Friday Morning



Market Sentiment Watch:  Next week becomes busier on the economic data front and our suspicion would be that oil prices will again come under pressure without actual action from OPEC / non OPEC (which we don't expect) given the time of year (maintenance season) and the propensity for larger crude inventory builds (though product stocks should ease). In today's post please find the natural gas storage review (spot on withdrawal estimate vs consensus but we see this time of year as full of noise masking fundamental improvements in the natural gas macro picture), some key play comments on the oil macro (CLB), a set of update shale production charts (quite clearly rolling lower now) and thoughts and an updated pro forma cheat sheet for OAS and some other odds and ends. 

Ecodata Watch:

  • We get the initial look at 4Q15 GDP at 8:30 am EST (F = 0.7% vs 3Q15 at 2.0%), 
  • We get the Employment Cost Index at 8:30 am EST (F = 0.6% vs 0.6% last read), 
  • We get Consumer Sentiment at 10 am EST (F = 92.8, last read was 92.6)
  • Next we get the beginning of month raft of economic data culminating in nonfarm payrolls at week's end. 

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watc​h
  3. Natural Gas Inventory Review 
  4. Stuff We Care About Today - OAS, HK 
  5. Odds & Ends


Holdings Watch:   

ZMT, ZLT, Z42016 (still 100% cash)

  • Yesterday's Trades: None

The Blotter is updated.

ZLT Pie - look for an updated Pie next week. 

Commodity Watch:

Crude oil closed up $0.92 yesterday at $33.22 moving higher early on high volume amidst more comments out of Russia and OPEC members of a possible meeting where a cut may be discussed. That's a lot of air guitar to be sure but it builds upon recent comments so while we're not saying it can't happen and as always we're not counting on it the strength is somewhat interesting. While we have not been adding to positions year to date, oil price bounce inflated levels due to this chatter don't do much to make us want to nibble before we had planned to (February lightly into March ... we're still not feeling rushed to dip buy). Today at some point before the close we expect to see EIA 914 data through November and it's likely going to reflect another month to month decline in Lower 48 volumes but also revisions higher in recent months' data. We will add a chart to the post once we have the data in hand. This morning crude is trading flat. 

  • Iran Watch:  Exports are set to hit 2 year high, up 20% YoY and expected to rise to 1.5 mm bopd in January before ebbing slightly to 1.44 mm bopd in February, according to Reuters. We note this is out of a recent ~ 2.9 mm bopd of production of which less than 1.3 mm bopd was officially exported last year and down from pre sanction 2011 levels when Iran exported ~ 2.6 mm bopd (much of which are lower value condensate volumes).  The current plan appears to be to add 0.5 mm bopd in exports near term sending an incremental 0.2 mm bopd to Europe (which took in > 0.6 mm bopd of Iranian volumes pre sanctions)  and pushing volumes to India to 0.3 mm bopd (up from recent ~ 0.2 mm bopd). Separately Reuters notes that Iran, who is refined product short, is importing more gasoline despite a recent increase (unquantified) in refining capacity to meet domestic demand.  
  • From Russia With Confusion Watch:  Russia's Foreign Minister Lavrov to discuss oil prices on a visit to UAE.  UAE has been quick to quash all talk of OPEC production cuts and cooperation with non OPEC players to stabilize prices by tempering over supply.  In other Russian news, Russia's Deputy PM noted their energy industry is largely private and not controlled by the State while Energy Minister Novak said Russia is ready to discussing oil output but said no decision has been made. As usual, Russia remains a confusing tease and we remain skeptical that they do more than talk. 
  • Operation Cooperation Watch:  According to Reuters, two OPEC delegates said ministers were discussing the idea of holding an OPEC / Non OPEC meeting to discuss prices. One said it's the "best idea" vs an OPEC emergency meeting (which likely wouldn't happen or where nothing would be accomplished) and said the timing could be February or early March and that such a meeting might be at the expert level rather than the ministerial level (meaning they could develop a plan without authority to act and then move on that plan, or not, later). 
  • VLO Comments Watch: VLO sees continued strong gasoline demand (cited SUV sales, increased miles driven stats.
  • CLB U.S. Comments Watch:   1) "Core believes that the worldwide crude oil supply and demand markets will balance in the second half of 2016.",  2) "U.S. unconventional production peaked at approximately 5.5 million barrels of oil per day in March of 2015, has since fallen by over 600,000 barrels a day owing to high decline curve rates associated with tight oil reservoirs" (offset by unsustainable adds of 250,000 bopd (we had noticed the adjustments in the data stream).  3) "The sharp declines from U.S. land production will continue into 2016 and Core believes these decreases could reach 900,000 barrels a day by the year-end 2016. Lower levels of new wells and delayed production maintenance will exacerbate this 2016 fall in U.S. land production." 4) "the short gains from legacy deepwater Gulf of Mexico projects will not materialize in 2016 to offset the significant decreases in U.S. land production as they did in late 2015." 5) "Core estimates that the current production decline curve rate for U.S. production is approximately 7.8% net which will expand as 2016 progresses and could reach 10% net by the end of the year 2016."
  • CLB Global Comments Watch:   1) "Globally, Core estimates that crude oil production decline curve has expanded to 3.1% net, up some 60 basis points from year earlier estimates. Applying the 3.1% net decline curve rate to the worldwide crude oil production base of approximately 85 million barrels a day means that the planet will need to produce approximately 2.6 million new barrels by this date next year to maintain current worldwide production totals." 2) "With the long-term worldwide spare capacity nearing zero, Core believes that worldwide producers will not be able to offset the estimated 3.1% net production decline curve rate in 2016, leading to falling global crude oil production by the second half of 2016." 3) "Therefore, Core believes crude oil markets rationalize in the second half of 2016 and price stability followed by price increases return to the energy complex. Remember, the immutable laws of physics and thermodynamics mean that the crude oil production decline curve always wins and that it never sleeps."
  • BHI Comments Watch:  BHI warned that global rig counts could fall 30% in 2016.


