Morning Thoughts – Oldinvestor

It won’t be long and LNG will be a 6Bcf/d+. Freeport and Corpus Christi are pushing exports higher and as soon as Sabine Pass and Cameron come back online, within a week or so, LNG will be consuming 6Bcf or more. There are boats at Corpus Christi and Freeport now and none still at Sabine Pass or Cameron.

Production is holding at 88Bcf/d and has only dipped below this for a moment. If drilling and completions continue to lag, this will slowly decline, but pricing is coming back slowly as well, and the cycle will start all over again. There never seems to be a lack of money to throw at this greedy industry. No doubt it’s going to take a while (maybe a year or more) to swing to an oversupplied market again, but it will happen.

One more consideration is Canada. There was a time the US imported more than 10Bcf/d from Canada. We currently import closer to 5Bcf/d, but this could get back to 10Bcf if there is a need and if there is pipeline capacity to support this.

Weather? What’s that? With all the drama with LNG and production, weather has taken a back seat. Also I saw that South Central storage didn’t had a draw in Salt, and a small build in non-salt, I believe. South Central may not make it to the 95% of capacity I was hoping to see before winter gets here. Production in the area is just too weak, even with LNG exports at lows.

UNL – 50% in from $7.4 and holding

BOIL covered puts – I rolled up on my 50 strike put for 3/19/21 expiration to 70 strike

BOIL covered puts as of 9/3/20
Covered Put P/L and changes

You can see I’m still short the same shares in BOIL from the same terrible prices; I simply rolled from a 50 strike to 70 strike and added $15.5 in premium to the trade to offset my protection. And I now have a potential to make $600 max gain vs the $1000 max gain before. But the price of BOIL just needs to get/stay below $70/share by March 19,2021. I feel much better about this trade. I hope to have the patience to sit on the trade through winter. This will not be quite the gain I was hoping for, but I may also get the opportunity to exit the put and hold the shares to ride back down for additional gains. I’ll cross that bridge when I get to it. Cheers to patience. May we all have a great weekend.