Seeking Alpha


Send Message
View as an RSS Feed
View Dryspell's Comments BY TICKER:
Latest  |  Highest rated
  • Why QE3 Will Not Happen [View article]
    Sorry but this is nonsense - at least the big oil part. "Big Oil" has much more to gain from gas as a transportation solution than it might lose with falling oil prices. Most imported oil is from state owned oil companies, not public companies. Increased natural gas demand and prices would be a boon for "Big Oil". Public companies own the vast majority of ng supply.
    Sep 11, 2012. 09:49 AM | 4 Likes Like |Link to Comment
  • Southwestern Energy (SWN +0.7%) moves up as chatter percolates that the company is in play as a takeover target. [View news story]
    Rumor was bull to allow someone to sell. I expect the current rally to end badly and the downtrend to resume. SWN assets are really worth maybe $12-$18/share as an option on future higher gas prices (worth nothing if low gas prices were to somehow remain).
    Apr 30, 2012. 02:44 PM | Likes Like |Link to Comment
  • A Mathematical Model Of Shale Gas Well Production Decline [View instapost]
    Congrats - you derived an equation that has already been in use in the oil industry for 70 years. What else have you discovered?
    Apr 30, 2012. 02:40 PM | 1 Like Like |Link to Comment
  • Natural Gas Has Spiked 60% Since Labor Day. Why? [View article]

    Excellent article. Thank you.
    Sep 15, 2009. 12:41 PM | 2 Likes Like |Link to Comment
  • Natural Gas Has Spiked 60% Since Labor Day. Why? [View article]

    I participate in this industry and I believe you have summed up the current situation better than I could have. There are many risks to increased prices and I believe the gas heavy US Independent E&Ps are a dangerous buy here. I am contemplating adding some puts to my portfolio today. Thank you for the post.

    On Sep 15 04:22 AM Aricool wrote:

