Market Sentiment Watch:

  • The Covid-19 numbers will get worse before they get better. Seems obvious but it's the back drop for the sitting on of hands so it bears constant reiteration.
    • Good Covid-19 trackers are listed at right on the site.
    • There will be multiple hot spot flareups and declines this month.
    • There will likely be a second wave this fall with better markets in between.
    • There is evidence that some places with stronger stay at home orders are seeing flattened curves.
  • Economic numbers are coming in worse that expected ... in many cases markedly worse. We expect the the numbers to spike down, and then back up beginning likely in mid to late May based upon current thinking.
  • OPEC+ will hold a virtually meeting on Monday.

In today's post please find:

  • the natural gas review:
    • smaller than expected withdrawal but this time of year modeling is difficult and the delta in any case is rounding error ...
    • ... we have arrived in the upper end of our long expected storage trough at the end of March, as expected for months now, not a back pat (well, maybe a little) but more just pleased to see the model tracking (we don't try to get each week right, could care less, we care about troughs and peaks ... look for our peak range for 2020 in a couple of weeks) ...
    • ... with that out of the way we very much look forward to exiting what should be the high demand heating season and entering what is likely to be a higher than usual for demand cooling season),
  • the near term supply/demand watch (new recent low for gas production, new high for LNG exports, new high for net US exports; we should see the first small build of the season next week but again, we look forward to getting out of the heating season and building more slowly than some may expect in the injection season_,
  • comments, graphs, and a quick look cheat sheet for EQT,
  • and some other odds and ends.

Ecodata Watch:

  • We get March Nonfarm Payrolls at 8:30 am EST (F = -140,000, last month was +273,000),
  • We get the unemployment rate at 8:30 am EST (F = 3.7%, last read was 3.5%),
  • We get average hourly earnings at 8:30 am EST (F = 0.2%, last read was 0.3%),
  • We get ISM nonmanufacturing at 10 am EST (F = 42.7%, last read was 57.3%),

In Today’s Post:

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


Holdings Watch:


  • Yesterday's Trades: None. Still sitting on hands but getting closer on adds inside the portfolio and to the portfolio (looking at ENPH (unowned) now).
  • The Blotter is updated.

Commodity Watch:

Crude oil closed up $5.01 (24.7%) yesterday at $25.32 after the market bought into comments made by President Trump that Russia and Saudi are close to a deal that would cut production 10 to 15 mm bopd.  These volume levels and the level of dialogue between Saudi and Russia appear to be highly optimistic to us and have been confirmed by no other party than the president. This morning crude is trading up over a buck.

  • OPEC+ plus Trump Watch: While Trump's claim of a 10 to 15 mm bopd cut may be beyond reason it is clear that the president has unfrozen the situation. OPEC+ announced this morning it will hold a virtual meeting on April 6th. They asked the Texas RRC commission to attend potentially along with the U.S. (DOE) and Canada.  Trump will meet with larger oil company names today and independents over the weekend. Putin is set to meet with Russian oil companies today but has not confirmed it will attend the April 6th meeting yet. Some groups within the U.S. oppose tariffs like the API but there is a rising push by some API members to act to keep imports out.
    • Sidebar: We note that several energy journalists point out multiple times a day that no cut of any size matters. We simply disagree. So do prices. Prices were down by two-thirds from earlier this year through two days ago. A lot of tanking fears were already priced in.  Is a big cut going to fix everything? Of course not. Demand is off a cliff. Will it help? Yes, that's just math. And so saying it doesn't matter is in our view more a part of their inherent, always negative bias against oil, against hydrocarbons than it is objective journalism. Some of these of work for big names like Bloomberg. And I've seen them actually take pleasure in falling job counts as rigs are stacked. They simply do not like oil any more than their namesake does. And it shows in their focus. Do I see a V-Up for prices? Probably not, I rarely do and we are in for a string of bad inventory data in April and part to all of May. But speaking to only demand at this time is like looking at only part of an equation. Cuts buy time. Cooperation improves sentiment. The lack of time and poor sentiment are part of what has driven crude from the $60s to the $20s.


