3 Month High In Oil Prices Will Drive This Cheap Energy Producer Higher [View article]
NFX is my favorite oil stock at current prices. It has the cash flow to fund a huge drilling program and it has prime leases to drill. All it needs is execution, and its management looks much better than six months ago.
NFX common is worth $50 - $60 at current oil prices (WTI = $93.47 as I type).
In the case of a major oil supply disruption, NFX would be one of the stocks to most profit. It is my largest holding.
Natural Gas Production Could Be Curtailed By Drought [View article]
I'm skeptical about the affect of water avaibility on natural gas prices. But politicians are irrational. Recall Pres Obama's malicious attack on Gulf drilling after the PB disaster.
In any case, the odds that natural gas prices will increase are less than 50:50.
An $8 Oil Stock With Takeover And Bakken Potential [View article]
REN has been on the skids. Its stock price has collapsed, and while it may be bumping bottom, it also may be headed for another cliff.
REN doesn’t update its website or presentation. It hasn’t issued a press release about it 2nd Qtr earning release and conference call (should occur about 7 August 2012). Frankly, REN is acting like FST acted before FST’s CEO left, and FST’s stock fell to new lows.
REN’s main asset is the giant Aneth Field complex of CO2 floods; it is a true gemstone. Beyond that REN holds some scattered and unproven properties in Wyoming, the Williston Basin, and Permian Basin. It got to those places late in the game.
I can’t see why another firm would want to buy REN. REN has little potential for the kind of growth an acquirer would expect.
Contrary to this article, successful oil firms rarely grow by acquisition. They grow by leasing raw land and drilling wells.
Bakken Update: Whiting's Second Quarter Was A Miss But Production Was Better Than Expected [View article]
I agree with MexCom that WLL’s “miss” is due to oil price. WLL, like CLR, is less hedged than some of the other oil E&Ps. I also agree that WLL is an excellent hedge against oil supply interruptions, like that potentially caused the warmongering of Obama and Romney.
However, WLL remains a growth story. No one yet knows the potential of the Williston Basin, and WLL has hardly begun to exploit the known potential of its vast acreage.
Good article. I especially like the comment that what counts is the *current* drilling success of the firm. The past provides nothing but a rapidly decreasing cash flow that must be quickly and successfully used. An oil firm’s value is based on the velocity of reinvesting its cash flow. WLL is one of the best at doing that.
WLL is also an excellent trading vehicle. I have have well over 100 sucessful round trip trades in WLL, better and more consistent than any other stock I have traded.
Tom, is right about efficiency. Plus gas cc plants start and stop much faster and are smaller.
Also this article deals with averages. Average cost/mmbtu of coal vs. average cost of natural gas/mmbtu. Variance in cost makes the switch rational.
Some plants will almost never swtich to gas as they have cheap coal. Others with more expensive coal are switching as fast as they can make the technical modifications and arrange for a large connection to the natural gas pipeline system.
Associated gas almost always eventually gets connected. I don't predict prices of natural gas, coal or oil, but my investments are in oil producers. The profit oil E&Ps make from associated gas is icing on the cake.
Newfield: South Cana Wells Shine, But The Play's Scalability Remains To Be Proven [View article]
Wow! One of the very best oilfield articles to appear on Seeking Alpha.
I agree. Even at today’s depressed stock price, NFX has a MktCap of $4.2B. It takes more new oil production to move NFX’s stock than it did to move BEXP’s when BEXP was $100M to $1B.
CEO Lee Boothby said the initial commitment to the Cana was $300M, that’s 7% of shareholder equity or $2.21 per share.
He said the Cana wells should yield 35% - 50% IRRs. Now the questions are: How many productive acres will NFX have? and What will be the well spacing (in acres)?
Mr. Boothby said was that the wells already drilled and tested were “25% to 60% black oil,” so the rest is split between NGLs and natural gas.
Who Will Take Over Whiting Petroleum? [View article]
WLL is my second biggest holding; but idle takeover talk is just idle talk.
I hit the BEXP takeover and the HK takeover. I buy oil stocks that have one or only a few only few large proven and prospective plays. These “simple” firms are easier for me to analyze. Large oil companies hunting for buys also want something simple to analyze.
They would first look at single-play firms like OAS (I own a tad of this) and CXO. WLL and CLR (both of which I own) would be just a little lower on the list. My favorite holding, NFX, would be further down the list, as it has international operations.