Natural gas closed up 2.5 cents at $2.18 after EIA reported an in line with expectations withdrawal of 221 Bcf that eroded the overhang to the five year average and year ago levels as noted below (you can see the gap to year ago and gap to record territory tighten in Chart A1 below). Gas fired power generation, according to Bentek, was 14% higher than year ago levels.  Warm near term forecasts are keeping a lid on prices but we see this period before March as largely noise with the mild winter forecast continuing to mask fundamental improvements in the macro picture for natural gas. We see gas as becoming more constructive after we trough under 2012's record high spring trough level just under 2.4 Tcf. Before the close today we should get EIA 914 data (better chance than usual of positive (lower) production news), After the close we will receive more dta and will include our macro slide show update in the Monday post.  This morning gas is trading up 4% at post time likely due to another round of colder air moving into the eastern third of the US in the 6 to 10 day and 8 to 14 day outlooks.  

Shale Data Watch:  EIA updated their view of production from the primary shale gas plays using their data and that of Drilling Info's data as they do about once per month. The data below runs through December 2015.  Note that Marcellus growth has stalled. Rig counts there have plummeted but we do suspect as much as 0.5 Bcgpd of the move off peak is curtailments.  Nice departure having watched it rise almost monthly since 2010. Note the other gassy and associated gas shales aside from the Utica are in decline now and the Utica's time will come likely in 2017. The Fayetteville now has no active rigs and once a key piece of the growth wedge is now slipping.  Lastly, please note the first two graphs run through October 2015 (we'll get November later today) and the rest of the play graphs are through December 2015. 

shale dec 2015 A


shale dec 2015 B


shale dec 2015 C

Bentek Data Watch:

  • Dry gas production:  Crossing over.  Bentek noted production was up 0.4% week to week (due to lower curtailments during winter) but is now only up 0.1% compared with year ago rates (recall last year at this time production was rising rapidly). On average over the last 12 months, production has been up 5.1 Bcfgpd on a YOY basis but was slowing in recent months and now appears to be up less than 1 Bcfgpd YoY. 
  • Imports / Exports: Imports from Canada were down 5.3% last week and were in line with year ago levels. Exports to Mexico were down 4.2% week to week but were near all time highs.


