Wednesday to Friday ~ Happy Thanksgiving



Housekeeping Watch:

  1. We hope you have a safe and happy Thanksgiving. We are grateful for all you.
  2. This post will grow over the next couple days to include the inventory reviews.
  3. I will be in and out of pocket today but around for certain at inventory times.
  4. Please bookmark our back up site, just in case:  www.zmanbackup.wordpress.com.
  5. If you are not getting emails at the proper address or not getting them at all please let us know at zman@zmansenergybrain.com 

In today's post please find:

  • the oil inventory preview,
  • the oil inventory review slide show - NEW 
  • the natural gas inventory preview, 
  • the natural gas storage review slide show - NEW
  • comments and a cheat sheet update for SWN,
  • and some other odds and ends.

Ecodata Watch:

  • We get jobless claims at 8:30 am EST (F = 229,000, last week was 231,000),
  • We get durable goods at 8:30 am EST (F = -3.4%, last read was +4.6%), 
  • We get consumer sentiment at 10 am EST (F = 60.6, last read was 60.4),
  • We get the EIA oil inventory report at 10:30 am EST,
  • We get the EIA Natural Gas Storage report at 12:00 pm EST,,
  • We get the Baker rig count today as well.  

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watc​h - with oil and natural gas inventory previews with the reviews TBA
  3. Stuff We Care About Today - SWN
  4. Odds & Ends


Holdings Watch:


  • Wednesday's Trades: None
  • The Blotter is updated.

Commodity Watch:

Crude oil closed down $0.05 yesterday at $77.77.  OPEC+ meets Sunday.   

  • After the close, API reported: 
    • Crude:  Up 9.05 mm barrels
      • Cushing: Up 0.6 mm barrels
    • Gasoline: Down 1.8 mm barrels
    • Distillates:  Down 3.5 mm barrels 
  • This morning crude is trading down 2% on the API figure as well as on the 4 day truce and hostage exchange in Israel and the OPEC+ decision. Opinions on that decision run the gamut with Goldman putting further cuts at 35% chance to Morgan Stanley expecting a cut. 

Oil Inventory Preview

This Week In History

Oil Inventory Slide Show:


Natural gas eased $0.036 settling at $2.846.  This morning gas is trading flat. 

Natural Gas Storage Preview

  • Z4:-5 Bcf
  • Consensus: +7 Bcf (Reuters)
    • Last Week: +60 Bcf
    • Last Year: -60 Bcf
    • 5 Year Average: -53 Bcf

Natural Gas Storage Slide Show


Stuff We Care About Today

SWN Cheat Sheet Update
The quarter was covered here. In a nutshell they:
  • Reported in line volumes and an EBITDA beat, 
    • Haynesville volumes continue to hold around 2/5ths of total with Appalachia the balance.
    • The split continues in the 86% natural gas, 14% liquids (predominantly NGLs). 
  • Generated modest FCF (bouncing from the prior quarters big drop),
  • Reaffirmed prior 2023 production and capex guidance.

The Plan:

  • SWN remains in maintenance mode (plus or minus a little).
    • 4Q23 is guided sequentially down 4% and the full year is set to contract by 3%.
    • We expect this approximate maintenance mode to continue until at least mid 2024.
      • If prices warrant and LNG export capacity expansion remains on schedule they may add to activity in 2H24.
      • At present, consensus modeling points to a gradual increase in 3Q and 4Q24 production but for the full year to be essentially flat.
      • SWN does have the ability to rapidly scale production if warranted via their Haynesville position.
      • For now however, management expects to continue its normal pattern of front end load capex leading to bigger quarters in the middle of the year with slightly lower production in 1Q24 (the result of lower 4Q23 spend).
      • Our sense is that analysts would like to see a shift to a little bit of growth.
  • They expect to continue to channel free cash to debt reduction.
  • A meaningful return of capital program will likely mean share repurchases before dividends. With weak gas prices this year they had not repurchased a share through the 9 months but do have a meaningful authorization in place.
  • They have protected 37% of 2024 expected gas production via swaps at $3.54 and have collars on another 8% so they're hedging downside more than names like AR (unowned and unhedged) and only slightly below RRC's 54% coverage, largely via swaps in the mid $3's. 

