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Monday
Jun142010

AEHI Signs MOU With Hyperion Power To Manufacture Small, Modular Nuclear Reactors In China And Market World-Wide

hyperion-power-plant-20-nov-09.jpg
 
Partnership to open untapped opportunities in commercial nuclear power

EAGLE, IDAHO - June 14, 2010 - Alternate Energy Holdings, Inc. (OTCQB: AEHI) - today announced the signing of a memorandum of understanding with New Mexico-based Hyperion Power Generation, Inc.  The MOU is the beginning of a joint venture between the two companies to license, build and market Hyperion's refrigerator-sized modular nuclear reactors on a world-wide basis.
 
"I am extremely excited and honored to be a partner with Hyperion and its equally impressive 25 MWe Hyperion Power Module.  It is one of the most innovative products I've seen in my 46 years in the nuclear industry.  Because of its small size the power plant's applications are limitless and could fuel a huge variety of important facilities including: hospitals, desalinization plants, emergency facilities, industrial parks, factories, military bases, and even small towns for many years.  Because of its innovative and exclusive design, Hyperion's technology can even open up applications that no other production reactor can perform.   Our partnership will make it possible to market the product internationally, and to locate specific applications in the United States," said Don Gillispie, AEHI CEO and Chairman.

"We chose AEHI to assist us in this endeavor because the company is independently operated, has unprecedented connections in the international community, especially in China, and is headed up by some of the most well-known and respected individuals in the nuclear industry.  If there is one company that has the ability to successfully place the Hyperion product in the international spotlight, it is AEHI," said John R. "Grizz" Deal, Hyperion CEO.

Hyperion knocked the nuclear industry on its heels last year when company officials announced the ultra-small reactor, which already has more than 150 purchase commitments from customers such as mining and telecom companies.  Unlike most reactors, Hyperion transportable reactors are sealed at the factory and are not refueled onsite.  When the reactor has exhausted its fuel, it is returned to the factory and a new reactor is simply installed in its place.

"The Hyperion Power Module practically sells itself," said Gillispie.  "It can be installed in a small vault, could power about 25,000 homes, and comes with an unbelievably affordable price tag. In, addition, the power plants can be stacked to provide exactly the amount of power needed now and still have the option to increase power supplies in the future if power demands increase. That combination opens up a limitless market, in which AEHI has a variety of customers who are ready to buy."

About Alternate Energy Holdings, Inc. (http://www.AEHIPower.com) -- Alternate Energy Holdings develops and markets innovative clean energy sources. The company is the nation's only independent nuclear power plant developer seeking to build new power plants in multiple non-nuclear states. Other projects include Energy Neutral™, which removes energy demands from homes and businesses (http://www.EnergyNeutralinc.com) Colorado Energy Park (nuclear and solar generation), and International Reactors, which assists developing countries with nuclear reactors for power generation, production of potable water and other suitable applications. AEHI China, headquartered in Beijing, develops joint ventures to produce nuclear plant components and consults on nuclear power. 
 
About Hyperion Power Generation, Inc. (http://www.HyperionPowerGeneration.com) -- Hyperion Power Generation Inc. is a privately held company formed to commercialize a small modular nuclear reactor designed by Los Alamos National Laboratory ("LANL") scientists leveraging forty years of technological advancement. The reactor, known as the Hyperion Power Module ("HPM"), designed to fill a previously unmet need for a transportable power source that is safe, clean, sustainable, and cost-efficient.
 
"Safe Harbor" Statement: This press release may contain certain forward-looking statements within the meaning of Sections 27A & 21E of the amended Securities and Exchange Acts of 1933-34, which are intended to be covered by the safe harbors created thereby. Although AEHI believes that the assumptions underlying the forward-looking statements contained herein are reasonable, there can be no assurance that these statements included in this press release will prove accurate. As a result, investors should not place undue reliance on these forward-looking statements.



Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Monday
Jun142010

Hydroelectric Revolution: A River Runs Through It

River Power 15 June 2010.jpg

By Marin Katusa, Chief Investment Strategist, Casey Research Energy team


Two years ago, British Columbia’s premier electric utility company, BC Hydro, issued its “Clean Power Call” – a bid for the province to achieve electric self-sufficiency through renewable energy by 2016. That aggressive goal sparked an intense competition. Renewable energy companies of all stripes were jostling each other to prove that their project was the best, and to win a coveted Electricity Purchase Agreement (EPA).

When the EPAs were finally handed out, one green technology captured over half of the sixteen contracts awarded. The overwhelming winner? Not solar and wind, but a relatively obscure type of hydroelectric power that is quickly becoming all the rage: run of river.

It’s no secret that hydroelectricity sits near the top of the renewable energy list. But hydro invariably conjures images of soaring concrete dams, rerouted rivers and flooding, environmental damage and displaced people. Not to mention the stiff price tag that comes with such an immense engineering project.

However, as British Columbia is proving, hydroelectric power generation is not limited to just dams. For junior hydroelectric companies, these run-of-river projects are a less expensive, more efficient, and fish-friendlier way to get in on the energy game. They’re also a ground-floor investment opportunity.

Run of river exploits the elevation drop of a river. Power stations are built on rivers with a consistent and steady flow, either natural or regulated by a reservoir at the head of the facility. There is no need to flood large tracts of land to keep the plant humming during the dry season; run-of-river projects simply use a weir (a small, only partially blocking dam) to divert some water via a penstock (delivery pipe). As the water flows downhill, it picks up the speed necessary to spin the turbines in the powerhouse and create electricity. The diverted water then joins the river again through a channel known as a tailrace.



Everything is done within the natural range of the river. There’s no need for the concrete monstrosities that come with large-scale damming – or the associated environmental controversy. At the most, a weir is constructed to submerge the mouth of the penstock. Capital outlays are relatively low, the ecological footprint from the projects is quite small, and if the geology is right, engineers can tailor the technology to the terrain, rather than having to wrestle with it.

Run of river just might be the ultimate in green power. On the one hand, with its near-zero emissions, it stacks up favorably against conventional, polluting sources of energy. At the same time, it has a distinct advantage over other renewables, like solar and wind. There’s no need for the costly backup generation units these technologies require to operate on calm days or at night.

These power plants have actually been around since the 1970s, but the technology has only started to take off in the last few years. In countries that can, and do, use hydro as a power source, the competition for contracts is becoming fierce. And thanks to the comparatively low costs, junior, small-cap companies are making out especially well, leaving the big boys to handle the staggering debt and the environmental protests associated with huge dams. Smaller-scale projects mean fewer headaches while providing excellent returns on investment.

Of course, nothing’s perfect, and run of river has its challenges. One is that without a large dam or reservoir, there is no way to store energy and adjust power output according to peak periods of consumer demand. There are also still environmental issues, albeit much less drastic than with a traditional dam. Somebody will always object to new roads and transmission lines. And while the projects are usually sited away from fish-spawning grounds, aquatic life still can get trapped behind the weirs or at the mouth of the penstock.

But one of the beauties of the technology is its flexibility. Engineering solutions like fish ladders, water-velocity regulators, and careful site design can mitigate many of these concerns. The smarter companies also work closely with local communities, to head off problems early on.

The biggest limitation is geology. These generators can’t be built across just any old river; only regions with a favorable lay of the land will do. And the next biggest is probably politics. Some African nations that could really benefit are too unstable to attract sufficient investment capital. Other countries, like Venezuela, deter investors because of the risk of nationalization. Still, the good news is that there is immense potential to be found on almost every continent, while utilization remains in its infancy. And as construction designs improve and engineers innovate, project sites that were formerly only theoretically feasible will become economically viable.

Run of river will not completely replace conventional hydro. It’s not meant to. There’s no way naturally running water can compete with something like the Three Gorges Dam across the Yangtze River in China, a project which will eventually have a total electric generating capacity of 22,500 megawatts. By comparison, the premier U.S. run-of-river plant – the Chief Joseph Dam on the Columbia River in Washington State – produces a “mere” 2,620 MW.

Be aware, though, that 2,620 MW is hardly trivial. Apply the usual rule of thumb, where one megawatt will supply the needs of 500-900 average houses, and this run-of-river plant could serve as many as 2.4 million homes. Not bad.

As the era of cheap fossil fuels winds down, governments and entrepreneurs alike are searching for alternative energy sources. Given run of river’s advantages – low initial cost and maintenance, flexibility, environmental friendliness – it is poised on the brink of a major construction boom, in many more places than British Columbia. 

It’s going to be an exciting ride, for end users and investors alike.

----

If you’re interested in “investing green,” Marin Katusa has the best picks for you... companies that make sense not only environmentally but also economically. Learn how Marin keeps picking stock winners by sorting through the hype and being left with only the best of the best.Read more here.  








Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Thursday
Jun102010

Fadel Gheit: Gas Sector M&A Activity About to Ramp Up

Source: Brian Sylvester of The Energy Report  6/10/10
http://www.theenergyreport.com/pub/na/6500

Fadel Gheit.jpg

When folks want the straight goods on the oil and gas sector they go to Oppenheimer's sage Managing Director Fadel Gheit. That's what we wanted, too, when we asked him to spend some time with The Energy Report. In this upfront interview, Gheit rails against government inaction on oil price speculation and predicts low gas prices will soon lead to more M&A activity. Gheit's market commentary is frank and insightful and could certainly impact your investment decisions.

The Energy Report: The oil spill in the Gulf of Mexico (GOM) continues to get daily headlines. Is the spill affecting the oil price or only the prices of companies with exposure to the Macondo accident?

Fadel Gheit: The spill really did not have any impact on oil prices. Oil prices are basically reflecting increased concern about global economic growth and China slowing down its economy; Europe is obviously having problems with the bailout of Greece and the expectation of bailouts for Portugal and even Spain. That casts a shadow on global economic growth and therefore demand for oil is likely to be a lot lower than earlier forecasts. That's why oil prices came down from $86 to $70. The Gulf incident really did not have any impact.

TER: You have a perform rating on BP (NYSE:BP; LSE:BP) and Anadarko Petroleum (NYSE:APC), two companies involved in Macondo. What is the rationale behind those recommendations?

FG: Well, we have not changed our recommendation on BP. We downgraded Anadarko because its exposure to future liabilities relative to size is almost 1.5 times the impact on BP. It is less financially flexible than BP, so BP can go and borrow $10 billion and still have a relatively acceptable debt ratio while Anadarko is pretty stretched out as far as its financial flexibility. They are two totally different companies, but unfortunately they are in the same boat. Their stocks have suffered significantly over the last 30 days.

TER: But at the beginning of May, well after the accident, you still had an outperform rating on Anadarko.

FG: Correct. Anadarko and BP both lost 29% of their market value in the last month. I thought for a while that Anadarko could withstand the pressure a little bit because it has tremendous upside potential as far as drilling. But then a lot of people concluded, including myself, that it has very high exposure to offshore drilling, which is likely to enter a new phase of government regulations. That would make it less appealing than it was only 30 days ago. That's the reason for the downgrade.

TER: In another May report you had EOG Resources (NYSE:EOG), Pioneer Natural Resources Co. (NSYE:PXD), and Occidental Petroleum Corp. (NYSE:OXY) rated as outperform due to their lack of exposure to what's going on in the GOM. Tell us about these companies.

FG: By definition companies that have very large exposure to an unconventional play are immune to what is happening in offshore as a result of the oil spill. Companies like EOG have very little footprint or none when it comes to offshore. It is going into production in the U.S. and focusing on liquid production growth and because oil is selling at a significant premium to natural gas. EOG and the rest of the independent oil and gas producers have increased their focus on growing their oil production at a much faster rate than they had planned only a few months ago. That's one of the reasons that we still like EOG. We still like Chesapeake Energy Corp. (NYSE:CHK). We still like Devon Energy (NYSE:DVN). All these companies are basically or predominantly natural gas but they are increasing their focus on oil.

TER: Are there other buying opportunities related to the Gulf?

FG: I do not follow services companies, but obviously increasing regulations will force producers to use more services to do more tests and be more careful going forward. Money will go to the service provider, whether it's a helicopter company or companies that do basic drilling platform maintenance to make sure that we are safe and sound. There will be winners in the new era of government regulations.

TER: In another Oppenheimer report it's stated that investors dumped companies with exposure to the GOM after White House comments regarding a possible moratorium on new drilling. Nonetheless, drilling in the Gulf continues. Might this be a good time to pick up some of those companies?

FG: Investors will shy away from companies that are making headlines for whatever reason. But a company like Apache Corp. (NYSE:APA), for example, is the largest operator of shallow offshore platforms and a very good operator. It has a clean track record. Obviously the stock came down very sharply on the news that there could be a moratorium on drilling and permitting. It also has a pending acquisition of Mariner Energy Inc. (NYSE:ME), which is focused on deepwater prospects. A lot of investors looked at the acquisition as negative and sold off. I like Apache, it has a very good management team, a very strong balance sheet, a very strong track record, too. It has become an investment opportunity.

TER: You were on MSNBC the other day talking about supply and demand fundamentals in the oil price. In another piece you said that some of the big financial players like pension funds, Goldman Sachs and Morgan Stanley are manipulating the oil market. Can you tell us how that works and what sort of role this price manipulation is playing in the oil price right now?

FG: I truly believe that speculation is driving or has driven oil prices in the last four or five years. Congress believed it too that's why there were hearings. I testified before Congress on that subject. The CFTC (Commodity Futures Trading Commission) chairman, who is a former partner of Goldman Sachs, believed exactly what I believe. The question is can we get Congress to really limit speculation by financial speculators. That becomes a tall order because of politics and lobbying and all these sort of things. I believe that if we put limits on commodity trading by non-principals—basically the financial players—I think you are going to see little volatility. I think you are going to see the restoration of supply/demand driven markets instead of future speculation driven markets, which we have right now and have had for the last five years.

TER: Do you believe the government will step in?

FG: I'm not sure. Elizabeth Warren, who is overseeing financial regulation in Washington, said publicly that the financial lobby and the financial industry is extremely powerful. Basically, when there are bought politicians on both sides of the aisle it becomes really difficult for Congress to push through this kind of regulation. The fact is even the CFTC chairman could not convince Congress to impose restrictions because his own staff shut him down. I am not hoping for change.

TER: Are you saying that consumers can expect artificially inflated oil prices for the foreseeable future?

FG: It's not only in oil prices. We've seen it in real estate and look what happened—we had the financial meltdown. We're seeing it in commodities because of knee-jerk reactions, because of misinformation, because of a lack of government regulation. It's sad but this is the environment we live in. Government is either incompetent or corrupt and they put us in debt as a result. Like I said I'm a realist; I don't daydream a lot. If we believe that we are going to have (oil price) regulations, then we will be daydreaming.

TER: In your view what should the oil price be?

FG: Theoretically speaking, in my calculations I don't see oil prices justifiable above $60. There is an old rule called the one-third rule. Basically the replacement cost should be about one-third of what the oil price is. Right now the industry replacement cost is less than $20, so the commodity price should not exceed $60. This rule has been in place for 30 years and we haven't really changed much. Actually a company like Occidental Petroleum, they limit the replacement cost of a barrel of oil to 25% of what they think the price of the commodity is likely to be. Having said that, they'd love to see $80-$90 oil but they'd like to keep the replacement cost under $15.

TER: What is Oppenheimer predicting for oil in the next six months and then the next 12 months?

FG: We really don't predict too much because if you play the game by the rules and everybody else is cheating you're guaranteed to lose. I don't enjoy losing so in our income model we tell people what we fear and what we think. When we do our earnings estimate, we basically link our benchmark to whatever the NYMEX is telling us. If the futures index is telling us it's going to be $80 next year, we use 5% discount on that number. Right now we're looking at oil prices on average to be about $77 this year and about $80 plus dollars next year.

TER: How do investors profit from $75-$80 oil?

FG: There are a couple of things. Stable or lower oil prices will always favor larger companies like Exxon Mobil Corp. (NYSE:XOM), British Petroleum, Chevron Corp. (NYSE:CVX), ConocoPhillips (NYSE:COP) but if oil prices or natural gas prices increase significantly for whatever reason, whether through speculation or market events, investors usually flock into the stocks of the independent oil and gas producers because they have a higher beta. On the way down they decline the most and on the way up they gain the most. So I'm still very bullish longer term on domestic oil and gas producers.

TER: What do you see happening in the domestic oil and gas producer space?

FG: I think two things will take place. The survivors will get bigger. They will acquire smaller companies. Apache is buying Mariner at a decent premium, but they will extract good value out of it. I'm very surprised that we have not seen more mergers and acquisitions. If natural gas prices remain close to the current level and oil prices don't go much higher, I think we are going to see a lot of pressure on the smaller companies that have been waiting for a very, very big payday that might not come. These companies will probably settle for a lot less than what they had in mind; we are going to see a lot of mergers and acquisitions. As a result the independent oil and gas producers are very ripe for the picking by larger companies, whether domestic or international. And, as I said before, that will create value. These smaller companies have real growth. The larger companies have little or no growth. So I still like the oil E&P (exploration and production) stocks. I think this is the future. Investors are basically thinking the same way.

TER: Are there any high percentage takeover targets that you're looking at?

FG: Companies don't buy other companies for one or two reasons; they want to see the best fit. They look at value, not necessarily what they are paying for the company. I mean one plus two should not be three. It should be 3.5 or 4 or even 5. Then you're creating shareholder value. I would say most if not all the independent oil and gas producers are potential takeover targets. It's unrealistic to think all oil E&P companies are going to be taken over. Probably 10% of the independent oil and gas companies—if oil and gas prices don't move much higher from the current level—are likely to be acquired over the next couple of years.

TER: Are we more likely to see takeovers of onshore E&Ps? Offshore E&Ps? E&Ps in the oil sands? E&PS in the Bakkens? What's the focus going to be?

FG: The consolidation onshore is going to accelerate because I don't see any real spike in natural gas prices any time soon. It's going to be survival of the fittest. We are going to see consolidation in the major and unconventional plays whether the Bakken Shale in North Dakota or the Marcellus in Pennsylvania or the Eagle Ford in Texas or Haynesville in Texas and Louisiana. Timing will depend on where the commodity prices are going to be six months or a year from now.

TER: You see most of the consolidation in the gas and shale plays?

FG: Yes, because this is the area where people were betting on higher prices that never materialized. Most of them are beginning to think realistically. I mean don't hope for $10 gas because it's not going to come any time soon. You have to readjust your valuation of your assets so you're most likely to accept a much lower bid than you had in mind. That's essentially what XTO Energy (NYSE:XTO) did with Exxon. XTO is one of the largest E&P companies. It basically set the tone for what to expect in futures mergers and acquisitions.

TER: What sort of models are you using for the gas price?

FG: Almost everybody thinks that gas prices at best will reach $6 in two or three years. Might even reach $7 but that's about it. Any higher prices would bring more supply because everybody has perfected the technology—everybody. This is no longer an exclusive, private club. The smallest of the companies drilling in Haynesville or Eagle Ford or wherever can do a better job than the largest player in that play. If prices rise, supply is going to come at much faster rate. The market will have to reach an equilibrium. Every time we see higher prices, you're going to see more production. More production will bring the price back down and so forth. The $5 to $7 range is probably good for the next four, five, six years.

TER: A recent Oppenheimer report stated that replacing reserves at competitive costs is by far the biggest challenge facing oil and gas-producing companies. To what extent does this make secondary oil companies more likely to be takeover targets?

FG: This is the basis for our thesis that there are fewer and fewer areas for the large companies to go. National oil companies have taken over. They are no longer in the passenger seat—they are doing the driving. The oil companies basically serve those companies. Nationals want to pick their brains of the oil companies and give them whatever.

TER: Why is that?

FG: Because there is no access to large resources anywhere in the world. Iranco is just as good as Exxon or BP at drilling onshore. It's their backyard—every rock and stone in the desert. Why would they need an Exxon or BP or Chevron to share their wealth? Russia is learning very quickly. Five years ago they were inviting every company to go over there and invest a lot of money. They learned the game. Now they want to play it, so they try to push companies out. Venezuela! Hugo Chavez confiscated the assets of Exxon and ConocoPhilips. The fiscal regime is getting tougher. Terms are getting tougher. The profit per barrel in North America as a result of these changes is now the highest in the world for the large oil companies or for whatever companies. After all is said and done companies make more money per unit of production in North America than in any of other country.

TER: The last time you talked with us you talked about Exxon, Royal Dutch Shell Plc. (NYSE:RDS.A), ConocoPhilips and Chevron. Please give us an update on those companies.

FG: Conoco is undergoing major restructuring. They are selling some of their assets. These steps will generate about $15 billion. They are going to use $5 billion to pay down debt; $5 billion to buy back their stock. The other $5 billion will go to capital spending, growth projects, tactical acquisitions or to buy back stock. And to increase its dividend because they believe growing the dividend at a higher rate is appealing to shareholders.

Exxon is waiting for the final approval of the XTO acquisition, which could be the catalyst needed to get Exxon on the right track. Exxon stock has not done well at all in the last two years. The acquisition is not really going to move Exxon's production or reserves but it's going to double Exxon's gas production in North America. It will basically give Exxon all the tools of horizontal drilling, which XTO perfected, to use on a global scale. That's where the growth is likely to come. Royal Dutch is basically going through organization and cost saving measures to improve their competiveness and lower their operating costs under new CEO (Peter Voser). He used to be the CFO so he's focused on costs. I wish him luck and he seems to be doing a good job.

Chevron has the second best stock performance among major integrated oil companies. It has a very strong balance sheet with very low debt, and a very high level of cash on hand. It has a very rich portfolio of projects. They are progressing with one of the largest natural gas projects in the world—the Gorgon field in Australia. The gas in Australia is going to be converted into LNG onshore and then shipped to customers in Asia. It's a $42 billion dollar project—the largest in the company's history. It's going to take four or five years to build. They have a lot of projects that will be following this one, unfortunately they are mostly natural gas, which is what most of these companies are focused on right now.

