by admin on June 23, 2010
Today’s buyout of Ryland Oil (RYL-TSX) by Crescent Point Energy (CPG-TSX) is a good example of how large “resource plays” can get valued by investors. CPG paid $121.8 million, or roughly $0.45/share for Ryland.
But back in 2006, when the mania of the emerging Bakken oil play in North Dakota and southern Saskatchewan was at a peak, Ryland soared from 10 cents to $4 in months.
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by admin on June 22, 2010
CSFB, or Credit Suisse First Boston, a US brokerage firm, estimates that all-in costs for natural gas producers is roughly $5.25/mcf, in a 37 page report issued June 21.
While the report had no startling conclusions, it did have some interesting facts and figures that often don’t filter down to the retail investor, such as:
– more productive gas rigs mean lower cost structures (an average horizontal gas well only takes 2/3rds the time it did 2 years ago)
-over half of US gas production is hedged in 2010 at $6/mcf or better – by their estimates
-the liquid-rich Granite Wash play of the Texas panhandle has the best IRR (internal rate of return) on investment of any US gas play at 64% – #2, the Marcellus liquids-rich section, was only 42 [click to continue…]
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by admin on June 21, 2010
Few investors realize that one sector of the heavy oil market is the most profitable oil in all of North America – it’s called cold flow heavy oil. Think of it as light heavy oil, thick and gooey enough that it needs a pump to get out of the ground, but no so thick that it needs expensive heating to make it flow – hence the name cold flow.
And the recent BP disaster in the Gulf of Mexico will only help Canadian heavy oil prices. If production from the Gulf is slowly curtailed, US refineries will look to Canada even more for supply.
When I say cold flow heavy oil is the most profitable, I mean that producers get more dollars of profit out for every dollar they put in to get the oil, than from other types of oil. For every dollar producers put in the ground to get the oil, they get anywhere from $3-$7 back (or more) – compared to $2-$4 for most light oil, generally speaking.
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[[T_F]]Data Leak Prevention – Data Security Solutions – Information Theft Protection, Detection and Prevention Software Productstracefusion_signature=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[[T_F]]
by admin on June 15, 2010
A group of natural gas producers in North America are discovering the secret sauce to profits, and as a result many of them are outperforming their peers.
It’s called “wet gas” or “liquid rich gas” or “natural gas liquids” or “NGL”, but any way you spell it, you get better cash flow than just regular “dry” gas. (Dry gas is methane.)
The market is now catching on to how much these NGLs improve cash flow, and they have been the first and biggest movers so far in the Canadian gas stocks. Institutional investors are realizing they can buy big leverage to rising gas prices and still get good cash flow from current low prices, because of the added NGL content.
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This is what I call the “shopping season” for natural gas stocks. And even though I’m a longer-term bear on natural gas, there is one part of the natural gas market that is not well known, I think mis-understood, and potentially mis-priced. As a result, I think it could make me money this year – and I think now is the time for me to be buying this little subset.
The reason for these purchases NOW is that every year, summer is the weakest time of the year for natural gas and sets up an annual trade for natural gas stocks – buy in June-August, sell in December- January when North American heating demand should have natural gas trading at its year highs.
Last year gas stocks languished badly through the summer, forcing fire sales on assets and it took every bit of goodwill the bankers and producers (in Canada) had for each other for some of these companies not to go bankrupt. But September 2009 saw a large seasonal jump in natural gas prices – they roughly doubled from $2.50/mmcf to $5 in January 2010 - despite fundamentals remaining poor. And there was a great 4 month trading rally.
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A large part of Canada’s massive oil sands deposits could become one of the most “green” energies on the planet, by using electricity to heat up and break down the heavy oil. EEOR, or Electrically Enhanced Oil RecoverySM is a new technology being field tested in Saskatchewan by a Canadian junior producer, Deloro Resources.
EEOR uses little water, emits no greenhouses gases on site, and uses electricity from local utilities to a conventional heavy oil well, says Phil Bell, President and CEO of Electro-Petroleum Inc., (EPI) the Pennsylvania company which developed the technology.
He adds that EEOR also greatly increases production, which means that both capital and operating costs will be a fraction of current technologies, like SAGD (Steam Assisted Gravity Drainage).
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A Saskatchewan entrepreneur could revolutionize oil exploration worldwide, with a new technology that uses readily available satellite data to determine if a property has commercial amounts of oil or gas underground.
Robert Fisher, CEO of Leaf and Stone Resonance Services Inc. in Saskatoon, uses a process called “resonance coupling” that he says can tell if there is oil and/or gas on a property, onshore or offshore.
To date, he has mostly used the oil exploration technology to help find mineral formations; Fisher says it’s good for finding gold, and for kimberlite pipes, the geological host for diamonds.
Fisher says his Texas based partner David Carr developed and tested resonance coupling in oil and gas for 21 months in the Permian Basin in Texas. Fisher’s Leaf and Stone is a marketing company for the technology. To date, they have had one commercial success with oil – the delineation of a heavy oil field near Lloydminster, Saskatchewan.
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The global oil price got slaughtered this week, taking oil stocks down with it. Is this a buying opportunity?
Only history will tell us, but I would suggest now that the stock charts of many oil producers have pierced their long term, 200 day moving averages, they will take weeks or months to “recycle”, and base again for a move up later this year.
There will be a rally next week, but the likelihood of oil market charts bouncing back up THROUGH their short term moving averages and staying there are slim. The daily, weekly, and monthly charts for oil are all negative now. (Natural gas charts however are in much better shape.)
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