Wednesday Morning – BKR, So Far This Quarter



Housekeeping Watch:

In today's post please find:

  • the oil inventory preview (benign expectations),
  • the natural gas inventory preview,
  • comments on the BKR quarter,
  • So Far This Quarter 2Q22,
  • the energy earnings calendar,
  • and some other odds and ends.

Ecodata Watch:

  • We get Existing Home Sales at 10 am EST (F = 5.38 mm, last read was 5.41 mm),
  • We get the EIA oil inventory report at 10:30 am EST.
  • President Biden will announce multiple executive orders on climate change today.
    • Not apparently on today's agenda but the president could declare a climate emergency soon.
      • This would give the Administration the ability to temporarily block oil or natural gas exports.
        • We would advise against this action since it would prompt 1) some upstream names to reduce 2023 budgets yielding lower domestic production, 2) problems with US refiners given crude quality concerns (the U.S. production slate is too light for their needs, 3) problems internationally for trade partners in LAM and the EU in particular.  It would also dip crude prices but only temporarily as the U.S. imports more oil than it exports and markets would adjust to fill the lack of U.S. supply on the oil side. On the natural gas side an export ban would plunge Europe into a dark and cold winter and give Russia significantly greater leverage. We don't see this happening even if markets are fearful of "news" on this front this week.

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watc​h - with oil and natural gas inventory previews
  3. Stuff We Care About Today - BKR, 2Q22 So Far This Quarter, 2Q22 Energy Earnings Calendar, LILM
  4. Odds & Ends


Holdings Watch:


  • Yesterday's Trades:
    • USWS – We added to our position in USWS as an inexpensive way to add PFHC who’s buying them as previously noted. HAL (unowned) reported a big beat this morning but more importantly they note: 1) North America is essentially sold out for frac, 2) talks for 2023 equipment allocations are underway now which we had heard elsewhere but it’s good to see them confirm and this is earlier than usual, 3) customers are not thinking “recession” but instead thinking higher activity in 2023 vs a tight capacity market, and 4) net pricing gains are expected to continue. As HAL notes, the tightness is not something that can be resolved quickly. This was a decade in the making and it will be multiple years in the undoing. Consensus estimates for 3Q22 are going to rise in the wake of the quarter and the rest of the service space should take note of the drivers. Meanwhile PFHC is highly likely to be the highest margin completion company on a per fleet basis for 2Q22 and yet the name continues to trade well below pro forma estimates, likely due to slightly more leverage than peers and it’s newness to the market.
  • The Blotter is updated.

Commodity Watch:

Crude oil closed up $1.32 yesterday at $100.74 on the September contract which takes over front month duty today. 

  • It's likely we see a bounce in implied gasoline demand in the EIA weekly today given last week's counter season big jump in blending components,
  • It's also likely we see a rebound in distillate demand.
  • Libya Watch:  Libya was said to be restarting exports at 4 previously closed ports overnight, potentially adding about 1 mm bopd back to global exports.
  • After the close, API reported:
    • Crude: Up 1.9 mm barrels
      • Cushing: Up  0.5 mm barrels
    • Gasoline:  Up 1.3 mm barrels
    • Distillates:  Down 2.15 mm barrels
  • This morning crude is trading down $1.40.

Oil Inventory Preview

This Week In History

Natural gas closed off $0.215 at $7.264 on a slightly cooler forecast for the last 3 days of July (Maxar). 

  • The EU said yesterday it is not counting on NS 1 pipeline returning to service.
  • The EU also said it is considering a 15% reduction in natural gas consumption from August 2022 to March 2023 due to Russian supply issues and we wonder how this would be achieved.
  • BNEF reports production was 95.9 Bcfgpd yesterday (still not able to mount a sustainable ramp higher),
  • and LNG yesterday held at 11.2 Bcfgpd (> 95% of non Freeport capacity).
  • This morning gas is trading up about 2% at post time.

Natural Gas Storage Preview

Street is at +50 Bcf for tomorrow's report. Z4 at +40 to +50 Bcf.

