28
May
Tuesday Morning
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In today's post please find:
- The Week That Was,
- and some other odds and ends.
Eco Data Watch:
- We get Case Shiller home prices at 9 am EST (F = 7.3%, flat with last month),
- We consumer confidence at 10 am EST (F = 96, last read was 97).
The Week Ahead:
- Wednesday - Beige book,
- Thursday - Jobless claims, GPD revision, advanced trade in goods and inventories, pending home sales, EIA Natural Gas Storage, EIA Oil Inventories,
- Friday - Personal income and spending, PCE, Chicago PMI.
In Today’s Post:
- Holdings Watch
- Commodity Watch
- The Week That Was
- Stuff We Care About Today
- Odds & Ends
Click the link directly below this to ...
break
Holdings Watch:
ZLT (Zman Long Term portfolio)
- Last Week’s Trades:
- 5/22/24 - CHRD – We added to Large Cap oily Bakken Player CHRD at $176 as the shares drop on a short term slip in oil prices and ahead of the company’s expected (next few months) pro forma ERF acquisition guidance. At current levels, CHRD trades at 3.8x our 2025 Base Case EBITDA forecast while offering a 7+% implied dividend yield, meaningful buyback potential, a strong balance sheet, and 20% upside to our 2025 based upside target of $210. CHRD is our 5th largest holding and we now have an average cost of $155.80.
- 5/23/24 - PED – We added to our position in PED at $0.915 in a follow on add during a weak group session. Our average cost edges up to $0.915.
- The Blotter is updated.
- We plan to add to LBRT and reduce PTEN near term. Both will be top 10 names (PTEN is currently #4).
Commodity Watch:
Crude oil fell 1.2% to close at $78.33 last week.
- Last week the EIA weekly was fairly neutral.
- To see last week's Oil Inventory slide show see the link at left or click here.
- Please see The Week That Was for more details.
- OPEC+ Watch: OPEC+ meets next Sunday. We suspect the group will, in aggregate, roll forward of current quotas and voluntary curtailments for 3 months. There is talk of incremental cuts to support the market but this does not seem likely or really necessary, as seasonal demand increases sharply in 3Q.
- Iran Watch: Over the weekend Iran was said to have increased its stockpile of near weapons grade uranium by 17%.
- This morning crude is trading up $1.20.
Natural gas retreated 4% to close last week at $2.52 after EIA reported a smaller than consensus expected storage build (we're still very overstore and profit taking ensued).
- To see last week's Natural Gas Storage slide show see the link at left or click here.
- We are looking for a slightly smaller build this week.
- Please see The Week That Was for more details.
- Production Watch: Production on Friday was 99.5 Bcfgpd according to BNEF. Note some decurtailment is in progress.
- LNG Watch: LNG exports were 12.9 Bcfgpd on Friday according to BNEF.
- This morning gas is trading flat.
Weather Watch:
- Last week: Cooling Degree Days (CDDs) came in at 37 vs 27 normal and 19 in the prior week.
- This week's forecast: This week, CPC predicts CDDs will edge up to 40 vs 33 normal.
The Week That Was
Stuff We Care About Today
- Look for owned name updates this week.
- Look for a Seeking Alpha piece from us on MGY this week.
- The request line is open.
Odds & Ends
Analyst Watch:
- TBA in comments
Brand new or been here 20 years, shout if you have questions.
May 28th, 2024 at 7:01 amAnalyst Watch
CIVI – RBC initiates at Outperform with a $90 target.
May 28th, 2024 at 7:01 amENPH – 3rd gen battery (the 5p) now shipping into Mexico.
“announced today that it started shipping its most powerful home battery to-date, the IQ® Battery 5P™, in Mexico. The IQ Battery 5P is a modular design with 5 kWh capacity and can be paired with the new IQ8™ Microinverters to provide homeowners reliable electricity to use whenever they need it.
The new Enphase® Energy System™ with the IQ Battery 5P enables configurations ranging from 5 to 60 kWh and offers a significantly improved experience for homeowners and installers because of more power, resilient wired communication, and an improved commissioning experience. Homeowners can also use the Enphase® App to monitor performance and intelligently manage their battery systems, including the self-consumption feature to help minimize the use of electricity from the grid.”
They have not spoken much about the Mexico market but did start ship a high power version of IQ8 (IQ8P) there late last year for residential given higher watt panels often used there (up to 650 watts with a 480 watt invertor).
We should see the higher margin 4th gen battery introduced late this year.
May 28th, 2024 at 7:49 amWTI > $79
May 28th, 2024 at 7:50 amCIVI update in tomorrow’s post.
