Sunday to Tuesday Vacation Post

This week is usually one of the slowest of the trading year and so we're on the road, spending a little quality time with the interns through Tuesday. I'll be brief but here will check in from time to time both days.  We'll have the Natural Gas Supply (production plus imports) and Demand slide shows in the Wednesday post. 

For easy reference with some of the comments on the first half below, we're including the wrap table again in today's post as it contains the 1H13 performance of the index and our portfolios. 

wrap 1H13

A few notable things through the first six months of the year:

WTI is up 5% while Brent is off 8%. Mixed bag of reasons for this:

  • Slightly higher than expected production in the States and on a good week, oil producton runs over 7.3 mm bopd which is the average we have been expecting for the entire year. 
  • Year to date U.S. oil production growth is running up roughly 1.2 mm bopd. 
  • Note that this is largely offset by a 1.1 mm bopd YoY cumulative decline in imports. 
  • Demand in the States has been tepid, at least more tepid that we expected, especially on the gasoline consumption front. 
  • Exports, after posting rapid growth in 2012, have plateaued in the first half of 2013 largely due to the narrower spread between the global basket and Stateside pricing.
  • Note the U.S. oil directed rig count has stalled and reversed, even with $90+ oil in the first half. Much of this is attributalbe to rig efficiency. A smaller part of this is due to the major liqiuds rich players getting their leasehold largely HBP'd and domestic E&Ps opting to persue a little more capital discipline in the face of stalled domestic oil prices. Dont' get me wrong, mid $90's WTI and $15 to $20 over that on the Gulf Coast are great prices but the players likely recognize that their stock prices don't differentiate well between 20% or 40% growth rates. Or, put another way, "why grow at 40% if that's the edge of the achievable envelope for you when you don't get credit for it in the market and you run the risk that logistical issues combined with say, some bad weather, means you turn in a 38% performance which is still quite strong in your eyes but a "miss" in the eyes of the market"?

​Natural gas is up 7% YTD, moderating the surge off the April 2012 lows in recent weeks. Higher demand, flattish production and lower imports have all helped with the move but this continues to be a 2 steps forward,1 3/4 steps back type advance.   Production is no longer rapidly rising but it refuses to really fall off either in part due to the associated gas production with the liquids rich plays. There's been little help from the Gulf and Louisiana is in full on decline as the Haynesville is dry gas and drilling there has all but dried up. The square States out west are holding up OK, Texas is treading water, while Oklahoma is rising with the Miss Lime and Cana plays. The "Other States" segment isn't rising as quickly as it once did due to countervailing forces within the category but Pennsylvania production from the Marcellus continues to swell and the nutshell is that production continues to refuse to decline depsite the 11 year low in the natural gas directed rig count.  We remain constructive on gas prices in the 2H13 period. 


Holdings Watch

  • Performance through the first half is essentially in line with the performance of the broad indexes in our equity only long term focused portfolios this year. We're about 70% oil, 25% natural gas and 5% either balanced or Service or Other (which includes a tiny coal position). We are slowly adding to our natural gas focused names and constantly adding to and subtracting from our oil names. As we have for the last year, all trades are noted in the comments section and via email and text if desired at the time they occur. 
  • The Blotter is updated here.

The Week That Was 

weekly wrap 062813

Enjoy the slow week and again, we'll check in from time to time. 



168 Responses to “Sunday to Tuesday Vacation Post”

  1. 1
    Zorgnak Says:

    S&P Areas of Interest  6/30 5:00 PM ES 1599


    Notes…. Market stalling at the 1606 CHVN after a low volume bounce. Heavy supply from 1606 to 1620..  Expecting retest lower with 1591 CLVN/minor support and 1582 minor CHVN as near acceptance.  Major CHVN below at 1541. Breadth trend is negative. Demand volume is negative in all time frames. POMO positive through the end of the month.  $USD upside bias and currently  mid range above volume pivot  with resistance/major breakout level at 85.

     Thoughts ……. 1606 is the short term volume pivot. Expecting low volume sloppy trading, with moves higher to stall below 1620 and rejection below 1606 to test to  1591. A break there would open up 1541 as the major downside target.  I’m looking for opportunity lower with a move below 1567 (152.27 on the SPY).

    Glossary   http://www.futurestrader71.com/?page_id=1280

    1620.25 CHVN/Heavy Supply/Previous breakdown point

    1606 Minor/CHVN/Supply/Short term volume pivot.

    1591 CLVN /Previous breakout point.

    1577-82 Minor CHVN

    1564 Minor CLVN/Support

    1541  Major CHVN/Acceptance

    1520 Major CLVN/support



    SP500 Futures




  2. 2
    Zorgnak Says:

    XLE  Sector trend line and CLVN support around 76.  Demand volume/breadth negative at the moment.


    FCG  Gas ETF support at 15.25


  3. 3
    Mark Wetzler Says:

    Zorg, you say heavy supply until 1620. On your master charts I see an LVA from 1610-20 on a variety of composites. How do you determine the "heavy supply" ?

  4. 4
    elduque Says:

    Morning Externals:


    BDI at 1179


    Brent/WTI at 5.5


    TYX at 3.53


  5. 5
    Zorgnak Says:

    ROSE…..ROSE has been a good trader off range lows.Last 50 Trades, 74% winners 3.29 profit factor. Setup would be complete with a close below 41.


