Monday Morning – Welcome To 3Q13 Energy Earnings Week Four


Market Sentiment Watch: In energyland week four has arrived for the 3Q13 reports and as usual it's going to be a very busy one. In today's post please find The Week That Was (including quick summaries of last week's reports as well our Misssion Accomplished thoughts on the oil price decline), the lastest macro data slide shows for natural gas (August data out of EIA), the earnings calendar for this week with comments for tomorrow's reporting names of interest, and a few other odds and ends.     

Ecodata Watch:

  • We get Factory Orders at 10 am EST (F = 1.7%, last read was -2.4%)

The Week Ahead:

  • Tuesday 11/5: ISM nonmanufacturing, 
  • Wednesday 11/6: Leading indictors,
  • Thursday 11/7: Jobless claims, 3Q GDP, consumer credit, 
  • Friday 11/8: nonfarm payrolls, unemployment, personal income

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Natural Gas Supply and Demand Macro Slide Shows
  4. The Week That Was
  5. Stuff We Care About Today - Energy Earnings 3Q13 Week 4 Calendar, LINE
  6. Odds & Ends

Click the link directly below this to ... Holdings Watch:   

ZMT (Zman Medium Term portfolio)

The ZMT currently holds small common stock positions in WPX, BCEI, HK and call positions in HAL (Nov $55s and $57.50s), SWN (Nov $40s), and RRC (Nov $82.50 and $85s - which are looking pretty ill fated after last week's retreat). 

ZLT (Zman Long Term portfolio)

  • The Blotter is updated.

Commodity Watch

Crude oil closed down 3% last week at $94.61 driven lower by another larger than expected headline crude build and a big build at Cushing. Product demand picked up nicely for both gasoline and distillates and imports did fall off more sharply as we have been expecting. Crude is trading technically and round number support rules are in play (in other words when $100 breaks, then $95 is often a likely magnet and when $95 goes, people start thinking about a possible test of $90. See more comments in The Week That Was section below. This morning crude is trading flat.    

Natural gas closed off 6% at $3.51 on Friday after EIA reported another slightly bigger than expected injection. We should get a bigger number this week due to last week's mildness before the season draws to close on smaller injections over the next couple of weeks.  See The Week That Was section below for more comments.  This morning gas is trading off a dime. 

Natural Gas Production Watch: Inched up to another new high driven by "Other States", Texas and Oklahoma volume gains and partially offset by Louisiana (which is down over 2 Bcfgpd YoY) and an ebbing Gulf of Mexico. 

Natural Gas Imports Watch: Holding near cycle lows and flat with the prior month at a net 3.5 Bcfgpd.  

Natural Gas Demand Watch: Second highest level of natural gas demand on record for August (first was the 2012 level). Industrial notched another record for the month and combined Residential and Commercial demand squeaked out another record as well.  

Tropics Watch: No activity underway as the quietest season on record comes to a close. 

Weather Watch: 

  • Last week - heating degree days rose back up to 90 but still were warmer than the normal 100 for this week of the year. 
  • The forecast for this week for HDDs shows them moving up to 106 vs 115 normal for the week. 

The Natural Gas Macro Slide Shows


NG supply Aug 2013 A


NG supply Aug 2013 B


ng imports Aug 2013


ng imports Aug 2013


The Week That Was

weekly wrap 110113

Stuff We Care About Today

Energy Earnings 3Q13 Calendar - Week 4

3Q13 EW 4

Notes for the Tuesday reports:

  • NFX - Looking for commentary on whether the $898 mm offer for Malaysia is the final offer or not and timing on China (thinking 1Q14 now).  Also looking for rapid growth out of Bakken, Eagle Ford, and Cana this quarter and through year end.  We expect the Street to increasingly focus on the clean, less levered, domestic oil growth story that NFX will be in 2014.   
  • CRZO - Looking for another strong quarter. Look for them to give results of an Eagle Ford downspacing test as well as more Wattenberg results on the call. Not looking for a guidance boost on this call. 
  • FANG - We don't own it but will likely late this year or early next. Just keeping tabs for now. 
  • GST - Looking for a Hunton play update. 
  • HK - Looking for continued sequential growth and possibly an asset sale announcement. Not expecting anything materially new on the Utica front but we are looking for a Kibbler area well announcement around year end. They may have 2014 volume and budget guidance on the call (it's been discussed as a maybe) and either way we expect them to talk about the go forward for the company in terms of Bakken first, Eagle Ford second, then Utica and Woodbine (with Woodbine potentially accelerating in 2H14 with the benefit of additional seismic. We would not be surprised to hear next year's budget will be close to $1.2 B and that leasing efforts will be way down although we do expect some new acreage adds in the Eagle Ford. EOG may have some well results in the area this quarter as well to talk about,
  • GDP - We don't own the name but listen for color on the TMS. 


Subscriber Weekend Mailbox

Question:  Z – I’m trying to put this current energy market in perspective. (A) Can you think of anytime in your career where the potential for returns in some E&P segments has been this good?  (B) Also, I have noticed that you have mentioned your plan to buy companies with the intent to hold them for 2-3 years.  Are you thinking that the cumulative development of these resource plays causes oil prices to breakdown at that point?  (C) It seems like several companies have the same model – acquire land, de-risk, and sell the company. (D) It would seem at some point the majority of the land in these plays is acquired and de-risked.  You think 10 years from now the potential to find companies like PVA or GST will exist? Thanks  - Seabull


A) Yes, we can think of times when it was cheaper but probably less predictable or modelable from company specific standpoint. We don't see the current market as over valued but it's no long failing to disount crude prices by as much they were all Spring and Summer. A lot of times when things have gone to extremely cheap land it's due to a large market correction that included the commodities and drove prices into the ground. They were not cheap on near term valuation then and the unconventional oil side of the picture was less of a known thing, In our main Bakken plays now for instance, we see additional zones being proven economic and results becoming increasingly consistent. So we have the same real estate becoming increasingly valuable, pushing more of the downside risk a little further from execution and a little bit more onto price.  To be clear, we are not fans of commodity prices that spiral ever higher and the names in the ZLT will do quite well in an $80 to $100 oil price environment and on the gas side increasingly well in a sub $4 / MMBTU environment. 

