01
Aug
Thursday – Oil Inventory Review, Natural Gas Supply and Demand Slide Show, Plus a Mess O’ Energy Earnings
Market Sentiment Watch: Data deluge continues and this morning Chinese PMI coming in ahead of expectations along with a late vote by the House in favor of further restrictions on Iranian crude exports (see Commodities Watch below) have futures moving higher early. In today's post please find comments on earnings reports from two owned names and over half a dozen names we watch as well as the oil inventory review of yesterday's weekly data (pretty neutral), the natural gas inventory preview, and the natural gas production (flat with last month and up only 1.2% YoY), imports (net imports hit a new as exports to Mexico tied the old higher, LNG imports remain a trickle, and volumes coming down from Canada dwindled further), and demand (second highest May on record) slide shows for the month of May. Enjoy.
Ecodata Watch:
- Official Chinese PMI was 50.3 vs 49.8 expected and 50.1 last month,
- We get jobless claims at 8:30 am EST (345,000 expected and 343,000 announced last week),
- We get ISM at 10 am EST (F = 52%, last read was 50.9%),
- We get Construction Spending at 10 am EST (F = +0.4%, last read was +0.5%),
- Car sales are out today (F = 15.8 mm rate, last reading was for a 15.9 mm rate),
- We get nonfarm payrolls, unemployment and factory orders tomorrow.
In Today’s Post:
- Holdings Watch
- Commodity Watch
- Oil Inventory Review
- Natural Gas Inventory Preview
- Natural Gas Production, Imports, and Demand Slide Shows
- Stuff We Care About Today - HK, WPX, Other Earnings Briefs (PXD, QEP, CJES, ATW, CHK, EPL, SFY)
- Odds & Ends
Holdings Watch:
ZMT (Zman Medium Term portfolio):
Yesterday’s Trades: None
ZLT (Zman Long Term portfolio)
Yesterday’s Trades: None
Commodity Watch:
Crude oil rebounded $1.95 to close at $105.03 yesterday after EIA reported a neutral looking report. The move in oil came with comments by the Fed that saw a moderation in the Fed's view of the economy which people took as a signal to worry less about the taper. See Review section below. This morning crude is trading up $1.75 on China and the U.S. government.
- Iran Watch: U.S. House passes more sanctions designed to further slash oil exports from the country. The bill looks to cut Iran's exports by 1 mm bopd over the course of the next year. Who needs a Cartel when the US government is looking out for oil prices?
Natural gas added a penny yesterday to close at $3.45 another day of light trading. Please see the supply and demand comments and graphs below. This morning gas is trading flat.
Natural Gas Quick Macro Watch: (much more in the charts below but here's a quick peek)
- Production - flat from April levels, up 0.8 Bcfgpd or 1.2% from May 2012. "Other States" represents nearly all of the growth.
- Imports - fell to a new low, just under 3 Bcfgpd. Included in the net figure are exports to Mexico which tied an old high, now at 1.95 Bcfgpd.
- Demand - Second highest level for May demand on record. Record industrial for the month, again.
Natural Gas Storage Preview
Street is at +55 Bcf for today's report.
- Last Week: +41 Bcf
- Last Year: +28 Bcf
- 5 Year Average: +47 Bcf
- 10 Year High: +81 Bcf
- 10 Year Low: +19 Bcf
Natural Gas Production Slide Show
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Natural Gas Imports Slide Show - slip sliding away
Natural Gas Demand Slide Show
Oil Inventory Review:
.
.
Stuff We Care About Today
WPX Reported In Line 2Q13 Results; New Oil Play, Good Bakken Results; Increased Confidence in Piceance Gassy Niobrara Program
Guidance: Not mentioned on a company level but upped for Bakken exit and addition of new oil play below.
Highlights:
San Juan Basin (SJB) oil discovery (Gallup Sandston in the Mancos group)
- this is one of the stealth plays they've been accumulating acreage in in.
- Four successful wells to date (IPs of 488, 623, 1,004 and 800 BOEpd)
- Plan to drill 8 to 10 more this year (3 drilling now); horizontals with average length of 5,400'
- Sees this new program exiting the year at a whopping 3,400 BOEpd (expect to hear the oiliness on the call but it should be high)
- They have accumulated 31,000 net acres and counting
- See initial resource potential 66 MBOE
Piceance (Niobrara)
- First well produces 1.4 Bcfe in fist 180 days; this is the one noted on the last call with a 16 mm/d IP and strong early month average rates,
- 2nd well to be completed this month, 3rd drilling, 4th before year end
- Expect 180,000 net acres to be prospective (claim based on vertical well control we're sure).
- Shooting 3D on 24,000 acres now and planning to more 2x the program for 2014.
Williston Basin (Bakken / Three Forks)
- production up 30%; new exit rate upped 2,000 bopd to 15,000 bopd
- Costs down 10 to 20% due to pad drilling and simultaneous drilling and completion operations.
Balance Sheet: Liquidity of $1.3 B, debt to cap of 24%.
Other: PRB asset sale sounds unlikely at this time.
Nutshell: In line results and what analyst doesn't like a new oil play? We own a start Core here and have been waiting on a market based opportunity to add. We may not get it soon. Results on the EPS line could drive an early dip from the knee jerk crowd but we like how this story continues to evolve and the reserve potential of the new oil play adds a second liquids rich arrow to theri quiver and we're likely to bolster this position soon.
HK Reports Strong 2Q13 Results; Announces Big Utica Liquids Well; Best Bakken Wells For The Yet, New Guidance Staddles The Street
Guidance: Pretty much as expected, taking into account comments on the 1Q call and divestitures they move to a range of 30,000 to 34,000 for the year. Note that they have 34,000 to 36,000 for 3Q and current production is 35,000 BOEpd.
