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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: MWitte who wrote (27798)	12/7/2003 9:04:24 AM
From: quehubo	Read Replies (1) \| Respond to of 206325

The challenge we will have going forward will be knowing what will cause the drilling activity to decrease, today's land drilling levels are likely to be base levels of activity in the future. If the drilling production treadmill speed is increasing faster each quarter when does it catch up? Catch up meaning supply has risen to meet all demand at a minimum price where E&P's will continue to pay drilling day rates much higher than today's. I keep a close eye on forward eps multiples, The apparent supply demand balance of NG as indicated by storage changes and factoring in NGL retention and fuel switching (impact of weather), The gas weighted HDD demand on storage(weather), The charts. I dont think storage will be high on April 1. I will have a very good idea of where it will end over the next 2-3 storage withdrawals. If the apparent gas weighted HDD ratio to demand is too low I will be selling quickly. If the market sees storage heading for 1,000 - 1,200 bcf with normal Winter NG prices will move down to clear the gas. I say apparent HDD ratio because you can have weak draws because of #2 oil switching and/or very high prices. March 2003 is an example when the NG contract closed at $9. Until there is a pipeline from Alaska I dont see much changing the NG story. For OSX plays a slight decrease in sentiment when service fees are quite high could cause a sell off. So if we get to 1,300 NG directed rigs in the USA this year a decrease in activity to 1,000 could cause quite a decrease in equity prices. So maybe NBR drops from $60 to $45 <vbg>. Who knows maybe soon the Summer will be a bigger factor on supply. Unless the proper areas get a scorching Summer I dont see that happening for 2-3 Summers. But who knows with the economy roaring.