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Natural Gas Prices: Headed Up or Down?

Tuesday, June 29th, 2010

In early May of 2010 natural gas prices started to climb, after reaching a seven year low in April, 2010. Then, an Energy Information Administration report revealed an unexpected rise in natural gas supplies to 2.5 trillion cubic feet in the Lower 48, resulting in a drop in the price of natural gas in early June. Many people predict that natural gas prices have returned to the upslope, while others (oil traders) have no confidence in the market. Oil analyst and trader Stephen Schork says, “It’s just a very scary market.” On the other hand, President Barack Obama and Joe Biden show interest in alternative energy sources, which may lead to higher demand for natural gas supplies. Also, the gulf oil spill and unusual weather patterns may contribute to an increase in demand for natural gas.

Over the past couple of months, gas prices were on a continuous rise. Many factors contributed to this rise. First of all, natural gas supply remained constant while demand increased, resulting in a higher price. While unusually hot temperatures circulated throughout the nation, many households were relying on natural gas to cool their homes. Increased demand associated with a flat rate of supply will cause an increase in price. Also, the disastrous Gulf of Mexico oil spill caused the U.S. government to mandate oil rig shutdowns, which caused a decrease in the commodity’s supply. A decrease in supply associated with an increase in the demand for energy will cause an increase in price as well. Finally, many hedge funds that had been shorting the commodity were also forced to cover their positions by repurchasing shares when prices began to rise.

Although natural gas prices increased, a slight decrease was witnessed in mid June. Natural gas supplies were underestimated, resulting in a price drop. Supply estimates rose to 2.5 trillion due to large findings of natural gas reserves in shale formations. Therefore, the supply estimate is large but the rise in drop in price may not reflect an accurate supply curve. After all, shale gas extraction is very costly and time consuming. Prices fell almost 2% Tuesday on the New York Mercantile Exchange, bringing the cumulative drop to about 8% over the past week of mid June. Whenever supply increases more than demand, a price decrease is followed.

Markets for natural gas hold great potential over the long-term. Various organizations predict that demand for natural gas reserves will increase over the near future. The Gulf of Mexico oil spill may contribute to increased demand for natural gas. Mandatory oil rig shutdowns will tighten energy supplies and may lead to alternative energy source extraction. Increased interest for alternative energy sources may also persuade the U.S. government to implement new alternative energy programs that can lead to increased demand for natural gas as well. Simultaneously, the National Oceanic and Atmospheric Administration (NOAA) predicts that an 85% chance of unusual hurricane type weather may occur. Some of the world’s major oil producers are located in the Atlantic hurricane region, and hurricanes can cause massive oil rig shutdowns, leading to reduced energy supplies. Also, the very same unusual weather patterns may cause increased natural gas demand due to energy consumption (ie. In air-conditioning).

“NATURAL GAS COMPANIES THAT MAY BENEFIT”

Stealth Energy Inc. (SLH)

Stealth Energy Inc. (CNQ:SLH) is a producing oil and gas company with a field office in Billings, Montana, USA. The company has focused much attention on oil producing properties located in Wyoming, and is expecting growth of natural gas extraction in Montana. Engineers have estimated property resources at 7.5 million barrels of oil, and possibly 3 billion cubic feet of natural gas per section. Analyst suggestions place value on Stealth property, making it a substantial energy reservoir within the U.S. Finances generated from high oil prices can provide Stealth Energy with the sufficient resources, enabling continued natural gas production to occur. While natural gas prices remain very low, Stealth can remain confident that demand for natural gas extraction will increase sometime in the near future.

Stealth can extract natural gas using conventional methods, enabling a high rate of production to be achieved. The company can use highly advanced equipment to implement efficient resource extraction and is ready to serve customers in search of a cleaner burning form of domestic energy.

EOG Resources, Inc. (EOG)

EOG Resources, Inc. (NYSE:EOG) is one of the largest natural and gas companies in the U.S.,holding reserves in the U.S., Canada, Trinidad, U.K., and China. These reserves are proved to be an estimated 10,776 billion cubic feet. EOG is similar to Stealth in that company focus is centered on resource extraction, but EOG extraction involves large quantities of shale gas.

Shale gas extraction is difficult and time consuming, resulting in high production costs. The massive reserve estimate that the Energy Information Administration reported at 2.5 trillion cubic feet had consisted of large reserves of shale gas, but since the firm can extract this shale gas using only costly and time consuming methods, the result may be higher natural gas prices.

Baker Hughes (BHI)

Baker Hughes Incorporated (NYSE:BHI) is focused on servicing oilfield companies across the globe, providing products and services to energy companies in 90 countries, and focuses primarily on offshore drilling services. BHI delivers products to companies that will enable less costly and more efficient drilling procedures to be achieved.

