I received an article in an email alert that included the following paragraph. The gist of the overall article was about majors having incentive to buy reserves in Canada with the lower Cad$ to US$ among other things. LSG gets a mention. Personally I believe this company could easily be a ten bagger over time and would rather see them go it along rather than have their excellent potential diluted by infusion into a less rewarding mine portfolio.
The Paragraph "In my view, a short list of well-followed companies would include Detour Gold for its Detour Lake mine, Pretivm Resources for its large, high-grade Valley of the Kings deposit, Rubicon Minerals for its very near-production Phoenix gold mine, Richmont Mines with its Island Gold mine, Lakeshore Gold with its producing gold mines in the Timmins mining camp, Kirkland Lake with its producing mine in eastern Canada, and Kaminak Gold which owns the Coffee gold deposit in the Yukon."
Are you sure KMI transports via rail? I am aware of their shipping and receiving terminals but not any ownership of rail lines or cars.
Thanks for embellishing my thoughts, you certainly took them past my thinking. Given your input, I would think that if Sprott has move from creditor to owner via shares, we might expect him to be aligned with appreciating share price rather than milking the company via debt service.
I think you have brought up a good thought. I saw an article a couple weeks ago that even the House of Saud needs a decent oil price to maintain their governing largess, but I do not remember the article specifying how high a price. Once they have established market share and driven high cost production (shale and tar sands at the moment) to the back burner, they will probably be cutting back and running up the price.
The reported 2 cents per share is 8 cents projected annually. that gives a PE around 12 at current share price. I am thinking we have further confirmation of a winning stock.
Someone asked in a while ago if oil/energy will recover with a strong dollar, presumably recover in price. In a word, I think yes. World oil production in very round numbers has been around 89 million barrels for a while and only worried about 2 million barrels. Therefore a minor shift in supply has resulted in massive swings in price. As I stated elsewhere, I believe that US production will start to fall rapidly as shale wells are not being drilled in enough quantity to replace production declines in existing wells and normal depletion in conventional wells will be more prevalent with reduce drilling there. This is occurring in the US and elsewhere in the world as well. I do not believe it will take a huge drop in production to get prices up just as it did not take a large increase to get prices down. Many Arab countries as well as Russia, North Sea producing countries and others need higher prices to fund domestic needs. They will be clamoring for higher prices sooner or later. Just my opinion.
Papa, I have noticed there is more institutional interest. Looking today at the institutions reporting for March 31 as reported on the NASDAQ site, there has been a net addition of 2,660,000 shares. The down side if you consider it a down side is the bulk of the additions are from Sprott with 3,550,000 shares added. With all the good news of all the exploration and operational successes, plus the major brokerage chain of Schwab giving the stock their highest rating, I believe they are getting a favorable review by smart money that is wanting to be part of that something explosive you mention. More institutional interest begets even more and that may suck up some of the share supply. I really cannot see any point in selling LSG shares unless an owner has a real need for cash, something like a court order. It will not be long and we shall be squinting at dollar island over the lazarette (that compartment at the stern of a vessel that generally houses the steering mechanism).
I really hope they can fend off any buyout attempt(s). This team and property has the potential to reward investors handsomely. Melding these assets into another company will likely dilute LSG shareholder returns by blending superb properties into a less desirable portfolio IMO. May the winds be brisk from lower left to upper right on the charts.
It is for the same reason Bakken oil price at the wellhead is significantly below market price, transportation restrictions. Keystone pipeline would replace much more expensive rail transport of Bakken oil which would raise the well head net price. That will not happen as long as Buffet and Burlington Northern continue to contribute significantly to Obama and the democrats. It is the same in spades for the northeast natural gas situation. Insufficient pipeline capacity and rail transport is not practical. More pipeline capacity would smooth the prices. There were probably crickets because it is so obvious that only a dumb knuckle dragging former engineer would see a need to respond.
Looks like I said something if the first of this reply series that offended Yahoo. Too bad, it had some basic shale reservoir information that would have been useful understanding hydrocarbon production mechanics.
Mention is made of an author deleting material that may have been wrong or possibly misleading. Well, I think that is probably a correct action as there is not much sense continuing to mislead folks if the author learned new information and was convinced his posted material was not correct. I have been know to pull a post myself, I am glad the feature is available.
I addressed the "small scale expensive just concluded CO2 fracking experiment..." in another post. Basically, it was not a fracking experiment, that statement is probably out of context.
It is for the reasons in the previous post, high capital costs to construct and complete shale wells and then the very steep decline rates that require continued drilling to maintain production rates, that I believe hydrocarbons from shale is going to be a big disappointment to people thinking the US is going to be energy independent. Shale will be a contribution to our total production for many years to come, it is just going to be metered out very slowly as a results of the production physics (low permeability).
Again, it has been several years back since I was a reservoir engineer, but allow me to share my one experience with CO2 injection. The pipeline operator delivered the CO2, period. It was the oil company's responsibility to inject it. Second, there are other miscible fluids, like enriched gas or micellular fluids that can be used, so CO2 has to complete on an efficiency and economic basis. One last consideration, in a CO2 flood, quite likely a slug of CO2 will be followed by a polymer based fluid buffer and then water, so the volume of CO2 and time for injection is only a fraction of the total CO2 flooding time period will In the scheme of things, CO2 will likely be like a gnat on an elephant's but when comparing to KMI's income. Should it amount to much, it will likely be several years out.
CO2 use for enhanced recovery is a tertiary operation flowing primary production which depends on in-situ energy to move fluids to the producing wells and then secondary recovery where a second cheap fluid (water, natural gas, etc.)is injected to provide incremental energy and a "sweep" of oil toward production wells. Not saying it could not have happened, but I really doubt an exploration geologist, geophysicist or other professional has CO2 in mind when applying their skills toward locating a potential new hydrocarbon field.
Coal to gas is done commercially in South Africa, but probably will not pass permit muster in the US as a significant by product is CO2 and the cost to do something with it at the plat site is prohibitive. Too bad as it would be a good use of coal. Another use would be coal feed stock in a thorium reactor. It is being further studied in Canada. I know little about nuclear energy, just relaying information from a news article that identified the study objectives and the researchers.
I agree that these companies are being severely stressed by low product prices and how the Fed has ratchet jawed about rate hikes to suppress PM's. I do not believe they will raise rates. First, the federal debt service would skyrocket and that would wreak havoc on the budget. Low rates has been a facilitator of irresponsible federal spending and you can be sure the vote buyers will not want to cut back. Second, raising rates will depress the stock and bond markets. They are not interested in depressing the asset values held on their books. Also,depressing the stock and bond markets could be a trigger for declining markets that get out of hand. Third, if markets are depressed and PM's raise, the cat is let out of the bag on the charade we call a free market. Real price discovery will point to the lawless banking system in a hurry and the government will look like even bigger fools than they are by neglecting the rule of law. One thing for sure, the fruitcake economics being administered is not going to last much longer.
On the positive side for silver, since the early November low, Silver has traded generally flat to a very slight up bias. I can envision a base building bottom being built around $15.00 and change. There was a dip below $15.00, but that took place during the wee hours of the morning and lasted very quick when exposed to volume trading. That test suggests that $15.00 may be pretty solid support.
Reading the various blogs and message boards will lead one to conclude pessimism is rampant. That may be a contrary indicator suggesting the bottom is near. I too have been in several PM stocks and have taken a serious hit, but I am holding as I believe they will come out just fine in the end. Have a look at Homestake mining during the great depression, it did very well with their product price fixed, even reduced at one point. SSRI should survive and do very well. It may turn out that early November was the low and it has started on a volatile uptrend.
Agree. Depending on circumstances, CO2 can have a high capital cost at initiation depending among other things on the proximity of the CO2 to the oil reservoir.
Mission Canyon, Duperow, and Red River are formations in the Williston Basin with conventional reservoirs that contribute to North Dakota's total oil production
I believe you have not been completely accurate in this post. Oil is not fracture treated. Fracturing is breaking something and you cannot break a liquid unless it is frozen. Hydraulic fracturing is hydraulically applying enough pressure to break or split the matrix rock. "The Dakotas have the Bakken shale" is correct, but North Dakota also has the Mission Canyon, Duperow, and Red River formations below the Bakken that contribute to the total oil production. They are conventional reservoirs and fracture treatments have been implemented for each horizon in the Williston Basin.
CO2 is not associated with drilling per se, rather it is a subsequent tertiary recovery operation that normally takes place long after the drilling rig has left the well. That is not to say development drilling cannot take place in a reservoir that is being flooded with CO2. I am aware of a drilling operation in a Wyoming field where this was the case.
Good post thewzardaz. You replied to another post that was pulled down while I was replying summarizing a study about CO2 flooding in the Bakken formation which I thought was also an excellent post. I wanted you to see my reply so it is posted here:
I believe thewzrdaz has stated the situation accurately, but it has not been understood in proper context. He never stated CO2 caused fractures, but that the CO2 injected into the Bakken shale would preferentially flow through previously induced and/or naturally occurring fractures in the formation rather than through the matrix rock. CO2 will not sweep oil from the matrix if it does not flow through the matrix. It makes sense in this respect: the matrix shale rock has high porosity, or void space in which the oil resides, but the porosity is interconnected very poorly, or the permeability is extremely low. Permeability along a natural or induced fracture is going to be an order of magnitude or more higher, thus the flow through a natural fracture will be preferential to the matrix.
In a secondary or tertiary recovery operation, it is normally an operational requirement that fluids be injected below fracture pressure to increase the likelihood that the fluid enters and flows through the matrix sweeping the oil rather than creating a fracture and bypassing the oil.
It has been quite a while since I practiced reservoir engineering, but I can add a few considerations. It is miscible flooding, not CO2 gas injection at the reservoir. One criterion is that the physical conditions in the reservoir must be such that the CO2 is above critical point, so that the CO2 will be miscible with the fluids being displaced. Reservoir rock properties must be conducive to flooding. One reason water flooding, secondary recovery is done before miscible, tertiary flooding, is to assure the expensive CO2 will not finger through the rock to the producing wells without pushing the oil in front. There are other considerations such as assuring the CO2 will be compatible with connate water and not create precipitates that plug the matrix permeability. Also, equipment must be tolerant of the inevitable corrosive environment that will be created.
Incrementally, the mechanical condition of the wells and all tubular equipment must sound and zone isolation verified. If a field has only been produced in primary, there may be considerable unitization work to be done to assure royalty and different working interests are treated equitably with reservoir recovery operations taking place over differing ownership interests. The most important consideration is economics. Reservoir engineering will be done to determine incremental recovery and over a time profile and economic models applied to assure minimum economic return is generated for the project investment and risk profile. Many reservoirs will not economically qualify.
My point of the post is to highlight a few considerations that go into evaluating a reservoir for any tertiary recovery project including CO2. It is definitely not a given that CO2 will work in any reservoir and even if CO2 will physically “work”, it still must be economic and feasible wrt royalty and working interest ownership.
I took a quick look at this company and do not see it as a potential barn burner. It was over $5 last summer and off seriously from the high. Is burner technology that profitable?