Comments on Nathan Weiss' articles RSS Syndication from SeekingAlpha.com http://seekingalpha.com/author/nathan-weiss/articles http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-332393 332393 Wed, 17 Dec 2008 15:49:06 -0500 A couple of questions:
1. How close is the correlation between the manufacturing index and natural gas consumption. Isn't a large part of NG industrial consumption a fixed cost and therefore not greatly affected by volume increases/decreases?
2. You cover industrial NG use (29%) and residential use (20%). What sector uses the remaining 50%? Is it electrical? Isn't most electricity generation by NG for top off for peak demand? If so, then NG use by electric utilities may not correlate with overall demand fluctuations.
3. What are the current import/export numbers for LNG? Does USA have the capacity to export significant quantities of LNG?]]> http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-317630 317630 Sun, 30 Nov 2008 14:08:26 -0500
tonto.eia.doe.gov/dnav...

Most E&Ps really suffer awful cash flows... Look at SandRidge Energy, spending 1.1x 2009 revenues on CapEx to keep production flat from Q4 run rates) in 2009. CHK is in the same boat (to keep the analogy going. It is going to be VERY intersting to see how natural gas E&Ps attempt to fund 2009 CapEx. ]]> http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-317142 317142 Sat, 29 Nov 2008 11:43:22 -0500
Over the longer haul, its hard to see NG use not increasing dramatically. The down side is expanded drilling by CHK, XTO, etc adding disproportionally to immediate supply.

If KMP looks so good, how about EP? Any thoughts?]]> http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-316784 316784 Fri, 28 Nov 2008 12:22:00 -0500 http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-316636 316636 Fri, 28 Nov 2008 09:41:19 -0500 http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-316613 316613 Fri, 28 Nov 2008 09:18:27 -0500
Oh yes, about that over supply issue. CHK may be delivering a lot less gas given their precarious financial situation.]]> http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-316562 316562 Fri, 28 Nov 2008 08:02:01 -0500 http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-316561 316561 Fri, 28 Nov 2008 07:56:05 -0500 http://seekingalpha.com/article/108315-natural-gas-demand-continues-to-decline?source=feed#comment-316559 316559 Fri, 28 Nov 2008 07:54:13 -0500 http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-236126 236126 Thu, 21 Aug 2008 23:50:47 -0400 ]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-236125 236125 Thu, 21 Aug 2008 23:49:24 -0400 ]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-235897 235897 Chesapeake is going to plummet. Simple reason for that: They are > on the verge of experiencing Peak production. Just have a look at > the numbers of Texas Railroad Commission. > Statewide monthly gas well gas production for Chesapeake Operating: > > Oct 07 32.9 Nov 07 31.5 Dec 07 31.1 Jan 08 29.9 Feb 08 27.4 Mar 08 > 27.8 Apr 08 25.7 May 08 25.1 > So, production plummeted by 24% within 8 months. Within these 8 months > NG prices surged from 6.17 (Q3 2007) to 11.34 (Q2 2008). > Also: According to Texas RRC, output from the Barnett Shale peaked > in Dec 07 with 3.07 BCF and declined to 2.61 BCF (May 08) so far. > > Shale NG is hot air, just declining too much.]]> Thu, 21 Aug 2008 16:15:21 -0400

On Aug 19 06:29 AM pacito wrote:

> Chesapeake is going to plummet. Simple reason for that: They are
> on the verge of experiencing Peak production. Just have a look at
> the numbers of Texas Railroad Commission.
> Statewide monthly gas well gas production for Chesapeake Operating:
>
> Oct 07 32.9 Nov 07 31.5 Dec 07 31.1 Jan 08 29.9 Feb 08 27.4 Mar 08
> 27.8 Apr 08 25.7 May 08 25.1
> So, production plummeted by 24% within 8 months. Within these 8 months
> NG prices surged from 6.17 (Q3 2007) to 11.34 (Q2 2008).
> Also: According to Texas RRC, output from the Barnett Shale peaked
> in Dec 07 with 3.07 BCF and declined to 2.61 BCF (May 08) so far.
>
> Shale NG is hot air, just declining too much.]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-235002 235002 Wed, 20 Aug 2008 14:20:53 -0400
We need to increase electricity production, electrify the railroads, expand frieght rail and get heavy trucks off the roads, thus cutting diesel consumption (helping to restrain jet fuel and home heating oil prices) and road maintenance costs.

In the short run, if energy security is a goal, we are currently under-using NG (at least until there is greatly expanded electric. prod. from renewables and nuclear).
]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-233770 233770 Tue, 19 Aug 2008 06:29:27 -0400 Statewide monthly gas well gas production for Chesapeake Operating:
Oct 07 32.9 Nov 07 31.5 Dec 07 31.1 Jan 08 29.9 Feb 08 27.4 Mar 08 27.8 Apr 08 25.7 May 08 25.1
So, production plummeted by 24% within 8 months. Within these 8 months NG prices surged from 6.17 (Q3 2007) to 11.34 (Q2 2008).
Also: According to Texas RRC, output from the Barnett Shale peaked in Dec 07 with 3.07 BCF and declined to 2.61 BCF (May 08) so far.
Shale NG is hot air, just declining too much.
]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-232167 232167 Sun, 17 Aug 2008 00:26:10 -0400 http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-232105 232105 Sat, 16 Aug 2008 18:39:15 -0400 http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-231960 231960 Sat, 16 Aug 2008 13:57:07 -0400 http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230715 230715 Thu, 14 Aug 2008 20:07:33 -0400 http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230673 230673 Thu, 14 Aug 2008 18:17:49 -0400
That said, by 2012 I expect natural gas demand for electricity generation to be 16.25% above todays levels, but this only adds 1.1 BCF/d in gas demand.

