Continuing to accumulate. Per latest report they now own 33M share, 12% of Peabody making them the largest shareholder. Somebody there is pretty confident about the future performance of BTU.
Bill Ellard has a hard time selling solar panels when electricity is so cheap. How much easier it would be if grid electricity was 20 cents a KwH..... darn coal.....
bellard, if you want to buy something with a forward P/E of 50, and a trailing P/E of 130, and a Price/Book 6, be my guest. Its your money.
Bellard; You are exactly clueless about PRB coal and where it is consumed. Educate yourself then post something logical.
sport, that's what I was saying yesterday, although its unclear how much they are hedged. But, in any case as time goes on (as with coal companies), realized prices do come closer and closer to spot prices. Hedging creates economic Lags to what we would expect to be happening economically.
Like all things that must end, so too will US shale gas production growth.
Times have changed:
The balance sheets of shale gas producers have no more capacity
oil prices no longer supportive of continued growth in associated gas production,
high decline rates and
shale operator management teams who are now being rewarded in the marketplace for capital discipline (i.e. dropping rigs) rather than production growth
No longer will booming production from a small sliver of northern Pennsylvania be able to single-handedly offset production declines in US conventional production and older shale gas plays as well as perpetrate the myth that rig counts don’t matter.
Unless it is different this time (and it never is), the greatly reduced gas and oil rig counts will result in lower production and higher prices in both the short and long term.
Lastly, it is not just declining production that will be the source of extreme volatility in coming months–rising demand will help push the US natural gas market to extremes. With the retirement of between 25 and 50 GW of coal fired power plants that will largely be replaced by gas-fired plants, and the opening of dozens of chemical and fertilizer plants–sharply rising for natural gas prices over the next two years is virtually guaranteed.
Increasing demand at a time of falling production will radically change the landscape of gas market despite the widely held belief that today’s status quo of low prices will continue.
Whoever said Marcellus gas producer cost was $2 yesterday was WAY off......
Marcellus increases have been slight recently, barely offsetting declines in the rest of the U.S. Don't believe those saying gas is forever cheap and plentiful!!! What we are seeing is the low-hanging best fruit being picked in the gas fields. What's left will be far less productive.
Google the Subject title:The Marcellus is close to Peak Production and why this is so Important
Most recent data from PA DNR shows the slowest growth since 2009. According the DNR, production growth in the Pennsylvania Marcellus, which accounts for approximately 95 percent of total Marcellus production, grew only 859 mmcf/d in the second half of 2014 compared to H1 2014 to 11.65 bcf/d. Growth of less than .5 bcf/d per quarter (1 bcf/d for 6 months) will be nowhere close to enough to offset declines in the rest of the US. Also, production in the West Virginia portion of the Marcellus is already declining.
Current prices in the Marcellus are incredibly uneconomic. With the price gas for delivery on March 30th at $1.69 per mcf, production in the Marcellus at today’s prices equates to epic capital destruction. With half-cycle costs in the Marcellus for Talisman Energy, a top ten producer with operations in one of the most prolific parts of the play, at $3.25 per mcf and full-cycle likely over $4.00 per mcf, the company is losing approximately $2.00 for every thousand cubic of gas it producers.
Producer debt levels indicate slowdown in Marcellus activity. With operators experiencing significant losses on their Marcellus production, activity levels will continue to slow, barring a big rise in basin gas prices. For example, debt-soaked Chesapeake Energy, the largest Marcellus producer, recently sold off part of its southeastern Pennsylvania core acreage and is shutting in producing wells northeastern PA due to extremely poor economic returns.
Recent data shows that major portions of Marcellus already in decline.
Why don't they switch to NG for mine haul trucks the way Arch coal has? Makes a lot of sense right now. Is the fuel contract take or pay, or only for what the use?
dstone; wouldn't NG producers likewise hedge their realized prices, and the pain will only increase for them as higher hedges prices roll off? I presume many are realizing well above the current spot prices still.
I'm guessing CEO elect Kellow loads upon on shares this quarter (with his own money), which he hasn't done yet, and then we start to see some positive surprises in earnings going forward. Based on the cost controls and hedges rolling off. Aus spot prices had a recent uptick.
There is an Seeking Alpha article "Natural Gas Supply Unsustainable At Current Prices" written in December. He states that nationwide the break-even cost of fracked NG is $4-$5. The $2 range is a select few margin players (and can you even believe them?)
Makes you wonder why Consol Energy recently implemented a large layoff in their Marcellus Gas division. If break-even is $2, shouldn't they be making a pretty nice profit at $2.50?
