TWTC has been cash positive for years , LVLT should realize an extra 150 million in free cash flow plus 200 million in cost savings per year after they merge operations………..
Why even bother shipping to Europe when you can pipe it to the south………………….
Exports to Mexico ramping up in Q2 2014
US exports to Mexico reached 2.07 Bcf/d on Thursday, the highest levels seen since October 2013, after averaging 1.8 Bcf/d over the last month. In April 2013, Mexican exports averaged 1.65 Bcf/d, suggesting a 9% growth year-over-year. Exports to Mexico from Texas averaged roughly 1.43 Bcf/d in April, a 10% increase from 2013’s mark and 28% higher than the 3-year average. The growth in Texas to Mexico exports can be attributed to an uptick in outbound flows at the Samalayuca, PEMEX (Alamo,TX) and Gasducto del Rio interconnects, increasing by 42 MMcf/d, 17 MMcf/d, and 8 MMcf/d, respectively. The PEMEX and Gasducto del Rio export points feed into Mexican pipes bound for the Mexico City area. LNG deliveries into Mexico City area from Manzanillo and Altamira dropped off by 41 MMcf/d month-over-month, which can explain why Mexico is relying more on US gas imports. As for the Samalayuca resurgence, it is likely a function of growing power demand in Mexico's Chihuahua state.
Power Burn Analytic Report
Proposed power plant to boos Southeast demand by 148 MMcf/d in 2018
Duke Energy said Tuesday it wants to build a 1,640-MW natural gas-fired power plant near the site of its shuttered 860-MW Crystal River nuclear plant in Florida. The company said construction on the new $1.5-billion plant at its Crystal River Energy Complex in Citrus County would begin in early 2016, with 820 MW coming online in spring 2018. A second 820 MW of power would come online in December 2018. Duke said it would also retire two coal-fired units (842 MW) at its Crystal River complex when the natural gas-fired facility comes online. Assuming a 50% utilization rate, the new gas plant will burn 147.6 MMcf/d of gas. State regulators must approve the new plant before the project can move forward, and Duke expects a ruling later this year. The new plant will be fueled by gas shipped through the new pipeline that Sabal Trail Transmission is building from southwestern Alabama to central Florida, which will terminate at a new Central Florida Hub south of Orlando. Sabal Trail will be capable of transporting more than 1 Bcf/d to serve local distribution companies, industrial users and gas-fired power generators in the Southeast.
The oil export ban has been lifted on a non-crude ,cleaned natural gas condensate or NG liquid is what they are talking about , it should help the drillers by supporting liquids pricing going forward…..
West Texas Shale Could Dwarf Eagle Ford Shale
The Texas oil industry for several decades seemed headed into territory best described by the old saying “all hat and no cattle.”
But the state appears awash again in oil and gas, with drilling in fields across the state, including one West Texas shale formation that could dwarf both the Eagle Ford Shale in South Texas and North Dakota’s famous Bakken Shale.
Texas recently had 839 drilling rigs operating — nearly half of all rigs in the U.S. and 22.7 percent of rigs worldwide, according to the Feb. 15 Baker Hughes Rig Count.
And most of those rigs were working in five regions of the state: the Permian Basin in West Texas, the Eagle Ford Shale in South Texas, the Granite Wash in the Panhandle, the Barnett Shale in North Texas and the Haynesville Shale in East Texas.
“You’d be hard pressed to find anybody who saw this coming,” said economist Karr Ingham, noting that there are more drilling rigs in the Permian Basin than during the 1980s boom. “That’s a stunning turn of events right there.”
West Texas has a multitude of overlapping oil fields, but the Cline Shale has created a stir. The formation runs about 140 miles north to south and about 70 miles wide through Howard, Glasscock, Reagan and Sterling Counties.
Early estimates for the Cline, based on Devon Energy’s exploration in the area, put the estimated recoverable reserves at 30 billion barrels of oil.
By comparison, the U.S. Geological Survey estimates the Eagle Ford holds up to 7 billion to 10 billion in recoverable reserves, while the Bakken Shale could hold as much as 4.3 billion barrels of recoverable oil.
Benjamin Shattuck, an analyst with Wood Mackenzie in Houston, said just 80 to 100 wells have been drilled in the Cline, and data is sketchy so far. He expects the industry in six months will have twice as much information on Cline Shale as it does now.
“Operators are doing their best to keep the result confidential,” he said. “The big thing in the Cline is that results so far have been good.”
Peggy Williams, editorial director with Hart Energy, said the Permian Basin, with more than 400 drilling rigs operating, is the most complex field in the state, with both horizontal and vertical drilling in multiple geologic horizons. The formations are so thick that they’re using vertical hydraulic fracturing, the process of using water, sand and chemicals pumped at high pressure to break open dense rock.
It could be the next hot spot , and it's wet.......