Takeover villains like Icahn are rag pickers. They want firms like CHK. Perhaps “vultures” would be a better term than rag pickers.
The BEXP and HK takeovers were not hostile. Their CEOs were willing to walk away in their 50s will huge and safe fortunes for a mere decade or so of work. Can you say that Whiting CEO James Volker is ready to sell?
I don’t buy stocks for their M&A potential; if takeover talk positively affects price, I sell.
"Stockton Plan: Make Bondholders Feel Pain," reads the title of a Bond Buyer story on the bankrupt California city. The town's play to slash debt payments has so far gone nowhere during negotiations with creditors. "If Stockton does get relief from bondholders," says strategist Dan Heckman, "that would be disturbing to the muni bond market." [View news story]
The risk premium will increase, especially for the weaker issuers. Premium = higher rates, which will increase interest cost and push the issuers toward defaut.
Chesapeake: A Strong Natural Gas Play At $17 [View article]
CHK has ceased to be priced as a petroleum stock and is now just speculative. The CHK story has devolved to the CEO’s foibles & crimes, takeovers, Icahn, major stockholders, SEC/IRS/DOJ, and completely new markets for natural gas (requiring major changes in infrastructure and consumer habits).
The real story should be whether or not CHK is successful in its efforts to find oil (not gas), and the quality and quantity of its leased oil acreage. A secondary story is whether or not it can raise cash by dumping selling assets, and what the account affects of that will be.
Baker Hughes And Schlumberger Have Good Earnings Results On International Growth [View article]
Thanks for the article; guar beans was a new one on me.
We used to say that BHI, SLB, & HAL got the tough jobs at premium prices, and their competitors under-bid them for many of the more routine jobs. It will be interesting in five years or so to see how this all shakes out.
What The Reduction Of The Natural Gas Glut Means For Energy Stocks [View article]
Steam coal is not dead in the US, but steam coal will be in a long-term depression. Long-term sales contracts partially protect coal producers, and some ultilities don't have the option to switch to natual gas (yet).
Natural gas is also being subsituted for some met coal.
The B-H rig count is down in the US but up in Canada, especially in the last few weeks.
Natural gas producers in the US are producing against the marginal NG producers in the US. The marginal NG producer is the US (my guess) can produce gas for around $2 - $2.50. We'll see. We're in the peak summer A/C season here in the US.
US oil producers are still competing against the marginal cost of imported oil. US oil producers can't get themselves into the bind that US gas producers have.
Oil is still the place to be in the US (not gas, not coal). Natural gas is a by-product of oil production; so oil E&P firms will benefit from higher gas prices if they come.
The Mississippian Lime: America's Next Big Resource Play [View article]
SD is poorly managed. It is priced at only $6.61 when the market is near it's post 2008-9 high.
If the market retreats , I'll be looking to speculate in SD, but below $6; I'm thinking $5.50.
Natural Gas: 40 Rigs Can Maintain Haynesville Production Plateau [View article]
Chesapeake's Eagle Ford News Good For Surrounding Companies [View article]
3 Month High In Oil Prices Will Drive This Cheap Energy Producer Higher [View article]
NFX common is worth $50 - $60 at current oil prices (WTI = $93.47 as I type).
In the case of a major oil supply disruption, NFX would be one of the stocks to most profit. It is my largest holding.
Natural Gas Production Could Be Curtailed By Drought [View article]
In any case, the odds that natural gas prices will increase are less than 50:50.
An $8 Oil Stock With Takeover And Bakken Potential [View article]
REN doesn’t update its website or presentation. It hasn’t issued a press release about it 2nd Qtr earning release and conference call (should occur about 7 August 2012). Frankly, REN is acting like FST acted before FST’s CEO left, and FST’s stock fell to new lows.
REN’s main asset is the giant Aneth Field complex of CO2 floods; it is a true gemstone. Beyond that REN holds some scattered and unproven properties in Wyoming, the Williston Basin, and Permian Basin. It got to those places late in the game.
I can’t see why another firm would want to buy REN. REN has little potential for the kind of growth an acquirer would expect.
Contrary to this article, successful oil firms rarely grow by acquisition. They grow by leasing raw land and drilling wells.
