Monday Morning – Natural Gas Macro Slide Show


Market Sentiment Watch:  All eyes on the Wednesday Fed statement and subsequent Bernanke speech where we suspect nary an actual taper start will be found. Look for Ben to continue the cautious tone and perhaps take this probably last most public opportunity to speak to fiscal issues congress needs to address.  In today's post please find the natural gas production, imports, and demand slide shows.  Please also find the The Week That Was, some subscriber mailbag items, and some other odds and ends.  

Ecodata Watch:

  • China HSBC PMI eased to 50.5 vs a prior reading of 50.8 overnight (and temporarily sent futures lower)
  • Empire State came in at +1.0 vs a forecast of +5.0 and a prior reading of 2.2.
  • Productivity revision for 3Q13 came in at 3.0% vs 2.9% forecast and an original reading of 1.9%,
  • We get Industrial Production at 9:15 am EST (F = 0.6%, last read was -0.1%), 
  • We get Capacity Utilization at 9:15 am EST (F = 78.5%, last read was 78.1%).

The Week Ahead:

  • Tuesday 12/17: CPI, Homebuilders' index
  • Wednesday 12/18: Housing starts, building permits, FOMC statement, Ben speaks,
  • Thursday 12/19: Jobless claims, existing home sales, Philly Fed, leading indicators, 
  • Friday 12/20: GPD 3Q revision (expected to be up slightly at 3.7% vs last read of 3.6%). 

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. The Week That Was
  4. Natural Gas Production - Other States dips and overall rate of grow slowing
  5. Natural Gas Imports - Holding near decade long lows which combined with record production puts supply at record (more less than you'd think) levels. 
  6. Natural Gas Demand - Just under a record levels
  7. Stuff We Care About Today - Subscriber Mailbag (U.S. oil exports), HK
  8. Odds & Ends

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

ZLT (Zman Long Term portfolio)

  • The Blotter is updated.

Commodity Watch

Crude oil closed off 1% last week at $96.90 on a mixed bag of an inventory report (see The Week That Was section below) and despite word that Iran was moving ahead with research on more advanced centrifuges.  This morning crude is trading up slightly.     

  • Iran Watch: On Friday Iran announced it was shutting down nuclear talks saying the US had violated the spirit of the recent agreement by talking about additional sanctions. Kerry says he expects the talks to resume within days. Experience would say this is going to be an on again, off again process and people who think Iran will be a good sport and scale back the program to the agreed upon extent will likely be disappointed. 
  • Libya Watch: Rebels declared oil export ports will remain shuttered until the government agrees to share oil profits with the rebels.
  • Exports Watch:  Energy Secretary Moniz indicated the current no exports policy is dated and may need to be altered. We take this as a positive sign as we had thought the current Administration and Senate leadership would be opposed exports. There may be some tit for tat in the works here regarding taxes and exports. 

Natural gas closed up another 6% last week at $4.35 on colder than normal weather and despite EIA reporting a slightly smaller than expected withdrawal on Thursday. We expect gas in storage to push further into deficit against both year ago and five year average levels with this Thursday's report.  The front month gas contract now looks like this moon shot and is for the first time in recent memory now above the 12 month strip. We note that natural gas focused energy names have not yet taken much notice of gas prices.  Our sense is that gas is probably a little ahead of itself but the brutally cold end of Fall has speculation running high. Note the speculative long position at CFTC continues to rise though we have not seen yet seen any covering and the net short position has only been contracting on the back of buying. See The Week That Was section below for more comments.  This morning gas is trading off 3% on this week's mild forecast. 

  • Lower 48 Marketed Production Watch: Rare dip in "Other States" production leads to a rare pullback in total Lower 48 production in September. ​
  • ​​
  • Net Imports Watch: Up slightly month to month on higher volumes out of Canada and a dip in exports to Mexico but still running 1.0 Bcfgpd low to last year over the first 9 months of both (that's down 23% YoY) and nearly 2/3 below levels seen in 2005 to 2007 (prior to the run up in U.S. shale volumes). See charts below. 
  • Demand Watch:  Demand continues to play out as expected.  September saw the second highest level of demand for that month with all of the retreat from last year's levels attributable to gas fired generation losing some share to coal. We also note that Industrial demand was up sequential and at a record level for September and we continue to see few signs that higher natural gas prices (on a YoY basis) are impacting Industrial demand. Desptie the dip in gas fired generation, overall natural gas demand is up slightly year to date and looking back several years it's up a whopping 9 Bcfpgd (going back to 2005 vs 2013). See review section below. 