May 28th, 2024 at 8:26 amWTI
May 28th, 2024 at 8:27 amhttps://tradingeconomics.com/commodity/crude-oil
NG
https://tradingeconomics.com/commodity/natural-gas
May 28th, 2024 at 8:27 amJust before equity open
WTI up $1.30+ at > $79
May 28th, 2024 at 8:28 amNG flat at ~ $2.52
2% green open.
May 28th, 2024 at 8:41 amVWDRY up 6 to 7%, no news we see.
May 28th, 2024 at 8:42 amACDC – setting up cup and handle.
May 28th, 2024 at 8:46 amThe seller in PED last week did not get filled but is no longer showing size 3 cents above the Friday offer price. Sloppy.
May 28th, 2024 at 8:48 amHere, working on an update, shout if you need something.
May 28th, 2024 at 9:17 amOT – grabbing coffee, back in 15.
May 28th, 2024 at 9:35 amCHRD – setting up text book cup and handle breakout. We added more last week. Please see our update in last Friday’s post here:
https://zmansenergybrain.com/2024/05/24/t-g-i-f-336/
May 28th, 2024 at 9:51 amWoodMac has LNG export receipts at 13.0 Bcfgpd today
May 28th, 2024 at 10:12 amZ can you take another look at MRO? I see your last focus was a while back. They now have exposure to EU gas prices. Guiding ~15% FCF at $80 WTI, $2.5HH, and $10TTF. Solid share BB
May 28th, 2024 at 10:16 amMRO- shares reduced 29% since 2021. Committed to shareholder returns based on cashflow from operations
May 28th, 2024 at 10:19 amre 17 – yes, we can take a quick look, look for it in a post in a few days.
May 28th, 2024 at 10:21 amThank you!
May 28th, 2024 at 10:26 amre 20 – thanks and you bet.
May 28th, 2024 at 10:28 amAnalyst Watch:
AR (currently unowned) – Raja ups from $38 to $40.
May 28th, 2024 at 10:43 amCurrent holdings
CIVI – by a ways
May 28th, 2024 at 10:47 amSND
GRNT (trade only)
PTEN (will reduce soon but stay in top 10)
CHRD
MGY (may see us add more back soon)
CRK (only pure upstream gas holding)
ACDC
PED (trade only)
ENPH
AESI
VWDRY
SHLS
EE
NFE
LBRT (look for a string of adds here soon to get it into the top 10)
QS
NXT
GEV (special case, spun from our long held GE that happens to be in the portfolio since 9/11)
GOEV
REE
EOG: Are they shifting their mix more toward natgas in the future? They tout the Dorado field in the EFS as top tier, they are developing the northern Utica region and appear thrilled with that and now this T&T possible deal with BP to develop a BP natgas field for LNG export while bidding on other natgas acreage auctions in T&T.
https://seekingalpha.com/news/4110777-bp-eog-resources-in-talks-to-jointly-develop-trinidad-gas-field?mailingid=35522337&messageid=2900&serial=35522337.10431&utm_campaign=rta-stock-news&utm_content=link-3&utm_medium=email&utm_source=seeking_alpha&utm_term=35522337.10431
May 28th, 2024 at 10:57 amre 24 – thoughts
Utica can be oily
They’ve been in Trinidad since the 90’s (I covered them when they were spun from Enron) and they had large stranded gas reserves they were exploiting there, conventional pockets, so not sure if they are just looking to maintain volumes into their liquefaction or if this is to grow.
If you look at slide 8 here it speaks to their transition to oil.
https://filecache.investorroom.com/mr5ir_eogresources2/331/EOG_0524_Supplemental.pdf
and note they have Utica on there as the last marker on the top right.
May 28th, 2024 at 11:08 amRE 24: EOG has historically been an organic grower of production, rather than a big acquirer of existing production. They have notably stayed out of the big free-for-all M&A happening in the Permian, the main shale oil producing region in the US. Their leasehold acquisitions appear to have been more targeted toward natgas. EOG used to be a natgas name before Pappa moved them into oil lease acquisitions. They might be returning to their natgas roots. The LT future of natgas does look promising.
May 28th, 2024 at 11:08 amre 24/25 – always a well run name, a little more spread out than we generally cover and a lot larger than our names. But always well run.
May 28th, 2024 at 11:09 amre 26 –
Yep, true. Pre and post Papa.
They already have massive location inventories so haven’t had a need to go buy names but have been good semi-stealth leasors over the years.
I don’t get that sense from those moves but maybe.
May 28th, 2024 at 11:11 amI don’t disagree that future for natural gas looks increasingly strong.