Highlights:
- Oil, not NGLs, but oil was 83% of the better than expected quarterly average. This is right in line with expectations on the mix. NGLs were 5% of total volumes
- They noted they plan to be even oilier by year end through their asset rationalization efforts,
- Liquidity of about $500 mm,
- Williston Basin - 7 rigs running, easing to 6 with efficiencies for the ballance of the year. Modifications to completions in new wells yielding results above expected type curves. 2 most recent FBIR area wells with 3,000 BOEpd IPs, their best yet, and kind of what we've come to expect from a good well drilled by area king KOG
- EL Halcon (EFS) - slightly lower IPs this quarter due to landing the laterals in some wells partially out of zone. Look for them to talk about growth here on the call as well as cost savings.
- Utica - assuming full ethane recovery they announced an IP of 2,233 BOEpd (75% liquids) in Trumbull County, OH. This is obviously their best effort to date in the play and in the county to our knowledge and may serve to put to rest some of the analyst chatter regarding the HK's position in the northern Utica/ Point Pleasant play.
Nutshell: HK answering critics with strong results. We don't expect a spike back to prior recent highs given the differnt path to growth that has emerged with the expansion of the balance sheet but our sense is that the name is overly beaten down at current levels. Volume guidance on the mid is slightly low to the current Street expectations of 33.6 MBOEpd but eyes should soon shift to 2014 plans and at about 5x TEV to 2014 EBITDA estimates our sense is the name starts to look too cheap as oily volumes mount from here. We continue to own the name in the ZLT as a top 10 position and a current levels can find room for additional trading positions.
Other Earnings Brief - we don't own these names
Here's the numbers and a few metrics:
Here are the brief highlights:
QEP
- Slight increase in EBITDA guidance due to higher price expectations.
- Reiterated volume guidance
- Released last operated rig in the Haynesville
- Midstream LP IPO (QEPM) on the way
- Bakken activity focused in South Antelope area (SDCJF sold some of this to them, could sell them more) and FBIR
- Not a lot of numbers meat in their releases.
PXD
- Production would have been in line with expectations were it not for unexpected ethane rejection
- Upped bottom end of range from 12% to 14%, top end stays at 16%.
- Capital budget unchanged.
- Midland County, TX Wolfcamp A with 24 hour IP of 1,712 BOEpd and 30 day rate 1,107 BOEpd (74% oil). Also noted a strong well in Martin County, a Wolfcamp B, there first in the county with a 30 day rate of 1,040 BOEpd. Good news for FANG, maybe LPI, AREX as well.
- Noted their first Wolfcamp B in Midland County did 140 MBOE in first 6 months
- Hedging upped in 2014 to 2016
- West had some thoughts overnight that were well worth noting here http://zmansenergybrain.com/2013/07/31/wednesday-morning-27/comment-page-3/#comment-228047
CJES
- Lower utilization and reduced pricing due to competition for pressure pumping
- Working to reduce costs
- Legacy contracts good / newer pricing = not so good
- Coiled tubing business hurt by trend towards larger diameter tubing ... aligning equipment to meet this shift.
ATW
- 41% operating margins vs 36% in the year ago quarter and 41% last quarter,
- As usual, not much color in the press release.
SFY
- 2013 EFS well results improving relative to 2012 wells (higher IPs and EURs, lower costs)
- July production from the Eagle Ford up 10% vs 2Q average
- Accelerating in 2H13 with 2 rigs running in EFS (capex upped $50mm)
- Per unit LOE up 14% on variety of higher costs
- Drilled first Wilcox horizontal, had mechanical difficulties but a geological success.
EPL
- Nice beat (for EBITDA, not EPS) on better than expected, above guidance, volumes.
- Oil production guidance bottom of range lifted; EBITDA range upped for 2013 from $475 to $525 mm to a range of $550 to $550 mm
- $30 mm or 10% creep in the capex budget to $330 mm
- Debt low, generating expected $105 mm in free cash flow this year, expanding share buyback from $40 to $80 mm
- As usual, the press release is devoid of much in the way of operational color but good quarter on the numbers.
CHK
- Nice volume based beat,
- Oil volume guidance upped 1mm bo or 1% (to growth of 22 to 28% for 2013)
- NGL guidance reduced by 2 mm barrels
- EFS volumes up 135% YoY and 14% sequentially
- Utica - still listing in MMcfe's, good growth but dropping from 11 to 10 rigs soon.
Other Stuff
- Tomorrow we get reports from KOG, UPL, and AREX.
- GST - Giving Cubic Energy a two week extension to August 30th to close the $46mm East Texas sale.
Odds & Ends
Analyst Watch:
- PXD - Barclays ups to Overweight
- PXD - FBR raises target from $225 to $250, maintains Outperform
Please share today's post, it's open to the public. Tap away on those little buttons directly above this comment.
August 1st, 2013 at 7:23 amZman, I saw a comment to a RBN Energy post about ZAZA and CWEI. Author of the comment was extremely bullish on CWEI growth. Have you looked at it or have an opinion?
August 1st, 2013 at 7:30 amCHK Weekly Clearing long term volume base on good volume.
http://www.charthub.com/charts/2013/08/01/stock_master390_1308010504
August 1st, 2013 at 7:31 amre 2 – Yes but I have no current opinion. Listened to a conference call a couple of quarters back, came away kind of mixed.
August 1st, 2013 at 7:32 amJobless claims at 326,000.
August 1st, 2013 at 7:35 amz — just a thought… i saw you posted a link to west's comments last night, but you might want to cut-and-paste into the comment section here today. West is an example of the incredible talent and information you have amassed into an investment-sharing group. "Visitors to the site" would benefit from reading his comments. I know I did.