  • Last Week: +58 Bcf
  • Last Year: +50 Bcf
  • 5 Year Average: +46 Bcf

Stuff We Care About Today

BKR (Unowned) Reports Misses The Mark; Their Outlook Remains More Cautious Than Most in the Space 

  • Revenue of $5.05 B vs $5.34 B expected,
    • vs $4.835 B in 1Q22
  • EBITDA of $651 mm vs $697 mm expected,
    • vs $625 mm in 1Q22
  • Operating margin of 9.7% vs 8.9% last quarter.
  • EPS of $0.11 vs $0.22 expected,
  • Free Cash Flow: $147 mm vs $257 mm expected.
    • vs -$105 mm in 1Q22,
  • Notable Quote Watch:  "Our second quarter results were mixed as each product company navigated a different set of challenges ranging from component shortages and supply chain inflation to the suspension of our Russian operations. While OFS (oilfield services) and TPS (turbo machinery and process solutions - largely LNG) are managing the current situation fairly well, OFE (oilfield equipment) and DS (digital solutions) have both had more difficulty"
  • Guidance:
    • Last quarter we noted their outlook was one of the most cautious in the greater oil service space.
    • No change to that today.
      • "the oil markets face an unusual set of circumstances and challenges. On one hand, the demand outlook for the next 12 to 18 months is deteriorating, as inflation erodes consumer purchasing power and central banks aggressively raise interest rates to combat inflation. On the other hand, due to years of underinvestment globally and the potential need to replace Russian barrels, broader supply constraints can realistically keep commodity prices at elevated levels even in a scenario of moderate demand destruction. As a result, we believe the outlook for oil prices remains volatile, but still supportive of strong activity levels as higher spending is required to re-order the global energy map and likely offsets demand destruction in most recessionary scenarios.”
    • That paragraph is a polar opposite to the HAL  (unowned) macro call from yesterday. 
  • Orders of $5.86 B in the quarter.
    • Up 15% YoY but down 14% sequentially on lower OFE and TPS (the stronger highlights above). Equipment orders were down 37% sequentially but all segments were up YoY.
    • Book to bill was 1.2x.
  • By Segment:
    • OFS - noted continuing interest in artificial life  - big Permian ESP contract and completion solution in Iraq as highlighted projects.
    • TPS
      • Secured contract for 7 LNG trains in the quarter for LNG (the company, unowned) Corpus Christi stage 3 for a total of 10.5 MTPA (48.7 x 10.5 / 365 = 1.4 Bcfgpd). 
      • Also contracted for additional offshore equipment for NFE.   
      • And TPS is helping with the Driftwood pipeline to support eventual start of the Driftwood LNG terminal.
    • OFE - says they continued to gain momentum internationally.  OFE continues to have negative operating income.
    • DS - gaining traction in aerospace (NAM and China aircraft maker inspections).
  • Balance Sheet: Net debt to annualized 2Q22 EBITDA of 1.4x vs 1.4x last quarter.
  • Dividend: Previously announced at $0.18 per quarter,
  • Conference Call: Today, 8:30 am EST.
  • Knock On Effects Watch:  Maybe early negatives for the OIH names in general but should not be too sticky. 
  • Nutshell: We had no interest in owning the name going into the quarter. No change to that. Here to listen for service and LNG color.

2Q22 So Far This Quarter

2Q22 Energy Earnings Calendar

Please see the Calendar link at upper left or click here.

Other Stuff

  • LILM - another day, another deal. Today they've announced a deal to develop an eVTOL network in southern Spain (they've been testing the craft in Spain this summer). Yesterday they announced a deal for 6 of their craft in Bulgaria with plans to develop a network there and in Norway for network development along with a 40 jet order.

Odds & Ends

Analyst Watch:

  • TBA in comments.

117 Responses to “Wednesday Morning – BKR, So Far This Quarter”

  1. 1
    zman Says:

    Analyst Watch:

    HAL – Susquehanna raises 2022 and 2023 estimates.

    HAL – Wells Fargo lowers target from $42 to $33 and stays equal weight. Raises estimates for 2022 and 2023.

  2. 2
    zman Says:

    64% of voters in the U.S. believe natural gas can help address climate change – Impact Research poll, commissioned by EQT.

  3. 3
    zman Says:

    BKR (Unowned) 2Q22 Call Notes

    – reading the press release on oil.

    Went off script on natural gas.

    – > 35 MPTA LNG contracting in 2022

    – speaking to strong demand for global natural gas.
    – says big need for investment over the next 5 to 10 years for natural gas
    – bullish natural gas, more neutral oil.

    will return 60 to 80% of cash flow to shareholders.

    Sees peer leading free cash flow and return of capital even in downturn.

    Looking to drive synergies between the segments, continue to streamline.

    OFS – positive trends NAM and Int’l, net pricing being achieved and see key area growth in 2023 and beyond.

    NAM activity and pricing strong, rig count above expectations. See continued modest growth in rigs 2H, 2023 dependent on global.

    Another nod too chemicals for int’l, sees strong next quarters, same as HAL (unowned) yesterday.

    – on track to $8 to $9 B in orders this year.
    – optimistic 2023
    – believe at beginning of another building cycle, particularly om US.

    expect 100 to 150 MTPA over 2022 and 2023, and more in 2024 and 2025.

  4. 4
    zman Says:

    Analyst Watch

    CRK – assumed coverage with Neutral and $11.50 target at MKM (analyst moved from RBC it appears).

