Best place to ask this is on the Boom Boom Room thread.
Something is going on - my GUESS -
Past 3-4 months the generally accepted idea was that 1) oil prices would come down post Iraq - and they did, somewhat.
and 2) North American Natural gas prices would tend to stay up, at least until there was more drilling, a warm winter or very low crude oil prices to beat down NG prices.
Well, oil prices seem to be stuck in the high 20's not low 20's...
Looking at the oil price charts, I could not make sense of the Nymex or WTI. The Brent shows an upward channel starting .....
oilnergy.com
I am now leaning a bit to buying some of the oilier trusts, just like Kastel - in fact I bought some BPT (Alaskan trust) today.
Pick a reason -
A) Oil is harder to find, we are seeing Hubbert's peak, sky will soon fall. Yawn - every energy consultant has a Power Point slide of this.
B) Venezuela cuts, Iraq cuts, and Nigeria & Columbia disturbances causing a shortage. Very real.
C) World economy is recovering, not tanking, pushing up demand. Don't know if this is true, or to what degree.
D) Bankers and Wall Street beat up on oil companies because they did not like balance sheets, so companies are paying down debt more than drilling. This is real - less drilling now than 2 years ago.
This interacts with B) do you want to spend 70 million on an offshore well platform if the oil price will be under $20 in two years when Iraq and Venezuela are fixed ?
Some of the neo-cons (like Larry Kudlow) are talkling about $12 oil. North Sea oil costs about $14. At least half the drilling in Texas would stop at $12.
Fear of having the price collaspe will reduce drilling commitments.
E) Something else.
Fotr energy stocks I will be buying Canroys and the smaller E&P firms who are increasign prodcution. Bigger firms. like DVN, EOG, ECA don't seem to get any respect.
On my buy list - PGH, NCN, VET (Vermmillion) PMT (Paramount, special situatuion) SJT, BPT. Maybe more TMR - I'm up to my position limit, but it's still tempting.
Watching CWEI. Want get some ROYL, but at a lower price.
TMR under $5.00 would be my nuber #1 pick right now.
Quick scan of the Yahoo TMR board, last months news releases, and a look at quarterly financial (and prodcution levels) will make the case for TMR.
Quick case for TMR -
In Q1 of 2003 they produced gas at a rate of about 67 MMCF a day.
In the middle of Q2, they completed a well which produces at 30 MMCF a day. SO that's 50% production increase. They are drilling more wells in that area, and just logged a new aone and reported on Tuesday.. May not be as good at 30 MMCf, pay zones about 1/3 size of the big well.
Completion in about 2-3 weeks.
They have lots of acerage in this area.
Oh, and NG prices are up ;-)
Plug the numbers into the financials, and make your own guess.
ED Adjootian turned me on to TMR. |