August 1st, 2013 at 7:39 amre 6 – done
From West last night
The accelerating super play of America is the Wolfcamp play in the Permian Basin of West Texas and Southeastern New Mexico. Pioneer Natural Resources (PXD) will be the Monster of the Mid-way with the dominant position in the heart of the Midland Basin. They currently control 900,000 surface acres with 6 prospective zones 50% risked gives an incredible 2.7 million prospective acres. They think they have possible reserves over 4 Billion boe from just the Wolfcamp B zone. The Wolfcamp B zone is estimated to be a 22 Billion boe for the entire field. So much of the Midland Basin is held by production, from Sprayberry vertical wells that have been producing for as long as 50 years. No other company is going to be able to amass this type of land position in the Midland Basin. This is one of the reasons that DVN moved east to the Eastern shelf for the Cline , which so far has been yada yada ,the lobster bisque was good. Also the southern part of the basin where large tracts of University Land were available now mostly leased by EOG, AREX and old El Paso. The horizontal play is just getting started in the Midland Basin and PXD was able to get the 960 rule pasted by the Texas Railroad Commission. This allows 960 acre unit with force pooling which is going to allow the the horizontally development which has not been possible in the past, because of the many small tract hbp properties across the Midland Basin. The PXD story is really going to take off, even though those without the insight will think that it is over valued. With 173,000 boe daily production that is mainly oil they are a prime target for majors that need this in their portfolio. The most likely buyer is Chevron which already has a huge and accelerating presence in the basin. Target price in the next year is $ 250………………… Of course the the next questions is what are the other players and their prospects….FANG which is a Permian focused play has good acreage position along western edge of Midland Basin in Midland , Ector, Martin and Andrews Counties. Low volume trader so subject to large price moves and recent run up warrants watchlist status for buy on market pullback. LPI don't like their IROR . EGN great company that spent to get oily. You get Midland Basin and Delware Basin with this one . Some time in the not to distant future with spin out their gas co in AL and will get bought out. Watch for pullback to establish position. CXO is mainly Delaware Basin play and is always looking for acquistions so you have to be ready for dilution at any time. Great company but will always be overlevedged if the past is any indication. Building a campus complex in downtown Midland , so for sale sign not hanging out……XEC Delaware Basin play , not a pure play, they really have a great land position , but still have a lot of gas production.. The Midland basin is about 75% oil and the Delw is about 35 to 50% liquids including the ngl's…….Like small cap CPE which will soon complete sale of GOM properties and be pure play Permian. Really like their acreage along western side of Midland Basin, FANG has several good wells next to them at the Midland airport producing from the WC A&B…..Super spec play here is Antares,AZZEF, which says they have a deal , but that is a big if if they next well in Dawson co is marginal. ………………………..Going forward look for the combined Permian Basin to pull away and be the largest oil producing region in the lower 48. PXD will be the leader and the target for one of the supers to take out and possibly one of the first companies to be taken out by a Chinese company. I sure as hell hope not. …….Probably high priced for some people but the potentional is amazing….Recommended on any pullback – See more at: http://zmansenergybrain.com/2013/07/31/wednesday-morning-27/comment-page-3/#comment-228047
August 1st, 2013 at 7:42 amS&P Areas of Interest 8/1 7:30 AM ES 1693
Notes….. Mkt continues to create acceptance higher. 1683 CHVN is current short term volume pivot. Mkt tested and rejected each lower CHVN as too low since Friday. All time highs and range expansion above 1694.50. Volume gaps below 1677.75 CHVN. Demand volume rolling over/flattening. POMO supportive through the end of August. Expect dips to be bought. Financials close to O/S bounce setup.
Thoughts …….Long term uptrend intact. Strong acceptance around the 1683 CHVN. Short term upside bias above that level.
Glossary http://www.futurestrader71.com/?page_id=1280
1687.75 Upper Value Area/Range extension above
1683 Minor CHVN/Volume Pivot
1677 Minor CHVN/Expect increased volatility if rejected as too high
1670.75 Minor CHVN/Key pivot point in last weeks test lower.
1667.75 Minor CLVN/Support/Volume Gaps Below
SP500 Futures
http://www.charthub.com/charts/2013/08/01/es_master_1308010510
August 1st, 2013 at 7:47 amZ – wow big post. I will share.
#7 – I saw West's post last night – great stuff. I have a cousin that lives in Midland – she says things are going vertical there in terms of people, business activity, trucks on the road etc.
Z- have you looked at CPE at all?
August 1st, 2013 at 7:52 amre 9 – yep, got asked awhile back by Wizard, didn't come away with positive enough thougts to buy it.
August 1st, 2013 at 7:53 am$USD range bound with slight negative bias. Uncorrelated to nearly everything at the moment.
http://www.charthub.com/charts/2013/08/01/dxy_master_1308010549
Crude Oil Futs Demand volume picking up again. Rejected return to long term acceptance.
http://www.charthub.com/charts/2013/08/01/crude_oil_multi_period_1308010552
Nat Gas Futs Below long term acceptance.
http://www.charthub.com/charts/2013/08/01/ng_master_1308010554
Still short crude and long nat gas.
August 1st, 2013 at 7:55 amGetting on the CHK call, notes in a bit …
August 1st, 2013 at 7:55 amAnalyst Watch
HK – comment from Johnson Rice this am saying they like this report too.
August 1st, 2013 at 7:58 amMorning cup of OT's
BDI at 1066
Brent/WTI at 1.6
TYX at 3.70
August 1st, 2013 at 8:02 amWhat fall under "simply amazing"- all the work Z put together between last night and first thing this morning.
August 1st, 2013 at 8:04 amCHK Notes
– efficiency leading to lower than expected capital spending
– working to control costs despite becoming more liquids rich
– net long term debt flat with YE12
– moved back to a 4.0 debt to EBITDA limit from 4.5x it had been expanded to and now at 3x
– planning to sell Miss Lime midstream for $300 mm
– 2013 capex fully funded via CF and asset sales
– go forward stategies
1) financial discipline – capex balanced with cf from ops, will fund only highest quality projects, get to investment grade metrics (hey I remember the guy before him saying that some time ago, this time sounds different)
2) plan to get to top quartile metric (ROCE)
Going to Q&A now …
August 1st, 2013 at 8:12 amFCX- Jim Bob purchased 1,000,000 shares yesterday!!!
August 1st, 2013 at 8:21 amMidland Tx = fastest growing city in USA.