TER: What are your ratings on these companies?

FG: We have “perform” ratings on all of these companies, unfortunately, they have been underperforming the market. Although the market so far this year is down about 4% all these stocks are down on average about 17% or 15%. The only stock that has outperformed the S&P 500 this year is ConocoPhilips. It's down but it's down less than the market.

TER: Are you more bullish on natural gas or oil producers at this point?

FG: You have to recognize the fact that oil is trading at 200% premium to natural gas. It's an undeniable fact. A lot of companies, if they have a choice, will increase their drilling on oil deposits instead of gas. They will keep gas until the price is right and to them the price is not right. Why waste the resource in an overcrowded and oversupplied market? Longer-term I think we should all be more bullish on gas. It's cheaper. It's cleaner. We should have plenty of it. The technology has been perfected by E&P companies and now the big and mighty from all over the world are coming to the U.S. to learn the technology at the hand of the masters. The masters happen to be the small E&P companies, whether it's Chesapeake, whether it's EOG, whether it's Range Resources (NYSE:RRC). It is really the future of this country. It's a commodity that relative to oil is undervalued and in more abundance now than oil and less political, which is very important. If the blowout in the Gulf of Mexico had been a gas field, we might not be in the mess we are in now.

TER: Who do you like among the independent gas producers?

FG: We like Devon Energy a lot. Devon recently sold its offshore assets and is now an onshore North American play. The safest you can get. The most stable area you can do business in. The focus is mostly on natural gas in the U.S. and unconventional oil, which is basically the oil sands in Canada. They are using the most advanced seismic deep technology, which is basically in situ processing. They produce oil by injecting super heated steam into the deposit and collect the oil. They are already producing from one project—Jackfish 1. They are duplicating it and have almost completed Jackfish 2. They have a permit to do Jackfish 3. Each project produces 30,000 barrels a day. Very profitable, very long reserve life, clean technology and a very well-managed company. Devon was one of the pioneers of horizontal drilling in the Barnett shale. They drilled more horizontal wells than any other company so they are expanding in other plays. The recent sell-off program gave them over $8 billion, which exceeded the high end of the forecast of $7.5 billion. The money is going to be split. Half of it is going to go to share buyback, which will be about 15% of the shares outstanding. The rest will be used to pay down debt. Two things that are likely to push the stock price higher. The reason the stock has not done much is basically because it's a predominantly natural gas play.

TER: Are there any thoughts you'd like to leave us with?

FG: I think price volatility will continue. I think it's a shame that the government knows what's going on and either does not want to do or cannot do anything about it. I think market transparency should be the norm, not the exception. I think it's the volatility that really hurts planning and future investment. Companies do not know how to budget if they don't know where gas prices will be a week from now or a year from now or whenever. Unfortunately, financial players can gain at the expense of consumers that have to pay dearly for the commodities that they are using.

Fadel Gheit is a managing director and senior analyst covering the oil and gas sector for New York-based Oppenheimer & Co. He spent six years with Mobil Oil and five years with Stone & Webster. He has been an energy analyst since 1986 with Mabon Nugent and JP Morgan and has been with Oppenheimer & Co. Inc. since 1994. He has been named to The Wall Street Journal All-Star Annual Analyst Survey four times and was the top-ranked energy analyst on the Bloomberg Annual Analyst survey for four years. He is one of the most quoted analysts on energy issues and has testified before the U.S. Senate and the U.S. House of Representatives about oil price speculation, and is a frequent guest on TV and radio business programs. Fadel holds a B.S. in chemical engineering from Cairo University and M.B.A. in Finance from New York University.

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Streetwise - The Energy Report is Copyright © 2010 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
The Energy Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.
From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.
Streetwise Reports LLC
P.O. Box 1099
Kenwood, CA 95452
Tel.: (707) 282-5593
Fax: (707) 282-5592
Email: jmallin@streetwisereports.com


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.





Tuesday
Jun082010

Hyperion Power Generation (Mini Nuke) Update

Hyperion plant.jpg


Get the facts and avoid the hype in this unique workshop on Small, Modular, and Mini Power Reactors. There's more to this market than old light water technology!

The Symposium will address:

New information on the designs and applications of small, modular, and mini nuclear power reactors

Exclusive!  Introduction to the new class of reactors known as Mini Power Reactors
Special Presentation on the ANS President's Committee report on generic issues for SMRs


Advantages of the new non-light water reactor technologies

A training symposium that will describe technical designs and operations

Perspectives on the challenges of design approvals by the NRC

Many conferences have been held to discuss the generalities of what Secretary of Energy Stephen Chu describes as "America's next nuclear option," small and modular nuclear reactors (SMRs).  However, most events offer repeats of the narrow slice of information that has already been presented.

Now, EUCI-a leading power and utility training firm- is bringing together experts and innovators that will provide attendees with a complete picture of the fast emerging SMR industry - including information on the promising non-light water technologies and the even smaller Mini Power Reactors (MPRs).  Join us to hear intriguing NEW speakers on the most important energy technology development in recent history.

Offering unique applications such as replacements for aging coal-fired plants, Small, Modular, and Mini Reactors can be built in half the time of large reactors and for as little as $4,000 per kilowatt capacity. In addition, smaller reactors have technical advantages over other reactors including increased safety and reduction of spent fuel challenges.  The new non-light water Mini Power Reactors (MPRs) play a different role. MPRs are smaller and simpler still, can be installed even quicker than SMRs and offer a more transportable solution for remote deployments, military and emergency response operations, on-site water purification and liquid fuel generation, and more.

In The Wall Street Journal, Secretary Chu said, "Their (SMR) size would also increase flexibility for utilities since they could add units as demand changes, or use them for on-site replacement of aging fossil fuel plants. Some of the designs for SMRs use little or no water for cooling, which would reduce their environmental impact. Finally, some advanced concepts could potentially burn used fuel or nuclear waste, eliminating the plutonium that critics say could be used for nuclear weapons."

In short, there are different applications, challenges and opportunities for the various sizes of the reactors that fall under the category of "new and smaller."  Come and get the complete picture on this new era of nuclear energy in a workshop format.  We'll discuss technical, logistical and licensing issues, as well as implementation and application considerations. Join us and be part of "tomorrow's nuclear" that's evolving today!





Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Sunday
Jun062010

Australian Miners not best pleased with proposed 40% tax

Map of Australia Mines 06 June 2010.jpg


One of the risks to investment in the mining sector is that commonly known as geo-political risk, which has now cast its dark shadow over Australia as the Rudd government look to raise more money from one of her booming enterprises.

We kick off with a snipit from the BBC as follows:



Mining group Xstrata has halted investment in two projects in Australia because of the government's proposed new tax on mining profits. It said it was shelving investment worth 586m Australian dollars ($500m; £338m) in two mines in Queensland. The investment is part of a planned A$6.6bn development in both of the projects, which Xstrata said would have created 3,250 new jobs. Australia's government is planning a 40% tax on mining profits from 2012.

Last month, Australian iron ore miner Fortescue Metals threatened to abandon $15bn (£10.2bn) of new projects unless the plans for the mining tax were watered down or axed.

Bad news travels fast as we can see in this article from Xinhua:



CANBERRA, June 5 (Xinhua) -- The federal government's 61 billion dollars (50.3 billion U.S. dollars) Future Fund called for the proposed mining super-profits tax to be completely revamped or abandoned because it is a risk to investment and a short-sighted use of the nation's resources, local media reported on Saturday.

David Murray, the former Commonwealth Bank chief executive who is the chairman of the Future Fund, on Friday joined a chorus of business leaders decrying the design and implementation of the resource super-profits tax.

Murray described the mining tax as significantly flawed, saying it robbed future generations and represented a risk to Australia's international investment reputation.

In an interview with Business Spectator, Murray said that if Australia could not "achieve a design that does not penalize the existing projects -- that's a sovereign risk issue and a design that does not discriminate between recurrent spending and long- term intergenerational wealth creation -- if those things can't be done, the tax should be abandoned."

Murray also said it did not matter in the longer term if the budget were returned to surplus in three or four years' time and that "this tax could cause more trouble". "It's a long-term tax being applied to a short-term purpose, really, that's where the problems arise," Murray said.

An overview is provided by Mbendi.com as follows:



Australia is a major global producer, containing 26% of the world's reserves. It is also the world's second largest producer after Canada, with mine production touching 8,931 t of Uranium in 2003. Exports in 2003 were estoimated at 9,614 t valued at A$398 million.One of Australia's largest producers is Energy Resources Australia (ERA), a subsidiary of Rio Tinto. ERA's operates the Ranger mining operation as well as developing the Jabiluka prospect in the Alligators River region, east of Darwin in the Northern Territory. However, the Jabiluka development has run into several problems with environmental agencies.

Three uranium mines operated in Australia in 2003: Ranger open pit (5,065 t in 2003), Olympic Dam underground mine (3,176 t in 2003), and the Beverley (689 t in 2003).

During 2003, 9.0 Mt ore were mined at Olympic Dam and the processing plant treated 8.4 Mt ore with an average grade of 2.4% Cu and 0.63 kg/t of uranium. The Beverley ISL mine was extended from the North orebody into the much larger Central orebody and plant capacity expanded to include a third train of ion-exchange columns..

The Western Australian Government has prohibited the mining of uranium for nuclear purposes from any mining lease granted after June 2002. The policy was ratified with an amendment to the Mining Act, which prohibits the mining and export of uranium for nuclear purposes. There are no uranium mines in Western Australia, but large deposits occur at Kintyre and Yeelirrie.
Since 2006 40 percent of the world's known uranium reserves are found in Australia.

As investors in uranium stocks we can only hope that something can be worked out that does not derail the mining industry altogether, taking uranium with it.


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Thursday
Jun032010

Carmel Daniele: Put Cash in Colombia’s Oil and Brazil’s Iron

Source: Brian Sylvester and Karen Roche of The Energy Report  06/03/2010

Carmel Daniele.jpg

Financial guru Carmel Daniele is none too concerned with the euro debt crisis, hemorrhaging oil in the Gulf or depressed natural gas. She's too busy making money. Whether it's oil in Colombia or potash in Peru, she's always looking for ways to improve the fortunes of her namesake CD Capital Private Equity Natural Resources Fund. In this straightforward interview with The Energy Report, Daniele shares with us her favorite emerging markets and investment opportunities for those willing to place some faith in London's commodity queen.

The Energy Report: What effect will the debt crisis in Europe have on oil prices?

Carmel Daniele: I have to say that the debt crisis in Europe has been blown completely out of proportion. Nearly 70% of the euro-area economy is made up of three countries: France, Germany and Italy. So unless the sovereign debt crisis derails their economies, I just can't see how the euro area can weaken sufficiently. Also, from a global perspective, Greece is quite small. China is 14 times bigger than Greece. In the meantime, we've got the U.S. economy rebounding. When the markets catch up and realize all this, I think that the oil price will increase again. Also, oil is one of the best hedges against inflation. With all the money supply being printed and inflation creeping in, there will be more investment in oil. I see the oil price going higher.

