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!