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

To: stan_hughes who wrote (2340)	12/21/2001 12:16:39 PM
From: David Alon	Read Replies (2) \| Respond to of 11633

I agree with your assessment of NG over the next few months, but, I do not understand why the prices are holding up so well. Eveb today, with all that storage here now, NG is trading well over $4 Can. What gives?

To: stan_hughes who wrote (2340)	12/21/2001 8:11:08 PM
From: Peter W. Panchyshyn	Respond to of 11633

Lorne - Here's some more doom and gloom analysis for Peter to stay in denial over. Wait until the average energy stock investor (who generally does not understand the business) gets an education on how high storage levels will affect prices at the wellhead going forward. ------------------ Wait , thats all that the doom and gloomers have been saying. Wait but it never comes about as they say. High storage levels were to have affected prices by now, sending them to $1CDN that never happened instead they went to close to $4 CDN now ---------------- Those who are hoping for some kind of big rebound in NG prices that will somehow end the slow torture are in for a big disappointment. -------------- There has already been a big rebound in natgas prices already from $1.80 CDN or lower in SEP/OCT to $3.60 CDN or more now. Your right as usual Stan (NOT). The long term price graph I linked to previous shows long term price ranges since 1988 of between $1 and $2 CDN. Where the trusts and other producers were making good money selling their product and delivering income to unitholders all during the time. -------------------- Big users contract some or all of their needs in advance for obvious reasons. ---------------- And what exactly does contract mean.? You are obliged to buy a certain amount at a fixed price over a fixed period of time. These are contracts they cannot be so easily broken whenever they want to. ------------------- Now consider what those high storage levels mean, particularly in light of our mild winter thus far. It means that a lot of those big consumption forward purchasers will not need to buy ANY MORE gas for the rest of this winter, because they're already loaded to the gills with the stuff. ------------- They will not need to buy anymore because they have contracts for all they need for the season ahead. The contracts are made well in advance to ensure supply. They are not fortune tellers able to predict months ahead of mild weather. If that were the case they could be wrong and their clients would seriously suffer with no supply if they needed it. --------------------- The only people buying gas as winter ends will be those who were smart enough to see this coming and hold back. There aren't many of them. It's even scarier when you consider that these people will represent almost the entire extent of spot market demand about 90 days from now. -------------------- And its already been shown the trusts or other producers don't sell on the same spot market that your quoting. Because when the prices collapsed in sept to $1.80 or lower not one of the trusts contacted said they had sold any gas at those prices.---------------------------------------------------- Utilities don't care about this situation because whatever they paid on behalf of their customers just goes into the cost base, upon which they are guaranteed a fixed rate of return. --------------- This makes no sense in light of the financial straps the California utilities have found themselves in. Obviously they were unable to pass on the costs as you suggested and that is why they became in trouble ---------- Oil prices are a lot lower than last year and fuel oil abounds. --------------- And that depends on from where you look. Do you look when oil reached a peak above $30 a barrell or when last year it had dipped below the $25 mark. The price of oil ranged last year as it does each and every year between highs and lows. Much in line with the actual trust unit prices as detailed in the table I present in post # 1998 where I show the yearly price ranges for ERF ------------------------------------ Consequently, NG's competitive cost advantage has a lid on it. This is why the notion that the onset of cold weather will save the day is a myth. Too little, too late. So let's fast forward to mid-February. You're a gas producer. The end of the NA winter heating season is staring you in the face, and so is that pesky continuing record volume of gas in storage. The cash market is going comatose,because most end users have their hands full just trying to use up the stuff they already own. ---------------- But they have to act and sign contracts to ensure they have supply for that which they cannot forecast. For what may or maynot happen because no one knows for sure how a season will play out in advance. Cause if they are wrong then they will get squeezed have no supply contract then have to go to the spot market which will rise because no one forecasted correctly and they will have to pay higher and higher prices. What I mean is that in advance they have to be assured they have all bases covered. Because if they get caught forecasting wrong then they maybe in deep and dire straits ---------------------------------- Except for firm service commitments, there is next to no demand for your product, and no chance for improvement until air conditioning season is in full swing (assuming that even materializes). Not exactly the kind of market environment that will find investors putting premium prices and multiples on your securities as a gas producer. --------------- This is much like the fantasy story you told months earlier and your dire forecasts did not go as low as you had said. Nor did they stay down that low for that long (maybe 1 month at best). BUT THIS TIME ITS DIFFERENT RIGHT. -------------------------- It doesn't matter that somebody at the DOE published a paper saying NG will be in short supply 3 or 5 years from now, because that won't help you over the next 6 months or a year. ------------- The short term is only a concern for "traders". Who can't guess right at the best of times let alone above 50-50 ---------------- And the $10 California bubble price that people have emotional ownership of as a potentially reachievable high? You'll never see it again in your lifetime. ---------------- You won't have to see that to succeed from these trusts. The past data has shown the longer running trusts were able to thrive and make payouts to unitholders when the price for natgas averaged between $1 and $2 throughout the period 1988 to recent present past highs. As long as they produce above their costs they will have no problems. They have done that before they will do it still and again. No matter how the price of the commodity fluctuates between lows and highs. That is the documented FACT. ------------------------- IMO things will get much, much worse before they get better, even if the economy improves earlier than expected (which I doubt will happen). The bottom line is that there is too much gas around that's already out of the wellbore, and the NG price is going nowhere until that surplus gets sopped up. -------------- All this BS you said before and it never materialized as you had said. In fact apart from a few weeks to a mere month it was dead wrong. And key to this with all your rattling your superior returns from such lousy insight is no where to be seen. --------------------------- That won't happen this winter and probably not next summer either, so you are looking at dead money at best for 9-12 months minimum, probably worse, and possibly a lot worse. ----------- Have to file this forecast along with your last failure where it belongs in the trash heap ----------------------- NB to Peter Pan - If you're reading this, I've put you back on Ignore where you belong, so don't bother addressing me because I won't see it. ----------- Thats good to see at least the insulting and rude behavior will be at an end. Though I doubt as usual you will rear your ugly head. And it won't be to counter points because you don't do that. Your only counters have and allways will be insults. I especially like how you just never responded with any back up whatsoever for any of your superior claims as you said you would ------------ ------------ I respond to your posts / points regardless. For joe average investor in these trusts. To dismiss with fact and documentation and points, all should consider to get the balanced view. To remain in perspective. To see both sides of the argument. So then he can make a complete and best decision for himself. ---------------------------