some really good wells in the Powder River Basin to the northwest with some in the 1,000 boepd.       So help me with the the math here . Would this indicate 2 million boe per 640 ac unit at the 75% risked rate?    So that would be 6 wells per section at 333,333 boe EUR per well based on a 107 acre spacing unit. At present the spacing units are 640 acres so that would indicate an EUR of 2 million boe per well.  I must be doing something wrong.

  61. 61
    ram Says:

    So is #60 positive or negative for SSN?

  62. 62
    zman Says:

    West – Don't know what the spacing will be yet. Used CHK's estimate of recoverable BOE in the ground. Then haircut 75% for risking. Not implying 2 mm BOE on a per well basis as I don't think it will be as bad as 75% at the end of the day. Recall that no play like this shows it's best wells early on. NBL comments and EOG comments have grown much more favorable of late. CHK still quiet though they have been trucking oil from wells adjacent to SSN Goshen position. I get what you are getting at but I don't think it is fair to take the early NAV any part of it other than cash some percent of the total company valuation. I've laid out that this is an early NAV in prior posts and can get to a much higher number if more of the play works out. 

  63. 63
    ram Says:

    Just an FYI: I replaced a portion of my REXX for GST.  In fact, you get around 400 shares of GST for 100 shares of REXX.

  64. 64
    zman Says:

    West – I hear what you are saying re Powder – I'm not sure that's a drag on CHK's per acre BOE or boost to it. Can't tell from their literature, I had assumed the PRB was a drag. 

  65. 65
    elijahwc Says:

    From an old friend this a.m. "Think the way to play the Eagle Ford is SM. They have 250000 acres hypothetically worth 4 billion or 60 bucks a share.  Using $16,000 acre"
    Guys done O&G since before I was in the bus.

  66. 66
    zman Says:

    Eli – yeah, it's on the list in #2 too, opposite end of the play (west) from this acq and partly in the dry gas window but it would have been up today anyway on its own news. 

  67. 67
    zman Says:

    Got an early lunch, back in awhile. Off topic thirty. 

  68. 68
    VTZ Says:

    Oil Sands IPO to come watch:
    Laricina and Sunshine will be the last of the big oil sands & deep shale land holders to go public.
    BQI is trying to sell itself, and still sucks, and is giving up land watch:
    Commentary on oil sands economic feasibility/marginal barrelwatch:
    The economic price they quote for SAGD operations is WAY high. I agree with the integrated mining/upgrader price however, but that's all. If Canada is the world's marginal barrel then maybe that's where prices are headed.

  69. 69
    bloodystupidjohnson Says:

    RE: 65 Eli, isn't SM trying to sell their EF stuff?   I thought I read that some where.

  70. 70
    VTZ Says:

    Yellow metal looking to breakthrough 1550 followed by a test of the alltime high.

  71. 71
    elijahwc Says:

    BJS #69, I don't know, haven't heard that…..but if they are then they have to be happier today than yesterday.

    I shot the following back at my friend, "MRO just paid 24,000 to KKR and Hilcorp….comps went up", and got the following back:  I'm reposting it  because some here are interested in ROSE.
    "Yeh but there are some who give a reserve figure or a flowing bbl figure which diminishes the price per acre. Simmons for example says 16000 per acre while MRO says 25 ooo. For my back of the envelope Im happy with a 60 plus figure for SMs acreage.Im surprised ROSE is down as their acreage at Gates ranch is damn good."

  72. 72
    choices Says:

    SM's divestiture plans:

  73. 73
    West Says:

    SSN…………..Z,  So that works out $ 19,065 per acre for their northern DJ Basin on a 75% risked basis, which would put it on par with the Eagleford right ? That just seems like a very high price for such an unproven area. I'm not trying to argue with you,  but have been working on this to establish a fair value and determine whether SSN is a buy here or has the potentional of a downside move if their results of their test well or some of CHK 's wells come in at the low end of expectations. I do own the stock and do think that on a risk weighted basis that it is going to start having a much higher beta. 

  74. 74
    apbd Says:

    Italy:  Glad you're back.  God bless you and all of our comrades.

