MONDAY EDITION

February 27th, 2017

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editorials

 
This Past Week In Energy
Jack Chan  Feb 14  

Oil Market Update
Clive Maund  Jan 04  

Did Anyone Actually Read Don Quixote?
Bob Moriarty  Dec 10  

Torchlight Energy Resources: Update After Breakout
Clive Maund  Nov 24  

Torchlight in the Middle of 20 Billion Barrel Oil Field
Bob Moriarty  Nov 22  

»» more editorials in the archives

market data


Ux U3O8 Price (Uranium)Feb 20th, 2017
$24.50 +$2.00 www.uxc.com



»View Commitment of Traders.

expert analysis & newsletter briefs

NexGen Energy Ltd.

"My top pick for 2016 is NexGen Energy Ltd. . . Arrow is an emerging world-class deposit that is still in the early stages of discovery. The state—it being so early in the delineation and development process—means a lot of upside still remains. . .the company just closed a $21M financing, which means the company has enough cash to carry through 2016 and beyond." (12/23/15) - Gwen Preston, Resource Maven

NexGen Energy Ltd.

"My top pick for 2016 is NexGen Energy Ltd. . . Arrow is an emerging world-class deposit that is still in the early stages of discovery. The state—it being so early in the delineation and development process—means a lot of upside still remains. . .the company just closed a $21M financing, which means the company has enough cash to carry through 2016 and beyond." (12/23/15) - Gwen Preston, Resource Maven

Fission Uranium Corp.

"Fission Uranium Corp. announced it entered into a binding letter of intent with China's CGN Mining, a subsidiary of nuclear giant China General Nuclear Power Group, to acquire 19.99% of Fission as part of an CA$82M strategic investment, along with a potential future offtake agreement on production from Patterson Lake South (PLS). . .we urge investors to bolster positions in Fission as the deal derisks development financing, and in the interim, should fund PLS through full feasibility and permitting." (12/22/15) - David Sadowski,

Energy Fuels Inc.

"Energy Fuels Inc. is the only conventional uranium producer in the U.S. and the second-largest producer overall. It has the potential become #1, given the projects and mines it has on standby or that are close to being in development. At full ramp-up we expect the company to be able to produce 5–7 Mlb/year, in a country currently producing 4–5 Mlb/year. The U.S. consumes 55 Mlb/year, but only about 10% is supplied domestically. U.S. utilities seeking security of supply will greatly prefer U.S. producers over those from Kazakhstan, Russia or Africa. This company is well positioned to benefit from higher uranium prices. We have a Buy rating with a target price of $11.85/share." (12/22/15) - The Energy Report Interview with Rob Chang

Fission Uranium Corp.

"Fission Uranium Corp. announced it entered into a binding letter of intent with China's CGN Mining, a subsidiary of nuclear giant China General Nuclear Power Group, to acquire 19.99% of Fission as part of an CA$82M strategic investment, along with a potential future offtake agreement on production from Patterson Lake South (PLS). . .we urge investors to bolster positions in Fission as the deal derisks development financing, and in the interim, should fund PLS through full feasibility and permitting." (12/22/15) - David Sadowski,


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Torchlight Energy (NASDAQ: TRCH)
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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



The Energy Report

Phil Flynn
http://www.pricegroup.com/
pflynn&pricegroup.com


The Energy Report 02/27/17

5 Million Barrels of Lost Production

Crude oil prices are rising even as oil rig counts grow to the highest levels since last April and U.S. production topped 9 million barrels a day. It seems that OPEC cuts and the lingering impact from major capX cuts is giving the market some support. As the Energy Report predicted, OPEC/non-OPEC compliance is at an all-time record high and we are the only source that I am aware of that predicted this outcome.

Reuters News reported, "The International Energy Agency put OPEC's average compliance at a record 90 percent in January, and based on a Reuters average of production surveys, it stands at 88 percent." Whatever the number, it is it is blowing away expectations and even a resurgence in U.S. shale oil output is going to worry OPEC. Because they know that they can maintain market share as the trillion dollars in cut spending will lower U.S. output by an estimated 5 million barrels a day over the next 5 years.

This estimate is from James W. Bunger who says that if $1.0 trillion is the amount of deferred capital expenditures - and I have heard this number before, then it is simple to calculate the amount of deferred production. If you use a round number of $33,000/daily-bbl-capacity this amounts to deferring 30 million barrels/day of supply. I have heard in the past that the decline rate on a conventional crude oil field is on the order of 5-6%/year, or about 5 million barrels/day, globally. This number is hard to find today, but it sounds reasonable.

By the foregoing calculation is sounds like in just a little over 2 years we have deferred about 6 years of production replacement. I don't see how we ever catch up short of a demand-killing price hike. And the longer that price hike is deferred, and the longer it takes to get back to steady state investment flows, the harder the pendulum will swing.

Bunger says that one can vary my estimate of $33,000/daily-bbl-capacity by quite a bit and it doesn't change the conclusion. Higher capex projects like oil-sands and deep water that might push $100,000/daily-bbl-capacity have investment lead times of at least 4 years and longer. He then asks, "Am I missing something or are we guaranteed a huge price spike? Perhaps even more severe than would have been caused by the Hubbert peak oil phenomenon, which would have taken place over a longer period of shifting economic conditions."

I do not think he is missing anything and I believe that is why we are seeing money managers add to their net long U.S. crude futures and options positions to the highest level since least 2009, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The increase is U.S. shale oil production will be a drop in the barrels as compared to OPEC cuts and the cut back in more traditional long term projects. Reuters reported that, "Assuming the U.S. oil rig count stays at current levels, oil production there would see an on-year increase of 435,000 barrels a day in the fourth quarter this year across the Permian, that is a far cry from the 1.2 million barrels of oil a day that OPEC has removed.

For crude oil, last year The Energy Report had one of the most bullish calls on oil and despite some wicked pull packs and historic volatility, we were ultimately proven correct. This year, once again we have one of the more bullish calls for a test of $73.00 a barrel this year. Others are also getting bullish such as Citi Bank and others. It is nice to see Citi get that bullish as they were as bearish as we were when we predicted that oil at that time would fall into the seventies before the OPEC production war. A call we made before Citi.

Natural gas is falling again as we are expected to see only a 3bcf withdrawal from storage. Andrew Weissman says that natural gas could be subject to conflicting forces this week. The fifteen-day forecast shifted moderately warmer over the weekend, creating a downward bias. Further, the EIA is likely to report one of the smallest winter draws ever on Thursday, negatively impacting the market. At the same time, however, demand is likely to increase significantly compared to last week’s paltry level. Additionally, last Tuesday’s fierce sell-off drove the twelve-month strip down to a level that is not sustainable longer term, potentially creating a floor near last week’s lows. You can call me to get his special report.

It’s a new week to prosper! Tune to the Fox Business Network! Turn off the chat rooms and cancel the pricy software and call me and get my daily trade signals. Call me at 888-264-5665 or email me at pflynn@pricegroup.com

There is a substantial risk of loss in trading futures and options.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. PFGBEST, its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Phil is one of the world's leading energy market analysts, providing individual investors, professional traders and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline and energy markets. Phil's market commentary, fundamental and technical analysis, and long-term forecasts are sought by industry executives, investors and media worldwide.

PLACING CONTINGENT ORDERS SUCH AS "STOP LOSS" OR "STOP LIMIT" ORDERS WILL NOT NECESSARILY LIMIT YOUR LOSSES TO THE INTENDED AMOUNTS. SINCE MARKET CONDITIONS MAY MAKE IT IMPOSSIBLE TO EXECUTE SUCH ORDERS.

Past performance is not indicative of future results. The information and data in this report were obtained from sources considered reliable. Their accuracy or completeness is not guaranteed and the giving of the same is not to be deemed as an offer or solicitation on our part with respect to the sale or purchase of any securities or commodities. Alaron Trading Corp. its officers and directors may in the normal course of business have positions, which may or may not agree with the opinions expressed in this report. Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction.

Contact Phil at 800-935-6487 or pflynn&pricegroup.com.



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February 27th, 2017

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