Monday Morning – Natural Gas Marco Plus Some Other Odds and Ends



Market Sentiment Watch: Good riddance July. Very busy week ahead as we have ten owned names reporting between tonight and Friday morning and then some other names we like to listen to as well. In today's post please find The Week That Was (full of all sorts of details from last week's busy action - a must read), the 2Q14 week 4 energy reporting calendar, a subscriber mail bag section and the natural gas macro update with slide shows for marketed production and rig counts, net imports, and demand. Today's post is open to the public so please feel free to forward the link about the web.  

Ecodata Watch:

  • No economic data release scheduled. 

The Week Ahead:

  • Tuesday 8/5: ISM nonmanufacturing, factory orders,
  • Wednesday 8/6: trade deficit, 
  • Thursday 8/7: jobless claims, consumer credit, 
  • Friday 8/8: productivity, unit labor costs, wholesale inventories. 

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watc​h
  3. The Week That Was
  4. Natural Gas Production
  5. Natural Gas Imports
  6. Natural Gas Demand​
  7. Stuff We Care About Today - Subscriber Mailbag,   Energy Earnings Calendar 2Q14 Week 4, AMZG
  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 5% last week at $97.33.  The action looked largely technical with late week pressure tied to the equity market sell off. A stronger dollar last week tied in with the move lower as well. This is the lowest the WTI cash price has been since March.  Brent also fell 3% as well last week. Please see The Week That Was For Details. This morning crude is trading flat.     


Natural gas rose 2% last week to close at $3.85 on Friday after EIA reported a smaller than expected but still record for this week of the year injection. The near term weather forecast is better than it has been but we need a hot August to really buoy the 12 month strip which has now fallen to $3.86.  See The Week That Was section below for more comments.  Please see the Natural Gas Macro, updated for May data, below. This morning gas is trading flat. 

Natural Gas Production Watch: Better weather yielding stronger growth, as expected.  May came in an 74.0 Bcfpg, up 0.8 Bcfgpd sequential and up 4.1 Bcfgpd sequentially.  Growth is still being headlined by associated volumes from unconventional liquids plays in Texas and Oklahoma and from strength in "Other States" volumes. 

Natural Gas Imports Watch: Holding near all time lows.  Canadian volumes edged back up (5 Bcpgd) but LNG imports remain dead (just 0.1 Bcfgpd) and exports to Mexico are holding at record highs (2 Bcfpgd) yielding a net 3.1 Bcfgpd just over the all time record lows reached this Spring. 

Natural Gas Demand Watch: Second highest demand for the month of May with Industrial production leading the way and stronger than 2013 level Electrical as well. So prior to the lack of summer, demand was not an issue and "structural demand" in the Industrial space continues to mount.

The Quick And Dirty Macro Charts (for those with who can't wait for the more detailed ones below)  

NG macro summary May 2014

Weather Watch:

  • Last week's weather: Population weighted Cooling Degree Days came in at 65 vs 75 normal.
  • This week's forecast: CDDs are forecast to edge back up to 74 vs 72 normal for this week of the year. 

Way Back in April Watch:  Farmer's Almanac called for scorcher of a summer. Oops. 

The Week That Was

weekly wrap 080114

Natural Gas Production Macro Slide Show

NG Supply May 2014 A


NG supply May 2014 B


NG supply May 2014 C

Natural Gas Imports Macro Slide Show

NG imports May 2014

Natural Gas Demand Macro Slide Show

NG demand May 2014

Stuff We Care About Today

The 2Q14 Energy Earnings Week 4 Calendar

2Q14 EW 4

Subscriber Mailbag Watch

Question: Any thoughts on relative valuation among the Permian players (without any recommendations or advice) would still be very useful–and appreciated.

ZComments: Yes. First, what's happened of late

Permian 080314

So looking at the move since June 30 which is roughly the peak on the broader E&P group and the Permians, it's apparent that high flyers (FANG, RSPP, CPE, ATHL) and low flyers (AREX, LPI) peaked and came off fairly rapidly.  Buying the "yet to move names" didn't really insulate you in the downdraft. 

Valuations are now in better shape but roughly in the same relative positions as before this little rollover.  What follows addresses your question on relative valuation as of Friday and know that we plan on updating the Permian players piece in just under 3 weeks when everyone has reported 2Q14 results. 

Permians 080114

Question: 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?


  • Apologies but it's not a name we own or closely track. We don't keep up with the Canadian Oil Sands players and have numerous other more pure play names in the Utica and Permian.  We find that often names like this one, that is spread over a number of different plays are often discounted substantially for that apparent diversification.  They may be taking the rights steps at this time but we're not the guys to ask on this at this time and would not want to offer thoughts without a thorough work up which I had not been planning to do at this time. Please see NRGY's comment #8 on the wrap this weekend. 


Other Stuff

  • AMZG announced results this morning catching us off guard as they posted their intention to release after the close on Friday. We're on the call now and will have comments later this morning. 


AMZG Report Essentially In Line 2Q14 Results - this is quick as we didn't know they reporting today

Production of 2,006 BOEpd, just inside company guidance of 2 to 2.1 MBOEpd.

Up 56% YoY and 22% sequentially

Current production of 2,200 to 2,300 BOEpd. Street is at 2.56 BOEpd for 3Q so they may be a bit light to that one as well. 

EBITDA crept up to ~ $52.50 per BOE, largely due to oil prices in the quarter.  Slight miss here with EBITDA of $9.6 mm vs Street of $10.0 mm.  


  • Capex increased from $100 to $115 mm for 2014; now sees $120 mm budget for 2015,
  • Still sees > 3,000 BOEpd. 


