| BLOG | ARTICLES | ABOUT |
May 8/08
A) Wall Street Fears The Rising Energy Trend
- AMP Portfolio Welcomes The Trend
Dow off 200 Points
Wall Street tumbled Wednesday as the price of a barrel of oil soared to a record near $124 and touched off concerns that the stock market's recent gains might have been premature as consumers grapple with rising energy and food costs
Energy Costs May Hobble Consumer Spending
Sharp gains in commodities prices have drawn fresh attention from investors worried that consumers -- the lifeblood of the U.S. economy -- will be forced to pare discretionary spending to keep up with increasing costs for necessities.
Oil prices have doubled over the past year, causing gasoline prices to surge further into record terrain and strap consumers, who drive more than two-thirds of economic activity, with another financial burden.
Wall Street slid amid a cacophony of worries about the effects of rising prices.
Kansas City Federal Reserve President Thomas Hoenig in a speech late Tuesday pointed to inflation as his main concern. Treasury Secretary Henry Paulson said in an interview with The Associated Press Wednesday that while the worst of the credit crisis might have passed, rising gas prices will dampen the benefits from the 130 million economic stimulus checks that the government is distributing.
While some observers say recent stock market gains had come too quickly anyway, others contend the market's declines reflect more serious worries about the difficulties blanketing consumers.
Ed Peters, chief investment officer at PanAgora Asset Management in Boston, said, "It is going to be a drag if we continue to get rising prices. The oil price is just symptomatic of a broader trend."
But Stephen Carl, head of equity trading at The Williams Capital Group, said that while rising oil prices appeared to rattle investors, many had also seen sizable gains from stocks in recent weeks and wanted to preserve their profits.
B ) Oilexco AGM Wednesday May 7th
we are all awaiting the NEWS - production progress and another Rig
Oilexco update from Pescod
OILEXCO INC. (T-OIL) $16.52 +.76 ( 4.8 %)
So what were you doing the day that Oilexco was under $10.00 in the recent market malaise?
We have to admit, we’ve been through the likes something of which we haven’t seen in ages and to think given current oil prices, we saw stocks such as Oilexco get so beaten up over the last few months, it was hard to explain what was happening in the world out there.
But we’ve lived through it and of course everyone would love to say that they were made of the right stuff and on that day, boldly went forth and scooped up some shares dirt-cheap. Then there’s some, us in particular, on a day like that, in a market like that, well we were probably hiding under our desk wondering what next the world was going to throw at us.
Oh well, we experience times like that, but we like these times a little better as Oilexco is having a great day on the markets, up significantly and it’s the annual meeting in Calgary this afternoon.
We suspect there is going to be tidbits coming out of that meeting that might get people further excited about the ongoing story (maybe some production sooner than expected?) although we do hear that the Moth, a huge story, which could have huge implications if successful for Oilexco, has been experiencing technical difficulties and is probably several weeks behind schedule.
C ) Natural Gas Two Year high
Natural gas in New York advanced to the highest since December 2005 as crude oil rose to a record.
Oil touched $123.80 a barrel, the highest price since futures began trading in 1983. Gas touched $11.387 per million British thermal units, the highest since $11.88 per Btu on December 29, 2005.
``Gas has been tracking crude more than not of late,'' said Eric Wittenauer, an energy analyst at Wachovia Securities in St. Louis.
Natural gas for June delivery rose 17.7 cents, or 1.6 percent, to settle at $11.327 per million British thermal units at 3:11 p.m. on the New York Mercantile Exchange. Gas has gained 51 percent this year.
Crude oil for June delivery rose $1.69, or 1.4 percent, to settle at $123.53 a barrel in New York. Futures have more than doubled in the past year.
Oil stockpiles rose 1.8 percent to 325.6 million barrels last week, the highest since August, an Energy Department report today said.
Oil traded at $122.04 a barrel before the release of the report at 10:30 a.m. in Washington.
Inventory Numbers Due Thursday May 8th
Gas also advanced amid speculation a government report tomorrow may show stockpiles rose less than the average for this time of year.
Gas Inventory Estimates May Be Below 5 Year Average
Inventories rose 62 billion cubic feet last week, according to the median of 15 analyst estimates compiled by Bloomberg. The average change for the comparable week over the past five years is a gain of 73 billion cubic feet, according to department data.
``We're getting prepared for a number tomorrow that on the injection side will be below the five-year average and last year,'' said Carl Neill, an energy analyst at Risk Management Inc. in Chicago. ``These injections seem very low. These numbers are adding more and more concern to an already tight market.''
Gas stockpiles for the week ended April 25 gained 86 billion cubic feet to 1.371 trillion, the department said in a May 1 report. Stockpiles were 255 billion cubic feet, or 16 percent, lower than a year ago and 3 billion below the five-year average.
``We haven't been able to narrow the supply deficit much, despite the fact that production is very strong,'' said Jim Ritterbusch, president of Galena, Illinois-based energy consulting firm Ritterbusch & Associates. ``Increased U.S. production is being negated by a decline in imports.''
U.S. Gas Production
Gas production in the U.S. is up about 5 percent this year, boosted by output from the Barnett Shale in Texas, though lower imports from Canada and fewer cargoes of liquefied natural gas, or LNG, have limited supply gains, said Ritterbush.
Canadian production in April averaged about 16.3 billion cubic feet a day, about 680 million cubic feet a day below a year earlier, Martin King, an analyst at FirstEnergy Capital Corp., said in a May 5 report.
He forecast Canadian output would average about 850 million a day less for this year, reducing the amount available for U.S. import.
