Wednesday Morning – All Eyes on Fed (and Wind and Oil Service)



Market Sentiment Watch: Nervous market conditions

In today's post please find:

  • the oil inventory preview (looking for product builds (especially gasoline) to begin to normalize),
  • the natural gas inventory preview (over 200 Bcf withdrawal expected, likely another 200+Bcf pull next week as well),
  • comments on the RES quarter (beat),
  • VWDRY outlook comments,
  • and some other odds and ends.

Ecodata Watch:

  • We get the advance report on trade in goods at 8:30 am EST (no forecast, last read was $97.8 B),
  • We get New Home Sales at 10 am EST (F = 760,000, last read was 744,000),
  • We get the EIA oil inventory report at 10:30 am EST,
  • We get the FOMC statement at 2 pm EST,
  • We get Chairman Powell's press conference at 2:30 pm EST.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watc​h - with oil and natural gas inventory previews
  3. Stuff We Care About Today - RES, VWDRY, 4Q21 Calendar Update (names are slowing filling in)
  4. Odds & Ends


Holdings Watch:


  • Yesterday's Trades:
    • CRK – Added to our small position in CRK at $7.13, down 9% on the day on group, market, and stock specific weakness. The essentially all natural gas Haynesville focused company reported a solid reserve report last night and while full year volumes fell within the middle of the prior range 4Q volumes looked light to expectations (there were moving pieces within the quarter with a 3Q21 divestiture and there may be a 3rd party or offset frac related reason for the 4Q shortfall but we would not anticipate well performance as a reason). We see the name as a good long term way to play strong demand for Haynesville natural gas and the company has much tighter differentials relative to their gassy Haynesville peers (ready access to an abundance of pipeline infrastructure and to U.S. Gulf Coast LNG demand which is hold at record levels), exceedingly low operating costs, a much more exposed to upside hedge book in 2022, and therefore strong EBITDA margins. This is a modest growth, medium leverage, high margin, and as we see it under valued gassy play that will continue to use free cash flow to reduce debt to much more palatable levels in 2022. Further, our sense is they become an increasingly obvious acquisition candidate if the equity price doesn’t move to more appropriate multiples of cash flow and reserves this year. Please see our December update here. https://zmansenergybrain.com/2021/12/10/t-g-i-f-235/
  • The Blotter is updated.
    • Near term potential adds in Owned Names:
      • CRGY: 40% oil, 15% NGLs, maintenance mode program, free cash flow to debt paydown and return of capital.  We have only a token position here. 
      • HPK: Very oily. We add on weakness here.
      • CIVI: Oily.  Super cheap. Nice yield. Below $50 is highly tempting. We own a lot but at these prices can own more.
      • PTRA: Waiting a little longer. Good news ignored. 
      • ENPH: Same reasons as prior. Technical trading at the moment. 
        • Other owned solar names may see adds after earnings season.
      • RRC:  Using some AR proceeds to balance out our gassy position.
      • CRK: Same as RRC (we added a little yesterday as per above).
    • And in Unowned Names:
      • ROCC
      • EGY
      • RES (4Q21 call today)

Commodity Watch:

Crude oil closed up $2.29 yesterday at $85.60 with the rally attributed to strong demand that is not being overly disrupted by or expected to be disrupted by Omicron, better than expected consumer confidence readings, stronger than expected Chinese exports, and by the fear of Russian oil production disruption. We expect the large builds in gasoline to moderate soon. 

  • After the close, API reported: 
    • Crude:  Down 0.9 mm barrels
      • Cushing: Down 1.0 mm barrels
    • Gasoline: Up 2.4 mm barrels
    • Distillates: Down 2.2 mm barrels
  • This morning crude is trading up about 50 cents.

Oil Inventory Preview

This Week In History

Natural gas closed up $0.026 at $4.05 with the situation in Ukraine helping to buoy prices along with well freeze offs in the U.S. and despite a warmer forecast. Sources are citing further short covering (we've noted 2 weeks of positive CFTC numbers movement and this week's data on Friday (for numbers dated through Tuesday) may well yield a third. Shorts remain ... very short. Meanwhile, LNG exports were back over 13 (13.02) Bcfgpd yesterday. This morning gas is trading up a whopping 25 cents.

Natural Gas Storage Preview

Street is at -209 Bcf for tomorrow's report. 

  • Last Week: -206 Bcf
  • Last Year: -137 Bcf
  • 5 Year Average: -161 Bcf

Storage Watch: The top chart should push back down into deficit territory with this week's pull. 

Stuff We Care About Today

RES (Unowned) Reports Solid 4Q21 Beat;  Estimates to Climb. 

  • Revenues of $268.3 mm vs $240 mm expected
    • Revenues up 80.5% from 4Q20,
    • Look for the break down of segment components on the call (last quarter pressure pumping was 42% of total)
  • EBITDA of $39.4 mm vs $27 mm expected
    • EBITDA margin of 14.7% vs 12% last quarter and 5% in 4Q21.
  • EPS of $0.06 vs $0.03 expected
  • Active frac fleets:
    • 8 (as expected with the additional of the tier IV fleet at the end of 3Q) vs 7 in 3Q21.
    • As of the 3Q21 call they had 8 fleets working and at that time had no plans to add more in 2022.
  • Guidance:
    • Nothing formal. Look for color on the call.
    • However, we note:
      • Consensus 2022 revenue of $1.076 B is almost exactly the 4Q21 revenue annualized. They play in the spot market. We don't see pricing as flat for the year. Even if they stay at 8 spreads all year estimates are highly likely to move up in the wake of today's report.
      • Annualized 4Q21 EBITDA would be $156 mm ... this would assume nothing for further cost leverage on higher revenues from price increases. The Street for 2022 is at $143 mm.  Again, estimates are very likely headed higher but we'll hear what they have to say regarding net pricing on the call.
  • Return of Capital:  Not at this time (not expected)
    • Share Repurchase: None
    • Dividend: None
  • Balance  Sheet:
    • No long term debt
    • Cash at $82.4 mm.
  • Favorite Quotes Watch:
    • "fourth quarter revenues increased as strong current and forecasted commodity prices encouraged our customers to continue their drilling and completion activities."
    • "As we begin 2022, there are many indications of continued growing activity levels and improved pricing. We look forward to participating in this market with well-maintained fleets of equipment and trained crews. Our operational environment is being impacted by personnel shortages exacerbated by the current COVID surge. Our industry is also facing materials and parts shortages impacting many essential inputs, as well as price increases for raw materials and components. While we have been able to stay ahead of these issues, they may impact our utilization and profitability in the near term,"
  • Related Name Action:
    • We see the release as positive for our holdings in LBRT (ZLT #4), NEX (ZLT #6), and PUMP (ZLT #12).  It's likely also positive for our SLB holding.
  • Nutshell:  We don't own the name but as noted above are well exposed to the space. This is a strong quarter with rising revenues putting margin expansion on full display. The stock should pop and provide further legs for our owned names which will look increasingly cheap to RES on a relative 2022 E EBITDA basis while LBRT's multiple will look to be at less of a premium to its smaller pressure pumper peers.   Please see our recent requested update piece here.
  • Conference Call: Today, 9 am EST.


VWDRY - Preliminary 2021 Figures and 2022 Guidance Announced - Miss and Lower Than Consensus Respectively (not really surprising) - Supply chain and inflation impacts to continue through 2022.  

