Playing the Shale Boom

[Boris]

Just curious if anyone has focused on a component of this run, which I believe has a way to go. Because I have an interest in some minerals, I have looked mainly at the drilling and production portion of the market, but this recent run in natural gas was something I should have played if I was thinking it through. I don't believe $6 nat gas will hold, but with colder weather coming, there may still be some room before it backtracks in warmer months.

How do you invest in energy? I believe $90+ oil is here to stay. I doubt the government will try to kill the best portion of the economy until there is substantial good news elsewhere.

[PICSIX]

If you are looking to invest, not trade, and you believe $90 oil is here to stay you could start with oil stocks that pay high dividends.

[_______]

Or buy XLE, an ETF that tracks the companies in the S and P 500 which engage in the energy sector.

[Shemp Howard]

MHR........going to $20.00 if not taken out sooner.

[Robert Fischer]

Indirect Shale Boom stock play

Rosneft - MCX:ROSN - is this stock any good??

You have the US, Israel, and West Ukraine/Kiev with the Shale gas that is going to supply Europe and at least free them from Gazprom Russian gas do-or-die negotiations.
Major loss for Russia and Gazprom.

At the same time China has been negotiating a long term import deal for Russian gas.
China has repeatedly insisted on a price below what Gazprom Russia was willing to agree to. In May, they are supposed to again try to finalize the deal.

Now with the Shale competition, Russia is pretty much forced to make a bargain price deal that China wants.

Rosneft is a different group than Gazprom(basically Gazprom is the Russian gas monopoly).

moscow times article and some interesting quotes:
http://www.themoscowtimes.com/busine...om/495885.html

Originally Posted by the article

"Rosneft wants to break the monopoly Gazprom to export gas via pipelines, signaling a flare-up between powerful clans, sources said."

"Rosneft in particular wants access to Gazprom's "Sila Sibiri," or Power of Siberia, pipeline designed to carry gas to China at a rate of 38 billion cubic meters a year, sources familiar with the matter said Friday."

"(Igor)Sechin(the CEO of Rosneft), unlike Gazprom, has successfully clinched deals to increase oil supplies to China, which may see Rosneft tripling its crude exports to Russia's neighbor later this decade. The Rosneft source said the company is eying natural gas supplies to China and that around 1 trillion cubic meters of gas is available for the company in East Siberia."

[Robert Fischer]

MOSCOW, April 1 (Reuters) - Russia's Rosneft, said on Tuesday it was on track to start production at its first liquefied natural (LNG) gas plant in the country's far east in 2018-2019, despite East-West tension over Ukraine.

The world's largest listed oil company by output signalled its partnership with U.S. ExxonMobil for building the plant, which will have an initial annual capacity of 5 million tonnes, would not be affected by the standoff.

[Robert Fischer]

Originally Posted by Robert Fischer

Indirect Shale Boom stock play

Rosneft - MCX:ROSN - is this stock any good??

March 11 to June 09
229.48 +10.88(4.7%) = 240.36

4.7%? That's less than a show bet. How do you guys make money on this stuff?

[Robert Fischer]

Originally Posted by Robert Fischer

March 11 to June 09
229.48 +10.88(4.7%) = 240.36

4.7%? That's less than a show bet. How do you guys make money on this stuff?

at least it went up another 1% last night.
242.80 +2.44 (1.02%)

I still don't get this game. I would either need a huge bankroll or the patience of Job...

[badcompany]

Originally Posted by Robert Fischer

at least it went up another 1% last night.
242.80 +2.44 (1.02%)

I still don't get this game. I would either need a huge bankroll or the patience of Job...

Most horseplayers I've seen think of the market in terms of a "score." That type of thinking requires that you jettison proper position sizing. That's why horseplayers are generally piss poor traders/investors.

The proper approach to the market requires thinking in terms of long term growth of capital while minimizing risk. The patience of Job definitely helps.

[_______]

The energy sector as reflected in XLE is up over 10% the last 3 months.

You're right to be disappointed in the performance if it's trailing the sector by that significant a margin. Energy has been the best performing sector over that time period.

