The future of energy and the best investments in the sector. Oil & Gas aren't going away in the near future (no matter what Obama wants)..so where are the best investments?

Good one...that's the idea!

Everybody hates oil stocks now...many are down 50% or more....time to shop.  BUT...if the company is mostly NG...forget it. I'm looking at oil E&P cos. I like Apache (APA) here:

It has exploration and production interests in the Permian, Central, Gulf of Mexico Shelf, Gulf of Mexico Deepwater, and Gulf Coast Onshore in the United States; British Columbia, Alberta, and Saskatchewan provinces in Canada; Egypt; offshore Western Australia in the Carnarvon basin; offshore the United Kingdom in the North Sea; and in the Neuquén, Rio Negro, Tierra del Fuego, and Mendoza provinces of Argentina.  As of December 31, 2011, it had total estimated proved reserves of 1,370 million barrels of oil of crude oil, condensate, and NGLs; and 9.7 trillion cubic feet of natural gas.

The fundamentals are excellent:

p/e: 7.68

profit margin: 24.6%

Return on equity: 15.5% (when roe is higher than p/e...that's a sign of an excellent buy... this is 2X p/e)

Free cash flow: 10.5% (5% is excellent)

debt/equity ratio: .25 (anything under .50 is acceptable)

book value: $74.09 w/a stock price of $81

Stock is down from a high of $134 and looks like a triple bottom.

Welcome back! This site is WAY better than RB was.

Inevitably, to a $ 200 oil
Dr Thomas Chaize
May 30th, 2012

 

Forecasts "official" price of oil have often shared their optimism. These forecasts "official" ones of the EIA (Energy Information Administration) are those that followers of forecasts "mathematics" (or spells) prefer to use in their model. The EIA was established in 1977, between the first two oil shocks of 1973 (rising prices from OPEC) and 1979 (War Iran / Iraq) to collect data on energy (coal, oil, natural gas, electricity, renewable and nuclear energy). The EIA is part of the U.S. Department of Energy (U.S. Department of Energy).

In 1996, the EIA provided a barrel of oil in 2012 between a minimum of $ 15 and a maximum of $ 35 (+ / -).

In 2000, the price forecast for 2012 ranged from a minimum of $ 15 and a maximum of $ 30 (+ / -).
 

In 2005, the price forecast for 2012 ranged from a minimum of 25 dollars and a maximum of $ 40 (+ / -).
 

In 2008, the price forecast for 2012 ranged from a minimum of 50 dollars and a maximum of $ 85 (+ / -).

Gradually, as the deadline got closer, the forecast has adapted to the rising oil prices.

Finally, in 2011, the average price of a barrel of oil was $ 95, and in 2012, we are currently $ 103: almost seven times the forecast low and more than three times the forecast high of EIA for 1996 ..

.
But things seem to have evolved in this institution this year, they plan for 2035, a low scenario to 60 dollars and a high scenario at 180-200 dollars (+ / -). 2035! I hear you say, it's far! True, but in their chart, they indicate that this price range is also possible in a relatively short time horizon, at 1, 2, 3 years.
This forecast may be optimistic for 2035, seems however quite adapted to the horizon of 1 to 3 years. Indeed, it seems highly likely that oil in a major structural trend upward knows very volatile at the discretion of the crises that are sure to punctuate his rise to new heights.
 

The quotation from John Davison Rockefeller, dating from the 19th century, however, is more relevant than ever: "Believe in oil, fall is not a reason to fear, but an opportunity to buy." Today the oil down, I have no idea of the level to which it goes down ... $ 92.5, $ 85, $ 75, $ 65, whatever! I am convinced that it will not be a reason to doubt, but a buying opportunity. We know it will go up, because to keep global production at this level, high oil prices, very expensive or even necessary. It's not a conspiracy of attendants, traders, hedge fund, is a structural trend predictable and inevitable. Oil is expensive because we are every day more and more that there is enough oil. You can return the problem in all directions, using incantations, "shale oil", "Greek crisis", "speculation" this or nothing will change!

Already today you can read everywhere that Libya, OPEC production, poor growth, Greece, shale oil threaten oil prices, blah blah blah blah ...
Then consider the quotation from Rockefeller "fall is not a reason to fear, but an opportunity to buy"...

These are two world views and our future that have been rivals for 10 years.
 

One who is to say that the earth is flat, oil abundant vitam eternam, as oil prices remain quietly at the desired level: they are usually economists, if you have one handy, talk to them about the future oil prices, it is worth its weight in "peanuts."
 

The other brought by disgruntled, often geologists and former officers of the oil industry, feel that something is amiss. If there is less oil in 50 years there is no reason to produce more and more today is the lag between peak discovery and peak production we spoke King Hubbert, 50 years ago...

Dr Thomas Chaize
May 30th, 2012

Which post is that in?

Thanks six...I looked at quite a few and what really convinced me was that APA was the only one that had decent free cash flow and low debt. That frees up money for drilling, exploring, and paying dividends without borrowing. Also they are rated 5-Star (Highest rating) at morningstar.....

'Apache is among the leading midmajors, with a balanced portfolio of onshore and offshore oil and gas properties throughout the world. The firm's approach includes exploitation of acquired assets--typically purchased from one of the larger integrated firms--as well as development of internally generated prospects. After a few years of relative inactivity on the acquisition front, Apache has gone a shopping spree as of late, with more than $18 billion in deals completed over the past several quarters. Combined, these deals--including a $4 billion merger with Mariner Energy; $11 billion in asset purchases from BP BP, Devon DVN, and Exxon Mobil XOM; and a $3 billion built-to-sell acquisition from a private equity firm--should provide near-term exploitation opportunities as well as longer-term exploration potential and help the firm increase production and reserves throughout our forecast period.'

Where Will You Be When the Lights Go Out?

By Marita Noon

6/3/2012

The passage of time is marked with milestones. We each know where we were when President Kennedy was shot, when the Berlin Wall came down, and on the morning of 9-11. If we continue on the current course, you’ll be telling your grandchildren where you were the night the lights went out in America.

America’s energy policy is being dominated by environmentalists’ priorities—regardless of the impact to the American economy, individual communities, or economically-challenged citizens. The plans to shut down or limit America’s abundant, available, and affordable energy are organized, coordinated, and effective. The results will be “lights out in America”—a dim future.

On May 30, the Wall Street Journal alerted us to the Sierra Club’s new campaign aimed at killing the natural gas industry: “Beyond Natural Gas.” WSJ reports: “This is no idle threat. The Sierra Club has deep pockets funded by liberal foundations and knows how to work the media and politicians. The lobby helped to block new nuclear plants for more than 30 years, it has kept much of the U.S. off-limits to oil drilling, and its ‘Beyond Coal’ campaign has all but shut down new coal plants. One of its priorities now will be to make shale gas drilling anathema within the Democratic Party.”

How do they think we will power America? With intermittent, ineffective, and uneconomical wind and solar energy.

Why are the Sierra Club, et al, able to wield so much power? The Obama administration is friendly to their cause. Many of the agencies regulating domestic energy development are staffed with personnel culled from within the ranks of the environmental movement. And, they are not shy about their biases—as was revealed in the now famous “crucify” comment. They also use their vast resources to sue, and sue often. As a new report from the Kentucky Coal Association (KCA) reveals, they don’t just sue the coal miners and the coal-fueled power plants, they sue the EPA to force new standards which are often unattainable—thereby effectively stopping all use of coal. (Remember, natural gas is the next target.)

The EPA, then, goes around standard operating procedures to do the bidding of their environmental buddies.

In Kentucky, hundreds of individual coal mining permits are typically approved each year. The application process has been in place for years. Companies applying for permits know the rules and applications are submitted accordingly. If a rule change is to be made, there is a process that includes a series of public hearings and industry input—providing participation for all parties. When a new rule is implemented, it often has a phase-in period and involved parties can prepare as they know about it far in advance.

However, Lisa Jackson’s EPA isn’t constrained by rulemaking policy.

On April 1, 2010, without reason or science, public notice or opportunity for public comment, the EPA issued “Interim Guidance on Clean Water Act (CWA) procedures for Appalachian surface mines”—which initially applied to only six states: Kentucky, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia. Lisa Jackson acknowledged that few—if any—mines would be able to comply with the new benchmark set to limit wastewater discharges from surface coal mining to instream conductivity levels of 500 micro-siemens. Even if you do not understand the conductivity level of instream micro-siemens, you can grasp that the levels called for in the “guidance” are lower than levels found in nature.

In March 2010, 27 permits were issued under the known procedures. Since the “guidance” came out, without warning, on April 1, no new permits have been issued. One company was offered a permit with the 500 micro-siemens limit applicable to every phase of mining beginning on day one. The “virgin” stream was tested before any mining operations commenced and was found to naturally have 1200 micro-siemens. The company would have been in violation before they ever started. On July 21, 2011, the “interim guidance” was replaced with a “final guidance” which suggested that conductivity levels be 300 or less instead of the previous 500—which was already unattainable. Even expensive bottled water doesn’t meet the standards the EPA has set for discharges from coal mining.

For more than 2 years, the Appalachian economy has suffered the loss of hundreds of mines, equaling thousands of direct potential jobs, as a result of this “guidance”—which is not a “rule” but is being treated as one.

In October 2010, the KCA filed a lawsuit against the EPA contending that the issuance of the “interim guidance” violated the Administrative Procedures Act and the CWA by ignoring public notice and comment rulemaking requirements, and unlawfully usurping the state’s role in establishing water quality standards under CWA. That suit has been consolidated with a similar suit filed in West Virginia and with National Mining Association litigation and has been transferred to the federal court in the District of Columbia; the case is scheduled to be heard July 11.

Meanwhile, applications for individual coal mining permits have been denied. Shortly after the new “guidance” was issued on April 1, 2010, The Kentucky Energy and Environment Cabinet (KEEC) proposed to issue 21 permits for new and surface mines in Eastern Kentucky that did not include qualification for the sudden “guidance,” but met all prior imposed limitations and were consistent with previous applications that were granted permits. The state has the authority to issue permits and the EPA has oversight authority. In September 2010, the EPA issued specific objections to all 21 permit applications—thereby preventing their issuance, blocking jobs and revenues.

On July 1, 2011, the KEEC proposed another 19 permits for new or expanded surface mining in Eastern Kentucky. These permits included a number of enhancements to assure protection of aquatic life. In late September 2011, the EPA objected to all 19 permits—but did not specify the deficiencies. There are currently 36 applications pending; the other four have been withdrawn with the potential investment presumably going elsewhere.

In accordance with the CWA, if the EPA has specific objections, the applicant can request a hearing to challenge the EPA’s decision. The KEEC requested a hearing in December of 2010. Finally, after an 18-month wait, EPA has scheduled hearings for June 5 and 7. The Kentucky Coal Association estimates that just the 19 permits the EPA blocked last September have cost $123,861,000 in state coal severance taxes, 3,800 Kentucky coal jobs, and the production of 125,476,000 tons of coal—all while America is in economic crisis.

Additionally, the micro-siemens benchmark was slated to apply to six states but was pulled back to just two: Kentucky and West Virginia. Why were these states singled out? If micro-siemens were important, if clean water was really the issue, shouldn’t the “guidance” apply nationwide? Interestingly, the two states targeted for the new rules may be victims of retribution. Neither Kentucky nor West Virginia went blue in the 2008 election and are not likely to in 2012. The Democratic primaries in both Kentucky and West Virginia were an embarrassment to the Obama re-election effort. In Kentucky, “uncommitted” got 42% of the vote and in West Virginia, prisoner Keith Judd got 41%. Obama nemesis Mitch McConnell hails from Kentucky and West Virginia’s Democratic Senator Joe Manchin made waves when he ran a campaign ad in which he picked up a rifle and shot a target labeled “cap and trade bill”—which was an Obama campaign promise. Ohio, Pennsylvania, and Virginia were removed from the micro-siemens guidance. They are blue states that are important to President Obama’s re-election. Once again, it appears that the Obama administration is putting electoral posturing ahead of energy production. (If Obama gets re-elected, you can be sure the “guidance” will apply to more states and other industries.)

The micro-siemens guidance is applied under the CWA section 402. While other industries are governed by section 402, the micro-siemens guidance applies only to coal, and only in two states. The selective application indicates that it isn’t really about the water.

The Sierra Club doesn’t want America’s abundant coal resources used in America. Their efforts have already contributed to the announced closure of 100 US coal-fueled power plants and reduced demand for coal. “Sales to Midwestern power plants have slumped, as has the market price of coal, dropping so suddenly that many local mines are cutting back hours or closing,” reports the New York Times. “The anger toward Washington is palpable.” In the May 29 NYT article, Chris Lacy, an executive at Licking River Resources Inc., said “layoffs among his 350 miners—in Magoffin County, where unemployment is already 17.5 percent — are inevitable.” Addressing the increasing regulations against coal, Lacy says the “concerns are overblown.” He sees them as “a conspiracy by environmentalists and the Obama administration to destroy the way of life here in Kentucky.”

The Sierra Club wants to keep coal in the ground and out of international markets where coal-fueled power plants are being built faster than they are being abandoned in the US. They are filing lawsuits against mining companies to prevent extraction and claiming settlements which include their legal fees. Environmental attorneys are among the highest paid—getting double and triple what veterans’ or seniors’ advocates receive. This hurts not only the local economies, such as the one supported by Licking River Resources, but it also does harm to the US economy, as selling US products overseas helps our trade deficit.

