Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Update - Nadeem_Walayat
2.Will Deutsche Bank Crash The Global Stock Market? - Clif_Droke
3.Gold Price In Excess Of $8000 While US Dollar Collapses - Hubert_Moolman
4.BrExit UK Economic Collapse Evaporates, GDP Forecasts for 2016 and 2017 - Nadeem_Walayat
5.Gold Stocks Massive Price Correction - Zeal_LLC
6.Stock Market Predicts Donald Trump Victory - Austin_Galt
7.Next Financial Crisis Will be Far Worse than 2008/09 - Chris_Vermeulen
8.The Gold To Housing Ratio As A Valuation Indicator - Dan_Amerman
9.GDXJ Gold Stocks - A Diamond in the Rough - Rambus_Chartology
10.Gold Boom! End Game Nears As Central Banks Buying Up Gold Mining Companies! - Jeff_Berwick
Last 7 days
This Commodity Has Perked Up its Investors' Portfolios - 27th Sept 16
Charting the Continuing Gold Market Correction - 27th Sept 16
Stock Market Crash and Recession Indicator Warning: Extreme Danger Ahead - 27th Sept 16
Financial Markets and FX Setups 27th Sept - 27th Sept 16
Crude Oil, Forex and Stock Market Trend Forecasts - 27th Sept 16
Why There is Trump - 27th Sept 16
Save Up to 70% in Shopping Expenses for Daily Items - 27th Sept 16
Gold’s Moving Averages and Long-Term Outlook - 26th Sept 16
September Stock Market - The Not So Silent Demise of Deutsche Bank - 26th Sept 16
SPX sell signal confirmed - 26th Sept 16
SPX is testing the next level of support - 26th Sept 16
Outrageously Entertaining US Presidential Campaign Final Stages - What Happens Next? - 26th Sept 16
BoJ, FOMC and Where To Now? - 26th Sept 16
Stock Market New All Time Highs Next - 26th Sept 16
Why Trump Will Win US General Election 2016 Prediction Forecast - 26th Sept 16
Martial Law Rolls Out Across the US As Jubilee Nears - 26th Sept 16
Stock Market More Correction Likely - 25th Sept 16
US Presidential Election Forecast 2016 - Trump Riding BrExit Wave into the White House - 25th Sept 16
US Economy GDP Growth Estimates in Free-Fall: FRBNY Nowcast 2.26% Q3, 1.22% Q4 - 24th Sept 16
Gold and Gold Stocks Corrective Action Continues Despite Dovish Federal Reserve - 24th Sept 16
Global Bonds: Why Our Analyst Says Things Just Got "Monumental" - 24th Sept 16
Where Did All the Money Go? - 23rd Sept 16
Pension Shortfalls Could Be 4X To 7X Greater Than Reported - 23rd Sept 16
Gold Unleashed by the Fed - 23rd Sept 16
Gold around U.S Presidential Elections - 23rd Sept 16
Here’s Why Eastern Europe Is Doomed - 23rd Sept 16
Nasdaq NDX 100 Big Cap Tech Breakout ? - 23rd Sept 16
The Implications of the Italian Banking Crisis Could Be Disastrous - 22nd Sept 16
TwinLakes Theme Park Summer Super 6 FREE Return Entry for Real? - 21st Sept 16
Has the Silver Bullet Run Out of Fire Power? - 21st Sept 16
Frack Sand: The Unsung Hero Of The OPEC Oil War - 21st Sept 16
What’s Happening With Gold? - 21st Sept 16
Gold vs. Stocks and Commodities, Pre-FOMC - 20th Sept 16
BrExit UK Inflation CPI, RPI Forecast 2016, 2017 - 20th Sept 16
European banks may be more important than the Fed this week - 20th Sept 16
Gold, Silver, Stocks and Bonds Grand Ascension or Great Collapse? - 20th Sept 16
Mass Psychology in Action; Instead of Selling Gilead it is Time to Take a Closer Look - 20th Sept 16
Hillary - Finally Well Deserved Recognition for Deplorables - 20th Sept 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The Power of the Wave Principle

U.S. the Saudi Arabia of Natural Gas, Following T. Boone Pickens into the Energy Patch

Commodities / Natural Gas Jun 01, 2012 - 07:02 AM GMT

By: Money_Morning

Commodities

Best Financial Markets Analysis ArticleG.S. Early writes: An iconic Southwestern energy patch player, T. Boone Pickens has built a legacy over the decades that proves the old Texas saying: "It's not the size of the dog in the fight, but the size of the fight in the dog."

