This Low-Cost, Fast-Payback Asset Is What The Market Wants

By
Keith Schaefer
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I believe that we are heading into a golden age for junior gold miners. Gold’s short, medium and long term charts look very good.
 
And importantly – the sector has been starved for capital for a decade. Despite gold prices being over $1,000 per ounce the capital markets completely deserted this sector for years.
 
It has allowed the great entrepreneurs of this industry to move in and pick up advanced stage assets for literally pennies on the dollar.  Companies with known and proven resources ready to go into production–but with bills they could no longer pay – created desperate sellers.
 
And one junior management team – who have put TEN mines into production – was able to buy one. They had to move fast – and so they used their own capital to acquire it.
 
Then they put this advanced stage asset into a very low market cap company. In fact, the market cap is SO low – their first year cash flow dwarfs their current valuation.
 
That’s where The Big Money is in gold right now – a great asset run by a great team that will generate multiples of cash flow compared to current market cap.
 
In tomorrow’s email, I’ll tell you the name and symbol of this tightly structured junior, which can put their high grade heap leach gold mine into production for as low as US$25 million. Other similar mines in the area produce for roughly US$700/oz, which would generate roughly US$40 million in cash flow–starting in 2022.
 
This is a near-perfect gold asset, ready for production. But what sold me on the stock was the management team. They’ve put a combined TEN mines into production, raised hundreds of millions of dollars in the process and this will be – by far – the simplest, cheapest, and most lucrative one they have ever done.
 
Management recognized a high quality asset when they first saw it: they paid $6 million of their own money to acquire this property where $20 million had already been invested. It has a ready-to-go oxide asset that can quickly go into production.
 
As they execute on their simple plan, I expect the Market to reward them quickly. This asset has exactly what I want to see in a junior miner:
 
Fast path to cash flow – 60,000 to 70,000 ounces of production starting in 2022

Extremely low capex – Just US$30 million required to get the project into production

Large profit margins – Other, similar mines in the area are producing for $700 per ounce versus $1,600 per ounce gold price

High grade – Twice the grade of gold of an average open heap leach pit

Extraordinarily fast payback – Capital can be recovered in MONTHS – well under a year at current prices.

North American operating location – No exotic location risk

The economics of the project should be spectacular – and perfect for a junior operator.

This is exactly the kind of simple low-capex, fast-payback and cash-gushing project that the Market now loves. 

Management believes the current resource will support 60,000 plus ounces of production per year. IF they can produce at a $700 per ounce mining cost – that’s what other mines in this region are producing at – this company could be generating $40 million of annualized cash flow starting in 2022… which is more than the market cap of the entire company today.

Everything about this project looks like a homerun.
 

What You Need To Know – Extreme Credibility

Everything about this junior gold stock has me excited.

The project, the gold price, the resource upside.  In the end though, what gets my attention on any junior operator is the track record of top management – which is where this company really stands out.

You just don’t see people like this running a company with a $25 million market cap.  You also don’t usually see them doing these things:

1/  The Chairman – was previously the CEO of a world class mining company where he led the company to a tenfold increase in market cap, creating $4 billion in value for shareholders.  In addition to that he has founded and sold another junior company for $250 million and built multiple mines.

2/  The CEO – is also a successful company builder, taking his last company public at 15 cents and it  went to over $4.60 per share.  More telling – he used his own personal cash to lock down this asset so that this opportunity didn’t get away.

3/  None of the top executives are taking salary, they are taking stock.  There is no better indication of their belief in the project than that.  Shareholders can’t ask for a team that is more fully aligned with them.

4/  After 17 years as a founding director at a much larger nearby company (that stock went to $19!!!) the Chairman resigned to take the lead role at this tiny company operating in the same region – a pretty solid hint at the value the team believes they have.
 

WHAT IF I’M WRONG?

I’m always looking for what can disrupt my thesis.  And here, there definitely could be one problem:  This mine could be much larger and much higher grade than I thought.

You see, heap leach gold mining is very low cost – but gold recoveries are not always high. The official resource estimate here only factors in 7 of 17.5 kilometers of gold strike; only 40% of what is there.  And that resource estimate uses a pessimistic gold grade of 0.5 grams per tonne – which there is very good reason to believe is far too low.  The average grade here so far is much closer to 2.0 g/t – that’s a very high grade heap leach!

But it does strongly hint that the current resource estimate is potentially too low.

Since the start of 2020 this little company has been releasing updates on mineral sampling that it has been doing on the property.  The grades being reported in the sampling are multiples of what we see in the existing resource.  Plus, much of the sampling being done is from outside the scope that prior resource estimate.

Yep, this fast payback plan would hit a roadblock if there was 2-4 million ounces of high-grade oxide gold here – that, IMHO, every mid-tier producer would pay up well over the US$95/oz average to buy out.  It’s in North America and it’s oxide (=cheap mining costs, v. sulphide) That’s my downside!

Do Not Miss My E-Mail Tomorrow

I personally prefer a low capex, fast payout cash flow mining story. Look folks, I can hardly find an oil and gas play that pays out in months.  When I do, I buy it. I have NEVER heard of a gold mine paying its costs back in months.

Tomorrow I’m going to give you all of the specifics that you need on this junior gold stock.

First, the name and ticker of this junior miner.

Second, the detailed background of this management group that is overqualified to be playing in the micro-cap sector

Third, an overview of this project that could be cashing flowing more than the current market cap of the stock within 20-24 months.

Fourth, the upside that this stock could have if it does discover 2-4 million ounces of high grade oxide gold. And lastly – this company is fully cashed up with millions in the bank.

Watch for my e-mail tomorrow!

Keith

Can These Stocks Scrub A Profit Out Of IMO 2020?

By
Keith Schaefer
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IMO 2020 was potentially a big trade in 2019, and is still potentially a big trade in 2020—though I confess I struggle to find any BIG WIN potential.

IMO 2020 stands for the International Marine Organization, a UN body.  They have mandated that ships switch to much cleaner and more expensive fuel, starting January 1 2020. 

Commercial shipping is incredibly pollutive—one stat I read stated that a cruise ship produces as much pollution a day as one million cars!  So this truly is an issue worth pursuing if we want a greener planet.

US brokerage firm Raymond James hosted a big conference call on January 23 2020 to give investors an update on how IMO 2020 was rolling out.  They invited Pacific Green Technology CEO Scott Poulter (PGTK-NASD) to speak.  PGTK makes a scrubber that ships can use to clean out the dirty ship fuel—which allows ships to continue to buy cheaper, dirtier fuel.

This initiative has mostly been pushed by Asia and Europe (the American gov’t meekly tried to fight it but to a small degree and ended up just followed along) and by all accounts, they are keen to see it enforced in their ports—where a ship not using cleaner fuel cannot come into port.

The Big Winner last year—if you timed it right—was LIQT-NASD; a Danish company called Liqtech.  Our subscribers enjoyed a partial ride on their stock run in 2019. 

LIQT 3 yr chart Feb 3 20

The company has great technology, but it became clear that the pace of orders from the shipping industry would not be anywhere near as huge as the Market guesstimated in early 2019, so I sold the stock and booked my profits. The stock languished the rest of the year but has recently had a 50%  bounce in six weeks.

Pacific Green is focused emission control technologies.  Using their ENVI-Marine System product, the company installs scrubbers for the shipping industry. 

PGTK 3 yr chart Feb 3 20


Over the last year Pacific Green has built up an order book of over 130 scrubber installations – with customers that include the Scorpio Group and Union Maritime.
 

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Source: Pacific Green Investor Presentation

Poulter was asked to give an update on scrubber dynamics now that IMO 2020 is here – and now that shipping companies are seeing the impact of the rule change.

To recap IMO 2020 – This is a new regulation to the shipping industry (that began January this year) that limits sulphur emission.  These limits restrict the use of HSFO as a fuel source for most ships. 

Unless a ship has a scrubber, it can no longer fill its fuel tank with high sulphur fuel oil (HSFO).
 

Scrubbers Remain Economic


Poulter cleared up any confusion about the economics of scrubbers – they are even better than expected for the large ships. 

VLCC’s, containerships and other large carriers can see a payback in 5 to 7 months.

This may come as a surprise to some.   The recent slide in very-low-sulphur fuel (VLSFO) prices has led to some questions about whether scrubbers would turn out to be worthwhile.

But while scrubber economics have narrowed since the beginning of January, they remain quite favorable.

Throughout most of December, VLSFO prices rocketed to new highs.  Since January prices have fallen back down to earth.
 

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Source: Sinagpore Bunker Prices – Ship & Bunker

But the reality is that even at current prices, scrubber economics remain in the black.

The spread at major fuel hubs still eclipses $200 per tonne based on a 60/40 blend of VLSFO and marine gasoil and current HSFO prices.
 

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Source: Ship and Bunker, January 27, 2020 data

Last year shipowners were making the decision to install scrubbers at an expected spread of ~$150 to $200 per tonne. 

Depending on the ship size, this was the price level where payback was between 6 months and 1 year.

DNB Markets put out this handy table of scrubber economics some time ago.  It is still instructive today:
 

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Source: DNB Markets – SHIPPING SECTOR: Scrubbing up nicely for IMO 2020

The reality is that at current spreads it still is very economic to install scrubbers on the larger tankers and containerships.

That being said, scrubbers don’t make sense for all ships.  Smaller tanker like MR’s don’t consume enough fuel to make scrubbers attractive.

Also, there remains a risk though that if product demand disappoints, spreads may tighten further. 

VLSFO and another fuel that ships can blend marine gas-oil (MGO) are middle distillate products that compete for refinery capacity with other fuels – most notably diesel. 

A weakening economy that pulled down the price of other distillates could continue to squeeze low-sulphur fuel margins.
 

Poulter Says Demand for Scrubbers Remains Strong
 

The pop in VLSFO prices in December made many ship owners take notice. 

Consequently, scrubber inquiries have picked up now that IMO 2020 is upon us. 

Poulter says that Pacific Green has received more scrubber inquires in the past 23 days than they did in all of 2019.
 

While smaller ships are less likely to install scrubbers, on a fuel usage basis – scrubbers are viable for 75% of the fuel consumption of the sector based on a 12 month return on investment.

That makes for a large addressable market for scrubber manufacturers.
 

Is Compliance Happening?
 

One of the uncertainties going into 2020 was compliance.  Would ports enforce the rules? 

At one particularly bleak moment Indonesia even went so far as to say they would explicitly not enforce IMO 2020 at any of their ports (they have since backtracked on those comments).

According to Poulter, those concerns have diminished.  He says they are seeing–so far–is strong enforcement of compliance at all the major ports.

Even during scrubber installations Poulter says that compliance is closely checked.  When they bring a vessel into the yard for a scrubber retrofit they are restricted from using HSFO even for the short-trip in.

Instead they have to use gas-oil, and once the scrubber is installed the vessel has to get an exemption to do sea trials on the scrubber – in other words even the most minor usage of HSFO is being scrutinized.

Pacific Green works primarily in China where they operate under a joint venture with Power China.  They see that the China government is being “very, very” strict about the enforcement of the regulations right now.
 

Long Lead Times

 
Pacific Green has a 6-month lead time on new scrubber orders but Poulter says theirs is one of the shortest lead times in the industry. 

Because of their JV with Power China, Pacific Green has shipyard capacity that other installers do not. 

What they are seeing from their competitors are up to 12 months of backlog.   On average Poulter believes the backlog for the industry is around 9 months.
 

Open-Loop versus Closed Loop


Meanwhile, as restrictions on fuels become strictly enforced, the shift is being made to scrubbers that do not discharge the effluent water into the ocean.

Open-loop scrubbers have, in the past, dominated the market – making up around 90% of scrubber installations up until last year.  But that has changed.

According to Liqtech (LIQT – NASDAQ) CEO Sune Mathieson that number has shifted to between 25% to 50% of scrubber installations being closed loop.

Closed loop scrubbers use filter technology to clean (or “scrub”) the effluent water before discharging it into the ocean.  Liqtech manufactures a silicon-carbide filter that can filter out the sulphur from the water, accomplishing this process.
 

A Bumpy Road


With the coronavirus hitting the shipping industry hard, it adds one more layer of uncertainty to an already muddy picture.

On the one-hand, anecdotal reports point to shortages of low-sulphur fuel at some ports and buildups of HSFO that has no where to go.

But so far these anecdotes haven’t shown up in prices as differentials between high and low sulphur fuel have narrowed. 

What’s more, indications are that U.S refiners are importing HSFO as feedstock to replace lost Venezuelan and Iranian heavy crude.  This is keeping a bid under prices, at least in North America.

