Seeking Alpha

rockyrocky

rockyrocky
Send Message
View as an RSS Feed
View rockyrocky's Comments BY TICKER:
Latest  |  Highest rated
  • Alpha Natural Resources Can Most Likely Survive, But Can It Thrive? [View article]
    I agree with dafacai. Met coal does not need to get anywhere near $170 for ANR to be cash flow positive. At todays met coal prices ANR had negative cash flow of $50 million last quarter and about one half of that $50 milliion was a non-recurring expense.
    Jul 23 08:17 AM | 2 Likes Like |Link to Comment
  • What Could Bring UNG And Natural Gas Down? [View article]
    The concept that natural gas production will continue to increase may be outdated. Bentek estimated that natural gas production was 67.7 in May and Bentek expects that natural gas production will average 67.5 for all of 2014. Looks pretty flat.

    The influx of new production from the Marcellus looks pretty anemic. Legacy production decline almost equals new production in the Marcellus. The Utica may be a new source of increasing natural gas production but that is not a given.

    Conventional sources of natural gas which still provide 60% of our natural gas have been in a death spiral for years. Stable shale gas production will not prevent declining overall natural gas production
    Jun 9 08:53 AM | 2 Likes Like |Link to Comment
  • Natural Gas Crushed By Huge Injection But Bullish Fundamentals Remain In Place [View article]
    Last year we had one triple digit injection in May. An injection of 111

    This year we have had ONE triple digit injection - of 106

    The injection of 105 was the result of reclassification of natural gas from working natural gas to storage natural gas. The actual injection was 97 - not 105

    We may have another triple digit injection in May but this years injections are similar to last years injections.
    May 28 01:27 PM | Likes Like |Link to Comment
  • Natural Gas Production Growth Is Slowing [View article]
    The idea the we are having larger natural gas injections than normal this year may be an illusion.

    Last year we had one weekly injection of 111 in May and another weekly injection of 101 in September. All other injections were less than 100.

    This year we have had one weekly injection of 106 in May. The weekly injection of 105 was really an injection of 97. The additional 8 in injection was due to reclassification of natural gas from working natural gas to storage natural gas.

    We may have another injection or two of natural gas over 100 in May and June this year and maybe one or two injections over 100 in September but there is not a lot of difference between natural gas injections this year as compared to last year - so far.
    May 28 03:39 AM | Likes Like |Link to Comment
  • Natural Gas Production Must Increase Dramatically To Refill Inventories [View article]
    Anyone who relies on data from the EIA must believe there is an easter bunny that lays eggs.

    Until well into January of this year, 2014, the EIA was projecting end of March natural gas storage of 1700. Now we know end of March storage will be about 800.

    The EIA is now magically predicting record smashing ng injections this summer. Unless we are in an ice age, this EIA prediction is nonsense

    The EIA is living with Alice in Wonderland trying to propogate the idea that we have cheap and plentiful natural gas. Although this is a fairy tale it conforms with Obama's delusion that natural gas will save us from coal and fits in nicely with Obama's misquided belief in the nonsense known as global warming/climate change.

    But most unsettling is that one cannot rely on EIA data. The EIA predicts gradual natural gas production increases by 1-2% for the next few years. However, production numbers published by the EIA are not even close to production numbers published by the States. For example, the Texas Railroad Commissions natural gas production numbers are not even remotely similar to production numbers published by the EIA. In all likiehood, natural gas production has already started to decline.

    This house of cards built on a foundation of Obama wishes and blunders is about to collapse.
    Mar 20 06:10 AM | Likes Like |Link to Comment
  • Is Natural Gas Heading Towards $4? [View article]
    Anyone who thinks that the end of the heating season and the beginning of the injection season will cause natural gas prices to plummet may be a little short sighted.

    It is obvious, if we have a normal summer, that we will start next heating season with natural gas storage at about 3000. Storage levels of 3000 constitute a crisis. There is not much wiggle room with that number. Natural gas production is not increasing.

    If we have a warmer than usual summer similar to the summer of 2012 we may enter next heating season with natural gas storage at about 2500. This would be an unmitigated disaster similar to 'The Night of the Living Dead'

    The promise of 'cheap and plentiful' natural gas is not holding. Natural gas is neither cheap nor plentiful and we are going to find that out in short order.
    Mar 11 05:24 AM | 2 Likes Like |Link to Comment
  • Will Natural Gas Change Direction Again? [View article]
    I think we need to consider where natural gas storage may be at the beginning of next heating season.

    If there is a perception that ng storage may be about 3000 at the beginning of the next heating season we have a crisis. Normal ng storage at the beginning of the heating has been closer to 4000.

    If there is a perception that, for one reason or another, natural gas production and ng rig counts are not going to increase - there is nothing we can do about the possibility that next heating season may begin about 3000.
    Feb 18 05:51 AM | Likes Like |Link to Comment
  • Is The Coal Space Turning? [View article]
    Dafacai

    I would like your input on this. Have you looked at Consuls (CNX) 4th quarter results. A train wreck. Revenue from fracked wells including NG, NGL, oil and condensates was $200 million. Capex expenses for the quarter were $300 million. You do not need to be a genius to know what that means.

    No wonder CNX cut their dividend and is selling assets..

