Natural Gas / Diesel pricing chart, infrastructure, YPF and Nautilus Minerals

Natural gas / diesel pricing chart, YPF and Nautilus Minerals

December 7, 2012

This is a copy of our Weekend Updated mailed FREE to our subscribers every Friday.

This week – Our proprietary natural gas / diesel chart update…. Building costs explode for Chevron at their liquefied natural gas (LNG) plant in Australia…. Exxon and Chevron capital budgets for 2013…. YPF – up now ~ 20% in 2 weeks… Eurozone unemployment hits another record – almost 12% – with youth unemployment in Spain and Greece at 60% – holy cow


Many of our subscribers are interested in natural gas related investments. The proprietary chart below graphically illustrates the current pricing differential between diesel and natural gas as of November 2012. This pricing differential is the single most important factor for investing in natural gas-related companies. As this price gap holds, businesses will continue to adopt natural gas as a primary energy source.

The chart continues to confirm our investment thesis – Natural gas thesis seen here.

Natural gas diesel pricing chart infrastructure adoption

As you can see – even though the price of natural gas as gone from $2 per Mcf to around $3.50 per Mcf in 2012 the spread is still significant and favors adoption.

Our December 2012 – Gold Member pick is at the epicenter of this mega trend and stands to benefit for years to come.

December 2012 – Gold Member report

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Few tidbits of news – Chevron unveils their capital expenditure budget up 12% over prior year – to about $37 billion

From Zacks ….

U.S. energy behemoth Chevron Corporation (CVX) offered a glimpse of its 2013 capital spending plans. The integrated major said that it will boost its capital expenditures by about $4 billion in 2013, as the company allocates the bulk of funds toward the ‘Exploration & Production’ segment, while continuing to be cautious about the amount of resources it devotes to the refining business. Chevron’s focus on the upstream business can be attributed to its strong portfolio of pipeline projects.

The second-largest U.S. oil company by market value has pegged its 2012 capital budget at $36.7 billion, up more than 12% from the $32.7 billion it expects to invest by the end of 2012. Of the total, roughly 90% will go toward oil and gas exploration projects worldwide, and 7% for downstream businesses.

Chevron’s move to raise spending by an eighth not only marks the most that it has ever budgeted for capital expenditure but also put its outlay right next to that of the industry leader Exxon Mobil Corporation (XOM), which plans to spend $37 billion per year in the coming years.

To me statements like the above are just more confirmation that oil and natural gas infrastructure companies are a good place to look for long term investments.

Little more on LNG in Australia – Chevron has lifted the cost estimate on its liquefied natural gas – LNG – project in Western Australia from $43 billion to now $52 billion – ouch! Chevron has reported the project 55% complete and should be operating in early 2015.

From an Australian publisher – Business Spectator

Chevron vice chairman George Kirkland said the economics around the Gorgon project remain attractive and that Chevron’s exploration program continued to discover additional gas resources that could support future expansions of its Australian LNG operations.

Gorgon encompasses 11 gas fields and a 15 million tonne per annum LNG plant on Barrow Island expected to last at least 40 years. Chevron operates Gorgon and has a 47.3 per cent stake, with fellow petroleum majors Exxon Mobil and Shell holding 25 per cent.

Sales agreements for up to 25 years have been reached for Gorgon with customers in China, India, Japan and South Korea.

 All great signs for our natural gas investment thesis.


Late last week the Eurozone reported unemployment hits another record high.

From BloombergBusinessweek…

Figures released Friday by Eurostat, the EU’s statistics office, showed that the recession in the eurozone pushed unemployment up in the currency bloc to 11.7 percent in October, the highest level since the introduction of the euro in 1999.

The rise from September’s previous record of 11.6 percent was anticipated after the eurozone returned to recession in the third quarter, commonly defined as two consecutive quarters of negative growth………

……..Spain and Greece have the region’s highest unemployment rates – both over 25 percent, with youth unemployment levels heading toward 60 percent, a figure that could have a long-term economic and political impact…..

 Just staggering numbers.


Position Updates – see below – a few highlights are posted here.

YPF (YPF) – Late Thursday partnership talk / rumors surfaced again.

From Reuters .. Dec 7, 2012

YPF sees deals with Bridas, Chevron before end 2012

LONDON, Dec 7 (Reuters) – Argentine energy company YPF expects to finalize an agreement with Bridas Holding for it to make a substantial investment in YPF’s shale assets before the end of 2012, YPF’s chief executive said on Friday.

YPF chief executive Miguel Galuccio also said he expected the company to agree commercial terms with U.S. oil major Chevron on a shale exploration tie-up before the end of the year, building on an accord the two inked in September.

The owner of Bridas Holding, an Argentine company which holds a stake in Pan American Energy through its involvement in Bridas Corp, said on Thursday that it was planning to strike a deal with YPF.

And another from Reuters… Dec 6, 2012.. some highlights

Argentina’s YPF to draw 1st big post-takeover investment

BUENOS AIRES (Reuters) – Argentine energy company Bridas Holding will make a substantial investment in state-controlled YPF in the days ahead, Bridas owner Carlos Bulgheroni told Reuters, marking a potential breakthrough in the government’s search for partners.

Citing a “confidentiality period”, the South American oil mogul declined to disclose the investment planned, but said an announcement would come before the end of the month.

It will be “a substantial investment” in YPF’s shale oil operations, Bulgheroni, who rarely talks to the media, said. Asked if it would be in the range of $500 million (310 million pounds), he said, “much more”.

Argentina sits on huge resources of shale natural gas and oil, but large amounts of capital would be needed to bring them into production.

“We’re moving it quickly,” he added, declining to specify the areas he plans to develop in partnership with YPF.

SHALE BOUNTY

A U.S. Department of Energy report shows Argentina holds more natural gas trapped in shale rock than all of Europe – a 774-trillion-cubic-feet bounty that could transform the outlook for Western Hemisphere supply.

In 2010 YPF discovered the mammoth Vaca Muerta (“Dead Cow”) formation in southern Argentina, which contains an estimated 23 billion barrels of oil equivalent.
“In terms of unconventional reservoirs, there is not only Vaca Muerta,” Bulgheroni said. “There are many others.”

YPF … could be a real winner. Have to just wait and see.

Zynga (ZNGA) – stopped out by 3 cents this week – I lost $0.13 on the trade – now that is keeping your losses to a minimum :-) . Been crying about it ever since. Nice bullish base last two days. Watching I may re-enter next week.

Nautilus Minerals (NUSMF and NUS) I have never recommended a stock under $1.00 before – this is a flyer and only a quarter of an allocation is currently at risk. This is such a flyer that and I am considering my initial tranche “worthless” – BUT….. if they are able to work through their differences with the PNG government (listen to the links below) – this one could double – so for me – it’s worth a “flyer”.

We have followed Nautilus for 6 months or so (see Free report here) and I started a position this week after listening to these two radio clips from Radio Australia – where a PNG mining conference was taking place. Listen for yourself.

PNG PM speaks out on tax review and Nautilus dispute

Nautilus CEO confident he can beat environmental activists in PNG


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