TGA
Re: TGA
There was a large block sold this morning that tanked the share price. Based on the company's mid-quarter report, the 4th quarter results will be very strong and I'm expecting a large increase in proven reserves. Everything points to strong production growth in 2011.
TGA has a history of trading down during long periods with no new information. Buying these dips has worked quite well in the past.
TGA is a pure play on oil with a solid track record of growth.
TGA has a history of trading down during long periods with no new information. Buying these dips has worked quite well in the past.
TGA is a pure play on oil with a solid track record of growth.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA
This is always a tough time for investors. Thanks to Sarbanes/Oxley requirements it now takes companies much longer to get out their 4th quarter reports. The wait can be painful.
When things settle down and we get more information to work with, I think those companies in the Sweet 16 that are heavily weighted to oil are going to do very well. I will be working very hard to keep up when year-end results start pouring out. That is why you pay me the big bucks!
IMO TGA and DNR are now trading well below Fair Value. Petrobank, EOG and GPOR also look very good to me.
I urge every Premium member to take a hard look at our company profile on Petrominerales (PMGLF). IMO it has incredible upside.
When things settle down and we get more information to work with, I think those companies in the Sweet 16 that are heavily weighted to oil are going to do very well. I will be working very hard to keep up when year-end results start pouring out. That is why you pay me the big bucks!
IMO TGA and DNR are now trading well below Fair Value. Petrobank, EOG and GPOR also look very good to me.
I urge every Premium member to take a hard look at our company profile on Petrominerales (PMGLF). IMO it has incredible upside.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA
TGA's oil production in Egypt goes directly to tankers on the Red Sea. The oil does not go through cities affected by the current riots. Any new government will need the current oil revenues so there is little chance the concessions will be affected.
No doubt there is a bit of a cloud hanging over TGA now. 100% of their revenues come from Egypt and Yemen.
No doubt there is a bit of a cloud hanging over TGA now. 100% of their revenues come from Egypt and Yemen.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: TGA
From Casey Research, Friday, January 28:
On Egypt
For many years now, Egypt has been a ticking time bomb. It is a bomb packed with the incendiary elements of militant Islam and a large population of young people suffering from high unemployment as a result of a corrupt dictatorship weighing on the economy. Toss in one of the highest population densities in the world, with over 90% of the people of Egypt crowded together up against the banks of the Nile, and you have all the necessary fixin’s for trouble.
Especially with the head thug, Hosni Mubarak, now of an age more suited to nodding off in a sunny corner than going head to head with a determined opposition. That he has not been seen in public or gone on national media to address the nation since the protests began could be interpreted by some that he’s gone soft – always a very dangerous perception in that it only emboldens the opposition further.
Supporting that point, Mohamed ElBaradei, his most outspoken critic, has left his sanctuary in Vienna to join the protesters in the streets of Cairo – the equivalent of poking a finger in Mubarak’s chest while mouthing, “Yeah, and whaddaya gonna do about it?”
For the record, though I tend to be skeptical of UN functionaries, as ElBaradei certainly has been, I rather like the man. He may be a bureaucrat, but he’s clearly a moderate and in favor of instituting basic human rights – a big improvement over Mubarak or his only other possible successors, the Muslim Brotherhood and the military, which can never be ruled out.
In support of the democratic protesters, Secretary of State Hillary Clinton stated that the Mubarak regime was “stable,” and VP Joe Biden, speaking on PBS Newshour, could be heard mumbling past his shoe leather that Mubarak was no dictator and shouldn’t resign.
(To be more accurate, Biden might have said that Mubarak is “our dictator,” which makes everything fine.)
Meanwhile, the Egyptian government yanked the cord on the Internet and flipped the switch on the mobile phone network in an attempt to keep whatever happens next from being quickly disseminated through Egypt and around the world.
If a dozen protesters fall and no one reports on it, did it really happen?
While we are trying to get “on the scene” reports from Casey Research readers in the area, from the sidelines it seems to this casual observer that the endgame for Egypt is well underway.
If ElBaradei is still drawing breath this time next week, something I would place money on only if offered substantial odds, then his rather bold reach for the golden ring of power might just succeed. At this point, however, things could just as easily swing to either the Muslim Brotherhood or to the military. Should either of those two outcomes occur, expect a sharp crackdown.
