Previous forecasts of unseasonably hot weather are no longer in the picture, and consequently natural gas futures fell for the first time in five days in response to the new forecast of cooler weather than originally expected.
That will reduce expected natural gas demand for electricity it powers, especially in the Northeast and Midwest.
The revision in the weather forecast calls for weather to be a minimum normal levels, with a good chance of dropping below normal temperatures.
Natural gas prices had soared 16 percent on the previous forecasts of much hotter weather.
July delivery of natural gas dropped 2.2 percent or 10.8 cents to $4.808 per million British thermal units on the New York Mercantile Exchange.
Even with supply outpacing demand for natural gas, prices since last year have increased by 29 percent, but most don't believe that is sustainable with so much natural gas available in the United States.
Natural gas production in the U.S. for 2010 was upwardly revised by the Energy Department’s Short-Term Energy Outlook by 0.8 percent to 61.22 billion cubic feet a day, up from the previous 60.75 projections in May.
Showing posts with label Natural Gas Demand. Show all posts
Showing posts with label Natural Gas Demand. Show all posts
Wednesday, June 9, 2010
Saturday, May 22, 2010
Williams Companies (NYSE:WMB) a Takeover Target?
Although there are no known overtures from giant oil and gas companies to woo Williams Companies (NYSE:WMB), the way the market will probably go over the long term makes them a possible target in the future.
What Williams does is produce and transport gas in a number of regions in the U.S. and Canada, and even though the price of natural gas has downward pressure on it, that won't necessarily cut into their transport costs, as natural gas will have to be moved, no matter what the price is at the moment.
So on the transportation side they are probably more attractive than on the production, which has an enormous number of competitors, as well as supply for many years.
With energy companies gravitating toward oil because of the vast supply of natural gas, Williams may not be as attractive as some think they are, unless they expand the transportation business to make it so.
For a large company looking to expand their natural gas play in the future, Williams could be a potential and attractive candidate in that regard, although they'll probably have to wait until the natural gas prices rise, which could take some years to do.
What Williams does is produce and transport gas in a number of regions in the U.S. and Canada, and even though the price of natural gas has downward pressure on it, that won't necessarily cut into their transport costs, as natural gas will have to be moved, no matter what the price is at the moment.
So on the transportation side they are probably more attractive than on the production, which has an enormous number of competitors, as well as supply for many years.
With energy companies gravitating toward oil because of the vast supply of natural gas, Williams may not be as attractive as some think they are, unless they expand the transportation business to make it so.
For a large company looking to expand their natural gas play in the future, Williams could be a potential and attractive candidate in that regard, although they'll probably have to wait until the natural gas prices rise, which could take some years to do.
Wednesday, May 12, 2010
Canada Has More Natural Gas than Thought
Prior estimates of natural gas residing in Canada have been low because unconventional sources hadn't bee included in the estimates, which now are close ot 4,000 trillion cubic feet.
You can hear some of the natural gas companies groaning to know there is even more natural gas in North America, now that the United States has found huge deposits residing shale deposits.
But get too overcome by the huge numbers as recoverable natural gas in Canada, even with the overall reserves upwardly revised, stands at between 700 TCF and 1,300 TCF, according to the Canadian Society for Unconventional Gas
Even so, that's over double original estimates of 357 trillion cubic feet of marketable natural gas from conventional sources.
Canada estimates their natural gas reserves will now last the country over 100 years, including domestic consumption and exports.
You can hear some of the natural gas companies groaning to know there is even more natural gas in North America, now that the United States has found huge deposits residing shale deposits.
But get too overcome by the huge numbers as recoverable natural gas in Canada, even with the overall reserves upwardly revised, stands at between 700 TCF and 1,300 TCF, according to the Canadian Society for Unconventional Gas
Even so, that's over double original estimates of 357 trillion cubic feet of marketable natural gas from conventional sources.
Canada estimates their natural gas reserves will now last the country over 100 years, including domestic consumption and exports.
Monday, May 10, 2010
MAG Silver (TSE:MAG), Platinum Group Metals (TSE:PTM) Founder Likes Natural Gas
The founder of precious metal mining companies like MAG Silver (TSE:MAG), Platinum Group Metals (TSE:PTM), R. Michael Jones, likes what he sees in the natural gas sector, and is pursuing it with his latest startup, Nextraction Energy Corp. (TSE-V:NE).
Nextraction Energy targets gas development in the U.S., primarily shale gas which has been so abundantly discovered, and over the long-term will change the energy picture around the world, and bring the focus back on the U.S., which used to be the largest oil producer in the world.
Jones especially likes the emerging markets possibilities, where natural gas will serve them as an efficient energy supplement or replacement for oil, which will cost much less.
While in the short term natural gas is expected to remain depressed in price, over the long term it could rise some and stabilize, offering a predictable stream of income for companies positioned to take advantage of it.
But this is definitely a long-term play, as natural gas companies gravitate toward oil for profits in the low-margin, existing natural gas market.
Nextraction Energy targets gas development in the U.S., primarily shale gas which has been so abundantly discovered, and over the long-term will change the energy picture around the world, and bring the focus back on the U.S., which used to be the largest oil producer in the world.
Jones especially likes the emerging markets possibilities, where natural gas will serve them as an efficient energy supplement or replacement for oil, which will cost much less.
While in the short term natural gas is expected to remain depressed in price, over the long term it could rise some and stabilize, offering a predictable stream of income for companies positioned to take advantage of it.
But this is definitely a long-term play, as natural gas companies gravitate toward oil for profits in the low-margin, existing natural gas market.
Saturday, May 8, 2010
Chesapeake Energy (NYSE:CHK) Liquids Strategy
Most companies heavily weighted in natural gas, like Chesapeake Energy (NYSE:CHK), are using a strategy of developing a more balanced porfolio of assets in order to deal with the low price of natural gas, which probably won't rise in price much in the near term.
At this time Chesapeake has a ratio of about 90 percent natural gas to 10 percent liguids, and their goal is to bring it to 80 percent natural gas to 20 percent liquids.
Chesapeake said they'll be cutting their rig count to 105 rigs, or 12 percent as part of their strategy, while reducing it even more in 2011 by 17 percent as far as what they spend in the gas segment.
Ethane, butane, isobutane, propane and natural gasoline are natural gas liquids companies are gravitating towards.
At this time Chesapeake has a ratio of about 90 percent natural gas to 10 percent liguids, and their goal is to bring it to 80 percent natural gas to 20 percent liquids.
Chesapeake said they'll be cutting their rig count to 105 rigs, or 12 percent as part of their strategy, while reducing it even more in 2011 by 17 percent as far as what they spend in the gas segment.
Ethane, butane, isobutane, propane and natural gasoline are natural gas liquids companies are gravitating towards.
Friday, May 7, 2010
Canadian Natural Resources (TSE:CNQ) Natural Gas Gamble
Canadian Natural Resources (TSE:CNQ) (NYSE:CNQ) is implementing a contrary strategy as their competitors are, as they're going to spend about $960 million to acquire natural gas properties, rather than shore up on oil assets, which most energy companies with a large exposure to natural gas have been doing.
The company believes the price of natural gas will eventually rebound, where they will at that time reap the benefits of their acquisitions.
This is risky, as huge amounts of natural gas are available, and unless that changes, it's hard to understand what CNR thinks will happen to change the supply/demand equation.
Even if demand goes up, which is easily could, there is so much natural gas available that it's highly unlikely prices would skyrocket as a result.
The enormous amount of shale gas reserves in the U.S. make supply a major factor in any of these decisions. This could be a big mistake by Canadian Natural Resources, but over the long term anything could happen, but I don't see it at this time.
The company believes the price of natural gas will eventually rebound, where they will at that time reap the benefits of their acquisitions.
This is risky, as huge amounts of natural gas are available, and unless that changes, it's hard to understand what CNR thinks will happen to change the supply/demand equation.
Even if demand goes up, which is easily could, there is so much natural gas available that it's highly unlikely prices would skyrocket as a result.
The enormous amount of shale gas reserves in the U.S. make supply a major factor in any of these decisions. This could be a big mistake by Canadian Natural Resources, but over the long term anything could happen, but I don't see it at this time.
Friday, April 23, 2010
Oneok Partners (NYSE:OKS) Expanding Operations in North Dakota
Oneok Partners (NYSE:OKS) announced it'll be developing a new plant in North Dakota, investing over $350 million for the new facility, which will be near its already operating Grasslands processing plant.
Once the plant is operational, estimates are it'll produce about 100 million cubic feet of natural gas a day, which will effectively double the capacity of Oneok at that time.
Gas produced will be shipped via pipelines already in place to Oklahoma.
Still, the company is going commit about $200 million to develop more pipe expansions, connections and upgrades in the state.
All of this is in preparation for the explosion in gas production in the extraordinary Bakken formation.
Once the plant is operational, estimates are it'll produce about 100 million cubic feet of natural gas a day, which will effectively double the capacity of Oneok at that time.
Gas produced will be shipped via pipelines already in place to Oklahoma.
Still, the company is going commit about $200 million to develop more pipe expansions, connections and upgrades in the state.
All of this is in preparation for the explosion in gas production in the extraordinary Bakken formation.
Thursday, April 22, 2010
Petrobras (NYSE:PBR) Gas, Oil Production Down in March
Petrobras (NYSE:PBR) reported gas and oil production in March was down slightly, with gas and oil production combined reaching 2.556 million barrels of oil equivalent on a daily basis.
In February total gas and oil production for Petrobras was 2.561 barrels of oil equivalent a day, 0.2 percent more than March.
Domestic oil production for March increased to an average of 1.994 million barrels a day, a 0.3 percent gain. In February that came to 1.988 million billions a day for oil.
Internationally, crude oil production fell for the company, as it averaged 149,600 barrels of crude daily, dropping from the 151,400 average in February.
The main reason for the overall decline in March gas and oil production was decreasing demand for natural gas, as Petrobras has lowered its output in response to lower usage.
Natural gas production domestically dropped to 66.7 million cubic meters a day, falling from the 68.1 million cubic meters a day used in February.
In February total gas and oil production for Petrobras was 2.561 barrels of oil equivalent a day, 0.2 percent more than March.
Domestic oil production for March increased to an average of 1.994 million barrels a day, a 0.3 percent gain. In February that came to 1.988 million billions a day for oil.
Internationally, crude oil production fell for the company, as it averaged 149,600 barrels of crude daily, dropping from the 151,400 average in February.
The main reason for the overall decline in March gas and oil production was decreasing demand for natural gas, as Petrobras has lowered its output in response to lower usage.
Natural gas production domestically dropped to 66.7 million cubic meters a day, falling from the 68.1 million cubic meters a day used in February.
EnCana (TSE:ECA) Production Goals Doubled
Even though natural gas prices are depressed at this time, EnCana (TSE:ECA)(NYSE:ECA) Corp. leadership says they're going to continue with their goal of doubling production over the next five years.
CEO Randy Eresman said on the earnings call of the company that even though natural gas prices are below $4 per million BTUs, that won't last forever, and eventually prices will rise again.
"We believe that the current low-price environment is unsustainable," he said. "We expect to see price improvements in the future, but that may take some time to unfold. We'll continue to maintain a longer-term perspective in how we execute our strategy."
Assuming Encana achieves their production goal, they will supply close to 10 percent of all natural gas used in North America at that time.
As far as natural gas prices go, Eresman is right, and eventually they will go up again, and Encana and other smart players in the game should reap solid rewards for some time, along with their shareholders.
Encana is a long-term play though, and needs to be considered that if investing in the company.
CEO Randy Eresman said on the earnings call of the company that even though natural gas prices are below $4 per million BTUs, that won't last forever, and eventually prices will rise again.
"We believe that the current low-price environment is unsustainable," he said. "We expect to see price improvements in the future, but that may take some time to unfold. We'll continue to maintain a longer-term perspective in how we execute our strategy."
Assuming Encana achieves their production goal, they will supply close to 10 percent of all natural gas used in North America at that time.
As far as natural gas prices go, Eresman is right, and eventually they will go up again, and Encana and other smart players in the game should reap solid rewards for some time, along with their shareholders.
Encana is a long-term play though, and needs to be considered that if investing in the company.
U.S. Natural Gas Fund (NYSEArca:UNG) Up on Lower Storage Level Growth
The U.S. Natural Gas Fund (NYSEArca:UNG) was up today as a surprise findings of a report from the Energy Information Administration found natural gas storage levels hadn't grown as high as expected, and the natural gas market responded positively to the news, driving prices up.
While this was a nice surprise for investors, it really is only a short-term event, as even after the lower-than-expected storage growth, figures still have natural gas levels up 18.5 percent higher than the five-year average, and up 5.5 percent from last year.
This shows me that once there is a sustainable turnaround in natural gas demand, the market is looking for an excuse to rise, and those companies and funds positioned for it should reward shareholders handsomely, as seen today with the U.S. Natural Gas Fund and others in the industry.
While this was a nice surprise for investors, it really is only a short-term event, as even after the lower-than-expected storage growth, figures still have natural gas levels up 18.5 percent higher than the five-year average, and up 5.5 percent from last year.
This shows me that once there is a sustainable turnaround in natural gas demand, the market is looking for an excuse to rise, and those companies and funds positioned for it should reward shareholders handsomely, as seen today with the U.S. Natural Gas Fund and others in the industry.
Natural Gas Prices Up on Lower Storage Levels
Investors in natural gas were surprised that storage levels had expanded less than anticipated, sending prices up, settling at $4.128 per 1,000 cubic feet on the New York Mercantile Exchange, an increase of 17.3 cents.
Original estimates by the energy department were natural gas levels were going to reach as high as 80 billion cubic feet, while growing by only 73 billion cubic feet; close to 1.83 trillion cubic feet for the week ending April 16.
Much of the discrepancy came from mild weather which had caused analysts to believe natural gas storage levels would rise higher.
Possible increased usage from the manufacturing sector and natural gas production being less than thought are reasons given for the storage levels being less than estimated.
Original estimates by the energy department were natural gas levels were going to reach as high as 80 billion cubic feet, while growing by only 73 billion cubic feet; close to 1.83 trillion cubic feet for the week ending April 16.
Much of the discrepancy came from mild weather which had caused analysts to believe natural gas storage levels would rise higher.
Possible increased usage from the manufacturing sector and natural gas production being less than thought are reasons given for the storage levels being less than estimated.
Monday, April 19, 2010
EnCana (TSE:ECA) Wishing it Kept Oil Assets?
When EnCana (TSE:ECA) spun off its oil assets last year into a new company named Cenovus Energy (TSE:CVE), it seemed a good move in light of the possibilities natural gas seemed to offer, they may have regrets now as many natural gas companies are adding oil assets to combat what could be an oversupply of natural gas for years head.
Of course the diffentiator for EnCana was its focus on unconventional natural gas, which should give it a cost advantage over its competitors, and hopefully increase revenue, and ultimately profits as a result.
The emerging shale gas play has been somewhat disruptive to that strategy, as the amount of shale gas in the U.S. is so high, it has put downward pressure on natural gas prices, and could for years to come.
Having said that, I do think natural gas will move up in price, even with the large supply. What has been priced into natural gas has been the large quantity available in the market which investors are starting to understand.
Once that is priced in completely, which it may be close to becoming, it seems over time that will change, and natural gas prices will start to edge up along with the share price of the natural gas companies like EnCana.
Long-term, natural gas should be a good play, based on the low cost of entry at this time. The only place it seems it can go is up.
Of course the diffentiator for EnCana was its focus on unconventional natural gas, which should give it a cost advantage over its competitors, and hopefully increase revenue, and ultimately profits as a result.
The emerging shale gas play has been somewhat disruptive to that strategy, as the amount of shale gas in the U.S. is so high, it has put downward pressure on natural gas prices, and could for years to come.
Having said that, I do think natural gas will move up in price, even with the large supply. What has been priced into natural gas has been the large quantity available in the market which investors are starting to understand.
Once that is priced in completely, which it may be close to becoming, it seems over time that will change, and natural gas prices will start to edge up along with the share price of the natural gas companies like EnCana.
Long-term, natural gas should be a good play, based on the low cost of entry at this time. The only place it seems it can go is up.
Friday, April 16, 2010
Jim Rogers Likes Natural Gas in the Energy Sector
Jim Rogers on Natural Gas
Jim Rogers was recently talking investing in energy, and stated he's not selling energy at this time, even though it has doubled over the last 12 months.
It seems he's not buying energy, but he said if he was, natural gas would be his choice, as natural gas prices are depressed, while oil has been high for some time.
Rogers said, "If I were buying energy, I would probably buy natural gas rather than oil just because it’s so depressed. I don’t like to buy when things are up. I like to buy things when down, when people are unhappy that’s when I like to buy things."
I think Jim Rogers may be being a little coy here, as I'm sure he's putting some major money into natural gas, which has nowhere to go but up, and with Rogers liking long-term plays, natural gas fits right into that strategy.
