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Abraxas Petroleum Corp. Message Board

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  • jimgggg jimgggg Apr 23, 2010 12:19 PM Flag


    I am an Okie, raised in the oil patch but long out of touch, so I respect what you are saying and thank you for it. Do you have any favorites you feel are underpriced by the market at this time?

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    • My most recent picks were TAT and CHK.

      I got TAT in February at about $2.70.

      I got CHK very recently at about $22.50.

      TAT is turning out great and I remain long although I have taken some profit along the way, CHK not so good.

      If CHK falls back to $22.00-ish I will add as the long term value of natural gas is higher than current prices.

      Even though our current Democratic regime is opposed to natural gas, we will eventually have some political change, and the government will do something smart for once and encourage the use of natural gas for transportation. The reason Democrats are opposed to natural gas is so CYNICAL, it is actually a cleaner transportation fuel by about 40% (we could cut transportation pollution by 40% tomorrow by switching to CNG) - they won't do something good for the environemtn because they knwo the natural gas industry will give their profits in supporting Republicans politcally, so rather than do what is best for the country and air quality, and their religious belief in "climate change" - they do what they think is best for their re-election, and keep us from enjoying the fruit of the bounty of our own natural gas.

      First you have to understand that 6 MCF has the same energy as one barrel of crude oil.

      1 barrel of oil costs about $85 while 6 MCF costs about $24. See the difference? There is EVEN MORE.

      1 barrel of oil due to refining required only makes about 22-30 gallons of Gasoline depending on the quality of the oil and the quality of the refinery - hence a $3 a gallon gasoline.

      Natural Gas requires little processing to be used in a car, you essentially just compress it, almost nothing is lost. You get about 42 "gallons" equivalent of energy from that 6 MCF.

      Follow me?

      So the price for a "gallon" equivalent of compressed natural gas would be 50 cents.

      50 CENTS
      50 CENTS
      50 CENTS

      IMAGINE THE BOOM THAT WOULD GIVE TO OUR ECONOMY!! If everyone could fill up their automobile for 50 cents/gallon. The economics ARE SO COMPELLING that even statist Democrats won't be able to keep natural gas benefits away from us forever. The higher oil goes the more compelling the case for natural gas.

      When we get Republicans that are not Environmental fruitcakes and hypocrites bent on nationalizing the entire USA economy there will finally be legislation passed to incentivize car makers, gas stations, and consumers to switch to CNG cars, and also remove the penalties. I bet you did not know that 90% of internal combustion engines on the road right now can be converted to run on natural gas for $2,000 in parts and labor? The Government currently makes you file for an "application of conversion" wait months then pay a $5,000 fee. It is LUNACY. Vote Republican as they have stated they will remove this and get us using our own gas.
      Hence I think in the long run Chesapeake is a winner as the largest domestic Natural Gas producer. I will add at $22 - FOR THE LONG TERM, this will not be an instant score.

      To summarize, TAT is another good company but I would be much more cautious buying shares here than I was in February. CHK you can start accumulating over the long term.

      Best of luck.

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