Tag Archives: Cheniere Energy

Business, Finance, Occupation & Industry

The U.S. Natural Gas Supply Just Got 26% Larger

Leave a comment

By Matt DiLallo, The Motley Fool

Filed under:

When an oil and natural gas exploration company books its energy reserves, it’s really using its best guess based on the currently available data. As with most guesses based on limited data, they tend not to be as accurate as we’d like. Sometimes that’s a good thing, as in the case of our nation’s future natural gas supply.

A recent study by the Potential Gas Committee shows that the U.S. now has 26% more recoverable gas than the group estimated we had at the end of 2010. The total now comes to 2,383.9 trillion cubic feet, or Tcf. That’s really good news both for producers and for current and future end users.

Thanks to the Marcellus Shale, the Atlantic portion of the country has the highest ceiling, at an estimated 741.3 Tcf of recoverable natural gas. That means decades of production coming from the likes of Range Resources and Chesapeake Energy , which have large acreage positions in the Marcellus and in the region as a whole. 

Chesapeake is already the nation’s second largest natural gas producer. The company pumps out 4% of our total production, and if gas prices rise, it has the potential to produce even more gas in the future. The company is the largest leaseholder in both the Utica, at 1 million net acres, and the Marcellus, at 1.8 million net acres. If gas prices are high enough, Chesapeake has plenty of room to expand its drilling budget and increase its production.

Range Resources, which was the top producer in the Marcellus last year, also has a large acreage position in the play. The company has 700,000 net acres in the Marcellus as well as another 231,000 net acres in its Southern Appalachia division. Overall, the company believes it controls 54 Tcfe of resource potential in its acreage just in the Atlantic potion of the country. As one of the lowest-cost producers of natural gas in the country, Range can profit even in a low-price environment.

Knowing that we have a larger supply of natural gas is great; however, it won’t do a whole lot for profits if prices don’t head higher. The good news here is that more demand is on the way. Overall, there should be enough room so that everyone can profit as more natural gas comes out of the ground.

One area to watch is liquefied natural gas exports. Currently, Cheniere Energy is first in line to begin exporting natural gas. Its Sabine Pass terminal is scheduled to come online in 2015. There’s a boatload of projects in various stages of the approval process that would like to join Cheniere.

The problem here is that chemical companies such as Dow Chemical have vowed to vigorously fight an increase in natural gas exports. With more than $4 billion in projects coming online over the next few years that use natural gas as a feedstock, you can understand why the company wants the

From: http://www.dailyfinance.com/2013/04/14/the-us-natural-gas-supply-just-got-26-larger/

Business, Finance, Occupation & Industry

3 Reasons to Buy Lockheed Martin Stock

Leave a comment

By Aimee Duffy, The Motley Fool

Filed under:

It’s no surprise that defense contractors like Lockheed Martin are desperately trying to diversify their business mix. The government is a big customer, but in this age of belt tightening, Lockheed needs to branch out if it wants to survive. The company is doing just that, pursuing a variety of projects outside the realm of government contracts. Today I’ll take a look at three of Lockheed’s diversification efforts. Each project serves as an important step forward, and together they provide three reasons investors should consider buying Lockheed Martin stock.

1. LNG tanks
In March, Lockheed announced it was making a $3 million capital investment to develop liquefied natural gas tanks for transportation and storage. The company is using its experience manufacturing tanks for space shuttles to get into the LNG business. The increasing importance of natural gas on a global scale makes this a smart investment for Lockheed. The company has already received initial orders for the tanks, and it expects demand to grow.

Indeed, companies like Chevron and Cheniere Energy are both quickly working to finish LNG export facilities in the next two years. At the beginning of this year, the industry was capable of producing 290 million tons per year, and some estimates for LNG see supplies rising 4.5% per year through to 2030.

2. Fusion
Nuclear fusion is an ambitious goal if there ever was one, but that’s exactly what the company is working on at its secretive Skunk Works facility in California. Few specific details are known about the project, but as The New York Times reported last month, the company is aiming to develop small, modular fusion reactors that could be made in factories. If — and this is obviously a big “if” — Lockheed were to reach its goal the development would be nothing short of game-changing.

3. Perforene
The third reason to consider picking up some Lockheed Martin stock is a product called Perforene. It is a thin carbon membrane, called graphene, with perforations about a nanometer big that filters salt from water. The thinness of the filter (it is only one-atom thick) means the energy required to push salt water through the filter is considerably less — 100 times less, according to Lockheed — than what is needed for other filtration systems.

The filter is still in its development phase, but Lockheed expects to be able to commercialize it by 2014 or 2015. It would slash the cost of filtering water at a time when world demand for clean water is reaching unprecedented levels.

Foolish takeaway
Tackling the world’s energy problems with forward-thinking ideas is a brilliant strategy for diversifying a business away from government defense contracts. We will always need energy, and increasingly there is money to be made by whoever can develop cleaner energy, or find ways to use less of it. Lockheed is targeting those problems and I think it will pay off down …read more

Source: FULL ARTICLE at DailyFinance

News, Politics, Government

Hedge Fund Giant Daniel Loeb Beats the Market with Yahoo, and Cheniere Energy

Leave a comment

By GuruFocus, Contributor In a difficult quarter for hedge funds, and rather pleasant one for the S&P 500, Daniel Loeb bested the market with a 13.3% in his Ultra Fund in the first three months of the year, according to CNBC. By comparison, the S&P returned 10%, and the average hedge fund eked out just 3.13%. Loeb, the leader of hedge fund Third Point well known for his stormy business shakeups in his activist investment targets and event-driven investment strategy, saw several points of his strategy blossom this year. …read more

Source: FULL ARTICLE at Forbes Latest

Business, Finance, Occupation & Industry

3 Winners for Energy Exports

Leave a comment

By Aimee Duffy and Tyler Crowe, The Motley Fool

Filed under:

At this point, many energy investors know that Cheniere Energy is poised to become the first U.S. company to export liquefied natural gas, or LNG, in significant quantities. Investing in energy exports is a smart move; however, LNG exports won’t become a reality until 2015, while the U.S. is already a net exporter of petroleum products. In this video, Fool.com contributor Aimee Duffy explains why investors should focus on companies that are already making money in the export game, including one company that is behind a whopping 25% of America’s energy exports, and two other companies that are flying under the radar.

Enterprise Products Partners is known best for its processing and fractionating footprint, but this midstream is poised to ramp up exports in 2013. To help investors decide whether Enterprise Products Partners is a buy or a sell today, click here now to check out The Motley Fool’s brand-new premium research report on the company.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Aimee Duffy and Tyler Crowe“, contentId: “cms.29739”, contentTickers: “NYSE:VLO, NYSE:EPD, NYSEMKT:LNG, NYSE:OILT”, contentTitle: “3 Winners for Energy Exports”, hasVideo: “True”, pitchId: “98”, pitchTickers: “NYSE:EPD”, …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Debate Over U.S. LNG Exports Heats Up

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

The debate over whether or not the U.S. should export its glut of natural gas – in a liquefied form known as LNG – is heating up.

The main beneficiaries would be the companies exporting LNG abroad, as well as U.S. natural gas producers. So far, only Cheniere Energy‘s Sabine Pass terminal has been green-lighted to ship LNG to countries that don’t have a free trade agreement with the U.S. But many more companies are restlessly vying for permits.

The main losers would include various manufacturing firms, especially those whose operations are highly energy intensive. Over the past couple of years, America’s shale gas boom has spurred a domestic “manufacturing renaissance,” as U.S. companies including chemical manufacturers and steelmakers have reaped the rewards of cheap and plentiful natural gas.

The argument against LNG exports
According to America’s Energy Advantage, an industry group supported by major industrial firms such as Dow Chemical , Huntsman , and Alcoa, allowing large-scale LNG exports from the U.S. would almost inevitably drive up the price of domestic natural gas and threaten to erode the competitive advantage U.S. manufactures have recently developed on the back of cheap natural gas.  

Higher gas prices, the group argues, could lead to a substantial loss of jobs, as well as reduced investment, in the U.S. manufacturing sector.  

Huntsman chemicals’ CEO Peter Huntsman suggests that if all the proposed export projects were green-lighted, it would cause the price of domestic natural gas to “skyrocket.” And Dow’s George Blitz argues that fears of a future spike in U.S. gas prices could seriously threaten the roughly $100 billion of new investment the company calculates has been planned to capitalize on cheap and plentiful domestic natural gas.  

