{"id":22426,"date":"2011-07-18T12:39:23","date_gmt":"2011-07-18T16:39:23","guid":{"rendered":"http:\/\/www.taipanpublishinggroup.com\/tpg\/smart-investing-daily\/smart-investing-071811.html"},"modified":"2011-07-18T12:39:23","modified_gmt":"2011-07-18T16:39:23","slug":"is-natural-gas-a-worthy-investment","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/07\/18\/is-natural-gas-a-worthy-investment\/","title":{"rendered":"Is Natural Gas a Worthy Investment?"},"content":{"rendered":"<div align=\"left\">\n<table style=\"width: 200px;\" width=\"154\" border=\"0\">\n<tbody>\n<tr>\n<td colspan=\"2\"><\/td>\n<td><a class=\"twitter-share-button\" href=\"http:\/\/twitter.com\/share\">Tweet<\/a><br \/>\n<script type=\"text\/javascript\" src=\"http:\/\/platform.twitter.com\/widgets.js\"><\/script><\/td>\n<td><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Over the past week and more, we&#8217;ve been talking about crude oil, crude oil and crude oil.<\/p>\n<p>And for good reason. Oil prices jumped above $97 a barrel in after-hours trading on Friday. This industry is so important &#8212; and so riddled with corruption and greed &#8212; that Sandy Franks and I wrote a book about it. <em><a title=\"Buy Barbarians of Oil\" href=\"http:\/\/www.taipanpublishinggroup.com\/tpg-misc\/pr\/barbarians-of-oil-promo-07-11-11.html\">Barbarians of Oil<\/a><\/em> is already on shelves, but you can get a big discount off the shelf price by <a title=\"Buy Barbarians of Oil\" href=\"http:\/\/www.taipanpublishinggroup.com\/tpg-misc\/pr\/barbarians-of-oil-promo-07-11-11.html\">visiting this link<\/a>.<\/p>\n<p>But while we&#8217;ve been talking about crude oil, natural gas has quietly crept back onto the investment scene. In fact, natural gas prices climbed six out of the past seven trading days.<\/p>\n<p>So we&#8217;re asking, &#8220;Is natural gas a good investment right now?&#8221;<\/p>\n<p>There are certainly a lot of news stories that say yes&#8230; Most of them involve China.<\/p>\n<p>China wants to double its methane gas production by 2015. This form of natural gas comes from coal beds, and <strong>PetroChina (<a title=\"Google Finance: PetroChina\" href=\"http:\/\/www.google.com\/finance?q=PTR:NYSE\">PTR:NYSE<\/a>)<\/strong> says the country has enough to meet 30% of its power needs.<\/p>\n<p>But right now, China relies on <a title=\"24 Billion Barrels of Crude Oil -- Signposts From America's Energy Future\" href=\"http:\/\/www.taipanpublishinggroup.com\/tpg\/taipan-daily\/taipan-daily-071511.html\">crude oil<\/a> and coal for its power needs. That&#8217;s expensive and dangerous. China&#8217;s the second biggest user of oil in the world, with imports skyrocketing. In the coal industry, small, unregulated mines kill thousands of people every year.<\/p>\n<p>That&#8217;s why China is desperate for natural gas.<\/p>\n<p>The problem is, China fell short of its production target last year. It wanted to produce 10 billion cubic meters, but finished with only 8.6 billion.<\/p>\n<p>There&#8217;s real doubt that China can meet its goal of producing 21 billion cubic meters a year by 2015. China needs international projects to add to the mix.<\/p>\n<p>China is investing billions in <a title=\"Natural Gas in Demand: Sector Soars on Petrohawk Deal\" href=\"http:\/\/blogs.barrons.com\/stockstowatchtoday\/2011\/07\/15\/natural-gas-in-demand-sector-soars-on-petrohawk-deal\/\">natural gas<\/a>.<\/p>\n<p>According to David Hurd, oil and gas analyst for Deutsche Bank, China invested $10 billion in unconventional gas deals between August 2010 and February 2011. Things like shale gas&#8230;<\/p>\n<p>One of the biggest deals was with Canada&#8217;s <strong>Encana Corp. (<a title=\"Encana Corp.