Some quick charts (followed by the more detailed ones below)

ng supply demand sep 2013

... and Some more intermediate detail charts 

NG quick Sep 2013

Weather Watch:

  • Last Week: Much colder than normal and the original forecast. Last week saw gas weighted HDDs of 251 vs 192 normal (and vs a forecast for the week of 224 HDDs). This is very cold for this time of year.  This was above the prior week's reading of 178 HDDs which prompted the 81 Bcf withdrawal in last week's report. 
  • This Week's Forecast: This week's forecast calls for HDD's to slip to 193 vs 205 normal for this week of the year.  We not that the forecast for home heating oil weighted HDD's are much more stout 240 for this coming week. 

The Week That Was

weekly wrap 121313

Natural Gas Production

NG supply Sep 2013 A


NG supply Sep 2013 b

Natural Gas Imports

NG imports Sep 2013

Natural Gas Demand

ng demand sept 2013

Stuff We Care About Today

Subscriber Mailbag Watch

Question 1) If the ban on oil exports isn't lifted before refining capacity maxes out, how do you see this scenario playing out for oil prices and the e&p sector? ~ Stuart

ZComments:  We think the ban maaayyyy be lifted but are certain not counting on it. If is not lift:

  1. We'll go with Goldman's number of 1.75 mm bopd of additional light sweet crude processing capcity, 
  2. At that level it will take about 2 years of expected growth to exhaust capacity to handle the lighter crude growth. Before then local glut or at least well overstored levels will occur on the Gulf Coast and we've already seen the LLS premium to WTI evaporate.
  3. We expect imports to the U.S. to continue to decline, probably in a range of 0.6 to 0.8 mm bopd for each of the next two years
  4. This decline in imports would help to support domestic oil prices. This further decline in crude imports is key as it has been this year,
  5. We expect new annual records for exports this year and again in 2014 and 2015 for finished products and we expect more gasoline to leave the States, 
  6. So for the next two year's we're pretty balanced but the shadow of glut with no place to go starts to loom before that. Lack of big builds in the finished product inventories will be price supportive but if gasoline moves to new highs we'd expect trouble. 
  7. The globe is going to add demand of 1 mm bopd in 2014 (or thereabouts) and probably a little more than that in 2015. As the U.S. grows, and less barrels are needed as need as imports to the U.S. that global growth (which is largely non US based) will mean OPEC will only need to ease back on the production throttle.
  8. Looking past 2014 we'd expect softer Brent and softer WTI.
  9. What of oily E&Ps? This is not the end of the world for E&Ps since capital costs are coming down and our names are part of the expected rise in crude. We may see a modest reversal in Revenue per BOE with prices in 2014 anyway since we expect prices to be slightly softer (at $95) and since hedging has been poor for some time now and we'd expect the same again in 2015. EBITDA per BOE should come off as well but only slightly as more barrels are spread over a more slowly rising figure for LOE and G&A.  Combine that with strong growth and most of our core ZLT names should be able to continue to grow EBITDA with oil prices in the $70s and $80s in 2015.

Sidebar: One thing we're not clear on is where the barrels would actually go were exports allowed. Canada is one possibility but that's pretty limited. Europe is structurally short refining capacity now, Latin America seems unlikely beyond a finished product export point, and MENA is adding it's own capacity to consume more of its own barrels. That likely leaves China and India as recipients of U.S. sourced oil which probably would not play well politically but the barrels won't care about that. Despite the new energy secretary's comments, we still think removing the export ban is something of long shot. 