  6. 6
    Zorgnak Says:

    #3 Mark….I see and  agree that there is a LVN between 1606 and 1620 and for day trading purposes I'd expect either rejection at around 1614 or a quick pass through to 1620. For longer term traders or EOD traders I think reversals could come anytime below 1620 where the supply is thickest with initial supply at 1606 rejecting price last Friday. Thanks for pointing that out. 


  7. 7
    Zorgnak Says:

    re #6   Gap open now thru 1614 CLVN ..appears 1620 is the upside target..a close above that level would be a big shock to those who bailed on last week's sell off


  8. 8
    Zorgnak Says:

    Volume moderate in energy stocks with 35 of 80 above average for time of day…advancers 64 of 80

  9. 9
    Zorgnak Says:

    Bloomberg TV ‏@BloombergTV56s

    BREAKING: U.S. June ISM manufacturing index rises to 50.9 from 49.0

  10. 10
    italyinvestor Says:

    While I hate that Z is away, i am looking forward to another "Z vacation rally."

  11. 11
    Zorgnak Says:

    S&P futs back to 1620 CHVN..important pivot going forward…


  12. 12
    elduque Says:

    Copper trading up 3% from its lows. 

  13. 13
    brodway Says:

    Anyone see Morgan Stanley downgrade VLO to Underweight? A little odd after a large move down from the highs

  14. 14
    brodway Says:


    agree on ROSE. stock has been pretty volatilie between 41 and 49. has been a better trading stock than a holding stock

  15. 15
    Zorgnak Says:

    FSLR  through the volume pivot


  16. 16
    Zorgnak Says:

    #14  yep…been a laggard that rips and dips…..

  17. 17
    Zorgnak Says:


  18. 18
    Zorgnak Says:

    Lot's of pretty charts today… a couple of stocks that conitnue to show breakouts






  19. 19
    nrgyman Says:

    IWM and XOP both up 1.75% so far. 

  20. 20
    Zorgnak Says:

    KOG showing breakout potential above 9.25…works to 10


  21. 21
    tomdavis12 Says:

    PQ Priced a senior note $200mm 10% '17. Yes leverage but still only 4x ebitda. Will develop Woodford in JV with NEE. Street should raise numbers. $5/sh is doable.   

  22. 22
    nrgyman Says:

    One negative is that natgas is down, trying to find a bottom in the late shoulder season sell-off due to cooler temps.  Perhaps the heat wave out west will bring a bottom soon.  Natgas stocks, for the most part are holding in.  FCG is basing just above lows.  Due to associated gas from liquids production and prolific high-margin Marcellus production, overall natgas production is steady—as Z has pointed out.  So demand is the controller of pricing now, which is coal-switching and weather dependent.  

  23. 23
    Zorgnak Says:

    # 22..trying a long Nat Gas / short Oil trade here….



  24. 24
    Andy Moore Says:

    tok  -PQ  ok for individ investors?  have cusip?  thks!

  25. 25
    tomdavis12 Says:

    Citi has met with RRC. Buy with $95 PT. One stock you must own if you think you will see $4.50 NG.

  26. 26
    tomdavis12 Says:

    JPMorgan best ideas for second half. CNX, CLR, GLOG, NOV, OXY, TSO

  27. 27
    tomdavis12 Says:

    24 Don't have access to info. Not at work.

  28. 28
    tomdavis12 Says:

    MS – Met with Fredrickson Group. Still expecting strong demand in UDW. Pushing companies that improve uptime & offshore recovery. CAM, FTI, SLB, OII

  29. 29
    Zorgnak Says:

    S&P Futs….pecking away at 1620 CHVN….intra-day support at 1615.50…Two secenarios ….was looking for sellers here at 1620..a break and hold above 1620 would change my mind. A break below 1615.50 opens up a test back to 1606.


  30. 30
    Mark Wetzler Says:

    Interactive Brokers has cusip 716748AB4 and 144a so not tradeable for individuals

  31. 31
    Zorgnak Says:

    MCEP   mean reversion trade posted  a few days ago completes at 23.  


  32. 32
    tomdavis12 Says:

    US House has voted to expand offshore drilling. We have been here before Macondo. States mentioned Virginia, So Carolina, Southern Calif.. Still very early with this. Why would this gov't want 6 figure paying jobs if it is not carbon free. 

  33. 33
    nrgyman Says:

    RE 25:  Agree on RRC.  I think we will see $4.50 natgas in the next year or so.  Buying natgas stocks now in anticipation of that, while it could be early if cold weather persists, makes too much sense to me.  Several names will do very well in that scenario.  In addition to RRC, I like EQT, COG, SWN, WPX, REXX and CHK.  I am long each of those now.  For income I like EVEP with a 9% yield and upside from the Utica.  Many gassy becoming liquids-focused names will also do well in a rising natgas environment, but oil will have more influence on them and the hot money will likely go for the 'pure' natgas plays that have more leverage to the rising natgas price.  

  34. 34
    Zorgnak Says:

    ROSE   near resistance at 43.50…volume gap above to 45.50


  35. 35
    Mark Wetzler Says:

    Re PQ10%-17  I should add that they are virtually identical to an outstanding publicly traded PQ 10%-17 issue.

