Ultra Results

Thursday magnified the importance of stock selection in the E&P sector.  SM rose 11% and BRY fell 12% on results.  Execution is the prime reason PXP is able to make its huge foray into the Gulf of Mexico while FST attempt to turn around and survive.  Wow!

Ultra (UPL chart) reported Q3 results and held its quarterly conference call:

“We are a natural gas company, having resolved that our assets return more at $4 gas than most oil plays do at $80 oil.”  I believe it as UPL is a low cost producer while oil has surprisingly skinning economics at $80.

Watford then made the case for natural gas production to fall, saying in part:  “For those who question the natural gas rig count reduction, from 900 rigs to 400 rigs, without any associated production impacts, we can look at ourselves to see the lag.”  If so, natural gas prices will be shockingly robust…

A comment from PXP’s Q3 results adds color:

“In the Haynesville Shale, third-quarter daily sales volumes averaged 190.4 MMcf per day net to PXP compared to third-quarter 2011 average daily sales volumes of 201.3 MMcf per day net to PXP. The sales volume decline reflects significantly lower drilling activity during the quarter. At the end of October, there were no drilling rigs operating in which PXP had a working interest. PXP expects to exit the year between 142 – 146 MMcf per day net to PXP.”

Sandy’s Impact on Natural Gas at Haynesville Play.

BMO oil storage and natural gas charts.

“In a new report, Calgary energy investment bank Peters & Co. said oil sands assets worth $17-billion are for sale today formally and informally — about the same value as oil sands assets sold over the entire last decade.  The interesting theme: The big sellers appear to be U.S. companies looking to get out, while the buyers seem to be national oil companies (NOCs) — such as those from China — looking to get in.”  Financial Post

Worldwide Shale Players Chase North American Expertise at EP Mag.

“A coalition of 22 U.S. governors, led by Oklahoma Governor Mary Fallin and Colorado Governor John Hickenlooper, has stated that their states would be willing to purchase up to 10,000 new compressed natural gas (CNG) cars and pickups a year.”  Marketwire

At the risk of being political, this piece distorts reality yet still shows the large government take on the energy industry:  WSJ.

For John:  Exports Prescribed for Propane Relief at RBN Energy.

Independent Stock Analysis expects to have more on our favorite gas play next week.