Other Items:

  • Hedges: Likely many gassy names now that are not 100% hedged at higher prices, SWN has seen it's leverage metric expand as EBITDA has contracted. At 2x they're fine in our view on what we effectively view as very near trough pricing. 
  • Short Interest: 4% of float. 
  • Rumor Watch:  Recently rumors have been circulated regarding a possible CHK takeover of SWN.  We think consolidation is coming to Appalachia and the Haynesville, we just don't know if that will happen without the pressure of higher prices.
  • LNG Watch:  Expected to roughly double in the next 4 years. 
    • LNG exports have recently been bumping up against 15 Bcfgpd which is a little over reported nameplate capacity (14.7).
    • LNG export capacity is expected to grow to 19.4 Bcfgpd by the end of 2024 with adds in 2Q, 3Q, and 4Q.
    • In 2025 another 1.2 Bcfgpd of capacity is expected to be online.
    • Larger adds are expected in 2026 and 2027 (not all FID'd yet) resulting in U.S. LNG export capacity of as little as 24 and as much as 29 Bcfgpd by the end of 2027.
    • SWN is the largest producer into the LNG corridor at this time (not firm capacity to but actual molecules).
    • While their volumes are as noted still dominated by Appalachia their sales are 65% priced to the Gulf Coast and LNG corridor.
    • SWN's ability to get gas to the Gulf Coast / LNG increases by 0.5 Bcfgpd in 2024 to 3.7 Bcfgpd. 
    • SWN will be well positioned to feed this growth from both basins where they continue to have 15 year inventories which again highlights their target status.


  • SWN trades at 4.6x Street 2024 and our Sub Case ($3 gas) and Base Case ($4 gas) numbers straddle the Street with our Base case at 3.3x.  Please see downside and upside targets in the cheat sheet. 
  • We hold SWN as our largest gassy name and it's the 5th largest holding at present.
  • We are not looking to sell the position at this time. We are instead looking through the winter of 2023/2024 now towards a rapid rise in U.S.----


Other Stuff

  • GRNT saw another director add a small amount of shares (500) in the open market Monday. 
  • Look for additional gassy name cheat sheet updates soon.

Odds & Ends

Analyst Watch:

  • TBA in comments.

Chart of Interest:

64 Responses to “Wednesday to Friday ~ Happy Thanksgiving”

  1. 1
    Viper1 Says:

    2023 08:06:08 AM
    OPEC delegates now saying the OPEC meeting for this weekend is delayed again – Volatility continues on Crude Oil
    11/22/2023 08:06:19 AM
    OPEC meeting talk delayed until next week
    11/22/2023 08:06:23 AM
    USO Saudi Arabia Faces A Supply Conundrum At OPEC+ Meeting – BBG

  2. 2
    zman Says:

    re 1 – thanks


  3. 3
    zman Says:

    WTI and Brent down $3+

  4. 4
    zman Says:

    Analyst Watch

    SWN – Wells upgraded last night to Equal Weight, edges target from $6.30 to $6.90. Kind of milk toast and they not M&A thoughts as part of the reason to upgrade.

  5. 5
    bada1969 Says:

    Per Bloomberg, the OPEC delay is due to KSA dissatisfaction with member production. They’re threatening to reverse the unilateral voluntary cut, if other countries don’t assist.

  6. 6
    zman Says:

    Just before equity open

    WTI down $3.35 @ $74.40

    NG flat @ $2.84

  7. 7
    zman Says:

    re 5 – thanks, this makes sense. Pretty normal Thanskgiving type action.

  8. 8
    zman Says:

    We may fished the slump.

  9. 9
    zman Says:

    … after more coffee …

  10. 10
    zman Says:

    Sub market orders in on three oily names.

  11. 11
    zman Says:

    API should be well accounted for in the combo EIA release last week. Expect a smaller crude build relative to last night’s big API report.

    We’d expect to see continued throughput growth as we exit maintenance season though any one week can be off as it’s generally not linear but still, up and to the right from here into near year end.

    Flat L48 oil production at 12.8 mm bopd.

    We’d like to see a large bump in gasoline implied demand on dealer pre stocking for the holiday.

    Further decline in distillate stocks, below the historic range.

  12. 12
    zman Says:

    Our three trades are not likely to trigger prior to inventory report in 10 minutes.

  13. 13
    zman Says:

    EIA Oil Inventory Quick Look

    WTI down to almost $74 (down 4.6%) just prior.

    Crude Up 8.7 mm barrels (vs +1.1 consensus)
    – SPR unchanged
    – Throughput – 15.5 mm bopd, 0.1 mm bopd week to week as come further out of fall maintenance.
    – Imports – up 0.15 mm bopd wtw
    – Exports – down 0.1 mm bopd wtw,
    – net imports remain lower end of range.
    – L48 oil production – unchanged at 12.8 mm bopd.

    Gasoline Up 0.7 mm barrels (vs -0.7 consensus)
    – implied demand – no bump, down 0.47 mm bpd week to week, poor in front of the holiday, maybe next week shows the seasonal bump.

