04
Aug

Tuesday Morning – Earnings Avalanche Day 1

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Market Sentiment Watch:

  • Still waiting on stimulus and employment assistance deal from DC (both sides said Monday's talks were productive),
  • Please note this is a busy earnings week for us. Some of our comments may be more brief than usual. If something is not clear please ask in the comment section below and we will address as time permits.

In today's post please find:

  • the early read on oil inventories (looking for another sizable crude draw),
  • the very early read on natural gas inventories (forming up just above last week's build, would not be surprised to see this ebb a bit as we approach Thursday),
  • comments on several unowned names of interest reporting 2Q20 results,
  • an interim gassy players update table (no comments to go with, a bit busy today),
  • and some other odds and ends.

Ecodata Watch:

  • We get factory orders at 10 am EST (no forecast, last read was -8.0%),
  • We get API oil inventories at 4:30 pm EST.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. Stuff We Care About Today –  RRC, FANG, HPR, VNOM, CLR, 2Q20 Earnings Calendar, Gassy Players, VWDRY, MGY
  4. Odds & Ends

 

Holdings Watch:

ZLT (Zman Long Term portfolio)

Yesterday’s Trades:

  • GPOR - Added to “gassy risk” position in GPOR at $1.06. In early June the company offered new guidance for 2020 production and we covered that in the June 2 post which we noted in the post here:  https://zmansenergybrain.com/2020/06/02/tuesday-morning-pe-gpor/  was in line with our model. They also noted at that time they saw free cash generation at the current strip, a strip which has only improved since that date. GPOR reports Wednesday and we maintain this as our 4th “gassy” position and our only Trading only position at present in the ZLT. Look for GPOR to highlight cost cutting efforts and the more activity for less capex nature of their new budget.

​The Blotter is updated.

Commodity Watch:

Crude oil rose $0.74 to close at $41.01 yesterday, moving up with word of stronger recent gasoline demand while overlooking rising OPEC volumes (which is now expected as the quotas begin to ease with the turn of the month (though most of the incremental volumes won't be exported)). This morning crude is trading near $40.25.

Early Read on Oil Inventories:

  • Crude: Down 3.3 mm barrels (we suspect it will be down more on higher throughput and low net imports)
  • Gasoline: Up 0.6 mm barrels
  • Distillates: Up 0.8 mm barrels

Natural gas rallied $0.30 (16.8%) to close at $2.10 yesterday (a 11 week high) in an extremely high volume session on short covering inspired by a rewarming of August forecast beginning next week. We note the 12 month strip ended up 4.5% on the day as well at $2.65 so it's not just a bit of front month noise.  The early read on natural gas builds formed up in a range of +29 to 31 Bcf. This morning gas is trading up $0.05.

Stuff We Care About Today

RRC (Unowned) Reported Solid 2Q20 Results; Announce The Punting of Northwest LA Segment

  • Production of 2.349 Bcfepd (71% natural gas) vs 2.295 Bcfepd (70% natural gas) expected,
    • Natural gas differential of $0.31 off NYMEX,
    • RRC sold the long underperforming North Louisiana segment for $245 mm (with potential for additional $90 mm in the future). They retain some FT commitments and are using $28.5 mm of the proceeds to reduce those commitments.  Bitter pill when you look back at what they paid for it but good to get it out of their portfolio long term. No word on the buyer.
    • N LA produced 0.16 Bcfepd in the quarter.
    • NGL comment: "Range expects NGL and condensate fundamentals to continue strengthening during the second half of 2020, as a lack of U.S. drilling and completions activity is expected to result in declining supply while demand continues to recover. "
  • EPS of ($0.10) vs ($0.16) expected
  • 2020 Volume Guidance:  At or slightly above 2.3 Bcfepd (in line with prior comments),
  • 2020 Capex Guidance: At or below $430 mm (also in line),
  • 2020 Price Guidance:  Slight increase in the natural gas and oil differntials.
  • 2020 OPEX Guidance:   reduced about a dime / Mcfe to a range of $1.60 to $1.68 / Mcfe.
  • Balance Sheet: Net debt to 2Q20 annualized EBITDA will be a little over 5.5x (they don't report EBITDA) vs 4.2x last quarter,
  • Conference Call: Today, 9 am EST.

