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September 23rd, 2014

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editorials

 
Achtung: Genius at Work!
Ferdinand E. Banks  Aug 21  

Ukraine's Next Crisis? Economic Disaster
OilPrice  Aug 20  

What The Oil Headlines Miss: Interview with Michael Levi
OilPrice  Aug 07  

21st Century Energy Centers Could Take the Bakken by Storm
Emerging Growth LLC  Jul 25  

Iraq Breaks Down, Oil Surges
Chris Martenson  Jun 18  

»» more editorials in the archives

market data


Ux U3O8 Price (Uranium)Sept 15th, 2014
$34.00 +$1.25 www.uxc.com

»View Commitment of Traders.

expert analysis & newsletter briefs

Focus Ventures Ltd.

"In Peru, I have been examining Focus Ventures Ltd., a very small company that has just released a major resource estimate on its Bayovar 12 project. . .the Bayovar is a strong phosphate region, and Focus' land package is surrounded by phosphate mines. It is a very straightforward project. Twenty drill holes were sufficient to outline a deposit with 215 Mt in resources at an average grade of 12.5% P2O5. The company has revised the exploration target upward of 300400 Mt. . .the mineralized layers are very horizontal, which makes it easy pickings for a shovel-and-truck operation. There are more than a dozen mineralized beds. For the top four beds, the grade increases to 14.4% P2O5 for 5051 Mt. That bodes well for the economics, because the project has excellent infrastructure. It is located near several ports in a phosphate region with two big mines already in production. This is a dream situation for any mining company. . ." (9/17/14) - The Energy Report Interview with Thibaut Lepouttre

Fission Uranium Corp.

"Many of the recent discoveries, especially the most high-profile ones, like Fission Uranium Corp.'s Patterson Lake North discovery, are either outside the basin or beneath it, hosted in basement rocks rather than rocks comprising the basin itself. I like Fission a lot. I'm a huge fan of Ross McElroy, its president and chief geologist. The only thing holding me back on Fission is it has 450M shares out and is a $500M company already. It's not a cheap stock but it's a great discovery." (9/17/14) - The Gold Report Interview with Eric Coffin

Roughrider Exploration Ltd.

"I just added Roughrider Exploration Ltd. for two reasons: Director Dale Wallster and CEO Scott Gibson. Dale and I go back a long time and Scott and I are close friends. I should note here that Roughrider is a stock I follow and update for subscribers but I don't rate it. I agreed to be a strategic advisor to the company. I think I may get paid for that but that isn't the real issue. There will be times I'm in possession of inside information so I can't rate the stock in the newsletter. Dale was the driving force behind Hathor and is a director of Kivalliq Energy. He made the decision to stake outside the Athabasca basin. Many of the recent discoveries, especially the most high-profile ones, like Fission Uranium's Patterson Lake North discovery, and the Roughrider discovery that made Hathor, are either outside the basin or beneath it, hosted in basement rocks rather than rocks comprising the basin itself. There is a northeast trending deformation zone that runs through the southeastern portion of the Athabasca Basin called the Wollaston-Mudjatik domain, which hosts all the in-production high grade deposits in the Athabasca Basin. So Dale and the people at Kivalliq chased that domain to the east in the basement rocks beyond the boundaries of the basin and staked a bunch of properties that people were ignoring. Kivalliq optioned this project, Genesis, to Roughrider. Roughrider can earn 85%, but Kivalliq is the operator.

Roughrider just finished the phase 1 program. There are few results back yet. The company is prioritizing eight target areas for a winter drill program and other targets may come out of the exploration program just completed. One of the advantages of being outside the basin, assuming the theory is right, is that you're dealing in an area where there's been a great deal of erosion. So rather than drilling 800900m holes, you're drilling 100200m holes. More bang for the buck. Roughrider should have about enough cash to do the winter drill program but without a lot to spare. So I would expect another small financing between now and the start of a drill program if only for prudence's sake." (9/17/14) - The Gold Report Interview with Eric Coffin

Focus Ventures Ltd.

"In Peru, I have been examining Focus Ventures Ltd., a very small company that has just released a major resource estimate on its Bayovar 12 project. . .the Bayovar is a strong phosphate region, and Focus' land package is surrounded by phosphate mines. It is a very straightforward project. Twenty drill holes were sufficient to outline a deposit with 215 Mt in resources at an average grade of 12.5% P2O5. The company has revised the exploration target upward of 300400 Mt. . .the mineralized layers are very horizontal, which makes it easy pickings for a shovel-and-truck operation. There are more than a dozen mineralized beds. For the top four beds, the grade increases to 14.4% P2O5 for 5051 Mt. That bodes well for the economics, because the project has excellent infrastructure. It is located near several ports in a phosphate region with two big mines already in production. This is a dream situation for any mining company. . ." (9/17/14) - The Energy Report Interview with Thibaut Lepouttre

Pan Orient Energy Corp.

