Thursday Morning – UPL



Market Sentiment Watch: Focus likely turns back to the Fed.  In energyland news flow is picking up as expected and the groups continue to show improved traction as the change in tone in oil continues to manifest itself a bit earlier than expected.  In today's post please find the natural gas inventory preview, the oil inventory review (record refiner throughput but backing off seasonally as expected, record low crude imports for time of year, and a blip higher in U.S. production (we expect the occasional one on the way lower), comments on "I Will Survive" club member UPL, a cheat sheet for RSPP pro forma their offering, CPE, and some other odds and ends.


Ecodata Watch: 

  • We get jobless claims at 8:30 am EST (F = 271,000, last read was 277,000),
  • We get the FOMC minutes from the September 17th meeting today at 2 pm EST.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch - with natural gas storage preview, DJ Basin sale comps (ECA, BCEI, SYRG)
  3. Oil Inventory Review
  4. Stuff We Care About Today - UPL, RSPP, CPE, SM
  5. Odds & Ends

Please click the link right below this to

Holdings Watch:

ZMT (Zman Medium Term portfolio):

  • Yesterday’s Trades: None

ZLT (Zman Long Term portfolio)

  • Yesterday’s Trades: None

The Blotter is updated.


Commodity Watch:

Crude oil eased $0.72 to close at $47.81 yesterday after EIA reported a small increase in domestic production including a rise in Lower 48 production which we attribute to EIA adjusting their model to reflect the higher July trend production due to a bounce in deepwater Gulf of Mexico volumes. We have said we do not expect a straight-line weekly drop in EIA's production numbers and this should not be much of a surprise to the market but is a good excuse for traders to take profits. We do not see this as a production bottom of any sort but expect further reductions in the weekly numbers within a few weeks time (but note that they could inch up again over the next two reports or hold it flat for a little while). This morning crude is trading around the $48 mark early. 

Crude Exports Watch: The Obama Administration strengthened its stance again proposed crude export ban lifting legislation yesterday by threatening a veto. The White House said the legislation was "not needed at this time".  Call me jaded but this is what a personal visit from the King of Saudi Arabia leads to. Not needed by who?

DJ Basin Watch:  ECA sells DJ Basin assets for $900 mm.  The assets are gassier than our holdings in BCEI and would have made BCEI look extremely cheap were it not for the rally of the last week. BCEI continues to trade at debt fear suppressed levels and we continue to see debt as entirely manageable and in no danger of covenant issues. 

ECA DJ sale 100815

Natural gas closed up less than a penny at $2.47 yesterday. We see this is as shoulder season noise but also see gas as oversold and due for a near term bounce. This morning gas is trading flat. 

Natural Gas Storage Preview Watch:

Street is at +98 Bcf for today's report. 

  • Last Week: +98 Bcf
  • Last Year: +105 Bcf
  • 5 Year Average: +90 Bcf
  • 10 Year High: +105 Bcf
  • 10 Year Low: +73 Bcf

Oil Inventory Review

exp vs act 100215


EIA 100215 A


EIA 100215 B


EIA 100215 C

Stuff We Care About Today  

UPL (unowned)  -  Will I Survive Update ~ We do not own the name.

We covered this basic gassy story in a fairly recent update here -----

Prenutshell:  Gassy name (92% natural gas in 2Q15) focused on the Pinedale Anticline (Wyoming) and Uinta Basin (Utah -their oil wedge) with an afterthought of a position in the Marcellus.  Given low prices they have curtailed activity in the Uinta. 

The Plan: 

  • 2015 - ~ 96% of E&P spending is focused on the Pinedale segment this year and likely near that next year as well.  Capex seen as within cash flow in 2H15 after modest outspend in 1H15. 
  • 2016 - as of the 2Q15 call they planned to increase activity on 12 month strip (around $3) and planned to outspend cash flow. They see $3.50 natural gas as their breakeven next year with cash flow level on a slightly large (but not yet well defined) capital program.
  • They see western basin natural gas as falling in general with little competition from Canada ("they're certainly not increasing supply). Their 2Q15 pre hedge realized natural gas price was $-----.  Nor do they see their gas as directly competing Appalachia volumes as you with the DJ Basin (Rockies) players as UPLs gas has access to better markets.

Balance Sheet - risky looking

  • Net total debt to TTM and to 2Q15 annualized EBITDA of 4.7x  and 5.2x respectively,
  • Their restrictive debt covenant applies to the subsidiary debt as noted in the cheat sheet below. Should they approach that limit they see either: a) borrowing more at the parent level or b) sell assets to buy back debt and shares. They do not see selling shares here and an asset sale sounds likely in the medium term. 
  • Liquidity of $335 mm but this is entirely borrowing capacity on a revolver that was at $670 mm at the end of 2Q15, 67% drawn. 
  • They have 12 senior note debt tranches with maturities in 2016 to 2026 (with $62 mm maturing next year) but they note they can simply exchange subsidiary debt for parent debt were natural gas prices to fall short of their expectations next year (allowing them to stay within their current covenants on lower EBITDA),
  • No fall redetermination for the revolver.