FANG (Unowned) Reported OK 2Q20 Results; Reiterates Volume and Capex Guidance

  • Production of 294.1 MBOEpd (60% oil) (preannounced) vs 293 MBOEpd (61% oil) expected,
    • they curtailed 5% of volumes (9 MBOpd) this quarter (now back online),
    • Per unit operating expense of $6.44/BOE (low);
    • including interest operating costs totaled $8.16 / BOE, lowest quarter on record for them, down from $10.16 in 1Q20.
  • EBITDA of $414 mm vs $428 mm expected,
  • 2020 Volume Guidance: Reiterated prior 290 to 305 MBOEpd (60% oil on mid),
  •       They chose to put as few wells on production in 2Q20 and placed no wells on line in June but they did markedly outspend Street consensus ($562 mm vs $486 mm expected but this is not news and was in the mid July update).
  •       2020 oil is expected to be 180,000 bopd vs 188,000 bopd in 2019
  • 2020 Capex Guidance: Reiterated prior $1.8 to $1.9 B.
    • they are pointing to significant free cash in 2020 and 2021 as they've received the message regarding outspend loud and clear. We expect them to be in the crowd of names saying the same this quarter and not looking to boost activity.
    • they note a 2021 maintenance budget of about $1.3 B (down 30% on mid from 2020) should holding flat with 4Q levels be the goal next year (also not news).
  • 2020 Operating Cost Guidance reduced by a combined $0.35 per BOE. LOE was $4.74 last year, was originally guided to $4.60 this year and is now at $4.40 per BOE despite the reduced volume guidance vs original guidance.
  • Balance Sheet:
    • Net debt to 2Q20 annualized EBITDA of 3.6x - this is up due to the dip in prices and will be up for all the oily names this quarter.
    • Liquidity of $1.9 B
  • They had 13 rigs in the quarter, 7 by July and have 6 running now.   3 frac spreads running as they not to meet the previously guided 170 to 175 MBOpd (oil only) 4Q target.
  • They are drilling wells a lot faster than in the past (not alone in that but they do note a Permian hz footage 24 hour record set this quarter at 8,150' which helps with their low D&C cost per foot statistics (now $450 to $500 in the Midland and $650 to $700 in the Delaware (excluding surface of $80 to $100 per foot)). There are well below updated guidance and auger for further reductions in coming quarters.
  • Dividend of $0.375 / quarter declared, in line with last quarter, implies 3.8% yield (our own PE is at 1.8% implied).
  • This should all be pretty well received aside from potentially the quarter's bottom line.
  • Conference Call: Today, 9 am EST.

HPR (Unowned) Reports Respectable 2Q20 Results; Guidance 3Q Only

  • Production of 31.9 MBOEpd (57% oil, 20% NGLs) vs 27.7 MBOEpd (57% oil) expected,
    • Above guidance by 12% due to well performance (which is why we used to own the name)
    • Oil price in the quarter was $22.74, a $5.26 differential this quarter which is good but we would  the diff here to widen soon unless demand picks up (of late DJ prices have been roughly $10 off WTI).
  • EBITDAX of $58 mm (ex items) vs $56 mm expected
    • Capex was only $25 mm in the quarter, and well below guidance.
  • EPS of $0.04 vs ($0.01) expected,
  • 2020 Volume Guidance: No provided
  • 2020 Capex Guidance:  As previously noted activity has been halted.
  • 3Q20 Guidance:  27.2 to 28.6 MBOEpd; this assumes NO completions.
    • the Street is at 26.75 MBOEpd now.
  • Balance Sheet: Net debt to 2Q20 annualized EBITDA of 3.7x  vs 2.2x last quarter.
  • We're sticking with BCEI as our solitary low valuation, low debt going to no debt DJ player but want to hear what HPR has to say.
  • Conference Call: Today, 9 am EST.

VNOM (Unowned) Reported OK 2Q20 Results; 2H Guidance Modestly Above Street

  • Production of 24.5 MBOEpd (59% oil) vs 24 MBOEpd (60% oil) expected,
    • They're volumes were supported by being in 14 of FANG's 15 well pops on the quarter,
    • They turned 2.4% net wells in line
  • EBITDA of $26.6 mm vs $29.7 mm expected
  • 2020 Volume Guidance: 25.75 MBOEpd (on mid) (61% oil); 14.75 to 16.0 MBOpd.
    • 2H20 initiated at 15.375 MBOpd (oil only) mid (range of ,
      •   This is above current Street oil only for the second half of 14.45 MBOpd.
  • 2020 Capex Guidance: $0
  • Balance Sheet: Net debt to 2Q20 annualized EBITDA of 5.8x,
    • Viper is buying back bonds in small chunks at a discount.
  • Distribution of $0.03 vs $0.10 last quarter; they remain at the 25% of cash available level now due to all the uncertainty in the markets.
  • "Active development" wells: 8.1 net (64% FANG)
  • "Line of sight" wells: 8.8 net (roughly half of them FANG wells)
  • Favorite Quote Watch: "Looking ahead to the second half of 2020, we expect Viper’s production to grow sequentially through the end of the year supported by Diamondback’s completion schedule which is focused on areas where Viper has significant mineral ownership."
  • Conference Call: Today, 11 am EST.