B)  No, 2 to 3 years is our average hold time, pretty much irrespective of commodity prices. We generally buy and hold for many years. 2 to 3 is probably more of an average for our Cores.  If we think we see a year of suppressed oil prices or one where prices could have a pinch point and spike up we have Trading positions on top of the Cores with which to add or remove exposure. 

C) Most companies acquire leases and exploit the underlying resources.  Some explicitly state the company is being built for sale but we own nothing for that outcome. We'd own the old BEXP happily today had they not sold out too early to STO.  The old HK comes to mind as well and with management teams we like, we really hate to see them hang it up for a one day pop. 

D) Yes we do.  Consolidation is a fact of the business. So too are new plays. And there is a lot of land out there that from time to time looks next to worthless due to commodity prices (like the Permian did when oil was $12 back in 1998). Lots of land was swapping hands then too and much of that was held.  People thought the Spraberry was a great thing then but the technology wasn't around to go after something like the Wolfcamp. 

Other Stuff

LINE  / BRY update - The two companies amended the merger agreement taking the exchange ratio up from 1.25 shares to 1.68 shares (they obviously had to agree to pay up given all the machinations since the time of the original deal announcement), valuing BRY at $4.9 B. Date for merger extended to January 31, 2014. The LINE is holding their call to discuss 3Q13 results and the BRY merger on Tuesdat at 10 am EST. 


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Odds & Ends


Analyst Watch:

  • TBA in comments. 

167 Responses to “Monday Morning – Welcome To 3Q13 Energy Earnings Week Four”

  1. 1
    Zorgnak Says:

    Solar  ETF  TAN consolidating after run up. 


    Weekly Uptrend intact. Next major resistance 50% higher.


    FSLR  Weekly Chart..Breaking out from long term volume base. Little resistance until 100


    SPWR  Weekly Chart. At breakout level with limited resistance until 60


    SCTY  Consolidation after breakout on weekly chart



  2. 2
    Zorgnak Says:

    Small Cap E&P 

    A number of strong charts pulled back to the vicinity of the 20 MA on Friday and either bounced or held. This often a buy point for those that buy dips on momentum. While this setup ("Holy Grail") has a good historical edge two issues standout. The small E&P group is now underperforming the market by quite a bit and there is little nearby defined support on the profile chars in  the pullback setups. If the momentum buyers are going to start nibbling off the charts I would expect it to happen soon. 



  3. 3
    tomdavis12 Says:

    WLL  said to be sniffing around up in Michigan. The Collingsford Utica being drilled by ECA. If successful also very good for BBEP which was one of the top 3 MLP's recommended by UBS last week.

  4. 4
    tomdavis12 Says:

    MLPs as defined by the AMZ index was up 24.6% (the latest DVN/XTEX merger helped mucho). LINE news may add to performance here if successful with merger. UTY Utilities +13.6% and RMZ Reits +8.1%. 

  5. 5
    tomdavis12 Says:

    APC eyeing a sale of more of their assets in China $1B. Another example of companies looking to develop here in NAM.

  6. 6
    Zorgnak Says:

    S&P Areas of Interest  11/4 8:30 AM    ES 1760.75/ SPY Chart Below

    Notes….. Market continues to build value and structure above previous breakout level. Current volume pivot at the 1754.50 CHVN.  Near support 1743 CLVN. Far support 1730.50 CLVN. Market working off overbought levels through sector rotation into laggard and defensive groups. Big cap leadership. Demand volume positive. Breadth trend supportive, working off overbought levels. POMO injecting $10 billion this week.

    Thoughts ……… Expecting  market  to trade sideways above 1743 CLVN with a positive bias above 1754.50. 1730.50 is key short term support with volume gaps to 1716 and below.

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

    1770.50                    ATH

    1754.50              CHVN

    1738.75               Minor CHVN/

    1730.50              Minor CLVN/Low volume area below

    1716                   CHVN

    1707                   CLVN/Minor Support

    SP500 Futures  


    SPY Comments on the Weekend Wrap


  7. 7
    Zorgnak Says:

    KOG up +2% pre-mkt on good volume after holding near support on Friday


  8. 8
    elduque Says:

    BDI up 27 to 1552


    Brent/WTI at 11.1


    TYX at 3.684


  9. 9
    tomdavis12 Says:

    Guggenheim (Friday) Offshore – Put out a field by field rig supply/demand forecast. They indicate tighter floater market over the next few years contrary to the current bearish consensus in the space. They see entry point having favorable risk/reward. They like SDRL, NE, ATW & PACD. Those are the names I would stay with also. 

  10. 10
    zman Says:

    Thanks for the levels and comments, just getting back into the office.

    SDCJF – breakout extending this morning – see last Thursday's post for commets on the 3Q operations update … strong things happening for that little one. 

    LINE – strong initial reaction to LINE having to really pay up to keep the BRY deal going. Hmm.

     SWN – have seen no post quarter follow up notes with target changes there. Bizarre. 

  11. 11
    zman Says:

    AR – earnings Thursday, initiations by a ton of sell side guys probably a week from today. 

  12. 12
    elijahwc Says:

    LINE mea culpa watch:  Radio silence over at Hedgeye and Barrons

  13. 13
    zman Says:

    re 12 – check hashtag Hedgecry

  14. 14
    reefguy Says:

    SWN- Brown Dense test.

         Hearing that the Sharp on other recent verticals are in the $8MM cost range.  This seems way high….likely that will drop to less than $5MM.  What is wrong with a vertical play( like the Delaware Basin Wolfbone?)

  15. 15
    zman Says:

    re 14 – thanks Reef. Notes I took Friday:

    The Sharp well cost $10 mm to drill due to some drilling troubles and extra science and it will still be economic. 

    Saying the next well cost $7 mm and has an IRR they think of 80 to 90% … that's better than Bakken. 