  5. 5
    zman Says:

    BKR (unowned) 2Q22 Call Notes 2

    – notes Saudi order for compressors for their largest unconventional gas field projection.

    – OFE – disappointed with performance – working to right size costs

    – solid pipeline of DW developing across a few key markets.
    – best quarter for flexible bookings (risers, umbilicals).

    Sidebar: Maybe positive knockon for OII (unowned) but modest.

    DS – noting another positive industrial customers.

    – Sidebar – they continue to be a firm that needs to streamline our view, too many directions, hard to analysts to cover, hard to manage as a public company as you have one segment doing great but another flagging almost every quarter. We see this with names that try to do too many things before they eventually get tired of trying in an area and sell it to someone like GE for a loss.

  6. 6
    zman Says:

    Analyst Watch:

    EE – Barclays trims from $33 to $27, maintains Overweight.

    Probably more of a mark to reality than a fundamental downgrade of PT.

  7. 7
    zman Says:

    BKR (unowned) 2Q22 Notes 3

    – bought back 6.7 mm shares
    – Russia
    – classified as held for sale.
    – suspended operations in 2Q, so revenue down 51% while costs were maintained.
    – Have to maintain cost base until they get it sold.

    OFS – up 8% seq, NAM was up low double digit onshore.
    10.3% op margin ex Russia

    3Q outlook – expect growth
    revenue mid single digits
    margins to be up 50 to 100 bps seq

    for 2022 expect improving outlook most markets
    NAM 50% or great growth
    Sees OFS to be up mid double digits 2022

    OFE – messy #s, apples and oranges.
    – 3Q outlook flat to down low single digits.
    – for full year 2022 – expect offshore recovery to drive order growth
    – but expect down double digit revenue.

    TPS – strong as noted
    – 3Q outlook – mid single digit up
    – expect margins to be moderately lower YoY
    – 2022 – revenue to be flat to up
    (this is lower than expected – on a few factors including Russia and timing)
    margins to be slightly higher YoY.

    DS – strengthening market outlook – strong oil service, industrial, and power.
    – negative impacts from chip supply chain.
    – continue to make changes including recent leadership changes
    – 3Q outlook – low single digit growth

    Going to Q&A 33 minutes in …

  8. 8
    zman Says:

    BKR (Unowned) 2Q22 Q&A

    Q) Russia noise – flesh out how this will ultimately be closed out and timing .
    A) $25 mm in costs per quarter, don’t know timing, don’t know how it gets done, expect to be done by year end. Notes negative euro to dollar impacts. Says offsetting costs other areas.

    Q) Outlook on OFS
    A) International – ME, LAM, N Sea and Asia-Pac, W Africa seeing strong growth in 2022.
    NAM – expect strong growth of 50% or greater vs 2021.

    Q) organizational question
    A) 4 companies run independently in the past, see more changes down road to get more alignment. They clearly see room for further streamlining – says evaluating several things. Going to be messy for awhile.

    Q) LNG – notes orders remain at $8 to $9 B. Can you speak to 2023?
    A) extremely positive – pipeline has grown
    – comfortable
    27 MTPA booked this year.
    2023 – expect the prior $8 to $9 B next year too (reiteration).
    – Seeing more modular designs and fast LNG

    Sidebar – positive for NFE and EE

    Q) DS order conversion into cash flow.
    A) chip and component shortage is preventing conversion of orders in backlog to sales. It’s affecting delivery schedules.
    Think this has troughed at 60% on time delivery. Been their for awhile.
    Says P80 is at 25 days vs 11 days a year ago.
    As it recovers says margins recover.

    Good news is demand remains strong.

    Q) TPS margin later in the year, seems flattish, when normally you get a margin pop.
    A) mix of equipment and service this year, larger equipment in 4Q which is lower margin.

    Analysts questing for positives.

    Q) DS – aside from internal effort are you seeing supply chain starting to improve?
    Chips – have not seen a lot of relief yet.
    Supplier are telling us we should see some relief in the 2H, due to our programs to change supply.

    Broad supply chain – outside of DS, things are relatively stable. Still seeing specialty chemicals while commodity chems are ok,
    Seeing metals coming down.

    BKR down about 7% just before market open.

    Likely estimates reduced post call.

  9. 9
    zman Says:

    Just before equity open

    WTI down $1.70
    NG up 3%, tapping on the $7.50 level again.

  10. 10
    zman Says:

    BKR (Unowned) 2Q22 Q&A

    Q) return of capital
    A) no change – plan to return 68% of FCF is unchanged. Really sees any discontinuity as short term.

    Call ending.

    Management ends with optimistic about their segments. Remain long term focused.

