PENNECO Believes Investors Should Take Heart

Everybody knows we are in a ‘bear market’ for oil & natural gas. Prices have dropped by two-thirds in the last couple of years, supply is far higher than demand, and the media pundits claim the industry isn’t turning around for a couple more years. All that may be true, but PENNECO investors and other smart investors know O&G investment is just like what Mark Twain said about land: “Buy it, they’re not making it anymore.”

We obviously haven’t hit the highly predicted “peak oil” phase, where supplies diminish and there’s no more oil to be found. So, that actually makes us bullish on exploration and drilling. Once PENNECO has found oil or natural gas for our partners, it’s not going anywhere – and nobody is making any more. So, pumping and storing or selling crude and natural gas becomes a matter of the markets, like any commodity.

“But prices are so low!” you say. Yes, yes they are. What do they say about selling stocks? Buy low, sell high. We know that is over-simplifying the situation, but only in the fact that buying or leasing to drill requires very large amounts of capital compared to buying stocks. If you’ve got the money to invest today, though, the pressure on small investors and producers to achieve some liquidity is immense.

And, while upstream companies are struggling with low prices, downstream has seen its commodity costs diminish by two-thirds! So, downstream companies are flourishing. Right here in Pennsylvania, new natural gas plants are being constructed, in part because of Marcellus Shale production. On the Texas gulf coast, ExxonMobil and other downstream corporations are building tens of billions of dollars in new refining plants in the next decades. These investments are continuing in spite of the oil downturn, because the fundamentals about petroleum say that it’s a good investment over the long term.

It’s predicted that the shale gas industry will “create 1.6 million jobs and a $200 billion economic impact by 2035.” That’s 20 years of profits for smart investors. PENNECO believes those two decades are still the beginning of the shale gas revolutions. We’ve seen a lot in our 40 years, ups and downs, scares and jubilation. The low prices today are just a speed bump. PENNECO investors have been taken care of, and we expect that will always be the case. Our partners would tell you – If you can, buy now. They’re not making anymore, and it’s not getting any cheaper.


For All The Latest In Oil & Gas Developments In The Marcellus Shale

Energy In Depth is your source for staying up-to-date with the Marcellus Shale. Catch up with the latest news, see what buzz is surrounding shale developments, and even join the conversation with other bloggers who share your passion for the industry.


Industrial zone, Steel pipelines, valves and ladders

Energy In Depth’s Take On Fracking: Just The Facts

Energy In Depth is one of our go-to resources for providing our clients and business partners the latest in oil & gas developments. In the current economic and cultural climate where there are many voices and opinions on the industry, we encourage everyone to get the facts to develop educated viewpoints on the ins-and-outs of industry business practices. Our friends at Energy In Depth have an excellent write up on a hot button topic, Hydraulic Fracturing, widely known as “Fracking.”


Fracking Rig, Close-Up

Six Texas Democrats Break Party Line On Crude Oil Export Bill

A 261-159 vote on a bill lifting the federal ban on the exportation of crude oil stayed mostly on party lines, but six Texas congressional Democrats broke the line to vote in favor of the legislation.

House Resolution 702, authored by Congressman Joe Barton, R-Ennis, passed early afternoon on Friday, October 13 in spite of a veto threat from President Barack Obama.

The bill, which would lift the Arab oil embargo ban on crude oil exports, faces stiff opposition from the United Steelworkers union and refiners such as San Antonio based Valero Energy Corp.. (NYSE: VLO)

Arguments from opponents include the risk of higher gasoline prices, refinery jobs being sent overseas, and environmental harm. Republicans were overwhelmingly in favor of the bill while Democrats were against it.

36 congressional delegates from Texas are part of the U.S. House of Representatives. Comprising the base of delegates are 25 Republicans and 11 Democrats.

A final vote roll call released earlier this month showed that six Democrats from the Texas delegation broke the party line to to vote for the bill:

  • Henry Cuellar (Laredo)
  • Beto O’ Rouke (El Paso)
  • Ruben Hinojosa (Edinburg)
  • Filemon Vela (Brownsville)
  • Sheila Jackson Lee (Houston)
  • Marc Veasey (Fort Worth)

Cuellar, of Laredo, signed on as an early supporter of the bill. His district includes a large chunk of the Eagle Ford Shale spanning from Laredo to the Rio Grande Valley. In favor of employment and economic growth, he added an amendment to the bill calling for oil field training and an improvement and increase or related degree programs at academic institutions with high minority enrollment. Cuellar, O’Rouke, Hinojosa, and Vela are all serving in districts with universities and colleges of majority Hispanic enrollment.

