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GAS DRILLING BOOM MUST COME!
Natural gas prices must rise and drilling boom must follow or we will run out of natural gas and face a serious disaster!
New oil discoveries have fallen to a six-decade low as explorers cut billions of dollars of capex spending to ride out the biggest market slump in a generation. Why is the market not worried about a shortage? Because the necessity to cut CO2 to stop global warming and filthy air in cities will curb oil consumption. Vehicles of all sorts will be forced to convert to natgas, including trucks, trains, planes, and ships. The new natgas-fired turbines are ready to go. They will be cheaper to operate on natgas than on oil. Conversions will save shippers lots of money.
This applies all over the world, especially China and the USA.
Coal is dead! Crude is slowly dying!
The primary fuel for the next 20 years has to be clean burning natgas because it cuts CO2 by 50% and there is no other replacement.
Natural gas, the cleanest fossil fuel, is a highly efficient form of energy. It is composed chiefly of methane; the simple chemical composition of natural gas is a molecule of one carbon atom and four hydrogen atoms (CH4). When methane is burned completely, the principal products of combustion are carbon dioxide and water vapor. Methane is not polluting if burnt.
Natural gas's advantages over other fuels include the following: it has fewer impurities, it is less chemically complex, and its combustion generally results in less pollution. In most applications, using natural gas produces less of the following substances than oil or coal: carbon dioxide (CO2), which is the primary greenhouse gas; sulfur dioxide, which is the primary precursor of acid rain; nitrogen oxides, which is the primary precursor of smog; and particulate matter, which can affect health and visibility; than oil or coal. Technological progress allows cleaner energy production than ever for all fuels, although the inherent cleanliness of gas means that environmental controls on gas equipment, if required, tend to be far less expensive than those for other fuels.
Natural gas also is helping the world develop clean alternative energy sources in various ways, such as the following:
Natural gas is used to make fertilizer for ethanol.
Natural gas is used to make methane for hydrogen.
Hydrogen is used to eliminate soot for cleaner diesel fuel.
Electric utilities use natural gas to generate clean power.
Natural gas is a raw material that goes into lightweight cars, wind power blades, solar panels and energy-efficient materials.
Using natural gas to replace less environmentally benign fuels can help address simultaneously a number of environmental concerns, such as smog, acid rain and greenhouse gas emissions.
Natural gas is highly efficient. About 90 percent of the natural gas produced is delivered to customers as useful energy. In contrast, only about 30 percent of the energy converted to electricity in conventional generating facilities reaches consumers.
In order to pursue alternative energies, the world must safely access natural gas supplies to bridge the cap until solar and wind can take over. It can't happen without natural gas.
We must switch to natural gas or we all die of heatstroke from Global Warming!
This is why the majors cut the capex in oil exploration. They are also walking away from offshore drilling and getting very serious about onshore fracking for natural gas.
The majors and the deep pockets are smart enough to know that crude oil is on the way out and natural gas is on the way in. If they want to survive, they have to start fracking for gas and they will have to act within the next 6 months.
They will be many majors noising around Chesapeake with the idea or making a bid!
By 2035, natural gas turbines will be the largest source of electrical power in the U.S., jumping from 21 percent today to more than 40 percent. Coal will dip below 20 percent, while nuclear will stay flat at around 21 percent.
We are looking at a world over time that is switching to natural gas. It is the fuel of the future!
Although natural gas is the big winner, new renewables like solar, wind and geothermal will see a jump as well, rising from four percent of the mix today to 11 percent by 2035.
The outlook is the result of a variety of factors. Technology allowing fossil fuel companies to access shale gas deposits, combined with a proposed pipeline in Alaska that should kick into gear in the next decade, could keep the price of gas under $8/mmBtu through 2030.
Chesapeake will soar during this period!
Get a grip on a hand full of CHK stock and hold on for the ride of your life!
No, I sold out out yesterday, make $15k. If you have any dry powder, I take at a bite at 13.75. I follows gas and will surely pop back to $15 in 10 days. I was going back in but CHK got cheap enough so I jump on it. Loaded back up the wagon at $4.55... it's gonna take a bit a nerve to ride this one, but the bottom line is that we are going into the hottest summer in history. Natgas is already at $2.58 and will likely go on up to $6 by October/November. Production will drop like a stone going forward because no one has any money to drill. Most of the DUCs were drill cheaply just to raise loan value and will likely never produce any gas. Somebody's going to need to drill baby drill and CHK is the only one I know with a $4 billion revolver and lost of choice land.
One or two things will happen to CHK: (1) They will do fantastic over the next 2 years, or (2) some major will buy them out and soon!
US and Canadia land drillers will have their best year ever! I'm in deep with PDS and losing my arse (down 10K now), but this just one of things in this market. There's good days and there's bad days.
The market is jittery over the UK leaving the EU. This will be a rough ride over the next 10 days but it's more scare talk than reality. It make shake the US market for a few days but things will snap back to normal in no time. The bears will by preaching doom and gloom all next week. Might be a good time to set of the side, but not me... I gotta have something to pump the adrenalin.
Anyway, this is going to be a fantastic year for gas producers like CHK with enough money to drill a lot of holes and the land to drill them on.
This is no sell off. Volume less than 1/3 of normal. Institutions holding. Only weak small time traders running out. Time to hold. This is one of the best land drillers in North American.
Ignore this temporary bullshit. Set tight, all will be fine in a few days.
razorback, you mean bought back in at $4.61... not $4.16!
Don't forget today is friday. The market gets a little soft in the afternoon.
I knew this was coming yesterday by the way short raid started and the way the stock was trading. They are still attaching CHK. Damn sure glad I dumped again at a profit. Maybe I can but back in today on cheap.
Precision drilling modern fleet is designed for natural gas plays, not so much for oil. In other words, the stock price should track nat gas prices and not crude oil. The drilling money is gonna be spent drilling gas.
Precision will double by Christmas.