    Tone was kind of as expected from management
    Analyst crowd was neutral and patient.

    Stock off 10+% at end of call.

    Call not indicative of how we expect your average service player call to go this quarter.

  11. 11
    zman Says:

    ENPH – snapping up through Zorg’s level and as we’ve stated we take as positive a close over $220 (Z4 average cost $147.73).

    OT – grabbing coffee, back in 5.

  12. 12
    nrgyman Says:

    RE 4: MKM did the same for RRC: Neutral with a PT below current price. They posted Buy ratings on several oil names though.

  13. 13
    Justin Says:


    JPM names one of Top Picks for H2. Cites margin improvement as ’21 bookings roll off and possible guidance increase as certain risks discussed in Q1, like Covid and AD investigation moderate.

  14. 14
    zman Says:

    re 12 – see it, thanks. B of A yesterday doing the opposite and leaning in on gassy names.

    re 13 – thanks, had not seen. Roth out there this morning stating kind of the obvious that upside to estimates ultimately rests with module availability. Our own obvious statement would be that the 2Q call will be more upbeat than the 1Q call given the 2 year exemption.

  15. 15
    zman Says:

    SHLS also perking up in that space.

  16. 16
    zman Says:

    As per post, expecting rebound in implied gasoline and distillate demand today. Gasoline can lag but the big build in gasoline stocks last week was tied to blending, something we usually see in winter.

  17. 17
    Kyle Graffagnini Says:

    Initiating/Assuming Coverage on 20 E&Ps; Would Buy Oil Names, Avoid Gas Exposure — MKM Partners

    MKM’s Leo Mariani said, “We prefer E&Ps with low-cost oil assets that can grow production in the low- to mid-single-digits while spending 50% of cash flow or less and return most of the remaining cash flow to shareholders. We would avoid natural gas levered names and focus on oil names as we see downside to natural gas prices in 2H22 and into 2023, but we think WTI oil prices will outperform futures pricing in 2023. Our Buy ideas are: APA, CDEV, CIVI, COP, CRC, DEN, EOG, FANG, MGY, MUR, PDCE, PXD, SM, TALO and VNOM. Neutral-rated ideas are: CNX, CRK, CTRA, OXY, and RRC. Our top ideas are: CDEV, COP, FANG, SM and TALO.”

  18. 18
    zman Says:

    re 17

    – thanks, I used to work with him, smart guy.

    – disagree with the premise on natural gas and would add that gassy stocks are not discounting current pricing after the recent summer dip.

  19. 19
    zman Says:

    Headline Watch:

    (US) Pres Biden to announce wind turbine plan for Gulf of Mexico and Atlantic; To lay out steps towards wind lease sales in the Gulf

    Positive implications for TPIC and VWDRY.

    Not BWEN (unowned).

  20. 20
    zman Says:

    Remember when we roughly half our VWDRY at $14?

    From the trading blotter.

    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.

  21. 21
    zman Says:


    VWDRY – We added to VWDRY at $7.72 average. this is an add back after our last action was to sell 45% of the position at $14.04 in October 2021. Among the expected executive orders today is an offshore wind plan for the Atlantic and the Gulf of Mexico establishing lease sales for the latter. VWDRY is a long term hold for us and 2022 and 2023 are already expected to be more challenged relative to 2021 due to supply chain impacts and inflation. The longer term out look is for greater offshore project impacts. Our sense is that the name is at or close to a medium term bottom now. VWDRY reports 2Q22 results in early August and expectations are fairly low given weak announced turbine order flow in 2Q22. The average cost on our remaining position is now $8.36 and Vestas is our 11th largest position.

  22. 22
    zman Says:

    EIA website lagging again, notes on the WPSR in a bit.

  23. 23
    zman Says:

    Crude stocks down 5.4 mm barrels even with the 5.0 mm barrel SPR release.

  24. 24
    Zorgnak Says:

    Good Morning
    ZLT % Change Since Open

  25. 25
    zman Says:

    EIA Oil Inventory Quick Look

    WTI at ~$98.80 just before the report.

    Crude – DOWN 5.4 mm barrels (vs +0.8 exp)
    – SPR released 5.0 mm barrels
    – throughput – 16.3 mm bopd, down 0.3 mm bopd week to week, still near pandemic period highs
    – imports – down 0.9 mm bopd w-t-w
    – exports – up 0.7 mm bopd w-t-w
    This puts net imports very low for time of year.
    – L48 oil production – reported as down 0.1 mm bopd, second consecutive week down in wake of the last STEO.

    Gasoline – up 3.5 mm barrels (vs +1.0 exp)
    – implied demand – up 0.45 mm bpd w-t-w

    Distillates – down 1.3 mm barrels (vs +1.7 exp)
    – implied demand – up 0.3 mm bpd w-t-w

    Nutshell: Positive side of neutral type report.