  16. 16
    zman Says:

    Doing a lot of data stuff today, will be pretty quiet at times, shout if you need something. 

  17. 17
    zman Says:

    RRC – decidedly negative tone since the end of their strong quarter and good call (or so I thought). Not sure what their beef is, will try to see. Could also just be gas prices taking all of the little run into earnings back out. 

  18. 18
    tomdavis12 Says:

    RRC downgrade @ Barclays

  19. 19
    nrgyman Says:

    RE 17:  COG struggling also since their report.  Natgas pricing is weak and the weather forecast is for warmer than normal temps ove the next 6-9 days.  Interesting that some other natgas names that have not reported yet are up today (WPX, CHK, AR), though these may have more of a liquids story to them and are not as expensive by certain metrics.

  20. 20
    zman Says:

    re 18 – was that today?  Can you see if that's Driscoll. I think he's smart but worthless on natural gas for the last… i dunno, forever. 

  21. 21
    zman Says:

    re 19 – hear ya on that, the RRC GIP maps are pretty important to the story but the names are largely trading around the yoyo action on natural gas prices. Kind of silly. 

  22. 22
    zman Says:

    PVA extending. 

  23. 23
    reefguy Says:

    Sharp costs.  Still puzzled.  4 stages=$1.2MM, Extra string because of pressure=$.7MM, thats $1.9MM.  Four cores=$1MM, now up to $2.9MM.  Drilling to 10,500 with a string a 5000' cannot be $5MM more for a total under $8??

    I just set a string of p-110 to 11,400' in pressure and it is at $3.5MM pre completrion.


  24. 24
    tomdavis12 Says:

    20  Yes today. Will try to ask who.

  25. 25
    choices Says:

    CRZO-insider sales last 30 days-certainly not massive but something I have been watching in the E & P sector during this "pause":




    Trade Date

    Shares Sold

    Rule 10b5-1

    Current Ownership

    Decrease In Ownership

    S.P. Johnson


    Nov 1





    Brad Fisher


    Oct 4-14





    Gregory Evans


    Oct 4-10





  26. 26
    john11 Says:

    MHR doing an analyst day today starting at 1:00 cst.  Presentation slides are up fwiw;


  27. 27
    choices Says:

    #25-whoa-did not come out at all as I copied/pasted

  28. 28
    zman Says:

    re 23 – hear ya. He said that they had some trouble drilling it that accounts for the extra cost but he didn't elaborate. Guessing long delay although not by my earlier notes. 

    re 24 – 26 – thanks. 

  29. 29
    zman Says:

    And Reef – note those economics at $7 mm … 80 to 90% as you know is stellar.   450' thick, probably here them talk laterals in various unseperated zones of it down the road but hey, go vertical until you're sure. They also mentioned some really big areal extent on where they think this works, said they don't need the geopressured for the economics to work. Sounds like 1H14 is delineation time via verticals and 2H14 is acceleration time with 2015 being the first year of big drilling. Plenty of liquidity here to exploit a baby Bakken in the South with no need to punt to the midstream to pay for it. Next year we may get a slight oil wedge with Marcellus and Fayetteville both driving growth.  

  30. 30
    zman Says:

    CHK was bolded in today's earnings calendar table. We do NOT own CHK. 

  31. 31
    nrgyman Says:

    EOG reports this week also.  CC on Thursday morning.  Always a good listen/read.

  32. 32
    zman Says:

    Thanks much, will add it to the table and repaste.  Also will put the table on the Calendar tab for reference. 

  33. 33
    nrgyman Says:

    SPWR now moving well after the earnings report selloff.  FSLR continues higher following its report.

  34. 34
    nrgyman Says:

    Coal names, especially met coal, getting a boost on the China PMI report.  WLT, ANR, BTU

  35. 35
    1520sbroad Says:

    #29 – Sharp well was drilled a while ago – TD was around May 1.  SWN clearly took their time to get that one flowing.  


  36. 36
    ButlerBaby Says:

    Re MHR note on Oct 25 – any additional thoughts?

  37. 37
    Zorgnak Says:

    SCTY  rocket ride

  38. 38
    zman Says:

    re 36 – nothing new

    re 37 – Not one of my names, why is it running?

  39. 39
    nrgyman Says:

    RE 38:  SCTY is one of the top 3 US solar names and they are all running.  SCTY founded by Elon Musk, same guy who started Paypal, Tesla and SpaceX.  I need to learn more about their model, but they install solar for low/no cost and collect revenues from the sale of the electricity.  Don't know the details on it, but SCTY is a momo name and a crowd favorite.  

  40. 40
    tomdavis12 Says:

    MHR – added to their Utica 11K acres. First hz well off 10-well Farly pad is flowing back. Lowered expectations for asset sales $220mm to $190mm. Lowering well costs $7.1mm to $6.4mm.

  41. 41
    ButlerBaby Says:

    Zorgnak – completely off topic – interested if could do a read on the BAC 4 year chart?

  42. 42
    zman Says:

    re 40 – thanks Tom – keep the notes coming if you can, know there's an interest in Gary here. A bit busy at the moment with other stuff. 

  43. 43
    tomdavis12 Says:

    MHR – Meeting today perceived as more of a "feel good" presentation rather than much new data output.  

  44. 44
    nrgyman Says:

    OAS.  Nice.

  45. 45
    brodway Says:

    re: 21

    sub freezing temps tonight and yesterday night on the East Coast. i would think gas prices would be more stable the cold evenings are more in line with late fall temps.


    i'm torn on AR. i bought a few shares at 52 and 53 but really way below a full position. would you wait until the quiet period ends, or would you be more aggressive here expecting upgrades to gravitate stock higher in the coming weeks. also are there any restrictions on IPO shares and would you expect those to become loose after restrictions lifted in those shares

  46. 46
    ButlerBaby Says:

    HK – 3 year breakout at 5.52  – $0.12 away

  47. 47
    nrgyman Says:

    Looks like the market is running up the stock prices going into the Q3 reports for many names this week, anticipating strong results.  