Bakken Update: Whiting's Second Quarter Was A Miss But Production Was Better Than Expected [View article]
However, WLL remains a growth story. No one yet knows the potential of the Williston Basin, and WLL has hardly begun to exploit the known potential of its vast acreage.
Good article. I especially like the comment that what counts is the *current* drilling success of the firm. The past provides nothing but a rapidly decreasing cash flow that must be quickly and successfully used. An oil firm’s value is based on the velocity of reinvesting its cash flow. WLL is one of the best at doing that.
WLL is also an excellent trading vehicle. I have have well over 100 sucessful round trip trades in WLL, better and more consistent than any other stock I have traded.
Natural Gas: Look Out Below [View article]
Also this article deals with averages. Average cost/mmbtu of coal vs. average cost of natural gas/mmbtu. Variance in cost makes the switch rational.
Some plants will almost never swtich to gas as they have cheap coal. Others with more expensive coal are switching as fast as they can make the technical modifications and arrange for a large connection to the natural gas pipeline system.
Associated gas almost always eventually gets connected. I don't predict prices of natural gas, coal or oil, but my investments are in oil producers. The profit oil E&Ps make from associated gas is icing on the cake.
Newfield: South Cana Wells Shine, But The Play's Scalability Remains To Be Proven [View article]
I agree. Even at today’s depressed stock price, NFX has a MktCap of $4.2B. It takes more new oil production to move NFX’s stock than it did to move BEXP’s when BEXP was $100M to $1B.
CEO Lee Boothby said the initial commitment to the Cana was $300M, that’s 7% of shareholder equity or $2.21 per share.
He said the Cana wells should yield 35% - 50% IRRs. Now the questions are: How many productive acres will NFX have? and What will be the well spacing (in acres)?
Mr. Boothby said was that the wells already drilled and tested were “25% to 60% black oil,” so the rest is split between NGLs and natural gas.
Who Will Take Over Whiting Petroleum? [View article]
I hit the BEXP takeover and the HK takeover. I buy oil stocks that have one or only a few only few large proven and prospective plays. These “simple” firms are easier for me to analyze. Large oil companies hunting for buys also want something simple to analyze.
They would first look at single-play firms like OAS (I own a tad of this) and CXO. WLL and CLR (both of which I own) would be just a little lower on the list. My favorite holding, NFX, would be further down the list, as it has international operations.
Takeover villains like Icahn are rag pickers. They want firms like CHK. Perhaps “vultures” would be a better term than rag pickers.
The BEXP and HK takeovers were not hostile. Their CEOs were willing to walk away in their 50s will huge and safe fortunes for a mere decade or so of work. Can you say that Whiting CEO James Volker is ready to sell?
I don’t buy stocks for their M&A potential; if takeover talk positively affects price, I sell.
How Low Can Zynga Go? [View article]
"Stockton Plan: Make Bondholders Feel Pain," reads the title of a Bond Buyer story on the bankrupt California city. The town's play to slash debt payments has so far gone nowhere during negotiations with creditors. "If Stockton does get relief from bondholders," says strategist Dan Heckman, "that would be disturbing to the muni bond market." [View news story]
Chesapeake: A Strong Natural Gas Play At $17 [View article]
The real story should be whether or not CHK is successful in its efforts to find oil (not gas), and the quality and quantity of its leased oil acreage. A secondary story is whether or not it can raise cash by dumping selling assets, and what the account affects of that will be.
Baker Hughes And Schlumberger Have Good Earnings Results On International Growth [View article]
We used to say that BHI, SLB, & HAL got the tough jobs at premium prices, and their competitors under-bid them for many of the more routine jobs. It will be interesting in five years or so to see how this all shakes out.
What The Reduction Of The Natural Gas Glut Means For Energy Stocks [View article]
Natural gas is also being subsituted for some met coal.
The B-H rig count is down in the US but up in Canada, especially in the last few weeks.
Natural gas producers in the US are producing against the marginal NG producers in the US. The marginal NG producer is the US (my guess) can produce gas for around $2 - $2.50. We'll see. We're in the peak summer A/C season here in the US.
US oil producers are still competing against the marginal cost of imported oil. US oil producers can't get themselves into the bind that US gas producers have.
Oil is still the place to be in the US (not gas, not coal). Natural gas is a by-product of oil production; so oil E&P firms will benefit from higher gas prices if they come.