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In today's post please find:

  • the natural gas storage review,
  • comments COG 1Q21,
  • comments on SWN 1Q21,
  • comments on NIO 1Q21,
  • and some other odds and ends.

Ecodata Watch:

  • We get personal income at 8:30 am EST (F = 20.0%, last read was -7.1%),
  • We get consumer spending at 8:30 am EST (F = 4.0%, last read was -1.0%),
  • We get core inflation at 8:30 am EST (F = 0.3%, last read was 0.1%),
  • We get Chicago PMI at 9:45 am EST (F = 65.0, last read was 66.3),
  • We get consumer sentiment at 10 am EST (F = 87.3, last read was 86.5).

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watc​h - core gassy position add, AR comments
  3. Natural Gas Inventory Review
  4. Stuff We Care About Today - COG, SWN, NIO, 1Q21 Calendar
  5. Odds & Ends

Holdings Watch:


  • Yesterday's Trades:

AR - We added to AR after the 1Q21 report last night and just head of the call (11 am EST today) at average $9.78, down about 4% on the day. The quarter was EBITDA and free cash flow beat. We expect estimates to rise in the wake of the call and have already seen one price target upped by 50% pre call. Debt paydown was faster than expected and debt metric targets set for YE21 are being achieved faster than expected. Our sense is this will accelerate the timeline for management turning to return of capital and we expect them to speak to this on the call. This add brings AR in terms of position size in line with our other gassy holding, VEI, and we may add more shares post call.

AR - added another piece of AR after a 9% fall in the shares, added at $9.31. The quarter was strong. The call was fine if a bit short. Debt reduction will continue to be the near term priority before they turn to return of capital next year (potentially sooner given their achievement of debt reduction targets but that's what they pointed to on the call). They see being below their debt to EBITDA target of 2.0x during 2Q21 and then achieving absolute debt target reduction by 2022 and commented that they may build cash on the balance sheet in the interim while opportunistically redeeming debt. From here production and capex trend very flat rest of year and they capitalize on strong NGL and potentially strong NG markets with Appalachia peer leading price realizations even as other see widening differentials on basin takeaway expansion concerns. We are just keeping AR in line with our VEI gassy position (AR being our more liquids rich play) with the two names holding the 8th and 7th positions in the portfolio respectively. It's possible a sellsider didn't like something from the quarter but so far targets have risen this morning and we didn't detect negative thoughts on the call. This may also just be a technical fall in the wake of a run into the quarterly report. This takes our cost basis to $7.02.

  • The Blotter is updated.
  • AR price action thoughts: 
    • We saw the move lower by 9% yesterday as a failure to break on out to cycle highs, results in momentum fade and selling for short term profit taking and stop loss protection.
    • We see this as noise.
    • We stand ready to further bolster the position should it retreat into the high $8s again which is where it was trading last week.
    • We see the quarter as positive and the guidance as improved.
    • We note that the 2021 estimated Free Cash Flow was $500 mm as of the 4Q20 call and is now $600+ mm while the 2021 to 2025 cumulative Free Cash Flow guidance has traveled from $1.5 B at 4Q20 to $2.0 B+.  Both were based on strip pricing at their respective times of issuance.
    • The name has paid down debt faster than expected.
    • The fundamental outlook for NGL's is strong as per their read and other NGL players and our own.
    • The fundamental outlook for natural gas is price supportive as we often state. We see no change to our views on this front and late spring cold has if anything bolstered our view by pushing stocks further into deficit territory a bit earlier than expected, something we expect to be the case with a lower peak storage level seen later this year after a season of "non record" injections.
    • So again, if anything, the story as is good as it has been since we have been long this outing, but technical action that reversed with group and then compounded saw a good quarter get sold.  We added twice yesterday as noted above.  The position is not near full for us but is fairly large and just under our position in VEI in size. We may tie them up as soon as today.

Commodity Watch:

Crude oil closed up $1.15 yesterday at $65.01 on "global GDP optimism" and word of a reopening NYC which overcame worry over demand impacts from worsening Covid conditions in Brazil and India.  This morning crude is trading down a buck.


Natural gas closed down $0.049 at $2.911 after:

  • EIA reported a low but slightly bigger than expected (reduced expectations) build of 15 Bcf.
  • We think key items of note would be storage for this week moving to deficit on the 5 year average and further deficit to year ago levels.
  • This sets up a price supportive tone of "low storage" as we close on exiting the shoulder and really get into injection season.
  • We expect a much larger build next week vs this week's report but for it to be only about half the size of the year ago injection.
  • This morning gas is trading flat.

NGL Price Watch:  Continued strong pricing. Very good for our AR. 

Short Term Supply / Demand Watch:

Natural Gas Storage Review 


Stuff We Care About Today

COG (Unowned) Reported Modest Beat on In Line Volumes; Guidance Inched Up; Dividend Inched Up

  • Production of 2.287 Bcfgpd (100% NG) vs 2.285 Bcfgpd expected.
    • Vs 2.375 Bcfgpd in 4Q20.
  • EBITDAX of $300.4 mm vs $284 mm expected.
  • EPS of $0.38 vs $0.37.
  • FCF of $137.6 mm.
    • vs $109 mm for all of 2020.
  • 2021 Guidance: Largely Reaffirmed
    • Capex reaffirmed at $530 to $540 mm.
      • down 6% from 2020.
      • Production reaffirmed at 2.35 Bcfgpd vs prior guidance of 2.25 to 2.30 Bcfgpd.
    • 2Q21 guidance of 2.25 Bcfgpd on mid.
      • Street is at 2.30 Bcfgpd for 2Q21.
      • Implied slight sequential decline on lower activity levels during winter.
    • 2H21 is expected to turn back higher to achieve full year guidance.
    • They reiterated that future increases in natural gas prices will not impact capex. 
  • Highlights:
    • Dividend increased by 1 cent to $0.11.
    • Supplemental dividend possible later this year.
  • Balance Sheet:
    • 1.1x net debt to TTM EBITDAX and 0.7x net debt to 1Q21 annualized EBITDAX.
    • Debt reduced by $88 mm senior debt that matured during the quarter.
      • Total debt now at $1.046 B.
      • Cash at $173 mm.
    • They see net debt to TTM EBITDAX below 1.0x target this year.
  • Other Items: 
    • They should get questions on the call regarding the timing of the Leidy South expansion project and thoughts on magnitude of potential positive impact on differentials.
  • Nutshell:  Pretty good quarter. We don't own it currently having taken a long term loss on the name but may be back in the name should prices continue to improve, expanding free cash flow rapidly, later this year.
  • Conference Call: Today, 9:30 am EST.

SWN (Unowned) Reports Solid 1Q21 Beat; Guidance Unchanged; Balance Sheet Fairly Rapidly Improving.

  • Production of 3.0 Bcfepd (21% liquids (17% NGLs, 4% oil) vs 2.995 Bcfepd (20%) expected.
    • Discount to Nymex was a hefty $0.58 in the quarter.
  • EBITDA of $382 mm vs $351 mm expected.
    • Vs $276 mm last quarter.
  • EPS of $0.29 vs $0.25.
  • Free cash flow of $88 mm.
  • Guidance: Not mentioned, no change. 
    • Capex holds at prior guidance of $850 to $925 mm.
    • Production holds at prior guidance of 3.05 Bcfepd.
  • Balance Sheet:
    • 2.0x net debt to annualized quarterly EBITDA vs 2.9x as of 4Q20,
    • Borrowing base reaffirmed,
    • Expects to approach 2.0x by YE21.
  • Conference Call: Today, 10:30 am EST.

NIO (unowned) Reported Strong 1Q21 Results; 2Q21 Guidance Is Above Street

  • Record quarterly deliveries of 20,060 vs 17,353 in 4Q and 3,838 a year ago,
  • Revenue of $1.130 B vs $1.02 B expected,
  • Gross margin was 19.5% vs 17.2% last quarter.
  • EPS of ($0.04) vs ($0.16) expected
  • Interesting Quote Watch: “The overall demand for our products continues to be quite strong, but the supply chain is still facing significant challenges due to the semiconductor shortage. In light of the strong momentum under a volatile macro environment, we expect to deliver 21,000 to 22,000 vehicles in the second quarter of 2021.”
  • Revenue guidance of $1.243 B to $1.298 B for 2Q21.
    • Street is at $1.21 B. 
  • We don't own the name but are keeping a closer eye on this Chinese version of Tesla.