  48. 48
    zman Says:

    re 46 – on HK? 

    re 44 – OAS, yeah, should be another solid quarter, decent chance of upgraded (modestly) guidance for 2013 here. Another name getting to free cash flow in 2014. Nesson deeper TFS bench test on this Q. See catalyst list for more. 

    re 45 – Ah, hypotheticals. I'm in a core postion there built in a day, not huge yet. Planning on being longer there soon. I don't really care about the quiet period ending, at least not much as in 2 to 3 years nobody will really remember. I'd like some guys to come with Neutrals on it so I could get a bit more cheap but I'm listening this week for more adds (or not).  By restrictions do you mean by people who took shares in the IPO? To that I'd say no.  

  49. 49
    ButlerBaby Says:

    46 – fwiw:

    linear long term down trend tops at feb 2012, apr 2013

    resistance at 5,74, 6.40, 6.70, 6.95, 8.25

  50. 50
    brodway Says:

    re: 48

    yes i meant IPO stock that may come unrestricted at 30 days and some folk may opt for profit taking.

  51. 51
    ButlerBaby Says:

    support 5.27, 5.00, 4.60, 4.40, 4.20


  52. 52
    zman Says:

    New accounts later this week (mentioned in the wrap)

    Will be like the ZLT C's (low churn, long term, fully invested) but starting from scratch. Since people ask "what would you buy now with new money?" I'll say that they will own likely own some FANG, some Bakken (probably 2 names, probably OAS or KOG and one other), probably WPX, and REXX or AR and then probably BCEI.  So 6 names, maybe 7. 

  53. 53
    zman Says:

    re 50 – Typically you're not going to lock IPO stock, I don't recall seeing any in this case. You try to put it with long term holders who won't flip but people will say they sell won't and then punt anyway on a good rally. There should not be anything special with regard to the end of the 30 days of quiet for the underwriters other than they can start publishing Buy and Neutral type reports.  Given the run it had I would expect some to come with Neutral initiations but we do get another look at them this week for 3Q and I'd guess its a bit of a short call with no Q&A given the timing but don't know for sure. 

  54. 54
    zman Says:

    re 51 – ah, 3 month. 

  55. 55
    Stewart Says:

    re 52..SWN RRC noticeably absent from that list

  56. 56
    ButlerBaby Says:

    3 year downtrend resistance – not intermediate highs

  57. 57
    Zorgnak Says:

    re #41 OT  Re BAC  My take..

    Butter… Here's the BAC chart on a weekly basis going back to the crash. Still working through  congestion/supply which begins to diminish significantly with a break of 15.10 Currently seeing it consolidating above defined support at 13.70. To my eye,an entry using the 13.70 zone as the risk pont to size a position offers a decent risk reward long with a likely retest of 15.10. A break of 15.10 area offers increasing room to run back to the 2011 reaction highs in the high 18s. Because this is a weekly chart the levels are not as precise as on the daily charts say + – .15 or so on the levels marked on the chart. So…long term bullish above 13.70 or so with potential for a significant breakout above 15.10. Weekly close much below 13.70   likely works back to the mid 12s and the major long term acceptance at that those levels


  58. 58
    zman Says:

    re 55

    – SWN – only because I already own quite a bit of it just about everywhere else. 

    – RRC – yeah, so is COG – they may get in there, we'll see …

    Lots of interesting gassy names in the stable but I want to stick to about 70% oil for now. Also no Service names in there. These are going to be treated like the ZLT C, all trades shown from the beginning, small accounts at $10K apiece.  

  59. 59
    ButlerBaby Says:

    also might be setting up for false MACD sell signal 10/31 before the 5.00 test last week – will be good signal

  60. 60
    ButlerBaby Says:

    zorg re 57 – gracias 

  61. 61
    zman Says:

    HK is a completely different company since the takeover of RAM so I would not use techincals going back for them that far but I guess some might. 

    SAC pleading guilty and paying $1.8 B fine but apparently no one going to jail and now they can just invest for themselves and not outsiders. Not far enough in my book. 


  62. 62
    zman Says:

    Stuart – also note it leaves out all the really little spec names. 

  63. 63
    BirdsofpreyRcool Says:

    #61 — just saw this tweet on SAC… couldn't resist

    "Finance is the only industry where you can break all kinds of federal laws, make tons of $$$ doing it and just tip the gov't on the way out."

    (Although, I'd add "green energy" to that list… and no tip is required.)

  64. 64
    zman Says:

    ZTRADE – ZMT – HK Calls

    HK – Added (30) HK December $6 calls for $0.20 (on the mid and easily) with the stock at $5.33

    ZTRADE – ZLT – HK Common

    HK – Added a trading position at just under $5.33.  Earnings tomorrow. We should get more strong Bakken well results and potentially the same from decreased stage distance in Eagle Ford wells as well. We may get another Kibler area Utica well to think about and we might get 2014 guidance although they may hold it until December, just no way of knowing. It should become increasingly clear that they are looking to 2014 as a more drill bit intensive year leading with the Bakken and the Eagle Ford, then Utica followed by a picup in the Woodbine in 2H14.  

  65. 65
    DaveH Says:

    SEA,AX (Australian Exchange version of SDCJF) was +3.54% today on volume of 4.53 million shares. Ended at all time high. Volume 4 times three month average.   Australian Exchange closed now because of time difference.  Aussies seem to want that stock.

  66. 66
    zman Says:

    re 65 – hear ya on that. SDCJF basically a carbon copy of the SEA chart http://hfgapps.hubb.com/asxtools/Charts.aspx?asxCode=sea&compare=comp_index&indicies=0&pma1=0&pma2=0&volumeInd=2&vma=0&TimeFrame=D6


  67. 67
    mattlee Says:

    E*Trade pretty aggressively pushing this new Goldman MLP fund (Goldman Sachs MLP Income Opportunities Fund) to customers like me (in the form of multiple emails).