The Canadian drilling season begins in January and runs for 4-5 months. Canada will be colder this winter tan it has been in decades. Gas demand will skyrocket. It looks like a great year for Precision.
wormwood, yes, there was a short connection. It goes like this. The manipulators want in at a cheap price. They draft negative reports and wait until the right timing, then they release all their negativity at same time. They get the stock to move down as far as it will based on the bad news and then they jump on and start shorting to run it down even more. The want to create fear in shareholders so they start selling. At the right time, they start clearing theirs shorts and buying as many shares that can at a low price. They hold the shares and wait till the stock moves back up and then repeat the same process. There are scores of ways they work this. Sometimes they raise the rating on a rotten stock and say great things about it so it will run up really high and then they start a short raid and run it back down, clearing their shorts on the downside. The right team can make millions everyday! Barclays, Barrons, Street.com, Deutsche Bank, and a whole lot more.
The major funds and institutions ignore the scams so the best way to judge is by watch volume. If volume does not jump up high, chances at really good that it a short raid by a group of manipulators. There's no volume because the majors ignore this clutter.
Stocks with a few problems like CHK are a major target because they know the small investors are worried about the fundamentals and technicals.
I bought 25K yesterday at $4.66 and dumped them at $4.88 in the aftermarket because the trading looked manipulated to me.
The same thing happened to SWN the other day. I bought a load at $14.12 and sold them back yesterday at $14.75. I like SWN because it trades on gas prices, not crude. I also bought 20K Precision Drilling but the stock went down with crude so i'm down $5,200. I like PDS and think they will be a great buy. They are really set up right to drill for nat gas, not crude. I expect a double in 6 months, but I would not recommend jumping in too deep now. Just put it on watch lists. It models it's drilling program after HP which is by far the best land driller but very expensive at $65. PKS is now at $5.66. They don't have a great balance sheet because they spent heavily to modernize their fleet.
I am beginning to unravel a mental picture of the gas producers and why the market traders so strange and what the future holds. I'll write a rough draft and post it. You can laugh if you want to because it really is wild story about a whole lot of bank swindlers, con men, and high flyers hustlers that got caught by a warm winter.It looks like 90% of the best con artists work in the oil and gas business.
Land drillers with a modern fleet are gonna be hot later this year.
One other point!
Natgas is up 6% in an hour and CHK, (an 80% gas stock) still trading for $4.67.... It should be at $6.00. This is what got me pissed!
PRECISION DRILLING TOP PICK!
PDS is set up to drill the gas wells all the producers want. Nat Gas just popped 10 cents of low storage and higher demand. Gas is going to $5/mmBtu and maybe even $6/mmBtu by Christmas simply because new drilling has been at a 50 year low. Buyers have not figured it out yet, but they will see the potential in a few days.
This will be the biggest boom drillers have ever seen. Day Rates will pop up to $40,000 per day for tier one rigs. 95% of PDS fleet are the best gas rigs in the business. Look out moon... here we come!
you think I'm nuts but go back and read the post I just made about Barrons and Street.com. While I was writing my post they released a big slam in the face to CHK. Read the shit and then tell me I'm crazy!
http://blogs.barrons.com/stockstowatchtoday/2016/06/09/chesapeake-energy-not-out-the-woods-yet/?mod=yahoobarrons&ru=yahoo
http://realmoney.thestreet.com/articles/06/09/2016/stressed-out-chesapeake-energy-slips-rbc-downgrade-over-looming-debt?puc=yahoo&cm_ven=YAHOO
DO YOU BELIEVE ME NOW?
Nat Gas just went to the moon like I said it would. NatGas stocks will run up quickly, especially SWN!
NatGas Jumped to $2.56/mmBtu and will continue to rise until it passes $3 or $4/mmBtu.
Rock and Rock SWN!
Nat Gas just went to the moon like I said it would. NatGas drilling will be booming in a few short weeks!
NatGas Jumped to $2.56/mmBtu and will continue to rise until it passes $3 or $4/mmBtu.
Rock and Rock Precision Drill!
Natgas Just went to the moon! I knew it had to happen!
Thanks... I got a bit upset when they called my a pumper. I don't pump stock--I always believe what I buy is a winner. I just scared that crude was going to do exactly what it did today. I'm even scared it might even drop to $48 on some manipulation scheme. The big boys like Barclays, the Street.com, Barrons, and a bunch more will always put a trick if they get a chance. Nature Gas just went to the moon. Hang on!
The balance of my 25k order just filed at $4.66 so I did lose much. Hope it don't drop another 15 cents and make me look foolish.
Thanks Hap0206. I got 15,023 shares at $4.66 a few seconds after the open so I only lost a penny. I'd like to get back to 25K. I was hold 80K and it was just too nerve wracking. I just don't like that CHK follows oil more than gas and never have like it.
I did pick up a bunch of Precision Drilling (PDS) which I believe has as much if not more potential as CHK. I also grabbed some cheap SWN shares.
I believe the US land drillers are about the enter the hottest drilling explosion they have ever seen. Producers can not make a dime under $3/mmBtu. If gas don't run up quick, there will be a whole bunch of bankruptcies.
The natgas market is gonna go through the biggest shake up you can imagine. Producers can't drill now because drillers, in trouble themselves, can not accept IOUs. And banks are getting scared and afraid to advance good money after bad.
Gas has to be between $4 to $5/mmBtu; otherwise the industry is gonna fold up. There will be bloody money in the streets if things don't change.
Not a lot of worry about SWN. It has dropped to $13.95 on only 2,900 shares sold in premarket. Shareholders are not worried... no rush to dump because they know that this was just a raid by the Street.com. Volume yesterday never even reached average... you can have a sell off on less that average volume.
It also looks like SWN shareholders trade this stock of gas prices, not oil prices. Gas is up slightly. Oil is down almost $1 barrel but this is a gas play, not an oil play.
