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

To: Dennis Roth who wrote (156924)	9/13/2011 10:40:43 AM
From: t4texas	1 Recommendation Respond to of 206089

based on aubrey mcclendon's comments on several conf calls and presentations in the past six months, it sounds that ng prices will remain low until current drilled-well inventory of ng is somewhat consumed or steady-state. his logic is once the big oil shale plays are running with proper pipelines and infrastructure to get the oil out of the oil shale regions more easily to markets, there is not such an incentive to drill and frac more ng wells when drilling and fracing a well for oil brings in much more revenue and profit. so the idea is ng may remain low for a while, but then ng prices will jump in a step rather than sort of linearly. other than a massive program to convert usa car/truck vehicles to ng, i would suggest that the step function in price for ng could come when the usa starts exporting ng to the world markets where ng prices are much higher. that seems to be something like 2014.

To: Dennis Roth who wrote (156924)	9/14/2011 9:10:51 AM
From: Dennis Roth	3 Recommendations Read Replies (1) \| Respond to of 206089

Adjusting Oil/Gas Prices and E&P Estimates Natural Gas Still $4.25/MMBtu for 2011; $4.35/MMBtu for 2012 13 September 2011 ¦ 73 pages ir.citi.com Outlook For Natural Gas Prices Still Bleak – Our full-year 2011 composite spot natural gas price forecast of $4.25/MMBtu, which we established one year ago, remains unchanged. However, we are reducing our 2012 forecast to $4.35/MMBtu, for 2013 to $4.50/MMBtu, 2014 to $4.65/MMBtu and 2015 to $5.00/MMBtu, all from $5.50/MMBtu previously. Our long-term (beyond 2015) “normalized” price remains $5.25/MMBtu. For more information, see our September 13th note: Natural Gas Price Summer Wrap-Up and Outlook - 2012 Supply-Demand Balance Shaping Up Little Changed From 2011. Oil Prices Hang In The Balance Of Global Economic Recovery – We are adjusting our oil price deck for purposes of our E&P estimates while we await clarity on the global economic recovery. Our 2011 Brent/WTI (per Bbl) figures are $110.65/$93.50 (vs. $105/$95 prior), for 2012 $110/$90 (vs. $95/$95), while our longer-term normalized prices remain $90/$90. We also show sensitivities under CIRA Commodities Strategy team forecasts of $106.00/$89.70 and $86.25/$71.75 for 2011 and 2012, respectively. The debate on oil prices centers around whether prices will continue to largely track global equity markets, and what course these will take given recent events and data, or will fundamentals push prices lower even if global equity markets don’t plummet. Estimate Changes – On average, 2011 EPS/CFPS estimates for our E&P coverage group fall 2%/1%, and for 2012 by 8%/6% (but 9%/4% and 35%/19%, respectively, under CIRA Commodities Strategy team forecast before any changes to capital outlays due to cash flow constraints and correspondingly to any lower production forecast). Price Targets – Given that our new natural gas price outlook does not entail prices rising above $4.50/MMBtu until 2014, we are adjusting our “normalized” price deck for purposes of setting price targets to $4.50/MMBtu (from $5.25/MMBtu) while for oil prices our normalized WTI figure is still $90/Bbl ($110/Bbl near term for Brent). Thus, the upside to price targets for our coverage group is nearly 38%, on average, on this basis. Currently, our coverage group reflects ‘normalized’ WTI spot oil and composite spot natural gas prices of ~$76/Bbl and ~$3.75/MMBtu, respectively, in our opinion. E&P Shares Continue Higher Beta Performance – We have previously shown that the E&P sector performance since the beginning of 2009 has predominantly been a higher beta reflection of the S&P 500 performance. The only times this has failed to occur was in April of this year when oil prices reached a critical 21/2-year high (WTI at ~$114/Bbl & Brent ~$126/Bbl) which held the group flat while the S&P rose~3%, and a few times the past three winters when extreme weather drove natural gas prices sharply in the opposite direction. We expect that E&P sector performance will continue to be a higher beta reflection of the S&P for the foreseeable future. Top Picks – Among our top picks at this juncture are APC, APA, CNQ and EOG, although we would note that the most capital constrained under a much lower oil price scenario, and given current budget projections, are CHK, DNR, NFX and EOG.