Question 2) Saturday's WSJ has a small article entitled: "McClendon Venture to Go Public. Aubrey has files for up to $ 2 Billion, 100 million units at $20.00."  Will you follow this?  Do we trust him? ~APBD


Starting in reverse order. I think he's the best landman that ever lived. Do I trust him? Yes. Do I think he's the buy to run a public company? Maybe. Will the Street welcome him with open arms? Probably not but depends on valuation. 

Some background:  

  • Name of the firm is American Energy Capital Partners (AECP)
  • Focus is Utica
  • This is not an IPO, it's an limited partnership, and they are selling units to high net worth individuals only

Will I follow it? Only to see what they are doing.  For Utica exposure we have AR and REXX in the ZLT.  

Other Stuff

HK Announces Add-On Senior Notes Deal, Reaffirms Guidance

  • Adds $400 mm in the 9.75% seniors.
  • Reduces its 2014 drilling budget by 14% to $950 mm, Total budget is still to $1,075 to $1,100 mm
  • Plans to divest $300 to $400 mm in additional non core sales 
  • Reaffirms guidance of 38,000 to 42,000 BOEpd.  This implies the bar was set at easy hop over levels on the 3Q call and that the improvements in Bakken and Eagle Ford completion methods are showing up at the volumes line. 
  • Nutshell:  Company is more than aware of their debt situation and the need to make numbers. 2014 is a rebuilding confidence year among other things. There have been rumors the Woodbine is on the table for sale too but we think the specified sale range is likely too low to include that unless a lot things we think should go do not in fact go.  

Look for the full Bakken Players update (including AMZG for the first time) by mid week

Housekeeping Watch:  Today's post is open to the public. Please use the little buttons at the bottom of the post to facebook, tweet, and email it to a broad audience.  Thanks, Z 

Odds & Ends

Analyst Watch:

  • COG - BMO starts at Outperform with $47 target

89 Responses to “Monday Morning – Natural Gas Macro Slide Show”

  1. 1
    Mark Wetzler Says:

    PVA on tape with $100mm midstream asset sale

  2. 2
    zman Says:

    re 1 – Thanks, proceeds go towards gap fill for 2014 budget, takes net debt to cap down 2% to 57%. Takes net debt to 2013 E EBITDA to 3.2x, quite managable. They repeated that this is the first in a series of planned sales. 

  3. 3
    zman Says:

    Analyst Watch

    MTDR – Jefco ups target by $10 to $23, rating stays Buy

  4. 4
    Zorgnak Says:

    S&P Short Term Areas of Interest  12/16 8:35 AM ES 1784.25/ SPY Chart Below. (SPY levels).

    Notes……Choppy trading within a low volume area between two CHVN at 1788.50-1758.50. Heavy congestion/supply from 1788.50-1804.50. Weak bounce off high odds bounce setup. Demand volume and ease of movement bearish. Strong short term upside seasonal bias. Nasdaq/Large Cap RS. Heavy econ# flow this week with Wednesday afternoon Fed release and Quad expiration on Friday. Large overnight reversal in Futures.

    Thoughts ….. Looking for bounce back to test 1788.50 CHVN. Between the1788.50 CHVN and 1809 CLVN looks like edgeless congestion left over from the recent double top at all time highs.  Neutral bias between 1788.50 to 1804.50. Bearish bias below 1788.50 with 1758.50 the first downside target if this bounce gets sold. Poor risk reward for longs to my eye.

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

    1809                                CLVN(181.43)

    1804.50                          Minor CHVN/ (180.92)

    1800.50                           CLVN/ (180.33)

    1788.50                          CHVN/ (179.32)

    1782.25                         Minor CLVN(177.98)/Low volume area below

    1770.25                          CLVN/Previous Range High

    1758.50                          Major CHVN

    SP500 Futures  




  5. 5
    zman Says:

    Thanks for the levels Zorg. No Santa Clause rally in your view, eh?

  6. 6
    elduque Says:

    BDI – what a difference a couple of weeks make. down this morning -38 to 2292. Nov. 25th at 1500. Hmmmm!!!! 

