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Andrew

 

Regarding energy, I take it you mean oilers and coalers and U but basically the resources end of the market?

 

By and large yes, but there are quite a few stragglers as well. ARQ and TAP have really struggled lately due to concerns over peaking production and a perception of lack of exploration success (even though this ignores discoveries like Marley for TAP). I remember about 2 years ago that similar concerns were held about WPL who whose production was going into decline and any pick up was years away. The price then was about $13 per share.

 

This punishing of certain oilers is typical of a basic NPV approach to existing reserves. In reality oilers with exploration acreage have a number of options on exploration success and also on the development of currently uncommercial finds which could become commercial if the oil price increases. The market generally does not value these options.

 

TAP is a fantastic option play on a few big targets this year but there have always been some very leveraged positions taken and when they have been unwound the price has been hammered which makes it too risky.

 

What I am observing about the oil and gas sector is that the game has moved to Africa. South America is moving towards nationalising resources (e.g. Venezuela, Bolivia and likely to spread). Europe is passed it. Russia controls its own reserves and won't let many foreigners in. Asia has opportunities as well, but not on the scale of Africa. The US is mature and many of the new wave of oilers have really awful assets. The trick is to get good financial terms to allow good profits for oilers. It is all well and good to discover 100mmbo but if there is a PSA which gives 90% of the profit to the government it is of little value.

 

Oil prices should remain very firm as the seasonal lull is now unwound and demand for gasoline in the Nothern Hemisphere summer picks up. The rise in US stocks is a temporary thing largely resourced from declining stocks in the rest of the world shipped to the US after the hurricanes. One devastating hurricane this season in the Gulf of Mexico will send oil prices well north of US$70 and if Iran turns off the taps in a huff then US$100 should be achieved.

 

Regarding coal, I think many are too pessimistic on coal prices after doing much research on the sector. Spot prices have very recently risen a fair chunk (over US$50/tonne for steaming coal). Hardly any coal company has capacity and mines are being acquired by Indian buyers. I think coal companies are good solid cash flow engines and could be played on the dips. They do lack the excitement of massive upside which the oilers give which is the only negative.

 

The other big factor is the USD/AUD exchange rate which is only getting better for Aussie companies. It seems that the rising interest rates in the US are pulling hot money there and pushing down the AUD. I do feel the AUD will remain strong as a number of large resource projects are developed over the next few years requiring AUD to do so. Also don't rule out demand for the AUD for large corporate transactions from the Chinese and Indians.

 

In summary, the fundamentals are sound and are only getting stronger.

 

The only sector I would be very cautious of currently is Uranium. While there will be a couple of companies who do well the vast majority have only a pipe dream. Many have only dirt with some vague indication of radiation. The wave of announcements from companies who ignored any U on their dirt until recently when they suddenly found they had some is just misleading. Even if a company were to go on and develop a meaningful resource you will currently be paying a premium for that. Why do that when there are so many other undervalued companies out there. Remember that if you lose 50% you have to make 100% to get back to where you started.

 

Shares I like in Energy are WPL, ROC, IPM, GCL, EXL, BHP.

 

Enough Sunday rambling! I'm off to the gym for some punishment from my personal trainer. http://www.sharescene.com/html/emoticons/weirdsmiley.gif

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In reply to: theflasherman on Sunday 02/04/06 09:55pm

Flash

 

In my opinion, compared to a few years ago:

 

* Aus small cap (AWE-BPT) and micro cap (AZA-HZN) are pretty much fully valued on a DCF basis (perhaps with the exception of NXS and HZN)

 

* this is shown by DCF values in broker reports, where there are very few trading at a discount to valuation

 

* however, this does presume that broker's long-run price of oil is US$40-$50/bbl, and not >US$60/bbl....if the latter, then stocks are trading < DCF valuation

 

* naturally, every stock has exploration upside...a key tactical question is therefore

1. Do you buy a stock that is trading at a premium to DCF value with good exploration upside; or

2. Is it better to wait to stock is trading at or below DCF value, so you get the exploration upside "for free"

I tend to the latter....although it would be hard not to get caught up in the excitement of the big plays such as Jacala (TAP/ROC).

 

* implication, is that for buying stocks below DCF value, now have to migrate to the nanocap and picocap sectors...e.g. MAG, PPP, APX.NZ, INP...but

1. is this wise (management, et al)

2. if do decide to invest, how much should one invest...1/4 or 1/2 or 1.0 times your usual allocation

 

 

Commander

(current holdings, in $ order, are: BPT, PSA, AWE, [QGC - not really an oiler], HZN, ROC, ARQ)

 

 

 

 

 

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Hi All,

 

The Energy Index may have peaked for this run up.