  • Announced 4 news wells, all TFS wells, and solid for them (remember, no sexy IP's here).
  •  4 well pad in what's been a strong area for them to begin completion ops in mid August with company planning to release 30 day IPs when they have them (so by mid October).  2 more wells to the western side of their acreage will also be completed later this month. 
  • Reserves at mid year of 15.4 MMBOE with a PV-10 of $336 mm (TEV/PV-10 of 0.9x).  We had expected reserves of 15.8 MMBOE, pro forma the March acquisition, so this lack of growth in reserves during 1H14 is unexpected. 

Nutshell:  OK quarter, making progress. Production is light due to lingering weather impacts from the quarter. Note to management. After a week like the group had last week, don't press release the conference call on Friday afternoon for a Monday, 8 am EST call slot; not unless you want to hide. Second note, don't have your 2Q14 webcast link on your website directed to the replay of your 1Q14 call. That's really sloppy guys. Aside from that it was an in line quarter and it's good to see a set of apparently solid wells for them. We'll get back on the replay of the right call and have notes later this morning. We'll have an updated cheat sheet out later this morning as well.

Odds & Ends

Analyst Watch:

  • TBA in comments

152 Responses to “Monday Morning – Natural Gas Marco Plus Some Other Odds and Ends”

  1. 1
    Stewart Says:

    HK trading at $5 this am…sure has come in hard.

  2. 2
    zman Says:

    re 1 – yep, it has plenty of company, lower dollar names coming off the highest as they generally are going to have more risk and a greater degree of retail in them. But in this case this morning … 

    Analyst Watch

    HK – Morgan Stanley cut to Underperform, cut target in half to $4.  No idea the reason on that big a chop after the strong quarter. 

  3. 3
    zman Says:

    Analyst Watch:

    REXX – SunTrust cuts target from $30 ot $27, stays Buy.  $27 from current?  Buy indeed. 

  4. 4
    brodway Says:

    re 2:

    HK downgraded to Equal Weight from Overweight me thinks. Don't see a target. 

  5. 5
    zman Says:

    AMZG – essentially in line on volumes, at low end of their range due to previously announced lingering weather, EBITDA a touch low but a new high for them, reiterating > 3,000 BOEpd exit for the year. New section to be added to the bottom of the post pre open. 

  6. 6
    zman Says:

    re 4 – thanks, on my screen it shows MORGAN STANLEY CUTS TO UNDERWEIGHT RATING; PRICE TARGET TO $4 FROM $8 

  7. 7
    zman Says:

    PVA on the tape confirming receipt of proceeds from the Selma Chalk sale and the arbitration settlement from MHR ($35mm instead of the $25 mm originally expected).  Pro forma these and the oil gathering system sale, liquidity is $625 mm with debt to TTM EBITDA of 2.5x. 

  8. 8
    Zorgnak Says:

    S&P Short Term Areas of Interest  8/4 9am ES 1924 SPY Levels in ()

    Notes…… Market is short term extreme oversold trading out of balance, below major supply. Major support at the 1900 level/neckline between the double distribution of volume at 1874.50 CVHN and 1948 and up. Multiple levels of minor resistance above and 1913.75 minor CLVN/near support. Demand volume and Ease of Movement negative. Small Cap Breadth near extreme oversold. Extreme oversold large cap within 10 day range. Fear and Greed = Extreme Fear. Primary uptrend intact.

    Thoughts……. Expecting a bounce to occur at or above the Major CLVN at 1900. Near resistance at 1939 CLVN. I’m not expecting the bounce to exceed 1948 CHVN and expect continued volatility, with the market trading between the previous major acceptance levels at 1968 and 1859.

    1948.                CHVN/ (195.80) Major Congestion/Above

    1939                 Minor CLVN/Resistance

    1923                 Minor CLVN/Minor Support

    1913                 Minor CLVN/Support

    1900                  Major CLVN/Support(190.50)

    1887.50             Minor CLVN/support

    1874                   Major CHVN


    SP500 Futures  (ES)


    ES  Intra-day




  9. 9
    brodway Says:

    RBC Capital downgraded Kodiak Oil & Gas (NYSEKOG) from Outperform to Sector Perform with a price target of $16.00 (from $15.00).

    Still reading through the morning report. A lot of information to digest. So far, however, i see that the declining rig count and increase in industrial demand may suggest stabilization in gas prices

  10. 10
    Stewart Says:

    looking at the Permian comparisons this morning, CPE sure stands out ..do they have enough drilling inventory?

  11. 11
    elduque Says:

    BDI has been unchanged for a couple of weeks now. Sittiing around 750

    Brent/WTI at 7.1

    TNX at 2.482


  12. 12
    zman Says:

    re 9 – I'd caution against thinking the declining rig count will stabilize prices.  It's been declining for years now. The growth is coming from a combination of increasingly prolific wells in the Marcellus and casinghead gas from the unconventional liquids rich plays.  As Wyoming once said, every time I drill a nice oil well in OK, I get a really good gas well as a bonus. 

    re 10 –  pretty strong, nearly 600 over 7 horizons at last check, vs a 26 well program this year. 


  13. 13
    Stewart Says:

    re CPE, 12  thanks.  ..is there anything about management or execution holding you back from inititaing a position there?  Or do you just want to see it stop falling and settle down?

  14. 14
    tomdavis12 Says:

    Sellside comments: DB with usual hatchett job on offshore names. MS – Offshore into a self-correction phase. Acceleration of fleet attrition. Demand having some green shoots. GOM with a 2 year high in permitting activity. (FCX, SD and Talos received approvals). As dayrates come down motivates contractors to cap costs (ESV) but also incentivizes operators to return to market. Recommending SLCA (proppant use doubled since Dec.). WFT on restructure. Dry Bulk earnings a disappointment so far (SB, DSX, BALT). CVX earnings beat. Recent asset sale in Angola. 13hz & 14 vertical rigs in Permian. Service NAmer names 12 out of 15 beat consensus. 