  36. 36
    Zorgnak Says:

    RRC  did a study this morning on this one.  Over the past two years a 10 day range low has been a successful swing trade with 76% winners 3.94 profit factor. If you think it's going to 95 then a 10 day range low would be a gift going fwd.. 75.52 would be the current setup…atm. I'll be watching for it.


  37. 37
    nrgyman Says:

    RE 23:  Smart, gutsy trade.  I don't trade the commodities themselves, but that one looks juicy.  I tend to stick with the equities that produce the commodity, so I am long and getting longer in natgas names–consistent with your trade.  Considering trimming some oil-weighted names soon as well.  Thanks for your trade info Zorg.

  38. 38
    Zorgnak Says:

    OT  sort of

    "People who receive frequent news updates on their investments earn lower returns than those who get no news." – Paul Andreassen

  39. 39
    Zorgnak Says:

    Re pullback mean reversion trade setups that I post….for example when I say that the RRC trade setup would be 75.52 that's just the mechanical level used for quantifiying the performance and risk/reward metrics….market context may suggest waiting or jumping the gun….today I took ROSE before the mechanical level for example…

  40. 40
    nrgyman Says:

    RE 38:  Don't know the truth value of that statement, but if people trade more frequently from more frequent news updates, and they are not good traders (most are not), then there might be something to it.

  41. 41
    nrgyman Says:

    Re 39:  Thanks for pointing out ROSE earlier.  I waited until the opening gap and the Friday afternoon trading gap were filled around 10 am this morning, then I bought some ROSE.  Perhaps early, but I like the name and the stock is down from the high 40s.  Lower risk entry, IMO.

  42. 42
    nrgyman Says:

    Natgas is now green and for those interested in EVEP, it just filled a gap left from Thursday.  Now bouncing to fill an upside gap from earlier today.  Amazing how that gap-filling TA works.

  43. 43
    Zorgnak Says:

    #41….best wishes for both of us….I don't mind bailing if it doesn't act the way I expect it to…my basis is at 42.68..which is also the short term volume pivot for the stock

  44. 44
    Zorgnak Says:

    #43 ROSE


  45. 45
    Zorgnak Says:

    #40  I tend to be swayed by the last thing I hear…so I try to limit my media input to as close to zero as I can…

    Now real informations is a different

  46. 46
    Zorgnak Says:

    OT Re #45  Media…along the same lines


  47. 47
    nrgyman Says:

    RE 43:  Started buying ROSE at 42.55.  Added more later to get a solid core position.  My avg basis is 42.71.  We'll see how this goes.  I'm not afraid to blow out of trades if my timing looks off as well.  Feeling ok on this one as a decent entry for a long-term hold.  I'll likely be more patient here.  

  48. 48
    Zorgnak Says:

    WPX  Another good pullback trader though with a much shorter history…since 10/24/2012, 6 of 7 trades off 10 day range lows as winners with 3.17 profit factor. Last setup at 18.94 on 6/28….yet to bounce.Defined support marked on chart


  49. 49
    DaveH Says:

    CIE +5.76% today.   I don't see any news today.   But this article has some good data.  http://seekingalpha.com/article/1506972-cobalt-international-energy-high-impact-campaigns-and-near-term-catalysts?source=yahoo

  50. 50
    choices Says:

    EOG-Jeff raises PT to $174 from $160, currently up >3% today:

    I have some options but wish I had more-seems that it is the leader in execution


  51. 51
    elduque Says:

    Robry at 72


  52. 52
    nrgyman Says:

    RE 48:  WPX is one I want to add to.  Waiting for it to fill the gap just below 18.50, but it doesn't want to so far.  The low point of the pull-back is 18.57.  There is also another gap lower at 17.50 that beckons if things deteriorate.  This is a cheap natgas stock with promising natgas wells and Bakken oil exposure.  Bought some under 19 but want more lower after gap fills.  

  53. 53
    tomdavis12 Says:

    49 CIE was added to best buys @ MS this morning. There will be 3-4 high impact well results by year end 

  54. 54
    RB Says:

    I see JPM downgraded VLO, HFC, MPC to underweight….a bit late with that I'd say…the only one I follow really is HFC and I just added a little to my position

  55. 55
    Zorgnak Says:

    Stopped out of ROSE at breakeven…

  56. 56
    Zorgnak Says:

    S&P futs…got the run to 1620…..sellers came out as expected…so far holding above 1606 CHVN….a close below 1606 wouldn't be helpful…


  57. 57
    nrgyman Says:

    RE 55:  ROSE–staying with it for now as it probes Friday's lows.  Bought more at 42.42.  Thinking longer term.  

  58. 58
    BirdsofpreyRcool Says:

    Andy — new PQ bonds are 144a.  The SEC is "protecting" us poor slobs from being able to buy them ourselves.

  59. 59
    Zorgnak Says:

    #57…I'll be back…..waiting to see how the market handles this spot between  ES 1606 and1620 with a bear flag on all the major sectors before I get married to anything new

  60. 60
    Zorgnak Says:

    S&P Futs back to the 1607 CHVN….opening gap and volume gap below


  61. 61
    Mark Wetzler Says:

    #58 BOP  I believe that the primary reasons for doing 144A Deals is that they get a less intense review  by the SEC thus allowing for a quicker turnaround and the issuer can use projections which aren't allowed in a normal underwriting. In any case, the 144A paper usually becomes registered as soon as fresh financials are filed. As mentioned above #35, there is n outstanding public issue of PQ bonds with an identical description.