Natural gas closed off $0.035 at $1.552 after EIA reported a smaller than expected withdrawal.  Key items of note from this week's supply and demand data:

  • Supply this week was down 4.6 Bcfgpd YoY as exports rose, imports fell and dry gas production continues to ebb. Production is now off 3.1 Bcfgpd (3.2%) from the November 2019 peak.
  • LNG exports set a new weekly record at 9.6 Bcfgpd.
  • This along with near record exported volumes to Mexico and imports from Canada falling seasonally pushed net exports to a new record at 11.3 Bcfgpd.
  • These are excellent figures and not very seasonal in natural other than the Canada portion which has become over the years less and less consequential.

This morning gas is trading up slightly.

Near Term Supply/Demand Watch:

Natural Gas Storage Review 


Stuff We Care About Today

EQT (Unowned) ~ Quick Update

The last time we did a quick update here the stock was $16.20 in July 2019 and we opted to pass on the name at that time due a lack of wanting to be in more gassy names, thoughts on debt as we looked ahead, uncertainty created by a changing of the guard with a new plan and ultimately the time the new plan would take to implement. The budget has been reduced and the dividend has been suspended to prioritize the balance sheet.

First some quick graphs:

Growth, Spending, Hedges:

  • No growth planned for this year.
  • The budget has been reduced three times since the original program was issued October. Well costs have come down smartly in recent quarters and another 10% or so is expected this year.
  • They are set to easily under spend this year,
  • They are well under half hedged with roughly 1/4 of expected natural gas swapped at $2.75 this year and a another ~ 4% in a asymmetric collar (smaller floor than ceiling).
  • Next year and beyond they are almost naked.

Balance Sheet:

  • Net debt:
    • At that time using 1Q19 data they were a 1.5x net debt type name (using annualized 1Q EBITDA)
    • Now they are a 2.9x net debt type name due to rising debt and falling EBITDA during the year.
    •     Like many names, this figure will expand in 1Q20 given low prices.
    •     We see YE 20 Net Debt to EBITDA just over 3x (they are looking to sell assets to reduce debt (non core, and their interest in ETRN (unowned) and this does not assume sales).  They've said they plan to sell the rest of ETRN by mid year but the valuation was higher when that comment was made ($230 mm in March).
    • At last check, debt was $5.3 B.
    • Bonds: Trading in modestly distressed territory on the long maturities (70's to 80's).

  • Liquidity:
    • Other than $0.7 B of letters of credit the revolver is now undrawn (they have reduced the draw since the end of the quarter via two new senior notes offerings ($1.0 B at 6.125% and $0.75 B at 7.0%) .
    • Interest coverage is more than adequate even on 4Q's lower EBITDA.


  • We do not own the name.
  • They have more leverage than we like.
  • With that said they are taking the right steps (cut the dividend, plan for underspend, target debt reduction) and take steps to reduce costs.
  • Thinking it over still.  Feel free to try to sway us into a position. Ears open and ready for some back and forth here.

Quick Cheat

Other Stuff

  • Look for additional Gassy Player cheat sheets next week, potentially a Gassy Player addition to the ZLT, and the full Gassy Player update.
  • Look for a new Renewable name in the next two weeks.

Odds & Ends

Analyst Watch:

  • TBA in comments

111 Responses to “T.G.I.F.”

  1. 1
    zman Says:

    NFP -701K, led lower by entertainment and leisure vs expectation of -83K

    Unemployment rises to 4.4% from 3.5%.

    Note the survey is taken mid March.

  2. 2
    Baylor Says:

    Oil ramping early

  3. 3
    zman Says:

    re 2 – yes, see comments above

  4. 4
    zman Says:


    Because as noted for days now, pushback on where it would actually go.

  5. 5
    zman Says:

    Got sent a piece on BE regarding the bond refi and Covid-19,

    – they note in the 10K they are impacted by supply chain issues, ability to build, conduct R&D, deliver, and ability to install issues due to Covid-19
    – This will not be unique to them, many firms will be in this same position.
    – 2020 was already going to be a low to no growth year with little upside until 2021 for guidance. In late 2019 we saw the move to offer rapidly installed micro grids prior to summer 2020 as an effort to offset this lack of near term growth. That program likely has stalled.

    • 2020 will be a throw away year for them and many. Summer 2020 will likely again be another bad fire season with power disruptions, once again emphasizing the need for clean decentralized back up and primary power.

    • we sold 90% of our BE position over $8. We have not added back to that position yet. We will re-evaluate that decision with the 1Q20 call.

  6. 6
    zman Says:

    WTI $27.35 as we approach equity open, has been over $28

    Brent is just under $34.