  • Opening Statement: "The wind power industry continues to be challenged by the current environment characterized by supply chain instability, which is causing significant cost inflation and delay in execution of projects. Furthermore, the current business environment severely impacts both visibility and profitability. The global business environment for wind energy remains volatile in the short term and prosperous in the long term."
  • 2021 Preliminary:
    • Record Revenues of EUR 15.587 B vs guidance of 15.5 to 16.5,
      • Street was at EUR 16.029 B
    • 16.6 GW deliveries,
    • EBIT of EUR 0.461 B (3% margin vs 4% guidance),
      • Street was at EUR 0.653 B
    • Warranty provision to 4.4% of revenues (elevated).
    • FCF of EUR 0.183 B
    • Price increases continue to address inflation.
    • Order intake of 13.9 GW.  Another 3.1 GW in preferred supplier agreements for the 15 MW massive offshore V236's as well.
  • 2022 Guidance:
    • Revenues of EUR 15 to 16.5 B 
      • Street was at EUR 16.9 B
    • EBIT margin of 0 to 4%. 
      • Street was at EUR 0.8 B.  2% on the revenue mid would be EUR 0.3 B 
    • "It should be emphasised that there is greater uncertainty than usual around forecasts related to execution in 2022, and the outlook seeks to take into account the current situation and challenges. In relation to forecasts on financials from Vestas in general, it should be noted that Vestas’ accounting policies only allow the recognition of revenue when the control has passed to the customer, either at a point in time or over time. Disruptions in production and challenges in relation to shipment of wind turbines and installation hereof, for example bad weather, lack of grid connections, and similar matters, may thus cause delays that could affect Vestas’ financial results for 2022."
  • Summary Quote Watch: "Group President & CEO Henrik Andersen said: “Everyone at Vestas did an outstanding job in 2021 to ensure record-high revenue despite a global business environment that became more challenging as the year progressed. Supply chain instability and rising energy prices as well as accelerated cost inflation from raw materials, transport, and turbine components, however, continued to amplify costs throughout the year, which severely impacted visibility and profitability. In this environment and without compromising on safety or quality, we achieved revenue of EUR 15.6bn, an EBIT margin before special items of 3 percent, and free cash flow of EUR 183m. We achieved an order intake of 13.9 GW, 3.1 GW of preferred supplier agreements on our V236-15.0 MW offshore turbine as well as strong performance in Service. In 2021 we also made strong strategic progress to strengthen Vestas’ foundation and customer focus. This progress included the integration of Offshore activities, the ramp-up of Development, and the establishment of one global organisational blueprint. We remain focused on executing our strategy and driving the energy transition forward with our customers but expect the current challenging business environment to continue throughout 2022, which hampers our outlook for 2022." 
  • Nutshell:  The wind group has been dropping swiftly over the last few months. We cut our position by almost half ahead of the 3Q report above $14.  The company has likely been receiving a number of inbounds in the wake of the smaller than year ago 4Q order flow as well as to address supply chain comments and decided to issue a rare preliminary report.  They also held a surprise conference call at 4 am EST which we were not aware of nor on. I will look for a replay of the call later this morning. The guidance appears to take into account a good amount of negatives and should help the stock stabilize (it was up > 5% post call)  but again, we were not on the call and as noted above, the outlook takes into account current thinking and further deterioration of the business environment could further hack back estimates. Regardless, estimates for 2022 will be reset this week (making them more believable).  The 2021 final results are set to be released on February 10th.
  • For reference, our October sale; "
    • 10/21/21 - VWDRY – We sold roughly 45% of our position at an average cost of $14.04, up 94%.In our note from early September here:https://zmansenergybrain.com/2021/09/03/t-g-i-long-weekend-8/We outlined some quick thoughts on medium term slowness in the wind market as well as levels we feel it could comfortably trade at over the next 12 months.  $14 was the low end of that range and it promptly fell before we could take a little off the table. In the last week they reported a large (2.1 GW order) for the super giant Empire Wind field off Long Island. In typical for Vestas delayed reaction fashion the name rallied a few days later. So we’re sticking with our prior thinking and taking the opportunity to reduce exposure ahead of the 3Q report which may see increased margin pressure on guidance due to inflation. Make no mistake, we like VWDRY. A lot. But we are short term cautious and are using the offshore news to push it down a bit in the portfolio. With this sale it moves from 5th largest to 8th largest position in the ZLT and our cost basis now computes as $8.42."

4Q21 Earnings Calendar Update

  • Note we get TSLA tonight which may help the EV space (or maybe just itself).
  • And we get the first gassy name of the quarter with CNX (unowned) reporting tomorrow.
See Calendar page for latest table.

Odds & Ends

Analyst Watch:

  • TBA in comments.

57 Responses to “Wednesday Morning – All Eyes on Fed (and Wind and Oil Service)”

  1. 1
    zman Says:

    RES (unowned) 4Q call about to start, notes in a bit.

  2. 2
    zman Says:

    Brent – $90 acting like a magnet.

    WTI tapping $70.

  3. 3
    zman Says:

    Analyst Watch

    CRK – Piper cuts from $9 to $7.50. We noted they were negative on 4Q volumes yesterday. Please see our comments on this under yesterday’s post. This is a “forest for weeds” type of call on their part and we added to our position on the noise from it yesterday at $7.13.

