06
Aug
Wrap – Week Ended 08/05/22
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Mixed bag of a week with the ZLT off 2.8% on the week on the heels of last week's near 19% rally. The traditional energy benchmarks, as noted in the table below, ranged from down 4.6% (the gassy XNG) to down 6.9% (the service names of the OIH), largely moving with the retreat in oil. We find notable that while near month futures sagged heavily during the week, the strip was more resilient as noted here:
Meanwhile, the renewables segment as represented by the TAN and FAN ETF's in the Wrap table below showed an indifferent week for performance as the IRA bill moved through the process. Our modest renewables wedge however was definitely up on the week with a new all time high scored for our largest holding in the space, ENPH, and good moves for solar, wind, and battery/EV tied names.
Earnings season is progressing with largely better than expected results. We're through 54 reports and have another 17 to go, most of them in the coming week. Please see the Calendar link for details.
Free Stuff Last Week:
- CIVI 2Q22 call note - great quarter, as expected guidance, net cash position for the first time, and a 12%-ish yield with more yield increase to come as the quarters roll by. Lot's to like.
- Last week's Wrap.
Holdings Watch:
- We initiated and added to a position in oily Permian FANG and added to our position in oil Eagle Ford player MGY.
- The Blotter is updated
A few notables from The Wrap table below.
- Active frac spreads hit a new record on 7/29 and then backed off that peak again with this Friday's report. Frac in the U.S. is extremely tight. 2Q22 calls have suggest 6 month or greater lead times for new spreads from the decision date, moves by operators to lock in next year's programs much earlier than usual, and a disciplined approach by frac companies to largely retire and replace horsepower rather than make a move at this stage in the cycle on market share. This should result in modest capacity growth in 2023, the common thought being 10%, and a good environment for further net pricing gains.
- Crack spreads remain resilient.
- Crude stocks are down 3% on the year. SPR stocks are down 24%.
Have a great weekend,
Z
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“HPK will get bigger again, but probably not until earnings as I think they pull the top end of the production guidance range down.”
Z, what is your thinking here?
August 6th, 2022 at 12:59 pmre 1 – thoughts
background:
4/13/22 – HPK – sold a little over 20% of our HPK position at $29.25, up 130% as it jumps on high volume on a positive mention on CNBC last night.
HPK – We sold more HPK at $34.68, up 164% to our average cost.
4/22/22 – HPK – Sold another chunk of HPK at $37, up 182%. With this sale the name moves down to the #8 slot in the ZLT.
So this was almost half the position.
With the 1Q report they reported a below expectation on volumes quarter due to offset shutins. The company was producing roughly double the 1Q average by the time of the call.
Our view is the math gets tough for the top end of current 2022 guidance and as such, even with a big 2Q and bigger and bigger again 3Q and 4Q there’s a fair chance they trim the top of 2022 guidance and no chance they up it. They may also need to raise capex as many have had to do this quarter.
The stock has filled the Cramer gap with the help of lower oil prices and the name is exceedingly cheap on our Base and Stretch cases. Earnings are just around the corner and so I’m not feeling rushed to redouble or position as some of those who discovered it in the mid $20s and $30s exit on the guidance change (should there be one) vs us who wrote it up back in October here near $10. https://seekingalpha.com/article/4461116-highpeak-energy-this-is-not-your-run-of-the-mill-maintenance-capex-upstream-player
August 6th, 2022 at 1:08 pmThanks
August 6th, 2022 at 1:23 pmBroad Market As of the Friday close.
Weekly One of the stronger bear market rallies in history bounce back into dense congestion and resistance around 4200. Needs to hold above the value area lows (4056).
https://funwiththinkscript.com
Daily Consolidation at June’s failed highs. Resistance/heavy supply above. Potential support around 4056 (Long term value lows, low volume node). ST. Demand volume flattening out now.
https://ibb.co/YBwqQhG
65 Minute Tight consolidation last week. 4107, last weeks value area lows and Fridays gap down low is the short term level of interest on the down side.
https://ibb.co/fr5rKXM
SPECs lightened up a little last week but are still very much on the short end.
August 7th, 2022 at 12:20 pmS&P Futures Non-commercial positioning..
August 7th, 2022 at 12:22 pmhttps://ibb.co/HzX8HyN
XLE Trying to break back above it’s value area highs at 72.77 after pulling back. Trading in dense congestion with major long term acceptance above at 77. 77 was the last upside target and remains the major price magnet after being rejected as too high. Bull scenario is a return to acceptance at 77. Likely pauses there for a catalyst. Supply dwindles above the 77.
August 7th, 2022 at 12:34 pmDaily
https://ibb.co/4ZHjnkM
XOP Choppy trading in dense congestion. Held support at the value area highs. Demand volume flat/weak. Bulls will want to see it trading above it’s value range highs and at least last week’s lows.
August 7th, 2022 at 1:00 pmDaily
https://ibb.co/6XpFNJ4
65 Minute
High relative volume bounce off Friday’s lows at previous acceptance (123.12).
https://ibb.co/6XpFNJ4
OIH Back to long term acceptance after the recent rally. At a minimum needs to see a break back above the current value area high at 125 to begin clear major acceptance and retest the recent failed attempt to break above last months value area lows (241). Demand volume flat/weak.
August 7th, 2022 at 1:10 pmDaily
https://ibb.co/K61rYXW
Thanks Zorg
August 7th, 2022 at 1:29 pmWTI Strong break below previous value range last week. Tested previous lower acceptance levels and held at 87.62, so far. Next step for the bulls is to break and hold above this week’s value area lows at 90. 86.48 is next lower level of previous acceptance and potential support. IF that fails major acceptance at 81.82 would be the next likely downside target. Demand volume trends remain weak. The whole oily side of things, both stocks and commodity really just sloppy and choppy.
August 7th, 2022 at 1:33 pmDaily
https://ibb.co/yVCymV4
TAN Solar stock ETF volumes 200% + higher than average this week. Long term value range at 98.48 is the next major longer term level of interest…Demand volume is in gear for that test.
August 7th, 2022 at 2:01 pmWeekly
https://ibb.co/BnDMSQ4
Daily Consolidating at previous acceptance with a value range between 84.54/81.19 VAH/VAL. Closed above that range on Friday. Volume gap above from 87-96. Demand volume supports more upside.
https://ibb.co/Gs410QC
Thanks Zorg
August 7th, 2022 at 2:04 pmSenate taking final vote now.
August 7th, 2022 at 2:04 pmFAN
August 7th, 2022 at 2:06 pmWeekly 200%+ above average volume last week. Demand volume supports another test of 19.92, previous long term value area lows.
https://ibb.co/ChTHZKx
IRA passes.
August 7th, 2022 at 2:18 pmNatural Gas traded in a very narrow value range in the first week of August. (Greyed out range to the right of current prices. Similar look to the ZLT natural gas stocks as they trade more inline with /NG
August 7th, 2022 at 2:26 pmDaily
https://ibb.co/rHX6JrD