  15. 15
    elduque Says:

    HK- I am pretty sure that Joe is not a fan of the TMS. Other than that, I don't know what there is to not like. 

  16. 16
    zman Says:

    re 13 – more the latter, that and I don't know them as well yet as I do the other Permian holdings in the ZLT.  You know me, I'm slow. Just on the math, they are compelling. 

    re 14 – thanks for the ongoing offshore color Tom. Beats in Service pretty modest from what I saw so far but the tone has been improved again. 

  17. 17
    zman Says:

    Analyst Watch – WLL

    SunTrust ups target by $3 to $117, stays Buy

    MacQuarie ups target by $17 to $119, stays Outperform  (that's a KOG equivalent of ~ $21)



  18. 18
    tomdavis12 Says:

    DO earnings poor. Not good for parent company Loews – LTR. Having trouble extending contracts in NSea thru winter.

  19. 19
    zman Says:

    Analyst Watch – skimmed the front page of the HK Morgan downgrade piece.  Lame. Most of the complaint is with the TMS, the rest is high leverage, possibility of a liquidity raise (shares we've guessed would be needed at some point), slower growth profile (huh?) and then back to the TMS for the reason for the cut of the target in half.  Given that its a Bakken and EFS name with 1 well completed so far in the TMS we don't see what's changed.  Why were you at $8 in the first place sir? Sheesh, ugh, etc. 

  20. 20
    Stewart Says:

    re CPE..thanks..trying to sit on my hands and be patient and wait for the market ..not an easy task…so far, WLL, PVA, CPE appear to be relative bargains on 2015 tev/ebitda.


    CPE cc this Thurdsay should be helpful..any reason CWEI was not on the Permian comparison charts?

  21. 21
    zman Says:

    Thnaks for sending the HK notes – got it 3x so far. I'm good, looks like the guy blows in the wind on TP. 

  22. 22
    tomdavis12 Says:

    WLL Z – Reread the CC this weekend. Still very pumped about their new completion techniques. (cemented liners – plug & perf.  Coiled tubing & slickwater). Getting away from sliding sleeve almost completely. I think I remember you thinking that others have used these techniques. Would you consider this a big step forward for WLL with production relative to costs? Tarpon 3rd bench and Cassandra deeper bench drilling significant? 

  23. 23
    Zorgnak Says:

    ATHL  Near major support  around 44


  24. 24
    zman Says:

    re 20 – yeah, we didn't have them in the last iteration so they're not in the dataset yet. Will be with the update. You can see a quick look piece here back in April:


    And then a quick mention of them a week or so back with the 2Q report on 7/24:



  25. 25
    brodway Says:

    re: 12

    thanks for setting this rookie straight….as far as rigs are concerned, what inferences can one make from the declining rig count. 


  26. 26
    Bill Potter Says:

    Z, thanks for the permian info, that is really helpful.  It looks like you have two graphs labeled "1Q14 EBITDA Margins"

    On the 2015 growth rate for CPE, does that include another rig?

  27. 27
    zman Says:

    re 22 – I think people are constantly honing, everyone small or large, so we're over half a decade in and we're still seeing new improvements that leade to acceleration if not yet proven EUR growth. The acceleration leads to more NPV so its not just pure early time rate growth without financial consequences.  The plug n perf is used by many; sleeves unpredictable … ask Wyoming about this and he'll show you SPE papers on it, and then use colorful language relative to sleeves.  So I think these are things that all the guys up there are trying, maybe not all of them yet but they'll get there.  They won't work everywhere or work everywhere as well in the Basin but so far so good in the areas they've test.  Re your last sure.  Tarpon is home to the biggest middle Bakken completion in the Basin, over 7,000 BOEpd, but also quite gassy to drive that strength, so potential for a 3rd bench test there coming in big is elevated. Cassandra is basically Polar, so that's southern Williams County which as Lynn pointed out many times, that's the same rock north of the river as it is just south, at Koala in northern McKenzie.  So yes, having a deeper bench test there work would be incrementally valuable to the WLL story as well.  I almost feel myself wanting to say "It's a good day at Whiting" 😉 

  28. 28
    zman Says:

    re 25 – that's the question. I put the rig counts in there out of habit but the correlations are broken.  I like to keep track of rigs and an increase in the gas directed rig count would be troubling.  A further swoon?  It would have to be a big one to cause me to be more encouraged.  Demand, non-Summer2014, not withstanding, has been growing hand in hand with supply (production + net imports), otherwise, gas would be sub $2/MMBTU. I haven't tried to math out the impact of rigs by play as I think that's a model asking for big error.  Given that each of the big liquids basins are now seeing strong efficiency gains (each rig drills more wells per year), it further complicates the idea of mathing that out.  

  29. 29
    zman Says:

    re 26 – you're welcome. Ha, thanks, that's actually intentional. One is EBITDA/BOE and one is EBITDA/Revenue … both are margins. 2015 stays at 2 rigs. 

  30. 30
    Natus Says:

    The Permian update is very useful after the latest July market action – thanks Z.
    In the graph "2015 Estimated Production Growth" where would you expect PE to fit into the lineup?

  31. 31
    Zorgnak Says:

    BCEI  Regaining major support at 55.21…..likely bottom of new trading range from 55-62


  32. 32
    zman Says:

    Housekeeping Watch

    Today's post is free and open to the public. 

    Got a friend or colleague who doesn't subscribe? Know someone that should?  Do us a favor (and help keep subscription prices at their 2008 levels) by sending out the link to today's post to people who you think would be interested. Drop it in chat rooms, put in on Seeking Alpha sites, use it as an excuse to get in touch with that rich Uncle, tweet it, bookface it, etc. 

