Carpe Diem

US shale oil boom is fueling a huge boom for railroads, with oil shipments by rail doubling in just two years

According to the Association of American Railroads, shipments of oil by rail this year will top 540,000 carloads, which will be a 46% increase over last year’s count of about 370,000 carloads.  And the number of train cars carrying oil this year will be almost double the number of carloads in 2010.

The Associated Press has a story today about how the U.S. oil boom has created a huge boom for U.S. railroads to transport the oil from oil fields in North Dakota and Montana to refineries around the country, here’s an excerpt:

Energy companies behind the oil boom on the Northern Plains are increasingly turning to an industrial-age workhorse – the locomotive – to move their crude to refineries across the U.S., as plans for new pipelines stall and existing lines can’t keep up with demand.

Union Pacific Railroad CEO Jack Koraleski said hauling oil out of places like North Dakota will be a long-term business for railroads because trains are faster than pipelines, reliable and offer a variety of destinations.

“The railroads are looking at this as a unique opportunity, a game-changing opportunity for their business,” said Jeffery Elliot, a rail expert with the New York-based consulting firm Oliver Wyman.

Delivering oil thousands of miles by rail from the heartland to refineries on the East, West and Gulf coasts costs more, but it can mean increased profits – up to $10 or more a barrel – because of higher oil prices on the coasts. That works out to roughly $700,000 per train.

 

HT: Don Geng

46 thoughts on “US shale oil boom is fueling a huge boom for railroads, with oil shipments by rail doubling in just two years

    • warren Buffet is one of those evil rich one per centers who has bought his way into liberal heaven by mouthing the right things about Obama and higher taxes for the evil rich, all the while getting even richer. In a former age it was called buying indulgences. In this age, it’s called crony capitalism, which is a specialty of Democrats passed down from the master, FDR. The irony of being a Democrat is so rich it causes obesity in lab rats.

      • Buffett has been very clear abut his investment ideas from the outset. He will take full advantage of the barriers to competition that governments have erected as he seeks the greatest return to his shareholders over the long term. Most Republicans had no trouble with that and only got angry at him when he began to support Obama.

        The way I see it, both sides are ‘evil’ because both would use the power of government to rob taxpayers and reward their favoured constituents.

        • worse, buffet is at it again.

          his calls for higher taxes especially on cap gains and on estates are based entirely on a desire to sell life insurance.

          life insurance (and keep in mind this is the real business of BH) is used predominantly as a wealth management tool for the rich to cover inheritance taxes.

          if the inheritance tax were eliminated, i would bet that life insurance sales by $ would drop 50-75%.

          buffet is trying to make life insurance more attractive in relative terms by pushing for higher inheritance taxes and higher cap gains taxes to make doing your own saving less attractive.

          a life insurance payment is tax free and based on payments and life expectancy you can estimate the annual ROI and compare it directly to other investments which will be, in most cases, taxed which means that higher tax on other investments makes life insurance a relatively more attractive way to pass on wealth to your kids. such insurance is all but essential in the cs of passing on many businesses.

          the inheritance tax is about to jump back to 55%. that means that dying will cause your family to lose control of your business unless you have other assets that can be sold to pay the tax.

          life insurance gets used to make that payment. it’s a massive (and subtle) subsidy to guys like warren.

          they would be in deep, deep trouble if that tax went away.

          it’s bad enough warren going out and talking his book and seeking policies favorable to BH through political cronyism and interference in markets, but to do so while wrapping himself in the mantle of “fairness” and spewing folksy lies about why he favors these things is truly galling.

          nepotism is bad enough without adding hypocrisy.

          • However assuming the deceased is the owner of the policy (paid the premiums) then the amount paid out is included in the taxable estate. So while the beneficiary does not pay income tax on it the estate must include its value in the total. If one gets life insurance proceeds the insurance company will furnish a form 712 to tell you the total Which form must be included if an estate tax return is to be filed (estate over exemption limit). So life insurance is just taxed differently.

          • Lyle

            However assuming the deceased is the owner of the policy (paid the premiums) then the amount paid out is included in the taxable estate.

            You will find that in most cases the beneficiary is the owner of the policy, thus avoiding the tax. It doesn’t matter who pays the premiums.

    • Of course he has, Che…Anywhere other railroads runs, their bagman are being invited into WH, to insurance other pipeline are not built as well…

      Funny how King Buffet is never attacked as a greedy rich pig by the socialists…

    • I’m not sure why this thread has turned into Buffet bashing, but the point is that the Keystone XL pipeline was not safe for the proposed route through the South Dakota Aquifer. I would rather see increased rail traffic to accommodate the crude transport.

      The dilbit solution does not act as traditional crude. It is 10x more corrosive (high sulfur content), and because of the thickness in consistency, it is difficult to monitor for problems while traveling through the pipeline. Also, keep in mind that the Keystone pipeline would be owned by TransCanada. I think the delay was necessary to ensure proper route placement, which will help protect the environment. Remember Kalamazoo MI pipeline, it to was transporting Diluted Bitumen.

    • Aggregate data is not a good measure of very much that is useful to anyone seeking to see reality as it is. And when you start being selective the data can tell us exactly what the cherry pickers want to emphasise.

      What I see is a shale industry that is still going to have trouble making any economic profits because the numbers do not work. The wells are far too expensive to allow payback in most of the non-core areas once you take the depletion into account and look at the actual production rather than the estimates that are being cited. Projects are still far from being self financing and the funding gaps are too large to continue for much longer. By around this time next year we will see a number of companies take significant write-downs to reflect the actual performance of their shale assets. You should see some mergers and significant sales of assets as the players try to remain in business for as long as possible before the day of reckoning clears away the lousy business plans and the fraudulent.

      • So I guess all that talk about record oil profits is just, well, talk. And all those fools are just fracking their lives away in fraudulent schemes. I don’t want to sound disrespectful of someone who is an expert, but do you understand why some people might think its rather arrogant of you to suppose that you know better than the thousands of people who are involved in getting the stuff out of the ground and into your gas tank? Or are you actually one of those evil oil speculators who actually profits from gouging an innocent and ignorant public?

        • There are record profits from conventional production because the price is high. But that is not what shale production is. Shale is the bottom of the barrel where you have to expend a huge amount of energy in the hope that the value of the energy that you get out is higher over the long term. It is easy to get an accounting profit if you assume that your average recovery from a well is 2.7 bcf and write off the costs accordingly. But when the actual recovery turns out to be 1.3 bcf all those profits will eventually have to be written off because they were never real to begin with.