  4. 4
    zman Says:

    RES (Unowned) 4Q21 Call

    4Q21 capex $22.7 mm

    2022 capex $125 mm – maintenance plus growth oppy’s

    Going to Q&A 9 minutes in …

  5. 5
    zman Says:

    RES (Unowned) 4Q21 Q&A

    Q) pricing for pumping, net pricing, what are you seeing, thoughts on margins for technical services
    A) experiencing net pricing improvements. Lot of moving pieces.
    Clearly utilization is improving.
    We expect net pricing to continue to progress.
    See continuation of the positive incrementals but difficult to predict costs.

    Q) Activity levels.
    A) 1H22 – flat
    Accessing activation of another fleet if prices warrant.
    We have no new equipment on order.
    We don’t know how long for new fleets to be delivered but know it would take awhile.
    Not focused on growing fleet count, focused on optimizing what we have.

    Q) Does the $125 mm contemplate fleet additions.
    A) there’s probably a placeholder for a new fleet in that #.
    It would be Tier IV DGB (not efleet).

    Q) product line breakdown – thanks Gengaro

    A) as % of revenue
    pressure pump 46%
    through tubing – transcript (should be high 20%’s)
    ct 12%
    nitrogen 3.9%
    rental tools 3.4%
    snubbing 1.8%

    Q) non pressure pumping pricing
    A) all the major services lines are seeing pricing increases. Also seeing higher costs (sounds like net pricing increasing though).

    Q) any sand availability issues
    A) not yet remains a risk.

    Q) Coker analysts on call, don’t think they officially cover – asking about challenges of supply

    A) no revenue impacts, s omeeextra costs but not missing out on revenue

    Q) RES used more inbasin sand than Ottawa sand adn that has a slight negative revenue impact.

    Q) question on 1Q – how does the cost challenges play out
    A) just communicating that costs could be an issue.
    4Q was better than expected, just trying to indicate the risks are out there and we are keeping them top of mind and continue to work through them.

    First quarter revenue up slightly.
    4Q was strong, see slower start to Jan

    Stronger growth in 2Q to 4Q

    q) 4th analyst (transscript), new guy -spot vs contract

    A) most is spot, have 3 on contract although those have moved about a bit (guess higher)

    Q) us e for cash on balance sheet
    A) nothing definitive. Looking at re instituting a dividend. Want to do that. Also buyback. Also reinvest in the business. Sounds like he really wants to put in a dividend

    Have identified some equipment we are going to cut up and make sure it does not get put back to work by others.

    The CAT fleet is a replacement and an upgrade and not viewed as a capacity add.

    Call over
    Positive tone

  6. 6
    zman Says:

    PUMP – BlackRock filing

    16.1% of outstanding.

    Last filing showed 12.6%.

  7. 7
    zman Says:

    AR – call options flagged for a 2nd consecutive day.

    Yes we sold some recently. Yes, it’s still our 3rd largest position.

  8. 8
    zman Says:

    RES (unowned) up 7.5% post call.

  9. 9
    zman Says:

    VWDRY opening up 5% on the warning.

  10. 10
    zman Says:

    We still have the Fed today.

    RES (unowned) and oil helping our frac names higher.

  11. 11
    zman Says:

    NEX taps 52 week high. Still cheap to where estimates are heading.

  12. 12
    zman Says:

    SLB as well, new 52 week.

  13. 13
    zman Says:

    SHLS – BlackRock 13g showing 19.1%.

    Prior 18.5%

    Will be interested to see a Fido update, last read was 7.2%.

    Business tied to solar installs … making them cheaper with a small wedge from EV charger installs (also cheaper).

  14. 14
    zman Says:

    Oil inventories in 10 minutes.

    Looking for implied gasoline demand to pickup this report or next. Typical beginning of year inventory issues of less blending for a time that suppresses the implied numbers and forces big gasoline stock builds about to reverse back out.

  15. 15
    zman Says:

    EIA Oil Inventory Quick Look

    WTI at $87.20 just prior

    Crude – up 2.4 mm barrels (vs +1.0 exp)
    – throughput – up 0.05 mm bopd week to week to 15.5 mm bopd.
    – imports – down 0.7 mm bopd
    – exports – up ~0.2 mm bopd week to week, lot of people looking for increased exports near term. Net imports back down to 3.4 mm bopd is low for time of year.
    – L48 oil production – flat week to week, total down 0.1 mm bopd week to week to 11.6 mm bopd on rounding from Alaska

    Gasoline – up 1.3 mm barrels (vs +1.9 exp)
    – implied demand – 8.5 mm bpd, up 0.3 mm bpd week to week.

