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San Juan Basin Royalty Trust Message Board

  • reefguy reefguy Sep 24, 2001 5:33 PM Flag

    Oct NYMEX

    Gas down.19 to $1.91. San Juan Basin differencial puts SJT gas at about $1.45

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    • Nomowk wrote:

      "I havn't seen much of you lately."

      I've been in hiding. Now I'm going into hibernation. Wake me in the spring.

      Good luck to all.


    • Hello there.
      I havn't seen much of you lately. I wish for your sake as well as a lot of others that I had been wrong. I don't like to loose money, and I hate to see others in that boat. Believe me, I have been wrong before, but this one struck me during the spring as phoney. There never was a "shortage" of gas. Tight yes, but shortage no. We had the unusual situation of excess in some areas and shortages in others with a lack of transport. Up until April, I was thinking we would settle in at about $3.50 gas. Didn't even slow down there.
      AS for a btu equivalant match, much more in a barrel of oil than mmbtu or mmcuft that NG is mesured in.
      Peaking plants are turbine generaters and are not even close to a direct steam generator in efficiency. As I said, my field is not in power, but I think $2.00 gas would be competitive to $20 oil, but with oil headed for the low teens after OPEC declaration today, there will be no contest.
      Oil and NG will become good investments again. When is the only question. I am still on the sideline.
      Take care.

    • 9/26/01

      Once again Nomowk is right on the money. Don't know anything about the closed end funds mentioned, but there are many good investments out there that pay more, as much, or slightly less than the current SJT, HGT, etc, and are safer, too.

      Being a fan of REITS I cite the following:

      FRT: 9% with a dividend coverage ratio of 123 %
      NHP: 10+% with a DCR of 110%
      DDR 9.2% with a DCR of 142%
      HR 8.5% with a DCR of 117%
      SKT 10.7% with a DCR of117%
      CARS: 8.7% with a DCR of 117%

      DCR the higher the DCR the safer the dividend.

      And there's always the good old SGU at 11% +

      I'm not knocking RTs (I own ERF and PGF)
      I also own CARS,FRT, NHP, and HR and am very happy.

      Good luck to all,


    • colorado wrote:

      "New plants coming on line that are NG fired are all peaking plants. They are very VERY non economical as opposed to sustaining plants."

      I think this just proves Nomo's point vs. that of NYH. The fact that peaking plants won't be employed (due to reduced demand) means that natural gas won't be as "in demand," thus not helping the price any. I have no information about oil vs. natural gas in power generation, but I did note that the posted price (not the futures price) for WTI (according to today's FW Star-Telegram) is $18 per barrel. $18. I'm guessing OPEC's non-decision today to do nothing isn't going to give oil a boost.

      I resisted Nomo's thesis (gas was headed down) all through August and most of September. After the stock markets reopened last week, I knuckled under and threw in the towel. The only energy stock I have left is XTO, due to their hedging.

      Nomo was right. I was wrong.


    • New plants coming on line that are NG fired are all peaking plants. They are very VERY non economical as opposed to sustaining plants.

      not sure i agree here... perhaps I've misunderstood.... refer to CPN (calpine) about new plant on line and others soon.

      BTW we're getting killed in san juan for next day delivery and NYMEX is in a free fall below $1.90 for Oct deliver (this is bid week) and winter strip not looking much better....

      however, look at xto fall! and they're hedged through 2002.


    • "If you still insist that demand is there, then so be it."

      Huh again!!!

      If you interpreted something I worte to indicate I said demand is there, I don't know what it could be.

      I stated it was the economy that was causing the price of gas to be down rather than your inference that oil was cheaper than gas for electric production and thus plants have converted to oil use.

      I was just indicating that as far as power generation, gas use will be increasing in the not too distant future.

      I think you better go back to your engineer friends and give them a simple question like which is cheaper... $2.00 gas or $20.00 oil to run power plants. Perhaps you misunderstood them rather than their having misinformed you.


    • Hello NHY
      My information comes from several engineers I personally know in the business. If they misinformed me, or I misunderstand the situation then so be it. Since I personally have never worked in power generation I will withdraw on that.. even though I am an engineer (MSEE) I opted for electomagnics as opposed to power. I think, at this time, there is a slight advantage to NG, but weather or not this offsets the cost to convert, I don't know. I do know that oil will soon be well below $20 and NG will rise to the $2.5 range during the winter. Someone else will have to do the economics.
      New plants coming on line that are NG fired are all peaking plants. They are very VERY non economical as opposed to sustaining plants. The price of gas has fallen in spite of the fact that production levels have not increased. Econ 101 says that happens WHEN DEMAND FALLS. If you still insist that demand is there, then so be it. I will continue to deal with the sources I know.
      Take care and have a nice day.

    • "Quite a few of the large generators (elec) have already swithed to oil from NG. It is not a complicated procedure as I understand it, but dose require time and money. The driver is cost per btu, and last winter the prices were skewed in favor of oil, causing the switch."

      Huh? You are right about last winter when gas was $10.00 but gas at $2.00 is half the cost of using oil for power generation. Any power plants using oil vs gas now for power that can switch are fools or expecting gas to get back over $4.00.

      And the procedure is NOT all that simple. It requires having such equipment already installed in the installation, getting regulatory approvals to switch, dealing with the EPA, etc. We are talking about years and millions to add that capability. I have no idea where you could have gotten such ideas that it is not complex.

      In addition, there are many new power plants coming on line soon, all gas fired, and several nukes will be shutting down temporarily next year for maintenance while having been producing at max recently.

      The only problem now is the economy that is causing the big drop in the price of gas, not the price of gas vs oil for power plant use.


    • Thanks for the tips on safer investments. I would be interested in understanding how a fund can invest in mortgages and provide a 9+% return.

      I did have a moment to look at HTR and it does appear they invest in high risk corporate securities which sort of explains their return.

      I would be very interested in finding "safe" 9% returns these days.


    • Good morning
      I understand your statement regarding the short term 9% return without regard to the principle. I still like to think I will be around longer than I probably will. Each of us has his own criteria, and if 9% return is yours, then there are a lot of safer vehicles IMO that provide this. Look at several MBS closed in funds that pay this amount in dividends and are backed by one of the safest investments short of MM etc., that being home mortgages. BSP CSP and SLA are a family of funds from Piper Jaffery that do this. HTR is another, that has been beat down due to a rights offfering and now yields over 10% All are safer investments than an RT IMHO.
      Have a nice day

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