          Because of timing and assumption leeway you need to look at the actual cash flows and the balance sheets. When you do and listen in on the conference calls the fact that the shale projects are not self financing becomes very evident. You also better be weary of the hype that comes from companies and the media. As a perfect example we have the Chesapeake Energy fiasco. More than half a decade ago people like Mark were hyping up Chesapeake as a leader who had discovered the holy grail and could take advantage of the ‘new’ shale discoveries and fracking techniques. After a while, when the analysts began to point out some problems with the discrepancy between the production data and the projections, the companies and media went on the attack and dismissed them as cranks. As the Chesapeake Energy CEO told Jim Cramer what you had was third-rate geologists that think, “that somehow they know more about the shale gas revolution in America than companies that have combined market caps of almost $2 trillion and have spent hundreds of billions of dollars to develop these new resources…”

          A year later

          Archie W. Dunham (Photo credit: Wikipedia)

          Today Chesapeake Energy named Archie Dunham to replace Aubrey McClendon, who turned out to have been very wrong about the economics of the shale gas that he was selling to the public. What we are expected to believe is that it is different when it comes to shale liquids even though the decline rates and production data have yet to show that the average formation can be produced economically.

          The fact is that we have heard this hype many times before. Things are not as simple or clear as you are being told and it is up to you to think for yourself. One place to start is to ask, as I have been doing for quite some time now, why it is that Mark, who is an economics professor, has never actually looked into the economics of shale production and why he sticks to hyping up all the reports in fields that he knows so little about.

        • Let me try this again…

          There are record profits from conventional production because the price is high. But that is not what shale production is. Shale is the bottom of the barrel where you have to expend a huge amount of energy in the hope that the value of the energy that you get out is higher over the long term. It is easy to get an accounting profit if you assume that your average recovery from a well is 2.7 bcf and write off the costs accordingly. But when the actual recovery turns out to be 1.3 bcf all those profits will eventually have to be written off because they were never real to begin with.

          Because of timing and assumption leeway you need to look at the actual cash flows and the balance sheets. When you do and listen in on the conference calls the fact that the shale projects are not self financing becomes very evident. You also better be weary of the hype that comes from companies and the media. As a perfect example we have the Chesapeake Energy fiasco. More than half a decade ago people like Mark were hyping up Chesapeake as a leader who had discovered the holy grail and could take advantage of the ‘new’ shale discoveries and fracking techniques. After a while, when the analysts began to point out some problems with the discrepancy between the production data and the projections, the companies and media went on the attack and dismissed them as cranks. As the Chesapeake Energy CEO told Jim Cramer what you had was third-rate geologists that think, “that somehow they know more about the shale gas revolution in America than companies that have combined market caps of almost $2 trillion and have spent hundreds of billions of dollars to develop these new resources…”

          A year later Chesapeake Energy named Archie Dunham to replace Aubrey McClendon, who turned out to have been very wrong about the economics of the shale gas that he was selling to the public. What we are expected to believe is that it is different when it comes to shale liquids even though the decline rates and production data have yet to show that the average formation can be produced economically.

          The fact is that we have heard this hype many times before. Things are not as simple or clear as you are being told and it is up to you to think for yourself. One place to start is to ask, as I have been doing for quite some time now, why it is that Mark, who is an economics professor, has never actually looked into the economics of shale production and why he sticks to hyping up all the reports in fields that he knows so little about.

        • Vangel:

          So how can I get in on those conference calls that you said I need to hear to find out that these shale operations are not self-financing and therefore WILL NEVER BE SELF-FINANCING?

          Does the failure of Chesapeake mean doom for the whole industry?

          At the risk of sounding like the Chesapeake CEO, why should we take the word of ‘third-rate geologists that think, “that somehow they know more about the shale gas revolution in America than companies that have combined market caps of almost $2 trillion and have spent hundreds of billions of dollars to develop these new resources…”?

          You really seem to have an ax to grind on this whole issue. Again, I ask, are you one of those evil oil speculators?

          • So how can I get in on those conference calls that you said I need to hear to find out that these shale operations are not self-financing and therefore WILL NEVER BE SELF-FINANCING?

            Find the companies that you are interested in. (On the old Perry site people mentioned the companies by name.) Get on their web sites and click on the conference call links in the investor section. Pay attention to the talk about finance gaps, debt, and asset sales and make up your own mind. Also look at the cash flow statements and look at the growth of debt (or equity dilution) on the balance sheets.

            Please do not look at a large integrated that has very profitable conventional production and assume that the aggregate reporting is related to shale. If you are not looking at pure shale plays you have to do a lot more digging and break out the numbers as well as pay attention to the specific questions that relate to shale on the calls.

            Does the failure of Chesapeake mean doom for the whole industry?

            No but it is reflective of what happens when you go outside of the few core areas where profits should be expected. Chesapeake was an early player that got leases in the best areas. It was able to hedge at high prices, which guaranteed that it would not suffer as much if prices collapsed unless it continued to spend massive amounts on drilling. It was also able to use contracts to hide its debt loads for quite some time until a few of the analysts figured out what was actually happening. Add the double dealing and you see how the industry has been operating. The management will make money no matter what happens to investors. That explains why you have so many companies doing all they can to keep drilling even though that means massive negative cash flows and more debt.

            At the risk of sounding like the Chesapeake CEO, why should we take the word of ‘third-rate geologists that think, “that somehow they know more about the shale gas revolution in America than companies that have combined market caps of almost $2 trillion and have spent hundreds of billions of dollars to develop these new resources…”?

            That question is easy? First of all, the analysts and geologists turned out to be right about the economics of shale gas while the industry managed to destroy a great deal of capital. Second, the analysts are dealing in actual facts and data while the promoters within the industry deal with narratives just as we saw when those analysts who did not believe the ‘eyeball’ valuations were told that they did not ‘get it’ and that we were in a new era during the 1990s or the analysts who looked to housing and said that without the bad ratings, GSEs, and Fed liquidity the housing market would contract.

            The bottom line is that as investors we have to learn to think for ourselves by looking at the actual data and facts not by buying a story told by people who have an interest in promoting it. And as investors the best way to become very rich is to bet against a trend that is not sustainable. Shale isn’t sustainable. The bond market isn’t sustainable. I would make bets on assets that would go up if those trends reversed rather than hope that when I pile on the trend it will continue until I get off.

            You really seem to have an ax to grind on this whole issue. Again, I ask, are you one of those evil oil speculators?

            I do have an axe to grind. I believe that those who ignore important information can get wiped out by the promoters much as they got wiped out when they piled into the internet stocks, housing, green energy, etc. And I do invest in energy, which includes oil and gas. That said, I think that coal is far more interested than shale gas right now and hope to have the chance to buy into well run companies that are very profitable. For the moment I am looking to South America and Korea for opportunities but once the coming US contraction runs its course I hope to purchase some of the cash rich players at the time the peasants are storming the White House and EPA offices.

            Since I answered your questions please answer mine. Are you investing or working in shale or shale related industries? If you are not, how do get your information? Clearly you did not know how to get on the conference calls and have yet to look at the SEC filings. Without this information why would you think that one side or the other is on the right track? How can you claim to know who is right when you do not even know what the facts are? And how can you ignore the work of those third-raters when they turned out to be right while Mark and the promoters turned out to be so wrong?

        • I’m reminded of Dow 30k predictions and “housing prices never go down” crud.

          It has been my experience that the greatest danger to the average investor comes from empty suits that pretend that they know what they do not know while avoid detailed examination of the area that they are hyping. In the case of shale we have seen Mark point to production data for years while he gives us all kinds of projections and estimates from government agencies even as he avoids the subject that he actually knows well, economics. I have yet to see any of the people who are hyping up the ‘new future’ when referring to shale take a close look at the fact that outside of a few core areas there are no self financing projects and no actual profits if we account for the depreciation costs on the basis of actual rather than projected ultimate production.

          I am not saying that I am certain that I am right. All I am saying is that given what we have seen reported to the SEC most of the shale players have about as much of a chance of success as internet companies like pets.com or space.com did.

        • so Vangel, I guess you must be shorting oil stocks. You seem to be contradicting yourself. You’re not certain you’re right but the companies have about as much chance as pet.com. Which is it?

          • Shorting is too dangerous and not profitable enough. And why would I be shorting oil stocks given the fact that any of the companies that have conventional reserves and are able to reduce capital investment should see their values explode after the massive write-down in shale assets? My preference is to look to the long side for my profits and being patient enough to take advantage of the secular trends. If you short you have a margin account and risk all that you have if the financial institutions are in trouble. If you use a cash account your holding should be held in trust and you should have access to them no matter what happens to the institution.

            As I see it the US recovery is built on sand and will hit against the wall of reality in the next year or two. That means that one needs to avoid the bond markets and to stay with gold and real assets that should benefit from a collapse in the currency and the damage done by the bond market.

      • Vangel,

        How about some links to the conference calls and 10-k reports you refer to – specifically on companies on the shale oil front?

        • A number of them were provided on Mark’s website where this issue has been discussed for several years now. On that thread I asked for companies that have been able to self finance shale projects out of cash flows. Even though many companies have been in the sector for more than half a decade nobody was able to provide an example where a pure shale play was able to produce positive cash flows and did not have issues with growth of debt or have management that was not worried about plugging financing gaps.

          Tell you what; you provide the names of the companies and we will look at the cash flows and debt changes in the SEC filings and look at the conference calls by those companies.

        • I’d love to know those instances you listed them because I never saw them; I’ve seen your frequent comments for several years.

          In fact, you seem to always try weasel out every time someone asks you for conference call or 10-k links: this is the FIFTH time I’ve counted in recent months where you dodge the issue when asked for links.

          In other words, I now have doubts of whether you know what you’re really talking about on shale oil. The doubt isn’t on shale gas, where one can Google plenty of critics with ease, but on shale oil where you seem to be the lone voice.

          • Range Resources Corporation
            Range Resources Corporation intends to sell certain properties in the Permian Basin in southeastern New Mexico and West Texas. The proceeds from the sale will be used to cover an anticipated $250 million funding gap in 2013. The assets to be sold are valued by analysts at $150 million – $200 million. The company also plans to open a date room for the properties in early January 2013.

            Chesapeake
            The potential for an extra billion dollars from what McClendon calls “the world’s hottest acquisition” comes after Chesapeake yesterday shelved a $1 billion sale of future production meant to help plug a cash-flow shortfall. The company risks a $16 billion funding gap this year and next, Standard & Poor’s said today. Chesapeake has said it may run out of money next year.

            SM Energy
            Tony Best, president and CEO, remarked, “Year to date, we have closed or entered into transactions in excess of $1 billion that will be used to fund the development of higher value assets in our portfolio while preserving the strength of our balance sheet.”

            The deal, which is expected to close in the fourth quarter of this year, is valued by Jefferies & Co. Inc. at $1,900/acre —considerably lower than the original $4,000/acre expectation it put out last year. However, because the transaction took over a year to complete, expectations for the non-core acreage have decreased and the sale will be considered a net positive, said Jefferies in a note to investors July 18.

            Around the same time, Jefferies expressed concern over the company’s 2011 and 2012 funding gaps, but now sees them as under control. The 2011 funding gap has “been covered through debt financing as well as EF [Eagle Ford] /Marcellus transactions. We estimate that SM should end the year with $160 million in positive working capital. In conjunction with ~$950 million in cash-flow, we estimate a funding gap of only $100 million in ’12, assuming a $1.2 billion budget. As of March 31, the company had zero drawn on a $1.3 billion credit facility. SM should be cash flow-neutral in ’13 as new Eagle Ford takeaway allows for the elimination of a potentially significant backlog on the operated acreage.”

            Sandridge Energy
            While the Permian sale does fully address the 2013 funding gap, SandRidge will still likely face a deficit in 2014. The company has precious little time to demonstrate, through delineation, the value of its vast acreage and prepare for additional monetizations in the next two years.

            I think that you simply choose not to see the obvious. It has been very clear from the SEC 10-K filings by all of the companies mentioned above, that there is a serious funding problem in the shale sector. We have seen debt loads explode and companies sell off their best assets just to keep their E&P operations going for a bit longer. While exploding prices could still save the day for some the depletion rates virtually guarantee that the current wells will not produce much by the time such prices materialize. Anyone who buys a shale play today and has to hang on to it for the next ten years is looking at losses of all or most of his initial investment. And let me point out that the oil services sector is no longer a safe way to play the shale boom because prices require the current rig counts to remain in place at a time when the funding gaps guarantee that we will see a major decline. In the link below, which I found in about ten seconds with Google, the author notes the possible problem for the service sector because of the producer funding issues. You pick a company and we will take a look at the debt and cash flow issues in the filings and will go to the conference call to see how the funding problems are being addressed.

            http://www.minyanville.com/sectors/energy/articles/thestreet-HAL-chk-bhi-cam-rig/9/7/2012/id/43823?page=full

        • Again, I’m asking for 10-k reports and conference calls, not links to articles.

          And once again, I already know what’s been happening in the shale gas industry for three years; I’ve known Chesapeake and Devon are companies to stay away from since ’09; I know SM Energy has sold off it’s entire Marcellus stake. I’m looking for stuff in the shale oil industry that works in places like the Bakken.

          • Look at any of the 10-K filings for the companies cited. They will show negative cash flows, shareholder dilution, increases in debt, and asset sales being used to close funding gaps. As I said, you pick the company and I will show you the problems.

            The fact that there are significant funding gaps for the shale companies is not new news. We have seen it in the 10-Ks for quite some time and we are still seeing it today. See Chesapeake, Continental, Concho, Range, or any of the other companies that I have mentioned or are mentioned in the articles cited. All of them show the same thing. And please do not try to claim that you cannot find the 10-Ks because you are provided links to the filings and the conference calls on the company sites in the investor section.

            And let me point out that I have cited plenty of analysts who have shown that the actual production data reported shows that the companies have overestimated EURs by around 100% or so in order to keep the depreciation costs of the wells lower than they should be. The problem is that the narrative of the promoters diverges from the actions taken by the companies who find that they must close the funding gaps or risk disclosure of the extent of the problem that they are having with the economics of shale production. The way I see it that will have to end soon. At best we have two more years of blind faith in the narrative but a more realistic estimate would be that the disclosures will come some time within the next three quarters.

