David Fessler

David Fessler
Contributor since: 2008
Company: The Oxford Club
Yes agree with David G. sounds like Mr. Petersen should have bought Tesla stock at $17 instead of that silly penny stock he used to peddle in his previous articles. Why isn't he talking about that now? Seems the only way he can get attention is to write negative articles about anything. It's a shame, because he otherwise is a good writer.
Here's data, right from the EIA...
Below are the subsidy levels for all the different types of energy, just for 2007. The data is right from a 2008 report from the EIA.
Renewables (in total) $4,875,000,000
Refined Coal: $2,370,000,000
Natural gas: $2,149,000,000
Nuclear: $1,267,000,000
Coal $932,000,000
So let’s look at the government’s fuel subsidies in a different way. How many “subsidy dollars” does it take to produce, say, one megawatt-hour of electricity, for each of those subsidized forms of energy? Again, we turn back to the EIA data:
Refined Coal: $29.81/Mwh
Solar: $24.34/Mwh
Wind: $23.37/Mwh
Nuclear: $1.59/Mwh
Coal: $0.44/Mwh
Natural gas $0.25/Mwh
Before you jump up and down and say "see I told you so" while solar and wind are high, they are also the newest on the list.
All you have to do is look at coal to know solar and wind will play a big part in our nation's energy future, and without all the pollution that goes along with all the others.
I don't usually weigh in on other author's articles, but this one is so poorly written, researched, biased, and myopic in its views, I felt it necessary.
First of all, "ridiculous amounts of land" aren't required. WalMart alone has over 35 square miles of store roofs in the U.S. alone. Similarly large tracts of "land" are available on the tops of other big box stores like Home Depot, Lowe's, etc. Most industrial parks are loaded with flat-roofed warehouse buildings that would require little if any modification to the building's structure to accommodate solar.
If solar was installed on these buildings, it would eliminate the need for other, more polluting forms of generation.
In terms of solar subsidies, it obviously comes as a surprise to you that every single form of energy generation in the United States receives some form of subsidy. Every one. Clearly you need to do a little more research on this point. I mentioned it in an article I wrote on solar a few months ago.
http://seekingalpha.co...
I spent most of my life in the semiconductor business. Solar cells are nothing more than large semiconductors. Like their smaller counterparts, mass production and advances in manufacturing technology continues to reduce their costs.
The first cellphones were thousands of dollars. Now they are smaller, orders of magnitude cheaper, and pack more computing power than mainframes did just a decade ago.
Solar costs will reach grid parity, storage battery technology and costs will also continue to come down, and in spite of your short-sighted view, it will be a major source of power both here and around the world. Technology marches on, and it does for solar as well.
Thanks for your kind words. Having spent 25 years in the semiconductor business in a previous life, I know that technology marches on when it comes to semiconductors, and just about everything else for that matter.
It won't be long before the economies of scale will do the same for LED lighting. That will, for the most part, relegate CFLs and incandescents to dust bins and museums.
I saw it happen with semiconductors when I was in the industry, and it's continued to happen in the 12 years I've been out of it.
Just look at the technology packed into a current smartphone, unthinkable at any price just a decade ago.
LED lighting will eventually transform the energy picture in the U.S. and elsewhere. Cree will certainly be one of the drivers and beneficiaries of that transformation.
I beg to differ, and so do two of the largest operators in the Niobrara. Two days ago, both Anadarko and Noble Energy both reported excellent Niobrara drilling results in the Oil and Gas Journal.
"Excellent economics" was a phrase used by Anadarko, and Noble plans to double its Niobrara rig counts there in two years.
They wouldn't be doing that if the play was uneconomical. Both companies have done enough drilling there to de-risk their own acreage.
Here's the article verbatum: Two key operators have provided positive assessments of horizontal drilling results in the emerging Niobrara play in giant Wattenberg field in the Denver-Julesburg basin.
Anadarko Petroleum Corp. said its well results in the Niobrara and Codell formations indicate excellent economics and a net resource of 500 million-1.5 billion bbl of oil equivalent, and Noble Energy Inc. said its Niobrara activities have revealed an estimated net risked resource of 1.3 billion boe, up more than 60% from 2010.
Anadarko, producing from only 11 horizontal wells within field boundaries, said the company has 1,200-2,700 future drilling locations with estimated ultimate recoveries of 300,000-600,000 boe/well, 70% liquids. It put costs at $4-5 million/well. Initial well rates have averaged 800 boe/d.
Initial rate at Anadarko’s best horizontal well to date, the Dolph 27-1HZ, was 1,100 b/d of oil and more than 2.4 MMcfd of gas. The well paid out in less than 4 months, and EUR exceeds 600,000 boe. The play should become self-funding in short order because payouts are expected to average 10 months, Anadarko said.
At more than 70,000 boe/d, Anadarko is the largest net producer in the basin. It holds more than 350,000 net acres in Wattenberg and operates more than 5,200 wells with an average 96% working interest and 88% net revenue interest.
Anadarko will run extensive tests to define the optimum spacing and lateral lengths for the Niobrara and Codell. It plans to be running seven rigs drilling Wattenberg horizontal wells by the end of 2012 and drill 160 horizontal wells compared with 40 in 2011.
Anadarko said it is exploring other liquids-rich horizontal opportunities on its 550,000 net acres in the greater DJ basin outside Wattenberg and 360,000 net acres in the Powder River basin. Both prospective for the horizontal Niobrara and “other horizons that we will evaluate over time.”
Noble Energy said it holds more than 840,000 net acres in the DJ basin and expects to double its 2011 net production of 67,000 boe/d, 54% liquids, by 2016.
Niobrara horizontal drilling, Noble Energy said, has derisked the legacy portions of Wattenberg and has expanded the economic limits of the field by 67%. The company’s 58 horizontal wells in the Niobrara are yielding 14,000 boe/d of net production, up more than 20% since Sept. 30.
“Strong returns continue to improve with recent production performance exceeding previous results. The company’s most recent 18 wells are expected to achieve an average EUR of 355,000 boe, which is a 22% improvement over an average EUR of 290,000 boe from 23 early wells,” Noble Energy said.
Within 2 years, Noble Energy plans to double its horizontal Niobrara rig count and well completions.
Great idea. The chances of this administration doing that are essentially zero. But watch what happens when oil spikes well above $100 a barrel again. And it will.
Actually, ALL of the continually dwindling output from the Alaska pipeline is soaked up by west coast refineries. Alaskan oil hasn't been exported since 2004.
Gasoline prices are high because the area you live in is pipeline and refinery limited. It's all about supply and demand.
Alaskan oil futures trade just like West Texas Intermediate on the futures exchange. The only difference is that it's the same refineries buying the output all the time.
Hope this helps.
The article reflects not only todays prices, but the forecast for this winter as well. Natural gas will look even more attractive as the price for oil continues to rise, which it most assuredly will.
Relative to oil, natural gas will remain cheap on a Btu to Btu (apples to apples) basis.
Agreed. Battery storage, like any other technology, is continually evolving. Technology marches on, and grid storage is on its way to becoming big business as more and more small-scale generation sources (solar panels and wind generators) end up on the distribution side of the grid.
Hi Joe,
Please don't shoot the messenger...
I'm not suggesting Germany's tax rate of 2.6 times the money needed is correct. But neither is America's collecting just 72% of the money needed and expecting roads to be in good condition. 100% would be the right number, IMHO. People who use the roads should pay for them. Increasing the gasoline tax is such a no-brainer, it's no wonder Congress hasn't taken action...
They will also have the capability to supply energy back to the grid during times of peak load, thereby eliminating the need to build additional "peaking plants", which are very expensive to run. Electric cars will still be cheaper than $4-5 a gallon gasoline...
I know I'll get a negative response from the "moving the pollution from the tailpipe to the smokestack" crowd, but I agree with your assessment of price eventually altering behavior.
Right now, there aren't a whole lot of EV's sitting in dealer lots waiting to be snapped up. That's simply an initial supply issue, just like with any new product (Apple's iPhone, iPad, etc.).
In addition, there aren't charging stations everywhere you go to eliminate the perceived "range anxiety" many would-be adopters of EV's are thinking will be a problem for them.
At least not in Pennsylvania, where I live. But eventually, and in relatively short order ( 1-3 years), both these problems will disappear. The EV is a real game-changer.
In terms of the tailpipe to smokestack issue, that depends on where you live, and what power company you are using. You can, of course, buy your power from a totally "green" supplier.
We certainly won't be weaned off fossil fuels anytime soon, but high prices will certainly make it happen faster, IMHO.
Thanks for pointing out the error. The company that was supposed to be the third company referenced in my article was in fact, Golar LNG Ltd. (Nasdaq:GLNG).
You are correct. To my knowledge, Frontline has no exposure to LNG. Sorry for the confusion!
Gassy13, Please don't shoot the messenger, and please don't ignore the facts. I'm not suggesting all the nuclear plants in the world all of a sudden have a problem. Others are all ready doing that. I'm an investor, not a politician. I look at life, sectors and companies from an investment standpoint. If I thought the nuclear sector was a compelling investment at this point, I'd be writing an article about it. In light of recent events, I don't think it is. Natural gas, on the other hand, is severely undervalued compared to other sources of energy. That's why power companies are switching to it in droves. That will eventually raise its price, and the price of companies in the sector. Supply and demand is an amazing concept... and it works every time.