SWN is also in the habit of turning on a dime and running up ever higher than before the raid started.
Lots of fabrications everywhere!
Lots of false stories floating around about natgas companies and the price of natgas. EIA announce the natgas storage would hit a record in October or November 2016. The means natgas might drop to $1/mmBtu. Jesus H. Christ, they cannot predict natgas even a week into the future and they know it, but they come out with this bullshit 6-month prediction.
The oil and gas business is the biggest scam going!
Natgas cost producers more than $3/mmBtu delivered to Henry Hub. Producers have only been selling it at a loss just to keep up with interest payments so that banks don't foreclose. Every gas producers is praying for a miracle. SWN is the only one cutting expense to the bare bone just to hang on until another 40 to 50 producers go BK! Producers cannot lose $1.50/mmBtu and stay in business more than 30 more days. Bankruptcies will skyrocket and the natgas business will collapse unless natgas gets to at least $4/mmBtu in less than 60 days! Natgas will likely see $6/mmBtu by January 2016! Otherwise, the industry is toast.
The reason it will hit $6 is because no one has any money or bank credit to drill now and drillers will not take their IOUs.
Most of the DUCs are worthless. They were cheap holes drilled into the ground just to increase the loan value of the company wanting to borrow more money. More than 50% will never produce a cubic meter of gas. Besides, most DUCs over 2 years old are not worth the cost of fracking. The banks were conned by some really smart con artists in hope that EVERYTHING would turn out rosey. But the warm winter killed them and now the truth will finally coming out. The scandal will be huge.
Southwest is one of only a few companies playing it square.
I've never seen so much bullshit is 30 years of playing the stock market.
What the manipulators really want to do is crash the oil and gas market so that the big boys can get in cheap and then they will quietly let the lies die on the vine and we will enter the biggest drilling boom we've ever seen. The downturn simply lasted far too long due to the ignorant Saudis.
SWN may dive a little but this stock will be a winner and hit near $30 in January 2017.
DRILL BABY DRILL!
Listen to all the old pros and they'll tell you to keep an eye on the rig count.
Rigs drilling for gas hit a 50 year low a few weeks ago and the count is still going down. In my opinion, Precision Drilling (PDS) has positioned themselves to double in the next 6 months.
I day-traded this stock for years and now think it's rip for a buy and hold. It might bounce around for a few days days but sooner than you can imagine, it will start a march up to $12.
We've been lied too by EIA and others about what they say is a coming gas crash, but it ain't gonna happen. The purpose of the lie is to allow the big boys to slowly move in first.
RigData last month reported that it could not find any active rigs in the Barlett natural gas field that underlies about two dozen counties in North Texas.The area supported nearly 200 rigs less than a decade ago.
Plummeting oil and gas prices, along with the seductive lure of bigger payouts in other parts of Texas and across the country, have brought exploration in North Texas to a halt. In March of last year, the count dropped to one rig for a week, then stayed under 10 since then.
Things have gotten so bad that the Powell Shale Digest in Fort Worth, once a must-read for those following industry activity in the Barnett, published its last edition a month ago.
The Barnett’s heyday was 2008. That June, the average monthly price of gas was $12.78/mmBtu, stirring up so much interest that by September there were 194 rigs in the field, the highest recorded by RigData, according to the Powell Shale Digest.
Hastening the decline were moves by the Barnett’s biggest players to take what they learned about drilling unconventional wells in hard shale rock and head where the gas was greener. The Marcellus and Utica formations in Pennsylvania and Ohio are considered more productive, but these areas are short of pipelines. It does not good to drill wells if there's no way to get the gas to market.
As natural gas prices began their fall from historic highs, drilling started dropping. In 2009, the number of rigs dropped below 100, never to see triple digits again. Three years later, the number of rigs dipped below 50 for the first time. Now they hit zero!
XTO Energy, once a big player in the Barnett, said in March that it no longer had any rigs working in the area. And BlueStone Natural Resources II, soon after it bought another big Barnett player, Quicksilver Resources, out of bankruptcy, said it didn’t anticipate having many new drilling rigs.
“I think the current price level of natural gas is not terribly supportive of drilling, but quite honestly we have a longer-term view for the assets,” John Redmond, president and chief executive of BlueStone, said at the time. Natural gas was selling for about $2 then. If the EIA is right with its latest report, gas will drop to $1/mmBtu by November 2016.
Last month, the number of rigs exploring for oil and natural gas in the U.S. dropped to 431, another all-time low, with 343 searching for oil and 88 for natural gas. A year ago, 932 rigs were active, according to Baker Hughes.
With the price at $2.40 Monday, the near-term future for the Barnett is not promising, Brackett said.
He said his publication’s founder, Gene Powell, once said it would take $6 to $6.50 natural gas prices for six months or more to lure drillers back to the Barnett. “We’re a long way from where prices need to be for us to see a lot of interest in the Barnett Shale,” he said.
“Given our publication started as the Barnett Shale Newsletter, the fact that the rig count has gone to zero it almost seems appropriate we are closing,” he said. “When we started this thing, there wasn’t really anything else than the Barnett.”
This story will repeat itself over and over again.
Gas and oil will disappear unless there is higher prices and an explosion in drilling.
Coal will return to KING and we will all burn to death as global warming turns life on Earth into a living hell.
The time to buy land drillers is now!
GAS DRILLING BOOM MUST COME!
Natural gas prices must rise and drilling boom must follow or we will run out of natural gas and face a serious disaster!
New oil discoveries have fallen to a six-decade low as explorers cut billions of dollars of capex spending to ride out the biggest market slump in a generation. Why is the market not worried about a shortage? Because the necessity to cut CO2 to stop global warming and filthy air in cities will curb oil consumption. Vehicles of all sorts will be forced to convert to natgas, including trucks, trains, planes, and ships. The new natgas-fired turbines are ready to go. They will be cheaper to operate on natgas than on oil. Conversions will save shippers lots of money.