    > Mistrofan,
    > We're already past the peak of Huricane season, and zero activity.
    > Each day that goes by exponentially drops the risk b/c the chances
    > are already slim that a given huricane would make a hole in one and
    > hit the TX/LA Gulf coast. The last one got completely deflected northward.
    > Also, I think your they are dangerously over simplistic and not at
    > all rigourous enough to even be taken seriously.
    > The current pop up is just massive short covering and rabid bull
    > sector rotation desperation. Why can't Nat Gas (
    > go under $2? The factors I talk about below are not priced in now
    > b/c market is controlled now by V-shape recovervy bulls expecting
    > industrial production to go up enough in Q3 (w/ the higher PMI) to
    > avoid over filling storage.
    > It is a matter of when, not if. If most of the producers are 100%
    > hedged for '09 (hence likely why their stock prices are not in the
    > toilet w/ NG price) and they have to produce to keep their valuable
    > leases and we have a 100 year supply, then why stop production at
    > any price when you're getting top (hedged) $ any how??? Someone needs
    > to explain to me why will they given these (and many other simar)
    > factors.
    > Besides, did you notice that rig counts bottomed in early June and
    > actually started to uptick in July-Aug. Also, day rates never came
    > down enough. Not a good sign if you believe in major production cuts.
    > Also, if you look at the last recessions NG droped to around $2.5-2.7
    > in real terms (adjusting for inflation); however, that was when US
    > NG production was believed to have peaked, which is why we later
    > created infrastructure for LNG imports- and those lows were before
    > we became the Saudi-Arabia of NG with massive supplies. So, it would
    > stand to reason that we'll see below $2 easy; esp. since we got so
    > quickly to $2.5 w/o resistance.
    > Moreover, I'm very concerned about the long term pricing of NG. I'm
    > trying to see it as bullish as you do, but many long-term factors
    > seem like it might keep it very low- not the least of which is LNG
    > imports from Russia and Arabs when NG gets back over $4.
    > Have a look at the LNG import spike between end '06 and early '07
    > and it tracks *exactly* with a step down of NG price from 7 to 5.
    > This is insane that LNG could crush prices during a robust US economy.
    > I'm very scared now that with the paltry 2% trend growth expected
    > for the US (and EU?) going forward that they'll dump excess Euro
    > LNG onto the US and repeat that '06/'07 event. This would almost
    > certainly keep NG prices under $4 in the expected weak situation
    > for '10. This is a huge uncertainty in playing '09 weakness esp.
    > if buying into NG driller/services securities to play the "perfect
    > storm" against NG. That is, the LNG would dump just enough supply
    > to easily keep the storage full, thus keeping NG exploration and
    > cap ex down to a minimum, and b/c most NG producers are only partially
    > hedged for 2010 (maybe 30% or less?) then they would get killed in
    > 2010 making there hedged supported stock prices 2009 quite high.
    > This uncertainty really sucks! Can you discount this scenario?<br/>
    > the EU is expected to recover more slowly than the US so why won't
    > the LNG plays dump what ever they can on the US. As I analyze the
    > charts, the LNG chart tells me a very bad story. That is, the June
    > '09 LNG was sold at only ~ $4.3 while volumes where a little above
    > that just before the '06 event (see above) when NG price in '06 was
    > ~7, and then dumped 2X the volume for 6 months and were more than
    > happy to collect only $5 in that time. Again, this was when the EU
    > and US were heading into a peak earning cycle. This tells me that
    > the LNG players will keep US NG prices in the toilet (<$4) until
    > the US (and EU?) are in a full recovery. Very, very bad for NG sector
    > stocks for 2010. Please debunk this gloom and doom scenario! It seems
    > all too possible if the magal V-shape recovery does not materialize
    > in early 2010. Hence, why with a weak EU they'll dump there LNG at
    > a (double? june '09) high rate and keep the US storage near max,
    > thus NG prices in the toilet.
    > I'd really hate to additionally bet on a V-shape recovery on top
    > of the structural NG risks I've discussed. There are much more (risk
    > adjusted) profitable bets on a V-shape recovery in the market.<br/>
    > Betting on a V-shape recover is over the top for a NG bet at this
    > point. Also, how can you be so sure that that '06/'07 event (see
    > above) won't repeat in 2010?
    > In summary, NG prices seem destined to go well under $2 well into
    > November, and while it may rebound next year LNG will keep it near
    > $4 and kill/hurt most US NG producers until the economy fully recovers
    > (1-2 years) and get NG price in the $5-6 range.
    > So, you can try catching a falling knife or put your money in soaring
    > NG stocks which will collapse next year when there hedges are gone
    > and NG is kept too low b/c of LNG. Seems like NG is a bad bet until
    > at least Nov.
    > Cheers,
    > Ariel-
    Sep 15, 2009. 12:39 PM | 1 Like Like |Link to Comment
  • Natural Gas Has Spiked 60% Since Labor Day. Why? [View article]
    If only this were true. There are currently producers drilling wells that are not economic hoping for a recovery in the gas price and to hold leasehold. It is possible in the short term for gas to trade below its marginal cost and producers to supply at a loss. They are doing it right now. This situation could take several years to correct without a return to strong demand.

    On Sep 14 10:19 PM Mark Anthony wrote:

    > The Author:
    > The subtitle in your article reads "Heading for a Sub-Zero Price
    > Zone?" Amazing any one can make that statement with a long face.
    > I would love to be able to use as much natural gas as I want, and
    > get paid to do so as well!
    > The fact of the matter is fundamentals here support a much higher
    > natural gas price. According to your quote number, EIA reports natural
    > gas consumption is down only 2.4% in 2009. Is 2.4% down a collapse
    > of demand. Let's say the demand is down 99%, the 1% of customers
    > who still use natural gas still have to pay a fair price, otherwise
    > not a single new natural gas well will be drilled and the supply
    > will drop to zero%. This is the true fundamental, any commodity must
    > be traded above fair cost, price below fair cost is unsustainable,
    > reardless of supply/demand.
    > The widely quoted number 3889 BCF is NOT the maximum storage capacity,
    > it is the conservation LOW BOUND of the capacity estimate. The more
    > optimistic upper bound of storage capacity is 4313 BCF. We are still
    > far below that limit:
    Sep 15, 2009. 12:33 PM | 1 Like Like |Link to Comment
  • Five North American Natural Gas Buys [View article]
    Acquiring leasehold and drilling wells is very capital intensive. With high prices the rush was on to get as much production online as quickly as possible. With that came exorbitant lease bonuses are skyrocketing drilling costs. You are dead on and these companies badly need increased pricing or some will have to go bankrupt/consolidate.

