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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: Bearcatbob who wrote (181728)12/15/2013 6:36:59 PM
From: Ed Ajootian  Read Replies (2) of 206330
 
BCBob, my sense is that there are a fair number of small E&P companies out there that match the description of your buddy's company but my thought at this point is that the additional drilling that those small companies will do in response to, say, $4.50 gas prices, will not be enough to move the needle, production-wise, or at least move it by very much. Most of the smaller companies aren't drilling the mile-long laterals with 30+ stage fracs that the larger companies are drilling. The negative stigma that gas currently has for investors vs. oil is likely to far outlast the point that gas has become economic to drill again, for psychological reasons, which will make it an uphill battle for a lot of these small companies to get more financing, at least initially.

I just don't see any "flood of gas" coming with increased prices, at least not at prices such as the what we are looking at now. Before we see new supply we should see reduced demand, from the last remaining amount of power gen switching from gas back to coal that can occur. I'm not sure how much that is but I don't think there is a lot of that left to go at this point. Its been so long that we had a high enough natty price to support zero coal-to-gas switching that I can't even recall what that price would need to be. Hopefully we'll see some research reports address this point in the coming weeks.
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