Coal is dead! Crude is slowly dying!
The primary fuel for the next 20 years has to be clean burning natgas because it cuts CO2 by 50% and there is no other replacement.
Natural gas, the cleanest fossil fuel, is a highly efficient form of energy. It is composed chiefly of methane; the simple chemical composition of natural gas is a molecule of one carbon atom and four hydrogen atoms (CH4). When methane is burned completely, the principal products of combustion are carbon dioxide and water vapor.
Natural gas's advantages over other fuels include the following: it has fewer impurities, it is less chemically complex, and its combustion generally results in less pollution. In most applications, using natural gas produces less of the following substances than oil or coal: carbon dioxide (CO2), which is the primary greenhouse gas; sulfur dioxide, which is the primary precursor of acid rain; nitrogen oxides, which is the primary precursor of smog; and particulate matter, which can affect health and visibility; than oil or coal. Technological progress allows cleaner energy production than ever for all fuels, although the inherent cleanliness of gas means that environmental controls on gas equipment, if required, tend to be far less expensive than those for other fuels.
Natural gas also is helping America develop clean alternative energy sources in various ways, such as the following:
Natural gas is used to make fertilizer for ethanol.
Natural gas is used to make methane for hydrogen.
Hydrogen is used to eliminate soot for cleaner diesel fuel.
Electric utilities use natural gas to generate clean power.
Natural gas is a raw material that goes into lightweight cars, wind power blades, solar panels and energy-efficient materials.
Using natural gas to replace less environmentally benign fuels can help address simultaneously a number of environmental concerns, such as smog, acid rain and greenhouse gas emissions.
Natural gas is highly efficient. About 90 percent of the natural gas produced is delivered to customers as useful energy. In contrast, only about 30 percent of the energy converted to electricity in conventional generating facilities reaches consumers.
In order to pursue alternative energies, the United States must safely access America's natural gas supplies to bridge the cap until solar and wind can take over. It can't happen without natural gas.
We must switch to natural gas or we all die of heatstroke from Global Warming!
This is why the majors cut the capex in oil exploration. They are also walking away from offshore drilling and getting very serious about onshore fracking for natural gas.
The majors and the deep pockets are smart enough to know that crude oil is on the way out and natural gas is on the way in. If they want to survive, they have to start fracking for gas and they will have to act within the next 6 months.
By 2035, natural gas turbines will be the largest source of electrical power in the U.S., jumping from 21 percent today to more than 40 percent. Coal will dip below 20 percent, while nuclear will stay flat at around 21 percent.
We are looking at a world over time that is switching to natural gas. It is the fuel of the future!
Although natural gas is the big winner, new renewables like solar, wind and geothermal will see a jump as well, rising from four percent of the mix today to 11 percent by 2035.
The outlook is the result of a variety of factors. Technology allowing fossil fuel companies to access shale gas deposits, combined with a proposed pipeline in Alaska that should kick into gear in the next decade, could keep the price of gas under the $8 per million BTU level through 2030.
Precision Drilling will soar during this period!
Let's talk about a drilling boom!
The recently released EIA Annual Energy Outlook 2016 forecasts almost unlimited gas supply at low prices. This is a lie! U.S. shale gas production is declining because of low prices AND WILL CONTINUE TO DECLINE!
The financial performance of shale gas-weighted E&P companies in the first quarter of 2016 was a disaster. Chesapeake, the biggest shale gas producer in the US, had negative cash from operations. That means that oil and gas sales didn’t even cover operating costs. Other shale gas plays including Anadarko, Comstock and Petroquest also had negative cash from operations. Goodrich and Sandridge are in bankruptcy and Exco and Halcon will soon follow. Ultra, Forest, Quicksilver, Swift and Talisman went BK last year. On average, surviving companies out-spent cash flow by two-to-one both in 2015 and 2016 but many normally strong companies greatly increased negative cash flow this year.
In other words, gas prices below $3 cannot sustain producers so why is the EIA lying to us!
Shale gas is the principal support for all U.S. gas production since conventional gas is drying up. U.S. dry gas production has declined almost 1 Bcf per day since September 2015 largely because of low gas prices.
Henry Hub gas prices have fallen 120% over the last 2 years from more than $6/mmBtu in January 2014 to $2.47 today and prices have been below $3/mmBtu since early 2015. A similar gas-price decline occurred from June 2011 to April 2012. Then, dry gas production fell when prices dropped below $3/mmBtu.
$3 is well below the breakeven gas price for any operator in any play. Even in the Marcellus–the most commercially attractive shale gas play–breakeven prices are more than $3.
All plays have declined from their respective peaks except the Utica Shale. Marcellus production accounts for more than a third (-0.36 Bcf/d) of shale gas decline in 2016. There is certainly no shortage of supply in that play but low prices and related delays in pipeline commitments have taken their toll on production.
There are no longer any "tier 1" horizontal rigs drilling in the Barnett or Fayetteville. These plays were supposed to help provide the U.S. with 100 years of gas supply.
Gas prices must increase or there will be no one left to produce it!
Lower gas production along with increased consumption and exports spell much higher gas prices later in 2016 and in 2017. On the other hand, the very latest estimates from EIA show that there will be no more storage capacity by October 2016. No more storage capacity will move prices to $1.00/mmBtu.
How can that be true!
Shale gas made sense in 2010 when real gas prices averaged almost $7/mmBtu. That was because there was a supply deficit as conventional production declined before shale gas supply increased to replace it.
Falling gas prices have exposed the BIG LIE. Production growth in the last few years was funded by debt. Capital in search of yield continued to flow and overproduction pushed prices $1.61 by the end of 2015. Gas producers had to produce to pay the interest on the debt, and they did not want anyone to know about it!
The wreckage was obvious in late 2014 but no one so it coming. The disastrous 1Q16 financial data and falling production should have made it clear to everyone. The Barnett and Fayetteville plays that were supposed to last 100 years are dead at current prices. The Haynesville will probably follow soon enough. Capital is vanishing into thin air and so will production.