    On Sep 06 02:26 AM c5966 wrote:

    > As I tend to be rather debt averse, when it comes to investing in
    > common shares, none of these companies appeal to me.
    > Relative to the cash on their current balance sheets, these companies
    > are quite debt heavy. Instead of the energy business, they all seem
    > to be in the debt-financing business.
    Sep 15, 2009. 02:23 AM | Likes Like |Link to Comment
  • Natural Gas: America's Energy Salvation [View article]
    Where do you get the idea that natural gas electrical generation is inefficient? Also your area has no shortage of water for the small amounts required for hydraulic fracturing, and the environmental and safety record of hydraulic fracturing is impeccable. What are the environmental effects of all those windmills? Finally what energy source will you use to mine and process ore, fabricate parts, construct your windmills, and move them into place? Your post is more a diatribe against carbon than one that argues the relative merits and efficiency of different energy sources.

    On Sep 06 01:29 PM terravario wrote:

    > I do not agree with Joseph Shaefer that natural gas is America's
    > total energy salvation. It is an essential fuel to heat America's
    > homes and can be used with 95% effeciency. With well insulated homes
    > and LEED building technology, natural gas can serve us as a heating
    > fuel well into the future. To burn natural gas in an inefficient
    > power plant to produce electricity is a terrible waste, even for
    > peaking purposes.
    > We in the Great Lakes are taking a different approach. We realize
    > that shale gas reserves are relatively abundant in the region. But
    > to extract these reserves requires a huge amount of water and other
    > chemicals in the fracturing process. Full development of these reserves
    > will require careful thought, consideration of alternatives, and
    > consideration of the costs involved with extraction in order to protect
    > both water quantity and quality.
    > We are also aware that renewable energy sources cannot be the total
    > answer to our energy needs in the near term (ie, the current need
    > to use natural gas for space heating). But renewables can meet most
    > of our energy needs of the future. Wind is a perfect example.<br/>
    > The Great Lakes region (US and Canada) is served by 75+ gigawatts
    > of generating capacity. This electricity supports a population of
    > more than 40 million people in a very concentrated load center that
    > is described correctly as the third largest economy in the world.
    > The region is also responsible for 10-15% of the world's greenhouse
    > gas emissions. The wind resource of the Great Lakes (onshore and
    > offshore) is one of the best on the planet and is estimated now to
    > be 300+ gigawatts. The US and Canada have set as a goals the generation
    > of roughly a quarter of our electricity by wind by 2030. That translates
    > into 15-20+ gigawatts of wind capacity, MINIMUM, from the Great Lakes.
    > With enough east-west and north-south diversity within a robust Great
    > Lakes power grid, those 15-20+ gigawatts of wind capacity (nicely
    > balanced with several gigawatts of existing hydro and pumped hydro
    > capacity to account for wind variability) can be considered base
    > load capacity. No need to wheel electricty generated by wind from
    > the plains of Canada and the US.
    > The real key to our energy future is to first decarbonize the electric
    > grid and then procede to decarbonize our transportation system.
    > The final push would logically be to decarbonize space heating through
    > energy efficent design, solar thermal, geothermal and other technologies
    > powered by wind and solar generated electicity. This is not pie-in-the-sky.
    > Decarbonization of the electric grid is already occuring at a rapid
    > pace within the Great Lakes which now depends on fossil fuels for
    > about half of its electric generating capacity. More megawatts of
    > wind generating capacity are being built than coal capacity in the
    > region, even as we speak.
    > For more information see the Great Lakes Wind Collaborative website
    > at <;.
    Sep 15, 2009. 02:18 AM | Likes Like |Link to Comment
  • Natural Gas: America's Energy Salvation [View article]
    I agree. Big Corn and Big Coal are much more powerful lobbies than big natural gas.