  75. 75
    choices Says:

    SM recent presentation-not sure what they plan to divest-not mentioned in slides-see slide #14:

  76. 76
    Zorgnak Says:

    NOG Bought some

  77. 77
    elijahwc Says:

    Nice find Choices.  BJS now we know the answer.  Wonder what it is worth to SM?  Further wonder if one of the "several bids" included one from MRO now that we know their pain threshold???

  78. 78
    Zorgnak Says:

    1330.50 Resistance
    1327.50 Acceptance
    1324.50 Support

  79. 79
    choices Says:

    Came across this SA article-fairly good summary of consequences of Germany's nuc decision and implications for Nat Gas:

  80. 80
    elijahwc Says:

    Fun & Games Dept:  Trading bunge LEI did a 2.84 to 3.45 ramp this a.m.
    Need to put scouts out to see if any tanks are being pulled on-site.

  81. 81
    choices Says:

    NOG:  thanks Zorg-also bot some

  82. 82
    bloodystupidjohnson Says:

    choices: good web site is http://www.naturalgasforeurope.com
    Germany's nuc decision means one thing, Russia's influence over Europe has just gone up.  The Polish Foreign Minister happens to thing that the Russians are behind some of the this frac controversy, at least as it applys to Poland.

  83. 83
    Zorgnak Says:

    BOP…How are the credit spreads looking today. I see that junk spreads widened.

  84. 84
    bloodystupidjohnson Says:

    RE: Eli — it means that I am not going totally crazy (lol). 

  85. 85
    Zorgnak Says:

    XLE Energy Holding Friday's lows. 

  86. 86
    BirdsofpreyRcool Says:

    zorg — don't just take my word for it… here is what XACS#2 had to say y'day (and still holds true today):
    When we returned from co-chairing the money market conference in March, we wrote that we thought the credit boom would
    intensify further, despite stock investors’ fears about Libya, the earthquake, the tsunami, and the nuclear disaster, and it did. At the
    end of April, we had an intraday note saying that credit investors were gearing up for an unscheduled wave of issuance that would
    lift buybacks and buyouts even further in the months ahead. We know that most equity investors only want to hear about bad
    potential outcomes, but we concluded last week, in a column titled “We Just Had The Best Week Ever,” that this issuance surge
    culminated two weeks ago with investors buying more new corporate bonds in a week than had ever happened.
    However, bullish as we have been, we once again underestimated the credit boom. With Memorial Day approaching, we thought
    the issuance surge concluded the week before last. We went away on a trip last week, only to return to find that credit investors
    were still snapping up corporate bonds at a feverish pace despite the approaching holiday! As a result, we’ve set a record for the
    most new junk bonds in a month! And May is typically a slow month! And the month’s not over! If there were any doubts about
    being in a credit boom, this month should have erased them.
    Yet, the majority of stock investors continue to doubt the credit boom. We continue to receive worried calls from stock
    investors concerned about the end of QE2, a rise in rates, or the sovereign situation. We continue to remind them that credit
    investors see the same new flow that stock investors do, but instead of sitting on their hands and producing no net gain for three
    months, as stock investors have, credit investors have bought with record gusto!
    In fact, now it appears that demand is so strong that this issuance wave will continue into June. That’s stunning, given that we
    should be in one of the slowest times of the year. That will eventually lead to even more buybacks and buyouts designed to boost
    stock prices.
    No matter how good the credit boom gets, however, it seems that stock investors just will not believe it. In fact, one of the top stories
    on Bloomberg today is titled “S&P 500 Cheapest to Junk Bonds.” We’ve been using that as our central theme for over a year now,
    so it’s nice to finally see someone else pick up on it, no matter how late to the party they are. However, that also highlights just how
    skeptical stock investors are, even though the credit market has been acting as if the S&P is well over 2000.
    That means that stock investors will likely continue searching for the dark lining in the silver cloud. The surprise of the continued
    surge last week finally pushed spreads a little wider last week, with investment-grade spreads widening 4 basis points and junkcredit investors bought a record amount of new junk bond issuance.
    Stock investors don’t want to hear that and would rather focus on negative
    widening by 19. Whenever spreads have widened in the last few years, we find there are some greedy companies who pull their
    bond deals citing “market conditions.” There were a few of those last week, and those stories often spook stock investors, who
    remember those stories during the credit bust sparking panic.
    But, this is a boom, not a bust, and greedy companies pulling deals over the last year hasn’t been a major cause for worry. In fact,
    the drop in Treasury yields accounted for much of the spread widening. Investment-grade yields actually dropped 5 basis points
    last week, and junk yields only rose by 10. For the month so far, investment-grade yields have fallen by 20 basis points and junk
    yields have fallen by 2. If you had told us a month ago that May would have broken all records, we would have guessed that junk
    yields would have risen by 75–100 basis points from the amount of supply.
    So, the credit market remains in excellent shape despite the end of QE2 and is poised to add to buybacks and buyouts in the
    coming years, which should continue to boost stock prices over time. But, stock investors still don’t believe in this process, which is
    why it is likely to remain a bumpy, joyless ride, and why our thresholds of S&P 1300, the low 1340s and 1370 will likely continue to
    have short-term importance.

  87. 87
    VTZ Says:

    BOP – How can we say that the credit markets are still ok when we have still recently seen billions in bids from the Fed. Someone's going to need to buy those bonds, and I know you are talking high yield but the whole credit markets are going to suffer (?).

  88. 88
    elijahwc Says:

    CIGX does the midday jig upward…nice

  89. 89
    VTZ Says:

    To follow up… look at the balance sheet explosion in treasuries. What's going to happen when that supply comes back to market along with the continued deficit financing… not pretty… QE3. The bond investors have their head in the sand expecting more stimulus? That's why yields are still ridiculous?

  90. 90
    BirdsofpreyRcool Says:

    VTZ — i'm not just talking about high yield… I am seeing CLO structures, asset-backed pools, and sub-prime lending being priced and done.  Even GM is back to issuing asset-backed deals… after us taxpayers bailed them out from the LAST time they got heavily into the lending business. 
    Who's buying?  Anyone who is in a "fixed income fund."  As well as pension funds, sovereign funds, banks, insurance companies… and, well, anyone who doesn't think a 25 bps yield on a money market fund is enough to fund their needs (but is afraid of stocks). 
    Saw a headline on bloomberg today that there has been a 24% surge in the sale of U.S. Variable Annuities.  What do you think those annuities invest in?  Stocks, bonds, income-producing vehicles.  But the manager takes a nice slice of the income, in order to "guarantee" a "variable income for life" from these funds.
    Money is not paid to sit in money market funds.  It may not be rushing into the stock market… but it's going somewhere.  Just follow the spreads.  It ain't all Uncle Sam… it's anyone who needs more than 25 bps on their money to live.

  91. 91
    BirdsofpreyRcool Says:

    The last time people were "afraid to buy stocks"… they poured money into housing instead.  That asset isn't as attractive, this time around.  So, leaves "fixed income" and gold, i guess.

  92. 92
    VTZ Says:

    If the "fixed income funds" are buying then why is the Fed balance sheet exploding?

  93. 93
    BirdsofpreyRcool Says:

    elijah #88 — guess someone said something "juicy" at the Roskamp lunch… more to come, i am guessing…
    bought some trading CIGX this morning… hoping this would happen…. so Book Talking here….

  94. 94
    BirdsofpreyRcool Says:

    VTZ — both are buying. 

  95. 95
    VTZ Says:

    It's the same as the top of the equity markets, the people or "fixed income funds" buying treasuries and low fixed income yields at these low yields are buying in the same postion.

  96. 96
    BirdsofpreyRcool Says:

    hey!  i'm with you!!
    This is going to end badly.
    Just not today.  Not tomorrow, next week, or next quarter.  Maybe in a year or two or so… but not yet. 
    Don't shoot the messenger.

  97. 97
    VTZ Says:

    Great lets all pile in then and collect a few % and risk getting buried. Sounds like a plan!

  98. 98
    BirdsofpreyRcool Says:

    Or — better said — this is currently ON TRACK to end badly.  But, meanwhile, have to make money while I can.  's all i'm saying.

