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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: quehubo who wrote (24171)	6/28/2003 8:31:08 AM
From: jim_p	Read Replies (2) of 206093

que, In theory the price needs to be higher than in the past due to the higher finding costs over the last several years. The problem is the cycle, if you have 1000 rigs running and the average depletion rate for the first years production is 30-45% you will always get over supply sooner or later. The higher the depletion rate, the shorter the cycle. One of the big factors today is the price of oil. If oil falls back to the $20.00 level, there is no reason NG will not fall back to $2-3.00. The next big over supply I see in NG is when all the planned LNG facilities are on production and NG prices have held up over $4-5.00 long enough for a nice sustained drilling cycle to cause a sustained period of over supply and very low prices. It's coming, it always has and it always will. We may stay in a period of shorter cycles for now until completion of the LNG boom. Jim

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