SOMEBODY LIED TO INVESTORS IN A BIG WAY! SEE MY NEXT POST TO FIND OUT WHY!
Just took a nice stake in PDS. Here's why:
Precision Drilling's New MODERN Fleet!
In Canada, Precision is the largest contract driller in the premium rig category. Going into 2016, the company had ~134 rigs deployed in Canada accounting for ~30% market share of the high-performance rig segment.
In the US, PDS operates the fourth largest fleet of ~102 rigs, over 70 of which are high-performance newbuilds (the fourth largest modern-generation fleet after Helmerich & Payne, Nabors, and Patterson-UTI). The company's market share in the high-performance US segment is close to 10%, and its stock price is under $6 while HP is $60+, NBR is near $11, and PTEN is $21+.
PDS retired all its older rigs and reduced its fleet to 238 Super Series "tier 1" rigs worldwide. It is modeling itself after the highly successful Helmerich & Payne (HP). They had to do it because the big boys were pushing the small drillers out of business.
The Super Series "tier 1" rigs feature AC drive, digitized control systems, integrated top drive, bi-directional pad walking or skidding systems for multi-pad well drilling, highly mechanized pipe handling, and high capacity mud pumps. The Super Single specification is a smaller, fast-moving, hydraulically-powered mechanized rigs that are optimized for shallow- to medium-depth resource plays in North America.
Tier 1 are rigs are high performance and very mobile. These are automated with advanced drilling controls. Horizontal capabilities and capacity mud pumps make these highly suited for deeper shale plays that have complex drilling needs, especially when drilling for oil. These rigs have hydraulic legs and can walk around on a large drilling pad to drill many holes in a given area. They are designed for pad-drilling operations.
The latest Pad-optimal rigs have six specific characteristics: 1,500 hp, dual-fuel capabilities, 7,500-psi mud system, safe by design and capable of fast conventional moves, omnidirectional walking systems, and AC drive. These rigs will be the first to achieve 100% utilization in 2016. Equipment that doesn’t meet these characteristics will returned to work on a slower tempo than pad-optimal rigs.
PDS is also stacked 10 Tier 2 rigs. These rigs can drill deep horizontal holes, but aren't mobile for pad-drilling operations. They have scrapped all but 15 Tier 3 rigs because they are unsuitable for horizontal drilling. They do have market niche opportunities so holding 15 makes sense, especially since they are already paid for 10 times over.
This make PDS the least expensive way to play the upcoming land drilling boom (see me next post).
Just bought a truck load at $14.15 because this is not a sell off!
It is a some kind of raid put together by KLR Group and the Street.com. Here's the way its works. KLR Group downgrades the stock to a hold and Cowen Group also downgraded the stock and given it a price target of $13, lower than the current market price of $15.50. Then Street Blast the stock with nasty remarks.
Why is this not a sell off? Because the average volume is 16,858,900 shares over the last 3 months. Sell offs and big drops in prices are ONLY confirmed during increases in volume. At 3:40 pm, the total shares sold was on 11,800,000 --- 5 million shares less than average and the stop is down 7.20%
No high volume with a servere drop in price signals stock manipulation with the Street.com at the very center of the action.
It will bounce back to $15.50 is less than a day or so.
Most of you seem to resent my post so I'll be moving on. It never was my intention to mislead anyone on Chesapeake or Southwest Energy. All the positives I posted about CHK and SWN were real, nothing was phony and nothing was a pump! I'm smart enough to know that pumping a stock to 10 or 15 small investors is complete waste of time. I did a lot of research and shared it just so I could keep track of my own efforts. But most seem ungrateful and resentful. It really your board and not mine so I will just leave and let the rest of you sort things out in your own style.
Sorry and good luck to all!
I"m not short! I dumped because my gut tells me that crude will drift back down and I can get back in maybe 15 cents cheaper. It's called day trading. Maybe I lose and am forced to buyback 15 cents higher?
What disturbs me most about CHK is that it trades on oil prices. I said that many times before. I feel uncomfortable with 80K shares and a nice profit with a stock that tracks oil. Crudes been bouncing all other the place these two years. It's a heavy manipulated commodity. If CHK would trade with natgas, I wouldn't want to lock in profits.
That what gets me about management. Don't they realize natgas is a far better bet? They should be releasing press releases telling everyone they are 80% gas!
Besides, even if I did pump and dump... aren't you happy your in? I didn't lie to you!
I dumped my load at $4.65...
Does this CHK bull look stupid today?
It's 4 am; gas down 4 cents; crude up 2 cents. Lets just hope it holds for another day or two.
Well I'll be damned, we got the price boost I was expecting but not the 60+ million minimum volume. I think we took out a lot shorts, but still did not bring in too many long term investors.
I also cannot figure out why CHK moves so much on oil and not natural gas.
__________________________________
Is Oil or Natural Gas Driving Chesapeake Stock? Link
Shares of beleaguered Chesapeake Energy Corp. (NYSE: CHK) traded up nearly 8% late Monday morning, and the rise in crude oil prices probably will get most of the credit. In fact, the outlook for natural gas prices is likely a more important driver.
West Texas Intermediate (WTI) crude for July delivery traded at around $49.70 Monday morning. The January 2017 forward traded at $51.71 and the June 2017 forward traded at $52.18. Based on Friday’s closing price of $48.62, WTI for July delivery is up 2.2%, up nearly 6.4% for January delivery, and up 7.3% for June 2017 delivery.
Natural gas for July delivery settled at $2.40 on Friday and traded at around $2.43 in the late morning on Monday. Gas for January 2017 delivery traded at $3.16 and June 2017 gas traded at $2.91. July natural gas traded up about 1.3%, January gas traded up a whopping 32% and June 2017 natural gas traded up an impressive 21%.