To put it another way, we generated 21.47% of our electricity from natural gas in 2007 and this used only 6.87 BCF a day. The current surplus of natural gas supply is nearly 4 BCF/d and growing!
]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230472 230472 Thu, 14 Aug 2008 14:28:35 -0400 http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230443 230443 Thu, 14 Aug 2008 13:58:21 -0400
Investors appear to be pricing stocks like CHK on the notion that there is too much supply (at current prices) in relation to demand. But CHK engages in very skillful hedging operations (most of the time, but not in the last quarter) that usuallly enhance earnings. In the last quarter, when gas prices rose well above their expectations, the hedging worked against CHK. Predicting future CHK earnings depends not only on the hedging operations but on the price of natural gasl.]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230434 230434 Thu, 14 Aug 2008 13:51:20 -0400
if your $6 avg is correct, the utility companys will max out on NG. the transport guys will be accelerating conversion from diesel, and oil[?] cost/bbl. is it believeable?

it'll mess up everyone's models and Al Gore will be pushing it. believeable?]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230411 230411 Thu, 14 Aug 2008 13:34:32 -0400
We may be getting a bit ahead of ouselves here, guys.]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230353 230353 Thu, 14 Aug 2008 12:51:19 -0400 ]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230351 230351 Thu, 14 Aug 2008 12:50:13 -0400
I believe natural gas prices wll hit $7.60 in coming weeks and average $6.00 in 2009.]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230339 230339 Thu, 14 Aug 2008 12:39:21 -0400
You're right, as well. Looonger term, gas hydrates will someday come on line. Since they contain 160X (!) the energy of NG per unit, people are doing the early R&D as we speak. And the U.S. has the most known reserves in the world off the coasts of AK and SC. While we won't live to see it, can you imagine South Carolina as a world energy leader? ]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230309 230309 Thu, 14 Aug 2008 12:16:29 -0400 http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230290 230290 Thu, 14 Aug 2008 12:00:13 -0400 http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230268 230268 Thu, 14 Aug 2008 11:35:52 -0400
Once these issues run their course (which is already starting as we begin to see the year-over-year (YoY) comps on LNG imports this month) storage levels will begin to move higher YoY. Note that LNG imports started to fall off late last summer with the following monthly imports for the US: July = 3.2Bcf/d, August = 2.8Bcf/d and Sept. = 1.4Bcf/d – and they move lower from there…

The difference in YoY storage levels is the main driver of short-term natural gas prices. Clearly there is a debate about what may happen in the long-term (US LNG exports or Pickens natural gas fuel US transportation fleets), but the analysis clearly shows that storage levels are going to be higher on a YoY basis over the next 9 to 12 months which will lead to lower natural gas prices. The really key thing here (and anyone who trades E&Ps should know this) is that Wall Street (WS) has factored very lofty natural gas expectations into company models and EPS estimates are currently very optimistic (I’m being nice here). On aggregate WS has Q308 through Q209 forecasts of: $11.50, $11.32, $10.42 and $9.50. The forward curve for the same periods is $10.41, $9.44, $9.27 and $8.99 (all from Bloomberg). With YoY storage set to go higher and natural gas prices set to move lower over the next few months EPS estimates are going to come down.

Let’s take CHK for example. Wall Street has $4.02 in EPS over the next four quarters. If you adjust quarterly estimates lower by the spread between current forecasts and the forward curve EPS goes down by over 11% to $3.57. With the stock at about $46.90 this estimate cut would take the forward P/E multiple to 13.1x from 11.7x. Now the 13.1x multiple may still look ok relative to the recent past, but the YTD valuations have been driven by growth expectations fed to investors by Wall Street. Backing out the last few months CHK has traded in a forward P/E range of 8.5x to 13.5x over the last three years. The stock is clearly more expensive than it appears at first glance. On top of this estimate cuts are never a good thing for stock prices. Considering the fact that the growth story will be questioned by investors over the next few months does anyone really think the stock should trade at the upper end of its historical range??? If you do I have some shares to sell you…

The really crazy thing is that the E&Ps are drilling more in the face of this clear (forward) oversupply situation... If you look at drilling permits you’ll notice that they totaled 6,600 in July up from 6,338 in June and up from 5,504 in July 07.

Note to fxtrader07 – the supply mentioned is lower 48 production and total demand is partially supplied by Canadian net imports which ran at about 15% of total US NG supply in 07 (take a look at the BP statistical review of world energy) – you can’t directly compare lower 48 production with total demand...

Note to Brahm – your analysis of the foreign gas situation is accurate – foreign gas markets are tight and prices are higher so LNG will not come the US unless it is under a firm long-term contract. If the US market were tighter and currency adjusted prices were higher the US would see more LNG imports, so the oversupply is a big reason for the lower LNG import levels…
]]> http://seekingalpha.com/article/90882-natural-gas-clean-fuel-with-a-dirty-little-secret?source=feed#comment-230194 230194 Thu, 14 Aug 2008 10:39:24 -0400
Apparently, Boone Pickens, who knows as much about this subject as anyone alive, isn't exactly "wowed" by our NG surplus. either. He's spending $2 billion to build wind farms, and take NG off the electric grid to make it available for use as a transportation fuel, as we speak.

But I agree with the gist of what you're saying. We keep finding more and more of this wonderful energy as we explore for it around the U.S. And that doesn't include the NG we may find when we open up the OCS.

Remarkable, isn't it? And, I might add, just in time!
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