Or Mubarak might just get his game face back on, in which case… it’s still going to involve a sharp crackdown.
So I’m pulling for the one more hopeful scenario, that ElBaradei – or, more correctly, the oppressed masses – end up on top. Of course, if he wins, the man and his supporters may not be too warmly inclined toward the unhelpful U.S. government. That said, any ill feelings are likely to pass quickly – $1.5 billion in annual U.S. aid is a lot more effective than a dozen roses in resolving such spats.
But what of the broader implications of what’s happening in Egypt? For that, I’d like to share some relevant quotes from an article on Egypt written in the March 2006 issue of our International Speculator by my dear partner and resident seer, Doug Casey…
You've got to ask yourself about any place, but especially about a country like this: how do the 80 million people survive? What do they produce? Guesstimates are that in ancient times Egypt supported a population of about 6 million, and rather comfortably for the era. In those days almost everyone was a farmer, and the annual flooding of the Nile insured both water and nutrients for crops that made Egypt the breadbasket of the ancient world.
There are still plenty of farmers in Egypt, but since the Aswan High Dam was built by the Russians in the '60s, the Nile doesn't flood anymore. Today the dam generates about 12% of the country's electricity, but it's silting up with the estimated four million tons per year of alluvial fertilizer that flows down from the highlands of Ethiopia and Uganda. Now Egyptians have to buy a million tons of chemical fertilizer per year. Of course, a gigantic river that floods everything annually doesn't fit well with an industrial society. When 95% of the country's people live within 12 miles of the river, it's one thing for them all to get wet if they're dirt farmers walking behind oxen, but something else if most of them are living in apartments.
So, the Aswan Dam is a mixed blessing in many ways. Although philosophically I'm of the "pave the planet" school, since I believe mankind's ultimate destiny is in the stars and that the Earth is an insignificant mote in the cosmic scheme of things, I'm naturally suspicious of mega-projects built by economically illiterate socialist governments. They may wind up destroying enough capital to keep people trapped on this planet, like serfs in a medieval village. Militarily, the dam is a boon for Israel. One small nuke and the entire country will be washed into the Mediterranean. Literally.
But farming and the dam, while important, don't bring money into the country. There are basically five things that keep the place going:
1. Tourism, roughly 5% of GDP. In Egypt, this means foreigners taking pictures of monuments built largely between 3,000 and 4,500 years ago, capital provided by the locals' distant ancestors. And it means other foreigners lying on Red Sea beaches, provided by nature. They keep coming, but every few years they're scared away when a tour bus is bombed or machine-gunned.
2. Remittances. Egypt's most reliable export is workers, who send money home to their families.
3. Oil. Net exports ran at roughly 300,000 bpd during the last couple of decades, but now the fields are in steep decline, and net exports are down to only 100,000 bpd, on the way to zero by the end of the decade.
4. The Suez Canal, built in the 1860's courtesy of Europeans. It is becoming less important as ships get larger (too large to use the Canal) and air transport grows.
5. Foreign aid.
Unfortunately, none of these things are a sound foundation for prosperity. They're not economic pillars, they're reeds.
… No one with any sense has much confidence in government figures, certainly not those from struggling Third World countries. But, to use an old saw from this part of the world, it's not hard to read the writing on the wall, and it's scary. The population is growing at something like 3.5% per year. And unemployment is about 25%, which means that the ranks of young, unemployed, unmarried males-unquestionably the most dangerous creatures ever to have walked the Earth, including T-Rex-are swelling. Meanwhile, when you look at the five income sources listed above, you can see that Egypt is relying on nothing but accidents of history and nature, and on the kindness of strangers.
My view, from a strictly economic perspective, is that Egypt is a disaster in waiting. But the same is more or less true of all the Islamic countries (with the minor exceptions of the Emirates and Malaysia). All of them, like Egypt, produce little that can be traded. Economically, all are saddled with gigantic, entrenched, concrete-bound bureaucracies that serve no useful purpose whatsoever, but do stop anything productive from happening. Politically, they're all basically authoritarian, one-party states. Sociologically, they're all highly traditional, conservative and, outside major cities, tribal.