  • For 2H15 they are essentially 100% hedged via swaps at $3.71.
  • In 2016 they're naked.  
  • EBITDA sensitivity: ~ $70 mm shift in EBITDA (about 11%) for each $0.25 move in natural gas prices. We note that at $3.50 gas and the low end of our 2016 guesstimate for spending they would be essentially cash flow neutral. 

Nutshell:  We do not own the name and it is likely misunderstood in terms of the real debt threat here being overly depressed by the sheer size of their debt position. This ignored positives on both the capex and cash cost fronts (a common theme with many of these severely beat down names).  Leverage plus lack of hedges will likely make it a strong bounce candidate when natural gas prices turn higher into year end and 2016 (our expectation and theirs as well as they are actually $3.50 gas guys for 2016 too). We envision adding the name for short and medium term positions (common and maybe calls) but probably won't be adding in the ZLT given the leverage. 

UPL 100715

RSPP Post Deal Cheat Sheet Update

  • Pro forma cheat sheet to reflect October 2015 acquisition and offering,
  • Liquidity increased to ~ $800 mm assuming the overallotment is taken,
  • Net debt to TTM EBITDA of 2.0x and to 2Q15 annualized EBITDA of 1.7x,
  • Mininutshell: As noted yesterday we expected the deal to be well received and the fact that they delivered another quarter of above Street expectation volumes (23.5 to 24.0 MBOEpd as a preliminary number vs the Street's 22.1 MBOEpd) didn't hurt either. We continue to own RSPP as our largest Permian position. 

RSPP 100715

CPE Borrowing Base Increase

  • Borrowing base increased 20% to $300 mm with the revolver 25% drawn, 
  • Liquidity pro forma the increase goes to $227 mm, 
  • Nutshell:  Better than we expected although given the growth and improved well results we had been looking for a flat or slightly down borrowing base in a "worst" case situation. 


Other Stuff:

SM (unowned) Borrowing Base Redetermination

  • Borrowing base reduced from $2.4 B to $2.0 B
  • Commitment level left unchanged at $1.5 B
  • As of 2Q15 they had 8% of their commitment level drawn and liquidity of just under $1.4 B.
  • This is the largest reduction we have seen so far this season but it should be no cause for alarm with holders as liquidity is not impacted and isn't in danger of being impacted near term.  

Tomorrow - a check up on CHK's debt levels. 

Odds & Ends

Analyst Watch:

  • TBA in comments

127 Responses to “Thursday Morning – UPL”

  1. 1
    zman Says:

    RICE on the tape with Utica midstream development deal with GPOR.  Shouldn't be a surprise or much of a stock moving event. 

  2. 2
    zman Says:

    Jobless claims at 263,000

  3. 3
    zman Says:

    Crude hugging $48 post mini base breakout





  4. 4
    zman Says:

    Analyst Watch

    Goldman out saying nothing has changed, reiterates lower for longer, expects recent rally to fade. 

  5. 5
    ram Says:

    Thank you for the SM update.

  6. 6
    Zorgnak Says:

    S&P 500 Futures Short Term Levels Of Interest

    Notes –    Wide volatile and range trade from 1840-1995. Dense congestion. Demand volume positive. Ease of movement positive. Sentiment = Fear. Large cap overbought in 10 day range.

    Thoughts –  No changes. Wide trading range around major acceptance at 1915. Market short term overbought testing major resistance 1995. High odds for a pull back to 1915 over the next several days.

    1995          Major CLVN/Resistance

    1947          Minor CLVN/Support

    1915         CHVN/Long and short term acceptance

    1960         Minor CLVN/Support

    1940         Major CLVN/Support

    SP500 Futures  (ES)


    Crude Oil –   Building acceptance higher after rejecting previous value (45.50) as too low. Major resistance at the 49.50 CLVN. A break above 49.50 has 52.26 as the far target on this up leg. Minor support at 47.19. I expect the market to continue to build acceptance below 49.50 and test it once again. I’d be wrong with a break of the low 47s.  


    XOP- Tested back to the 37.53 CHVN after the overshoot. Easily rejected 37.53 as too low intraday. Now holding above minor support at 38.50. I’m still expecting for an overbought pause/consolidation around this area (37.53) and then test of 41.58 (major resistance) if/when crude breaks 49.50. So far individual stocks not giving much back on profit taking by the close, stocks are trading back to previous breakout points/support and new finding buyers. OAS FANG WLL LPI REXX a few examples for the nimble yesterday.