    Distillates – down 2.8 mm barrels (vs -1.2 exp)
    – implied demand at 4.75 mm bpd, up 0.2 mm bpd week to week, very strong level.

    Nutshell: Benign report and just positive side of neutral as weeklies go. Likely largely ignored. Prices are up a lot recently and this is not much of a driver for further upside. Also, the CFTC long / short is bothersome-ly high. The throughput up is probably temporary but welcome if modest. We still expect a short and shallow maintenance turn and then a move to pandemic period highs for U.S. refiners.

  16. 16
    zman Says:

    Distillate stocks now 17.4% below the five year average.

  17. 17
    zman Says:

    Crude Stocks Change (000 barrels)
    2015 102,384
    2016 32,144
    2017 (59,500)
    2018 16,918
    2019 (11,518)
    2020 55,600
    2021 (67,600)
    YTD 2021 (8,800)
    YTD 2022 (1,700)

  18. 18
    zman Says:

    Gasoline Implied Demand (000 bpd) YoY Chg
    2016 9,327
    2017 9,264 -1%
    2018 9,312 1%
    2019 9,340 0%
    2020 8,140 -13%
    2021 8,974 10%
    YTD 2021 7,826
    YTD 2022 8,212 5%

  19. 19
    zman Says:

    Distillate Implied Demand (000 bpd) Change

    2016 3,770
    2017 4,033 7%
    2018 4,070 1%
    2019 4,021 -1%
    2020 3,685 -8%
    2021 4,032 9%
    YTD 2021 3,910
    YTD 2022 4,353 11%

  20. 20
    zman Says:

    From tomorrow’s post:

    1) Refiner Throughput. Throughput rose less than 0.1 mm bopd, and continues to run just under 1 mm bopd above the year ago week. See Chart A1a below. Crack spreads remain strong. Product exports have been weak of late but we expect a rebound soon. We CONTINUE TO EXPECT A SHORT AND SHALLOW MAINTENANCE SEASON FOLLOWED BY PANDEMIC HIGH REFINER DEMAND. We expect 2022 throughput to fairly consistent rest above 2021 and well above 2020 levels but to remain below 2019.

  21. 21
    zman Says:

    From tomorrow’s post:

    2) Crude Net Imports (Imports less Exports). Better this week, but still modestly above recently set seasonal lows. We expect Net Imports to make headwind type headlines for WTI soon. Scroll down to Chart C1 below. Net imports remain historically low with some modest variation week to week, generally due to swings in reported exports. WE EXPECT MODESTLY HIGHER IMPORTS FROM OPEC+ in 2022 given that we do not see the group pausing their 0.4 mm bopd decurtailment program. Expect volumes from Canada to remain historically elevated but to level off in 2022. Expect exports from the U.S. to move modestly above 2021 levels in 2022 as U.S. Lower 48 volumes climb. More color in charts C1-C3 below.

  22. 22
    zman Says:

    From tomorrow’s post:

    3) Lower 48 production – Reported as flat week to week, again. Recent STEO data forced EIA to rein in the weekly number three weeks ago after they ran it higher non sensically in the preceding weeks. We would note that U.S. production, at 11.6 mm bopd, is well below peak levels as noted in chart B1a below (over 13 mm bopd in early 2020) and up 0.6 mm bopd vs a year ago. We continue to expect a 0.5 to 0.7 mm bopd increase in L48 production in 2022.

  23. 23
    zman Says:

    From tomorrow’s post:

    B) Product Stocks:
    Gasoline stocks are 1.9% below their 5 year average
    Distillate stocks are 17.4% below their 5 year average

    This situation is price supportive for gasoline, distillates, and oil.  

    OT, grabbing coffee, back in 15.

  24. 24
    Skeptcl Says:

    This sounds nice but I’m not holding my breath waiting for Congress to act:


  25. 25
    zman Says:

    re 24 – thanks, hear ya.

    We will have a RES (unowned) cheat sheet in tomorrow’s post, along with thoughts on 2022 #s and comps to LBRT, NEX and PUMP.

  26. 26
    zman Says:

    ENPH – Blackrock trimmed from 11.9% to 11.1%

    We sold ours at $260 and $245 and started recently adding it back. Interesting they appear to have waited to drop 49K shares near current levels.

  27. 27
    zman Says:

    Analyst end of season storage tipping back lower now. Latest consensus 1.617 Tcf. We remain at 1.4 to 1.6 Tcf set a few months ago.

  28. 28
    zman Says:

    Oil up $2+ now at $87.75


    OT – grabbing lunch, back in 30 minutes, shout if you need something.

  29. 29
    zman Says:

    Back, reading, shout if you need something.

  30. 30
    zman Says:

    Russia saying new Iran deal could be reached by end of Feb and see oil embargo lift by April.

    Wow, just in time, eh?

  31. 31
    zman Says:

    *FOMC Will Complete Monthly Bond-Buying Taper In Early March

    *FOMC: It Will Soon Be Appropriate To Raise Fed Funds Rate

    *FOMC: US Economy Continue To Improve, But Pandemic Weighing On Activity

  32. 32
    zman Says:


  33. 33
    zman Says:

    SLB with a $40 handle. Nice. Likely with 2Q or 3Q report they move to bump the dividend modestly.

  34. 34
    zman Says:

    RES now up 3 to 4% on day.

    Peers up 2% LBRT, 2% PUMP, 5% NEX

  35. 35
    nrgyman Says:

    RE 31: Market has priced in the coming rate hikes. There is market uncertainty about the Fed’s plan for their BS. The BS growth will stop in March and the FED said no BS reduction before the rate hikes begin.

    But there is no clear indication of the rate of BS reduction planned. This BS reduction is needed to raise LT rates in order to prevent the yield curve from flattening (or inverting) as they raise ST rates. The LT rates have the most impact on the stock market due to their importance in NPV formulas used to determine stock multiple valuations. The VIX is still trading near 28, which is elevated–consistent with the uncertainty of the future FED BS reduction moves.

  36. 36
    zman Says:

    re 35 – thanks for the color.

  37. 37
    zman Says:

    WTI settled 87.35

    Brent 89.96

  38. 38
    zman Says:

    No trades today.

  39. 39
    zman Says:

    re 35 – still green here but barely. As usual, Powell is a buzzkill.

  40. 40
    nrgyman Says:

    RE 35: Note the LT t-bond market has sold off since the FED announcement. The market’s uncertainty about the FED’s BS reduction is translating into a selloff in the bonds and a rise in the VIX, with the corresponding stock market selloff. Sort of a shoot first and ask questions later situation.

  41. 41
    nrgyman Says:

    VIX just hit 32 vs 28 when the FED made its announcement. Plenty of uncertainty and risk being priced into the markets in the form of valuation multiple reductions. XOP is down 4% since the FED announcement.

  42. 42
    zman Says:

    re 40/41 – I was personally wondering why people were getting giddy in front of a Powell presser. Trades likely in the morning, maybe one this afternoon.

    RES (unowned) now up 1% (true was up nice the day before but there are a lot of short term people in these names). LBRT and PUMP slightly red now, NEX still up.

    Gassy names mixed.

    Oil reversed and took oily names with it, not bad though.

    Solar names gave back some nice bottom fish gains.

  43. 43
    zman Says:


    ENPH – We added to microinverter and smart storage player ENPH at $122.71 average, taking advantage of a Fed inspired dip in the shares this after. Reasoning as the same as recent adds here as we dollar cost average into this high margin name that continues to see strong demand and do a good job of managing supply chain issues. The position remains relatively small and we continue to slowly add ahead of early February 4Q21 earnings.

  44. 44
    zman Says:

    The blotter is updated:


  45. 45
    nrgyman Says:

    RE 42: Agreed. Powell is most concerned about inflation now, with the strong labor market not a primary concern any longer. That means a FED switch from accommodation to tightening. Short term rates hikes (via fed funds rates) and LT rate hikes (via BS reduction). The speed of the BS reduction is the market’s concern atm. So, yeah, buying ahead of Powell’s probable impact does raise an eyebrow.

    Markets have stabilized atm after the selloff.

  46. 46
    zman Says:

    re 45 – hear ya, and for the very short term oriented, which I am not …

    Likely oppy oil space, oil service space.
    – caveat, that CFTC number is concerning.

    Neutral gassy space.

    Iffy tech space.

  47. 47
    zman Says:

    Flat close for us.

    Beerthirty, here for awhile.

  48. 48
    zman Says:

    VWDRY ended up 6% after the warn and guide down.

  49. 49
    zman Says:

    TSLA out any minute now.

