₪ David Pescod's Late Edition September 26, 2006
CRUDE OIL $61.01 -0.44
CONNACHER OIL & GAS (T-CLL) $3.43 +0.15
It was just back on August 30th, we did an interview with Eric Sprott of Sprott Asset Management, one of the leading proponents in Canada of higher commodity prices. Naturally, with commodity prices across the board retreating over the last few weeks, all of a sudden, people seem to be dismissing the concept of Peak Oil production.
Which makes this months issue (September 6th of their monthly letter) “Piquing Over the Peak” fairly interesting reading. Much of the four page commentary looks at research put out by Cambridge Energy Research Associates over the last while and they were one of the biggest critics of Peak Oil. Their research shows that Cambridge estimates of who is producing what have missed the mark, rather significantly. It points out by how much and in what countries that happened.
They also have some rather interesting commentary on the recently announced Jack 2 well discovery in the Gulf of Mexico and they are pretty blunt in their criticism of that discovery.
They write; “Let’s discuss the Jack 2 well, and how it is being touted as the refutation of Peak Oil. We think this is a load of crock that is being greatly over-hyped. After years of planning, Jack 2 was drilled far off the coast of Louisiana at a depth of Mount Everest and at a cost in excess of $100 million… Furthermore, it is being claimed that 3 to 15 billion barrels of ‘new’ oil (such a large range doesn’t lend confidence that they know what’s really down there) was found, but this would encompass the entire lower tertiary of the Gulf of Mexico (which stretches for hundreds of miles) and not just the environs of Jack. In short, it is arm-waving. It says nothing about recovery rates, and it says nothing about existing rig shortages and how that will delay new drilling.”
They continue; “Jack 2 is said to have found “light sweet”, but other deepwater wells drilled to that depth in the area have only come up with heavy oil too thick to extract. It is also worth noting that even at the upper end of the resource estimate, and assuming 100% recovery (an extremely generous assumption), the entire lower tertiary only accounts for not even half a year of global oil demand…We can guarantee you that if Saudi Arabia’s 5 million barrel per day Ghawar field goes into decline, it will be far more significant to the Peak Oil theory than is Jack.”
“One final point is the issue of time frame. Jack is not expected to have commercial production until 2012-13. By that time, the world will already be past Peak Oil and Jack, with production of 60,000 barrels per day, will mean Jack!”
To receive a copy of Sprott’s report, just e-mail Sandra at Sandra_wicks@canaccord.com.
Is it time for traders/investors to consider Connacher?
Connacher Oil & Gas
www.connacheroil.com
GOLDCORP INC. (T-G) $25.53 +0.92
Unless you’ve been on a vacation to some magical island in the middle of nowhere with no communication or off on a religious retreat, you know that the commodity markets have had a huge correction in the last while.
Some people call it a correction, others suggest it is bigger than that. Oil stumbles from $78 to $59; gold stumbles from $730 to $570 and natural gas continues its ever lower drift. The only commodities seemingly impervious to this sell off has been uranium, nickel and zinc.
But for those of us who play the junior game, and figure it is just ourselves being punished, take a look at a the chart of Goldcorp. Goldcorp, one of the bigger players in the gold industry, and once upon a time the darling of the seniors in the stock market, shows just how badly everyone’s been hit.
Of course, there are some people that aren’t keen on some of Goldcorp’s recent deals, but still, the correction is just the sign of the times we’ve been in...and maybe an opportunity.
www.goldcorp.com
What War With Iran Would Look Like……….
So what would you do if you were the President of the United States (and you know that these days most people in the world don’t like you - particularly in the Middle East) and you know that Iran is on the verge of having their own nuclear weapons?
There are so many people that are believers that once Iran does have the nukes, they might just use it and if you were the President of the United States, what should you do?
Well it’s pretty scary to contemplate, but obviously the world is not as safe of a place as it has been over much of the last two decades. But, the scenario that is painted out in Time Magazine is just a little bit scary and that is probably why you might want to give it a read.
The implications (of course) are enormous, particularly for the price of oil, considering that Iran virtually controls the Straits of Hormuz….. Andy Gustajtis suggested yesterday that it was worth a read and we definitely concur!
If you would like to receive the Late Edition, just e-mail Debbie at debbie_lewis@canaccord.com |