The Cline Shale (also known as the Lower Wolfcamp) lies over a very large area on the eastern shelf of the Permian Basin. The “Cline” is a localized name for the Pennsylvanian aged shale that some recognize as the D bench of the Permian aged Wolfcamp. Starting at the Wolfcamp A bench down to the bottom, Wolfcamp C bench, the rock has less carbonates. However, the underlying shale is interbedded with sand and silt, indicative of its depositional environment. The Cline source rock lies on a broad flat shelf, with very little relief. Total Organic Content (TOC), porosity, permeability, and OOIP are all fairly comparable in both the Wolfcamp and the Cline. Even though the Wolfcamp is thicker, which can be a driver for production in shale plays, it is the pressure and thermal maturity of the Cline that set it apart. The pressure gradient is around 0.55-0.65 psi/ft with an Ro value of 0.85-1.1%. Along with NGLs, this allows for a nice, light crude with an API gravity of 38-42 degrees, which some say is comparable to the Eagle Ford. The industry type curve for the Cline Shale is quoted at 420 Mboe EUR/well with 60% oil and a 30 day IP of 575 Boe/d with 75% oil.
In short, the Cline is an organic rich shale, with Total Organic Content (TOC) of 1-8%, with silt and sand beds mixed in. It lies in a broad shelf, with minimal relief and has nice light oil of 38-42 gravity with excellent porosity of 6-12% in thickness varying 200 to 550 feet thick.
Active players in the shale include Devon Energy, Chesapeake, Firewheel Energy, Apache Energy, Laredo Petroleum, Exco, Callon Petroleum, Pioneer Resources and others.
There doesn’t seem to be any concern about storage at this time as NG is down after the report. Overall production must be robust as the amount of gas being piped to Mexico could exceed
1 Tcf per year by the end of 2014 with no apparent effect on storage.
ETP signs deal to supply Mexico's CFE with 930 MMcf/d
Energy Transfer Partners has signed a 15-year agreement with Mexico's Comision Federal De Electricidad to provide 930 MMcf/d across the Texas border to Mexico's growing fleet of gas-fired power plants. ETP's Houston Pipe Line and Oasis Pipeline will use their existing systems and build two new interconnects to deliver gas to the Mexican pipeline system. The Edinburg Extension near McAllen, Texas, is expected to enter service in the fourth quarter, while the Nueces Crossover will connect with ETP’s existing facilities in Live Oak County and will be completed Q1 2015. Bentek estimates Texas exports to Mexico have averaged 1.3 Bcf/d so far this year, unchanged from last year. Bentek expects an additional 2.6 Bcf/d of export capacity to Mexico will be developed by the end of 2014, bringing total capacity to 8.4 Bcf/d and an additional 5,500 MW of gas-fired power plants are expected to be completed in Mexico between 2014 and 2016.
I think people have just gotten way too accustomed to looking at that one graph we’re all familiar with, that shows the red line bouncing in between the spread of the 5 year average. Let’s start paying attention to what we’re burning now and what we’re producing now. Yes you still need to look at the overall picture. Storage capacity is going to go up every year to stay on pace with rising demand, sense 2001 we’ve added on average about 100 bcf to our storage each year.
As a percentage I think storage growth has outpaced both production and usage in that time. Storage on average is 10% of usage, Average is key here……….
Power burn is the one dynamic that is changing the equation through , I will paste the EIA’s comparison below.
“ The Energy Information Administration recently compiled data showing who exactly is using nat. gas, and how much. The world's largest economy consumed more than 26Tcf of the energy source last year, a modest 2 percent rise from the year prior. That represents more than 71 billion cubic feet worth of gas that gets used in the average day.
However, the data get more interesting when the EIA peels back the layers of where that fuel is going. Utilities comprise the lion's share of domestic use, consuming 8.1 trillion cf. last year as na.t gas continues to eat into coal's market share in power generation—helping to explain why natural gas prices spiked over the winter. Industrials such as chemical- and plastic- makers swallowed about 7.5 trillion cubic feet in 2013, while residential use rose to 4.9 trillion during the year.
Most striking is the negligible use of na.t gas in vehicles. Although retail gasoline prices remain uncomfortably high, natural gas-powered vehicles are still few and far between. Cars and trucks used less than 33 billion cubic feet last year—an amount so marginal it didn't even register on the EIA's graphic. “
Here’s the kicker……….Average price it received for its gas during Q1 was $3.27/M cf, up from $2.13/M cf a year ago. , What do you think cash flow will look like going forward…………The hedges they have in place are a buck higher. Plenty of upside……..
Dish does not owe Terrestar shareholders swat for the spectrum, they were purchased out of bankruptcy……………….
Duke has a 41% Coal to 33% NG generation mix at present , New Coal generation cost 2 to 3 times what natty does to build , I would bet within 10 years that generation ratio will be reversed…..
Recently Completed Generation Projects
Regulated Utilities completed its generation fleet modernization program in 2013. The additional capacity from this program has allowed Regulated Utilities to
retire or plan to retire older, less efficient capacity. The following table summarizes the generation projects constructed and placed in service during the past three years.
