Even though Chesapeake Energy (NYSE:CHK) CEO Aubrey McClendon has recently said the company wouldn't go into deeper debt to raise capital, they once again have changed their minds and reversed direction, as they've decided to issue $1.7 billion in preferred convertible shares to raise the money.
This pretty much deja vous for the company, as the almost exact reasoning behind this debt has been stated in the past, as the debt will be used to reduce debt. Sounds like the government in many ways.
One other way of raising capital is through the sale of some of its Marcellus Shale assets, which will evidently also be used to pay down debt to the tune of $3.5 billion.
What is left over is targeted for investing in more liquid gas and oil assets. As I said, deja vous.
The company has been brought to this place because of the increased supply of natural gas which is pushing prices down, as well as the large number of acquisitions which led to the debt in the first place.
If it didn't access capital, which the lower natural gas prices can't buy, they could lose their drilling leases, which would happen if they quit drilling.
Consequently, the company will have a dilution of their shares which will cause share price to fall.
Showing posts with label Natural Gas Stocks. Show all posts
Showing posts with label Natural Gas Stocks. Show all posts
Saturday, May 22, 2010
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.
Devon Energy (NYSE:DVN) Ready to Fly
Devon Energy (NYSE:DVN) made a great move (in hindsight) when they divested of their holdings in the Gulf of Mexico before the unfortunate accident which brought down the oil rig Deepwater Horizon, which while lucky, still has strong, positive repercussions for Devon going forward, specifically with how they're making use of their extra capital, and have prepared for solid, organic growth for some time to come.
With their $9.9 billion in capital as a result of selling their Gulf assets, Devon has been buying back stock in the company, with $3.5 billion used for that purpose.
The strong balance sheet of Devon, along with a good mix of oil and gas assets, and their low operational costs, has positioned them to be among the best in the natural gas sector for some time to come.
With their $9.9 billion in capital as a result of selling their Gulf assets, Devon has been buying back stock in the company, with $3.5 billion used for that purpose.
The strong balance sheet of Devon, along with a good mix of oil and gas assets, and their low operational costs, has positioned them to be among the best in the natural gas sector for some time to come.
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.
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.
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.
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.
Exxon Mobil (NYSE:XOM) and Natural Gas
Exxon Mobil ties future growth to natural gas
Exxon Mobil (NYSE:XOM) in acquiring XTO Energy Inc. has positioned themselves far a strong future with the natural gas play they got with XTO.
With natural gas prices as low as they are, there's no doubt it'll begin to rise again in price again, and when it does, Exxon Mobil will rise in value with those prices.
Exxon has one of the largest stakes in natural gas now, and their future fortune is tied into it in a big way, and even if the sector was to grow conservatively and moderately, long term this should be a great stock to own.
Exxon Mobil (NYSE:XOM) in acquiring XTO Energy Inc. has positioned themselves far a strong future with the natural gas play they got with XTO.
With natural gas prices as low as they are, there's no doubt it'll begin to rise again in price again, and when it does, Exxon Mobil will rise in value with those prices.
Exxon has one of the largest stakes in natural gas now, and their future fortune is tied into it in a big way, and even if the sector was to grow conservatively and moderately, long term this should be a great stock to own.
Friday, March 26, 2010
Natural Gas Hits Record April Low
Natural Gas in Record April Low
As natural gas storage inventory grew last week, reports helped drive prices even lower, dropping it the lowest levels ever recorded in April, according to The Associated Press.
The lowest April price referred to was when contracts fell to $3.94 during the Thursday session.
Storage levels weren't able to be drawn down as thought, with warmer weather cutting back on demand.
For the five-year average, natural gas storage levels are 8 percent higher than usual.
Natural Gas in Record April Low
As natural gas storage inventory grew last week, reports helped drive prices even lower, dropping it the lowest levels ever recorded in April, according to The Associated Press.
The lowest April price referred to was when contracts fell to $3.94 during the Thursday session.
Storage levels weren't able to be drawn down as thought, with warmer weather cutting back on demand.
For the five-year average, natural gas storage levels are 8 percent higher than usual.
Natural Gas in Record April Low
Thursday, March 25, 2010
Natural Gas Futures Plunge
Natural Gas Futures
After a government report stating for the first time in 2010 natural gas inventory grew, natural gas futures prices plunged in response.
The extremely cold winter has generated increased demand for the fuel, but the warmer weather and slow drawdown couldn't cut the large surpluses, with gas levels moving to 8 percent higher than the five-year average.
Natural gas fell 15.9 cents for April delivery to $3.946 per 1,000 cubic feet on the NYMEX. It dropped as low as $3.940, the lowest ever recorded for an April contract.
Natural Gas Futures
After a government report stating for the first time in 2010 natural gas inventory grew, natural gas futures prices plunged in response.
The extremely cold winter has generated increased demand for the fuel, but the warmer weather and slow drawdown couldn't cut the large surpluses, with gas levels moving to 8 percent higher than the five-year average.