  99. 99
    BirdsofpreyRcool Says:

    I am not buying US Treasuries (or treasury funds) or any fixed income funds.  Have a few bonds left over from a year or so ago.  Buying stocks, income producing stocks, and special situations.  Wouldn't touch a bond fund here and now.  But 99% of individual investors don't agree with me on that. 

  100. 100
    VTZ Says:

    I understand. I guess all I'm saying is I find it dangerous to quote anyone who is saying the credit markets are ok. They aren't ok.
    I'd rather:
    a) invest in a currency that isnt getting destroyed
    b) invest in an asset class that isnt doomed because there's only one direction it can go (the same acknowledged to be doomed by anybody with a brain, including most experts in that field and the biggest investor in that asset class)
    c) sit on my hands and collect nothing but assume no risk
    d) invest somewhere that doesnt have structural deficits into oblivion
    e) eat hot garbage

  101. 101
    Zorgnak Says:

    BOP…..Thanks for the good information

  102. 102
    BirdsofpreyRcool Says:

    Stocks are down over 200 pts (on the Dow)… investment grade (IG) bonds are 2 basis points wider and high yield (HY) is 1/2 point lower.  During the Dark Days, when stocks were down 200 pts, IG was 10 bps wider and HY a point or more lower. 
    Stocks are scared stupid.  Fixed income is busily buying bonds to put money to work.  Not saying it's "all fun and games" in stocks… but the spread between the "yield" on the S&P stocks and bond yields makes stocks a better "risk-adjusted" place to be.  Just have to take your sea-sick pills.

  103. 103
    VTZ Says:

    Good talk. Lets do it again after the June purchases end.

  104. 104
    DrLink Says:

    VTZ- Do you like Petrobank down here? Thanks!

  105. 105
    VTZ Says:

    Not until I see more THAI results.

  106. 106
    blackgold39 Says:

    re 100 – seconded.   I am just young enough to recover if I get my lunch eaten (or garbage, haha)

  107. 107
    choices Says:

    #82-Russians stoking frac fears-heh-I believe it is almost an absolute certainty if not 100% certain-seen other reports also to this effect.
    BSJ-thanks for the site.

  108. 108
    blackgold39 Says:

    Down days, people just dislike holding NFX

  109. 109
    BirdsofpreyRcool Says:

    VTZ — #100 ha!  You always make me sound like Pollyanna.  I don't think I am.  I was right next to Tater in his cave a couple of short years ago.  But we are not there now.  Headed back there at some point.  But meanwhile, going to plant seeds, cultivate, and harvest in the sunshine…. to build up some stock, before it's time to take to the caves again.

  110. 110
    choices Says:

    credit:  saw a report that Bill "talking my book" Gross likens bondholders to frogs in a frying pan.

  111. 111
    VTZ Says:

    No offense intended. Just looking out for ya. Don't end up a frog.

  112. 112
    elijahwc Says:

    #110 Bill is the frog.  He missed the entire last  5mos.

  113. 113
    BirdsofpreyRcool Says:

    choices — #110… sounds about right to me.
    Here's the thing, tho.  If you run a fixed income mutual fund, you have to be about 95% invested.  If you aren't and the mrkt continues to rally… you get thrown out on your butt like Jeff Vinick was.  But if you're fully invested and the mrkt goes down, you can hide behind your fund prospectus.  So… what do you think fixed income fund investors are doing right now?   They HATE the tight spreads…. but everyday, they wake up to more money flowing into their fund b/c people don't want to put it in equities.  That is what is driving yields tighter.  Not some happy-happy-joy-joy feeling in the fixed income investment community… bonds are purely technically-driven.  Money comes into the asset class, yields drop, companies notice and rush to issue bonds.  As long as money continues to flow in, companies will continue to sop up that liquidity.
    I think equities are far more worried about the end of QE than bonds.  But we shall see.  The World is a fairly ugly place.  But, still have to wake up every morning and make decisions about what to do with your cash.

  114. 114
    BirdsofpreyRcool Says:

    SO — deep breath —- the Answer lies in keeping your eyes and brain open.  At some point Bill Gross is going to be right.  But not today or next month.  Also, Pimco bought a couple of stock funds and managers about a yr or so ago.  Tried that a long time ago, didn't work for them.  But doing it again.  What's that say about "stocks vs bonds" ?? 
    Love this quote:  "10-yr treasuries at 7% are an investment… at 3% they are speculation." 
    musing… Bill Gross is mainly a treasury bond investor… and that 30 yr ride (from 1981 to 2011) is O-V-E-R.  Done.  Ain't gonna happen again in our lifetime.  So what's he supposed to say?  He was the Elvis of the Treasury Market.  Right man, right place, right time.  But, it's time for Elvis to leave the building.

  115. 115
    zman Says:

    Well that will teach me to go to an early lunch. This pull back would have happened in part yesterday were it not for month end. Group reaction actually not that bad.  

  116. 116
    VTZ Says:

    In my opinion, what is driving yields tighter is the Fed. They drive income funds out of treasuries into the rest of the fixed income market because they are overpaying for treasuries. Spreads go down then, no?
    Agree that a contributing factor is the lack of anything to get excited about in equities and the fact most people are scared of the markets ever since the mortgage fiasco, high frequency trading, flash crash, fraud rampant among wall street, charges against most large banks, settlements, etc etc.
    Another contributor is demographics, boomers need a little more safety for their money these days. It's not surprising that RIFs are increasing with the amount of retired boomers and a little bounceback in the equity markets since the drop.

  117. 117
    zman Says:

    Re 73 – I think I said they have about a $1 of downside should the first well be dry. Again, on risking, I generally take the reserve potential by the whole position and then risk it. So not a barrels per acre or a $/acre valuation in the end, or a barrels per well thing (still don't know spacing), it's . The risking is a judgement call but I think warranted for where they are at this stage of the game given what I have heard/gleaned about offset operator potential. 

  118. 118
    BirdsofpreyRcool Says:

    musing…. nobody pays me to be a fool in public… i do it voluntarily.  hmmmmm…. silly me.

  119. 119
    VTZ Says:

    I sold NOG 19 puts just now. If I get em, it's on the cheap!

  120. 120
    Dillon Says:

    Bought me some Nog at 19.27. Purely on fundamentals, bc this is one ugly chart.

  121. 121
    bloodystupidjohnson Says:

    Dillion — I am not a chartist, however I think NOG does not have that bad of chart.  It looks like it is trying to but in a base around current levels.

  122. 122
    john11 Says:

    Stephens out ith BEXP initiate overweight tgt 37
    also initiated KOG, OAS, and TPLM as overweights, don't have targets.

  123. 123
    irongate Says:

    KOG TPLM BEXP OAS   all just initiated with an overweight at Stephens

  124. 124
    zman Says:

    Re Stephens – and to think I told him to do that, what 9 months back? Well, better late than never. Will take a look as they give me free research.

  125. 125
    Zorgnak Says:

    S&P 1315.75 Next support….1312.75 major acceptance area

  126. 126
    BirdsofpreyRcool Says:

    Greece just cut to Caa1 from B1 by Moody's.
    That is a pretty big deal.  Means the gloves are completely off in the fight over Greek Debt restructuring.  Not a lot of room to negotiate… when you're triple-C.

  127. 127
    zman Says:

    Re NOG – no chartist either but I'd guess it needs to hold $18.50 or lower lows will ensue. Whether it be a soft market or some other item, the name can't seem to get above it's 20 day for now. 

  128. 128
    cargocult Says:

    I'm taking Zman's word for the value in NOG, but the chart has been trending down since March 5 so I'm not seeing an urgent reason to buy. Couple that with the ragged bumper sticker of a "story" that hasn't worn off and it will take something new in my view to move this stock up. This sideways action is an improvement, if only because it in not down.  I invest with the belief that value is recognized in the end, so good things may come to those who wait.

  129. 129
    zman Says:

    Cargo – I have been saying for some time that it will be results that turns the stock and that I'm not looking for a V shaped recovery in the shares but a U shaped one that takes several months.

  130. 130
    Dillon Says:

    BSJ – im not a chartist either. it does look like it is trying to put in a base like you said but is still slightly trending down. I would think at these levels some other larger operator like EOG or someone who is an operator of many of NOG's wells would be interested in buying NOG right now.

