<ABX:would rather put $68 in the bank than bet on rising gold prices>
They already have put almost all that money in the bank. For instance, a glance at their hedge book shows 3,000,000 oz sold forward in 2003 at $340. This morning the June 2003's are $280 (spot is about 273). If they could find a seller (unlikely?) for their close out purchase, $60 of that $67 "profit" could be realized today. They've already speculated against POG and won. Why would they wish to squeeze out a mere $7 contango and hold this position for another year and half? Makes no sense to me, unless they are betting on much lower prices. If they would do this even a huge ABX critic like me would be a buyer. Otherwise why would anyone pay $14 for a stock that offered no cash flow upside in a gold rally?
Message 16664668
Barrick "premium sales" program:
barrick.com
Some notes from a Matthew Simmons presentation:
Through 8/31/01 19,700 natural gas wells were drilled during the previous twelve months, utilizing over 1000 rigs. NG production in the third quarter was reported at 52.5 bcf/day. In the first quarter of 1997 the system produced, the same 52.5 bcf. Wells drilled in the twelve months prior was about 12,000. This suggests established fields are facing serious depletion issues.
The NYMEX gas strip has shown a strong correlation to gas drilling with only a two month lag. Simmons suggests that based on current prices rig usage will fall to 600-700 and that wells will drop to 12,000-13,000.
If record well numbers in 2001 only achieved the production seen from the levels of depressed drilling in 1996, any predictions on what 12,000 wells will produce by mid-2002? This may explain in part why energy stocks are fighting off hyper depressed stock prices right now? Perhaps the market understands that low prices are very temporary. |