  26. 26
    Viper1 Says:

    RE 19 A alternative way to play these windmill projects from a support view is KEX

  27. 27
    Zorgnak Says:

    Demand volume supports a move back to recent acceptance at 8.39
    Weekly Heavy volume selloff to long term acceptance (purple line) at 6.73. Volume Looks like everyone that wanted and could get out, did.

  28. 28
    zman Says:

    re 26/27 – thanks, tied up for a bit, will circle back.

  29. 29
    Nick Says:

    Biden’s press conference expected at 2:45pm EST today

  30. 30
    Zorgnak Says:

    WTI Front Month
    106.87 is major acceptance and near term resistance. Demand & relative volume still sketchy for a big move higher. Price/volume distribution has a nice bell shape to it…Heavy ill defined congestion.

    September Support/resistance 102/92.

  31. 31
    Anonymous 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 8,708
    YTD 2022 8,714 0%

  32. 32
    Anonymous 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 3,994
    YTD 2022 3,998 0%

  33. 33
    zman Says:

    re 29 – thanks very much

  34. 34
    Zorgnak Says:

    XOP Longer term uptrend firmly in place. Note the long buying tails off major long term acceptance (Purple line) and the uptrend line at 108.22. Note also the June reversal at previous major acceptance/supply above at 166.

    XOP Daily
    Demand volume shifting positive both on the daily and intraday time frames. First time since June. XOP in value with supply to move through. Relative volume remains below average
    65 Minute
    Looking inside the daily time frame, 128 is the next level previous acceptance/supply. a level to gauge the strength of this move..”What is it trying to do and how is it doing with that?”

  35. 35
    zman Says:

    Distillate exports very strong last week.

  36. 36
    Zorgnak Says:

    Nat Gas Front month..
    Daily Consolidating at resistance after getting extended. Demand volume positive in multiple time frames. Weekly, Daily and Intraday.
    65 Minute

  37. 37
    zman Says:

    Analyst Watch

    CIVI – MKM starts with Buy and $70

  38. 38
    Zorgnak Says:

    ENPH Poised above long term price/volume base
    Daily Pausing at price resistance at 220.. Demand volume positive for higher with supply falling away quickly on an earnings spark, if/when. Above 212 sets up the breakout…
    65 Minute High volume open attempted to break the pre earnings consolidation…eager beavers.

  39. 39
    Zorgnak Says:

    CIVI Back to major acceptance around 53.50.Demand volume shifting quickly here now. Moving easily through considerable supply back to acceptance.
    Resistance above at 56.71.

  40. 40
    Zorgnak Says:

    SND High relative volume today..

  41. 41
    zman Says:

    From tomorrow’s post:

    3) Lower 48 production – Reported as down 0.1 mm bopd for a second week at 11.5 mm bopd, combined with AK production yielding production of 11.9 mm bopd. We see the pullback in the reported L48 production as the outcome of over zealous prior forecasting by EIA being pulled lower in the wake of lower April actual figures released a couple of weeks ago and the STEO last week. The 11.9 mm bopd level is up 0.2 mm bopd from where production started the year and is 1.2 mm bopd below pre pandemic peak levels of 13.1 mm bopd in early 2020. See chart B1a. We continue to expect a 0.5 to 0.7 mm bopd increase in L48 production in 2022.

  42. 42
    zman Says:

    re 40 – noted. The only mention of sand quarter to date was on the HAL (unowned) call yesterday as they noted much easier sand logistics in 2Q vs 1Q which was an expected comment. Expect big volumes when those guys and their peers SLCA and SOI (both unowned) report despite the reopening of some upstream controlled mines.

  43. 43
    zman Says:

    re 38 – thanks for the look.

  44. 44
    zman Says:

    Viper – we’ve not looked at KEX (unowned).

  45. 45
    zman Says:

    Analyst Watch

    MGY – MKM starts at Buy and $26 PT.

  46. 46
    Zorgnak Says:

    Broad Market Relief Rally
    S&P Futures testing value area highs at 4015. Nasdaq and Russell have already broken above their value areas. Major resistance/supply above.
    S&P Daily
    Weekly Major resistance starting at 4024.

  47. 47
    zman Says:

    MGY looking to test the 200 day sma from below.

  48. 48
    Zorgnak Says:

    TAN At a major level of interest around 75-77…Consolidation at major resistance/value area lows on the weekly and major acceptance on the daily time frames…Should get relatively easier to move above 77, if/when…Demand volume has turned supportive in both time frames..

