21
Oct
T.G.I.F.
..
.
Market Sentiment Watch: 3Q22 energy earnings season in progress:
- 4 names down. So far so good and we'll have the first iteration of So Far This Quarter in the Monday post as we look at the high points and learnings of the quarter as it unfolds.
- 68 to go. The season rapidly moves into overdrive next week with 25 names on our calendar reporting including several owned names in the upstream and oil service segments.
Housekeeping Watch: Are we using the correct email for you? If you're not getting ZBLAST's or are getting them at the wrong address contact zman@zmansenergybrain.com
In today's post please find:
- the natural gas review (modestly larger than expected late season build; look for a significantly smaller build next week),
- comments on the SLB quarter,
- and some other odds and ends.
Ecodata Watch:
- We get the 3Q22 index of common inflation expectations at 12 pm (no forecasts; read for 5-10 and 10 year expectations was 3.1% and 2.2% respectively last month.
In Today’s Post:
- Holdings Watch
- Commodity Watch - ST natural gas supply demand balance sheet, NGL prices,
- Natural Gas Inventory Review
- Stuff We Care About Today - SLB, 3Q22 Calendar
- Odds & Ends
Holdings Watch:
ZLT
- Yesterday's Trades: None.
- The Blotter is updated.
- Actionable Thoughts Watch:
- CHRD (unowned) - Bakken
- Position add.
- Oily, cheap, middle tier yield.
- See recent write up here
- FANG - Permian
- Position add
- Looking to slowly increase this into a full Core.
- Oily, maintenance mode, big buy back, upper tier yield,
- See recent write up here
- CHK - Gassy
- Position add
- want to add low $90's.
- also plan to slow increase to full Core.
- Gassy, modest grower, upper tier yield,
- See recent write up here
- GNRC (unowned) - Home standby power
- Planning Initial Position
- Was watching for a break down to about $135 - modest technical support there, but said better down at $110. Now thinking around $100. This name traded over $500 a year ago on lower than current revenue and EBITDA levels.
- Yesterday they warned for 3Q and trimmed guidance for the full year. Stock fell 25.3% to $110.
- This was trading at $174.16 as of our last update on 9/29 as we watched for it to drop.
- Headwinds seen persisting through first half 2023.
- See press release here.
- Name will hold their 3Q call on Nov. 2.
- Expect an avalanche of downgrades this week.
- See recent write up here.
- HPK (unowned) - Permian
- Position re-entry
- Timing as day before or day of 3Q22 (not yet announced but likely first 10 days of November).
- Expect them to cut guidance as per yesterday's post.
- Super cheap on our 2023 Base case below $30.
- Would like to add back in the upper teens if possible.
- ENPH - Solar inverters and battery story
- Position add
- We'd like to add around $220 as it has been showing signs of needing to fill a technical gap.
- If possible at that kind of level in front of 3Q22 earnings on October 25th that would be fine ...
- ... but we may also had near current $250 level just before the report.
- BSM (unowned) - Gassy yield
- Position entry on shoulder season weakness should see some.
- See yesterday's post.
- PR (unowned) - Permian
- Trade entry
- Interesting closer to <$8.
- Balanced mix, low valuation, upper tier implied yield.
- See recent write up here
- SLCA - Sand
- Position add
- Waiting for the 3Q report but expecting positive pricing.
- CHRD (unowned) - Bakken
Commodity Watch:
Crude oil closed down a penny yesterday at $85.51 on the December contract which takes over front month duty today, giving up early gains on economic concerns.
- This morning crude is trading up slightly at post time.
Natural gas closed off a dime at $5.36 as:
- The storage injection was modestly larger than expected.
- Storage is now at 3,342 Bcf.
- Next week look for a significantly smaller build as Residential and Commercial demand jumps, and net supply (production + net exports) dips nearly 2 Bcfgpd. See ST supply / demand table below.
- We are boosting our expected mid point end of season storage level from 3.425 to 3.5 Tcf to reflect the last few weeks of stronger should builds which are the result of production near record levels and shoulder season mildness.
- We see no reason to change our $5 2023 natural gas price target at this time.
- This morning gas is trading down 25 cents at post time.
NGL Price Watch: Expect dashed line to turn higher near term.
Short Term Supply / Demand Balance Sheet:
Natural Gas Storage Review
.
Stuff We Care About Today
SLB (Unowned) Reports Big 3Q22 Beat; Strong Outlook
Other Numbers and comments
- Free cash flow was +$1.1 B vs ($119 mm) last quarter. The Street was at $1.16 B.
- On the 2Q22 call management indicated they saw strong FCF rebound in the second half.
- They have been targeting EBITDA margins exiting this year near 24% and mid 20%'s before year end 2023 relative to this quarter's 23.5%.
- EPS and operating income at best levels in 7 years.
Favorite Quote Watch: "The second half of the year is off to a great start with strong third-quarter results that reflect the acceleration of international momentum and solid execution across our Divisions and areas. Sequentially, we delivered another quarter of double-digit revenue growth and margin expansion, as the pace of growth in our international business stepped up significantly, complementing already robust levels of activity in North America."
Outlook:
- Prior 2022 revenue guidance (increased last quarter) of high teens growth or "at least $27 B,
- 4Q Guidance: sequential growth and continued margin expansion.
