Replies to This Discussion

Permalink Reply by Taylor on February 22, 2009 at 1:52

dadgum

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Permalink Reply by P.G. on February 22, 2009 at 5:58

I hope our utility companies are buying up these cheap gas price futures so they can pass them along to us like they have been passing along those high priced futures they bought!

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Permalink Reply by Martin on February 22, 2009 at 9:39

Give the customer a price break? look at the current price of crude oil ~ $35.00/barrel vs $1.78/gallon for gas at the pump here on the Texas Gulf Coast.... Crude is down from two months ago by $10.00 or so, but gas is up by about 30 cents a gallon.

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Permalink Reply by adubu on February 22, 2009 at 10:17

I am old enough to remember gas was flared and burned off on oil wells and then a market developed in the late 1950's and gas prices was about 25 cents/mmcf. In July 2008 gas was 13.30/mmcf and the rig count about 1600 demand was good, Then everything hit the fan when credit dried up, demand drop along with prices result in rigs being laid down to presently ~1300 rigs. Expect rig count to drop to~ 5-600 by year end with resulting decrease in supply then 3-5BCF/day less than demand. We presently use about 60BCF of gas per day. It will take 1-2 years for supply to drop to demand levels to eat into storage supply. It will take then longer to rig back up to drill to increase supplies than it took to down rig. Sometimes by late 2009-early 2010 you will have chance of a life time to buy NG at its lowest when "Blood in in the street" and then be set for life. You can buy NG stock or if lucky minerals royalty from people who have to sell. NG could drop to $2-$3. then with in 3-4 years be back in the $10-11range.

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Permalink Reply by JamesCO on February 22, 2009 at 12:39

Thanks. I felt that way but feel better thinking it after reading your post. What do you think of Williams as a good way to accumulate? I have heard some of the seasoned NG people say that it is a very well run operation and is poised to reap a good return when the price gets up in 2010-2011.

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Permalink Reply by adubu on February 22, 2009 at 13:46

who knows what stock will make it without filing chapter 7 or 11. William Co. traded as low as 0.78 in summer of 2002 then up to >40 last year if you had filled you boat at bottom and sold last year =50 bagger you could have retired, but no one is smart enough to buy at the low and sell at the high. Have no ideal what stock will make it. This economy will recover at some point 2010?? 2015?? who knows. When it does hope you have some money to invest because gas and oil will all ways be needed in the world. When recovery is in up swing then evaluate the stocks that are still in business and talk to some smart people and follow someone like Warren Buffet

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Permalink Reply by BirdDawg, plain ole' idiot on February 23, 2009 at 14:49

adubu,
Well, I like the way you talk. Makes sense to me.

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Permalink Reply by Count of Monte Cristo on February 22, 2009 at 12:52

My best guess is that we will see depressed prices at least through early 2010. There are scenarios where the economy does not recover yet energy prices increase substantially. For example, if deficits continue to soar eventually inflation will increase as debt holders demand more return for buying debt. So NG and oil prices could be pulled up by inflation in 2010 and 2011 even if the economy is not back to "normal." It may be 2015 or 2020 before things feel "normal" like back in 2007. We are truly in uncharted territory with the amount of deleverage that must happen and government intrusions into the economy.

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Permalink Reply by Bruce on February 23, 2009 at 14:44

Monte Cristo, I agree with you about the inflationary aspects of the bank bailouts and the stimulus package. Sooner or later inflation will have to kick in with over a trillion extra dollars in the economy and I think one of the first places we will see it is in the o&g industry. I tend to think it will be a sudden surge when summer driving season begins which will coincide with the beginnings of massive spending by the government from the stimulus package. I believe we will see prices recover as fast as we saw them falling. Does anybody see it different?

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Permalink Reply by Count of Monte Cristo on February 23, 2009 at 16:40

The inflation to come won't even be due mainly to the stimulus package... heck that's "only" 800 billion. We've poured 8-9 trillion into the system since the beginning of '08. It is doubtful we will see a rapid surge to $14/Mcf again, but i wouldn't be shocked to see $7-8 /Mcf NG by late 2010. We should all view the parabolic spike in NG prices as just that, a temporary blip. Commodity prices rarely stay at astronomic levels for long periods of time, usually they only get up there as parabolic spikes. What goes up comes down pretty quick, let's just hope it works the other way around too!

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Permalink Reply by Jon Williamson on February 23, 2009 at 17:19

I too am no expert. I got into the oil business a little over 10 years ago and gas was hovering around $2 mcf. The market for nat gas seems to have changed since then though as well as new resource plays coming online, ie; all the non conv shale gas. My gut feeling is that gas will flounder around $3.50- $4.50 for 2009 and start to climb back up in 2010 where it will reach $6 and beyond. At that point the shale plays will resume. It's anybodies guess at that point. We could see $10 gas again anytime between 2010 and 2012. I am a landman and also own minerals, so I can relate to both sides. IMHO the bonuses we saw last year in the Barnett and HS were possibly a once in a lifetime thing. If you get a lease offer, think it through, get 1/4 royalty but try not to be greedy. Counter with limited depth restrictions if the bonus seems too small. Let the operator make a buck and lets get this thing moving again. The revenues we will get from HS royalty will make up for bonus money possibly gone forever on the front end.

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Permalink Reply by Bobi Carr ("parker") on February 23, 2009 at 17:21

Jon,

People should limit depths above and below the HS.

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