America’s Energy Advantage is instead advocating a “balanced” approach, suggesting that only a few more companies should be approved to export U.S. natural gas to countries that don’t have free trade agreements with the U.S.  

The argument in favor of LNG exports
On the other hand, the Center for LNG – an industry group advocating unfettered LNG exports – and foreign countries eager to secure new supplies of relatively cheap U.S. natural gas are up in arms about the idea of restricting LNG exports from the U.S.

The Center for LNG argues that limiting gas exports would amount to unwarranted interference in energy markets, while some foreign countries are desperate for any chance to improve their energy situations.  

Japan, in particular, continues to be plagued by high fuel import costs, which have worsened markedly following the yen’s recent decline. The Japanese currently pay nearly $17 per MMBtu for imported natural gas, a little over four times the price of gas in the U.S.

Yes or no to LNG exports?
To date, 21 applications requesting LNG export licenses have been filed with the Department of Energy (DOE). If all of them were approved, it would amount to exports totaling 28.3 billion cubic feet of gas per day …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Readers Respond: The 10 Best Ways to Play the Hugest Bubble in History

Leave a comment

By Ilan Moscovitz and John Reeves, The Motley Fool

Filed under:

WHat??????????
What is the hell are you guys talking about ??????????

That was just one of the nearly 1,700 emails we received in response to our “Hugest Bubble in History Set to Explode” special alert.

By now, most of you probably know that we weren’t really tipped off to a soon-to-explode bubble of historic proportions. There was no anonymous Swiss bubble expert feeding us information — it was all part of this year’s April Fool’s Day joke, which took to task Wall Street, hurried speculators, and breathless pundits.

In addition to offering our own Market Goggles™ to help you “see” through the market noise and a ShadowFear Index™ that identified “hidden” levels of market fear, we asked readers to submit their own favorite bubble plays.

The most popular were big-name blue chips: Johnson & Johnson, Hormel, Berkshire Hathaway, and Costco. A lot of readers also thought tech stocks like Apple and 3D Systems would be good picks for a bubble.

Commodity buffs liked natural gas exporter Cheniere Energy and Silver Wheaton. The VIX market volatility index was also a popular pick, even though we claimed in update 7 that the VIX IS CONTROLLED BY WALL STREET.

Here were some fairly typical responses:

I want two (2) pairs [of Market Goggles™].
I want green and blue
One stock I am interested in to play the bubble is Johnson & Johnson (JNJ).

Is this a joke? JNJ

Please send me the “MegaBubble: What’s Hot and What’s Not” special free report.

Wondering if you still have the market Google for free. 

Some readers got really creative and suggested alternative investments for playing the bubble. Here are 10 of our favorite responses:

1. As an asset class, ant farms have held their value in previous market downturns. The only downside that I can foresee is that it is a niche market within the collectibles class that is very thinly traded, and is only traded on the Puerto Maldonaldo exchange.

2. With the end of Hostess, Twinkies are already becoming a rare commodity…. The already low supply and intense demand that will come after the collapse will create a perfect storm for Twinkie prices.

3. Invest heavily in toilet paper…….and shovels……

4. None of the metals you mentioned above. More likely silver. Secondarily maybe Boron.

5. I would like to request one pair of 3-D glasses, Rose colored lenses; my stock to play the bubble is Facebook.

6. Cannot reveal source as it is a close and trusted friend, seems [large European bank] is looking more and more “troubling.”

[At that point, our reader received our automatic email response: “Dear Fool, Thanks for your note! The Motley Fool’s mission is “to educate, amuse, and enrich,” and every April 1, we like to focus on amusement in particular….” The reader then replied]

Oh, then “nevermind” the bit on [large European bank]
Onwards

7. Hardened Structures, LLC and Utah Shelter Systems. Should the dreaded triple top scenario play out, global markets will be worthless so we should invest …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

ExxonMobil Wins Either Way With Natural Gas Exports

Leave a comment

By Tyler Crowe, The Motley Fool

Filed under:

The funny thing about the natural gas export debate is that both sides are claiming the exact same thing — that they will help create more American jobs and bring down the trade deficit through more exports. So how can we tell which side offers the better argument? Dow Chemical and ExxonMobil , have been two of the most vocal advocates on opposite sides of the debate, and have recently taken a couple of shots across each others’ bows.

