Wrap – Week Ended 7/19/14

YoYo market is engaged in the group pre quarter. After a nice bounce over the past week, the portfolios are resting about 4% under their all time highs reached at the end of June. 

Big news of last week was the WLL for KOG deal. Please see our write up of the deal in last Monday's post here.

and our wrap of the pro forma NewCo here.  Comments about take-unders aside (LOL), we very much thought the deal price and 100% stock for stock deal structure was appropriate and we've not sold a share of our long held KOG position (started buying in 2008). Thanks much to Lynn Peterson for education on the Bakken/Three Forks and the profits that came with it; you will be missed.

Want to know more about Zman's Energy Brain?  Please check out the How To ZEB link at upper left or shoot us your questions at zman@zmansenergybrain.com.

Thanks and have a great weekend. 

wrap 071814


20 Responses to “Wrap – Week Ended 7/19/14”

  1. 1
    Baylor Says:

    GDP to announce earnings 10am cst on 8/7

  2. 2
    Baylor Says:

    Anyone have thoughts in this: "we're in the 3rd largest stock bubble of all time…"


  3. 3
    Baylor Says:

    Looks like normal July temperatures will be back tomorrow and the next 10 days for much of the southwest 

  4. 4
    elduque Says:

    Quite simply the most valuable resource I have in order to invest. If you are a value investor you will find Z's analytical work not only thorough but timely. If you ever wanted to have your own analyist this is the place to be.

    In addition, in an area of life where greed seems to dominate, the willingness of everybody on the blog to help one another is a gift in itself.

    Quite simply, if anything I have written sparks a little interest, don't think twice. Just give it a try.

    Enjoy your weekend. 

  5. 5
    nrgyman Says:

    Iran nuke talks deadline passes without a deal, so they have agreed to extend it for four more months (November expiration).  Current restrictions on Iran's oil and commerce activity will remain in place until a deal is reached.  



  6. 6
    Baylor Says:

    re 5 I assume that would be price supportive.  Has the recent run down in oil prices been in anticipation that the restrictions would be lifted as of the deadline this week?  If so, that would seem to raise prices in the coming days and weeks.

    If not, it would seem like a non-event and probably largely expected.

  7. 7
    Baylor Says:

    Zorg (or others) – do you have support levels for REXX?  I'm looking at writing some August puts on Monday.

  8. 8
    Baylor Says:

    It's thinly traded though so may not be an option (re REXX puts)

  9. 9
    zman Says:

    re 4 – Most kind, thanks very much and thanks much for being a member for the last 7 or so years. Have a great weekend. 

    Out of pocket today, playing with the interns.  Any questions will be addressed in the Monday Post Subscriber Mailbag section. 

  10. 10
    tomdavis12 Says:

    Barron's watch: Positive spin on HAL. Article quotes a few sellsiders.Growth in  underwater space expecting to be excellent.

  11. 11
    brodway Says:


    i often times find your notes interesting and a offer a different point of view. its not my goal to be on the bandwagon on every trade and enjoy the range of comments on this board including yours. this week i read your note on EXXI and started to revisit the company, as i concurred that this was an overlooked and beaten down company which is when i like to buy them. we all have our own convictions and opinions on different things, but its always been civil here with a good amount of intelligent feedback. so keep on rockin!!!

  12. 12
    brodway Says:

    re: 2 

    Baylor…i often time find that bubbles are not reached when many news sources and analysts talk ad nauseum about it, which seems to be more popular of late.  its when no one seems to think anything can ever go down that we need to worry. my view on this subject is somewhat different. i don't know when markets are cheap or expensive; that is a function of price of equities, earnings and sentiment. based on earnings reports, stock buy backs a current string of take overs and mergers, it seems to me that the animal spirits that were almost non existent in the last 7 yeas are just starting to re-accelerate. confidence is starting to return as businesses are indicating investment should increase this year as well as next, something that has been lacking for a long time. there is still a considerable amount of cash on the corporate balance sheets that has yet to be deployed for anything else other than buy back.  people also forget that Nasdaq was 5000 in the year 1999, a level that we still haven't returned to. Markets advance 67% of the time, a side effect of continuous monetary inflation, a statistic that can not be ignored and has been the force behind all recent bull markets. You hear Dow just hit 17,000 just a few months after it hit 16,000. Unless my math is wrong the move from 16,000 to 17,000 only equals 6% which doesn't seem to be an uber bullish scenario. 