With so many factors influencing prices, trying to make a bet on where these product prices go from here is very tricky. 

What has to be always kept close at mind is that product prices are all connected – if demand for one goes down, refiners will shift their output at the margins to produce more of another that is more profitable.

Finally, for tiny suppliers like Pacific Green and Liqtech, the question that looms is–can they actually generate Big Money from the scrubber boom.

That, perhaps is the biggest uncertainty of all.  In Liqtech’s case, at their recent investor day the company targeted 30% gross margins for the first half of 2020 and guided to 40% gross margins by 2021.

This remains a far-cry from the 65% gross margins that the company had been expecting once it had ramped production.

Pacific Green seems to be handling the sudden influx of back log a bit better.  In Q3 19 they earned 30c EPS – not bad for a $3 stock.

The scrubber opportunity will not last forever.  Installations will likely peak this year, and in a few more years of catching up to the retrofit backglog it will only be new ships that will see installs.

That means these companies need to make hay while they can.

 

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This Discovery Hole Could Be Worth Billions.

By
Keith Schaefer
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Compelling Geology. Proven Team.RECON-ENERGY (RECO-TSXV; LGDOF-PINK)

Can Be Play-of-the-Year

There is not a single doubt in my mind.

Reconnaissance Energy Africa (RECO:TSX.V/LGDOF-PINK) is the single most exciting oil stock to watch in 2020.

This 60 cent stock is drilling a well that could create more than 100x times its value—yes, in just one hole.

Do you remember where you were when the first Permian well hit big? Or when the first Bakken well was successful? For Canadians it was the Leduc#1 well in 1947.

These wells discovered entire basins that discovered hundreds of billions in value for shareholders and created tens of thousands of jobs—high paying jobs that last for decades—in nearby communities.

ReconEnergy is drilling that kind of well. The geological data is compelling. A nearby well has hit shale. They have put together a Tier 1 team of geologic and market professionals—who have built and sold international juniors before (that is SO important!).

And when you combine their technical and market teams with the geological data, and then throw in the movie-worthy detective-work of how they acquired the entire basin—well, it made me run out and buy stock.  Because history says if one hole in a blanket shale has oil, it almost always means the entire play–in this case 6.3 million acres–has oil.

ReconEnergy has secured the entire Kavango Basin in northeast Namibia—a sparsely-populated country that was colonized by the Germans. It’s as deep as the Permian.  It’s as wide as the Eagle Ford. It could be worth A LOT of money.

Should ReconEnergy prove up what high quality data is telling this high quality team—about 12 billion barrels of OOIP (Original Oil in Place) could be present–then this stock is the Play of the Year.

One well–to be spud in July–could transform this $38 million market cap oil company into one worth billions for shareholders, and a multiple of that to industry and communities.

And I think the likelihood of it working out is VERY high for this kind of play. Here’s how this massive play came about:

Energy entrepreneur Craig Steinke had just finished selling Realm Energy at $1.30/share. Realm was a Polish shale play, and he monetized it for shareholders quickly—it was a fast 500% win for the original shareholder group, and more than a triple for retail shareholders.

Fresh off an international shale win, he bought a new global shale study by IHS Markit—Steinke says he was quite probably the first or second customer for this comprehensive document.

He had a list of 20 criteria he wanted to see in a new play—some above ground, some under-ground.

The Namibian data was just interesting enough for him to fly over there and start developing relationships with the government.

He was looking for oil, but he found a gold mine of data.

The Namibians had recently paid for an airborne magnetic survey over a massive amount of land.

To be clear, a magnetic survey is a low cost way to cover a wide territory and help identify magnetic anomalies that suggest the presence of hydrocarbons.

The Namibian Government had—up until that point—not done anything with it.

And with no wells ever having been drilled in the area, nor any seismic data ever recorded—nobody came asking about it.

Data is the source of leads for oil and gas explorers, so no data… no interest. It was an undiscovered gold mine of data.

Steinke has a GREAT network of international oil and gas professionals—and he turned it over to one of the world’s finest magnetic survey reading consulting experts, Bill Cathey of Earthfield Technologies.

Over 35 years at Earthfield, Cathey has consulted for every oil and gas major and large independent in the business. He has studied data from every major oil and gas basin in the world—from massive sub-salt discoveries in Brazil to huge onshore oil reservoirs in the Middle East he has helped producers find big oil prizes.

What Cathey saw in the Namibian magnetic data shocked everyone involved.

The data revealed to Cathey an incredibly thick (30,000 foot – 6 mile) Permian age sedimentary basin. Not just thick, but also massive—covering an Eagle Ford sized area of land.

In a phone call with me recently, Cathey was clearly excited about what the potential for a Big Discovery at Kavango:

“We took a look at the magnetic data and it’s some of the best that we’ve ever seen. We knew we could do a great job of interpreting how deep the sedimentary basin there would be.

“The first thing that really started jumping out was that you have a sedimentary package that could be up to 30,000 feet thick in that area. It’s flooded with all kinds of sedimentation, including a lot of marine shales, like at the Permian Age Karoo formation.

“It is a very deep basin, and it had never been drilled. Then we saw there is a well that’s a few kilometers to the east, that had actually encountered those Karoo shales, and they were just shallow.

“They seemed to be projecting right into the ReconEnergy acreage… and nowhere in the world is there a sedimentary basin this deep that does not produce hydrocarbons….”

I want you to re-read the last two paragraphs.  First, Cathey says there IS a well that hit oil shale, only a few kilometres/miles away. There IS shale oil in this area. 

Then he says this type of basin has ALWAYS produced hydrocarbons.

Now folks, that is not a guarantee of success, BUT—having a proven well, and having one of the top geophysicists in the world say that—is incredibly important. The main comparables for sedimentary basins with this depth and thickness are the Gulf of Mexico, the Delaware Basin in the Permian, the big sedimentary basins of the Middle East and Russia—the biggest plays in the world.

This is a very deep hole—which is exactly what you need to have for a huge hydrocarbon prize. Needless to say that Cathey’s interpretation of the magnetic data was jaw-dropping.

Information Is Power – And Nobody Else Had This Information

There is a reason that insider trading is illegal in the stock market. It is because it gives whoever has it an unfair advantage. Left unchecked, those with information can easily use it to become filthy rich.

