Table of Contents
Leaps Trader Commentary
We knew last weekend that a miss by Dennis would pressure oil prices and that is exactly what happened. Oil fell from $62 to $58 and oil stocks got clobbered. The dip should be temporary with another spike due with the Wednesday inventory reports. We also had a miss by hurricane Emily that veered away from the Gulf oil fields and farther to the west. It is still possible Emily could cause problems but I would not count on it.
When Dennis posted a clean miss I had hoped we would get a strong buying opportunity for a couple more positions. We did add a couple but they were on breakouts instead of breakdowns. We still have a full wish list and any further dips this week could garner a couple more.
I did not get any complaints this week about adding some non-leap plays to the watch list so I assume everyone is happy to have something new to trade.
If the dip does continue we have strong support at $56 and again at $54 with the 100-day average at $55.50. Continue to buy the dips until further notice. When the August contract ceases trading we should get another spike higher as we move closer to the end of year high demand months.
The Unocal/CNOOC/Chevron deal is still pending and Chevron is dropping in price as everyone expects them to raise the bid to grease the skids. Opposition is still rising to CNOOC and I strongly doubt they will win. This sets up a positive event for Chevron. They will either get Unocal and the stock will rise when the uncertainty passes OR they will not get Unocal and the stock will rise on relief. I consider any Chevron dip prompted by a higher bid as a buying opportunity.
It was interesting to see what stocks were up on Friday in the oil sector. Most were down with several up a few cents. Only SUN and VLO tacked on big gains of more than a buck. Makes me wish SUN was in the portfolio but their options are very expensive with at the money leaps nearly $20. Pass again!
BP came very close to a watch list trigger once again. The problem with BP is the Thunder Horse platform, which is threatening to sink into the sea. BP owns 75% of the platform and XOM 25%. If it sinks it is a $2 billion loss. If they rescue it I would buy BP immediately on the weakness. Options are cheap at $4 for the 2007 $70 leap. BP has pledged to return all cash received over $20 a bbl to the stockholders. This will be done though dividends and stock buybacks.
While crude oil softened on the hurricane news we saw natural gas spike over $8 on the current contract. This is an all time high and the December contract is bumping $9. This makes gas plays like CHK, SWN, RRC and MRO even stronger.
We are going to start getting earnings from most companies over the next couple weeks so expect some volatility.
December Crude Chart - Weekly
December Natural Gas Chart - Weekly
Changes in Portfolio
Portfolio Listing & Top Picks
Most Recent Plays
RRC - $29.42 - Range Resources ** Stop Loss $25.50 **
RRC continued to rise despite the drop in oil as it is primarily a gas driller/producer. RRC exploded out of the gate on Thursday after issuing guidance that they were going to report a record quarter for Q2. With gas prices still climbing I believe this will be a very good play.
Range Resources Corporation (RRC) is an independent natural gas and oil company engaged in the exploration, development and acquisition of oil and gas properties, primarily in the Southwestern, Appalachian and Gulf Coast regions of the United States. As of December 31, 2004, RRC has proved reserves of 1.18 trillion cubic feet (Tcfe) of natural gas equivalent, of which 81% natural gas; 64% is proved developed reserves, and 77% operated with a reserve life of 14.9 years. The Company owns 2,428,000 gross (1,890,000 net) acres of leasehold plus over 400,000 royalty acres. RRC has a multi-year inventory of drilling projects that includes over 5,000 identified drilling locations. On June 23, 2004, RRC purchased the 50% of the remaining Great Lakes that it did not own. In December 2004, RRC also purchased additional Appalachian properties through the purchase of PMOG Holdings, Inc, a private company, or Pine Mountain.
Dec 2005 $30 CALL RRC-LF @ $2.90
Entry $30.50 (7/13)
APA - $66.83 - Apache ** Stop Loss $62.00 **
This entry did not work out as expected. Bullishness in APA led it to spike over our breakout entry despite the miss by Dennis. The Thursday drop in oil knocked -$5 off the APA price. As with all the oils I believe it is only temporary but it is painful.