    Distillates Down 1.0 mm barrels (vs -0.7 consensus)
    – implied demand – almost exactly flat from prior week at 4.11 mm bpd – ok for time of year.

    Nutshell: Negative side of neutral as weeklies go. Given pricing and without thought of a looming OPEC+ meeting would normal expect a little lift even with the big crude build as crude demand picks up and net imports remain quite tame.

  14. 14
    zman 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%
    2022 8,696 -3%
    2022 YTD 8,733
    2023 YTD 8,842 1.3%

  15. 15
    zman Says:

    YTD showing slow improvement:

    Distillate Implied Demand (000 bpd) YoY Change

    2016 3,770
    2017 4,033 7%
    2018 4,070 1%
    2019 4,021 -1%
    2020 3,685 -8%
    2021 4,032 9%
    2022 3,909 -3%
    YTD 2022 3,947
    YTD 2023 3,825 -3.1%

  16. 16
    Dallas Says:

    Check out the other oil category, draw of over 5mm bbls. Seems odd, is there a reclassification where these liquids included in the crude storage?

  17. 17
    zman Says:

    Natural gas inventories in 10 minutes.

  18. 18
    zman Says:

    re 16 – thanks, still walking through the report, don’t see anything in the notes and it should not be related to the new “transfers” category. Will see if we can dig something up.

  19. 19
    zman Says:

    Apologies, natural gas inventories at 12 pm EST, not 11.

  20. 20
    zman Says:

    The oil inventory slide show section has been added to today’s post.

  21. 21
    Anonymous Says:

    Good Morning
    ZLT-Related ranked by % change since the open.


  22. 22
    zman Says:

    re 16 – it’s a good sized drop this week but not unprecedented. Couple of thoughts:

    1) I don’t think they could have pulled from that category and shifted it into oil, but as you ask, maybe there is an unannotated reclass and so I’ll ask them.

    2) It’s highly seasonal. For reference, we’ve thrown a chart into the bottom of the post.

  23. 23
    zman Says:

    re 21 – morning Zorg, typical OPEC+ meeting stuff, especially typical for Thanksgiving meetings.

  24. 24
    zman Says:

    re 21 – almost got some more CHRD earlier, sharply off lows now.

  25. 25
    Anonymous Says:

    Broad Market S&P
    Demark extreme overbought setup is completed today. Demand volume and breadth trends are positive with very Low volume since the large gap up since 11/14.
    Breadth and Demand Volume

  26. 26
    Anonymous Says:

    #21…Nice recovery in most of the names since the open

  27. 27
    Anonymous Says:

    NFE Pulled back from extreme O/B on 11/20. Up 3% from the open this morning. Demand volume supports higher. Next upside target at 39.08.

  28. 28
    apbd Says:

    Happy Thanksgiving to Z and family and all of my friends.

  29. 29
    zman Says:

    Natural Gas Inventory Quick Look

    – 7 Bcf, in line with our -5 Bcf estimate, better than consensus of +7 Bcf.

    Storage is now 3,826 Bcf

    251 Bcf above year ago
    249 Bcf above the 5 year average.

  30. 30
    zman Says:

    re 28 – and to you as well.

  31. 31
    Zorgnak Says:

    ENPH Moving into the price/volume gap. Kind of a head and shoulders look to it with the next major supply level at 121.84. Demand volume trend is positive.

  32. 32
    zman Says:

    re 31 – thanks, recall they got triple dinged for the current fundamentally slow period.

    1) with the 2Q report and warning
    2) with the SEDG (unowned) warnings (first gap)
    3) with their own 3Q report and delayed recovery guidance.

    Recent bounce is all about rates as the analysts rediscover their spines.

  33. 33
    zman Says:

    Trades possible soon.

  34. 34
    zman Says:

    Rig Count Watch

    Oil rigs flat at 500, vs 627 year ago.
    NG rigs up 3 to 117 vs 155 year ago.

    Haynesville, Marcellus, Cana all up 1.

  35. 35
    zman Says:


  36. 36
    Kyle Graffagnini Says:


  37. 37
    zman Says:

    WTI and Brent down < $0.75 now.

  38. 38
    zman Says:

    re 36 – probably unrelated.


  39. 39
    nrgyman Says:

    RE 38: Iranian sabre rattling. It does at least two things: supports oil prices via risk premiums and signals to its proxy clients that they are supported by Iran.

    Have to wonder if this is just words. Iran has already almost abandoned Hamas financially in recent days. Iran also is producing and exporting oil closer to its max level now, so they risk US sanctions becoming tighter if they misbehave. OPEC+ probably would not mind seeing Iran be forced to reduce exports via sanctions as they can easily make it up if they choose because Iran has taken market share away from SA and the rest of OPEC+. The Saudis right now are likely threatening a production/export raise if other OPEC+ members don’t stick to their quotas. Iran is likely to probe with hostilities as they have done recently but doubtful it goes much further.