Jim Rogers was recently talking investing in energy, and stated he's not selling energy at this time, even though it has doubled over the last 12 months.
It seems he's not buying energy, but he said if he was, natural gas would be his choice, as natural gas prices are depressed, while oil has been high for some time.
Rogers said, "If I were buying energy, I would probably buy natural gas rather than oil just because it’s so depressed. I don’t like to buy when things are up. I like to buy things when down, when people are unhappy that’s when I like to buy things."
I think Jim Rogers may be being a little coy here, as I'm sure he's putting some major money into natural gas, which has nowhere to go but up, and with Rogers liking long-term plays, natural gas fits right into that strategy.
Monday, April 12, 2010
Huge Amount of Natural Gas Discovered in Levant Basin
Natural Gas Reserves in Levant Basin
Previously undiscovered natural gas have been found in the Levant Basin, with estimates of 122 trillion cubic feet available to be recovered, according to U.S. geologists. The Levant Basin is located in the Eastern Mediterranean.
According to the U.S. Geological Survey, the natural gas in the basin is considered "technically recoverable," which is a phrase meaning the existing practices and technology available to energy companies can tap into the reserves.
USGS Energy Resources Program Coordinator Brenda Pierce said this about the survey. "This assessment furthers our understanding of the world's energy potential, helping inform policy- and decision-makers in making decisions about future energy supplies."
Previously undiscovered natural gas have been found in the Levant Basin, with estimates of 122 trillion cubic feet available to be recovered, according to U.S. geologists. The Levant Basin is located in the Eastern Mediterranean.
According to the U.S. Geological Survey, the natural gas in the basin is considered "technically recoverable," which is a phrase meaning the existing practices and technology available to energy companies can tap into the reserves.
USGS Energy Resources Program Coordinator Brenda Pierce said this about the survey. "This assessment furthers our understanding of the world's energy potential, helping inform policy- and decision-makers in making decisions about future energy supplies."
Saturday, April 10, 2010
Carrizo (Nasdaq:CRZO) Latest Natural Gas Company to Migrate Toward Oil
Carrizo Oil & Gas Gravitating Toward Oil
With what looks like an abundance of natural gas reserves which could last for a century or more, natural gas companies like Carrizo Oil & Gas (Nasdaq:CRZO) are now gravitating toward oil as a way to diversify their product portfolios, as the huge store of natural gas is expected to put downward pressure on natural gas for some time, which of course will squeeze margins.
Oil on the other hand is expected to continue increasing in price, or at minimum hold in price, making it more desirable than natural gas at this time.
Consequently, Carrizzo announced it was going to increase its budget for oil production from $170 million to $225 million, including, along with production, increased acreage and reserves.
Carrizo has recently offered 2.5 million shares of common stock at $23.50, which has reportedly been raised to pay back money it has borrowed from its revolving credit line, but other reports have stated it's to acquire more acreage. Possibly the credit line was tapped for the acreage, although it isn't clear that that's the case.
It looks like once some natural gas companies moved toward oil, the rest are starting to stampede that way, as the future of natural gas, while abundant and saleable, will have margins pressured for a long time, which will dim the profits being generated by the company, even if revenue from natural gas sales grow.
Maybe they should concentrate on selling more and let the profits grow from increased sales, even if margins are less; similar to Wal-Mart (NYSE:WMT) turning over inventory with low margins but high revenue, which in turn raises profits from inventory turnover rather than solely on margins.
With what looks like an abundance of natural gas reserves which could last for a century or more, natural gas companies like Carrizo Oil & Gas (Nasdaq:CRZO) are now gravitating toward oil as a way to diversify their product portfolios, as the huge store of natural gas is expected to put downward pressure on natural gas for some time, which of course will squeeze margins.
Oil on the other hand is expected to continue increasing in price, or at minimum hold in price, making it more desirable than natural gas at this time.
Consequently, Carrizzo announced it was going to increase its budget for oil production from $170 million to $225 million, including, along with production, increased acreage and reserves.
Carrizo has recently offered 2.5 million shares of common stock at $23.50, which has reportedly been raised to pay back money it has borrowed from its revolving credit line, but other reports have stated it's to acquire more acreage. Possibly the credit line was tapped for the acreage, although it isn't clear that that's the case.