CLR (personal only) Reported Soft 2Q20 Results Due To Curtailments; Reiterates Budget.

  • Production of 202.8 MBOEpd (47% oil) vs 204 MBOEpd (52% oil) expected,
    • The quarter saw massive curtailing with 55% of oil shut in during the quarter.
      • Bakken 2Q19:  194 MBopd
      • Bakken 2Q20: 88.8 MBopd
      • It is not clear how many BOEs are currently curtailed.
  • EBITDAX of $36 mm vs $110 mm expected
  • EPS of ($0.71) vs ($0.59) expected
  • 2020 Capex Guidance: Reiterated $1.2 B budget.
    • 2021 maintenance budget is $1.2 B which is unlikely to appease investors who are becoming accustomed to significantly reduced maintenance budgets in 2021.
  • Projecting $200 mm in free cash flow in 2020 at $40 oil.
  • Reinstating cost guidance.
  • Balance Sheet: Net debt to 1H20 annualized EBITDA of 4.6x,
  • We plan to listen to this one on replay for Bakken color in general and about takeaway in particular and for comment on the drastically reduced level activity in the Mid-Continent
  • Conference Call: Today, 12 pm EST.

2Q20 Energy Earnings Calendar - updated calendar here.

Gassy Players Update - mid quarter with selected 2Q20 numbers as noted.

Other Stuff

  • VWDRY - Pens deal in the Philipines to service 54 MW of Gamesa turbines for 5 years. Look for more of these kind of deals and recall that the service segment is significantly higher margin.
  • MGY - Announced termination of services agreement with Enervest. Positive in our view as they streamline costs.

Odds & Ends

Analyst Watch:

  • TBA in comments

87 Responses to “Tuesday Morning – Earnings Avalanche Day 1”

  1. 1
    zman Says:

    Analyst Watch

    COG – JPM inches target up a buck to $22.

  2. 2
    zman Says:

    Planning to be on the RRC at the top of the hour, will circle back to FANG and HPR (all unowned here).

    Then VNOM (unowned) at 11 am EST
    and
    CLR (unowned) at 12 pm EST (listed as a down gapper this morning … miss + no one likes their maintenance capex idea for 2021).

  3. 3
    zman Says:

    RRC (unowned) presentation

    https://rangeresources.gcs-web.com/static-files/971d1157-e409-4e3a-9ee2-8f630a5f5539

  4. 4
    zman Says:

    RRC (Unowned) 2Q20 Call Notes

    RRC called flat at start of call, NG up 3 cents on the morning.

    As they note, top 10 NG producer, top 5 NGL producer.

    1) peer leading well cost (capex / Mcfe below Appa group); now below $600 / ft.
    2) peer leading base decline (~19%)
    3) PA – some of best enviro standards in the world for NG production.
    4) RRC – 100% water recycle, low for emissions (leak detection).
    5) noting the big reserve pile and usual big value vs current value of stock.
    6) says others delineation near their undeveloped acreage will show value of RRC as others exhaust their core positions.
    7) will fund capex organically, reduce costs (seeing this happening with sale of LA – 17% of workforce goes away, headcount down 1/3 since 2018), LOE falling on water management, will reduce debt more.
    7a) prior guidance for opex was $1.75/Mcfe. 2H20 close to $1.65.

    Don’t expect borrowing base to fall with LA divest.

    More asset sales are in process.

    Debt will fall this year due to the LA sale.

    2021 strategy – sustainable cash flow. No growth for growth sake. Sees considerable improvement for NG and NGL markets in 2021.

    Many “reputable analysts” are predicting $3 gas for 2021.

    But longer term prices are lower and this is not incenting any growth.

    Maintenance capex – $385 mm
    Maintenance capex risked – $440 mm
    This compares to the 2020 budget of <=$430 mm.

    1 rig, 1 frac crew running.