  62. 62
    BirdsofpreyRcool Says:

    Mark — #61… completely agree with your comments (except the "projections" part… insitutional investors who have not signed a Confidentiality Agreement are not privy to financial info that all other investors get).  I do "understand" why 144a exists (as I used to be a 144a buyer of HY bonds myself).  Just sayin' it ain't right.  Point being that the SEC has made it so painful and time-consuming to get a bond registered that companies go the 144a route, with a plan to register within 6-9 months.  This results in the pool of potential bond investors to be smaller, pushing up rates for the borrowing entity, and keeping out individual investors.  By the time the bond is registered (sometimes almost a year later), individual investors can buy the bond… but the price is much higher at that point (all else equal).


    So what is the SEC really "protecting" the individual investor from?  Not much.  But it is generating a lot of work (and fees) at the SEC.  Guess it keeps those lawyers from being ambulance chasers… 'bout all the good i can think of.

  63. 63
    nrgyman Says:

    Brent/WTI near parity happening faster than many thought:



  64. 64
    Zorgnak Says:

    Sector and Group Cumulative Volume Charts…..Lower chart is cumulative advancing – declining volume with the rate of change of the cumulative volume. 



    E&P Stocks


    Nat Gas Stocks




  65. 65
    Zorgnak Says:



  66. 66
    choices Says:

    #65-zorg, do you see any refiners at or near support worthy of watching-I guess with the parity approaching of Brent/WTI, the refiners are not currently  not all that attractive.


  67. 67
    choices Says:

    #66-sorry, no hurry at all-will take a closer look at #65.

  68. 68
    Zorgnak Says:

    Bakken Stocks ..where the money is going.  I need suggestions/additons/deletions to make this custom index representative of Bakken centric oil companies. Stocks in the index shown are CLR EOX KOG NOG OAS TPLM 


  69. 69
    Zorgnak Says:

    #66  re refiners..Choices…Seems like easier pickings in other places

    HFC has support coming up…marked on chart but as you can see demand volume and ease of movement are straight down with heavy down volume today so that support looks suspect until proven for me…


    VLO coming into support shown on chart but same smell as above




  70. 70
    choices Says:

    Thanks much, zorg; agree on easier pickings.

  71. 71
    Plainview Says:

    From FT alphaville


  72. 72
    Zorgnak Says:

    S&P Areas of Interest  7/2 8:30 PM ES 1610


    Notes…. Mkt rejected 1620 CHVN. Trading between 1607.25 CHVN and 1620 CHVN/Heavy supply. Volume gap below 1607.25. Weak demand volume. Breadth trend flat.  Pomo supportive through the end of July. $USD upside bias supportive. Risk sectors relative strength.

     Thoughts ……. Expecting choppy/sloppy low volume trading until the market clears the 1607.25-1620 area one way or another. Heavy supply at 1620 limits upside until taken out. Respecting volume gap risk below 1607.25. 1607.25 is the short  term volume pivot.

    Glossary   http://www.futurestrader71.com/?page_id=1280

    1620.25 CHVN/Heavy Supply/Previous breakdown point

    1607.25 Minor/CHVN/Short term volume pivot.

    1591 CLVN /Previous breakout point.

    1577-82 Minor CHVN

    1564 Minor CLVN/Support

    1541  Major CHVN/Acceptance

    1520 Major CLVN/support



    SP500 Futures




  73. 73
    Zorgnak Says:

    Crude Oil Futs  Major acceptance lower at 95


  74. 74
    Zorgnak Says:

    re 73…add resistance at 99 CLVN…


  75. 75
    Zorgnak Says:

    Nat Gas Futs   Major long term acceptance higher at 3.71. Quarterly CHVN at 4.03 with defined resistance at 3.98


  76. 76
    Zorgnak Says:



    and various negative broker comments today

  77. 77
    elduque Says:

    Tuesday morning:


    BDI unch at 1170


    Brent/WTI continues to narrow: 4.6


    TYX- treasury yields moving lower; now at 3.478


    Enjoy the day:


  78. 78
    brodway Says:

    LINE falls on informal SEC inquiry


  79. 79
    brodway Says:

    re: 68


    i would probably add WLL to the list of the stocks you mention above. although Zman is of the opinion that it is a slower grower than others in the area, i do believe their assets are quite valuable and remains a take out candidate.

  80. 80
    Mark Wetzler Says:

    #62  BOP thanks for the response. Slightly OT but the best protection the SEC provides with 144A restrictions, is perhaps keeping individual investors from excessive markups by unscrupulous brokers and market makers.

  81. 81
    Zorgnak Says:

    #79..thanks  I missed that one…will put it in

  82. 82
    elduque Says:

    Linn Co. downgraded to neutral by JPM.

  83. 83
    Zorgnak Says:

    Bakken Stocks(corrected)…only energy sub-group that I track that is still showing positive money flow during this recent correction…Bodes well going fwd  imo


  84. 84
    brodway Says:

    re: 83


    that has been the trend for several weeks now. the thing is some belive that since gold is no longer considered a safe haven some  are moving into oil as an alternative safe haven asset.

  85. 85
    brodway Says:

    is anyone buying LINE/LNCO at these prices or is there too much risk given the news flow today?