  7. 7
    zman Says:

    re 5 – sure, have not done any real work there in awhile, mostly just noting for purposes of keeping up with the ongoing redetermination season which has been more benign than many seemed to fear. 

  8. 8
    zman Says:

    re 6 – thanks. Re giving much back and nimble, expecting more chances soon, not expecting much beyond the move to $48, maybe $50 but we have a set of tough weeks just from a headline crude build perspective coming up. Short term stuff here and there will happen, also some initial medium term stuff in both Shopping List and I Will Survive List names, the planned ZLT capital add is still in the wings but not feeling pressed on it 

  9. 9
    Zorgnak Says:

    LPI  Tested support after being extended at 13.74 (previous acceptance). Found buyers and returned to now new acceptance at 13.74  Looking for a pause here that unfolds into a new higher range from 13 -16.28.


    OAS Similar story. Tested support after being extended. See new range with a top at 15.53



  10. 10
    Zorgnak Says:

    GPOR Rejecting the 33 CHVN as too low…looking for a test of 36.69


  11. 11
    Zorgnak Says:

    #8 Thanks for your thoughts….they help keep me patient and remember that this climb is going to be a long one in any event

  12. 12
    Wayne G Says:

    Oil Rally to Fade Given Still Weak Fundamentals: Goldman

  13. 13
    Wayne G Says:

    Saudi Arabia Said to Order Spending Curbs Amid Oil Slump (2)
    Government hiring, promotions frozen after crude price drop
    Kingdom's foreign assets fell to lowest in two years in August

    (Bloomberg) — 
    Saudi Arabia is ordering a series of cost-cutting measures as the slide in oil prices weighs on the kingdom’s budget, according to two people with knowledge of the matter.

    The finance ministry told government departments not to contract any new projects and to freeze appointments and promotions in the fourth quarter, the people said, asking not to be identified because the information isn’t public. It also banned the buying of vehicles or furniture, or agreeing any new property rentals and told officials to speed up the collection of revenue, they said.

    With oil accounting for about 90 percent of revenue in the Arab world’s largest economy, a drop of more than 40 percent in crude prices in the past 12 months has combined with wars in Yemen and Syria to pressure Saudi Arabia’s finances. While public debt is among the world’s lowest, with a gross debt-to-GDP ratio of less than 2 percent in 2014, that may rise to 33 percent in 2020, according to estimates from the International Monetary Fund.

    “In order to demonstrate a bit of fiscal discipline the government
    needed to take some measures in 4Q to moderate spending,” John Sfakianakis, a Riyadh-based Middle East director at Ashmore Group Plc, said by phone. “Going forward Saudi Arabia will have to implement spending cuts and efficiencies in order to avoid a runaway fiscal deficit in 2016.”

    To help shore up its finances, authorities plan to raise between 90 billion riyals ($24 billion) and 100 billion riyals in bonds before the end of the year, people with knowledge of the matter said in August. The kingdom’s net foreign assets fell for a seventh month to $654.5 billion in August, the lowest level in more than two years. That’s down from a record $737 billion a year earlier.

    Economic growth in OPEC’s biggest oil exporter will probably slow to 3 percent this year from 3.6 percent in 2014, according to the median estimate of economists on Bloomberg. Brent, a benchmark for more than half the world’s crude, was trading at $51.73 per barrel at 1:33 p.m. in London, down about 10 percent this year.

    The finance ministry declined to comment. The government was working with advisers on a review of capital spending plans, people familiar with the matter said in August.

    The kingdom’s benchmark equities gauge, the Tadawul All Share Index, has dropped 7.8 percent this year amid the decline in crude. While Saudi Arabia’s riyal has been pegged to the dollar for almost 30 years, one-year forward contracts for the currency are trading near the highest since 2003, signaling some traders are increasingly betting it could weaken.

  14. 14
    zman Says:

    Anyone see news on SN? I've got a news bug but no story/headline?

    Thanks Zorg – please keep the comments coming.  Re LPI – interesting to see the perrenial Permian laggard pop up like this especially given EBITDA down next vs this year and not exactly cheap. Our update here said basically not adding, not selling just holding but interesting to see market show it's discounting the 2015 to 2016 drop and not sweating the higher out year multiple for now.  One week in to be sure but interesting.    Our recent walk through of LPI's numbers was here: http://zmansenergybrain.com/2015/09/10/thursday-morning-dualing-inventory-reports-4/

    Prompting us to again look at also Permain laggard and long avoided AREX here:



  15. 15
    Wayne G Says:

    Snap-Back May Hinder Iran Oil Investment, BofA’s Blanch Says

  16. 16
    Wayne G Says:

    No news on SN on the terminal

  17. 17
    ctb14 Says:

    SN was erroneous..meant for Smith and Nephew

  18. 18
    zman Says:

    re 14 – thanks for the story, saw the headline, sounds like no impact on oil investment

    re 15 – ha, what snap back?

    re 16 – thanks. 

  19. 19
    zman Says:

    re 17 – thanks

    Last update of the oily shopping list, for reference (really let CXO run up and away from me – $96 to $112 errrr):


  20. 20
    Wayne G Says:

     Saudi Arabia pumped 10.226m b/d of crude oil in Sept. and supplied 10.26m bpd to the market, Platts Oil

  21. 21
    zman Says:

    adding to 19 – MTDR – which we do own in size ($20 to $26.70), most other moves smaller than that one (PE, RSPP had share sales but up,  SYRG nicely up) but as noted previously, the Shopping List is "safer" but going to perform less well than the debt encumbered at times when people become less worried about debt so you get moves like a double of the lows in non Shopping List member BCEI and in really debty EXXI. 

  22. 22
    zman Says:

    re 20 – thanks.  The second part doesn't make sense by the waY, unless they count domestic as market. 

  23. 23
    zman Says:

    re 12 – saw the bullets, shorter this week.  He discounts lower US supply as always , talks down demand, and doesn't see risk in the ME to supply saying the activity is far from producing regions which is a fantasy.  Clearly short, clearly feeling the need to weekly call for lower oil. 

  24. 24
    Wayne G Says:

    re EXXI: one thing to keep in the back of your mind: When the debt gets repurchased/sold or if people see it appreciating, there is a lot of stock being held short against it. fwiw

  25. 25
    zman Says:


    CPE – Added (100) CPE $10 October Calls for $0.10 with the stock at $9.  High risk trade.  View increased borrowing based announced yesterday as a positive with the name 25% drawn currently and a move to growth in a cash flow neutral state next year seen as likely.  Trading at TEV/EBITDA on 2015 and 2016 of 9.5x and 7.9x now and we'd expect that to migrate north towards their larger but also growth peers soon. High risk trade given the time remaining on this strike. Likely to roll fairly quickly to Novembers upon a modest bump in the shares. 

    CPE – Added common at $9 as well. 

  26. 26
    zman Says:

    re 24 – good point

    Natural gas inventories in 5 minutes

  27. 27
    zman Says:

    Volume coma pre FOMC minutes

  28. 28
    zman Says:

    Natural Gas Inventories

    +95 Bcf vs latest consensus of +98 Bcf and Robry +102 Bcf

    We are now at 3,633 Bcf in storage

    Up 13.9% Yoy and Up 4.5% to the five year average.

    No change out of this to our peak storage levels.   

  29. 29
    zman Says:

    Getting on a call, back in a bit. 

  30. 30
    zman Says:

    NFX – flattish cup with handle formed

  31. 31
    zman Says:

    Once again goto name EOG moving on $85 in a breakout extension attemp. 

    CXO – Permian goto, same kind of action. 

    Hard to move the mids and SDMs without leadership, nice to see. 

  32. 32
    RB Says:

    what I see in terms of patterns in so many of our names is "inverted head and shoulders"….many are right at the neckline or have broken out slightly above.  the upside targets on these patterns are big, but of course the overhead resistance looks to be considerable as well.  we shall see….feeling a bit bullish here

  33. 33
    Wayne G Says:

    Saudis Said to Boost Sept. Crude Supply to Market to 10.26m B/D 
       Saudi Arabia supplied 10.26m b/d to market in Sept. vs 10.18m in Aug., according to person familiar w/ nation’s output, who asked not to be identified in line w/ policy. 
    • Country produced 10.23m b/d in Sept. vs 10.26m b/d in Aug.

  34. 34
    zman Says:

    re 32 – hear ya, I'm still mostly being patient, but change in tone is certainly there. Need to see some sideways trading and resting as some of these moves have new money in them that's up big in a short amount of time and those guys' exit, compounded by overhead supply from those who count themselves as trapped longs can make sizable pieces of the last week's gains evaporative (especially in the 3x + current debt to TTM EBTIDA meets negative planned volume growth in 2016 crowd).  


  35. 35
    zman Says:

    re 33 – thanks.  We'll get a fresh OPEC monthly next week and a fresh EIA Drilling Productivity Report – should be pretty interesting (OPEC may change little – demand could be edged either way this time around but not big moves. Non OPEC supply should edge lower).  Drilling report should point to a modest acceleration in the out month decline from the big 5 oil shales. Likely helpful data there for NG supply as well. 

  36. 36
    nrgyman Says:

    Do we know who bought ECA's DJ Basin assets?

  37. 37
    zman Says:

    re 36 – yes, the Canadian Pension Plan (CPP) and something called the Broe Group who I don't know. 


  38. 38
    BirdsofpreyRcool Says:

    Pension plans are not taxable and therefore require a lower ROR on their holdings.  Know a bunch of companies who looked at the ECA DJ assets and just passed as they are "too messy and all over the place."

  39. 39
    Wayne G Says:

    debating when to dip into gas (SWN,RICE) when nuke downtime takes effect

  40. 40
    ButlerBaby Says:

    anyone know what division of the CPP, out of curiousity? 

  41. 41
    nrgyman Says:

    RE 37:  Thanks.  

  42. 42
    BirdsofpreyRcool Says:

    nrgyman — just curious… have you ever run into Rich Frommer?  He seems to have a pretty strong background.  Bet he's glad he's not at Samson anymore…http://broe.com/team/

  43. 43
    zman Says:

    re 38 – thanks much BOP – if commodity prices were a bit better I'd have thought their acreage a natural fit for NBL. And  I hear ya non contiguous and gassy valuation.  Just wanted to highlight i my view it makes BCEI look all the more cheap.   

  44. 44
    zman Says:

    re 39 – nukes should be at peak down now. We're getting a lot of weird weather/late heat which should be bumping up demand – will get Bentek update this afternoon. NC and SC heavy rain a downer on South Atlantic power demand as a small offset.  

  45. 45
    zman Says:

    Zorg – volumes look light to me everywhere I look. 

  46. 46
    zman Says:

    … probably waiting on FOMC minutes to get busy one way or the other. 

  47. 47
    Zorgnak Says:

    Mark..Many thanks for bringing ChartHub back to my attention. They will now allow me to post charts once again….big quality and ease of use difference.

    Compare this GPOR chart to #10….


  48. 48
    zman Says:

    From tomorrow's post watch:

    This puts storage at the 3rd highest level for this week of the year (just under the 3,715 Bcf in storage in this week of 2012 (with $3.40 the prevailing natural gas price then) and 3,658 Bcf in 2009 ($4.70 to $4.99)).

  49. 49
    Zorgnak Says:

    #45 Re volumes  Bakken very light on balance. Permian and Wattenburg above average but not terribly so…





  50. 50
    Zorgnak Says:

    CPE  Setup


  51. 51
    nrgyman Says:

    WPX:  Kind of under the radar, but has been strong with an interesting chart and TA.  Higher low followed by higher high.  Higher debt, declining ebitda and former natgas-focused name, but with solid assets and new CEO driving cost reductions and divestments to bolster balance sheet.  Low multiple.  With non-core asset sales they would need significant cost reductions, strong well results and somewhat higher oil prices to show growing ebitda in 2016.  What oil prices are needed for them to be likely to do it?

  52. 52
    zman Says:

    re 51 – We continue to own it, like the story and new top guy, and still see it as a sleeper name so am quite patient.  On my $55 number they grow EBITDA modestly, about $25 mm over 2015 expectations to $975 mm.  At $65 that goes to about $1.1 B (15% sensitivity for a $10 move in oil).  They're hiring technical types now by the way. 

  53. 53
    nrgyman Says:

    re 42:  Sorry, no, I do not know him.

  54. 54
    BirdsofpreyRcool Says:

    Interesting commentary from a DJ operator on the ECA sale.  Can't post what ECA thought they would get for the assets… but suffice it to say the package went for a lot less than that.  The compelling spin on this is that bankers and private operators are looking at those numbers also.  It puts a damper on PDP valuations.  This could result in some private guys (and their bankers) — who are on the fence — to think about pulling the For Sale Trigger.  This would be a positive for the public DJ guys.

    Just some basin scuttlebutt…

  55. 55
    zman Says:

    re 49 / 50 – thank you sir

  56. 56
    zman Says:

    re 54 – thanks, interesting thought.  Deal talk in the Wattenberg is that bid/ask has come way in of late. 

  57. 57
    nrgyman Says:

    RE 52:  Thanks again Z for the commentary.  Very helpful.

  58. 58
    Zorgnak Says:

    WLL  Holding breakout…room to roll $6 on next leg up.  20.51 as support to lean against..


  59. 59
    zman Says:

    Permians largely marching higher. PE, CXO, and RSPP in the wake of their recent deals putting on a show.  XEC moving well too.  Reef – did Einhorn have comments re PXD at that dinner?   Would expect CPE to follow leaders up a bit here as oil probes over $49 again.  LPI and then AREX as well. 

  60. 60
    nrgyman Says:

    RE 54, 56:  Seems like the Wattenberg is ripe for consolidation.  It is hard to get long-term scale there due to the domination of NBL and APC and the relatively smallish partitions owned by many others.  For longer term growth considerations and for efficiencies, M&A appears likely there.  PDCE and SYRG have strong balance sheets and would be in a position to acquire.  BCEI appears more likely to be acquired.  At current valuations, PDCE and SYRG have stronger currencies with their stock prices and BCEI is really cheap.  Any chance something happens with these names in the near term?

  61. 61
    zman Says:

    re 60 – the people who would buy them are probably on the fence given their own currencies.  Prior to the dip into the end of 3Q I'd been thinking bolt on would happen for sure as asset values are better than public values and some people need to sell things but that corporate M&A is still a ways down the road, at least a post OPEC meeting in early December hurdle. I don't know that I've changed by thinking on that. 

  62. 62
    Wayne G Says:

    Opec, Non-Opec Countries to Hold Meeting Oct. 21: Del Pino 
       Countries to hold technical meeting, Venezuela’s oil ministry writes in Twitter post, citing Oil Minister and PDVSA President Eulogio del Pino. 

  63. 63
    nrgyman Says:

    RE 61:  Thanks.

  64. 64
    zman Says:

    By the way, just updating my weekly storage charts and tables.  

    At the bottom of the slide stack we show EIA's end of October storage number.

    Last month they saw 3,867 Bcf as a storage peak

    We have been saying 3,950 to 4,050 for some time now. 

    They moved to 3,956 Bcf with the new STEO out this week. 

    In my view not a big deal, just a bit shallow all along, but if they are correct (or its in our range, either way) this will be a record pea storage level (prior was 3,926 Bcf in 2012). 

    This will make for bearish headlines.  Doesn't bother me as we started the year at a high trough due to demand and high supply.  Demand has grown further and supply is still strong but flattening.  I care a lot more about the trajectory of change in the supply demand equation than I do about absolute storage levels.  But the move to "Record High Storage" could create a pretty sharp buying oppy in my view late this month or early next. 


  65. 65
    zman Says:

    re 62 – thanks (not new news by the way but maybe VZ just found out). 

  66. 66
    BirdsofpreyRcool Says:

    nrgyman — #60 I know that the public companies have looked at the other public companies (often, at the behest of equity investors begging to put their company into stronger management hands), but just can't get there on valuations or cultural differences (e.g. who gets to play CEO, post merger).  Maybe we will see some public companies get together at some point.  But that is not the current thinking.  Thinking is that consolidation will occur with the publics buying privates.  And — ideally — the privates taking at least some equity in the deal (which is the preferred "sale," assuming you are not 100% bank-financed).  Time — and low oil prices — will tell.  Something to keep in mind is that the basin diff to WTI still runs $8-9/bbl. 

  67. 67
    zman Says:

    re 66 – unlike in the Bakken where it's collapsed to just about $0.  Also NG pricing out of the DJ is not the best now. 

  68. 68
    reefguy Says:

    59: Einhorn stills says he's correct, it just might take longer than planned to see his short in the money.  His fund, Greenlight is having a bad year…..

         He was non-specific on PXD except to joke on arrival'  "I am suprised you invited me back this year,  I know I am  in enemy territory".

  69. 69
    Wayne G Says:

    Saudi to Raise Official Selling Price for Oil in November: Ross

  70. 70
    nrgyman Says:

    RE 66:  Thanks BOP.  

  71. 71
    Zorgnak Says:

    Crude Oil  Testing 49.50 once again…..


  72. 72
    zman Says:

    re 68 – thanks. What a toolbag. 

    re 69 – interesting, they just lowered again to Asia, Europe, US

    re 71 – Goldman to be on CNBC at what time?  LOL

    Offtopicthirty – grabbing a slow walk, back in 1 hour. 

  73. 73
    Zorgnak Says:

    #72…re what time Goldman…I'd say around 49.50- 50  o'clock.

  74. 74
    nrgyman Says:

    Doug Kass: "I think a bunch of Hedge Funds are long F.A.N.G / short energy – and are getting royally squeezed."  (F.A.N.G. = FB, AMZN, NFLX and GOOG.)

  75. 75
    besherman Says:

    I find it hard to believe that Putin's entrance into the Syria conflict–together with his now formal alliance with Assad and Iran and the geopolitical threat that represents to SA and the gulf states–is not a significant part  of this oil rally.

    Oil Wars: Return of Risk Premium, coming soon to a theater near you.

  76. 76
    nrgyman Says:

    Bakken names:  Basis reduction from $10 to 0 at these prices represents nearly a 20% increase in ebitda, pre-hedges, outside of WTI price increases.  Underpinning the Bakken re-emergence from the basement.  Pipelines to the rescue.  Looking forward to same thing eventually happening in the Wattenberg and Utica/Marcellus.

  77. 77
    nrgyman Says:

    BCEI:  -8% to +8% in 2 hrs.  

  78. 78
    BirdsofpreyRcool Says:

    besherman – it has to be part of the strategy… and higher oil prices drop right to Russia's bottom line….