Technologically, there's zero innovation; practically everything more recent than 18th-century products either is imported or made under license and with foreign capital.
Doug then goes on to a wonderful dissertation on the fundamental reasons why these Middle Eastern countries have remained stuck in the Dark Ages – blaming it on the entrenched roots of religion. However, as I am trying to avoid the usual onslaught of outraged emails, I’ll leave it there.
(For those of you who are paid subscribers to the International Speculator and are not offended by philosophical musings about the nature of monotheistic religions, you can read Doug’s article on Egypt in full in the archives for March 2006.)
While one can, as Doug did, look at a trend in motion and ascertain a very probable outcome – in the case of Egypt and the other stultified countries of the Middle East, the outcome being the proverbial top blowing off the pressure cooker of the tightly controlled, corrupt and inefficient economies – it is not so easy to predict the knock-on consequences. For example, if ElBaradei and his allies succeed, as have the pro-democracy protesters in Tunisia, it could light the fuse on regional unrest that quickly flows into the big oil producers, including Saudi Arabia, Iraq and even Iran. At the flare-up point in a major oil producer, especially Saudi Arabia, one has to imagine both oil and the precious metals moving much higher in a hurry.
But then… just maybe… moderate new governments could emerge that know that their political fortunes rest largely on promoting a more broadly based and successful economy, which can only happen by lightening the hand of government.
Though the trend of the past half-century has certainly been for more government at the expense of individual freedoms, it is not set in stone that the trend must continue to the point of widespread collapse. If the oppressed of the Middle East can muster the will to finally rise up and throw the bums out – mullahs and moochers alike – then maybe there’s hope for the rest of us.
Of course, if there were actually an unleashing of free markets around the world, given that it must come at the expense of out-of-control governments, then owning precious metals might not be quite so important and prices would fall. But there’s a long way to go between here and there, and it is highly unlikely that the ruling elites will go so quietly into the night.
In any event, unlike most of what people spend time paying attention to these days, this is certainly a drama worth watching.
Is there an investment opportunity in this? As you can see in the chart here of the Market Vectors Egypt Index ETF (EGPT), the unrest has caused the Egyptian stock market to sell off sharply.
A small speculation that things will be resolved in favor of the democratic opposition, or even by Mubarak agreeing to some sort of compromise, could make for a quick rebound and a tidy profit. And the returns could keep piling up as the blossoms of the free market begin cropping up in Egypt.
That’s the upside. The downside is that if either the Muslim Brotherhood or the military end up with the prize, the bottom could be a long way off. The EGPT ETF is currently selling for $16.24 a share. So, maybe set a stink bid at 20% below that, to see if you can’t pick up shares even cheaper as the situation reaches a crescendo. Mind you, that is not an investment recommendation, just an idle thought for the adventurous among you.
On Egypt
For many years now, Egypt has been a ticking time bomb. It is a bomb packed with the incendiary elements of militant Islam and a large population of young people suffering from high unemployment as a result of a corrupt dictatorship weighing on the economy. Toss in one of the highest population densities in the world, with over 90% of the people of Egypt crowded together up against the banks of the Nile, and you have all the necessary fixin’s for trouble.
Especially with the head thug, Hosni Mubarak, now of an age more suited to nodding off in a sunny corner than going head to head with a determined opposition. That he has not been seen in public or gone on national media to address the nation since the protests began could be interpreted by some that he’s gone soft – always a very dangerous perception in that it only emboldens the opposition further.
Supporting that point, Mohamed ElBaradei, his most outspoken critic, has left his sanctuary in Vienna to join the protesters in the streets of Cairo – the equivalent of poking a finger in Mubarak’s chest while mouthing, “Yeah, and whaddaya gonna do about it?”
For the record, though I tend to be skeptical of UN functionaries, as ElBaradei certainly has been, I rather like the man. He may be a bureaucrat, but he’s clearly a moderate and in favor of instituting basic human rights – a big improvement over Mubarak or his only other possible successors, the Muslim Brotherhood and the military, which can never be ruled out.
In support of the democratic protesters, Secretary of State Hillary Clinton stated that the Mubarak regime was “stable,” and VP Joe Biden, speaking on PBS Newshour, could be heard mumbling past his shoe leather that Mubarak was no dictator and shouldn’t resign.