- Demand Quote Watch:
- "While concerns remain over the broader economic climate, the energy industry fundamentals continue to be very constructive. Against the backdrop of the energy crisis and limited spare global capacity, the world faces an urgent need for increased investment to rebalance markets, create supply redundancies, and rebuild spare capacity. All of these are exacerbated by geopolitics and increasing instances of supply disruptions."
- “These dynamics and the urgency to restore balance are resulting in a supply-led upcycle, characterized by the decoupling of upstream investment from near-term demand volatility. Furthermore, the need for sustained investments is reinforced by the long-term demand trajectory through the end of the decade and by OPEC+ decisions that are keeping commodity prices at supportive levels.
- “Concurrently, we are witnessing a significant commitment from the industry to decarbonize oil and gas, with E&P operators all over the world deploying capital and adopting technologies—including digital—at scale, to reduce emissions. Taken together, we expect these constructive fundamentals and secular trends to support multiple years of growth.”
Highlights:
- NAM (revenue of $1,5 B)
- NAM was sequentially flat but up 37% YoY.
- US land was up double digits sequentially but this was offset by weaker exploration in the Gulf of Mexico.
- NAM was sequentially flat but up 37% YoY.
- International (revenue of $5.9 B)
- Revenues above pre Covid 3Q19 mark despite international rig count that's still down 25% vs then.
- Revenues were up 13% sequentially and 26% YoY.
- Strength in well construction on and offshore. Regionally growth was broad based with the Europe/Africa/CIS division leading with 21% sequential growth.
- Continued growth in renewables segment - in the release more hydrogen, carbon capture, and battery grade lithium color.
Dividend:
- $0.175 vs prior $0.175.
Balance Sheet: Cash continues to build with net debt to annualized EBITDA now down to 1.3x. At quarter end debt was $12.45 B and cash was $3.6 B. After the quarter they redeemed $0.9 B in debt.
Nutshell:
- Across the board beat. We don't see the slight miss on FCF as a big deal as this quarter was converting working capital into cash flow after working capital builds in the prior period. The swing is big and close enough not to be worthy of comment in our view. Revenue growth and margin expansion are more than tracking expectations which is key. Broad based strength is also key.
- Macro outlook is confident and solid.
- Knock on impacts:
- First blush NAM flat sequentially may see some knee jerks in our frac names. Read the part about onshore vs offshore however and this is positive for our names from an activity level and pricing basis.
- Offshore commentary is largely positive (the GOM comment is short term stuff) and as such activity based uplift is likely viewed as positive from recently review RIG (unowned) to long watched and sometimes player here OII (currently unowned).
- See the full release here.
- We sold our last position in SLB in February at $40.01, up 36% and we continue to keep tabs on the story for a possible re-entry.
3Q22 Energy Earnings Calendar
See the calendar link here for the latest edition (73 names, 25 reporting next week).
Other Stuff:
- Look for the first iteration of So Far This Quarter early next week.
Odds & Ends
Analyst Watch:
- TBA in comments
LBRT (unowned) – CEO Chris Wright sold 20K shares as part of a Rule 10B5-1 sale yesterday, most at average $16.16.
October 21st, 2022 at 7:13 amAnalyst Watch
CRGY – Jefferies ups from $15 to $16.
October 21st, 2022 at 7:14 amAnalyst Watch – LBRT (unowned)
Atb Capital ups a buck to $23.50
October 21st, 2022 at 7:16 amCowen ups from $14 to $16
Piper ups a buck to $19
Venezuela’s largest refinery complex (955,000 bopd) is shutdown following a small fire, which caused a total blackout. The fire was quickly put out.
This refining complex is actually two refineries (Amuay & Cardinal) located next to one another……but they share a common power supply.
Tha article is available on Reuters, but the link would not copy.
October 21st, 2022 at 7:28 amAnalyst Watch
OVV (unowned, recently reviewed) – RBC cuts from Outperform to Sector Perform – cites higher returns elsewhere.
We last did a requested look here:
https://zmansenergybrain.com/2022/10/06/thursday-morning-ovv/
Our nutshell from that piece:
Nutshell:
“It’s a big cap producer considered by some to be ” go to” in the space and management is generally well respected.
As such, it will move with oil although it is quite gassy (about half).
We generally are not fans of overly geographically diversified company as they usual carry a discount to normal group multiples.
The later two positions are also two small to move the corporate needle and should be monetized in our view while commodity prices are elevated.
Valuation looks a little high to us given the lower margins here and lack of meaningful dividend relative at least to several of our core holdings.
We are going to pass at this time but thanks for asking about this one.”
October 21st, 2022 at 7:30 amre 4 – thanks
October 21st, 2022 at 7:31 amNatural gas headed to 7 month low.
October 21st, 2022 at 7:44 amLBRT Price RAISE
Liberty Oilfield Services price target raised to $25 from $24 at Citi
October 21st, 2022 at 8:05 amre 8 – thanks, see 3, a number of them edged it up this morning.
October 21st, 2022 at 8:10 amre 9 thnx for those price increases on lbrt
October 21st, 2022 at 8:12 amFlow chart of US. NG INPUTS & OUTPUTS for 2021…..source: EIA
https://www.eia.gov/naturalgas/annual/images/2021/fig_ngacoppwpM.png
October 21st, 2022 at 8:13 amSLB (unowned) call in 15 minutes, notes to follow.