Apache Corporation is an independent energy company that explores for, develops and produces natural gas, crude oil and natural gas liquids. In North America, the exploration and production interests are focused in the Gulf of Mexico, the Gulf Coast, the Permian Basin, the Anadarko Basin and the Western Sedimentary Basin of Canada. The Company has interests in seven countries, such as the United States, Canada, Egypt, Australia, the United Kingdom, China and Argentina. Its segments are the United States, Canada, Egypt, Australia, North Sea and Other International. On August 20, 2004, Apache signed a definitive agreement to acquire all of Anadarko's Gulf of Mexico-Outer Continental Shelf properties (excluding certain deepwater properties). During the year ended December 31, 2004, the Company participated in drilling 1,913 gross wells, with 1,735 (90.7%) completed as producers.
JAN 2008 $75 LEAP CALL YWA-AO @ $13.70
Entry $70.50 (7/12)
EOG - $58.65 EOG Resources ** No stop **
EARNINGS DUE July 27th at 9:30
EOG hit another new high at $61.75 before falling prey to profit taking with the sector. I am suggesting an insurance put but only if EOG trades at $55.50. There is strong support at $56.
EOG finished first in an investor relations survey by Greenwich last week. Rounding out the top five were Noble Corp, Carnival, Dell and UTX.
EOG is engaged in the exploration, development, production, and marketing of natural gas and crude oil, primarily in major producing basins in the U.S., as well as in Canada, Trinidad, the United Kingdom North Sea and, from time to time, select other international areas. At December 31, 2004, EOG's total estimated net proved reserves were 5,647 billion cubic feet equivalent (Bcfe), of which 5,047 billion cubic feet (Bcf) were natural gas reserves and 100 million barrels (MMBbl), or 600 Bcfe, were crude oil, condensate and natural gas liquids reserves. At such date, approximately 50% of EOG's reserves (on a natural gas equivalent basis) were located in the United States, 25% in Trinidad, 24% in Canada and 1% in the United Kingdom North Sea. EOG's operations are all natural gas and crude oil exploration and production related. (source EOG)
Joe Allman, natural gas analyst at RBC Capital Markets said EOG and companies like them generate a 30% to 50% rate of return on assets. Sometimes even 100% on certain projects. EOG grew +30% in 2004.
2007 $60.00 LEAP Call OAC-AL @ $9.50
Entry $59.00 (7/05)
EARNINGS Due July 28th
Encana was knocked for a huge loss on Thursday when the entire sector took a serious hit. ECA lost -$3 or nearly -7%. Fortunately it had risen on Tuesday to mitigate the loss. $40 is strong support and hopefully the damage is over.
ECA owns the largest independent gas storage network but that is not the primary focus of its business. ECA has been divesting itself of non-core assets in an effort to focus on its main business. It will divest itself of the gas network either through a competitive bid or IPO by early 2006. This represents a major cash generation point for ECA and they will use the cash to acquire more reserves. This is the kind of story we want in our LEAPS portfolio. Unfortunately ECA does not have leaps and we will have to use the Jan-06 calls. That should get us through the Fall demand cycle and allow us to take profits ahead of the spring dip.
With an enterprise value of approximately US$44 billion, EnCana is one of North America's leading natural gas producers, is among the largest holders of gas and oil resource lands onshore North America and is a technical and cost leader in the in-situ recovery of oilsands bitumen. EnCana delivers predictable, reliable, profitable growth from its portfolio of long-life resource plays situated in Canada and the United States. Contained in unconventional reservoirs, resource plays are large contiguous accumulations of hydrocarbons, located in thick or areally extensive deposits, that typically have low geological and commercial development risk, low average decline rates and very long producing lives. The application of technology to unlock the huge resource potential of these plays typically results in continuous increases in production and reserves and decreases in costs over multiple decades of resource play life. (source Encana)
Encana does not have leaps so we are going to use the January-06 calls. The demand cycle runs through November giving us plenty of time to rotate out and reenter on the spring demand dip.
JAN 2006 $45 CALL ECA-AI @ $2.70
Entry $42 (7/05)
EARNINGS Due July-28th before open
MRO made another new high on Wednesday at $58.46 before crashing back to earth with the sector to hold at $55. MRO actually suffered less than most of the positions due to a sharp spike on Tuesday.
Only one company will end up with Unocal and that leaves the other hungry and looking for other targets. XOM also has nearly $30 billion in cash and needing to make an acquisition. Marathon is one of the largest remaining independents and a likely target due to its diverse operations. MRO has several large properties in Asia and within China's sphere of influence.