Natural Gas Storage Review

gas table 012216


gas graphs 012216


gas graphs 012216b


Stuff We Care About Today

OAS Quick Wrap

Please see yesterday's post for comments in addition to the ones below. Please find below an updated cheat sheet pro forma yesterdays offering. Key points:

The Offering:

  • Assuming 34.0 mm plus the full shoe of 5.1 mm shares we would expect a net capital raise of  ~ $175 mm,


  • Lifts cash to ~ $185 to $190 mm and takes liquidity to ~$1.6 B, 
  • Revolver stays 9% drawn as they didn't label proceeds for credit facility reduction. We note the draw on the revolver was down from 12% drawn at the end of the 3Q15 as they free cash flowed in 4Q, 
  • Net debt to TTM EBITDA and net debt to 3Q15 annualized EBITDA inch down to 2.3x and 2.8x respectively on the cash build.
  • On our $43.75 and $2.50 deck we put 2016 EBITDA at ~ $400 mm with a swing of $45 mm (10%) for a $10 drop in oil.  This incorporates additional hedged announced yesterday. 
  • This puts YE16 net debt to EBITDA at 5.4x on just above midpoint volumes (49,000 BOEpd) which we'd expect them to best (vs 4.5x using current Street EBITDA) and assuming no external financing is obtained for midstream build out. 

Nutshell: Necessary action to keep revolver relatively clear and be able to expand infrastructure in Wild Basin (core of core highest return asset they hold) in preparation for growth there in late 2016 into 2017.  They may still monetize a portion of the midstream later this year which would reduce the $140 mm midstream wedge in the budget.  Removes near term pressure in our view and buys management more time (instead of adding to debt while waiting for higher prices). At this point it would seem to be appropriate for management to start openly buying shares.  We continue to own the name in the ZLT as a Core Bakken position with a core of core Williston Basin program and in our view top flight management. While the name is not our our Shopping List due to leverage concerns relative to low oil prices we see it as overdone to the downside (more than we see oil that way and we do see oil that way) and it is on our Blue Light Special list of names under consideration for additional Trading Share adds near term. 

OAS 012816


Other Stuff

Odds & Ends

Analyst Watch:

  • TBA in comments. 

83 Responses to “Friday Morning”

  1. 1
    zman Says:

    4Q GDP up 0.8% vs 0.7% expectation.  Revisions here in a month should be interesting. 

  2. 2
    Wayne G Says:

    re 1: flip headline


  3. 3
    Wayne G Says:

    OAS price target raised $1 at RBC to $10 from $9

  4. 4
    Wayne G Says:

    OIL MKT RESEARCH: Goldman Sees Prices for ‘Fundamental Change’
    — Goldman Sachs says prices right for driving rebalance in oil mkt. Russia, OPEC deal on output seen as unlikely by Saxo, while small cuts from each would signal mkt bottom.
    Goldman Sachs head of commodities research Jeff Currie 
    “Recent price declines are not demand driven, but rather driven by structural supply forces”
    “Time-spreads in Brent and oil products have strengthened, not weakened, and weakening time-spreads are characteristic of demand-driven price declines”
    “We’re now in the right zip code in terms of prices that are creating the adjustment process”

  5. 5
    zman Says:

    CVX capex

    $ MM 2014 A   2015 A   2016 E  
    CVX       40,300         34,000         26,600 -22%
    CVX upstream       35,898         31,280         24,000 -23%
    CVX US upstream         8,799           7,582           5,400 -29%
  6. 6
    zman Says:

    re 2 – apologies, too right, my typo. 

  7. 7
    zman Says:

    re 3 – Wow, someone gets it.  Nice vs the plethora of $6 to $4 mark-target-to-market-and-keep-your-head-down-if-it-doesn't-sell-Wolfcamp cuts I see. 

    re 4 – third week of change in tone.

  8. 8
    zman Says:

    Chatter support holding near $34


  9. 9
    zman Says:

    MRD CEO to resign effective immediately to focus on MEMP duties. Replaced by Jay Graham, co founder WildHorse Resources, geologist, APC area manager prior to 2007. 

  10. 10
    zman Says:

    re 9 – Geno, Reef, or anyone. Got color on him?

  11. 11
    zman Says:

    > $34 http://www.cx-portal.com/wti/oil_en.html  More staying power than your usual chatter. 