  5. 5
    zman Says:

    Here’s who bought RRC’s N LA segment:

    https://www.cci.com/media/latest-news/castleton-resources-llc-announces-agreement-acquire-terryville-upstream-assets

  6. 6
    zman Says:

    RRC (Unowned) 2Q20 Call Notes – Natural Gas Macro

    Macro – NG in advantaged position as world transitions to cleaner fuels.

    Range comments:
    – says supply now down 10% from Nov 2019 high. Due to legacy base declines and shutins.
    Z4: OPIS weekly data shows dry gas down closer to 7% post oil play decurtailment. It was down close to 10% at the height of oil play curtailment which was combined with some gassy player curtailments during 2Q20.

    • EIA forecasts > 10 Bcfgpd exit 2019 to exit 2020.
      Z4: True.

    • they note only slight increase when curtailed oil production came back on line.
      Z4: True.

    • NG rig count down 65% from early 2019.
      Z4: True.

    • sees dry gas supply response muted by capital discipline.
      Z4: Same.

    • they forecast a fairly sharp production decline now through early 2021 (about 7 Bcfgpd from May level data to early 2021).

    Z4: Steeper than what we use for our peak 2020 storage range.

  7. 7
    zman Says:

    RRC (unowned) 2Q20 NGL

    • slide 16,17
    • 260,000 decline in propane production since early 2020l
    • March 31 to June 30 – Mont Belvieu – up 60%.
    • sees stronger NGL and condensate prices in the 2H.

    Touting some solid ESG comments (spills, emissions).

    Going to Q&A 36 minutes in …

  8. 8
    zman Says:

    RRC 2Q20 Q&A

    Q) Asset sale – why not have waited given your outlook. What else.
    A) we are constructive on prices but taking action and moving on (no kidding, re moving on, lucky not to have a shareholder suit on that buy and sale foray into LA).

    They wanted to reduce risk and reduce costs.

    Reminds all there is potential upside contingent payment if prices move up.

    Agree, better to punt now.

    Sets up 3rd year of declining debt, lowers costs.

    Q) GP&T – how big is the magnitude of savings of producing above commitment levels.
    A) see slide 14. Notes that you see unit costs falling into the future even in a 0 growth long term scenario. This is a function of GP&T coming down to $1.20 to $1.25 over time.

    Q) D&C reduction
    A) mostly from completion efficiency, water recycling, cost savings on the service side (softened slightly). Sees all of this as sustainable, most of this is due to efficiency and use of existing pads on the blocky position. Plan to push further below $600/ft.

    RRC (unowned) flipped negative during the Q&A, noise I think. Will do a full cheat sheet update here next week, see as a risk name.

    All of today’s reporting names are red at the moment with a slightly red group.

  9. 9
    zman Says:

    RRC (unowned) 2Q20 Q&A 2

    • as we think about 2021 it’s hard to think of service prices being higher.
    • after N La is out, that takes maintenance capex to the low $400 mm’s.

    Q) hedging strategy for 2021. At $2.60 to $3.00.
    A) generally speaking we want to be 60 to 80% hedged as we enter a calendar year for that year.

    This year we’ve been on the lighter end of hedging due to our thoughts on prices next year.

    Also using some collars to preserve upside.

    Pleased to see some reality setting into the forward curve.

    Will continue to operate in the historic frame of 60 to 80% but will try to preserve upside.

    Call over – neutral/positive tone.

  10. 10
    zman Says:

    All overnight reporters flat to down slight save CLR (small legacy personal only, no chance that gets in ZLT any time soon), which again, was expected to be negative as per post comments, now down 7%.

    ZLT up sharp yesterday, up today after brief opening dip.

    TPIC leading nicely again.

    Trade position in GPOR trying to awaken.

    OT – grabbing coffee, back in a bit.

  11. 11
    nrgyman Says:

    Solar inverter stocks:

    SEDG (+15%) on the Q2 report. This is the name GS recently went to Sell rating, saying US residential had peaked for them.

    ENPH (+10%) pin action on SEDG report. Reports tonight.

  12. 12
    nrgyman Says:

    RE 11: SEDG Q2 color:

    https://seekingalpha.com/news/3599826-solaredge-sizzles-after-big-q2-beat?utm_medium=email&utm_source=seeking_alpha&mail_subject=sedg-solaredge-sizzles-after-big-q2-beat&utm_campaign=rta-stock-news&utm_content=link-3

  13. 13
    zman Says:

    re 11/12 – thanks

  14. 14
    nrgyman Says:

    RRC: Per the table, RRC is the most expensive name on Ebitda metrics for 2021. Also has the highest debt metrics. Plans on maintenance mode production with 2021 mostly unhedged. They really need natgas and NGL prices higher. Doing these asset sales now, when prices are low, shows some desperation imo. Still, RRC likely to show strong equity response to a natgas/NGL rally.

    AR in similar situation but less debt and cheaper multiple. Also owns some AM shares. Biggest AR issue (aside from debt) is the unused FT cost. Maintenance mode production growth likely to slow down the elimination of that. Has the liquidity to overcome debt wall by redeeming debt at a discount.

    Both names are super cheap (none better) on reserves with a strong reserve base. With an ebitda rebound on higher NGL/natgas prices the multiples will begin to look better, but AR is currently roughly half the TEV/ebitda multiple of RRC.

  15. 15
    zman Says:

    Proterra article:

    https://thebossmagazine.com/proterra/

    TPIC makes the shells.

  16. 16
    zman Says:

    Rumored that Proterra will come public via SPAC, maybe HCAC (personal only holding).

  17. 17
    zman Says:

    MGY edging back up on the cost reduction move. 2Q20 Thursday will let them speak to it. Should also hear if they are completing the Goodrich pad in Giddings or not yet.

  18. 18
    zman Says:

    TPIC – classic cup and handle. 2Q20 report Thursday evening.

  19. 19
    zman Says:

    re 12 – SEDG (unowned) – UBS ups from $130 to $160, stays Neutral.

  20. 20
    zman Says:

    Getting on the HPR (unowned) 2Q20 replay. Notes in a bit.

  21. 21
    zman Says:

    Oil back over $41, Libya exports, U.S. gasoline demand.

  22. 22
    nrgyman Says:

    RE 19: With SEDG at $205 that -20% decline TP deserves a Neutral rating? At least GS put a Sell rating on them.

  23. 23
    Denise Says:

    ADV of Nat Gas options up 19% y/y according to CME Not sure if CME chart as of 8/3 will post below

    https://www.cmegroup.com/reports/top-nymex-natural-gas-options-daily-market-update.pdf?mkt_tok=eyJpIjoiTjJRMk1UZzNNV05pTlRjMSIsInQiOiJacVZucVZsdVpwVGdIR3gyRE50R0IxSm80RGNqeUtYUXRFQ2lKUTFZZHRlQWtZbGdMazFWcnhjdTlcL1NSN0NIbXo0V0l4c2NiK29QZ0dxMUp0bkJpNFVPMEY0dVcreGpNV0ZNUHR5Ris5YUtuYzhwYUFwMzVrVmdWdm1xYldWa2kifQ%3D%3D

  24. 24
    zman Says:

    HPR (unowned) 2Q20

    • expect diffs to return to normal 2H (so not the -$10 we see posted for DJ vs WTI).
    • 3Q20 capex = $10 mm. Just not doing much.

    • best development wells from high intensity completions yet in both areas. This performance is why we used to own the name (and the balance sheet is why we don’t now).

    • water handling cutting LOE

    • went to Q&A 12 minutes in … want to see who is still paying attention.

  25. 25
    zman Says:

    re 22 – heh

  26. 26
    zman Says:

    re 23 – thanks.

  27. 27
    zman Says:

    From Zorg on GPOR

    “Nice follow through after yesterdays lift off….defined resistance not until 1.31…..This one is just getting started I think…..”

  28. 28
    zman Says:

    HPR (unowned) 2Q20 Q&A

    Q) CO politics
    A) most favorable position in a long time, nothing this ballot, agreed nothing in the 2021 ballot, as they implement past policy.

    Good for BCEI.

    Q) Price decks for borrowing base redetermination.
    A) the decks are up summer vs spring. Banks will want to be looking 3 to 5 year strip.

    4 analysts, call done in 23 minutes.

  29. 29
    zman Says:

    Getting more coffee, then to the FANG (unowned) replay.

  30. 30
    nrgyman Says:

    TAN (+5.6%) at new multi-year high (since 2011).

  31. 31
    ram Says:

    Re 15. That will be a multi billion dollar company out of the gate! The perfect CEO, no emissions, quite the diverse employees. Every municipality, school district, airport authority will line up to buy those buses. Another common denominator with those after the EV buses, they will be bought through municipal bonds, almost economic proof. Zman, is it highly probable that The SPAC you mentioned will bring it public?

