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Mike Maher  

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  • Solar stocks bounce as market rallies, Deutsche pounds table [View news story]
    In the electricity generation industry, natural gas peaking plants supply the marginal unit of electricity, so in a reverse auction they set the price everyone receives. Lower costs for fuel mean they can bid lower, which means the market clearing price is lower, which means electricity prices are lower. Wholesale power prices in the MISO and NEISO are down ~$20/MWh since 2008. Look at the presentations from Calpine or Dynergy - they tell you that their profits decline as natural gas prices decline.

    Drilling in the US hasn't been put on hold - companies are scaling back 2015 cap ex, but still calling for production growth year over year. The Baker Hughes rig count was down 29 last week to 1811 drilling rigs in the US. That's a 1.5% decrease. And that number is still 60 rigs more than this time last year. Production in the GoM continues to come on, with break even costs well below current prices.
    http://usat.ly/1zX5omj

    All I'm saying is that the oil industry is a classic boom bust industry, and that due to hedges, lots of loans, the need to drill wells or risk forfeiting leases, and differing production costs, assuming that $80 - $100 is going to be the market clearing price forever doesnt make sense. The marginal producer sets the price. Econ 101.
    Jan 9, 2015. 11:00 AM | 1 Like Like |Link to Comment
  • Obama proposes free community college program [View news story]
    How is this being funded?
    Jan 9, 2015. 07:55 AM | 1 Like Like |Link to Comment
  • Solar stocks bounce as market rallies, Deutsche pounds table [View news story]
    Again - SCTY and SunEd dont produce modules, so that point is irrelevant. I value these projects for a living. I talk to the developers in the US. I talk to US government officials in charge of deciding to develop these assets on federal land. I talk to developers working in other countries. I talk to government officials who are in charge of approving energy projects in developing countries. The decline in natural gas prices here has major solar power developers in the US on hold. Declining natural gas and coal prices globally make solar less attractive to developing counties, and that is putting them on hold. These arent my opinions - these are statements I hear from market participants who are in charge of investing in assets.

    Topaz in Cali just energized - 550 MW. Largest on the planet. Desert Sunlight, also 550 MW, also in Cali, set to energize in 2015. Both are the largest solar farms on the planet. Neither is in a developing nation. Ordos in China was suppose to be 2000 MW. FSLR dropped it - since they never got a price locked down.

    Dezee - US solar isnt backed by the governments here in the US? Ever here of the Federal ITC or SREC programs the states have? Ask BP how much federal money they got putting that solar farm out on Long Island. You might be surprised.
    Jan 9, 2015. 01:13 AM | 2 Likes Like |Link to Comment
  • Another cold blast on track for Permian oil patch [View news story]
    Prices are down 50% in 6 months. High cost producers will keep producing to attempt to pay off bonds. Every single domestic E&P I follow has announced a budget reduction, but still predicts year over year growth in production. Prices are still going lower from here, and barring a civil war or attack on Iran/Russia/Saudia Arabia, there isnt going to be a supply drop and prices arent going to just snap back. Everyone appears to think that the $100 barrel that we got use to from 2007-2014 was the norm - what if those prices were the exception?

    Its a commodity business - high prices cure high prices.
    Jan 9, 2015. 12:53 AM | Likes Like |Link to Comment
  • Another cold blast on track for Permian oil patch [View news story]
    Because if you cut production, you get $0 in revenue, and the rest of the producers get to benefit from higher prices that you made possible. In the long run for commodity products, Price = marginal cost. The low cost producer wins, its macroeconomics at work.
    Jan 8, 2015. 04:44 PM | Likes Like |Link to Comment
  • Solar stocks bounce as market rallies, Deutsche pounds table [View news story]
    Those $18 LNG prices were based on $110+ Brent. Brent is at $50, LNG prices will be $8 - $12. Cheap US natural gas means cheap coal, which the US has been exporting rampantly to both China and Europe.

    As for the US not being the most important solar market, the US is the largest single country economy on the planet, the 2nd largest consumer of electricity after China, so its a fairly important market to the power generation industry. And if the analyst's top picks are SolarCity (completely US focused) and SunEdison, which has 44% of its backlog in US projects. Natural gas sets the marginal price, so HH 100% affects power development plans for those companies.

