Rod,
I agree --- looks like your occupation is in pretty good shape at this point!
You may find the following of interest, from today's PetroDistpatch, an e-mail service written by Steve King:
Is the World Running Out of Energy?
Will science and technology to supply the world with natural resources in unlimited amounts? Some experts have stated ?...we shall be compelled to reject the simple depletion theory. The revised theory will suggest that natural resources are not finite in any meaningful economic sense, mind-boggling though this assertion may be. That is, there is no solid reason to believe that there will ever be a greater scarcity of these extractive resources in the long-run future than there is now.? (SIMON, J. L., 1980, Resources, Population, Environment: An Oversupply of False Bad News: Science, v. 208, June 27).
Science and technology do have limits imposed by the laws of geochemistry and the current trend in the growth of population. The demands of increased world economic growth will ultimately overwhelm the ability of science and technology to solve the problems of availability of resources. It takes stuff to make stuff.
The questions are when will this happen and how can individual investors make money from this knowledge.
Advanced exploration and production technologies have allowed geologists and engineers in a less than two hundred years to discover and develop the huge store of mineral and energy resources which accumulated slowly over billions of years. Since 1900, world population has increased nearly four times, but the world economy has expanded more than 20 times. Fossil fuel use has increased by a factor of 30 and industrial production has grown by a factor of 50, and four-fifths of these increases have occurred since 1950. More petroleum, coal, and metals have been used since 1950 than in all previous human history. The oil development has gone more and more to the Middle East. Worldwide, petroleum is still in abundance but the delivery system maintains prices.
For the investor, these trends mean you can make money by investing in the companies exploiting these resources. But only in those companies who are better than their competitors by finding more of what is left at lower costs. These will flourish and the weak sisters will die. Use opportunities presented by overly complacent investors who periodically sell off these good companies, to add to your positions.
This winter looks like just such an opportunity. A third warm winter should depress share prices despite strong crude prices. Many of the recommendations in the BLACK GOLD Investment Advisory are back to good fundamental values. If OPEC can?t deliver its promised production in March when the excess supplies are projected to be eliminated, crude prices should spike (a time to sell half on the double?). If OPEC can produce at its promised rates, share prices could be expected to be flat which would be OK if you are selling covered calls. Later, because of a third winter of depressed cash flows which will decrease exploration activities, natural gas supplies should be obviously less than demand by the end of 2000.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$
Are you selling oil from that well you hit? Must be pretty cool to be getting almost double the amount of cash flow that you banked on when you planned the well!
What is the posted price down there now? |