"Pan Orient Energy Corp. has announced that its steam assisted gravity drainage (SAGD) demonstration project in Alberta commenced first bitumen production as of September 16, 2014, after injecting steam for three months. The company expects it can achieve a stable rate of bitumen production within six to eight weeks. . .the establishment of bitumen production is encouraging. . .we should have more definitive results in November 2014. We see significant upside if the initial bitumen production results and steam injection ratios indicate the potential commerciality of the Sawn Lake SAGD project." (9/17/14) - Bill Newman, Mackie Research Capital


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from the publisher
  Robert J. Moriarty

Welcome to 321energy.



Three Trends Energy Investors Should be Following


By Dan Dicker
admin@Oilprice.com
http://oilprice.com/
September 19th, 2014

I don't spend much time finding very short-term trades, as regular readers know. Staring at my screens and trying to find a great long-term trade hasn't been a breeze either. It's not that the trends aren't there to be found; it's more that there are few ways I see right now to put them in actionable motion.

But noting those trends are the first step and I see three of them, with the actual trades following later. They are:
  1. The inexorably rising price of crude
  2. The relative advantage of US Exploration and Production and
  3. The Liquid Natural Gas opportunity
Finding trades to go with these energy trends is the trick (and one I'd like to hear your opinions on), so let's go through the trade opportunities on each of them as I see them today.

I've written dozens of columns on the trade opportunity in oil itself. With an increasing global demand profile and a rising cost in procuring the average barrel of crude, it's far, far more likely we'll see $125 oil before we see $75 oil - and $150 oil after that. One opportunity I've continued to see (and hold) is back month crude futures, which continue at a (lesser but still holding) backwardation, meaning that crude priced two years from now is actually trading MORE CHEAPLY than now. That still presents to me as perhaps the best trade in the investment world.

But most investors aren't comfortable with a long-term futures position.

The stock opportunity that follows from a long-dated higher crude price are the Exploration and Production companies, and US E+P's hold a distinct advantage over the rest of the world because of new shale opportunities, first-rate technology and advantaged government leasing and tax policies. I've gone through my favorite E+P's and spoken about them often, so no further discussion is needed here. What I'd rather like to find is a sleeper E+P working in a newer shale area that hasn't already experienced the exponential share price rallies like many successful E+P's in the Bakken and Eagle Ford shales.

That hasn't been easy - and forced me to find target prices to increase positions in already bloated shares of E+P's like Cimarex (XEC), Pioneer Natural Resources (PXD), EOG Resources (EOG) and Continental Resources (CLR).

Finally, natural gas has shown a longer term opportunity that's somewhat negative - for although it might experience moments of strength caused by a very bad winter like last year, it looks destined to stay at a price far lower than anywhere else in the world. Sure, natural gas could see $6/mcf at times, but looks far likelier to hover as it is now, around $4. That's in contrast to $12 EU prices and $16 prices in Japan and implies a tremendous opportunity in liquid natural gas (LNG) exports.

Now, I've written many times of the financial hurdles to building an LNG export plant and finding forward contracts to support it, an act of financial suicide if you ask me - and the Apache (APA) walk-away from the Kitimat project in Canada is another example of the 'smart' corporate move away from LNG. You'd have to be crazy to continue to pursue an LNG export plan - or crazy like a fox.

Which is how I've always viewed Cheniere (LNG), who were either brilliant or knew so little about global energy economics that they wouldn't be sidetracked. And now that they are going to be the only company 'dumb enough' to get to the LNG finish line first (or maybe at all), they're absolutely going to clean up.

Two years ago that was a reason to recommend them (which I did, as well as Golar (GLNG), running a LNG gasification tanker model). But I can't possibly recommend them now, despite their fantastic prospects. Cheniere, for example, is still at least a year from shipping their first cargo and are trading at $84, a more than four-fold increase in the last year and a half. I sadly sold my holdings in Cheniere months ago and cannot get back on the bandwagon - they're nothing but a momentum play now - but I cannot find a similar LNG opportunity anywhere.

So, here are my three sure-fire energy trends, all needing some trades to go with them. Help me find them - send your best ideas on these trends to me at ddicker@mercbloc.com and we'll talk about them next week.


By Dan Dicker
admin@Oilprice.com
http://oilprice.com/
September 19th, 2014



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