  7. 7
    zman Says:


  8. 8
    tomdavis12 Says:

    Z: Big picture question. I find it difficult to figure out the pro-anti energy bias of many articles I read. Let me know what you agree or disagree with. Worldwide supply capacity let’s assume is 1B bls. Lets say 750mm bls are already in storage. If the virus lingers for 4-6 weeks the storage may be close to full. Therefore I am wondering about timing of when the energy sector is likely to be back into favor. Would you agree that once the virus is not only flattening but declining and demand for energy starts to pick up, keeping some capital for that time would likely get the best performance. I know way to many variables but just like you are doing – waiting for the other side of the mountain could be where good performance will be. I always thought that when capex goes lower and lower production is not always easy to get going again.

  9. 9
    zman Says:

    re 8 – couple of questions/comments and will then respond in another comments

    What does “pro-anti energy bias” mean?

    – Non OPEC – between 65 and 67 mm bopd.
    – OPEC – has been recently < 28 mm bopd (Feb) and about 28 mm bopd in the early surveys on March.
    Could be stepping to ~ > 30 mm bopd with KSA moves (Saudi was ~9.7 in Feb, and claims 12.3 for April.

    So I’m not following on the supply capacity comment of 1 B barrels. I’m assuming you mean storage but just want to make sure. I also don’t know where the 750 mm barrels comment comes from. OECD stocks alone are 1.4 B Barrels. Is the 750 the OECD only less SPR in OECD?

  10. 10
    Skipton Says:

    Z interesting graphs thanks

  11. 11
    zman Says:

    re 10 – yeah, those guys do a really good job, lot of information in that.

  12. 12
    zman Says:

    MR has that bottoming look to it.

  13. 13
    brodway Says:


    That’s a good question Tom….unless we know where the slow of infections start to occur and there is some reasonable way to treat this disease its almost impossible to foresee where the supply continues to build. Its a function of people getting back into their vehicles going back to work, school and vacations until we see the other side of the mountain. For now, i think its a slippery slope trying to catch the bottom. Certainly some of the names followed have already seen their lows, the question is which ones are still going to be trading a year from now.

  14. 14
    zman Says:

    Bill Gates – 10 more weeks


  15. 15
    zman Says:

    re 13 – would add that, what we own in the ZLT, is strong balance sheet focused. Which is why I turn down a lot of names with the > 2.5x type EBITDA metrics, names with big revolver draws, and names with near term maturity cliffs. I don’t see any of our current names as not trading a year from now. COG is our #1 position, they’re a sub 1.0x debt met name and while that will come up a bit on a 1Q20 annualized basis they are fine. Names like VWDRY don’t have net debt, they have net cash. Others are low. BCEI for instance is working to $0 debt by end of year from very little now (just $80 mm on the revolver).

  16. 16
    brodway Says:

    re: 12

    Yup…just as crude had a non ending bid at $20 last week and this week…at some point those companies that survive yet another fiasco in the energy markets will regain a good portion of their losses….MR may be more immune as they are more of a gas producer. Certainly there are going to be individual names that are going to be huge outperformers over next 12 months.

  17. 17
    Baylor Says:

    Any thoughts on near term downside risks to ENPH? Seems to have strong support here down to the low $20s

  18. 18
    brodway Says:

    re: 15

    It must be reiterated that the ZLT has slowly shifted its investment thesis to include alternative energy names….and from what i’m hearing it may increase further by year end.

  19. 19
    james T Says:

    re13 We have the treatment ? You mean handle the raw numbers if we don’t keep people at home I assume. Bill Gates 10 weeks, Virus is going to still be around in 10 weeks. Are they waiting until Pharma has made enough HydroxyCloroquine, maybe we don’t have enough Z pacs as well.

  20. 20
    brodway Says:

    re: 17

    Baylor…strictly from technical perspective it did not go back to the original support of $18….found buyers at $23 and then retested a bit higher than that…based on the last report, they seemed to be doing very well and their presentation was quite impressive based on Zman’s write up. Once this dreaded disease is managed i don’t see a reason why they don’t accelerate efforts to get back to full speed ahead. Its a long term global solution to tap into alternative energy sources….that i don’t think changes for a very long time

  21. 21
    brodway Says:


    what i meant is they find some way to manage the virus and treat it until a cure is found. its still not clear whether the hydrocloroquine is fully effective but i sense that some sort of coctail will be in use soon enough that makes people not die. i don’t see how they can contain it and whether quarantine is a realistic solution.

