Kelt Exploration Ltd T.KEL

Exxon - Pioneer deal, NG & Oak narrative

[PabloLafortune]

My view is Exxon bought Pioneer for the natgas as much if not more than the oil and the NGLs. I compare it to Shell acquiring BG.  Exxon didn't buy PXD to sell the natgas down the road for $3 per thousand cubic feet.  Companies like Exxon and Shell are highly integrated multinationals. They must have a plan to export most of it as LNG down the road. I'd love to be a fly on the wall as to what they think they'll be getting for NG and oil 10 years hence. 

Moreover couple of quarters ago, PXD's natgas was up 19% YoY I believe (E&OE) and activity based cost wise, its zero cost. PXD's play will struggle to maintain oil production but in doing so,they'll produce more NG. 

We in Canada produce a lot of natural gas too much actually relative to egress in place. Moreover, a lot of our (Canada) electricity and heat for that matter doesn't come from natgas.  So many think natgas is not that valuable.

but when you look at LNG, and the huge TAM if you factor in replacing coal, its a huge market. 

But also, natgas is a very important fuel actually. Its what most of the US is heated with. It has the biggest share of power generation. Its the fuel that is reliable and can be ramped up quickly if need to be. It can be - with new technologies - quite friendly to the environment. You can make gasoline from it. It really is the most important fuel. It doesn't trade like it, but intrinsially, it is. 

So subject to natgas egress etc..., all the Kelt plays but esp. Oak is going to be very valuable down the road, IMO

Hope you enjoyed this narrative.

[Oldnagger]

No matter what board you post on ,I always pay close attention to your words. Keep it up please !!

[PabloLafortune]

Thanks Old. These big companies think years ahead. I can imagine Exxon thinking if the PXD asset becomes 35% oil and 65% natgas and NGLs later on, thats fine with us because that's more or less how the market will evolve over the next xx years as well.  This could be liquids rich shale's unique advantage right now - that it becomes gassier over time just like its markets perhaps

[Oldnagger]

Anecdote for you, I remember reading a story years ago how US Steel back in the day when they were one of the top 10 market caps in the US, built a mine or 2, a deep sea port, a 200 mile long railway in the middle of nowhere in the harshest conditions imaginable AND 2 towns in order to secure their supply of cheap iron ore (from Canada of course). They were literally thinking 50-100 years down the

[PabloLafortune]

Old, I'm not an engineer so can't have that discussion with you but soap box wise, I think I got you beat there...natgas is going to be around for a very long while so should be a good investment. Oil may be as well but best case it carries on as is IMO, worst case it loses market share (energy wise) to electrical power and 24% of that worldwide is generated by natural gas (coal 33%). Btw,

[PabloLafortune]

By the way old, interesting pie chart on twitter from Robert Friedland. Coal powers (ie electricity) 35% of the world followed by natgas at 22.7%.  Also some are calling BS on XOM increasing production (see The Deep Marcellus on twitter). They think the majors are going to use their financial muscle to increasingly control supply. "best way to control expanding production and thus