Marathon Oil Corporation (Marathon) is engaged in worldwide exploration and production of crude oil and natural gas. It operates through three segments: exploration and production (E&P), which explores for and produces crude oil and natural gas; refining, marketing and transportation (RM&T), which refines, markets and transports crude oil and petroleum products, and integrated gas (IG), which markets and transports natural gas and products manufactured from natural gas, such as liquefied natural gas (LNG) and methanol. The Company's principal operating subsidiaries are Marathon Oil Company and Marathon Ashland Petroleum LLC (MAP). During the year ended December 31, 2004, the Company's worldwide liquid hydrocarbon production averaged 170,000 barrels per day (bpd) and sales of natural gas production, including gas acquired for injection and subsequent resale, averaged 999 million cubic feet per day (mmcfd).
On Thursday (June 30th) MRO completed acquisition of $3.7B in properties from Ashland Inc (ASH). Asland owned 38% in Marathon Ashland Petroleum (MAP) and two other businesses. ASH fell -$11.72 on the deal which represented the payment from MRO to Ashland and Ashland shareholders of stock and cash. Ashland applied $2.5B of the proceeds to payoff debt.
2007 $55 LEAP Call VXM-AK @ $7.90
Entry $54.74 (6/27)
EARNINGS Due Aug-4th after the close
CHK held its gains very well from the prior week although it did suffer from the selling pressure. No sweat here as higher gas prices will be a windfall for CHK.
CHK is our low dollar entry into the energy market. With natural gas prices continuing to rise it means money in the bank for CHK. Much of the electricity generated over the summer for cooling the south will be produced with CHK gas.
Chesapeake Energy Corporation is the third largest independent producer of natural gas in the U.S. Headquartered in Oklahoma City, the company's operations are focused on exploratory and developmental drilling and producing property acquisitions in the Mid-Continent, Permian Basin, South Texas, Texas Gulf Coast and Ark-La-Tex (including the Barnett Shale) regions of the United States.
Chesapeake Energy derives 90% of its revenues from natural gas. They are very aggressive about replacing reserves and will capitalize on the continued increase in prices. Gas prices have soared in the U.S. due to the addition and conversion of electric plants to the cleaner fuel. Several times over the last winter the gas levels supplying those plants dipped to dangerous levels. The demand is increasing faster than supply and the production peak is now estimated to be 2007. Prices are going to continue higher, much higher and Chesapeake is positioned to benefit.
This summer much of northern California will get its electricity from gas due to a drought in the northwestern hydro-electric grid. Generation levels will be below normal and natural gas is the fall back fuel.
2007 $20 LEAP Call VEC-AD @ $4.00
Entry $19.00 (05/13)
EARNINGS Due July 29th before the open
APC lost -$4 in the oil sector carnage but appears to be holding support at $86. APC has been rolling very nicely as it moves higher and a 15 min MACD of 15,26,11 could provide some very nice day trades.
Anadarko Petroleum Corporation's mission is to deliver a competitive and sustainable rate of return to shareholders by developing, acquiring and exploring for oil and gas resources vital to the world's health and welfare. As of year-end 2004, the company had 2.37 billion barrels of oil equivalent of proved reserves, making it one of the world's largest independent exploration and production companies. Anadarko's operational focus in North America extends from the deepwater Gulf of Mexico, up through Texas, Louisiana, the Mid-Continent, western U.S. and Canadian Rockies and onto the North Slope of Alaska. Anadarko also has significant production in Algeria, Venezuela and Qatar, and exploration or production positions in several other countries.
Anadarko has just completed a restructuring program and raised estimates on May-2nd. They expect output to rise +5% in 2005 and costs to be below industry trends. S&P is estimating $8.55 for earnings in 2005 and a price target of $85.
APC signed a new pipeline deal in late June to accommodate 750 mcfpd from its Bear Head terminal currently under construction. APC announced last week it is on track to meet its annual production growth target of +5% to +9% per year through 2009. APC said it had identified 2.1 boe of additional resource potential. Half of the new resources are already on APC properties under development.
2007 $75 LEAP Call OCP-AO @ $10.10
Entry $70.50 (5/04)
EARNINGS Due July 27th before the open.
COP continued to trade almost penny for penny with oil prices. COP was hammered from a new high at $62.22 on Thursday back to just over $59 in the space of a very few minutes. Like oil it bounced Friday morning then faded into the close. Still it closed down less than $1 for the week. Can't complain about that.
