Wrap – Week Ended 03/25/22



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The ZLT was up 9.8% on the week with oil and natural gas both rising smartly (front month and strip) and several of our upstream equities pushed to new 52 week and in one case an all time high on the week.  Valuations remain reasonable-to-inexpensive and are by no means discounting the 2022 strips. Meanwhile, renewable/green space names continued to bottom and while the ETFs in the table below were off on the week our names were mixed and generally continued to make basing progress.


Free Stuff Last Week:  None

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Z4Comment:  Thank you. Glad to be a help.

Holdings Watch: 

Numbers of Note From The Wrap Table Below:

  1. Oil
    1. EIA weekly was positive as weeklies go (strong headlines and strong internals):
      1. Highlighted by the strongest refiner throughput so far in 2022.  We expected short and shallow and recent move for generic crack spread has only reinforced this. Expect move to best throughput since 2019 by May.
      2. Gasoline exports also rose to the best weekly level since 2018; a better late than not at all materialization of something we expected to see in 4Q21.
      3. Net imports remain near the bottom of the range.
      4. Stocks remain in price supportive territory (for our Base case, not the current strip) and we'd like to see a bit more domestic gasoline demand which was fairly soft (and not just on blending related issues in winter):
    2. CFTC speculative position remains uncomfortable high. This makes sense:
    3. Oil directed rigs were flat and growth has been relative tame in recent weeks when viewed through the lens of sharply higher oil prices.
      1. given budgets for 2022 were only recently established and there would be a need for board meetings and a belief that the next 24 months of oil strip were sustainable and not just current events driven.
      2. and in light of
    4. The active frac count was not available this week but we expect a lift from the seasonal dip of the last couple of reports.
    5. Note that close on the OPEC basket. Wowser.  And that was before Yemen based rebels targeted multiple sites in Saudi.
  2. Natural Gas
    1. The weekly storage report was slightly smaller than expected (but the variation was noise and especially so for this time of year) and managed to take storage below our long held trough range forecast of 1.4 to 1.6 Tcf.
      1. We expect a modest injection next week.
    2. LNG export terminal inflows set a new daily record of 13.77 Bcfgpd last Saturday.
      1. The bid for US  LNG is going to be a lot stronger in 2022 than we expected a month ago.
      2. End of year LNG capacity is expected to be 14.1 Bcfgpd.
    3. LNG & Pipelines - FERC is helping push projects forward in light of U.S. commitments to send more volumes to the EU.
    4. Europe  - our back of the spread sheet math suggests the incremental 15 BCM (1.45 Bcfgpd) the U.S. wants to send to the EU on top of the 22 BCM in 2021 is achievable.
    5. Regardless, the EU is going to have shortages winter 23/24.
    6. The CFTC non commercial position remains extremely net short.
    7. Our view remains that the natural gas strip is ahead of itself at this point on low-ish storage and strong European pricing and we expect a pullback as the shoulder gets underway. Our plan remains to add opportunistically to our gassy positions (we own 4 gassy names including 2 names that are in our top 5) on shoulder season weakness.


Questions and comments under The Wrap be addressed in the Subscriber Mailbag section of the Monday post.

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Thanks for reading.

Have a good and peaceful weekend,



3 Responses to “Wrap – Week Ended 03/25/22”

  1. 1
    Anonymous Says:

    Z, are you still thinking of looking at the FLMN deal? If you have the time I’d like to hear what you think?

  2. 2
    zman Says:

    re 1 – will put on a post it to take a look, thanks.

  3. 3
    zman Says:

    Also asked by another minerals co to take a look at writing them up for SA but it turned out to be too small for us.

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