In the wild days of the 1980s, made famous by a generation of traders who emulated the likes of Gordon Gekko, few could ever match the Pickens eye for the big deal.


Never eat anything bigger than your head?.... Pickens never heard that one.

As the head of Mesa Energy, his first deal was to purchase the Hugoton Production Company - made notable by the fact the company was 30 times the size of his own.

His thirst for Goliaths continued for decades to come. He once even went after Gulf Oil, which is now Exxon Mobil.

The point is Pickens has never shied away from risk when he saw reward. And for all his bold achievements there is always less "crazy" there than there seems to be.

And if you're looking for a guy who knows:

•How Wall Street traders and Texas wildcatters think.
•Who can read a geological map.
•Who can manage a hedge fund.
•And who can make money in a volatile industry... Pickens is your guy.

He's the Warren Buffett of the energy patch.

That's why there is more there than meets the eye in his unique venture into the natural gas market with Clean Energy Fuels Corp. (Nasdaq: CLNE). Pickens is its founder and largest individual shareholder.

The Original Natural Gas Evangelist
A little over a decade ago, Pickens began to build an integrated natural gas company that would support natural gas vehicles (NGVs) from golf carts to tractor trailers.

Clean Energy Fuels Corp. was the first step in the integrated energy concept -- which isn't a surprise coming from a lifelong oil man.

You also might recall that in 2008 Pickens unveiled his Pickens Plan, which promotes natural gas as an alternative to imported oil and a bridge to future renewable energy resources like wind power.

As Pickens points out, electric vehicles (EVs) may be more popular but you can't make commercial trucks electric because you can't derive the necessary torque from an electric engine.

There are also questions about what impact high levels of EV adoption would have on electricity generation and the demands on the antiquated power grid. NGVs don't have these issues.

Four years later, CLNE is a story of note because it has become a vertically integrated force in the natural gas industry.

CLNE has built a network of subsidiaries across North America to make natural gas vehicles more accessible and practical. These subsidiaries include:

•refining operations;
•distribution operations;
•engine conversions (BAF Technologies);
•commercial and consumer filling stations (Northstar);
•the financing of fleets and filling stations (CE Finance).

CLNE even has a subsidiary that develops biomethane fuels (CE Renewable Fuels). These are fuels derived from landfills and other organic waste facilities (a growth industry to be sure).

While natural gas is 23% cleaner in carbon emissions than diesel in heavy-duty vehicles - and far cleaner in NOX and PM emissions - biomethane enables an 88% reduction in carbon emissions when displacing diesel or gasoline.

The Saudi Arabia of Natural Gas
But at this point Wall Street has linked CLNE's fortunes to the price of natural gas, so the company rises and falls relative to the price of the fossil fuel. Now the stock is a bargain because natural gas is so cheap.

Nat gas prices are so low for two reasons. First, it's the weak economy. And second it's the reality embodied by the map above: new oil shale discoveries mean there are larger reserves of natural gas in the U.S. than there are oil reserves in Saudi Arabia.

The truth is we have more natural gas reserves than we know what to do with. Unless, of course, you're T. Boone Pickens.

Now, let's take that logic one step further.

If natural gas is cheap, and municipalities and fleets and trucking services can convert their vehicles to a low cost, stable alternative to petroleum with a solid, predictable infrastructure, isn't now the time to do it?

We certainly have the pipelines to move the gas around.

And since we don't have many ports for moving liquefied natural gas (LNG) to outside markets, the domestic production stays here. So when organizations commit to long-term planning, natural gas becomes the fuel of choice.

As more and more organizations, businesses, and consumers opt for natural gas powered vehicles, demand will increase, which will put pressure on supplies and move prices higher -- especially as LNG export facilities come on line in a few years.

And even when we get to that point, you can guarantee that CLNE will be a part of the LNG export business as well.

Granted this is not going to happen in the next year. But as long as all of these forces remain in play, natural gas has a bullish future.

But don't wait for the rally to jump in.

While this may not be the ultimate bottom, there is a lot more upside potential here for long-term investors in an integrated natural gas play than there is downside. CLNE is a buy below $16/share.

After all, Pickens told an audience at the National Press Club a few years ago, "I'm not a young man; I don't buy green bananas anymore."

Here's a guess CLNE is no green banana but part of a longer-term vision from somebody with an eye for the right deal.

Source :http://moneymorning.com/2012/06/01/natural-gas-following-t-boone-pickens-into-the-energy-patch/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife