toobad41

Natural Gas Gains: Not Convinced of Sustainability

I am no longer privy to inside information on natural gas production but I do know that much of the gas we are talking about is old gas...i.e. gas that has been producing to the pipeline for years. For the operator that gas is virtually free. Yes there is some overhead but that is little cost. I suspect that a lot of the drilling going on today is new exploration or lease obligation wells. Lease obligation wells are drilled to save a lease from going to the original owner or to someone else. Some of the drilling may also be aimed at proving up the lateral extent of a new discovery. Sure all of this hearsay on my part but it has been true in the past and I tend to believe it is still going on. Also I would like to point out that most oil or gas operators are not in consort with anyone else and they could care what other operators are drilling unless it is just across the highway from their lease. Sometimes operators will have a relationship with other companies if they have a mutual area of interest. But that rarely happens onshore. It does happen offshore where it costs so much to drill and produce. That is my two cents... For what it is worth.

Forget About Natural Gas, Oil Field Services Sector Shows More Promise

The current pricing and glut is a result of the intensive search for gas that has been going on for the past several years. The gas plays going on throughout the USA was sparked by good gas pricing. Now that there is an over abundance of the stuff the companies involved with drilling and production will cut back on their activity. Why sell their product at $3.50 today when they can get $12 next quarter or next year?

Bullish Signs from Oil

It is rare to find a company that produces just "natural gas". The same is true with an "oil company" producing only oil. Generally gas reservoirs also produce liquids (oil or condensate) and oil reservoirs also produce some gas. Sometimes a lot of gas. To put it simply, gas and oil can exist in the same reservoir. A company will make money from both.