    One of the more interesting statistics for me, is the amount of money NOT invested in the market and remain on the sidelines. you have to ask yourself the question whether you believe we are going to continue in a period of low inflation and continued investment in low interest bearing savings accounts will continue to make sense. perhaps i'm the only one paying twice what i paid for milk or gasoline or groceries, but inflation is not going away, and with the amount of money printed over the last 5 years, it is only going to get worse. the true money supply has increased by by almost 100% in the last 6 years and i think at some point we will see that cash somehow funnel its way back into the economy, suggesting more inflationary pressures. Its already obvious as we are seeing savers reach for yield as recenlty many had no qualms jumping into Puerto Rican bonds offering 9% yield, and to me what is really in a bubble is the bond market.

    Perhaps those preaching the concept of a bubble in capital markets are those that missed out on investing in equities since the market began to rally in 2009 and are needing such a decline so they can too join the party.  As a rule of thumb, i find markets will always move against those that it can hurt the most. As has been the case in the last few years, short interest is still high, there is still under investment in equties by the general public and inflation is something that may not be a concern today, but can easily get out of hand quickly. these are ingredients for a market rally and not a decline. 

    I joined Zman Energy Brain because i believe that although many in the US fail to accept it, fraccing has resulted in American oil production reneissance. This is going to play out over the next several decades regardless of markets hihgs and lows and for me a great place to be invested simply for the economics inlvolved. 

  13. 13
    sc4 Says:

    Encourage all to read today's ny times  business section on indexed fund performance vers managed funds. For me it was a very interesting

    piece worth considering.I'm not going to reduce my own management activities but still food for thought. On another note , I strongly encourage you to try and read some pieces by Steven Kopitz-more big picture oil supply and demand without the granualarity of Z but still very insightful. You can find a presentation he did at Columbia by googling his name. A very worthwhile read.

  14. 14
    nrgyman Says:

    Admininstration approves Atlantic seismic studies:



  15. 15
    nrgyman Says:

    For those who missed it, the IEA has recently issued a bullish crude oil report for 2015 in its first montly report that addresses 2015.  Global demand is expected to increase from 1.2 to 1.4 million bopd due to global economic expansion.  The extra demand will largely be met by increased output from the US and Canada, with smaller increments added by other non-OPEC countries.  Citing the EFS as particularly dynamic, it projects a 34% increase to 1.6 million bpd there in 2015.  The report also highlights the supply risks and projects OPEC output to decline slightly to 29.8 million bpd in 2015.



  16. 16
    skibbi9 Says:

    @13 didn't see it yet, but probably that passive cheap index funds are going to significantly beat active on average… Larry Swedroe and All the Boglehead movements are good places to start


  17. 17
    Baylor Says:

    Re 12 – brodway

    Thanks for your well thought out response.  I am incapable of knowing if it will go up or down (i could have gotten out of the way sooner in 2007/2008, but still didn't while keeping a fairly close eye on things though not as close as now).

    I don't ever post these types of articles for fear monger, but with the collective intellect of this site and other resources, I like to get the opinions of those that are managing their own money and generally value them more than what I can get on CNBC, which NEVER said "GET OUT NOW!!!" in 2007 or 2008 and won't the next time around either.  There's always someone saying the market will go to 5,000, etc and who knows, maybe we'll have another 90% decline one day.

    I personally am more worried about a hyper-inflation scenario given all the printing and no way to pay our bills.  Maybe that takes longer than my lifetime or my family's lifetime, but still try to educate myself on how best to protect from big moves down.  If I can get out of the way and get back in at an appropriate time, even DCAing, it can have significant improvements over a 30+ year period than simly buying and holding. 

    Thanks again for yours and others thoughts on the macro view.

  18. 18
    Baylor Says:

    Are we in Bizarro World with Obama approving the Eastern seaboard oil search?

    Is this an admission that there has been trouble the last half decade in creating good paying jobs?  What motivation would the administration have to go against their base like this when they are in lame duck phase?  Or is that why to do it?  It is quite intriguing nonetheless.

  19. 19
    brodway Says:

    re 15

    have to get that Zman cheat sheet of the EFS names. interesting.

  20. 20
    gdr Says:

    Z—Can you please re-post recent comment on PE? Thanks.

    Seems as if not participating in the current Permian push as much as others.

    Wondering valuation and growth metrics.

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