    Brent/WTI at 12.2

    TYX at 3.85



  7. 7
    zman Says:

    re 6 – no doubt and welcome back El-D

  8. 8
    Zorgnak Says:

    #5 Re I really don't know….There's certainly a strong historical argument for that and I know everyone is expecting it. 


    I'm going on vacation from Tuesday until after Christmas. I'll try to post market levels but I'll only be in and out while I'm gone

  9. 9
    zman Says:

    PVA – so far the $95 mm net of that sale being pretty well accepted, PVA back over $10 after a rapid fall late last week on no news profit taking. 

  10. 10
    zman Says:

    re 8 – hear ya on that, I don't do it that short term in general anyway, just noted your risk/reward for longs comment. What was your time frame for that out of curiousity?

    As to vacation, have a great one. Thanks much for all the chart work!

  11. 11
    choices Says:

    OII-Goldman raises to buy, PT not available from note;

  12. 12
    choices Says:

    Best to you, Zorg-thanks!

  13. 13
    zman Says:

    Getting on a call, back in a few. 

  14. 14
    tomdavis12 Says:

    Comments from a WFC Energy Conf attendee:  CEO's not concerned about crude pricing. Line in sand is $80/bl. Will continue as is unless that line is crossed.  Infrastructure build out is alive and well. Beneficiaries: CBI,FLR, FWLT, MTZ, PRIM, THR. Interesting slide from EPD where they showed how they can continue to grow without tapping the equity or debt markets. How many other MLP's can say that.   APC/TROX bounce caused by thought that settlement may be tax deductible and payable over time.  GDP showing some interesting new technology that has saved them over $1mm/well but the problem is there are no big companies carrying the flag in this basin. Everyone wants the basin to be proved up right away. This just doesn't happen. Since stock is still up 80% YTD many locking in profits and are willing to wait. Risk is missing the JV announcement.   NAM land large volume in bullish call spread for HAL. With NG prices higher and more rigs probable expectations are for higher capex by E&P's and HAL not having the same difficulties in Iraq as SLB & BHI.    

  15. 15
    zman Says:

    Thanks for the color Tom. 

    Quiet open in energy. 

  16. 16
    sea bull Says:

    This was part of an email alert I recieved from SA on the HK news today.  Did I sleep through them adding to their TMS property?

    "~~• HK, which recently acquired acreage in the Tuscaloosa Marine shale play while already selling off ~$300M in non-core conventional assets, says it aims to make further asset disposals of $300M-$400M next year."


  17. 17
    tomdavis12 Says:

    Sellsider Comments: DB cutting energy sector to UW. MS out with positive note for offshore names with the Mexican reform. Good for NE ( SpinCo S1 should be out by year end). DO & ESV. Brent up as Libya can't get act together. PDCE raised at KLR.  CLR Hamm saying we don't need Keystone XL. Rail handling 90% of CLR's shipments.  GS – ATW added to conviction buy list. PXD & BAS removed.    And the Mortimer We're Back Award goes to AECP as mentioned here earlier. 

  18. 18
    zman Says:

    re 16 – not that that I'm aware of two wells drilled, mixed results, no adds planned at last call into them. 

    re 17 – I agree with Hamm. We really don't. 

  19. 19
    Wayne G Says:

    re 17 – that DB cut was last week, no?

  20. 20
    Zorgnak Says:

     #10…Re time frame.Not taking on any longer term positions without stops. …We're getting the short term bounce I was looking for now. How far it will go  or how  long it will hang out in this rather dense area of congestion/supply in not clear. Which direction it will break from this area is murkier than usual to me as well. I can see a 5-10% correction or nominal new highs. So, the amount of market risk % seems skewed to the downside unless I see a substantial pullback or rally above supply(1804-9) that gives me some indication that buyers are higher. Until either one of those conditions are met I don't plan to make new longer term commitments. This area we are in is as edgeless as I am clueless as to What's Next?? 