    Whoever the McClendon look alike is at CNX - he had better take off his blinders and see that natural gas may be important but natural is not making money for anyone at todays prices. Unfortuneately, once you buy into this NG optimism there is nothing you can do but hold on and hope you don't end up in chapter 11 bankruptcy.
    Feb 8 03:59 PM | 2 Likes Like |Link to Comment
  • Is The Coal Space Turning? [View article]
    Congratulations. You are one of the few who recognize that the problem with natural gas is natural gas production. Natural gas production has been stable since the beginning of 2012. Hopes of increasing NG production are a pipe dream until NG prices go much higher - think at least $8

    Anyway, NG production in the USA is not increasing. Exports to Mexico are increasing, imports from Canada are decreasing, exports to Canada are increasing and LNG exports may enter the picture. And, just for good measure, there is absolutely no likliehood of an uptick in NG drilling until the price of NG balances with cost of production - all costs in - of ng. And that price may be higher than you think.
    Feb 8 10:24 AM | 3 Likes Like |Link to Comment
  • Natural Gas Prices Are Here To Stay [View article]
    The observation that natural gas production increases after drilling starts decreasing is a well known fact.

    In the Barnett NG drilling peaked in 2008 then plummeted. However, natural gas production continued to increase in the Barnett until 2012 when NG production fell off a cliff.

    In the Haynesville NG drilling peaked in 2010 and then fell drastically. However, natural gas production skyrocketed in the Haynesville until the end of 2011 when NG production in the Haynesville took a nosedive and is now producing about 50% of what it produced at its peak.

    There are lots of reasons for this increase in natural gas production after drillling starts decreasing. The simplest to understand is that drilled wells are not always connected immediately. They wait for infrastructure or better prices or the driller is low on cash. Sooner or later, unless they are likely to be dusters, they are connected.

    The moral of this story is that the Marcellus had peak drilling in 2011. Drilling in the Marcellus, especially in dry plays, has decreased a lot since then. If the Barnett or Haynesville are any type of forecaster, we might see ng production in the Marcellus plateau and then start declining pretty soon.
    Feb 6 09:17 AM | 2 Likes Like |Link to Comment
  • Natural Gas: Will Low Inventory And Low Rig Counts Balance The Market? [View article]
    Interpretting rig counts is tricky. You can read whatever you want into them.

    However, if you go by the tried and true Baker Hughes rig numbers, my guess is the Baker Hughes rig count will not budge until natural gas is above $6 for a sustained period of time.

    Natural gas production definitely is not exploding. Might even be declining. We will need a burst of drilling for beginning of next season natural gas storage to be much above 3000. I doubt we will see that burst in drilling.
    Feb 6 08:36 AM | 1 Like Like |Link to Comment
  • Will The Natural Gas Market Slow Down? [View article]
    There is no secret to where ng prices are going. Natural gas prices need to be near the cost of production of natural gas - whatever that is.

    The production numbers for ng are a little suspect. They are estimates. The best we can say is that production of natural gas has been more or less stable since the beginning of 2012.

    Where is ng production going from here? The EIA says it will stay stable for a few more years. Exxon, the nations number one producer of natural gas reduced production of ng by 8% last year. Chesapeake, the nations number 2 producer of natural gas also reduced production of natural gas last year

    There is a widespread belief that higher ng prices will spur ng production. I would not hold my breath on that one. In all liklihood the breakeven point - all costs in - for most ng producers is somewhere around $7-8. I will bet the ranch that the current $4-6 ng will provide absolutely no incentive to increased drilling. You can track this by following rig counts. The current rig count is 350-360 with a year range of 340-400. My guess is that rig counts will stay in this range until the price of natural gas is close to the cost of production of natural gas - which may be higher than most people think.
    Feb 3 05:49 AM | 2 Likes Like |Link to Comment
  • Marcellus Shale Sees Large Increase In Legacy Production Decline [View article]
    Great article.

    You can get an idea of what might happen in the Marcellus by looking at the Haynesville and Barnett plays. The Barnett had peak drilling activity in 2008 and the Haynesville had peak drilling activity in 2011. Drilling activity dropped off dramatically after the peak but guess what happened? NG production increased dramatically in both fields for 2-4 years after peak drilling until one day, guess what, natural gas production plateaued and then fell like a rock in both fields.

    How can natural gas production increase while drilling activity decreases. Easy. Many pads drill multiple wells and not all are immediately put into service. As they are put into service ng production increases until there are no more drilled but unconnected wells. Then ng production nosedives.

    I am not sure what the latest drilling activity is in the Marcellus but it is a small fraction of the drilling activity that occurred in 2011. It is seems obvious that what happened in the Barnett and Haynesville will play out in the Marcellus. NG production will increase for 2-4 years after peak drilling and then plummet
    Jan 26 05:07 AM | 3 Likes Like |Link to Comment
  • Time To Again Take A Flier On Coal [View article]
    I doubt that NG production will increase anytime soon.

    If you look at specific plays such as the Barnett or Haynesville you will find a lag period of 2-4 years between peak drilling and the inevitable decline in ng production. For example, both the Barnett and Haynmesville fields saw impressive production increases for 2 to 4 years after drilling began declining. But eventually, in both the Barnett and Haynesville, ng production fell off a cliff.

    The Marcellus will be similiar. Peak drilling in the Marcellus occurred in 2011. Since then drilling has declined drastically. But as expected, natural gas production has continued to increase. But sometime in 2014 or 2015 ng production in the Marcellus will plateau then decline. Just as it did in the Barnett and Haynesville.
    Jan 25 06:30 AM | 1 Like Like |Link to Comment
  • Real Chance Natural Gas Storage Dips Under 1 Trillion Cubic Feet [View article]
    I keep hearing this underlying theme that higher natural gas prices will spur new drilling activity. My response is fat chance. NG gas producers will use any increase in ng prices to repair their balance sheets which look like train wrecks.

    Eventually when natural gas gets to a level where the price they receive for ng is more than the costs - all in - for producing ng then we may see increased drilling activity.

    The price where ng begins to be profitable is not $5 - not by a long shot. Add a couple bucks to that.
    Jan 23 06:43 AM | 1 Like Like |Link to Comment
COMMENTS STATS
118 Comments
179 Likes