  131. 131
    Dillon Says:

    re 130 – but then again, maybe they are waiting for it to drift lower as well!

  132. 132
    skimo Says:

    OT BOP, when will the results of today's meeting be made public? Seem to be getting the sell the news dip already.

  133. 133
    zman Says:

    Dillon –  I'd suspect an MLP or similar entity would have more an interest in their kind of assets. They have good concentrations but a dozen operators to deal with and any one of them is unlikely to want to take on being a non-operator with so many partners. Someone like LINE, who just did a nice deal along these same lines could come in and buy them but I think that name in particular would rather do smaller bolt on deals than that.  

  134. 134
    zman Says:

    V – By the way, saw a story earlier saying everyone will now run back to gold in a flight to safety. 

  135. 135
    BirdsofpreyRcool Says:

    CIGX — hit an air pocket…. bear raid.  Meeting going well, is what I am hearing.

  136. 136
    cargocult Says:

    Anything up with BEXP? taking it on the chin today.

  137. 137
    VTZ Says:

    Re 134 – I'm sure they will. I'm more confident than ever in numbers like 2500, 3000, etc.

  138. 138
    zman Says:


    Not that I know of:

    BEXP -5.3%, OAS -5%, NOG -6%, WLL – 3.6%, KOg – 4.5%, CLR -4.6% = bad day in the Bakkens

  139. 139
    Pati Says:


  140. 140
    Dillon Says:

    133 – Good Point. Thanks for pointing that out.

  141. 141
    zman Says:

    BOP – air pockets helped by down 27+ on the S&P today, not a lot of thinking going on in my names at the moment, probably same for your little pharma name. 

  142. 142
    BirdsofpreyRcool Says:

    OT CIGS:  Good day to scare some shares out and cover some shorts, methinks.  Tomorrow, those at the Roskamp meeting will be talking about what they heard.

  143. 143
    zman Says:

    re 140 – I wish that I thought otherwise as the field of potential buyers would be bigger but that's not what I truly see happening. So while it makes a heckuva lot of sense to say KOG would be a tasty treat for XOM, the same doesn't really hold water, at least with me, for NOG.  I could be wrong on that but the case is harder to make for some many non-operated interests. There are probably some larger mid-cap names that would take it on who are not operators there already or who are small but I haven't figured out one that really makes sense strategically yet. I think if they were the operator of the assets (and even if their operating costs were 20% higher) that there would be a good chance they would have been taken out by now. 

  144. 144
    zman Says:

    I'd also point to the Southcoast comments from last week on the high degree of buyside interest in the name. I think 2 more quarters get reported and the results push the shorts to largely cover. 

  145. 145
    elijahwc Says:

    CIGX appears those short the stock have pictures of the docs smoking out back during the break between presentations.
     Think I'll join them.

  146. 146
    bathtime Says:

    OT: Re: CIGX trading. Thanks for the update BOP, sure makes for an interesting day.

  147. 147
    Zorgnak Says:

    Back in CWEI..had a nice bounce last time it came down here…

  148. 148
    BirdsofpreyRcool Says:

    OT CIGX:  what better day to scare longs and cover a short position?  Nice thing is, you don't have to hear it from me… we have a member of this board at the Roskamp meeting today.  Perhaps he can find the time to post a quick summary this evening. 

  149. 149
    john11 Says:

    ot..just popped a couple of cigx and added some.

  150. 150
    Pati Says:

    #149 Ditto!

  151. 151
    zman Says:

    Zorg – how do your support levels for the S&P look for tomorrow?

  152. 152
    BirdsofpreyRcool Says:

    High Yield index all of +13 bps wider… that's -9/16 point.  Not even close to panicked.  Investment grade now +2.5 bps wider. 
    But people are nervous.  Even seeing "joking" from the bond desk about a stock "flash crash tomorrow."  And that sort of stuff can be self-fulfilling… especially if the trader is short. 

