Natural gas

[fareastwarriors]

http://www.businessweek.com/articles/2013-03-22/natural-gas-prices-and-profits-have-come-roaring-back#r=hpt-ls

 

 

Natural Gas Prices, and Profits, Have Come Roaring Back

 

[muscleman]

What's the best way to play the nat gas theme? I have XCO, SD and CHK. I think each of them has a different risk profile. Anything else that would be interesting to buy?

[fareastwarriors]

http://washingtonexaminer.com/article/2525150

 

America's oil and gas revolution

 

[ItsAValueTrap]

Anything else that would be interesting to buy?

 

Contango Oil & Gas  MCF:

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/mcf-contango-oil-gas/msg93785/#msg93785

 

Contango got hit really hard by the recent drop in natural gas liquids prices.  NGLs used to be their main source of revenue.  I think that MCF is clearly better managed than almost everybody else out there.  What they're doing makes sense and the long-term track record is amazing (you can go back all the way to Zilkha Energy... Contango's exploration partners are from Zilkha).

 

[muscleman]

Anything else that would be interesting to buy?

 

Contango Oil & Gas  MCF:

http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/mcf-contango-oil-gas/msg93785/#msg93785

 

Contango got hit really hard by the recent drop in natural gas liquids prices.  NGLs used to be their main source of revenue.  I think that MCF is clearly better managed than almost everybody else out there.  What they're doing makes sense and the long-term track record is amazing (you can go back all the way to Zilkha Energy... Contango's exploration partners are from Zilkha).

 

Thank you very much! I will look into that! :)

[Parsad]

Energy Boom Ripples Through U.S. Economy.  Cheers!

 

http://finance.yahoo.com/news/energy-boom-ripples-us-economy-192914084.html;_ylt=AoV3OrknK0JoX9Vry.a9B_WiuYdG;_ylu=X3oDMTQ4cmViMXBjBG1pdANDTkJDIFRvcCBTdG9yaWVzBHBrZwNhZmU1MzUzYi0yMzNjLTM0ZWItOWJmOC00MzRjY2EzZWFiY2YEcG9zAzEEc2VjA01lZGlhQkxpc3RNaXhlZExQQ0FUZW1wBHZlcgNjZGYxZTg1NC05NTg4LTExZTItYjczOS1jM2UzYWM1NTc4ZDU-;_ylg=X3oDMTFpNzk0NjhtBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25z;_ylv=3

[Ross812]

What's the best way to play the nat gas theme? I have XCO, SD and CHK. I think each of them has a different risk profile. Anything else that would be interesting to buy?

 

I belive Devon Energy to be the highest quality gas rich energy company...

[fareastwarriors]

http://www.bloomberg.com/news/2013-03-27/oil-demand-plateau-seen-as-natural-gas-favored-chart-of-the-day.html

 

Oil-Demand Plateau Seen as Natural Gas Favored

[fareastwarriors]

Natural-Gas Market Tries a Balancing Act

 

 

http://online.wsj.com/article/SB10001424127887323916304578400821099709516.html?mod=WSJ_hp_LEFTWhatsNewsCollection

SB1000142412788732391630457840082.pdf

[muscleman]

Does anyone have a solid view on the natural gas prices? Last week is supposedly the last storage withdraw week, and normally gas demand in April is the weakest, yet the gas price keeps going up. It is over $4.11 today. :o

[T-bone1]

If we have a hot summer like last year, the price will probably continue to rise.  If we have a "normal" summer it will probably fall from here.  Given that I am not a weatherman, if I was running an E&P, I would be hedging right now.

[ItsAValueTrap]

I think that natural gas prices are really hard to predict.  Very, very few people would have guessed that natural gas would dip below $3. 

e.g. Ken Peak of Contango didn't; his stock went up something like 40x since inception.  Even the smartest people in the business can't figure it out.

[Parsad]

Very difficult to predict.  But I suspect we've bottomed, as there is a real transition happening where industrial energy use is changing to natural gas.  There are enough projects, ideas, etc happening, where you are starting to get some equilibrium between supply and demand at a higher, more natural level.  Too much supply for gas to go back up to $7-8 right now, but not enough where $5-5.50 is quite realistic.  Cheers!

