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From: Ed Ajootian2/12/2012 9:02:01 AM
2 Recommendations   of 185057
 
FBR Capital Markets

We expect U.S. natural-gas liquids production from shales to increase about 50% to 658,000 barrels of oil equivalent per day in 2012 and nearly double to 912,000 barrels of oil equivalent per day in 2013.

As a result, we believe downward pricing pressure on the natural-gas-liquids (NGL) barrel will remain in place for quite some time. Consequently, we are reducing our 2012 and 2013 NGL price-realization expectations to 40% of West Texas Intermediate (WTI) from 50% currently.

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Above, from Barrons, was snipped from a Yahoo teaser posted on Friday. If in fact NGL prices were to decrease by 20% this year (which assumes that oil will stay flat) this would seem to put even further pressure on the natty-oriented E&P companies, making even some of the "liquids rich" plays no longer economic. This would cause the natty rig count to continue to slip much lower than what many prognosticators are currently projecting.

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To: Sweet Ol who wrote (163756)2/12/2012 9:15:35 AM
From: MIRU
1 Recommendation   of 185057
 
JR, That's why you buy a CDS or if Google, a put. nobody has any fear that the put won't be honored. The lack of a clearing corporation is what allows counterparty risk to bollix up the CDS works.

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From: Bearcatbob2/12/2012 9:20:20 AM
   of 185057
 
calgaryherald.com 

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From: Dennis Roth2/12/2012 9:59:11 AM
1 Recommendation   of 185057
 
Progress makes decision to turn off natural-gas production

Postmedia News February 12, 2012 2:20 AM
theprovince.com 

Bargain-basement natural-gas prices not seen in a decade and storage nearly brimming this winter prompted many in Alberta's oilpatch to wonder who would start turning off the valves on production.

Progress Energy Resources Corp. ended the guesswork this week, as the only Canadian producer to have said it will take the plunge and shut in wells across Alberta and B.C.

Other players are expected to soon follow suit, with analysts keeping an eye on news from Canada's top gas producer EnCana Corp. in financial reporting next week.

[snip]

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From: Dennis Roth2/12/2012 10:02:14 AM
2 Recommendations   of 185057
 
Pipeline from Alva area to Cushing will boost oil deliveries
02/11/12
Alva Review-Courier
news.mywebpal.com 

• Plains line could boost supply to Cushing by 175,000 bpd

• Plains signs deal with SandRidge Energy to transport crude

• New line to serve Mississippian Lime shale oil play in OK.

NEW YORK – Plains All American will build a new crude oil pipeline from a booming U.S. shale oil play to the largest U.S. oil hub at Cushing, Oklahoma, the company said on Tuesday, potentially boosting Cushing deliveries by 175,000 barrels per day (bpd).

The new line is expected to start up in mid-2013, Houston-based Plains said. It will transport crude pumped by producer SandRidge Energy, a major acreage holder in the up-and-coming Mississippian Lime shale play, which spans Oklahoma and Southern Kansas.

The pipeline is a huge expansion of a project Plains first announced last December, known as the Medford-to-Cushing line. Altogether, the new pipeline system will run 170 miles from near Alva, Oklahoma to Cushing, the delivery point for the NYMEX benchmark WTI crude contract.

Plains’ earlier plans had called for a modest flow of up to 25,000 bpd into Cushing, while the planned expansion could boost Cushing-bound capacity by seven times that volume.

The Plains announcement comes at a time when many oil producers in the U.S. Midcontinent have been seeking to ship oil away from Cushing and toward regions, such as the U.S. Gulf Coast, where crude commands a hefty premium to Cushing prices.

Light crude in the Gulf Coast has been trading around $10 a barrel higher than at Cushing, where outbound pipeline capacity is limited.

Enterprise Product Partners is working to reverse the 150,000 bpd Houston-to-Cushing Seaway pipeline by the middle of 2012, to siphon more crude away from the big crude hub.

A glut of crude in the Midwest, largely due to increasing Canadian crude imports and growing shale oil production in North Dakota and other shale plays, has driven regional price disparities. Cushing tanks have been holding around 30 million barrels of crude, according to Department of Energy data.

In December, SandRidge announced it entered a $1 billion joint venture with Spanish oil major Repsol YPF to develop acreage it holds in the Mississippian play in Western Kansas. At the time, SandRidge said it had already drilled more than 195 wells in the play.

Plains said it could extend the new pipeline project northward from Oklahoma into Kansas if demand warrants further construction.

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To: wherry who wrote (163758)2/12/2012 11:26:02 AM
From: sm1th
   of 185057
 
I do not think that the existing cross Canada Enbridge pipeline comes this far East (terminates at Sarnia, Ont, perhaps?), so a major construction project seems needed (hundreds of miles).

Or perhaps by ship from the great lakes? Do the pipelines go that far?

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To: sm1th who wrote (163769)2/12/2012 12:14:04 PM
From: Rupertthered
2 Recommendations   of 185057
 

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To: 16bit who wrote (161912)2/12/2012 12:19:07 PM
From: Ed Ajootian
   of 185057
 
16bit, Saratoga Resources (SARA) -- you're welcome, and I very much believe the party will continue for at least the next few months on this one. See a great research report on them put out by CK Cooper a few weeks ago at ckcooper.na.bdvision.ipreo.com  , where they initiated coverage with a Buy, $10 PT.

About 11 weeks ago SARA announced that they were in advanced discussions with MMR to do a JV to drill some deep wells on SARA's acreage. Most of these targets are gunning for primarily gas on a btu-equivalent basis but in some cases they could contain substantial amounts of oil. For example, SARA's Zeus prospect is thought to contain P50 reserves of 128 BCF of gas and 6.4 MMBO of oil, which means that the value of the potential oil actually exceeds the value of the gas if you used a 25:1 conversion ratio.

This is just a hunch but I suspect that we could be hearing some news on a definitive farmout agreement with MMR sometime in the next 3-4 weeks. This is because its most likely that MMR had been given something like a 90 day exclusivity period during which they could attempt to negotiate a farmout with SARA (otherwise they never would have allowed SARA to put out the PR announcing the "advanced discussions") on 12/6).

Although about 40% of SARA's current production is gas on a btu equivalent basis, well over 90% of their revenues are derived from the sale of oil due to the fact that they get premium LLS pricing on their oil sales. Even with the sharp drop in natty prices that has occurred this quarter vs. last, they only stand to lose something like $600K of EBITDA per quarter. This company thus represents a great opportunity to gain exposure to natty prices without risking losing your shirt while you wait for them to recover.

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To: raybiese who wrote (163726)2/12/2012 12:31:34 PM
From: Kayaker
2 Recommendations   of 185057
 
Why is Gasoline Consumption Tanking?

More EIA data from their beta site. It'll be interesting to see how this plays out. Next monthly data March 1st.

This graph shows the same monthly total gasoline sales volume drop a bit differently. Hard to believe but gasoline sales in the US are half of what they were in June 2007 and dropping like a rock. (You can draw a box with your mouse and zoom in.)

Refiner Motor Gasoline Sales Volumes
(select the "Motor Gasoline" check box and then click the "Graph" button)
eia.gov 

Looking at more recent data -- "US Weekly Product Supplied" for gasoline. It doesn't show the same dramatic drop off (???) but interestingly shows a drop in Jan 2012 that we don't yet have monthly "sales" data for. So will monthly sales drop even further?

U.S. Weekly Product Supplied
(select the "Finished Motor Gasoline" check box and then click the "Graph" button)
eia.gov 

Looking a monthly Exports, here I see a dramatic uptick in exports of gasoline. Makes sense if sales in the US have dropped so much.

Exports (monthly)
(scroll down and select the "Finished Motor Gasoline" check box and then click the "Graph" button)
eia.gov 

Imports of gasoline are down which makes sense.

Weekly Imports & Exports
(select the "Total Motor Gasoline" check box and then click the "Graph" button)
eia.gov 

This shows the recent gasoline exports increase on a weekly basis.

Weekly Imports & Exports
(scroll down to "Exports" and select the "Finished Motor Gasoline" check box and then click the "Graph" button)
eia.gov 

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To: Kayaker who wrote (163772)2/12/2012 12:47:25 PM
From: pz
3 Recommendations   of 185057
 
"Hard to believe but gasoline sales in the US are half of what they were in June 2007 and dropping like a rock. (You can draw a box with your mouse and zoom in.)"

Not hard to believe at all....the Big "0" arrived in Jan. of 2009 and it's been downhill ever since.

Just think what he can do in 4 more years.....oh geez...I think I threw up a little in my mouth. :o)

Paul

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