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The markets will speak.......I've made my bets!!
"Nutball".....don't know about that,but the markets may start to reflect some fears of our wonderful leadership starting a war with Iran.
Do you think China will be our ally after having bought 100 million of forward Iranian oil production? Will China dump US dollars????
Is the war for resources to begin?
Place your bets now!
Rogue
Iran War to start??.....regrettfully I've been expecting this to occur. That is one of the reasons I have huge overweightings in oil/natural resource companies.
We could see $75 oil and $3 gasoline this year? Don't forget that China has bought 100 billion dollars worth of Iranian oil production going forward. Will China be our ally????
Scott Ritter Says US Attack On Iran Set For June
Mark Jensen / February 21, 2005
On Friday evening in Olympia, former UNSCOM weapons inspector Scott Ritter appeared with journalist Dahr Jamail. -- Ritter made two shocking claims: George W. Bush has "signed off" on plans to bomb Iran in June 2005, and the U.S. manipulated the results of the Jan. 30 elections in Iraq....
Scott Ritter, appearing with journalist Dahr Jamail yesterday in Washington State, dropped two shocking bombshells in a talk delivered to a packed house in Olympia's Capitol Theater. The ex-Marine turned UNSCOM weapons inspector said that George W. Bush has "signed off" on plans to bomb Iran in June 2005, and claimed the U.S. manipulated the results of the recent Jan. 30 elections in Iraq.
Olympians like to call the Capitol Theater "historic," but it's doubtful whether the eighty-year-old edifice has ever been the scene of more portentous revelations.
The principal theme of Scott Ritter's talk was Americans' duty to protect the U.S. Constitution by taking action to bring an end to the illegal war in Iraq. But in passing, the former UNSCOM weapons inspector stunned his listeners with two pronouncements. Ritter said plans for a June attack on Iran have been submitted to President George W. Bush, and that the president has approved them. He also asserted that knowledgeable sources say U.S. officials "cooked" the results of the Jan. 30 elections in Iraq.
On Iran, Ritter said that President George W. Bush has received and signed off on orders for an aerial attack on Iran planned for June 2005. Its purported goal is the destruction of Iran's alleged program to develop nuclear weapons, but Ritter said neoconservatives in the administration also expected that the attack would set in motion a chain of events leading to regime change in the oil-rich nation of 70 million -- a possibility Ritter regards with the greatest skepticism.
The former Marine also said that the Jan. 30 elections, which George W. Bush has called "a turning point in the history of Iraq, a milestone in the advance of freedom," were not so free after all. Ritter said that U.S. authorities in Iraq had manipulated the results in order to reduce the percentage of the vote received by the United Iraqi Alliance from 56% to 48%.
Asked by UFPPC's Ted Nation about this shocker, Ritter said an official involved in the manipulation was the source, and that this would soon be reported by a Pulitzer Prize-winning journalist in a major metropolitan magazine -- an obvious allusion to New Yorker reporter Seymour M. Hersh.
On Jan. 17, the New Yorker posted an article by Hersh entitled The Coming Wars (New Yorker, January 24-31, 2005). In it, the well-known investigative journalist claimed that for the Bush administration, "The next strategic target [is] Iran." Hersh also reported that "The Administration has been conducting secret reconnaissance missions inside Iran at least since last summer." According to Hersh, "Defense Department civilians, under the leadership of Douglas Feith, have been working with Israeli planners and consultants to develop and refine potential nuclear, chemical-weapons, and missile targets inside Iran. . . . Strategists at the headquarters of the U.S. Central Command, in Tampa, Florida, have been asked to revise the military's war plan, providing for a maximum ground and air invasion of Iran. . . . The hawks in the Administration believe that it will soon become clear that the Europeans' negotiated approach [to Iran] cannot succeed, and that at that time the Administration will act."
Scott Ritter said that although the peace movement failed to stop the war in Iraq, it had a chance to stop the expansion of the war to other nations like Iran and Syria. He held up the specter of a day when the Iraq war might be remembered as a relatively minor event that preceded an even greater conflagration.