  32. 32
    zman Says:

    re 30 – yeah, things like DQ (unowned) running too, our JKS is lagging (up 7% today but not at new highs), part of that is the previously mentioned fire at a large supplier and thoughts of higher raw mats in the near, medium term.

  33. 33
    zman Says:

    re 31 – it’s hard to say but the bus experience at the spac makes it the thought of some. I’d say better than coin toss odds, not sure how much better. The EV bus market is going to be quite big. Side note we have locally seen our NG buses disappear and replaced by their diesel predecessors in some cases it seems. The proterra website is pretty informative. Again, we have been watching for TPIC angle but want to be involved as with WKHS (currently unowned).

  34. 34
    zman Says:

    Can’t get on the FANG (unowned) replay yet, switching over to Continental.

  35. 35
    Denise Says:

    FYI.. Beirut explosion .https://www.arabnews.com/node/1714671/middle-east

  36. 36
    zman Says:

    CLR quick notes

    Capex at $1.2 B or lower
    Debt think has peaked, down from here through 2021
    $200 mm FCF @ $40 WTI ($500 mm at strip for 2H20 as they were outspending in 1H).

  37. 37
    zman Says:

    re 35 – ME peace – just not there yet.

  38. 38
    zman Says:

    CLR 2Q20 Q&A

    Q) when industry grow
    A) $55 to $60. Modest until then.

    Q) drilling cadence long term
    A) 7 rigs – rough guide is 50/50 split Bakken/MidCon

    At $50 oil throws off $100 mm’s FCF

    Q) Non D&C piece of maintenance Capex

    A) Notes to be careful on the minerals portion, they have a carry with Franco Nevada, careful for free cash calc, they are 80%. $100 mm is that. Facilities is at or below the 2020 level. Leasehold ebbs over time, not a lot of renewals next year.

    For clarity, earlier he said $800 mm of the $1.2 B 2021 maintenance is D&C piece.

    I am not interested in adding CLR at this time to the ZLT.

  39. 39
    zman Says:

    CLR – shut in all of Montana production for 2 months, came back 2x (flush, this bleeds down quick and is normal) but point is they came back on with no issue.

  40. 40
    zman Says:

    CLR – Re DAPL

    We feel good that the judge’s order will be stayed and the pipeline will continue to operate, notes it has operated trouble free for 3 years. Sees strong support from a legal side. Did a thorough analysis on this.

  41. 41
    zman Says:

    OT – grabbing lunch, back shortly. Tomorrow should be more interesting day from a reporting perspective.

  42. 42
    zman Says:

    Here, prepping for Wednesday, shout if you need something.

  43. 43
    zman Says:

    re 35 – said to be fireworks storage

  44. 44
    zman Says:

    HEALTH MIN SAYS BEIRUT BLAST DUE TO FIREWORKS DEPOT: JAZEERA

  45. 45
    zman Says:

    NG up another 4% today

    https://www.investing.com/commodities/natural-gas

  46. 46
    zman Says:

    Likely we see PE re-initiate 2020 volume guidance tonight (likely flat with pre 1Q level or slightly down on curtailment) while maintaining spending of < $0.7 B.

  47. 47
    Viper1 Says:

    re 15 Hennessy, same group the brought BLBD public via SPA, they know the BUS industry . Thx

  48. 48
    zman Says:

    re 47 – yep, that’s the thinking, I own a bit, my kids, etc.

  49. 49
    zman Says:

    MGY up 5% on the Enervest back office punt. Good timing as they can speak to the savings on the call on Thursday.

    No change to the plan here.

    They will likely be high to the 60% of EBITDA as spending target in 2Q but then go well below it in 3Q and 4Q to get the year into line as they under spend.

    High realizations near WTI but a bit below it this quarter, low costs = strong margins.

    Debt is low.

    Don’t need to see less shares outnow.

    Need them to examine a dividend.

  50. 50
    zman Says:

    Early Read on Thursday

    Natural Gas Storage Preview

    Street is at +30 Bcf (Bloom survey) and +31 Bcf (Reuters) for tomorrow’s report. 

    Last Week: +26 Bcf
    Last Year: +58 Bcf
    5 Year Average: +39 Bcf

  51. 51
    zman Says:

    From Zorg on COG

    “Weekly chart…..A break higher here has room to move……Next area of previous major acceptance at 23.50…..”