By acquiring the Namibian Government’s magnetic data and having a world class expert examine it the ReconEnergy suddenly found themselves possessing the ultimate inside (and perfectly legal) information….

They were the only people aware that the Kavango Basin could be worth tens of billions of dollars.

With this information advantage the ReconEnergy team struck what could turn out to be the deal of the decade in the oil and gas business. They locked down the rights to the ENTIRE BASIN — 6.3 MILLION ACRES!!!

This was not a bidding war; there was no competition for this land. Nobody else knew!!! Isn’t that crazy?

Some perspective on this is required. 6.3 million acres is virtually identical in size to the entire Eagle Ford in Texas. The Eagle Ford being an oil play that is responsible for tens of billions of dollars of stock market capitalization.

The Kavango Basin could also be worth tens of billions of dollars and the entire thing is held by one tiny company with a market cap of $38 million.  

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 After locking down the asset, the next step was to bring in a top reservoir engineering firm to give their assessment. That was done by Sproule which assessed the potential of Kavango as being a whopping 12 billion barrels of oil and 119 trillion cubic feet of natural gas—actually considerably larger than the latest estimates for the entire Eagle Ford. (Natgas is actually worth something in Africa!)

For a company of this size to hold all of basin this big isn’t unusual—it is unheard of.

I Will Be CheckingMy News Flow Every Morning In 2020….

Steinke has not only assembled an entire world class project, he has put a team in place to match.

Bill Cathey—that world class magnetic data expert–didn’t just provide the consulting advice for the company. He liked what he saw so much that he came onboard as part of the team. What better verification of how big this opportunity is than that?

Also part of the core group is Daniel Jarvie, a name anyone who follows oil and gas will recognize. Jarvie was a key member of Mitchell Energy—the company that cracked the Barnett shale and for which the world can thank for the entire shale revolution.

Jarvie was also head technical man for the $50 billion market cap EOG Resources (EOG-NYSE). The quality of this opportunity speaks to the people that are attracted to it. It’s a world-class team on a world class play.  It’s rare you get to be part of the discovery team for an entire basin.

This drill program is happening FAST. The first well should be spud in July. Then there will be two more immediately to follow. Interested investors need to place their bets before news from the first well comes out.  I expect a speculative premium to start building on the stock, which is why I wanted to alert you to it NOW.

The wells are not expensive; roughly one-third the cost of a Permian well. And since they are targeting a “blanket-shale”, if they hit—there’s an excellent chance that the whole 6.3 million acres is good for the same. The basin is loaded with both shale and conventional opportunities.  

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The numbers here are mind-boggling. At the current share price investors pay $5 per acre for what ReconAfrica holds, meanwhile acreage in proven plays of this kind go for $20,000 per acre plus.

What it all boils down to is this…

2020 for this company is all about drilling 1 hole—with potential to create tens of billions of dollars of value. This isn’t a double or triple of it works—he upside here is unlike anything that I have ever come across in mining or oil and gas and investors get it all for a 60 cent stock.

What I can’t get out of my head is that this is a 30,000 foot thick hydrocarbon formation—and Bill Cathey says every single play he’s ever seen like this HAS hydrocarbons. ALL of them.  It’s as thick as the Permian.  It’s as wide as the Eagle Ford.

Of course there’s risk. That’s why the stock is 60 cents. But junior investors like me wait our whole lives for this kind of play—a great team with great geology and they got their first.  It’s a retirement stock; a yacht stock—if they hit. 

We don’t have to look far to see how one well can create massive wealth overnight. Apache’s (APA-NYSE) entire market cap just went up $5 billion on a discovery that won’t be close to being as large as the upside that this one has.

Stay tuned….

Reconnaissance Energy Africa’s management has reviewed and sponsored this article. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons.  Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom.  Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements.  No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.

Keith Schaefer is not registered with the United States Securities andExchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act,as an “investment adviser” under the Investment Advisers Act of 1940, or in anyother capacity.  He is also not registered with any state securitiescommission or authority as a broker-dealer or investment advisor or in anyother capacity.

A Novel Idea to Get Canadian LNG to Asia

By
Keith Schaefer
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0

A group of Calgary energy entrepreneurs has a novel idea – that could have much lower capital costs and much lower operating costs – for getting Canadian natural gas to Korea and other Asian markets.

Building LNG (Liquid Natural Gas) terminals on tidewater in western North America has been a tough sell.  High costs, environmental impact concerns and activism have caused regulatory delays in both Canada and the United States.

What can you do when you can’t get an LNG terminal built on tidewater?

The answer for tiny TSX Venture company ArcPacific (ACP – TSVX) is simple: you build it inland and transport the LNG to the coast. In Asia and Europe, using existing rail and large river barge infrastructure is a common way to move commodities—including LNG—to markets.

Arc Pacific calls its project “WESCO LNG” , and it’s bringing together major

What they are moving forward is the WESCO LNG project.   This is a very early stage project.  But it is pursuing a novel idea – an LNG production terminal located inland in a sparsely populated area away from the most active opponents of large energy projects, with the ability to tie into an existing underutilized, long-haul pipeline and use existing infrastructure to transport the LNG to the coast.

Getting the Gas (LNG) to Tidewater

WESCO plans to use an existing pipeline to transport the feed gas to the production facility. By avoiding the high cost of a major new pipeline, the project saves billions in capital cost.

So it SHOULD be able to deliver the LNG to the coast at a much lower cost than any other proposed West Coast projects. And this means that the project can be phased-in to meet market demand.  This is not an option for other LNG projects in Western North America which must cover the pipeline development cost – up to $7 billion — from Day 1.

Management says that WESCO’s approach also saves years and tens of millions of dollars of permitting time and expense. Long-haul pipelines by definition cross many jurisdictions and so have a significant environmental and landowner impact.

This means that the process involves countless government agencies and the land rights of many property owners plus exposure to many First Nations land ownership claims.

West Coast energy projects have been plagued with

  1. The cost of construction,
  2. extensive regulatory oversight, and
  3. political complications associated with new pipelines

Having an inland LNG terminal has the potential to avoid that.

Once the LNG is near the coast, WESCO will then transfer the LNG to large, standard LNG tanker vessels which will transport the LNG to Asian markets.  This transfer process is referred to as a Ship to Ship transfer

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This is not new technology. Privately owned Excelerate Energy has done over 1,500 such ship-to-ship (STS) transfers with more than 171 million cubic meters of LNG transferred.  Complete STS technology solutions are now available on the market and STS operations are becoming routine in both Europe and Asia.