        • The companies listed are for the most part heavy SHALE GAS players. Range Resources’s sale of Permian basin assets are not
          considered part of the Eagle Ford play.

          Every time someone asks you for 10-k reports and conference calls on shale oil players, you seem to play vague or elusive on the requests, or ignore the request all together (this isn’t the 1st time I’ve asked). That makes me guess you really don’t have the conference calls or 10-ks on shale oil players you claim to possess, right?

          • Every time someone asks you for 10-k reports and conference calls on shale oil players, you seem to play vague or elusive on the requests, or ignore the request all together (this isn’t the 1st time I’ve asked). That makes me guess you really don’t have the conference calls or 10-ks on shale oil players you claim to possess, right?

            Vague? I told you to pick any of the companies and look at their 10-Ks. I do not need to cherry pick any particular company because every single one is having the same problems. Since you want to look at pure Eagle Ford play you find a company that fits your criteria and we will look at the 10-Ks together.

            But let us note that picking the newest hyped up area can provide cover because there would be no companies that would have been operational in it for enough time to give us the type of clear look that prudent analysis requires. You can always argue that since the area is new there would be little production and a big need for capital investment for any particular company so the negative cash flows are not a big problem. That might be true if we did not have so much hype for all of the basins when they were first discovered and if the same process did not keep repeating over and over again. But as I pointed out I have an open mind. If you do not like the players I listed provide one for yourself and we will look at the SEC filings and listen to the conference calls as part of the analysis. Frankly, I doubt that you will provide us with an example because you can’t find one because I have looked for a long time and have yet to find a single example.

        • Nice try, Vangel, but that’s not going to fly.

          Ultimately, you confirmed what my original suspicion is: that you’re NOT a big time energy investor you claim you are. Any real energy investor would produce the info. requested on hand flat, in no time; the investor would have had info. big time SHALE OIL players, and wouldn’t have tried playing loose by getting me to check out big time SHALE GAS PLAYERS.

          You obviously demonstrate a high level of interest in the energy industry, and have read a great deal about it, but I noticed too many generalities, intermixing of simple subjects (confusing shale gas for shale for oil is a common one), and claiming things simply not true in your arguments to take you seriously.

          • Nice try, Vangel, but that’s not going to fly.

            Ultimately, you confirmed what my original suspicion is: that you’re NOT a big time energy investor you claim you are. Any real energy investor would produce the info. requested on hand flat, in no time; the investor would have had info. big time SHALE OIL players, and wouldn’t have tried playing loose by getting me to check out big time SHALE GAS PLAYERS.

            I never claimed to be a ‘big time energy investor’ because I do not know what that means. I am an informed energy investor because I talk to management, read the filings, and look at the fundamentals. I already gave you a list of the larger and better companies in the sector and told you that all of their 10-Ks showed exactly the same problem; shale projects are not and have not been self financing, even when prices were higher. You have yet to refute this statement because it is clear that you have not looked at any of the filings or listened carefully to the conference calls. It seems to me that you are more interested in narrative than in analysis.

            You obviously demonstrate a high level of interest in the energy industry, and have read a great deal about it, but I noticed too many generalities, intermixing of simple subjects (confusing shale gas for shale for oil is a common one), and claiming things simply not true in your arguments to take you seriously.

            I do not confuse shale gas with shale oil and clearly mean tight oil and gas when I use both terms rather than kerogen, which is what some of the posters on Mark’s web site were talking about. Most of my investments are in precious metals because I think that the money printing will end badly for the bond market bubble. That said, I do have several hundred thousand invested in energy plays across the spectrum, including unconventional producers not involved in the shale sector.

        • Vangel,

          For the last time, I know the shale gas players are in trouble and have for THREE years. It’s the Baken and Eagle Ford players I’ve asking for.

          Anyway, most successful self-made millionaires are too busy, or have better things to do with their time than troll comments sections, playing “the last man standing.”

          I don’t know what you really do but my suggestion is to enjoy life no matter what you do because in the end, none us funny monkeys get out alive in the end anyway.

          • For the last time, I know the shale gas players are in trouble and have for THREE years. It’s the Baken and Eagle Ford players I’ve asking for.

            As I have pointed out, I see no 10-K filings by ANY of the shale producers that would indicate that the projects are self financing. The depletion rates seem to be too high to allow for the required payback. The only way to claim that the economics are good is to ASSUME a high EUR that is not supported by the actual production data.

            Anyway, most successful self-made millionaires are too busy, or have better things to do with their time than troll comments sections, playing “the last man standing.”

            I made most of my money by investing early in the commodity bull market and staying put. When you are riding a secular bull market and refrain from trading you would be surprised how much free time there is. It certainly leaves a lot of time to educate others who do not seem to see reality as it is.

            I don’t know what you really do but my suggestion is to enjoy life no matter what you do because in the end, none us funny monkeys get out alive in the end anyway.

            I do enjoy life. I retired a little over a decade ago in my early 40s after 15 years in the aircraft business. I looked around and found that all the people who did my job tended to look far older than they actually were and decided that was not the life for me. Luckily for me, I discovered the Austrian School of Economics when working in China. Two of the AVIC economists that I had socialized with turned out to be hard core free market advocates and led me to Mises and Rothbard. Their insights allowed me to make more in a single year of investing than I had in 15 years of working and allowed me to make some pretty good predictions about the general direction of the markets. By managing my risks I have done pretty well although the ride has certainly been very volatile. Once a year I attend the PDAC, where I socialize with and ask questions of many of the management teams from the mining and energy companies that interest me as well as some of the analysts that cover them. I make my investment decisions based on what I find out and can sleep well knowing that I have diversified my holdings and managed my risk. That allows a lot of time to read, spend time with the kids, and post a few comments on sites that interest me.

            The bottom line is that I enjoy life. I spent three hours in the gym today, mostly swimming with my wife and kids and just got back from a two week cruise with my family and some friends in the Caribbean and holiday in Florida. It was a blast hearing the kids argue about the trolley problem, self ownership, and the best form of government. It was very satisfying to have my 14-year-old son bring up Aquinas and Sophocles when supporting his natural rights based argument for property rights and my 12-year old point out how elitists imagine heroes by bringing up Star Trek as an example. There is nothing more enjoyable than teaching your kids how to think and spending time with family and friends. Fortunately, I am in a position to devote most of my time to those actitivies.

        • Vangel,

          That’s a nice story there…

          Now, if you are what you claim you are, you should have no trouble conjuring up 10-Ks and conference calls on the companies I’m talking about. If you are what you really say you are, it should be easier than falling off a log.

          • Now, if you are what you claim you are, you should have no trouble conjuring up 10-Ks and conference calls on the companies I’m talking about. If you are what you really say you are, it should be easier than falling off a log.

            I did. All of the companies that I cited have SEC filings that show that my observation about the inability to self finance is correct. And none of the conference calls refute that claim either. As I said, you pick the company and we can discuss which parts of the filings and conference calls support my view and which ones support yours.

        • Okay, Vangel, let’s add some things up…

          You, a self-professed energy investor, incessantly cry scam in the shale oil sector and constantly claims you’ve combed through the 10-Ks and conference calls for proof. Yet…

          When someone asks you for links to 10-Ks and conference calls, you don’t produce them; you say things like “I’ll have to look for them, I’ll cite links if I get time.”

          And here I get this runaround:

          No conference calls or 10-Ks, just an article about SHALE GAS companies – WHICH I’VE TOLD YOU REPEATEDLY I KNOW ARE IN TROUBLE – and citation. I’m given a list of SHALE GAS COMPANIES, not heavy SHALE OIL players that I’m suppose to check out – and again, no 10-Ks or conference call links.

          I even one time caught you asking another commenter where you can find a certain company’s 10-K report. A real energy investor would have no trouble finding that, and wouldn’t need to ask.

          So sorry, Vangel, but I know you’re a fake. Normally I wouldn’t even give a rat’s ass, but your incessant trolling over the years has gotten annoying; you know it’s bad when the unflappable Mark Perry – one of the most tolerant bloggers I’ve seen when it comes to comments – sarcastically jeers you.

          So in other words, if I catch you trying to monopolize shale oil debates in the future (I won’t do this on the shale gas, which you’re correct about, or other topics), I may pop in and prove to the readers you’re a fake, and not to be taken seriously.

          • You, a self-professed energy investor, incessantly cry scam in the shale oil sector and constantly claims you’ve combed through the 10-Ks and conference calls for proof. Yet…

            When someone asks you for links to 10-Ks and conference calls, you don’t produce them; you say things like “I’ll have to look for them, I’ll cite links if I get time.”

            That is not true. I gave you a number of shale producers and asked you to choose one or to find a company yourself. I also pointed out that I cannot find a single shale company that has self financing operations or a funding gap. How hard is it for you to understand that ALL of the companies in the sector are money losers?

            And here I get this runaround:

            No conference calls or 10-Ks, just an article about SHALE GAS companies – WHICH I’VE TOLD YOU REPEATEDLY I KNOW ARE IN TROUBLE – and citation. I’m given a list of SHALE GAS COMPANIES, not heavy SHALE OIL players that I’m suppose to check out – and again, no 10-Ks or conference call links.</b.

            Gee. I give you a list of the most prominent companies and you say that you know that they are in trouble just as I said that they were. But you claim that there are other unnamed companies that are doing great without listing them. Who exactly is having trouble with credibility here? I cite the data and tell you that there are no good 10-Ks that do not show cash flow and debt problems. You say that is not true but cannot provide a list of any of the so-called good companies.

            I even one time caught you asking another commenter where you can find a certain company’s 10-K report. A real energy investor would have no trouble finding that, and wouldn’t need to ask.

            All 10-K filings can be found with the SEC by going through the investor page. That is known by anyone so I have no idea where you are getting the idea that I could not find 10-Ks? Please cite the comment to show that you are correct. I think that you are either misinterpreting what I write or are making stuff up because you cannot find what I have asked for.

            So sorry, Vangel, but I know you’re a fake. Normally I wouldn’t even give a rat’s ass, but your incessant trolling over the years has gotten annoying; you know it’s bad when the unflappable Mark Perry – one of the most tolerant bloggers I’ve seen when it comes to comments – sarcastically jeers you.

            Let me get this straight. I was pointing out the obvious problems in shale gas and you were citing single wells as indicative of the industry. Now we have seen that the shale gas hype turned out to be a bust and you still think that you and Mark are right? How much capital do you need destroyed before you finally see the light?

            So in other words, if I catch you trying to monopolize shale oil debates in the future (I won’t do this on the shale gas, which you’re correct about, or other topics), I may pop in and prove to the readers you’re a fake, and not to be taken seriously.

            You make up material that is never cited. End of story. Where did I claim that I did not know how to find 10-Ks? Where did I say that IPs were below 100 bpd? The fact is that unless you misread something or there was a typo there was never any posting by me that made such statements. As I said, I gave you a list of the top shale producers and showed that they had negative cash flows and funding gaps. Please do the same if you want to be seen as someone who is not just an idiot or a promoter. And tell me how good Mark is after he does some (or any) analysis of the economics of shale production.

        • “That is not true. I gave you a number of shale producers and asked you to choose one or to find a company yourself. I also pointed out that I cannot find a single shale company that has self financing operations or a funding gap.”

          You gave me a list of crappy SHALE GAS companies. I want 10-Ks and conference call LINKS for large Bakken and Eagle Ford players; you still will not provide these despite endless assertions to other readers that you’ve combed through their 10-Ks and such. If true, provide the LINKS. Noncompliance leaves you suspect; you cannot wiggle out of this.

          “All 10-K filings can be found with the SEC by going through the investor page. That is known by anyone so I have no idea where you are getting the idea that I could not find 10-Ks? Please cite the comment to show that you are correct. I think that you are either misinterpreting what I write or are making stuff up because you cannot find what I have asked for.”

          LOL! After fighting tooth & nail to get any 10-K and conference call links on shale oil players – and failing miserably – you actually have the gall to demand proof from me? Okay Vangel, but I don’t bluff – in fact, I’ll provide two links:

          Bakken1515: “Vangel look at denbury onshore for an example.”

          Vangel: “Where would one find the SEC filings?”

          http://mjperry.blogspot.com/2012/07/nd-economy-so-good-its-like-another.html

          Bakken1515: “Vangel denbury is not private company and as I am a driller on a rig for denbury I can assure you they are not strictly drilling in core areas of the Bakken.”

          Vangel: “The web site shows that the company is active in a number of areas, not just the Bakken. And if you have a link to the SEC filings I have no trouble looking at the information.”

          http://mjperry.blogspot.com/2012/07/americas-new-no-2-oil-state-north.html

          In fact, I’ll even do you one better: I’ll provide the link for Denbury’s 2012 10-K – right from the fucking company’s webpage.

          http://denbury.q4cdn.com/4ca292af-f9eb-42e0-8f7d-d9291a5b8a8c.pdf?noexit=true

          I’ll let you know right now that I’ll link this thread in the future to prove to others you’re not an energy investor – or at least in the form you claim – and that you have not really combed through 10-Ks and such as you brag.

          Seriously, find something meaningful in life to do over sitting behind a computer and trolling internet comment sections. You will not find true, long-lasting satisfaction doing this, trying to live an imaginary existence. Life is too short. You can move beyond this and better yourself – you will be glad in the long run if you do.

          • You gave me a list of crappy SHALE GAS companies. I want 10-Ks and conference call LINKS for large Bakken and Eagle Ford players; you still will not provide these despite endless assertions to other readers that you’ve combed through their 10-Ks and such. If true, provide the LINKS. Noncompliance leaves you suspect; you cannot wiggle out of this.

