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  • Is Ultra Petroleum A Low-Cost Producer? [View article]
    Rig counts in 3 month increments:
    9/5/14 1925 rigs
    12/5/14 1920 rigs -5
    3/6/15 1192 rigs -728
    6/5/15 868 rigs -324
    9/4/15 864 rigs -2

    Detail 9/5/14 1584 oil 341 NG=1925 total
    Detail 9/4/15 662 oil 202 NG = 864 total

    This is from a source on a Yahoo Finance m.b. however I believe the numbers are accurate. The author's argument is that there is about a one year lag between falling rig counts and falling production that I also believe is accurate. If so the numbers imply a severe fall in rig counts last winter should result in falling production this winter. I'm curious to see Richard Zeits take on this one.
    Sep 27, 2015. 11:10 AM | Likes Like |Link to Comment
  • Is Ultra Petroleum A Low-Cost Producer? [View article]

    I'm in no way shape or form a nat gas expert and thus can only go by what management states and opinions from other knowledgeable sources like this author. However there was a question on the last cc in regard to gas from the east being shipped west affecting their argument about serving declining gas output markets. The answer was something to the affect that the east gas shipped west would effect markets to the east of the rockies but not to the west and they primarily serve markets to the west of the rockies.
    Sep 27, 2015. 11:01 AM | Likes Like |Link to Comment
  • Is Ultra Petroleum A Low-Cost Producer? [View article]
    Thanks Richard, your response brings up another issue I'm trying to wrap my head around. Per management their production is skewed to the west market and they claim they get (expect?) better pricing than Henry Hub which I believe is east pricing? I believe you have them realizing slightly lower than Henry Hub pricing recently?

    They did seem to be emphasizing over all west production declines are on the horizon which would translate to better pricing. I didn't catch the expected driver of the over all decline in the west. What are your thoughts about UPL's market specific guidance?
    Sep 26, 2015. 12:32 PM | Likes Like |Link to Comment
  • Is Ultra Petroleum A Low-Cost Producer? [View article]
    <In light of a strong drilling return and significant outspending relative to pre-hedge cash flow, I intuitively expect that the company should be able to demonstrate strong production growth. However, production did not grow during the first half of this year and the 4%-5% annualized growth rate implied by the midpoint of the H2 2015 guidance is obviously not a strong growth rate either>

    I'm a nat gas novice so I very well could be missing something here, however from my recollection of the last cc the east production which they don't control was in decline which would offset production gains in the west. Wouldn't this account for the strong economics noted in Pindale while production growth was less impressive than the economics of Pindale might imply?
    Sep 26, 2015. 12:04 PM | 2 Likes Like |Link to Comment
  • KB Home leads homebuilders lower [View news story]
    Note to S.A., you might want to work on your "Recommended for you" feature. I just opened up an article on KB Homes earnings from 2006. I thought I was in bizzaro world reading about them lowering guidance from $10/ share to $8.50/ share.
    Sep 24, 2015. 11:10 AM | 1 Like Like |Link to Comment
  • An Important Insight Regarding Elevated Crude Inventories [View article]
    Math isn't my strong suit but I believe doubleE is correct. I believe Paolo's argument would only be valid if both imports and domestic additions were starting from zero and would only have an effect for 30 days from zero.

    IE: If both domestic and foreign (sea borne) production was 1,000 bpd, after 30 days domestic would have added 30,000 barrels to storage however foreign would have only added 1,000 barrels for 31,000 barrels combined. Forever after that they both contribute 30,000 barrels every 30 days or 60,000 barrels combined.

    If (after the initial 30 days) you shift the mix to 1,500 bpd domestic and 500 foreign it has no affect on the total in storage; you still have 60,000 barrels in storage after 30 days.
    Sep 22, 2015. 11:49 AM | Likes Like |Link to Comment
  • China Calling: Deals, Disputes, And The Trump Factor [View article]
    Trump and Xi are two sides of the same coin, each needs the others country to act as boogey man so they seem important. I lean right but god help the Republicans if they are stupid enough to nominate Trump for president.
    Sep 21, 2015. 08:31 AM | 2 Likes Like |Link to Comment
  • Range Resources: A Strong Buy In The Natural Gas E&P Space [View article]
    Despite the fact I'm citing a post on a Yahoo Finance m.b. the info seems accurate and relevant.