COP reported earnings of $4.10 that rose +80% over the year-ago period. Analysts had only expected $3.29. They said unplanned down time at refineries kept them from doing even better. They also said they were going to spend $3 billion between 2006-2010 to increase their ability to handle the cheaper sour crude.
COP has been aggressively purchasing assets around the globe and especially in Russia. Putin has said repeatedly that COP assets and agreements are not at risk and that COP is a partner with Russia in producing their oil.
On July 1st COP and Russia's Lukoil finalized a joint venture to develop energy fields in Artic Russia as part of a broader strategic alliance. COP has very good contacts in Russia and has been mentioned several times by Putin as a strategic partner. COP owns 12.6% of LUKOIL and has been approved to buy up to 20%.
2:1 Split on June 2nd gave us 2 of each.
(2) 2007 $50 LEAP Call OJP-AJ @ $7.88
Entry (4/18 $49.00)
Earnings are due for July-22nd
OXY made a new high at $82.75 on Wednesday and was slammed back to $78 by Friday's close. OXY declared a dividend of 31 cents payable on Oct-15th. In other news the Sultanate of Oman issued a Royal Decree approving OXY as the developer of the Mukhazna oil field. This is one of the largest fields in Oman.
OXY declared a quarterly dividend of 31 cents in early May and appointed former U.S. Secretary of Energy, Spencer Abraham, to their board. Earnings in 2004 were a record $2.6B and as the CEO pointed out on Friday it was more than a billion more than they earned in 2000. Not a bad growth record. Q1 earnings were up +74% over Q1-2004.
OXY reported earnings on April 26th of $2.16 per share compared to estimates of $1.99. OXY said it had higher than expected production, strong pricing and record chemical sales. Still it failed to produce the blowout earnings of COP due to hedging.
OXY reported an agreement with Oman to invest $2B in the Mukhaizna oil field and upgrade production from 10,000 bbls per day to 150,000 per day. I would happily invest $2B once to get $3B return per year. Good job!
OXY is the 239th largest company in the world and an oil giant.
2007 $70 LEAP Call VXY-AN @ $10.00
Entry $68.00 (4/19)
EARNINGS Due July-28th
XOM crashed and burned with the rest of the group and dropped back to support at $58. Our put expired and I placed a stop loss at $56.50. However, if XOM does not develop a positive trend by the Sunday after its earnings I am dropping it. I am hoping that it will announce something regarding its $30 billion in cash when it announces earnings. Otherwise we are out of here.
XOM reported a +44% jump in earnings in Q1 but missed analyst estimates. After items XOM earned $1.15 and analysts were expecting $1.20. XOM hedged to capture high oil prices and prices continued to move higher. They also saw a drop in production as mature fields continued to decline. XOM said it will spend $15-$16 billion in capex in 2005 in an effort to discover/produce more oil. They also said they were going to buy back $3.5 billion in stock in the current quarter. Their record profits of $7.86 billion for the quarter give them plenty of cash for anything they desire. Maybe a couple acquisitions would help that sagging production.
XOM has larger reserves and more cash than any other oil company. They have to find something to do with their $30 billion and it will either be returned to the shareholders or used to buy more reserves.
XOM is the largest oil company in the world and while it has the largest reserves it also has the highest overhead cost.
2007 $60 LEAP Call ODU-AL @ $6.70
Entry $58.00 (4/19)
No change here. The XLE is still chained to the losses in XOM as the biggest component. $45 is strong support.
The XLE SPDR is composed of 27 energy stocks and represents about 8% of the SPX. This is the 8% that helped push the SPX to the current levels with the rise in oil over the last year. In fact the XLE has far exceeded the SPX in performance over the past year.
I chose a leap close to the money because there was no material price difference for the Leaps $2-3 away. Insurance is cheap and I expect this to be a very long-term play.
2007 $40 LEAP Call ORJ-AN @ $5.60
Entry $39.75 (4/18)
EARNINGS Due July-26th
VLO lost the obligatory -$4 like everyone else and came to rest at initial support at $82. Stronger support waits at $79 but I hope we don't need it. VLO declared a dividend of 10 cents payable on Sept 8th.
VLO remains in the best position to profit given their ability to refine the heavy sour crude currently available in the market. As prices rise on distillates VLO will continue to gain margin against other refiners.