\" href=\"http:\/\/www.google.com\/finance?q=ECA:NYSE\">ECA:NYSE<\/a>)<\/strong>.<\/p>\n<p>Here&#8217;s a little background.<\/p>\n<p>In February 2011, PetroChina agreed to pay $5.4 billion for a 50% stake in natural gas deposits in Western Canada. These deposits are owned by Encana, and they are shale gas &#8212; the most difficult type of natural gas deposit to tap.<\/p>\n<p>China was very interested in this deal because it wanted to learn better ways of extracting shale gas. It could then use these methods to tackle its coal-bed methane deposits.<\/p>\n<p>It hooked up with the right company. Encana is considered one of the best in the business&#8230;<\/p>\n<p>But suddenly, on June 22, Encana announced the $5.4 billion deal was over. The two companies couldn&#8217;t agree on key points about the deposits. Encana is now looking for another company to partner with.<\/p>\n<p>China has lost out on 255 million cubic feet of natural gas a day, or 7.22 million cubic meters. That deal would have boosted China&#8217;s natural gas production by 2.64 billion cubic meters a year&#8230; a jump of 30% over 2010&#8217;s production!<\/p>\n<p>But even though this massive deal fell through, there are still a lot of deals going on right now.<\/p>\n<p>The latest news comes from <strong>Shell (<a title=\"Shell\" href=\"http:\/\/www.google.com\/finance?q=RDS.A:NYSE\">RDS.A:NYSE<\/a>)<\/strong>. Shell could partner up with China National Petroleum Corp. (PTR&#8217;s parent company), Korea Gas Corp., and <strong>Mitsubishi Corp. (MBI:XETRA MSBHY.PK)<\/strong> to build a liquefied natural gas (LNG) facility in British Columbia.<\/p>\n<p>Shell has a pretty close relationship with China National Petroleum Corp. In November 2010, these companies signed an agreement for &#8220;integrated cooperation.&#8221; This would allow more collaboration between the two companies on oil and gas projects in Canada, and coal-bed methane project in China.<\/p>\n<p>But that&#8217;s not all&#8230;<\/p>\n<p>Shell signed a &#8220;shareholders agreement&#8221; with China National Petroleum Corp. in late June. The agreement was for a 50-50 joint venture &#8220;meant to accelerate large-scale development of shale gas, tight gas and coal bed methane through the standardization and automation of drilling,&#8221; according to LNG World News.<\/p>\n<p>In all, deals between China and Western Canada could get even hotter, and the rest of Asia isn&#8217;t about to be left out in the cold. <strong>Progress Energy Resources Corp. (<a title=\"Goggle Finance: Progress Energy Resources Corp.\" href=\"http:\/\/www.google.com\/finance?q=PRQ:TSE\">PRQ:TSX<\/a>)<\/strong> inked a $1.07 billion deal with Malaysia&#8217;s Petronas.<\/p>\n<p>Even more interesting, though, are U.S. companies making deals with Canadian companies. <strong>EOG Resources (<a title=\"Google Finance: EOG Resources\" href=\"http:\/\/www.google.com\/finance?q=EOG:NYSE\">EOG:NYSE<\/a>)<\/strong>, Encana and <strong>Apache (<a title=\"Google Finance: Apache\" href=\"http:\/\/www.google.com\/finance?q=APA:NYSE\">APA:NYSE<\/a>)<\/strong> are the companies behind Kitimat LNG. This project is working its way through government review right now.<\/p>\n<p>(We&#8217;ve talked about <a title=\"Fighting Arab Nations Are Costing You Hundreds at the Gas Pump\" href=\"http:\/\/www.taipanpublishinggroup.com\/tpg\/smart-investing-daily\/smart-investing-061311.html\">Apache Corp.