    NG Up 5%  up on next round of cold


    We should get EIA 914 data after lunch for both, probably shortly after rig counts. 

    Link to last month's 914 data – note the increased number of purple (down) arrows


  12. 12
    zman Says:

    Chicago PMI unexpected up big. 55.6 for January vs 45.3 expected and a last read o 42.9.

  13. 13
    ctb14 Says:

    11 enough chatter to chase out a few shorts

  14. 14
    nrgyman Says:

    CNX reported another huge deep Utica well:   61.9  mmcfpd 24 hr IP.  Greene Co, PA (SW PA–under the Marcellus).

  15. 15
    zman Says:

    re 13 – yeah, it's a quiet, joyless rally but it sets up a sideways trade and beats down lock limit action of the 1st two weeks of the year. 

  16. 16
    nrgyman Says:

    RE 14:  That well could be stoking RICE, as they have a decent footprint in Greene Co.

  17. 17
    ctb14 Says:

    New Harold Hamm interview


  18. 18
    zman Says:

    re 14 – thanks – deeper, overpressured area.  Note that the Utica is the only shale in the chart set still up and even with big IPs and wells that are choked to a flat 20 MM/d for the first year that won't last long given the rig count sharp drop there. 


    rigs mini 012216


  19. 19
    macguyver Says:

    re 14 did they say how much the well cost?

  20. 20
    RB Says:

    Both WTI and XOP reflect divergences on the weekly charts.  The WTI chart divergence is better defined and would seem to offer more spring.  The trouble is we need a catalyst and what we get is chatter that pops things a bit and the chatter is followed by denials.  I have taken the trade on XOP a few times and had my head chopped off each time.  When these things move I think the distance they can travel is tremendous.  Not sure there is anything to do other than to realize the instruments are poised to make outsized gains.



  21. 21
    zman Says:

    re 20 – thanks for the read

  22. 22
    Wayne G Says:

    Iran Wouldn’t Join Immediate Opec Cut: WSJ, Citing Iran Official

  23. 23
    nrgyman Says:

    RE 19:  No cost data on the well that I could see.  These are deep, higher cost 'science' type wells that producers (esp EQT, RRC and CNX) are trying to prove the concept of the deep Utica in PA and WV under the Marcellus.  EQT claims they will eventually cost $12.5 mm to $14 mm per well, but they are not there yet.  EQT plans to drill 5 (could move up to 10) deep Utica wells in 2016 and they are the leaders in this deep Utica development.  

  24. 24
    zman Says:

    re 22 – which when spoken aloud surprised no one who had listened to them any time recently.  Iraq will say same though both support cuts by others. 

  25. 25
    Wayne G Says:

    MORE: Iran Won’t Consider Cut Until Exports Rise 1.5m bbl/d: WSJ
    — Iran “won’t consider a cut” until its exports have increased by 1.5m bbl/d over current levels, WSJ reporter Summer Said says on Twitter, citing an unidentified Iranian official.
    Iran produced 2.7m b/d in December: Bloomberg estimates 

  26. 26
    macguyver Says:

    so much for a grand oil cut

  27. 27
    macguyver Says:

    re 23: like RMP long term….however with RICE bonds yielding 12% don't know how much can rally until they do too. 

  28. 28
    zman Says:

    re 25 – and appear to be exporting about 1.5 mm bopd this month. So they won't cut until production is close to 4 mm bopd (pre sanction levels). Makes sense to me.  That will take time, more if they want most of that to be light sweet. 

  29. 29
    zman Says:

    Getting on a couple of calls, back in a bit. 

  30. 30
    nrgyman Says:

    RE 27:  Agreed.  RMP, AM and EQM all have solid long term growth profiles in the midstream sector.  One reason I like their GPs:  RICE, AR and EQT.  Midstream growth is adding value to the E&P business.  

  31. 31
    zman Says:

    CVX (unowned) call at 11 am EST

  32. 32
    Wayne G Says:


  33. 33
    Geno Says:

     RE 9: Wildhorse is a direct competitor with Memorial I wonder if they are going to roll Wildhorse's acreage in again.

  34. 34
    macguyver Says:

    re 33 isn't Wildhorse also a portfolio company of NGP (sponsor of both MRD and PTXP)?