If you are tired of the undue influence the environmental groups, such as the Sierra Club, hold over your energy use and cost—they proudly state that their attack on coal is “just the tip of the iceberg” (natural gas is next), stand with Kentucky against the singular attack. A pre-hearing rally is being held in Frankfort, KY, on June 5 from 5-7 PM between the Capitol Plaza Hotel and the Frankfort Convention Center where elected officials, pro-coal advocates, and invited guests will speak about the dangers of the EPA’s actions to Kentucky jobs. If you can’t make the rally, you can still offer written comment (Docket ID:EPA-HQ-OW-2012-0315).

If we do not stand up to these senseless attacks on the American way of life, our energy freedom, and our economic security, we will be telling our grandchildren where we were the night the lights went out in America.

Because thay are 'leftists' and their goal is to destroy what they can of this country so that people will turn to the government and say "Do whatever you want, just help us"..and that will be the end of freedom as we know it.

Chesapeake Yields To Icahn, Adds 4 New Independent Directors, McClendon Steps Down As Chairman

Submitted by Tyler Durden on 06/04/2012

The first step toward the terminal McClendon ouster is here, because as a reminder, broken management teams are fixable, as we explained last week. Not surprisingly, stock is up 5% in the premarket. Next steps: a big balance sheet suitor? Carl C. Icahn, Chesapeake’s second largest shareholder, said, “We appreciate the Board’s willingness to listen to shareholders and to respond appropriately. Under Aubrey’s leadership, Chesapeake has assembled great assets and I am confident I can help the Company create significant shareholder value from these assets. We enjoyed a very good relationship when I acquired almost 6% of the Company’s stock in late 2010 and I look forward to a similarly constructive relationship now.”

By SANDY SHORE, AP Business Writer

Jume 4, 2012

The price of oil rose Monday, although last week's sharp declines still loomed over the market.

Benchmark U.S. oil rose 75 cents to $83.98 per barrel in New York. It fell $7.63, or 8.4 percent, last week as gloomy economic data from the U.S., China and Europe raised questions about the strength of demand for oil and other energy-related products.

Monday's gains followed support by the German chancellor for a European banking union. That pushed the euro higher against the dollar. A decline in the dollar makes oil cheaper for holders of foreign currency.

Still, the fundamentals aren't in oil's corner. The pace of hiring has tailed off in the U.S. Growth in China and India is slowing. And Europe is struggling simply to keep its economic bearings as leaders are unable to find a solution to its debt crisis. That all points to weaker demand, at least in the short term.

Most analysts don't expect the price of oil to rise much without clear signs about where the global economy is headed and, in particular, how Europe will resolve the massive crisis that has kept the region in turmoil for months.

"You've got this pale over the market that is just kind of hanging in," said oil trader Stephen Schork.

In the U.S, the Commerce Department on Monday reported that U.S. factory orders fell 0.6 percent in April from March. It was the second straight month of declines. In addition, demand for products such as heavy machinery and computers dropped 2.1 percent.

The disheartening economic headlines diminish the positive impact of falling gasoline prices. The national average for a gallon of gasoline fell to $3.585 over the weekend, according to AAA, Wright Express and the Oil Price Information Service. Gas hadn't been below $3.60 since Feb. 22. It's down 35 cents from its peak on April 6, making a fill-up for a minivan about $7 cheaper.

Brent crude, which is U.S. to price a variety of crudes imported by U.S. refineries, rose 42 cents to $98.85 in London. Brent fell 7.8 percent last week.

Analyst Jim Ritterbusch said the signs of slower economic growth likely will lead to reduced forecasts for oil demand.

In other trading Monday, natural gas prices rose on forecasts for hot weather across much of the mid-section of the U.S. Accuweather.com projected above-normal temperatures over the next two weeks from Maine to North Dakota and into the Southwest. Natural gas rose 8.9 cents, or 3.8 percent, to $2.415 per 1,000 cubic feet.

Heating oil was unchanged at $2.627 per gallon and gasoline futures rose 1.39 cent to $2.671 per gallon.

nowwhat..you're right about the oil sector stocks and support. Many are near their 2 or 3 year lows. Like PM stocks recently , the O&G stocks are looking good, but I would be hesitant buying O&G cos. that are mainly NG producers. I'm looking for OIL explorers/producers. So far I've picked up APA and CNQ but also the ETF's: XLE, IEO, XOP, and IYE. I also have a large holding in PEO which is yielding 9%.