Agreed. The speculators add an artificial component to all commodities, and it's sometimes tough to sort out how much they are affecting the price of a given commodity at any given moment. Throw geopolitical events and "acts of God" and you've got a great new table game for Las Vegas...
If you were shorting it, I might agree with you, but this company's been dropping like a stone since the beginning of the year. It's off $12 a share. I suppose once it returns to its historical average of about $30 a share it might become a buy again, but I wouldn't touch it here, especially with copper prices in retreat...
Your observations on natural rubber is very timely. I just finished an article today that will be published on Monday over at Investmentu.com
Seeking Alpha will probably grab it the same day, but if you want to read it a few hours earlier, check over there.
Your observation is spot on... both copper and natural rubber are extremely volatile commodities... not for the faint of heart. I think a much better way to play them is the long term trend. I'm not aware of a natural rubber ETF, but there's an idea...
Anything that happens in China these days, positive or negative, will have an impact on commodities, and copper is no exception. Even if China slows down just a little, copper demand will still far exceed supply. This one's a no brainer long-term. I'm not a short-term trader, so I tend to ignore short-term market fluctuations.
Copper is the Apple of the commodities world... but then so are steel and natural rubber, which are the subjects of my next two articles. Stay tuned... :)
Not sure I agree with you on that one. The demand in China and India -- if it continues as it currently is -- will far outstrip the ability of the world's oil companies to supply the increased demand. China alone will use all of the current supply by by 2030 if its demand continues to increase at current rates.
The only reason things "appear' to be OK now is the depressed demand from OECD countries, most of whom are still mired in recessions to some degree...
Petrobras is the leader in deepwater exploration, drilling, and production. Much of the technology required was invented by them. They claim anything over $40 a barrel is cost effective for them to go that deep. While it's clearly expensive to drill down 5-7 miles, the size of the reservoirs they are producing from, as well as the quality of the oil makes it cost-effective over the life of the reservoir. Drilling costs are amortized over the life of the reservoir, which could be 20 years or more.
There's a lot more oil below Brazil's pre-salt and sub-salt fields than has been publicly disclosed. Just look at their website and how many new fields they've announced in the past year, and you begin to get the idea...
I personally have owned Seadrill for a year or so. I too think it's a great company, and a great way to play the deep water drilling space. Its services will become in even greater demand as deepwater drilling continues to gain traction in other parts of the world. It will be sometime before the U.S. government allows it again here, much to our detriment, I believe.
Clearly the BP disaster was human error. The technology is proven, as long as corners aren't cut...
John,
I've read many of your articles, and while your analysis is generally correct with regards to what is happening today, you conveniently ignore the fact that "technology marches on... continually". I spent over 20 years in the semiconductor industry, and saw advances that made my head spin. In the ten years since I've left, the advances have been even more amazing.
With EVs, we are at the very beginning. Battery and vehicle technology will continue to make them more efficient over time.
You can't possibly expect all the coal and fossil fuel plants to be replaced overnight. But coal plants are being retired on a regular basis, or being converted over to cleaner burning natural gas. That will continue. So, over time, the "long tailpipe argument" will have less and less merit, I believe.
Global warming aside, getting off foreign oil is crucial to the future economic health of the United States. Spending $1 billion every day to purchase foreign oil is insanity. Putting it to use here on EVs and CNG vehicles (ala Pickens) and the associated refueling/recharging infrastructure makes more sense.
Rome wasn't built in a day, but if we don't get started, we'll never get there. I think there's no question we're going to be beholden to fossil fuels for a long time. But we can certainly lessen our foreign dependence on oil, and improve our nation's security in the process.
The EV industry is already creating thousands of engineering and production jobs, and it's just getting started. As far as lithium-ion technology goes, there's a lot of money going to be made investing in companies who mine and produce it, regardless of whether or not it ends up being the final EV battery technology. Right now, it seems to be building quite a head of steam.
I for one think EVs are here to stay, and investors who position themselves correctly stand to make a lot of money as the adoption of them increases. Fleet EVs are already being eagerly accepted by the likes of Fed Ex and UPS. They can't wait to begin replacing their diesel guzzling delivery vehicles.
We shall all have to wait and see what happens, but I believe EVs are building quite a head of steam. Arguing about how clean the power is that is recharging them is a moot point. That's a separate problem, and one that's being fixed. When's the last time you saw a new coal-fired plant being built here?
All the Best,
Dave Fessler
All good points, Carl. Thanks for pointing out the other plays EOG has a working interest in. It just strengthens its share value.