  49. 49
    zman Says:

    Street is at +50 Bcf for Thursday’s report

    Z4: +40 to +50 Bcf
    Last Week: +58 Bcf
    Last Year: +50 Bcf
    5 Year Average: +46 Bcf

  50. 50
    zman Says:

    PFHC / USWS – looking constructive.

    Least expensive pro forma combination in the space with best margins in the space.

  51. 51
    zman Says:

    re 48 – glad to see it shrugging of the CBP issue faster than it did the Commerce Dept. issue.

  52. 52
    Anonymous Says:

    Natgas names moving higher in the face of that curious MKM downgrade.

  53. 53
    Anonymous Says:

    RE 52: MKM sour view on natgas names likley related to their natgas bench price projection. Very curious/quizzical call by them. Natgas is up +.40 today at $7.55. Low demand elasticity, so seasonal moves drive price and winter season is looking quite bullish. Just don’t get their call on natgas.

  54. 54
    zman Says:

    re 53 – thoughts

    – He’s moving from Keybanc to a new firm.

    – I’ve been through that kind of thing before.

    – it takes time to get the models updated, get the basic reports written, etc.

    – those gas pieces were likely written weeks ago with gas prices in full retreat.

    – probably less sure on the macro on gas so being cautious.

    – He’s a smart guy, probably thinking he’ll have time to upgrade (if needed) before prices commit to higher levels this fall so the short term pricing would not enter in.

    – I worked with him for a few years and that’s my guess.

  55. 55
    nrgyman Says:

    RE 54: Thanks. He does have shoulder season ahead that could mute prices and potentially give himself an opp to become more bullish. But Freeport LNG will partially return, storm season could be in full swing and Putin is going to be Putin. Also not seeing a big supply push either. Not sure I would want to play cute with this shoulder season.

  56. 56
    zman Says:

    We’ll be on the TSLA call tonight.

    Primarily for supply chain comments on solar and solar components and battery storage growth.

  57. 57
    zman Says:

    re 55 – yeah, exactly, my thoughts beginning in April/May were to add our gassy names on an expected pullback, a pull back that we’re not in our coming out of and we did add a bit.

  58. 58
    zman Says:

    STEM – increasingly constructive.

  59. 59
    nrgyman Says:

    RE 58: STEM, ARRY and SHLS are each on the verge of a P/F breakout. ENPH and SEDG already did so.

    FSLR scored a P/F Double Top breakout today.

  60. 60
    zman Says:

    re 59 – thanks

  61. 61
    zman Says:


    NEX – We added to NEX at average $8.74 ahead of SLB (unowned) earnings Friday and NEX, LBRT, and RES earnings next week. We expect positive demand and net pricing guidance for several of the names including NEX. In recent weeks the frac names have retreated with the pullback in oil but we see rising demand for frac in 2H22 and 2023 vs essentially flat capacity. NEX trades at just 3.8x 2023E EBITDA now as estimates have marched significantly higher since the 1Q22 report and the mid June upward guidance revision while the stock has continued to retreat with recession concerns. This add takes our average cost to $5.20. NEX is our largest completion company holding and 5th largest position in the ZLT. Please see today’s post for the first edition of So Far This Quarter 2022 which outlines positive frac sector comments from yesterday’s HAL call.

  62. 62
    Zorgnak Says:

    Nat Gas Broke out of that short consolidation on 200%+ relative volume for time of day during the lunch hour and now above average on the daily…Not much between here and previous acceptance 8.50-8.60.

  63. 63
    zman Says:

    The blotter is updated


  64. 64
    Nick Says:

    Does anyone know why Nat Gas is breaking out?

  65. 65
    zman Says:

    President Biden speaking now.

  66. 66
    Zorgnak Says:

    NEX In range with support at the value area lows. Demand volume trending higher. Nice risk reward level for trader types, imo.
    65 Minute moving into a low volume zone with with room to move next to 9.48, previous acceptance and price gap close.

  67. 67
    Zorgnak Says:

    #66 NEX correct daily chart…my apologies

  68. 68
    zman Says:

    …. in coming days will announce executive orders.

    re 64 – heat, reports of demand at record levels. Potential for a summer draw in the next two reports (not this week, but in the next two reports builds to get quite low). European prices not really reacting but noting Spain said no on the EU conservation plan noted in the post. Otherwise not seeing much. As noted each Wrap, specs are very very short.

  69. 69
    zman Says:

    NG testing $8


  70. 70
    Zorgnak Says:

    FANG Non ZLT..Breaking back into value range. Looking for a return to major acceptance around 125-128…

  71. 71
    Peter G Says:

    The only news is Cheniere inking deal with China. Did Freeport get waiver??

  72. 72
    zman Says:

    re66/67 – thanks for the levels Zorg, is the purple line the 50 day?

