AUT - Aurora Oil and Gas

Natural Gas: The Realistic Choice


Tiny snippets from a huge and interesting article.


Natural gas prices have been depressed for more than a year, and stocks levered to the fuel have turned in a mixed performance. This weakness has lead many investors to the unfortunate conclusion that natural gas isn’t an interesting investment story.

Nothing could be further from the truth. Gas is an abundant and environmentally friendly fuel that’s already revolutionizing key global energy industries such as petrochemicals. And natural gas is a far more viable alternative to oil in the transportation sector than any of the widely hyped alternative energy technologies

Natural Gas: The 21st Century Fuel

The two main sources of demand for natural gas are electric power generation and industrial applications. .........

In markets where natural gas competes with oil, gas’s main advantages are that it’s more readily available and cheaper........


...... starting around 2006 the close correlation completely broke down””oil has consistently traded at a much larger premium ....... Global oil supplies are likely to remain constrained

Supply bottlenecks in the global gas market are far less onerous. ......

The greater availability and reliability of supply mean natural gas prices will remain relatively cheap compared to oil....

None of this means natural gas will completely replace oil in industrial markets. However, it is likely to gain market share, particularly in markets with plentiful supply.......

Toward the end of 2009 and into early 2010, US petrochemical companies were retooling their facilities to allow them to produce more ethylene from gas-derived ethane and propane rather than oil derived naphtha. .....

Transport is a huge potential growth market for natural gas....

The first markets to be penetrated significantly are fleet vehicles such as buses, taxis, and garbage trucks. Refueling such vehicles requires building only one or a handful of centralized refueling stations ......

The true game-changing market for natural gas vehicles isn’t personal passenger cars or fleet vehicles but freight trucks......

http://www.investingdaily.com/tes/17689/natural-gas-the-realistic-choice.html

Is Now the Time to Buy Natural Gas Stocks?

For years, natural gas was in many respects the forgotten fossil fuel as coal was the dominant fuel for power plants and major manufacturers like steel producers, while oil powered vehicles. In the debate over alternative power supplies, solar and wind zoomed to the top of the hot list, but they are still years away from being major sources of power generation despite the hype. Over the past couple of years, natural gas has gotten more attention as a potential “bridge fuel” to greater energy independence for the U.S., but nonetheless, prices for the fuel continue to hover near lows, as do the stocks of natural gas producers.

More recently in June, researchers at the prestigious Massachusetts Institute of Technology issued a report that also urged policymakers to make use of the nation’s ample natural gas supplies as a substitute for coal-fired power plants.

“The substantially lower carbon footprint of natural gas relative to other fossil fuels, combined with the development of North American unconventional natural gas supply and the high cost and slow pace of lower carbon alternatives, has focused attention on natural gas as a ‘bridge’ to a low-carbon future,” the researchers said
http://www.tickerspy.com/newswire/?p=3038

Despite the DOW faltering on close the futures are still up for the 2nd session running accross the board.



Good to see the longer term NG prices rising as well.


When you look at these figures someone is telling porky pies. Either the journos are spinning a load of hog wash on how bad they think the US economy is, or the futures trades are standing to lose a lot of money. It doesnt add up. Thing is is trust the futures traders more then the journalists.

Tricks and traps in share price targets By Rudi Filapek-Vandyck
August 10, 2010

A small snippet from a very good article from the Eureka Report

Over the years I have developed a great affection for consensus price targets .......

The simple reason I tend to look at consensus targets instead of targets set by individual stockbrokers is that they work much, much, much better.

When bearish analysts think a certain stock is not worth more than $5, while their bullish colleagues believe it could trade up to $10, practice shows it is likely to find a ceiling around $7.50.

At that point the second group will continue rating the stock as buy or overweight or outperform, potentially setting up a “broker trap” for investors who are not paying attention to the wider picture.

Let me first point out that no one single method works every time and under all circumstances. We're talking about the stockmarket here, which harbours “risk assets”, so there are no watertight guarantees.

Click to expand...

On this basis, currently both brokers have a buy - indicating a buy

Both brokers have targets above the current sp and above the current 52wk high, indicating upward pressure.

Brokers have targets of 1.23 and 1.50, indicating a consenus price of about 1.31 at present.

The Best Peak Oil Investments

http://seekingalpha.com/article/222381-the-best-peak-oil-investments

extract from a brilliant article - i highly suggest a read.
Is it Speculation?

Many have been quick to point the finger at speculation as the cause of increasing volatility in the oil price. Multiple studies have looked for but have not found any link between oil speculation and oil price volatility [pdf].