  35. 35
    zman Says:

    CVX (unowned – variety of reasons to listen) 4Q15 Notes

    $4.28 dividend – $8 B, 28th year of increase

    Sold $11 B assets last 2 years

    Cash $11 B

    Net Debt to $27 B (net debt to cap of 155)

    Noting higher lifting costs – hmm. 

    $9 B less spent as per table noted above in 2015

    Sounds like per BOE F&D down 10% in 2015 reserve replacement was 107% vs 5 year at 113%. 

    Said capex is stale due to lower prices since the fall forecast was made – so bigger cuts coming

    Will divest non competitive assets

    Grew production by 2% in 2015 – part of this was GOM

    $6 B this year wrapping up major LNG projects (Gorgon, Wheatstone), next year only $2 B

    Noting they have a strong balance sheet; will use our AA rated balance sheet this year, you use the strong balance sheet during the down times, will remain strong but long term projects will continue to press ahead. 

    Low end of 2016 capex is $25 B vs the table above.  The low end is the low end, not much flex below that for spend this year. There is more flex lower in the 2017 and 2018 budget.  "I don't want to shut in all our rigs around the world".  "We've done tremendous work in the Permian to get our costs down, we have 6 rigs there and 14 non ops" and they don't want to lose that efficiency.

    Rating agency comments – they have conservative decks which are reasonable. Many companies are up for review. If a downgrade does occur we won't be the only one and she doesn't see that materially impacting their costs or ability to work. 

    Costs in the deepwater have not come down as fast as they have onshore. As you go further ashore, some of the deeper projects are more challenged (need bigger pools, bigger hubs than before – noting some prior thought to be hub sized pools would be instead tiebacks and then non economic).   So some deferred and that $ is going into the Permian. Yep. Reinforces comments re unsustainable pop up in the Gulf of Mexico production. 

    Capex $20 to $24 B in 2017 and 2018 – growth to slow to 1.5%.   "We are dramatically cutting capex.  We have momentum in the system but we are not initiating long cycle. We are not going to invest to hold volumes. "



  36. 36
    zman Says:

    re 33/34 – thanks

  37. 37
    zman Says:

    CVX Notes 2

    Silver lining thoughts:

    1) most of cost reductions are going to be permanent

    2) new greater simplicity of structure will be permanent

    3) there are opportunities emerging. 

    Q) Non OPEC supply resilience – base declines 

    A) History has shown during times of lower spending like this you can see a percent or two of increased base decline.  Increasingly ability to hold up production is wearing off (hedges noted as wearing off leading to lower activity). 

    Sees  trend towards balance as inexorable.


  38. 38
    Wayne G Says:

    China Poised for Biggest Crude Binge Since ’11 
       Chinese traders booked 1.38m b/d of West African crude for loading onto tankers in Feb., biggest monthly flow in data compiled by Bloomberg since Aug. 2011. 
    • Shipments jump 35% m/m

  39. 39
    Dillon Says:

    Wildhorse 1 was what MRD was compiled of. I'm hearing there is a Wildhorse II out there compiling acreage in the same area. You know that's a deal that's being done to sell to MRD. Pretty sure NGP made that 2nd vehicle to acquire acreage discretely and flip it to MRD.

  40. 40
    zman Says:

    re 38 – Kung pao

  41. 41
    zman Says:

    Fairly resilient after the Iran comments


    Thanks Dillon, anyone with color on Graham can email us a zman@zmansenergybrain.com. Thanks. 

  42. 42
    nrgyman Says:

    MRD:  Are there any advantages to MRD holding onto the GP interest of MEMP?  Seems like the consolidated debt of MEMP clouds the optics, not to mention the negative pull from an associated upstream MLP.  Why not sell the GP interest, pay down the revolver, eliminate altogether the financial association with the MLP and give the markets a clearer, cleaner vision of the promising E&P?  Is this management move today is a step toward that end?

  43. 43
    zman Says:

    re 42 – they talk about the consolidated debt on every CC so I don't think anyone is missing that point … could be wrong but it's been noted many times. As to a potential move, the move to run just the one would make sense as a move in that direction but have not seen anything on it and don't recall them hinting at that on prior calls but could be they see what you are seeing. 

