Seeking Alpha

User 353732

User 353732
Send Message
View as an RSS Feed
View User 353732's Comments BY TICKER:
Latest comments  |  Highest rated
  • The Power Sector Powers Up UNG [View article]
    Natural gas production is unlikely to reach a cyclical peak until Mid Q3.
    At the same time the impetus for sustained consumption growth could begin to manifest itself as we will have a better idea how much fuel switching there will actually be in power generation and what the magnitude of exports to Mexico and LNG exports will be in 2016.
    We are perhaps a year away from secular(not weather driven) demand driven prices increases in natural gas. Even so at $3.50 the supply response will be large and swift preventing any sustained price strength for at least the next 2 to 3 years. Even after that $4.00 may be the ceiling on prices since vast amounts of dry gas reserves become quite profitable at that price and Marcellus/Utica become enormously profitable.
    Jun 23, 2015. 09:56 AM | 1 Like Like |Link to Comment
  • Williams rallies on Energy Transfer bid, but will it get a better offer? [View news story]
    Williams will be an even more attractive business after rolling up WPZ: more efficient, lower cost of capital and better strategic direction but of course then it will be too big for ETE to acquire. Naturally ETE wants to control WPZ without having to buy it .
    The KMI model is more suitable for Williams: post roll up it will have a formidable unified footprint and be well positioned to buy several smaller midstream companies as well as expand its merchant activities.
    Jun 22, 2015. 05:39 PM | 7 Likes Like |Link to Comment
  • Kinder Morgan LNG export project applies for FERC approval [View news story]
    No midstream company is better positioned to benefit from natural gas pipeline( to Mexico), LNG, and condensate exports than KMI.
    Starting mid 2016 there will be a sustained increase in natural gas exports that will support record throughput year after year for at least 10 years.
    Condensate exports will also increase and by 2017 there is a good chance of crude exports.
    Jun 20, 2015. 08:46 AM | 14 Likes Like |Link to Comment
  • EIA Natural Gas Inventory [View news story]
    Prices will not reach $3.00 until production stabilizes at current levels( perhaps by mid Q3) and the combination of exports and domestic growth adds about 5 bcfd to baseload demand: something we might see by mid 2016.
    For the next few years there will be robust demand growth but prices above $3.50 for even a few weeks will elicit a rapid and notable supply response ( especially Marcellus/Utica as logistical/processing choke points are relaxed via new construction)causing prices to fall below $3.50
    Jun 18, 2015. 11:05 AM | 4 Likes Like |Link to Comment
  • Chevron upgraded to Buy from Hold at Societe Generale [View news story]
    CVX is a fine company with a superior portfolio of prospects and properties. However, it has not been able to complete major projects without large and in some cases massive cost ovveruns and delays( this true for all big international companies, including XOM).
    In 2015 CVX will have to borrow to maintain dividends, which is nice for income but bad for wealth creation.
    The cash flow from Gorgon will be a material help in 2016 but until then it may be better to wait on CVX and see if management has learnt how to bring mega projects in on budget and time.
    Jun 17, 2015. 10:18 AM | 3 Likes Like |Link to Comment
  • Reuters: Magellan Midstream shifts sights to trading oil for first time [View news story]
    Midstream companies are not just multi modal logistical intermediaries but also market intermediaries who provide producers with competitive alternatives to Wall St.
    As long as volatility, locational discounts/premia, logistical choke points, hedging, physical delivery in connection with financial positions are features of liquids and natural gas markets, trading is both necessary and desirable.
    MMS also has a quality of balance sheet advantage over most of its peers which will make counter party credit easily available, as long as the trading book does not become too big relative to the balance sheet.
    Jun 17, 2015. 09:38 AM | 1 Like Like |Link to Comment
  • Exxon's Kearl oil sands expansion project begins production [View news story]
    Good for cash flow since the capital has already been sunk but bad for income and near term wealth creation. It will be many years before major new tar sands projects are initiated in Canada: not until the next decade.
    High costs and low netbacks coupled with midstream choke points make Canadian tar sands quite unappealing compared with North American shale.
    Jun 16, 2015. 10:32 AM | 2 Likes Like |Link to Comment
  • Chevron completes its largest-ever seismic survey off southern Australia [View news story]
    There are several large unexplored or very lightly unexplored basins in the world, especially Africa and deep waters almost everywhere.
    CVX is right to be spending research money to identify prospects for the next 25 years and Australia is a much better place for the upstream business than Africa or Latin America. Nonetheless, the known proven and probable reserve oil and gas base in the world is already enormous and there are decades worth of drilling opportunities in low permeability oil and gas basins in North America alone.