In the first quarter of 2016 Chesapeake produced 61 million barrels of oil equivalent, of which just 9 million were crude oil and only 6 million were natural gas liquids (NGLs). But prices were so depressed on natural gas compared with the first quarter of 2015 that many people have forgotten that Chesapeake even produces gas.
In the first quarter of 2015, Chesapeake’s realized price for gas was $3.67 per thousand cubic feet, compared with just $2.29 in the first quarter of this year. Natural gas prices are not currently bid any higher than about $3.30 per thousand cubic feet in February of 2018.
But what matters for Chesapeake is that it will see improved pricing on natural gas through the fall and winter of 2016 and 2017, and the steps that the company has taken so far this year to sell assets, reduce debt and refinance borrowing are very likely to pay off next year.
Chesapeake’s forward price-equity ratio out to December 2017 is 11.45. Exxon Mobil’s is 20.46.
Based on Friday’s closing price of $4.09, the implied gain for Chesapeake using a consensus price target of $4.55 is 11.2% compared with Exxon’s more than fairly valued stock based on Friday’s closing price of $88.37 and a consensus price target of $85.16.
Chesapeake still has a long way to go before its turnaround is complete, but the company bet earlier this year that it would get some help on pricing for both oil and gas, and that now looks like a smart bet.
Chesapeake’s stock traded at $4.38 just after noon on Monday, up about 7%, in a 52-week range of $1.50 to $13.45.
3 million shares sold in 15 minutes.
If we can just hit 50 million shares and stay up 2.5% for the day -- that's the signal I'd like to see.
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The Venezuelan crisis!
Venezuela is near collapse. The produce 2 million barrels per day. This is the source of government funds. Companies helping them produce are pulling out as fast as they can because (1) they are not getting paid, and (2) civil war could break out anyday.
If they do collapse, expect crude to run up to at least $60 overnight.
Link
Investors believe that shale gas is cheap, abundant and profitable thus defying all rules of business and economics. That is magical thinking.
The recently released EIA Annual Energy Outlook 2016 sparkles with pixie dust as it forecasts almost unlimited gas supply at low prices out to 2040 and beyond. Exuberant press reports herald a new era of LNG exports that will change the geopolitical balance of the world and make America great again.
But U.S. shale gas production is declining because of low prices and shale gas companies are in deep financial trouble because in the real world, price and cost matter.
The financial performance of shale gas-weighted E&P companies in the first quarter of 2016 was a disaster. Chesapeake Energy, the biggest shale gas producer in the world, had negative cash from operations. That means that oil and gas sales didn’t even cover operating costs much less capital expenditures like drilling and completion.
Other shale gas-weighted companies including Anadarko, Comstock and Petroquest also had negative cash from operations. Goodrich and Sandridge are in bankruptcy and Exco and Halcon will soon follow. Ultra, Forest, Quicksilver, Swift and Talisman were lost in action last year.
On average, surviving companies out-spent cash flow by two-to-one both in 2015 and 2016 but many normally strong companies greatly increased negative cash flow this year.
Devon Energy has been cash-flow neutral through much of the shale gas revolution but disturbingly increased capex-to-cash flow 5-fold in the first quarter of 2016. Similarly, Southwestern Energy has had an excellent record of near-cash flow neutrality but doubled its negative cash flow in 2016.
The debt side of first quarter earnings is far more disturbing. The average debt-to-cash flow ratio for shale gas companies increased almost 4-fold to more than 7, up from less than 2 in 2015.
Gas prices below $3 cannot be sustained without damaging the balance sheets and income statements of even well-managed companies.
Debt-to-cash flow is a critical determinant of risk from a bank’s perspective because it measures how many years it would take to pay off debt if 100% of cash from operations were used for this purpose. This means that it would take these companies an average of 7 years to pay down their total debt using all cash from operating activities.
The energy industry average from 1992-2012 was 1.53 and 2.0 was a standard threshold for banks to call loans based on debt-covenant agreements. That threshold increased in recent years to about 4 but 7 years to pay off debt is clearly beyond reasonable bank exposure risk.
Shale gas is the principal support for all U.S. gas production since conventional gas is drying up. U.S. dry gas production has declined almost 1 Bcf per day since September 2015 largely because of low gas prices.
Henry Hub gas prices have fallen for the last 2 years from more than $6/mmBtu in January 2014 to $2.41 today and prices have been below $3/mmBtu since early 2015. A similar gas-price decline occurred from June 2011 to April 2012. Then, dry gas production fell when prices dropped below $3/mmBtu.
$3 is well below the breakeven gas price for any operator in any play. Even in the Marcellus–the most commercially attractive shale gas play–breakeven prices are more than $3.
All plays have declined from their respective peaks except the Utica Shale. Marcellus production accounts for more than a third (-0.36 Bcf/d) of shale gas decline in 2016. There is certainly no shortage of supply in that play but low prices and related delays in pipeline commitments have taken their toll on production.
There are no longer any horizontal rigs drilling in the Barnett or Fayetteville, plays that were supposed to help provide the U.S. with 100 years of gas supply.
Gas prices must increase or there will be no left to produce it!
Lower gas production along with increased consumption and exports spell higher gas prices later in 2016 and in 2017. Latest data from EIA show a supply shortage by late 2016.
A supply deficit does not mean that there won’t be enough gas but will require more extensive withdrawals from inventory and this will move prices higher. During the last supply deficit in 2013 and through much of 2014, Henry Hub spot prices increased from $2 at the peak of the previous surplus to more than $6 per mmBtu and averaged $4.05. Expect the same in early 2017.
Shale gas made sense in 2010 when real gas prices averaged almost $7/mmBtu. That was because there was a supply deficit as conventional production declined before shale gas supply increased to replace it.
Falling gas prices have exposed the delusion of shale gas magical thinking. Production growth was funded by debt. Capital in search of yield continued to flow and overproduction pushed prices $1.61 by the end of 2015.