  86. 86
    Zorgnak Says:

    ROSE  back in at 43.03…..

  87. 87
    Zorgnak Says:

    KOG  trying to work out of long term congestion 


  88. 88
    Zorgnak Says:

    S&P Futs…..moving on little volume..note thin profile today compared to yesterday's…a break above 1620 or below 1607.25 would be significant


  89. 89
    RMD Says:

    for preferred people:

    Vanguard Natural Resources, LLC (VNR) (the “Company”) today announced that the NASDAQ Global Select Market (“NASDAQ”) has informed the Company that its 7.875% Series A Cumulative Redeemable Perpetual Preferred Units representing preferred equity interests in the Company will commence trading on the NASDAQ beginning today, July 2, 2013 under the ticker symbol VNRAP.

  90. 90
    elduque Says:

    BOP/EXXI- worst performing stock has been EXXI, your thoughts, as long as they are positive, are welcome. 

  91. 91
    DaveH Says:

    Re: 85 I sold some LINE Oct $21 Puts for $1.15.   That would have me buying LINE at $19.85 in Oct. if it is below $21 then.  If it is above $21 I keep the $1.15.   $19.85 seems like a bargain price even with the SEC news.   Time will tell.

  92. 92
    nrgyman Says:

    RE 87:  ROSE gap today came after the open–a bit unusual.  Bought more today–avg 42.80.  That gap beckons, though, so I am holding powder until it gets filled.  I own some if it runs away and doesn't pull back–it is a very good value here.  But I like it even better at 42.50 on the gap fill.  Will wait for it.

  93. 93
    DaveH Says:

    Re: 66 NTI is a refiner to consider.   It doesn't have a technical chart support but at the present price it is yielding about 20.8% so that should provide some price support.

  94. 94
    Zorgnak Says:

    BCEI  Holding above defined support….


  95. 95
    Zorgnak Says:

    #92  thanks….I bought a smidgeon.. Also bought BCEI here at 35.71 to open a position.

  96. 96
    nrgyman Says:

    AAPL is building a new solar farm with Buffet's new subsidiary for a data center in NV.  All AAPL US facilities are powered by renewables, and 75% worldwide are so powered.  Their goal is to have all worldwide power needs met with renewables, as avialability allows.  Meanwhile, solar stocks continue to march higher.

  97. 97
    Zorgnak Says:

    XOP  on trend line below resistance…


  98. 98
    Andy Moore Says:

    bop  —  u have an opinion on PQ bonds.  and its ok to be negative

  99. 99
    Zorgnak Says:

    Crude Oil at resistance 99CLVN….


  100. 100
    nrgyman Says:

    KRE:  Regional banks etf starting to go parabolic on heavy volume, outperforming all financials and most other sectors.  Good for the economy.

  101. 101
    Zorgnak Says:

    Nat Gas…coming off swing lows with long term acceptance at 3.71…would expect it to slow there


  102. 102
    nrgyman Says:

    RE 102:  Natgas stalwart names responding well to the natgas bounce.  

  103. 103
    Zorgnak Says:

    Nat Gas stocks getting demand volume today….these two at areas of interest

    WPX  at defined support


    SWN Testing resistance


  104. 104
    Zorgnak Says:

    These two continue to break higher with volume in gear





  105. 105
    Zorgnak Says:

    COG  Volume in gear for more


  106. 106
    RB Says:

    I was out last week…EXXI just looks like a broken chart with a lot of resistance around 26…anyone aware of anything on this one other than the same old stuff about some tough luck drilling, some unanticipated infrastructure delays etc.

  107. 107
    BirdsofpreyRcool Says:

    EXXI — hearing that there were 2 dry holes drilled offsetting LaFrog.  But there are 2 to 4 horizontals currently in progress in two field that should be nice and oilly.

    Schiller… first, he could do no wrong.  Now, he can do no right.  That said, lots of insider buying down here.  And since 6/30/13 is EXXI's fiscal year end, I would expect EXXI to post an operational update some time before YE results are officially reported.  Hope to see (good) news about the 2-4 horizontals.  They are being drilled in old fields, where there is oil.  Just need to see how much.  That said, the EXXI ride for 2013 has been terrible.  And it's been my 2nd largest position, behind KOG (which hasn't done much this year either).  Thank you, RMD, for SYRG.  And EOX has helped too.  Otherwise, I would have to pull out the old paddle and whack myself upside the head a few times… and trust me, that HURTS.

  108. 108
    Zorgnak Says:

    S&P Futs..drive to yesterday's VPOC at 1618 with supply at the 1620 CHVN…Will be interesting to see if 1620 becomes the magnet now otherwise watch a break below 1614 for a reversal back to 1607.25..Breadth, volume, cumulative tick, bid/ask delta all positive atm


  109. 109
    nrgyman Says:

    Just some musing:  Natgas and renewable stocks are in the spotlight now due to gov't environmental policy and rising demand.  Coal is hated but still comprises a significant (but shrinking) portion of the US power market and a very significant (and still growing) portion of the global power market.  ACI and ANR are both down 93% in value in the last 5 years.  BTU and CNX less so, but still are very depressed.  As these companies retool and reorganize for efficient, profitable lower-volume output one can make a case for owning these stocks.  Coal is likely to stay as a significant contributor to the global power markets for the forseeable future.  As natgas prices rise, coal–after adjusting for added costs due to pollution curbing factors–is likely to bounce back.  

  110. 110
    RB Says:

    thx BOP….hadn't noticed the insider buys…I have pretty patient money…too old to sweat things much…my performance has dropped off a lot…was much easier to buy 'em in any sector in 2009 than it is now….

  111. 111
    elduque Says:

    Thanks BOP- have been day trading the stock at these levels. Make a little, give a little. Eventually will catch a pop. 

  112. 112
    elduque Says:

    re EXXI- there is something to be said for the Australian way of handling info. If there was really dry holes, it would be nice to have them confirmed rather than rumor, etc.


  113. 113
    BirdsofpreyRcool Says:

    elduque — #112… given that the Oil Patch is a porous place, it would be nice to inform us all about what is going on.  Guess EXXI is trying to act like a Big Boy and not report wells on an individual basis.  That said, information is leaky, for sure.

  114. 114
    elijahwc Says:

    Last Thurs WLL completed a small balance sheet clean-up by converting their remaining converts ( WLLprA ) into commom.  Stock has been on a tear ever since.

  115. 115
    zman Says:

    Question above re refiners – acting as expected, letting them come in to me in front of 2Q13 reporting season which is generally earlier than the E&Ps' season.  I still have no exposure. We played with VLO calls last 2 quarters with success. I say the weaker in front of earnings the better. Look for them to address MLP timeline on the 2Q call. 

    EXXI – thanks BOP, I don't see it quite that harshly, for every 3 to 4 good wells he's had a troubling one, either gassy or dry, the dry hole comment rumors were around last week and both of those wells named were onshore (transition zone) gas wells. If you are going to drill a dry hole (which as I wrote to Tom last week happens in non resource play names) then I would much rather it be a gas well than an oil well prospect.   I think the bar is set really low here and that it stabilizes with good news going forward. The name is cheap and they are headed back to the land of free cash flow in late calendar 2013/early calendar 2014 as per the new plan and meanwhile they are buying back shares. 

    LINE – as per comments a couple of weeks back I am not bottom fishing the name but am waiting for it to settle down. Today's "news" isn't really news in the sense that we already knew the SEC was looking into the situation … it may further delay the proxy if it is indeed more indepth but it's not a cancellation of the BRY deal by any means. Could that happen? Sure. Will it happen? Don't know, it's a new way of buying a C Corp so we will see how the SEC wants to deal with that as it's precedent setting. 

    Zorg – re Bakkens – it depends on what you want it for and how you weight such an index. CLR trades more with oil than the group, it's a much bigger name than most. And it's not a pure play but it is the biggest acreage holder in the Bakken so I would not leave it out. WLL is a must include, don't really care about the growth rate if just talking about the Bakkens, Lots of names are non pure plays in the Basin but I think you have it covered. SSN is almost pure Bakken now, ESTE is as well but they are weird ones so you might include or not as you like. Then you have a bunch of guys like QEP and NFX and HK that have significant Bakken operations but are not close to pure plays. 

    Otherwise, pleased with how things are sitting in the portfolio.  NG due a bounce although the weather isn't quite cooperating yet. 

    We'll have a regular Wednesday post out tomorrow. 


  116. 116
    zman Says:

    re 114 – I'm not ready to go into the name yet, Postle was a big deal for them with no real reaction. There may be an activity acceleration there in the offing.   Stock perf up 9% over the last few days, CLR up 7%, OAS up 6%. Much of this is just overdone oil. 

  117. 117
    zman Says:

    EXXI – on the tape with a production platform (WD93) shut in after 2.27 gallon oil spill. Yeah, gallons. Not a big deal, may take a little time to repair a leaking crude line from the platform but know they will be on it fast.  

  118. 118
    zman Says:

    SSN rising on volume, no news. Other than the occassionally Aussie reporting rules non news operations update I would expect no material news from these guys until August. See last week's posts for further comments. 

  119. 119
    nrgyman Says:

    Harvard study out claiming US crude production in 5 years (2017) is likely to be 10.5 million bpd and total liquids production is likely to be close to 16 million bpd.  Texas will likely re-emerge as a top world oil producer with around 4 million bpd of crude expected.  The top 3 shales (Bakken/TFS, EFS and Permian Basin) should combine to produce 4.7 million bpd of crude alone in 2017.  It describes other shale plays as less certain so it doesn't give much credit to them (just 400,000 bpd of crude in 2017 combined for all other shales beyond the big 3).  It does acknowledge such production is vulnerable to curtailment if prices drop significantly.  Here is the link:



  120. 120
    choices Says:

    refiners:  thanks for cmts, Z, NTI heads up, DaveH-have decided to wait to see where the Brent/WT I settles.  Do like the yield on some but I've been bitten before when I start chasing yield and ignoring the underlying story.

  121. 121
    zman Says:

    re 120 – Yield rarely holds something up when the group is sliding. Same argument could be made when NTI was a 16% yielder which is seen is high. Also, note for NTI that they are going to be more of a variable distribution play than you see with some of the names like LINE or MCEP. So unless you are modeling out the distributions simply multiplying by 4 isn;t going to cut it for me.  Not saying it's going lower but would need to model it up to buy into that. 

  122. 122
    zman Says:

    See the little buttons at the bottom of the post under the words Share and Enjoy? Please use them. 

  123. 123
    zman Says:

    CRZO – this would be a new closing high since we've owned the name.   Saw a blurb from a broker note saying that catalysts here are piling up. We wrote much the same back on June 18. This was a GHS note so good to see them confirming same following their conference. Our list of catalysts and the snapshot on the company from last note are here:


  124. 124
    elduque Says:

    Z- have you returned or did your wife lend you her ipad.

  125. 125
    zman Says:

    re 124 – I am back in the office. 

  126. 126
    elduque Says:

    Welcome back!


    TAT up a total of 10% the last two days. 

  127. 127
    Andy Moore Says:

    KOG    cramer asked about it last night during lightning round  – said he liked and thought StatOil int in more bakken acreage.

  128. 128
    zman Says:

    rer 126 – thanks. Any news?  Noting a number of small bumps, could be some increased sentimnet due to oil too. SSN up 15% today on nada. 

  129. 129
    zman Says:

    Not seeing a good reason for $99 oil 


    There is a spread trade underway (long WTI, short Brent) that is working to collapse the spread and making WTI overbought (in my view). Those have a way of reversing without warning. 

  130. 130
    zman Says:

    re 127 – clarification. Was he saying he thought STO wanted to buy more Bakken acreage?

  131. 131
    Andy Moore Says:

    z   –  re 124  vacation rally now over.

  132. 132
    Andy Moore Says:

    z –  i thot that's what he said.  was on very late last night (replay)

  133. 133
    RMD Says:

    EPL mgt meeting with JRCO: 

    large shallow inventory, wide-asimuth seismic hoping to redefine u/s of salt dome structures. Potential 150-300mm boe could be a game changer.  Start testing  deeper stuff in '14.

  134. 134
    zman Says:

    re 131 – wow you guys are so short term, lol.  Tell you what, I am taking another few days near the end of the month in an effort to boost the market at that time. 

    re 132 – thanks and it doesn't really matter. It's a common rumor. OAS would make a bit more sense given STO's footprint but KOG makes sense as well and STO might like the bigger well country of the FBIR after having primairy gotten Williams and McKenzie ND and some Richland MT acres with the BEXP buy. 

  135. 135
    Zorgnak Says:

    S&P Futs  Supply at 1620 CHVN sells, market back to 1607.25 CHVN volume pivot with volume gap below….


  136. 136
    zman Says:

    re 133 – re deeper stuff – what depth?   These guys deeper stuff is I'm guessing 16,000'.  Risk is that's overcooked and is gas.  Last time I thumbed through EPL stuff (last week) they were looking for oil. 

  137. 137
    RMD Says:

    EPL has always defined deep as ~ 12m-20m ft, then you get into the UD. Mgt has always wanted oil to the best of my memory. 

  138. 138
    zman Says:

    re 137 – right, kind of my point. Spinnaker did a lot of looking for oil at those mid teens depths and found a lot of gas. I don't think their seismic is going to differentiate the molecules, lol. 

  139. 139
    zman Says:

    LINE and LNCO – off 18 and 16%.  This is why I was loath to add post Hedgeeyes little chat a couple of weeks back. I'm sure those guys are saying we told you so repeatedly at this point and my thought is that still little has changed and that Cooperman's comments on it all still apply as well. Moves gettering exacerbated by the market dipping now. 

  140. 140
    zman Says:

    EOX quietly making a move on $7. Slow drift up in the wake of the last 3 wells. Recall that my estimates are quite a bit higher than the Street for next year and a little higher than them this year as well. 

  141. 141
    BirdsofpreyRcool Says:

    Andy — PQ bonds.

    No opinion on the company (as I don't follow it).  But the bonds are rated Caa1 / B.  Rather unusual to have a 2 notch difference in rating agency opionions.  But Moody's is almost always more conservative.  That said, the version (registered) that non QIB's can buy (like you and me) is currently offered around $107 for a yield of 7.45%.  That is not enough to get me interested.  Not saying it's not a good investment… but I don't follow the company.

  142. 142
    zman Says:

    The Street is at +75 Bcf for tomorrow's report (due out at 12 pm EST, a day early due to the holiday). 

  143. 143
    nrgyman Says:

    Z, current thoughts on ROSE?

  144. 144
    zman Says:

    re 143 – no change from recent thinking. Eagle Ford going very well, got to be a free cash flow name earlier this year and then they bought into the Permian. Deal didn't look overvalued on the surface, time will tell on results. Expecting a good quarter there in terms of operational commentary.   Don't see anything wrong with the name but volatility has been up and I've noticed that of late there is again less attention being paid to the names in the space that don't have better looking charts.   The name is cheap, well run, has a huge inventory. Chart is full of noise. Expect that to get worked out of the next 6 months resolving higher as long as crude doesn't fall out of bed and NGL pricing doesn't fall further out of bed. 

  145. 145
    nrgyman Says:

    Re 145:  Great.  Thanks.  Chart looks to be in a support area to me.  Been doing some buying in the name yesterday and today.  

  146. 146
    zman Says:

    re 145 – hear ya on that, not really sure what causes the wide oscillations in the name, especially of late, metrics all strong and moving in right direction, good management there, very long term thinking type guys.   I suppose you could have Pearshall disappointment in the name but that's a nothing type concern to me or them. Otherwise, it's an Eagle Ford first, Permian second. Eagle Ford probably has half a dozen years of well inventory left which will grow with downspacing and probably no surprises on well productivity. Permian stuff looked solid, could have well rate upside but time will tell. They run a tight ship, not one I worry over. If people are dumb enough to punt and sell lower I may add some more. 