In addition to the lack of evidence that speculation increases price volatility, blaming speculation for increased volatility demonstrates a naivete about how speculators make money. As anyone who has ever traded anything from baseball cards to exotic derivatives knows, in order to make money, a speculator needs to buy low and sell high. When speculators buy oil, they are acting to increase demand (the aggregate desire to buy), and so are increasing the oil price. When speculators sell oil, they are acting to increase supply (the aggregate desire to sell), and so are decreasing the oil price.

In order to increase price volatility, a trader would need to buy when prices are high (raising prices further) and sell when prices are low (causing them to drop further.) Any speculator who consistently buys high and sells low will also consistently lose money, and will soon stop speculating because of lack of funds. In contrast, a speculator who buys low and sells high will not only make money, but will reduce overall volatility. Selling when prices are high will moderate price spikes, while buying when prices are low will moderate price falls: both have the effect of reducing price volatility.

In other words, speculators who increase volatility will soon run out of money and stop speculating, while speculators who reduce volatility will make money and likely continue speculating unless laws are changed to prevent them from doing so. Attempts to ban or limit oil speculation are likely to have the perverse effect of increasing, rather than reducing future oil price volatility.

..........I conclude that the most likely source for increased oil price volatility is a reduction in the ability of oil supply to adjust to changes in price. This agrees with another formulation of the Peak Oil thesis: Peak Oil is not the end of oil, but the end of "easy" oil.

Implications of the End of Easy Oil

As world oil demand continues to rise, and extracting oil becomes increasingly expensive and more dangerous, several trends are likely to continue.

1.Oil prices will rise
2.Oil companies less able to quickly adjust supplies to changes in the oil price,
3.Increased drilling risks 4.Increased oil prices will lead to adjustments in our oil use that decrease demand.
4.Increased oil prices

This link has the index for all articles http://www.altenergystocks.com/archives/2010/05/peakoil.html

also of interest
What Peak Oil Means for the Economy and Stock Market: The Methadone Economy
http://www.altenergystocks.com/arch...estments_part_ix_the_methadone_economy_1.html

extract from the article
...........
Conclusion

I see three major investment themes in the Methadone Economy.

First, there is the knowledge that long-term solutions will be implemented, although not completely and at insufficient scale. Investors in contractors who specialize in mass transit and high-speed rail should do well, as should the longer-term alternative fuel solutions discussed in earlier articles of this series. Vehicle efficiency improvements will find rapidly growing markets as fuel becomes more expensive.

Second, band-aid solutions will thrive. Bike lanes, electric scooters, buses, and any other transportation solution which can be implemented with only small changes to existing infrastructure. Road pricing schemes and the software technology to help people coordinate ride sharing. The clever use of a few resources will always win over grand schemes when there are few resources to spare.

Finally, the Methadone Economy is an economy where we cannot expect long term growth. More likely, we will see periods of anemic (and occasionally robust) growth punctuated by periodic crisis-driven declines. This will be mirrored in the stock market, and so investors in the above two solutions should do well to hedge their overall exposure to the market.

Our other leading indicator of the outcomes for AUT imo is the health of the US economy and its flow on effects into the oil prices.

IMF's Lipsky does not see double-dip recession

A top International Monetary Fund official said on Thursday strong corporate profits and moderate income growth should prevent the U.S. economy from slipping into a new recession.

......"We certainly don't expect some sudden surge in employment growth, but surely if the expansion continues, as we expect that it will, it will produce job growth," Lipksy said.

Lets hope hes right, he certainly has more idea then us, but is he just talking it up, or is he genuine.
Certainly the oil futures tend to agree with him.



Goldman Sachs has increased its odds of a double-dip recession to 25 percent. Mark Zandi of Moody's Economy.com sees a 1-in-3 chance, vs. 1-in-5 just a few weeks ago.

http://seattletimes.nwsource.com/ht...012730247_the_double-dip_recession_no_lo.html

Ford Exec: Double Dip Unlikely

The head of Ford Motor Co.'s U.S. operations said Wednesday he doesn't foresee a double-dip in the economy but is keeping a close eye on how the recent spate of bad economic news is affecting consumer confidence.

Buy On Dip Fears
Ken Fisher, 08.26.10, 05:40 PM EDT
Forbes Magazine dated September 13, 2010

The second quarter of 2010 should be the third in a row when earnings growth exceeds 30%. The last time that happened was 1983.

The post-April stock market correction has been the most textbook perfect I've seen since the one in 1998. That one fed on the Asian contagion, the Russian ruble crisis and the Long-Term Capital Management hedge fund freak-out.

Like that one, this year's minicrash had been pushed along by several scary stories that turned out to be nonsense but were nonetheless impossible to dispel. The biggest was the PIIGS hysteria--the idea that Greece was going to go bust and take down Portugal, Ireland, Italy and Spain with it. But all five have effectively completed their 2010 financings without incident. Only Greece took any bailout money at all.

.......... article continues

http://www.forbes.com/forbes/2010/0...-buy-on-dip-fears.html?boxes=Homepagechannels

thought i'd extend the chart on comsec this afternoon since we're in a bit of a down trend.

we should be dew for some news soon usually about every 15days or so

AngusSmart said:

thought i'd extend the chart on comsec this afternoon since we're in a bit of a down trend.

we should be due for some news soon usually about every 15days or so

Click to expand...

Condensing the last few reports from AUT, we should be getting news shortly.

From the announcement on 17 August, AUT told the market that the first well in Ipanema, Patino #1H spudded. Presumably we'll get some flow rates in the not-too-distant future.

This announcement also set out the 7-day flow rates for Turnbull #3H on a restricted choke. I'd expect to see the 60-day flow rates in the near future.

AUT also advised the market that production tubing had been installed on Turnbull #2H and it would be brought back online "shortly". AUT was going to update the market when "stabilised rates" were achieved.

From the announcement on 16 August, AUT advised the market that Luna #1H well had spudded on 7 August. I would expect to see some flow rates from that well fairly shortly.

From the announcement on 5 August, AUT advised the market that the drilling operations on Kowalik #1R had been completed, production tubing installed and the well was to be fracced. Haven't seen flow numbers on this either yet.

From the quarterly report announced on 30 July, AUT advised the market that the forward plan involved "up to eight wells" in the Sugarloaf AMI, three wells in Ipanema API and the fracture stimulation of the third well at Longhorn.

I don't think we'll see any more announcements this month (just a feeling) but there's still a lot of news in the pipeline (no pun intended).

McCoy Pauley

I suspect theres some hold ups on the frac crew, theres extreme labour shortages at present, and somewhere in there they said, thier crew was going off site, i think it was to the Hilcorp KKR JV to do 2 fracs then returning, that was a few weeks ago now, so i suspect if they arent already back on site fraccing ours they would be now.

They are currently trialing that fraccing in three stages, so i suspect they will come back and rotate accross ours in three stage, or intertwined with the KKR acerage in the three stages revoulving through the 5 wells or so??

Wonder how there going securing the third rig and Full time frac crew for 2011, primarily on Longhorn. It will be back to back news flowing once thats happening. Virtually a news flow per week with the 7 days or so between frac, 3 rigs drilling as fast as they can frac and then 30 and 60 day flows revolving along beyind them. Wont be many quiet weeks in 2011 thats for sure.

Right now i think they are dragging thier heeels just a little bit, becasue they are a bit under crewwed (frac team ) but know they can easily achieve the 2010 well obligations.

AngusSmart said:

thought i'd extend the chart on comsec this afternoon since we're in a bit of a down trend.

Click to expand...

Easy to see how 1.20 and 1.30 will be achieved on the back of some good news or sentiment looking at that chart. It was certainly a pullback we needed to have looking at the chart.

Old graph and new graph. At 1.16 it was looking a little bit over bought, its now looking well and truly over sold anytime below about 99c imo. Could turn out to be a good buying or top up point for late entrants ??? Thats not advice, its just an observation.

Thats a strong rebound from Crude, over $2 on most time frames on the Back of Benankes comments. If the market judges his response as fair dinkum, and his ability to do so with the tools available, I think we just got our life line on oil prices imo, and possibly the stimulant for the start of the next bull run on oil prices.


Oil futures are the best guide we have to profitability and repayment times on wells, this surge is fantastic, and imo that news from Benanke is even better then fantastic. It imo clearly implies he thinks the US recovery is not at major risk, and he thinks he has the tools to fix it if it did falter. Perhaps as I suggested last week the market commentry is being manipulated, up one week, down the next or up one month down the next. Certainly seems to be the case.

Taking a step back though these are nervous times, coming off low lows with high debt problems , volatility and nervousness where always going to be a part of any recovery for some time.


http://online.wsj.com/article/BT-CO-20100827-710312.html
OIL FUTURES: Crude Settles Up As Bernanke Speech Lifts Markets

NEW YORK (Dow Jones)--Crude futures ended the week with a three-day rally, as comments by U.S. Federal Reserve Chairman Ben Bernanke on Friday gave investors renewed confidence that the central bank would step in if the U.S. economic recovery is in jeopardy.

Light, sweet crude for October delivery settled up $1.81, or 2.5%, at $75.17 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange was recently up $1.63, or 2.2%, at $76.65 a barrel.

For crude, it was the first time closing above $75 a barrel since Aug. 18, as three straight days of gains made up for a steep drop that took prices to a two-month low of $70.76 a barrel midday Wednesday.

Futures rose Friday after Bernanke told an audience in Jackson Hole, Wyo., that the Fed is committed to supporting the economy and has the tools to do so. While Bernanke stopped short of announcing new action, gains across many markets indicated that investors were convinced of the central bank's willingness to step in.

The Dow Jones Industrial average was recently up 151 points, or 1.5%, at 10137.

"He basically said 'We will bring out the heavy artillery'" said Matt Zeman, chief market strategist at LaSalle Futures Group in Chicago. "That should drive the dollar lower and give commodities a bounce."

New well application in by Hilcorp. The names just keep getting harder to pronounce and spell, "Urrutia"

Hey condog, what is the relationship between hilcorp and AUT? Besides they are both in oil n gas and from Texas area?

Hey NUN

Do you see an entry point now the stock price is slowly dropping
or do your charts show a further drop in the share price

If so could you post a chart and a comment



James

BrightGreenGlow said:

Hey condog, what is the relationship between hilcorp and AUT? Besides they are both in oil n gas and from Texas area?

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John hilcorp are the opreators, they are the ones doing the drilling and fraccing, planning, which wells get done next and how to do them.

In return for this , plus the fact they funded the first 10 wells on a cost recovery basis, they will earn upt to 50% in some of AUT's acerage.


J&M - please lets not start this all over. Given the jump in oil and the comments of Benanke, im doubting your going to see it here for much longer. But thats only opinion. Anywhere close to the bottom green line is a bargain in my opinion. But do your own research and seek advice.

J&M said:

Hey NUN

Do you see an entry point now the stock price is slowly dropping
or do your charts show a further drop in the share price

If so could you post a chart and a comment



James

Click to expand...

Gday James.

Personally think the area marked as "area of intrest"(95-90) provides a nice low % loss on stopout point ... i would first like to see it bounce off 91/ 92/93 on VOLS but that may not happen due to the rallys on fri night so MAYBE worth a punt at any point around previious close if you can get it ( if it gaps on monday just be patient there SHOULD be a better entry than the auction/first hour exhuberence)

IF it Breaks the 90 area .all bets are off and that would see ME out to come back to later.( please ignore my line on chart as in wrong spot)

merely opinion Bud and i am only TRADING it , nothing more.

condog said:

J&M - please lets not start this all over. .

Click to expand...

Excuse me.

J&M asked for MY opinion obviously for a reason.He has a right to ask and i have a right to respond.

I have deliberatly not been posting in this thread as cant be bothered with the sniping on different views when they are presented.


This is a public forum and it is not your place to decide who and what gets posted here.

Please do not reply as it will only lead to me having to respond to your posts on a daily basis again and frankly its too much like hard work for me and every other bugga thats gotta read the soapie it turns into.

Lloyd’s peak oil report, supply crunch, $200 oil in 2013?

The Lloyd’s insurance market and the highly regarded Royal Institute of International Affairs, known as Chatham House, says Britain needs to be ready for “peak oil” and disrupted energy supplies at a time of soaring fuel demand in China and India, constraints on production caused by the BP oil spill and political moves to cut CO2 to halt global warming.

http://www.liveoilprices.co.uk/oil/...oil-report-supply-crunch-200-oil-in-2013.html

nunthewiser said:

Gday James.

Personally think the area marked as "area of intrest"(95-90) provides a nice low % loss on stopout point ... i would first like to see it bounce off 91/ 92/93 on VOLS but that may not happen due to the rallys on fri night so MAYBE worth a punt at any point around previious close if you can get it ( if it gaps on monday just be patient there SHOULD be a better entry than the auction/first hour exhuberence)

IF it Breaks the 90 area .all bets are off and that would see ME out to come back to later.( please ignore my line on chart as in wrong spot)

merely opinion Bud and i am only TRADING it , nothing more.

Click to expand...

Price of gas at the henry hub is one of the factors at play here at the moment.

Down from 4.70ish to 3.70ish. http://oil-price.net/dashboard.php?lang=en#natural_gas_large

You can talk fundamentals till you're blue in the face but if the product you're selling is declining in value by 20% in a month look out below.

I'm back on the sidelines with a nice profit in the bank on the run up and looking to reenter again sooner or later.