  50. 50
    nrgyman Says:

    RE 46: Oil producer equities have lagged the oil price rise. That CFTC number reflects oil market trading and traders are bullish. Perhaps overly so. Oil equities are somewhat at the mercy of the broader markets, but still appear to be outperforming when the market turns green. Hence your point about the buying opp.

    If oil prices flatlined at these levels for the next few years the oil equities would really ramp. OPEC is now more concerned about higher oil prices than lower prices. The equity market appears to be more concerned about lower prices, keeping equity valuations lower than the strip normally would price them. As time progresses if oil prices stabilize without falling significantly the oil equities should run higher.

  51. 51
    zman Says:

    re 50 – very true. I model at $65 for a number of reasons not the least of which is I don’t follow the strip around by the nose and I’d rather be low than high any day. If a name is cheap on my base case I’m pretty happy and I can get to where the Street using one my $10 increments and a little adjustment pretty quickly. Then we can talk about $75 or $80 with the backstop of knowing the subject is cheap or at least not overvalued at $65.

    TSLA is a beat, early sell off and then bounce, have not seen the culprit. Very brief notes in tomorrow’s post. I personally don’t think translates to other EV knock on action. Different weight class, different animal.

  52. 52
    zman Says:

    TSLA 4Q21

    Revenue of $17.7 B vs $16.35 B expected,
    EPS of $2.54 vs $2.26 expected,
    Free cash flow of $2.775 B,
    speaking to supply chain issues in the release.

  53. 53
    zman Says:

    TSLA deck


  54. 54
    zman Says:

    – no new model this year.
    – not currently working on $25K care

    breathing room for lower price players.

  55. 55
    zman Says:

    TSLA call over, good stuff:

    Draft of tomorrow’s notes

    TSLA (wife owned) Reports Strong 4Q21 Results

    Revenue of $17.7 B vs $16.35 B expected,
    Gross margin: 27.4% (new high),
    Margin improvement
    more Model Y
    localization with Shanghai
    transition to updated models
    higher pricing.
    Looking ahead there will be factory launch inefficiencies this year with simultaneous launch of Austin and Berlin.
    Further out, higher margins to come from FSD (full self driving).  They see the value of FSD and “robotaxi” as hard to over estimate long term. They see cars driving about 4 to 5x as much when they are full autonomous. 
    Elon a irritated by the quality of the questions surrounding FSD. Basically saying analysts don’t get the value here. Cars 5x as valuable (ride share) from prior with FSD.  
    14.7% operating margin,
    EPS of $2.54 vs $2.26 expected,
    Free cash flow of $2.775 B,
    Expect to grow car volumes by 50% in 2022 via two factories (Shanghai and Nevada and excludes Austin and Berlin).
    Not battery cell constrained,
    Chip constraints look like they will be alleviated this year. “Crazy number of chip fabs being built now”. 
    They are increasing capacity at all factories,
    New factory announcements likely late in 2022.
    No new car model this year due to chip constraints.
    They are not currently working on the $25K car (too busy).
    Cybertruck – question is how to make it to be affordable.
    Tesla Insurance with informatics showing improved driving with feedback and lower rates with the improved driving. Working well in TX, in five states now, working to get law changed in CA.
    Energy Business:
    Expect rapid growth but hard to predict in 2022 how much. 
    Stationary Storage – sees a transition to iron and/or manganese over nickel. 
    In the future they see a TWh scale business. 
    Optimus (Tesla bot) – first use will be in Tesla factory.
    Conference Call was last night. We listen primarily for EV / energy market thoughts.

  56. 56
    zman Says:

    “At times in recent periods, Schlumberger has experienced delays in payments from its primary customer in Mexico. Included in Receivables, less allowance for doubtful accounts in the Consolidated Balance Sheet as of December 30, 2021 is approximately $0.5 billion of receivables relating to Mexico at December 31, 2021 ($0.7 billion at December 31, 2020).

    Schlumberger’s receivables from its primary customer in Mexico are not in dispute and Schlumberger has not historically had any material write-offs due to uncollectible accounts receivable relating to this customer.”

  57. 57
    zman Says:

    We have a call in with RES (unowned).

    We get results from the first big gassy name of the season tomorrow.

    And we get VLO (unowned).

    Back in 4 hours.

Leave a Reply

Zman's Energy Brain ~ oil, gas, stocks, etc… is is proudly powered by Wordpress
Navigation Theme by GPS Gazette