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  1. #501
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    It's all coming together.

    Big Oil Entering the Shale Natural Gas Arena

    by Hans Wagner, TradingOnlineMarkets.com | March 26, 2010

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    Successful exploration of natural gas from shale has contributed to a drop in natural gas prices during the past two years. Yet the large energy companies have taken notice of the potential from natural gas from shale, lead by Exxon’s acquisition of XTO Energy and the Total/Chesapeake joint venture. Does the move by “Big Oil” indicate a strong future for shale based natural gas?
    According to the Energy Information Administration, the weekly update for February 19, 2010 shows the amount of working gas in storage is nearing the average of the last five years. Working gas in storage was 1,853 Billion cubic feet (Bcf) as of Friday, February 19, 2010, according to EIA estimates. This represents a net decline of 172 Bcf from the previous week. Stocks were 56 Bcf less than last year at this time and 13 Bcf above the 5-year average of 1,840 Bcf. Throughout 2009 gas in storage set new five-year records primarily from shale gas production.

    As the volume of gas in storage falls, you would expect the number of natural gas rigs to increase. As of Friday, February 19, the natural gas rotary rig count rose to 893, an increase of 2 from the previous week, according to Baker Hughes Incorporated data. This marks the eighth consecutive week that the natural gas rig count has risen, and is now at its highest level since March 6, 2009. The natural gas horizontal rig count totaled 524 as of February 5, the highest level in the past two years for which data are available. The increase in horizontal rigs could be indicative of changes in drilling technology, as well as the increasing influence of natural gas production from shale formations. Conversely, the natural gas vertical rig count was at 198 on February 5, having largely dropped off from levels above 700 two years ago. According to data from Baker Hughes released on February 5, 2010, total active rigs in key natural gas basins have been increasing over the past year, after dropping off from highs in late summer of 2008. However, rig counts in the Louisiana-Mississippi Salt Basins (Haynesville Shale) and Appalachian areas are currently at highs of 138 and 116, respectively, over the 2 years for which data are available.

    Increased drilling activities accompany the need for more capital to fund lease purchases, as well as exploration and production activities. The problem is many analysts believe that natural gas from shale has yet to be cash flow positive. The independents focused much of their capital on acquisition of acreage. Now they must shift to exploration and production to generate sufficient returns. The problem is the production profiles of many of these shale natural gas fields might not achieve historical trends. While their initial flow rates are impressive, these fields have experienced a more rapid production decline that more normal fields, indicating the shale plays may not be as cash flow positive as many expect.
    As a result, many independents are looking for ways to exploit their large investments in natural gas shale acres without increasing their capital requirements. Along come the big energy companies with their vast amount of capital. The large companies are exchanging their capital for access to horizontal drilling and hydraulic fracturing technologies. Big oil wants to develop their expertise in shale exploration and production to take it globally.
    With high acreage costs, large royalty payments, and expensive production wells, many analysts question the ability of the independent natural gas companies to generate a profit at current price levels. Many analysts believe gas prices must rise to the $7 to $8 per Million cubic feet (Mcf) level before the gas producers can make a profit.
    Exxon’s purchase of XTO at a 25% premium indicates that the major oil companies believe that shale has a future. The major oil companies have the financial resources to weather lower gas prices. By acquiring the expertise that the independent’s posses in developing gas shale, the majors are looking to find and produce gas from U.S. Canadian and other international plays. Therefore, we should look for additional acquisitions and joint ventures in the months to come.
    Copyright © 2010 Hans Wagner
    Editorial Archive
    If you wish to learn more on evaluating the market cycles, I suggest you read:
    Ahead of the Curve: A Commonsense Guide to Forecasting Business and Market Cycles by Joe Ellis is an excellent book on how to predict macro moves of the market.
    Unexpected Returns: Understanding Secular Stock Market Cycles by Ed Easterling. One of the best, easy-to-read, study of stock market cycles of which I know.
    The Disciplined Trader: Developing Winning Attitudes by Mark Douglas. Controlling ones attitudes and emotions are crucial if you are to be a successful trader.
    Bio As a long time investor, I was fortunate to retire at 55. I believe you can employ simple investment principles to find and evaluate companies before committing one's hard earned money. Recently, after my children and their friends graduated from college, I found my self helping them to learn about the stock market and investing in stocks. As a result I created a website that provides a growing set of information on many investing topics along with sample portfolios that consistently beat the market. Feel free to visit the site at http://www.tradingonlinemarkets.com/?
    contact information
    Hans Wagner | Colorado, USA | Email | Website
    The opinions of FSU contributors do not necessarily reflect those of Financial Sense.
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  2. #502
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    Thanks Tricha,
    Have been researching Shale gas for some time and it looks BIG but it is expensive and is fraught with high decline rates and increasing EPA environmental hurdles. As for Aussie I think it is years away. EXXon has an environmental get out clause and as you know New York State have forbidden the Marcellus shales to be drilled/fracced . They want to protect their aquafers.

  3. #503
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    Quote Originally Posted by bermuda View Post
    Thanks Tricha,
    Have been researching Shale gas for some time and it looks BIG but it is expensive and is fraught with high decline rates and increasing EPA environmental hurdles. As for Aussie I think it is years away. EXXon has an environmental get out clause and as you know New York State have forbidden the Marcellus shales to be drilled/fracced . They want to protect their aquafers.


    I do not know much about Shale Gas Bermuda, but environmental issues in the Cooper Basin, I think its a desert and Beach are spouting this is a high class deposit. With oil rising to $100 a barrel soon, game will be on and Beach is a ripe takeover target.

    Where is the next Saudi Arabia sized shale oil deposit?

    Shale Gas Going Global

    An Interview with Dave Forest

    by Keith Schaefer, editor, Oil & Gas Investments Bulletin | March 30, 2010

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    Dave Forest and I are philosophically aligned. Dave writes “Pierce Points” everyday (and I read it every day) and he is a former Casey Energy newsletter editor. We’ve started sharing ideas and a key one for both of us is that we see huge shareholder wealth being created for oil and gas investors as the new technologies now used in North America – horizontal drilling and fracking – get exported around the world.
    Of course these technologies are 40 years old, but only in the last decade have they been perfected so they can get oil and gas out of shale rock.
    Being able to make an economic hydrocarbon discovery in rock as opposed to the regular loose sands is about as simple as I can make the opportunity. It opens up the probability of billions of new barrels of oil to be discovered over the coming decade or two. Where is the next Saudi Arabia sized shale oil deposit? I think we could find out in the next decade.
    These technologies were first perfected in the Barnett shale in Texas over a decade ago, and has now become the big growth engine of oil and gas production from Louisiana to northern British Columbia.
    Literally tens of billions of dollars in stock values have been created for oil and gas investors by North American oil and gas plays like the Barnett, the Haynesville gas shale, and the Bakken and Cardium oil formations.
    But the question for investors is now – what’s next for shale oil or shale gas? Where will the industry create billions in value next? Dave is much more technical than I am – he’s a geologist, I’m a journalist – so I asked him to share with readers where he sees the next big opportunities in shale oil and gas, for investors.
    “These technologies are quickly going to move around the world,” he said. “Foreign companies are scrambling to learn the tricks and “take the show on the road”. We’ve seen a slew of farm-in deals from companies like Total on shale gas acreage in Texas, and other foreign companies in other basins. More than production, these companies are looking to learn from their North American partners, and use this to unlock new basins abroad.”
    So which shale basins do you think will get developed next?
    “Well, before I answer that, it’s important to know that economic shale gas is about more than just geology. There are a lot of gas-bearing shales around the world. But making money cracking shales is a tough game. You need high-quality services at a reasonable cost. China is cheap but probably not good, and the UK is good but well costs can run 2 to 3 times the cost for a comparable well in Texas. That blows your profitability.”
    OK, sssoooo….how will investors know what the next big international shale play?
    “Money will be made in overseas shale gas. But it will take places with
    1) a strong gas market, and decent pricing,
    2) lots of services competition, and
    3) basins with good history of conventional production, where geologic data is readily available.
    Poland and the Czech Republic have been held up as examples of countries where all these goals might be achieved.
    Perhaps more interesting is the shale gas activity that’s starting to pick up in southeast Asia, e.g. northern Thailand. One angle here may be access to affordable, high-quality services from Japan. Combined with a strong southeast Asian gas market, shale gas projects might be economic here.”
    In our next story, Dave will help us understand how market economics in the gas industry in Europe is changing, and how that could affect shale gas plays there.
    Dave Forest’s analysis on the natural resources sector has been featured on BNN, Kitco.com, Financial Sense and the Daily Reckoning. He is a professional geologist and formerly advised a worldwide client base on oil/gas, mining and renewable energy at Casey Research LLC. Dave currently serves as managing director of Notela Resource Advisors Ltd. and writes the daily e-letter Pierce Points, on natural resources and the macro-economics that drive the sector.
    You can sign up for Dave’s daily letter at www.piercepoints.com. (He is a great read – more concise than me).
    And yes Part III of Fracking series is coming.
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  4. #504
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    Lifes a Beach! Beach is a sleeping giant, it has got it and when the market awakes, watch this space.

    Page last updated at 23:15 GMT, Thursday, 8 April 2010 00:15 UK
    E-mail this to a friend Printable version
    Should Gazprom fear shale gas revolution?



    By Konstantin Rozhnov
    Business reporter, BBC News


    European countries heavily dependent on Russian gas supplies are cheered by signs of a balance shift in the continent's energy market.
    Russia supplies more than a quarter of Europe's gas needs

    Dozens of companies, including world majors, have begun exploring or even drilling in search of shale gas, amid talk of huge reserves in the US, Poland and many other countries.
    Russian gas giant Gazprom's deputy chief executive Alexander Medvedev has reacted by branding shale gas projects as "dangerous", provoking suspicions that Russia could be unnerved by the latest developments in the world gas market.
    In 2009, Russia was beaten by the US to the title of the world's leader in gas production, but it still satisfies more than a quarter of Europe's gas needs.
    For his part, the head of Russia's union of oil and gas producers, Gennady Shmal, has told journalists: "Statements that there will be a revolution in the gas industry and that the United States and Europe will manage without our gas are a propagandistic stunt."
    He added, however, that "it is necessary to monitor the situation in this sector", according to Itar-Tass news agency.
    US know-how
    US Energy Secretary Steven Chu said that US natural gas reserves had "definitely" increased by a third and had "probably doubled", thanks to new natural gas drilling technologies.
    One of the unconventional methods which attracts a lot of attention and is credited with contributing to the US natural gas production surge is so-called "hydraulic fracturing", the technique of shale gas extraction.
    Shale gas deposits sit in tight rock formations at depths of up to 3km, but new technology has made them accessible for the first time.
    Shale gas now accounts for up to 20% of US natural gas production, and the US has been ready to help other countries discover whether they possess significant shale gas resources and show them how to turn the reserves into money.
    If a commercially beneficial technology is found, the issue will be raised about the need for Russian gas exports to Europe