Scott Ritter's talk was the culmination of a long evening devoted to discussion of Iraq and U.S. foreign policy. Before Ritter spoke, Dahr Jamail narrated a slide show on Iraq focusing on Fallujah. He showed more than a hundred vivid photographs taken in Iraq, mostly by himself. Many of them showed the horrific slaughter of civilians.
Dahr Jamail argued that U.S. mainstream media sources are complicit in the war and help sustain support for it by deliberately downplaying the truth about the devastation and death it is causing.
Jamail was, until recently, one of the few unembedded journalists in Iraq and one of the only independent ones. His reports have gained a substantial following and are available online at dahrjamailiraq.com.
Friday evening's event in Olympia was sponsored by South Puget Sound Community College's Student Activities Board, Veterans for Peace, 100 Thousand and Counting, Olympia Movement for Justice & Peace, and United for Peace of Pierce County.
TGA....if you can justify the currently insane valuaton for GOOGLE or the hysterically insane valuations of the tech/internet junk stocks a few years back, TGA at $100 per share would like like an incredible bargain!!
The oil/gas stocks are still in the 2nd inning of the ballgame.....I expect a real "urgency" to buy them down the road by the "general public". They will most likely have "moonshot parabolic" charts before the ballgame is over. We have some good names on this board.......they should do well.
Sure got ripped off by TREK management though......that could have been a good one if the shareholders were allowed to share in the companies good fortune.
Rogue
Regarding "Oil stocks doing well today. Something going on?".......
It's my take that there is an increasing likelihood and acceptance by smart money that the next really hot and speculative sector will be oil and gas. The "value" guys(us!) were here first and soon the growth and then the momentum guys will get involved. It will probably compare to the speculative excesses that prevailed with the "internet and technology" bubble of 5 years ago.
It wouldn't surprise me to see some really crazy and "overvalued" PPS numbers for some of our energy favorites before this superbull in energy is over. Hold your core positions and do a little trading with them on the overbought/oversold swings IMO.
Rogue
NXG....I recently bought a block at $1.36. I think $1.69 is a reasonable short-term target.
I have a "core" investment position in NXG and like to trade around it. Adding to and paring down the position on selloffs and spikes.
Rogue
Anyone have any Chinese companies to add to our list here for DD???
Rogue
Regarding Iran........I'd also like to make everyone aware on this board that Iran has sold $100 billion dollars worth of it's future oil production to China.
Do you think Iran want's China's backing???
The sad thing is that it is mostly our exported US dollars that allow this to happen. US leadership???...what a joke.
Rogue
Bobwins....YDHCF is one Chinese company I own for the reasons you stated in your post. I think this has great long term investment potential......besides being currently very undervalued. Could be a ten-bagger from these levels in a year or so.
I wouldn't be surprised to someday in the next few years recieve annual dividends from this company in excess of its current share price(one very real possibility as the Remnibi appreciates against the US$). That was the case a few years back when I was a huge buyer of CYD(China Yuchai Diesal) when it was trading below $1.
Rogue
YDHCF.....value microcap Chinese paper company. I think it deserves some DD by the board. I own a 50,000 share block. It's trading around .12 cents per share......undervalued and huge upside potential IMO. My shares won't become available till much higher prices...... patiently waiting on this one as a long-term investment in China.
Some new research on YDHCF......
J.M. Dutton & Associates Announces Investment Opinion: Yantai Dahua Holdings Speculative Buy Rating In Initiating Coverage By Dutton & Associates
Friday February 11, 12:00 pm ET
EL DORADO HILLS, Calif.--(BUSINESS WIRE)--Feb. 11, 2005--J.M. Dutton & Associates initiates coverage of Yantai Dahua Holdings (OTCBB:YDHCF - News) with a Speculative Buy rating. The 30-page report by JM Dutton senior analyst Silvia Kwan, CFA is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Multex and other leading financial portals.