 

There is wave equality evident and point ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“DÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ on the chart below is 61.8% of the wave equality which does lend to ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Â¦ÃƒƒÂ¢Ãƒ¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…âہ“EÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚ being a major turning point or solid resistance. A move and close below the recent low of 18,482 on the daily chart would be confirmation.

 

Cheers.

post-37-1213492929.gif

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In my opinion, the two biggest challenges facing humankind are (1) our addiction to fossil fuel energy and (2) our need to kick the habit so our grandkids won't suffer consequences that climate scientists keep revising from bad to worse to severe to terrible to catastrophic.

 

The important part: As the evidence mounts, the time between revisions is getting shorter - like a Geiger Counter clicking faster the closer it gets to oil and coal's Global Chernobyl.

 

Forewarned is forearmed so (with two provisos) I support Australia joining the 'War on Global Warming' by phasing out our carbon-emitting industries, our carbon-emitting modes of transport, and our carbon-based energy exports.

 

But when change in difficult, solutions from Lulu Land will appear. One of the more hilarious is 'clean' coal. Relying on 'clean' coal (to cure a carbon addiction) is like relying on 'clean' heroin to cure a heroin habit.

 

Memo to Big Kev and Big Bizz: It's not impurities that do most damage, it's the carbon. If you're not familiar with carbon, it's the black stuff in coal!

 

Returning from LuLu Land to my two provisos:

 

Proviso One: In parallel with phasing out carbon-emitting industries, modes of transport and exports, Australia needs to phase in non-carbon-based industries, modes of transport and exports.

 

Proviso Two: To prevent massive social and economic disruption, moving vast amounts of capital and labour from a carbon to a non-carbon mode of 'being in the world' (to save the world) needs to be done so the phase-in rate matches the phase-out rate.

 

If those rates don't match, unemployment will soar and redneck political parties will emerge with 'final 'solutions' involving prison camps (for people not like us) and voodoo economics.

 

Political, business and union leaders who can't learn from Australia's history are condemned to repeat it.

 

For instance, when globalisation exported Aussie industries and jobs to low-wage nations (and the Liberal and Labor parties did little to foster new industries and jobs) One Nation filled the policy vacuum with its blame non-whites, quick-fix voodoo economics.

 

And the major parties had a terrible fight clawing back voters that their nonchalance (in the face of voter pain) had converted into One Nation supporters.

 

Forewarned is forearmed. In parallel with other nations, Australia better get its 'Phase In' skates on - preferably before the ice melts and everything is 'phased out'!

 

 

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QUOTE (gmacafee @ Sunday 22/06/08 05:35am)

qmacafee, there is no such thing as clean energy..every thing made has a carbon cost. however much we all rave on about renewables the fact is we need huge amounts of base power..there is such a thing as cleaner coal such as gasification of coal without strip mining. Gas can be pulled off, scrubbed and used in gas fired power stations or turned into ultraclean diesel as LNC are demonstrating at Chinchilla. Also AOE among others are planning to turn coal based methane into LNG for export from Gladstone. Its a case of thinking outside the square and using a valuable resource While you have govts like the previous Howard Govt. who buried their haeds in the sand and kowtowed to a few large businesses...innovation will be ignored.

Google Dr Zhengrong Shi of Suntech Photovoltaics now one of Australias richest men but totally ignored and unknown here except by a few but honoured all over the world. Now he is turning China into a world leader whereas the so called smart country with all its open spaces and sunlight uses less than Germany. Talk about exporting jobs, money and brains.. this is the sad but hilarious joke...our dumbness

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In reply to: jacsar on Sunday 22/06/08 08:18am

Jascar writes:

 

"Dr Zhengrong Shi of Suntech Photovoltaics ... is turning China into a world leader."

 

"Talk about exporting jobs, money and brains ... this is the sad but hilarious joke."

 

That is spot on - but I believe that installing a 1700 watt solar power

collecting system (and 300 litre solar hot-water system) on my roof is

better than cursing the stygian darkness of Aussie solar ignorance.

 

I was part-raised on a farm and if you wanted somethng done on a

farm you did it yourself or hired somebody to do it. You didn't pray

for it or expect Big Business or the Government to do it for you.

 

As the sun is shining now, this message is being typed on a

Solar-Powered (and two-finger powered) Mac computer

with the balance being pumped into the grid to make

a tiny contribution towards less CO2 being pumped

into the atmosphere by dinosaur technology:

 

 

 

post-37-1214107202.jpg

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Some successful businessmen frame the

first dollar bill they ever earned and

hang it on their office wall to

remind them that:

 

"From little things big things grow."

 

I keep a picture of the first solar killowatt

that I pumped into Australia's power grid.

 

post-37-1214108548.jpg

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