    Rooftop solar is probably competitive in 1/3 of US markets, since it saves the customer not only the generation cost, but also the transmission costs. Thats the most easily addressable market here, but I still can't really figure out when SolarCity starts generating meaningful amounts of FCF. There are a lot of moving pieces and financial games that make that hard for me to wrap my head around.

    I think solar costs coming down is great for the consumer, but its a commodity business, this is still a race to the bottom. Electricity use in the US has been down since the recession, and the rate of growth doesn't look poised to snap back. Lower electricity prices make putting solar panels on your home or business a less desirable investment. Solar makes the most sense in the islands and in developing nations, but in my experience these nations are some of the least likely to opt for large scale solar development. There is certainly an opportunity, but the governments will not pull the trigger.
    Jan 8, 2015. 04:41 PM | 4 Likes Like |Link to Comment
  • Solar stocks bounce as market rallies, Deutsche pounds table [View news story]
    Oil accounts for ~5% of global electric generation, but global natural gas prices are tied to oil, and and natural gas accounts for 23% of global generation. Natural gas sets the price of electricity in the US, and natural gas ay Henry Hub is at multi-year lows. He's missing part of the story here.
    Jan 8, 2015. 02:06 PM | 3 Likes Like |Link to Comment
  • Natural Gas Supply Unsustainable At Current Prices [View article]
    BTU equivalency wont happen in the US for years - we dont export enough oil and there arent enough natural gas export facilities.
    Jan 8, 2015. 12:33 AM | Likes Like |Link to Comment
  • Another cold blast on track for Permian oil patch [View news story]
    2.3 million barrels, if spread out over the full week, is ~330,000 boe/d. Thats a meaningful amount of oil, I would have expected prices to firm on that level of disruption. I think that means we likely have more room to the downside.
    Jan 7, 2015. 04:34 PM | Likes Like |Link to Comment
  • Natural Gas Supply Unsustainable At Current Prices [View article]
    December was abnormally warm, so I'd argue that yes, the supply/demand picture is very different than 30 days ago.
    Jan 7, 2015. 01:32 PM | Likes Like |Link to Comment
  • Barron's Takes Another Swipe At Linn Energy [View article]
    The distribution is down 57%, from $2.90 annually to $1.25. It wasn't reduced until last week, which was more than 18 months after I wrote this. They went from quarterly to monthly distributions in the summer of 2013, so that might be why you think the distribution was cut for the next distribution paid after this article was published.

    Here's the distribution history:
    http://bit.ly/1qcVw2J
    Jan 5, 2015. 03:05 PM | Likes Like |Link to Comment
  • U.S. Natural Gas Economics: $4 Works; $3 Is Too Low [View article]
    Gathering companies with focus on only one region or driller are most at risk. The larger names have multiple basins they operate in and should be ok. If the MLP is greatly exposed to a high cost basin, I'd be worried - but also at this point I bet its reflected in the unit price.
    Jan 4, 2015. 04:06 PM | 1 Like Like |Link to Comment
  • U.S. Natural Gas Economics: $4 Works; $3 Is Too Low [View article]
    Nuke plants can't switch to natural gas, its a different technology. In the PJM and MISO they're just closing the coal plants and building new combined cycle natural gas plants, not retrofitting 40 and 50 year old coal plants.
    Jan 4, 2015. 04:03 PM | 1 Like Like |Link to Comment
  • U.S. Natural Gas Economics: $4 Works; $3 Is Too Low [View article]
    According to the EIA it was 15 BCF/d in 2013. That is likely higher now as the gas gathering systems in places like the Eagle Ford and Bakken were further built out in 2014.

    Given what the article implies, expect prices to remain between $2.50 and $5.00 for the foreseeable future. You may see price spikes in Boston and NYC, and prices well below Henry Hub in Appalachia, but the rest of the country has a very ample supply of gas, and can bring new supply to market very, very quickly. If prices got above $4.50 for more than a few weeks there'd be a flood of new supply.

    http://1.usa.gov/1w5ub6h
    Jan 4, 2015. 02:02 PM | 1 Like Like |Link to Comment
  • Magnum Hunter: The Nightmare [View article]
    Just that its capped, theres no indications of any damage to the well or the others on the pad, and that production should start in January after they get approvals. Havent seen anything about any of the other wells either.
    Dec 30, 2014. 06:47 PM | 1 Like Like |Link to Comment
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