  73. 73
    zman Says:

    re 71 – Freeport only news is that an inspection is planned for mid September, news broke on that about 23 hours ago.

  74. 74
    zman Says:

    re 70 – it’s on our to do list. Solid quarter expected with reiteration of maintenance outlook.

    See our last update here at the end of June:


  75. 75
    zman Says:

    No executive orders ready today.

  76. 76
    zman Says:

    re 75 – sounds like next week, sounds like Manchin caught them off guard.

    To me this is something you have ready but they didn’t ask me. Not a political comment just saying I’d have mine ready if it’s important to me.

  77. 77
    zman Says:

    Says will do everything can to support offshore wind.

  78. 78
    Zorgnak Says:

    USWS Playing catch up with it’s suitor today. Big volume pop last hour reversal yesterday. Testing supply at 0.86. Above that level room for a run back to 0.9599999
    65 Minute

  79. 79
    Peter G Says:

    Re 73. The work is complete. I assumed Biden and co would squat on final til election. Maybe not.

  80. 80
    Zorgnak Says:

    #72 Re NEX..The magenta line near the 9.42 area is the 50 Ma…some of my momentum/swing trader friends say, ” Nothing good happens below the 50 Ma”..I’d expect they will like it higher..
    The purple horizontal line was previous acceptance which acted as support (notice the bounce) at one point and now supply being tested..

  81. 81
    Zorgnak Says:

    ENPH Horses are at the gate. Hope they’re pointed in the right direction..
    5 Minute

  82. 82
    Peter G Says:

    Re 73 There have been three runs. All good.

  83. 83
    zman Says:

    re 78 – PFHC posted best in show bounce post HAL (unowned) call yesterday, up a touch (2.5%) today as well. Remains least expensive name in group.

    At $16.50 it trades at 2.7x our pro forma 2023 EBITDA. Despite the $23 to $25 mm EBITDA per annualized spread guided for 2Q22.

    At the 0.0561x conversion rate USWS would be $95, less a normal arb spread of 5% would be $0.87.

    That’s fine but kind of noise to my short and medium term thinking.

    PFHC has not yet posted a call date for 2Q22 earnings (given the recent IPO and announcement of USWS not a big surprise). We stand ready to add more USWS next week as a majority of the rest of that group posts #’s and guidance. Expect LBRT (unowned) to be on the more timid end of guide and NEX to be as aggressive as the HAL comments. Probably few will be on the RES call but that’s a mistake by those covering it.

  84. 84
    Zorgnak Says:

    ZLT Into the last hour. Ranked by % Change Since Open. Quite a few at or near HODs. TPIC, GOEV, SND, Nat Gas all with above average volume today…

  85. 85
    zman Says:

    re 79 – thoughts

    1) Freeport is a closely held name. I’ve seen no stories indicating repair work is complete. If you’ve got a credible source on that lemme know.

    2) Given the Admin’s promised incremental volumes to Europe and desire for thumb-in-eye-of-Putin action I’d think they’d want to get it open sooner rather than foot drag.

  86. 86
    Zorgnak Says:

    RES Bounce off previous acceptance. Demand volume shifting for a test of resistance at the value area lows around 7.08…A break above resistance has a low volume zone to 8.63. Makes for a nice rally if/when 7.08 is taken out with demand volume in gear.

  87. 87
    Peter G Says:

    I can tell you it smells there. The radiant energy will turn you into crispy critter. On the second point the Administration will do anything/everything to reduce energy costs before the mid terms. They sell lots of paper crude contracts trying to depress price of physical which explains the backwardation. They know Freeport is ready. It is a political decision.

  88. 88
    Zorgnak Says:

    CRK Had an alarm set for this level…Testing resistance/value area lows. Demand volume in gear for higher prices. Next minor resistance at 14.63. Acceptance higher at 16+

  89. 89
    Viper1 Says:

    Freeport probably will not open fully until early spring IMO

  90. 90
    zman Says:

    re 87 – k, thanks, have seen no evidence that the Admin is watching that type of gas price. Natural gas prices will have a far greater impact on consumers than prices at the gas pump will.

    re 89 – that’s possible. I’ve color from LNG research guys along those lines regarding pipeline safety historical actions.

  91. 91
    zman Says:

    re 88 – was just about to note the daily there. It remains our 3rd largest gassy position.

  92. 92
    zman Says:

    GOEV looking for it’s 3rd best close post Walmart deal and Army, um, exam.