October 21st, 2022 at 8:14 am.Schlumberger posted its highest profit in seven years as overseas drillers put oil and gas rigs back to work, following North America’s lead amid tight global supplies
.Schlumberger Beats Profit Estimates as International Drilling Ramps Up
October 21st, 2022 at 8:15 am.Company says sales and margins should expand in fourth quarter
re 13 – yes, please see the post above for details. Call starts in 5 minutes.
October 21st, 2022 at 8:25 amre 11 – thanks -fun to see CBM still in there as a tiny contributor.
October 21st, 2022 at 8:29 amslb, as an ofs leader, good to see + 4.5%
helps sentiment in energy, and the doomsday shorts in energy via slb taken to cleaners
October 21st, 2022 at 8:40 amSLB (unowned) 3Q22 Call Notes
Key highlights – this is in the table above.
Increasingly driven by int’l and offshore.
All divisions executing very well.
All divisions saw margin expansion.
Seeing net pricing gains.
Highlighting increasing importance of offshore.
Recent US and EU policy decisions helping. Look for announcements in months ahead.
Macro
– strengthened view
– near term – seasonal uptick in demand for oil and gas.
– further out – the S/D situation remains delicate
– spare capacity is limited.
– sees driving urgent investment in energy development
– OPEC+ – sees supportive of confident investing for energy investments.
– see capex growth as durable
– both NAM and Int’l – with Int’l and offshore now more visible as per 3Q results.
– in NAM sees continued solid growth and margin expansion.
– sees Middle East driving next leg of Int’l growth.
Knock-on impact watch – should be positive for OII and RIG (both unowned).
…
October 21st, 2022 at 8:41 amjust after equity open
WTI up $1.10
NG down 30 cents
October 21st, 2022 at 8:42 amre 18 – retracement lower in EU NG price helping US natural gas prices lower again.
https://tradingeconomics.com/commodity/eu-natural-gas
October 21st, 2022 at 8:43 amlbrt +2.8%, hal 2.5%…ramping…slb helping sentiment also
October 21st, 2022 at 8:47 amSLB (unowned) 3Q22 Call Notes 2
Noting margin improvement reflects operating leverage and ability to deal with inflation.
Net debt to TTM EBITDA is 1.6x with debt down $2.7 B vs year ago.
Heading to Q&A 17 minutes in …
October 21st, 2022 at 8:48 amTrades soon …
October 21st, 2022 at 8:51 amSLB (unowned) 3Q22 Q&A
Q) core strengthening – over next couple of years, how should this play out over the next couple of years.
A) critical foundation:
1) performance – tech and people differentiation.
2) customer intimacy
Leads to increased share and pricing premium.
International and Offshore leading.
In NAM focused on high grading and capital light mode.
…
October 21st, 2022 at 8:51 amenergy shorts in ofs getting ko”d
slb +5.3%
October 21st, 2022 at 8:52 amlbrt +3.1%
hal +2.8%
SLB (unowned) 3Q22 Q&A 2
Q) question on recent Digital Forum
A) watershed for customers – platform is very mature and delivering value for “many many customers”. Getting widely recognized, at inflection point in adoption, with more adoption at scale on the way.
Q) Service intensity – square the Int’l revenue growth with 25% lower rig count vs 2019 levels.
A) Technology to deliver performance. Customers focused on critical assets leading to higher adoption of digital to get higher return for customers. This increases both net intensity but also net pricing increase.
Q) Pricing – analyst thinks pricing momentum is not well understood by investors (underestimated).
A) We are seeing this improvement already today. Pricing started in NAM 2 years ago and in Int’l showed up last last quarter. combined with service intensity, noting increase in offshore rigs is creating tightness.
Seeing big offshore FID’s for 2023, notes a wood mac figure (TRANSCRIPT), biggest in several years.
Sees number of 200 subsea trees, this is good indicator used by OII who doesn’t make trees but does do umbilical s and will be busy with the ROV’s.
…
October 21st, 2022 at 9:04 amSND Broke out from value yesterday on big volume…Low volume pull back …poking above value again today…interesting.
October 21st, 2022 at 9:05 amhttps://ibb.co/kmWdSnF
ZTRADE – ZLT – OII – Re-entry
OII – We added OII (global offshore oil service) back to the portfolio at average $9.83. SLB (unowned) further stressing that the global offshore recovery is in progress and will be a part of the next growth leg for them in 2023. Combined with SLB’s positive macro today we see OII as one to sharply benefit from these trends in 2023. We’ve been fairly patient with OII over the years and have seen a number of false starts in the space and we plan to step slowly here. OII reports next week and this addition is not a reflection of our thoughts on those results (expectations are not high) but on their outlook. Please see today’s post and the comments section for the SLB call color.
October 21st, 2022 at 9:07 amGood Morning
October 21st, 2022 at 9:08 amZLT related ranked by % gain since open. Relative volume (early) far right column
https://ibb.co/SXWy8c3
re 26 – apparently no sellside color driving that. I think only Gengaro covers and he’s not one to get risky. Dunno but it caught a little momo and it could be a target.
October 21st, 2022 at 9:08 amnatty gas names best to hold since on the other side as of dec prob demand picks up, etc, or reduce 15% or other % from positions, exam0le swn etc? thks
October 21st, 2022 at 9:08 amMGY Trying to break out from it’s value range this morning.
October 21st, 2022 at 9:11 amDaily
https://ibb.co/vqd43Sp
Natgas hit a $4 handle. UNG now trading in the gap created by the March 22 opening at the bottom edge of its low-vol trading zone. Support area here. Very oversold. Picked up more natgas equity exposure, expecting a turnaround soonish.
October 21st, 2022 at 9:14 amre 32 ; any names youre thinking for adding to natgas equity exposure?
you think we get a bit of the nat gas reversal equity exposure towards mid nov when they see demand to pick up as of dec + next yr europe demand for winter 23 is not looking good from supply perspective
October 21st, 2022 at 9:20 amSLB (unowned) 3Q22 Q&A
Q) New energy vs CSS
A) sees both being strong opportunities – helping to reduce customers scope 1 and 2 footprint, happening at scale. Targeting lower carbon oil and natural gas production.
There is also a lot happening in the clean energy – hydrogen and lithium – helped by both US and EU policy initiatives.
SLB up 7%
Q) de-levering progress
A) quite pleased, have not set a new target. Expect it to continue to improve.
Notes the dividend increase last quarter. Would expect that to increase slowly over time.
Q) How cycle unfolding now vs 2005-2008
A) difficult to compare but will say what is unique about this one:
1) global gas market is uniquely constrained and structurally imbalanced. Sees this yielding a longer growth cycle, on and offshore, conventional and unconventional.
2) have the price to support offshore oil and gas development including in the Middle East – notes big rigs for offshore Saudi.
3) and more Middle East in general as they look to increase spare capacity and not just for oil but also natural gas capacity expansion.
This will be the largest investment cycle in the Middle East in history in the next 2 to 3 years.
…
October 21st, 2022 at 9:22 amOII Breaking above value area highs today…
October 21st, 2022 at 9:24 amDaily
https://ibb.co/9whGNgH
65 Minute Next untested supply at 10.49
https://ibb.co/j84Tw9C
SLB (unowned) – call over
Tone quite positive, both sellside and company.
Expect targets to get upped today and next week.
October 21st, 2022 at 9:24 am–SCHLUMBERGER SEES LONG GROWTH CYCLE FOR NATURAL GAS MARKET
seems that as bit more LNG compressors come on line and take out 1-2bcf a day, it will bet net positiv for nat gas
October 21st, 2022 at 9:31 amRE 33: I have major exposure to AR and CHK atm as I regard them as best situated. AR -6% today is an opportunity, imo. Also watching CRK and SWN as they retreat for potential rebound exposure.
October 21st, 2022 at 9:32 amZTRADE – ZLT – AR
AR – We added to our position in AR at average $33.20 on shoulder season natural gas price weakness (this is the weakness we’ve been waiting for) and NGL price weakness (tied to soft oil and set to rebound seasonally near term). Note that our $80 and $5 natural gas base case 2023 price deck has not changed.
We expect a strong quarter and outlook from AR as they increasingly push towards a transition from debt reduction to return of capital (largely in the form of share repurchases but also with an initial dividend). The company is more exposed to natural gas prices in 2023 and is naked on NGL’s. We expect higher 2H vs 1H production but for management to espouse another maintenance budget in 2023 (maybe “maintenance plus”) with FCF optimized over volume growth. At $33, AR trades at 3.1x our Base Case ($5 natural gas) 2023 EBITDA and 2.0x our Stretch $7.50 case.
AR remains our 3rd largest holding and our average cost moves up to $15.64 with today’s add. Please see our September post quarter update here for more color.
October 21st, 2022 at 9:34 amhttps://zmansenergybrain.com/2022/09/23/t-g-i-f-267/
AR Value area lows at 32
October 21st, 2022 at 9:35 amDaily
https://ibb.co/9c7PpjS
CHK VAL at 95.58
Daily
https://ibb.co/dQM7r09
CRK Non ZLT at previously untested acceptance and previous swing lows .
65 Minute
https://ibb.co/6nW2pjC
The blotter is updated
https://zmansenergybrain.com/subscriber-data/zeb-zlt-blotter-ii/
October 21st, 2022 at 9:39 amRE 39 AR
October 21st, 2022 at 9:41 amThanks for AR commentary and defending/adding ar…long ar
re 30 – We’re not decreasing natural gas equity exposure at this time. I’ve been waiting for shoulder season weakness. See post comments on EOS less increase due to recent mildness and a bit of a hump higher in dry gas volumes. We are $5.00 for next year which is constructive given valuation of our names within the space. We did recently take profits in CRK and RRC (both now unowned) for 48% gains in march but our Core positions are getting modest bolstering during this shoulder.
October 21st, 2022 at 9:42 amre 38 thanks for the color; likewise, long more gassy names ar, rrc, eqt besides other e&ps w/ both oil n gas exposure
October 21st, 2022 at 9:43 amBroad Market S&P Futures
October 21st, 2022 at 9:44 amDaily…Continues to struggle below resistance at the value area lows 3273. tested and rejected this morning…
Daily
https://ibb.co/BKyWnVr
RE 32: UNG just filled the gap and is now stabilizing. Potential catalysts coming that can quickly change this picture, perhaps not today, especially given the oversold condition and the support area natgas finds itself in now.
