S&P 500
2117.69
+4.76 +0.22%
Dow Indu
18080.14
+21.45 +0.12%
Nasdaq
5092.04
+35.98 +0.71%
Crude Oil
57.15
-0.26 -0.45%
Gold
1179.470
-13.300 -1.13%
Euro
1.087455
0.000000 0.00%
US Dollar
96.898
-0.413 -0.53%
Weak

How to Make Money in the Chaos of Oil and Gas

The Energy Report: Stephane, do you think the oil price has hit bottom and is now recovering?

Stephane Foucaud: When the Brent oil price was close to $50/barrel ($50/bbl), I think it was the bottom. It has recovered quite a bit. There is a risk that it might dip again, but I don't think we will reach the low $50s for quite some time. The reason I think there is a risk that the oil price could dip is that there has been an overreaction to the North American rig fleet reports, and particularly to what appears to be a large number of rigs being taken out of the market. Those rigs are, however, associated with lower-producing areas. Therefore, I think it's more sentiment than reality in terms of impact on the supply. The recovery has been too steep.

TER: What prices are you forecasting for 2015 and 2016?

[Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/yMw_yYAi6co/16542

Low Oil Prices Are an Act of Economic Warfare

The Energy Report: Bob, in January you published an article saying that the drop in oil prices could be the "straw that pops the $7-trillion derivative bubble." Can you explain the influence of oil prices on derivatives?

Bob Moriarty: It's not the oil prices that are significant; it's the change in oil prices. If you own an oil field and it costs you $75 to produce a barrel, at $110 a barrel ($110/bbl), you're OK. If oil drops to $45/bbl, you're in serious trouble.

In the shale oil sector, producers were taking out hundreds of billions of dollars in loans to finance shale oil that was costing them about $110/bbl to produce. It looked good on paper, but was a disaster waiting to happen. A lot of people in the shale oil business will soon be going out of business.

"Pan Orient Energy Corp. just closed on the Thailand sale, and will be drilling a game-changing well in the next couple of weeks."

This could start World War III. The United States is the biggest oil producer in the world today, and Russia is number two. Russia's economy is based on oil priced at $110/bbl. They are very angry at the U.S. and Saudi Arabia for the games that have been played in oil. Oil at $45/bbl is not sustainable. It could bring down the world's financial system all by itself.

The real cost of energy today is $60 to $70/bbl. In the last piece I did with The Energy Report, I said $75 to $100/bbl oil was the new normal. That's still true. Oil is way below the cost of production, and that's going to hurt a lot of people.

TER: There is speculation the Saudis are doing this to wipe out some of the Russian and deepwater production. Could that be true? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/3Q1GTdww_qI/16503

Want to Avoid Oil's Gloom? Turn to the Sun, Says Outsider Nick Hodge

The Energy Report: You call yourself an "outsider," and have founded an investment club of that name. In what sense are you an outsider?

Nick Hodge: Being an outsider stems from my upbringing. Both my parents were middle to lower middle class, and I never had anything given to me. I've always had to work for what I have, starting with a lawn-service business when I was 12 and working my way through college as a butcher. I look at the "mainstream" with a skeptical eye. I'm a contrarian. I'm not on the inside of big business, big banking and politics, and don't want to be.

The Outsider Club has been around for about a year now. I founded it after writing for several newsletters over the past decade about energy and speculative investments.

TER: What does being an outsider mean with regard to your views on energy?

NH: I'll give two examples. First is my belief in the peak oil theory. Second is my early adoption of a belief in renewable technologies, such as solar and smart-grid technologies.

TER: It would be safe to say you're not an admirer of our financial elite? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/7eO8E2RMolM/16476

Marin Katusa: Winter is Coming, How Investors Can Win in the 'Colder War'

The Energy Report: Your book, "The Colder War," is based on the idea that world domination will come through control of the energy economy, and that Russia is winning the fight. How is Russia using the petrodollar to achieve energy supremacy?

Marin Katusa: Under the leadership of President Vladimir Putin, Russia has reestablished itself as the alternative to the American superpower. Putin has aligned himself with nations like China to work in concert against U.S. interests globally. Furthermore, a new bank formed by the BRICS countries Brazil, Russia, India, China and South Africa will attempt to assert itself as an alternative to the International Monetary Fund.

The Colder War will be a long battle, just like the first Cold War, but in the Colder War, judgment day of the petrodollar will be the critical battle. One must understand global politics and the Colder War to be a successful investor in the energy sector.

TER: What is China's role in this struggle? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/gJnfua7lD8s/16354

Do You Practice Quality of Life Investing? Michael Berry Does

The Energy Report: When we last interviewed your son, Chris Berry, he advised to invest based on the reality of a growing, emerging market in China. That included both energy and agriculture sectors. Are you also bullish on quality of life-based (QOL) investing?

Michael Berry: I am bullish; I developed the QOL concept a few years ago. What I'm seeing is quite a few big institution life insurance companies, family offices and money management companies opening quality of life funds, although often with different names. They are beginning to recognize that as people move from the country to the cities in the emerging markets, and a new middle class develops, they will want more animal-based protein chicken, fish, pork, beef and eggs. By 2030, once the credit cycle is corrected, I'm very bullish that quality of life funds are going to push forward. I think both the energy and the agriculture sectors are going to be interesting investment areas.

Chris and I have been spending a fair amount of time lecturing and presenting our QOL thesis and talking to investors and companies that have big stakes in this area. When you have 2 billion (2B) new consumers who want to live longer, healthier and easier, and who want better food, education and transportation, energy and nutrition will be key sectors.

TER: Does that mean that you are not worried about reports of slowing economic growth in China? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/PMelOWaWzu0/15971

Mike Breard: Buy Small for Deep Profits

The Energy Report: How do you choose the energy names in your coverage list?

Mike Breard: I look for managers with great track records. For example, I attended the annual meeting of Matador Resources Co. (MTDR:NYSE), and there were 150 people there. Normally, only maybe 20 people attend the annual meetings of the junior energy companies, but these folks had been investing with the current managers of Matador in private deals for 30 years. They were so eager to get in on the newest venture of these guys that Matador stock has tripled during the past year.

TER: What is driving Matador's success? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/RcWkBCCIBBU/15894

Food, Water and Fuel Are Necessary to Life and Investors

The Energy Report: In your Gold Report interview last fall, you said that the two biggest reasons for the erosion of the middle class are peoples' inability to save money due to low interest rates or low wages, and higher taxes, especially the hidden taxes we end up paying.

Bob Moriarty: Yes. I think there are 37 taxes on a loaf of bread. Taxes have increased dramatically over the last 20 years, including what are called the "unclaimed taxes."

In an article James Gruber wrote on peak oil last month, he made the point that debt is actually a future call on energy. Under the General Agreement on Tariffs and Trade, when you owe money, you've already spent the energy. He argues that the economy is an energy system, not a monetary system. He's absolutely correct, in my view.

"The enormous increase in wealth we've seen worldwide over the last 150 years has stopped."

The enormous increase in wealth we've seen worldwide over the last 150 years has stopped. There will be no more growth. From a mathematical point of view, you cannot increase growth. Energy consumption per capita has to go down, and that means wealth goes down. All the debt we've accumulated is a noose around the neck of society.

TER: Gruber also wrote, "Deflation is winning the battle over inflation." His argument is that excessive debt has to be deleveraged and in that deleveraging process, asset values will plummet. Central banks are doing whatever it takes to create inflation in an environment where deflation is really the underlying tide. What do you have to say about that? [Read more...]

Article source: http://feedproxy.google.com/~r/theaureport/Ajgh/~3/YuHKFrOZt48/15852

Get Positioned Now for the Next Great Natural Gas Switch

The Energy Report: Ron, welcome. You are making a presentation at the Money-Show conference in Orlando in late January. What is the gist of your presentation?

Ron Muhlenkamp: The gist of my presentation is that natural gas has become an energy game changer in the U.S. We are cutting the cost of energy in half. This has already happened for homeowners like me who heat their homes with natural gas. We think the next up to benefit is probably the transportation sector.

TER: What is behind this game change? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/FQcSCOSLwkA/15815

Fracking, Uranium and Solar, Oh My!

Oil Gas: Enhanced Recovery

Nothing catches the market's attention like cushy profit margins. Technologies that enable oil producers to drill more for less money were a notable theme for the experts featured in The Energy Report in 2013.

As Jim Letourneau commented, "Reducing drilling time by 2040% is an easy sell, and the enhanced oil recovery business has a huge market in the field." [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/E3sZavEf6M8/15776

Where to Drill for Portfolio Outperformance

The Energy Report: Chad, you recently released an early look at 2014 titled, Drilling Down for Outperformance. You noted that you saw an average 3540% upside on your Buy-rated names. What are your criteria for picking companies?

Chad Mabry: To start, we use a discounted cash flow-based net asset value (NAV) approach to valuing exploration and production (EP) stocks. While cash flow is an important metric, NAV does a better job of comparing companies with different asset profiles, specifically within the small and midcap EP space. NAV does a better job of accounting for a company's upside potential than cash-flow metrics. We use a bottom-up approach to drill down into a company's asset base, its average type curve, estimated ultimate recoveries (EURs), well costs and so on. In this way we find out about the economics of those plays and what the sensitivities are to our commodity price deck. We then try to sort out companies that aren't being valued appropriately and identify strong risk-reward opportunities.

TER: There has been a lot of commodity price volatility this last year. How do you determine what prices to use when you're estimating NAV? [Read more...]

Article source: http://feedproxy.google.com/~r/theenergyreport/caoK/~3/oIiWSD_uX6o/15767

© Copyright INO.com, Inc. All Rights Reserved.