            Crappy? The last time I looked they were among the most prominent shale players and were touted by the media as great companies not that long ago. The CEOs were on with Cramer and were interviewed by the financial media as if they were some priests of high finance and princes of industry.

            It is now your turn. You go and find any company that you want to talk about in the Bakken and we will look at their 10-Ks. I can’t find any shale company that I would invest in because I see funding issues with all of them. You say there are great companies and I say that they do not exist. Clearly I could not find evidence for the companies you claim are out there and my position does not require that I find them. Since you say that these companies are there provide us with a link to their home pages and we can take it from there. If you can’t provide the evidence my claim that there aren’t any good ones still stands.

            Note that the companies that I provided also operate in the Bakken. They just can’t self finance their projects without selling off bits and pieces of themselves or without diluting current shareholders. That is not a sustainable process.

            Bakken1515: “Vangel look at denbury onshore for an example.”

            Vangel: “Where would one find the SEC filings?”

            I could not find any annual filings with the SEC for Denbury Onshore. The only thing that the SEC provided was the filings for Denbury Resources, which is the parent company of Denbury Onshore. That filing only mentioned Denbury Onshore four times and had no specific production and financial information broken out.

            If you search the WSJ for articles that mention Denbury Onshore you will not find any. It is up to you to provide the links to the subsidiary accounting and filings. As for Denbury Resources, I see nothing to get too excited about in the cash flow statements because it still needs to issue new shares and borrow money to fund its operations even though the company has been around for more than a decade.

            In fact, I’ll even do you one better: I’ll provide the link for Denbury’s 2012 10-K – right from the fucking company’s webpage.

            http://denbury.q4cdn.com/4ca292af-f9eb-42e0-8f7d-d9291a5b8a8c.pdf?noexit=true

            You gave a link to Denbury Resources, which I had already looked at. But you were talking about Denbury Onshore, which has no SEC filings on its own and no key officers listed the last time I looked. Again, you are very confused about what the debate is about. When we talk about shale producers we cannot look at one well or one project unless that is all the producer does. For all shale producers we have to look at the shale formations that are being worked and have to look at the results from all ongoing operations. If you are arguing that Denbury Resources has crappy projects outside of the ones that are worked by Denbury Onshore that is fine. But if that is the position we need to write down the assets for all those crappy projects off the balance sheets. If that happens there would not be anything for the investors of Denbury Resources because whatever is a useful asset will go to the creditors to minimize their losses.

            I’ll let you know right now that I’ll link this thread in the future to prove to others you’re not an energy investor – or at least in the form you claim – and that you have not really combed through 10-Ks and such as you brag.

            Actually, it proves that you have no idea what you are talking about. You are supposedly an investor in Denbury Resources but can’t tell the difference between it and its subsidiary. Had you actually looked at the 10-K filings you would have found them to be provided by the parent company and that Denbury Onshore is not even mentioned. And the filings are not showing that the company has the ability to self finance. It has to sell off bits of itself, borrow, or dilute existing shareholders in order to keep financing its shale operations.

            Seriously, find something meaningful in life to do over sitting behind a computer and trolling internet comment sections. You will not find true, long-lasting satisfaction doing this, trying to live an imaginary existence. Life is too short. You can move beyond this and better yourself – you will be glad in the long run if you do.

            You worry about your own life and let me worry about mine. But when you post on this topic make sure that you know what it is that you are talking about and what others are talking about. There is a difference between a parent company and a subsidiary. And no, the SEC filings do not break out enough information about the subsidiary for anyone to reach a meaningful conclusion. Investing is about looking at the facts, not hoping and praying.

        • Okay, let’s run through this…

          “Crappy? The last time I looked they were among the most prominent shale players and were touted by the media as great companies not that long ago…”

          Please do not purposely take my sentences out of context. Tell me: how many times you counted me cheerleading shale gas players on this thread so far?

          “It is now your turn. You go and find any company that you want to talk about in the Bakken and we will look at their 10-Ks.”

          My turn? You never gave 10-Ks or conformance call links the first time I asked; you don’t seem to grant them period when asked. So far, I’m the only one who’s even posted a real 10-K. The burden of proof lies on you, and it’s still your turn.

          “I can’t find any shale company that I would invest in because I see funding issues with all of them.”

          Then you should have your pick of the litter. It should be like shooting fish in a barrel.

          “You gave a link to Denbury Resources, which I had already looked at. But you were talking about Denbury Onshore…”

          Okay, so I goofed up here. I was taking it you couldn’t find a 10-K and thought it was looking ridiculous given you hadn’t provided any 10-Ks on Bakken or Eagle Ford players; I should have paid better attention to the Denbury name.

          You see? I can come clean and admit my mistakes – not like you.

          “You are supposedly an investor in Denbury Resources but can’t tell the difference between it and its subsidiary…”

          When did I ever say I was an investor in Denbury or that I was an investor period? I’m not the one who’s living a imaginary life. And again, how many times have I TOLD YOU the list of companies you gave me – comprised of major players in the Marcellus, Haynesville, Barnett SHALE GAS plays – are playing an UNECONOMICAL game in today’s price climate? I’m not interested in shale gas because I know it’s uneconomical.

          “You worry about your own life and let me worry about mine…”

          Sounds fair, but if you want to keep living an imaginary life, it’s not going to make any source of unhappiness in the real life go away.

          Anyway, in case you haven’t figured it out yet, I wasn’t interested in playing “last man standing” but rather “last man laughing.” I said I intend to use this thread in the future to show people you’re a fake – seriously, not a single 10-K or conference call link on Bakken or Eagle Ford players? Just an incessant pounding of shale gas players – of which I told you countless times I know are money losers, or drives to push the burden of proof on me when you can’t produce the butter.

          • Please do not purposely take my sentences out of context. Tell me: how many times you counted me cheerleading shale gas players on this thread so far?

            I don’t keep track. But you are missing the point. I provided a list of what the analysts claim are the among the biggest and the best of the shale players. These were the type of companies that Mark was citing when he was talking about the shale gas revolution because they are among the biggest producers of that shale gas. Yet, none of them have self-financing shale projects.

            My turn? You never gave 10-Ks or conformance call links the first time I asked; you don’t seem to grant them period when asked. So far, I’m the only one who’s even posted a real 10-K. The burden of proof lies on you, and it’s still your turn.

            What part of, “there are no companies that I could find that are cash flow positive in the sector,” can’t you understand. If I am right that means ZERO filings yet you want me to find a filing that does not exist. If you claim to have such examples please provide us with links. Let me note that your link to the Denbury Resources filings does not meet the criteria. First of all Denbury makes money from pipelines, selling helium, etc. But even with those it is still relying on selling off shares to finance its operations. There are clear funding gaps that cannot be closed without new debt, shareholder dilution, or assets sales.

            Please show us the links to these great companies you claim are cash flow positive and have no funding gaps for their shale projects.

            Then you should have your pick of the litter. It should be like shooting fish in a barrel.