  147. 147
    zman Says:

    Noted the WPX comment above about adding below $18.50 while setting at the pool yesterday, that is my add level as well.  If it is not there by the 2Q report I will add more anyway.   But natural gas weakness is helping with my patience for the chart to improve itself.   Would like it if gas gives one more big injection to crunk names like that one into filling gaps. There is also a gap below $18 which would be a fine place for me to add to the core as well. 

  148. 148
    nrgyman Says:

    3:21 PM  Caught up in the Linn/LinnCo downdraft is Breitburn Energy Partners (BBEP -8.2%), which Hedgeye slammed this morning as "Linn Energy junior" whose fair value is $2-$8/unit and whose distribution is "largely a mirage." EV Energy Partners (EVEP -0.7%) and QR Energy (QRE -3.2%) also are mentioned as companies that "may significantly understate maintenance capex, and as a result, overstate DCF."  (from Alpha)


    Looks like Hedgeye is expanding its short 'coverage'.

  149. 149
    crysball Says:

    LINN  [LINE / / LNCO] has   loss  due to  Hedging to add  to  their  problems:



  150. 150
    zman Says:

    re 149 – that's not new. 

  151. 151
    zman Says:

    Beerthirty.   If you asked a question above and I either missed it or didn't fully address it please ask again and I will get to it this evening. 

  152. 152
    mimster90 Says:

    I bought some LINE today ~ $28.5 to round out my position. I like even numbers. Time will tell if I was smart or dumb.

  153. 153
    zman Says:

    GST on the tape selling non core OK assets for $62 mm plus another $12 mm in proceeds as a partner exercises AMI rights.  That's going to look pretty good on the back of any envelopeas they can point to having paid $74 mm for it and they are retaining what they see as core Hunton Lime acreage. 

    East Texas asset sale still unclosed, Cubic has until July 12 to come up with the cash ($46 mm deal announced back in April). 

  154. 154
    zman Says:

    Crude up after hours on a big drawdown in crude stocks (according to API) of 9.4 mm barrels.  That's likely due to the expected reversal (fall off) in imports after the last two relatively elevated import reports. 

  155. 155
    BirdsofpreyRcool Says:

    #153 — GST is very good at "transactions."  Hoping they get better at "production."  But it really was a nice deal for them.

  156. 156
    zman Says:

    re 155 – right, hire a new operations team and maybe they'd have a chance. 

    Big long graph laden post tomorrow. Tune in early. 

  157. 157
    zman Says:

    Trip digit watch:


  158. 158
    Zorgnak Says:

    Charts are all equal weighted composites of the stocks within the index or ETF. Cumulative Volume is  the  aggregate of the stocks within in the index/ETF.

    XLE  Sector ETF below  resistance (80). Volume showing strength. Bear flag or resumption of uptrend?


    ZLT Composite Index of 92 E&P Stocks below resistance. Aggregate cumulative volume flat.


    ZLT Composite Index of 15 NatGAs stocks uptrend. Demand  volume turning up today.


  159. 159
    Zorgnak Says:

    ZLT Bakken Index.  Strong demand volume.


    ZLT Refiners Index lower lows on price and demand volume.


  160. 160
    Zorgnak Says:

    OIH   Looking interesting trying to break the bull flag and clear congestion with positive demand volume.  



  161. 161
    zman Says:

    re 160 – $100 oil would help.

    Crude on the daily looks like a breakout

    And on the longer term chart its higher lows and lower highs until this one, forming a flag. Fundamentally I'm not overly bullish on oil (though I am 70% portfolio weighted that way) but here we sit at $101.30. 



  162. 162
    Zorgnak Says:

    #161..Breakout into low volume area that runs to up to 105…Major long term acceptance lower at 95


    Short OiL..Long Nat Gas

  163. 163
    zman Says:

    re 162 – those two commodities work on different cycles, noted your prior comment and meant to say good luck with the pair trade but I think a refining long is more closely aligned with the turn. 

  164. 164
    Zorgnak Says:

    #163  Thanks ….I'll keep that in mind…

  165. 165
    zman Says:

    re 164 – actually, mine only works if you have a longer term time frame like a few weeks plus in mind. 

  166. 166
    Zorgnak Says:

    #165  On the pair trade I'm just working off the stretch from major acceptance in both commodities as well as the expectation for higher Nat Gas prices going fwd. I'd cover the oil short with a return to the 95 CHVN.

    To be clear..is your idea to go long refiners and short oil?

  167. 167
    elduque Says:

    Zorg- I do a lot of pair trading, but find it has been easier and more profitable to short USO and buy SU for example, or vice versa. Can't help but think that a short USO and long EXXI will make you at least 10% over a relatively short space of time. Have made good money shorting UNG and buying ECA in the past, when nat gas has had a spectacular rise. Right now the gassy stocks have outperformed UNG over the last couple of months. 


  168. 168
    zman Says:

    re 166 – no, I don't do pair trades. I find them difficult to work at best.   But if I were to want to short oil I'd want something related to it, that benefits from its drop to be on the long side.  I get your purpose is technical on both.


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