As natural gas use continues to rise, so will its price. That will be nothing but good news for EOG shareholders...
Dave Fessler
Appreciate all the comments. As several posters have pointed out, I should have more fully explained all the different kinds of REITs. I did point out that the two I mentioned are agency-backed mREITs.
As several posters have also correctly pointed out, as long as short and long term rates and inflation remain status quo, these two stocks and others like them will remain compelling investments.
Commercial REITs are a completley different animal. In suburban America, there is a negative absorbtion of commercial real estate space. In the last year over 15,000,000 square feet of additional commercial real estate came onto the market. This has had the effects of keeping prices depressed, vacancy rates high, and investments in them performing poorly.
New York City is an exception, and there are real bargains to be had there in commercial real estate now. I'm not aware of any commercial REITs that focus exclusively on NYC real estate, but there may in fact be one.
John, what about the 800lb gorilla in BEVs favor in the form of fleet adoption of BEVs? BEV adoption by fleets is something that's being overlooked here. Most large fleet owners are already testing and experimenting with BEVs, and since most of them travel far less than 100 miles in a day, "range anxiety" isn't a problem for them.
One of their biggest costs is fuel and maintenance, and a BEV will likely cost less for both. I haven't seen any cost spreadsheets from fleet owners, and it's likely we never will. The point is that once fleets start using them en-masse, the public won't be far behind.
As with any new technology, BEVs will experience fits and starts. But with nearly ALL of the big automakers announcing entire families of BEVs, it will continue to be one of the hottest sectors for investment over the next 5-10 years, IMHO.
The biggest problem the car manufacturers will have is keeping up with demand. I think you'll find the EIA numbers will be way off... on the low side. The big variable, of course is trying to predict what the adoption rate of them will be by Americans and others around the world. $5 gasoline will certainly help to push their thinking in favor of them.
I concur with a previous poster about the number of errors in your article. Here's another one: "The largest rock production is in Australia, while the largest brine production is in Chile and Bolivia."
Better check your facts: Bolivia, may have huge lithium reserves, but it produces no lithium, and it likely won't for some time. It's government won't partner with outside companies, and it doesn't have the technical knowledge to develop its reserves on its own.
A more accurate statement would be "The largest rock production is in Australia, while the largest brine production is in Chile and Argentina."
As previous posters have said, distributions from MLP's are considered a return of capital rather than taxable income. There was some indication that an IRS ruling was pending on this, but until they definitively make a ruling, your best bet is to consult with a tax attorney. Everyone's case is different...
Regardless of where solar panels are made, the installers and service people have to live and work in America. With a little incentive at the Federal level, we could have a thriving green energy business in this country. There's a reason 45% of all the panels made in the world - including China - go to one country: Germany.
Germany's successful implementation of the feed-in-tariff concept has resulted in a thriving green energy sector there, and the country now gets over 10% of its total electrical energy needs from the sun.
So it's possible to have a viable green sector. Sadly, but of no surprise to most Americans, the 400 people in Washington (Congress) operate in an apparent vacuum from the rest of us. In my humble opinion, it's doubtful our energy dilemma will be solved by them anytime soon.
If you weren't so impressed with yourself, perhaps readers could take what you say with something more than a grain of salt.
Anyone who constantly refers to themselves as "brilliant" -- which you do in most of your posts -- loses credibility rather quickly.
Any "brilliance" you may have -- and I'm really going out on a limb here -- will come out in your writing.
Perhaps you should start out your research sessions with a slice of humble pie. Wash that down with some factual research, and you might just end up with an article that's somewhere north of gibberish...
Otherwise, it barely even rates as entertainment, let alone useful.
Hello John,
Great question, and yes roughly 75% of Rosetta's acreage is in the liquids-rich window of the Eagle Ford.
The company has a total of 64,000 net acres in the Eagle Ford area, which gives them about 48,000 in the high oil pay area.
With oil prices set to rise globally for the foreseeable future, this certainly bodes well for the company's future prospects.
Good Investing,
Dave
Alphausr is correct. New sources of rare earths are being actively explored and exploited as a result of China's potential plans to hoard more of its supply. I don't believe Nidec's operations - or that of any other manufacturer that uses them - will be affected in the long run.
Australia also has a large deposit of rare earths.
Ignoring the collective intelligence and experience of oil and gas exploration companies, their engineers -- who each have more experience than the number of years you've been on the earth -- and the incredible technology they have at their disposal, paints a very biased and warped view of reality of the oil and gas industry.
About the only job you're likely to garner in the energy industry is making pretty graphs for others who are giving you the real data. Good luck. You'll need it.