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Source: Company Presentation

Getting Canadian NatGas to Market Cheaper

Building an LNG terminal inland has its advantages.

First off, investors are saving the capital cost of the pipeline. The Coastal GasLink pipeline from Dawson Creek to Kitimat, which would serve a competing, proposed LNG project, has an  estimated cost of $6.6 billion.  It will transport 2.1 Bcf/d with further expansion potential.  In contrast, on a per Bcf/d basis, WESCO’s approach will require only a fraction of that capital investment.

A second advantage is cheap power.  WESCO has easy access to abundant, low-cost renewable hydro and wind power which already exists in its region.  This power is in surplus and that surplus is expected to increase.

Management says that by using renewable energy for nearly 100% of its energy input, WESCO will be one of the “greenest” LNG projects in the world.

Transportation and operating costs for WESCO should compare favorably to other West Coast LNG projects – total input costs are ~1/3 t0 50%  of other West Coast LNG projects according to the company.

Sourcing Gas from North America’s Cheapest Hub – AECO

Still, transportation costs to tidewater are higher than the Gulf Coast.  But a couple of factors more than make up for that expense:

  1. Lower natural gas costs from AECO-priced supply
  2. Cheaper shipping costs to Asia

AECO pricing has lagged US Henry Hub natural gas pricing for years.  As increasing US shale gas production has taken more market share there, the AECO price discount versus Henry Hub has only increased—a pattern which could last for decades.

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Source: Arc Energy

Even with recent mandated changes to the operation of the Nova Gas transmission line (a topic we covered in the blog post: How Cheap are NatGas Stocks), AECO prices still trail Henry Hub . The futures price shows the AECO price trailing the Henry Hub price for the year 2024 by over $US.80/MMBtu.

What’s more, the market is not enthusiastic as you look further out – the current futures price for the year 2024 shows AECO at US$1.69/MMBtu while Henry Hub is at US$2.51MMBtu.

To get the gas from British Columbia and Alberta gas production fields to their LNG terminal, WESCO will use the existing TC Energy pipeline system.  Traditional natural gas markets that used natural gas for power generation are increasingly turning to renewable energy. As a result the company expects no problems accessing capacity on these pipelines.

Asian Shipping Costs

And of course, the US west coast is MUCH closer to Asia than the US Gulf Coast. LNG from the Gulf Coast must travel 10,000 nautical miles compared to 5000 nautical miles for a West Coast project; plus a Gulf Coast project must first transit through the Panama Canal which causes an additional delay and incurs a hefty Canal fee.

LNG from the US Gulf Coast either must travel through the Panama Canal or along a long, expensive route via the Cape of Good Hope in South Africa.

Last year the Canadian Energy Research Institute (CERI) compared various Canadian LNG export options to Gulf Coast LNG and to LNG from Australia.

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Source: CERI Competitive Analysis of Canadian LNG, 2018

Shipping costs from Western Canada to Asia are much cheaper than US Gulf Coast gas, and only 9% more expensive than LNG from Australia (where capital costs and costs of gas production are substantially higher than in North America).

Keep in mind the CERI report is looking at LNG terminal costs off the coast of British Columbia that include the full transportation cost.

The shipping method proposed by WESCO lowers costs even further.

Contracts are expected to be primarily a blend of low-risk, fixed-price tolling contracts and take-or-pay offtake agreements that provide more upside from LNG prices.  A small amount of capacity is expected to be allocated to merchant sales that will capture the full upside in price.

This leads us to the other reason for the inland terminal.  The belief is twofold:

  1. Inland communities tend to have less opposition to development than coastal communities—most inland areas are not as wealthy and embrace regional economic improvement
  2. Transportation of LNG to the coast eliminates the need for any major pipeline development.

Final Investment Decision Not Until 2023

The project is calling for a 6 MTPA liquefaction facility located inland. One MTPA (million tons per annum is approximately 135,000 MMBtu/day).  The project can be built in three phases of 2 MTPA at a time.

The project will use a floating LNG terminal. This minimizes onshore land use and  reducesA LOT of the environmental impact – again making permitting much easier and quicker.

Floating LNG terminals (which can largely be built in  Asian shipyards) also typically have much lower capital costs versus traditional “stick-built” LNG plants built onshore which are prone to cost overruns and labor shortages.

As the map below shows, Western North America has an extensive existing pipeline grid that links all major supply basins. An inland project can tie into this highly integrated pipeline grid to ensure supply security and competitive feed gas prices.

WESTERN NORTH AMERICA SUPPLY BASINS AND PIPELINE GRID

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Source: NWGA

The only pipeline requirements for WESCO is a short lateral pipe connecting the project terminal with an existing major long-haul pipeline mainline. The company says this line would not pose any significant environmental concerns.  A short electrical transmission line to the site will also be built—all in a very sparsely populated, rural area.

Capital expenditures for WESCO are expected to come in around $4 billion for the full 6 MTPA (million tons per annum) build out (mgmt. suggests it could actually be $3 billion; $4 billion is playing it safe), which includes the terminal and the transport barges.  A conservative estimate pegs that price tag on a 4 MTPA terminal, but the company believes they can deliver 6 MTPA for the cost.

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Source: Sprott Korea Presentation

The Final Investment Decision (FID) is expected in 2023, which gives a little over 3 years for permitting approvals and construction financing to be arranged. Final permitting approval is expected June 2022.

ArcPacific can earn up to 75% in the project by spending $50 million on the development over the next 3 years.

The remaining equity of WESCO would be split 50/50 between the project originators and a Sprott Korea affiliate.

Subsequent construction capital will come from the market, but could be guaranteed by the Korean Export-Import Bank.  The guarantee would bring down the cost of capital significantly.  It is expected that debt to equity will be around 75/25.

Project Economics

If management can pull this off, the WESCO project should have some excellent economics.

The combination of cheap, abundant Western Canadian gas, no pipeline and a relatively short and direct path to Asia make the project competitive with any global LNG project.

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Source: Company Presentation

Compare these costs to LNG Canada.  The CDN$40 billion price tag on LNG Canada includes a CDN$17 billion LNG plant at Kitimat and a CDN$6.2 billion Coastal GasLink pipeline.

LNG Canada is expected to process 1.7 bcf/d of natural gas into 14 MTPA of LNG.