August 1st, 2013 at 8:28 amCWEI's last conf call: they have ~85,000 net acres in Del. Basin around Reeves cty which they are looking to JV as they have short leases. Plan A is to sell 1/4th, get carry to accelerate development, repay debt. They said do have a Plan B if no JV so they can still control acreage; West's comments make that sound smart, but also sounds like a JV is very possible. GHS was guessing JV could have a gross value of $800mm-$1B vs. cap of ~$700mm and EV of ~$1.4B. Clayton is 81.
Will use proceeds to drill EFS. I own a small amount.
August 1st, 2013 at 8:29 amCHK: When I mentioned the CC yesterday I was thinking of how many Aubrey calls I had been on. Would be curious as to what kind of grade you would give the new guy.
August 1st, 2013 at 8:30 amREN also fancies itself as a reconstructed Permian co.which I hae trouble warming up to; same with CPE.
August 1st, 2013 at 8:31 am20 Aubrey's calls uped to be Can't Miss Them. Now I glance at the transcript when I get the time.
August 1st, 2013 at 8:32 amCHK Q&A
– we have demonstrated ability to grow while reducing capex
– not providing guidance on 2014, will live within cash flow
When will cf and capex be balanced?
A) Plan to get there for 2014, trying to get there on the top quartile metrics in 2014 as well. Talking about how the company has been grown from single well pads, talking about the benefits of going from a drill to hold to drill to develope way of life, helping with the reduction in capital.
Q) should we expect well count to fall, rise, stay flat in the core areas
A) should be flat on balance due to the efficiencies – reduced cycle times on both drilling and completions … think of it as a flat year for well count.
Q) balance sheet to improve via non core affiliates while cash flow meets capex?
A) yes, balance sheet improves as they punt the weaker parts of the portfolio. Not sharing what's getting sold beyond what's been already noted.
Q) top quartile metrics vs who?
A) similiar sized peers – NAM centric big cap E&Ps.
Q) Completions plans for the big 4 areas
A) will be down slightly in the second half, less catch up needed on drilled but not completed well inventory and maybe a bit slower drilling pace in 2H13.
Q) Comment on reducing complexity of the organization at CHK?
A) Looking at all the affiliates they have to see if they are adding value. Timing should be ongoing process.
Q) Other capex guidance
A) Materially lower in 2014
Q) Utica performance – has it trended a little more gassy, still thinking to make exit rate?
A) gassier since we entered the play, but nothing new from last quarter – the analyst noted they are quoting in MMCFE's as I did, they didn't give much of an answer on this.
q) Thoughts on an equity raise to give them some flexibility
A) those options are out there but the focus now is on being as efficient as possible and to focus dollars on the best plays.
…
August 1st, 2013 at 8:32 amPDCE – selling off a bit, have not gotten to look at their numbers yet.
August 1st, 2013 at 8:33 amre 20 – Doug has a completely different tone from Aubrey and the analysts are putting a fresh face on it, I'd say people are generally pleased with what they are hearing on this call.
August 1st, 2013 at 8:34 amLPI and FANG jumping on the PXD comments.
August 1st, 2013 at 8:36 amHK opeing up 5% post numbers. Call starts in about 25 minutes.
RMD – listen to the replay, not the transcript on this, if they didn't say Chesapeake occassionally you would not recognize this CC.
August 1st, 2013 at 8:37 amZTRADE – ZMT – NOV Calls
NOV – Sold the (35) Nov August $72.50s for $0.62, on the mid and easily, with the stock at about $70.90. We are still mulling purchases in the name (of the common) in the ZLT but for for a 2 to 3 day trade (we added the second set of 30 calls on Tuesday at $0.23) we are pleased to be up 74%.
August 1st, 2013 at 8:41 amThanks Eld – why sleep when you can write? 😉
OAS tapping new all time highs today.
HK call starts in 10 minutes.
August 1st, 2013 at 8:50 amSWN – attempting to break on out, earnings next week, more Brown Dense detail but not likely to get the thumbs up yet.
August 1st, 2013 at 8:52 amPXD up $20 … EOG could do same in this price environment with their earnings.
August 1st, 2013 at 8:57 amWPX
http://www.charthub.com/charts/2013/08/01/stock_master390_1308010657
August 1st, 2013 at 8:58 amXOM was reported on CNBC to have said they are involved in a major new oil field now in the Permian. I wonder where that is….. 🙂
August 1st, 2013 at 9:01 amISM at 55.4 %
HK call just started, notes in a bit …
August 1st, 2013 at 9:02 amISM 'blowout' number at 55.4 vs 50.9 last month.
August 1st, 2013 at 9:03 amATW: Posted 6th consecutive earnings beat and market leading ROC of 12.1% (up 300 bps Y-Y). My hat is off to you Z for having this as one of your faves from 2 years ago. I did not like the small fleet but these guys have been very consistently good with their execution. I know you are not long but I can give you credit for the talented "gut" thinking.
August 1st, 2013 at 9:04 amRMD thanks for the comments on CWEI
August 1st, 2013 at 9:04 am#30 – SWN earnings release is this afternoon with cc tomorrow morning.
August 1st, 2013 at 9:07 amre 38 – thanks, slip of the keyboard.
August 1st, 2013 at 9:10 amWest–thanks for the post last night. Great read and helpful. Thanks, Z, for reposting it today. Looks like the Permian is really taking off.
August 1st, 2013 at 9:11 am# 31: but PXD posted a $ 0.03 miss. Any take-out rumors?
August 1st, 2013 at 9:12 amcoals and even the dry bulks are looking green this am, WLT up ~5%, short some puts.
August 1st, 2013 at 9:13 amre 41 – No, it's the Wolfcamp A and B results in those two counties noted in the post.
August 1st, 2013 at 9:13 amVLO back to breakout level and downtrend line
http://www.charthub.com/charts/2013/08/01/stock_master390_1308010714
August 1st, 2013 at 9:14 amXOP at 1 yr high, closing in on multi-year high set in 2011.
