Three Reasons to Like Nat Gas E&Ps

Source: Seeking Alpha, SL Advisors (9/21/10)

"Shale gas plays transformed the economics of domestic nat gas market."

We continue to find attractive value plays amongst the natural gas E&P names. We like this sector for a number of reasons:

The U.S. is self-sufficient and has many decades of domestic reserves. Shifting some of our consumption away from foreign oil would reduce our reliance on a volatile region for our energy supplies and is, clearly, in our best interest.

Natural gas generates around 2/3 of the C02 of crude-oil-based products and only 50% that of coal. Therefore, natural gas must be part of any serious effort to reduce our carbon-based pollution.

Natural gas is far cheaper than crude oil on a BTU-equivalent basis. At current prices, nat gas produces energy at about 1/3 the price of crude oil.

And yet, there are still serious obstacles to the U.S. altering its mix of energy sources. As a replacement for gasoline, nat gas suffers from a shortage of infrastructure to provide retail distribution. It also has to be stored at extremely high pressures and at temperatures as low as -260 degrees F, which makes it harder and more expensive to handle. While T. Boone Pickens argues relentlessly in favor of converting the U.S. fleet of trucks to nat gas, it's unlikely to happen without Federal tax breaks and these don't appear to be on the horizon.

The shale gas plays have really transformed the economics of the domestic natural gas market. By allowing access to abundant supplies, shale drilling has both improved our position of self-sufficiency while propagating uneconomic production as E&P companies drill in order to retain the leases they've bought. While the low returns on capital that result should be self-correcting, for the bulls on natural gas and their related E&P stocks—it's an interminable wait.

This is why so many names appear attractive—their prices are weak.

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Source: Streetwise Reports (07/13/2020)

Streetwise Reports is offering 100 investors—at no charge—the opportunity to meet via Zoom with executives of precious metals companies as they discuss recent developments at their companies and upcoming catalysts.

"China's export quota could be opportunity for Canadian miners"

Mexico: Gold's Next Powerhouse Player
Source: Marc Davis, BNW News (11/03/2009)

As the world's key gold producing nations struggle mostly in vain to replenish dwindling below-ground supplies, Mexico is bucking the trend in a big way.

Where Have All the Gold Mines Gone?
Source: Brent Cook, Exploration Insights (04/14/2009)

Given the declining global gold production, mining companies’ demand for reserve replacement and the acute dearth of new gold discoveries, there is no doubt that real economic discoveries will be exceptionally valuable. . .the opportunity for stellar profits is the best it has probably ever been. Identifying the few successes, however, will require vigilant and constant technical assessment of geology and drill results, always with an eye to mine economics.

Congo Completes Mining Review, Says Majors Quit Talks
Source: Reuters (12/20/2008)

"Review process is extended an additional 45 days to allow six companies to return to the negotiating table for direct talks with government ministers."