    Thanks much in advance. Here's the link: 


  33. 33
    brodway Says:

    re: 28  

    thanks for the explanation…a disconnect between rig count and being able to forecast price or demand for that matter. so how is market price of gas determined? 

    re: 31

    Zorg…thanks for the heads up…i was looking at BCEI Friday, but fearful to tip my toes back into the rough waters right now.

  34. 34
    zman Says:

    re 30 

    Our pre IPO read on 2014 was 13,700 BOEpd  (up 173%)

    Street Consensus is currently 13,585 BOEpd (so feeling like we are in the same ball park)

    I don't have 2015 worked up at this time as I want ot listen to the 2Q14 call first and get a better feel for them. 

    Fro 2015, the Street has them at 23,500 BOEpd, up 73% 

  35. 35
    Stewart Says:

    BCEI.. another name that looked relatively cheap to 2015 tev/ebitda..may need to get past the nov referendums first

  36. 36
    zman Says:

    re 33 – it's still supply and demand directionality with an eye on storage levels. You just can't take much away from rig counts. 

  37. 37
    Bill Potter Says:

    re 29.  ah, I see it now.  I need more coffee.

    In the hopes of stoking your interest in CPE on the Q1 earning conference call they said the were looking at adding another rig later this year.

  38. 38
    zman Says:

    re 35 – interesting side note. One of the ballot initiatives would bar communities that ban "energy development" from receiving their share of state oil and gas production tax revenues. Tit for TAT.

    re 37 – thanks, that would be incremental, I thought they were saying that if they took in more leadhold that could prompt them to go to 3 rigs to accelerate.   


  39. 39
    Stewart Says:

    re 38, now that's a rational policy.I'm reluctant to get my hopes up on a rational outcome..should be interesting to see how it develops.

  40. 40
    tomdavis12 Says:

    Z – EOX tonight .04 vs -.23. You taking the over or under? Turning profitable should not be important in this market I assume (if they do the .04)?

  41. 41
    zman Says:

    re 40 – now you know I don't care about any one quarter and I don't care about EPS.  Looking for a big bump in sequential growth with them pointing to a stronger second half.  Look for EBITDA margin increase.   Good shot at another small bump to full year guidance, pretty likely the exit moves > 5,000 BOEpd (1Q14 was 2,511 BOEpd).  This KOG 5 years ago in my view, oppy is for improving wells over time and swapping up into higher working interest acreage position over time, but for them, harder to acquire acreage than KOG had it.   Results out of the gate after the non-op to operator game plan change have been very solid.  

  42. 42
    zman Says:

    Sitting on hands early this week at least. 

  43. 43
    Stewart Says:

    Z..admire your patience..curious what names are on your radar to buy/add as opportunities or sell and why. 

  44. 44
    zman Says:

    re 43 – OAS, PE, PVA, REXX, ATHL, HK, OII (unowned, $63 ish), MTDR top the list. Cannot add to them all. Just mulling. Not feeling rushed. Would rather not see an attempt at a V-shaped rally off these lows … would rather see sideways trading establish itself.  

  45. 45
    zman Says:

    and TPLM if it dips into single digits. 

  46. 46
    zman Says:

    WTI hanging $98


    NG up 5 pennies.  Sweater weather is over hear, back to sweating weather.


  47. 47
    nrgyman Says:

    Synergy Resources upgraded to Buy at Stifel • 11:26 AM

    Synergy Resources (SYRG +2.2%) is upgraded to Buy from Hold with a $13 price target at Stifel based on strong well performance, which suggests a larger portion of SYRG's acreage is located in the Wattenberg Middle Core than previously estimated; also, SYRG's Middle Core wells have been outperforming expectations.

    Despite strong results, he stock declined 21% over the past month vs. a 13% peer group average pullback as concerns over a November vote to place stiffer regulations on Colorado's oil and gas production have weighed on the shares.

    The firm forecasts Y/Y production growth of 109% in FY 2015.

  48. 48
    zman Says:

    Zorg – How does ROSE look to you now. Fell out of its flag with the group on no news, kiss the 200 day SMA on Friday and lifted today with the group. Reports tonight. Several Permian segment catalyst wells to be with this call. Moe upper EFS news. Don't see an upgrade to the 26% YoY guidance for 2014 but it's not out of the question. 

  49. 49
    zman Says:

    HK green. 

  50. 50
    zman Says:

    Tropics Watch

    Bertha strengthens into Cat 1, appears to be no threat to Gomex. 

  51. 51
    brodway Says:

    re: 44

    Zman…surprised you don't have new names on that list…not that the ones you mention are not worth adding to

  52. 52
    zman Says:

    re 51 – those are almost all ZLT, can't kiss all the girls 

  53. 53
    Zorgnak Says:

    #48 ROSE….I'm reading it as rejecting the previous lower acceptance area at 46 in June, then breaking out and attemtping to establish value higher at around 54. The pull back to the wide low volume level( 50-51), that splits the two major acceptance levels,  is par for the course on this type of volume profile. Does it hold the low volume area as support or fall back to previous acceptance at 46? I see the more likely scenario, off the chart, as a hold and then return to 56 which was the last major accepted price level, barring some big off the table event coming in…


  54. 54
    Zorgnak Says:

    HK  Near resistance at 5.56


  55. 55
    Zorgnak Says:

    SWN At major long and intermediate support


  56. 56
    elduque Says:

    BOP- have you heard of any reason for the sell off in GDP.




  57. 57
    zman Says:

    re 53 – thank you sir

  58. 58
    brodway Says:

    re: 52

    i actually bought some PE recently as i didn't own any. my guess would have been you'd be looking to deploy into some new names, specifically those you've mentioned in discussion….LPI, CPE, FANG, etc…i'm perfectly happy with the ZLT however.

