Mmarrkk

Is Exxon Betting on $100 Oil?

Alan:

XOM invests for the long term. For those on Wall Street, "long term" means something more than 1 or 2 quarters out!! Just wanted to make sure you knew that. XOM is looking 5-10 years out. Oil >$100 in 2015-2020: almost a dead-certain cinch!

While you talk about political risk in Ghana, the current U.S. Congress and Administration make investing in the U.S. much more risky. For example: at their whim, the Congress is talking about completely changing the tax rules for only the major oil companies. We have that blubbering idiot Sen. Markey wanting to re-write contracts with companies just because prices are high and Congress wants to! Thanks, Supreme Court, for reminding him that when you sign a contract, you adhere to the terms on that contract!! Investing in capital projects in the U.S. carries an ever increasing amount of risk due to a) overwhelming budget deficits, b) nothing on the horizon that shows our government will do anything about spending c) in fact, rapid rises in social giveaways and increased government control and spending d) the desire to change tax law to continue to soak the successful e) the desire to change tax law to discriminately tax single industries or companies deemed as not "politically correct".

Sorry, I vote with XOM over the next ten years! They have more money in the bank than most banks have in the banks! And have proven management, not like our political leaders who are only proven as failures.

8 Possible Targets for Exxon's Cash

Bill: XOM has more capital than most banks!!!

Surf: MRO has refining and that will be an anti trust issue. But, sell it off before the purchase!! Done! Will it happen? XOM will wait a while longer and let more folks squirm in pain, then they will move at a great price.

I think the big JV idea is a good one but XOM doesn't like to sit in the back seat (unless it is their executive limo's); they want to drive the operation so doing a deal like BP did with CHK is probably not the XOM way. Maybe a reverse of that type of deal?? In any case, they will wait until the blood runs freely on the streets before making a move.

Cramer's Mad Money -10 Reasons the Economy Is Not So Bad (2/6/09)

Healthcare is not a right. But we can debate that for a long time without agreeing.

I am not supporting a company's "right" to deny healthcare. What I am questioning is why do we assume the companies MUST provide healthcare coverage at all? Where did that get written in a law, a constitutional amendment or regulation?? You see, I don't agree that companies should be FORCED to supply healthcare coverage. If they offer it, then that is great. But if they don't, then we shouldn't judge them harshly. Now, their employees can judge them harshly and use their feet to vote! They can decide not to work for WMT because Target or anyone else decided to offer healthcare coverage.

What we're approaching, since so many of you decided that healthcare is a "right", is healthcare as welfare. Again, if that's what the majority of the country wants, then I guess that's where we're going. But don't impale the system with rules that will strangle the free-market side of the biz. Previous attempts would have made it ILLEGAL for a provider to work within the government's system and a free market pay as you go system. That is ludicrous. If I can pay for a doctor out of my pocket, why shouldn't he be allowed.

How about we take a few trillion out of O's "Steal-from-us" plan and use it to buy a high deductible healthcare plan for everyone?? Then, I'm sure we'll have to give out checks for the deductibles for everyone but the evil rich. Personally, I have a HSA and a HDHP that covers catostophic events.

What next? Owning a home is a right? Owning a car is a right? I guess with the new "fix" the gov't will be bailing out the idiots that got in over their heads with high leverage mortgages and couldn't read or comprehend those evil loan documents. While those of us living within our own means still have to pay 100% of our mortgage, these clowns will have 30-50% of their loan balances "forgiven". I'd like for someone to say "thank you" when I finish paying for their stupidity and greed.

Cramer's Mad Money -10 Reasons the Economy Is Not So Bad (2/6/09)

Atypical: you said that WMT is "not providing benefits, (pushing costs onto states rolls for healthcare)".

Please answer me this: Where is it written that healthcare benefits MUST be underwritten by employers?? Why is that something that HAS TO BE PAID for by an employer? Healthcare is not a right, particularly a right of employment. Companies that pay for healthcare pay for it either out of the kindness of their hearts or because they have a business case...keep employees healthy and they show up at work and make me lots of money!!!

The nanny state...a trainwreck waiting to happen! Just ask your friends in the Former Soviet Republics how great it USED to be for them!!

What Devon's Huge Write-Down Means for Natural Gas

Paul: Cheniere's application is what Matgigem referred to...re-export of cargoes that were being stored in Cheniere's tanks. Basically the LNG is never "re-gassed"; it stays in its liquid state in a storage tank until it is exported back out. To truly get into the export business, one would need to build a multi-billion dollar liquification plant and there are already too many of those around.

BTW, there is a small scale liquification/export plant already built up in Kenai Alaska. Phillips, now COP, built it 20 years ago and its still working. But very small scale.

Getting export permits from the US will be very very difficult as most Northeast Congressmen do not want NG leaving the US; they want an oversupplied market to drive prices down for their constituents. Eventually that little game drives to gluts then shortages then gluts then shortages.

What Devon's Huge Write-Down Means for Natural Gas

Times are changing on LNG and the supply of LNG out on the open seas is getting r4eady to ratchet up. This LNG will find its way into the US market, mark my words. This will impact pricing in US. Expect LNG imports to top 3 BCF/day in late 2009/early 2010 vs 1.5 right now. Over supply and demand cratering in the Far East and Europe. If the Ruskies don't go all Rambo on EU markets. Plus all of the new plants coming on line in Australia will push Qatar gas out of the Far East and that gas has to go somewhere and the US is the place as it helps support their crude price linkages.

What Devon's Huge Write-Down Means for Natural Gas

To the author:

see my post above regarding LNG. You're missing it here.

