Wrap – Week Ended 2/15/13

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19 Responses to “Wrap – Week Ended 2/15/13”

  1. 1
    tomdavis12 Says:

    Z: Barron's has an article questioning LINE's derivative accounting. What the downgrade @ HWeil was about.

  2. 2
    choices Says:

    "maybe" some weekend reading (if any gold fanatics are still out there):
    BTW, Frank Holmes has a solid reputation in the gold industry

  3. 3
    john11 Says:

    Posted on LINE's website on 2/15;
    "LINN’s Hedging Strategy and Response To Inaccurate Statements 
    Made By An Anonymous Short Seller"

  4. 4
    zman Says:

    Re 1, 3 – have been out of pocket much of the weekend, apologies for the late response. 

    Thanks Tom – I don't get Barron's (used to read all the time, now I dunno, not something I take any longer) 

    I got an email from a subscriber mid last week who had a friend who was saying he thought LINE 's hedge accounting had problems. My response was that I am not a forensic accountant, and that if he wants to really get to the bottom of it he should contract Clay Jeansonne at the company. But my sense is LINE is unlikely to be do anything untoward.   They've been doing this for a long time, have KPMG as accountants and have no disagreements with their account according to the K. So I shrugged my shoulders at it thinking "doubtful"

    In looking at the well thought out response by LINE (do go read it) it's clear that they have heard this before. They are not unique in the way the hedge or conduct other oil and gas accounting operations. I'd note their point about short sellers freely mixing up cash and non-cash items as something I too have seen over time. Shorts largely, from what I have seen, do not hold accuracy or understanding of accounting in high regard. If I were them I'd pick easier targets. 

    Tom – I don't have the Barron's article but assume its one of their short ones that just says basically here is what Wunderlich was saying? Is that correct and did they try to contact the company for a response before going to print? In the past they have put a lot of one sided stories out that turned out to be wrong, giving quick dips in names before, well, the truth came out. It's one of the reasons I no longer get the paper copy on my desk. 

  5. 5
    tomdavis12 Says:

    John – LINE. Thanks for posting. Thought their response was very thorough. Do you have a link to the Barron's article? I only have the paper. Thanks.

  6. 6
    tomdavis12 Says:

    Z: 4  The article was not that short but I have much more confidence in the LINE side of this. Much more interested in what they had to say then what the other side was saying. I too had heard some rumbling of this prior. I guess Thurs we will hear a little more.

  7. 7
    john11 Says:

    Here's the link to the Barron's piece, may need online sub thoug. Let me know.

  8. 8
    zman Says:

    Thanks Tom – LINE's been around a long time, shorts come and go. People who think they've "found something" don't generally pick up the phone and ask the company about it. 

  9. 9
    john11 Says:

    Z..totally agree with your summary comments re Barron's and their often disappointing shoot first approach.  I stick with my online sub as its tied into WSJ and I do have to acknowledge that they can be market movers if only in the short term.  I'm a longterm LINE holder and will certainly continue to be.

  10. 10
    zman Says:

    Analyst Watch:

    LINE – Raymond James saying there is nothing wrong with LINE's accounting for puts, reiterated Strong Buy on Friday. 

  11. 11
    brodway Says:

    while on the subject of shorts, the NOG short position is down to 9 million. hasn't helped the stock price as the short position has been reduced significantly since last year, but it certainly would help the stock move freely if things got cleaned up in the future.

  12. 12
    zman Says:

    RB – thanks for the ice tea. Good to catch up. 

  13. 13
    zman Says:

    Just off the phone with Osage, notes in tomorrow's post. 

  14. 14
    nrgyman Says:

    ECA:  Going against the grain and ramping up drilling in the ….Haynesville Shale!  Good article on the ECA Haynesville cost analysis and why they are doing this.  One conclusion is that as production ramps in the targeted sweet spots, the decline of production in the entire Haynesville play expected in H1 2013 will be halted and overall Haynesville production will start rising again.  This appears to be another future contributor to natgas supply 'stickiness'.  The article also points out the stronger economics in the Fayetteville and, particularly, the Marcellus Shales.  Increasingly, the bull case for natgas prices rests even more on demand growth as supply falloffs are looking to be less likely or significant.

  15. 15
    zman Says:

    re 14 – thanks. I was on the ECA call, didn't get the impression they were talking about arresting LA state decline via the Haynesville but will go back and check, more just a sense of still drilling in sweet spots. On the Fayetteville, it has been growing but will SWN which is the low cost guy in the play does not expect to grow production for the first time in their history. All of their growth comes from PA this year. PA rigs have rolled way over, so while some may grow there the growth has slowed. Texas is flattish but likely to grow a little, same with OK, Colorarado has been falling, NM flat, WY flat and the Gulf is likely to be off again this year in our view but some see it flat. I don't call the Gas Macro a bull case as much as I do a less bear, rounding bottom, growth in supply is slowing and likely to roll in the next 12 months or so while demand continues to pick up and the very price depressing storage situation we have labored under in terms of surplus has evaporated on the YoY and should do so on the five year as well over the course of the summer. 

  16. 16
    choices Says:

    Europe's gas potential:

  17. 17
    milepost_43 Says:

    16 Poland

    PGNiG now weeks away on shale gas well results
    – Polish gas monopoly PGNiG has now completed its first, but delayed, horizontal fracturing well probing a shale gas prospect on the Baltic Sea coast, and will present the results in a few weeks, it said on Friday.
    U.S. drilling contractor Halliburton is conducting the drilling at PGNiG's Lubocino site in the Wejherowo concession area.
    Poland is counting on untapped shale gas reserves to help it become less dependent on Russia, which supplies more than half of the near 15 billion cubic metres of natural gas which the country burns annually.
    But poor drilling results so far and a lack of detailed legal regulation has caused some doubts about Poland's true shale gas potential.
    Poland estimates its recoverable shale gas reserves at between 346 billion and 768 billion cubic metres.
    PGNiG's testing at Lubocino is crucial as it will provide data for a new report, being compiled by the state geological institute, on the prospective size of shale gas reserves.
    The company, which has 15 of the country's more than 100 shale gas concessions, originally intended to have the results from hydraulic fracturing in the Lubocino well at the end of last year but said it had hit unexpected geological problems.

  18. 18
    bathtime Says:

    Can read the full Barron's article on LINE free vby searching for barron's linn in Google News.

  19. 19
    zman Says:

    Thanks bathtime

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