Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Neal Dingmann's Main Points



Neal Dingmann
Fundamental Energy Outlook

  • Fundamental Upside
    • Today's environment is different than it has been in the past, as macro factors currently support the energy picture
    • Supply and demand imbalance
      • Flat to decreasing supply - lower quarterly production, lower exports, and few near-term alternatives
      • Increasing demand - higher industrial use, higher GDP, higher GNP
    • Increasing asset sales
    • The start of REAL growth in pricing/margin
    • High crude oil price support
      • Tight capacity/political unrest
    • While all energy sectors should benefit from the macro outlook, the OSX and XNG are most levered (generally)
  • Less Supply - Details
    • U.S.
      • Q2 '04 domestic gas production was down 3-3.8% YoY, after a previous decline of 4.2-4.4% in Q1
    • Mexico
      • Now a bigger importer of natural gas, the country's demand for this fuel has outpaced its production in the past decade
    • Canada
      • Since peaking in 2001, annual natural gas exports to the U.S. have fallen, declining 11.4% from 2002-2003
    • LNG
      • While estimates vary regarding timing and incremental supply, domestic regulation could present a tough obstacle
    • Nuclear
      • Currently over 96% of capacity, which is 2% higher than the same period last year
    • Coal
      • Current prices of $59.50 / short ton are the highest in history
  • Growing Demand - Details
    • U.S.
      • Energy Information Administration (EIA) is forecasting the demand for natural gas to rise 1.1% YoY in 2004
    • Alternative Sources
      • Demand for coal, hydro, nuclear, and other energy sources is expected to rise in 2004
    • Macro Demand
      • Q2 '04 GDP rose 7.0% YoY, after rising 5.6% in 2003
  • Crude Price Support
    • With the price of crude at $44.50/bbl, it is hard to imagine natural gas falling below $5.50/Mcf in the near future
  • Domestic Natural Gas Drilling
    • Primary Driver
    • 80% of U.S. drilling is directed toward natural gas
    • Expectations of higher natural gas prices influence spending on U.S. drilling activity
    • Strong commodity prices are drivers in our U.S. rig forecast. We are expecting the U.S. rig count to be up 14% in this year, and up another 1% in 2005
      • While rig count totals can vary, there is no questioning the higher rig growth or utilization
      • The big difference between the present upcycles in land drilling rates and utilization versus the upcycles in 200/2001 is the rate of increase. Since the rate is more moderated this time, I believe the upcycle can last longer
      • Higher U.S. rig activity has historically coincided with a higher OSX price
  • Current Upcycle Performance
    • In the upcycle that has taken place between October 2001 and today, small/mid cap service and land drillers have outperformed all other sub-sectors
< Previous
  • 1
Next >
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.

Featured Videos