Monday, November 21, 2011

Good Time To Invest In U.S. Oil? : APC, CHK, RDS.A, RDS.B

The United States has more oil and natural gas resources than previous estimates, according to a recent study by National Petroleum Council. The study also concluded that development of these resources will reduce but not eliminate dependence on imported energy and production, and delivery of these resources should be done in an environmentally responsible manner.

The National Petroleum Council is a federally-charted but privately-funded organization set up after World War II to advise the government on issues pertaining to oil and gas matters.

The industry is well represented on the National Petroleum Council, with James Hackett, the CEO of Anadarko Petroleum (NYSE:APC), Aubrey McClendon, the CEO of Chesapeake Energy (NYSE:CHK) and Marvin Odum, the director for Upstream operations in the United States for Royal Dutch Shell (NYSE:RDS.A, RDS.B) as members. (For related reading, see Peak Oil: What To Do When The Wells Run Dry.)

Natural Gas
The study's first conclusion is rather obvious given the recent media spotlight on domestic onshore natural gas development. The United States is the world's largest producer of natural gas and has an enormous natural gas resource base that can meet demand for generations if new basins are allowed to be developed.

Although this conclusion seems obvious to us now, just a few short years ago, many observers were climbing over themselves to come up with the direst predictions of falling natural gas supply in the United States. The conventional wisdom at that time was that the United States needed massive investment in liquefied natural gas (LNG) facilities to provide for soaring future domestic demand for natural gas.

One finding that may surprise some investors and also strike some fear into peak oil advocates is the conclusion that crude oil is much more abundant in the United States than previously thought. This new supply is coming from a number of different areas, including tight oil areas where new technology has been applied to develop resources that were previously not economic to produce. In the long term, supply will come from offshore areas, the Arctic region and even shale oil deposits in Colorado. (For related reading, see Unearth Profits In Oil Exploration And Production.)

A recent report from an analyst at Goldman Sachs (NYSE:GS) predicts that the United States will surpass Saudi Arabia and Russia and becomes the world's largest oil producer by 2017. The firm expects United States production to reach 10.9 million barrels per day by 2017. This production figure includes natural gas liquids in the total.

This level of production is certainly doable given the current level of industry activity in the United States. The U.S. Energy Administration reported that the United States produced 8.95 million barrels per day of crude oil, natural gas liquids and other liquids in May 2011. The 10.9 million barrel projection implies total production growth of 21.8% over the next six years.

Despite the optimism on oil production, the United States will still be a net importer of this commodity even under an unconstrained development scenario under which production rises to approximately 22 million barrels per day by 2035.

Environmentally Responsible Development
The final conclusion was that the oil and gas resources need to be developed in a responsible manner to gain the trust of the public. The study also recommended educating the public on the risks of drilling and quoted a study from MIT that found only 43 gas well accidents out of nearly 20,000 wells drilled over the last decade.

The Bottom Line
The conventional wisdom on the amount of natural gas and oil resources in the United States appears to be incorrect, with the only question being whether we will allow these resources to be developed.

Trading Pro System - Trade Stock & Options -
Make Money Regardless Of Whether The Market Goes Up Or Down!
Better Than Forex, Penny Stocks, Day Trading, And Swing Trading The Stock Market.
Over 24 Hours Of Video

Ben Davies: We are Seeing 2008 Style Crash Signals

from King World News:

With so much fear and uncertainty in markets around the world, today King World News interviewed Ben Davies, CEO of Hinde Capital. Davies alerted KWN that his firm is seeing crash signals similar to those of 2008. When asked about these signals, Davies responded, “We’re seeing that lending spreads are widening. Certain rates are starting to look stressed. Clearly there’s a funding issue brewing within the banking sector with what’s happening in Europe. High yield spreads are beginning to widen as the corporate sector is getting crowded out by the needs of the sovereign nations, who keep issuing unbelievable amounts of capital or pseudo capital.”