LNG Imports
May LNG imports are averaging about 900 million cubic feet a day, compared with 2.9 billion cubic feet a day in the same month of 2007, Stacy Nieuwoudt, an analyst at Tudor, Pickering, Holt & Co. in Houston, said in a note today.
Shipments into the U.S. for the first quarter were 800 million cubic feet, less than half of the 1.9 billion cubic feet in the same quarter a year earlier, she said.
Higher prices in Europe and Asia lured LNG to those markets in the first quarter. LNG is gas that is super-cooled to a liquid for transport by ship to markets not connected by pipelines.
The Energy Department yesterday revised its estimate for LNG imports to 580 billion cubic feet this year from 680 billion in its April outlook. The U.S. imported 770.8 billion cubic feet in 2007.
A decline in distillate stockpiles, which includes heating oil, also helped lift gas prices, said Neill.
Birchcliff Energy $ 10.85 no change
Vero Energy $ 9.45 up .14 ( 1.5%)
D ) Additions to Natural Gas Watchlist
( in the newest - MAY 2008 - edition of The AMP Book)
Accrete Energy ( GZ)
CDN. SUPERIOR ENERGY (T-SNG) $ 3.53 –.08
It’s a big target and it looks like it’s finally created a little interest in the market, as yesterday, Canadian Superior Energy saw its stock have quite the pop. We are talking about the Bounty well offshore Trinidad that Canadian Superior along with partners BG International and Challenger Energy are drilling.
This is about 2 1/2 miles from the recently announced successful Victory well that Canadian Superior announced some time ago and this area of Trinidad is providing an awful lot of successful wells for companies over the last while.
IR guy Mike Coolen with Canadian Superior suggests some success Challenger has acquired is what’s putting the spotlight on the well.
Meanwhile, the Bounty as of 6:00AM Tuesday morning, was at 13,912 feet sub-sea, on its way to a target of 18,000 feet. It was originally scheduled to drill 110 days, currently
on about its 80th day. So it is going to be a while before people find out whether it’s a goodie or not. In the meantime, we remind folks that this is Josef Schachter’s favorite pick for this coming month, so there are more than a few of us who have an interest in whether this well works, or not.
E ) The ( Vancouver / May ) AMP Seminar
Planning Not Wishing for Success
Seminar Registration - please print out the Application Form in the right hand margin
( or for seminar materials ONLY )
Seminar Materials AVAILABLE NOW - book form
What is Your Plan for 2008 ?
AVAILABLE NOW - PROFIT NOW - 150 pages bound copy 9 1/2 " by 11 1/2 '
MAY 2008 AMP Book Edition
"Building Your AMP Portfolio
Our Best Ideas for 2008 - 09"
You have a plan for building your portfolio.
You have a book that shows a plan for 2008 and beyond.
AT A MINIUMUM - if you are investing thousands of dollars in a particular recommendation - invest $35 to develop a portfolio plan. That's common sense - and common sense is highly valued because it is uncommon. Use the order form in the top right hand margin.
OR ( for the seminar materials ) mail your cheque for $ 35 payable to J.Bass
to
J.Bass
5866 Birmingham Place
Chilliwack , B.C.
Canada
V2R 3G1
F ) Western Goldfields Disappoints
WGI $ 2.45 down .40 ( 14 %)
Investors expected higher production - and sold when they did not get it . AMP will hold for another quarter or more - it is too early to abandon this new producer.
The Report
During the first quarter:
- 9,960 ounces of gold were sold;
- The expanded leach pad, activated in late 2007, became operational;
- The process plant upgrade was completed;
- New carbon columns for the processing circuit were installed and were brought on line April 25, 2008.
Financial Results
Western Goldfields incurred a net loss to common shareholders for the three month period ended March 31, 2008 of $19.6 million, or $0.14 per share. This compares to a loss of $2.6 million, or $0.03 per share for the three month period ended March 31, 2007. The net loss includes a non-cash pre-tax loss of $24.1 million arising from the mark-to-market of contracts for the forward sale of gold, which were taken out as a requirement of our term loan facility.
RESULTS
Results for 2008, as compared with 2007, show an increase in gold sold to 9,960 ounces from 1,875 ounces.
Selling Price
The average selling price per ounce rose to $929 in the first quarter of 2008 from $658 in the first quarter of 2007.
Company Projections
Given the slower leach recovery and the increase in consumable costs, mainly of diesel fuel, gold production for 2008 is projected to be 135,000-145,000 ounces, a decrease from the 155,000-165,000 ounces previously estimated. Cost of sales for 2008 is expected to average between $470-$490 per ounce of gold(1), up $60 per ounce from previous estimates of $410-$430 per ounce(1).
Going forward, 2009 gold production is expected to be 135,000-145,000 ounces of gold production at a cost of sales of $430-$450 per ounce(1). Average annual gold production for the period 2010-2015 is expected to grow to 160,000-170,000 ounces of gold at an average cost of sales of $390-$410 per ounce(1).
Final Words
The behaviour of the market is unpredictable, but the behaviour of the market's participants is about as predictable as you can get. For long-term success, investors need the discipline to do two things:
1. Invest during points of pessimism
2. Exercise patience.
Email is very welcome answered here - or directly within one day - usually/mostly - really.
Please use the Vote For Me buttons in the right hand margin to vote for this blog.
Our Motto: The Road to Wealth is a Toll Road and Uphill
We invite you to share this market letter - but please attribute any comments to the web site.
| FEATURED BOOK |
|
|
|
|
|