₪ David Pescod's Late Edition July 18, 2006
NATURAL GAS $5.55 -0.228
CANDAX ENERGY INC. (T-CAX) $0.92 n/c
PARAMOUNT ENERGY TRUST (T-PMT.UN) $18.55 +0.05
Yesterday it was hot over much of North America. A
scorching heat wave hit much of the United States—New York
City saw 96 degrees, Chicago saw 95 degrees and Denver
almost 100. Even north of the border up here, Toronto was in
the high 30’s and put in the humidity and you have an unbelievable
44 degrees Celsius in much of southern Ontario.
Hot!
Just what the oil and gas follower needs, because of an
incredibly weak natural gas market that has affected all sectors
of the oil patch recently. So with all that heat that you
assume would have led to greater demand for power for airconditioning,
things should have been getting better, right?
Well wrong. Gas plummeted yesterday, having one of its
biggest drops this year, down $0.56 to $5.78 because of yet
another big build in natural gas inventories to 2.7 TCF in the
U.S.A., up 27% over the five year average. Something is not
working here and we suspect that the high prices are making
a lot of fuel users go elsewhere to find alternative sources of
power.
Either way, we go to John Clarke, for two years in a row
named “Canada’s top oil and gas analyst” before he decided
to get into the business himself with Candax Energy and ask
him what he thought next for natural gas.
“It’s got to go higher” he suggests and when we ask him
why, he’s pretty blunt - “It just has to go higher.” He suggests
that he finds himself nibbling these days on a couple of
natural gas stocks, some of which we’ve actually named here
in the past, plus nibbling on a couple of trusts. “These are
not the kind of ideas that are going to change a persons lifestyle”
he suggests, but he thinks will give a person a chance
to make a buck.
We are doing our big “Doubles” issue the third week of
August, by which time we hope the resource markets may
have bottomed and Clarke tells us by then, he will have something
pizzazzy and exciting.
As far as facts on the natural gas, after this heat wave
things seems to be cooling a bit over North America, despite
California announcing its first power emergency in nine
months.
Meanwhile, a good interview on ROB-TV with Clay Riddell
of Paramount Trust in which they also talk about natural
gas and what next. The confident Clay Riddell, a legendary
player in the oil and gas patch simply says, “Every year we
have to replace 25% of the gas being used” and like Clarke,
suggests prices have to go up to make sure people will
look for it. To see this interview, go to www.robtv.com and
click on watch past videos. It’s the 7:00 show from Monday.
This doesn’t just affect all the oil and gas stocks and
many of the gassy stocks have lost 20% to 40% over the
last few months, it’s now starting to affect the drilling
stocks as well, because whereas six month ago, you couldn’t
find a rig at all, now all of a sudden, you want one—you
can probably find one as some of the big companies have
cut back on their natural gas exploration budgets.
PETROLIFERA PETROLEUM (T-PDP) $14.09 +0.98
CONNACHER OIL & GAS (T-CLL) $ 3.88 -0.05
It’s the summer doldrums on the markets folks, in case
you weren’t very well aware of it. Volumes are a small
fraction, maybe as little as a quarter of just a few months
ago and small orders are sometimes affecting stocks,
sometimes significantly. But in these doldrums and despite
a screen that’s 80% to 90% red, there’s still tidbits
of good news. Petrolifera Petroleum has a good day as
GMP Securities initiates coverage with a $20.00 target.
We’ve mentioned a few others that think $20.00 is quite
do-able for Petrolifera and their Puesto Morales/
Rinconada Concession in Argentina and one of the big
beneficiaries is Connacher Oil & Gas (CLL), who has
31% of Petrolifera. But while Petrolifera’s stock has a
good day today, Connacher is suffering like so many
others. Looks to us like Connacher is another Oilexcotype
story where as we get closer to production, maybe
people will care more. |