    Thinking outloud

  21. 21
    Wayne G Says:

    E&P – zero bounce…a bit surprised given Libya and oil….i guess DB upset they didn't get any sell energy trades yet this month. ruining our move today for sure

  22. 22
    elduque Says:

    Where do I go to find out NGL pricing? Thanks


  23. 23
    tomdavis12 Says:

    19 Wayne: You may be right, I don't have timing

  24. 24
    Dedwards Says:

    I am completely blown away by the structure of Aubrey's new biz… If you add up all the fees (dealer management fees, incentive fees, well interest, etc), the common unit holder has nearly a 10% hurdle to clear before they make any money!! Aubrey is the only winner in this business structure.

    I guess Aubrey figures widows and orphans will buy anything with a 6% yield (which will undoutedly be funded through further unit issuances because when was the last time CHK cared about cash flow?)

    I will be astonished if this offering maxes out the 100M units.

  25. 25
    zman Says:

    re 20 / 21 – all part of why we are longer term guys.  This really short term stuff is noise to me. We took 15 to 25% off the tops of most E&Ps from October and given the growth expectations our names are now likely discounting oil in the $80s next year, not our $95 expectation. Street at the moment is at $96.60 now. Their estimates were inching up with the 3Q move and then when oil fell, apparently unexpectedly with the Fall maintenance season, many sellside guys started pulling back on the price throttle. 

    re 22 – Bloomberg. Otherwise not very simple to get and an NGL is not the same everywhere. Who are you looking for NGL pricing for?  Most model as a percentage of WTI. Many are thinking 30% of WTI at the moment, and you get more than that if you have something like natural gasolines higher in the mix like BCEI does in their AR segmennt from the Cotton Valley.   You can get pieces of it from EIA like propane but they don't give you the prices all year long, just in the heating season.   EIA updates their full pricing only rarely in a piece like this one: http://www.eia.gov/todayinenergy/detail.cfm?id=12291 and then they have a composite you can use but it's currently 5 months out of date: http://www.eia.gov/dnav/ng/ng_pri_fut_s1_m.htm

  26. 26
    zman Says:

    Analyst Watch

    PVA – Johnson Rice noting the midstream sale was expected by end of year and price talk was $75 to $100 mm.  Making the very good point that the sale won't impact the revolver. 

  27. 27
    Zorgnak Says:

    E&P   Here's the cummulative volume chart for energy. It blew past the levels that have been associated with swing lows last week and shows no sign of finding a bottom yet and price has yet to find any sort of balance(sideways trading). .I don't see a big E&P bounce coming here any time soon. 



  28. 28
    elduque Says:

    Just thinking about NFX. Why would you model as a % of WTI, shouldn't it relate more to Nat Gas?

  29. 29
    Wayne G Says:

    a few things…DB was this morning actually. More importantly and interesting is Goldman's 2014 energy and E&P notes out today. a lot in there but if anyone is curious why GDP is down so much, they cut target 24%…heavy haircut.

    Sector view evolves to be more tactical

    After two years of oil stability allowing resource

    improvement to drive E&P stocks, a more volatile

    US oil macro and more positive gas macro should

    play a larger role in 2014. Related E&P valuation/

    sentiment warrants a more tactical approach to

    our coverage view. We stay Attractive as $80/bbl

    WTI oil is already discounted in shares and oil

    supply rationing should not be needed in 2014.



  30. 30
    Wayne G Says:

    thats goldman's intro

  31. 31
    zman Says:

    re 29 – yeah, not sure I buy more volatile for oil, perhaps more fear but actually thinking OPEC is going to quietly accomodate more this year than last. 

    Re the natural gas portion, absolutely agree. If you wanted to sum up all the supply (production plus demand) work in today's post it would be those two words at the top of the detailed gas chart section: "decelerating growth".  Demand would be more along the lines of continued growth. Nutshell: Better balanced market going forward. 


  32. 32
    zman Says:

    Very mixed bag in gassy names today on the dip in NG due to the mild forecast for this week.  SWN failing to hold pre budget release levels.  WPX and REXX looking more near term constructive. 

  33. 33
    zman Says:

    Here, working on a model, shout if you need something. 

  34. 34
    tomdavis12 Says:

    XOM  pretty impressive move from the GS upgrade. Guess defensive approach makes sense to some.