August 1st, 2013 at 9:18 amSSN is still going crazy, 3x normal volume today already. I noticed I now have 93k ( yea I'm overweight and underwater) of SSWTS# warrants in my account. Does anyone know when these become transferable?
August 1st, 2013 at 9:22 amHK 2Q13 Notes
– Around the Utica well listed in the post they have room they think for about 500 wells
– Trying first slick water frac in FBIR after success in Williams county
– As we suspicioned after the last call, they are now adding to acreage around the first of their big Utica wells.
Q&A
Q) Utica – delineated most of the play, what are your thoughts the different regions
A) We have a large area in 5 of the counties, north is gassier, south is oilier (nothing new here). In the area up beyond their wells to the north, not prospective. But called the area in Trumbull County, OH very largem, around this first 2,233 BOEpd IP well. Wells are $10 mm CWC now, will get them down to $8 mm once they get the science costs off the wells.
Q) Landing zone in EFS being narrower?
A) No longer having any trouble landing/getting all their fracs off in the zone
Q) EFS sale – this is the acres they had to sell due to the deal with BHP
A) sold for $140 mm post quarter
Q) Is the 4,500 BOEpd in the guidance
A) yes, so that comes out.
Q) Wilcox – anything going on
A) Completing 3 wells now, doing fine, not a big focus for us, no more wells this year, nice play but doesn't have running room for us, it's a structural play … not exactly their shaley type repeatable success play.
Q) Well costs in the Williston Basin
A) Well costs up a bit do to use of ceramic almost everywhere $10 mm in FBIR, $9 mm in Williams county, expect that to trend lower over the year.
Q) How much acreage Trumbull and Mahoney Counties –
A) We don't disclose, we are adding acreage – have room for 500 wells at 160 acre spacing in the south part of the play. Next couple of years we will spend all of our capex in the area of the well announced today (Kibler area).
…
August 1st, 2013 at 9:23 amYou know the energy sector is en fuego when even little MHR is perky!
August 1st, 2013 at 9:24 amWPX- trading down.
August 1st, 2013 at 9:24 amFTK: another beneficiary of PXD results?
August 1st, 2013 at 9:24 amre 48 = LOL, would say same but to an even higher degree with SSN doing what it's doing.
Popeye – don't know, will see if can find out.
BOP – can you check your email? Thx.
August 1st, 2013 at 9:25 amre 50 – yeah, good association there.
re 49 – yep, as per post, EPS miss causes some to punt plus that chart is weak and people eye the gap. I – like – what – see – there. Waiting on weakness to add more.
August 1st, 2013 at 9:27 amKOG knocking on $10 door. Wakey wakey eggs and bakey … same kind of long rest period we gave OAS before writing the piece about the coming breakout for Oasis at the end of last year. Lynn has preannounced his 6th miss in a row … stock performance to hinge on current rate talk and the cubed spacing test he should have a dozen wells to talk about tomorrow from those two spacing tests … and should point again to the hockey stick in current production that will carry into a really strong exit vs the 2Q13 average.
Still listening to HK
+59 Bcf – a bit high to estimates … need some summer weather.
August 1st, 2013 at 9:30 amHK 2Q13
TMS – we have not lost interest whatsoever. We had some completion problems but very interested in the play … no more wells planned this year, plenty of the lease term. Have 90 to 100,000 acres there.
August 1st, 2013 at 9:33 amre: 52
WPX. lower levels come into play as it broke through previous support level. Patience probably required to add there
August 1st, 2013 at 9:33 amREXX – break out in progress.
August 1st, 2013 at 9:34 amI agree with West. PXD is my largest holding. The old Spraberry Play they pioneereed back in the day didn't make them a lot of money but did serve to HBP an extremelly large position in the Midland Basin that is worth a fortune. I spoke to an operator the other day that leased a fair amount of acreage in the Delaware Basin for Bone Springs/Avalon outside of the over-pressured window. They were dissapointed with the results but tried the Wolfcamp. After that well they stopped the marketing process and are very pleased with the results. Im my opinion it is the best of the Permian Plays.
August 1st, 2013 at 9:35 amre 57 – I used to work with 2 executives from Parker& Parsley, up to the point of the Mesa merger, before it became PXD. Hard to get them to talk about much besides the Spraberry and in those days it was all a stacked pay vertical play.
August 1st, 2013 at 9:38 amNFX – post quarter recovery in progress … it was a good operational update. Don't care about the post release sell off.
August 1st, 2013 at 9:40 amHK call over.
WPX call in 20 minutes.
OAS moving into all time new air over $43. Yippee Skippee.
August 1st, 2013 at 9:42 amThanks for sharing the link to the site today, trying to keep costs down and subscriptions the same price that they have been for the last 5 years.
August 1st, 2013 at 9:48 amWPX – into the first gap fill. Call in 10 minutes
August 1st, 2013 at 9:52 am#43: thanks
August 1st, 2013 at 10:16 amWPX 2Q13 Notes
Marcellus up 33% YoY
Bakken up 30% YoY
Added rigs (previously noted) to arrest declines in gas via drilling in the Piceance.
See exit of 730 mm/d instead of 700mm/d
Mancos oil wells – better than expected well results, think EUR > 500 MBOE
Walking through cost reduction and operational efficiencies in the Bakken
Spud count up from 39 to 46 … adds the 2,000 bopd to exit rate as per post. This incrementally increases 2014 Bakken guidance by 8% … this is 8% over guidance that they have not given yet.
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August 1st, 2013 at 10:16 amEPL call: still selling around 1P PV-10 so increasing buyback authorization
GOM deal flow high
EXXI's hz well in our backyard so looking into
very little of production guidance increase is due to increased capx, maybe 100boed. Will see that production in '14. As I remember, recent Canaccord initiation guessed '14 production up ~6.5%, which felt low to me.
recent Ship Shoal well 'encouraging', this is a 2-5 year play for us so we are being careful, but start to see results over the next 12 months.
just a solid story, solid mgt, call dull except that results so good and have the deep and hz's in front of them.