1Q21 Calendar

Other Stuff

Odds & Ends

Analyst Watch:

  • TBA in comments

48 Responses to “T.G.I.F.”

  1. 1
    zman Says:


  2. 2
    zman Says:

    Analyst Watch – AR

    MKM ups target from $15 to $16.

    JPM ups from $11 to $12.

  3. 3
    zman Says:

    Big earnings list next week, see calendar link at upper left.

  4. 4
    zman Says:

    Disney reopening

  5. 5
    zman Says:

    Red market/energy groups open on tap.

    With 10 minutes to go until equity open:

    WTI down $1.45
    NG up 4+ cents

    COG call in 10 minutes, notes to follow.

  6. 6
    zman Says:

    Analyst Watch

    PLUG – Evercore sees “outsized and explosive growth in the coming years”

  7. 7
    zman Says:

    For reference:


  8. 8
    zman Says:

    COG (unowned) 1Q21 Call Notes

    • FCF of $138 mm highest since 1Q19.
    • higher prices primary driver.

    • volumes above mid guide

    • capex below expectation

    • opex improved (slightly)

    • notes the strong balance sheet

    • leverage improves throughout 2021

      • nothing new so far.
    • we are different as others have to send FCF to balance sheet (not for long Dan)
    • reiterates fully committed to base + supplemental dividend.

    • on strip, see excess FCF above base and maturing debt.

    • operations

      • stage by stage new design to stop frac hits on parents.
      • 21 wells in 1Q saw 2 to 4 different designs across each lateral.
      • multi safeguards to keep from hitting the 33 parent wells.
    • the 21 wells on 4 pads are doing well, the parents are performing well (said higher, no significant hits)

    • clean burn – pad compressors – 10 to 15% pressure reduction resulting in higher production and 5 to 15 Bcf uplift (whoa) per pad.

    – much more bullish summer 2021 and winter 2021/22 than the view this time last year.
    – better LNG exports vs last year.
    – strong tailwinds for demand in 2H21
    – supply – volumes in Appalachia are flat YoY and down about 2 Bcfgpd from fall 2020.
    – see capital discipline is intact in Appalachia.
    – across the L48 – down about 5 Bcfgpd pre pandemic,
    – noting storage down 302 Bcf below last year and below 5 year. It’s like he read the post.
    – 2021 Nymex are 80 cents higher than the 2020 level.
    – widening basis in the NE creates near term headwind (yeah, need MVP to come on).
    – notes some is due to Leidy South expansion project in May that will pinch volumes before it comes on.
    – sees strong summer demand and strong LNGEx

    Guidance – reiterated for 2021 spend and as noted in post on volumes
    – notes the slight 2Q21 dip in volumes.
    – this is lower spend in winter.
    – 2Q sees more activity
    – sounds 2Q in line with 1Q, then up in 3Q and more up in 4Q as a guesstimate on shape.


  9. 9
    zman Says:

    going to Q&A 14 minutes in …

  10. 10
    zman Says:

    COG (unowned) 1Q21 Q&A

    Q) why not get aggressive with a buyback now given your bullish outlook and your underperformance.

    A) we don’t disagree with your comments, disappointed. We are looking at buybacks, we increased the dividend, we are focusing on it, we appreciate your comment (heh).

    Q) Use your multiple vs peers to buy assets, noting you could by at 3 to 4x EBITDA that are FCF’ing.
    A) M&A space had been active, pandemic put a lull in that (not really, well, maybe for gas and his area … but actually no). Anyway, it’s not easy to make a transaction work.
    Z4 – sounds like he just doesn’t want to. This could also help on the idea of location quality but OK, we got impatient here after 3+ years of owning the name and having it underperform our other gassy holdings and this kind of answer is why.

