Higher natural gas prices? We are rightly forcused on the Canol oil as this is tremendous development. However, I would still invest in MGM for its gas prospect. Unlikely the market consensus I don't think Shale gas can compete with the conventional gas reserves in the Mackenzie Delta. Peter's and Co and other's have done many reports comparing the Cost of Supply of various fields. Here are some selected number;
Mac Delta Anchor field $5.25/mcf, Marcellus $5.10, Fayette $5.50,MGM $5.60, Monteny $6.50, Horn $6.20
The bottom line is that shale gas is abundant but not cheap. Or maybe it isn't so abundant. The claim is that the USA has 100 years of supply. I have been very uncomfortable with his conclusion based upon the technical data that I have reviewed. While have reserve's evaluation expience, I don't have access to the technical information that the experts do. However, in the last few months the USGC has published a report evaluation all the shale gas and oil reserves in the USA. The numbers are not good. They show that the reserves are 1/2 to 1/3 what the likes of Cheseapeake are claiming. The report received very little coverage because it was a highly technical article with lots of numbers and statistical analysis. However, it was based upon production data and hence is not opinion but facts and facts are very stuborn things. When there was little production data from the shale gas discoveries there was a lot of discretion in assigning reserves. Over the last few years more and more production data has become available and has it has become apparent that the most optimistic reserve assignments are a physical impossibility. Even the Champion of Shale Gas - Chesapeake- has come to realize this. They took a $2.1 billion reserve write down this quarter.
The implication for all this for the natural gas market are much, much higher prices. I think we will see world gas prices and exporting LNG will no longer be on the table. However, my opinion is definitely in the small minority and hence MGM trades at $0.20. However, if this is a correct analysis and the my analysis of the Canol is right, MGM could be the benificiary of gas reserves and a hugh oil discovery. A few years from now, analysis will be saying how it was obvious that all this would happen.
Here is an article on the coming Shale Gale. I am not sure that Bill Power's has his timing right as I I think it is going to take a few years to see a return to double digit gas prices instead of a few quarter, but I think the direction of his analsysis is correct. He feels that the USA has 10 years not 100 years of shale gas reserves.
https://www.ohio.com/blogs/drilling/ohio-utica-shale-1.291290/expert-says-u-s-shale-gas-will-last-fewer-than-10-years-1.348901