Wrap – Week Ended 8/01/14



Goodbye July, your cold weather and ugly market action won't be missed. 


Questions and comments under the wrap will be addressed in the Monday post. 


Questions about ZEB can be sent to zman@zmansenergybrain.com


Have a great weekend. 

wrap 080114

14 Responses to “Wrap – Week Ended 8/01/14”

  1. 1
    nrgyman Says:

    Some recent color on the crude export ban situation:




    (To get past the subscription, use Google to search the article title–find it in the search results and click the link)

  2. 2
    Baylor Says:

    How are the heating days looking?  In Dallas metroplex we start to retun to normal August here next week (especially late in the week with temps > 100 predicted). 

  3. 3
    sc4 Says:

    z-  Could you share some views o GPOR at present? Looked in the index and could not find any headings. The stock has been down subsantially and given the nature of their assets, seems like this may be overdone. In all events, how do you see them fitting in? You do not hold them but would be interested in your reasoning and what you see as the future i.e. 2015-16 for them? TIA

    ps. understand that you hold rice which has a jv with them but does this cover it ?

  4. 4
    brodway Says:

    re: 3

    Nrgyman recently commented on GPOR. He has been following this company for at least a couple years that i know of and generally has shared accurate assessment of the company.  You may be able to do a search by symbol and see his latest commments, which i think may be helpful.

  5. 5
    brodway Says:

    its interesting that with the current sell off in full swing, there are 2 factors that seem different than with sell offs that we've seen taking shape from 2008 to 2013. First, the 10 year yield is moving up, where it has in the past moved down due to flight to safety.  Second is the price of gold. It has actually moved down since the sell off started, where in the past gold moved up on any moves down in equity markets.  one thing is for sure, the markets are dynamic and ever changing, and this seems like a different animal than what we've seen in the past.  Interesting to see how this all plays out, but its never a dull moment.

  6. 6
    sc4 Says:

    3 thank you broway for the suggeestion. There are no post by z under this symbol and I can check nrgyman. Nrgyman given the substantial decline in price- what is your take on gpor at present. Have not looked at it before but the magnitude of the decline and their links to fang make it seem quie interesting- to say nothing of their larger wells. tia your views.

  7. 7
    zman Says:

    All questions to be addressed in the Subscriber Mailbag session of the Monday post.


    Swing And A Miss Watch: http://farmersalmanac.com/weather/2014/04/28/will-this-summer-be-a-scorcher/

  8. 8
    nrgyman Says:

    RE 6:  I am not currently invested in GPOR.  Sold in the 73s on valuation after a big long-term run before the drop on the Q1 miss.  Bought again just under 60 for a bounce back trade, but sold out for a modest proft in the low 60s.  I have not been in it since.  GPOR has very attractive assets, especially in the Utica, and they have a strong balance sheet–with low debt (financially conservative management).  My concerns are valuation and management effectiveness.  While growing rapidly, management guidance was repeatedly overstating actual results.  Much of this was due to slower than expected infrastructure build-out, which has plagued all Utica producers, but they repeatedly over-estimated results.  They also had some more recent problems with their wells, some of which is how long to sit them before production, how much to choke them, etc–short term vs long term well production issues they are grappling with that has caused management to reduce near-term guidance.  The moves to address these issues might be better for GPOR in the long term, but the market is trying to guage how much these adjustments will affect future production.  With a sky-high valuation (FPE= 48 and TEV/Ebitda=21 ttm) this is not what one wants to hear.  Finally, there has been management turnover.  The new CEO (who has been with GPOR) made the changes that he felt necessary for the long-term benefit of shareholders (highlighted above).  The short-term effects of these changes are still reverberating in the stock price.  The market seems to be attempting to assess what the new growth projections will be given the adjustments made to their well completion and production methods, as well as to the persistent infrastructure constraints.  When the new CEO gains the trust of the market by hitting his guided targets without the unpleasant surprises the stock will gain traction, imo.  

    Macro market considerations are also influencing the name.  GPOR trades more and more like a natgas name, which it is rapidly becoming.  The declining natgas price and the differentials in Utica/Marcellus region are affecting GPOR, similar to other producers in the region.  There is also a great deal of 'ringing the register' in high-beta names with huge market gains.  GPOR moved from 15.79 in June 2012 to 75.75 in April 2014–there are plenty of profits to lock in given all of the uncertainties.  Can't say at what price I would find the name attractive again.  Plenty of uncertainties from the above issues.  The 42.50 area would get my attention, if it fell that far.  But it is oversold now, like many other energy names.  If find other names, owned and discussed by Z, as much more compelling investment opportunites at the moment.  That is just my take on GPOR.  Hope that helps.  Please DYODD.  

  9. 9
    brodway Says:

    That is great analysis Nrgyman…i didn't think that the street is labeling GPOR as gas related. right now, anything that has gas written on it is being avoided like the plague. So that doesn't help the stock with recent slide. I realize its difficult to put value on a company not fully understanding guidane, but 42 is  45% off highs. From a technical perspective mid to high 40's is where most of the long term suport lies, so i won't be surprised to see it there if S&P gets down another 3-5% from here. I'm hearing temps should be approaching 100 in Texas next week again? We haven't had a real hurricane in years either, so right now, i'd say the see-saw is way too skewed for my taste.

  10. 10
    brodway Says:

    A whole slew of stocks moving on technicals this week. Either hitting 50 or 200dma moving averages on daily.  A good bit also filling longer term gaps and some breaking down to long term support levels not seen in a year or two.  Its gut check time and until the buyers come out with their check books, its going to be rough seas for a while.  As in previous sell offs these times offer a great opportunity to re-balance the portfolio, as the better growth stories are being sold off as much if not more sometimes as the slower, more risk to earnings stories.  This week and next week (options expiration) should offer a compelling time to get my portfolio more fit and ready for the year end bull.

  11. 11
    sc4 Says:

    8 many thanks for your thoughtful piece. I have not followed the stock but it seemed to be down a great deal. On metrics , I guess it still has a way to go. Will do my own dd and keep an eye on it. Interested in any further observations you may have over time. Thanks again sc

  12. 12
    Baylor Says:

    Business Insider pints out something "interesting" bu then wraps up the discussion with this conclusion – "odd."  Nice jornalism



  13. 13
    zman Says:

    Thanks for the thoughts over the weekend. 

    Tune in early tomorrow, kind of a lengthy one. 

    Also, it's a free post Monday post so feel free to send the link out to friends and family and the internet in general. 

  14. 14
    RB Says:

    AMZG press release out, pleasing enough to me

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