  79. 79
    j Says:

    Z – apologies if I missed it — did you ever compile a list of the single digit midgets you mentioned the other day?   (no offense meant to any midgets on the site).  😉 


  80. 80
    nrgyman Says:

    RE 75, 78:  When negotiation doesn't work to your advantage, and you have impact ability to get more of what you want through sabre-rattling, Russia and Iran have shown no hesitancy to employ this time-tested winning strategy.  With crude risk premiums near 0, seems like easy-pickings.  This is the counter strategy to SA over-pumping from two nations highly dependent on oil revenues.

  81. 81
    zman Says:

    re 79 – do you mean the "I Will Survive" List?  That's the ongoing project of the month.  So far all to one degree or another in terms of me liking them (unowned names in addition to the SDMs we now own):   DNR, UPL, ECR, SN, AREX.  Each has been addressed in recent days and not a one of them have I tossed off the list yet as potentials.  Each have their own merits, SN I like better than PVA (which we own), ECR I sort of dont' need as I like REXX a bit better and we own a lot of REXX.  UPL has something of an attitude as management goes but is interesting down here, and then AREX is front and center as a candidate.  Most of my work on this is October to December consideration for adds by me. Will have a few more next week.  


  82. 82
    zman Says:

    Adding to 81

    UPL was today

    AREX yesterday: http://zmansenergybrain.com/2015/10/07/wednesday-morning-arex-rspp/

    ECR – this past Tuesday: http://zmansenergybrain.com/2015/10/06/tuesday-morning-89/

    DNR late September: http://zmansenergybrain.com/category/dnr/

    SN later September: http://zmansenergybrain.com/2015/09/29/tuesday-morning-sn/

  83. 83
    james T Says:

    Latest from Robry :


    post by robry "Comments"  might be of interest 

  84. 84
    zman Says:

    FOMC minutes volatility in progress. Dollar dipped early on them.

    OT – Russian cruise missiles aimed at Syria, fired from the Caspian crash in Iran.  Poor quality control? Deliberate tension raise.  Reported earlier that Russia gave US no advance notice for strikes today. 


  85. 85
    elduque Says:

    Crude probing above significant resistance line

  86. 86
    Paul in Kansas City Says:

    RE 81; followup; i was looking for your ebitda sensitivity charts wrt oil price for various names;i could not find what you have finished so far.  thanks Z

  87. 87
    james T Says:

    TBT 20 year basket ETF dropping.

  88. 88
    zman Says:

    re 86 – I pubished them for the oily names on the Shopping List here:


    For other names I generally list it in the hedge section of the post for that name. Was there someone in particularly you wanted to see?

  89. 89
    Wayne G Says:

    Four Russian Cruise Missiles Landed in Iran, U.S. Official Says

  90. 90
    zman Says:

    re 89 – crashed or landed I wonder. Smells like a missile tech sharing violation to me 😉 

  91. 91
    zman Says:

    NFX – handle extending now, approaching levels from May that form the left side of the cup. 

  92. 92
    choices Says:

    OT-The "fight against terrorists."  It would probably be good if our efforts were managed by someone who knew what they were doing=tab for $100 bil with no results or negative results.


  93. 93
    zman Says:

    re 92 – saw that last night, almost included, speechless on the tab but can't verify it's that much. Just wow. 


  94. 94
    zman Says:

    Whoever said that quitting was a tactic by Boehner (Mark maybe?) he is apparently dropping hints that he may stay now that the first vote failed. 

  95. 95
    Wayne G Says:

    Russian Missiles Headed for Syria Crash Land in Iran: CNN


    looks like they were shot from th sea 

  96. 96
    zman Says:

    re 95 – yeah, from the Caspian … bad Ivan tech. 

    XOP trying to make Zorg's targets today. 

  97. 97
    zman Says:

    WTI briefly tapped $50


  98. 98
    Paul in Kansas City Says:

    just staying current; but looking for OAS and TPLM

  99. 99
    Wayne G Says:

    Genie Energy Confirms ‘Significant’ Oil, Gas Find in Israel 

  100. 100
    reefguy Says:

    AREX:  What is the short thesis?  I don't get it as there is no secured(other than revolver) and the unsecured is due in 2021.

                 Their Cap Ex is zero so no out-spend(lol)…

  101. 101
    BirdsofpreyRcool Says:

    #88 follow-up — when did you publish that oil price vs EBITDA sensitivity chart?

    I recall there were a couple of surprises in there for me.  But i can't recall which names it was.  Thx.

  102. 102
    BirdsofpreyRcool Says:

    Computer algos have no idea what to do with the Fed Minutes… so guess the path of Most Pain is up.

  103. 103
    zman Says:

    re 98

    – OAS is lightly hedged next year (about 18% as of last update), on a flat prod assumption and my cost thoughts they are a 25% EBITDA mover on a $10 move in oil.   At $55 EBITDA is just north of $500 mm.  At $65 about $630.  Should be cash neutral in the $50s. 

    – TPLM is more complex but just the E&P EBITDA moves 30% on a $10 oil change. 

  104. 104
    Zorgnak Says:

    #96…Re targets…XOP tested 38.50 minor support and never looked back…41.58 is still major resistance and XOP is as extended by some measures (demand volume) as it's been since the E&P crash began. 


    Crude Oil- Working off a better base than E&P pushing key resistance (49.50) now and not extended to extremes yet. 52.50, major long term acceptance just $3 away. 


  105. 105
    Wayne G Says:

    OPEC, Non-OPEC Nations to Discuss Stabilizing Oil Mkt in Vienna
       ’’The idea is that all the participants openly discuss technical elements about what should be done to stabilize the oil markets,’’ Venezuela’s Oil Minister and PDVSA President Eulogio Del Pino said in comments broadcast by PDVSA Radio. 
    • Producers from OPEC and Non-OPEC countries to participate
    • Saudi Arabia, Russia, Colombia and Mexico have confirmed participation
    • “No one benefits from the extreme up and down movements in oil prices”

  106. 106
    zman Says:

    re 99 – yeah, Petra yelled "oil in the Golan Heights" at me from her office earlier.  To which I think I said hmmm

    re 101 – 9/15 – it's that link

    re 100 – Re AREX – yeah, my thoughts as well. I avoided them over margins and mix but at this price I have to say it's not an expensive situation.  I think they got treated like the red headed step child of the Permian long ago and with the beat down they just got beat further down. Revolver draw over 50% is an automatic nono for many on the conference calls I've been on last 3 quarters (in general, not their calls).  What did you think of them?  

  107. 107
    reefguy Says:

    Arex: Looking for entry

  108. 108
    zman Says:

    Three of my favorite words

  109. 109
    Zorgnak Says:

    AREX at the gate…room to roll, with first supply not until 4.35


  110. 110
    Zorgnak Says:

    #109…gotta be a lot of short term eyes on this level/setup…big pop and (if you're late) drop potential in the short term….

  111. 111
    zman Says:

    re 110 – yeah.  Clearly a lot of people fishing in the really hit names. Check out DNR and SN last few days. And of course, EXXI.   Also HK and PVA. 

  112. 112
    Paul in Kansas City Says:

    re 103  thank you

  113. 113
    Geno Says:

    I hear Cheniere should be coming on line early November may already have been reported

  114. 114
    zman Says:

    re 112 – anytime. 

    re 113 – I just had 4Q15, thanks.   It does not seem to be a factor yet priced into our market. 

  115. 115
    macguyver Says:

    Z: ballpark what EV/acre is EOX trading at here?

  116. 116
    macguyver Says:

    asking cause looking quick at TPLM thinking it could really run here if oil stays here and overall market stays here

  117. 117
    zman Says:

    re 115 ~ $2,800

  118. 118
    zman Says:

    Beerthirty, back in a bit. 

  119. 119
    Paul in Kansas City Says:

    Just watching TPLM; I wonder what will happen once we get the bank redetermination out of the way?  Probably the extent of the short base is what will drive the price move (assuming up) if nothing material happens.  I increased my share count by 30% under $1.50.  After watchng BCEI's upward move this week anyone still short should be worried.  

  120. 120
    macguyver Says:

    re 117 thanks

    re 119 thinking same….like the risk/reward here (as does everyone else here!  nothing earth shattering from me)

  121. 121
    brodway Says:


    perhaps you would consider adding CRC to your single digit analysis list. a few were talking about owning it sometime in the spring this year and it tanked as did others and haven't heard it mentioned since

  122. 122
    zman Says:

    re 121 – yeah, it's on the list, I looked at it for SC4 since the IPO, kind of neutral on them at the moment as management changed a lot of pre IPO talk due to lower IPO prices … didn't get a good sense they had a plan to deal with all that debt, and at last check their comments seemed like those of a division of a larger company and not an independent.  

  123. 123
    RMD Says:

    AREX last time I looked, which was a while ago, you didn't want to give any credit for their large southern acres.  Also a mgt discount. But I am out of date.

  124. 124
    sc4 Says:

    122 Johnson Rice initiated with a fairly long and interesting piece  on CRC dated 9/25/15. While the debt reduction program has not yet been publically described in any detail, they noted that crc has a substantially lower decline rate than many mid-sized firms which could allow them to operate with lower capex and yet sustain production.Management has not been good at keeping the investment community updated on their approach to debt reduction.

  125. 125
    zman Says:

    re 123 – Am not doing an NAV analysis on them.  Re management, I thought you liked their geo guy quite a bit. Well results have been solid for the area. They are looking to run extremely lean with no spending increase until $55 sustained and have some other debt reducing ideas on their plate.  Looking at it as more of a trade as noted here:


  126. 126
    zman Says:

    re 124 – agreed re management. Deer in headlights on the last call. 

  127. 127
    zman Says:

    Probing above $50 now


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