But the S and P is only up 3.9% so congrats on beating the overall market.

Ditto what badcompany said.

[Robert Fischer]

last night +6.86 (2.83%) to 249.66

so from 3/11 posted to 6/11:

229.48 +20(8.8%) to 249.66

I'm OUT! lol "sell" or whatever you say.

"Blue Horseshoe loves Anacott Steel."

8.8% is fine for me, I admit I am clueless here.


It seems that information is very important in having a better idea of which specific days will have the lions share of the fluctuation, rather than being along for the long haul. I certainly don't have the relative level of info I have looking at horse races.

The risk/time ratio seems different from horse racing as well.
Seems like you (generally) lose your money slower than in horse racing (e.g. a show bet you can get 10% but you can also lose your investment in less than two minutes).

Originally Posted by _______

The energy sector as reflected in XLE is up over 10% the last 3 months.

You're right to be disappointed in the performance if it's trailing the sector by that significant a margin. Energy has been the best performing sector over that time period.

But the S and P is only up 3.9% so congrats on beating the overall market.

Ditto what badcompany said.

Sounds like a savvy stock player could have diversified in the energy sector and had similar(or better) results with less risk exposure. Makes my beginner's luck seem less impressive after all.

[highnote]

Originally Posted by Boris

How do you invest in energy? I believe $90+ oil is here to stay. I doubt the government will try to kill the best portion of the economy until there is substantial good news elsewhere.

Casey Research has a lot of good free newsletters on energy. You can also subscribe to their services.

It is possible the U.S. could work in concert with their oil producing allies to flood the market with oil to drive down prices in an attempt to cripple Russia's economy.

So you have to stay on top of international politics, too. If the U.S. and Iran kiss and make up and Iraq oil returns to it's pre-war production then prices could fall.

However, the U.S. also depends on high oil prices to generate income. This could play out in any number of ways.

I'm certainly not an expert, but I read a lot of economic news and that is what I have picked up so far.

I'd also recommend reading the free articles at stratfor.com. George Friedman has a good series of free articles now about the buffer states around Russia -- including Ukraine. He mentions oil as being a major factor in Russia's strategy.

http://www.stratfor.com/weekly/borde...beyond-ukraine

What we are seeing is regional players toying with new alliance structures. The process is in its infancy, but it is already forcing the Russians to consider their future. An added dimension to this is of course energy. The Russians would appear to have the advantage here: Many of the nations that fear Moscow also depend on it for natural gas. But there is a Russian weakness here as well. Natural gas is a powerful lever, but it is not particularly profitable. Russia's national budget -- indeed, its economy -- is built around oil . The chief danger Moscow faces is that it doesn't control the price of oil. A radical decline in that benchmark would cause the Russian economy to stagger at the very least. While in Poland, Obama deliberately pointed out Russia's economic problems. He wanted Russian President Vladimir Putin to know that he understands Russia's weakness.



Deployment of military force, while necessary, is therefore not the core element of the developing Western strategy. Rather, the key move is to take steps to flood the world market with oil -- even knowing that implementing this strategy is extremely difficult. It appears likely that once Tehran reaches an agreement with Washington on nuclear weapons, Iran's oil market will open up, and a major source of oil will flow. Additional Iraqi oil is also moving toward the market, and Libyan production might soon resume. Washington itself wields the most powerful weapon: The United States could reverse its current policy and start exporting oil and liquefied natural gas.


Read more: Borderlands: The View Beyond Ukraine | Stratfor
Follow us: @stratfor on Twitter | Stratfor on Facebook

[badcompany]

IMO the ship has pretty much sailed in the play. In this chart, while production is still rising, notice the per well production. The core areas are very profitable but the marginal locations not so much.



If you want the big players, CLR in the Bakken and PXD in the Permian.

[plainolebill]

The Bakken is becoming an oil factory. The operators are doing pad drilling - multiple wells from one pad do netbacks are improving despite smaller returns on individual wells.

[badcompany]

What a difference six months makes, and this is the "Best of Breed" in the shale oil area: