Oilfield Daily News

From 2005 to 2008, I made an absolute fortune in solar.

And it was insanely easy, too.

Hell, back then you could pretty much just pick any random company with the word “solar” attached to it, and watch your money double, triple, even quadruple.

Yes, those were three great years. And I live very comfortably today because of those three years.

But the solar market isn’t what it used to be.

Last year, solar stocks got slammed. And while most expect to see a recovery in the space this year, the sector remains as volatile as ever.

Now just a few weeks ago, solar stocks were soaring after some new data came out that indicated a rise in solar installations in Germany in Q4.

The result was a quick run on solar stocks, and certainly traders made out…

But then there were those poor souls who didn’t read the fine print, ponied up a few thousand, and are now wondering what happened to the solar run all those analysts on television were talking about.

Yes, a few weeks ago there was some positive data, which apparently cast a shadow over the fact that cell and panel prices were still continuing to fall.

And it didn’t take long for the sector to shed its recent gains, then fall even further after Germany’s Energy Minister announced that the country’s Feed-In Tariff should be adjusted every month instead of twice a year.

In a matter of minutes, we watched solar stocks fall off 10%, 15%, even 20%.

While I continue to remain bullish on the long-term growth picture for solar, unless you can stomach the risk and volatility, the solar space is no space to be right now.

Truth is until we see next quarter’s forecasts, I’d be very hesitant about playing solar.

This Will Blow Your Mind!

As the last remaining solar manufacturers struggle with depressing margins and intense competition, one little solar tech company continues to pay off for investors.

And the reasons are simple: This solar stock has zero competition, it has no exposure to the euro, and it isn’t even really affected by the potential loss of subsidies.

Truth is, this company’s technology allows it to reach profitability without a single penny in subsidies.

This technology is truly ground-breaking. It will enable the cost of solar to come down so much, it could actually compete with all the dirt-cheap natural gas we have at our finger tips. I’m completely serious.

And here’s the most fascinating part… this particular solar technology doesn’t actually need the sun’s rays to work.

Natural Gas is Still King

There’s no doubt that there’s still plenty of money to be made in solar.

You just have to know where to look, and of course, not get caught up in all the hype generated by those know-nothing media buffoons who couldn’t even tell you the difference between solar thermal and solar PV, much less know how to play the solar market…

Hell, these are the same guys who were telling us just a few years ago that natural gas would never fall below $5.00.

Last Friday, it fell below $2.30.

And now they’re scrambling to dig up any bearish news they can find. But nothing they say can stop the natural gas boom.

~~eac_alt_energy~~

I’ve said it a thousand times before, and I’ll say it again: Natural gas is king.

And right now, it doesn’t take much to make money from this sector. In fact, it reminds me a lot of the solar sector from 2005 to 2008. It’s just so easy to make a killing.

Just ask my colleague Keith Kohl, who was touring today’s biggest natural gas properties back when the word “hydrofracking” was a term only used by insiders and roughnecks.

This guy’s made me — and his readers — some serious coin in the natural gas space…

Especially with his latest find at the Three Forks location in North Dakota. Check it out:

I know it may not look like much. And I know it may not sound as sexy as solar…

~~nat_gas2~~

~~jeffs_signoff~~

Solar Competes with Natural Gas originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

Here’s some rare straight talk about the Keystone XL pipeline, which would carry oil from Alberta’s tar sands to refineries and distribution hubs in Illinois, Oklahoma, and the Gulf Coast.

There’s been a ton of spin, so I’d like to give you the facts and the best investments for the eventual outcome.

Pipeline Nuts and Bolts

In 2011, after vicious opposition from environmental journalist Bill McKibben, the Natural Resources Defense Council, and the World Wildlife Fund, a decision on the pipeline was delayed until 2013.

At issue were the emissions associated with tar sands and the route of the pipeline, which crosses ecoregions and the all-important Ogallala Aquifer.

Waiting until 2013 was too long for pipeline proponents in Congress.

