Brace for volatility

Our bakken plays have continued to trade sideways as oil has settled towards $76 per barrel.    We had a major blip on the recovery radar with the economic troubles in Dubai with some state owned entities not being able to make some upcoming debt payments and essentially asking for more time to do so.    American banks don’t have that much exposure to this debt so the impact is not necessarily direct,  but psychologically,  this is a huge negative and raises questions about whether this is the tip of the iceberg.  VIX,  the volatility indicator jumped 25% after hitting a low near 20 approximately 2 weeks ago.   In addition,  the holiday shopping season got off to a lackluster start in my opinion with spending down from 2008.   In addition,  my personal observation in the malls this past weekend seemed to indicate that traffic was down as well as spending as compared to last year.  I saw no black friday frenzy or big ticket item buying and have heard similar from colleagues,  a number of which have plenty of discretionary income to spend.   Obviously this just one statistically insignificant data point but I cannot imagine this bodes well for the retail sector.    I think we are going to have negative volatility for the remainder of 2009 with our bakken plays trading sideways at best with the potential negative catalysts listed below

  • China economic growth seen slowing.  GM issued a release on this today.
  • Retail sales for holiday season could be poor hurting stocks in retail sector and causing overall drag on the market
  • Analysts indicating that large banks could potentially have to raise more capital to boost liquidity
  • Jobless rate that continues to climb putting a drag on growth.  A jobless recovery is an oxymoron and economic spending cannot be sustained.
Symbol Last Trade Change Volume Avg Vol (3m)
CLR 1:58pm ET 37.78 Up 0.06 Up 0.16% 438,522 738,643
WLL 1:58pm ET 62.5575 Up 0.2175 Up 0.35% 391,394 1,008,900
NOG 1:58pm ET 9.06 Down 0.27 Down 2.89% 225,616 372,363
EOG 1:58pm ET 86.42 Down 0.81 Down 0.93% 1,328,240 2,929,990
SM 1:58pm ET 32.53 Up 0.26 Up 0.81% 337,268 824,415
BEXP 1:58pm ET 10.222 Down 0.118 Down 1.14% 1,086,709 3,562,180
MDU 1:58pm ET 22.38 Up 0.38 Up 1.73% 422,329 734,809
GEOI 1:58pm ET 10.7493 Down 0.0407 Down 0.38% 100,270 61,850.8
KOG 1:56pm ET 2.32 Down 0.07 Down 2.93% 573,335 2,048,950
KDKN.OB 1:57pm ET 0.28 Up 0.02 Up 6.87% 208,057 443,292
WSEG.OB 1:20pm ET 0.03 Up 0.01 Up 20.00% 49,011 52,298.5
BSIC.OB 12:45pm ET 0.78 Up 0.01 Up 1.30% 21,435 11,247.7

Active Drilling Rig Count – Nov 18th

As of November 18th,  the active rig drill count is at 64 which is 24 more than we saw during the summer months but far fewer than the 100 plus we saw in 2008.    Familiar names such as EOG and Whiting lead the pack with the most active rigs at 6 but some other smaller private players such as Anshutz Exploration and Cirque are entering the fray as well.    The good news is that it looks as if exploration budgets seem to be on the mend and companies in the region are again ramping up production even if at a slower rate than previously.