With a $4 billion cost estimate, WESCO is a virtual bargain in comparison. WESCO’s capital costs per ton of LNG production capacity are only about half of LNG Canada’s, and WESCO’s operating costs per ton of LNG are also likely to be lower than LNG Canada’s.

 
CONCLUSION – A Unique Angle to LNG

This is a really early stage project and there are lots of hurdles ahead.  The regulatory environment will have its pitfalls, as it always does.

That said, the unique approach makes this a development project worth keeping an eye on.

Given the stigma around pipelines these days, a model that removes the requirement for a large-scale pipeline project could have an important leg up.

What remains to be seen is how the environmental opposition organizes against the project. Clearly this project has been designed to manoeuvre through the most contentious aspects of the West Coast permitting maze; however, any major fossil fuel energy project these days can expect opposition.

Nevertheless, the early estimates show compelling economics.  The capital required for river transport is a fraction of what a pipeline would cost. And the capital cost reduction (and cost control) achievable with a floating LNG production facility versus an onshore facility is substantial.

The West Coast is the natural location to transport gas to Asia.  That the Korean government is open to backing the debt from the project shows their interest level is high.

Finally, any project that will find new markets for Western Canadian Sedimentary Basin gas will certainly have the support of a Canadian natural gas industry that is desperate for more markets and takeaway capacity.

Many stakeholders stand to benefit.  Just a matter of getting through the regulatory maze.

EDITORS NOTE: The Market believes US oil production in the Permian basin will rollover – plateau and maybe even decline.  If that happens, oil stocks will soar – and this fully covered 13% yield could go to 30% – GET THE NAME AND SYMBOL OF THIS STOCK RIGHT HERE.

If Core Labs Is Going Down, Oil Is Going Up

By
Keith Schaefer
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Surprisingly…….the most bullish recent piece of news for the price of oil in 2020 DID NOT come from the Middle East.

Not that the massive escalation of Middle East issues with the killing of Iran’s top general isn’t hugely bullish news for oil.

However, the bomb that the oil service company Core Labs (CLB:NYSE) dropped on New Year’s Eve is even bigger and should have the attention of all investors — because it gives us a very clear view as to what is coming in the oil market in 2020.

Core Labs is #1 worldwide in reservoir tweaking–they’re in most every oilfield in the world and have one of the best views as to how oil production is going.  They’re right beside the oil producers in the field.  They know how much oilfields activity is declining or moving up before the public does.

And from what they told the Market–let me tell you friends–I haven’t been this BULLISH ON OIL STOCKS for a decade!

That last time I was this excited my portfolio was loaded with triple digit winners within six months.  The only difference is that this time energy stocks are even cheaper.

 
Ugly, Ugly, Ugly – Unless You Are Long Oil

Core Labs is an important bellwether, or more specifically a leading indicator, for where oil prices are going.

If business is bad for Core Labs, it is telling us that supply is likely to lower, and oil prices are going up.

And while the news isn’t pretty for Core Labs, it most definitely is pretty for oil bulls.

Core Labs share price ended December 30 at $46.46.

After releasing a press release on that day after hours……the stock opened a shocking 21% lower on December 31.

Core Labs didn’t disappoint the market, it shocked the market.

For a press release to have that kind of impact for a company this well known the news has to be more than bad, it has to be distressingly bad……as in far beneath what was believed to be the plausible “worst-case” scenario.

What Core Labs did was hit the market with a hat-trick of painful cuts (1):

Painful Cut #1 – Cut guidance for the last quarter, Q4 2019

Painful Cut #2 – Cut guidance for the next quarter, Q1 2020

Painful Cut #3 – Cut the amount they pay to shareholders, their sacrosanct dividend

Yep, they covered pretty much everything…….Core Labs told investors that most recent results are far worse than expected, results will get worse going forward and that they can no longer afford to pay the current dividend.

The cut to Q4 2019 earnings and earnings per share was 15%.  That is shockingly large considering that initial guidance came out almost a full month into the quarter at the end of October.

In two months business has fallen apart, and remember this isn’t a company that has walk-in traffic.

Customers must be backing out of agreed-upon-business for this kind of surprise to happen.

Business must be rapidly deteriorating if they cut to the dividend — which will immediately be slashed to 25 cents per share from 55 cents per share.

Just two months ago in management’s Q3 conference call with investors CEO David Demshur said this about the dividend:

“Core has no plans to cut our dividend as we review its importance to our investor base, especially our European investor base as being sacrosanct.” (2)

To go from calling the dividend sacrosanct to a cut–in just two months–requires a big-time worsening in future outlook.

Not to mention the crow that you have to eat after throwing around a word like sacrosanct and then immediately not living up to it.  If you want to lose the faith of the market this is a great way to do it……clearly the dividend cut is something the company felt it absolutely had to do.

Why What Core Labs Is Saying Matters So Much

Oil bulls should sit up and applaud this information from Core Labs.  Core Labs is the service company that is in everyone’s kitchen — they have a clear view as to what is going on with American shale and are telling us exactly what is going to happen.

If business is falling apart for Core Labs that means that American horizontal producers have hit the wall hard and that is BULLISH FOR OIL PRICES in the very near future.

If these companies aren’t drilling like crazy their production falls very fast, atrociously high decline rates have always been the Achilles Heel of the shale producers.

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For months now we have been getting drips and drabs of information that U.S. oil growth may disappoint in 2020…..but Core Labs is suddenly seeing activity drop so much that they have contradicted what the CEO just said about the sacrosanct dividend and slashed it by more than half.

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I would suggest they view the immediate future as being quite dire…consider that this $0.55 dividend held  through the entire oil crash in early 2016 when WTI dipped under $30 per barrel, and drilling activity collapsed.

That environment didn’t frighten the Core Labs Board of Director’s to cut the dividend but what is coming in 2020 does.  I would say that’s BULLISH for oil prices!

Perhaps the most interesting tidbit from this news release from Core Labs was this……..while management gave a multi-year outlook for international/offshore client activity they gave nothing specific about U.S. onshore Q1 guidance.

I take that to mean–they know it is bad, but they don’t want to go on record with a specific number for fear of having to reduce it again later.

The Oil Sector Is Already Massively Undervalued

If you follow the oil market you know that the only thing that saved the world from permanent triple digit oil prices was the American horizontal revolution.

American shale has been the only source of global oil production growth for the past decade.