August 1st, 2013 at 10:18 amZTRADE – ZLT and ZMT – WPX
ZLT
WPX common, added a second peice to the Core at average $18.62, on weakness during the ongoing call, see today's post for comments
ZMT
WPX Calls – Added 30 August $20 Calls for $0.14 with the stock at that same level.
Stock is focused on the EPS miss but missing out, at least in our view, on the oily growth that's underway and not giving them any credit for the new oil discovery here.
August 1st, 2013 at 10:19 amre 65 – thanks much, great call there, they are still cheap despite the rally, wish they'd talk a little more about the plays in the text
August 1st, 2013 at 10:22 amWPX – big upbeat tone from management on the call … can't blame them, things humming and a new play
Q&A
Q) San Juan oil discovery – would any one of the wells meet the 500 MBOE
A) They all exceed it, the original thought was 350,000 BOE and they all exceed the 500
Q) 2013 guidance – kept the same … but with the Bakken increase and the San Juan wells, can you talk about mix by year end
A) We did have some capital and barrels in guidance with the SJB oil, so it was somewhat in there although it's much better than expected, saying Piceance better too, but hamped by some near term stuff in the Marcellus. Liquids percent will be up slightly so mid to high point of guidance, probably still 78% gas at the end of the … I've commented before that they have a great Bakken company buried in a gas company and he just said that they won't get much oilier because of the re-growth of gas from the Piceance. Working to get compression for the gathering system in the Marcellus. Would like to go back to 3 rigs in Susquehanna County, PA next year (vs 1 rig now).
Q) re-asked the question on mix for 2014
A) that intuitively makes sense to management, that it would be higher than 22% liqiuds, Said they would guide on the 4Q call or around year end 2013 for the 2014 volumes, costs, mix. Basically they are getting oilier but they are not going to spoon feed the analysts right now.
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August 1st, 2013 at 10:33 amHK now up 5%, improving post call.
August 1st, 2013 at 10:33 amWPX Q&A
Q) Mancos wells
A) We are adding acreage, have plans to 4 wells this year, then 8 to 10 next year. Won't pull dollars from Bakken or Piceance (Niobrara) next year if they decide to the accelerating this new San Juan Basin oil program.
ZComment sidebar watch: It's a rare day when a stealth oil play is announced with 4 successful, bigger than expected wells and people don't like it sooner or later due to an EPS miss where the EBITDA met and the guidance is being upped in another core play.
More SJB – all 4 wells are above the 350 MBOE, in the 500 MBOE range on all 4 wells
What's the length of production mix?
A) first was flowing in April, so not long but not a flush IP either.
Nobody talking about the Piceance Niobrara but the firm itself but 1.4 Bcfe in 6 months is a monster well in this area.
ZComment: Estimates just about have to go up for 2H13 now, given the Bakken, given the SJB and given the Piceance, partially offset by slower Marcellus ytd.
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August 1st, 2013 at 10:40 amOT Asset allocation strategies
http://www.mebanefaber.com/2013/07/31/asset-allocation-strategies-2/
August 1st, 2013 at 10:41 amWPX Q&A
– SJB – 150+ locations on current acreage on what they understand about the play so far
Q) Efficiencies in the Bakken
A) Pad drilling just kicked in in 2Q13, 1H13 bad weather, just starting to roll on the cost savings,
Q) Higher spud count in the Bakken in the budget?
A) There was some reallocation but also the cost savings. We're headed towards the upper end of the range (brought some dollars over from the Marcellus due to the infrastructure issues)
Key takeaways
Picence – excited about arresting gas delcines for the company via this play
Piceance – Niborara – excited about the delineation, results of second well sometime next few months, 3Q at latest
Bakken – excited about the well results, the drop in costs, the extra wells and the growth
SJB – and they are exited about the 4 new wells all being above type curve
Call ended.
August 1st, 2013 at 10:48 amHK Near resistance at 5.98. Far resistance at 6.83
http://www.charthub.com/charts/2013/08/01/stock_master390_1308010856
August 1st, 2013 at 10:57 amCome on heat
http://www.investing.com/commodities/natural-gas
August 1st, 2013 at 10:58 amOT-SFM-up 110% from its IPO today, delayed opening on IPO to 11:40-reminds me of the dot.com days but farm fresh food retail??
go figure.
August 1st, 2013 at 11:02 amThanks Zorg for the retweets!
We have SWN and KOG after the bell. We own good sized positions in both names, SWN is our largest gassy name and 4th largest positon in the portfolio, KOG is around 11th or 12th and we've got calls on both going into their reports. Much more of this pre report jubilation this afternoon and those calls come off. Expectations for KOG have been beat to death, for SWN I expect an update on the Brown Dense latest vertical but not the horizontal and no project sanction. I think at worst they reiterate guidance and at best they inch up the mid point by a percent so call it 13% YoY. Marcellus to get more than its usual share of attention on the call as Fayetteville flattens.
August 1st, 2013 at 11:02 amOftopicthirty, grabbing lunch
August 1st, 2013 at 11:28 amKOG Nice one….10 has been resistance for a long time. Will interesting to see how it's treated this time around
http://www.charthub.com/charts/2013/08/01/stock_master390_1308010927
August 1st, 2013 at 11:29 amOAS call premiums have been above average all week.
August 1st, 2013 at 11:31 amZ, thoughts on taking a position in a name focused on the hot zone in the Permian? I liked West's and Wildcatter01's comments adding color to the story.
August 1st, 2013 at 12:10 pmre 80 – Please see recent LPI and FANG updates using the pull down menu. We hold ROSE now, we don't hold the other two but find them both interesting, including FANG despite the run.
August 1st, 2013 at 12:13 pmSSN up 30%, it's a good bet they have another asset sale on the way and the news is leaky.
August 1st, 2013 at 12:14 pmadding to 81 – oh, and we own a little of the AZZEF play West mentioned though that's a pure arb spec.