  40. 40
    zman Says:

    re 39 – hear ya. US conducted strikes in Iraq overnight on Iran backed positions.

  41. 41
    nrgyman Says:

    XOP is green.

  42. 42
    zman Says:

    re 41 – true. Big recovery off the morning lows, a little faster and from a little higher than we expected so none of our adds are going to trigger.

  43. 43
    zman Says:

    WTI settled $77.10.

  44. 44
    zman Says:

    We hope everyone has a peaceful Thanksgiving.

  45. 45
    Anonymous Says:

    Happy Thanksgiving to you all!

  46. 46
    zman Says:

    re 45 – thank you, you too.

  47. 47
    zman Says:

    Vestas announces 270 MW order in the US, 2 days after a 239 MW order

    Announced 4Q orders at 915 MW.

    Compares to 3.336 GW in 4Q22 announced and 0.827 GW unannounced.

    They’ve been trending higher this year and passed 10 GW late in 3Q and now past 11 GW. Looks like we beat 2022 easily (11.189).

  48. 48
    Anonymous Says:

    As expected, we see no news in our names.

  49. 49
    zman Says:

    OPEC+ said to be closer to compromise with African producers.

    Angola has been rumored to be thinking about leaving. Unlikely to happen but also immaterial. They’ve been a long time under producer.

    Nigeria also has been below quota and has been resisting a group plan to reduce their quota to something closer to current volumes.

  50. 50
    zman Says:

    Just before equity open:

    WTI down $0.85

    NG down $0.086

  51. 51
    zman Says:

    Light green equity open.

  52. 52
    zman Says:

    Light volumes but group trying for a flattish week.

  53. 53
    zman Says:

    Trade possible soon.

  54. 54
    zman Says:

    ZTRADE – ZLT – GRNT (Trading Only position)

    GRNT – We added to non operated upstream player GRNT at average $6.14. The name is just under a quarter turn levered and plans to move to 0.5x prior to living within free cash flow in 2024. They offer a 7+% base dividend implied yield now and the dividend is likely to hold at $0.11 per quarter in the medium term as they pursue strategic programs with selected operators.

    At current pricing GRNT trades at 2.7x our 2024 Base Case ($80 oil, $4 natural gas) and 2.5x Street consensus EBITDAX. The current level is the result of a poorly priced selling shareholder secondary in September that changed nothing fundamentally, increased the float, and saw additional Street coverage post deal.

    Please see our Tuesday write up here:


    GRNT remains the only Trade Only position in the ZLT and currently sits in the #6 slot in the portfolio where we have a $5.73 average cost exclusive of dividends.

  55. 55
    zman Says:

    The blotter is updated


  56. 56
    zman Says:

    re 54 – only about 102K on the day at time of add.

  57. 57
    nrgyman Says:

    UNL, the 1 yr natgas strip ETF, is breaking down. UNG, the current futures ETF, is will make a multi-decade low weekly close today. UNG has contango roll costs impacting it significantly, but UNL less so. Not a good look for natgas bulls atm. Curiously the natgas equity names are green today with natgas -1.8% at $2.84 on the Dec contract.

  58. 58
    nrgyman Says:

    RE 57: UNL scored a Descending Triple Bottom Breakdown on Nov 21 and it is below that level now. This is the one-year strip so it appears a mild winter is being priced into the strip.

  59. 59
    Zorgnak Says:

    Good Morning
    ZLT-Related ranked by % change since the open.

  60. 60
    zman Says:

    re 57/58 – good oppy our view.

    1) record high output reported for Wednesday.

    2) We have another difficult comp in the coming week

    3) and weather for winter is uncertain as always.

    4) but looking at 2H24 and 2025 there is a need to grow volumes substantially:
    14.7 to 15.0 Bcfgpd LNG ex cap current
    19+ at YE24
    20+ in 2025
    24 Bcfgpd possible in 2026.

  61. 61
    zman Says:

    Quiet morning Zorg.

  62. 62
    Zorgnak Says:

    #61 Indeed. Not paying much attention. Not much of interest to me.
    Volume and current daily ranges atm.

  63. 63
    zman Says:

    Early Read on Natural Gas Storage

    Consensus: -9 Bcf
    Last Report: -7 Bcf (Z4 at -5; Street at +7)
    Year Ago: -80 Bcf
    5 Yr Avg: -44 Bcf

  64. 64
    zman Says:

    Beerthirty, have a great longish weekend.

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