VLO has been weak since the announcement it was buying Premcor. This should be a very good deal for them and the combined companies will control a large portion of the refinery business. Think of it as a buying opportunity.
Valero is the largest independent refiner in the U.S. and one that has made the switch to the higher profit margins of sour crude. Oil prices are generally quoted using the West Texas Light Sweet price. The sour crude sells for significantly less and will become the dominant variety as oil supplies dwindle. Sour crude has been running about $10 a bbl under sweet crude. Valero is seeing even bigger discounts from less desirable grades from Mexico and Alaska. It costs more to process the sour crude and fewer refineries can handle it. This forces the price of that sour crude lower. Finished gasoline is priced basically on the price of a barrel of sweet crude. This means the same gas Valero produces from cheaper sour crude sells for the same price as the gas produced from sweet crude. This enables Valero to capture a significant profit margin. They had a record year in 2004 due in part to their ability to process the cheaper grade of oil. The company has already said 2005 profits will be higher in 2005 even if margins narrow for others.
Company website: http://www.valero.com/About+Valero/
Valero reported earnings on April 21st of $1.92 that more than doubled the prior year of $.91 cents. VLO fell slightly in trading because analysts had estimates of $1.97. Shucks, they missed estimates by a nickel but more than doubled last year. Let's sell them. Duh! They rebounded as eager traders rushed into the gap and they closed at $74.86 on Friday, more than $5 above the earnings dip at $69.55.
Valero announced on June-30th it was going to retire the Diamond Shamrock brand and put up Valero signs at its 2,900 Shamrock stations. This will give the Valero brand and image a huge boost since few if any consumers know Valero owned the chain. Valero has gone from a single refinery with 170,000 bbls of output to 14 refineries and 2.5 mbpd of output and 4,700 retail stores over just a few short years. It will become the largest refiner in the nation when it completes its acquisition of Premcor later this year.
2007 $75 LEAP Call VHB-AO @ $14.10
Entry $68.00 (4/15)
EARNINGS Due July-29th
Chevron continues to languish while we wait for the August 10th vote and any potential new bids. No excitement here but a Unocal victory should give them a significant boost.
I consider any dip on a raised Unocal bid as a buying opportunity. We have the Sept $55 put and I plan on selling it on any material dip to offset our cost in the LEAP. Target $53 to sell the put.
CVX rebounded slightly on July 1st after the House voted 333 to 92 to prohibit the sale of Unocal to CNOOC. This is not a binding vote as it only accomplished adding an amendment to a spending bill but it does hurt the chances of CNOOC for getting the deal done. Traders are afraid Chevron will be forced to bid higher and that is causing weakness in the stock.
Chevron could easily bid higher given the paltry $11 per bbl of proven reserves. It is only good business to wait until it feels prudent to do so. I am betting Chevron will sweeten its offer just before the Unocal vote on August 10th. This will hinder CNOOC from raising its bid quickly enough to matter.
Chevron spiked to $54.50 on May 6th on news of an oil find in Utah by Wolverine where Chevron has extensive leases. It was also announced that Chevron had won a portion of the 15 blocs up for bid in Libya.
Chevron posted earnings that disappointed the street due to several unplanned outages at various refineries. CVX saw refining profits fall -36% but the condition is expected to be temporary. The stock is also weak due to uncertainties about the Unocal acquisition.
Chevron announced in early April that it was purchasing Unocal for $18 billion in cash and stock and both CVX and UCL dropped sharply. This was not a surprise for Chevron to make the purchase but the timing caught everyone off guard.
In theory everyone was waiting for oil to drop in Q2 and allow the next round of acquisitions to be made at a more reasonable value. Instead Chevron did a take under on Unocal by offering less than the current share price. It is a good deal if you can pull it off.
Chevron beat out several other firms including China's CNOOC who had been a hot pursuer but had to drop out at the last minute after it could not complete the final terms in time. CNOOC has since offered $67 a share for Unocal but the deal is expected to fail due to a lack of approvals.
Chevron will likely sell off about $3 billion in non-core assets once the deal is consummated. The main asset Chevron wanted was the 1.7 billion barrels of proven reserves and tens of thousands of acres of additional leases still to be explored. Chevrons current average cost of produced crude is $27. After selling the non-core assets they will end up with the Unocal proven reserves at about $9 a bbl plus billions in other assets like gas fields, power plants and joint ventures around the world. This was a very sweet deal for Chevron.