For months there has been speculation that American shale production growth may have peaked, but now you have to wonder if American shale production in total may have peaked…….as in it may actually roll over and decline.

I don’t know about that, but what evidence like Core Labs is making clear is that–horizontal driller activity is slamming to a halt, which should greatly help 2020 oil prices.

What makes this investment opportunity EPIC is the fact that there are great (non-shale) oil businesses that are trading at historically (and absurdly) low valuations.

The best stocks will have high oil weightings; almost no natural gas.  They will have great balance sheets–little or even no debt (yes there are a couple!).  And they will be growing inside cash flow.

These companies aren’t priced for anything close to $60 oil — many of them would need to double or triple just for that.  So if oil keeps going up from here and money starts finding the valuations here……..

These are the kinds of wealth creating buying opportunities that you HAVE to exploit.

The sector has a huge tailwind coming from the price of oil as shale production slows and the valuations in the sector are at historic lows.

Now is not the time for sitting on your hands and watching this play out.

Now is the time to pounce on this opportunity before the really big mainstream institutional dollars start flooding into the sector.  The entire market is expensive, this is the one sector that is dirt cheap.

The stock that I am telling subscribers to own has it all–including a double digit yield.  How many distress-free stocks have that?  Grab that yield NOW–click HERE.

Are Ridesharing Stocks About To LYFT Off?

By
Keith Schaefer
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Everyone thinks Facebook is a great stock—and it is; the 10 year chart says so.

But investors are forgetting that Facebook stock stumbled badly after its IPO, losing almost 2/3rds of its opening day high of $45.  It took roughly 18 months for the stock to hit new highs—and then it never looked back, going to $218, or 1250% off the $17.55 bottom.  And it did that with almost no volatility!

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UBER and LYFT are two disruptive leaders, like Facebook, that also stumbled badly in the public markets after their IPO.  They bled cash profusely in their first couple quarterly reports.

But clearly, things are changing.  Research notes from brokerage firms are noting how this competitive industry is now turning into an oligopoly of two—and this should be good for UBER and LYFT as pricing pressures ease.

Their charts are bottoming just as Facebook did in its first year.  It’s important for investors to understand one very important thing—these stocks don’t need good financials to soar higher: they just need less-bad financials.  Like oil in 2019—everybody hated these stocks.  That could set them up for a great 2020 with any hint of a turn-around.

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Folks, oligopolies make a LOT of money. Now it could still be years before UBER and LYFT show positive cash flow.  But stocks will price that in well in advance of it actually happening.

The #1 problem for rideshare companies right now is: LACK OF DRIVERS. My favourite stock in this sector helps solve that problem.  They have a platform technology that they are exploiting like no one else.  And it’s all packed into a very tightly structured $50 million micro-cap.

It’s a high-risk junior, but if UBER and LYFT take off, so will this stock—quite possibly a multi-bagger if they execute properly just as these senior ridesharing stocks soar upwards.   It’s a very exciting time for this young company.  Get my report on it before it lyfts off!  Click HERE to learn more this offer which ends January 13th.

Get Ready For Doubles And Triples In The Oil Sector In 2020: Peter Lynch

By
Keith Schaefer
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The latest table pounding buy for the oil sector was issued last week.

It came from the most unlikely (and highly credentialed) source.

The single greatest fund manager in history said in a Barron’s interview last week:

“Oil, energy services, and natural gas can provide triples……”

He named no other sector, this is where he says to invest today.

To be clear on exactly what he said….

1—He did not say that the sector offered opportunity.

2—He did not say that he that he is buying some oil and gas stocks.

3—He did not even say that he thinks that there is one specific oil and gas stock that can triple.

What he said is that the oil and gas sector is full of stocks that can triple from current prices.
It is go time!

The Investor Is Peter Lynch
His Track Record Unfathomably Good

Peter Lynch ran the Fidelity Magellan mutual fund from 1977 to 1990.  When he took over the fund it was tiny, just $18 million in assets.  When he left 13 years later……it was the biggest fund in the world with $14 billion.

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Source: Fox Business

He retired early in 1990 because his father had died at 46, which understandably hung over him.  He didn’t want to spend his whole life in an office and miss his children growing up.

His performance was epic — he generated an astonishing 29% annualized return over the period that he ran Fidelity Magellan.  $10,000 invested with Lynch in 1977 would have been $300,000 when he left.

The table below shows his annual performance versus the S&P 500.  The consistency for someone putting up annualized numbers that big is remarkable.  I would have expected a lot more volatility.

Clearly he wasn’t making many big mistakes…

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Source: Fidelity

Most of us knew of this great performance already, so this isn’t news.

What was revealed in his interview with Barron’s though is–new information about Lynch’s investing, post-retirement.  It turns out he has been killing it since he left Fidelity as well.

Lynch told Barron’s about his late wife’s IRA which he had managed for her.

From 1974 to 1978 she put just $750 per year into it.  Despite subsequently taking $3 million out of it to pay for weddings, graduations and other events, those small $750 contributions had still grown to be worth $8 million when she passed from leukemia in 2014.

Lynch believes that the IRA account was up 350,000% over that time period….WOWZERS!!!

Making Big Sector Bets Drove Lynch’s Performance

Obviously you don’t rack up the kind of performance that Lynch has by running with the herd.

Outperformance like this requires thinking very differently.

While at Fidelity Magellan Lynch often overweighted areas that were unusually attractive. Lynch made big sector bets, once putting 25% of the fund in utilities, and later owning 400 financial institutions when they traded at half of their book value.

He didn’t follow the herd, he followed the value.

Today the sector that Lynch is betting on is oil and gas — as I mentioned, he believes that stocks in this sector can be triples from where they currently trade.

Lynch notes the hatred for the sector is off the charts….his words on energy compiled in Barron’s:

“You wouldn’t know it from the stocks, but oil is 25% higher than a year ago. Why have these stocks gone down? Everybody’s assuming the world’s not going to use oil for the next 20 years, or five years, or next year. The private-equity money wants out. The banks want to cut back their lending. They can’t do an initial public offering.”

Barron’s didn’t really do a great job of articulating his thinking….so to further clarify what he means I also found him interviewed by Fox Business News late last week, where he laid out his thesis much more clearly.