The company focuses on servicing many offshore drilling rigs across the nation. Many offshore drilling rigs may experience slow production throughout the hurricane season. The Gulf oil spill may also contribute to loss production as well. BHI is a good company with a good product, but the future for offshore drilling remains uncertain following the oil spill.

Tags: CNQ:SLH
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Stealth Energy (SLH) Offers Alternative to Shale Plays

Wednesday, June 9th, 2010

Traditional natural gas plays like Stealth Energy, Inc. (SLH) may be a better alternative to shale plays like Ultra Petroleum Corp. (UPL) and Exxon Mobil (XOM) as it boasts both higher margins and significant reserves, as natural gas continues to rapidly grow in popularity as an alternative source for domestic energy.

The enormous natural gas reserves held within shale rock formations has led many analysts and politicians to see clean-burning natural gas as a way to reach energy independence. The increased focus has helped natural gas prices rise off of their all-time lows to around $4.35 per MMBtu, but prices remain under pressure until bullish policies are actually implemented.

The combination of lower-than-normal demand and a lack of policies implemented has created an opportunity for investors to get involved in natural gas ahead of a potential rise. Some analysts, like Sanford C. Bernstein & Co.’s Ben Dell, project prices to hit $8.50 by 2011 as companies need gas to rise to at least $7.50 to profit from new wells.

While shale rock formations may hold a lot of natural gas, extracting the natural gas is no easy task. The development of new technologies, like hydraulic fracturing (known as “fracking” in the industry), has somewhat lowered cost, but many shale operations remain economically unviable. As a result, investors may be better off with traditional producers like Stealth Energy, Inc.

Stealth Energy, Inc. (SLH) is a Canadian-listed oil and gas exploration company with properties located in the U.S. In addition to its promising oil fields, the company sits atop 40,000 acres of property (approximately 62 sections) with potential natural gas reserves of 3 Bcf per section. And without difficult shale formations, the gas is much cheaper to extract.

As a result, Stealth Energy is poised to benefit from the policy changes and pricing effects of shale gas exploration while maintaining a higher profit margin and significant reserves. The massive reserves held in shale formations will likely encourage energy independence policies, while the expensive process of drilling these shale formations may force a rise in prices.

Tags: CNQ:SLH, NYSE:UPL, NYSE:XOM
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Stealth Energy (SLH) Outlines Summer Drilling Program

Monday, June 7th, 2010

Stealth Energy Inc. (SLH) is a junior oil and gas exploration company, similar to companies like Culane Energy Corp. (CLN) and Cequence Energy Ltd. (CQE), that is engaged in acquiring, drilling, developing and evaluating oil and natural gas properties. The company is currently focused on the East Teapot Dome property in Natrona County, Wyoming and its various oil and gas properties in Central Montana.

Stealth Energy Inc. (the “Company”) is pleased to announce that it has now scheduled the start of its summer drilling program for 1 July 2010. Initially the first phase will comprise of 3 wells in the Sumatra Oil Field, with the main target of the Tyler formation at approximately 4,500 feet.

John Campbell states “The weather has finally allowed us to mobilize and the equipment we will be using is the Ellenberg Rig #11. As the Sumatra, in the neighboring leases, has in the past been a prodigious producer of in excess of 100 million barrels, we are looking forward to the results with interest”.

Stealth Energy Inc. is a producing oil and gas company with its field office in Billings, Montana, USA. The company develops its own properties and continues to seek and make acquisitions, primarily within Montana and Wyoming. For further information please contact Carlo Nigro at (604) 669-7831 or stealthenergy@telus.net.

Tags: CNQ:SLH, CVE:CLN, TSE:CQE
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Stealth Energy (SLH) Targets the Infamous Teapot Dome

Friday, May 14th, 2010

Stealth Energy, Inc. (SLH), an oil and gas exploration company similar to EOG Resources, Inc. (EOG) in the United States or Crescent Point Energy (CPG) in Canada, is targeting the infamous Teapot Dome for its drilling activities and new initiatives to increase production.

Stealth Energy, Inc. (SLH), an independent oil and gas exploration company with properties in Montana and Wyoming, is targeting the infamous Teapot Dome in its drilling initiatives. Its fields are located near the Department of Energy’s Naval Petroleum Reserve #3 and Rocky Mountain Oilfield Test Center, and consist of 1,160 acres in the East and 40 in the West.