October 21st, 2022 at 9:46 amre 38 – hear ya, see 39, 43. No plan to add to SWN (presently our #6 holding) at the moment but may again before year end. Looking forward to 3Q22 Haynesville color on local hub pricing, growth thoughts on 2023 (not guide yet, just thoughts).
re 41 – thanks Zorg. Next adds by us on CHK like around $92 ish. I don’t know that we get $90 or not. You?
re 42 – you bet.
October 21st, 2022 at 9:47 amSND – no volume follow through on yesterday’s move. Odd.
October 21st, 2022 at 9:47 amSWN Swing lows and previous acceptance at $6
65 Minute
https://ibb.co/gMnzdPf
October 21st, 2022 at 9:48 am*LIBERTY SEES ITS FRACK FLEETS SIZE NOT MOVING MUCH FROM NOW
*LIBERTY SAYS IT’S DONE BRINGING LEGACY FLEETS BACK TO WORK
October 21st, 2022 at 9:49 amOur prior recent AR add was at 30.67 on Sept 23, at the time down 9% on the day. Higher lows in the shoulder.
Also my layman’s TA notes 32.39 as 200 day sma. We can add a bit more there. Will still be a distant 3rd place to our top 2 names.
October 21st, 2022 at 9:49 amre 50 – yep, as per yesterday’s call notes.
They were 35 ish active fleets in 2Q
They were low 40’s fleets in 3Q
They brought back 6 stacked fleets taken in the OneStim acquisition from SLB (unowned).
They remarkably staffed those in 90 days and spoke to the tight labor market being somewhat less tight now.
I sold them in part over lack of transparency since OneStim and I think they kind of goosed the results of 3Q yesterday by not being granular on fleet counts (kind of helps with modeling) and then adding back more of those fleets than anyone thought possible to get to the resulting beat yesterday.
4Q flat vs 3Q on revenue. This means higher average fleet count for the whole quarter that will offset the normal Turkey day to Christmas dip in activity we are used to seeing in frac, along with prices slowly edging higher and some not out of control inflation for them.
He said on the call yesterday he expects the active fleet count in US to be about where it is now, a year from now. Demand will be there.
But you have fleet attrition due to high intensity completions (these things have a useful life and it gets accelerated with bigger fracs) and a lack of meaningful still stacked HHP that doesn’t need a ton of upgrade capex along with supply chain time frames for new builds means that much of the limited amount of new build capacity and upgrades of Tier II to Tier IV and efleet adds will simply go to replace aging diesel based iron.
These notes will be incorporated in the first 3Q22 edition of So Far This Quarter due out in the Monday post.
October 21st, 2022 at 9:58 amOfftopic – grabbing coffee – back in a bit.
October 21st, 2022 at 9:59 amLooking forward to HAL (unowned) results out Tuesday as it pertains to our 3 frac names.
October 21st, 2022 at 10:04 amZTRADE – ZLT – AR
AR – We added to AR at $32.30 in an added on to the prior trade and with further gassy group weakness. AR reports 3Q22 results next week. Our average cost edges up to $15.87.
October 21st, 2022 at 10:11 amNG toying about the $5 level.
On Monday was asked if $6 was a floor. Our response:
” I don’t make those kind of calls, longer term focus on average prices. Maybe for the front month in 4Q. Ish. But natural gas is the most volatile commodity of the major energy ones and it can easily surprise in either direction.
Thoughts:
1) we’re heading to non record peak storage.
2) our mid point case is now our thought on peak or a little higher at 3.425 Tcf.
3) if we get some mild weeks of weather in late October and early November we could see 3.5 Tcf.
4) that’s not the end of the world but it could dip gas briefly into the lower $5s.
5) if Freeport is delayed beyond say mid November that too could prompt a $5 test.
6) we should get some help from slowing gas production growth late this year.
7) there may also be some less than year ago sized imports from Canada.
8) so would not be surprised to see a $6 to $7 type average 4Q price with spikes above and below on weather events.
9) that’s a really nice price.
10) it won’t however do much to encourage growth from Appalachia. Really expect 2023 to look at a lot like 2022.”
#3 and #4 in play now.
October 21st, 2022 at 10:14 amBroad Market S&P Futures
October 21st, 2022 at 10:20 amDaily with a $USD overlay (magenta line)….
Daily
https://ibb.co/yk9GhT5
FANG breaking out.
CIVI, MGY, CHRD contemplating it.
October 21st, 2022 at 10:20 amRe:
3) if we get some mild weeks of weather in late October and early November we could see 3.5 Tcf.
4) that’s not the end of the world but it could dip gas briefly into the lower $5s.
Happening quickly!
October 21st, 2022 at 10:22 amre 59 – it’s one of the most volatile commodities on the planet. I don’t care about the short term noise unless it gives me an opportunity to add to some names I like. We added to AR today, twice.
Valuations in the names are on 2023 numbers now. No change to our $5 Base Case price deck and on that basis it’s trading at 3.0x now which is in our view cheap for the sum of the parts and the evolution of the story there.