  59. 59
    Zorgnak Says:

    XOP   Similar (somewhat) to ROSE, with a double distributiion of volume with a mid-point low volume area being tested. Expectation is for volatility/sideway chop until resolved either back to previous most accepted price levels, 77.64 above with near resistance at 75.99


  60. 60
    zman Says:

    re 58 – waiting a little longer for the market to resovlve itself, LPI is a laggard so that's got time either way, CPE has had a big year, it may be cheap but on downdrafts, there's momo in there that could come out during more red weeks at a faster clip. FANG we've never owned, having chosen RSPP and ATHL in the same areas instead, likely would be a bit redundant to own RSPP and FANG (maybe not but anyway, limited capital, so I think I have their same plays covered with the those two). 

  61. 61
    zman Says:

    Offtopicthirty, grabbing lunch, back in a bit. 

  62. 62
    Zorgnak Says:

    MRD Showing, at least on the intra-day, a successful test of CLVN support.


  63. 63
    Natus Says:

    34 – thanks much for those numbers Z  –  PE looking very good for its age out in public –

  64. 64
    Wayne G Says:

    Bloomberg: Colorado to Create Task Force on Oil and Gas Drilling 

  65. 65
    Wayne G Says:

    Colorado Gov. Hickenlooper Reaches Deal To Remove Anti-Frac Initiatives From Ballot

  66. 66
    Stewart Says:

    So much for the overhang on BCEI..guess SYRG and PDCE as well

  67. 67
    BirdsofpreyRcool Says:

    GDP — rumor has it that the SLC well was screwed up during completion operations… supposedly drilled through the casing pipe while drilling out one of the frack plugs.  Who knows.  But rumor has it that the well is only flowing at 600 boe/d on a partial completion.  Since this well was drilled in one of the "better areas" within the core, 600 boe/d is certainly not the preferred outcome.

    Does this kill the TMS?  Heck no.  But it doesn't help GDP… who was going to be looking for a JV partner this summer.  GDP needs moola to develop the TMS… and drilling $13mm wells for 600 boe/d aint going bring the A-Listers to the Party.  And so… we wait… for a good well to come in.  (Here's looking at YOU, Black Rock.)

  68. 68
    Zorgnak Says:

    Boom! Wow!  Did I miss something?  

  69. 69
    zman Says:

    re 63 – happy to, redirect me if I don't fully address, a touch busy this time of year

    re 64/ 65 – NICE. 

    BOP – thanks for the update and agreed. 

    re 68 – hear ya, I should step out more often, nice little bounce in progress, 2.5% up day reversing some of the noise from late last week.  

  70. 70
    brodway Says:

    PDCE up 8? BCEI up 6? wowzers…

  71. 71
    BirdsofpreyRcool Says:

    Colorado fracking deal positive for drillers with DJ exposure, says Wells Fargo
    Wells Fargo views the last-minute deal between environmentalists and Colorado's Governor to withdraw proposed ballot initiatives that would have restricted hydraulic fracturing, or "fracking," as a positive for companies with exposure to the Denver-Julesburg Basin, including Anadarko (APC), Noble Energy (NBL), Bill Barrett (BBG), PDC Energy (PDCE), Whiting Petroleum (WLL) and Carrizo Oil & Gas (CRZO). Shares of Anadarko are up nearly 5% following the announcement in Colorado, while Noble is up 5.6%.

  72. 72
    zman Says:

    re 71 – CRZO should be rebounding nicely again, not sure I buy the non verified rumor over a sale of their Niobrara segment. But either way, those acres just became more valuable. 

  73. 73
    BirdsofpreyRcool Says:

    Short interest on SYRG was at an all-time high… heh heh heh.

  74. 74
    zman Says:

    re 73 – it's not often that we use words like "giddy" but when the word fits. 

  75. 75
    BirdsofpreyRcool Says:

    I'd call "up 17%" a ticket to ride the Giddy Train, yes.

  76. 76
    zman Says:

    WLL doing a little Redtail coat tail move as well. 

  77. 77
    BirdsofpreyRcool Says:

    SYRG short interest officially reported at almost 17% of float.  That's a lotta shares to call back into the fold… giddy-up!

  78. 78
    Zorgnak Says:

    WPX  Similar pattern playing out in the group and a number of the names  ..Testing mid point of profile after being rejected from recent acceptance levels…key levels then become, in the case of  WPX  at 21.50… where the reactionary buying needs help from initiative buying once supply has dwindled….


  79. 79
    nrgyman Says:

    Time for APC to pounce on PDCE or BCEI.  Frac restrictions were the main barrier.  Valuations for the quality of assets available look very attractive here.

  80. 80
    Zorgnak Says:

    BCEI  is a little further along in the process, just now hitting the key high volume node/magnet at 59.27 (CHVN) which divides reactive buyering from initiative buying..as the theory goes…Ease of movement is obviously positive. Now we need to see increasing demand volume after the break above the high volume/ supply levels…


  81. 81
    Zorgnak Says:

    PDCE  Same phenomena with this one..notice the reaction as price is drawn to the high volume, major acceptance level at 61.26…Usually these areas are good for some back and forth and then require initiative buyers to be willing to step in…56.76 is near support.


  82. 82
    zman Says:

    Bakkens getting a little glow from the Wattenberg's today, not that it's much of a threat in North Dakota but in the future, people are likely going to refer to this as the Colorado Plan. 

  83. 83
    Stewart Says:




    Callon Petroleum earnings preview: Lowering estimates on higher Permian crude basis differential; maintain Buy — Maxim Group  (10.15 +0.52)

    Maxim Group notes the following highlights ahead of CPE's earnings release after the close 8/6:
    •Lowering EPS estimates on wider crude basis differentials in the Permian

    •Below consensus estimate appears to be largely in stock.

