Energy, Energy Service, Natural Gas &amp; Oil Sectors

Top 580. Jul 17, 2001 5:45 PM

» lcha - Brutal

Has anyone noticed energy stocks have gone down a few percent recently?

It's a convenience not having to deal with those pesky capital gains taxes.

I feel like I'm watching waters rise while thinking how green everything is going to be when it stops raining but praying the house doesn't flood at the same time.

-- posted by lcha

Top 581. Jul 17, 2001 6:14 PM

» JenL_2 - Re: Brutal

In response to message posted by lcha:

Lcha - Yeah - I've noticed - but what isn't going down? Seems like there's no safe place to hide in the stock market these days....

<img src="http://chart.bigcharts.com/industry/bigc... XNG XOI&comp=OIL:171573&rand=2195" width=527 height=316>
Oil & NG Indices 1 YR Chart

...which is probably the best time to be buying!......Jen

-- posted by JenL_2

Top 582. Jul 18, 2001 5:58 AM

» lcha - Energy stock drop

One very positive point about the latest drop in E&P stock prices are the balance sheets of the companies and their profitability.

Unlike the tech stocks of 1999-2000, where tech companies operated under the assumption that they could sustain 50% growth rates for years to come, E&P companies operated as if the bottom was going to fall out of the market at any minute. Capital expenditures grew but didn't get crazy.

Risk profiles for projects were based on $18 oil and $2-3 gas. There are exceptions but they are rare. Also, unlike the tech companies of 1999-2000, the E&P companies by and large have been REDUCING debt, not building it.

While the E&P stock prices have taken a beating, the E&P companies are fundamentally healthy and will be profitable at $3 NG and $18 oil.

-- posted by lcha

Top 583. Jul 18, 2001 1:56 PM

» lcha - Real world example

This was posted on the Yahoo VPI message board to show what earnings and cash flow would be like at $20 oil and $2.5 NG

VPI Forecast with $20 crude oil

If suddenly on August 1st VPI's net realized prices drop to $20/bbl of oil and $2.50/mcf of NG this is how 2001 earnings and cash flow would end up. (BTW my SWAG for VPI's realized prices in Q2: $25.40/oil and $3.50/NG)

Note: Keep in mind that VPI has about 20% of Q3 crude oil hedged at $29.87 so WTI market price would have to be much lower than $20 for VPI's Q3 price to average $20.

2000 Actual: $3.06 EPS and $5.01 CFPS

2001 Forecast with $20/oil and $2.50/NG after 8/1:

Q1: $1.10 EPS , $1.79 CFPS (Actual)
Q2: $0.92 EPS , $1.69 CFPS
Q3: $0.56 EPS , $1.29 CFPS
Q4: $0.35 EPS , $1.05 CFPS
YR: $2.93 EPS , $5.82 CFPS

VPI currently trades at $15.6/share with 63M shares outstanding.

Under this reduced commodity price scenario, VPI will sport a P/E/ of 5.32 and a P/CF of 2.68. They will earn $184.5 M for the year and have a cash flow of $367M.

I'll wait for the short term TA bozos to knock the price down a little farther and then buy some more.

-- posted by lcha

http://www.sfgate.com/cgi-bin/article.cg...

Top 584. Jul 19, 2001 12:11 PM

» Kirk - In My Back Yard

Funny. You hear so many complain and not want stuff in their backyards, the pipeline this article discusses runs by our family property and most have been very proud of any association with the geysers even if they can sometimes be very loud. PG&E ran their huge transmission lines through our family land but they were good and put them out of view of the homes that are there. Funny how we don't have electricity up there ourselves.... we use gas.... vacation homes in the middle of nowhere.. but some in the family hunt and appreciate the roads put in by PG&E to service the power transmission towers.

Anyway, this is a good article on how to solve two problems at once.

Steam Heat
Santa Rosa wastewater may soon recharge geothermal field

Well worth reading and make sure you look at the pictures. 5% of CA electricity comes from geysers...

-- posted by Kirk

Top 585. Jul 19, 2001 1:13 PM

» lcha - Mexico Energy Warnings

Its not just our production that's falling.

MEXICO CITY, June 28 (Reuters) - After decades of sliding investment, Mexico's oil and gas reserves are now in the throesof a full-blown crisis and could lead to falling crude exports if new investment does not come soon, said a top official onThursday.