  22. 22
    brodway Says:


    also i’d like to see how ENPH acts as it approaches the 200dma at $28…if it holds there even if markets have another leg down, i’d think technically it would be a highly bullish statement. should it not hold there, i’d probably look to be a buyer at 23-24 range

  23. 23
    zman Says:

    re 17

    • estimates will come off on Covid-19, can’t come close at this time to saying how far.

    • products in high demand prior to virus disruption of supply chain, production, installation.

    • saw the other day they are doing virtual teach ins for installers. I’m planning on watching some near term as it helps me better understand home storage, energy management vs their prior online short videos.

    • their 10K was out in mid late Feb. This was prior to Covid-19 really blowing up in the US in terms of lock down. Language in the K was limited to a single mention of Coronavirus.

    • if you look at the BE 10K which just got published, it’s litter with Covid-19 commentary.

    • ENPH is HQ’d in California. I would assume they are working from home but don’t know.

    • Their products are made in China and Mexico. As of the 4Q call they were not seeing big hits on the manufacturing side in China, things were ramping back up, they expected to see an uptick in expedited shipping, something they’ve done before to make numbers.

    • on all the alt energy 4Q calls the worry about Covid-19 was manufacturing in China and supply chain to the manufacturing. Most companies like them, like TPIC said things were actually working pretty well.

    • my suspicion is the 1Q round of calls will be more focused on install impacts in the U.S. California is a big market for them. I don’t know if much is moving right now on sales or installs. People out of work cannot help the sales environment and the outlook for solar has dimmed for the 2Q at least.

    • long story short, a lot of moving pieces. I’m very tempted to nibble at obvious TA support levels. I certainly will not go “all in” in one day or week. If it decides to fill gaps all the way into early last year however, I’ll be 3 feet in.

  24. 24
    zman Says:

    re 18 – this could be the case; I’ve heard this as well.

  25. 25
    zman Says:

    NYC situation going from bad to worse next week likely to weigh on market’s mind.

  26. 26
    james T Says:

    r. Stephen Smith: The more we see this disease, the more we understand that severe rapid COVID disease especially is in diabetics or prediabetics. We have 19 or 20 patients who are intubated. And 18 of the 20 are diabetic. And two are prediabetic. We don’t have anybody who’s been intubated in our group of over 80 now that was not diabetic or pre-diabetic that was intubated. We’ve seen younger patients with severe disease that have a very high BMI. We have patients that are over 300 pounds. We’ve seen a lot of it. And just now I think the world is catching up to this. A Seattle group published their data in the New England Journal of Medicine saying 58% of their ICU code patients were diabetic and that their average BMI was 33 which is morbidly obese. That fits with our data. What people haven’t focused on yet is that pre-diabetics are also at risk, especially if they have a high BMI. We haven’t had anyone under 70 who didn’t have a high BMI or was pre-diabetic get seriously ill.
    Dr. Stephen Smith then later pointed out that not a single coronavirus patient under his care who was on the hydroxychloroquine regimen needed to be intubated.

  27. 27
    tomdavis12 Says:

    9 The pro-anti energy bias is meant to say, if you know the author of what you are reading – like any Cramer comments you know are coming from a negative bias. He wants to keep proving how right he has been. If I read something where I do not know bias, that is when getting another opinion makes sense.
    So lets come from a different direction for global storage capacity issue. I know you had addressed NAM storage capacity. If the virus lingers for Cuomo 4 weeks and not Gates 10 weeks, do you think global storage capacity gets close to full and if capacity gets near full and starts to move down, would that not be a good time to commit some capital to energy exposure?

  28. 28
    zman Says:


    This is kind of in line with Goldman’s comment about 26 mm bopd of demand destruction (for April, not for full 2Q, last I read).

  29. 29
    zman Says:


  30. 30
    james T Says:

    re26 So maybe they will come around to offering the meds to this group (not the most healthy) of people before they get sick ??

  31. 31
    Skipton Says:

    As far as northern cal is concerned there is a complete lock down on construction so no solar being installed

  32. 32
    nrgyman Says:

    Re 17: The opening gap on March 24 has not yet been filled. Close on previous day was $27.51. I am using that as a near term target. The 200 dma is $28.22. The previous leg down found support at the 200 dma, which then had a $17 handle. Obviously the recent crisis spike lower broke it and the $21.49 low was set.