    Vladimir Chuprov, Greenpeace Russia

    According to estimates by consultants Advanced Resources International, Poland alone could have 3 trillion cubic metres of potentially recoverable reserves of shale gas, enough to satisfy domestic demand for more than 200 years.
    Russian daily Kommersant has reported that Europe's gas reserves could jump 47% if Poland's gas reserves are confirmed.
    Poland consumes 14bn cubic metres of gas a year and imports more than 70% of it from Russia.
    It is easy to see how the country could benefit from starting shale gas drilling as soon as possible. Not only could it decrease its dependency on Russia, it might even turn into a gas exporter.
    But specialists highlight a number of difficulties with implementing the US shale gas drilling experience in Europe.
    "We certainly see it [shale gas] as a major opportunity, but we also think it's important to manage expectations," US special envoy for Eurasian energy Richard Morningstar said in an interview with Reuters news agency.
    Money and environment
    One of the problems is the cost of shale gas extraction.
    "In terms of reserves, it [shale gas] is comparable with high-pressure gas and is present everywhere, but the questions is whether the shale gas extraction technology can advance to a commercially advantageous level," said Greenpeace Russia energy programme director Vladimir Chuprov.
    "If a commercially beneficial technology is found, the issue will be raised about the need for Russian gas exports to Europe, which may create serious problems for Gazprom," Ria Novosti news agency quotes Mr Chuprov as saying.
    Poland has to import more than 70% of its gas supplies from Russia

    But it looks as though Gazprom officials do not have too many reasons to lose sleep over shale gas at present, partly because there is another big factor working against it - environmental concerns.
    The US Environmental Protection Agency announced last month it was going to study the impact of the hydraulic fracturing technique on people's health and environment.
    Under the technique, water, sand and chemicals are pumped into rock formations under high pressure.
    A number of environmentalists are concerned the method could contaminate drinking water supplies.
    It also requires the drilling of a lot of wells close to each other, which leads to a more significant footprint.
    Besides, as some point out, it will take longer for shale gas drilling to take off in Europe than it took in the US, purely because there are not enough of the land drilling rigs in Europe that are essential for shale gas projects.
    'Energy security'
    Nevertheless, the Polish government has been an active supporter of the projects, says Oisin Fanning, head of the British company San Leon Energy, which has exploration licences in Poland.
    "The government is creating a very large commercial incentive to develop these [shale gas] deposits," he told the Times newspaper.
    Mr Morningstar, US special envoy for Eurasian energy, believes that shale gas "certainly can be a way" to increase Eastern Europe's energy security, if these projects in the region's countries succeed.
    "It's not a question of being independent from Russia - it's a question of having overall energy security," he says.
    But other experts point out that even if planned European shale gas projects do not bring significant results, Gazprom could still find itself under pressure from rising shale gas production in the US and other parts of the world.
    Falling demand and increased gas production in the US have already forced the Russian gas monopoly to divert its liquefied natural gas from North America to Asia.
    For now, Gazprom does not appear to have a serious shale gas problem. But the company may need to think carefully about whether it should start getting seriously worried soon.
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  5. #505
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    Did anyone else notice that 45% of BPT turnover yesterday was short sales?

  6. #506
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    [QUOTE=macduffy;301168]Did anyone else notice that 45% of BPT turnover yesterday was short sales?[/QUOTE)

    Na where did you find that imfo Mac be real interesting how many shorts are on ROC going well of late
    "With a good perspective on history, we can have a better understanding of the past and present, and thus a clear vision of the future." — Carlos Slim Helu

  7. #507
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    JB, have a look at

    www.asx.com.au/data/shortsell.txt

    Note that it's a daily report of transactions. Doesn't tell you what the total outstandings are on individual stocks.

  8. #508
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    Quote Originally Posted by macduffy View Post
    Did anyone else notice that 45% of BPT turnover yesterday was short sales?
    So on a bad day on the market, Friday we had a good turnover on Beach and a price increase, does this mean people who sold short, had to buy on this day to make due a shortfall.

    ?? I do not understand short selling, can someone edify me please.
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  9. #509
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    Just a wiki explanation, but it should do the trick....

    http://en.wikipedia.org/wiki/Short_(finance)

  10. #510
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    Quote Originally Posted by Huang Chung View Post
    Just a wiki explanation, but it should do the trick....

    http://en.wikipedia.org/wiki/Short_(finance)
    Can not get an answer, can you try again Huang, thanks.
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