Sunday, November 11, 2007
Aspen (ASPN.ob) is looking good. Aspen Exploration hasn't faired well since the fall of the natural gas prices from their $12 Katrina induced highs down to the current $6 or $7 bucks that it's at now.
At current prices natural gas is looking poised to rise. Of course natural gas prices are highly correlated to the weather. As T. Boone Pickens recently stated in an interview, "Tell me what the winter is going to do?" But I believe that natural gas should sell near the BTU content of oil and at current prices it sells at half the BTU content of oil. Natural gas is also a cleaner fuel than oil, though oil is nicely suited to transportation because of it's energy density. A hidden feature of ASPN is it's new Montana oil field buy-in that they purchased in January. They had not planned on reaping any significant profit from it for 2 years, but with oil prices significantly higher they will certainly have some positive effect that they did not expect. Also, they have hit some monster natural gas wells, and at higher percentage ownership levels. The stock price is unchanged at $3.15 today, but I am expecting good things this quarter an the next. Hopefully the Montana development can be speeded up with the extra cash coming in, but they are not the operators, so that may be possible.
Saturday, November 10, 2007
I was recently asked about what I thought of Merril Lynch. It recently announced an 8 billion dollar write-down and the stock price fell. The assumption was that all the bad news is already priced into the stock and so now it was down and ready to rise again to new heights. I am not that interested in financial stocks because with the dawn of derivatives financial stocks are able to hide enormous liabilities so I don't trust myself to be able to analyze their statements with enough depth to avoid a catastrophe. I also remembered reading that Jim Rogers had been shorting the financial stocks for awhile, so I wanted to know what his thoughts were, searching the news sites for the answer led me to this article
. It seems that Jim Rogers has been adding to his short position over the last few weeks. He also validly points out that these bubbles such as we've had in the financial sector with the housing boom take quite awhile to work themselves out. I don't think this housing sub-prime mess will have worked itself out for at least another year and the financial stocks should continue to go down as more news about their bad loans come out. I've also heard on the Jim Puplava Financial Sense Podcast that there is an upcoming law that will take effect in mid-November that forces financial companies to get more specific with the valuations of their holdings. This law is expected to cause another slew of write-downs coming from financial companies who must fess up earlier than they had planned. I don't plan on buying an financials.
Well, now oil has moved up to around $95 dollars a barrel and I am thinking oil stocks have much upside. Transglobe has not yet moved up as quickly as I would have liked, but it is moving. Recently Transglobe has announced that it has project in the works with the Yemen government whereby they would be able to sell their natural gas to the Yemen government at $2.50 an MFCD, plus by sending out their natural gas they would also be able to get the condensate which as good as oil. This could double Transglobe's earnings. Also, their new field which they bought in Egypt was purchased with a loan denominated in dollars while the dollar is depreciating and the oil has been appreciating rapidly. I'm thinking this spells good things for Transglobe and the value has not completely made it into price yet.