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Positive week for markets. More than positive for energy equities with our portfolio, the ZLT, up 9.0% on the week last week. We're traveling this weekend so comments will be a bit brief.
3Q22 Energy Earnings kicked of this week and were largely better than expected. SLB's Friday beat helped set the tone for the OIH and if you missed it, results and the call were covered in Friday's post which was open to the public here.
- We're 4 names into a 73 name reporting season.
- We have 26 names reporting next week including the first oil and gassy upstream reports of the season, more frac names, and some renewable space names.
- Our energy calendar is in the 3Q22 link at left.
- Look for the first 3Q22 edition of So Far This Quarter in the Monday post.
Holdings Watch:
- We re-opened a starter core in offshore specialist OII yesterday at $9.83 ahead of earnings this week (not a thought on beat or meet for 3Q but of the positive 2023 forward view we expect them to espouse),
- We added to big cap gassy player AR in two average trades at $33.20 and $32.30 on Friday and our average cost there is now $15.87.
- The Trading Blotter is updated
Questions about the site may be directed to zman@zmansenergybrain.com.
Questions under The Wrap will be addressed in the Monday post.
Brief comments from The Wrap table below.
Oil:
- Inventories remain in price supportive territory, especially distillates.
- Oil directed rigs, as expected, continue to slip higher at a more modest past than 1H22.
- The active frac count set a new cycle high at 298. We expected a pre Turkey day rise to around 300 and this appears to be in the offing. We don't expect much further rise after that. Note that LBRT said on this week's call that they would not be surprised to see the active frac count flat with current levels. See our thoughts here in comment #52 under that free Friday post.
- CFTC data was relatively muted last week. We note the move above 6.0x long vs short but don't see that engendering downside risk to oil at this time.
Natural Gas:
- Another bigger than expected build as we trudge through shoulder season combined with EU price weakness yielded the massive drops in front month and the '22 and '23 strips you see in the table below.
- We see this as normal. Note our price deck for 2023. Natural gas is one of the most volatile commodities in the world.
- As analyst EOS targets are adjusted higher due to the recent spate of record for week of year builds prompted by widespread mildness it's normal for the commodity to fall.
- We have been waiting for shoulder weakness to add to our core gassy names and used Friday's group weakness to begin adding to them again with AR adds as noted above.
Have a great weekend,
Z