Also, if you are "admittedly unsure if CHK uses hedges", I'm admittedly unsure if you should be writing articles concerning nat gas and companies that may have to take write downs. CHK is 82% hedged at prices over $8 for the rest of 2009 and 50% hedged for 2010. Kind of a key point, wouldn't you think if you are recommending investments in nat gas??

What Devon's Huge Write-Down Means for Natural Gas

Andy1234: You're missing the true story of LNG. The big problem is that over the next several months, there will be a lot excess LNG capacity in several places, like Qatar. While LNG may not appear to be competitive, you need to look at the incremental cost to run an LNG plant ONCE ITS ALREADY BUILT. The cost to produce nat gas in Qatar, liquify it, ship it the the US and re-gas it for entry into the pipeline system at the Gulf Coast is less than $2-3 per MCF. That is VERY competitive! Drilling in the Shales and producing has a break even cost of about $5, assuming a nominal rate of return. Once these massive LNG liquifaction plants are built and those $4 billion dollars are invested/sunk, the owner of the plant has a lot of incentive to operate the plant and generate cashflow as long as the operating costs are at least break even.

So don't discount LNG as too expensive. LNG imports will probably impact the US nat gas market a lot more than most think. With the downturn in Asia economies and the additional capacity being built in Qatar and Australasia, there will be lots of very cheap LNG hitting this market and it will suppress prices. It will also knock the teeth out of a lot of the more expensive US drilling projects.

Chesapeake: When Gas Prices Will Recover

Forgot to add this: At $2 nat gas, virtually all of the gas produced in the Rockies would be selling for pennies as the basis differentials are huge due to lack of capacity in pipelines. So what would happen if 1/2 the gas in the Rockies were just shut in?? Think that might have an impact on prices??

Chesapeake: When Gas Prices Will Recover

Maynard and weiwentg: explain how CHK gets to the point of liquidation or dilution again? As I see it, if prices continue on down (which I've stated is very hard to justify over an extended period of time due to the fundamentals), CHK has the option to continue to cut back on their drilling/acquisition budget. It truly is that simple; just live within your means and cashflow. Now, if they continue to cut their drilling costs, they will lose some of their undeveloped leases but that can really be managed by savvy landmen using 640-acre units and a single well in each. A huge portion of their acreage is held-by-production (HBP) which means they don't have to drill the wells anytime soon. the other result of cutting capital is that their production increases will be slowed down. So instead of growing production 20-25% per year, they may have to live with 5% per year. Again, not a liquidation scenario.

They have the choice to either spend the money or not. If they want to spend the money in low price environments, they will have to issue stock which will be dilutive. But they DON'T HAVE TO DO THAT. They just stop drilling! Their average cost to maintain current production is below $1/mcf without drilling.

As for the $2 nat gas scenario, at that price level everyone in NA will stop drilling nat gas wells. You will see a rapid decline in supply, the likes of which we haven't seen in many years. Supply will drop well below a depression-like market and prices will rise. Alternatively, LNG will be attracted into the market at higher prices than $2 as the cost to operate the LNG liquifaction, transport and re-gas system is higher than that. For these reasons, prices at $2 won't last long. I believe prices below $4 won't last long. So all Aubrey has to do is be patient and continue to cut back on his drilling budget, accept very low growth (GROWTH none the less) and wait.

As for me, I'd love a $2 nat gas environ. I'd be out scooping up assets left and right at firesale prices!

Takeover Climate in Oil and Gas

Have you ever listened to a conference call where the so-called expert analysts give the CEO's huge amounts of grief about acquisitions? COP was villified by these analysts for their acquisition of Burlington, a move that now appears to be a huge winner. And every quarter thereafter, one of the "smart" young guns asks a question with a clear tone of "You aren't thinking about another big acquisition, are you??" as if to say we've got our finger on the trigger, baby, so just try one!!

Unfortunately, that will really slow down the M&A market overall for the big guys. And they may be the only ones with the money to do these sized deals. But you are spot on...these are great companies and with their recent declines in price, selling at attractive values.

Where is the North American Natural Gas Market Headed?

I believe your engineering on the coalbed methane (CBM) is off a bit. Yes, the rate increase initially as the coal de-waters and the pressure is reduced. However, CBM wells also experience hyperbolic decline like shale gas wells and eventually decline to a very small flow rate. Now, that flow rate will last for a long time, but it will be very very low. The plot shown in the EOG study includes CBM wells, a lot of them as CBM has been a major producing source for many years. BP, ConocoPhillips and Burlington (now part of COP) have been producing CBM in the San Juan basin for years. But the wells have high decline rates too. Get your reservoir engineering straight. Natural Gas is in tight supply and the land owners fight like hell to keep us from drilling for it. I've worked 3 projects involving CBM and only one of them has been economical. The others were fraught with delays and rapid cost increases due to land owner and greenie weenie fights against us.

Energy Stock Trader: Tuesday Outlook

Mark has some of the best folks working for him plus he's willing to take measured risks. He took some of the best qualities of his previous employers (Conoco and then Enron) and put them to work growing a company. I think EOG will outperform the other 3 companies you mention as they have great growth opportunities.

Energy Stock Trader: Tuesday Outlook

Where do you conclude that SWN is better than EOG? Just wondering.

I would choose EOG over SWN every time. EOG has a much broader portfolio; SWN is basically a Fayatteville Shale play with some other minor growth. EOG has a hand in several large basins and is using cutting edge technology to squeeze profit and keep costs in check. And no, I don't work for either company; rather, I work for a competitor of both. I am much more afraid of EOG as a competitor than SWN.