The wreckage is clear from disastrous first quarter financial data and falling production. The Barnett and Fayetteville plays that were supposed to last 100 years are dead at current prices. The Haynesville will probably follow soon enough.
Capital may continue to flow to shale gas companies but most of it will be used to repair balance sheets. Prices will gradually increase and financially stronger companies with core positions in the Marcellus and Utica plays will survive. Many companies will not.
The U.S. has perhaps a decade of gas supply at about $6 and considerably more at higher prices. By the time prices reach those levels, the folly of export will be apparent.
Matt DiLallo at Motley FOOL said:
I've soured on Chesapeake Energy (NYSE:CHK) over the past year. That's after watching the company burn through nearly $5 billion pursuing production growth at a time when the market clearly didn't need that incremental production. In doing so, the company's management team put it in an even more precarious financial position that could lead to its collapse if commodity prices don't continue to improve.
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Yes, Matt. Investors punished Chesapeake sending their stock down to $1.50; what a beating. It was almost $15 a year ago and not its only $4.09. How much punishment is needed to teach management a lesson?
One other point, Matt. The popular myth is that gas production will continue to increase and that prices will remain low for years. In the myth, price has no effect on production. The reality is that price matters and production is down 1.2 bcfd1 since September 2015. And, there is no simple solution to falling supply. That’s because almost half of U.S. supply is conventional gas and it is in terminal decline. Now, shale gas is also in quick decline. Conventional gas will continue to decline at about 5% per year because few companies are drilling those plays. Shale gas must, therefore, continue to grow by at least 15 bcfd per year just to offset annual conventional gas decline (~2.5 bcfd per year) and legacy shale gas production decline (~12.5 bcfd per year). It will take 15 bcfd of new shale gas production in 2016 to keep U.S. production flat. But shale production has been falling 0.72 bcfd (~2.2 bcfd annualized) for the last 4 months of data.
So now what you got to say?
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Chesapeake Energy might possess some of the best shale assets in the country, but the company just doesn't seem to know how to create value out of its assets. That's why it has become the one energy stock that I really loathe.
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Matt, you're not looking forward, you're looking into the past predicting the future. Natgas was $1.61 and now a few short month later it is $2.41, before you know it, natgas could hit $4 or even $5. Then the company with the best shale assets in the country will be the #1 stock to buy and Motley FOOL will have made one more stupid mistake to add to all the others.
Here's some more news to make you feel like shit!
The biggest declines since peak production are from the older “legacy” shale gas plays namely, the Barnett, Fayetteville and Haynesville.
Although additional reserves exist in the Barnett and Fayetteville plays, the core areas have been largely developed and marginal areas require substantially higher gas prices to be commercial. There is only one horizontal rig operating in the Barnett and there are none in the Fayetteville.
Production in the Haynesville Shale has decreased by 3.64 bcfd since its peak. High costs and relatively low EURs make the play uneconomic below about $6.50 gas prices. Parts of the core areas remain under-developed at today’s prices.
Marcellus production declined 0.52 mcfd since July 2015. Most of this probably represented intentional shut-ins because of low wellhead prices. Marcellus production can grow but new pipelines are needed to turn reserves into supply. Even with additional infrastructure, production will peak in the next few years just like in the older plays.
Production in the Utica and Woodford plays is increasing but it is largely offset by declining associated gas from the Eagle Ford, Bakken and other tight oil plays.
A Supply Deficit Even In The Optimistic EIA Case
The EIA forecasts that net dry gas production will increase 1.4 bcfd in 2016 and 1.6 bcfd 2017. Even with that optimistic forecast, their data still shows that the U.S. will have a supply deficit beginning in the last quarter of 2016. A more realistic forecast implies a much greater deficit that begins sooner.
What is different this time, however, is that net imports will reach zero in early 2017 because of decreasing imports from Canada and increasing exports. Add to that the challenge of replacing conventional gas depletion, and there is a much more serious supply problem than EIA’s already questionable forecast suggests.
Another big difference is that in 2013-2014, capital was freely available with average oil prices above $90 per barrel and average gas prices more than $4 per MBTU. Today, the oil and gas industry is in financial shambles with both oil and gas prices at very low levels, and it is unlikely that companies can raise the capital necessary to ramp up gas drilling quickly if at all.
Export plans of at least 7 bcfd by 2020 are not helpful considering the challenges of meeting domestic supply in coming years.
AEO 2015 Natural Gas Imports & Exports Jan 2016. U.S. net natural gas exports. Source: EIA and Labyrinth Consulting Services, Inc.
The prospect of exports increasing to 13 bcfd by 2030 is even more troubling absent some new shale gas play that we don’t know about yet.
Higher Gas Prices Are Inevitable
A few years ago, the oil and gas industry convinced the world that the U.S. had 100 years of natural gas. Some of us cautioned that it is worth reading the fine print, that there is a difference between a resource and a reserve. The harsh light of reality eventually reveals that what seems too good to be true usually is.
The obvious solution to declining gas supply is higher prices.
The EIA’s STEO forecast calls for $3.17 per MBTU gas prices by December 2016 and for $3.62 by December 2017. Those prices will not support necessary drilling in legacy shale gas plays. EIA’s AEO 2015 reference case does not call for gas prices to reach $5 per mcf until 2025. We can’t afford to wait 9 years.
It is, therefore, inevitable that natural gas prices must increase sooner, preferably in the next 12 to 24 months. If oil prices remain low, a shale-gas revival may save the domestic E&P business. During the last supply deficit in 2014, gas prices averaged $4.36 per mcf compared to only $2.63 in 2015.
But it will take time for producers to reverse the decline in drilling and production. It may be difficult to raise capital for renewed drilling given the current distress in the oil and gas industry.
Something will have to give sooner than later. That will be natural gas export.