Yantai Dahua Holdings is principally involved in the manufacturing and sale of printing and writing papers in China through its 85% owned subsidiary, Yantai Dahua Paper Industry Co. Ltd. (YDPI). With an annual production capacity of 28,000 tons, YDPI is considered as a medium-sized paper manufacturer in the People's Republic of China (PRC). The Company is aggressively increasing its production capacity and expanding its product range into the specialty paper niche market, which offers a higher profit margin. A new 2,400 mm production line for specialty paper, with a capacity of 8,000 tons per year, is targeted to commence production by the end of May 2005. The specialty paper will primarily be marketed to cigarette manufacturers and dictionary printers and financed by sale of a convertible debenture. In our opinion, the Company offers investors a good opportunity to invest in China's growing paper industry, especially in the high-end quality paper segment. With the new production line, the Company is expected to capture the strong demand for specialty paper. In our earnings forecasts, we assume the convertible debentures offer will be completed with its minimum offering of $5 million. Net profit is projected to grow at a compound annual growth rate of 95% over 2004-2006. At a target price of $0.50, the Company would be trading at a prospective 14.4x estimated 2005 diluted earnings or 9x estimated 2006 diluted earnings. We note several significant factors: 1) Experienced management with strong expertise in the paper industry in the PRC, 2) Paper consumption in China should be increasing-driven by its expected robust economic growth and global events, 3) Anticipated strong demand for high-end quality paper, 4) Production capacity to increase to 36,000 tons per year in 2005 from 28,000 tons per year, up 28.6%, and 5) Diluted earnings per share CAGR of 52% over 2004-2006.
Rogue
YDHCF.....value microcap Chinese paper company. I think it deserves some DD by the board. I own a 50,000 share block. It's trading around .12 cents per share......undervalued and huge upside potential IMO. My shares won't become available till much higher prices...... patiently waiting on this one as a long-term investment in China.
Some new research on YDHCF......
J.M. Dutton & Associates Announces Investment Opinion: Yantai Dahua Holdings Speculative Buy Rating In Initiating Coverage By Dutton & Associates
Friday February 11, 12:00 pm ET
EL DORADO HILLS, Calif.--(BUSINESS WIRE)--Feb. 11, 2005--J.M. Dutton & Associates initiates coverage of Yantai Dahua Holdings (OTCBB:YDHCF - News) with a Speculative Buy rating. The 30-page report by JM Dutton senior analyst Silvia Kwan, CFA is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Multex and other leading financial portals.
Yantai Dahua Holdings is principally involved in the manufacturing and sale of printing and writing papers in China through its 85% owned subsidiary, Yantai Dahua Paper Industry Co. Ltd. (YDPI). With an annual production capacity of 28,000 tons, YDPI is considered as a medium-sized paper manufacturer in the People's Republic of China (PRC). The Company is aggressively increasing its production capacity and expanding its product range into the specialty paper niche market, which offers a higher profit margin. A new 2,400 mm production line for specialty paper, with a capacity of 8,000 tons per year, is targeted to commence production by the end of May 2005. The specialty paper will primarily be marketed to cigarette manufacturers and dictionary printers and financed by sale of a convertible debenture. In our opinion, the Company offers investors a good opportunity to invest in China's growing paper industry, especially in the high-end quality paper segment. With the new production line, the Company is expected to capture the strong demand for specialty paper. In our earnings forecasts, we assume the convertible debentures offer will be completed with its minimum offering of $5 million. Net profit is projected to grow at a compound annual growth rate of 95% over 2004-2006. At a target price of $0.50, the Company would be trading at a prospective 14.4x estimated 2005 diluted earnings or 9x estimated 2006 diluted earnings. We note several significant factors: 1) Experienced management with strong expertise in the paper industry in the PRC, 2) Paper consumption in China should be increasing-driven by its expected robust economic growth and global events, 3) Anticipated strong demand for high-end quality paper, 4) Production capacity to increase to 36,000 tons per year in 2005 from 28,000 tons per year, up 28.6%, and 5) Diluted earnings per share CAGR of 52% over 2004-2006.
Rogue
YDHCF.....value microcap Chinese paper company. I think it deserves some DD by the board. I own a 50,000 share block. It's trading around .12 cents per share......undervalued and huge upside potential IMO. My shares won't become available till much higher prices...... patiently waiting on this one as a long-term investment in China.
Some new research on YDHCF......
J.M. Dutton & Associates Announces Investment Opinion: Yantai Dahua Holdings Speculative Buy Rating In Initiating Coverage By Dutton & Associates
Friday February 11, 12:00 pm ET
EL DORADO HILLS, Calif.--(BUSINESS WIRE)--Feb. 11, 2005--J.M. Dutton & Associates initiates coverage of Yantai Dahua Holdings (OTCBB:YDHCF - News) with a Speculative Buy rating. The 30-page report by JM Dutton senior analyst Silvia Kwan, CFA is available at www.jmdutton.com as well as from First Call, Bloomberg, Zacks, Multex and other leading financial portals.
Yantai Dahua Holdings is principally involved in the manufacturing and sale of printing and writing papers in China through its 85% owned subsidiary, Yantai Dahua Paper Industry Co. Ltd. (YDPI). With an annual production capacity of 28,000 tons, YDPI is considered as a medium-sized paper manufacturer in the People's Republic of China (PRC). The Company is aggressively increasing its production capacity and expanding its product range into the specialty paper niche market, which offers a higher profit margin. A new 2,400 mm production line for specialty paper, with a capacity of 8,000 tons per year, is targeted to commence production by the end of May 2005. The specialty paper will primarily be marketed to cigarette manufacturers and dictionary printers and financed by sale of a convertible debenture. In our opinion, the Company offers investors a good opportunity to invest in China's growing paper industry, especially in the high-end quality paper segment. With the new production line, the Company is expected to capture the strong demand for specialty paper. In our earnings forecasts, we assume the convertible debentures offer will be completed with its minimum offering of $5 million. Net profit is projected to grow at a compound annual growth rate of 95% over 2004-2006. At a target price of $0.50, the Company would be trading at a prospective 14.4x estimated 2005 diluted earnings or 9x estimated 2006 diluted earnings. We note several significant factors: 1) Experienced management with strong expertise in the paper industry in the PRC, 2) Paper consumption in China should be increasing-driven by its expected robust economic growth and global events, 3) Anticipated strong demand for high-end quality paper, 4) Production capacity to increase to 36,000 tons per year in 2005 from 28,000 tons per year, up 28.6%, and 5) Diluted earnings per share CAGR of 52% over 2004-2006.
Rogue
GPXM.....Gollden Phoenix Minerals. Sold a 50,000 share block today for a nice trading gain for a few days.
Still holding 35,000 shares. We'll see how it acts from here......
Rogue
GPXM.....it is taking a long time and everyone is losing patience. I smell some oppurtunity here though. The "vultures" should be circling....if the PPS low is not in yet, it may be soon.
Rogue
GPXM.....yesterday looked like at least a short/intermediate term selling climax. I think of few of the junior exploration companies are in the process of trying to make "long-term" bottoms.
There will be big money made here on the turnaround.....I'm building positions and trading in and out of a few. Trying to get a feel for the bottom and "load up" and trade them a bit here. You are right about catching a falling knife though......but after 10 years on the floor of the CBOT trading treasury bonds you sometimes get "conditioned" to catch that knife occasionally!!!
If the rally falters.....we'll see if .13 cents holds.
Rogue
GPXM....Golden Phoenix Minerals up today from selling climax yesterday. Bought another 35,000 block today. Looking for at least a short term run to .17 cents......the sellers seem exhausted. The long-term bottom may be in on this one......been following it for awhile. Can trade much higher as the dollar resumes it's weakness soon and junior exploration companys gain favor again.
Rogue
Bought a 50,000 share block of GPXM yesterday.....my first purchase of GPXM. Good natural resources/metals play.
I've had a knack over the years of picking long-term bottoms and I've been following this one for a few years. Looks as if it had a capitulation low yesterday......lot's of disgusted holders seemed to have given up. High probability that a bottom was seen yesterday.
I'll lean on yesterdays low as a measure of the bottom being in...it sure feels like it! Hopefully I'll be buying a few more blocks today depending on the price action. There is value here.......and fear!!! I
hope to be a holder for awhile here and buid a substantial position for some big gains down the road.
I rate GPXM right now a "strong speculative buy"........looks like a good oppurtunity right here to buy for big turnaround gains!!
Rogue
GPXM....Golden Phoenix Minerals,natural resource company trading at multi-year low today of just .13 cents.
Looks like capitulation selloff today based on prevoius chart support broken.
Just picked up a block. ...."Buy when there is fear and sell when there is greed!".
Rogue
GPXM....Golden Phoenix Minerals,natural resource company trading at multi-year low today of just .13 cents.
Looks like capitulation selloff today based on prevoius chart support broken.
Just picked up a block. ...."Buy when there is fear and sell when there is greed!".
Rogue
wade/TGB.....the shares are being sold for $1.45 Canadien....which translates to about $1.176 US dollars. Not too bad of dilution, but explains the stock selloff today. The $1.66 Canadien optioned shares translates to about $1.33 US dollars.
Rogue
wade/TGB.....the shares are being sold for $1.45 Canadien....which translates to about $1.176 US dollars. Not too bad of dilution, but explains the stock selloff today. The $1.66 Canadien optioned shares translates to about $1.33 US dollars.
Rogue
CYD...... The dispute between the holding company and operating unit has been talked about for years. The $9.25 low in price may have reflected and discounted all the building investor pessimism over the dispute and could be the low for the next upmove.
I'm not even sure I quite understand fully the dispute......but it is the key issue I believe in valueing CYD. Over the years I've made money buying heavily into CYD when everyone was worried about the company ownership structure. The key is to sell when everyone forgets about the ownership controversey.....like when it traded abovr $37 a few years ago. Investors weren't concerned about the ownership squabbles then(they convienantly forget in all the enthusiasm and higher stock price!).
The ownership issue may be finally resolved for good or bad someday......or the market may just "forget" about it and drive CYD higher again for the next "China upmove".
Rogue
TGB.....It just feels from the stock price action that we may be heading for a "throw in the towel" sort of capitualization.
It feels like holders are "giving up" and dumping and it may be ready to bottom out soon.JMHO.
Rogue
RRainman....."Oil reserves for the long term!"
I very much agree, especially for us here in America that have a currency that is very "suspect" to say the least. In reality,we have very low interest rates and very high inflation in nearly every aspect of our society. Our government would try to persuade you otherwise......but our currency may not be worth the paper it's printed on in the "long term".
US dollars are loosing purchasing power very rapidly......oil reserves are a good hedge and investment. Oil is "real money".
Rogue
CYD and EGY.......both are "deep value" and doing very well in my portfolio today. Should see much higher PPS for both of these down the road.
Rogue
YDHCF.....Chinese value and growth company. I'm long a decent position.
Yantai Dahua Holdings Approves Debt Financing for Plant Expansion
Tuesday February 1, 5:07 pm ET
EAST OF MUPONG, YANTAI, SHANDONG, People's Republic of China, Feb. 1, 2005 (PRIMEZONE) -- Yantai Dahua Holdings Company Limited (OTC BB:YDHCF.OB - News) announced today that the board of directors has approved a private placement offering to accredited investors to raise up to $8 million in the form of secured convertible debentures. The proceeds from the debenture offering will be used to finance a new plant facility and production equipment for specialty thin paper products. The new plant and equipment is expected to increase overall annual production capacity from 28,000 tons to 36,000 tons of paper. The specialty thin paper products will allow Yantai to offer a premium, high-end product to its customers.
ADVERTISEMENT
The final terms of the private placement of secured convertible debentures have not been determined. Yantai has engaged an investment banking firm to act as its exclusive placement agent on a ``best efforts'' basis. There is no guarantee that the private placement will be completed or that any funds will be raised from this offering.
ABOUT YANTAI
Yantai is engaged in, through its subsidiaries, the manufacture and sale of paper principally for printing and writing in China. The major types of paper products manufactured by Yantai are printing paper, writing paper, computer paper and other paper, including newsprint. Yantai is a leading paper manufacturer in Shandong, China and employs over 1,000 staff. It has six sales offices throughout China and over 200 customers, including publishing houses, printing companies and state-owned material supplies companies.
FORWARD LOOKING STATEMENTS
The statements in this release contain certain forward-looking statements concerning, among other things, the future plans and objectives of Yantai's management. These forward-looking statements can be identified by the use of such words as ``plans,'' ``anticipates'' and ``expects.'' Actual results might differ materially from such plans, anticipations and expectations, due to general economic conditions, supply and demand for paper, labor conditions, the availability of requisite financing and other factors.
Contact:
Yantai Dahua Holdings Company Limited
+86 535 465 2033 8080
Rogue
DNDT....I think Checkmate28 found this one. Correct me if I am wrong??
