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Shale Natural Gas, Oil and NGLs and ESA
An SI Board Since August 2008
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6129 101 0 ESA
Emcee:  jrhana Type:  Moderated
Shale natural gas is turning hot on a national scale. This is abundantly documented in the thread itself. This country is up to its ears in natural gas. We have so much that we almost don't know what to do with it. I could even rename this thread Natural Gas Nation. With all this natural gas we literally have the opportunity to become energy independent and become an energy exporter. And natural gas is benign from an environmental stand point (as also is well documented through out the thread).

Please take the time to listen to Senator Hatch's 50 second audio

Message 25769044

and to read Senator Menendez's article

Message 25767993

There now appear to be 6 major shale NG deposits in North America. Barnett, Fayettville, Haynesville, Marcellus, Eagle Ford, Horn River.

Message 25774013

Here is a great map of the Marcellus Shale courtesy of Isopatch

webhosting.web.com


This post that I wrote on Shale gas is appropriate for the thread header IMO

Message 25681289

Here is a nice piece on the NG vehicle

ESA right now is awaiting proof that it can realize its potential

Message 25775332

ESA could prove to be an excellent investment but it is not for trading

Message 25775348

Original thread introduction:

ESA now known as Energy Services of America has finally successfully completed its SPAC IPO process.

To have an understanding of ESA one should start with Marshall Reynolds. Marshall Reynolds has a long history of deal making centered in the West Virginia area. His style is not that of a typical corporate raider like that of Michael Douglass in the movie Wall Street.

Rather he generally searches out small well run and profitable niche type companies and packages them together so as to bring synergies and economies of scale. In contrast to the typical corporate raider, Marshall Reynolds looks to improve employment and benefit his area's economy in addition to richly rewarding his investors. Marshall Reynolds likes to create real companies that provide real services to real customers while realizing real earnings and generally paying a dividend.

After carefully rationalizing and improving the management of these smaller companies joined into one, he then generally will sell his deals at a large multiple. I have no doubt that this is his plan for ESA: to make it a profit making machine and then sell it out at a large multiple to today's price.


And his investors have done well. Informally Marshall Reynolds has been known to claim that he has created more millionaires than any other living American with the exception of Bill Gates.

Marshall Reynolds apparently had a vision some years back about the need in the USA for domestically produced energy and that environmentally clean NG would be crucial for meeting this need.

West Virgina and the other Appalachian states happen to be sitting on top of the Marcellus Shale NG field.

Message 24656876

Apparently the Marcellus Shale contains huge amounts of NG in close proximity to the huge energy markets of New York, New England, the Mid Atlantic the Midwest states. Not only is this NG conveniently located, but it appears very economical at least according to a recent Deutsche Bank study.


Message 24840066

ESA comes into the picture with its just approved purchase of two pipeline companies.

biz.yahoo.com

The most important highlights of the deals can be found here:

sec.gov

This is the huge more than you ever want to know version. This crucial SEC document took over 1 year of working nights and weekends to finalize. ESA has shown that it is very careful about making sure it passes regulatory muster. All the ts were crossed and every i was dotted in this document:


sec.gov


One of these companies is CJ Hughes.

cjhughes.com

herald-dispatch.com


C.J. Hughes management overlaps with the ESA management itself including its CEO Ed Burns. C.J. Hughes has been in business since 1946, but has recently enjoyed exponential type growth in its revenues and earnings. It is a preferred contractor for Marathon Oil (MRO) among others.

In addition while ESA was undergoing its arduous SPAC acquisition progress in May 2007, C.J. Hughes itself acquired a nifty company called Nitro Electric. As detailed in its web site Nitro Electric is sort of an electrician to the electric utility companies. From what I understand the profits from its first large contract payed for its entire purchase.


nitro-electric.com

Nitro Electric gives the pipeline businesses of of ESA a further advantage in procuring contracts. The contracting companies like to avoid confusion by dealing with a limited number of providers and now with ESA they can directly contract for a wide variety of services ranging from pipeline to a full gamut of electrical services including high voltage power line construction.


The second part of the acquisition was ST Pipeline. Its founder Mr Shafer played a major role in the construction of the original Alaskan pipeline, but he had the foresight to recognize early that West Virginia was going to be where the action was. So in 1984 he came to West Virginia and founded ST Pipeline where they have also enjoyed success and have their own loyal customers..

stpipe.com

ST Pipeline will be run separately because of the very personal nature of its sales force and because although both C.J. Hughes and ST Pipeline enjoy excellent labor relations, the unions of the two companies are quite separate and would probably not be worth trying to merge. They will enjoy significant cost saving synergies in terms of sharing heavy equipment and in the purchase of insurance.

