thomas728

The Brightest Stars in the Commodities Boom, Part I

I like your rationale as I am long CHK, ACI & KOL.

Why ACI & KOL ? Because I was long ACI and put my son
into KOL.......when I had reason to monitor (my first ETF)
I simply liked what I saw.

Be well & thank you for the post and the "me to" which always
helps !

Tom


On Jun 20 02:21 PM User 161473 wrote:

> Mark,
>
> You always have good comments.
>
> I wanted to say a few things about coal. One thing you didn't mention(at
> least I think you didn't mention) was the price of Nat Gas which
> is the direct competition for coal. As nat gas prices go up, so will
> demand for coal as utitilities switch to the cheapest generation
> input further pushing up prices.
>
> I think everyone is starting to realize that all energy sources are
> interconnected(oil, gas, coal) When we have shortages of one it pushes
> up the price of others. Currently oil companies are having a difficult
> time in finding new places to drill where the hurdle rate makes sense.
> At some point they are going to have to start drilling or buying
> other energy companies. If you look at a coal company as an energy
> company such as an oil company is an energy company, you could come
> up with higer valuation. I know this is kind of twisted logic especially
> when you look at earnings but here is an example. Peabody(BTU) has
> more reserves in the ground than Exxon does in terms of BTU's. The
> market cap of Exxon is $450 billion vs. $20 billion for Peabody.
> Every year Exxon's production is declining with not much hope of
> ever stopping it. Would XOM be willing to pay $30 billion (50% premium)
> to double it's reserves in terms of BTU's? What should we value future
> coal reserves if believe worldwide oil production will start to decline
> soon?
>
> Thanks,
> Don