It looks like once some natural gas companies moved toward oil, the rest are starting to stampede that way, as the future of natural gas, while abundant and saleable, will have margins pressured for a long time, which will dim the profits being generated by the company, even if revenue from natural gas sales grow.
Maybe they should concentrate on selling more and let the profits grow from increased sales, even if margins are less; similar to Wal-Mart (NYSE:WMT) turning over inventory with low margins but high revenue, which in turn raises profits from inventory turnover rather than solely on margins.
Thursday, April 8, 2010
JPMorgan (NYSE:JPM) Deal with Cheniere Energy (AMEX:LNG)
JPMorgan Natural Gas Deal with Cheniere Energy
A number of banks have been moving into the natural gas sector, and that's true with JPMorgan (NYSE:JPM), as evidenced by their deal with (AMEX:LNG).
The deal entails importing liquefied natural gas, which while having long term potential, in the short term will put downward pressure on teh profits of JPMorgan.
I'm a long-term investor, so that doesn't bother me in the least, but for those only looking at the short-term, it will be a challenging deal to absorb.
This is the result of the continuing fall of natural gas prices in the United States, which shows no sign of abating any time soon.
How the deal will work, is JPMorgan will jointly buy natural gas cargoes with Cheniere from overseas markets and resale them in the U.S. market. Both will share in any profits or losses incurred from the arrangement.
With the growing number of gas-shale opportunities within the United States, it is becoming more difficult to acquire import loads at a price that will make sense or be profitable.
Adding the balance sheet of JPMorgan to the mix does make it more probable they can make larger acquisitions which could result in lower prices which would make sense at that time.
Either way, this is a long term play, which will demand a lot on the domestic natural gas supply in the U.S., which shows no sign of abating.
JPMorgan competitors like Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS) have also entered the natural gas market in anticipation of growing demand. But as long as supply is so available, this shouldn't do much to increase the profits at the companies, but does position them for the day when the supply/demand situation changes.
A number of banks have been moving into the natural gas sector, and that's true with JPMorgan (NYSE:JPM), as evidenced by their deal with (AMEX:LNG).
The deal entails importing liquefied natural gas, which while having long term potential, in the short term will put downward pressure on teh profits of JPMorgan.
I'm a long-term investor, so that doesn't bother me in the least, but for those only looking at the short-term, it will be a challenging deal to absorb.
This is the result of the continuing fall of natural gas prices in the United States, which shows no sign of abating any time soon.
How the deal will work, is JPMorgan will jointly buy natural gas cargoes with Cheniere from overseas markets and resale them in the U.S. market. Both will share in any profits or losses incurred from the arrangement.
With the growing number of gas-shale opportunities within the United States, it is becoming more difficult to acquire import loads at a price that will make sense or be profitable.
Adding the balance sheet of JPMorgan to the mix does make it more probable they can make larger acquisitions which could result in lower prices which would make sense at that time.
Either way, this is a long term play, which will demand a lot on the domestic natural gas supply in the U.S., which shows no sign of abating.
JPMorgan competitors like Citigroup (NYSE:C) and Morgan Stanley (NYSE:MS) have also entered the natural gas market in anticipation of growing demand. But as long as supply is so available, this shouldn't do much to increase the profits at the companies, but does position them for the day when the supply/demand situation changes.
Monday, April 5, 2010
SandRidge Energy (NYSE:SD) Acquiring Arena Resources (NYSE:ARD)
SandRidge Energy
In a move to tap into more oil resources, SandRidge Energy (NYSE:SD) announced it will acquire its rival, Arena Resources (NYSE: ARD), for $1.6 billion, equaling the market cap of SandRidge at the time of this writing.
Natural gas prices are projected to remain low for a long time, and companies overweight in natural gas are scrambling to diversify to remain profitable and grow.
SandRidge has a strategy of searching for its oil and gas in a more conventional manner, holding back from entering into the higher-cost shale gas others are tapping into at this time.
As far as natural gas goes, this is a good strategy as the most profitable companies will be those able to contain their costs the best in a low-price environment.
SandRidge Energy
In a move to tap into more oil resources, SandRidge Energy (NYSE:SD) announced it will acquire its rival, Arena Resources (NYSE: ARD), for $1.6 billion, equaling the market cap of SandRidge at the time of this writing.
Natural gas prices are projected to remain low for a long time, and companies overweight in natural gas are scrambling to diversify to remain profitable and grow.
SandRidge has a strategy of searching for its oil and gas in a more conventional manner, holding back from entering into the higher-cost shale gas others are tapping into at this time.
As far as natural gas goes, this is a good strategy as the most profitable companies will be those able to contain their costs the best in a low-price environment.
SandRidge Energy
Chesapeake Energy (NYSE:CHK) Targeting Oil
Chesapeake Energy
The abundance of natural gas which has resulted in natural gas prices plunging, has resulted in a number of natural gas companies like Chesapeake Energy (NYSE:CHK) to focus on other sources of revenue; and in the case of Chesapeake Energy that is oil.
Aubrey McClendon, Chairman and CEO of Chesapeake Energy has resisted making the move, but the refusal of natural gas prices to rise over time has forced her to reconsider, and now is changing her tune and is looking at oil as a way to diversify their assets.
McClendon recently stated the company feels they probably have enough gas to last them the rest of their lives. What she really means is the economics of natural gas is no longer as compelling as it has been, and they need to go beyond it for a more profitable future.
Chesapeake Energy
The abundance of natural gas which has resulted in natural gas prices plunging, has resulted in a number of natural gas companies like Chesapeake Energy (NYSE:CHK) to focus on other sources of revenue; and in the case of Chesapeake Energy that is oil.
Aubrey McClendon, Chairman and CEO of Chesapeake Energy has resisted making the move, but the refusal of natural gas prices to rise over time has forced her to reconsider, and now is changing her tune and is looking at oil as a way to diversify their assets.
McClendon recently stated the company feels they probably have enough gas to last them the rest of their lives. What she really means is the economics of natural gas is no longer as compelling as it has been, and they need to go beyond it for a more profitable future.
Chesapeake Energy
Tuesday, March 30, 2010
Natural Gas Prices Rise on Economic Recovery Hopes
With natural gas plunging to lows over the last several months, there are thoughts it could start to rise again based on hopes there will ultimately be a sustainable recovery, although that's far from being a reality at this time.
So far in 2010 natural gas prices have fallen by 29 percent.
Natural gas prices have a good chance of rising this week as those speculating on short positions exit them.
Also the fact that everything has been working for shorts makes this a possibility that prices will rise just as a temporary corrective or on any economic news which offers some hope.
At about 1p.m. today prices for natural gas had increased by 3.8 cents to $3.954 a million British thermal units.
So far in 2010 natural gas prices have fallen by 29 percent.
Natural gas prices have a good chance of rising this week as those speculating on short positions exit them.
Also the fact that everything has been working for shorts makes this a possibility that prices will rise just as a temporary corrective or on any economic news which offers some hope.
At about 1p.m. today prices for natural gas had increased by 3.8 cents to $3.954 a million British thermal units.
Monday, March 29, 2010
Shell (NYSE:RDS.A) Increases Natural Gas Stake in Texas
Royal Dutch Shell Natural Gas Holdings
Royal Dutch Shell (NYSE:RDS.A) has been increasing its position in a natural gas field in Texas to enlarge their position in the North American gas business, which has great promise for decades ahead.
The location of the Texas natural gas field is near San Antonio, and is called Eagle Ford. Shell leased another 150,000 acres in the region not too long ago in anticipation of increasing demand for the commodity.
Shell has been working the last couple of years to build up their portfolio in North America, and now have 2.4 million acres of land which holds up to 21 trillion cubic feet of natural gas.
Shell also has significant holdings in the U.S. Rockies and Louisiana, as well as in British Columbia and Alberta, Canada.
Shale gas could end up accounting for half of all U.S. natural gas supplied by 2035.
Royal Dutch Shell (NYSE:RDS.A) has been increasing its position in a natural gas field in Texas to enlarge their position in the North American gas business, which has great promise for decades ahead.
The location of the Texas natural gas field is near San Antonio, and is called Eagle Ford. Shell leased another 150,000 acres in the region not too long ago in anticipation of increasing demand for the commodity.
Shell has been working the last couple of years to build up their portfolio in North America, and now have 2.4 million acres of land which holds up to 21 trillion cubic feet of natural gas.
Shell also has significant holdings in the U.S. Rockies and Louisiana, as well as in British Columbia and Alberta, Canada.
Shale gas could end up accounting for half of all U.S. natural gas supplied by 2035.
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