So when they passed the temporary tax cut bill in December, they added a provision giving Obama until February 21st to make a decision on the pipeline.

The president, siding with a State Department announcement made last month, said this week that:

The rushed and arbitrary deadline insisted on by Congressional Republicans prevented a full assessment of the pipeline’s impact, especially the health and safety of the American people, as well as our environment.

And Obama made clear this wasn’t a permanent killing of the project, adding: “This announcement is not a prejudgment of the merits of the pipeline,” and further that this decision “does not change my Administration’s commitment to American-made energy that creates jobs and reduces our dependence on oil.”

What he’s saying is that this is a temporary denial, pending submission of an alternate route by TransCanada (NYSE: TRP), which it says it will submit.

This man has an election to win over the next ten months. He can’t kill a pipeline that would create thousands of jobs, break a supply logjam in Oklahoma, and carry between 500,000 and 1 million barrels of secure Canadian oil to the States every single day.

It will happen… eventually.

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Right now, 99% of Canada’s crude exports come to the United States.

It has 90% of all proven reserves outside of OPEC.

And as Canada made clear this week, there are plenty of places to sell that oil.

In addition to the Keystone XL, Canada wants to build the Northern Gateway Pipeline, which would take Alberta oil to ports in British Columbia.

Canadian Natural Resource Minister Joe Oliver affirmed this fact when he said the “decision by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market.”

Billions of barrels of shale oil are going to be sold to someone.

Whether on Main Street, America or the streets of Shanghai, the companies selling it will be equally profitable.

~~nicks_signoff~~

The Secret to Gold Prices: Real Interest Rates: TIPS Sellout at Negative Yield
Why would a record number of investors pay to lose money? Could it be they think inflation is coming?

Politics Killed the Pipeline, Not the Profits: When Elections Outweigh Energy Security
Why Obama’s rejection of the Keystone XL pipeline will have bigger consequences for us in the future…

Oil and Gas Service Stocks: A Different Way to Profit During this Shale Boom
Energy and Capital’s Keith Kohl offers investors a new way to find profits during North America’s shale boom.

Gold Buffalo Tribute Proof is a SCAM: Beware of This Gold Coin Scam
Editor Nick Hodge sheds some light on a gold coin scam that’s been going around, and shows readers how to educate themselves about buying precious metal coins.

Obama’s Hydraulic Fracturing Pledge: The Biggest Promise Obama Didn’t Break
For all of Obama’s flipping and flopping, it looks like he got one right…

Energy, Agriculture, Metals All Drifting Higher: The Commodity Supercycle
We’ve all seen what the commodity supercycle has done to copper, gold, and many other resources. Copper, nickel, gold, wheat, corn and, of course, oil will never again see the prices of the nineties and early oughts.

Yap Has No Gold: Limestone Blocks, the Ultimate Storehouse of Wealth
Yap, as you well know, is a coral island in Micronesia. According to the their Tourist Bureau: “Yap is so remote it takes a two day journey by plane, but the moment you step off the airplane, a topless woman will great (sic) you with a fresh flower lei.”

Natural Gas Export Stocks: Will This EIA Report Push Natural Gas Stocks Higher?
Editor Jeff Siegel discusses what the coming EIA report means for natural gas stocks.

The Shale Boom is Giving Birth to Other Bull Markets: Bigger than OPEC
Those of you who remember the introduction of the drug Viagra to the in 1998 will agree it was a game-changer for the pharmaceutical markets. The same thing is happening in the American oil and gas shale boom.

Gold Coins and Freedom: 32 Miles from Purgatory
If you don’t own physical gold, you should get some.

Pipeline Straight Talk originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

U.S. natural gas prices plummeted this week, dropping 85 percent from their all time high reached in 2005.

The drop reflects the decreased demand for heating fuel in U.S. markets.

An unseasonably warm winter has reduced the nation’s dependence on natural gas and supply has sky rocketed  in response.

According to the San Francisco Chronicle, rising output has resulted in a huge surplus. 

Stocks were 539 billion cubic feet higher than they were this time last year and 566 billion cubic feet above the five-year average of 2.724 trillion cubic feet.

For the first time since 2002, prices for natural gas could drop below $2 per million Btu as a result of the increasingly rising output.

Natural gas prices have already plunged nearly 34 percent since the beginning of December and prices in January are 50 percent lower then they were at this same time last year. 

Cindy Wexler, an independent gas trader on the floor of the New York Mercantile exchange said:

“It looks pretty bad right now, it’s going to take some time to undo this supply situation and that’s going to pressure prices.”

Unfortunately time is of the essence for natural gas storage facilities around the country.

If demand does not increase, storage facilities might be forced to release gas into the atmosphere in order to maintain operational integrity.  Such actions would have devastating effects on natural gas prices in the upcoming months.

The upcoming week indicates the situation can only get worse.

The coldest portion of winter has already passed by and the Industry Weather Group is calling for above average to well above average weather for the week ahead.

Energy companies are taking steps to mitigate the long-term negative effects the warm temperatures and rising surplus will have on long-term natural gas prices.

Production budgets across the industry have been cut by 10-15 percent.

Talisman Energy Inc. (NYSE: TLM), an energy producer based in Calgary with operations in the U.S., has cut spending on drilling by $500 million as a result of the decline in North American prices.

The growing output and associated storage problems have caused Goldman Sachs (NYSE: GS), Deutsche Bank (NYSE: DB) and Bank of America (NYSE: BAC) to cut their price forecasts for natural gas in 2012.

According to the Energy Department’s Office of Fossil Energy, one possible solution to the storage problem put forth by the natural gas companies is to export up to 14 billion cubic feet per day, equating to about 20 percent of all natural gas production.

The only problem?

The exportation of the gas to foreign markets could cause an increase in domestic prices thus decreasing the already diminished demand for heating fuels.

Until Next Time

Nate

Unseasonably Warm Winter Has Chilling Effect on Price of Natural Gas originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

“OPEC absolutely loves Obama right now,” I was told over the phone this morning.

The guy on the other end of the line isn’t even from the United States. In fact, he was calling from two hundred miles north of the Montana-Canadian border.

Despite his lack of citizenship, I quickly found out why he has a vested interest in the mess our politicians are making here in the U.S…

When pressed for more details, he laughed right into the receiver: “Shoot, I’d even vote for him if I could! Fact is, he’s going to make a lot of us up here a lot of money,” he said with confidence.

It was hard to argue with that when I knew perfectly well he was being truthful.

I’ve had that feeling ever since the Keystone XL project started hitting snags.

When Obama first announced he would delay the decision, it was only a matter of time before he caved to the pressure.

And to be fair, can we really expect anything less during an election year?

It turns out the uproar over the project centered around the section of the pipeline running across Nebraska and the Ogallala Aquifer:

The opposition insists an oil leak here would be devastating to the water supply. And yet, the 25,000 miles of pipeline already in place (2,000 miles of which are located in Nebraska) isn’t drawing their ire.

For the record, that’s 730 billion barrels of oil that cross the entire aquifer each year (again, more than 100 million of that figure travel through Nebraska’s portion).

And let’s forget for a minute the 20,000 (and as many as 100,000 related jobs) that come as an added bonus to the pipeline.

This isn’t a sudden brand-new issue at play; oil has been piped across the aquifer for decades.

No, there’s a much bigger reason Obama fumbled this decision…

Why OPEC Cast Its Vote for Obama

You see, the environmentalists weren’t the only ones protesting the pipeline, clapping with joy when Obama rejected TransCanada’s application on Wednesday.

He had the full support of OPEC, too.

Even Chavez was secretly wiping the sweat off his brow. After all, an additional 830,000 barrels of Canadian oil per day flowing south into Texas would mean our oil imports from Venezuela would be the first on the chopping block.

Why would that put Chavez in a bind?

We’ve been doing a fairly good job of limiting our exposure to Venezuelan crude over the last few years:

click to enlarge image

We know that Venezuela’s oil supply isn’t the most attractive around — and it doesn’t hold a candle to the light, sweet stuff flowing from areas like North Dakota.

We’re talking about heavy, sour production that’s more expensive to refine.

~~eac_nat_gas~~

And if you want to see how crucial the quality is to refiners, call to mind the situation that unfolded last summer when Libya’s oil production was shut-in.

In good form, the Saudis decided to pick up the slack until Libya’s exports could get back up and running. The problem, unfortunately, was that many of the European refineries weren’t able to handle the low-quality crude that makes up Saudi Arabia’s spare capacity.

This is what it all comes down to: more Canadian oil means less from more volatile sources like OPEC.

Normally, we could just end things here. What was a no-brainer for Obama turned out to be a disaster.

But why would the government be worried about shunning Canadian imports? Canada really has only one true customer, right?

Well, that’s not exactly true…

We’ve grown so accustomed to Canadian imports that we’re taking them for granted.

And that that could be the worst mistake we ever make.

Politics Killed the Pipeline — Not the Profits

Look, it’s no shock my hockey-loving friend was still excited after the Keystone pipeline rejection.

Companies like Enbridge already have a plan in motion. Instead of relying on the United States, they’re ready to connect to a whole different oil-consuming beast.

And that project just got a little boost of support from the Canadian government.

Following Obama’s indecision, Canadian Prime Minister Stephen Harper reiterated his plan to expand Canada’s customer base.

Earlier today, he was quick to point out that “the ‘decision’ by the Obama administration underlines the importance of diversifying and expanding our markets, including the growing Asian market.”

And there you have it, folks.

Harper spelled it out, plain as day…

If the U.S. doesn’t want it, China will get it.

Next week, I’ll show you exactly which Canadian oil stocks will make investors a hefty profit when this Canadian-Chinese relationship blossoms.

~~keiths_signoff~~

Politics Killed the Pipeline, Not the Profits originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

TransCanada Corp’s (NYSE: TRP) Keystone XL oil-sands pipeline has hit a hard roadblock with rejection by President Barack Obama.

The delay is a blow to the $7 billion project and the potential profit for shareholders.  But TransCanada has not given up yet.

The rejection came after environmental scrutiny and protests.  The initial path of the pipeline would cross through sensitive regions in Nebraska, and citizens were unhappy with this type of an invasion.

The President was under a harsh deadline to approve the pipeline, and though there is a chance for approval in the future, he would not do it without environmental support.

Officials from TransCanada have announced that the company will reroute the pipeline layout and reapply again for approval.  They expect, with this new complication, that construction will be finished by 2014.

That is, if this plan even follows through.

TransCanada is still reviewing its options as far as the pipeline goes.  Alex Pourbaix, president of the company’s oil pipeline sector, told the Financial Post:

“This company is not just Keystone XL, we are a $60 billion company.  Keystone was such a significant capital project that the delay actually gives us an opportunity to advance a number of other projects.”

But another option for the company is to begin the project without crossing the international border. CEO Russ Girling said in an interview:

“I think that clearly…we are now open to amending or changing our plans to building this in segments.”

If parts are built in the United States first, the final step would be crossing the border into Canada where the oil-sands are.  The company may then apply for that permit at a later date.

TransCanada was down 0.02% on Friday to $41.22.

That’s all for now,

Brianna

TransCanada Looks for Options After Pipeline Rejection originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

Avoid disappointment and future regret.

That’s the last line of a gold coin commercial I saw on television the other night.

I knew right then I wanted to tell you about it, but I wanted to see the commercial once more to get all the details.

And while it may be obvious to some — or even most — who’ve seen it, I thought it was worth 600 words of our time to air out this stinky mess.

Avoid This Gold Coin Scam

The two-minute ad starts off with a neighborly male voice telling you:

The original $50 Buffalo gold piece is America’s purest gold coin ever. It was the first one ever struck using .9999 — that’s four nines! — pure 24k gold. Its design was based on the famous Buffalo nickel of 1913 to 1938.