  52. 52
    zman Says:

    GPOR – nice volume at 3.5 mm vs 2.67 mm 20 day avg, up another 15%.

  53. 53
    zman Says:

    GPOR – worst of their bonds are starting to move up.

    http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C746731&symbol=GPOR4551340

    http://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C711859&symbol=GPOR4530194

  54. 54
    zman Says:

    GPOR – as noted yesterday, about 14% of outstanding shares are short, just > 22 mm shares.

  55. 55
    zman Says:

    Analyst Watch

    CDEV (unowned) – TD Securities cuts target from $0.95 to $0.80.

    Thoughts:
    – we have long avoided this one.
    – Name is swapping debt out.
    – Still $1.14 B debt, 56% revolver draw.
    – Net debt to TTM EBITDA at 2.6x; on a net debt to annualized 2Q20 basis this is at a whopping 11.6x.
    – can’t spend to grow, can’t get to underspend without getting a lot smaller due to high base declines.
    – should be multiple years from possible return to shareholders
    – pass.

  56. 56
    zman Says:

    Ram – I take it all OK with storm?

    Nrgy – will have ENPH call comments in tomorrow’s post.

  57. 57
    zman Says:

    Beirut – now saying it was a nitrate explosion. Israel saying it was not them.

  58. 58
    zman Says:

    BWEN up a touch in front of earnings and yesterday’s profit taking. Numbers out before the open.

  59. 59
    zman Says:

    Nice couple of days. Back at API time, then probably in 2 hours with some quick looks at reporting names.

    Beerthirty.

  60. 60
    zman Says:

    Nice beat at GPOR

  61. 61
    nrgyman Says:

    RE 56: Thanks Re ENPH.

  62. 62
    zman Says:

    re 61 – you bet

  63. 63
    zman Says:

    Draft for GPOR for tomorrow’s post:

    GPOR (Our “Risk Gassy” Name in the ZLT ) Reports 2Q20 Beat, Generates Much More Free Cash Than Expected;  Reiterates Guidance

    Production of 1.027 Bcfepd (91% natural gas) vs 1.09 Bcfepd (89% natural gas) expected,
    2Q20 guidance range:  1.0 to 1.05 Bcfepd.
    EBITDA of $145 mm vs $122 mm expected,
    Capex was far below expectations at $54 mm (Street expected $94 mm) driving free cash flow of $43.9 mm vs the Street’s view of $5.6mm.

    EPS of $0.29 (ex items) vs $0.02 expected,
    Guidance:
    2020 Volumes: Reiterates prior guidance of 1.0 to 1.075 Bcfepd (equates to down 25% on mid),

    2020 Capex: Prior thinking was that they would come in at the mid point of the official $285 mm to $310 mm range. Now they are thinking they will come in at or below the low end of the range.

    15 operate Utica wells spud with 25 turned to sales. Previously this was set to be 18 turned to sales but they are getting more done with less dollars.

    8 SCOOP wells spud with 4 turned to sales. No change here.

    2021 Capex:  Prior thinking was $300 mm for a maintenance budget but given efficiency gains this is likely to be lower.

    3Q20 Volume Guidance:  0.98 to 1.03 Bcfepd vs Street at 1.08 Bcfepd.

    Balance Sheet:  Still in the risk end of the gassy group but improved this quarter on the better EBITDA generation, moving to 3.3x net debt to annualized 2Q20 EBITDA vs 3.7x as of 1Q20, moving against the flow of peers who have all worsened on this basis this quarter.

    Nutshell:  Nice beat and underspend. Nicer to see the incremental activity while speaking to capex going to the low end of the range. We could see them tighten volume guidance higher next quarter as these DUCs reach production but this will depend upon the timing of the new wells being places on line as they may simply go to give 2021 a headstart on a maintenance style outlook. Slight ding on the quarter is the 3Q guidance which is likely a timing issue but below Street (also sets up a beat). We added to the name on Monday at $1.06.
    Conference Call: Today, 10 am EST.

  64. 64
    nrgyman Says:

    NKLA color:

    https://seekingalpha.com/news/3600249-nikolaminus-2-after-q2-loss-is-wider-anticipated?utm_medium=email&utm_source=seeking_alpha&mail_subject=nkla-nikola-2-after-q2-loss-is-wider-than-anticipated&utm_campaign=rta-stock-news&utm_content=link-3

  65. 65
    zman Says:

    re 63 – added color on 3Q, slight ding on the quarter.

