Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
The S&P 500 appears ready to correct, and that is a good thing - 18th Sep 20
It’s Go Time for Gold Price! Next Stop $2,250 - 18th Sep 20
Forget AMD RDNA2 and Buy Nvidia RTX 3080 FE GPU's NOW Before Price - 18th Sep 20
Best Back to School / University Black Face Masks Quick and Easy from Amazon - 18th Sep 20
3 Types of Loans to Buy an Existing Business - 18th Sep 20
How to tell Budgie Gender, Male or Female Sex for Young and Mature Parakeets - 18th Sep 20
Fasten Your Seatbelts Stock Market Make Or Break – Big Trends Ahead - 17th Sep 20
Peak Financialism And Post-Capitalist Economics - 17th Sep 20
Challenges of Working from Home - 17th Sep 20
Sheffield Heading for Coronavirus Lockdown as Covid Deaths Pass 432 - 17th Sep 20
What Does this Valuable Gold Miners Indicator Say Now? - 16th Sep 20
President Trump and Crimes Against Humanity - 16th Sep 20
Slow Economic Recovery from CoronaVirus Unlikely to Impede Strong Demand for Metals - 16th Sep 20
Why the Knives Are Out for Trump’s Fed Critic Judy Shelton - 16th Sep 20
Operation Moonshot: Get Ready for Millions of New COVAIDS Positives in the UK! - 16th Sep 20
Stock Market Approaching Correction Objective - 15th Sep 20
Look at This Big Reminder of Dot.com Stock Market Mania - 15th Sep 20
Three Key Principles for Successful Disruption Investors - 15th Sep 20
Billionaire Hedge Fund Manager Warns of 10% Inflation - 15th Sep 20
Gold Price Reaches $2,000 Amid Dollar Depreciation - 15th Sep 20
GLD, IAU Big Gold ETF Buying MIA - 14th Sep 20
Why Bill Gates Is Betting Millions on Synthetic Biology - 14th Sep 20
Stock Market SPY Expectations For The Rest Of September - 14th Sep 20
Gold Price Gann Angle Update - 14th Sep 20
Stock Market Recovery from the Sharp Correction Goes On - 14th Sep 20
Is this the End of Capitalism? - 13th Sep 20
The Silver Big Prize - 13th Sep 20
U.S. Shares Plunged. Is Gold Next? - 13th Sep 20
Why Are 7,500 Oil Barrels Floating on this London Lake? - 13th Sep 20
Sheffield 432 Covid-19 Deaths, Last City Centre Shop Before Next Lockdown - 13th Sep 20
Biden or Trump Will Keep The Money Spigots Open - 13th Sep 20
Gold And Silver Up, Down, Sideways, Up - 13th Sep 20
Does the Stock Market Really "See" the Future? - 12th Sept 20
Basel III and Gold, Silver and Platinum - 12th Sept 20
Tech Stocks FANG Index Nearing Critical Support – Could Breakout At Any Moment - 12th Sept 20
The Tech Stocks Quantum AI EXPLOSION is Coming! - 12th Sept 20
AMD Zen 3 Ryzen 4000 Questions Answered on Cores, Prices, Benchmarks and Threadripper Launch - 12th Sept 20
The Inflation Mega-trend is Going Hyper! - 11th Sep 20
Gold / Silver Ratio: Slowly I Toined… - 11th Sep 20
Stock Market Correction or Reversal? The Jury Isn't Out! - 11th Sep 20
Crude Oil – The Bearish Outlook Remains - 11th Sep 20
Crude Oil Breaks Lower – Sparking Fears Of Another Sub $30 Price Collapse - 11th Sep 20
Inflation by Fiat - 10th Sep 20
Unemployment Rate Drops. Will It Drag Gold Down? - 10th Sep 20
How Does The Global Economy Recover After This Global Pandemic? - 10th Sep 20
The Best Mobile Casino - 10th Sep 20
QE4EVER! - 9th Sep 20
AMD Ryzen Zen 3 4800x 10 Core 5ghz CPU, Cinebench Benchmark Scores (Est.) - 9th Sep 20
Stock Traders’ Dreams Come True – Big Technical Price Swings Pending on SP500 - 9th Sep 20
Should You Be Concerned About The Stock Market Big Downside Rotation? - 9th Sep 20
Options Traders Keep "Opting" for Even Higher Stock Market Prices - 8th Sep 20
Gold Stocks in Correction Mode - 8th Sep 20
The law of long-term time preference and Gold ownership - 8th Sep 20
Gold Bull Markets: History and Prospects Ahead - 8th Sep 20
Sheffield City Centre Coronavirus Shopping Opera Ahead of Second Covid-19 Peak - 8th Sep 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

The Dawn of the Natural Gas Era

Commodities / Natural Gas Mar 02, 2012 - 07:49 AM GMT

By: The_Energy_Report

Commodities Best Financial Markets Analysis ArticleNew oil harvesting technologies first perfected in the Bakken are opening up production around the world. Stephen Taylor, portfolio manager of The Taylor Fund and founder of Taylor Asset Management, is excited about the prospects for several New Zealand-based efforts. He's also optimistic about the dawning of a new age for natural gas as the chemical sector steps in to prop up slumping prices in this exclusive interview with The Energy Report.


The Energy Report: There's some escalating tension in the Gulf of Hormuz between Iran, the U.S. and Israel. Do you think that this will be a catalyst for oil prices in 2012?

Stephen Taylor: It may well be. It underscores the need for and the value of assets in politically stable areas. It also bodes well for energy assets in North America and places like Australia and New Zealand. The Middle East has always been a volatile place, but this issue certainly focuses investor attention on the risk in that area.

TER: What themes in energy are you positioning for?