    The challenge for the rest of the decade is not exploration but greatly increasing the efficiency of D&C completions in proven, large, productive basins everywhere in the world. Driving doing total unit costs year after year is the challenge for all upstream companies, including CVX and XOM: what made financial sense at $95 oil in 2014 has to make sense at $65 in 2016
    Jun 12, 2015. 11:34 AM | 7 Likes Like |Link to Comment
  • Kinder Morgan opens nearly 2% lower after cautious Barron's piece [View news story]
    A few quarters ago Hedge funds tried to even drive down XOM and for 4 months succeeded. Reality reasserted itself and XOM recovered well. The same is now being attempted with KMI(and perhaps by extension with its peers).
    KMI's business model has not changed nor has its existing and planned asset mix(the best in the industry) nor has its organizational capability nor have the prospects for natural gas and condensate exports(which benefit KMI even more than its peers).
    What has changed is that KMI overhead costs are lower and so is the cost of capital. Anyone who approved of KMI in 2014 should approve of it just as much today.
    No company or sector is safe from Big Money depredations and small investors who allow themselves to be stampeded always get hurt but business and economic truths do prevail.
    Jun 12, 2015. 10:32 AM | 24 Likes Like |Link to Comment
  • Petronas-led group gives conditional go-ahead for B.C. LNG project [View news story]
    Canadian prosperity is inextricably linked to its oil and natural gas exports. Unless Canada finds the will to expand its oil and gas export and feeder pipeline infrastructure its oil and gas industry will stagnate in terms of volume and languish in terms of cash flow. Capital investments and hence incomes and jobs will be substantially curtailed.
    Canada faces growing competition for LNG exports to Asia and its window of opportunity is closing. This is also becoming true for Canadian heavy oil exports to Asia or Europe. The single best opportunity for Canadian heavy oil is the US Gulf coast where it could completely displace Venezuelan imports which would be strategically and financially good for both Canada and the US......Precisely the result that Californian Billionaires(gorging on "green" subsidies) and the present US Regime do not want to see.
    Jun 12, 2015. 08:56 AM | 6 Likes Like |Link to Comment
  • Chevron searches for answers to problems plaguing Big Foot project [View news story]
    It is true that LNG will become an important generator of cash flow for CVX starting next year. This is good news for shareholders.
    However, CVX(together with its peers) has incurred massive cost overruns and expensive delays on its mega projects. This is an organizational weakness that CVX must remedy : what was tolerable when $100+ oil prices were the expected norm is intolerable in a period when oil prices ( hence LNG prices) are much lower and unlikely to see $100 in nominal dollars until the end of the decade.
    Jun 11, 2015. 07:58 AM | 4 Likes Like |Link to Comment
  • Giant Kashagan oil field aiming for 370K bbl/day by end of 2017 [View news story]
    An object lesson in how not to pursue mega oil (and LNG) projects.
    Major technical challenges, highly corrupt government; paucity of local skills and infrastructure, weak supply chain, management by committee; rotating leadership all combined to delay production by years while causing total costs to escalate by tens of billions of dollars.
    Huge, concentrated, resources by themselves are no guarantees of physical or financial success: if they were, Venezuela would be as big an oil producer as the US and Iran would be as big a natural gas producer as the US.
    Jun 9, 2015. 10:37 AM | 2 Likes Like |Link to Comment
  • The Weakness Of UNG Continues [View article]
    There will be continual increases in organic demand in the US and next year and both pipeline exports to Mexico and the start of LNG exports will further increase demand. However in the near term there is little to move natural gas out of a narrow trading range.
    Petrochemicals, fertilizer, power generation and exports will all drive sustained and substantial growth in natural gas demand for the next 10 years. Once prices in the Marcellus/Uttica exceed $3.00/mmbtu the production response will be impressive as well. It is difficult to envision prices reaching $4.00 per mmbtu (and staying there for months) over the next 10 years,
    Jun 9, 2015. 08:41 AM | 2 Likes Like |Link to Comment
  • Cyprus gas field to produce 8B cm/year with pipeline to Egypt, partners say [View news story]
    Good for Israel and Egypt and once the gas fields and infrastructure are finally developed Israeli( and later Cyprian and Jordanian) gas can be shipped to Southern Europe, which is unfavorable for Iran and Russia of course but also for African countries trying to find LNG markets.
    Jun 8, 2015. 12:10 PM | 1 Like Like |Link to Comment
  • Tanzania says gas reserves rise 18% to reach 55T cf [View news story]
    It will be at least another decade before these reserves can be monetized either via exports or meeting domestic needs.
    Major LNG projects have been plagued by large cost overruns and very few grassroots LNG projects are now being pursued beyond the evaluation and feasibility stages.
    Moreover, the Mediterranean Basin is emerging as a significant potential supplier of gas to Europe while Russian, Australian, East Timor and North American gas producers are all seeking Asian markets, unfortunately for Africa.
    Jun 8, 2015. 09:38 AM | 3 Likes Like |Link to Comment