Wrap – Week Ended 05/03/19

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Oil off 2% on the week after a weak EIA report (weak as weeklies go).  Check out the 3-2-1 now.  We expect refiners to move throughput higher towards the later part of May with 1 mm bopd of demand added over the next 6 weeks.  Also note the spread to Brent (export supportive).  

Group off 3 to 6%.  ZLT off 5% last week.  Most earnings were favorable and we saw positive responses to most recent add names including adds prior to the OII and LBRT quarters. TPIC threw us a curve ball and we doubled the ZLT position there down 20% on the knee jerk response to their warning (a warning which had been previously communicated as entirely possible - see 4Q call notes). 

The Trading Blotter is Updated. 

The 1Q19 Energy Earnings Week 4 Calendar has been added to the calendar page (another busy week). 

Have a good weekend.



14 Responses to “Wrap – Week Ended 05/03/19”

  1. 1
    zman Says:

    Published to SA this week:



  2. 2
    zman Says:

    Tomorrow's post:

    The Week That Was

    The 1Q19 Energy Earnings Week 4 Calendar

    The first edition of 1Q19 So Far This Quarter

  3. 3
    Baylor Says:

    JPM says energy is at its best value relative to book value in over 30 years 


  4. 4
    Baylor Says:

    Pipelines seem significantly undervalued compared to crude based on thisnchart



  5. 5
    zman Says:

    re 3/4 – thanks.

  6. 6
    zman Says:

    Oxy agrees to punt APC's Mozambique LNG to Total. 

    Chevron should take the $1 B break up fee and move to options #2. 

  7. 7
    brodway Says:

    re: 3

    that is difficult to dispute….but how to get the street to invest in energy again? 

    thinking its been 5 years since the bottom in energy has been put in….sector has been drifting higher and then lower with a number of names going under and a number of names being acquired by larger balance sheets. 

    i see many companies doing/saying the right things and focusing on shareholder returns vs. growth at any cost. in addition, recent consolidation should lead to fewer names in the space with lower debt, positive cash flow and a stable WTI price. over next 2 years i see the sector turning and m equity moves to upside not being crushed. the sector needs a confidence build. 



  8. 8
    zman Says:

    re 7 – unlikely it comes from M&A. Or at least not from the one off odd ball deal.   More likely it comes from repeated quarterly reports that stick to original plans AND a move by an increasing number of larger names to move into free cash flow and give back to shareholders in one form or another. Hard for the little guys to do as that's really never been the focus until now. They've always focused on getting bigger and then going cash flow positive as an outcome of that.  We know for a fact however that if you have a lower decline rate and high margins you don't have to be all that big to generate free cash at current oil prices. 

  9. 9
    zman Says:


  10. 10
    brodway Says:

    re: 9


    S&P futures down 50 in response to above

  11. 11
    brodway Says:

    re: 8

    thanks for the thoughts….the bigger guys with ability to create free cash flow are going to get recognized by street much quicker than face challenges getting there….at least that's how i see it….nice write up on EOG

  12. 12
    zman Says:

    re 10 – yep, DJIA fut off 400 on a threat to go to 25% tariffs on Friday. 

    re 11 – thanks. 

  13. 13
    zman Says:

    China rumored to be backing out of trade talks set for this week due to Trump tweet. 

    DJIA fut down 511, S&P fut down 56

  14. 14
    corporate proxy solicitation fraud report Says:

    Proxy Solicitation Process Meaning

    Wrap – Week Ended 05/03/19 | Zman

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