  153. 153
    Jerome Blank Says:

    CIGX… whew…..trying to base with a intraday flag, will try an add if CIGX trades back above $4.30 , can go either way, odds are better if it starts to break higher…did not take out the lows on the last try….if no news,  thinking its worth a try on down 20%,  stating the obvious, but…high risk…

  154. 154
    Zorgnak Says:

    #151 Looks like a test of 1305 at minimum ..then 1297
    I'll take a closer look after things settle down….

  155. 155
    elijahwc Says:

    Falling knives everywhere…appears the machines want a low of the day close and may well get it.  
    "The fact that the U.S. finds itself in its current predicament really ticks me off.  Cathartic moments and beneficial 
    change can occur after experiencing great pain.  As a nation, we had a chance following the financial crisis, but blew 
    it" from "Wait and Hope" Steve Romick's address to  the Value Investing Congress in May.
    Yup Steve
    The full text can be found here;

  156. 156
    Zorgnak Says:

    BOP..thanks for the credit report

  157. 157
    zman Says:

    Thanks Zorg.


  158. 158
    BirdsofpreyRcool Says:

    CHK 5-yr CDS (basically, their cost of borrowing 5 yr debt) = 5 bps wider today.  And that is mainly b/c the 5 yr UST rallied about 12 bps.  So, i don't really think of that as "OMG, bonds are down!"  More of a rush to safety on all this uncertainty. 
    No argument from me, that is is so much that is wrong these days.  When 1 in 8 Americans are on food stamps and at the same time there is a record number of limosines owned by govt officials… i just have to shakes me head in wonder. 

  159. 159
    BirdsofpreyRcool Says:

    Looking forward to seeing what TED says about market conditions tomorrow.  Didn't really move much (wider) today.  Currently at +20.9667 bps

  160. 160
    ram Says:

    BOP, so with the increased volume as CIGX cliff dived, you don't think that was bad?

  161. 161
    Dman Says:

    Just got the monthly Marc Faber letter. He includes the following quote:
    "If we are all in agreement on the decision–then I
    propose we postpone further discussion of this matter
    until our next meeting to give ourselves time to develop
    disagreement and perhaps gain some understanding of
    what the decision is all about."
            Alfred P. Sloan, Jr.

  162. 162
    blackgold39 Says:

    ugh NOGulator, come on back!

  163. 163
    BirdsofpreyRcool Says:

    ram — CIGX:  what I think happened = my trading desk is saying that one individual showed up with 1.6mm shares and dumped it on the mrkt.  We think we know who it is… and his fund has been a front for shorts in the past.  Also, the shares showed up just after the meeting was over…. when everyone else was on the bus, being shuttled back to the main hotel… so attendees were not even aware this was happening. 
    Just spoke with a friend who was there… the science backing up the (frankly, almost) outrageous results various scientists are seeing (across various medical disciplines) is compelling. 
    It will be very interesting to see what summaries come out tomorrow.  Patrick Cox was the closing (i think) speaker.  Heard he was a lot more "credible" than that informercial he ran last week.  Good thing.  But more importantly, credible doctors (from Hopkins and the Flint, Michigan study) were there, presenting amazing data. 
    I hate that the stock fell… but we've seen Bear Raids on CIGX before.  With 19.2mm shares short, I think they will ultimately prove to be on the losing end of this proposition. 

  164. 164
    blackgold39 Says:

    re 143 – couldnt agree more on the NOG takeout.  Nobody will want them unless it is one of the folks like Slawson who operates all their wells.  Even then, when your specific strategy is to buy up non-operated interests, you will never gain a big enough piece to be an operator, and therefore have no controllable asset base.   It would only be accretive to a company like CLR or Slawson who already has the operatorship of the sections and simply want to add more.
    One other problem is that picking up non-op pieces puts you at risk of being AFE'd to death in times when you might have to spend money elsewhere.  Then you're stuck losing your rights when you have to non-consent.   Very ugly pill for an acquirer just to say they have Williston assets.

  165. 165
    elijahwc Says:

    #161 that's a wonderful quote.

    I would like to see this one used by one of our energy execs in testimony before Congress on the contents of fracking fluids:

    “There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.”
    Donald Rumsfeld

  166. 166
    ram Says:

    BOP, I went to the CIGX well a third time and got poisioned once more.  In less than one hour I am sitting on an ugly paper loss after suffering two real losses earlier this year.  I am starting to believe that this company doesn't make product that helps people, it actually trades violently to make one sick.