August 1st, 2013 at 12:16 pmFANG
http://zmansenergybrain.com/2013/07/10/wednesday-morning-fang/
August 1st, 2013 at 12:21 pmLPI
http://zmansenergybrain.com/category/lpi/
August 1st, 2013 at 12:23 pmSSN, Might be a good time to "sell the rumor" since they have not shown the ability to do much right from an operational standpoint .
August 1st, 2013 at 12:24 pmTomDavis—I've been looking at those calls–thinking of selling the OAS 45s as a covered call play…what do think the chances of getting to 45 by August 16th? I may sell the Septs instead so that I have more time to hopeufully play with them (buy the calls back a few different times when OAS dips/sell them when OAS rises) to generate some income on OAS
August 1st, 2013 at 12:29 pmre 86 – I'm not disagreeing with you on that point.
August 1st, 2013 at 12:29 pmFollowing the good economic data from ISM and global PMI improvements, the transports (IYT) have moved to all time highs. This is good news for the economy. Perhaps the expected crude oil sell-off will not be so steep, and certainly not so immediate.
August 1st, 2013 at 12:36 pm#78 Zorg, if we see KOG break and hold above$10, is there any resistance at and above $10.50?
August 1st, 2013 at 12:39 pmre 87 – I know you didn't ask me but since I do the modeling on the name I'd say coin toss. I think the numbers will be fine there for the quarter and certainly not expecting anything but a reiteration of guidance (they announce next week) with about an even chance of them yet again bringing up the low end of the guidance range for the full year. Could also see them yet again cut their average well cost for the year (now at $8mm) and you could see them comment on more locations from the TFS. I'm mulling doing somewhat higher strike September call writting in a number of names at the end of the next week … at that point 2Q13 reporting will be largely over, everyone will know everything and oil shouold again be thinking about dipping back towards $100.
August 1st, 2013 at 12:39 pmGood to see Bakken leadership in CLR, OAS, KOG having an impact on TPLM in terms of stock moves.
August 1st, 2013 at 12:46 pmGood to see some people taking note of the not at all bad stuff on the WPX call
Getting on a call, back in a few.
August 1st, 2013 at 12:48 pmre: 93
that was a crafty move buying those calls when the stock was lower
August 1st, 2013 at 12:57 pmZ, Thanks for your take on OAS–of course, I should've directed that question to you as well. I like your plan for next week's call writing. I love where all these O & G co.s are, but I also like to generate some monthly income since they don't for the most part pay divs.
August 1st, 2013 at 1:00 pm#90 Re KOG There is some supply left over from 2012 but as you can see from the profile serious supply has been negotiated already…The story is quite different from when it broke 10 last time. Lot's of folks shook out.
http://www.charthub.com/charts/2013/08/01/stock_master390_1308011105
August 1st, 2013 at 1:07 pmTranscanada is moving foward with its 1.1 mmb/d Energy East pipeline wihich will move Western Canada crude to East coast refneries and export markets. At the same time, Transcanada announced building a $300m export terminal in New Brunswick. This becomes a much bigger deal if Keystone XL doesn't get built and it may be the easiest path to export landlocked Canadian crude.
http://www.reuters.com/article/2013/08/01/irving-transcanada-terminal-idUSL1N0G21BL20130801
http://www.bloomberg.com/news/2013-08-01/transcanada-to-proceed-with-c-12-billion-pipeline-to-east-coast.html
August 1st, 2013 at 1:13 pm87 Katherine – I have had a covered call position for about 3 months. (Aug 45). I am mostly wacky with my covered calls. If it gets to 45, I usually sell 20% of the position and move up the calls to $50. If stock pulls back I would reenter. If it doesn't, I will gradually feed into strength. As to whether they get there in two weeks will be all about the earnings & guidance. Good Luck. If your cost is low enough (Thanks Z) all your choices should be pleasant.
August 1st, 2013 at 1:14 pmThanks TD. It is low (thanks Z) but I hate to pay the IRS more than my fair share. I try to keep my core position from being called away and I usually sell puts and calls around each of my positions (that have liquid options) usually a 2-3 x/month to generate income. I sell the puts where I wouldn't mind owning the shares.
August 1st, 2013 at 1:25 pmre 95 – Katherine, not my intent to sound scolding, just wanted to throw my tired two cents in on it.
Anyone know of kid friendly venues near the Galleria in Houston, preferably something with an outdoor beergarden/junglegym? Going there this weekend with intern #1 to see a pro game. Thx.
August 1st, 2013 at 1:27 pmre 99 – nice.
re 94 – better to be crafty than good, LOL
August 1st, 2013 at 1:28 pmre 97 – thank you, had not seen.
August 1st, 2013 at 1:31 pmRegulator says XOM pipeline rupture in AR caused by 70 year old manufacturing defect. Tree huggers should rejoice in new pipelines where those kinds of issues are less likely.
August 1st, 2013 at 1:32 pmThanks Zorg. Looks like empty space above in KOG
August 1st, 2013 at 1:40 pmVLO trying to make a move off the 200 day SMA. We still don't own the name, just long a few calls in the ZMT.
August 1st, 2013 at 1:41 pm99 Katherine. It sounds like you should stay with stangles & naked puts. If that case you should call on Zorg. The best directions for short term traders. The only guidance I would offer if you do naked puts or calls for income is do NOT be afraid to take losses.
August 1st, 2013 at 1:49 pmBCEI make a rare appearance over $42 earnings next Thursday.
August 1st, 2013 at 1:52 pmWhat is wrong w/ NOG ? Can't catch a bid even w/ oil up $1 and market at all time highs ? Geez ….
August 1st, 2013 at 2:00 pmre 108 – Somebody else field that.
August 1st, 2013 at 2:10 pm108 109 – Time to sick some actiivist investors on that management – sell the company
August 1st, 2013 at 2:20 pmre 108 / 110
1) non-operator
2) 1Q13 and 2Q13 production flattish
3) non-operator
4) 3Q production expected up but people won't believe it until they see it
5) non-operator
6) EBITDA margins tied with best guys in group (OAS, KOG) … oh, no, wait, that's a good thing
7) non-operator
8) no perceived catalyst since its not a catalyst driven name
9) not perceived as a takeout candidate at the moment.