New oil discoveries have fallen to a six-decade low as explorers cut billions of dollars of spending to ride out the biggest market slump in a generation. Link
Why is the market not worried about a shortage? Because the necessity to cut CO2 to stop global warming and filthy air in cities will curb oil consumption. Vehicles of all sorts will be forced to convert to natgas, including trucks, trains, planes, and ships. The new natgas-fired turbines are ready to go. They will be cheaper to operate on natgas than on oil. Conversions will save shipper money.
Coal is dead!
The primary fuel for the next 20 years has to be clean burning natgas because it cuts CO2 by 50% and there is no other replacement.
This is why the majors cut the capex in oil exploration. They are also walking away from offshore drilling and getting very serious about onshore fracking for natgas.
Chesapeake Energy controls 8 million acres of untapped oil and gas reserves. They are the 2nd largest gas producer in the US by far. This makes them a huge takeover target.
The majors and the deep pockets are smart enough to know that crude oil is on the way out and natgas is on the way in. If they want to survive, they have to start fracking for natgas.
This is not gonna happen overnight! However, if they want to buy a cheap US natgas play, they will have to act within the next 6 months or they will miss out on a bargain.
I would not be surprised if secret talks have not already began.
Why do I say this? The low volume of CHK shares indicates that major stockholders are not worried. They talk to management all the time. Something is in the wind that keeps them calm.
OPEC IS DEAD!
http://www.cnbc.com/2016/06/02/opec-is-finished-oppenheimers-fadel-gheit.html
Donald Trump said the US will be oil dependant and use oil and natural gas as a means of paying off the $19 trillion national debt. He has mentioned hundreds of time the unfair deals the US geta with its trading partners. I expect he will stop all unfair free trade agreements and place import taxes on products coming into to the US from countries with unfair advantage. This will include OPEC oil!
Capex spending has went below a crash stage. Offshore drillers are in deep trouble all over the world. US Land drillers are not doing so well either. Rigs drilling for natgas fell by 5 last week.
Production companies are struggling to stay out of bankruptcy court. I have never seen it this bad in my 30+ years of investing mostly in drillers. Stacked rigs have been cannibalized for spare parts to keep the few other rigs running because drillers have no money to buy new replacement parts. Rigs are far from ready to go back to work. Even if there was a magical change, drillers would need six months to get their equipment back in operation. Cold stacked rigs will take a year to get inspected and back drilling.
It's gonna take a lot of money that no one has to get drilling and production back on its feet. I see a major spike coming for oil -- maybe $80 by the end of the year, then a slow fall back to $70
I also see a huge spike coming in natgas. The summer will be hot and humid and take down the record storage levels. Mexico's demand will be up %5 and LNG will also be up so we should enter the winter heating season with "normal" storage levels. How much we use then will depend on the winter weather. La Nina usually producers mild damp winters -- not the bitter cold that we really need. This is my one big worry going forward. But this is offset by the fact that a wet winter could produce near record snow storms all along the Atlantic Coast and the Midwest.
Does snow keep people indoors and increase both electric and natgas demand? I don't know?
In the week ended June 3, the number of rigs drilling for oil in the United States totaled 325, up nine from the prior week and compared with a total of 642 a year ago. At the same time, the number of rigs drilling for natural gas fell by five, leaving the gas rig count down by 140 year over year.
Fewer natural gas rigs means less production, and less production means less gas going into storage, which means higher prices. Natural gas touched a high of $2.45 on Friday, its highest price this year. Last week’s natural gas injection into storage totaled 82 billion cubic feet, well below the five-year average of 98 billion cubic feet and even further below last year’s injection for the same period of 126 billion cubic feet.
The amount of natural gas already in storage is 35% above the five-year average, down a couple of percentage points from the prior week. Now that hot weather is on its way, demand for air-conditioning will rise.
Producers are not overproducing because they don't have the money. Many of the DUC wells drilled in the last two years were drill cheaply just so the producers could increase there lending value and borrow more money. These wells are not just standing by ready to frack and start producing. Many may never produce and others will need major investment at a time when there is little money available. Don't count of the DUCs to increase productions very much.
Everything looks like a gas shortage is in the making. I even expect $5 by January 2017. It all depends on how many disruptions form snow storms and hurricanes, and how cold it gets this winter. Right now we are looking at an hot humid summer with a average to mild winter.
http://247wallst.com/energy-economy/2016/06/04/oil-rig-count-jumped-by-9-last-week-hedge-funds-cant-decide-direction/#ixzz4AhMhHGyI
Here's a gamble that might pay off.
Southwest Energy, the 3rd largest gas producer behind Chesapeake is halting all drilling so that it could redirect cash toward debt reduction. Lots of other troubles producers are cutting way back of Capex spending. If drilling stays low, natgas production will fall far behind natgas demand.
Chesapeake is not holding back. It is spending less than it did last year, but is planning to maintain production and spent about $1.5 billion on Capex.
If natgas goes up to $3 or $4 as projected, Chesapeake wins big. If it crashes back to $2 or less, they loss it all.
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One thing you notice about of lot of stupid Chesapeake analysts, they are figuring this stock as a oil stock, not a natgas play. Chesapeake's is close to 80% natgas, with 20% crude. Most of Chesapeake's 8 million acres is gas plays, not oil plays.
This is what upsets me with management. They need to get some press releases and some articles written explaining to investors that they are a gas play, not an oil play. The stock day trades on oil prices not gas prices, which is ridiculous. They also need to update investors more often with informative articles that say they are progressing smoothly with their plans, not just clam up at a time when investors need a little cheer.
Then the other day they announced that has donated a $35 million dollar mall to a non-profit group. This is bullshit... they don't need to be giving away stuff. They need to be selling and raising cash. What a horrible press release on a day when the stock is falling due to too much debt!
Makes me begin to think that CEO Lawler may be a bit of the stupid side! This giveaway pissed me off and scare the hell out of me.
I'm damn sure going to change my investment style with Chesapeake! I should have stayed in SWN! I was averaged in $4.60... I have a triple by now.