Rig Operator Well Name and Number
BRONCO 16 ANSCHUTZ EXPL CORP TWIST 31-4H
CYCLONE 25 ANSCHUTZ EXPL CORP KADRMAS 11-27H
H & P 255 ANSCHUTZ EXPL CORP KARY STATE 34-19H
ENSIGN 123 BAYTEX ENERGY USA LTD FURHMAN 36-162-99H
WHITE MT. 750 BRIGHAM OIL & GAS LP LIFFRIG 29-20 1-H
NABORS 49 BRIGHAM OIL & GAS LP STATE 36-1 1-H
NABORS 52 BRIGHAM OIL & GAS LP WILLISTON 25-36 1-H
NABORS 266 BRIGHAM OIL & GAS LP JACKSON 35-34 1-H
PIONEER 44 BTA OIL PRODUCERS LLC NORTH COUNTRY, 9210 JV-P 31-8
BRONCO 28 BTA OIL PRODUCERS LLC 20401 JV-P LOUIE 1-36H
PRECISION 602 BURLINGTON RES O&G CO CHSU 24-23SH 15
PRECISION 825 BURLINGTON RES O&G CO BADLANDS 21-15H
NABORS 59 BURLINGTON RES O&G CO ARCHES 24-35H
NABORS 165 CIRQUE RESOURCES LC RED LADY 36-4H
NABORS 688 CIRQUE RESOURCES LC ALASKAN AMBER 11-3H
CYCLONE 9 CONTINENTAL RESOURCES LOWE 42-9NH
CYCLONE 20 CONTINENTAL RESOURCES ARVID 2-34H
CYCLONE 22 CONTINENTAL RESOURCES BICE 2-29H
PATTERSON 180 CONTINENTAL RESOURCES NORMAN 1-9H
TRINIDAD 36 CONTINENTAL RESOURCES OMAR 2-1H
PRECISION 289 ENCORE OPERATING LP WERRE TRUST 44-34H
NABORS 161 EOG RESOURCES INC LIBERTY 2-11H
MAJOR 43 EOG RESOURCES INC FERTILE 14-17H
NABORS 527 EOG RESOURCES INC WAYZETTA 102-02H
NABORS 148 EOG RESOURCES INC AUSTIN 101-15H
TRUE 28 EOG RESOURCES INC CLEARWATER 100-19H
DHS 12 EOG RESOURCES INC ROUND PRAIRIE 1-17H
NABORS 108 FIDELITY EXPL & PROD CO CRAFT 44-29H
NABORS 460 HESS CORPORATION HA-NELSON A-152-95- 3427H-1
H & P 241 HESS CORPORATION EN-RICE A-155-94- 0310H-1
H & P 179 HESS CORPORATION EN-DAVIS-156-94- 0805H-1
BRONCO 20 HUNT OIL COMPANY NICHOLS 10-15H 1
UNIT 117 KODIAK OIL & GAS (USA) INC MOCCASIN CREEK 16-3-11H
H & P 259 MARATHON OIL CO LIL J. REISS 34-9H
H & P 257 MARATHON OIL CO PAUL ROHDE 21-29H
H & P 256 MARATHON OIL CO WOLDING 14-24H
PRECISION 645 MUREX PETROLEUM CORP JOY 26-35H
WHITE MT. 720 NEWFIELD PROD CO MANTA RAY 1-12H
NABORS 272 NEWFIELD PROD CO CLEAR CREEK STATE 1-36H
H & P 258 PEAK NO DAK LLC SONDROL 30-21H
ENSIGN 46 PETRO HUNT LLC PRODUCERS CORPORATION 159-94-8B-17-1H
ENSIGN 93 PETRO HUNT LLC FORT BERTHOLD 148-94-17D-08-1H
BRONCO 8 PETRO HUNT LLC SORENSON 152-96-13B-24-1H
UNIT 329 QUESTAR E & P CO MHA 1-13-14H-150-91
PIONEER 57 SHD OIL & GAS, LLC SIMBA 24-30H
PRECISION 512 SIMRAY GP LLC ROBERTS TRUST 1-13H
PATTERSON 167 SINCLAIR OIL & GAS CO HIGHLAND 1-9H
NABORS 687 SLAWSON EXPLORATION STALLION 1-1-12H
RED HAWK 558 SLAWSON EXPLORATION BANSHEE 2-1H
ENSIGN 125 SLAWSON EXPLORATION HOWITZER 1-25H
NABORS 152 ST MARY LAND & EXPLORATION CO TORGESON 3-30H
ENSIGN 88 ST MARY LAND & EXPLORATION CO BEAR DEN FEDERAL 4Y-30H
NABORS 742 ST MARY LAND & EXPLORATION CO MONDAK FEDERAL 4-14H
NABORS 182 TRACKER RES DEVMNT OBRIGEWITCH 4-1H
PIONEER 56 WHITING OIL AND GAS CORP SANISH BAY 42-12H
PIONEER 67 WHITING OIL AND GAS CORP PLATT 44-28H
NABORS 686 WHITING OIL AND GAS CORP ANDERSON 11-7TFH
PRECISION 106 WHITING OIL AND GAS CORP IVERSON 11-14H
PRECISION 520 WHITING OIL AND GAS CORP RIGEL STATE 12-16H
PIONEER 66 WHITING OIL AND GAS CORP KANNIANEN 44-33H
NABORS 265 XTO ENERGY INC LOIS FEDERAL 24X-6
H & P 180 XTO ENERGY INC MENDENHALL 12X-18
NABORS 481 ZAVANNA LLC BOBCAT 1-25H
PRECISION 517 ZENERGY OPERATING CO LLC DAKOTA-3 PATRICIA CHARGING 4-15H
PRECISION 96 ZENERGY OPERATING CO LLC THOMPSON 1-SWD

Out of hibernation

I apologize for the sheer lack of posts over the last few months,  I’ve been so busy trading in other sectors that my free time was quite limited.    The good news is my personal portfolio has done quite well,  the bad news has been I did not include any Bakken plays up until now.     I think the Bakken sector deserves a fresh look at this point.    All of our Bakken plays are up anywhere from 25% (MDU) to over 300% (SM) over the last 6 months.  Oil has stabilized between $70 to $80 per barrel as the economy has firmed.     Earnings season for the current quarter is just about over and the following companies have reported earnings in the last few weeks with generally good results.  Most of our bakken plays are within 15% of their 52 week highs with the exception of microcap plays like Basic Earth and Kodiak Energy that have not recovered.   The number of active drilling rigs currently sits down about 40% from a year ago at 64 indicating that exploration has not gotten back to the frenetic pace of early 2008.   From an investment standpoint each of these companies deserves a fresh look and analysis and I’ll be covering that over the coming weeks.

Symbol Last Trade P/E Pct from Yr High Short Ratio
MDU Nov 16 22.56 N/A Down 1.44% 1.5
GEOI Nov 16 11.79 35.09 Down 12.34% 2.9
KOG Nov 16 2.53 N/A Down 12.46% 0.8
NOG Nov 16 10.30 117.05 Down 7.29% 5.2
BSIC.OB Nov 16 0.82 N/A Down 73.03% N/A
KDKN.OB Nov 16 0.31 N/A Down 91.60%
CLR Nov 16 38.94 297.25 Down 17.62% 4.8
WLL Nov 16 63.78 N/A Down 1.95% 4.3
EOG Nov 16 90.53 37.38 Down 5.56% 1.9
WSEG.OB Nov 16 0.025 N/A N/A%
BEXP Nov 16 11.19 N/A Down 2.27% 1.1
SM Nov 16 34.06 N/A Down 10.49% 3.7