What makes this story even more interesting, though, is that ExxonMobil is poised to do well no matter what side wins this debate. Let’s take a look at why these two sides of the argument are claiming the same benefits for the U.S. and how ExxonMobil could come out on top no matter what.

The debate
Thanks to the recent surge in natural gas production, many have debated the merit of exporting liquified natural gas, or LNG. Certainly a market opportunity exists, but is this market opportunity in the best interests of the nation? On the side for exporting LNG is ExxonMobil, which claims that it would spur an even further increase in natural gas production, and in turn create more jobs and lower the country’s trade deficit. Exxon isn’t the only one on this side of the debate, either. Over 17 different sites in the U.S. have been identified as potential locations for LNG export, and 10 of them have gone to the Federal Energy Regualtory Commission for an export license.

As of right now, Cheniere Energy has the only approved license to export to countries that are not members of a free trade agreement. The license allows them to export at a rate of about 2 billion cubic feet per day, or about 3% of the total current U.S. production. While it is difficult to determine how much production would increase if more of these proposed facilities were to come online, certainly we can assume that the percentage of production going to exports would increase significantly.

On the other side of the coin, we have a large base of manufacturers in the U.S. that claim by not exporting natural gas, we would be able to use this advantaged feedstock to power the manufacturing industry in the U.S. This would in turn create American jobs and decrease our trade deficit by exporting finished goods.

Dow Chemical is one of the first companies that comes to mind on this side of the debate because chemical manufacturing has seen some of the most immediate effect from cheap natural gas as a chemical feedstock. Other sectors that also see major advantages from not exporting natural gas are energy intensive endeavors like power generation and aluminum and steel manufacturing.

Atlantic Power generates almost 66% of its power exclusively from natural gas, and the cheaper cost of generating power could potentially inspire power hungry industries to consider the U.S. Also, steelmaker Nucor has plans to resurrect one of its steel mills in Louisiana …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Could Turning Natural Gas Into Liquids Be the Next Big Thing?

Leave a comment

By Arjun Sreekumar, The Motley Fool

Filed under:

The past decade has seen a renaissance in U.S. natural gas production, as the application of horizontal drilling and hydraulic fracturing has allowed energy companies to tap the nation’s vast reserves of shale gas, leading to a massive glut of the commodity.

One way of taking advantage of America’s cheap and plentiful natural gas is by exporting it to foreign markets, where it commands higher prices. But so far, only one company, Cheniere Energy , has received approval to export liquefied natural gas, or LNG, to countries that don’t have a free trade agreement with the United States. And in any case, even if more companies win approval to export LNG, it will probably be at least another few years before these exports start to gain traction.

But there’s another way to capitalize on America’s natural gas glut: by turning gas into higher-value liquids such as diesel and jet fuel. Let’s take a closer look at this so-called gas-to-liquids, or GTL, technology, its potential, the hurdles it faces, and some of the companies investing in it.

All about GTL
The GTL process entails converting natural gas to higher-value petroleum distillates, including diesel, naphtha, and lubricant base oils. Central to the process is a chemical reaction known as the Fischer-Tropsch process, which uses a catalyst to synthesize carbon monoxide and hydrogen into synthetic fuels.

German scientists developed the technology to convert natural gas into liquid fuels back in the 1920s, though it failed to gain widespread popularity because of exorbitantly high costs. Even today, despite the major incentive that America’s vast reserves of cheap and plentiful natural gas provide, investment in GTL technology remains minor.

Just a handful of plants around the world operate commercially, mainly in Qatar, South Africa, and Malaysia. Combined, they produce a relatively insignificant 200,000 barrels of fuels and lubricants a day — less than 1% of worldwide diesel demand.

Major hurdles for GTL ventures
High capital costs are still the largest barrier for most potential entrants. Though several major companies showed interest in GTL technology in the late 1990s after Syntroleum, an Oklahoma-based company focused on developing renewable synthetic fuels, reported progress in bringing expenses down, costs have instead escalated substantially since then.

According to some estimates, capital costs are now as much as 10 times as high as they were a decade ago. Royal Dutch Shell‘s Pearl project in Qatar, currently the world’s largest GTL facility, serves as the most powerful reminder of this trend.

Pearl, located in the industrial city of Ras Laffan, is the result of a joint effort by Qatar Petroleum and Shell. The facility was designed to produce various products via the GTL process, including diesel, naphtha, kerosene, and lubricant oils, as well as condensates and liquefied petroleum gas.  

Through the third quarter of last year, Pearl had produced nearly 6 tons of natural gas liquids and other products using the GTL process. Initially, the economics of the facility appeared highly …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is Shell Making a Sequel to "Waterworld"?

Leave a comment

By Maxxwell A.R. Chatsko, The Motley Fool

Filed under:

It’s not every day that a company writes a check for $15 billion in an effort to save money. That’s a pretty astronomical number, but it does represent the cheaper option for several companies looking to tap offshore gas fields for liquefied natural gas, or LNG, production. Laying underwater pipelines for hundreds of miles can be expensive, especially when the gas and condensate contains large amounts of seawater and sediment. This heavily skews the economic competitiveness of large offshore reserves around the world to the “noncompetitive” category.

Why bring the gas to the liquefaction facility when you can bring the facility to the gas?

Royal Dutch Shell aims to get around the high costs of developing offshore gas fields by building a floating liquid natural gas, or FLNG, facility. This is not a fanciful idea by a large multinational company with too much time on its hands: Construction has already begun on the $12.6 billion Prelude FLNG facility. It could mean big things for the future of natural gas.

All ideas start off as crazy
Shell’s Prelude FLNG facility (67.5% interest) will be the world’s largest, producing 3.6 million metric tons (mtpa) of LNG, 1.3 mtpa of condensate, and 0.4 mtpa of liquid petroleum gas each year. If building a massive floating facility sounds ridiculous, that’s because it is. And how massive is massive? Try 488 meters long. That’s about 50% longer than a Nimitz-class aircraft carrier (the world’s largest), more than four times longer than a soccer field, the same size as the Taipei 101 Tower, and just plain ginormous. The floating giant will displace the same amount of water at six Nimitz-class aircraft carriers. Yet despite its massive size, Prelude will have just 25% of the footprint of a similar-sized onshore facility.  

The capacity will represent only about one-third the capacity of the Sabine Pass facility being constructed by Cheniere Energy and Total . However, this should not be looked at through a lens that focuses solely on capacity. Prelude is writing an important chapter in world energy supply — the kind that isn’t factored into long-term energy predictions. As we’ll see, the facility can be useful long after the gas field becomes uneconomical.

Source: Royal Dutch Shell.

Prelude FLNG will be moored about 200 kilometers off the northwestern coast of Australia and will open up a steady supply of gas to the high-priced Asian markets. The facility won’t have to be brought back to port for inspection for 25 years — not even during the strongest typhoons imaginable (famous last words).

How it works
The FLNG facility will float 250 meters above its target gas field, extract the riches from beneath the sea floor, clean and process the natural gas into LNG and other liquids, store them in the massive tanks located under its deck, and then offload the booty to LNG carriers that come cruising on by. Engineers have created a system that …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

These Stocks Have Great Growth Potential

Leave a comment

By Selena Maranjian, The Motley Fool

Filed under:

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some small-company stocks to your portfolio, the Vanguard Small Cap ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The Vanguard ETF‘s expense ratio, which is its annual fee, is an ultra low 0.10%. 

This ETF has performed  well, beating the S&P 500 over the past three and five years. As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why small caps?
It’s common, and reasonable, to invest in lots of large-cap companies, as they’ve typically proven themselves enough to grow large, and tend to have some competitive strengths. But it’s also smart to include smaller companies in your portfolio, as the best of them can grow rapidly and eventually become large caps.

More than a handful of small companies  had strong performances over the past year. Natural-gas specialist Cheniere Energy soared 75%, with investors excited  about its plans to build a liquid natural gas (LNG) export terminal to ship gas procured relatively inexpensively here to regions where it can be sold at a much higher price. They also like the stability that the company’s planned long-term contracts  should offer. It’s currently income-poor, but seems to have some long-term gains locked in. The stock is trading near a 52-week high.

American Capital , a business development company (BDC) that’s also involved in mortgage-backed securities, surged 68%. It was upgraded  in February by analysts at Zacks, who liked its expense and debt reduction, along with better-than-expected earnings. But more recently, Wells Fargo analysts downgraded the whole BDC sector, citing heightened credit-market risks and steeper valuations. Some are hoping that American Capital will reinstate its dividend in the near future, as management has said  it would like to do. In the meantime, it has been buying back shares, which isn’t always the best thing for a company to do. There’s a case to be made, though, that the company may be too inscrutable for most investors.

United Rentals gained 26%, renting out construction and industrial equipment, among many other things. Though its P/E ratio of 68 looks steep, its forward P/E of nine is much more attractive, suggesting strong expected growth. Indeed, revenue has been growing at a double-digit clip over the past three years, though free cash flow is negative.  Along with its fourth-quarter earnings, the company reported working on paying down debt, and expects to have significant free cash flow in 2013. It also pointed to …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

British Demand Adds to the Natural Gas Export Debate

Leave a comment

By Taylor Muckerman and Joel South, The Motley Fool

Filed under:

As the debate rages on regarding whether or not the United States should export natural gas, Cheniere Energy continues to move forward with its deal-making for LNG exports out of its Sabine Pass facility. Being the first mover in this space has afforded the company a tremendous advantage now that the chemical industry is asking for tighter regulation of the exportation process. 

The company has had its first four trains booked for some time now, and the fifth train, which has yet to be approved, is nearing its capacity. The newest 20-year contract is for $5.5 billion with the United Kingdom-based utility Centrica. If this train is allowed to export LNG, it would bring the contracted total to 12.75 million tons per year to be exported between all trains. Look for Cheniere to continue touching new 52-week highs if positive news like this keeps flowing in. 

One company that would be more than happy to see LNG exports ramp up
Energy investors would be hard-pressed to find another company trading at a deeper discount than Chesapeake Energy. Its share price depreciated after negative news surfaced concerning the company’s management and spiraling debt picture. While the debt issues still persist, giant steps have been taken to help mitigate the problems. To learn more about Chesapeake and its enormous potential, you’re invited to check out The Motley Fool’s brand-new premium report on the company. Simply click here now to access your copy.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ eventType: “TickerReportPitch”, contentByline: “Taylor Muckerman and Joel South“, contentId: “cms.27423”, contentTickers: “NYSE:XOM, NYSE:DOW, NYSE:TOT, NYSEMKT:LNG“, contentTitle: “British Demand Adds to the Natural Gas Export Debate”, …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is Heckmann the Perfect Penny Stock?

Leave a comment

By Rich Duprey, The Motley Fool

Filed under:

With the country awash in natural gas inventory, you’d suspect that companies servicing the drilling industry would be doing well, but Depression-level pricing has crushed everyone, and water treatment specialist Heckmann has not been immune. Shares are down 13% over the past 12 months, and though they’ve jumped well above the lows they hit last fall, they remain symptomatic of the industry as a whole.

According to the Energy Information Administration, natural gas prices ticked up $0.08 to $3.57 per million Btus last week, a tight range that it hasn’t been able to shake off, but with inventories remaining above the historical five-year average — even with the number of rigs in service dropping 39% from a year ago — there doesn’t appear to be a catalyst for a breakout anytime soon.

It’s the falling rig count, though, that weighs most heavily on Heckmann. It provides water and fluids used by drillers in the hydraulic fracturing process to access the oil and natural gas trapped therein. Once the fracking process is complete, Heckmann treats the water that is extracted for disposal.

Through the use of fracking and nontraditional drilling methods like horizontal drilling, the industry has produced copious amounts of gas, creating both a boon and bane because the influx has caused prices to crumble. But I’m convinced that will ultimately lead to the greatest economic boom yet, because the low energy cost inputs will drive innovation and development further. While Heckmann should be one of the beneficiaries of the coming natural gas boom, it’s really in oil where its future lies.

Following the purchase of Power Fuels last year, Heckmann became an oil-oriented play, with approximately 70% of its focus in the oil shales and liquids market and just 30% in the natural gas shale. Power Fuels is centered almost entirely in the Bakken oil play, and the goal really is to become an industry giant, a one-stop shop for environmental services.

That could be seen in its purchase of Thermo Fluids last year, what ended up becoming Heckmann’s fluids management division. It was the first real diversification away from its core gas services business and indicated a trend that it would follow with Power Fuels. The liquids market will be a driving force for the company, and it could be exports that lead the way.

Cheniere Energy is particularly poised to reap the rewards there, as it owns exclusive approval rights to export LNG supplies to other countries. Its Sabine Pass liquefaction facility in Louisiana has the capacity for 16.9 billion cubic feet of storage, and deliveries are expected to begin as early as 2018. French energy specialist Total has already agreed to buy $6.3 billion worth of LNG from Cheniere over a 20-year period.

It helps explain why drillers such as Chesapeake Energy and SandRidge Energy  have largely abandoned gas drilling for the more lucrative oil and liquids markets. Indeed, SandRidge hardly even mentions gas on its …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why These Companies Are My Top 2 Investments

Leave a comment

By Taylor Muckerman and Joel South, The Motley Fool

Filed under:

Since buying into Cheniere Energy and Starbucks , these two companies have grown into my top two holdings. My investment rationale behind these two companies was vastly different at the time I bought shares, but one thing I saw that they held in common was that the future of their business models was very bright and lacking in serious competition.

Looking at Starbucks, I really liked the worldwide brand name and its ability to continue growing under CEO Howard Schutlz. The recent expansion into China and India bodes very well for the company, and are prospects that allayed my concerns that Starbucks was trading at a relatively high price-to-earnings multiple. With this company, we could be looking at its U.S. growth all over again but in two new markets.

Cheniere Energy immediately piqued my interest given its first-mover advantage with its approval to export liquefied natural gas to nations who are not members of the Free Trade Agreement. To this day, it is the only company of its kind. With 18 million proposed tons per year of liquefied natural gas capacity already spoken for, and an additional nine million awaiting approval, the company’s gains are locked in for the long term. What’s more, Cheniere’s Corpus Christi, Texas, facility is awaiting approval. The potential of the company’s position in the liquefied natural gas market supports my purchase despite the company’s lack of income at the moment. 

Do these two companies fit your investing profile?
You might be better off taking a look at what our co-founder Tom Gardner is holding; he also recently revealed his top two stocks. For the names of that surprising pair of companies, just click here.

The article Why These Companies Are My Top 2 Investments originally appeared on Fool.com.


Joel South has no position in any stocks mentioned. Taylor Muckerman owns shares of Cheniere Energy and Starbucks. The Motley Fool recommends Starbucks and Total. The Motley Fool owns shares of Starbucks and has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, and Short Jan 2014 $15 Puts on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

(function(c,a){window.mixpanel=a;var b,d,h,e;b=c.createElement(“script”);
b.type=”text/javascript”;b.async=!0;b.src=(“https:”===c.location.protocol?”https:”:”http:”)+
‘//cdn.mxpnl.com/libs/mixpanel-2.2.min.js’;d=c.getElementsByTagName(“script”)[0];
d.parentNode.insertBefore(b,d);a._i=[];a.init=function(b,c,f){function d(a,b){
var c=b.split(“.”);2==c.length&&(a=a[c[0]],b=c[1]);a[b]=function(){a.push([b].concat(
Array.prototype.slice.call(arguments,0)))}}var g=a;”undefined”!==typeof f?g=a[f]=[]:
f=”mixpanel”;g.people=g.people||[];h=[‘disable’,’track’,’track_pageview’,’track_links’,
‘track_forms’,’register’,’register_once’,’unregister’,’identify’,’alias’,’name_tag’,
‘set_config’,’people.set’,’people.increment’];for(e=0;e<h.length;e++)d(g,h[e]);
…read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

4 More Treasures from 2009's "Dash for Trash" Rebound

Leave a comment

By Alex Planes, The Motley Fool

Filed under:

The financial crisis ended — at least where the markets are concerned — four years ago. But some people couldn’t believe it was over. On the way back up, they warned that it was a garbage rally — a sucker’s game that would soon take adventurous investors to the poor house. Pundits and analysts pointed to dire financials and warned that soaring speculative selections might soon go the way of the dodo.

Plenty of stocks did go belly-up. But an elite few not only survived, but thrived, producing outsized gains that have made the Dow Jones Industrial Average‘s four-year double look like chump change. Make no mistake: These were some incredibly risky stocks to chase in the dark days of 2009, as you’ll soon see from a few eye-popping then-and-now financial comparisons. Did you listen to the doomsayers and sit on the sidelines, or did you jump in with both feet, not knowing when (if ever) you might touch bottom?

