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SandRidge Energy, Inc. Message Board

  • bogwa1406 bogwa1406 Oct 2, 2013 6:24 PM Flag

    Billionaire investor Wilbur Ross...on CNBC fast money says Obama's increasing pace of GTL plants and export facilities

    will accelerate the recovery in natgas pricing and the sector is a good investment. Duhhhhh ! I already had BAC @ $5 a share when Warren Buffet had a rubber ducky bathtub moment and bought in @$7. Now we have Wilbur Ross figuring out which direction natgas is heading.......Rainbow, myself and others have been preaching the coming natgas price revival for a while. It warms the cockles of one's heart to hear billionaires triumph the position "you already have" !
    Actually the natgas scenario isn't that difficult to analyze. Because natgas prices got so high in the US and dry gas was expensive and high decline rates....natgas was losing to cheap coal. When Aubrey (CHK) began the shale discoveries they and all others piled into hitting high dollar natgas and supplies overwhelmed the takeaway/consumer capacities. Hence we went from sky high natgas to sub $2 natgas....but the upside to a pricing bust is all the additional straws sucking at that low energy price. So while the low price starts killing the EP's and they park rigs and cut capex....simultaneously....more straws keep getting stuck into the cheap natgas glass. It's just a classic boom/bust cycle that repeats itself in most commodities. The biggest difference I see going forward is that the GTL's / export facilities will act to remove the "landlocked" natgas cycles of the past. I would expect by 2016 at the latest US natgas prices will be priced more on the global market as a sufficient number of export facilities will be on line by then. It's basically a repeat of what occurred on WTI when the Bakken and Permian supplies were bottlenecked...steeply discounted to Brent. What happened as soon as the rail and pipeline takeaway capacity came on ?...WTI is now priced to the global benchmark. Natgas will repeat the same scenario. JMHO....GLTA

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    • i bought 3500 xco when i diversified my gas/oil holdings. it's nice to be sitting alongside wilbur ross for a good deal less per share than he's in for.

      i think natural gas is a great place to be for the next 3-4 years. we're due a big run up in the beaten down producers.

    • Your Bac story is wrong. I've been trying to figure out what longtime poster you are. I put you in at 10 bucks. I read your and rainbows posts and I laugh at you to dopes.

      • 2 Replies to trmmara
      • Trmarra, there is no doubt that I could be wrong about NG trading at 10 to 1 with Oil. It could hit its BTU equivalency of a 6 to 1 ratio and has spiked above that level in the past.

        At any rate, the ROR on dry gas is going to have to be comparable to the liquids plays. Tell me what companies will increase CAPEX for dry gas before it hits the 5.50 to 6.00 area.

        Let's start with XOM and CHK, the two largest NG producers in the USA. Both have stated their methane production would be down 5 to 7 percent EOY 2013 vs 2012. Both have little CAPEX dedicated to Dry NG going forward at today's prices.

        Did you listen to CHK's 2Q CC regarding wells hooked up in the Marcellus vs. Drilled? Hint, they are hooking up more wells than they are drilling.

        I will admit RRC is going nuts in the Marcellus and I'm up about 40% on it. Check out their most recent presentation. The sweet spots in the Marcellus are pretty well delineated and they are sitting nice.

        Then get back to the board and tell us how much production is going to rise in the Marcellus, the number of backlogged wells that have yet to be completed or hooked up and what the production rate for the field will be in the next 3 years. Offset that with the decline in the major dry gas fields and add in associated production in the oil fields.

        And back to the RRC slide showing the Marcellus has another 7.1bcfd of pipeline capacity that will be added by 2016. Tell us what if any producers in the Marcellus are going to add 7.1bcfd and whether that will be enough to offset the declines in other fields and satisfy the additional demand build.

        Maybe IntelligentInvestor, Cleint9, and Wi will help you out.

        Where is Clitto, how is that short position working? What is that interest rate costing you on the short position - does 25% sound about right, or are you just getting killed in the time premium on the options?