May 28th, 2024 at 11:17 amVWDRY – up 7+% – in their case that kind of move generally presages offshore contract news.
May 28th, 2024 at 11:18 amre 30 – and it generally sells on the news.
May 28th, 2024 at 11:18 amRE 25: Slide 8 shows the most recent leasehold acquisitions are Dorado and Utica. Slide 9 shows the top 4 most mature assets are oil dominated (Bakken, DJ, EFS and Delaware) whereas the least mature developments (where the future development is most likely to occur) is Dorado, Utica, Powder River and some Int’l prospects (like T&T natgas). While present activity is oil weighted, the future development appears heavily weighted toward natgas prospects. They will also have significant liquids exposure but natgas looks like it will take on a greater portion of the mix in the future. They have enough oil prospects to last for years but they appear to be preparing for a heavier mix of natgas when the market for it becomes more favorable, which it easily could.
May 28th, 2024 at 11:23 amre 32 – OK, I guess you could view it that way. Not sure if you are asking something of me?
May 28th, 2024 at 11:27 amRE 33: EOG has been well-run and was an early mover from natgas into oil within the shale patch. Sort of a leader among the shale producers, if you will. Now they appear to be investing in natgas leases and citing the success of those developments. Might they be signalling they have enough high quality oil leases to last past the peak of oil demand (GS just said 10 years away) and they therefore want prepare for a robust and longer lasting natgas future? EOG has proven they are worth watching for signals about future expectations within the O&G market.
May 28th, 2024 at 11:42 amre 34 – Oh OK, understood.
May 28th, 2024 at 11:46 amre 34 – we have over the years generally listened in on a couple of their calls per year. Will read the transcript from 1Q.
May 28th, 2024 at 11:53 amEarly Read On Thursday’s EIA Report (Reuters consensus):
May 28th, 2024 at 12:08 pmCrude: Down 1.9 mm barrels
Gasoline: Up 1.0 mm barrels
Distillates: Up 0.4 mm barrels
RE 36: The deal with BP in post #24 and the bidding for natgas leases in T&T may not show up in the Q1 report, but they supplement the recent natgas leasing efforts in the Dorado and northern Utica. EOG also indicated they are tempering their pace of Dorado development due to current natgas prices. Leasing activity and D&C activity going in different directions at present due to low natgas prices, which makes sense. Picking up natgas leases on the cheap while governing D&C capex for natgas development at this time appears smart. They are focused on the long game.
May 28th, 2024 at 12:10 pmRE 38: I’m somewhat surprised we have not seen natgas M&A during this period of solid oil prices but depressed natgas prices. Acquiring quality natgas assets on the cheap should be a good strategy for those with strong BS, like most oil producers have. Most of the natgas M&A has been among natgas producers but now their BS are somewhat stretched (except perhaps CHK). CRK looks like a prime target. Aethon (also a west HS developer) is a private still available as a larger target. Perhaps the delays in LNG capacity expansion is having an impact on M&A.
May 28th, 2024 at 12:24 pmHere, reading, shout if you need something.
May 28th, 2024 at 1:32 pmEarly Read on Storage:
Z4: Near +70 Bcf
Consensus: +73 to +86 Bcf (Reuters range)
Last Week: +78 Bcf
May 28th, 2024 at 1:33 pmLast Year: +106 Bcf
5 Year Average: +104 Bcf
WTI settles 79.83
May 28th, 2024 at 1:41 pmCVX + HES (both unowned) vote passes.
May 28th, 2024 at 2:44 pmVWDRY may be up on the Orsted agreeing to pay New Jersey $125 mm for cancelling offshore wind farms. Money will get plowed back into offshore NJ wind projects.
May 28th, 2024 at 2:45 pmENPH threatening break out.
May 28th, 2024 at 2:47 pmRE 45: ENPH actually scored a P/F Ascending Triple Top Breakout on May 24. This follow through is encouraging. Note the 50 dma has turned up and ready to break above the slightly declining 200 dma. A good pattern of higher highs and higher lows has developed since the April low. The upside volume has also been strong of late (3 of last 4 trading days with above avg volume on positive days).
May 28th, 2024 at 3:00 pmLNG export terminal receipts on Tuesday were 13.4 Bcfgppd according to BNEF.
May 28th, 2024 at 3:00 pmBeerthirty, back in a bit.
May 28th, 2024 at 3:01 pmre 46 – thanks.
May 28th, 2024 at 3:01 pmHey Bada, um, COP (unowned) took out MRO (unowned) this morning.
May 29th, 2024 at 6:14 am