  35. 35
    zman Says:

    re 34 – fear over too much growth never a problem with the Majors, LOL. 

  36. 36
    Paul in Kansas City Says:

    Regarding Aubrey; I posted this yesterday but read "THe Frackers' by Greg Zuckerman; the story of Aubrey; Tom Ward, and Chesepeake as well as Harold Hamm and other players in this multidecade story.  It is worth it from a historical perspective and Zuckerman is a good writer; as an aside THe Greatest Trade Ever by Zuckerman also worth the effort.  

  37. 37
    zman Says:

    re 36 – thanks Paul. 

  38. 38
    Paul in Kansas City Says:

    That book isnt the only place where you can read about Aubrey and ward's hedge fund trading' those guys were minting money off of their knowledge of the nat gas futures markets

  39. 39
    Dedwards Says:

    Re 38 – I think that is what Ward is doing full-time now

  40. 40
    reefguy Says:

    Aubrey/Tom types:

            They are not alone is in the self dealing/pocket lining/gray line running management.  I think you will see a round of activists in the small cap E&P space.  They are any number of overpaid and bad acting management teams.

    Does this board have any particular ones?  How about FST? Or check out Mr. Allison's compensation at Comstock.  Is anyone worth that kind of dough using OPM(shareholder) dinero?

    I wiuld think each of us can name of few to push out the door, lets start a list….

  41. 41
    zman Says:

    re 40 – hear ya, nice idea. I don't own either of those for a variety of reasons.  NFX has been in the higher G&A/BOE category, actively working to reduce it for a little while now. 

  42. 42
    zman Says:

    Gotta run to a thing, back in a bit.

  43. 43
    Dedwards Says:

    Re 40 – Been doing a lot of reading on FST last couple weeks.  The value is there if only you can throw out the C level and board and start over.  Until the status quo changes, thinking it is dead money or a bagel longer term => FST Board and Mgmt team should certainly be on the list.

  44. 44
    Bill Potter Says:

    EOX G&A looks really high for their size

  45. 45
    zman Says:

    re 44 – I'd be careful putting too much worry on that metric with firms just getting started up.  High now to be sure on a per unit basis but as volumes launch that metric falls and you get a rapid rise in EBITDA per BOE on flat or even down oil prices. 

  46. 46
    elijahwc Says:

    NATDF:  Slight bump this morning.  Here's why.   This one of the JF Cos. Nice yield as well.

    Hamilton, Bermuda, December 16, 2013 – North Atlantic Drilling Ltd. (NADL, or the Company) announced today that it has filed its second amended registration statements with the United States Securities and Exchange Commission (SEC) in connection with its initial public offering and concurrent offer to exchange previously issued unregistered common shares, other than the common shares owned by affiliates of NADL, for common shares that have been registered under the Securities Act of 1933, as amended. The initial public offering of NADL's common shares and concurrent exchange offer are expected to commence after the SEC completes its review process. The amended registration statements on Form F-1 (File No. 333-185394) and Form F-4 (File No. 333-185395) can be publicly accessed through the EDGAR system available at http://www.sec.gov. NADL has applied to list its common shares on the NYSE under the symbol "NADL". 

  47. 47
    Bill Potter Says:

    re 45  I'm travelling and don't have the numbers in front of me but that number really stood out on a total dollar basis.  It appears they are paying themselves very well even while they are tiny.  I get that the number will drop rapidly on a per barrel basis.  It's just that I'd rather see managments compensation grow with the business.

  48. 48
    tomdavis12 Says:

    Approval of merger – LINE/LNCO/BRY

  49. 49
    DaveH Says:

    RE: 48 🙂

  50. 50
    zman Says:

    re 47 – understood, and I hear ya. In their case I see them following TPLM who had same seemingly high G&A to cover a lot of bases with guys who've been around awhile. 

    re 48 – thanks, kind of lackluster response so far. 

  51. 51
    zman Says:


    Your tax dollars not at work at all:


  52. 52
    zman Says:

    AMZG on the tape with a $150 mm shelf. 

  53. 53
    Bill Potter Says:

    re 57 my favorite part of that story is his supervisors never checked his lies. Does anyone believe they will get fired?  Tax dollars not at work indeed.

  54. 54
    zman Says:

    TPLM receding again on a weak, below support looking chart. Should it get hit down to obvious support at about $7.50 we will likely add more. 

  55. 55
    zman Says:

    Paul – that PDH looks kind of interesting for the yield, found near term pricing on their bench mark propylene price, doing a little math on it. 

  56. 56
    tomdavis12 Says:

    TPLM  Your buddy Filloon just put out something. I was hoping $7.78 – $8.00 had some support for TPLM.  

  57. 57
    zman Says:

    re 56 – ha, buddy. I see it. Opening talking about big disappointment on the bottom line miss. To him maybe. Disagree with his assertion that it was a confusing quarter.  Agree that it was a very good quarter.  

  58. 58
    elduque Says:

    Z- what did NFX do to create such an unfriendly attitude towards the company. It is almost like there is nothing they can do to have a more positive tone. 

  59. 59
    zman Says:

    re 58 –  going back a little ways,

    – a number of quarterly misses,

    – high G&A,

    – some misteps in key new plays (the Bakken being one until recently),

    – being gassy,

    – opting to rein in capex and thereby sacrifice growth. 

    – most recently adjusting mix of liquids, slowing Uinta, accelerating STACK

    Did you see #25 above? Need more there? 

  60. 60
    Paul in Kansas City Says:

    Re 55; big picture info on its way

  61. 61
    zman Says:

    re 60 – thanks chief. 

  62. 62
    zman Says:

    re 60 – it's so not my world, hard for me to pay attention to it. The yield is impressive, the model is pretty simple but it's subject to big swings on pricing and costs. Probably not something I'll own. Still doing some work.

  63. 63
    Paul in Kansas City Says:

    nothing to useful but for a reference on asia

  64. 64
    tomdavis12 Says:

    LINE/LNCO  Looks like they paid 7x ebitda for BRY. Does increase DCF by .15/sh. Now expecting to generate cash 5-10% in excess of distribution. Have been getting better NGL pricing, a reason on Dec 3 they had increased their guidance for 4th q. Likely to increase div in early '14 or say they will some time during the year. Just now need to execute.

  65. 65
    Paul in Kansas City Says:

    Re I appreciate your thoughst; this may be the type of thing to own when spreads narrow and you get a 20% return after normal capex om mlp price per unit; probably means you never buy unless there is a panic.

  66. 66
    zman Says:

    re 64 – thanks.  Saw your comment on granite wash re execution the other day. I agree, as of 3Q they were already showing return to improved results there. 

  67. 67
    tomdavis12 Says:

    66 I am probably a little harder on them then you. I think the number was 22 uneconomic wells in a row which seems like to me a little poor basin mgmt. but what do I know. I will look for much better execution before I take much bigger position. I still trust Mark & Koyja and I hope time will heal some wounds.  

  68. 68
    zman Says:

    re 65 – yeah, thinking same.  25% yield from here annualized off 3Q and just using their calc on the prop to poly spread it looks like current pricing would only be slightly short of 3Q.  Don't know volumes, have not read re outages but yeah, not real complex at the company level. Buy and hold however equals whole different ball of wax. 

  69. 69
    zman Says:

    re 67 – sounds right, but I think on a 7 rig program they got outside of a delineated area pretty quickly.  I'm not disagreeing that it was a poor on their part, just history. No plans to add there now. 

  70. 70
    zman Says:

    Market an group in tight range all day … waiting on Ben speak. 

  71. 71
    Paul in Kansas City Says:

    yeah; this really shouldnt be a public security; talk about using Graham and Dodd and the dividend discount model for valuations tools; that means more pain ahead

  72. 72
    elduque Says:

    re NFX- I must be missing something???? Don't all laugh. Just seems way overdone. 

  73. 73
    zman Says:

    re 72 – we did a little update on it late last week.  I think it's overdone and now further beaten down by tax loss selling and maybe end of year window dressing. Certainly the former, maybe the latter as well. 

  74. 74
    gdr Says:

    72—I'd say the same for TPLM

  75. 75
    zman Says:

    re 74 – yep, me too apparently. This too shall pass. Profit protection, rolling chart, little interest in the group at the present. Can change rather rapidly. The lower it goes the more I like it for adds.  

  76. 76
    zman Says:

    AMZG – responding negatively to the shelf filing. Fairly knee jerk response, especially given the recent drop. We may have to break our moratorium on SA pieces here soon, have seen nothing out of the last few that modeled it. Big growth next year.  Shelfs are not a bad thing and it makes sense for them to have one in place.  

  77. 77
    zman Says:


  78. 78
    zman Says:

    CRK on the tape with guidance and saying that if gas prices continue to improve they will consider restarting north LA drilling program. 

  79. 79
    gdr Says:

    Seems that the E&Ps won't budge until the companies come out and state their anticipated profits in an $80 and $85 world of oil. Is this something they would likely do, or would they wait until each quarter's results are published and show the profits at that time?

  80. 80
    zman Says:

    re 79 – some publish sensitivites but for the most part not. It's not all that hard to guage. It's really about EBITDA generation. Right now you have worry over crude prices in general and then you expanded differentials (Bakken blew out recent and is retightening to WTI and LLS lost its Brent like pricing in recent weeks taking away some of the advantage Permians and Eagle Fords enjoyed over the first 3 quarters of this year).  I don't make calls on that short of scale but we think some of the current lackluster performance again is just profit taking exacerbated by late to the party and panic to the exits types who didn't expect oil to drop from triple digits like it did and as we were talking about since May. WTI had little business being up there in the first place and we slowed our buying over the summer to a crawl and have been patient adders during this decline.  Bargain pricing in the Bakken names and select EFS and Permians now in play. 

    Offtopicthirty, back in a bit. 


  81. 81
    milepost_43 Says:

    79 Northern Gateway decision by end of year

    The 1,177-kilometre pipeline would bring diluted oil sands bitumen from Alberta to Kitimat, B.C., for shipment to Asia. The board is expected to release its report by the end of 2013, followed by a federal cabinet decision next year. After 180 days of hearings in 21 locations across British Columbia and Alberta, the board is to release its decision by the end of this month. It has yet to disclose a reveal the date, but has said it will give two days notice. http://tinyurl.com/kcr8d22

  82. 82
    Dedwards Says:

    Rice Energy S-1 http://www.sec.gov/Archives/edgar/data/1588238/000119312513474755/0001193125-13-474755-index.htm

  83. 83
    Dedwards Says:

    Haven't read much in the Rice3 S-1 yet, but their acreage looks prime.  This one will be a high flyer for sure.

  84. 84
    zman Says:

    re 82 – thanks for the headsup, will have comments in a post coming soon. Dan is a very smart guy. 

  85. 85
    Stewart Says:

    Z..been out all day..thanks for the mailbag answer

  86. 86
    zman Says:

    re 85 – glad to have it to answer, hope it helps.

  87. 87
    milepost_43 Says:


    Kinder Morgan has officially filed an application to expand its Trans Mountain Pipeline, which would triple its capacity to ship crude oil between Strathcona County, near Edmonton, and Burnaby, B.C.

    The company said the next step will be for the NEB to establish a hearing schedule that corresponds to the federal government’s legislated 15-month period for review and decision

    Once the NEB delivers its final report, the federal government will have 90 days to review the recommendations and make a final decision on the expansion.

    If approved, work on the $5.4 billion project to revamp the 1,150-kilometre, 60-year-old pipeline could be complete by late 2017, said the company.

  88. 88
    zman Says:

    Post to be out at 9:15 am EST. 

  89. 89
    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Wrap – Week Ended 12/20/13 Says:

    […] one). Please see last Monday's post for the Natural Gas Production, Imports and Demand slide shows here in a free post for nonsubscribers and the Friday post for the latest natural gas storage slide show along with our thoughts on […]

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