I expect XTXI to cross $8 this week as the weakhands that sold in the last 2 days buy back in, Thursday inventories decline severly from the cold weather, NG prices climb back toward $6, and XTXI management proves to be making great strides on the financial front. Lisa and Sibley will be proven wrong again as usual.
Easy Money here!
You just don't get it, the NG rig count still 50% down from peak, the Rigs for oil recovered very strong, for gas just a little. It is a matter of time, this will affect the production. It is not down yet because there ware many wells on inventory waiting for completition, but now they are finished.
To check the NG rigs, go this Barker Hughes site, and check the chart Total US Gas Rigs.
Oh yeah, as for NG rig count...well even when rig count dropped by half last year, production hardly decreased at all. So now that rig count has roared back so strong, production is sure to increase.
The thing is that the rigs being brought back are mostly horizontal rigs which can produce as much as 8 times conventional rigs. So even if total rig count is lower, the potential production is still higher.
Hey, I realize the glut was toward the latter part of injection season, of course. But if we are now already higher than last year and production expected to be up, then most obvious conclusion will be that we will get to the same glut this year.
Sure, I agree once winter is over the picture will be clearer, but as of today that is the most likely outlook. Sure, if we have another 8 weeks of >200 per week withdrawal then the picture would be very different, but that is pretty unlikely.
As for statements by CHK, they were saying the same thing about production dropping all through last year and nothing they said came to pass. Furthermore CHK themselves is planning production increase. IMO the statements by CHK are self-serving. So long as they have profitable hedges in place they will pump all they can, glut or no glut.
Tow things wrong in your post:
a) you are talking about the Total Rig count, but you should refer to the NG Rig Count which stands at 833 vs the peak of 1,606.
b) Yes we are 9% above last year inventory, but then there wasn't a glut, it started after the Winter. And now we have few more weeks of strong cold. The real point of comp will be in 6 weeks when the winter ends (we still have 8 weeks of inventory reductions but the last tow very small).
You should read carefully the pages 22,23 and 24 in the last week CHK presentation to see what they expect about the production decline and in general the NG market outlook.
Here is the link
Lisa: Stop freakin' out over a 150Bcfs. The East Coast will burn that up and need more driving inventory below the average. You did read the EIA quote, "At 2,406 Bcf, total working gas is within the 5-year historical range."...right? Don't be such a drama queen! And, that's inventory, not volume NG transfered... Big difference. Higher volumes transfered is why rigs are up along with production, Baby Cakes! So, sit tight, cross your legs, keep your skirt on and check out Thursday's Big drop in inventory.
The NG gas business is experiencing a Paradyme shift. One indicator is, of couse, NG inventory levels. But inventory doesn't gauge the volume of NG being generated and sold. The truth is, the volumes are much higher, the earnings for NG companies will be significantly higher due to these new volume levels. That's the beauty of natural gas industry right now: New found reserves combined with higher demand and uses for NG equal more volume production for XTXI.
XTXI will benefit from cold winter for heating and hot summer for power generation. Utility power companies have geared up to buy more NG for gas powered plants.
Demand is up!!!
(sound of bomb falling) The pumpers in here aren't taking their own advice, or they are crying thru the gloats. It has been painful to watch this slo-mo crash. I have nailed every number in the last week.