It’s true, the original was a beauty. Take a look:

The only catch is, this is not the coin the commercial is selling.

The neighborly voice continues:

Now you can reserve your own tribute copy of the $50 gold Buffalo, clad in 14 mg of pure gold. National Collector’s Mint’s private nonmonetary minting recreates James Earl Frasier’s American Buffalo.

Did you catch the multiple red flags there?

1. Tribute copy

2. 14 mg of pure gold

3. Private nonmonetary minting

And if that isn’t enough to scare you away, the closing pitch should be:

The final issue price was to be set at $50 per proof, but during our special release, this 24k pure gold clad masterpiece can be yours for only $9.95.

I think the only disappointment and future regret you’d have is if you actually bought these coins.

~~eac_rare_earth2~~

The Rub

The National Collector’s Mint is taking advantage of record-high gold prices and naïve customers to turn a profit for themselves.

What they are selling is a “tribute copy.” It’s a cheap replica, plain and simple.

It’s clad (read: thinly coated) with 14 mg of pure gold. 

There’s no difference between this coin and a commemorative NASCAR plate. Both are junk.

How much is 14 mg of gold?

Well, there are 31.1 grams in a troy ounce, so we must divide 14 milligrams by 31.1 grams. A few keypunches tell us the coin is clad in 0.00045 troy ounces of gold (0.014 / 31.1 = 0.00045016).

How much is that worth?

Simple: Multiply that number by gold’s current price of $1,660 per ounce and you get $0.747.

That $50 Buffalo gold piece is worth less than three quarters.

The More You Know

I certainly hope you haven’t been taken advantage of by this ruse.

I know plenty of people have already fallen victim, because I came across quite a few complaints while trying to find the commercial again online.

The best thing to do if you’re interested in investing or protecting your wealth with precious metals is to get educated.

Talk to your friends and family. Read up. Drop in on some reputable dealers and ask questions.

There’s a lot of misinformation out there and, as we’ve just seen, some outright deception. And I don’t want any of you to do anything foolish with your money.

Gold and silver have a place in every portfolio, but you have to make sure you do it correctly.

Because of record prices, record interest, and sadly, record scams, we’ve put together a complete gold and silver buyers guide.

It will be held in seminar form on January 31st at 6 p.m. It’s free to anyone who signs up.

So take a moment to do that now — and make it a point to invite anyone else you think would be interested.

And if you must see the commercial, you can find it here (for entertainment purposes only).

~~nicks_signoff~~

Gold Buffalo Tribute Proof is a SCAM originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

Publisher’s Note:  Before you get to Keith’s editorial for today, please take a moment to sign up for our educational presentation on silver and gold.

It will be held on January 31st and includes a 2012 gold forecast, the best ways to buy, and how to avoid taxes. It’s free to all who sign up.

Good Investing,
Nick Hodge

A year from now, you won’t hear me say I didn’t see it coming…

That’s the feeling that swept over me yesterday when I was filling up my gas tank for $3.75/gallon (I realize that’s actually cheap considering what some of my West Coast readers are paying).

And I know $5 is right around the corner.

But truth be told, I don’t think I’ll complain when it tops $5 a gallon.

Because I’ve been hearing — and telling my readers — about a little theory called Peak Oil that was presented more than fifty-five years ago…

Perhaps the most common misconception about Peak Oil I come across is this idea that we’re running out of oil.

That simply isn’t the case here — and it’s never been about how much oil is still in the ground…

Instead, it all comes down to the rate at which we can produce what’s left.

And if you want a firsthand look at production rates, take a quick peek at this chart:

That’s the story of U.S. oil production — at least, it was up until a few years ago.

And while we’ll never return to the good old days, it isn’t for lack of trying.

More Drilling, More Profits

Three days ago, when I saw that the latest number of U.S. oil and gas rigs had fallen below 2,000, I wasn’t concerned in the least.

In places like North Dakota, there are still more than 200 rigs drilling away.

In Canada, there’s an outright drilling surge currently taking place. They added 250 rigs just this week.