Duke Energy Carolinas Cliffside Unit 6 825 Coal 2012 $ 2,100
Duke Energy Carolinas Buck Combined Cycle 620 Natural Gas 2011 675
Duke Energy Carolinas Dan River Combined Cycle 620 Natural Gas 2012 675
Duke Energy Progress H.F. Lee Combined Cycle 920 Natural Gas 2012 725
Duke Energy Progress Smith Combined Cycle 1,084 Natural Gas 2011 575
Duke Energy Progress L.V. Sutton Combined Cycle 625 Natural Gas 2013 575
Duke Energy Indiana Edwardsport IGCC 618 Coal 2013 3,550
Total 5,312 $ 8,875
And a year or so later up $12.00 plus..........,It’s turned out to be quite profitable , new 52 week high today $95.28 , not sure I can hold when interest rates start rising though.
"BENTEK Top Stories
Northeast demand will peak today; TCO announces first injection of season
Northeast gas demand will peak today as the region is hit by another round of colder weather. Demand is expected to hit 20 Bcf/d, which is 6 Bcf/d above normal for this time of year and the highest demand level since March 27, when Northeast demand touched 22 Bcf/d. "
Lower power burn and outflows to help rebuild storage this summer
Southeast gas inventories fell to a low of 150 Bcf on March 26 and are currently estimated at 153 Bcf, a 161-Bcf deficit to the 5-year average and a 141-Bcf deficit to last year. Inventories at the 59-Bcf Pine Prairie facility have averaged 13.6 Bcf over the last 30 days, 22 Bcf (62%) below last year, suggesting that the facility will need to fill at an average rate of 110 MMcf/d faster this year compared to last in order to reach 2013 summer-ending inventories. Bentek expects that lower gas burn and outflows will help the region rebuild this massive deficit. During summer 2014, Bentek expects total power burn to average 0.2 Bcf/d less and outflows to the Midcon and Northeast to average 1.6 Bcf/d less, year-over-year. "
Looks like you will get your wish , another low injection on top of an epic draw season.It will be interesting to see how the build unfolds this summer and fall.
Industrials must have massive infrastructure and storage for NG , They use just under 7.5Tcf last year. Power burn came in at a little over 8Tcf.
Chesapeake Energy (CHK) +2.6% premarket and may be poised to begin trading at a 52-week high after Q1 earnings and revenues skyrocket Y/Y and easily beat Wall Street expectations.
Q1 oil and gas production totaled 675.2K boe/day, up 11% Y/Y after adjusting for asset sales, consisting of 109.5K barrels of oil, 84.2K bbl of natural gas liquids and 2.9B cf of natural gas.
Average price it received for its gas during Q1 was $3.27/M cf, up from $2.13/M cf a year ago.
Raises 2014 total production growth outlook 9%-12%, up from an earlier forecast of 8%-10% growth, to reflect higher than expected natural gas liquids volumes; raises the midpoint of 2014 operating cash flow outlook by 13% to $5.8B-$6B from prior $5.1B-$5.3B due primarily to the increased production outlook.
I am an TWTC holder so I have several months to think about my options , I may just may let it roll with the $10.00 cash PS and .7 share exchange. Either way I go I will I have large realized gains . Going forward it’s looking like LVLT has turned the corner so parking some money here might be a profitable option……….
Market Recap Analytic Report (Weekly)
" Power burn set to jump; production may ramp as well
US demand was lower this week but power burn moved higher as the week progressed, reaching a seasonal high (since April 1) of 24.2 Bcf/d on Thursday. The Bentek forecast calls for power burn to average 22.5 Bcf/d over the next two weeks, including levels near 25 Bcf/d on Tuesday and Wednesday after the Memorial Day holiday. Bentek's estimate of dry gas production was at 67.5 Bcf/d this week, off 0.4 Bcf/d from the all-time weekly high of 67.9 Bcf/d a week ago. Production is forecast to average 67.8 Bcf/d over the next two weeks and could touch or exceed the single-day high of just above 68 Bcf/d that was reached on May 10-11, particularly as Northeast production continues to grow. Northeast output reached a single-day high of 15.7 Bcf/d on May 12 and Bentek expects it will average at that level in June, helped by the start-up of REX's 200-MMcf/d backhaul project. "
Looks like Marcellus production is on the rise , should be offset by summer weather , we will see...............
“ The current natural gas rig count of 320 represents a drop of 52, or 14%. Most of the decline in natural gas rigs came from the Cana Woodford (-14), the Eagle Ford (-16), and other areas outside of the major classified plays (-20). However, natural gas rigs have decreased throughout 2014. At the beginning of this year, natural gas rigs drilling totaled 372.
Regarding U.S. natural gas drilling activity, Baker Hughes commented on its 1Q14 earnings call, “Taking a look at natural gas, U.S. working gas in storage is currently 1 trillion cubic feet below the five-year average. Getting storage levels back to average before next winter’s drawdown, would require an addition of another 3 trillion cubic feet of gas. And that sort of addition would require injection levels to approach record levels every week between now and then. With gas storage at this level, prices are higher than many would have guessed only a few months ago. When coupled with favorable oil prices, this environment fares well for our customers’ cash flow and spending capacity.”
If you check the realized gains from page 4 of the last annual report CHK averaged $2.45 for gas in 2013 and about $3.25 last quarter. We are a full buck above last quarter and full year 2014 will be almost double 2013 for dry gas…………The next quarters should impress……………