    On Sep 10 08:48 AM jay brebner wrote:

    > "if only the politicians would stop spending on pork and get the
    > hell out of the way of private industry that is trying to provide
    > this source: clean-burning natural gas."
    > the politicians are defending coal and ethanol. In the coming mid-term
    > ask your rep or senator their position on NG and hold them accountable.
    Sep 15, 2009. 02:00 AM | 2 Likes Like |Link to Comment
  • Natural Gas: America's Energy Salvation [View article]
    There is no significant manipulation of the energy market except by the government itself. If it were so, natural gas would not be below the cost of production of many producers. Trust me, if it was easy to manipulate price the NG producers would love to. We don't need more gov't intervention - the kind that brings huge ethanol subsidies turning food into fuel. If the government was interested in cheap clean fuel direct a few "stimulus" dollars to building out the NG infrastructure and CNG autos. Better yet just get out of the way and stop subsidizing their pet industries. Buying votes through industry subsidies is unethical and bad for the efficiency of the economy.

    On Sep 06 08:13 AM apppro wrote:

    > There is no doubt that NG will become our preferred energy of choice.
    > It is clean (and XOM is building a plant to make it even cleaner),
    > the technology to use it is here now, the technology to distribute
    > is here now, we have loads of it, etc., etc.
    > BUT what we don’t have is a market place where suppliers, end use
    > industries, and long-term investors can buy &amp; sell it. The option
    > traders/traitors have destroyed the spot market by making it a place
    > for gambling and speculation. The media has portrayed some investor
    > instruments as villains, and are relentless with their destruction.
    > We have allowed the Bush years of deregulation of the markets to
    > foster a short-term mentality that has infected every corner of our
    > financial world and even our energy world, too. Until we put an end
    > to all this manipulation due to short-term traders/traitors we will
    > never have a cohesive energy policy no matter what fuel we use.
    Sep 15, 2009. 01:58 AM | 2 Likes Like |Link to Comment
  • Plenty of Natural Gas: Exploration and Production Companies Keep Increasing Oversupply [View article]
    Raymond - good article. The only way the companies could effectively "collaborate" on reducing natural gas output would be via the state oil and gas regulatory agencies. A few operators have asked the Oklahoma Corporation Commission to lower the well allowables across the state for example. If this were done in a coordinated manner in most of the producing states, it might have an impact on supply. I do not see this happening as highly hedged highly leveraged operators with lots of acreage to drill and hold will be opposed. It also would probably not sit well with the public as it a form of priced manipulation. However, as many of the producing states get a significant amount of revenue from various oil and gas taxes, it might be in the states' interest to try and increase prices and therefore tax receipts. Natural gas is essentially being given away free at the moment (nowhere near the price of oil on an energy equivalent basis).
    Sep 15, 2009. 01:39 AM | Likes Like |Link to Comment
  • Plenty of Natural Gas: Exploration and Production Companies Keep Increasing Oversupply [View article]
    Correct. In fact it would be illegal for them to collude on price. There are several factors at play that keep many of the independent E&Ps drilling away. First, many have significant hedge positions that allow them to weather the low prices for now. More importantly, mineral lease terms are usually short (1-3 years) and these companies paid dearly for shale gas acreage. They either drill it and establish production or lose rights (or pay expensive lease renewals if available). As long as the hedges stand they are incentivized to continue drilling, holding acreage, and hope for a price recovery. If prices do not recover and they cannot maintain their hedges (give it a year), they are doomed whether they continue drilling or not.

