Morning Thoughts – Not sure

I noticed yesterday I named the title “holding”. Now I realize I didn’t just hold. I didn’t even say I was holding, I made some changes. Maybe I’m spread a bit thin these days. Part of my reasoning for trying some actual long term positions.

My positions as of pre-market 1/27/21

on with it then…

I added to EOG by 1 share, reduced UNL by 25 shares at $8.1. Then I also added 4 REITs to my positions. It appears only my utilities and 1 REIT are in the green. Barf.

On to Gas… Weather is doing what weather does, swinging back and forth between warmer and colder than normal. I keep seeing missed chances to play UNG or even BOIL/KOLD on these swings. I even have confidence the market isn’t going to go for another huge tumble from here. I’ll will keep a closer eye on this now that I’ve filled the boat with a bunch of equities. All in all, gas is going nowhere, production isn’t really budging, as if producers can afford current pricing. I have heard a lot of news of cutting CAPEX. In fact, drilling activity has increased slightly.

The EIA Drilling report (https://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf) reflects this slight increase. Granted, I would think rig counts are too low to maintain the level of production that is currently flowing. With so many DUCs, it’s hard to tell. Of course, also on the EIA drilling page, there is a DUC supplement to the report, and a quick glace shows DUCs are on a sharp decline.

DUCs by region and the monthly change

This shows that many more wells are being completed that new wells being drilled… I need to see if Ron H. has any charts for the history of drilling and completions. It could be good info to have in order to establish a stance on production in the months to come.

history of DUCs by region at RonHenergy.com

well that was easy… RonH has DUC counts, now if I can find rig counts. I’ll have to ask about this… plus each region produces different amounts of gas, so they will effect the market a little different. This means I would still just be a guessing at best. I’m running out of time.

Drilling doesn’t really mean shit. You want to know how many wells were completed in each region, and the average size of these wells in each region. You also want to know the rate of decline per well so you can estimate how many new wells need to be brought online in order to simply maintain production. Then you can guess as to whether or not production will continue or fall as current well production declines and new wells are or are not being completed and brought online fast enough to maintain the status quo. My guess, without all the data, is that production will be on the decline. It’s more a matter of time. There are still plenty of DUCs for producers to complete and have access to new gas production, but most companies have cut back so much for so long now, we should start seeing cracks in the future of production. If LNG demand continues as this pace, eventually I should be all-in UNL. But when?

For now I’m going to sit tight and search for the data I need in the mean time.

I’m getting pestered about things no one can figure out.

Natgas surplus to the 5 year average at EIA Natgas Storage Dashboard

Good luck

Oldinvestor

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