    My strategy is to pick up a partial position at the gap fill and wait to see if it tests the low, where I would add more. If the market moves higher before that low is reached add more.

  33. 33
    james T Says:

    re 30 Yeah that was my point on almost any equity unless a utility or something. Going to be affected one way or another when earnings come out ???

  34. 34
    zman Says:

    re 27

    • re pro-anti energy – OK, understood, that makes sense, thank you for the redirect, that helps me a lot when you do that.

    • re global storage. Did you see the URSA data chart I put in a post earlier this week? I thought that borrowed chart was pretty good and I just added it to the bottom of today’s post in Other Other Stuff for easy reference.

    • if nothing changes, I see a lot of places going to tank tops. The US bar in that chart aligned with my calculation exactly. I can’t vouch for much of the rest of the data but since they got that right I would assume it is fairly accurate. There is the big unknown on China and cavern SPRs but yeah, if nothing changes we are going to see location after location eventually reach tops. I think U.S. on my glide path is a mid to late May topper.

    • I do think something breaks on production first however. Canada, the U.S. are going to voluntarily cut I think. It only makes sense. Don’t know the veracity of the WSJ claim in 29.

    • re timing, your comment makes sense to me. Caveat. I am very long now. I have been sitting on hands. This market is extremely volatile. I sold three names on the way down, two of which were higher debt risk names. I have not added to a name since I guess Feb on the hydrocarbon side and only one on the green side in March (PLUG). So please bear that in mind, given that as I know you are largely away from the small / mid cap space, my thoughts are not exactly focused on which day, week, month upon which to add and more on am I OK owning what I own now while doing homework and grazing for potential opportunities.

  35. 35
    zman Says:

    re 31 – thank you. Suspected as much. I will have a call coming up with a wind name to chat about construction in the mid west as well.

  36. 36
    zman Says:

    re 30 – several instances of that.

    re 32 – thank you.

    Cuomo NY update started.

  37. 37
    zman Says:

    From Zorg on MR

    “Trying to turn here? Buyers rejecting 2.35 as too low all week long now…..looks like it wants to test 2.80/short term resistance again…..”

  38. 38
    tomdavis12 Says:

    34 Thanks. I’m coming from a reminder to myself to keep some dry powder available for the when the timing makes the most sense to me. You always seem to have enough capital. Historically I have struggled there. I find it harder to quantify the level of overreaction to oversold equities and when to buy. I can say many have been oversold, but not sure of a catalyst to change current thinking. Negative energy thinking seems to be common right now. I am always looking for changing measureables.

  39. 39
    zman Says:

    Seeing a sellside analyst sending around a piece that is speaking bullishly to natural gas.

  40. 40
    zman Says:

    WSJ reporting Trump could order Gulf of Mexico oil production closed due to Covid-19.

    That would be 1.9 to 2.0 mm bopd.

    Noted yesterday some BP GOM workers are infected, may be on some platforms (should not be surprising given what’s going on in Louisiana).

  41. 41
    Baylor Says:

    Can you help me understand the royalty topic? What does waivers mean? How does it help?

  42. 42
    tomdavis12 Says:

    Speaking of measureables, names I have an interest in PXD, PE & EPD all are showing buy signs using the MACD technicals.

  43. 43
    zman Says:

    re 38

    • as you should, perfect, agreed.
    • we add on a regular annual basis and the other day added more on top of that.

    • I have access to substantially more than what I actively manage but that’s a different discussion, I don’t call it cash because it’s in different accounts but it could, with a lot of arguing by me come in for additional adds and that’s not at all likely right now. The idea of all our eggs in energy is not how I would plan a good night of sleep.

    • agreed, it’s negative, at least for the hydrocarbon side. The renewables side is more broad market tied in my view.

    Hydrocarbon energy will continue to suffer ESG concerns etc but demand for volumes on the other side of Covid-19 will remain. I’ve watched forward multiple contract and expand depending upon the direction of commodity prices and the sustainable feel of price levels many, many times. Right now they are quite low. What was a balance sheet, margin, growth profile that would have supported a 10x type multiple is now closer to 6x. It’s always an evolution and not a “in 3 weeks” type answer to me.

    Same goes for which commodity is in favor (for a long time it’s been oil, this year would have been no different had it not been for the virus although NG was in the gutter and expected to rally and that has not changed other than a bit more risk has come into demand/exports than we expected 3 months back).