  11. 11
    zman Says:

    COG (unowned) 1Q21 Q&A #2

    Q) basis question in Appalachia – Leidy South (this was our ? as per post). You think LS will help basis.
    A) We are excited about new takeaway capacity, this adds 0.5 Bcfgpd directly out of the basin, we see it as constructive on differentials, positive effects of this. Not exactly granular. To COG it’s a net 0.25 Bcfgpd.

    Then says basis exposure is not as great as people think. Says to see the pie chart in the presentation (this is always in the presentation) and he makes a good point but then you look at the diffs each quarter of late and it’s just pretty wide.

    Says the are disappointed with the 6 mile replacement line project that is blowing out basis for May and that’s a short term thing, then better.

    Q) Do you want to have the September $100 mm bond redemption done before getting to the other items like buyback and supplemental dividend and then do you have a formula for the supplemental.
    A) says it’s teed up very well for this. FCF is going to be fairly robust, our history has been fairly generous with return of capital (true, thanks for that). We are already talking about how we will manage the available cash (reiterates the very positive macro).

    The supplement dividend payment will be in December 2021. Will know most of pricing and free cash at that point.

    Q) redirect of the question – trying to understand supplemental vs buyback.
    A) if FCF is $500 mm (to make up a number), our commitment is at least $250 mm, then $180 mm goes to debt and then decide rest.
    – at $12 per share they’d be more heavy on buyback vs supplemental and the opposite at $20 stock price.

    Q) new completion design – seems like you have substantially solved parent/child and did it cost you anything on the design change.
    A) it has not cost us anything (he means EUR on the child wells). The parents were impacted by 2 MM/d for hits early which is very little and expects that to really clean up and not impact the parent EUR.

  12. 12
    zman Says:

    COG (unowned) 1Q21 Q&A part 3

    Q) cadence on spend – cadence looks like 2020 with 2Q21 peak and you declined in 1Q and 2Q20 so is that similar in 2021? (this was my thought from the notes above as well).
    A) basically said it’s about pad TIL timing. No real answer here. We’re more lumpy because our low capital intensity … no answer to the question.
    – so I’d expect 2Q to be flat to down a bit from 1Q and then up into 2H21.

    Dan doing a good job of expressing his frustration with tying wells to production and going even into lease geometry. Then says hope to be more efficient in the Upper Marcellus given the different lateral lengths in that program.
    Note that the Upper doesn’t really kick off for another 9 years.

    Basically explaining why trying to get quarter volumes here is very difficult for them let alone analysts (basically why annual makes more sense).

    Noting a number of pipeline projects in works (Penn East) – this is a ways out.

    No mention of incremental local demand projects … no more local gas turbines mentioned last several quarters now.

    Call wrapping up, tone is pretty neutral, not a lot of great quarter guys type comments. Analysts not pleased with the stock performance, letting it be known, not combative, but pretty skeptical tone here by sellside continues.

  13. 13
    zman Says:

    SWN (unowned) call at the bottom of the hour. No new presentation, the March one is here:


    Notes to follow …

  14. 14
    zman Says:

    COG (unowned) off 3% at the end of their call.

  15. 15
    zman Says:

    SWN (unowned) 1Q21 Call Notes

    Noting the strong natural gas macro.

    Noting the strong propane and ethane macro.

    Noting a litany of reasons to own SWN (not new items just delivering on promises, paying off debt, reducing costs). Our view has been and remains it’s not exactly cheap, we like AR better, but better than RRC (unowned).

    2Q21 – 85 to 90 cent discount to Nymex.

    2Q21 – despite rise in WTI still expect NGL realizations to maintain % shown in prior guidance.

    Going to Q&A 15 minutes in …

  16. 16
    zman Says:

    SWN (unowned) 1Q21 Q&A

    Q) returns by window, one better than other now.
    A) pretty equivalent now, we can move about when we see those trends change, but for right now 50% capex in dry gas and 50% in liquids rich and super rich.

    Q) NE PA – sense of remaining inventory and split between L and U Marcellus.
    A) L Marcellus are about 150 to 200 locations that are economic now.
    U Marcellus locations were are methodically testing.
    then Flat Castle Utica up there.

    Q) Debt target achievement
    A) first make sure when you get to target it is sustainable, then see what we view is best thing for shareholder. So get to 2.0x and the n make sure it is sustainable and then go from there.

    Q) operating cost questions.
    A) we still see a little deflationary trend, then uptick next year. Vertical integration helps insulate from cost strings since have own rigs and those are SWN employees.

    Q) FCF guidance appears to be handily exceeded, so when up it.
    A) we gave some calibration levels (with 4Q), will watch it but your are right.

    Q) Flat Castle – any program
    A) interesting EURs there, studying it, no wells planned 2021.

    To stay flat we are around 30 wells a year.

    Q) M&A questions
    A) pretty standard answer, rigid framework, must be right deal.

    Q) Utica – what need to see in the Montage assets to move the SWN legacy Utica forward.
    A) Always look at the full portfolio, so learning from the Montage OH Utica … the legacy SWN Utica is not imminent but it’s being improved by the learnings from that Montage wells.

    They could go well below 2.0x debt target.

    They plan to take the revolver to $0. Don’t want to term it out.

    Noting leading practices in ESG. Speaking to a number of wells being certified and will talk more about this soon.

    Call over, call this one positive side of neutral tone.

  17. 17
    Anonymous Says:

    When you get time, would you please give me your thoughts re price action on solars and stocks like PLUG. Do you think it is overdone to the downside.

  18. 18
    Anonymous Says:

    VEI- very little volume today.

  19. 19
    zman Says:

    re 17 – thoughts


    • the names ran hard last year, ran up to the inauguration in buy the election, sell the Biden type fashion.
    • demand remains high but their are real supply chain issues that both impact ability to deliver product and increase the price of it.

    • this is being worked through.

    • this group along with wind appears to be finding a base range before moving on up from a longer term standpoint.

    • we have very limited current exposure in solar at the moment (we hold ARRY, we sold JKS (unowned) last year).


    • momentum fade and multiple short attacks.
    • we have a $5.22 cost here.
    • we sold a piece at $75.00 and another piece in the $50s.
    • watching it now try to find a base.
    • fundamental outlook is strong near and long term but they did have a snafu on reporting and we’re awaiting non material changes to be re-filed with SEC.
    • again, it had a huge run, it’s had a huge retracement. Andy Marsh plan seems good and their core customers in mats handling will very likely evolve into core customers in distribution facility to retail site H2 powered Class 8 and smaller trucks.
    • meanwhile, they are making Hydrogen, along with others and working on distribution such that chicken/egg issues don’t overly slow adoption.
  20. 20
    zman Says:

    re 18 – it’s generally a light trade but today really crickets. Month end can be weird.

    OT – grabbing coffee, back in 20 minutes.

  21. 21
    zman Says:

    Broad market sell off today ?

  22. 22
    Skipton Says:

    Z has anyone thought about NG demand in the NE as a result of today’s shut down of the Indian point reactor

  23. 23
    crysball Says:

    Z & Zorgak,
    RE: COG& AR. post Q sell offs

    Is algorithm trading at work in accentuating these sell offs ??

  24. 24
    zman Says:

    re 22 – it’s part of the ongoing strong gas-fired demand level for this year.

    We can convert at a 7,500 BTU heat rate vs high utilization to get the corresponding ballpark on natural gas incremental demand … it’s not huge, not tiny either.

    this is a little sheet we keep around for that kind of thing (not sure how well this will paste in):

    1,040 Mw (net nameplate)
    8,760 hours /yr
    11/12 Assumed utilization
    8,351,200 Mwh
    8,351,200,000 Kwh
    7,500 btu/kwh (hate rate, efficient gas fired unit)
    62,634,000,000,000 btu
    1,037,000 btu /Mcf (average)
    60,399,229 Mcf
    165 MM/d

    60 Bcf

  25. 25
    zman Says:

    re 24 – so that’s 60 Bcf incremental on the year or 0.165 Bcfgpd were it to all be won by natural gas.

  26. 26
    zman Says:

    re 23 – I don’t know, every time something sells off some guy says algos, no real traders. This is simply not the case. There are plenty of large institutional holders in these names. Some play swing positions. There are also hedge funds. See comments in post regarding momentum fade for my thoughts on this in the Holdings Watch section.

  27. 27
    zman Says:

    OT grabbing lunch, back shortly.

  28. 28
    zman Says:

    Rig Count Watch

    Oil down 1 to 342 vs 325 a year ago (a year ago rig counts were in freefall)

    NG up 2 to 96 vs 81

    HZ up 1 to 398 vs 374

    Permian down 2 to 224 vs 219 year ago

  29. 29
    Skipton Says:

    Z re 24 I guess every little helps

  30. 30
    zman Says:

    re 29 – sure. The bigger impact is just the large annual coal closures and the continued rise in gas-fired capacity.

    In 2019 for instance:
    Coal retirements: 14.35 GW (that’s like having 14 large nukes go off line … granted, they don’t keep the same kind of utilization as a nuke but they are baseload).
    Coal additions: 0 GW

    Natural gas retirements: 4.8 GW
    Natural gas additions: 8.6 GW

  31. 31
    Zorgnak Says:

    #23 AR..From way I frame things 10.10 was a key level going into earnings. For the past 90 days it had acted as both support and resistance on numerous occasions. (See 65 minute chart). That 10.10 level was also the value area low for 4/28. The value area high was 10.35 (See 5 minute chart). On 4/29 the value area high for the previous day was tested with very little volume and without a sustained breakout highe the third test of the value area low at 10.15 broke and volume increased to over 150% of the daily average for time of day….Traders were positioned for a breakout higher and when it didn’t happen post earnings (zip opening range volume) they bailed on the break of the 10 level. The relative volume for the day was above average with a high number of trades of smaller size. AR had ripped 10% in a pre earnings rally….with no extension expectations went out the window.. Protecting range trading profits kicked in….Choppy end of month/earning season seems unpredictable to me generally…
    Just my .02..
    65 Minute
    5 Minute https://i.postimg.cc/QCnJ7HJx/ar.png

  32. 32
    zman Says:

    re 31 – thanks Zorg.

  33. 33
    Zorgnak Says:

    #31 re AR…Chart of NG on 4/29…probably didn’t help…

  34. 34
    zman Says:

    fair point as well.

  35. 35
    Zorgnak Says:

    AR From my perch here and now.Long term acceptance is higher at 9.44. The selling took us below that level. On retest of 9.44 it was rejected as too high.
    I see a confluence of levels of support around the 9 +- level.It has been the value area low on the weekly and multi-month time frames since Feb….In this environment it seems to make sense to trade the range lows as a trade or for longer term positioning….Not advice..just thinking out loud…
    65 Minute

  36. 36
    Zorgnak Says:

    S&P Futs at support 4168

  37. 37
    zman Says:

    Thanks for the levels,

    Here, reading, shout if you need something.

  38. 38
    Zorgnak Says:

    On days like this I like to notice relative strength….although most of the ZLT names are red here are the ones that are up from their open…

  39. 39
    zman Says:

    re 38 – still watching ENPH for our starter entry.

  40. 40
    Zorgnak Says:

    XOP Could breakout of it’s weekly or monthly value area high with crude at $65…

  41. 41
    Zorgnak Says:


  42. 42
    Zorgnak Says:

    ENPH Multi-Month value area lows are pretty obvious around 140…volume drying up…relative strength vs solars in general last two days….
    I own it higher..
    65 Minute

  43. 43
    zman Says:

    Thanks – notes from the quarter here:


  44. 44
    zman Says:

    U.S. restricting travel with India.

  45. 45
    Skeptcl Says:

    Volume appears light on a number of renewables today

  46. 46
    zman Says:

    re 45 – light on oily and gassy names in the portfolio as well. Service too. Several names running less than half full day’s volume with a little over an hour to go. I have to leave for an appointment at 3:10 pm EST. Looks like many have already checked out.

  47. 47
    zman Says:

    Modest up week despite the last two days of soft group action.

    The Wrap will be out on Sunday.

  48. 48
    Bill Potter Says:

    Z, have you looked at RTP at all?

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