It may take some time for the cloud to lift from the stock price but the next jump in oil prices should do wonders. Chevron dropped back to its 100-day average at $55.50 on the news and this should be very strong support. There is not expected to be any hurdles to getting the deal approved as most of the assets are either out of the country or will be divested as part of the deal.
The Unocal leap was actually triggered when the price hit $59 on the announcement. With UCL trading at $58.74 at Friday's close there would not have been any material movement. Because any Unocal leap will eventually end up being a Chevron leap I am electing to use the previously recommended Chevron leap as the actual position. I am using Friday's close for the entry price.
2007 $60.00 LEAP Call VCH-AL @ $5.60
We held both CVX and UCL leaps when the buyout was announced. I dropped the UCL listing as a duplicate to focus on the eventual merged company. Anybody holding the UCL leaps at the time should still be in them and ready to benefit from a higher UCL bid by CNOOC.
New Put 6/19
Entry $56.67 (04/07)
Leaps Trader Watch List
The drop was sharper than I expected and considering almost every stock in the sector dropped by the same amount I suspect there was some options activity as well.
We were triggered on the APA and RRC entries and that leaves us with four possibles and a very full portfolio.
I am not adding any new entries this week and we will play the cards we are holding.
The severity of the drop left me with a bad feeling and I want to see some new highs before we get too aggressive again.
Stocks I think everyone needs to keep on their personal watch list including those listed above.
DO - Diamond Offshore
Current Watch List
UPL - $33.47 Ultra Petroleum
** Breakdown Target $31.00 **
Ultra Petroleum Corp. is an oil and gas company engaged in the development, production, operation, exploration and acquisition of oil and gas properties. The Company's operations are focused in the Green River Basin of southwest Wyoming and Bohai Bay, offshore China. During the year ended December 31, 2004, it owns interests in approximately 166,974 gross (92,997 net) acres in Wyoming covering approximately 260 square miles. The Company owns working interests in approximately 241 gross productive wells in this area and is operator of 41.5% of the 241 gross wells. Through Pendaries Petroleum Ltd., it is active in oil and gas exploration and development in Bohai Bay, China. The Company also owns interests in 15,518 gross (14,652 net) acres in Pennsylvania, as well as interest in approximately 720 gross (320 net) acres and interests in three productive wells in Texas.
BP - $65.03 BP, PLC
** Breakdown Target $63.50 **
BP p.l.c. produces & markets crude oil & petroleum products worldwide. It is involved in exploration and field development throughout the world and is engaged in the manufacture and sale of petroleum-based chemical products. For the 3 months ended 3/31/05, revenues rose 15% to $81.01B. Net income rose 34% to $6.60B. Results reflect increased sales from all the business segments, higher marketing & refining margins and inventory gains
TLM $39.99 Talisman Energy
** Breakout target - None **
Talisman Energy Inc. (Talisman) is an independent international upstream oil and gas company whose main business activities include exploration, development, production, transporting and marketing of crude oil, natural gas and natural gas liquids. The Company's operations, during the year ended December 31, 2004, were conducted principally in four geographic segments: North America, the North Sea, Southeast Asia and Algeria. The Trinidad Angostura project began production in January 2005. Exploration is being advanced in other areas outside the principal geographic segments, including Alaska, Colombia, Qatar and Peru. During 2004, total production averaged 438 million barrels of oil equivalent per day (mboe/d) and the Company exited the year producing 452 mboe/d in December. In 2004, the Company drilled 641 successful wells.
KWK $43.01 Quicksilver
** Breakout target $46.75 **
Quicksilver Resources Inc. (Quicksilver) is an independent oil and gas company engaged in the exploration, acquisition, development, production and sale of natural gas, crude oil and natural gas liquids (NGLs) primarily from unconventional reservoirs, such as fractured shales, coal beds and tight sands. Quicksilver's operations are concentrated in Michigan, Indiana/Kentucky, Texas, the Rocky Mountains, and the Canadian province of Alberta. At December 31, 2004, Quicksilver had estimated proved reserves of 968 billions of cubic feet of natural gas equivalent (Bcfe). Approximately 92% of its reserves were natural gas, 77% were classified as proved developed. Approximately 62% of the estimated proved reserves are located in Michigan.
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