Rogue
Checkmate28.......Do you think someday we should introduce to the board our growing little alternative "health beverage" company???
Probably would be an ideal pick for the VM "zipcode changers" board!!
Rogue
CYD is a good one......I'm long here too. I wouldn't be surprised to see a triple here either this year. They've had some really nice dividends paid to shareholders the past few years too. Could be a great income and capital gains stock going forward. It has been for me in the past.
Rogue
Rainman.....CYD is an exceptional value at this level. It's very oversold at this time....could be an excellent entry point here. I've been in and out of this one for years.
The Yahoo message board was buzzing recently about some "ownership and control" squabbles in CYD governance. The stock has been punished and that has usually been the time to load up on CYD. The somewhat complicated ownership structure existed when the stock was trading at $37......it's only at $10 and change now, and the pessimism runs deep. Could be an excellent time to buy.
Another Chinese company that looks cheap is YDHCF. I own a big block. Check it out.
Rogue
GREENBACKS GREASE OIL
By Eric J. Fry
Question: How is a dollar bill like a barrel of crude oil?
Answer: It isn't.
Significance of the answer: 1) Oil prices will rise; 2)
Merger and acquisition activity in the energy stock sector
will increase.
Dollar bills and crude oil are different...very, very
different.
For example, dollar bills, while easily combustible,
provide very little energy when burned. As such, they are
not an ideal fuel for heating homes or for powering
automobiles.
Crude oil, on the other hand, is a poor substitute for
dollar bills. Although crude may be a worthy competitor to
the U.S. dollar as a store of value, it is not widely
accepted in Madison Avenue boutiques. What's more, crude
oil makes a mess of wallets and purses, and it gums up ATM
machines when deposited.
Although the dissimilarities between dollars and oil are
numerous, one specific dissimilarity may be exerting a
powerful influence over the price of crude oil: dollars are
plentiful; oil is scarce.
Dollars are plentiful, of course, because they are so easy
to create. They fly off the printing presses at the U.S.
mint, billions at a time. But creating crude oil requires
several geologic eras – give or take a few billion years.
Because dollars are plentiful and crude oil is scarce,
large holders of the former have become increasingly
interested in exchanging them for the latter.
We suspect it is no mere coincidence that China, one of the
world's most conspicuous buyers of natural resource assets,
is also one the most vocal critics of the dollar's
reliability.
Last night, Fan Gang, director of the National Economic
Research Institute at the China Reform Foundation, shocked
a standing-room crowd at the World Economic Forum in Davos,
Switzerland, when he volunteered, "The U.S. dollar is no
longer – in our opinion is no longer – [seen] as a stable
currency, and is devaluating all the time, and that's
putting troubles all the time."
No doubt, China is but one of many nervous dollar holders
who may increasingly become eager oil buyers.
"The key to the oil price, we believe, lies not so much in
the ratio of reserves to production," observes James Grant,
editor of Grant's Interest Rate Observer, "but in the
position of the dollar in the global economy..."
"The dollar exchange rate is – ultimately – going down.
[Therefore], commodities denominated in dollars will, other
things being the same, tend to become more expensive in
dollar terms...
"Last summer, a Hoboken, N.J., money manager exactly
summarized the petro-monetary situation. 'Awash in a sea of
dollar debt,' wrote Jes Black to the editor of the
Financial Times, 'the world now finds itself in short
supply of tangible goods and the opportunity cost of not
transferring these paper dollar claims into hard assets is
too great. If and until the Fed shows it understands the
dilemma, too much money will fuel ever higher oil prices.'"
In other words, the bull market in crude oil is one part
monetary and one part geological – and the monetary part is
becoming increasingly important. Many large holders of
depreciating dollars want to spend them while their dollars
can still purchase something of value. Crude oil certainly
qualifies. Oil-producing companies with significant oil and
gas reserves would also qualify.
Clearly, the abundance of dollars, alone, would not be
sufficient to fuel a bull market in crude oil. Rather,
oil's relative scarcity is half the bull market equation.
"The oil industry now faces significant exploration
challenges," say Wood MacKenzie analysts, Matthieu
Castellani and Andrew Latham. "Overall oil discoveries from
new fields have replaced only 40% of production."
