natural gas price

[Myth465]

Gas futures are now getting towards $3.99. I am looking for a pullback in some of the key stocks. The issue still remains the catalyst. With half the rigs not working we still have equal supply and demand. What will fix this?

[oldye]

"what will fix this?"

 

As Ken Peak once said, the cure for low prices are lower prices! Although it probably wouldn't hurt if Ukraine and Russia were to go at it again. 

[Myth465]

I guess these things are never long term. You just have to trade the cycles.

[Myth465]

Another great presentation by Ken Peaks.

 

http://www.contango.com/investor/events.htm

[biaggio]

http://www.peyto.com/ia/pmr/20100402PMR.pdf

 

recent brief commentary on natural gas industry, Monthly letters helpful to those like myself learning about nat gas industry.

[arbitragr]

Lot's of supply right now. I think Anadarko, or one of them, have been producing gas at very efficient rates, lowering cost and pumping more supply onto the market, leaving higher cost operators at a disadvantage, especially when it comes to technology (shale gas?? off the top of my head as i write this, don't have much time ... )

[biaggio]

http://www.theglobeandmail.com/globe-investor/investment-ideas/features/taking-stock/a-contrarian-makes-another-call-this-time-natural-gas/article1538686/

 

...his analysis (and more than 50 years of experience) tells him that gas inventories are about to get a lot tighter, that new supplies are overstated, and that prices are headed north of $8 by the end of summer.

“Everyone thinks [shale gas] is going to solve all of our problems. There are very optimistic estimates about the economically recoverable volumes of gas from this new resource,”

 

The reality, he argues, is that shale gas deposits are a tiny part of the North American production pool – and they are already depleting fast.

 

Mr. Groppe says that while the average depletion rate in conventional gas wells is about 25 per cent (in other words, if you didn't drill at all for new wells, production would decline by a quarter each year), shale gas shows even more rapid depletion – output tumbles, on average, 45 per cent in the first year for shale wells.

 

shale gas accounts for just 6 per cent of U.S. natural gas production.

[biaggio]

http://www.sys-con.com/node/1830407

 

"Peyto grew production 53% year over year or 32% per share since Q1 2010, while generating first quarter operating margins of 75%(1) and profit margins of 32%...Peyto's unwavering focus on cost control maintained all-in cash costs below $1.50/mcfe. The strong financial and operating performance resulted in an annualized 15% Return on Equity (ROE) and 13% Return on Capital Employed (ROCE)."

 

I am impressed by all in cost of $1.50/mcfe. Seems that it will do well even if prices stay between $4 and $5.

 

Probably fairly priced at just under $20  (= 10 x FFO or the value of their reserves discounted @10%).

 

Anyone else follow or own this?

[triedtestedand]

biaggio:

 

I've tracked PEY since they were first listed as a TSX company ... making one of those "lost opportunity" mistakes a decade ago by buying at $.60, and selling at $.95 (thinking I was really smart) ... before they then went on to peak at >$35 a few years later. 

 

They are an incredibly well managed company ... their founders are Buffett type investors, and their structure/incentivation is very well aligned with shareholder interest.  They do well as low cost producer, and their CEO's monthly report is a great read.

 

I bought back into them a few years ago when there was concern about their revolving line of credit, and the stock (well actually, trust units then) went down to $6 ... yielding >15% as a consequence, it was a no-brainer ... I sold out last year at around $15, obviously a bit early in retrospect, largely on premise that natural gas prices would remain depressed with all this shale gas coming into the market, and so there wouldn't be catalyst for PEY to crank up to former lofty levels.

 

[BargainValueHunter]

Just in case no one has noticed...

 

NG prices are collapsing today.

 

Opportunity?

[plato1976]

why it's an opp? you believe the price will bounce back quickly?

 

Just in case no one has noticed...

 

NG prices are collapsing today.

 

Opportunity?

[Liberty]

Energy investors are getting coal in their stocking this year.