            You are confused. I have looked through a large list of shale producers and can’t find a single one that is cash flow positive. Most companies are not pure liquids or pure gas players and have other assets. None meet my criteria. I listed the most popular companies among the analysts and the most hyped up in the financial media. All failed the test.

            You claim to have a list of good companies but have only provided us with a subsidiary that has no SEC filings and belongs to a parent that also fails my tests.

            Okay, so I goofed up here. I was taking it you couldn’t find a 10-K and thought it was looking ridiculous given you hadn’t provided any 10-Ks on Bakken or Eagle Ford players; I should have paid better attention to the Denbury name.

            Let me be clear. Anyone can find any findings by going on the SEC’s, EDGAR System. I could not find the Denbury Onshore because it has not filed any annual reports with the SEC.

            You see? I can come clean and admit my mistakes – not like you.

            As soon as you point out an error I have no problem admitting it. There are plenty of typos and misstatements that may mean any one of my postings is wrong. But when you look at them all in context the misstatements are easy to identify and it is clear that what was stated in any one particular post due to the typing errors is be representative of my comments elsewhere.

            You say that I have made errors because you are misinterpreting what I have said.

            When did I ever say I was an investor in Denbury or that I was an investor period? I’m not the one who’s living a imaginary life. And again, how many times have I TOLD YOU the list of companies you gave me – comprised of major players in the Marcellus, Haynesville, Barnett SHALE GAS plays – are playing an UNECONOMICAL game in today’s price climate? I’m not interested in shale gas because I know it’s uneconomical.

            My request is simple. I claim that any company that I give will be uneconomical because the projects are not self financing and earning statements will have to be restated eventually. You claim that I am wrong and that you know of companies that have shale projects that are self financing but have yet to mention them by name. I suspect that you are clueless or are confused by the fact that there is a certainty that we could see a company that only operates one or two wells could be in a core area that is economic. Such companies do not tell us anything about the economics of a particular shale formation which is why if you look at anyone that has a decent land position you would be looking at negative cash flows.

            I have also pointed out that shale oil is also not very economical. As Arthur Berman, who got the shale gas story right even as the media was hyping it up as much as possible, pointed out that the Eagleford shale, is showing annual decline rates that are above 40%. That means that the industry will need to drill close to 1,000 wells costing around $10 million each just to keep the production level from falling not too long into the future. The inability to find the necessary financing to keep running on the production treadmill will come to a big surprise to most people and at that time Mark will have to explain why he, as an economics professor, never looking into the actual financial data and saw what was obvious to anyone with a brain.

            Anyway, in case you haven’t figured it out yet, I wasn’t interested in playing “last man standing” but rather “last man laughing.” I said I intend to use this thread in the future to show people you’re a fake – seriously, not a single 10-K or conference call link on Bakken or Eagle Ford players? Just an incessant pounding of shale gas players – of which I told you countless times I know are money losers, or drives to push the burden of proof on me when you can’t produce the butter.

            Like I said, I provided plenty of links to companies that have interests in the Bakken and Eagleford ares. But you have yet to provide a single company that is self financing and keep acting as those real estate fools did during the housing bubble that they could not recognize.

            I am not interested in showing anyone how dumb you may be. I am simply using these postings to expose how little so-called ‘experts’ know because they failed to open their eyes and see reality as it wish. I guess it did not feel as good or pay as well as living in a fantasy world.

        • “I don’t keep track. But you are missing the point.”

          If you can’t keep track then you have no business being an opponent in a discussion.

          “I provided a list of what the analysts claim are the among the biggest and the best of the shale players.”

          Yup. Big players in Marcellus, Haynesville, Barnett SHALE GAS areas. I’ve been jumping giddily up and down for those companies this who thread. Have you counted all the times I’ve defended them?

          “What part of, “there are no companies that I could find that are cash flow positive in the sector,” can’t you understand. If I am right that means ZERO filings yet you want me to find a filing that does not exist.”

          And what part of “shooting fish in a barrel” did you not understand? Doesn’t help if you don’t keep track of what I say, eh?

          10-K and conference call LINKS, please, not peak oil articles – which you obviously have an abundance of. I’m so far the only one who’s provide an actual 10-K link.

          “You are confused. I have looked through a large list of shale producers and can’t find a single one that is cash flow positive…”

          And I’ve looked through this entire thread and haven’t found a single 10-K or conference call link from you; I’ve never seen you post one ever, even though you have plenty of peak oil articles.

          “You claim to have a list of good companies but have only provided us with a subsidiary that has no SEC filings and belongs to a parent that also fails my tests.”

          LOL! Did I ever say I had a list of good companies? And I’m suppose to be an investor of Denbury – and I’m being accused of being confused? What’s next? I’m auditing your taxes?

          Oh, and that’s right: I’m big cheerleader of Chesapeake Energy and those other big time Marcellus/Haynesville, Barnett drillers. Those darlings!

          “As soon as you point out an error I have no problem admitting it.”

          Have you put up any 10-K or conference call links for the type of companies I’ve requested? Do you still assume I cheer on heavy shale gas players?

          “You claim that I am wrong and that you know of companies that have shale projects that are self financing but have yet to mention them by name.”

          I didn’t claim you were wrong – I claimed sounded suspicious. Plenty of peak oil article links but never any 10-K or conference call links, despite constant hounding to “check them out.” I decided onetime to have you put your money where you mouth is and ask form them; you’ve failed to do that TWICE. Someone onetime asked you the same thing and you told them something like, “I’ll have to look them up. I’ll post them if I get them time.” Nothing ever happened.

          “I have also pointed out that shale oil is also not very economical. As Arthur Berman, who got the shale gas story right even as the media was hyping it up as much as possible, pointed out that the Eagleford shale, is showing annual decline rates that are above 40%…”

          Lots of rhetoric and material from articles, and that’s fine… but where’s the 10-K and conference call beef?

          “Like I said, I provided plenty of links to companies that have interests in the Bakken and Eagleford ares…”

          Yup. Plenty of the 10-K and conference call links for the companies I’ve requested scrubbed all over this thread. Thanks, Vangel, your the best! You’re not like some other guy who wasted my time once.

          “I am not interested in showing anyone how dumb you may be.”

          Yup. You made an ass out of me… 10-Ks and conference call links up and down the thread; those servers are going to blow up from the data overload. You’ve really proven you haven’t found a single self-financing company. Everyone will agree.

          • If you can’t keep track then you have no business being an opponent in a discussion.

            I debate ideas, not keep track of how many times you have said something. The bottom line here is simple. I claim that none of the shale companies that I have looked at have self financing projects that are capable of generating positive cash flows. (Note that this does not mean that there are no one off wells that can make a nice profit in either gas or liquids. I look at projects in fields that involve a bit of acreage.)

            You claim that there are many such companies but have yet to produce any examples. Where you did provide an example it was clear that you were grasping at straws because you provided the name of a subsidiary of a company that had exactly the type of funding issues that I am talking about.