October 21st, 2022 at 10:25 am2023 strip less impacted
https://www.barchart.com/futures/quotes/NG*0/futures-prices
October 21st, 2022 at 10:26 amYen down 1.8% in 30 min, to 147 handle from 151
ahhh the easy-money-pileon crowd learning the hard way, thers no free lunch, they kept pressing against the yen and pilin on the usd…
October 21st, 2022 at 10:28 amNFE Getting the consolidation that I was looking for…Good volume. Watching for a break above 50.40….
October 21st, 2022 at 10:29 am65 Minute
https://ibb.co/Vjc3c3p
Daily
https://ibb.co/ZMDQQPv
Re 60. Roger that
October 21st, 2022 at 10:30 amre 63 – thanks for the continued TA there. Will be interesting to hear their color on the goings on with Pemex on that offshore production and liquefaction project on the 3Q call.
October 21st, 2022 at 10:36 amNEX with an $11 handle. Will likely be top 2 in EBITDA per annualized active frac fleet this quarter.
October 21st, 2022 at 10:37 amRE 59: Natgas is at $4.97 now. The dip has happened. Volatility could push it even lower but technically (to me) it looks like it is very oversold, at support and filled a target gap, which is why I picked up more gassy equity exposure.
October 21st, 2022 at 10:38 amDVN COP MRO OXY EOG flexing – up2% +
Quality e&p performing well; very invested in the above
October 21st, 2022 at 10:38 amZLT related coming into lunch time..
October 21st, 2022 at 10:44 amRanked by % change since open. Relative volume so far, far right column.
https://ibb.co/RBsjdTB
re 67 – this is the dip we’ve been looking for. Mild weather into end of month and October could easily take it lower but the strip should look through that pretty well as should the names.
October 21st, 2022 at 10:46 amTTI: Brought this name up several times. Water management and chemicals for drilling, with lithium and bromine asset exposure that is in process of development. Global scale, so benefiting from energy services exposure. Cheap and indications are promising for TTI to gain market share with tech innovations.
This week TTI +20%, NEX +18.5%, SLB +16.7%.
October 21st, 2022 at 10:47 amre 68 – that’s generally large cap than our pond. I covered EOG and DVN (both unowned) on the sellside for many years and we’ve owned COP (currently unowned) in a more recent time frame (search blotter) but I find myself to be more of a value add in the smid caps. Often a less expensive and now higher return of capital option.
October 21st, 2022 at 10:48 am$USD Breaking below this week’s value area..
October 21st, 2022 at 10:49 amevery little bit Helps..
Daily
https://ibb.co/ZGYvqdg
MGY Trying to breakout…needs to break above 24.77 to my eye..
65 Minute
October 21st, 2022 at 10:52 amhttps://ibb.co/sqq6yqj
re 71 – nice. Out of curiosity why would you group those and any particular reason to focus on weekly performance vs say, YTD?
October 21st, 2022 at 10:52 amre 74 – si patron.
October 21st, 2022 at 10:53 amCRGY Trading up from support/value range lows this morning. Not much reaction the analyst comments so far. A bit of a grind higher. 16 is next major supply
October 21st, 2022 at 11:01 amDaily
https://ibb.co/QkMJR1K
65 Minute 16 is next major supply. Intra day volume picking up
https://ibb.co/mG31vQZ
re 74 – another with a strong quarter on the way. Sad call as it will be the first since Chazen suddenly passed away.
Expect no change in the game plan.
Significantly underspend (around 35% of EBITDA) this year, likely sub 45% next year,
slowly growing base dividend,
and a special dividend appears more likely early next year as they are net debt free and only have the one $400 mm tranche of senior debt that’s not yet callable and nothing on the revolver.
all while taking in at least 1% of outstanding share count each quarter.
October 21st, 2022 at 11:01 amYen 146.5 up bigly 2.5%
Usd down 1% 111.7
shorts are trapped today, deservedly so, they think they can easily pile on for quick buck.
Dow Jones & SP500 up 1.5%
October 21st, 2022 at 11:05 amneed natty names equity to recover a bit to complete the strength in full energy sector, maybe they can see thru all towards dec + 2023
October 21st, 2022 at 11:07 am#71 TTI non ZLT Nice looking chart…took out last bit of supply at 4.36
October 21st, 2022 at 11:12 amhttps://ibb.co/cFftvM5
ENPH Light volume levitation back to acceptance at 252..
Daily
October 21st, 2022 at 11:19 amhttps://ibb.co/cw54fR6
65 Minute
https://ibb.co/hY4CLzC
RE 75: Looking for energy service name exposure for a rebound, so weekly data is more relevant to me than ytd. Picked those three names because I wanted to show how TTI stacked up against two of the best names in the space (SLB and NEX) on this rebound so far. I own all three (along with PFHC, which has potential but is underperforming this group atm).
October 21st, 2022 at 11:20 amre 83 – OK, yeah, I care a good bit less about the short time frames and technical performance since I’m not a day or short term trader. I don’t follow TTI (unowned) but have noted your mentions. It’s a little off my pond and we do have a number of names already that are. Why the increase this week?
Fundamentally the NEX story has strengthened as the year has proggressed. Despite the 213% YTD performance it remains fairly low multiple (< 4x next year) and far lower than SLB which is "go to" in the space but trades at a 10x multiple now.
