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Douglas E. John...'s  Instablog

Douglas E. Johnston
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Quantalysis, LLC, is a boutique investment analysis and risk management firm. They can be reached at quantalysis.llc@gmail.com
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  • EXCO Beats On NI But Fades On Rev? What Gives???

    Confused? EXCO beat estimates on net income, earning 3c / shr adjusted, which losing out on revenue big time....the answer is simple - it is all about their hedges and accounting. The headline revenue number does not include the benefit of their hedges while the NI does...so the big decline in NG prices raised net income but reduced headline rev....with hedges accounted for, rev was $185mn -> in line....don't get too excited about the NI beat as there will be payback next few quarters as hedges ain't working no more. Best news is credit line was down to 1.1 and they got a bit more wiggle room on the covenant...so they can shop TGGT around w/o a fire sale....GL and listen in tomorrow AM!

    Disclosure: I am long XCO.

    Additional disclosure: i am long the common and their bonds

    Tags: XCO, Natural Gas
    May 01 10:47 PM | Link | Comment!
  • A Non-Negative On Natural Gas

    Ok, I am not bullish on NG prices, at least in the near term (like until November, maybe) but one non-negative sign is that inventories, while building, are doing so at a slower rate. Examining the EIA data from the weekly storage report shows that over the last five weeks NG in storage rose by 143 bCfe. While not exactly welcome, given we have very high inventories for this time of year, it is noteworthy that in the prior two years, the inventory builds off the bottom (end of March/early April) were 248 and 214 bCfe, respectively. So, while I wouldn't stretch and say this is a positive for NG, I call it a non-negative and it is a sign, albeit tentative, that maybe supply is beginning to adjust to a $2 mCfe world. If the slower inventory build keeps up, worries about topping over current storage capacity will wane and we'll begin trading views on next winter's temperatures --- brrrrrr.

    Disclosure: I am long XCO.

    Additional disclosure: XCO is viewed by many as a leveraged play on natural gas prices

    Tags: Natural Gas
    Apr 19 7:05 PM | Link | Comment!
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