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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Walter Bagehot who wrote (38067)	5/27/2010 11:56:53 AM
From: E_K_S	Read Replies (1) \| Respond to of 78751

Hi Walter - RE: An Expanding NG Market (both domestic & worldwide) My NG energy growth theme is based on all the new NG wells coming online from the domestic shale drilling ventures currently in process. I expect double digit growth in NG deliveries through 2020. LNG is only one of the many by products of the processing. I want exposure to all the components in the NG processing cycle. Description of a natural gas processing plant en.wikipedia.org In all cases you require the infrastructure expansion that CBI specializes in building. There are many other companies that will participate in this growth. The trick will be finding the undiscovered "value" buys, especially those with hidden asset "jewels". One of the immediate needs is the storage and temporary warehousing of the gas. Salt mines are being converted to store the gas (D and GASS have the largest storage capacity in the U.S. which is tied into the intrastate pipe lines). For example, NG gathered from the Marcellus shale fields eventually makes its way to some type of storage location (above ground tank, converted salt mine) before being processed for further distribution. Some of this gas is compressed (LNG) where ships are loaded at one of two different east coast ports (a third is being built near Maryland) for delivery around the world. en.wikipedia.org "...LNG accounted for 7% of the world’s natural gas demand.[4] The global trade in LNG, which has increased at a rate of 7.4 percent per year over the decade from 1995 to 2005, is expected to continue to grow substantially during next years.[5] The projected growth in LNG in the base case is expected to increase at 6.7 percent per year from 2005 to 2020.[5]..." Therefore, I think you can make a compelling argument for double digit growth in NG w/i the U.S. (primarily due from new shale well development). There will be the need to further build out the NG infrastructure (refineries, storage & pipelines) to deliver all the NG component products (including LNG) domestically and around the world. The value propositions I am looking at are several of the specific infrastructure projects that need to be completed to bring the Marcellus Shale NG (and other NG shale fields) to market. The other value opportunity is to identify those companies that own the pipe line and storage assets (many are financing expansion projects ie.MDU Resources Group Inc. (MDU)) that will benefit from the increased distribution volume in the coming years. Many of these assets can currently be purchased at value prices (PE<12) and some of these companies have hidden jewels that when integrated into the growing NG infrastructure become extremely valuable (ie. pipeline easements, underground NG storage capacity, selected mineral rights, end user customer base - commercial & residential). EKS