      • Hi Trmmara, There are several people here who post with different handles.... Take longstrongs at a minimum FOUR DIFFERENT HANDLES...... Rainbow, I believe only one,( rainbow ).... Victoria pointed out the low life longstrongs to me months ago. Victoria is able to quantify & qualify these lower level people for US....... My Good Trmmara & Good Ribby lets concentrate on truly important matters. NFL ATS----Money Line---- Parlay's ... This is our world. Certain Fools Cannot Relate To US for WE are Far To Advanced....Do Not Even Attempt To Filter Out The FOOLS for they are FOOLS....

        Happy Payback Himself ; Who Rocks With Obama

    • Great Post Bogwa! I totally concur. The Marcellus production is what has been killing NG prices. That is soon to change.

      I've been telling you guys about more wells are getting hooked up in the Marcellus than are getting drilled in the play. Yet overall supply in the USA is basically flat to slightly declining. The Marcellus is the only field that is still building production and the backlogged wells are rapidly being worked thru.

      Range Resources is making a killing in the Marcellus (disclosure I own this stock) they have a good presentation up showing the delineation of the Marcellus Play.

      RRC also has a slide up on the takeaway capacity of Marcellus Pipeline Capacity thru 2016. Its a bunch of extra capacity totaling 7.1bcfd and quite a bit of it is already online.

      But here is where Bogwa is right on as well as a bunch of the other NG Bulls, that 7.1bcfd sounds like a ton, and it is, but all of the extra straws sucking on this supply are going to take it away.

      Mexico will be importing an additional 3.0bcfd from us by 2015. Forget about Canadinan exports to the USA of 5.0bcfd as we have seen in the past, they have their own LNG export facilities that will be shipping to Asian Markets that pay 15/mcf plus.

      Then we tack on Shell's $10 Billion Gas to Liquids Plant (NG to Diesel/Jet Fuel), the mandatory Coal Plant Retirements by 2015 forward.

      And all of the LNG export terminals coming into play in the USA.

      So what if Marcellus adds 7.1bcfd of additional pipeline capacity? CAPEX plans are in place for 2014, the field may grow production a bit, but the vast majority is going for the liquids fairways. Dry Gas won't grow much and the rest of the dry gas fields in the USA will decline.

      Associated gas in the Oil fields won't make up the difference and a lot of the stranded gas in the Eagle Ford has recently been hooked up.

      Natural Gas is a very volatile commodity, especially in the USA. We saw a nice spike to $4.60 on cold weather last winter.

      That is nothing at all compared to what is coming. Global equality less transport an liquification will occur - those run 4 to 6 per mcf. The US has historically traded NG at a 10 to 1 Ratio with Oil. As in 80 to 100 Oil = 8 to 10 NG.

    • Keep in mind what you have witnessed over the last few years in the way of STRAWS being created. Look at all the city buses, Fed -Ex, UPS, Garbage trucks, utility companies. These all become permanent draws on supplies and surface transportation is accelerating. Add to the mix the GTL's and if I recall the gas to liquids rate is around 600 to one...meaning 600 parts gas to create one part liquid and most of that volume will be exported....again once these straws start they are permanent draws. Now regardless of how many natgas wells are presently have to take into account the steep decline rates on wells...anyone familiar with type curves can easily figure out existing wells can not keep up with demand. Since US natgas usage is still more or less landlocked....mild winters have hidden what can occur...if ( hopefully ) we have a normal to colder than normal winter....we won't have to wait on the export facilities to get price'll happen quickly. The added restraint to another glut occurring is that E&P's were hammered so bad by low prices that even if prices and demand surged...they don't have the drill baby drill. Too many like CHK and SD are now debt heavy and cash restrained....soooo as the turn around in pricing begins...recovery should track much slower. Also keep in mind....pure play natgas E&P's can't survive at current pricing....oil production was everyone's savior....SD 49 % oil = 80 % of revenues....pretty much tells the sad story but the upside is when the natgas valuation comes back....and that's why you buy survivors when they're beaten down. Right now SD has found a lifeline in oil and basically is earning nothing on their largest portion of production..natgas. That's all I want SD to do going forward...stay alive on the Miss oil....the money is going to come home to roost when the natgas becomes worth something. If a sale comes on SD..that's OK...but it's fine with me as is.