The Teapot Dome Scandal

The infamous Teapot Dome was the subject of an unprecedented case of bribery involving the White House, during then-President Warren G. Harding’s presidency. In fact, prior to Richard Nixon’s Watergate scandal, it was often regarded as a benchmark of political corruption.

Then U.S. Secretary of the Interior Albert Fall leased, without competitive bidding, the U.S. Navy petroleum property in the Teapot Dome fields to Harry Sinclair of Sinclair Oil. Later, it surfaced that Sinclair had lent large amount of money to the Secretary of the Interior, which was interpreted as bribery and eventually led to charges against those involved.

Stealth Targets the Teapot Dome

The Teapot Dome fields are now producing nominally on primary recovery, while it is estimated that less than 10% of the original oil in place from the Shannon Sandstone and less than 2% of the Shale Oil has been accessed. As a result, substantial recoverable oil reserves are expected based on recent engineering reports detailing the property.

In March of 2010, the company received a preliminary proposal from the U.S. Department of Energy with respect to the introduction of both a water and CO2 flood at the U.S. Naval Petroleum Reserve #3 that is adjoining and immediate neighbor to the company’s property.

These measures are designed to increase output when extracting oil. Water is first injected, followed by CO2, in an effort to restore pressure. The company is confident that these measures will help improve output for its own adjoining oil wells, too.

Conclusions

Bottom line, the infamous Teapot Dome may have been the subject of scandal in the past, but Stealth Energy (SLH) is well-positioned to take advantage of it now. Investors are looking forward to potential increases in production thanks to the Department of Energy’s decision to flood the reserves and increase pressure.

Tags: CNQ:SLH, NYSE:EOG, TSE:CPG
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Stealth Energy (SLH) Poised to Profit from Oil and Gas Properties

Monday, May 10th, 2010

Stealth Energy, Inc. (SLH), an independent oil and natural gas producer operating in the same industry as companies like Chesapeake Energy Corporation (CHK) in the United States and Canadian Natural Resources Limited (CNQ) in Canada, is poised to profit from rising oil prices and bottoming natural gas prices with its promising portfolio of properties.

Stealth Energy, Inc. (SLH), an independent oil and gas production firm with properties in Wyoming and Montana, was incorporated in February 2006 with the objective of oil and gas exploration, development and production. The company intends to develop its own properties and acquire oil and gas properties primarily in the States of Montana and Wyoming.

Commodity Prospects Look Bright

Oil prices have already more than doubled from their 2009 lows to more than $80 per barrel, while some analysts are calling a bottom in natural gas prices.

Oil prices have been rising due to a robust global economic recovery, led by demand recovery in the United States. Analysts like Goldman Sachs and T. Boone Pickens are predicting oil prices will reach $95 in 2010 and Morgan Stanley predicts $105 in 2012.

On the other hand, natural gas prices have been beaten down by the lack of demand and an excess supply to near all-time lows. In fact, the commodity is currently priced below the total cost of production, which should cause supplies to tighten, thereby increasing prices.

Official reports from the U.S. Energy Information Administration indicate that natural gas prices will average $5.36 per Mcf in 2010 and rise to around $6.12 per Mcf on average in 2011. Given the commodities approximate current price of $4.00 per Mcf today, this represents a substantial move higher.

Finally, commodity markets as a whole could benefit from a possible inflationary environment in the U.S. due to the country’s recent spending programs. Since commodities are priced in U.S. dollars, any drop in the value of the dollar leads to a rise in the price of commodities.

Stealth’s Promising Properties

Stealth Energy’s properties in Wyoming and Montana represent significant opportunities for shareholders to not only capitalize on these rising commodity prices, but also realize substantial value in the sheer volume of oil and gas contained within the properties themselves.

In Wyoming, Stealth owns an oil field covering approximately 1,200 acres on the infamous Teapot Dome, which has already produced more than 2.5 million barrels. Meanwhile, some experts believe that the property could contain some 7.5 million more barrels to be produced.

In Montana, Stealth has leased approximately 40,000 acres (62 sections) that it expects to begin drilling during the summer of 2010. Experts are also upbeat on this property, which was drilled for oil in the early 90’s and upon finding natural gas instead, the wells were abandoned due to low commodity price and lack of pipeline. Using the information from those drilled wells, engineers estimated that the drilled section could contain reserves of 3 billion cubic feet of natural gas and the rest of the acreage could potentially have similar reserves.

With the Wyoming property already producing oil and production in Montana expected to come online within the next year, the company is well-positioned to take advantage of the anticipated rise in commodity prices. Stealth Energy, Inc. (SLH) is an excellent opportunity to simultaneously invest in oil and natural gas.

Tags: CNQ:SLH, NYSE:CHK, NYSE:CNQ
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