  93. 93
    Peter G Says:

    They are carefully watching natgas because voters electric bills are skyrocketing. Neighbors with 3000 ft houses are seeing $900 bills. I got a 5 year with TXU at .10 cents per KWh. Plus, we all trade the only free market left in the world. NatGas. No paper selling to prevent price discovery. Whoopie

  94. 94
    Zorgnak Says:

    NFE Positive price and demand volume momentum on all time frames. Rejecting major acceptance as too low, again. Next upside test at the value area highs at 46.84.Last time the breakout failed on the retest as Freeport news came into the market…Next time up will be interesting…
    Weekly 53.68 is the long term value area highs and important level of interest longer term…There is little supply above this level. 40 is the long term point of control and it has been rejected as too low on numerous occasions. Next step is a test of the 53.68.

  95. 95
    zman Says:

    CIVI – At $55, remains extremely inexpensive, trading at

    Z4 Base Case ~ $80 oil, NGLs 40% of WTI, $6.00 NG 2.8x

    Z4 Stretch Case ~ $100 oil, NGLs 40% of WTI, $6.00 NG 2.2x

    with implied combined yield of:
    Base: 13.1%
    Stretch: 18.6%

  96. 96
    nrgyman Says:

    RE 94: NFE today scored a P/F Triple Top Breakout.

  97. 97
    zman Says:

    re 93 – I’ll just repeat that I’ve seen no evidence that the Admin is really taking note of natural gas prices yet.

  98. 98
    zman Says:

    re 94/96 – thanks.

    Beerthirty, back in a bit.

  99. 99
    Zorgnak Says:

    EE Setting up for a test of the value area lows/resistance at 22.50. Heavy post IPO volume above that level begins around 23.25

  100. 100
    zman Says:

    Shell looking to punt Auger Hub and Conger interests, DW GOM, says 50,000 bopd and looking for $1.5 B. Pretty mature stuff. Also talking about selling the Whale discovery which would come on line in 2024. Reuters reporting.

  101. 101
    zman Says:

    re 99 – both of them took a hit with Freeport and the drop in gas prices and neither would be impacted by either event. We last added to EE at $25.10 in May. Waiting for the 2Q call now as we continue to come up to speed there.

  102. 102
    nrgyman Says:

    Volumes still below avg for most of the energy names (and the market). CHK had an above avg volume day today, one of the few, as it follows through on the Double Top P/F breakout two days ago.

  103. 103
    zman Says:

    re 102 – hear ya summer.

  104. 104
    zman Says:

    SND to 2Q report Aug 10

  105. 105
    Zorgnak Says:

    OIH Continues to attempt find balance around major long term acceptance at 220. No sign of volume demand to move the needle yet. Last dive took went past major long term acceptance to the next lower low volume node…going to take some work to repair the damage/trust here.

  106. 106
    zman Says:

    EQT (unowned) announces 20% bump to quarterly dividend to $0.15 = 1.5% implied forward yield.

  107. 107
    Jason Says:

    I know that it’s small … LILM with some contract announcements. Sounds like LOI-type deals (not revenue):



  108. 108
    zman Says:

    re 107 – yeah thanks, we did note them at bottom of post today.

  109. 109
    zman Says:

    GOEV – Form 4’s coming across for a 10% holder, sold 1.8 mm shares Monday and Tuesday.

  110. 110
    zman Says:

    Why would EnerCom schedule their conference during earnings season? I just don’t get that. I could use a trip to Denver but not when I’m covered in CC’s.

  111. 111
    zman Says:

    Getting on the TSLA call, back in an hour.

  112. 112
    zman Says:


    Solar  – down big in 1Q, but up 25% 2Q to 106 MW, best quarter in 4 years.  Record gross profit for the segment.

    Positive for solar segment given they’ve previously spoken to issues importing components.

  113. 113
    zman Says:

    TSLA call

    Price of lithium is up sharply (said was $11 / kg, now $80 / kg). 

    Says finding it is easy
    Refining margins are high.
    Encourages entrepreneurs to get into lithium refining.

    Carbon steel and aluminum is trending down. 

  114. 114
    zman Says:

    Nrgy – Elon is stressing it’s all about the refining, and reiterating as per prior calls that you can find lithium all over the place. But refining is key. Wonder why they don’t do it themselves. Do that instead of buy twitter. $18.9 B on the balance sheet, etc.

  115. 115
    zman Says:

    OK – they are doing some refining themselves.

    “if our suppliers don’t solve these problems themselves then we will”

  116. 116
    zman Says:

    Consensus retreating.

    Natural Gas Storage Preview

    Street is at +45 Bcf (Reuters) for Thursday’s report

    Z4: +40 to +50 Bcf
    Last Week: +58 Bcf
    Last Year: +49 Bcf
    5 Year Average: +41 Bcf

  117. 117
    zman Says:

    Jason – you know they have a $1 B deal with a Brazilian co last August but no one gave that deal believability.


    I think they’re getting more believable with the test flights and smaller orders.

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