<\/a> in <em>Smart<\/em> <em>Investing<\/em> <em>Daily<\/em>. I mentioned this company back in mid-June, and since then, the share price has climbed more than 5%. If you haven&#8217;t already, sign up for <em><a title=\"Sign uo for Smart Investing Daily\" href=\"http:\/\/www.taipanpublishinggroup.com\/free-signups\/splash\/sidvid-su-sidweb.html\">Smart Investing Daily<\/a><\/em> and you&#8217;ll never miss out on opportunities like this.)<\/p>\n<p>What you need to know is this: There is huge potential in natural gas investments&#8230; even more when you throw China into the mix.<\/p>\n<p>Look for a lot more deals to come in this industry. The players could be from China and other Asian countries (like Japan, Korea and Malaysia), or even places like Australia.<\/p>\n<p>In fact, one of Australia&#8217;s biggest companies just agreed to buy out an American natural gas producer.<\/p>\n<p style=\"padding-left: 30px;\"><em>New Growth Investor<\/em> editor Zach Scheidt was all over this acquisition, and recently wrote me to say:<\/p>\n<p style=\"padding-left: 30px;\"><em>In &#8220;The Energy Titans of Growth&#8221; I recommended a purchase of <strong>Petrohawk (<a title=\"Google Finance: Petrohawk\" href=\"http:\/\/www.google.com\/finance?q=HK:NYSE\">HK:NYSE<\/a>)<\/strong> because of the company&#8217;s ample reserves. <\/em><\/p>\n<p style=\"padding-left: 30px;\"><em>You see, the company is sitting on 3.4 Tcfe (Trillion cubic feet) of proven reserves. <\/em><\/p>\n<p style=\"padding-left: 30px;\"><em>Of course, proven reserves are only part of the company&#8217;s actual asset base. A significant amount of acreage has yet to be fully analyzed and documented. These acres are listed as &#8220;resource potential&#8221; &#8212; and will likely be converted to proven reserves as the company continues to expand its drilling program.<\/em><\/p>\n<p style=\"padding-left: 30px;\"><em>At the time the report was issued, HK was trading near $27 per share. The stock has been volatile due to a very uncertain energy market. But HK&#8217;s reserves have never been in question. <\/em><\/p>\n<p style=\"padding-left: 30px;\"><em>Today, HK is trading 62% higher (overnight) because <strong>BHP Billiton (<a title=\"Google Finance: BHP Billiton\" href=\"http:\/\/www.google.com\/finance?q=BHP:NYSE\">BHP:NYSE<\/a>)<\/strong> agreed to acquire the company for $38.75 per share. BHP made the acquisition because of HK&#8217;s tremendous reserves. In this transaction, HK provides the gas assets that BHP so desperately needs, and BHP provides the drilling infrastructure and financing to quickly ramp production and increase profits.<\/em><\/p>\n<p style=\"padding-left: 30px;\"><em>It&#8217;s a win-win situation. HK shareholders get a 62% windfall, and BHP shareholders now have a tremendous gas asset that could pay dividends for years to come.<\/em><\/p>\n<p>It seems as though companies with spending money are trying to snap up as much natural gas as they can.<\/p>\n<p>And that means the natural gas industry is a very worthy investment right now.<\/p>\n<p><strong>Publisher&#8217;s Note: <\/strong>Zach Scheidt&#8217;s <a title=\"Learn more about Zach's energy picks\" href=\"https:\/\/orders.taipanpublishinggroup.com\/OILC\/WTAIM604\/\">energy picks<\/a> are on fire. I just looked through the former hedge funder&#8217;s model portfolio. He recommends three energy companies &#8212; all are up by double-digits.<\/p>\n<p>Zach&#8217;s next pick is due out in two weeks. <a title=\"Get Zach's next pick\" href=\"https:\/\/orders.taipanpublishinggroup.com\/OILC\/WTAIM604\/\">Click here to make sure he sends it to you.<\/a><\/p>\n<p align=\"left\"><em>Article brought to you by Taipan Publishing Group. Additional valuable content can be syndicated via our <a title=\"Go To: Subscribe to Taipan's News Feed\" href=\"http:\/\/feeds.feedburner.com\/taipan-news\">News RSS feed<\/a>. Republish without charge. Required: Author attribution, links back to original content or <a title=\"Go To Taipan Publishing Group's Homepage\" href=\"http:\/\/www.taipanpublishinggroup.com\/\">www.taipanpublishinggroup.com<\/a>.<\/em><\/p>\n<p>{loadposition sidarticles}<\/p>\n<p>{jtagstpg} {authorstpg}<\/p>\n<p><strong>Other Related Sources:<\/strong><\/p>\n<ul>\n<li><a title=\"24 Billion Barrels of Crude Oil -- Signposts From America's Energy Future\" href=\"http:\/\/www.taipanpublishinggroup.com\/tpg\/taipan-daily\/taipan-daily-071511.html\">24 Billion Barrels of Crude Oil &#8212; Signposts From America&#8217;s Energy Future<\/a><\/li>\n<li><a title=\"Natural Gas in Demand: Sector Soars on Petrohawk Deal\" href=\"http:\/\/blogs.barrons.com\/stockstowatchtoday\/2011\/07\/15\/natural-gas-in-demand-sector-soars-on-petrohawk-deal\/\">Natural Gas in Demand: Sector Soars on Petrohawk Deal<\/a><\/li>\n<li><a title=\"Fighting Arab Nations Are Costing You Hundreds at the Gas Pump\" href=\"http:\/\/www.taipanpublishinggroup.com\/tpg\/smart-investing-daily\/smart-investing-061311.html\">Fighting Arab Nations Are Costing You Hundreds at the Gas Pump<\/a><\/li>\n<\/ul>\n<div class=\"feedflare\"><a href=\"http:\/\/feeds.taipanpublishinggroup.com\/~ff\/SmartInvestingDaily?a=l_ogf4EWmXo:2dGpiY8SgR4:yIl2AUoC8zA\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/SmartInvestingDaily?d=yIl2AUoC8zA\" alt=\"\" border=\"0\" \/><\/a> <a href=\"http:\/\/feeds.taipanpublishinggroup.com\/~ff\/SmartInvestingDaily?a=l_ogf4EWmXo:2dGpiY8SgR4:-BTjWOF_DHI\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/SmartInvestingDaily?i=l_ogf4EWmXo:2dGpiY8SgR4:-BTjWOF_DHI\" alt=\"\" border=\"0\" \/><\/a> <a href=\"http:\/\/feeds.taipanpublishinggroup.com\/~ff\/SmartInvestingDaily?a=l_ogf4EWmXo:2dGpiY8SgR4:F7zBnMyn0Lo\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/SmartInvestingDaily?i=l_ogf4EWmXo:2dGpiY8SgR4:F7zBnMyn0Lo\" alt=\"\" border=\"0\" \/><\/a> <a href=\"http:\/\/feeds.taipanpublishinggroup.com\/~ff\/SmartInvestingDaily?a=l_ogf4EWmXo:2dGpiY8SgR4:V_sGLiPBpWU\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/SmartInvestingDaily?i=l_ogf4EWmXo:2dGpiY8SgR4:V_sGLiPBpWU\" alt=\"\" border=\"0\" \/><\/a> <a href=\"http:\/\/feeds.taipanpublishinggroup.com\/~ff\/SmartInvestingDaily?a=l_ogf4EWmXo:2dGpiY8SgR4:qj6IDK7rITs\"><img decoding=\"async\" src=\"http:\/\/feeds.feedburner.com\/~ff\/SmartInvestingDaily?d=qj6IDK7rITs\" alt=\"\" border=\"0\" \/><\/a><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Tweet<\/p>\n<p>Over the past week and more, we&#8217;ve been talking about crude oil, crude oil and crude oil.<br \/>\nAnd for good reason. Oil prices jumped above $97 a barrel in after-hours trading on Friday. This industry is so important &#8212; and so riddled wi&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-22426","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/22426","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=22426"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/22426\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=22426"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=22426"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=22426"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}