  68. 68
    elijahwc Says:

    FTK will report after the close on the 6th with CC to follow at their usual get you out of bed early slot of 7:30.  just in case anyone missed it they previewed the miss this morning.  All things considered the stock is doing quite well and here you go on the preview:

    Colorado Severe Flooding Update

    As reported by Flotek in October, the severe rains and associated flooding in Colorado in September had a meaningful impact on the Company's chemical sales in the Denver-Julesburg Basin ("D-J Basin") during the second-half of the month. After a complete review of all business, delayed orders and anticipated commercial activity, weather impacted the Company's commercial sales by more than $3 million, a large part of which would have been comprised of CnF® sales.

    In addition, while commercial activity has now stabilized to levels slightly above pre-storm levels, decreased activity continued into the first two weeks of October. While no business was permanently lost, entire drilling and completion programs in the region were notably delayed.

  69. 69
    BirdsofpreyRcool Says:

    Superior Energy just had some assets seized in Venezuela.  Seems PDVSA was late on some payments for services… and the govt seized SPN's assets?  Hmmm…

  70. 70
    zman Says:

    re 67 – well that's annoying

    re 68 – thanks Eli, noted it, shoulder shrug to weather in my view … much more interested to hear about the evolving MENA sales channel

    re 69 – typical.  

    Company A – "We insist you pay what the contract states

    PDVSA –  ….crickets ….

    Company A – "no really, you gotta pay up"

    VZ –  yoink!

    I don't know how many service guys have to see this happen to think it's a crap place to do business. 

  71. 71
    zman Says:

    Offtopicthirty – grabbing a run, back in a bit. 

  72. 72
    nrgyman Says:

    GST:  Venture any thoughts about what they will report tomorrow?  Do you see any likely catalysts in this call?

  73. 73
    BirdsofpreyRcool Says:

    #70 — you could do Stand Up Humor in any bar in Texas.  Priceless!

  74. 74
    BirdsofpreyRcool Says:

    GST — no numbers expectations… I leave that to the guys with detailed models.  I'll be in meetings all day tomorrow, so will have to read the transcript.  But I will be combing the verbage, peering for anything Russ et al. has to say about their 2 Hunton wells and one Woodford well where they have a very (very) small working interest.  Any positive Woodford statements would catch Mr. Market by surprise.  Also, looking for Hunton wells to IP at greater than 500 boe/d.  That would make me happy.

  75. 75
    Natus Says:

    73 – I would say the same thing about your comments, BOP. I think we all really enjoy your perspective, and #63 is a perfect example.

  76. 76
    nrgyman Says:

    RE 74:  Thanks BOP.  I'll be interested in hearing your take on GST sometime after it reports.  Appreciate your contributions.

  77. 77
    elijahwc Says:

    OT: STSI  

    I’m fishing.

    Any rumblings on new mgmt in the offing?  Perhaps brought in from outside pharma.

    A friend has a thesis that combines some new mgmt, an IND filing in Thyroid with a 3 to 6X polymer version, the reconfiguration certain patents earlier this year,  and a little company with it's RA mainstay (Humira) coming off patent (ABT) that might have an interest in diabetes and thyroid markets in addition to to preserving its market leading RA franchise.

    I've watched this person go into painstaking detail on his holdings over the last 20+ years so I get excited with where his thinking is going, and I certainly don't discount it.

    Any help here?

  78. 78
    Dedwards Says:

    I am kind of scared what the MHR print will look like later this week.  Midstream was down for an awful long time!

  79. 79
    zman Says:

    re 74 – yeah,  what she said. I have no detailed model there so no numbers from me. I think it's more of a story thing for now, not yet a bottom line thing … big miss could cause a dip for sure but could be offset by operations update on Hunton wells 6 and 7 plus a timeline on results of (if they don't have them yet) their first operated well that spud back on the day of our call with them in late September.  If they have Woodford news it might rub off a bit on OEDV, if it's close enough and that will get shouted out on Twitter I'm sure. 

  80. 80
    tomdavis12 Says:

    LINE – Calling deal accretive even at higher price.

  81. 81
    zman Says:

    re 80 – say that, guessing they mean in 2014 and nothing actually confirms that either your currency is pricey or what you are buying is really undervalued like being able to still make that statement after that kind of exchange ratio bump. 

  82. 82
    ButlerBaby Says:

    preet bharara = systemic risk

  83. 83
    zman Says:

    Interesting reading watch:


  84. 84
    tomdavis12 Says:

    81   Had been accretive by $.42/sh at previous exchange rate. I guess alot of vigorish to work with.  

  85. 85
    Zorgnak Says:

    HAL looking to extend


  86. 86
    zman Says:

    Hey Zorg – Noted EOG held a level you mentioned last week and bounced. Then noted the chart looks really familiar. Looks like OAS now. And many others with this pullback below the recent consolidative period after making all time new highs.  KOG, BCEI, and more have this same group shaped pull back with large recovery today. Not that I mind the occasional green day and the volumes look nice this morning but it has a bit of a headfake feel to it to me. I was thinking that more short term types might use this as an oppy to punt … to me we need to do more side ways trading before crafting new highs. Got thoughts. 

  87. 87
    Zorgnak Says:

    GDP Working at Interesting level at 24…2 month's worth of underwater longs supply


  88. 88
    ButlerBaby Says:

    83 – interesting –

    Look at drop in effective fed funds rate since beginning of year;

    Also nearly 50% increase in reserve balances with Fed banks since beginning 2013…wow.

  89. 89
    BirdsofpreyRcool Says:

    OT:  eli #77 — i concur on numbers 1 through 3.  #4 makes sense.  And no knowledge of 5.

    1) Looking for some interesting reading when proxy gets filed.  (AGM around Dec 20th, so proxy should be out a month ahead of time).

    2) Company has said they will file an IND.  They have an isomer of the naturally-occuring molecule that seems to "work better."

    3) 6mg time-release should be out any day between now and January.  (NB:  the Flint Study was completed with patients who took the non-time release version, 3x a day… and anatabine has been shown in mice to be much much more efficacious when you take a little bit continuously… so just think how great the results would have been if the patients had been given the time-release version).

    4)  Makes sense.  Paul Perito may not be the best at wresting cash from tobacco companies, but his specialty in real life is pharma patents.

    5) There are many pharmas who would benefit from adding the anatabine isomer to their drugs coming off patent.  Just one of the ways we will all be aware of anatabine citrate in the future… it makes certain drugs "work better."  And — more importantly to the drug manufacturers — gives them a new lease on an expiring patent.

  90. 90
    tomdavis12 Says:

    Energy best performing sector in market today. I believe the APC news has had a big impact.

  91. 91
    Zorgnak Says:

    #86 I see what you mean. To my eyes all are variations on the high odds pullback/bounce setups I mentioned this morning in #2….Some of the better pullback setups had  defined support, others not so much. The whole group is now above the volume pivot(supply) left behind after the recent drop and could see a day or two more of momentum, maybe more if small cap momentum continues back into favor beyond today. Noticing lots of momentum money moving back into last weeks beat down names in more than a few groups.  Even the Chinese stocks are moving atoday. We have 76 of 80 energy stocks with higher than average short term volume…a pretty good bounce. So resumption of trend or head fake? Impossible to tell. 


  92. 92
    zman Says:

    re 91 – See, I knew I didn't have an original thought today. Thanks for the reads as always. 

  93. 93
    BirdsofpreyRcool Says:

    #75 — you are too kind, Natus.  😉

  94. 94
    Zorgnak Says:

    S&P Futures trading sideways at the volume pivot at 1758. Under the surface among the liquid stocks I track 105 are up 4% or more vs only 29% down 4%. The consumer staple leaders from last week are fading as risk groups are popping. Small cap energy up 2%+


  95. 95
    Zorgnak Says:

    #94 make that 105 up and 29 down more than 4%

  96. 96
    Zorgnak Says:

    XOM   something you don't see everyday….it's a beast today


  97. 97
    zman Says:

    We'll have a fresh set of ZLT Pies out in the morning. And comments on 7 reporting names of interest. The updated calendar in on the Calendar tab (note, EOG should be in bold on that table). 

  98. 98
    zman Says:

    Zorg – add REXX and ROSE to that list of chart lookalikes as well.  

  99. 99
    zman Says:

    Just taking a look at where we are overall on mix (oil vs gas) in the ZLT and it's closer to 80/20 when I flip some from gas to oil which is there focus (like a PVA that just tipped over or a NFX that will).  Going to try to get that up by adding to things like COG and RRC over time, maybe to REXX though it's pretty big already read and probably not to SWN as it's #5 in the portfolios at this time. 


  100. 100
    nrgyman Says:

    EOX launching into the report Wed with a similar chart.

  101. 101
    zman Says:

    re 100 – yeah, wildly cheap in my model. 

  102. 102
    nrgyman Says:

    Z, looking forward to all of your reports this week.  Must feel like your in an arcade game with data flying at you from every direction.  

  103. 103
    nrgyman Says:

    RE 102:  sorry typo:  s/b 'you're' not 'your'.  Hate it when I do that.  I do marvel at your ability to decipher and report to us so quickly all of the info that gets put out in these almost simultaneous reports.

  104. 104
    zman Says:

    re 102 /103 – it's fun.  And as long as a majority of them are kind of enough to report the preceding evening I don't get too cranky.  TPLM has made the switch.  I about begged HK to but not go there. I personally think it's stupid to wait unitl people 3rd cup of coffee to report at 8 am EST for a call an hour later. 

  105. 105
    Zorgnak Says:

    #103 there' more than one Zman….only explanation I can think of

  106. 106
    nrgyman Says:

    RRC starting to buck the natgas price doldrums and the mystifying downgrade from Barclays.  

  107. 107
    zman Says:

    TPLM – 30 minute slot with CFO now on Wednesday afternoon after market.  I can't recall what I wanted from the guy at this point but will come up with a list, lol.  They report their 3QFY14 in about a month. While I'm on a list of things people should do with their companies, another would be, get on a calendar basis. 

  108. 108
    DaveH Says:

    OT: Re: 89.   The difficulty with anatabine becoming used for various illnesses is that the FDA will fine a company big money if they assert their drug is useful for an illness that the FDA has not approved it for.   It does not matter if doctors or patients have found that the drug works for that illness.   For instance J&J is being fined 2.2$B, part of which is for promoting "off label" use of drugs.   See http://finance.yahoo.com/news/johnson-johnson-said-pay-2-153425014.html

    I take a prescription drug that prevents cold sores but most people will never learn about that effect because the drug is not approved for that.

  109. 109
    zman Says:

    Yeah, they're kind of lonely in that move. 

    KOG back over $13. Added a little Friday after listening to the replay. Congrats to those that added sub $12 as I was more of a mid $12 adder, just under where we sold trading positions early in the Fall. 

  110. 110
    Stewart Says:

    re 86, 91..glad the group bounced after last week's pullback…now I see how the momentum players jerk this stuff around and how it helps no one.

  111. 111
    Zorgnak Says:

    HAL  Peek-a- boo…


  112. 112
    zman Says:

    re 110 – they do provide liquidity if you think something's too rich. 

    re 111 – got near term thoughts, I have a few calls in the ZMT that would be pleased with a near term move on $55. 

  113. 113
    Zorgnak Says:

    S&P 500  …Looks like max chop til Thurs premkt econ??


  114. 114
    Zorgnak Says:

    #112 Re HAL  see # 85

  115. 115
    Zorgnak Says:

    #112  RE 55 on HAL….I don't see why not…be nice to get a little group co-operation

  116. 116
    nrgyman Says:

    FANG started slowly this morning but started to launch this afternoon into its report tomorrow.  Similar chart pattern to the others.  They already reported production numbers exceeding expectations and raised production guidance.  Stock sold off anyway.  Now bouncing again with the others.

  117. 117
    BirdsofpreyRcool Says:

    OT:  DaveH — that is why Star is going to go the "drug approval" route… so they will be able to make those claims.  And they are very careful NOT to do anything that the FDA would not like.  People may not be fond of Paul Perito, Esq. as the COO.  But the guy knows his way about the pharma and FDA world.  And his professional reputation in those areas is solid gold.

    Oh yeah.  And the head of Rock Creek, Dr. Curtis Wright, used to work at the FDA.  So there are lots of things to worry about… but crossing the line with the FDA is not high up there on my list.

    This will be done properly (that is the hope, anyway).  There are lots (and lots) of studies (not just thyroiditis) being conducted by doctors, proving anatabine's affectiveness across a broad swath of autoimmune disorders.  The word will get out.  But until they have pharma-status, Star will leave it to others to connect the dots publicly.

  118. 118
    zman Says:

    re 115 =thank you sir. 

    re 116 – we'll be on the replay there. 

  119. 119
    nrgyman Says:

    XOP up 3%.  Dragged down by the natgas and refiner names.  


    Solar names are rocketing.  TAN up over 8% reflecting a big move in the Chinese solar names.  SCTY up 13.5%, SPWR up 10.2%.


  120. 120
    Stewart Says:

    re 112..absolutely..and their exits can provide a good entry…and this site provides excellent information to help make those decisions….always harder for me to recognize when to lighten up than when to add to a position when its cheap.

  121. 121
    zman Says:

    EPL bouncing with the group today, we'll do some work on it once it settles down, maybe try to talk with them again and weigh owning it in addition to EXXI for offshore exposure. 

  122. 122
    zman Says:

    re 120 – me too which plays into the longer term focus for 99% of what I do. 

  123. 123
    zman Says:

    NOG up 6%, 2nd best Bakken name on the day (after EOX). Don't get to say that often. 

  124. 124
    zman Says:

    Beerthirty, back in a little bit with 3Q report briefs

  125. 125
    Zorgnak Says:

    Anadarko 3Q ADJ. ESP $1.13, EST. $1.16

  126. 126
    nrgyman Says:

    Newfield Exploration EPS of -$0.03. • 4:04 PM

    Newfield Exploration (NFX): Q3 EPS of -$0.03.

    Revenue of $486M. (PR)



  127. 127
    zman Says:

    HK on the tape

    – new personal best for HK Bakken well at 3,900 BOEpd and new bestg for EFS well in El Halcon area at 1,262 BOEpd

    – HK guiding above Street for 2014 at 40% vs Street at 36%

    – 37,707 BOEpd for 3Q13 is well above Street's 34,750 but that's probably largely timing of asset sales on part of Street

    – As such, revenue of $305 mm easily beats Street's $268 mm 

    – They report CF from ops of $179 mm, didn't have a consenus ops number but it will be close to EBITDA plus Interest and EBITDA estimate was $172 so that's going to be about in line. 

    – EPS comes in light at $0.04

  128. 128
    Baylor Says:

    What time does hk report tomorrow?

  129. 129
    ButlerBaby Says:

    HK what do you make of that downspaing diagram?

  130. 130
    Dedwards Says:

    Brutal EOX close

  131. 131
    ButlerBaby Says:

    HK no mention of what acreage $155.7m buys?

  132. 132
    DaveH Says:

    One thing that was not mentioned in your LINE press release summary was that they anticipate the shareholder meetings of LNCO and LINE to approve the merger to be held in mid-December.  See http://ir.linnenergy.com/releasedetail.cfm?ReleaseID=803936

  133. 133
    zman Says:

    NFX on the tape

    – 2013 guidance bumped from a range of 46 to 47 MMBOE to a point estimate of 48 MMBOE

    – nice beat on 3Q13 volumes coming in at 130.4 MBOEpd vs 119.8 MBOEpd Street … US volumes look strong. domestic liquids up 9% sequentially. Nice. 

    – Revenues of 675 mm with discontined ops vs $570 mm Street … w/o the disc ops of international revenues were $486 

    – $0.70 EPS vs $0.50 EPS expected but there's a little noise in the number as it includes discontinued ops and we don't how many analysts are keeping the international stuff in there until the time of sale or not.   My guess would be that most guys are leaving it in until it's sold. 

    – Announcing big Wasatch longer lateral wells, IP > 2,200 BOEpd – nice

    – Talking new STACK play in the Anadarko – adjacent to Cana (SCOOP) area … Meramec and Woodford Shales, 7 wells so far, IPs average 900 BOEpd, 40% oil, 70% liquids

    – Bakken production came in ahead of expectations

    – EFS still on track for a big 4Q ramp, expecting 8,200 3Q to jump to 12,200 BOEpd as 4Q avg. 

    – Uinta came in 10% light due to refinery downtime, not drilling. 

    Malaysia – said they signed the $898mm deal, closes early 2014. 

    Favorite quote watch: "In February 2013, we rolled out a three-year plan and today we have year one behind us. We have even greater confidence in our ability to hit our corporate level targets and we intend to deliver on our promise of doubling liquids production from our four key plays by the end of 2015."


  134. 134
    DaveH Says:

    RE: 132.   I should have said the LNCO and BRY shareholder meetings

  135. 135
    nrgyman Says:

    PXD on the tape with an .08 miss but the stock is up big in AH due to strong well results and delineation successes.  Pad drilling timing issues hurt Q3 but will help Q4.  



  136. 136
    zman Says:

    re 128 –  10 am EST. 

  137. 137
    zman Says:

    re 129 

    It's very small but that's a 1,280 and that's the direction people are headed. It's theorectical at this point, and nobody is ready to say that all three benches will work with that tight of a spacing just yet. On the Bakken people are testing that 7 well in the zone spacing but it's still early days. 

  138. 138
    ButlerBaby Says:

    HK – whats with the impairment charge? 

  139. 139
    zman Says:

    re 131 – that should be largely Eagle Ford

    re 134 – thanks

  140. 140
    ButlerBaby Says:

    Writing off the Woodbine or a chunk of Utica?