And this is all leading to a tremendous opportunity…

You see, we know what’s coming in 2012. Billions of dollars from the North American oil and gas landscape will pour into investors’ pockets.

For the last few weeks, I’ve shown you time and again that the smaller drillers are consistently outshining the lackluster performances of ExxonMobil and friends…

That much isn’t going to change.

But it’s not just the speculative players that will be flushing our pockets with cash in 2012. Smart investors are constantly finding new ways to play the oil and gas renaissance taking place in Canada and the United States.

I’ll give you an example.

Today, Carbo Ceramics (NYSE: CRR) is still one of the best shale plays that most investors have never heard of — and the best part is they don’t have to produce a drop of oil to deliver you gains.

Carbo manufactures ceramic proppants which replace the sand used in the hydraulic fracturing process. They’re making artificial sand to help drillers improve productivity.

And right now is the perfect environment for companies like Carbo…

~~oil-sign-up~~

Over a million wells have been stimulated using hydraulic fracturing — including more than 90% of the wells drilled today.

Although many of us have been following the war over hydraulic fracturing that’s being played out in the media, the entire issue comes with a huge catch: It doesn’t matter which side you are on.

Fact is, an outright ban could potentially be crippling to us. Without it, production would plummet — and we’ll be headed right back down the Peak Oil slope.

We’d also have to find someone to ship us hundreds of thousands of barrels a day.

Believe me when I say our sources are drying up faster by the day.

Aside from Canada, not many other producers would help us out — mostly because they’re having struggles of their own. Mexico’s oil and gas production is in just as much trouble as ours.

And let’s be honest, do we really need to add more OPEC oil into the mix?

Our outlook is grim enough… It’s mid-January, and oil prices are still in triple-digit territory.

~~keiths_signoff~~

Oil and Gas Service Stocks originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

A brand new solar panel technology is heating up the market and offering to bring panel prices down even further.

EnXco Inc. is working on a solar farm in Kern County, California that is projected for completion in June 2013.

But instead of using regular thin-film solar panels from cadmium telluride or the more expensive silicon panels, the project is getting up to 150 megawatts of CIGS thin-film panels from Showa Shell Sekiyu K.K. (TYO: 5002) subsidiary Solar Frontier.

Based in Japan, Solar Frontier is the world’s main producer of CIGS panels, or thin-film panels made from copper indium gallium selenide.

These types of panels are competitive to cadmium telluride thin-film panels because they generate about the same amount of electricity but are cheaper to produce.

They have yet to take off as a leading panel because silicon panels convert electricity much more efficiently, but as the market looks for a cheaper option, silicon panels are waning in popularity.

Called the Catalina Solar Project, the solar plant will be completed in two phases.  The first will be complete by the end of 2012 and will generate 60 megawatts.

Once finished, it will be the largest plant powered by CIGS panels.

Gregory Ashley, COO of Solar Frontier Americas, told Forbes:

“This is a landmark moment not only for Solar Frontier but the CI(G)S industry as a whole.  We have demonstrated successfully that the unique characteristics of CIS technology are compelling to major customers by delivering more [kilowatt-hours] over the lifetime of a project for a lower cost.”

This technology could soon catch on to lead the solar industry, surpassing the traditional thin-film solar panels in overall efficiency.

Some other companies looking into CIGS manufacturing are Stion, HelioVolt, and SoloPower.  But for now, Solar Frontier remains far in the lead.

Showa Shell Sekiyu was up 2.14% to 524.00 JPY, or $6.82, at close today.

That’s all for now,

Brianna

Japanese Company Breaks Out New Solar Panels originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

I told you a few weeks ago you’d be hearing more about my recent trip to a graphite mine in the Ontario wilderness…

Many things I saw and learned on that trip are worthy of passing along.

Today I’d like to focus on the conversation I had with the CEO of the company I went to visit during our three-hour ride to the mine from Ottawa.

The Commodity Supercycle

“We’ve all seen what the commodity supercycle has done to copper, gold, and many other resources,” he said as we pulled out of the hotel parking lot.