  167. 167
    bathtime Says:

    BOP, thanks for the added insight on the day's trading and for passing on your friend's account of the meeting. Look forward to hearing more.
    I'd mentioned CIGX to a friend the other day and he has already been in the stock for about a week. He subscribes to a service by a guy Andy Obermueller:
    Obermueller did a write-up and rec on CIGX, throwing out a long term $100 target. Seemed like he was using a lot of Cox's material as a reference.
    I emailed John Faessel last night to get on his email list. In his last bulletin he mentioned he was flying to Florida for a meeting – without referring to CIGX directly. I mentioned CIGX stuff and he emailed this morning, "Much to say soon."

  168. 168
    BirdsofpreyRcool Says:

    ram — #166 i can't tell you how much that pains me.  I was buying at $5.09 this morning… and $4.29 this afternoon.  Based on what I heard, what I know, and what the doctors are saying, I expect that even my $5.09 shares will make me a Happy Camper.  I do not intend to sell on the FEAR Trade.  But it just KILLS me that you have a paper loss.  For now.  Let this one ride this time.  The potential here is enormous.

  169. 169
    bloodystupidjohnson Says:

    I was reading the comments on a buy out of NOG.  I think that would be the last thing a current shareholder would want.  NOG is growing its production and, if reports are right, could see 10,000 bpd by 2012.  There is no way a buy out would get you full potential value for these shares.  NOG would be valued on current metrics, not 2012 ones. 
    So unless you are a trader, or on margin forget about the daily price swings in NOG.  Long term investors can use any price weakness as a gift from Mr Market to buy a cheap DEBT FREE stock cheaper.  I can't see anything wrong with that.

  170. 170
    Zorgnak Says:

    S&P Regular Session  Futures Levels
    S&P futures came to a stop almost exactly on the 1313.50 Acceptance level, closing the  session at 1325.25.  This particular level has been the most accepted area to do business for the last 5 months and now for the past 6 days. First significant support and resistance is at 1305.50 and 1320.75. We'll have to see how overnight trading goes to see what the field position is for tomorrow and  what levels will come into play.  I would expect 1305.50 support to be tested at some point, possibly tonight. If the market tests lower than 1305.50 there are three distinct support levels posted below.
    There are a number of high probability mean reversion long setups that have triggered after today"s action. I would expect that if we do test lower tomorrow we'll not have seen the last of 1313.50. At least that 's the way I'll be playing it.
    1320.75 Resistance, Major CLVN

    1315.75  Minor Resistance, CLVN
    1313.50 Major Acceptance, CHVN

    1309.75 Minor Support. CLVN
    1305.50 Support, Major CLVN

    1297.75 Support, CLVN1
    1291.75 Support, CLVN
    1286.50   Support, CLVN

  171. 171
    choices Says:

    Reaping the rewards of a collapsing US dollar-question is where is it showing up in US economy.

  172. 172
    zman Says:

    re 169 – yeah, wasn't advocating it, just saying what kind of buyer I thought it would be were it to happen. I think they'd be hard pressed to let it go for less than a small premium above the old high, given that the shorts apparently have nothing, and the production growth is going to happen and they are going to continue to add acreage at a rate of 10K or so acres per quarter. It is inexorable. There is not exploration risk in the portfolio in the next year at least.  

  173. 173
    zman Says:

    Here's a pictorial argument for a diversified spread of acreage across a play. In this case, this is, I understand, current views form Williams county. 


  174. 174
    mimster90 Says:

    OT: I am long CIGX but I am not buying any more shares until the court ruling comes out, either way short term I think it will move the stock big one way or the other. I hope their story of treating alzheimer is real as it will improve the lives of so many people. CIGX is s swing for the fences money for me. My eye short term is on some of our favorites here NOG, TPLM, GMXR, EXXI to name a few [and SSN thanks to z's great write up today], With summer doldrums coming things can get a bit crazy so I hope we all can find some $20 dollar bills on sale for $5. Thanks to BOP for keeping us up to date on CIGX and the state of the bond dog's tail.

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