I got smacked pretty hard today, with NRP, HCLP and BAS all taking blows. The earnings out of NRP and HCLP apparently spooked some investors, and BAS just sort of followed along.

I am not concerned about any one of these positions. The rest of the holdings were a pretty mixed bag.

I dare not address the Tesla selloff just yet, for fear I somehow jinx it. I refuse to report any of the numbers on my put position, as it is so small and just unpredictable. Suffice to say, the first batch of options expire with early 2014. The next two thirds of them expire with early 2015. I’ll mark them down as they expire worthless, or record the profits when I actually have something more concrete.

The trials of last week were grinding and I simply exhausted myself. While this week hasn’t set up much better, I think I can at least imagine the point where I will begin to see the light reflecting off the walls from the light coming in at the end of the tunnel.

So there’s that going for me…

I want to dig into CCJ’s numbers on here, as they were impressive and caught the intelligentsia off guard. Mind you they didn’t just beat the numbers. They beat the numbers by something so stupid, I dare not even write it down.

Speak the name Fukushima again; it won’t save your predictions.

There’s a clear trend setting up in my book; BAS, CCJ, NRP, HCLP…they all have something in common, besides the massive ramp ups in price. I like what I’m seeing here, and some of their better peers seem to be confirming it.

Yes oil is selling off hard. But oil was unduly expensive, wasn’t it? Because the price was flung up in response to those tired fears. The price falling is not a problem, it’s a blessing to companies that need to see activity pick up.

The extra hour of sleep did me well. I’m refreshed, at least for the moment. See you around.

BAS is up 4% this morning after announcing earnings last night. The earnings themselves were unspectacular, but I think capital is beginning to catch on to the idea, judging by the gap up.

BAS has managed to close earnings losses by about half (so far) while keeping revenues approximately flat (-4% year over year), which in this environment with such steep competition for rig hours is an impressive feat.

The real story here is BAS’ cash position, which actually increased despite everything else. They now are sitting on $100 million, up from $96 million last quarter – and keep in mind that this time last year they were only sitting on $104 million.

The company has made a few big acquisitions over the last couple quarters, including a salt water disposal company last December. Total capital investment was $139.9 million for the last 12 months. During that same time, BAS’ long term debt increased by $82 million. So I think I can see clear value being created by the operation, the losses notwithstanding.

The real game BAS is playing here is best laid out by their CEO Roe Patterson (emphasis mine):

“With respect to acquisition opportunities, seller expectations still remain high. We expect valuations to come more into balance over the next two quarters so we will continue to conserve our liquidity until we see those opportunities. We currently anticipate spending about $165 million for capital expenditures in 2013, adding mainly higher margin rental equipment and salt water disposal wells, along with maintenance and sustaining capital.”

BAS is positioning themselves to buyout the competition at fire sale prices. That’s the real play. I first got on to this company, actually, when I was looking through the space for potential investments, and realized nobody had any cash on hand.

BAS was the first company, after checking a few dozen, that actually had suitable cash reserves.

The natural gas price collapse that occurred throughout 2011 (nice work, Aubrey…) struck the well services industry hard. I’d say BAS has a hunch a subset of their competitors might start to get in trouble here shortly – why else wait? It’s not like energy services firms (at least the publicly traded ones) are commanding high multiples these days.

The rig services guys are killing themselves right now to stay in business. This cut throat competition can’t hold up indefinitely. BAS has a mark of it falling through sometime in the next two quarters. That’s when they’ll make their big moves.

My HCLP position is up another 5% this morning, pressing gains. The agreement to settle the Baker Hughes lawsuit coupled with a six year supply agreement was a big deal.

This partnership is one of the rare examples of me buying into an expensive equity position. I normally toe the line within certain valuations. However, I was willing to pick up the “pricey” HCLP partnership units because I like the prospects going forward. The partnership is small and the fracking revolution is young.

My expectation is for the HCLP and BAS positions to transform into cash cows over the next five years.

It’s a Friday, and my heart isn’t in this right now. Rather, my imagination keeps running away outside to whatever’s left of Summer slipping away. This is most inopportune, since work is a runaway train.

So, here’s a brief list of things going through my mind right now.

1) War is overrated and oil is begging to get taken down a notch. Tell me when these geopolitical type scares have actually panned out? The last time was under what, Carter? The oil market is well supplied; a few oil traders are just gaming the system to make their year’s. Meanwhile, a US energy revolution is sweeping accross America.

2) Multifamily REITs selling off alongside broader REITs is as careless an act as I can think of. These companies are all 95% plus occupied with rising rates and numerous projects in the pipeline. Tell me who was forecasting that two years ago, other than myself and a handful of others? Yields are only a problem on a case by case basis. Sellers slamming the whole space here are irresponsible.

3) Coal prices and associated companies are unnecessarily low. Natural gas prices have come back nicely from the death throes they were convulsing in last year. The EPA can only do so much to legitimate, legal owners of coal producing assets. There’s this power grid we have that demands base load, after all. And even the most eco-friendly of Californian millionaires will not tolerate their precious Tesla batteries running dry. Even with natural gas transitioning taking place, there’s a price point where coal comes back online Everyone hates coal, making it pretty attractive right now.

4) I still fear for the wellbeing of Tesla longs, but I can only care so much. On a different note, there was a Seeking Alpha article about battery supply problems that made no sense. It was trying to argue that batteries will constrain Tesla production, but it pointed out that Tesla’s primary competitors are transitioning away from using the kinds of batteries that make up Tesla’s product. At most, I could see competition for batteries pushing up Tesla’s costs, keeping their vision of an affordable mainstream electric vehicle at bay (for longer than longs could survive, I might add). But at some point, Tesla forcing helping to force battery prices higher causes the electronics manufacturers to convert to the newer battery options, freeing up capacity. Besides 100,000 vehicles a year for Tesla isn’t exactly a plague of rats.

5) The natural gas and fracking boom will run further than any of you can possibly fathom. There is no reason not to buy into this. The go to corporations are the specialists who make the backbone of the extraction process (like BAS) and coporations or partnerships supplying the materials that make it all possible (I like HCLP). Risks that the frackers will saturate the market with so much gas and oil that it will collapse profits have blown over. Chesapeake energy was last year. Aubrey McClendon’s ass has been fired.

6) I’m not sure I can like this DRI position if prices for commodities keep pushing higher. But there was plenty of opportunity for the resturant business to line up cheap access to the raw foodstuffs they need for any number of months into the future. So I’m going to hope for the unexpected. Meanwhile, the job market is humming along. Now go eat at Red Lobster tonight.

7) The uranium market disgusts me. I knew it would blow out again. So far CCJ is taking the damage in stride. There’s a major fuel supply issue looming, but reactors just use up fuel so slowly, it takes forever for it all to wind its way through the system. It would be nice if the Japanese could get off their culturally slow-as-shit asses and maybe do something expediently for once in their lives. No, no, please, by all means continue to import oil and coal to your resource depleted island for sky high prices. Who needs an economy, especially with the egregious demographics problems of a nation like Japan?

8) I would rather lick an ant hill than let the sequal to the Catholic Church circa 12th century France come back to power – whether it’s crosses painted on the walls or crescents. To hell with both sides of the Syria civil war. If we’re going to let loose the arsenal, we should at least do it indiscriminately.

9) We are going higher.

I am back in the office, and cannot help but notice that you took quite the liberty of my free tap water policy while I was away. I shall not make that mistake twice.

Upon opening the door to the 9th floor (which croaked with the strain of old wood to my push), I spied the portal in the corner and immediately was overcome with the urge to buy lots of BAS. So that is what I did.

I added to BAS for $11.55.