Natural gas fell 15.9 cents for April delivery to $3.946 per 1,000 cubic feet on the NYMEX. It dropped as low as $3.940, the lowest ever recorded for an April contract.
Natural Gas Futures
Monday, March 15, 2010
United States Natural Gas Fund (NYSEArca:UNG) and Inventory
United States Natural Gas Fund
Over the last year the United States Natural Gas Fund (NYSEArca:UNG) has continued on its downward spiral, with the chart line continually dropping from left to right.
A year ago the stock was almost at double what it is today, and there's no end in sight as far as where it will bottom out, as inventory continues to hold strong with no surprises in the mix. Two years ago the stock was over five times the value as it is today, revealing once it bottoms out there could be a nice rebound, although many of those long in the stock are hoping that happens sometime soon.
Until demand for natural gas picks up though, the company will continue to struggle, and we could see it plunge even further before we see signs of sustainable recovery.
This confirms consumers and businesses aren't convinced the recession is over, and until they start spending again, including on natural gas, we'll see supplies continue to grow or stay the same, giving the stock nowhere to go but down or stay level.
Even so, I like this stock once it does reach its bottom, as it should give a nice upward push at that time.
United States Natural Gas Fund
Over the last year the United States Natural Gas Fund (NYSEArca:UNG) has continued on its downward spiral, with the chart line continually dropping from left to right.
A year ago the stock was almost at double what it is today, and there's no end in sight as far as where it will bottom out, as inventory continues to hold strong with no surprises in the mix. Two years ago the stock was over five times the value as it is today, revealing once it bottoms out there could be a nice rebound, although many of those long in the stock are hoping that happens sometime soon.
Until demand for natural gas picks up though, the company will continue to struggle, and we could see it plunge even further before we see signs of sustainable recovery.
This confirms consumers and businesses aren't convinced the recession is over, and until they start spending again, including on natural gas, we'll see supplies continue to grow or stay the same, giving the stock nowhere to go but down or stay level.
Even so, I like this stock once it does reach its bottom, as it should give a nice upward push at that time.
United States Natural Gas Fund
Thursday, March 4, 2010
Union Drilling (Nasdaq:UDRL) Narrows Losses
Union Drilling Quarterly Results
Union Drilling (Nasdaq:UDRL) lowered its losses in the fourth-quarter of 2009 over the fourth quarter of 2008, but revenue plunged to about half of what it was year-over-year.
In 2008, profits surged largely because of a writedown on assets held by the company.
Losses this year came in at $2.9 million, or 12 cents a share, while losses in fourth quarter of 2008 stood at $3.7 million or 17 cents a share.
But taking into account the charges for both quarter, the 2009 fourth quarter was a disaster, as the 2008 fourth quarter would have ended with a profit of $4.2 million, while this fourth quarter would have resulted in losses of $1.9 million otherwise.
Revenue mixed expectations, although not by much, as it dropped to $40.6 million, while analysts had looked for $41 million. From a year ago though, revenue had been $80.9 million.
For all of 2009, Union Drilling profits were down by about $12 million, or 55 cents a share. In 2008 the company generated $7.8 million, or 35 cents a share profit.
Revenue also dropped in a big way from $302.8 million in 2008 to only $168.9 million in 2009. A bad year no matter how you look at it.
Union Drilling Quarterly Results
Union Drilling (Nasdaq:UDRL) lowered its losses in the fourth-quarter of 2009 over the fourth quarter of 2008, but revenue plunged to about half of what it was year-over-year.
In 2008, profits surged largely because of a writedown on assets held by the company.
Losses this year came in at $2.9 million, or 12 cents a share, while losses in fourth quarter of 2008 stood at $3.7 million or 17 cents a share.
But taking into account the charges for both quarter, the 2009 fourth quarter was a disaster, as the 2008 fourth quarter would have ended with a profit of $4.2 million, while this fourth quarter would have resulted in losses of $1.9 million otherwise.
Revenue mixed expectations, although not by much, as it dropped to $40.6 million, while analysts had looked for $41 million. From a year ago though, revenue had been $80.9 million.
For all of 2009, Union Drilling profits were down by about $12 million, or 55 cents a share. In 2008 the company generated $7.8 million, or 35 cents a share profit.
Revenue also dropped in a big way from $302.8 million in 2008 to only $168.9 million in 2009. A bad year no matter how you look at it.
Union Drilling Quarterly Results
Natural Gas Falls on Inventory
Natural gas prices
Natural gas prices plunged today as data from the U.S. government showed that the drop in inventory was not as much as expected.
The sudden warming up has been a major factor in the higher inventory, as stockpiles were ready if cold weather patterns persisted.
Natural gas storage levels currently exceed the five-year avaerge, said the Energy Information Administration.
Natural gas prices
Natural gas prices plunged today as data from the U.S. government showed that the drop in inventory was not as much as expected.