    Rig Count. Most is a repost from MHR board, from 9/4/15 report.
    These are BHI NA total for 9/4 and they include oil and NG. Nat gas production is rolling over. See Rainbow post on Shale NG production.
    Rig counts in 3 month increments:
    9/5/14 1925 rigs
    12/5/14 1920 rigs -5
    3/6/15 1192 rigs -728
    6/5/15 868 rigs -324
    9/4/15 864 rigs -2

    Detail 9/5/14 1584 oil 341 NG=1925 total
    Detail 9/4/15 662 oil 202 NG = 864 total
    Key point: year over year (y/y) NG rigs down 40.8% and Oil rigs down 58.2%!!!!
    Now BHI 9/11 report shows another 16 rig drop. Oil -10 and NG -6.

    The author of this post notes a one year lag between falling rig counts and falling production that seems consistent with what I've heard elsewhere. On the other hand, the fact that Mr. Market seems to be missing this implies that maybe there is more to this story?

    On another note looking at the latest EIA report nat gas production has been hugging it's 5 year average all year long. There was another S.A. article out a month or so ago pointing this out and projecting that while we will likely set another storage record this injection season it won't be close to the capacity that seems to be spooking the market and not that far above the five year average. The author made a compelling case that based on the consistently slight deviation from the 5 year production average and the total storage numbers nat gas pricing should in the high $3's. The author surmised that an unfounded fear of maxing out storage of gas this year was behind the depressed prices. Anecdotally this fear seems real.

    Thoughts from the more knowledgeable members?
    Sep 12, 2015. 10:16 AM | 3 Likes Like |Link to Comment
  • Why China's Renminbi Rate Will Be Going Down... And Down [View article]
    <And, since China has maxed out its internal spending on infrastructure and excessive / duplicative production capacity its most significant opportunity for growth was to build infrastructure elsewhere. A decline in the RMB will make those overseas investments much more expensive.>

    Not to mention it's a whole lot more difficult to order some African country to build a railway to nowhere using Chinese contractors than it is in China. Excellent post to another excellent article by Pauline.
    Sep 8, 2015. 08:44 AM | 1 Like Like |Link to Comment
  • High-Quality Natural Gas E&Ps Are Strong Buys [View article]
    I became a big fan of Jakes during the great recession when he was one of the extremely few investors making the macro case for themes that I already felt were true; however it was comforting to have someone a lot smarter than me stating them. IE: The U.S. always recovers from recession, bet on U.S. based businesses to recover, China is in a bubble stay away from China, Housing starts are unsustainably low levels bet on the home builders to recover.

    I'm also a Chanos fan and stayed away from commodities including oil. Coming from the construction industry the housing starts argument interested me on a few levels and was an argument I spent a good deal of time understanding and getting comfortable with. I was also fairly comfortable with the China argument although they've managed to hold up longer than I expected.

    In any case my point is anyone betting on a housing recovery back then was derided as an idiot. The U.S. run as an economic super power was done, anyone betting on a U.S. recovery was likewise an idiot; China, and emerging markets are the places to be invested. Peak oil was almost universally accepted and there was only one direction prices could go. Ditto commodities in general as the twelve really smart guys in China figured out how to beat the business cycle and China would grow forever.

    To tie this into the topic on this m.b. I'm not an expert on oil or gas but saw a logical flaw in the one way bet on oil prices in that it completely discounted the idea that at some point consumers can't just absorb this cost and will have to cut back. I believe the proponents of the one way trade argued China would more than make up the difference but given workers there make ~10% of a U.S. worker it seemed absurd to me that prices too high for U.S. consumers to bear would be no problem in China. I also remember having a debate with a guy who was in the oil industry (offshore) and read up on all of the peak oil literature at the time and was trying to convince me that his experience in the field and in his reading were proof there was no more oil to be found and peak oil was a reality.

    It took a while to be proven right on these themes, some longer than others. I also realize past performance is no guarantee of future success, and just because Jake was right in the past doesn't make him right today. However as best I can follow the technical debate on this thread, it seems to assume that because natural gas prices have been depressed for a long time and continue to be depressed, they will remain depressed even into Jakes long term investment time line.