            Yup. Big players in Marcellus, Haynesville, Barnett SHALE GAS areas. I’ve been jumping giddily up and down for those companies this who thread. Have you counted all the times I’ve defended them?

            No, I am just waiting for you to tell us which companies that that have most of their operations in shale you think are cash flow positive. You have yet to give any, which means that you are not as sure of yourself as you are claiming.

            10-K and conference call LINKS, please, not peak oil articles – which you obviously have an abundance of. I’m so far the only one who’s provide an actual 10-K link.

            All the 10-Ks and conference calls in the sector show the same thing. There is no objective evidence that any of the players are self financing. The newer plays do not have a large enough history to show that they are any different than all of the other hyped up shale formations that wound up destroying so much capital and there is little in the way of comfort coming from the per well production data.

            And I’ve looked through this entire thread and haven’t found a single 10-K or conference call link from you; I’ve never seen you post one ever, even though you have plenty of peak oil articles.

            Really? Did you not notice that all of the companies that I mentioned have web sites on which there are investor pages. You can find the presentations, conference calls, and SEC filing on those pages or can skip the companies and go directly to the EDGAR database for the SEC filings. Why is it that you are unaware how to find the information when my 12-year old is more than capable of finding it?

            LOL! Did I ever say I had a list of good companies? And I’m suppose to be an investor of Denbury – and I’m being accused of being confused? What’s next? I’m auditing your taxes?

            It seems that we agree. I claim that there are no good companies in the sector because none are self financing. After days of argument it seems that you cannot locate a single good one either. If you agree that none of the companies have primary shale projects that are self financing then how am I wrong? If you don’t agree, then give us a list of the companies that do not fit my criteria. You may be trying to suck and blow at the same time.

            Have you put up any 10-K or conference call links for the type of companies I’ve requested? Do you still assume I cheer on heavy shale gas players?

            I provided you with a list and a clear statement. You seem to be backing off now because you cannot find a single company that is cash flow positive and can self finance its shale projects.

            I didn’t claim you were wrong – I claimed sounded suspicious. Plenty of peak oil article links but never any 10-K or conference call links, despite constant hounding to “check them out.” I decided onetime to have you put your money where you mouth is and ask form them; you’ve failed to do that TWICE. Someone onetime asked you the same thing and you told them something like, “I’ll have to look them up. I’ll post them if I get them time.” Nothing ever happened.

            How can I say this again; you look at a list of shale producers. All of them have filings with the SEC that you can access through its database and conference calls and presentations on their investor pages. Pick any one and you find the same thing; lots of negative cash flows that create funding gaps that need to be filled by diluting current investors, selling off assets, and adding debt to the balance sheets. I cannot give you a good company because I have yet to find one. If you believe one exists try providing it so that we can look at it.

            Lots of rhetoric and material from articles, and that’s fine… but where’s the 10-K and conference call beef?

            On the company investor pages. Anyone who invests knows how to access the information or to use the SEC EDGAR database (or SEDAR if you are listed in Canada.).

            Yup. Plenty of the 10-K and conference call links for the companies I’ve requested scrubbed all over this thread. Thanks, Vangel, your the best! You’re not like some other guy who wasted my time once.

            Note that you are wasting your own time. You are asking me to provide a link to a good primary shale producer, something that I claim does not exist. At the same time you do not claim that a good producer exists, which seems to mean that you support the position that I hold. And you certainly have failed to find a single primary producer that is self financing.

        • Oh yeah, I totally love companies like Chesapeake Energy, and I loveExxonMobil’s shale gas plays. I’m so glad this is what the debate was about, and that you kept sticking to companies like these. I totally thought shale gas was a winner; I’m so glad you stuck through and made me see the light on this.

        • Murphy S,

          Lots of mudslinging here.

          Me and Vangel had several lengthy discussions
          over shale oil a while back too. At first I thought he was a loser too but he convinced me he was genuine. But after following this thread I’m once again undercover impression he’s faking it.

          He seems to say some strange things. For example, he kept insisting coal methane was most responsible for increases in US gas production where as I disagreed. It took some links and tooth pulling but he cried uncle. What was frustrating was how he kept mixing up shale gas with shale oil, despite my constant reminders.

          I do remember one time him warning another reader how “Americans may be freezing in their homes over gas shortages” in 2
          011. It’s amusing and if I can find the link, I’ll provide it.

          • He seems to say some strange things. For example, he kept insisting coal methane was most responsible for increases in US gas production where as I disagreed. It took some links and tooth pulling but he cried uncle. What was frustrating was how he kept mixing up shale gas with shale oil, despite my constant reminders.

            You have to cite the discussion because I have never claimed that CBM was mostly responsible for the increase unless we were talking about the pre-2003 period when CBM production was causing the decline to reverse. I think that you are confused about what I said but if I have made an error a link to where I have argued what you claim I did would be appreciated.

            I may have brought up CBM when discussing issues brought up by Bill Powers, whose book, Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth, needs to be read by all those who are buying into the shale hype being promoted by people like Mark.

            I do remember one time him warning another reader how “Americans may be freezing in their homes over gas shortages” in 2011. It’s amusing and if I can find the link, I’ll provide it.

            Over the past decade we have seen mild winters in the east and an economic contraction that has left natural gas in storage at high levels. Shale gas is not sustainable and some time in the next year or two the bubble will break. (We have already seen a few companies write down their investments because the EURs were not supported by the production data.) If the US economy recovers as Mark claims and we have more normal winters in the east it is very possible that those at the end of the distribution system will have trouble getting gas and face the same risk factors as Europe is facing.

            While I like to think for myself and do not like to be deferential to so-called experts, I would rather be on the side of Berman and Powers than McClendon and Perry.

    • And those 10-K and conference call links on big time shale oil players were helpful, too. Thanks! I’ll be up for nights reading and listening to those.

  1. Me and Vangel had several lengthy discussions
    over shale oil a while back too. At first I thought he was a loser too but he convinced me he was genuine. But after following this thread I’m once again undercover impression he’s faking it.

    Here is a perfect example of the type of discussions I have been having with people who read Mark’s blog. Note how we are told that companies like RRC, COG, and EQT are a success even when their filings show the need for massive additions of new debt or shareholder dilution by issuing equity.

    The argument at the time was that any company requires debt, which is very true. But that argument was followed with claims that the cash flows will come not now but in seven to ten years. The problem with that argument as the acceptance of a hyperbolic decline rate that is not showing up in the production data. When you expect a $7 million well to produce $12 million but it has only produced $4 million you have a serious problem that will have to show up in the accounting eventually. Those of you who argued for the narrative assumed that the company projections were valid. I did not make that assumption and looked at the actual production data, which was indicating that the depreciation costs were understated by a significant amount. That meant that the companies could show an accounting profits for quite some time but that those profits would eventually have to be written down.

    I have yet to see any of you deal with the actual argument by looking at the actual data and by finding examples in the SEC filings that show that I am wrong. If it is that hard for you to provide a single example of an SEC filing that shows that my conclusions are wrong it may be time to consider the fact that I may be right.

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