Jump to content

Is Shale Gas a Bubble


rukawa
 Share

Recommended Posts

Is shale gas a bubble? Do people think that shale gas reserves and sustainable production is overstated. And if this is the case and natural gas prices are going to increase what are the best companies to invest in? Gazprom? Encana?

 

 

Link to comment
Share on other sites

I'm more worried about what happens with gas and oil prices when half the world starts drilling shale gas:

http://en.wikipedia.org/wiki/List_of_countries_by_recoverable_shale_gas

 

Buy the "pick and shovel" manufacturers is a thought that keeps popping up in my head…

 

Agreed.  That's why I don't own any oil and gas producers.  Rather own the companies that will make money the more oil that's produced, rather than be subject to pricing. 

 

Frac sand providers are the most leveraged to shale oil production in the North America.  The three public names are EMES SLCA and HCLP in that order.

Link to comment
Share on other sites

  • 1 month later...

I was reading yesterday's Globe and Mail and they were talking about how Encana is shifting away from Natural Gas and towards Liquids. But what I found interesting is that the article criticized Encana for investing in Shale Gas because its unprofitable.

 

The conclusion for me is that many shale gas plays are unprofitable and eventually nat gas prices will rise a lot. Conventional shale gas producers should rise in value too. Encana which is increasingly diversifying out of conventional nat gas is making a huge mistake. But now I realize how much companies are driven by quarterly earnings.

Link to comment
Share on other sites

I was reading yesterday's Globe and Mail and they were talking about how Encana is shifting away from Natural Gas and towards Liquids. But what I found interesting is that the article criticized Encana for investing in Shale Gas because its unprofitable.

 

The conclusion for me is that many shale gas plays are unprofitable and eventually nat gas prices will rise a lot. Conventional shale gas producers should rise in value too. Encana which is increasingly diversifying out of conventional nat gas is making a huge mistake. But now I realize how much companies are driven by quarterly earnings.

 

I am not too sure on this. At this stage, fracking technology is fairly commodity technology. If gas goes up enough, gas producers can always switch back from liquid. I think its the question of last man standing and whether or not the capital market remains open. If the capital market closes for some reason, a few years of underinvestment can make the remaining players very rich.

Link to comment
Share on other sites

Yup - all depends on whether you're a low cost player (and can remain so) or not.

 

Even the pick and shovel mfrs had better have a sustainable competitive advantage or they just pass profits on as lower prices.

 

National Oilwell might be a good one there.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...