In progress ....
Year To Date Energy Has Been The Place To Be. Of course that does not mean it will be without volatility in the near term or that you can expect to annualize the first quarter over the back three quarters of the year and become complacent. But my expectations are, in general, modestly higher oil prices for 2011 relative to 2011. I do think we see an end of the Libyan government relief drop in the near term ... assuming Ghaddafi loses. Natural gas is a little more complicated but I do expect it too to end the year higher than current levels after we see a near term pullback on slack shoulder season demand and continued too strong production. See the Friday post for more detailed thinking on both commodities.
U.S. Gas Rig Count In Pre Cliff Dive Mode. Note that the U.S. gas directed rig count is only off 6% despite pervasively weak natural gas prices. It's a mad dash to get acreage held and then stack rigs or shift them to oily plays. To compete with oil wells, natural gas in the States would need to trade in excess of $10 / MMBTU (or $7 to $8 if you listened to Aubrey's most recent comments). The timing of the real decline in gas rigs is still thought to be mid year although some slippage could occur with the count not really tailing off until Fall. Horizontal rigs continue to punch through to new record levels and the associated gas from many of the liquids rich plays is going to come up the hole no matter economics.
Alternative Fuels Get A Burst of Sunshine. After extreme under-performance in 2010 and the first part of 2011, the alternative energy plays, as exhibited in the third red circle in the Wrap table below, have been given a breath of fresh air with 1) the rebreaching of the $100 mark for oil prices, 2) the nuclear disaster in Japan, and 3) the President's newfound energy for energy policy. The only trouble with solar is economics. With a strong governmental breeze at your back both solar and wind can compete with more traditional fuels. Right now might not be the time for that with deficit debates in danger of overtaking reality shows. My sense is that there will be little in the way of increased subsidies for alt energy projects in the US or Europe in the near term and that the alternative energy group is the subject of more emotion than the fundamentals will bear out.
Natural gas even received favorable mention in the President's bullet points if not positioning. Increasing domestic production was only mentioned after a bizarre comment about working with international partners to help them increase their supply. Secretary Chu really should send the White House a memo on just how bottom of the barrel LNG imports to the States are at present and perhaps why that is. And besides, isn't the play to get off foreign hydrocarbons? And create jobs in the U.S.? On a positive note, Chu has been tasked with making sure shale gas extraction in the States is safe. Chu is a scientist and my sense is that he will move with more alacrity on greenlighting the frac process than Salazar (holder of a BA in polysci, a JD, and a career politician) did on the moratorium. One would think that Chu should be able to connect the dots regarding the easiest way to transition to lower imported crude volumes and higher employment numbers as we approach 2012.
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Another county's oil prodcution is offline…….albeit a small one with only 220,000 bppd [vs. Libya's 1.5 to 1.6 million bopd].
Gabon's oil workers union went on strike(nationwide) which resulted in the shut-in of most of the nation's oil production [on-shore & offshore].
The apparent issue causing the strike is the proprotion of foreign oil workers working in Gabon. Last year the government agreeed a program to reduce the %age…………but apparently the union is not satisfied. Since Total is by far the largest operator and employer of oil workers in Gabon it would seem to be directed at them.
Since oil represents the primary source of government revenue, the stike is not expected to be prolonged………but only time will tell.
Thanks much Crysball. If EGY takes a big hit I'll take another look, big year of change for those guys. On Gabon, small yes but all those pinch points matter again. I expect Nigeria to cause problems again in the near term and for markets to be paying attention. Cote d'Ivoire small at 60,000 bopd but a problem too with 800 reported deaths in their presidential struggle and U.S. companies suspending exploration for the time being.
Anyone like their mid 2006 or newer landcruiser?
Zorg had a great quarter. He'd like to thank everyone on the board who contributed trading ideas that wouldn't have seen otherwise. In particular he'd like to thank Z who provides the "grist for the mill" on a daily basis. Also, much thanks to those who contributed market/sector concepts and context that taught me a lot along the way. Zorg also has to acknowledge the market in general and the energy sector more specifically. This quarter has been the best since 1998 for the S&P500 and the energy sector has been the strongest sector within that index. Zorg has to remind himself of the old saying "Don't confuse a bull market for brains" and not get sloppy and complacent here.
http://finance.yahoo.com/echarts?s=XLE+Interactive#chart3:symbol=xle;range=3m;compare=xlf+xly+xlb+xlk+xli;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=off;source=undefined
Best to all.
EGY was down 5.4% on the news [#1 above] on Friday.
EGY should spud their first Buffalo Wallow [Granite Wash] well shortly [1-4 weeks], and while Horizontal completion is subject to avialability, am told they paid $65 million in 2010 for OHGP completion services in 2010 in Gabon and have been assured they will receive preferrred scheduling…..if that means anything.
While a 640 arcre leasehold seems a miniscule toehold [in the big Granite Wash picture,] they allude to closing on largeer leasehold's soon.
Could someone clarify the downspacing in the Granite Wash…..in one presnetation heard 20 acres…………..is that real?
Also hear that 20 acre downspacing plays into the hands of cash-rich companies [like EGY] who have to come up with the front end money.
Re Beer Thirty
A man is sitting on the porch with his wife and he says, “I love you.”
She asks, “Is that you or the beer talking?”
He replies, “It’s me………talking to the beer.”
Has anyone seen this yet on CIGX? BOP?
Must read.
http://xa.yimg.com/kq/groups/14511094/1089346374/name/%5E2011-03-18+Anatabine+Issue_noPortfolio.pdf
Zorg – glad it's working for you, thanks for the kind words, agree re caution and complacency thoughts.
JB – voted, great charts, making a habit of going through them all each Sunday, opening page BEXP is constructive looking.
You can vote for JB here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3724280
re 6 BOP that link here posted that several days ago.
David and mim — thanks for the posting and comments. That article is just mind-blowing, really. Worth making sure everyone has a chance to read it. Even if you are skeptical of the CigRx product (and who, in their right mind, wouldn't be?), it's an interesting read on some theories of the mechanics behind "aging."
JB..Thanks. Found a couple interesting things. Voted
BOP, Zman, Zorg…thank you and others very much for the votes, always appreciated, will be interesting to see how futures open tonight…looking at setups going into next week…
JB — my pleasure. Really appreciate your work!
Re CIGX
This is fascinating old news. In 2003 Dr. Mullan (MD PhD) resigned as head of the Alzheimer's research facility at the University of South Florida to go full time to Roskamp. He took 40 people with him and "dozens of scientists."
http://www.sptimes.com/2003/02/20/TampaBay/Alzheimer_s_research_.shtml
Also see
http://www.youtube.com/watch?v=ztPkv7wc3yU
David — interesting stuff.
Yes… Robert Roskamp and the Roskamp Institute are the Real Thing… staffed by Real Scientists… working on a Real Solution to Alzheimer's. Kind of exciting, isn't it?
#14 It is exciting. Someday, maybe, this stock could be a life changer. More than that, anatabine could be a world changer.
CHK closed on support Friday at $33.50, notice the double layer triangle support in a zone between $32.50 and $33.50, the 30 min should be helpful in dialing down to more specific areas of support for long entry consideration. Charts updated….
Big thunderstorm, high winds, lots of lightning, may lose power here.
cigx up 36 premarket over 5.15