ST: We like smaller emerging companies that are heavily focused on oil, as well as companies that are benefiting from the application of new technologies. Technologies that were pioneered in the Bakken in North Dakota have spread to similar geologic formations around the world, and there are going to be tremendous opportunities arising.

One of our largest positions, New Zealand Energy Corp. (NZ:TSX.V; NZERF:OTCQX), is applying some of those same technologies in New Zealand and is announcing terrific results. In fact, just recently the company announced terrific results from its Moki-2 well at 1,000 (K) barrels a day (bbl/d) of production. We think the company has tremendous potential ahead of it.

TER: New Zealand Energy seems to be one of the darling plays right now. Beyond its results, why do you think that is?

ST: New Zealand Energy and Tag Oil Ltd. (TAO:TSX.V) are really the only pure plays onshore in New Zealand. Of the two, New Zealand Energy is more focused on oil versus gas production. It's a country that requires 150K bbl/d in oil yet produces only 55K bbl/d. The domestic demand is there.

The company also has tremendous land positions that potentially could mean billions of barrels of oil. It's a question of what sort of recovery rate applies. The increasing level of exploration and drilling technology may just push that number higher in the years ahead.

We have found the company's management team to be very solid and straightforward. We were early investors in New Zealand Energy and participated in the first private round last year. It's a company that seems to under-promise and over-deliver, which we like.

TER: You said you prefer oil-focused plays, but you have a position in domestic oil and gas company Saratoga Resources Inc. (SARA:NYSE.A), which is a little heavier on gas. Are you concerned about Saratoga's oil:gas ratio?

ST: Saratoga was recently listed on the NYSE Amex stock exchange. It was a great day for the company and we were there with management for the bell ringing ceremony. Tom Cooke and his team have done a terrific job turning that company around. It was in Chapter 11 in 2010. He and his team brought the company through bankruptcy without any shareholder dilution, which is quite an accomplishment.

Saratoga's properties are focused on the offshore Louisiana Gulf Coast area. Importantly, they are all within state as opposed to federal waters, which means they are within three miles of the transitional coastline. Its leases are in shallow water, typically less than 20 feet deep. This affords significant cost savings when drilling wells. A company can get away with leasing cheaper, less sophisticated equipment than that required for drilling in deeper depths. Being able to drill cheaper wells is always a good thing.

Recent exploration activity is focusing investors' attention on the potential for ultra-deep gas in that area. The Davey Jones well, drilled by McMoRan Exploration Co. (MMR:NYSE) is in the process of bringing a flow-testing unit online over the next few weeks. It's becoming increasingly obvious that the deep gas may now be accessible from shallow water. A company could drill into the same formations, but only be drilling in 20 feet or less of water as opposed to 200 or more feet.

On that point, Saratoga is in discussions with McMoRan about forming a joint venture on one of its key leases. That process is continuing. We'll see what happens, but I would expect some news over the next several weeks. Saratoga has a very valuable collection of assets and we think the stock is a good buy.

Saratoga may be about 50% to 60% in gas versus oil, but it has a number of oil-rich targets that it could drill as well. The production profile for that area is very long lived and many of its wells have been in production for 40-plus years.

I also believe that further downside to gas prices could be limited. There could be a return and rebirth of the U.S. chemicals industry over the next several years based largely on cheap and reliable supplies of natural gas in the U.S. Huntsman Corp. (HUN:NYSE) recently said it plans to expand and enlarge its U.S. capacity.

There is reemerging demand for natural gas that many investors may be underestimating. That demand will come from traditional users, like the chemical industries, but also increasingly from transportation uses, too. Energy policies like the Pickens Plan, and similar offshoots that push U.S energy independence, will target commercial vehicles and transportation fleets. That's going to begin to use more natural gas more quickly than a lot of people are currently thinking. That's good for the country and good for natural gas producers.

So, the long-term outlook in this case may not take quite as long as some people think.

TER: What's your biggest regret so far in managing the fund?

ST: I'm not one to dwell on regrets. When I was on the Chicago Board of Options Exchange (CBOE) trading floor, we had an expression: "Next trade." If you made a bad trade, you had to forget about it, get back to business and move on to the next trade without consuming yourself with regrets.

TER: What advice would you give to retail investors looking to gain further exposure to energy?

ST: Look for quality management teams. Find teams that have a track record of generating shareholder value and taking care of their shareholders. That is the most important quality—before a project or anything like that. The wrong person in charge of a good asset will not get good results. Look for teams that have skin in the game. Tom Cooke at Saratoga owns 20-30% of the company. That's a substantial portion of his net worth tied up in the same investment as the regular shareholders.

TER: Thanks, Steve.

Steve Taylor is chairman and CEO of Taylor Asset Management, a Chicago-based investment management firm focusing on small-cap domestic equities and emerging markets. He also serves as a portfolio manager for the Taylor International Fund Ltd., a small-cap equity fund. In addition to emerging markets, Taylor's area of expertise includes private equity, restructuring and turnaround situations and both small- and mid-cap companies. He has considerable experience in the natural resources and finance industries in Canada and China.

Want to read more exclusive Energy Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Exclusive Interviews page.

DISCLOSURE:
1) Brian Sylvester of The Energy Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Energy Report: New Zealand Energy Corp. and Saratoga Resources Inc. Streetwise does not accept stock in exchange for services.
3) Stephen Taylor: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise for participating in this story.

Streetwise – The Energy Report is Copyright © 2012 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

The Energy Report does not render general or specific investment advice and does not endorse or recommend the business, products, services or securities of any industry or company mentioned in this report.

From time to time, Streetwise Reports LLC and its  directors, officers, employees or members of their families, as well as persons interviewed for articles on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110
Petaluma, CA 94952

Tel.: (707) 981-8204
Fax: (707) 981-8998

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules