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Gold/Mining/Energy : Canadian REITS, Trusts & Dividend Stocks -- Ignore unavailable to you. Want to Upgrade?

To: stan_hughes who wrote (1596)	10/2/2001 9:32:13 PM
From: russet	Read Replies (4) \| Respond to of 11633

<<<Actually, what you described only serves to depress prices even longer, because an increasing supply of shut-in gas wells is being created that will be sitting there waiting to offset any demand>>> This is not my understanding. The wells that have been drilled quickly this past year to take advantage of the spike in prices, were mainly drilled in existing shallow fields which can deliver the volume quickly, but they expire quickly. In other words, the pressure drops 50% every couple of months so their lifetime is short. Soon these wells will need treatment or horizontal drilling to produce at economic rates, if they can produce economically at all. The long lasting reserves come from deeper wells that cost a lot of bucks to drill and complete, and no one will drill too many of these without a good natural gas price because it ain't worth it. We are likely in a temporary oversupply position brought about by the price spike last year which caused all this extra drilling. This gas production spike is leveling off now, and decreasing well production volumes is predicted by the industry to put us right back into the escalator of rising gas prices perhaps only after a couple of months of cold weather. Don't forget, even with all that drilling, they still didn't replace gas reserves used last year. The main question now is perhaps as the Jubak article described,...when to get in before the next upswing starts,...perhaps it already has. Good old NCF.un had a nice spike again today,...so did most of the other trusts. Cold weather on the way this weekend. Checked your furnace yet (gggggggggggggggggggg). Sandy McIntyre (sp)(oil and gas trust expert) was on ROBtv tonight. Talked about the oil and gas trusts,...felt they are oversold because traditionally people/institutions with large positions must sell into very thin markets with thin bids resulting in large unwarranted price drops. The same thing can happen in the other direction when someone wants in,...these comparatively thinly traded stocks have always been very volatile. Keep in mind though, that oil and gas royalty trusts as a whole have outperformed both the TSE30, TSE300 and oil and gas stocks for the last 10 years to this date, even with the latest drop off. I think you are too pessimistic with your outlook. Looking at the financial statements of many oil and gas companies, it seems most have hedged a lot of gas production at much higher prices for most of the balance of the coming heating season,...how many producers are warning? I doubt anyone is willing to sell too much gas at a buck,...it costs more to transport it to a major hub and the producer many times must pay that freight cost, especially if they sell to the spot. Realize who, and what volume is being sold at spot,...it could be small independents with low volume who just want beer and casino money for the weekend. The volumes sold at spot are probably quite low. The third and fourth quarter reports will tell the tale,...we can revisit these comments then to see if I'm a true guree, or just full of crap. Interesting that Enerplus (very conservative trust) distribution only dropped a nickel to $.40 this month,...they factored in September prices,...are things looking up??? Only the guree knows???:-))