We have seen the rig count go down slightly for oil but I have not heard of a reduced Nat Gas rig count. I am hoping we gat a meaningful reduction in oil wells. 17% of Nat gas comes from oil wells and reduced wells could translate into reduced Nat Gas. On the flip side, maybe drillers will switch back to Nat gas but there doesn't seem to be any price incentive to do that.
My concern last year was the frackers would kill the price of oil like they did to Nat Gas. Lo and behold if happened but much faster than I ever anticipated. Indications are they will cut back oil production. However, we have met the challenge of filling up the Nat Gas storage this summer and we continue to meet the challenge of winter with minimal draws. So, it appears they have no self control on production, so what happens in the spring if storage is minimally depleted? Will the price crash back to $2? These guys just can't seem to cut back unless they are declaring bankruptcy !!!!!
Nat Gas and Oil both suffer from a lack of growth in demand, not lack of demand. The USA and Chinese economy are usually is a contagion for the rest of the world. If they do well then you will see growth in energy stocks. LNG are really a 2016 event, but exports to Mexico are here and now and growing.
I am concerned that the producers, OPEC and NON-OPEC just can't take a 10% hit and allow prices to return to normal. They all must be the tuff guy and everyone gets hurt.
If OPEC's desire is to slow down the shale players and non-opec members then they have performed their duty. If the Americans and Saudi are really after Russia and Iran then they want to do this at minimal damage to themselves. They may very well cut production before the hedges run out on most shale players. Way too many variables to predict since we really don't know their motives.
If Putin was willing to work with OPEC, they could agree on production cuts. He has a me against the world mentality, so let their economy become the next Venezuela.
Now things are starting to make sense. If you look at their last presentation a good portion of their gas will get Henry Hub pricing in 2015. I was wondering how that was to happen.
I am in agreement. TLM has, or will have, a major cash flow problem. He could easily make up any loss by investing in CHK.
If you recall, he felt Nat Gas was to remain around $5 throughout the summer. We all know that did not happen. He is better at long term calls vs short term calls.
They should ask themselves what better investment than themselves. One billion buy back with a great return in 1 year.
Try about 3 points !!!! 5 bill , plus 4 bill revolving = 9 bill liquidity. We will be one of those that will make it thru this mess. Hope they don't jump the gun and start buying things.
Thanks so much for that explanation. This board provides that best insight than any board I read. The Ford board is just a political mess and is worthless.