MahOyster

There is so much enthusiasm about shale gas. ... capital availability for gas companies was not an issue with gas prices above $4. And the supply was/is acclaimed by the public as ever growing rather than diminishing. Berman details his view here: http://www.theoildrum.com/node/8212. His voice sounds rational and probably that when the availability of capital drys out some carnage will occur for all those companies whose breakeven is above market prices. ... unless gas prices go up sooner rather than later... which may renew the frenzy. The BP Capital consensus view (just like Berman) may be wrong. Nevertheless, his study is convincing - his point is not made out of thin air but reasoned.

I think IFT is not extremely original as an investment idea, but could be worth a look anyway. It was written on VIC (http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/64378) and has since appreciated more than 50%. Still, even at +$4/share, there is room to capture, 50-70%, if: - cash is not wasted (lawyers, SEC settlement) - Bulldog continues their deed - the 10-K does not kill the thesis

I think that natural gas companies resemble a lot with shipping companies. They have to invest a lot of money and then they need a breakeven daily rate (or long term fixed contracts) to stay afloat. Gas companies are very shy in stating their breakeven gas price. Why is that, why are they shy? May breakeven be in the $7 range? Would providers of capital run away if the breakeven would be discussed openly by these companies? I tend to believe Berman is knowledgeable and that $7 he suggests could be a realistic treshold. I would be curious to see the IRR's per well/company for shale gas operators. CHK for instance consumes capital like donuts. What is the real value of their assets? (a bear (realistic) approach/analysis here: http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/19220)

A very interesting presentation by Arthur Berman: U.S. Shale Gas: Magical Thinking & The Denial of Uncertainty (http://www.nicholas.duke.edu/hydrofrackingworkshop2012/presentations/Presentation-Berman.pptx). The author, a widely respected professional in the field, states among otrhers: "The true break-even cost of shale gas is $7/mcf. The price must rise above this cost for companies to survive: Production is impressive but most wells are not profitable. All plays have contracted to core areas a fraction of the size of the play as originally advertised. The shift to liquid-rich shale plays will deflate the gas over-supply and cause prices to rise. Environmental problems will limit the contribution of the Marcellus Shale." And some more trails of Cheesapeke... http://www.rollingstone.com/politics/blogs/national-affairs/rolling-stone-responds-to-chesapeake-energy-on-the-fracking-bubble-20120306#ixzz1oMwnx4gd

This court decision sounds good for Overstock, too.