(To be more accurate, Biden might have said that Mubarak is “our dictator,” which makes everything fine.)
Meanwhile, the Egyptian government yanked the cord on the Internet and flipped the switch on the mobile phone network in an attempt to keep whatever happens next from being quickly disseminated through Egypt and around the world.
If a dozen protesters fall and no one reports on it, did it really happen?
While we are trying to get “on the scene” reports from Casey Research readers in the area, from the sidelines it seems to this casual observer that the endgame for Egypt is well underway.
If ElBaradei is still drawing breath this time next week, something I would place money on only if offered substantial odds, then his rather bold reach for the golden ring of power might just succeed. At this point, however, things could just as easily swing to either the Muslim Brotherhood or to the military. Should either of those two outcomes occur, expect a sharp crackdown.
Or Mubarak might just get his game face back on, in which case… it’s still going to involve a sharp crackdown.
So I’m pulling for the one more hopeful scenario, that ElBaradei – or, more correctly, the oppressed masses – end up on top. Of course, if he wins, the man and his supporters may not be too warmly inclined toward the unhelpful U.S. government. That said, any ill feelings are likely to pass quickly – $1.5 billion in annual U.S. aid is a lot more effective than a dozen roses in resolving such spats.
But what of the broader implications of what’s happening in Egypt? For that, I’d like to share some relevant quotes from an article on Egypt written in the March 2006 issue of our International Speculator by my dear partner and resident seer, Doug Casey…
You've got to ask yourself about any place, but especially about a country like this: how do the 80 million people survive? What do they produce? Guesstimates are that in ancient times Egypt supported a population of about 6 million, and rather comfortably for the era. In those days almost everyone was a farmer, and the annual flooding of the Nile insured both water and nutrients for crops that made Egypt the breadbasket of the ancient world.
There are still plenty of farmers in Egypt, but since the Aswan High Dam was built by the Russians in the '60s, the Nile doesn't flood anymore. Today the dam generates about 12% of the country's electricity, but it's silting up with the estimated four million tons per year of alluvial fertilizer that flows down from the highlands of Ethiopia and Uganda. Now Egyptians have to buy a million tons of chemical fertilizer per year. Of course, a gigantic river that floods everything annually doesn't fit well with an industrial society. When 95% of the country's people live within 12 miles of the river, it's one thing for them all to get wet if they're dirt farmers walking behind oxen, but something else if most of them are living in apartments.
So, the Aswan Dam is a mixed blessing in many ways. Although philosophically I'm of the "pave the planet" school, since I believe mankind's ultimate destiny is in the stars and that the Earth is an insignificant mote in the cosmic scheme of things, I'm naturally suspicious of mega-projects built by economically illiterate socialist governments. They may wind up destroying enough capital to keep people trapped on this planet, like serfs in a medieval village. Militarily, the dam is a boon for Israel. One small nuke and the entire country will be washed into the Mediterranean. Literally.
But farming and the dam, while important, don't bring money into the country. There are basically five things that keep the place going:
1. Tourism, roughly 5% of GDP. In Egypt, this means foreigners taking pictures of monuments built largely between 3,000 and 4,500 years ago, capital provided by the locals' distant ancestors. And it means other foreigners lying on Red Sea beaches, provided by nature. They keep coming, but every few years they're scared away when a tour bus is bombed or machine-gunned.
2. Remittances. Egypt's most reliable export is workers, who send money home to their families.
3. Oil. Net exports ran at roughly 300,000 bpd during the last couple of decades, but now the fields are in steep decline, and net exports are down to only 100,000 bpd, on the way to zero by the end of the decade.
4. The Suez Canal, built in the 1860's courtesy of Europeans. It is becoming less important as ships get larger (too large to use the Canal) and air transport grows.
5. Foreign aid.
Unfortunately, none of these things are a sound foundation for prosperity. They're not economic pillars, they're reeds.
… No one with any sense has much confidence in government figures, certainly not those from struggling Third World countries. But, to use an old saw from this part of the world, it's not hard to read the writing on the wall, and it's scary. The population is growing at something like 3.5% per year. And unemployment is about 25%, which means that the ranks of young, unemployed, unmarried males-unquestionably the most dangerous creatures ever to have walked the Earth, including T-Rex-are swelling. Meanwhile, when you look at the five income sources listed above, you can see that Egypt is relying on nothing but accidents of history and nature, and on the kindness of strangers.