The sudden warming up has been a major factor in the higher inventory, as stockpiles were ready if cold weather patterns persisted.
Natural gas storage levels currently exceed the five-year avaerge, said the Energy Information Administration.
Natural gas prices
Saturday, February 27, 2010
Questerre Energy Corp.(TSE:QEC): Utica Shale
Questerre Energy Utica Shale
Western Canada has historically and rightfully been considered the energy capital of Canada, but the discovery and early promise of natural gas in what is being called the Utica shale, has many companies and people in the area giddy about the potential if things play out the way they think.
Questerre Energy Corp. (TSE:QEC) says there's a possibility Utica shale could contain over 20 trillion cubic feet of recoverable natural gas, although it'll take time to prove that assumption.
In the first several weeks of the opening of the well, 12 million cubic feet of gas was produced on a daily basis, although that has dropped to less than half of that since that time. That's the normal way natural gas shale production works though, so not a real problem in that regard.
There are three more wells set to be opened similar to this particular well, which will give a better picture of the overall promise in the area.
While there is a lot of excitement about the potential in the first well, it will take some time, in fact years, and many more wells before it is known how strong of a find this is, but it's important that the first well at least showed solid potential and reason to go forward.
Other than Questerre Energy Corp., another way this could be played would be through Talisman Energy Inc. (TSE:TLM), which has a 75 percent stake in 400,000 hectares of land held by Questerre.
Questerre Energy Utica Shale
Western Canada has historically and rightfully been considered the energy capital of Canada, but the discovery and early promise of natural gas in what is being called the Utica shale, has many companies and people in the area giddy about the potential if things play out the way they think.
Questerre Energy Corp. (TSE:QEC) says there's a possibility Utica shale could contain over 20 trillion cubic feet of recoverable natural gas, although it'll take time to prove that assumption.
In the first several weeks of the opening of the well, 12 million cubic feet of gas was produced on a daily basis, although that has dropped to less than half of that since that time. That's the normal way natural gas shale production works though, so not a real problem in that regard.
There are three more wells set to be opened similar to this particular well, which will give a better picture of the overall promise in the area.
While there is a lot of excitement about the potential in the first well, it will take some time, in fact years, and many more wells before it is known how strong of a find this is, but it's important that the first well at least showed solid potential and reason to go forward.
Other than Questerre Energy Corp., another way this could be played would be through Talisman Energy Inc. (TSE:TLM), which has a 75 percent stake in 400,000 hectares of land held by Questerre.
Questerre Energy Utica Shale
Tuesday, September 29, 2009
Commodities | Natural Gas Correction Coming
Commodities: Natural Gas
There is about to be a major correction the the North American natural gas market, as the large number of natural gas producers in America and Canade won't be able to continue on, as there are too many of them in operation today.
What to watch for are those companies high operations costs and low margins, who aren't able to compete with lower prices, which will determine the winners and losers in the coming shakeout in the natural gas industry.
Not that natural gas prices have hit a seven-year low recently, selling at $2.50 per thousand cubic feet. The problem is no natural gas producer is blinking an cutting back on production, evidently thinking they're in it too big to make that decision.
Of course the market will make that decision for them, whether they want to or not, and a market-driven supply and demand response will be the result.
If you're an investor in natural gas, you must face the fall in prices (even though there has been some recent increase in prices in natural gas), and realize that the existing prices of natural gas companies can't continue on without a major correction. Demand is low and supply is high; that will eventually bring down the price of natural gas company stocks, and you don't want to be in them when they plunge.
Either the lack of extra storage of natural gas or a price drop will bring things back to reality. Either way, you need to change your way of thinking if you believe natural gas stocks can hold these prices in the midst of the current natural gas reality.
Commodities: Natural Gas
There is about to be a major correction the the North American natural gas market, as the large number of natural gas producers in America and Canade won't be able to continue on, as there are too many of them in operation today.
What to watch for are those companies high operations costs and low margins, who aren't able to compete with lower prices, which will determine the winners and losers in the coming shakeout in the natural gas industry.
Not that natural gas prices have hit a seven-year low recently, selling at $2.50 per thousand cubic feet. The problem is no natural gas producer is blinking an cutting back on production, evidently thinking they're in it too big to make that decision.
Of course the market will make that decision for them, whether they want to or not, and a market-driven supply and demand response will be the result.
If you're an investor in natural gas, you must face the fall in prices (even though there has been some recent increase in prices in natural gas), and realize that the existing prices of natural gas companies can't continue on without a major correction. Demand is low and supply is high; that will eventually bring down the price of natural gas company stocks, and you don't want to be in them when they plunge.
Either the lack of extra storage of natural gas or a price drop will bring things back to reality. Either way, you need to change your way of thinking if you believe natural gas stocks can hold these prices in the midst of the current natural gas reality.
Commodities: Natural Gas
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