    •Expect positive update on core Southern and Central Midland properties.

    •Not expecting definitive news on third rig or Northern Midland plans.

    Firm maintains Buy rating and $14 tgt on CPE.

    Read more: http://www.briefing.com/InPlayEq/InPlay/InPlay.htm#ixzz39RzQWtds

  84. 84
    nrgyman Says:

    TPLM:  Also think it is time for WLL to make a premium offer for TPLM–all stock.  KOG deal is certian to get shareholder approval.  TPLM shares have come in whereas WLL has positive momentum.  Give TPLM shareholders a chance to participate in WLLs upside after capturing a premium price.  WLL could sell Rock Pile to HAL or another growing service provider like CJES for cash and a sweet long-term drilling deal.  WLL could also sell Caliber to a midstream operator like TRGP or OKE, both of whom are expanding their gathering operations in the Bakken.   WLL could use the cash to accelerate drilling in the TPLM sweet spots.  Win-win.  TPLM looks like good value here.

  85. 85
    zman Says:

    re 84 – Agreed but think that's 2015's business at soonest.  With the Ursid buy, KOG surrounded a good chunk of TPLM's core in McKenzie. 

  86. 86
    nrgyman Says:

    RE 82:  Agreed.  This is big for the industry.  Take regulation out of the hands of the reactionary, un-informed public and put it into the hands of industry experts and players.  Less chance of major value destroying regulation.  Since other states are watching, this model will be good for the energy industry.

  87. 87
    zman Says:

    re 86 – hear ya, hopefully NY doesn't see it, we don't need their natural gas right now. 😉 

  88. 88
    nrgyman Says:

    RE 85:  Probably so, but why should WLL wait?  TPLM's value will likely climb by then–perhaps significantly.  Of course WLL's value might as well so a stock deal would mitigate TPLM's higher price to some extent.   Just thinking that this would be a good time to get the better relative price.  Being a TPLM owner, I would not mind waiting for more value later, but WLL might be advantaged to consider a deal now.

  89. 89
    nrgyman Says:

    Mineral rights owners aren't satisfied with Continental payment offer • 2:49 PM

    This is not a typo: Continental Resources (CLR +2.6%) says it wants to pay North Dakota state taxes and make royalty payments on natural gas it improperly burned off at dozens of wells in recent years, and is asking state regulators to approve its plans.

    But lawyers for land and mineral rights owners who have sued CLR over what they say are unpaid royalties believe the company's main goal is to minimize its liability as the state finally moves to curb flaring; natural gas that is pumped out of the ground along with more valuable oil is burned at a much higher rate in North Dakota than in other crude-producing states.

    How to value the gas that has been flared off is at issue: Those who are owed royalties are pushing for a higher valuation than CLR wants, and want royalties on flared gas the company says is legally exempt from royalty and tax payments under state statue.

    Other companies that have been accused of failing to pay land owners or the state treasury for flared gas include Exxon Mobil (NYSE:XOM) subsidiary XTO Energy and ConocoPhillips (NYSE:COP) unit Burlington Resources Oil & Gas.

  90. 90
    zman Says:

    re 88

    – Just thinking they will want to digest one deal at a time; most often the bigger kids do before taking in something else.

    – Re value, there will be a big difference for TPLM being taken out vs KOG.  KOG valuation was fullish near and medium term.  We would have been pleased to see KOG end the year at $14 and again, a bit sad to see them go out, but not because of the price, the price is fine and higher than some thought it was, definitely not a disappointment.

    – TPLM on the other hand is not fully valued at this time and a premium would be required, at least upper teens in our view.  WLL is playing the long game and I've never seen them as hasty to do anything; they're methodical.

    – And with KOG they have over 10 years of Bakken/TFS inventory on a 25 rig program now.  So just integrating another set of 4 to 5 rigs could be muddlesome/logistically difficult before they get KOG fully integrated.  Of course in time, the comments WLL made about bringing down KOG CWC would apply all the more to TPLM. 

  91. 91
    Zorgnak Says:

    RSPP  Resistance at 30.15 looks to be tested


  92. 92
    Zorgnak Says:

    LPI  Looking to test resistance at 28.03….volume pivot at 29..far resistance at 31.23 


  93. 93
    Zorgnak Says:

    PVA  Resistance at 13.38…major acceptance at 15


  94. 94
    zman Says:

    Zorg – as always, thanks for all the levels sir. 

  95. 95
    nrgyman Says:

    RE 90:  Appreciate your thoughts.  Integration issues make sense as a reason for waiting.  TPLM being bought out by someone else would be a reason not to wait–especially if the TPLM assets synch well with WLL's existing positions.  I'm thinking the pressure to purchase prime assets in key shale basins is going to grow as the remaining available leasehold for acquisition shrinks into fewer hands.  Low financing rates is another motivator.  Other players could find TPLM attractive and beat WLL to the table.  First movers have an advantage in deals, imo.  Then there is the int'l turmoil and global growth that could push oil prices higher–especially if crude exports are allowed.  Granted, the crude export restrictions may be a long-term impediment to accelerated production growth, as several analysts are trumpeting–and nothing is likely to be done until after the Nov election, if ever.  Lots to consider.

  96. 96
    zman Says:

    re 95 –  Oil prices more likely to ease than rise in our view, probably bodes for our thinking on waiting as well.  Also, deals in the Basin of size are pretty rare.  I think the thinking that because an XOM missed out on KOG that some of the smaller names of a target is faulty reasoning (not saying that's your thinking at all but it's out there).  I do think OAS is teed up for someone like a XOM or a CLR though.  

  97. 97
    Baylor Says:

    Does EOX pr come out after close today w call tomorrow or after close or before bell tomorrow with call tomorrow or Wednesday?

  98. 98
    nrgyman Says:

    As a corollary to the CO deal, the pipeline and midstream operators are also getting some traction–better prospects or the E&Ps means more production flowing through midstream assets.  AMJ, the Alerian etn, up 2%+.

  99. 99
    Zorgnak Says:

    #90..my pleazure…

    anyone who finds these profile charts handy and has a name they'd like to see posted….let me knnow

  100. 100
    zman Says:

    re 97 – after the close today, call at 10 am EST Tuesday. 

  101. 101
    Baylor Says:

    Re 100 thx

  102. 102
    Baylor Says:

    OT – RCPI to present at conference


  103. 103
    Stewart Says:

    TPLM whoa!

  104. 104
    Zorgnak Says:

    EOX  Nice bounce off defined support..trading in congestion, but above the volume pivot/long term acceptance 7.25(CHVN) on positive demand volume, supply dwindling to key resistance at 8.06. 


  105. 105
    zman Says:

    re 103 – TPLM seeking advisors for sale of one of it's two segments, guess would be it's RockPile, but don't know yet. 


  106. 106
    zman Says:

    re 105 – clarification – seeking advisors for sale of either Caliber or RockPile, don't know which yet. 

  107. 107
    nrgyman Says:

    RE 106:  TPLM unlocking value–good move for them.  

  108. 108
    Zorgnak Says:

    S&P Futs…Initial bounce target at 1390 hit….supply thickens from here. Major Resistance at 1955.75


  109. 109
    zman Says:

    TPLM – yeah, it's RockPile going to get monetized a lot sooner than we thought, there's a Bloomberg story out on it now, saying the company is seeking advisors for the sale.   At least $0.5 B valuation likely (or just under half of the current company TEV)

  110. 110
    dan bob Says:

    should we set some limit under 11 ? risk reward looks compelling?

  111. 111
    Zorgnak Says:

    #108   Make that ES target at 1939

  112. 112
    brodway Says:


    do you see these as short term bounces ? i'm still inclined to believe there's going to be a retest coming at some point in the next few weeks. just hearing the little voice inside my head saying its happened before and retests come following a bounce on oversold conditions. thinking of selling call options this week on huge runs in BCEI , PDCE and SYRG.

  113. 113
    BirdsofpreyRcool Says:

    HUSA — seeing some pretty interesting headlines scroll past….

  114. 114
    tomdavis12 Says:

    EOX CC 877-407-8831  #413333 10am EST

  115. 115
    Zorgnak Says:

    TPLM  Rejected quickly at the 11.50 CHVN/volume pivot… Pulled back to low volume area at 10.89. Very slippery/fast moving trading below that, in either direction from 10.50-.89




  116. 116
    zman Says:

    re 110 – I don't give advice. I just tell you what I'm doing and thinking.  For TPLM, this is an event we expected to occur in 2015 or 2016.  This sounds like they may be pushing that to the early 2015 time frame, market conditions willing.  TPLM is in the top 3 ZLT positions.  

  117. 117
    zman Says:

    Beerthirty, back with quick notes when EOX and ROSE report. Full details in the Tuesday morning post. 

  118. 118
    brodway Says:

    re: 117

    Zman…that news from Colorado today calls for a Coors Light!!!!!!!!!!!!!

  119. 119
    zman Says:

    re 118 – ha, yes, the Summer Brew. 

  120. 120
    nrgyman Says:

    RE 84:  Looks like TPLM doesn't want to let anyone else (potential buyer of TPLM) benefit from the monetization of Rock Pile or Caliber.  Apparently the company announced it plans to sell Caliber after Rock Pile is sold.  As a shareholder, I like that they are unlocking hidden value now–while positioning themselves more favorably for a takeout later.

  121. 121
    Stewart Says:

    TPLM..happy they want to unlock shareholder value..curious what you think the stand alone oil company should be worth..bberg article puts a 570mm value on RockPile and a 210mm value on Caliber.

  122. 122
    tomdavis12 Says:

    LINE – PXD pull off a small deal.

  123. 123
    zman Says:

    re 121 – I'd say at least $500mm for RockPile (a little over 6x multiple of current standalone EBITDA for FY 2015 which is basically the 2014 number. In reality it should go for more as that's got some ramp in and a 2H14 (calendar) run rate would be higher. And then it ramps again as the 4th spread (the first outside the Williston) comes on line. So call it $500 mm as a floor and likely more, their number sounds fine.   Caliber is a little more early days but as a midstream in the right place with a good sized oil pipeline as well it will carry a much higher EBITDA multiple in a sale.  Would not expect that segment to leave the building until 2016 (calendar).   But hey, they bought more leases the week after I got an update on lease values in the area, availability, etc and I didn't see it coming so I'd say I'd rather not play poker with the CFO there. 

  124. 124
    RMD Says:

    118 well said! I was out fishing for the afternoon action.  It is always hard to know know much stock movement is tied up with any goven hope/worry.  In this area I'll have a Yuengling.

  125. 125
    skibbi9 Says:

    @TPLM comments – This is good news, especially as they've felt they weren't getting any valuation previously from these subs.  What should TPLM do with the cash if/when they sell rockpile? 

  126. 126
    zman Says:

    re 125 – block up acreage and accelerate. 

  127. 127
    Stewart Says:

    re 123..TPLM..rough valuation for the remaining E&P portion of TPLM ?  curious what you think a sum of all the parts valuation could total.  thanks.

  128. 128
    zman Says:

    We'll have comments on AREX and CRK quarters in the morning as well. 

    EOX on the tape, reading ….

  129. 129
    Stewart Says:




    Clayton Williams Provides Financial Guidance for 2014; co currently plans to spend ~ $440 mln on exploration and development activities during fiscal 2014, up 5% from our previous guidance of $418.7 mln

  130. 130
    zman Says:

    EOX Quick – Nice beat

    Volumes ahead at 3,781 BOEpd vs Street at 3,500 BOEpd

    Revenue of $31.3 mm vs $26.7 est

    EBITDA of 17.4 mm vs $14.1 est

    EPS of $0.11 (ex items) vs $0.04

    Good sized acquisition of 31,500 net acres – swapping 4,175 net acres in Williams and paying $78.4 mm cash (it has a little production on it, on a production adjusted basis it comes to under $1,700 per acre, NICE). 

    Interesting pre post metric: 

    93,000 net acres goes to 120,400 net with the HBP metric going from 37 to 53%, still 75% operated

    No change to guidance at this time but my sense would be they are bagging us a bit, especially with the acreage add, likely 3Q sees the increase. 

  131. 131
    Zorgnak Says:

    #112  Re strength/duration of short term bounce…I don't know….coin flip….Your guess is as good as mine..  

    Looking ahead, for me it depends on the reaction of the group, market and individual stocks as they reach levels of interest. In the general mkt and the E&Pgroup as a whole we are closing at or near defined reistance with dense supply overhead. Not a setup to buy into perhaps..  Just off the chart, the XOP bounce needs to prove it's self by taking our defined resistance at 76 out and then the CHVN at 77 with demand volume in gear with the move. Key support at 72.79 has been tested twice already and today looked like a good bottom to me…

    Note where XOP stopped today… at defined resistance at 76


    Note that the S&P futs are closing at or below resistance.


  132. 132
    ratberto Says:

    131 – Thanks Zorg incredibly useful poop

  133. 133
    zman Says:

    EXXI on the tape with an ops update, reading … 

  134. 134
    zman Says:

    ROSE on the tape, will have the quick out in a bit … 

  135. 135
    elijahwc Says:

    LINE/LNCO on the tape buying PXD Hugoton assets.

  136. 136
    brodway Says:

    re: 131

    a lot of what i was  thinking is well communicated in your note and supported by a chart. thanks for the helpful input….as always…. of course all short term thinking on my part as i like to trade around my longer term holdings… that has little interest to some on this board including our benovelent leader Zman…. 🙂

  137. 137
    zman Says:

    ROSE Quick

    Volumes at 61.5 MBOEpd vs 59.4 consensus

    that's up 26%YoY and 13% seq with oil up 56% YoY

    Revenue at $265mm vs $257 est

    EPS in line at $0.82

    Volume guidance going up:

    From range of 60 yo 65 MBOEpd (that would have been up 26%),

    To a range of 63 to 66 MBOEpd (mix stays the same), now up 30% on the mid

    Budget edged up as well from $1.1 B to $1.2 B

    Lowered cash cost guidance as well

    – showing off big wells in the Delaware (one 7 day IP at 1966 BOEpd), much bigger than last quarter's wells in Reeves. 

    – EFS well cost down about 8% in the core from last guidance due to methodology change.  Bad news for CRR potentially if anyone cares but I doubt they do

    – strong upper EFS comments w/o #s


  138. 138
    Zorgnak Says:

    #137  ROSE  thanks for shining a light on this one earlier today…

  139. 139
    zman Says:

    re 138 – no problemo, thanks again for all the TA reads. 

  140. 140
    Zorgnak Says:

    Oil Producer Index  Bouncing off support back to a flat 50 MA. 


    Weekly     Long term uptrend intact. 


    Natural Gas Producer Index  Weekly  Group pulling back into long term base…


  141. 141
    Wayne G Says:

    exxi looks like they finally beat with solid production to back it up. hopefully a start of more to come

  142. 142
    Zorgnak Says:

    CRK  Nice high volume day coming back to test important resistance at 24.62, prior support broken during mkt/group pullback


  143. 143
    zman Says:

    re 141 – thx have not gotten to it yet, 

    AREX – beat but the mix got gassier again and the wells this quarter were less impressive, in aggregate, than the wells last quarter.  Guidance upped due to outperformance of NGL and NG wedges.  More deets in the morning post. We continue to not own the name. 

  144. 144
    Natus Says:

    Wayne G – thanks for your helpful posts – always good to hear from you

  145. 145
    elduque Says:

    EXXI- not to be overlooked:  Assisting with our free cash flow goal is the fact our cost synergies have proved to be more than twice the expected rate, now estimated to be around  $60 million  in the first year. 

  146. 146
    nrgyman Says:

    RE 123:  Regarding Caliber, I was reading the recent TRGP Q2 report where they discussed their desire to grow gathering and pipelines in the Bakken–they are already established there but want to grow more near term.  Specifically in the natgas segment, where they see themselves helping to reduce flaring.  Mentioned that OKE is also expanding in that region so their desired growth could be constrained by competition for opportunities from OKE (and possibly others).  Would not Caliber be a nice prize for one of these two midstream operators?  If so, we may not need to wait until late 2015 or 2016–a good offer from one of them might move TPLM to act sooner rather than later.

  147. 147
    nrgyman Says:

    RE 146:  Just noticed that Caliber is an oil system, not natgas, so this may not apply.

  148. 148
    zman Says:

    re 147 – Just to be clear, Caliber is a 5 stream gathering system – Oil, NGLs, Natural gas, clean water and returned water. Plus oil storage, an oil pipeline and a shorter natural gas transportation line and salt H2O disposal well. 

  149. 149
    Zman’s Energy Brain ~ oil, gas, stocks, etc… » Blog Archive » Wrap – Week Ended 08/09/14 Says:

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  150. 150
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