My view, from a strictly economic perspective, is that Egypt is a disaster in waiting. But the same is more or less true of all the Islamic countries (with the minor exceptions of the Emirates and Malaysia). All of them, like Egypt, produce little that can be traded. Economically, all are saddled with gigantic, entrenched, concrete-bound bureaucracies that serve no useful purpose whatsoever, but do stop anything productive from happening. Politically, they're all basically authoritarian, one-party states. Sociologically, they're all highly traditional, conservative and, outside major cities, tribal.
Technologically, there's zero innovation; practically everything more recent than 18th-century products either is imported or made under license and with foreign capital.
Doug then goes on to a wonderful dissertation on the fundamental reasons why these Middle Eastern countries have remained stuck in the Dark Ages – blaming it on the entrenched roots of religion. However, as I am trying to avoid the usual onslaught of outraged emails, I’ll leave it there.
(For those of you who are paid subscribers to the International Speculator and are not offended by philosophical musings about the nature of monotheistic religions, you can read Doug’s article on Egypt in full in the archives for March 2006.)
While one can, as Doug did, look at a trend in motion and ascertain a very probable outcome – in the case of Egypt and the other stultified countries of the Middle East, the outcome being the proverbial top blowing off the pressure cooker of the tightly controlled, corrupt and inefficient economies – it is not so easy to predict the knock-on consequences. For example, if ElBaradei and his allies succeed, as have the pro-democracy protesters in Tunisia, it could light the fuse on regional unrest that quickly flows into the big oil producers, including Saudi Arabia, Iraq and even Iran. At the flare-up point in a major oil producer, especially Saudi Arabia, one has to imagine both oil and the precious metals moving much higher in a hurry.
But then… just maybe… moderate new governments could emerge that know that their political fortunes rest largely on promoting a more broadly based and successful economy, which can only happen by lightening the hand of government.
Though the trend of the past half-century has certainly been for more government at the expense of individual freedoms, it is not set in stone that the trend must continue to the point of widespread collapse. If the oppressed of the Middle East can muster the will to finally rise up and throw the bums out – mullahs and moochers alike – then maybe there’s hope for the rest of us.
Of course, if there were actually an unleashing of free markets around the world, given that it must come at the expense of out-of-control governments, then owning precious metals might not be quite so important and prices would fall. But there’s a long way to go between here and there, and it is highly unlikely that the ruling elites will go so quietly into the night.
In any event, unlike most of what people spend time paying attention to these days, this is certainly a drama worth watching.
Is there an investment opportunity in this? As you can see in the chart here of the Market Vectors Egypt Index ETF (EGPT), the unrest has caused the Egyptian stock market to sell off sharply.
A small speculation that things will be resolved in favor of the democratic opposition, or even by Mubarak agreeing to some sort of compromise, could make for a quick rebound and a tidy profit. And the returns could keep piling up as the blossoms of the free market begin cropping up in Egypt.
That’s the upside. The downside is that if either the Muslim Brotherhood or the military end up with the prize, the bottom could be a long way off. The EGPT ETF is currently selling for $16.24 a share. So, maybe set a stink bid at 20% below that, to see if you can’t pick up shares even cheaper as the situation reaches a crescendo. Mind you, that is not an investment recommendation, just an idle thought for the adventurous among you.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
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eppe@sbcglobal.net
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Re: TGA
Excellent, Dan. Thanks for sharing.
Re: TGA
A big plus for TGA is that their oil sales contracts are tied to the price of Brent crude which is currently trading at near $10/bbl higher than WTI. If I assume $100/bbl for my TGA's forecast, the Fair Value goes way above my current estimate of $20/share.
I don't see the violence in Egypt or Yemen directly effecting TGA's field operations. There is some fear that the Suez Canal will be shut down but I really don't see that happening. Even if it does, the crude can be shipped out the southern end of the Red Sea.
I don't see the violence in Egypt or Yemen directly effecting TGA's field operations. There is some fear that the Suez Canal will be shut down but I really don't see that happening. Even if it does, the crude can be shipped out the southern end of the Red Sea.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group