What Lynch believes is that the capital starvation of shale is going to hit production very hard in 2020.  The shale producers can’t raise equity, they can’t issue more debt and are even having existing bank lines reduced.
You can see it happening, the horizontal rig count is collapsing

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Shale production of the future will look very different from the growth machine we have seen over the past several years.

Shale production has driven an increase in U.S. oil production from 5 to 12 million barrels per day….but that shale production is also declining at a rate of 40% per year which requires frantic drilling to offset.

Companies can’t drill frantically if they don’t have to cash to pay for the wells.

Lynch believes that 2020 is going to be an eye-opener for the oil markets and that triples are there for the taking…..

I plan to get my share of those triples–starting with an oil and gas stock that gives me the best of both worlds–income and capital gains.

This stock offers:

  • A 15% yield…that is not a typo…fifteen percent
  • Excellent balance sheet–NO debt
  • Has no exposure to shale
  • Doesn’t need oil prices to increase to be a great investment

Peter Lynch said he expects triples from this sector, what more do you need to here than that?  Get your share of this opportunity by clicking HERE.

What Are The EIA Oil Production Numbers Telling Us?

By
Keith Schaefer
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How fast is US oil production slowing?  That is The Big Question that oil bulls are asking right now.

That—and some wildly different EIA data—make this question very timely right now.

You see, the monthly and weekly EIA oil production data are showing growth at two very different speeds.  The weekly numbers intimate growth is barely slowing at all, while the two-month delayed monthly numbers (EIA 914 report) show production slowing a lot.

For the monthlies, an investor could reasonably argue the rollover in US shale production is already happening.

For investors, it’s a $100 billion question.  The weekly numbers say don’t buy oil stocks yet; red light!  The monthly numbers are saying buy now; green light!

Weekly vs. Monthly

The EIA is the Energy Information Administration based out of Washington DC.  You can learn all about them here – https://www.eia.gov/about/

The EIA Methodology

Every week the EIA estimates oil inventory, imports, exports and production to give the public a full picture of what happened over the previous week.

If you talk with the EIA or dig into their methodology, one thing becomes clear: they have a much firmer grasp on inventories than any of the other numbers they provide.

Every week the EIA surveys for inventory.  In addition, there are third party data providers like Genscape that make inventory estimates from thermal cameras, satellite images and other innovative techniques.

What it means is that EIA has a lot of confidence in their inventory number.  They know it’s in the ballpark and are confident which base it’s on.

The production numbers on the other hand….

Weekly production is estimated from the latest available production data from Alaska and a whole bunch of short-term forecasts for the rest of the country.

Those short-term forecasts come from the STEO, or Short-Term Energy Outlook, an EIA modeling exercise which is notoriously inaccurate.

Bottom line – the weekly data we get is marked-to-model and has a history of being wrong.

Monthly Surveys

The monthly numbers are far better quality than the weeklies.

In 2015, the EIA began to issue a comprehensive, survey based monthly production report (the EIA-914).

The survey used in the report included all major production areas.  According to the EIA at least 85% of production within a state is surveyed. Overall, they assert that 94% of production in the country is accounted for.

Even though the methodologies differ, over time the weeklies and the monthly data have tracked each other fairly well.

There are some that say this is because the EIA plays with the weekly data if they need to get it back inline with the monthly numbers.

Whatever the backroom mechanics, the data is usually fairly close over time and if anything, the monthly data has a history of showing higher production than the weeklies.

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Source: EIA Data

That is, until recently.

First, let me be clear – there is very little discrepancy between the two datasets for the last few comparable periods.

In fact, if you looked at the September data alone, you would conclude that the weekly and monthly numbers agree extremely well.

The monthly data for September, which is the last reported period, is showing about 12.46 million barrels per day of production.

The weekly data agrees with that – the September weeklies bounced between 12.4 and 12.5 million barrels per day.

No problem, right?

Well, maybe.  The problem is in the trend.

Taking a step back to look at a longer time horizon, the two datasets are telling different stories about the trend in production since around the fourth quarter of 2018.

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Source: EIA Data

Weekly data started the year at 11.7 million barrels per day – which means up to the September numbers, there was 700,000-800,000 barrels per day of growth in production.

The monthly data is showing much more modest growth.  Only a little over 400,000 barrels per day for the first 9 months.

Looking through to December, the weekly data continues to show production climbing.  The most recent numbers have production at 12.9 million barrels per day.

Clearly if the weekly data is correct then US growth has not slowed that much this year – 1.2 million barrels per day of growth is huge!

But if the monthly trend is correct then maybe this is a different story all together.  It is telling us the U.S will add maybe half a million barrels per day by year-end.

That would be very bullish for crude prices.

The Next Few Months with be Telling

There are two noticeably different trends here and it is too early to say which is right.

The simplest way that I can see this resolve is if the monthlies “catch up” to the weeklies.

In other words, we see large production increases in October and November, it confirms that crude production has grown as expected and the crude oil market continues to muddle along.

If that happens, then this is all much ado about nothing.  What we are seeing here is not a trend, its noise.

But what if the monthlies don’t confirm the production increase at year end?  What if the trend continues along the same line it has followed since late-2018?

In other words: what if the monthly data is telling us that the supply-demand balance is quite a bit tighter and the Permian rollover is already happening?

To conclude:

  1. Of the two datasets – the monthly data is always going to be more accurate
  2. So far, it is the monthly data that is reflecting a noticeable slowdown
  3. This slowdown is not confirmed by weekly data – a dataset that is well known to be inaccurate and based on a model
  4. As a general rule, models are poor at forecasting inflection points

Anecdotally, what we hear from producers and servicing companies line up much better with a trend of flatter numbers.

The rig count has trended down all year.  In fact, there was a slowdown that began in the fourth quarter of 2018 (is it coincidence that this is the same time the monthly data began to flatten out?).

Commentary coming out about the fourth quarter of this year point to this slowdown continuing.

On top of that you have the decline rates.  Just this week IHS estimated that base decline rates in the Permian were 40%.

That means that 1.5 million barrels per day of production need to be replaced next year just to keep production flat.

Shale production is on a treadmill that needs to run very fast.

I’m still taking a wait and see approach, but my interest here is piqued.

The next couple of monthly numbers will be key.  If the monthly numbers don’t show a pop up to 12.8 or 12.9 million barrels per day it will be a huge red light for production growth.

And a green light to buy well positioned oil stocks.

Keith

Become a Paid Subscriber to get access to my top energy picks, and more, by clicking HERE

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