October 21st, 2022 at 11:27 amHey we broke the top 100
https://www.tipranks.com/experts/bloggers/steve-zachritz
October 21st, 2022 at 11:34 amRE:83
October 21st, 2022 at 11:48 amz on what metric slb trades at 10x nex <4x 23'?
on forward pe think slb is aprox btn 16-21x
RES – cusp of breakout, again, a bit of different animal as it’s not pure frac and has more non frac revenues from other services but trends in their favor, no debt, and a modestly rising active frac spread count (8.5 spread average late this year to 10 early next) and fairly low (5x @ $9) type valuation in their favor as one that can move after the others do.
October 21st, 2022 at 11:51 amBroad Market Institutional size volume off the lows this morning…Testing through resistance at 3723. Next test of supply at the value gap at 3785. Chop chop
October 21st, 2022 at 11:53 am65 Minute
https://ibb.co/NyG2FqS
re 86
SLB (unowned) at $49.79 current price is trading at TEV/EBITDA of 10.4x
NEX at $11 trades at 3.8x 2023 Street EBITDA.
October 21st, 2022 at 11:54 am#85 Congrats Z…much hard work my friend. Thanks.
October 21st, 2022 at 11:54 amre 90 – thank you sir, it’s all the publicly published stuff at Seeking Alpha they track. We don’t give them names like ENPH which would have helped and we’ve got some renewables in their weighing me down a bit as well. But it’s mostly E&P and Service weighted.
October 21st, 2022 at 11:56 amadding to 89 – and our pro forma 2023 for PFHC has them cheaper than NEX (the Street has come up to meet our number there). The lower multiple is likely due to uncertainty on the pending acquisition and the resulting bit more leverage they will have vs peers in the space.
Vote is next week.
On the other side of the deal PFHC will be #2 in US frac and #1 efleets.
October 21st, 2022 at 11:58 amGNRC Hey, don’t look now but GNRC went green…This has been one heavy thing.
October 21st, 2022 at 11:59 amWeekly chart. Exhaustion setup complete with extreme volume on the selloff to previous acceptance at 107.77….
https://ibb.co/3038932
re 93 – being patient there. We missed the $112 to $525 run, and also the retreat. Last update at $174 and said watching for the gap fills. Could see us add soon but want to let it shake out a bit between now and the moot call (they preannounced and guided down). See cheat with the before and after look in yesterday’s post:
https://zmansenergybrain.com/2022/10/20/thursday-morning-lbrt-tsla-gnrc/
and the September 30 post for our thoughts on timing an entry here:
https://zmansenergybrain.com/category/gnrc/
October 21st, 2022 at 12:04 pm#92..thoughts on flipping from USWS to PFHC? Maybe I missed them?
October 21st, 2022 at 12:05 pmRig Count Watch
Oil up 2 to 612 vs 443 year ago
Natural Gas flat at 157 vs 99
Notable CO added 2 to 22 vs 11 year ago. DJ Basin actually up 3 to 20 which is a rare thing to see (been 16 to 17 for some time now). Should not CIVI … might in part be PDCE (unowned).
October 21st, 2022 at 12:10 pmOII Nice start. Extending the break above previous value range. 10.49 next supply/ST resistance.
October 21st, 2022 at 12:12 pmhttps://ibb.co/FY1FGhB
re 89 ok thnks
October 21st, 2022 at 12:16 pmre 95 – I’ve mused about it a couple of times.
I think the vote on 10/31 passes but can’t be sure. The arb is essentially gone.
Currently:
PFHC 21.21
USWS 6.67
arb is down to 1% (0.3366x share for share)
If something untoward happens with the HAL (unowned) deal pre vote then it’s a lot safer to be in PFHC (assuming it’s bad and they can walk away from USWS ~ and I know nothing in this regard – they can’t talk about, it could be nothing to bad and it’s a counter suit so this could still take a long time). So it may be prudent to switch over other than tax considerations which I shouldn’t have if my shares just get converted (and if something did crop up pre close and I’m holding USWS then taxes probably not my first concern).
October 21st, 2022 at 12:25 pmre 98 – thanks for the question.
October 21st, 2022 at 12:26 pmNatural Gas can both or one of these scenrios:
1.in Freeport LNG’S return of initial operations nearing
2.+ Cold Weather
help market improve before end of Oct or by nov?
With Freeport LNG’s return of initial operations nearing and some chatter about couple of tankers sitting idle outside the facility.
October 21st, 2022 at 12:36 pmGiven if these LNG exports from Freeport Texas facility are to be done early to mid-November, as prev planned, it could certainly stop the selloff in natty gas.
For sure early start would send gas prices higher
re 101 – hear ya on all that.
October 21st, 2022 at 12:45 pm#99..Thanks
October 21st, 2022 at 12:47 pmSND volume still high..break of 1.87 would be interesting…
October 21st, 2022 at 12:53 pmre 103 – you bet
re 104 – those cats need to show some FCF. They know this. So far it has eluded them in the current up cycle for a number of reasons.
October 21st, 2022 at 12:57 pmHi Z Any news on when the Shell cracker in Pen strays thks
October 21st, 2022 at 12:58 pmOT – gotta read a thing, back in 15.
October 21st, 2022 at 12:59 pmslb is it short covering and/or pile on for the goto renter crowd who conveniently now want in the ofs?
October 21st, 2022 at 1:15 pm+10%
PFHC
October 21st, 2022 at 1:35 pmDaily Next upside target at value area highs
and previous swing highs at 21.
Daily
https://ibb.co/zJ4pvSK
65 Minute Cutting through supply levels today
Next supply at 21
https://ibb.co/6rGSSvz
Drilling 12 miles deep with a Gyrotron
A startup with some BOLD AMBITIONS led by someone who has Oilfield Drilling Experience [eX-SLB] ………..
https://www.bloomberg.com/news/articles/2022-10-21/drilling-12-miles-down-to-ta
October 21st, 2022 at 1:41 pmre 106 – it’s done and commissioning.
re 108 – it was a very good quarter and call.
re 110 – for geothermal purposes?
October 21st, 2022 at 1:46 pmFANG – breakout with eyes on cycle high period from June.
October 21st, 2022 at 2:11 pmAR – lifting off that tag of the 200 day sma.
October 21st, 2022 at 2:12 pmpileon in the afternoon in certain ofs is glaring, off slb #s – my pt is, bet u majority are just renting, and most prob did not endure the selloff for ex since early june highs before biden attacked the energy sector and triggered the jun-jul selooff etc etc
(full disclosure, im long ofs names also but for btn 3 qrtr to over a yr in certain names)
October 21st, 2022 at 2:22 pmbasically, fomo for many who missed the energy group, bad mouthed it all yr long, and now have to show #s b4 end of yr and forceefully ile on w stock up %5 by noon.
October 21st, 2022 at 2:23 pmXLE Extending it’s breakout. Next supply at 91.80
65 Minute
https://ibb.co/Pg631hN
XOP Trying for that breakout again above 150…Nat Gas stocks lifting some helps…
October 21st, 2022 at 2:32 pm65 Minute
https://ibb.co/NtHtKhT
NFE moving right along…
October 21st, 2022 at 2:34 pmUS Dollar/Commodities: Another drop in the US dollar today and many commodity names are seeing big moves. The over-valuation of the dollar and the unsustainable upside move it has shown in the last two years is now starting to shown signs of topping. If dollar declines gain momentum (seems inevitable at some point) the commodities sector, which has been devastated by the dollar rise, should see a big move higher. Today Copper (FCX +10.3%), Aluminum (AA +6.4%), Lithium (PLL +13.3%, LAC +12.2%), US Steelmakers (CLF +8.3%, NUE +8.3%) are all responding well to the dollar decline.
October 21st, 2022 at 2:35 pmhal up 6% from that 31.98 early morning as an example, has liquidity, and “use-rent” slb #s/conf call yada yada, get some from the investing spectrum to pile on.
–but they are the 1st to bail next weeek on any negative headline, or worse macro negativ note, renters that they are
October 21st, 2022 at 2:39 pm–these r the people that help create undue volatility
re 118 agreed
October 21st, 2022 at 2:41 pmre 117 – good to see that and EE not being tied to NG pricing so tightly.
October 21st, 2022 at 2:41 pmReporting Monday night to Friday morning next week:
RRC
HAL
VLO
HLX
ENPH
RES
NEX
MTDR
QS
NOVA
CLB
EQT
PTEN
OII
AR
FSLR
PXD
October 21st, 2022 at 2:46 pmSWN
XOM
NOV
CVX
ZLT End of day. Ranked by % change since open.Relative volume next to last column. Far right column = close relative to the HOD.
October 21st, 2022 at 3:02 pmhttps://ibb.co/HTGTc5C
Z,
Re 110 Gyrotron is for Geothemal application.
They are drilling 3 test bores by 2026.
Much skepticism because all 3 boreholes involve some volcanic strata.
October 21st, 2022 at 3:04 pmre 118 dollar reversal was triggered by yen strengthening from 152 to 147.5 around lunchtime…they got caught offguard, deservedly so…they all wanna be soros against british pd bak in the day
October 21st, 2022 at 3:04 pmThe Wrap will be out on Saturday.
Ending the week up about 9% on the week.
Have a good one.
Beerthirty.
October 21st, 2022 at 3:04 pmre 124 – that’s unnecessarily deep for commercial geo. Guessing they have some bigger than current scale application in mind.
October 21st, 2022 at 3:07 pmAR Reversed off the VAL (32) on better than average volume for time of day. Closing hour volume +200% above average for time of day..
October 21st, 2022 at 3:10 pmNice
65 Minute chart
https://ibb.co/bNZ8mdY
With the Shell Pa Cracker in commissioning, it should be good for AR (Ethane),. …… shipped local and free up some pipe space.
October 21st, 2022 at 3:10 pmre 129 ar-good
October 21st, 2022 at 3:13 pmFwiw..
October 21st, 2022 at 3:58 pmNon-commercials’ net shorts in S&P e-mini futures up to 5-week high. Sitting on decent amount of holdings and refuse to cover. Index (3753) up 4.7% this week. Today’s 2.4% rally broke above 3723 resistance on above average volume. 3785 is first test of any follow through next week. Plenty of fuel for a bear market rally to 3888 if/when we get follow through next week..Have a great weekend.
https://ibb.co/1Zq9zXb
The Wrap is up.
I will largely be out of pocket Saturday.
October 22nd, 2022 at 10:52 am