Energy Prospectus

The latest reports indicate global oil demand should continue to grow in 2011 – OPEC sees and increase of +1.2 mmbbls/day, IEA +1.2 mmbbls/day, US EIA +1.35 mmbbls/day. We should see record global demand.

Supply of high quality crude remains somewhat constrained by the fact 1.6 mmbbls/day remains off line due to the Libyan conflict. Saudi internal consumption is setting records, leaving less to export—and much of their crude available for export is lower quality production which is more difficult to refine.

OPEC’s excess productive capacity is falling, and will continue to fall, according to many analysts.

Unless recent events turn into a global economic crisis the ongoing demand/supply trends remain positive – and should support energy prices. If this is the case many of the firms in our portfolio are selling at levels seen very infrequently, and set up potential gains for investors.

We discuss today, and the impressive results of Gran Tierra Energy (GTE), on our blog (August 11th):

http://www.lsgifund.com/index_files/Page960.htm

I agree. IMO the price of oil will move higher after Labor Day. The growth in oil demand is relentless and it really doesn't matter what the U.S. economy does.

IMO "Corporate America" is in good shape. "Government America" has serious problems. We must elect people with some business sense!
> Unemployment will remain high
> Low interest rates and a large workforce is good for Corporate America

GTE's 2nd quarter production beat my forecast. I will take a hard look at it this weekend.

wilma, dan, help!!

on the 5th of aug par-putt posted this

<On July 27, 2011, Solana Petroleum Exploration Colombia Ltd. (“Solana Colombia”), a wholly owned subsidiary of Gran Tierra, entered into an agreement (the “Solana Agreement”) with Ecopetrol pursuant to which Solana Colombia agreed to sell to Ecopetrol, and Ecopetrol agreed to purchase from Solana Colombia, all of the volume of crude oil production produced in the Chaza Block, Santana Block and Guayuyaco Block owned by Solana Colombia. This volume of crude oil does not include the volume of oil owned by the National Hydrocarbons Agency (ANH) corresponding to royalties. In the event that Ecopetrol does not accept a full delivery, Solana Colombia may sell to another party the crude oil not accepted. The price at which the crude oil is to be sold is established by a formula, which varies depending on the delivery point and export point, and is generally based off of WTI (West Texas Intermediate crude price), adjusted for the quality of the crude oil, and decreased by a “marker” discount, fees for transportation and loading, transportation tax, and handling and commercialization fees. The Solana Agreement will expire on June 30, 2012.
The Gran Tierra Agreement and the Solana Agreement each became legally enforceable on August 1, 2011.>

the lgsi web site today states gte crude is high quality with price based on brent. what am i missing??

WTI is a benchmark crude oil and lots of contracts are tied to it. However, there are local market differentials that apply. I will check into this more when I work on GTE this weekend.