Sucker’s-rally stocks that soared
The Dow bottomed out on March 9, 2009 after peaking in October of 2007, and it has since recovered to set fresh all-time record highs. In the four years since that day, the index has gained 120%, which increases to 146% if its components’ dividends are added to the calculation. That’s not bad, but it can’t hold a candle to these “garbage stocks” that turned out to be diamonds in the rough. Each has returned at least 500% since the end of the financial crisis crash, and some have recorded far greater gains than that:

Stock

Total Loss From Peak to Trough (2007-2009)

Market Cap at End of Crash

Total Return Since End of Crash

Cheniere Energy

91%

$176.94 million

550%

Wyndham Worldwide

90%

$550.22 million

2,090%

Avis

98%

$38.54 million

6,690%

Huntington Bancshares

94%

$395.33 million

630%

Source: YCharts.

What a wild ride. Let’s see how these companies have performed on a variety of metrics, both before and after the crash, to get a better understanding of why their stocks were so hated then — and why they’ve since proven the doubters wrong.

What happened to Cheniere Energy?

  • Trailing-12-month earnings per share in 2009: -$7.87
  • Most recent TTM earnings per share: -$1.83
  • Debt-to-cash ratio in 2009: 30.2
  • Most recent debt-to-cash ratio: 10.7
  • Total return from start of crash to today: -43%

 On Jun. 21, 2009, the financial blog Sober Look wrote:

Cheniere Energy has built up enormous capacity to purchase liquefied natural gas, convert the liquid into gas, and pump the gas into the US pipeline system. The idea was to buy up cheap liquefied natural gas from say Kuwait and sell it in the US. In the past this capability to convert LNG into gaseous form did not exist in the US on a large scale. … Unfortunately for Cheniere, natural gas prices in the US have collapsed as …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Northern Tier Energy: Yet Another Risky Oil and Gas MLP

Leave a comment

By Rich Duprey, The Motley Fool

Filed under:

With more than 5,400 stocks to choose from, the universe of investment possibilities is enormous, so looking for stocks based on what you already know and own might be a path to pursue.

Motley Fool CAPS, the 180,000 member-driven investor community that translates informed opinion into stock ratings of one to five stars, helps you focus your attention by providing you with a personalized Stock of the Day. Using its supercomputer, it looks at stocks currently in your active pick list and then scans stocks picked by highly rated players with lists similar to yours, as well as industries in which you currently have active picks, and targets areas in which you already have an interest.

By pairing up the opinions of some of the top investors in the CAPS community, CAPS provides you with a handful of companies on which to begin your own due diligence and research.

Buy what you know
No doubt based on my having weighed in on companies such as HollyFrontier, McMoRan Exploration, and Cheniere Energy in the broad oil, gas and consumables sector that I rated to outperform the market averages, the CAPS supercomputer thought I also might be interested in Northern Tier Energy , an independent downstream energy master limited partnership with refining, retail, and pipeline operations serving the PADD II region of the U.S., districts created during World War II to ration fuel but still used today for data collection purposes.

It was one of five Stocks of the Day it offered up for my consideration this week, and though it offers a tempting dividend that currently yields 16%, just remember that as smart as the CAPS algorithm may be, it’s still just an algorithm. So be sure to look before you leap on any of its suggestions.

Northern Tier Energy snapshot

Industry

Oil, Gas, and Consumable Fuels

Sector

Energy

Market Cap

$2.9 billion

Revenues (TTM)

$4.5 billion

1-Year Stock Return

N/A

Return on Investment

N/A

Estimated 5-Year EPS Growth

25%

Dividend & Yield

$5.08/16.5%

Recent Price

$30.76

CAPS Rating

****

Source: FinViz.com. N/A = not available. Northern Tier Energy had its IPO on 7/26/12.

Pipeline to profits
Because of their high divided yields, master limited partnerships continue to be popular with investors looking for an easy way to generate income, particularly during periods like now, when the Federal Reserve is implementing monetary policy hat keeps interest rates artificially low. It almost seems too good to be true: The MLPs make a ton of cash every quarter, and they distribute it all to their unitholders. Wash. Rinse. Repeat.

For certain MLPs it is a very repeatable business model. Their origins lie in fixed assets like oil and natural gas pipelines and storage facilities, where a Kinder Morgan or Plains All-American essentially collect a toll for every barrel of oil equivalent transported through their pipeline system. These …read more
Source: FULL ARTICLE at DailyFinance