Tag: streetwise

Optimistic Banker Sees 'Encouraging Time in the Basins'

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The Energy Report: Bruce, the price of natural gas has remained well below $4 per thousand cubic feet ($4/Mcf). How long can junior and midcap explorers and producers (EPs) of natural gas keep on going at this rate?

Bruce Edgelow: They're in a better place than they were a year before. The marketplace isand I'll hesitantly use the word"enjoying" about a 4550% increase in prices year over year. This new price is, for the most part, bringing producers back to a break-even or a modest return on cash flow. However, they clearly need a more robust price to generate the returns that the market expects of them.

TER: The spread between West Texas Intermediate (WTI) and Brent Crude prices has narrowed to just a few dollars per barrel. How is that affecting the crude EPs? Continue reading "Optimistic Banker Sees 'Encouraging Time in the Basins'" →

Micro-Cap Oil Stocks that Hit the Jackpot

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The Energy Report: With oil prices firming up over the past couple of months and the spread between West Texas Intermediate (WTI) and Brent Crude narrowing, what are your price expectations for the remainder of 2013 and into next year?

Phil Juskowicz: While I don't spend a lot of time predicting commodity prices, I personally see relatively stable short-term oil prices. Intermediate or long-term prices may weaken, assuming no supply disruptions arise from political upheavals, while gas prices may strengthen based on supply/demand fundamentals. We've seen continued oil supply growth and the short term market seems to be pretty range bound, having developed a good base around the $100 per barrel ($100/bbl) level.

TER: Where do you see some of the best investment opportunities in the oil and gas business? Continue reading "Micro-Cap Oil Stocks that Hit the Jackpot" →

Casey's Louis James Warns: 'Don't Try to Time the Market'

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The Gold Report: You warn investors against trying to time the market. If even experts don't know a bottom until it's behind them, how do regular investors know when to invest, when to buy the next tranches and when to cut losses?

Louis James: The wisdom of not trying to time the market is tried and true. Benjamin Graham said the same thing 60 years ago. I shouldn't have to defend this premise. Even though investors all know it, they fervently wish it weren't so; they just can't help themselves.

You can't time the market. A bureaucrat in Washington can open his mouth and send the price of gold up or down 5% in an afternoon.

Fortunately, we can look for value. Value tends to be slippery in the junior sector when you have a bunch of companies that, as Doug Casey famously says, are little better than burning matches. They have no income. Even the biggest players in the field are so volatile that Benjamin Graham would never touch them.

However, there are things that we can look for. We can compare companies to their peers. We can look at the ounces in the ground and see if something is out of whack. We can look at cash in the bank. The market is so beat up now that some companies with viable projects are trading for cash or less. It's actually possible in a market this beat up to make relatively low-risk acquisitions. Continue reading "Casey's Louis James Warns: 'Don't Try to Time the Market'" →

Worldwide Oil & Gas Capex Growth Good News for 'Big Four' Services Companies

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The Energy Report: James, you have said the energy industry is in the early stages of a strong, sustained upside trend. What's driving that?

James West: Sustained high oil prices are driving a trend toward higher capital spending. Oil prices have been at elevated levelsabove $100 per barrel ($100/bbl) for Brent and $85 and above for WTI (West Texas Intermediate)for close to 40 months. Those are exceptionally good levels for most companies; they can make good profits on projects. Capital investments seem to be accelerating somewhat, particularly in the international markets.

North America is going through a little bit of an efficiency phase and a slowdown from rampant growth. That started after the financial crisis. Now the international markets, which are slower to recover after a financial crisis or downturn, as we saw in 2009, are starting to accelerate.

We recently released an update to our spending outlook, where we survey well over 300 companies in the oil and gas space. These companies represent about 90% or so of capital expenditures (capex) on exploration and production (EP), and they are showing about 13% gain year-over-year (YOY) in the international markets for capital budgets. There have been some regional shifts, but that's a pretty healthy number. Also, globally we're showing about a 10% gain in spending. This is the fourth year in a row of double-digit gains driven by high, sustained oil prices, behind which are many factors, one being limited OPEC spare capacity.

TER: Is the trend equally strong for gas? Continue reading "Worldwide Oil & Gas Capex Growth Good News for 'Big Four' Services Companies" →

Electric Transportation Could Jump-Start Rare Earth Markets

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The Metals Report: You've said that the ratio of natural gas to oil prices [see price charts below] represents the largest arbitrage opportunity in history. What does that mean for the future of transportation and rare earth element (REE) consumption?

Patrick Wong: This trillion-dollar arbitrage will bring a lot of momentum into the electrification of transportation. You need REEs to make the permanent magnets that go into the electric drive motors, so they have a key role. In 10 years, we'll look back and recognize that this is the beginning of the end of a world dependent upon petrol-based transportation. Continue reading "Electric Transportation Could Jump-Start Rare Earth Markets" →