    Jakes basic argument is that eventually market forces will expand demand for cheap domestic natural gas. That was his thesis for his macro calls at the height of the recession. E.V.'s becoming a larger segment of the market seems logical even if we don't know exactly how much market share they'll expand to. My understanding of the current argument against LNG is that it cost's too much to produce and therefore is only economical when nat gas is extremely high priced. Technology brought the cost of extracting oil down so why wouldn't it bring the cost of producing LNG down? The market forces to do so are certainly there. Further expansion into Mexico seems a gimmee. Likewise replacing coal and oil at power plants. If oil stays low wouldn't we get more cut backs in shale oil and thus less associated gas? If it goes up nat gas outside the U.S. goes up helping make LNG more viable? Vlad Putin is also doing his best to make the case for LNG.

    Another argument seems to be that marginal players are in a cash crunch and have to produce more gas as prices drop just to generate cash to pay debt. Consolidation will never happen in this industry? The airlines were notorious for over capacity and also being killed by high fuel costs a few years ago. I didn't have the nerve to bet real money on them but played them in a stock picking competition and read some pretty convincing arguments at the time that the consolidation going on at the time was real, the airlines finally get it, and this would be a much more rationale industry going forward. Judging by the multibaggers my picks became and anecdotal evidence of shabby way the airlines are able to treat passengers it seems like consolidation did work for the airlines.

    I doubt even Jake expects market forces will play out exactly as he surmises in this article however it seem to me a good bet that market forces will find a way to expand demand and make the industry more rationale over time.
    Sep 7, 2015. 10:35 AM | 2 Likes Like |Link to Comment
  • Bank Of America Capital Position: Mostly Smoke And Mirrors (Part I) [View article]
    I.P., I assume your interpretation is the regulators told BAC they could use their own risk weightings and then proceeded to tell BAC what their risk weighting will be?

    You may be right and we shall see, however I fail to see the logic of forcing BAC to agree to use more stringent weightings when they are supposed to be using their own numbers, than when they were required to be using the standardized numbers that I assume their regulators came up with or at least approved?
    Sep 6, 2015. 01:23 PM | Likes Like |Link to Comment
  • Fasten Your Seatbelt - Natural Gas Is Ready To Blast Off [View article]
    UPL is a near pure play on natural gas and my play on supply and demand forces eventually taking nat gas higher. Good article but not sure why the author is betting on coal benefitting from nat gas rising instead of nat gas directly.
    Sep 5, 2015. 09:26 AM | 2 Likes Like |Link to Comment
  • Bank Of America Capital Position: Mostly Smoke And Mirrors (Part I) [View article]
    <Based on the above slide, the CET1 ratio (on a fully phased-in basis) is 10.3%. However, as can be seen in the note to the right, under modifications requested by U.S. regulators (needed to exit parallel run), the estimated CET1 ratio stands at 9.3%.>

    <Under the "advanced approaches framework" approved today by the Fed and OCC, Bank of America (NYSE:BAC) beginning in Q4 will be able to use its own risk weightings instead of standardized weightings when calculating risk-based capital requirements.>

    Maybe I'm misreading last nights announcement but it sounds to me like the regulators backed off of the demands for modifications that you were referring to.
    Sep 4, 2015. 11:44 AM | Likes Like |Link to Comment
  • HART up 34% on exoneration of misconduct by famed trachea transplant surgeon [View news story]{"allowChartStacking"...

    If the chart does not default to one year set it at that and see HART decline from the $8-$9/ share range to $1.40 AFTER the pump portion of a pump and dump (over the course of the year that insiders didn't sell).

    BTW I was dumb enough to hold my shares when management was making open market buys last winter assuming they were telegraphing warranted optimism about the second large animal trial they were supposed to have been in at the time. It wasn't until they announced McGorry as the new permanent CEO that I realized I was screwed. I held until the first trade after their earnings call a couple of weeks ago hoping that no bad news in regard to the second large animal trial was good news. Then I found out there was no second large animal trial and no product to trial either.
    Aug 31, 2015. 05:27 PM | Likes Like |Link to Comment
  • HART up 34% on exoneration of misconduct by famed trachea transplant surgeon [View news story]
    BTW the crew that's been making open market purchases recently were doing the same thing ~6 months ago at over twice the price they just paid and at a time when they were leading investors to believe they were in a second large animal trial for their trachea product that they were confident would address the swelling issues that caused them to abandon the first large animal trial.
    Aug 31, 2015. 04:15 PM | Likes Like |Link to Comment