TER: Are you willing to specify a range?

CD: It's very hard to predict, but I think around $80–$90 is the level where everyone seems to be relatively happy.

TER: You mentioned Greece as being a relatively small economy, but we know that Spain is having some debt issues, as well as Portugal and Ireland. If there is contagion, is that cause for concern?

CD: France, Germany and Italy basically constitute 70% of the euro area, so they are the key.

TER: How solvent is the UK right now?

CD: I think that the UK will be fine. They were wise not to go into the euro back in 2000. London has historically been the mining finance center of the world. So, if the commodity super-cycle continues for another 20 years—which I believe it will—I think the UK should be fine. In the short term, there is talk about increasing taxes. But I think the biggest risk is if taxes increase to such a level that it provides a disincentive for businesses to be headquartered here, there will be a mass exit to other jurisdictions. However, the current government is quite sensitive to that and would not do anything drastic to jeopardize London's status as one of the key financial centers of the world.

TER: You started the CD Private Equity Natural Resources Fund in 2006 to take advantage of the commodity super-cycle. So far, oil is doing pretty well, but natural gas is below expectations. What's your take on what's happening with natural gas?

CD: Gas always has really violent cycles. I haven't really invested a lot in gas, but I think now would be a good time to invest because it's so cheap, and I can't see it staying this low.

TER: Any particular plays in the gas sectors that have caught your attention?

CD: There's one private company that I've invested in called Tourmaline Oil Corp. Its focus is on the western margin of the Western Canadian sedimentary basin, where the remaining targets are larger and where its staff has had considerable success in the past. These targets include the Alberta deep basin tight gas sands, unconventional gas resource targets and deeper conventional Devonian carbonate reservoirs. The management team, headed by Michael Rose, has had success more than once in the past in building similar companies, like Durvaney Oil, and selling them to majors. I wouldn't be surprised if the company were to be sold prior to a listing. This is one of the most liquid private companies I have come across.

TER: One of the biggest stories on this side of the ocean is the oil spill in the Gulf of Mexico. What effects do you see the spill having oil market?

CD: I was reading the other day in the Financial Times that the market is overstating the damage to BP and that the damage done to their market cap is greater than the cleanup costs and liabilities. I get the feeling that U.S. lawmakers will be in a hurry to make sure an accident like this doesn't ever happen again. They'll probably push through some legislation that impinges upon Gulf producers' earnings; there will probably be stronger enforcement of safety standards and a rise in the current liability cap. This will all impact Gulf producers' bottom-line earnings.

TER: Do you see the oil spill creating investment opportunities?

CD: We have been looking at oil and gas investments in general and not specifically looking to capitalize on the Gulf of Mexico spill. We invest quite heavily in private companies. One of them is a private Brazilian oil and gas company called HRT Oil & Gas, with properties in the Solimoes basin of Brazil. They have recently done deals in Namibia with the government and entered into a joint venture with Universal Power Corp. (TSX.V:UNX). The properties are close to the Petrobras (NYSE:PBR) fields in the Solimoes basin, which had a further discovery recently. The management team is one of the best in the planet, headed up by Dr. Marcio Rocha Mello, who has over 24 years experience from Petrobras and is considered a world leading expert in Petroleum geochemisty and exploration.

TER: What about some publicly listed oil and gas companies that you have your eye on?

CD: The other oil and gas plays we have our eye on are in Colombia. I was there not long ago, and basically Colombia is a geologist's dream. It is very rich country with about two-thirds of the country untapped. One of the properties that we visited belonged to Pacific Rubiales Energy Corp. (TSX:PRE; BVC:PREC), which is headed by some very impressive Venezuelans who have the expertise to develop the oil there given their experience in building Venezuela's Petróleos de Venezuela, S.A. (PDVSA) before Hugo Chavez's nationalization campaign.

TER: What is the other company?

CD: The other one, Canacol Energy Ltd. (TSX:CNE), has only about a fraction of the market cap of Pacific Rubiales and is often referred to as the "poor man's Rubiales." Management at Canacol has estimated the un-risked resource for its blocks at 5 billion barrels oil in place, which is comparable to the Rubiales field, with 4.2 billion barrels oil in place. Mackie Research, a brokerage firm in Canada, believes that, with exploration success, Canacol has the potential to establish a reserve of similar size to the Rubiales field. We are also keeping an eye on Gran Tierra Energy Inc. (NYSE.A:GTE; TSX:GTE), PetroAmerica Oil Corp (TSX:PTA) and Parex Resources (TSX.V:PXT).

TER: Are you looking at oil and gas suppliers?

CD: Yes, the oil and gas companies in Latin American are all cashed up and looking to spend it on services and drilling. Tuscany International Drilling Inc. (TSX:TID), which listed about two months ago on the Toronto Stock Exchange, is positioned to take advantage of all these cashed-up oil plays in Latin America. It's the same management team that built up Saxon Energy services and sold it to Schlumberger and an investment fund consortium. The management has developed excellent relationships with Pacific Rubiales, Gran Tierra Energy, HRT Oil & Gas and many other players in the region.

TER: What else did you learn on your recent trip to Colombia?

CD: As I said, Colombia is really a geologist's paradise. It's a rich country that has opened up to the world, with two-thirds of the country ready to be explored for the first time. It's a lot safer than it used to be. I felt very safe there; it's changed completely. A lot of the big resource companies are scrambling to open offices there, whereas a few years ago they would not go anywhere near it. Colombia is absolutely booming. The government is very investor friendly; very environmentally conscious, as well. They want some of the bigger players that are environmentally conscious working on their properties rather than the small operators that are probably not as environmentally friendly. The other thing that I noticed was that the Colombian pension funds have a lot of money to deploy and they want to deploy it in their own country.

TER: What size are these funds?

CD: Multibillion-dollar funds. They manage roughly US$40 billion and are growing by about US$400 million to US$500 million monthly. I think it's very exciting when they start investing in their sector.

TER: Are you saying that these funds could create opportunities in terms of publicly listed companies?

CD: Yes, they create a lot of value because they can go in and buy oil and gas companies listed in their country on the Colombian exchange. That drives up the price and creates more liquidity for companies that are dual-listed there. That is what happened to Pacific Rubiales when it listed on the Bogota Exchange, and Canacol is looking at doing the same soon and should benefit in the same way.

TER: One of the reasons you started your fund was to take advantage of the burgeoning middle class in places like China and India. Tell us about the prospects for China considering recent reports that growth there will be somewhat below projections for at least 2010 and possibly 2011.

CD: The thing is China still has its foot on the accelerator and it's growing. It may not be growing as fast as we first expected, but we also have to remember that it's growing from a larger base. The impact is still huge. I'm still very bullish on it. China overtook the U.S. in the number of cars that it purchased in 2009 and more cars means more oil. There are 1.3 billion people in China; 300 million with spending power. It's obvious when you do the numbers that the Chinese will continue to buy as many cars as the 300 million Americans have for the last 20 years because they have five times the population. In China, 1 out of 10 people owns a car. Can you imagine when they catch up to the U.S.? They'll consume a lot of oil.

TER: What sort of opportunities is that creating for you and what companies are you following that are directly positioned to capitalize on China's advances?

CD: China is still on the hunt for acquisitions. It acquired Emerald Energy Plc., which had properties in Colombia, a while ago for about half a billion. They seem to like Latin America for oil and gas lately as they've done quite a few deals there. We are already seeing this wave of M&As (mergers and acquisitions) with overseas oil and gas M&As by Chinese and Indian oil companies bound to reach a record high in 2010. In the first half of this year, overseas M&As reached US$16 billion, surpassing the previous record set in 2009. I'm interested in world-class oil and gas plays in Latin America that have the potential to grow to a sufficient size to attract China and India.

TER: China is stockpiling or has cornered the market on some strategic metals like lithium and rare earth elements. Anything appeal to you in the rare earths space?

CD: One company in rare earths that is quite interesting is a company called Dacha Capital (TSX.V:DAC; OTCQX:DCHAF). They try to stockpile rare earths to control the physical market. They're buying it, stockpiling it and storing it. I know that China has a monopoly and is trying to make sure that it controls rare earths. Of course, the Japanese are trying to break that monopoly by looking for acquisitions. So it will be interesting to see how Dacha Capital goes.

TER: You talked earlier about how many cars are going to be purchased by the Chinese in the coming years. That means that they'll need a lot of steel, and that means a lot of iron. What's happening right now in China's iron sector and how do you see that playing out in terms of investment possibilities?

CD: I love iron ore. I've actually liked it for a long time because of the market dynamics. Asia (excluding Japan) is estimated to spend over $2 trillion in the next five years just building infrastructure. It has been estimated that the world will spend US$41 trillion in infrastructure from 2005 to 2030. You look around for supply and there aren't many new major producing iron ore mines coming on stream. The only one that's gone into production since the start of the super-cycle is Fortescue Metals Group Ltd. (ASX:FMG) in Australia; and even they have announced cutbacks to supply due to the Australian super tax. Three-quarters of the world's seaborne iron ore supply is controlled by three players, Rio Tinto Ltd. (LSE:RIO; NYSE:RTP; ASE:RIO), BHP Billiton Ltd. (NYSE:BHP; PKSHEETS:BHPLF) and Vale S.A. (NYSE:VALE).

China, on the other hand, consumes roughly 70% of the world's supply and doesn't control price. It has desperately been trying to control pricing, without much success. It tried to take a 19% stake in Rio Tinto during the crisis, which would have given them a seat at the negotiating table but that fell through. So you've got these three players that control supply and China who just can't get enough iron ore and that's why we've had a 100% increase this year in the benchmark iron ore price—something that we haven't seen before in history.

The other interesting thing is that China needs to blend the Australian iron ore with the Brazilian iron ore due to high impurities like phosphorous and alumina in the Australian product. So I prefer Brazilian iron ore plays at the moment, and the added bonus is they are not subject to the Australian super tax.

TER: Is there a Brazilian iron ore play worth looking at?

CD: There's a company called Ferrous Resources Ltd. They've got over 4.5 billion tons of iron ore, and it's growing at a rapid rate. They are all cashed up with US$500million in the bank. They've put together a world-class management team from Brazil. CEO Mozart Litwinski was formerly with Companhia Vale do Rio Doce (Vale), and the Executive Chairman Gordon Toll is ex-BHP and Rio Tinto and was previously non-executive chairman of Fortescue Metals Group. Ferrous Resources is my favorite iron ore story.

TER: You're a big believer in potash, too, which plays an essential role in fertilizer. What are some companies with promising projects in that commodity?

CD: There are two private ones that look very promising. One of them is called Brazil Potash Corp. , which will take advantage of Brazil's chronic shortage. Brazil imports 90% of its potash and the country has a growing agricultural market, so its demand for potash will grow. The other one is called Satimola, with potash in Kazakhstan. That one's close to China and has the potential to supply China's needs for potash for the next 100 years.

In the public space, a promising one is Americas Petrogas Inc. (TSX.V:BOE). It started off with oil and gas in Argentina, but it is now monetizing its potash deposit in Peru, GrowMax, which could ultimately be spun out to shareholders. The potash deposit is unique because you don't have to build infrastructure and you can get it into production fairly quickly as near ports, highways and towns and is also near Vale's phosphate plant. Very recently, the Indian Farmers Fertiliser Cooperative came in as a strategic investor.

TER: Thanks so much Carmel. Very informative, as always.

Carmel Daniele is the founder of CD Capital and CEO of the CD Private Equity Natural Resources Fund. The Fund's investment objective is to achieve capital growth through pre-IPO and pre-trade sale companies in the natural resources sector, targeting opportunities that deliver substantial returns on exit. Carmel was previously focused on selecting and negotiating natural resource investments for the Special Situations Fund at RAB Capital. Prior to this she was a Group Executive in Corporate Advisory at Newmont Mining, negotiating and structuring mergers and acquisitions around the world for the Newmont Capital group which included the US$24 billion three-way merger between Franco-Nevada, Newmont and Normandy to create the largest gold company in the world.

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Expert Insights page.

Streetwise - The Energy Report is Copyright © 2010 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.
The Energy Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.
From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.
Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.
Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.
Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.
Streetwise Reports LLC
P.O. Box 1099
Kenwood, CA 95452
Tel.: (707) 282-5593
Fax: (707) 282-5592
Email: jmallin@streetwisereports.com





Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Wednesday
Jun022010

Sven Del Pozzo: Ban BP but don’t Expect Offshore Ban

Sven Del Pozzo.jpg
Source: Brian Sylvester of The Energy Report  06/01/2010

http://www.theenergyreport.com/pub/na/6424

Sven Del Pozzo, until recently a senior oil and gas analyst with C.K. Cooper and Co., is nothing if not honest. In this candid interview with The Energy Report, Del Pozzo discusses the importance of Gulf of Mexico oil exploration to the U.S. economy, the need for more reflective oil price markers, how shale gas is keeping investors awake at night and oil and gas companies that could be ripe for the picking. The Energy Report interviewed Del Pozzo in late May, prior to his leaving C.K. Cooper.

The Energy Report: The massive oil slick from the Macondo well in the Gulf of Mexico could result in a ban on offshore oil exploration. What's your take on the fallout from the spill?

Sven Del Pozzo: There's obviously been irresponsibility on behalf of more than one party, mostly BP (NYSE:BP; LSE:BP). BP is a British company. These are U.S. waters. Typically we left the waters open to foreign operators, but in this case you'd like to see the bad operators get out of town and the good operators stay. Norwegian companies have an excellent track record of not having injuries and not having spills because they rely on fishing a lot in Norway and they drill where fishermen fish. They make sure there aren't any oil spills. It can be done. I say get rid of the companies that can't do the job. They don't deserve to drill over here.

TER: Do you think there will be a ban?

SDP: I think it's very difficult for the U.S. to ban offshore, exploratory drilling. That's a kind of death for us, because the Gulf of Mexico is the only place where we had production growth enough to cause our production to rise about 2% in 2009. Basically, the Gulf of Mexico allows us to be less dependent on foreign imports. To ban offshore drilling in the best place the U.S. has for oil exploration is really going to hurt our balance of payments and make us more and more dependent on foreign oil. That's going to be a very sour pill to swallow, and it makes me think the economic necessities of the United States are going to prevail over the environmental ones. Rather than saying, "No, you can't drill here anymore," you need to regulate better and make sure the companies that come here are fulfilling certain guidelines for safety and health.

TER: Are you seeing any investment opportunities as a result of the spill?

SDP: ATP Oil and Gas Corp. (NASDAQ:ATPG). It has been really banged up, and I think a lot of it is related to this debacle. It has a big offshore deepwater development called Telemark. Essentially, the future of the company depends on the performance of this one field, at least in the near term. They're in the development phase, so that means they're not exploring. If there's a ban on offshore exploratory drilling, then ATP shouldn't be affected too much because they're already in development and they've never really been known to have exploratory success anyway. If it achieves its production targets, I think it is going to come out from this debacle a winner.

TER: Are there other companies in the Gulf that you like?

SDP: If the U.S. continues to invite foreign capital, but only from companies that have a good record of not having spills and not killing their workers, that all points to Statoil ASA (NYSE:STO; OSE:STL), Norway's oil company. Statoil is at the forefront of technology and subsea developments. All of its production is offshore in Norway; that's pretty much the only thing that they do. If there is a shift to appreciating companies that do a good job in offshore, it would be Statoil.

TER: Crude stockpiles are at near capacity at Cushing, Okla., the delivery point for U.S. West Texas Intermediate (WTI) crude. As a result, WTI is trading at a significant discount to international crude. What's your view on the glut of oil in the U.S. and how is this likely to affect the oil price in the near and medium-term?

SDP: The way I think about storage might be a little different. I tend to think that oil is not just in storage in Cushing, but it's also in storage under the ground. We need to produce it and develop it in order to make it useable. I think there tends to be a little too much focus on stockpile data, which is simply data at a given point in time and it doesn't really tell you how active drilling is or how much new supply is coming onto the market. Also, Cushing is a little bit dated in its usefulness as a marker because there isn't much of a local market for the crude, but crude still goes there.

TER: Are you saying we need a new system to determine oil prices?

SDP: WTI is used as a marker for international oil price contracts. It's being used less and less because other countries recognize that WTI is less useful. It's not representative of what the true oil price should be. That being said, it's still used kind of as a legacy marker, so movements in WTI might end up affecting sale prices of oil in a completely different country. Brent oil prices are more relevant, despite the fact that there's not that much Brent oil out there. So we've got a lot of markers that are reference prices for oil, mainly WTI and Brent, which are really dying markets, because that's not where the future growth in oil supplies is going come from. As time goes on and as countries recognize that these markers are less useful, they're going to start and try to use different markers for oil prices because you're going to get these local supply and demand fluctuations that are not necessarily reflective of the true global oil supply.

TER: What would act as those new markers?

SDP: There should be more focus on the countries that have the most reserves and the most production growth. Those would include Angola, Brazil and Russia. It's difficult to hand over the reins to countries like that. Ideally, you want an oil price marker that is reflective of true conditions for supply and demand. What will probably happen is that there will be a mix of markers that will be put into some kind of fictitious "basket" of oil. They'll take various markers and combine the price movements for oil prices from these regions and come up with kind of synthetic global marker.

TER: What role do you think OPEC would take in determining the oil price in that basket?

SDP: Fundamentally, OPEC's role will get bigger and bigger. The only countries that can really fight back against OPEC in terms of producing more oil are Russia, and to a smaller extent Brazil, which has a lot of reserves but not as much production. And the fact that OPEC countries made a lot of investments in refineries to process heavy crudes and turn them into higher end products; those investments made in the last five or six years are going to help heavy oil prices stay higher in the future. OPEC has quite a lot of heavy oil it can bring on and off; the swing volumes that Saudi Arabia will bring on are typically heavier oil. Saudi Arabia has more power now, because all of a sudden their heavy oil is worth a lot more than it used to be, because technologies are out there that can process it.

TER: What is the impact of China in all of this?

SDP: Demand in the U.S. is pretty much flat, and that's 25% of the picture. Then the Chinese data is showing really big growth—like in the 20% to 30% range—but you don't quote it because it's not worth quoting. Everybody is wowed by the Chinese data, but China is not anywhere close to being the consumer of oil that the United States is. Give it five to 10 years, and it starts to become a lot more significant. You really need the Asian countries to pick up the slack. They're doing it to a certain extent, but probably not enough to offset the U.S. flatness to mild decline.

TER: What are your near-term projections for the oil price?

SDP: I moved to $80 recently, but it's been between $70 and $80. When I moved to $80, the oil price was already at something like the high $80s. My move was a little tentative in the sense that I had not seen earlier demand response, although demand in Asian countries was apparently pretty high in the first three months of the year—but you know the data is bad from over there. In the U.S., where we have some better data, demand has been pretty flat for gasoline and transportation fuels. You ask yourself, 'why is the oil price going up?' I think it was based on an influx of money into oil because it is a commodity and it was one of the commodities that hadn't really run up a lot since the beginning of the year. You had iron prices running up a lot. You had steel prices going up a lot, but oil hadn't really had this huge run in percentage terms like those other commodities. I think there was some money coming into oil simply because we need it to build things and, if the world is going to grow, then oil prices have to go up, so I'm ok with $75–$80.

TER: What's your timeframe on that price?

SDP: I'd probably give it another six months to a year, because the U.S. consumes 25% of the world's oil and until we really start to pick up, that's a huge portion of the picture that needs to start consuming more oil before you have good, solid, fundamental reasons for the oil prices to go into the $90 range.

TER: What do you see as the single biggest factor in that higher push that you're projecting?

SDP: U.S. employment—U.S. families making enough money so that they can go on vacation and drive around a lot this summer.

TER: With the uncertainty in the Gulf, do you see a shift to onshore exploration?

SDP: Every oil company would like to have a steady production base, and if you can't get that offshore, because projects might not start on time or might not get developed or you're going to get a start/stop production profile, then investors really don't like that. What they like is steady production, and that comes from onshore, where you can actually manage drilling programs and deploy rigs on schedule. Onshore gives you the power to create your own destiny. I mean, the Bakken Shale has been really the number one spot to be. A lot of the merit of the Bakken Shale has already been priced into Bakken stocks, but there's even more value being placed on the onshore because it's one of the only places where companies can go in the U.S. and really envision growing oil production.

TER: Can the big players really expand their growth profile in the Bakken Shale?

SDP: I think it's for smaller companies, small to mid-cap companies. It's going to be difficult for the big boys to generate the kind of growth they need from oil. The Bakken isn't big enough for them unless they go and buy companies. Bakken companies might get acquired by majors or by larger independent oil and gas companies. I'd say the most logical thing would be to talk about an M&A-driven type of premium being placed on Bakken oil companies that already have acreage that's leased up, because it's difficult to buy new acreage.

TER: Another onshore play is Canada's oil sands. What are some opportunities you're excited about there?

SDP: One I'm covering is Gulfport Energy Corporation (NASDAQ:GPOR). It has about 125,000 net acres of oil sands leases. That's a lot of oil sands acreage for a relatively small company like Gulfport. Not many people know it has this huge oil sands exposure. It's getting some value for the oil sands, but at $70 oil, the oil sands are still worth a lot of money; at $60 oil the oil sands become less interesting. I have a buy rating on it with an $18 target. It's trading around $13 right now.

TER: Tell us about some others.

SDP: There's a company called Cenovus Energy Inc. (NYSE:CVE; TSX:CVE). It has some of the best oil sands leases in Canada. With oil sands, you can get predictable production. If the Gulf turns out to be a slower area for North American oil production because of regulations, there's more oil to be developed in Canada, as long as oil sticks around $70 a barrel.

TER: On the natural gas side, there's a lot of debate about whether the long-term gas supply from shale plays will be as abundant as it was once thought to be. There's certainly an oversupply of natural gas right now. What does that mean for investment opportunities in the North American natural gas market?

SDP: There's not much demand growth in the North American natural gas market. You've got the petrochemical sector that uses natural gas and the petrochemical industry is firing on all cylinders. The Asian economy is doing well and they export petrochemicals to Asia. That creates an underpinning in demand, but I don't see much in terms of demand growth. That leads you to think about supply; it's more of a supply-driven problem. With the shale plays that have popped up, there's no reason why we shouldn't find more of them. It's a question of how much can you drill. I think service companies are probably charging too much to drill wells right now. Once service prices come down for things like fracking and completion services, then you might see it make more sense to develop these shale plays more aggressively. There are wells being drilled that probably shouldn't be drilled in this price environment.

TER: What about ways to play the market?

SDP: In terms of investment opportunities I like Comstock Resources Inc. (NYSE:CRK). It is buying up gas assets that are close to market in Louisiana's Haynesville Shale. For example, you know New York City is going to get cold and Buffalo, too. The whole Northeast will get cold, so investors are snapping up companies that have acreage that's close to the Northeast. You have growth in Marcellus gas, but why would you import gas all the way from the Rockies if you've got gas right next door in the Northeast? It doesn't make sense. If you figure that natural gas demand is not going to grow that much, you want to just have the supply that's close to the end user.

TER: Comstock is in Louisiana, but you're talking about trying to get plays in the Northeast. Why is Comstock your one investment opportunity then?

SDP: It's the one that I cover, and that I have a buy rating on. They've got really big wells. I also think the management is really good. They still have a sturdy balance sheet. Based on financial modeling, it's the production growth that is attractive. There are quite a few pipelines going from Louisiana to connect to the major Appalachian interconnects. I think it's kind of an opportunity. If you like natural gas in general because you think it's been oversold, why would you buy the companies that have already experienced the share price run up when you can find one that has been really banged up and is essentially a high quality company?

TER: What about playing the Euro market via something like FX Energy (NASDAQ:FXEN)? You have a buy rating on it.

SDP: Gas in Europe is different, because gas contracts in Europe are linked to refined product prices and if oil prices go up then at a lag you tend to get a response in natural gas prices through the increase in price reflected in refined product prices. So there's a tighter link between oil and gas prices in Europe. The reason FX has a buy rating on it isn't really price based. It's based on reserve growth, future reserve growth and exploratory track record of success.

TER: You said Harvest Natural Resources (NYSE:HNR) would get to $8, and it did. You're bullish on Gulfport but you also like Concho Resources Inc. (NYSE:CXO) and Pioneer Natural Resources Co. (NYSE:PXD). What do these companies have in common?

SDP: It's mainly exposure to oil. That's the only thing that these companies have in common. Each of them is quite different. I mean Harvest has all this exposure in Venezuela that the market doesn't care about. Then it has a couple of discoveries in Utah, which might be new oil plays for them. Concho is like 75% oil. They have a really good growth rate and really good returns on capital. Gulfport? It is almost 100% oil and it has all this oil sands acreage, although it's not proven. The oil sands acreage isn't a proven reserve because it hasn't been developed yet.

TER: You're projecting that maybe oil would get to $75, but in essence the global market is somewhat flat. Given that, why do these oil exposure companies like Harvest and Concho appeal to you now?

SDP: Harvest is actually below my target price now. It had a run and I made the correct call. Now you can kind of say that the target price is pending review. As for Concho, I started liking oil about two years ago. I still think that oil makes a lot of sense because it's a transportation fuel and its usefulness is more tangible than natural gas. The main investment thesis here is that you aren't discovering a lot of new oil shale plays. You're discovering a lot of new gas shale plays. You can go to sleep knowing there probably won't be many oil shale discoveries. Frankly, it's the gas shale plays that you have to be worried about, because they will discover another one tomorrow or the day after. If it's oil, you might find one or two more but it's not going to be something that can really change the dynamics of the market.

It's in the Gulf of Mexico where you can find oil supplies that will change supply and demand for the U.S. It has the power to change it. Yes, we're going to get more people coming to the U.S. to look for oil onshore, but you know there's not that many places you can go. You have to explore for it because it's not well established where you have to go to get your oil growth. The growth that you will get is going to be with smaller companies. You're not going to find something big that's going to make an individual big company stock price go up, because there's oil resource scarcity. Period. As an investor, you kind of have that on your side; it's a safer investment if you lean on oil. Now for gas, which has been really banged up, you might have a chance to make a bigger return, but in the near-term we don't know exactly where gas prices are going. There's more risk involved.

TER: That sounds like oil is a great longer term, multi-year play because we're expecting the supply to be harder to find, while U.S. demand will eventually go up. Wouldn't that make Harvest still sound like a reasonable multi-year investment?

SDP: Most of its value is in Venezuela. Nobody wants to pay for oil reserves in Venezuela, because you wake up tomorrow and Hugo Chavez could take all your reserves away. It's fraught with political risk. The only reason it went up to $8 is because it had two oil discoveries in Utah that they didn't have before. It is highly significant for the firm, but we're still in the early stages. Frankly, there is a lot that can go wrong; not for these oil discoveries in the U.S., but they have a lot of other exposure too. Venezuela. Indonesia—they're going to be drilling some big exploratory wells there. They could very well drill dry holes. The company is fraught with political and exploratory risk.

TER: What's Harvest's relationship like with the Chavez regime?

SDP: It's a little company operating in Venezuela. They've been there a long time. They just have to deal with the bumps in the road, as they've been able to in the past. They're still there and they haven't been kicked out. Perhaps there's some truth to them saying, "Listen, we're here to help you guys! We're here to develop your oil. If you kick us out, we won't have a company anymore." Is it really in the interest of the Venezuelan government to ruin the future of this tiny oil company that's developing just a couple of fields in their nation? Not really. You probably won't buy Harvest because it's got assets in Venezuela. The reason you buy Harvest is because it's got assets in Utah where they're onto something.

Sven Del Pozzo, until recently, was a senior analyst of the Research Group for C.K. Cooper & Company, a full-service investment bank. Del Pozzo graduated from Queen's University, Canada, in 1996, where he earned an Honors Bachelor degree in Economics. Del Pozzo worked at John S. Herold, Inc. for nine years as an equity analyst covering U.S. and international Exploration & Production as well as integrated oil companies including regulated and unregulated pipeline concerns and coal companies. Mr. Del Pozzo has been a CFA charter holder since 2003 and is a member of the New York Society of Security Analysts.

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Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Sunday
May302010

Rio Chief says Tax Man is now His `Silent Partner’

Rio Tinto Rossing Uranium 31 May 2010.jpg
Rio Tinto Rossing Uranium 31 May 2010


Its an interesting take on the proposed new mining super profits tax in Australia by the CEO, Tom Albanese, who is of the opinion that the tax has damaged the nation's reputation overseas and added to sovereign risk, according to a news release by Bloomberg.


Rio Tinto Group, the world’s third- largest mining company, said as much as half its balance sheet is threatened by Australia’s plan to boost taxes on resources producers.

The complexity of the proposal for a 40 percent super profits tax on resource companies makes it difficult to assess its costs precisely, Tom Albanese, Rio’s chief executive officer, said in an interview broadcast yesterday on ABC’s “Inside Business.” He said it may amount to more than 50 percent.

“This is half our balance sheet at risk because we have someone now coming in to say, ‘I want to be your silent partner. I want 40 percent of your pretax profits and largely written-off assets,’” Albanese said. The tax has damaged Australia’s reputation overseas and added to sovereign risk, he said.

The government set aside A$38.5 million ($32.6 million) in its May 11 budget to promote an overhaul of the nation’s tax system, including the resources levy. Mining companies oppose the tax, scheduled to take effect in 2012, and have placed full- page advertisements in Australian newspapers to lobby for changes.

Last week, the government said it will run its own advertising campaign to counter the “misinformation.” Treasurer Wayne Swan said in an e-mailed statement yesterday that the super profits tax, or RSPT, wouldn’t be retroactive.

‘Misleading’ Claims

“There has been much comment from mining companies in recent weeks about the supposed ‘retrospectivity’ of the RSPT,” Swan said. “These claims are clearly misleading, as the RSPT will apply to mining profits from 1 July 2012. It does not apply to past profits.”

Rio’s CEO said it was important to reconsider the proposal and that he’s ready to work with Prime Minister Kevin Rudd’s government on a fundamentally different approach. The world’s third-largest mining company is already paying almost 35 percent tax plus royalties, and will publish independently audited data on its tax payments later in the week, he said.

“Albanese left no doubt he’s willing to engage on a long- term, workable solution, arguably a process companies like Rio should have been involved in before the tax was announced,” said Tim Schroeders, a fund manager at Pengana Capital Ltd. in Melbourne.

To read the article in full please click here.



Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Tuesday
May252010

Why Google Should Subscribe to Casey Research

Costs per Plant Casey 26 May 2010.jpg

By Marin Katusa, Chief Investment Strategist, Casey Research Energy Division
What do search engines and wind energy have in common? That’s the question a lot of investors were asking earlier this month, when Google made an almost US$40 million investment into NextEra Energy Resources, a North Dakota wind energy firm. The simple answer: more than you think.
 
It’s not surprising that the Internet search-engine superstar needs energy. Companies like Google own massive computer frameworks, known as server farms, to store all that digital data floating around in cyberspace. While Google is quite hush-hush about how many computers it owns, estimates put it at about 1,000,000 servers (almost 2% of the world total), and an enormous amount of power is needed to keep them running constantly. And as cyber-information grows – almost 24 hours of video footage is uploaded onto YouTube every minute – more and more computers are required to store and distribute it.
 
But where does their power come from? Most server farms are located near coal-fired generating plants. Good for efficiency, but that adds up to a pretty big carbon footprint. Naturally, this has environmental groups fuming and lobbying the corporations for clean energy alternatives. Given Google’s avowed sensitivity on this issue, investing in wind turbines in North Dakota makes good public relations sense.
 
However, it is usually the company’s philanthropic arm, Google.org, that handles such good-citizen initiatives. Thus the unprecedented move to make a first-time direct investment into NextEra Energy suggests that Google is expecting something further.
 
It seems logical to assume that the company’s motivation also involves saving money by slashing its dependence on coal-fired generators. After all, when your electric bills approach that of a small country, it’s hard not to jump on a company that could potentially produce enough power to light up 55,000 homes.
 
But if this is, in part, an exercise in cost-cutting, Google made a big mistake: it chose the wrong renewable energy.
 
Wind Farms vs. Geothermal Power
 
The main problem with wind farms: they don’t work when it’s not windy.
 
But that’s not all. Wind energy is plagued by high capital costs, a weak power transmission system, and low output, making its success heavily dependent on government subsidies. Load factors for wind energy – that is, the difference between how much power a generator can produce and how much it actually produces, which determines how much money a utility will make – are also quite low. The large physical footprint – the amount of land required to build wind farms – is another downside, as is the threat they pose to birds and the noise pollution they generate.
 
Add this all up and you’ve got the biggest loser when it comes to going green. In reality, the best renewable energy bet Google could make, especially in the United States, is on geothermal. Leaving everything else aside, geothermal beats wind energy on the most important factor: it is not dependent on weather. That means there is no need for backup power generation facilities, something wind farms must have for the days when the turbines won’t turn. Nor are government subsidies absolutely necessary for geothermal energy; they’re more of an added bonus. And geothermal power plants require the least amount of land: they can hum away contentedly even in the middle of farmland or a park.
 
Geothermal also wins on the numbers, with the highest load factor of all renewable energies and the biggest profit margin. Take a look at the cost breakdown of renewable generating technologies in the U.S. – it’s clear that geothermal is miles ahead:
 





Once Bitten, Twice Shy
 
Perhaps the reason Google decided to go with wind energy this time is because it gave geothermal a chance in the past. Two years ago, through Google.org, the company became the biggest investor in enhanced geothermal research, beating even the United States government. Unfortunately, that time around, Google picked the wrong company.
 
Google invested US$6.25 million into AltaRock Energy in August 2008, to help the company make a success of its promising Geysers project in northern California. AltaRock was using the latest technology – Enhanced Geothermal Systems (EGS) – in an attempt to harness some of the energy locked far beneath the earth’s surface. As Google discovered, though, making a sound investment is not as simple as picking a company just because it has a great project location and the finest in tech. A host of pitfalls faces any geothermal developer – including inexperienced crews, insufficient financial backing, and the lack of a good power purchasing agreement.
 
But most formidable of all are the challenges of very deep drilling. While EGS represents a breakthrough, it’s still new, and it’s tricky to use. To properly exploit its potential, companies need to learn how to drill that deep, and to do so despite the hot corrosive fluids and unfriendly intervening layers of rock that can ruin a well in short order. And as if that weren’t enough, users have to work extra cautiously. Geothermal activity is generally found around seismic fault lines, and fracturing deep rocks using hydraulic pressure has linked EGS to earthquakes.
 
 As AltaRock Energy (and its investors) found out, it’s going to take more than just fat corporate and government checks and tweaks to conventional techniques for EGS projects to work. The Geysers project came to an abrupt halt just over a year after drilling began. Barely a third of the well’s planned 12,000 ft depth had been reached before drillers encountered a layer of fibrous rock that caused the holes to collapse.
 
Getting on the (Right) Green Bandwagon
 
Renewable energy is essentially still in its infancy, with plenty of barriers to surmount. At the same time, there’s no mistaking politicians’ growing desire to climb onto the bandwagon. Which means more and more companies are jumping at the chance to join in. But this is still relatively unexplored territory, and the market has some hard lessons yet to teach. Not every company... or idea... is cut out for this.
 
It would be wrong to say wind energy doesn’t have a future, because it does – a very distant and windy one. One that won’t be materializing anytime soon, at least not until the capital costs of wind development drop and transmission techniques improve.
 
Geothermal isn’t easy. The Geysers failure demonstrates that. But it’s proven, it’s cost effective, and it runs 24/7... so for now, it’s our favorite renewable energy.
 
Our research is focused on finding the best geothermal companies out there and, because Google is our favourite search engine, we’ll be happy to share that research with CEO Eric Schmidt and his band of merry men. So come on Google, feel lucky and click here – we’ll give you a free three-month trial with our Energy newsletter, including our #1 geothermal recommendation.

---
 
Not just for Google, you too can get access to Casey’s Energy Report today and start profiting from the green energy movement, as well as from oil, gas, and other energy trends.  Start your 3 month risk free trial today.



Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.
Thursday
May202010

Eric Nuttall: Maximizing Oil and Gas Investments

Source: Brian Sylvester and Karen Roche of The Energy Report 5/20/10
http://www.theenergyreport.com/pub/na/6337

Eric Nuttall.jpg

"If you want to talk about the Gulf and the oil leak in terms of investment, I think it's creating some pretty interesting investment opportunities," says Eric Nuttall, portfolio manager of Sprott Asset Management's Energy Fund. The straight-shooting Nuttall never fails to opine or shine as he explains why onshore oil plays are solid investments and talks oil and gas juniors, shales and prices in this exclusive interview with The Energy Report.

The Energy Report: How do you see the European Union's sovereign bailout of Greece affecting the oil price?

Eric Nuttall: It relates to the overall psychology about global and European economic growth. We've seen the price of oil have unbelievable volatility on different headlines. A few weeks ago when Goldman Sachs was being investigated for fraud, oil took a tumble. It is largely being driven by traders looking for an excuse to buy or sell, depending on whatever headline they read that day. It's difficult now to appreciate the effect the bailout of Greece is going to have on European and global oil demand. I think that it's more of a knee-jerk reaction than an actual shift in fundamental demand or supply.

TER: The oil price is up a few dollars since we first heard about British Petroleum (NYSE:BP; LSE:BP)'s accident in the Gulf of Mexico, which is likely to delay further offshore exploration there. How do you see this incident influencing the oil price?

EN: As it stands, I think it has had almost no fundamental impact, and there's a few reasons for that. One, the route of oil imports into Louisiana has not been impacted because the slick is too far east. As long as there are no disruptions in actual imports of crude oil, there really should be minimal impact on pricing.

TER: And over the long term?

EN: Were there to be a permanent ban on offshore drilling, that would obviously have an impact given the Gulf accounts for a meaningful percentage of overall U.S. oil production. However, with the long lead-time to projects, be it three to five years to first oil or first gas, a short-term ban on drilling is not going to have an impact on longer-term supplies. I really don't see it having a large impact in either the short term or long term.

TER: What about the environmental implications?

EN: I think that it's too early to accurately say, though there is obviously a bias in the media to over-sensationalize at times. There are suspicions that 5,000 barrels of oil per day are leaking into the Gulf. I've read that over 2,000 barrels per day naturally leak from subsurface cracks in the seabed. Longer term, I think the impact is not going to be as significant as some people are predicting.

TER: Has the oil spill created investment opportunities?

EN: I think it has created some pretty interesting investment opportunities, one being British Petroleum. I started buying it the last Friday in April. It's turned into a sin stock, along with the tobacco companies. We've seen an erosion of over $21 billion in market cap, which I find just astounding. I put pen to paper in terms of what the maximum exposure could be, and my maximum cost scenario amounted to around $10 billion. That's less than half the market cap erosion. In the meantime, the price of oil is doing quite well. You can buy a company, with a PE at seven, yielding about 7% annually, and it's obviously out of favor.

TER: How much BP did you buy?

EN: I made it about a 2% weighting for the overall energy fund, thinking that it looks like a pretty easy 10% trade over an undefined time period, but I don't expect it to be a long-term holding. You get paid 7% per annum in the meantime.

TER: Why didn't the oil spill decrease all oil company stocks? Why just BP?

EN: There's no reason that it should have. There is some thought that for offshore drilling companies, it's going to become more expensive because of increased insurance costs; and secondly, there is likely going to be a need for more safety equipment such as a second blowout preventer, or maybe more servicing of the equipment. So higher cost, lower margins. Some companies that would actually benefit should a long-term offshore drilling ban be enacted would be the onshore oil producers. The Bakken names have been very, very strong. In addition, the Canadian oil sands become increasingly attractive, given that the Gulf of Mexico is one of the few areas of tremendous prospectivity. If reason goes out the window and there is a medium- to long-term ban on offshore drilling in the Gulf, then the only remaining large source of oil is either the Bakken or the Canadian oil sands.

TER: There's not much fundamental support for oil in the $80 range. Some experts believe the trading of oil derivatives is largely responsible for pushing the price to that level. What's really going on?

EN: I would agree that a price in the high $80s is probably not justified. The most important number to look at now is OPEC's capacity and compliance on production rates. We have seen a significant deterioration in OPEC compliance relative to what their production quotas are. I think we've had six months now of abiding to 50% overall compliance, and they're sitting on 5-6 million barrels a day spare capacity. They've publicly stated—at least Saudi Arabia has—that they find a price in the $70s or $80s to be "fantastic." The largest holder of spare capacity in the world is telling you that the high $70s and $80s is its price point. That tells me that in the medium to long term, that will probably be the going price until a global economic recovery is able to soak up a majority of OPEC's spare capacity.

TER: How long will that take?

EN: I think that could take several years. In the meantime, an $80 oil price is as high as we go for the short term.

TER: Among your Energy Fund's bigger holdings is Bankers Petroleum Ltd. (TSX:BNK), which is up to $9 now from about $1.70 a year ago. What are things you look for when you seek investment opportunities in oil companies like Bankers?

EN: We look for companies that have a very meaningful resource upside that is not currently being recognized by the market. In addition, we look for companies that are well funded, preferably have production, and are stewarded by good management teams.

TER: That sounds like Bankers.

EN: Bankers is a perfect example. We got involved in the company a few years ago. I had been following the asset, which is the largest onshore oil field in Europe and was discovered by the Russians in 1929. A new management team parachuted in and we had known the new CEO Abdel (Abby) Badwi and his technical team from a previous company that we had done extraordinarily well with called Rally Energy.

TER: Is that when you got involved?

EN: The day that Abby joined Bankers we offered, and they accepted, a $50 million financing. Bankers have used those funds to increase production, but much more importantly, it was able to delineate the field. Since our initial investment, the field has grown from about 2.2 billion barrels to over 5 billion barrels of oil in place. And they have used Canadian drilling technologies—pumping and horizontal drilling—to meaningfully increase the production profile of a typical well. They've been having wells come on at over 150 barrels a day on a horizontal basis, which is just phenomenal. It really increases the net present value of the company because you accelerate production. The company is producing over 8,000 barrels a day and has a visible window to grow to over 30,000 over the next several years.

TER: Is it a takeover target?

EN: There are very few assets like this that have the strategic nature of both being onshore and also being of a material enough size to attract the attention of a large state oil company. We think Bankers is likely to be taken over in the next, I would say, two years, most likely at a 50% to 100% premium from where it's trading today. I think that when Abby and his team are ready to part with it and move on, it should generate quite a bit of interest.

TER: You also hold a lot of Corridor Resources Inc. (TSX:CDH), which has exploded from about $2 this time last year to around $6.30. Tell us about it.

EN: Corridor has a lot of the same attributes as Bankers. It had a large land base in New Brunswick, which is not a province that is typically associated with hydrocarbon production. We saw quite a bit of running room in their McCully Gas Field. In addition, we thought that they had very significant onshore shale gas potential, as well as a huge offshore exploration prospect that could contain up to 1 billion barrels of oil. Corridor owns 100% of that prospect and we're hoping that they will be able to drill it later this year.

Since our investment, they've increased production at McCully and, most importantly, a very significant a shale gas producer called Apache Corporation (NYSE:APA) agreed to evaluate the commercial potential of natural gas in the Frederick Brook shale formation. Having such a premium quality shale gas producer come to New Brunswick really validated the resource potential.

TER: How is that working out?

EN: Corridor has drilled a few wells into it, had promising test results, and so now Apache is carrying them for $25MM, on an earn-in basis, which will take them through proof of concept. At that point, Corridor could have over 50 TCF (trillion cubic feet of natural gas) net to the company. That's a huge, huge potential resource and that's something I look for. We weren't paying for it at the time. It always makes me uncomfortable when you're expected to have to pay for exploration success. I much prefer to buy companies that are cheap with existing production; you get the resource upside for free, because exploration doesn't always work.

TER: Is that an investment philosophy?

EN: I tell my sales force I never want to come into the office and be afraid that I am going to have a name down 80% because they dusted one individual well. It's a tough way to get rich. I much prefer buying companies with existing production where you get the exploration as a free option as opposed to the exploration upside being the only thesis to the investment.

TER: What are some other juniors you have your eye on?

EN: One name that's done very well for us is Rock Energy Inc. (TSX:RE). It's a conventional producer of heavy oil in the Lloydminster area of Alberta, Canada; it's trading about four times cash flow on existing production, but at the same time, they're testing a natural gas play in the Elmworth area of Alberta. It's surrounded by the likes of Encana Corporporation (TSX:ECA), ConocoPhillips (NYSE:COP), and Daylight Energy Ltd. (TSX:DAY.UN;DAY) (formerly Daylight Resources Trust), all of which are well-regarded companies. These companies have either successfully tested or have existing production from two zones, which Rock is targeting, which are the Montney and the Nikanassin zones. They have had a successful Montney test rate. They should have a good Nikanassin test rate over the next couple of quarters. If 10% of their acreage works in one of those two zones, then it could triple their reserves. So they have a highly significant exploration program; but at the same time, it's trading at four times cash flow and existing production—so your downside is largely protected.

Delphi Energy Corp. (TSX:DEE) is also a name I like a lot for a one- to two-year investment. They have a great asset base in the Deep Basin of Alberta where they are targeting in 2010 over five new zones that have no meaningful reserve bookings. I see them having the potential to triple their production and quadruple their reserve base through a successful exploration program this year, which so far has been going extremely well. At the same time, they produce over 8,000 boe/d and trades at around six times enterprise value to cash flow, so it is not being valued at an egregious valuation.

TER: What about onshore oil juniors in places that are maybe not quite as stable as Canada but still relatively stable? Something like Tethys Petroleum Ltd. (TSX:TPL).

EN: Tethys has had some extraordinary well results in Kazakhstan; they're also in Tajikistan and Uzbekistan. The market is highly anticipating a follow-up well from their original well. Management thinks they could be sitting on a very material oil discovery in the hundreds of millions of barrels. The geographical location of their discovery is kind of in the no man's land in Kazakhstan in terms of where it was thought you would find oil; it was thought to be a much more gas-prone area of the country. They could have an incredible material oil discovery; there have been some very large numbers thrown around, like several hundred million barrels recoverable potential. If further drilling is successful, then the company should do quite well, even though it's been a big winner over the past year.

TER: You also own a lot of Questerre Energy Corporation (TSX:QEC).

EN: Questerre is in the Utica Shale, an emerging shale play in Quebec. Of the juniors, Questerre has the largest and highest-quality acreage swath in the play. The stock has been weak recently; Questerre did a financing at over $4 and now trades around $3. They have had some very encouraging test rates from a recent eight-stage horizontal well that rivals the Marcellus Shale, We think, given the passage of time, assuming that future horizontal wells confirm the first test rate, Questerre could be sitting on a four-to-five net TCF discovery, and on a market cap today of roughly $700 million with well over $160 million in the bank, it's a pretty good higher-risk investment. However, they have limited production, so your risk is a little higher than other names.

TER: Could you provide with an overview of natural gas exploration over the last 20 years?

EN: Until recently, the majority of natural gas was produced from conventional sandstone; these would be highly permeable, high-porosity reservoirs of consolidated sand. You typically drill a vertical well that requires no fracking, which is when you put pressure on the reservoir to induce artificial cracks to enhance the flow rates. Until the last 15 years, sandstone deposits were the predominant focus of the industry. As large discoveries became more rare, the industry started targeting unconventional zones. These include tight sands, a sandstone where natural permeability is low. If you drilled a vertical or horizontal well into one of those without fracking it, it would yield an uneconomic rate. Tight gas has been a focus for about the past 15 years as large discoveries have been made such as the Pinedale anticline in Wyoming.

After that, the industry went toward coal bed methane—coal seams saturated with gas that must be desorbed. CBM, too, had a large increase in production but is now in decline. After coal bed methane, the industry started going toward shale gas.

Shale has natural gas in the actual porosity of the reservoir and the natural fractures; however, it really needed better fracking technology to make most plays economic. The revolution was to drill a horizontal well using a very long lateral hole and then be able to place not one frack but up to 30 different fracks in an individual well bore. The Barnett Shale was really the first to take off commercially. That led then to the Marcellus Shale, Fayetteville Shale, and then most recently the Haynesville Shale, which is being touted as probably the most economic shale play. It straddles the border between Louisiana and Texas.

TER: How has finding natural gas in shales changed the industry?

EN: In Canada, going back a couple of years, the average well would come on at about a quarter of million a day in initial production. In the Haynesville Shale, it is not uncommon to drill a 15 million-a-day well—or 60 times the average initial production of a Canadian conventional vertical well. This is a huge change in average productivity, which has led to a very bloated natural gas storage situation in North America, which has led to low prices.

TER: Is it true that certain shale leases are artificially inflating supply?

EN: A lot of companies acquired acreage in these shale plays, predominantly the Haynesville Shale, and the terms of the leases require a company to drill and produce within about a three-year timeframe. For a lot of these companies the expiration window is fast approaching. Companies are being forced to drill and produce on this acreage, even though the economics may not be as stellar as they once thought they would be. That's leading to an artificial influx of natural gas.

TER: Where do you see prices going for the rest of 2010 and then maybe for the next three to four years?

EN: I think for the next three years there's a cap of about $6 on natural gas. There is an unbelievable amount of supply that is highly economic at that price point. You have companies that are the largest in the industry such as Encana and Chesapeake Energy Corp. (NYSE:CHK), both sending out very aggressive growth forecasts. They're both growing by 50% over the next three to five years. So when you have the largest companies bringing on production at a time when natural gas pricing is in the $4-$5 range, it tells you that they view the marginal cost of supply to their portfolio as much less than historically. We used to think that we needed $7-$8 to grow natural gas profitably. That is no longer the case.

TER: What effect is hedging having?

EN: Much of industry in the U.S. is hedged, approximately 55%, at around $7; that's allowing companies to maintain a very active capital-expenditure program. This has led to a very over-supplied market, and my theory is that until the core areas of each of the shale plays are drilled up, which I think could take three to five years or longer, we're in a situation of a chronic oversupply. Four dollar natural gas is too low; I do not think $4 is sustainable, but at the same time, I do not think we need $7-$8 to bring on supply. I think a $5-$6 range, probably closer to $6 than $5, is probably what we should be expecting over the next three-odd years.

TER: Which one gets you more excited: the oil or the gas sector?

EN: It's a common question because a lot of people say oil is trading at $84 and gas is at $4, obviously you must be looking for oil companies and that's not necessarily the case. The valuations of oil companies now and the multiple that you have to pay is significantly higher than for natural gas companies. If we use a long-term natural gas price of $5, we can buy some natural gas companies at their proven net present value, which implies that you're getting the probable and possible reserves for free. Given the confidence in proven reserves, the risk/reward on that type of investment is extraordinarily low. I think as gas prices firm up from $5 over the next six months, those companies will be very good performers. Despite having the stigma of being natural gas producers, I think people are going to head to that area of the market over the next couple of months.

TER: Does that mean you're not looking at oil companies?

EN: There are some oil companies as well that are trading at very attractive valuations. It's not so much trying to target natural gas or oil; it's trying to be opportunistic in trying to find the most upside on a risk / reward basis.

TER: What's Eric Nuttall's tried-and-true method of playing the sector?

EN: Buy companies that trade at reasonable valuations on existing production but whom also have very meaningful reserve potential for which you don't have to pay. Make sure that their balance sheets are strong enough so that they can withstand a long period of low commodity prices so they won't be forced to liquidate assets. Invest in management teams that have proven themselves in the past, but make sure you're buying into good assets. You can have a good management team with a mediocre asset and they're still probably going to do okay. But if you have a good asset and a bad management team, you're probably not going to do terribly well. The quality of the asset is terribly important.

TER: That's all?

EN: One other thing. Try to recognize opportunities before others, and this just doesn't apply to the oil and gas sector, but it's something that we always try to do. Recognize opportunities before others; don't be afraid to be wrong; act quickly if you see a very exciting opportunity where the risk reward is very skewed; act quickly, act big.

TER: Is that what you did when you recently took a position in Massey Energy Co. (NYSE:MEE)?

EN: Massey is out of favor given that there was a significant mine explosion in April. The stock has fallen 30% or $1.2 billion. The ultimate cost of the monetary reimbursement for the families of the fallen miners is likely to reach $100 million. So you have about an 18-times decrease in market cap relative to ultimate exposure. You're buying a company at seven-times earnings. They have the largest net metallurgical coal reserve of any U.S. company. Met coal pricing has been extraordinarily strong due to strong steel demand worldwide. You need met coal to produce steel. You've got a market cap of $3.8 billion with some debt, so an enterprise of $4.5 billion and a coal reserve of almost three billion tons. It's not a bad value proposition. The memories from the tragic accident will pass with time and the stock should do quite well.

Eric Nuttall is a portfolio manager with Sprott Asset Management (SAM). He joined the firm in February 2003 as a research associate and was subsequently promoted to research analyst in 2005, associate portfolio manager in 2008, and then to portfolio manager in January 2010. Eric is co-manager of the Sprott Energy Fund along with Eric Sprott, and also co-manages the Sprott 2010 Flow-Through Limited Partnership with Allan Jacobs. In addition to his responsibilities for those two funds, Eric supports the rest of the Sprott portfolio management team with identifying top performing oil and gas investment opportunities. Further, Eric contributes towards internal macro energy forecasts, and his insight into emerging unconventional plays has been covered in several financial publications such as The Wall Street Journal, Asia and Barron's. Eric graduated with high honors from Carleton University with an Honors Bachelor of International Business.

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DISCLOSURE:
1) Brian Sylvester and Karen Roche of The Energy Report conducted this interview. They personally and/or their families own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: Tethys Petroleum and Rock Energy.
3) Eric Nuttall: I personally and/or my family own shares of the following companies mentioned in this interview: Rock Energy and Delphi. I personally and/or my family are paid by the following companies: None.

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