"The 1990s saw major advances in the opening of exploration
acreage to the international oil industry," the pair of
analysts explains. "Changing geo-politics and technology
were the principal drivers. Much of what became available –
like deep water – was previously undrilled or at least had
not been explored with modern techniques. Accordingly, the
oil companies...made very significant discoveries.
"But life is now getting harder for the explorer," say
Castellani and Latham. "There is no escaping the fact that
oil and gas are finite resources: the more that have been
found the less that remains to be found...Reserve
replacement is a critical issue. A super-major like BP
needs to add around 1.3 billion barrels of oil equivalent
(boe) each year – more than 100 million boe each month – to
sustain its position. Between them, western majors need to
find the equivalent of an Angola every 15 months or a UK
North Sea every 18 months just to stand still."
As we observed in the November 2, 2004 edition of the Rude
Awakening, "Mineral exploration, like a kind of cosmic
Easter egg hunt, becomes increasingly difficult the longer
the hunt proceeds. Today, most of the world's oil explorers
are finding that the best chocolate eggs are long gone. The
only goodies remaining are a few stray jellybeans and some
candy wrappers. So the big oil companies are turning their
attention, instead, to the candy store known as Wall Street
to satisfy their permanent craving for new reserves."
To illustrate the diminishing returns of energy
exploration, we presented the chart below, courtesy of Wood
Mackenzie, illustrating that the commercial value of oil
and gas discovered by the 10 largest energy groups over the
last three years was well below the sums spent to find
them. In 2003, for example, the top 10 oil groups spent
about $8 billion hunting for oil, but only found about $4
billion worth of the stuff.
"We believe that exploration cannot continue to be the main
growth engine for the majors as it has in the past,"
Castellani and Latham conclude. "The majors will have to
find new ways to explore or find other ways to grow."
Acquisition, rather than exploration, seems to be one of
the most plausible means of "growing" reserves. And a few
oil companies are beginning to figure this out.
Late last year, Noble Energy offered $3 billion to buy
Denver-based Patina Oil, one of the four major purchases in
2004 of an energy company with significant Rocky Mountain
natural-gas assets.
Yesterday, Cimarex Energy Co. continued the trend by
agreeing to purchase Magnum Hunter Resources Inc. for about
$1.5 billion in stock.
But Western oil companies do not have the marketplace to
themselves. Increasingly, they are brushing shoulders with
buyers from the East. As oil companies in the West jockey
to replace reserves, oil companies from the East are
stepping up their efforts to secure future supplies. The
more these two buyers bump into each other, the more
frenzied the shopping is likely to become.
Since 1990, according to a paper by Philip K. Verleger Jr.,
senior fellow of the Institute for International Economics,
oil demand in China and India has soared 7% a year. Over
those same 14 years, world demand has grown by only 1.3% a
year – INCLUDING the demand growth in China and India.
Therefore, as Asian demand continues to boom, securing
future supplies becomes an increasingly vital economic
imperative. The Chinese oil companies seem to have gotten
the message, as they crisscross the globe to ink joint
ventures and takeovers in the energy sector.
"[Foreign] state-owned oil companies that don't answer to
shareholders appear willing to pay premiums for oil and
natural gas they desperately need to meet long-term
demand," Barron's reports. "Chinese companies are
outbidding their western counterparts or access to new
reserves in places like Venezuela and Russia. Recently,
China National Offshore Oil was reported to be interested
in Unocal, which has significant Asian reserves."
As merger and acquisition activity intensifies in the oil
patch, the values of nearly all mid-sized oil and gas
companies should appreciate. Some will be acquired and some
will merely begin to reflect the values an acquirer might
pay. Barron's suggests Occidental Petroleum and Anandarko
Petroleum as potential takeover targets. Outstanding
Investments editor Kevin Kerr has also recommended a few
select mid-sized oil companies that could catch the eye of
an oil-hungry suitor.
"This may go down as the year of the shopping junket for
energy companies flush with cash from high oil prices,"
Barron's concludes. "Now investors need to figure out what
will be in the shopping bag."