Jackson Lee voted in favor of the bill after amendments were added requiring reporting on opportunities for veterans and women, in addition to tracking how exports on American petroleum reserves would affect the economy.

Congressmen Lamar Smith and Will Hurd of San Antonio voted in favor of the bill however, fellow congressmen Joaquin Castro and Lloyd Doggett did not.

3 Energy Stocks On The Uprise This Winter

Across the U.S., Americans are experiencing the changing colors and mild temperatures of fall. Although it may feel nice now, the harshness of winter will soon arrive for many. Consumers do have some good news in store though, as lower crude oil prices should mean lower heating costs, especially for those using heating oil during winter. 

Lower crude oil prices also equate to cheaper input costs for oil refining companies, which turn crude oil into a finished product such as heating oil, jet fuel, or diesel fuel. 

Oil refinery prospects are good. It’s been a tough year for the energy sector as crude oil prices have dropped more than 50 percent. Refiners, though, are one segment benefitting from these price drops since they will lower input costs. 

“It is very profitable to make diesel and heating oil in the November-through-March period. Refiners are beneficiaries when the price of crude oil drops, and a really cold winter could deliver handsome profits for them,” Tom Kloza, global head of energy analysis at Oil Price Information Service said. 

In spite of the global crude oil downturn, refineries reap revenues from the difference between crude oil purchasing costs versus what they receive in sales from a refined product such as heating oil. 

“Right now, if refiners buy crude oil at $50 a barrel, they can sell heating oil in the $65 to $70-per-barrel range. Those are nice profits,” Kloza said. “That compares to a $5 to $10-per-barrel difference that prevailed from 1980 to 2005. There has been a paradigm shift. Refining is very prosperous.” 

Below is a look at three refinery company stocks trading below fair value per Morningstar.

Marathon, an independent U.S. refiner with seven refineries nationwide, has their MPC rated at four stars, with fair value at $65. Their stock recently traded at about $49. 

Valero, a San Antonio based exporter, has 14 refineries in the U.S. and exports more refined products than its competitors and has a VLO rating at 3 stars. Their fair value is estimated to be around $68, and their stock recently traded around $63. 

Phillips 66, another independent refiner, received a 3 star rating with a fair value estimate of $88 compared to trading recently around $81. 

Regardless of the end demand levels, profit margins continue to be rich for refiners and above the average of more historically normal levels. If El Nino doesn’t deliver the expected warmer temperatures and heating demand soars, winter revenues may increase more than expected for refiners. “They all pray we will have a Siberian Express polar vortex,” Kloza said.

Myth Vs. Fact: The Truth On Fracking From Independent Research & Science

There are many opinions and beliefs regarding the energy industry’s practice of fracking. A number of myths have been perpetuated from a long line of Hollywood actors and activists. Check out this video on some of the top fracking myths and why they are just that: myths. Don’t be fooled, fracking is fundamentally safe and the risks are very manageable.

Shale Development in Maryland – Investing or Not

Recently there have been many different opinions on both sides about Maryland Shale Development. While Maryland is standing an incredible opportunity to join the rest of the country in natural gas development, its hydraulic fracturing, or fracking, has raised many questions about the safety and environment impacts. The truth is that the audience lacks an adequate amount of truths to understand fracking and its potential investment in the future. In order to provide the public with actual facts, Energy In Depth has created this infographic to debunk myths about fracking safety and explain enormous benefits that natural gas investment can bring to Maryland and its residents.

According to President Obama and his top environmental advisors, not only does fracking have a low risk associated with water contamination, the development of natural gas also further supports our efforts to provide clean energy in home markets and create thousands of new jobs in Maryland. Instead of fueling our cars and trucks with foreign oil, we are having this opportunity to increase the production of domestic natural gas and bring over millions of new tax revenues to the state. Let’s review this Myths and Facts on Maryland Shale Development infographic to understand what this investment actually brings to Maryland and its residents.


penneco-drilling-shale-development Myths and Facts about Maryland Shale Development