Energy & Commodities

The Mining Company of the Future

Posted by Visual Capitalist

on Friday, 14 November 2014 8:46

Mining companies today face a complexity of problems: spiraling costs, government intervention, deepening pits, lower ore grades, and declining productivity are just some of the issues. Communities are not trusting mining, and this creates additional uncertainty. It is harder to find and start a mine than ever before. Combine this with today’s capital environment and struggling commodity prices, and it creates a very difficult picture.

A much more extensive framework for mining companies is outlined in the infographic below

kin catalyst development partner framework mining

10 Must-Know High-Yield Canadian Energy Stocks

Posted by Canada Stock Channel

on Thursday, 13 November 2014 14:53

1) Crescent Point Energy Corp (TSE:CPG.CA) — 7.6% YIELD

Crescent Point Energy is an oil and gas exploration, development and production company with assets focused in properties comprised of crude oil and natural gas reserves located in Canada and the United States. Co. is engaged in acquiring, developing and holding interests in petroleum and natural gas properties and assets related thereto through a general partnership and wholly owned subsidiaries.

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Uranium Stocks Go Boom

Posted by Nick Hodge

on Wednesday, 12 November 2014 14:35

I’ve been pounding the table on uranium for some time now.

Over history, investors who have made the biggest gains have shown time and again that you need to buy when everyone else is selling. You need to buy what everyone else hates. You need to buy what no one else will.

And ever since the earthquake-induced disaster at the Fukushima Daiichi nuclear plant, there have been few admirers of nuclear and uranium, and even fewer buyers.

Indeed, though they had already been sliding from their June 2007 cycle highs near $137 per pound — spurred by the flooding of the Cigar Lake Mine — after the tsunami and subsequent shuttering of all 48 reactors in Japan, the bid simply disappeared from under uranium spot prices.

Ultimately, uranium spot prices fell all the way to $28 per pound this past summer, a level not seen since May 2005.

10-year-uranium-spot-prices

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Uranium prices at these levels are unsustainable. They must go higher.

When they do, uranium stocks will move much higher as well. And the companies with proven deposits boasting high grades and shallow depths will move higher by many multiples.

That’s the natural cycle of things. You just have to be aware of it and be willing to buy a hated sector in anticipation of the profit cycle changing direction.

History to Repeat

For example, when uranium prices spiked over 400% from 2005 through 2008, junior uranium miners and exploration companies added as many percentage points, or better.

uranium-stocks-2007-1

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Again, when uranium spot price rebounded by 47% in 2010 and 2011, uranium mining stocks soared even higher.

uranium-stocks-2011

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Now, we’re on the verge of the cycle turning over once more.

2015: Uranium Profit Cycle?

I honestly don’t know when the momentum will truly shift. I just know it has to, or utilities won’t be able to sustain 14% of global electricity production.

Chairman of Sprott U.S. Holdings and legendary resource investor Rick Rule put it bluntly in an interview with CEO.CA alongside Sprott’s Vancouver Natural Resources Symposium in July:

When I look at a theme now like uranium, I am perfectly comfortable with the fact that it might take 5 years to be right. I have come to learn that asking myself investment questions where the answer begins with when, not if, is a very good trade.

In the uranium business now, industry costs including cost of capital is about $70, so you produce for $70 and sell it for $30 and lose $40. You cannibalize existing capital in corporate vehicles and that goes on until they go broke, and then the price shoots just like it did last decade. That’s a question that begins with when. When does the dam break? It’s not if. Does the price of uranium go up or do the lights go out?

With no Japanese demand and high supply from decommissioned nuclear warheads, nobody wanted to be the first to buy.

That’s starting to change.

Exelon (NYSE: EXC) is the largest nuclear utility in the U.S., which is the largest nuclear power market in the world. It recently started buying large quantities of uranium at the bottom of the market.

That goaded buying interest in other utilities like Southern, Duke, and FPL.

As a result, uranium spot prices have now surged 40% off their summer lows of $28/lb to nearly $40/lb.

And can you guess what uranium stocks are doing?

Keystone Approval Will Make These Stocks Winners

Posted by Money Morning

on Tuesday, 11 November 2014 12:15

“TransCanada Corp. (NYSE: TRP), the company building the Keystone XL pipeline, would be the greatest beneficiary of its approval, of course. But dozens of other companies also figure to gain from the project.”

Republican control of the U.S. Senate has made approval of the Keystone pipeline imminent.

The controversial $8 billion project, skillfully delayed for years by U.S. President Barack Obama, would transport oil sands crude from Canada to refineries on the U.S. Gulf Coast.

TransCanada Corp. (NYSE: TRP), the company building the Keystone XL pipeline, would be the greatest beneficiary of its approval, of course. But dozens of other companies also figure to gain from the project.

With the Democrats soon to be the minority party in the Senate, Majority Leader Harry Reid, D-Nev., will lose his power to block voting on Keystone XL pipeline bills, as he has done for years.

The new Majority Leader, Sen. Mitch McConnell, R-Ky., plans to hold a vote on the Keystone pipeline shortly after the 114th Congress takes office in January. The Republican-controlled House of Representatives already has approved several Keystone bills.

No More Obama Wiggle Room on the Keystone XL Pipeline

As for President Obama, the clock has just about run out on his stalling tactics. When asked by reporters about the Keystone XL pipeline yesterday (Wednesday), the president stuck to the neutral position he’s held all along.

“On Keystone, there’s an independent process. It’s moving forward. And I’m going to let that process play out,” President Obama said. He was referring to a pending Nebraska Supreme Court case. The court is to rule on whether the state’s governor had the authority to approve a Keystone route change in 2012.

keystone-pipelineBut when the Keystone pipeline bill lands on his desk next year, President Obama will have to either sign it or veto it. Both options put him in political hot water.

Signing the bill will enrage the environmental wing of the Democratic Party. But a veto would anger a much larger group of people.

The Keystone pipeline has significant Democratic support in Congress, making this a bipartisan issue. A non-binding Senate vote on the Keystone bill taken earlier this year won 11 Democratic votes.

 

But what will really give President Obama pause is public opinion. A Pew Research Center poll taken in the spring showed that 61% of Americans favor building the Keystone XL pipeline. And that includes almost half of all Democrats (49%).

 

“I actually think the president will sign the bill on the Keystone pipeline because I think the pressure – he’s going to be boxed in on that, and I think it’s going to happen,” Republican National Committee Chairman Reince Priebus said on MSNBC.

When the Keystone pipeline bill is approved early next year, it will boost at least a dozen energy stocks…

The Winning Stocks of the Keystone Pipeline

It’s easy to see why oil and gas companies from Canada to the Gulf Coast are eager to see the Keystone XL pipeline built.

It’s a massive project.

TransCanada says the pipeline will have a capacity of 830,000 barrels a day over its 1,179 mile length.

Many of these stocks have been slammed lately as oil prices have dropped. But that’s just made them cheaper.

The stocks that will benefit from a completed Keystone pipeline fall into several categories:

The Pipeline Companies: TransCanada (Thursday’s close: $49.22) has waited a long time for this. And even though the Keystone XL is partly priced into the stock, official word next year should bring a nice pop. TRP also may be in the crosshairs of some activist investors. And TransCanada pays a 3.6% dividend.

Another pipeline company that could win from the Keystone pipeline is Enbridge Inc. (NYSE: ENB). A rival of TransCanada, Enbridge (Thursday’s close: $45.14) could enjoy a halo effect from Keystone. If Keystone gets approved, it could grease the regulatory wheels for several pending Enbridge projects. ENB pays a 2.7% dividend.

The Oil Producers: These companies need the Keystone pipeline to get their product to the refineries. The lack of infrastructure has been a drag on Canadian oil prices. But Keystone – along with several other pipeline projects – will fix that problem. Higher oil prices will drive higher profits.

Among the top picks here is Suncor Energy Inc. (NYSE: SU). Suncor (Thursday’s close: $33.62) was a Canadian oil sands pioneer and continues to add to its large acreage position in Alberta. SU pays a 3.2% dividend.

Another is Imperial Oil Ltd. (NYSEMKT: IMO). Imperial (Thursday’s close: $46.89) is building the largest crude oil terminal ever constructed just outside Edmonton, Alberta. The terminal will be able to move 250,000 barrels a day from the IMO Kearl oil sands project. IMO pays a 1% dividend.

Other plays in this group include Canadian Natural Resource Ltd. (NYSE: CNQ), Cenovus Energy Inc. (NYSE: CVE), and Baytex Energy Corp. (NYSE: BTE).

The Gulf Refiners: The Gulf Coast has a large concentration of refineries capable of handling the heavier, harder-to-process oil sands liquids. While the oil can get there by other means, a pipeline is the cheapest and most efficient.

One of the biggest refiners in the Gulf region is Valero Energy Corp. (NYSE: VLO). Valero (Thursday’s close: $50.24) has seven refineries that can process more than 1.5 million barrels a day. And all of Valero’s refineries are equipped to process the heavy Canadian oil. Valero has already committed to taking 100,000 barrels a day from the Keystone XL pipeline through 2030. Plus, Valero has an option to buy 15% of the Keystone pipeline. VLO pays a 2.2% dividend.

Phillips 66 (NYSE: PSX) only has about half of Valero’s capacity (733,000 barrels a day). But Phillips 66 (Thursday’s close: $75.42) has two refineries that can process the heavy Canadian crude. And most of Phillips’ profits come from refining. PSX pays a 2.7% dividend.

Other plays in this group include Exxon Mobil Corp. (NYSE: XOM) and Alon USA Energy Inc. (NYSE: ALJ).

The Bottom Line: There’s no need to wait for the official approval of the Keystone pipeline. At this point it’s a near-certainty. So now is the time to buy the stocks that will benefit the most

Energy’s Potential “Dead Cat” Bounce

Posted by Lance Roberts - X-Factor Report

on Monday, 10 November 2014 15:15

‘Over long-term time frames prices both rise AND fall. When prices rise or fall extreme distances from their underlying average, the gravitational pull of the moving average will drag prices back. The example I most often use is that of a rubber band. When a rubber band is stretched to its extreme and is released, it will snap back an equal distance in the opposite direction. This is what happens with prices over time. The chart below is a monthly chart of the S&P 500 as compared to it 36-month (3 years) moving average.’

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…..click on chart for larger view and much more analysis