Ben Davies continues: Read More @

Trading Pro System - Trade Stock & Options -
Make Money Regardless Of Whether The Market Goes Up Or Down!
Better Than Forex, Penny Stocks, Day Trading, And Swing Trading The Stock Market.
Over 24 Hours Of Video

Funny Pic of the Day

Bloomberg Businessweek - 21 November-27 November 2011

Bloomberg Businessweek - 21 November-27 November 2011
English | 112 pages | HQ PDF | 92.00 Mb

download it here

Trading Pro System - Trade Stock & Options -
Make Money Regardless Of Whether The Market Goes Up Or Down!
Better Than Forex, Penny Stocks, Day Trading, And Swing Trading The Stock Market.
Over 24 Hours Of Video

The Complete Guide To The European Bank Run

"Nervous investors around the globe are accelerating their exit from the debt of European governments and banks, increasing the risk of a credit squeeze that could set off a downward spiral. Financial institutions are dumping their vast holdings of European government debt and spurning new bond issues by countries like Spain and Italy. And many have decided not to renew short-term loans to European banks, which are needed to finance day-to-day operations. " So begins an article not in some hyperventilating fringe blog, but a cover article in the venerable New York Times titled "Europe Fears a Credit Squeeze as Investors Sell Bond Holdings." Said otherwise, Europe's continental bank run in which virtually, but not quite, all banks are dumping any peripheral exposure with reckless abandon is now on. Granted, considering the epic collapse in bond prices of Italian, French, Austrian, Hungarian, Spanish and Belgian bonds which all hit record wide yields and spreads in the past week, and furthermore following last week's "Sold To You": European Banks Quietly Dumping €300 Billion In Italian Debt" which predicted precisely this outcome, the news is not much of a surprise. However, learning that everyone (with two exceptions) has given up on Europe's financial system should send a shudder through the back of everyone who still is capable of independent thought - because said otherwise, the world's largest economic block is becoming unglued, and its entire financial system is on the edge of a complete meltdown. And just to make sure that various fringe bloggers who warned this would happen over a year ago no longer lead to the hyperventilation of the venerable NYT, below, with the help of Goldman's Jernej Omahan, we bring to our readers the complete annotated and abbreviated beginner's guide to the pan-European bank run.

But first some more details from the NYT:

The flight from European sovereign debt and banks has spanned the globe. European institutions like the Royal Bank of Scotland and pension funds in the Netherlands have been heavy sellers in recent days. And earlier this month, Kokusai Asset Management in Japan unloaded nearly $1 billion in Italian debt.

At the same time, American institutions are pulling back on loans to even the sturdiest banks in Europe. When a $300 million certificate of deposit held by Vanguard’s $114 billion Prime Money Market Fund from Rabobank in the Netherlands came due on Nov. 9, Vanguard decided to let the loan expire and move the money out of Europe. Rabobank enjoys a AAA-credit rating and is considered one of the strongest banks in the world.

American money market funds, long a key supplier of dollars to European banks through short-term loans, have also become nervous. Fund managers have cut their holdings of notes issued by euro zone banks by $261 billion from around its peak in May, a 54 percent drop, according to JPMorgan Chase research.

Is this setting familiar to anyone? It should be: "Experts say the cycle of anxiety, forced selling and surging borrowing costs is reminiscent of the months before the collapse of Lehman Brothers in 2008, when worries about subprime mortgages in the United States metastasized into a global market crisis."

Ah, but there is one major difference: last time around, the banks were not all in on the wrong side of the world's worst poker hand (as described by Kyle Bass earlier). Now they are. And should Europe's banks begin a domino-like spiral of collapse, there will be nobody to bail out first Europe, then Japan, then China, then the US and finally the world.

But lest someone suggest this is merely the deranged ramblings of yet another blogger, here is Goldman Sachs with a far more cool, calm and collected explanation for why we should all panic (which comes at the sublime moment: just as Goldman takes over all the key political locus points of the European continent: more on that in the conclusion...) (more)

How Many Mortgages are Underwater in Your State?

click for interactive graphic

Credit Sesame

Little Cloud Stock Could Become a High Flier 8x8 Inc. should make a powerful advance

8×8 Inc. (NASDAQ:EGHT) — This innovative provider of cloud communications equipment and solutions was added to the Ocean Tomo 300 Patent Index on Nov. 14. The index is the first to be based on the value of corporate intellectual property and is composed of 300 companies that own the most valuable patents relative to their book value.

EGHT has been awarded 78 patents since its establishment in 1987, and was recently granted a “Virtual Telephone Extension” patent for its work in cloud-based VoIP, video, mobile and call-center applications.

Technically the stock has been supported by a powerful bullish support line now at $3.55 and has tracked its 200-day moving average as support since February. Buy EGHT for a possible long-term multiple advance and potential takeover candidate.

Trade of the Day – 8x8 Inc. (NASDAQ:EGHT)

John Rubino: “World May Be Headed To Complete Paper Asset Market Collapse”

3 Stocks On Sale : BA, CLF, MMM, RPM, UTX

The market's volatility and summer selloff have no doubt rattled investors, but for those who are interested in the fundamental, long-term approach, the lower averages signal potential value. There are more good companies whose stocks become available at better buying prices with each subsequent market drop.

3M, A Dow Stalwart
Global industrial conglomerate 3M (NYSE:MMM) does $27 billion in annual sales and generated $4.1 billion in free cash flow in 2010. The company is highly innovative, as it has a culture that's based on producing new products in all its segments. Although the company is best known by consumers for its Scotch brands and such things as Post-it, its core business segments also includes its largest - industrial and transportation - as well as electro-chemical, and others. (For related reading, see Vital Link: Manufacturing And Economic Recovery.)

In its recent quarter, 3M achieved record sales of $7.5 billion even in what is a slowing global economy. The company is a relentless dividend payer since 1916, and has increased its payout 53 consecutive years. The current yield is 2.7%. Earnings have ranged from $4.52 to $5.63 a share in the last five years, though they've fluctuated through the recession. Likewise profit margins have fluctuated, though they've been in a mid 13% to 16% plus range in the same time period.

The stock recently traded at $80.56, well off its $98.19 52-week high, on concerns for the company's growth in the slowing global economy. Other than the market's near-collapse from 2008-2009, this tends to be the lowest range 3M stock has traded in the last five years. Even at 3M stock's nadir in March of 2009, when its share price went under $42, six months later it traded in the $70s again. United Technologies (NYSE:UTX) and Boeing (NYSE:BA) are well-known companies that compete in 3M's industry.

Paint, Seal, Coat and Profit
Specialty paint, coating and chemical company RPM (NYSE:RPM) is another excellent candidate for value investors to look at. The company reported its fourth quarter and full-year results at the end of July, and the results were outstanding. Its pro-forma results showed an 11% increase in sales for the quarter, year over year, and an 8.5% increase for its fiscal year. Pro forma net income for the quarter grew 15%, and 16% for the year. The pro forma results include the deconsolidation of one of RPM's holdings and give a truer picture of performance than the as-reported numbers.

These impressive results were achieved in the face of difficult conditions in the consumer segment as well as headwinds from the moribund commercial construction market. RPM is a well known dividend payer, with a current yield of 3.7%.The stock traded recently at $22.52.

Mining Its Own Business
Cliffs Natural Resources
, Inc. (NYSE:CLF), known for its iron ore mining, also mines metallurgical coal, both for the steel industry. The company's business has surged in the last five years. In 2006, it produced revenue of $1.9 billion, with its 2010 total $4.7 billion. Revenue dipped in 2009 when the economy retreated and net income has fluctuated as well in the last five years, but overall has grown from the $200 million to $280 million range to more than $1 billion in 2010.

Cliffs is attached to a very cyclical industry, so naturally its stock price is going to reflect this. The stock is currently trading in the middle of its 52-week range, at under $70 a share, as the potential for further global slowing in the economy seems priced in. Cliffs, however, has also shown dynamic long-term growth, as its stock price rose from under $20 a share in 2006 to over $100 a share in 2008. (For more on cyclical stocks, see Cyclical Versus Non-Cyclical Stocks.)

The Bottom Line
These are three strong companies whose stock prices have been dragged down in the market selloff and who suffer from the perception that they won't be able to grow their businesses as well in the current global economic industrial and manufacturing climate. These companies have shown great resilience and strength, however, and their underlying stocks now trade at attractive buying prices.

US Weekly Economic Calendar

time (et) report period Actual forecast previous
8:30 am Chicago Fed national index Oct.
-- -0.22
10 am Existing home sales Oct.
4.80 mln 4.91 mln
Tuesday, NOV. 22
8:30 am Gross domestic product 3Q
2.3% 2.5%
10 am Richmond Fed survey Nov.
-- -6
2 pm FOMC minutes 11-2
-- --
Wednesday, NOV. 23
8:30 am Jobless claims 11-19
390,000 388,000
8:30 am Personal income Oct.
0.2% 0.2%
8:30 am Consumer spending Oct.
0.3% 0.6%
8:30 am Core PCE price index Oct.
0.1% 0.0%
8:30 am Durable goods orders Oct.
-1.5% -0.6%
9:55 am Consumer sentiment Nov.
65.0 64.2
11 am K.C. Fed survey Nov.
-- 8
Thursday, NOV. 24

Thanksgiving Day
None scheduled


None scheduled