UPDATE 4PM 4/10/15: A highly placed source tells MDN that the number of total layoffs in the gas division is 170, many of which happened today. The total number is just shy of 5% of CONSOL’s total workforce. Our thoughts and prayers go to those affected.
It’s not often that MDN gets to break news–but from scouring available news sources, we believe this is one of those times. Yesterday a long-time MDN reader phoned MDN to report that CONSOL Energy has begun, and is in the process of, a large round of layoffs in its CNX Gas division. The layoffs include personnel cuts in the following CONSOL locations: In WV there have been cuts in the Jane Lew and Bluefield offices; and in PA, cuts have been made (or will be made) in the Waynesburg, Indiana, and Canonsburg offices. We must stress this is second-hand information. We believe our source, but we do not have confirmation of cuts in all of those locations. Our source told us he had once worked in the Jane Lew office when that operation was part of Dominion (prior to CONSOL taking it over) and that someone he once worked with in that office–a woman who’s worked in that office/operation for 28 years–was just given her pink slip. So our source has an inside track on the situation. However, it’s always best to get confirmation, so MDN contacted CONSOL via email to ask for confirmation (or denial) and this is what CONSOL said:
Like many of our peers operating in the Marcellus play, we are evaluating our workforce and taking steps to streamline our organization as the industry is confronted by a potentially sustained period of low commodity prices. This workforce realignment is intended to ensure that the company remains strong through this challenging environment, and is best positioned to emerge even stronger when the market turns.
Good points blackout. We have seen some significant volatility in NG prices though, it hasn't been all downhill. Several states are questioning fracking; I wouldn't assume it will continue unabated but you are right there should be time to get in when things turn around :) Assuming the turn around isn't an acquisition or takeover of some sort.
I don't see how these production levels are sustainable, they are exhausting previously drilled wells with very little cap ex on new wells. Also associated gas production from oil wells is on the decline. It just doesn't add up. They simply can't drill and produce profitably at current price levels. These dry gas wells deplete 75% the first year; another 40% the second year . Marcellus and other fracked wells are a drilling-intensive endeavor. Better drilling efficiency is more than offset by reduced well production life.
(Associated Press, March 15) – Arch Coal is expanding its use of liquefied natural gas to fuel its haul trucks at the Black Thunder coal mine in Campbell County, according to the company that converts trucks to LNG fuel.
Arch Coal first converted two Komatsu 830E trucks at Black Thunder in January 2014 as part of a pilot program.
Now the mining company is ordering 10 more conversions from GFS Corp. for its Komatsu 930E haul trucks, according to a GFS press release.
The Black Thunder mine has a fleet of 148 haul trucks, according to Arch Coal. It is one of the most productive mines in the world and has held the title of biggest in the world in the past.
As of April 1, FERC, which is responsible for authorizing the siting and construction of LNG import and export facilities and associated pipelines, has received plans for15 proposed LNG export terminals for approval, with more LNG facilities in the early planning stages. It is unclear how many additional natural gas liquefaction facilities will move into the construction phase, or when that might happen, particularly as questions have been raised about how recent low oil prices could affect LNG markets. In its Annual Energy Outlook 2015 Reference case, released two days ago, EIA projects that LNG exports from the Lower 48 states will reach 7 Bcf/d by 2022. These five projects alone, if all go into operation at their fully rated capacity, will exceed EIA's projection of LNG exports by 2 Bcf/d.
Impact on U.S. NG & coal prices??
Cheniere Energy's Corpus Christi, Texas, liquefaction export facility, approved by the Federal Energy Regulatory Commission (FERC) this past December, is moving toward construction with an anticipated start-date during the second quarter of 2015. If it occurs as planned, there will be five liquefied natural gas (LNG) export facilities in varying stages of construction in the Lower 48 states. Four of these LNG terminals are brownfield projects being developed on existing regasification sites already in operation, which allows them to share functions with existing LNG import facilities to conserve on construction and operating expenses. Cheniere's Corpus Christi facility, being developed on Cheniere's La Quinta Channel property previously approved for a regasification facility (but not constructed), is the first greenfield project approved by FERC. These East Coast and Gulf Coast facilities, representing nearly 9 billion cubic feet per day (Bcf/d) of LNG export capacity, are expected to begin operations in late 2015. All of them are scheduled to be in service by 2018.
To put this in perspective, total U.S. total natural gas consumption will average 76.3 billion cubic feet per day (Bcf/d) in 2015.
Bottom line being we and the whole coal industry is reeling from depressed NG prices. How long can these gas production levels and low prices sustain?
Not sure about the MLP idea - would the conversion count as a sale of BTU shares and count as a capital loss to the IRS? That wouldn't suit me very well. Or would it be a partial conversion, where the BTU shares still exist but new MLP shares are issued as a dividend.