“Copper traded between $0.50 and $1.00 per pound for decades. And then, because of the commodity supercycle, it went over $4.00. Same with gold… It used to sell for between $250 and $500 per ounce. Now it’s $1,600 per ounce.”

That isn’t inflation.

That’s the commodity supercycle.

Many things have caused this change, the big one being China, with India soon to follow.

And in the mining industry, the deposits we’ve lived off for years have been the big low-cost, easy-to-find mines — just like with oil.

But those mines are all getting deeper and older, so costs are increasing.

Engineering and environmental standards have gone up and there’s been capital and cost inflation.

So gold can’t go back to $400 per ounce… and copper can’t go back to $1.00 per pound.

Next in Line

Graphite has been one of the last minerals to respond to this commodity supercycle. And the reason for that is there was excess production capacity from China.

From 1990 until 2005, graphite prices were in the tank.

Gradually, the growth in automobile and steel demand began to eat up that spare capacity, and prices began to rise. They grew steadily through 2008. Then something else happened…

China got tired of selling the world cheap graphite.

They control 70% of the market, and just as they did with rare earths, they started imposing export duties and value-added taxes to manipulate the market.

~~eac_rare_earth2~~

Currently, China is adding a 20% export duty and a 17% value-added tax to graphite produced there.

And, just like with rare earths, graphite prices have started to soar:

They’re up more than 120% in the past few years.

But valuations of companies and deposits were slow to catch up.

When the company I went to see got going in 2008, it only had a market cap of $2 million — and it’s potentially the largest graphite mine in the world.

It’s since grown to about $40 million…

But with hundreds of millions — if not billions — of dollars worth of graphite in the ground, it certainly won’t stop there.

I can’t wait to tell you more about it.

Rising Tide

I’m sure you’ve taken notice of the “commodity supercycle,” even if you didn’t know what it was called.

Copper, nickel, gold, wheat, corn and, of course, oil will never again see the prices of the nineties and early oughts.

I break these commodities down into three categories: energy, agriculture, metals. Some may split metals into two categories: precious and industrial.

We’ve been showing you how to profit from the energy side via oil and natural gas producers. Last week, I showed you how to buy energy and agricultural commodities directly.

To help get you up to speed and profit from the metals side, I’ve been researching and taking as many hands-on trips as possible.

I firmly believe physical materials will be one of the best ways to grow your wealth over the next few years.

~~nat_gas2~~

~~nicks_signoff~~

Energy, Agriculture, Metals All Drifting Higher originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.

Canadian oil and gas company Pembina Pipeline Corp. (TSE: PPL) agreed on Monday to purchase Provident Energy Ltd (NYSE: PVX).

The deal, worth about $3.1 billion, will offer Provident shareholders a 25% premium over last week’s closing price of $9.31.

Shareholders will receive 0.425 shares of Pembina for every share of Provident, the equivalent of about $11.58.

Provident operates natural gas liquids (NGL) and will provide Pembina access to a significant amount of the resource.

Pembina owns 4,661 miles of oil and natural gas pipeline across Canada.  This deal will allow the company to expand its pipeline into the Utica and Marcellus shale deposits in the United States and also increase its presence in Canada.

CEO of Pembina, Bob Michaleski, said in a statement:

“Provident’s assets, employees, customers and growth projects are an outstanding fit for Pembina.  Our expanded footprint will provide greater access to natural gas liquids markets across North America.”

The deal will close later in 2012 after shareholder approval.  Both boards of directors have approved the terms unanimously.

Once the deal is complete, the company will be valued at around $10 billion.  It will become one of Canada’s largest energy companies.

Pembina will look to increase its monthly dividend by 3.8% after the deal closes.

Pembina fell 5.59% in Monday afternoon trading to $26.34 after announcing the terms of the deal.

That’s all for now,

Brianna

Pembina to Buy Provident originally appeared in Energy and Capital. Energy and Capital, a free 3x-per-week newsletter, offers practical investment analysis in the new energy economy.