https://www.youtube.com/watch?v=inB_MWJbFGk
Shown yesterday at noon
Marc Fisher on energy
Talks about same themes Dan has been talking about
Must watch - energy views
Must watch - energy views
Re: Must watch - energy views
I agree with Marc. Only a very mild December will keep HH natural gas near where it is today. I also agree with him that this is not a short-term supply/demand problem. The global gas market is seriously under-supplied, so demand for LNG exports will remain very high and we export enough gas now (~20% of our production) that international prices will keep upward pressure on U.S. gas prices.
I know someone raised the chance of Team Biden banning exports of ngas.
1. That would crush Europe and Asia, which in turn would have an impact on the U.S. So, it would be stupid for Biden to do, but he does a lot of stupid stuff. When I say "crush" I mean CRUSH. Those economies can't handle an energy shortage. Russia will have them by the nuts. The UK is already screwed.
2. We do have abundant natural gas resources. Takeaway capacity is a problem in the Marcellus/Utica play but we can ramp up drilling in the Haynesville, Eagle Ford and the Permian Basin to cover the increased export demand. Our nation's problem is regional. The regions controlled by the Woke Wackos are going to be short gas supply and see skyrocketing utility bills this winter. I thank God daily that he got me to Texas.
The Wackos War on Pipelines is insane and the last thing to do if you really care about the environment.
If Marc's prediction of ngas going to $12 comes true, my advice to CRK, GDP, SBOW and lots of the Permian Basin companies is to use hedges to lock in high prices and then ramp up production. Focus on the companies that don't have much gas hedged for Q1, that is where the BIG BUCKS will be made this year.
CLR produces over a BCF per day of unhedged gas production. Let's say ngas moves to $12 in December and that CLR can lock in $10 for the first quarter. Here is the math: 1,000,000 mcfepd X $10 X 91 days = $910 million of revenues for the quarter. Plus, they have a good marketing team that knows how to take advantage of regional price spikes. A cold December in Chicago might take that region up to $20/MMBtu.
If we have a colder than normal winter the gas price will still pullback in April, but if it spikes to $12 during the winter, the "pullback" might just be to $6. Just remember that refilling storage is not optional in the U.S. Storage MUST be refilled each year, so think of low storage at the end of March as another layer of demand for April to October. In my opinion, AR, EQT and RRC are trading as if ngas will settle back in at $3.00 and stay there. The chance of that happening is near zero.
I know someone raised the chance of Team Biden banning exports of ngas.
1. That would crush Europe and Asia, which in turn would have an impact on the U.S. So, it would be stupid for Biden to do, but he does a lot of stupid stuff. When I say "crush" I mean CRUSH. Those economies can't handle an energy shortage. Russia will have them by the nuts. The UK is already screwed.
2. We do have abundant natural gas resources. Takeaway capacity is a problem in the Marcellus/Utica play but we can ramp up drilling in the Haynesville, Eagle Ford and the Permian Basin to cover the increased export demand. Our nation's problem is regional. The regions controlled by the Woke Wackos are going to be short gas supply and see skyrocketing utility bills this winter. I thank God daily that he got me to Texas.
The Wackos War on Pipelines is insane and the last thing to do if you really care about the environment.
If Marc's prediction of ngas going to $12 comes true, my advice to CRK, GDP, SBOW and lots of the Permian Basin companies is to use hedges to lock in high prices and then ramp up production. Focus on the companies that don't have much gas hedged for Q1, that is where the BIG BUCKS will be made this year.
CLR produces over a BCF per day of unhedged gas production. Let's say ngas moves to $12 in December and that CLR can lock in $10 for the first quarter. Here is the math: 1,000,000 mcfepd X $10 X 91 days = $910 million of revenues for the quarter. Plus, they have a good marketing team that knows how to take advantage of regional price spikes. A cold December in Chicago might take that region up to $20/MMBtu.
If we have a colder than normal winter the gas price will still pullback in April, but if it spikes to $12 during the winter, the "pullback" might just be to $6. Just remember that refilling storage is not optional in the U.S. Storage MUST be refilled each year, so think of low storage at the end of March as another layer of demand for April to October. In my opinion, AR, EQT and RRC are trading as if ngas will settle back in at $3.00 and stay there. The chance of that happening is near zero.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group