[ItsAValueTrap]

The transition to more natural gas usage might take some time.

 

It takes a while for gas power plants to be approved and built.  e.g. here in Ontario a natural gas plant was denied due to NIMBYism.

I presume vehicles need the refueling infrastructure (and some economies of sale) for natural gas to be viable and economic.

Exporting natural gas will take a long time as the plant will take a long time to be approved, financed, and built.

etc. etc.

 

In the short run, natural gas producers aren't making money.  Natural gas production exists on a continuum (coalbed methane is probably the cheapest)... a lot of the cost curve isn't profitable.  Drilling has gone down significantly and shale gas wells tend to deplete fast, so you might expect supply to go down a little soon.  Supply changes faster than demand.  It takes far less time to permit and drill a shale gas well than it is to build a natural gas power plant.

[Zorrofan]

The transition to more natural gas usage might take some time.

 

It takes a while for gas power plants to be approved and built.  e.g. here in Ontario a natural gas plant was denied due to NIMBYism.

I presume vehicles need the refueling infrastructure (and some economies of sale) for natural gas to be viable and economic.

Exporting natural gas will take a long time as the plant will take a long time to be approved, financed, and built.

etc. etc.

 

Are there not several export terminals coming on line over the next few years? I believe one in Canada starts in 2015 and there are several in the US with start up dates in 2017?  When you are old like me 2017 is not that far away.....

 

cheers

Zorro

[oldye]

'Natural gas rotary rigs totaled 389 as of Friday, March 28, according to data released by Baker Hughes Incorporated. This represents a decline of 29 rigs from the previous week and is the first time it has fallen below 400 since 1999. Oil rigs rose by 30 to 1,354'

 

 

Rig counts are what we want to watch here, and they're down 40% YOY!  I think I remember Ken Peak saying that the depletion rate on natural gas wells is around 30% annually, and nat gas in storage has dipped  below the 5 year average. This should be relatively bullish for NatGas and SD. 

 

Cheers!

[ubuy2wron]

My  2nd largest holding and one of the few things I am willing to buy today is Encana (tho I did buy a bunch of ABX two days ago)

[Guest valueInv]

Here's an encouraging sign:

 

http://www.bloomberg.com/news/2013-04-01/stealth-moves-tankers-13-500-miles-in-dash-for-u-s-gas-freight.html

[ExpectedValue]

Canadian sites are Kitimat and Douglas Island, should add up to just shy of 1 bcfd.

 

US sites that should be operational by 2017 would be Cheniere/Sabine Pass and potentially the Freeport LNG terminal. That's 4.4 bcfd.

 

To give context, US nat gas production is around 70 bcfd right now.

 

Trucks could be pretty helpful, I estimate they can do around 11 bcfd in additional demand but there's no really time horizon set for that, I doubt it will happen by 2017.

 

Keep in mind that there's plenty of really cheap gas out there. Only about 33% of current production comes from dry gas wells. The rest is coming from wells where you get NGLs or oil, where the economics can be much friendlier.

 

When you look strictly at dry gas wells, it's really tough to beat the Marcellus, that can really ramp up and add -A LOT- to supply while being economical at $3.50-$4.

[muscleman]

Canadian sites are Kitimat and Douglas Island, should add up to just shy of 1 bcfd.

 

US sites that should be operational by 2017 would be Cheniere/Sabine Pass and potentially the Freeport LNG terminal. That's 4.4 bcfd.

 

To give context, US nat gas production is around 70 bcfd right now.

 

Trucks could be pretty helpful, I estimate they can do around 11 bcfd in additional demand but there's no really time horizon set for that, I doubt it will happen by 2017.

 

Keep in mind that there's plenty of really cheap gas out there. Only about 33% of current production comes from dry gas wells. The rest is coming from wells where you get NGLs or oil, where the economics can be much friendlier.

 

When you look strictly at dry gas wells, it's really tough to beat the Marcellus, that can really ramp up and add -A LOT- to supply while being economical at $3.50-$4.