  44. 44
    DaveH Says:

    Z, in post 106 yesterday in reponse to post 104 question about what the COT data was you gave NYMEX link and said "If you search crude you'll see longs add 3,246 contracts by last Tuesday and shorts punted 31,503 contracts".   I wondered if by "punted" you meant that shorts sold short 31503 more contracts of ir you meant that shorts covered 31,503 of their shorts.   I attempted to answer my question by looking at the NYMEX data.   I scrolled down looking for "Crude" and found "CRUDE OIL, LIGHT SWEET – NEW YORK MERCANTILE EXCHANGE".   Under that category for "Commercial" and "Changes in Commitments from: January 12, 2016"  I found Long = -44,225 and short = -15,495.  Those numbers don't match yours.   Where am I going wrong?

  45. 45
    james T Says:

    re44 I was looking at Wrap from weekend:


  46. 46
    zman Says:

    re 44 – apologies, sloppy nomenclature on my part.  The reduced their short positions week to week by 31, 503 contracts. 

    Sure, see link here:


    In browser search "crude" – it's a bit more than halfway down if you want to scroll. Its the first that comes up of 8 hits.

    Labeled as :


    and the section will look like this (what I look at is the Long and Short numbers under the non commercial segment – these are the speculators vs the commercials who may be producers or consumers – the #s I noted yesterday are in bold italics below).

    CRUDE OIL, LIGHT SWEET - NEW YORK MERCANTILE EXCHANGE                                                   Code-067651
    Commitments of Traders with Delta-adjusted Options and Futures Combined, January 19, 2016                          
         :   Total  :                        Reportable Positions                                :   Nonreportable
         :----------------------------------------------------------------------------------------     Positions
         :   Open   :           Non-Commercial       :     Commercial      :       Total         :
         : Interest :   Long   :  Short   : Spreading:   Long   :  Short   :   Long   :  Short   :   Long   :  Short
         :          : (CONTRACTS OF 1,000 BARRELS)                                               :
         :          :                                                                            :
    All  : 2,400,004:   514,276    284,441    948,633    828,408  1,074,748  2,291,317  2,307,821:   108,687     92,183
    Old  : 2,400,004:   514,276    284,441    948,633    828,408  1,074,748  2,291,317  2,307,821:   108,687     92,183
    Other:         0:         0          0          0          0          0          0          0:         0          0
         :          :                                                                            :
         :          :          Changes in Commitments from: January 12, 2016                     :
         :  -137,427:     3,246    -31,503    -89,082    -44,225    -15,495   -130,060   -136,080:    -7,367     -1,348
  47. 47
    nrgyman Says:

    SYRG:  Do you have the post-offering TEV/Ebitda metrics for 2016 and 2017?

  48. 48
    james T Says:

    EIA Discrepanices : Texas 


  49. 49
    zman Says:

    re 47

    At $6.05 (assuming the shoe was taken) its trading at TEV/EBITDA of:

    FY2016: 7.0x

    FY2017: 5.0x



  50. 50
    zman Says:

    re 48 – great comment on his part. 

    Rigs in a few minutes. 

  51. 51
    zman Says:

    EIA 914 data out, quick notes in a bit

  52. 52
    Wayne G Says:


  53. 53
    Wayne G Says:



  54. 54
    zman Says:

    EIA 914 data

    Minimal increase in October vs last month (generally the more recent months come up a bit as estimates are replaced in parts of the data with actual numbers.) 

    They show November at 9.318 mm bopd vs October at 9.37 mm bopd, down 0.6% or 52,000 bopd month to month. 

    TX and N are essentially flat, 

    Gulf of Mexico is down 3.5% or 57,000 bopd 

    Almost everything else down slightly including OK down 2.9%

    A bit hard to buy the Texas number given the EFS declines.  This puts November slightly down L48 onshore. 

    We'll have the States graph set out in the Monday post with rigs. 



  55. 55
    nrgyman Says:

    RE 49:  Thanks.  Stock in doghouse now for dilution at a low price, but no debt, low costs and attractive future growth when oil turns has me interested (and acquiring).  One of the names that stands out due to no debt.  5x on 2017 seems reasonable for such a situation.

  56. 56
    zman Says:

    Thanks Wayne

    Rig Count Watch

    US Land down 17 to 490 vs 1,482 YoY

    Gulf of Mexico down 1 to 28 vs 47

    Oil down 12 to 498 vs 1,223 year ago and peak over 1,600

    NG down 6 to 121 vs 319 (continuous slide)

    Horizontal rigs down 13 to 487 vs 1,168 a year ago

    Verticals down 3 to 74 vs 235

    Texas lost 13 rigs last week with the Permian down 17 rigs (positive offsets in other parts of the state, with the EFS flat)

    Bakken down 1 to 44 vs  ….. 148. 

    On the gassy side of things

    Marcellus down 1 to 34 vs 75 a year ago

    Fayetteville remains at 0 rigs vs 9 a year ago

    Utica holding at 14 vs 43




  57. 57
    ctb14 Says:

    37 #1  E&Ps have all been voicing this…I find it hard to believe fully…Service companies are going to want some margin back

  58. 58
    zman Says:

    re 55 – same numbers in the Permian would trade 10x.  It's on our Shopping List (see pull down menu at upper left for the new people around here). 

  59. 59
    zman Says:

    re 57 – my general sense (from the last couple of quarters worth of CC's and some chats)  is that most E&Ps see holding 1/2 to 1/3 of D&C savings when prices really turn up, and that's based upon time savings for both drilling and completion operations. Maybe it's a bit higher now but not 100% for anyone that I can think of.   

  60. 60
    james T Says:

    ZMAN – Rig count is another positive,  alot of small positive things seem to be piling up.   So just worried about Iran and oil inventory builds for how many more weeks ?


  61. 61
    zman Says:

    re 60 – from the weekly wrap:

    Beginning this week and running through early March, the potential for "Monster sized" crude builds increases. Refinery utilization typically pulls back fairly significantly during this period for the primary maintenance season of the year (refiners gear up to make summer grade gasoline and perform any needed maintenance). These builds should be significantly smaller (less "Monster") than those seen at this time in 2015 due to lower production levels (by 500,000+ bopd on a YoY basis). 
  62. 62
    zman Says:

    Offtopicthirty – grabbing a run, back in a bit. 

  63. 63
    DaveH Says:

    RE: 46, thanks, I understand now.

  64. 64
    BirdsofpreyRcool Says:

    Was talking to a CFO at one of our z-companies… he said the Credit Suisse Nerd Herd of i-Bankers were there yesterday just to check in for a chat.  Anyway, seems that any energy company with spare cash and a leveraged balance sheet is buying their own debt in the open market.  This makes complete sense!  Why put that money into capex for a 0 to 20% ROR, when you can buy your own bonds for a >20% total return?

    Also hearing that banks are adding new covenants to their redeterminations… can't recall what he called it, but basically says that if you have any cash holdings and anything drawn on your revolver, you must pay down the revolver.  In other words:  no cash hoarding (i think that's what he called it… a "No Hoarding" clause).  Well… that is not so much aimed at companies who like to hold some cash on hand, even with borrowings on their revolver.  Nope.  It's a defensive move by the banks, looking down the road and expecting more Chapter 11s.  A common practice for a company about to Chapter is to draw down their entire availability under their revolver.  Gives them some cash to operate while they put a DIP facility in place (among other things).  And it's one of the BK "tells."  The anti-hoarding covenant would prevent companies from being able to do that.

    Didn't i see somewhere that Sandridge drew down their entire revolver recently?  Can anybody confirm that?  I don't know where i saw that…

    I never understood what Lee Cooperman saw in Sandridge.  Guess it must means that no one is perfect.

  65. 65
    zman Says:

    e 64 – thanks – I'd note that most don't have much on the revolver, I can think of handful with > 20% drawn but those lack cash to pay it down. 

  66. 66
    ctb14 Says:

    Sandridge indeed drew down entire revolver and hired advisors.

  67. 67
    zman Says:

    re 66 – not to put too fine a point on it but that's shady. 

  68. 68
    zman Says:

    EIA 914 data for natural gas up 0.6% Nov vs Oct (gross withdrawals) – marketed production not yet out. We'll have the macro slide shows in the Monday post. 

  69. 69
    BirdsofpreyRcool Says:

    #67 — it may be shady, but that is pretty typical, pre-filing.  Hence the new "Thou Shalt Not Hoard" bank covenant. 

    In my opinion, t's not about the "hoarding," it's to prevent the pre-BK drawdown.

  70. 70
    zman Says:


  71. 71
    BirdsofpreyRcool Says:

    ctb14 — thank you.


    Kirkland & Ellis + Houlihan Lokey => Chapter 11 advisory team.  Paid for with lots and lots of cash from their fully-drawn-down revolver.  Ouch!

  72. 72
    ctb14 Says:

    Sandridge was never the same after the activists pushed Tom Ward out.

  73. 73
    zman Says:

    re 72 – yeah, Riatta (sp?), then SD – we owned it up and down, got out many years back now, never looked back. 

    XOP – drifting up with market into the last half hour o the month.  

  74. 74
    zman Says:

    FANG (unowned) – best post secondary reaction in quite some time, especially given that they'd raised just prior to that as well. No hedges. No real need of them. Shopping List name, missed our oppy in the mid $50s the other for being cheap, after the next group based pullback we are very likely to take the Starter there (Feb/Mar)

  75. 75
    tomdavis12 Says:

    Co.      Project                        Start                  End          Capacity         Estimated In-Service Date

    KMI   Gulf Coast Mainline    Moultrie Co, Ill.  Texok, TX     750 MMcf/d        3Q '16

    WPZ  Constitution       Susquehana Co, Pa  Schoharie Co, NY    650         4Q '16

    D     Lebandon West II    Butler Co Pa       Lebanon, Ohio         130            4Q '16

    NFG   Northern Access   Seageant Twshp, Pa    Wales NY       350             4Q '16

    REX   Rex Reversal      Clarington OH          Meeker CO           1200            4Q '16

    SEP   Gulf Markets Ph1      West V             Louisiana                 250             4q "16

    This is takeaway Capacity scheduled for Marcellus/Utica. There are also projects scheduled for '17 and '18. I have a list. What I am hearing is that if capital is unavailable or too expensive many of the out projects can be laid down. The other concern is that the E&P's have to make the NG or liquids commitment and if not that can another reason for lay down. There is 22 BCF/d of takeaway capacity scheduled for the next 3 years if necessary.  Nrgyman – you may have mentioned but if you did not always good to keep track of what happening in that basin. I know you do..  

  76. 76
    tomdavis12 Says:

    74  Maybe thinking it is an ETF for Facebook, Netflix, Amazon  Google  nyuk  

  77. 77
    zman Says:

    re 76 – heh

  78. 78
    zman Says:

    OK, signing off.  

    If it's not cold where you are this weekend then lap the block a few times and crank the AC.  

    The wrap will be out on Sunday. 

    Have a great weekend.  


  79. 79
    nrgyman Says:

    RE 75:  Thanks tomdavis12 for the midstream update table.  The goal of most of these is to get Appalachian natgas out of the region to markets where the differentials are much lower.  Net effect will be to reduce Utica/Marcellus diffs but possibly moderate Nymex pricing (to the extent more natgas flows there).  Utica/Marcellus players should benefit at the expense of others.  Note the large volume Rex Reversal–that is the Rockies Express Pipeline (not related to REX or REXX) being reversed to take natgas to the midwest from Appalachia.  A much wider region will soon be impacted by the Utica/Marcellus monster.  Huge future takeaway coming in most directions.  Just like with the GCC oil producers, the low cost natgas producers from the Utica/Marcellus are going to take market share away from everyone else.  High probability most of the planned pipe gets built in the Appalachian region.  Could have some delays, especially when dealing with the anti-fossil fuel NE communities who are trying to hold up permits.  

  80. 80
    nrgyman Says:

    XOP:  looks like it is targeting the closing gap left from Jan 5 at $30.27 and the 50 dma around $30.65.  

  81. 81
    geburtstagswunsche zum 18 geburtstag Says:

    geburtstagswunsche zum 18 geburtstag

  82. 82
    February 2016 Blank Calendar Says:

    February 2016 Blank Calendar

  83. 83
    geburtstagswunsche fur manner Says:

    geburtstagswunsche fur manner

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