  141. 141
    Dedwards Says:

    GST has me sitting on the edge of my seat.  Numbers are due out tonight right?

  142. 142
    zman Says:

    re 138 –  "Transfers of unevaluated Woodbine and certain  Utica / Point Pleasant  property costs to the full cost pool during the period contributed to the impairment charges. There were no additional proved reserves associated with these property transfers."

    – parts of both not getting drilled as rapidly as expected. Impairments are non cash so they don't impact cash flow.  I think I mentioned before they are going to focus 2014 on the Bakken and EFS. 

    % growth on 2014 comes from a lower starting point than the Street has … so 2014 is actually light vs the current Street. 

  143. 143
    zman Says:

    Checking out for a bit to work on these 

  144. 144
    zman Says:

    re 141 – GST reports some time tonight

  145. 145
    ButlerBaby Says:

    HK – 

    Early stage results from Halcón’s initial three well 660 foot Bakken downspacing pilot test in the North Fort Berthold area are promising. These three downspacing pilot wells recently came online producing an average of 2,665 Boe/d, which compares favorably to all other Bakken wells recently put online in the area. Based on these results, the Company has scheduled the majority of future drilling in the Fort Berthold area at 660 foot spacing. Drilling Bakken and Three Forks wells 660 feet apart has commenced on four additional pads with initial results expected late in the first quarter of 2014. In addition, Halcón plans to conduct initial Bakken downspacing tests in Williams County in early 2014. 

  146. 146
    zman Says:

    re 145 – right from the pr, got a question on that?

  147. 147
    ButlerBaby Says:

    what does that do to inventory?

  148. 148
    zman Says:

    re 147 – Depends on how they define northern  … it won't be an insignificant add to their numbers … that's already know to be really good real estate, not really surprising that the tighter spaced wells are working fine for them there. 

  149. 149
    zman Says:

    GST on the tape 

    3Q voluemes just over Street,

    revenue of $23.8 vs 24.4,

    EBITDA of $16.8 vs 17.0,

    First operated Hunton well drilled but not yet completed, drilled faster and lower cost than expected, 

    2nd op Hunton well about to spud

    Nice rates from wells 5 and 6 from their non operated Hunton program


  150. 150
    BirdsofpreyRcool Says:

    At airport. Can't access GST PR. What were the rates on the 2 Hunton wells?

  151. 151
    ButlerBaby Says:

    Z – it would be great if you can include in your HK commentary any analysis of '14 capex vs cfo and funding shortfall/surplus

  152. 152
    zman Says:

    re 150 

    The Mid-Con 5H well (GST 50% WI), completed in August 2013, exhibits strong Hunton production  in spite of mechanical issues during the completion phase that limited flow to approximately one-third of the lateral wellbore.  The well achieved a peak production rate of 428 BOE per day, and the 30-day average as of October 23, 2013 was 327 BOE per day, of which 76% was oil.  The Mid-Con 6H (GST 50% WI) well was completed in early October and is currently producing at a gross production rate of 774 BOE per day, of which 86% is oil, and which rate is expected to increase as completion fluid is recovered.  In our experience, the horizontal Hunton wells take an average of approximately 30 to 90 days to reach peak production.  Our seventh non-operated Hunton well, the Mid-Con 7H (GST 50% WI) has been drilled to total depth and completion operations have commenced.

  153. 153
    BirdsofpreyRcool Says:

    Thanks. Sounds good to me!!

  154. 154
    zman Says:

    re 151 – ballpark,  they are probably going to be $400 to $500 mm short. 

  155. 155
    choices Says:

    Carrizo Oil & Gas (CRZO): Q3 EPS of $0.72 beats by $0.02.

    Revenue of $145.49M misses by $1.01M. (PR)

    Carrizo Oil & Gas (CRZO) -5.2% AH after announcing a public offering of 3.75M shares of common stock.

  156. 156
    zman Says:

    re 153 – yeah, not too shabby. 

  157. 157
    choices Says:

    CRZO:  PR a lot more positive than the alpha headline-no surprise there:


  158. 158
    brodway Says:

    anyone have a clue as to why ATHL was down today. don't see news or volume of any significance.

  159. 159
    zman Says:

    re 115 – CRZO

    – Nearly 1,000 BOEpd ahead of the Street

    – Record total and record oil production

    – I show EBITDA and EPS in line

    – balance sheet remains in good shape

    – 3.75 mm share deal plus shoe to help fund Utica plan (newly acquired acres in heart of play) and accelerate in the EFS

    – saying good things re EFS downspacing, adjusting plan to add 3 years to inventory

    – IPs on latest Niobrara wells look about as expected; working on downspacing here (in pilots with NBL and WLL)


  160. 160
    zman Says:

    re 158 – no new or filings that I see. Probably a broker comment.  Would like to see it come in more as its on our list of things to consider in the Permian.  Should be an interesting quarter. Young management team but I liked the way they handled the last call. 

  161. 161
    ButlerBaby Says:

    HK is that impairment deducitble for tax purposes?

  162. 162
    brodway Says:

    re: 159

    if CRZO comes in on the offering its probably a good entry for those that don't have any. probably not going to price below 40 and the days where i was able to buy in the 20's are probably history

  163. 163
    Zorgnak Says:

    ATHL  30.36 Support.


  164. 164
    zman Says:

    re 161 – they're not going to be a cash tax payer for quite some time but it will get factored in, yes. 

  165. 165
    zman Says:

    FANG quarter = very nice beat

    2 key wells on the call tomorrow. 

  166. 166
    Baylor Says:


    bop, howmdoes STSI compare to something like DNDN which I've seen go from $2 to $50 in a matter of weeks basically all the way back to $2?

    – See more at: http://zmansenergybrain.com/2013/10/31/thursday-morning-more-3q13-earnings-plus-oil-review-and-natural-gas-preview/#sthash.NOArVVyB.dpuf

  167. 167
    Marlena Hendrie Says:

    Really good blog,thank so much for your time in writing the posts.

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