  44. 44
    zman Says:

    re 41

    • working interest
    • net revenue interest

    So you might own a well 100%
    you have an NRI of 82% because the royalty rate is 18%.
    So that 18% comes off your revenue prior to you deducting expenses.
    Allowing the operator or working interest owner not to pay the royalty burden would mean keeping 100% of production.
    – I assume they federal acres and not some other meaning.

  45. 45
    zman Says:

    Grabbing coffee back in a bit.

  46. 46
    zman Says:


    • suspends the divided.
    • lays off 7% of staff.
    • executive pay cuts to 30% now (prior cut was 20%).
    • capex cut in half.
  47. 47
    zman Says:

    re 46

    That was a 5 cent quarterly dividend.

    Net debt to EBITDA: 0.0x.

  48. 48
    elduque Says:

    LBRT- why would they cut their pay? Wouldn’t it make more sense to give themselves a retention bonus?😃

  49. 49
    zman Says:

    COG speaks on frac bans


  50. 50
    zman Says:


  51. 51
    zman Says:

    re 48 – because they’re not bad guys.

  52. 52
    elduque Says:

    we have another mini spike up. Trump tweet?

  53. 53
    zman Says:

    Putin says:

    Russian oil producers should combine efforts
    Reduction of 10 mm bopd is possible.

  54. 54
    zman Says:

    Putin says cut of more or less 10 mm bopd would be based from 1Q20 levels.

  55. 55
    zman Says:

    Bloomberg headlines:



  56. 56
    zman Says:


  57. 57
    Michael Says:

    Question: How is US able to contemplate coordinated cuts without running afoul of antitrust issues?

  58. 58
    Skipton Says:

    Z With the recent rise
    Are the oil prices still in super contango

  59. 59
    zman Says:

    Rig Count Watch

    Oil down 62 to 562 vs 831
    NG down 2 to 100 vs 194
    HZ down 60 to 593 vs 901

    Permian down 31 to 351 vs 462

  60. 60
    zman Says:

    re 57 – if the government directs it that’s not a Sherman violation.

    re 58 – yeah, I’d still call it that, maybe not an ultra, but the 6 month time spread is about $7 now.


  61. 61
    brodway Says:

    Seems like markets are liking that Trump actually spoke to Putin and it wasn’t fake news…

  62. 62
    zman Says:

    re 61 – I am pleased that the parties are talking about the need for meetings and possibilities on cuts again.

    US oil rigs down 120 (18%) since OPEC+ failure day on March 6th.

  63. 63
    james T Says:

    re61 Schiff is going to want the transcript of the call.

  64. 64
    nrgyman Says:

    RE 60: That contango spread means fat profits for those who own storage. Buy Saudi oil at current and sell the 6 mo futures with a $7 gain locked in, minus storage costs. Saudis giving away money until no more storage exists. Then prices plunge if they don’t shut in production.

    The 10 million bpd cuts proposed are a start but the demand loss is much higher. Some say 25 million bpd or more. With storage running out before long they will need to cut (or shut in) much more. Perhaps they are hoping for demand to pick up before that is necessary. Perhaps SA will keep holding the market by the throat until others are required to give up more production.

  65. 65
    brodway Says:

    re: 62/63

    have not heard the name Schiff for several weeks now…how quickly the stage and focus of attention has changed in this country.

    oil obviously likes that people are paying attention to its price.

  66. 66
    nrgyman Says:

    XLE -2.64% but XOP -0.24%. Disparity on the downside like that is unusual. It is due to the natgas names. 4 of the top 10 names in XOP are natgas and they comprise a disproportionate 20.2% of the weighting. Those names are COG, EQT, SWN and RRC in that order of descending weight. Natgas names standing out in this market, not only vs oil names but also vs the market.

  67. 67
    brodway Says:

    TPIC seems to have found a new area of support right around 12 1/2….bounced again off this level…the sub $10 may have been an one off and one of the few names that may not revisit the lows

  68. 68
    Baylor Says:

    SCO back under $21

  69. 69
    zman Says:

    re 64 – yes, all previously discussed last several days on site re cut vs demand destruction. Goldman says 26 mm bopd as noted. Wrote a sidebar in today’s post on it in fact and discussed last few days a number of times. Those who say a cut doesn’t matter to markets are incorrect/negative biased.

    Nrgy – did you see my EQT (unowned) section? I don’t see the debt reduction, at least not lately. They want to sell share in ETRN (unowned) which is peanuts their debt. They want to sell non core upstream assets (in this market?). What am I missing? I know Rice guys are smart. I am sure Rice guys will work a good deal for Rice guys.

    re 66 – we’re up slight on day and week. COG #1, then 2 wind names, then BCEI, more wind, then PE and so on.

    re 67 – getting an update on wind projects in the states soon, hope to having something for Tuesday.

  70. 70
    zman Says:

    Another take on payrolls data


  71. 71
    zman Says:

    Sounds like Bill Gates does not see the US back in stadiums and arenas for sports events until we have a vaccine.

  72. 72
    zman Says:

    He is very much not in the camp of a V-shaped economic/jobs bounce.

    Goldman has some very slow employment rebound numbers out there.

  73. 73
    zman Says:

    MR – technical move noted above in progress.

  74. 74
    brodway Says:

    re: 71

    same could be said for airplanes, buses, trains, bars, bowling alleys, restaurants, catering halls, large events such as birthday parties, weddings and religious functions….i think we as Americans will have an entirely new perspective on life. its certainly not the same anymore.

  75. 75
    brodway Says:

    Question that i can’t get my hands around….how many businesses will not reopen and be gone for good?

  76. 76
    zman Says:

    re 74 – He didn’t see it that way, saw those coming back before tightly packed stadiums, in interview today. He’s smarter than me so there ya go, it is what it is.

    re 75 – no one know. Did see PE money is trying to nab a chunk of SBA loan money.

  77. 77
    james T Says:

    re71 He also said 10 more weeks. Not sure how much real empathy he has for people on the bottom of the financial ladder.

  78. 78
    zman Says:

    Nrgy – I am keeping an open mind, promise.

    Analyst Watch:
    EQT (unowned) – JPM upped from $13 to $15 today.

  79. 79
    zman Says:

    Analyst Watch

    HAL – JPM cuts from $12 to $10.
    HAL – RBC from $12 to $9.

    HAL $7.60 today.

  80. 80
    zman Says:

    re 77 – He’s known to be one of the most knowledgeable persons on diseases around and is trying to keep the greatest number of people alive.

  81. 81
    Baylor Says:

    Any expectation of a cut announcement today? I’d expect that if it happens it would be after the meeting on Monday

  82. 82
    Viper1 Says:

    Z did gates make a comment that no pro sports before a vaccine is developed?

  83. 83
    zman Says:

    re 81

    • not that I am aware of re today re OPEC+.

    • Maybe something comes out of the WH regarding the US end of things today or over the weekend, dunno.

  84. 84
    zman Says:

    re 82 – no filled stadiums. Didn’t say they couldn’t play.

  85. 85
    Viper1 Says:

    maybe this cut in crude production will be enough to move Natty a few cents

  86. 86
    zman Says:

    Zorg on MR again

    “extended now at resistance…2.80”

  87. 87
    zman Says:



  88. 88
    Baylor Says:

    85 – DGAZ down $60-70 today from recent highs.

    Not a recommendation. If virus doesn’t end civilization as we know it, it should be very profitable the next few months.

  89. 89
    Baylor Says:

    Re 72 – I’m modeling DOW < 17,000

  90. 90
    Baylor Says:

    Oil approaching $29

  91. 91
    Viper1 Says:

    thx Z ON GATES

  92. 92
    nrgyman Says:

    RE 69: Thanks for the EQT update. True, debt reduction has been small–only a $205 million reduction in 2019. They recently did a debt refinance successfully that zeroed out the revolver and reduced some near term maturations, so their liquidity position has been significantly enhanced. They have a plan to reduce debt further using FCF and asset monetizations. From Rice on 2/27/20 regarding asset monetizations:

    “Despite weakened commodity prices, the aggregate potential value of these opportunities is substantially greater than EQT’s stated debt reduction target. Further, EQT does not believe lower gas prices will impede on its ability to execute multiple transactions. Transaction processes are progressing as planned, market interest is strong and EQT continues to target execution by mid-year 2020.”

    The virus may impact those plans somewhat. The most encouraging note is regarding their cost reductions and the corresponding FCF estimate in this environment. Any significant natgas price rally will deliver higher FCF which will be used to reduce debt until the debt metric is <2x on a sustained basis.

    Debt is still the negative, but the near term debt wall has been significantly reduced by the refi and near term moves will reduce or eliminate the nearby maturation wall, leaving only the longer term maturities to deal with.

  93. 93
    zman Says:

    Goldman Economics

    1Q20: -9% GDP (quarter over quarter, ann growth)
    2Q20: -34% GDP (says expect advance GDP to show -19%)
    3Q20: +19% GDP

    This leaves 2020 GDP at -6.2%

    Unemployment to reach 15% by June 30.

    As they put it, deeper trough, bigger rebound.

  94. 94
    zman Says:

    re 88 – roger
    re 89 – paste model this space 😉
    re 90 – great expectations
    re 91 – you bet.

  95. 95
    nrgyman Says:

    RE 92: EQT is committed to reducing debt by mid-year a total of $1.5B, with $0.4B already done. They claim there is more than enough in asset sales to do it. We’ll see.

  96. 96
    zman Says:

    re 92 – yes re recent, noted, March level debt lower than YE19, post that deal.

    Having no real revolver balance is nice.

    Wonder if they address the letters of credit this year. Can they?

    • saw the comment on transactions … not a lot of time in there, saw a figure of $1.5 B. In this market? Hmmm. That would be nice!
    • on costs, I included 4Q, 2019 whole year and guidance in my little table. No change to OPEX expected this year.

    • on capex costs I noted their changes … so few will care about that this, more done with less I get, completely but end of day, with $250 mm free cash, and lower EBITDA, you end without lower net debt/EBITDA so the story would seem to me to be about:
      1) asset sales
      2) execution of wells on new spacing. I recall from mid year last year they were looking to begin to show those results in about a year. Basically as new mgt took over they had to drill through some permitted and planned inventory on the prior plan and so the fruits of their new and improved design/well plan would not begin to really show until saw the 2Q20 report. Going by memory here and don’t know if they’ve changed that but anyway, trying to learn why you like a 3x type debt name in this environment with these multiples.

    Not pushing back on the idea entirely as it does make some sense to me to take on some more levered names when you think gas prices are going to rise in the next few weeks/months (which I do, if not in 2016 fashion then something at least way better than here and strip).

    I’ve got a very low cost, lightly levered name in COG, with almost no hedges. That’s one way to play an improving market.

    And I’ve got another name with good margins, more liquids and modest leverage (soon to be a bit more as the denominator shrinks with the 1Q20 report).

    Anyway, working to get a few more out next week and then the Gassy Players piece where you can just scroll across. I don’t think we have ever put EQT in that list so will be interesting.

  97. 97
    zman Says:

    From Zorg

    “SP Futs..bouncing off important 2450 level…waterfall below 2440 to my eye….”

    “COP Held important short term support today….”

  98. 98
    zman Says:

    U.S. CRUDE OIL FUTURES SETTLE AT $28.34/BBL, UP $3.02, 11.93%


  99. 99
    zman Says:


    So much easier to type than OPEC+

  100. 100
    nrgyman Says:

    RE 96: EQT is a trade for me on higher natgas prices. In my experience the levered names drop the most in down markets, but go up the most in strong markets. The problem is knowing when to invest. We have seen many rallies reverse and the levered names drop even further, often with breath-taking speed.

    This is the first time in seemingly ages where the natgas fundamentals look attractive for a reasonably sustained rally. Associated natgas reduced, producers forced to protect the BS and appease shareholders instead of growth capex and export demand.

    In this scenario I’m willing to trade with higher debt names as long as they are showing cost discipline. EQT, CRK and MR fit so I own them. RRC also looks interesting.

  101. 101
    zman Says:

    re 100 – understood, thanks

  102. 102
    zman Says:

    Energy going it’s own way as we approach the close vs a falling market.

  103. 103
    zman Says:

    TB vaccine to be tested for Covid-19 efficacy.

  104. 104
    zman Says:

    Texas RRC says would agree to Texas production curbs.

    Oklahoma also considering cuts.

  105. 105
    zman Says:

    I’m sure there are many in Colorado who would be in favor of shut ins as well.

  106. 106
    zman Says:


    Unexpected price traction this week.

    The Wrap will be posted by tomorrow night.

    Have a good, safe weekend.

  107. 107
    zman Says:

    OPEC+ meeting delayed until at least Thursday from the previously announced Monday emergency meeting deadline.

    Not shocking.

  108. 108
    james T Says:

    That should help the price of oil sell-off and rally again into Thursday, really feel that is the game. Big Money.

  109. 109
    zman Says:

    The Wrap will be out Sunday.

  110. 110
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