After the dust has cleared with the closing of the SPAC acquisition, it appears that ESA will have about 12.5 million shares outstanding. In addition there are approximately 20 million warrants exercisable at $5.


<Each warrant entitles the holder to purchase one share of our common stock at a price of $5.00. Each warrant will become exercisable on the later of our completion of a business combination and August 29, 2007 and will expire on August 29, 2011 or earlier upon redemption.>
sec.gov

<Energy Services may redeem the warrants at any time after the warrants become exercisable, in whole and not in part, at a price of $.01 per warrant, upon a minimum of 30 days prior written notice of redemption, if and only if, the last sales price of our common stock equals or exceeds $8.50 per share for any 20 trading days within a 30-trading-day period ending three business days before the notice of redemption is sent. Redemption of the warrants could force the warrant holders (i) to exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous for the holders to do so, (ii) to sell the warrants at the then current market price when they might otherwise wish to hold the warrants, or (iii) to accept the nominal redemption price which, at the time the warrants are called for redemption, is likely to be substantially less than the market value of the warrants.>
sec.gov

For now at least, ESA and its warrants are best suited as an IT or LT investment and should not be bought for ST trades:

Message 24886348


For anyone unfamiliar with SPACs please reference Glen Petersen's thread header and thread.
Subject 55438

Notice: Anyone who posts on this board is expected to do so reasonably and with courtesy. Anyone who posts in an unreasonable or inappropriate manner will be immediately banned. I will be the sole judge of this.
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ReplyMessage PreviewFromRecsPosted
6129Marcellus Region production continues growth U.S. Energy Information AdministraGlenn Petersen-August 6
6128very interesting. Natural gas is very volatile and is a gift for traders. EspeDavy Crockett-May 14
6127ESOA is no longer on the grey exchange and you can now see a bid and ask spread.JohnJr-March 18
6126New Financing Forbearance agreement They've secured new financing and areJohnJr1February 9
6125The full 10-K: sec.gov The Balance Sheet looks a lot better. Current Assets remGlenn Petersen-January 2
6124 Earnings for last quarter were just recently announced. finance.yahoo.comJohnJr-January 2
6123Congrats on your oil/ng investment. Fantastic return. Please share your knowlFindit-12/13/2013
6122Marcellus region to provide 18% of total U.S. natural gas production this monthGlenn Petersen-12/10/2013
6121Does anyone here own oil/NG partnerships. I own a couple and am getting 13.5% tJoan Graffius-11/30/2013
6120Wyoming’s Strong Fracking Rules May Be a Model By KATE GALBRAITH New York TimGlenn Petersen-11/22/2013
6119 ZEX IS IN PLAY 11/11/2013 9:56:36 AM of 22193 More than 1 oil super major isjames flannigan-11/11/2013
6118‘The Frackers’ and the Birth of an Energy Boom By BRYAN BURROUGH New York TimeGlenn Petersen-11/4/2013
6117<i>“There is a lot of oil and gas all over the world, so having access to nigel bates-10/10/2013
6116As Drilling Practice Takes Off in U.S., Europe Proves Hesitant By STEVEN ERLAGlenn Petersen-10/10/2013
6115Shale Gas Dethrones King Coal Walter Russell Mead September 23, 2013 [graphicGlenn Petersen-9/24/2013
6114ZEX shares now set to explode now: This will cause a shale boom in Cal Good nejames flannigan-9/12/2013
6113Biggar than Bakken and Eagleford combined: Opinion > Independent Reports &gjames flannigan-8/28/2013
6112Foreseeing Trouble in Exporting Natural Gas By CLIFFORD KRAUSS and NELSON Glenn Petersen-8/15/2013
6111George Mitchell, Billionaire Behind Shale Boom, Dies at 94 By David Wethe &amGlenn Petersen-7/26/2013
6110Fact-Checking Gasland Part II Walter Russell Mead The American Interest July 21Glenn Petersen37/21/2013
6109I have been out of the stock for a while now. . . also at a loss. Management faiGlenn Petersen-7/9/2013
6108Did you read the 10-Q? If so, what did you make of it? I read it and it appearWilliam JH-5/21/2013
6107The second quarter 10-Q: sec.govGlenn Petersen-5/16/2013
6106America's Foolhardy Ban on Natural Gas Exports By Jason Rugolo, Stan VeugGlenn Petersen-5/12/2013
6105European industry flocks to U.S. to take advantage of cheaper gas By Michael BGlenn Petersen-4/2/2013
6104Seeking Alpha on ( Sundance, Austex) seekingalpha.com AusTex ( ATXDY.OB) is Celtictrader-4/1/2013
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