Natural Gas Market Share

“Total domestic coal distribution was an estimated 199.6 million short tons (mmst) in the 2nd Quarter 2012. This value is 24.5 mmst (i.e. 10.9 percent) lower than the 1st Quarter of 2012 and 31.7 mmst (i.e. 13.7 percent) lower than the 2nd Quarter of 2011 estimates.”  ISA expects the third quarter number to be lower.  Most importantly, the large majority is a baseline shift toward natural gas.  EIA  Continue reading

An Old Friend

Independent Stock Analysis readers know JJ Butler was promoted from piker in the rebound from the telecom bust in 2003.  Teck Resources (TCK) was an even better score as a high quality company pigeon holed with outstanding long term assets into short term debt into the teeth of the financial crisis.  Another investment success* was the booming energy market in the middle of last decade.  Today we look at an old friend.

*No, they are not all winners.  In fact, the losers are more common.  Fortunately, the best stocks can be multi-baggers. Continue reading

Crude Consumption and Production

Oil Advances to 3-Month High Before Europe Debt Meetings at Bloomberg.

Demand destruction stunner:  “Oil consumption in July 2012 was 18.062 barrels per day–matching July 1995 levels.”  John Hanger

With 2011 Permian oil production of 767,000 bpd and Bentek estimating current Permian oil production near 1.29 million bpd, it seems the predicted 60% increase to 1.82 million bpd by year end 2016 is quite light.  Reuters

Projected Utica shale growth a ‘game changer’ for Ohio, speakers say at Ohio.

The refinery trade defined:  “U.S. oil refiners are benefiting from infrastructure bottlenecks.”  Globe and Mail

At some point the U.S. might want to stopping lolly-gagging and approve the Keystone XL Pipeline:  Mining.  “…overall, the idea of adding the value in Canada, developing, upgrading, processing, refining, our own natural resources is a good one.”  Financial Post

I maintain US natural gas drillers would destroy LNG pricing in short order if given the chance (IAR).  A pragmatic look at The Reality of Exporting LNG at Haynesville Play.

I’m still catching up, so while this is a almost a week old, energy was actually the second best performing sector over the last month:  All Star Charts.

Owning the right stocks is vital.  Robust oil prices and still ATP Oil & Gas Files for Bankruptcy Protection in Texas at Bloomberg.

Update:  In the next day or two Independent Stock Analysis looks to become a subscription website.

Coal Relationships

The super-cycle is still soft as BHP warns of job cuts in coal as China cools in Mining Weekly.  However, mine curtailments and capex cuts are the fertile ground of bull markets.  Peabody Energy says it is continuing to evaluate spending in 2012, 2013, so says the Fly on the Wall.

India to get coal from Kentucky at UPI.  Seems like a pretty big deal.

Germany: world’s largest coal-fired power plant inaugurated at AGI.  The developed world still needs coal too.  In the wake of Japan’s Fukushima disaster nuclear is being pushed aside, but the generation capacity needs to be replaced.  Bloomberg

The severity of the natural gas over supply:  “By our estimates, low gas prices allowed natural gas generation to pick up nearly 6 Bcf/d of incremental year-over-year (y/y) demand at the expense of coal (through May).”  Raymond James on coal switching.

Natural gas continues cutting into coal demand at Fuel Fix.

Institutions have coal on their radar, FWIW:  “Fidelity, Wellington, and Blackrock significantly decreased their positions while D.E. Shaw, a well known quantitative hedge fund, and other well known hedge funds increased their holdings of Alpha Natural Resources and other coal companies like Peabody Energy and Arch Coal.  This actually makes me a bit nervous because same thing happened with Patriot Coal before it went bankrupt (DE Shaw and these hedge funds might be shorting these coal companies) but I doubt these companies are at risk of bankruptcy any time soon.”  Pension Pulse

Coking coal prices are down from a peak last year, but still at high levels.  Thus Alpha Natural (ANR) reporting second operating losses is quite disturbing:  “Alpha is down because it needs coking coal prices to rebound by 2013 to maintain free cash flow break even.”  Peter Epstein wrote that as a Alpha bull.  With coking coal pricing tumbling recently, I find the statement particularly damning for Alpha in light of their debt load.

“CLD at resistance at 18 with a break higher looking at 20” chart by Greg Harmon.

Expensive Oil

Oil Declines in New York Amid Signs of Higher U.S. Supply at Bloomberg.

June oil production in North Dakota was higher by 20k b/d over May and 71% higher year over year (June 2011 was weather depressed) (Mark Perry).  When the revised Texas numbers come out we’ll see an bigger party down there:  Mark Perry.

Mixed results in the Utica and not much oil:  Ohio.

Offshore oil rigs drilling deeper than ever at Globe and Mail.  Yes, new oil production to offset natural declines is very expensive.

China’s oil demand ebbs and flows.  Right now it’s soft.  Reuters.

Animation on the basics of horizontal drilling and fracking:  Business Insider.

This afternoon’s coal post will have the natural gas commentary.  Tomorrow morning I leave for a much needed few days off.  Feel free to search Independent Stock Analysis using the search button in the upper right corner.  Signing up by email or FeedBurner are options too.