  66. 66
    zman Says:

    re 64 – thanks, will take a quick look later tonight. If you have color please add. Not a name I am currently following closely.

  67. 67
    zman Says:

    Very rough incomplete draft for the #s

    ENPH (unowned) Reports Modest 2Q20 Beat; Guidance 3Q20 Above Consensus

    Revenue of $125.5 mm vs $123 mm expected,
    Non-GAAP gross margin was 39.6% (new record),

    vs 39.5% in 1Q20

    Guidance was 37 to 40%

    EPS of $0.17 vs $0.14 expected.
    The conference call was last night and notes for the call are incorporated below.
    Encharge energy storage shipped for testing in June to good feedback —– followed by production shipments in July and said they are pleased with initial customer feedback.

    The company is doing everything possible to allow for remote learning and feedback by and between installers and customers.

    Outlook:

    3Q20 revenue of $160 to $175 mm vs Street at $155 mm

    Non-GAAP gross margin of 37 to 40%


  68. 68
    zman Says:

    API Watch:

    Crude:  Down 8.6 mm barrels
    Cushing: Up 1.6 mm barrels

    Gasoline: Down 1.75 mm barrels

    Distillates: Up 3.824 mm barrels (this build would not be welcome were EIA to reflect it)

  69. 69
    ram Says:

    Re 56. We’re OK. Thanks for asking. Unfortunately the people up north took a beating. Hopefully they recover soon.

  70. 70
    zman Says:

    re 69 – good. Some beach town got a lot of sand I heard. Stay safe. Going to be a long season I think.

  71. 71
    ram Says:

    The distillate must be about aviation. There are so many trucks on the road for supplying brick and mortar as well as e-commerce.

  72. 72
    zman Says:

    re 71 – yes, have heard a couple of times that kerosene is in the distillate numbers. If you look at the kerosene line in the weekly EIA 8 pages of the WPSR it’s flattish with year ago. No way given the traffic drop.

  73. 73
    ram Says:

    Speaking of a long season, Mrs. Ram is trying to push for a Generac whole house backup generator. I might bite. In Florida you actually get your money back and then some when you sell a home with a backup system.

  74. 74
    zman Says:

    re 73 – smart gal. Keep us posted.

  75. 75
    zman Says:

    Thinking GPOR 3Q guidance gives an addable dip tomorrow.

    Balance sheet better,
    Costs falling (capex and opex),
    Getting more wells on line vs prior.

    If it looks really dippy I’ll have an SA piece in the hopper.

  76. 76
    ram Says:

    Zman, have you seen CPE’s earnings?

  77. 77
    zman Says:

    re 76 – I have not yet, other than the headlines, looks like a beat, free cash to debt reduction, looks like they are reinstating guidance, something I expect PE to do tonight as well.

  78. 78
    zman Says:

    WSJ on the tape talking about Saudi / Chinese yellowcake facility.

  79. 79
    zman Says:

    TRUMP SAYS BIG NUMBER COMING OUT FRIDAY ON JOBS

  80. 80
    zman Says:

    Intern #2’s latest school rules.

    No kid drop off. Temp check through open window.

    All close relatives to be lumped into same grade, including cousins.

  81. 81
    zman Says:

    BLDP on the tape saying Medium and Heavy duty vehicles powered by their fuel cells have driven 50 mm km, up 5x from 2017. They report later this week.

    Notes also 66 countries now adopting zero carbon 2050 targets and 20 countries, 70% of global GPD, have H2 roadmaps with an addressable annual market of $130 B.

    https://www.ballard.com/about-ballard/newsroom/news-releases/2020/08/04/fuel-cell-electric-vehicles-powered-by-ballard-have-now-driven-over-50-million-kilometers-enough-to-circle-the-globe-1-250-times

  82. 82
    ram Says:

    Re 80 Yikes, more aggressive than not so little rams school.

  83. 83
    zman Says:

    re 2 – intern number 1 is a senior now, 2 days in person, 2 days zoom, everyone zoom Friday.

  84. 84
    zman Says:

    There is an error in the calendar table, PE reports tomorrow night, not tonight. Apologies.

  85. 85
    zman Says:

    OK, GPOR submitted with cheat sheet update to SA. Should pop out of editing in about 12 hours.

    Getting on the ENPH (unowned) replay now.

  86. 86
    zman Says:

    GPOR Street 2020 EBITDA estimates too low.

  87. 87
    zman Says:

    If you have time, listen to the ENPH call, especially if never have. Badri is a force of nature and well worth your time.

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