    On Sep 11 11:53 AM toobad41 wrote:

    > Your sentence "The action by E&amp;P Companies as a whole could be
    > short sighted" is a flat out stupid sentence. E&amp;P Companies
    > are independent of each other and seldom (if ever) act as a whole.
    Sep 15, 2009. 01:28 AM | Likes Like |Link to Comment
  • Natural Gas: Extreme Contango Suggests Caution for E&P Companies [View article]
    Elliot - unfortunately your observation is both true and incredibly sad. I find it strange that in addition to Congress many of the locals in economically depressed northeastern states are also dragging their feet. "Environmental consultants" and local politicians are also throwing up roadblocks. It appears to me that they are just attempting to find out how to get their share of the natural gas revenues. I see the big stink caused by several environmental consultants about hydraulic fracturing and groundwater in Pennsylvania as nothing more than those consultants trying to find a way to extract a living from the new Marcellus industry (nice way to say it). Natural gas extraction is much safer and cleaner than coal extraction and could provide the area with much needed jobs. The consultants know the truth about fracturing and the excellent safety and environmental record of the technology under individual state regulation. They just want to siphon off some of the revenue. Once the local taxing authorities, lawyers, unions, and consultants have figured out how to get their finger in the pie, I expect things to move much faster.
    I apologize for the tangent. There are many frustrating and seemingly senseless things affecting natural gas production and the enlargement of the market.

    On Sep 08 03:55 PM Elliott wrote:

    > Two main reasons Congress is ignoring NG
    > 1. Coal lobby
    > 2. Political calculations -- Pennsylvania is an important swing
    > state in elections, and neither side wants to be punished by Penn
    > voters for causing the loss of coal industry jobs.
    > On Sep 08 12:01 PM GotLife wrote:
    Sep 15, 2009. 01:07 AM | Likes Like |Link to Comment
  • Natural Gas: Extreme Contango Suggests Caution for E&P Companies [View article]
    Ricard - your comment re: partisanship makes no sense. I'm sure Pickens would love for the Democrats to get behind his plan for natural gas. He has a vested financial interest in it. I doubt he cares who gets "credit" for it. Besides the Dems can do it with or without the Pickens's of the world. The only thing stopping them are probable deals with Coal State Democrats and utility lobbyists. As a Republican who works in the natural gas industry I wish the Dems would move forward with a central role for natural gas in our energy policy. It makes economic and environmental sense to do so and I could care less who gets the credit.

    I also agree with the author of the article. Prospects for natural gas are bleak if the shale plays turn out as currently touted and new markets cannot be found and expanded. The market should take care of this situation in the long run with consumers moving to the cheaper fuel, but this will take years. I do not agree with the federal "stimulus" plans. However if they are to exist, building out the natural gas infrastructure, increasing NG electrical generation, and building a new fleet of CNG autos would seem to be a wiser way to spend the taxpayers money than what is currently being pursued. It would lessen our trade deficit, put people to work, decrease power costs, decrease emmisions, and require a new fleet of autos for Detroit to build. Too bad our government is more concerned with politics and idealogy than for the people and the economy.

    On Sep 07 05:16 PM Ricard wrote:

    > Great article and comments, especially from UK Gas Guru.
    > I'd like to add in a political angle as well. T Boone Pickens has
    > IMHO become a spokesperson of sorts for natural gas and the shale
    > plays, and it's interesting to note that despite the cleanliness
    > of the fuel, he is a staunch Republican - I still remember the controversy
    > behind his support for those swift boat commercials attacking Kerry.
    > I think there are some very good merits to his point about using
    > NG to fuel cars and trucks, which could dramatically increase demand
    > for the fuel in the US.
    > I wouldn't be surprised if vested interests like Pickens can't wait
    > for a Republican administration to come along so that they can give
    > the credit to 'their' party, for solving the energy dilemma, for
    > providing cleaner fuel, and for cutting our addiction to oil. I'd
    > find it very strange indeed if Pickens and other energy moguls came
    > out and gave a filibuster proof Democratic administration a morsel
    > like this to savor.
    > In that sense, I wouldn't be surprised if NG rallied along with prospects
    > for Republicans to at least break filibuster next year, and for it
    > to rally further still if in 2012 a Republican had a good chance
    > of de-throning Obama.
    Sep 15, 2009. 12:45 AM | Likes Like |Link to Comment