Raul Munoz, director of giant state oil monopoly Petroleos Mexicanos (Pemex), said investment in Mexico's bountiful oil and gas deposits fell by nearly a two-thirds between 1981 and 2000.

``This has provoked a crisis in oil reserves that has already extended to production and should not be allowed to go on any longer,'' Munoz told reporters. ``Production declines are already a reality at some oil fields.''

The revelation is doubly troubling for Mexico, the world's No. 7 oil producer. Not only does the government rely on oil for one-third of its overall revenues, but any decline in output would jeopardize Mexico's share of the U.S. market, the crown jewel of world energy markets.

Munoz, an engineer and longtime private sector executive who took the helm of Pemex in December, has long said that Pemex desperately needs new sources of investment to beef up reserves.

But the chief Pemex official has never sounded a call of alarm over Mexico's reserve levels.

``A bigger crisis in reserves and production could mean ... the risk of running out of natural gas, and further down the road, a drop in oil exports,'' Munozsaid.

Pemex, the world's seventh-biggest oil company, said in March that proven reserves posted a 4 percent decline in 2000 to 32.614 billion barrels, whileprobable reserves rose slightly in 2000 from the year before to 12.196 billion barrels.

Munoz noted a further sign of Pemex's faltering on the reserves front. After a spate of discoveries in the 1970s and early 1980s, Pemex did not make asignificant new find until the offshore Sihil field was found in 1999.

CASH COW STATUS

The key culprit in Mexico's failure to invest in its subsoil resources is Pemex's status as the government's cash cow. Each year the behemoth sends nearly allits revenues to the government, which then parcels out cash to Pemex as part of the annual budget.

President Vicente Fox had vowed to change this scheme by increasing overall tax revenues and reducing the onus on Pemex, but legislators have so farviolently opposed his proposed plan to slap value-added taxes on food and medicine.

This means that Pemex must find new ways to beef up its reserves under existing laws, which have been on the books since Mexico nationalized its oil wellsin 1938 and gave Pemex the exclusive right to explore and produce oil and gas.

Munoz said one possibility is for Pemex to undertake more effective service contracts with outside companies, like the one it has with Canada's PrecisionDrilling Corp. (Toronto:PD.TO - news) at the Burgos natural gas field, but did not elaborate.

Pemex can also legally bring in private investment in areas such as gas imports, transport and distribution and petrochemicals, which would free up some ofPemex's cash to use for other areas, said Munoz.

``Pemex will need to invest about $9 billion a year in coming years in all of its lines of business,'' said Munoz. ``Of this, more than two thirds will be spenton oil and gas exploration and production.''

-- posted by lcha

Top 586. Jul 19, 2001 1:31 PM

» lcha - Latest Texas production

NG production for May just reported from the Texas Railroad Commission:

May production down 1.3% from April

May 2001 production down 7.6% from May 2000

2001 YTD total production down 2.9% from 2000 YTD production.

This despite the fact that Texas is drilling more NG wells than EVER before.

Another note:

Texas NG production peaked at 9,602,629,629 MCF in 1972. Last year it was 5,645,792,009 MCF.

Texas NG reserves peaked in 1968.

I'm afraid that when the economy picks up, NG demand will pick up and NG prices will rise again, acting as a brake on an economy trying to expand.

-- posted by lcha

http://www.askresearch.com/cgi-bin/chart...

Top 587. Jul 19, 2001 4:49 PM

» JenL_2 - Energy

CaptRon's take copied from the "TA" thread:

Author: CaptRon
Date: July 19, 2001 11:16 AM
Subject: Energy

FWIW, this Pro-fund is approaching bottom of 12 mo downtrend line. Possible bounce...:

Oil & Gas index bounced off a support line at 510 area:

http://stockcharts.com/def/servlet/SC.we...

Not recommendation, but aggressive traders MIGHT take long, with stop just under 510 area

-- posted by JenL_2

Top 588. Jul 19, 2001 6:13 PM

» lcha - Re: Energy

In response to message posted by JenL_2:

You know, I look at charts, I make my mental trend lines, support lines, resistance lines, etc... and I make my stock picks on fundamentals. I'm just not a TA guy. It's kind of like voodoo; if it works it works because other people think it works. I'm also wary of everybody having the same access to TA software and tools and everybody looking at the same trend lines and everybody making the same decisions on buying/selling at the same time. I try to stay more long term focused anyway. For the people that can successfully use TA as a short term trading tool, that's great. Happy investing.

-- posted by lcha