Maybe so, but we wouldn't advise trying to guess the next
mid-sized oil company to catch the bouquet. Rather, we'd
suggest seeking solid companies and riding the powerful
trends already in place: a crude oil bull market, enhanced
by a U.S. dollar bear market.
-------------------------
Did You Notice...?
By Eric J. Fry
Is the crude oil market fast approaching a geologic
"tipping point?" David Goodstein thinks so. Goodstein, a
vice provost and a chaired professor at the California
Institute of Technology, believes that the world is running
out of oil. He says so in his new book, 'Out of Gas: The
End of the Age of Oil.'
"Goodstein's new idea (new, at least, to us)," James Grant
reports, "is that the moment of truth will come not on the
day when production ends, but rather on the day that it
slows. That is, the real bull market in energy begins when
a declining rate of production crosses a rising rate of
consumption. 'That means,' Goldstein explains, 'the crisis
will come when we've used roughly half the oil that nature
made for us.'"
"The Goodstein thesis is both less radical and more radical
than it first appears," Grant continues. "Over the 1995-
2003 span, total additions to the known supply of oil
(technically, energy "liquids") outstripped global
production, according to a report from HIS Energy, a Denver
oil and gas research and consulting service. Of course, as
HIS readily acknowledged, oil is a finite resource. Mankind
started with 2,285 billion barrels, it says. We have
prod! uced 1,020 barrels. The remaining resources of 1,265
billion barrels imply global liquids depletion of 44.6% at
end-2003. In other words, humanity is 5.4 percentage points
away from the Goodstein halfway mark."
Flash Update! The world has consumed about 30 billion more
barrels of oil since the end of 2003. Therefore, the
world's remaining crude oil birthright has slipped to about
1,235 billion barrels. In other words, humanity is now only
5.1 percentage points away from the Goodstein halfway mark.
Based on current consumption trends, planet earth should
arrive at the halfway mark sometime around New Year's Eve
2007.
[Ed. Note: Ubiquitous commodity trader, Kevin Kerr, is in
the news again. He was commenting on a new 3-month high for
gasoline, and was quoted by MarketWatch. "We are not seeing
any build in supplies and this is going to turn into a
major problem as winter fades and we head into peak driving
season," said the editor of Resource Trader Alert.
"The market needs to see big buildups in the fuel, but it's
seeing exactly the opposite for now," he said. "The shift
of focus is going to be on unleaded."
CYD, HQSM.....sharpen your pencil on NYSE listed CYD. Diesal engine manufacturer in huge and growing Asian market. I'm looking for a bottom on this one sometime????
Now own a nice block of 25,000 shares of HQSM. This one looks promising going forward. May be adding more on further weakness.
Rogue
CYD.....NYSE listed China Yuchai Diesal starting to look cheap again after a spectacular run from 2001 to 2004. Currently below $10. Looks inexpensive and can be called a "small-cap" with only a 344 million market cap in a huge and growing market(China).
Rogue
HQSM....I'm buying and building a nice position. Barron Partners are smart people. This will be a home-run someday soon I believe.
Rogue
HQSM.....I've been buying shares the past few days. You still like it Rainman?
Rogue
CYD....I was a big invester in CYD back in 2001. I actually bought big blocks that day of the low between .26 and .31 cents. Rode it and sold it to prices between $4.50 and $34.
Made a small fortune on that one. Not sure of ETLT. But am keeping an eye on CYD again. Looks somewhat promising again after the big selloff. Waiting for some sign of a bottom in CYD to "re-load" after all this time!
Rogue
EGSRE.......Buy? Sell? hold???
Opinions?
Rogue
Rainman....I am holding those same names also. I'm having a very hard time finding any value also,
What broker do you use to buy all of your foreign companies????
Rogue
EGSRE.....Rainman, we seem to own quite a few of the same companies. I don't own EGSRE........do you own it?? Can you explain the "Scam" thing in your previous post.
Rogue
EGSRE.....
"I called the company today and talked to Patti, seem legit enough and said everyone was in a meeting with visitors"........
maybe the "visitors" didn't like what they saw and got nervous and dumped their shares??
Just wondering about the selloff today.
Rogue
EGSRE.......big selloff today on almost 4 times normal average daily volume so far.
Any theories or news to account for the agressive selling today??
Rogue