I hold them for the long term .. their acreage position is in good parts of the Williston. At some point someone will want them. As I've said before, I don't know when that will be but would guess the stock will move better as the grow comes back. Last quarter they tied in very few wells due to road restrictions. Grow resumes as they get back into completion mode.
August 1st, 2013 at 2:21 pmNOG – PackMan 108. My guess is that all the other BB's have many short term catalysts that NOG does not. They are a 3rd and 4th Q story and the non-op model is viewed as unpredictable. M Reger has a few things to learn about how to manage Wall St expectations. So cheapness is not a valuable as momentum in a good market. Z any different slant?
August 1st, 2013 at 2:26 pmre 111
You couldn't resist? Just copy response and put in a file to paste again later. One day the value will be recognized. Until then it's an opportunity.
August 1st, 2013 at 2:33 pmSWN
http://www.charthub.com/charts/2013/08/01/stock_master390_1308011234
August 1st, 2013 at 2:34 pmre 112 – no, that's about it. Listen, we own 30 names. We are at our all time highs today. This gives me patience with names like NOG. Not endless patience but their EBITDA / BOE is right up there with the best of the operators. Their account is not tricky and there never were any holes in it. I've never felt deceived by them. But if I am frustrated over time by a name to the point that some seem to be it might be that I need to re-examine my expectations for stock performance vs what they have going on and sell the name if it becomes a nuisance to me. NOG is at the bottom end of the ZLT Top 10, at near a 5% position (it was 8th and I have not run the numbers in a couple of weeks but it's been outpaced by some names that were below the top 10 in terms of dollars), and it is far below in terms of importance of an OAS, BCEI, TPLM, SWN, (where the positions are all 10%+ etc. If it were number one … well, it wouldn't be since I've said before I own it only after owning the leadership Bakken players (well, most of them, not WLL at the moment). Anyway, just my two thoughts but other than some mild drift up with the rest of the names I would not expect much until they approach the 3Q report.
August 1st, 2013 at 2:34 pmre 113 – I don't mean to be flip but apparently I'm not a good communicator on this one. If I didn't think it would ultimately work higher (within in the next 2 years) then I'd sell it. As soon as they do some MLP that loves gobbling up non-operators will take them out and that would be ashame.
August 1st, 2013 at 2:36 pmOT: I received a notice that the borrow rate on the STSI that I have loaned out was increased to 9.5%. So the shorts must be getting more aggressive as the price goes up. 9.5% is not huge but free money falling out of the sky for a stock I would hold anyway is fine with me. Thanks to BOP for making me aware this gift was available.
August 1st, 2013 at 2:37 pmRe 97: More on the Transcanada Energy East pipleine:
TransCanada is also building an oil storage terminal in southeastern Saskatchewan that could collect crude from North
Dakota's Bakken field that is now shipped east by rail.
http://www.reuters.com/article/2013/08/01/transcanada-pipeline-idUSL1N0G214720130801
August 1st, 2013 at 2:41 pmEOX more chart candy
http://www.charthub.com/charts/2013/08/01/stock_master390_1308011241
August 1st, 2013 at 2:41 pmWLL
http://www.charthub.com/charts/2013/08/01/stock_master390_1308011243
August 1st, 2013 at 2:43 pmZorg – how about BCEI?
August 1st, 2013 at 2:44 pmBeerthirty a little early, back later with notes on SWN and KOG
August 1st, 2013 at 2:48 pmNOG just released their CC date & time. .
August 1st, 2013 at 2:50 pm#119 EOX another one with nothing but air above.
August 1st, 2013 at 2:50 pmBCEI No lack of pretty charts today
http://www.charthub.com/charts/2013/08/01/stock_master390_1308011305
August 1st, 2013 at 3:06 pmSolar took a breather…SPWR took a header. 23.12 support
http://www.charthub.com/charts/2013/08/01/stock_master390_1308011308
August 1st, 2013 at 3:09 pmDon Coxe has a conf call tomorrow, 10:00 am EST, titled Gold: the Low is In
August 1st, 2013 at 3:10 pmOT: ONVO
01-Aug-13 16:03 ET
Organovo proposes public offering of common stock; size not disclosed (5.37
+0.30)
Classic. You could smell it today. Bankers ran it up today in order to price it. Remember the registration became effective Monday and it appears that you get your ATM Financing tonight. Artitfical ears in 3D, so get yourself a 'little ear-full' if they crunch it on the offering.
August 1st, 2013 at 3:13 pmKOG on the tape
They preannounced production but Street was still 950 BOEpd high for their estimates … go figure … so Revenue, EBITDA, EPS all below Street. Not a big deal in my view, since we already knew about the volumes, would be nice if analysts would actually update their models but whatever.
All 12 wells in the Polar cubed space test are on line; average IP 2,549 BOEpd, don't have 30 days in these yet but these are Williams county wells, and they are half Bakken / half Three Forks. Saying it's early but they are encouraged they didn't see much communication between the zones. That will need some clarification on the call.
Margins were strong in the quarter at $62.05 on an EBITDA per BOE basis.
More tomorrow.
August 1st, 2013 at 3:19 pmNo kidding watch: Headline "U.S. natgas price fall may prompt utilities to switch from coal"
August 1st, 2013 at 3:21 pmSWN on the tape
Volumes beat top of guidance range,
Lifting production guidance range above top of old range
Nothing material I see re Brown Dense
Marcellus up more than 3x YoY
notes tomorrow
August 1st, 2013 at 3:54 pmKOG at 10.00 in AH
August 1st, 2013 at 4:25 pm111, 112, 113 etc. re: NOG …. thanks
August 1st, 2013 at 9:34 pmmacys coupon code august 2013
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April 27th, 2014 at 7:53 pmbowling strike zone lake worth
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October 13th, 2014 at 5:34 amfacial toning
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July 28th, 2015 at 1:53 am