 

What are the best ways to play this major trend? We can buy gas producers with the lowest cost, like XCO and UPL. We can also buy oil producers with a lot of gas in production, like SD.

What other options do we have? Pipeline construction companies? Auto companies that will launch nat gas trucks?

[Guest hellsten]

What are the best ways to play this major trend? We can buy gas producers with the lowest cost, like XCO and UPL. We can also buy oil producers with a lot of gas in production, like SD.

What other options do we have? Pipeline construction companies? Auto companies that will launch nat gas trucks?

 

I don't know. Maybe it's like a good old gold rush and Buffett, Munger, Weschler and Combs have found the best stock (for them):

http://www.dataroma.com/m/stock.php?sym=NOV

[Zorrofan]

Canadian sites are Kitimat and Douglas Island, should add up to just shy of 1 bcfd.

 

US sites that should be operational by 2017 would be Cheniere/Sabine Pass and potentially the Freeport LNG terminal. That's 4.4 bcfd.

 

To give context, US nat gas production is around 70 bcfd right now.

 

Trucks could be pretty helpful, I estimate they can do around 11 bcfd in additional demand but there's no really time horizon set for that, I doubt it will happen by 2017.

 

Keep in mind that there's plenty of really cheap gas out there. Only about 33% of current production comes from dry gas wells. The rest is coming from wells where you get NGLs or oil, where the economics can be much friendlier.

 

When you look strictly at dry gas wells, it's really tough to beat the Marcellus, that can really ramp up and add -A LOT- to supply while being economical at $3.50-$4.

 

What are the best ways to play this major trend? We can buy gas producers with the lowest cost, like XCO and UPL. We can also buy oil producers with a lot of gas in production, like SD.

What other options do we have? Pipeline construction companies? Auto companies that will launch nat gas trucks?

 

Thanks! WEB plays the oil boom via rail shipments. I recall reading many years ago that the people who got rich during the gold rush were those selling shovels....we need to find our "shovel"  ;D 

 

 

cheers

Zorro

[fareastwarriors]

Group's U.S. Natural-Gas Reserves Estimate Grows 26%

 

 

http://online.wsj.com/article/SB10001424127887323820304578412980022810100.html?KEYWORDS=natural+gas

Group_U.S._Natural-Gas_Reserves_Estimate_Grows_26.pdf

[muscleman]

Canadian sites are Kitimat and Douglas Island, should add up to just shy of 1 bcfd.

 

US sites that should be operational by 2017 would be Cheniere/Sabine Pass and potentially the Freeport LNG terminal. That's 4.4 bcfd.

 

To give context, US nat gas production is around 70 bcfd right now.

 

Trucks could be pretty helpful, I estimate they can do around 11 bcfd in additional demand but there's no really time horizon set for that, I doubt it will happen by 2017.

 

Keep in mind that there's plenty of really cheap gas out there. Only about 33% of current production comes from dry gas wells. The rest is coming from wells where you get NGLs or oil, where the economics can be much friendlier.

 

When you look strictly at dry gas wells, it's really tough to beat the Marcellus, that can really ramp up and add -A LOT- to supply while being economical at $3.50-$4.

 

What are the best ways to play this major trend? We can buy gas producers with the lowest cost, like XCO and UPL. We can also buy oil producers with a lot of gas in production, like SD.

What other options do we have? Pipeline construction companies? Auto companies that will launch nat gas trucks?

 

Thanks! WEB plays the oil boom via rail shipments. I recall reading many years ago that the people who got rich during the gold rush were those selling shovels....we need to find our "shovel"  ;D 

 

 

cheers

Zorro

 

Either find shovels, or find existing undervalued gold mines. But never buy junior companies that has nothing except a promise to find gold mines.

I think the pipeline companies could be interesting. Also LNG exporters.

[muscleman]

Very difficult to predict.  But I suspect we've bottomed, as there is a real transition happening where industrial energy use is changing to natural gas.  There are enough projects, ideas, etc happening, where you are starting to get some equilibrium between supply and demand at a higher, more natural level.  Too much supply for gas to go back up to $7-8 right now, but not enough where $5-5.50 is quite realistic.  Cheers!

 

Is SD your only exposure to natural gas?