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We'll Tell You When It's Time to Tap Tesla

A week ago today, in a strategy story aimed at helping you survive and thrive in today’s whipsaw markets, Chief Investment Strategist Keith Fitz-Gerald told us to put Tesla Motors Inc. (Nasdaq: TSLA) on our “watch lists” for a likely future purchase.

“BP, Tesla is a definite ‘shopping list’ stock,” Keith told me back then. “We’ve been nibbling at it here, and have played it successfully several times. But it’s not yet at the point where I’m ready to jump all the way in. I think my rationale behind Tesla remains upbeat. I mean, you’ve got a real winning combination here – a disruptive sales model, a CEO who’s the most innovative guy on the planet, all the capital in the world that can be brought to bear. I don’t give a rat’s [tail] that New Jersey won’t let the company sell its cars there. There are much bigger opportunities. Wait ’til you see what the company does with China.”

Sometimes I think Keith has a “crystal ball” in his hip pocket…

  • Featured Story

    Why T. Boone Pickens Likes These Natural Gas Companies

    Legendary investor T. Boone Pickens has been called the Warren Buffett of energy investing, and over the years he has built up quite a legacy.

    From his days as a wildcatter drilling in unknown oilfields, Pickens went on to start his own oil company, Mesa Energy, take on the likes of Exxon Mobil Corp. (NYSE: XOM), and manage a hedge fund, BP Capital.

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  • Why Britain is Looking to U.S. for 20 Years' Worth of LNG pipes

    With its domestic natural gas reserves nearly depleted, the U.K. is turning to a U.S. company to supply enough liquefied natural gas (LNG) to provide energy to nearly 2 million British homes for 20 years.

    The $15.1 billion-plus deal between Houston-based Cheniere Energy Inc. (NYSE: LNG) and Centrica, a British energy firm, marks the first time Britain has ever imported natural gas from the U.S.

    The deal has big implications for companies involved in the flourishing U.S. shale gas industry, in which gas is extracted through hydraulic fracturing, or fracking.

    You see, fracking has led to an abundance of natural gas and will go a long way toward making the U.S. a net exporter of energy instead of a net importer in the coming years.

    That, of course, will be a big boon to natural gas companies that export LNG.

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  • Why Japan's Desperately Seeking U.S. LNG Two years after the Fukushima nuclear disaster, only a few of Japan's 50 nuclear power plants have been restarted. The island nation is increasingly turning to liquefied natural gas to supply its huge energy needs. Here's what this mean for the LNG industry. Read More...
  • Why U.S. Natural Gas Companies Are Looking Forward to 2014 Natural gas companies in the United States hope the worst is behind them.

    In 2012, natural gas prices plummeted to a two-decade low at below $2 per million BTU. This meant U.S. natural gas lost 87% of its value over a six-and-a-half year period. The low price was thanks to a glut of gas due to newer drilling technologies such as fracking.

    But there is hope for a brighter future on the horizon for these companies.

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  • Natural Gas Companies: The Latest Must-Know News Natural gas companies watched their stocks tumble earlier this year with the price of nat gas, but some share prices have successfully reversed course.

    Now natural gas prices, which have recently bounced around the $2.80 level after hitting a ten-year low in April, may be ready for another move up.

    The fall in prices - from a high of $10.38 per million British thermal units (BTUs) in July 2008 to just $1.83 in April of this year - was primarily the result of a decade-long increase in U.S. gas production, which climbed by 21.6% from 2002 to 2011.

    Now inventories are growing much slower and demand is increasing as electric utilities switch to natural gas from the more expensive coal. Other potential catalysts such as the weather, e.g. Hurricanes Debby and Isaac, could also send prices higher.

    Natural gas prices rose more than 6% in the past week to $2.85 per million BTUs.

    A rise in prices though doesn't guarantee a rise in all natural gas stocks, as there's a lot more than a price reversal happening in the industry.

    For investors interested in natural gas companies, here's this week's wrap-up of what you need to know:

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  • Natural Gas Companies Enjoy Price Climb Ahead of Earnings There's not much to love about an ultra-hot U.S. summer - unless you're investing in natural gas companies.

    The record-breaking temps (the U.S. is on pace for its hottest year ever) have made the country crank the AC, lifting natural gas prices and stocks.

    "Hot weather forecasts and elevated cooling demands continue to provide a boost to the market," Addison Armstrong, director of market research at Tradition Energy, wrote in a research note Tuesday.

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  • These Natural Gas Companies Found the Next Energy Hotbed Natural gas companies have struggled as the fossil fuel's overabundance in North American shale formations has led to decade-low prices.

    But don't expect those cheap prices to be around long.

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  • These High-Yield Natural Gas Stocks are Cheap Buys Cheap natural gas has made this a year for price pullbacks among natural gas stocks and related investments.

    Look at United States Natural Gas Fund (NYSE: UNG), the exchange-traded fund following the price of the fuel. In July 2011 it was selling for over $45 a share.

    UNG hit a 52-week low of $14.25 on April 19.

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  • How Natural Gas Companies Could Save You 25% on Fuel Thanks to new developments from natural gas companies, fuel costs might soon be falling by as much as 25% for some individuals.

    Royal Dutch Shell PLC (NYSE: RDS:A, RDS.B) plans to spend $250 million on a liquefied natural gas (LNG) plant and filling stations in what is the biggest single investment yet in making frozen gas a transport fuel.

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  • Natural Gas Game Changer: The U.S. Paves Way for Sabine Pass Last week, natural gas prices fell below $2 per 1,000 cubic feet for the first time in a decade. Let's talk about what that means for you, as an investor.

    The oversupply of natural gas continues to swell thanks to breakthrough technologies in fracking and horizontal drilling that "unlocked" this huge swath of energy. Tack on that local U.S. demand has been limited by an unseasonably warm winter, and you get the unsurprising dip in gas prices.

    Meanwhile, in Europe, prices are near $11 for the same quantity, and $14 in South Korea, an important hub to the Asia-Pacific markets.

    But with no (legal) way to... Read More...
  • How to Play Decade-Low Natural Gas Prices Natural gas prices remain below $2 per million British thermal units, the lowest level in 10 years. Prices will likely remain depressed for a while, but cheap natural gas now means great opportunities for long-term profits. Money Morning Capital Waves Strategist Shah Gilani joined Fox Business' "Varney & Co." to share two of his favorite picks to play natural gas prices. Just watch this video to hear why Shah thinks these stocks are "Buys."

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  • Natural Gas Companies: A Contrarian Bet on Higher Prices The decline in natural gas stocks has been anything but natural lately.

    With ample stores and cheap prices, natural gas-related equities have taken a beating and continue to be battered.

    While it is always difficult to call a bottom, the tide may be turning for natural gas companies despite the latest data.

    The price of natural gas fell again last week after the government reported an unexpectedly large increase in supply. To date, natural gas prices have slumped to levels not seen in 10 years.

    Recent Energy Information Administration (EIA) reports reveal that the energy industry continues to deliver gas at a faster rate than Americans can consume it.

    U.S. supplies grew by 42 billion cubic feet in the week ended March 30, pushing the country's total supply to 2.5 trillion cubic feet. According to Platts, a premier source for energy prices, industry analysts had expected supplies to grow between 33 billion to 37 billion cubic feet.

    With natural gas stores bursting at the seams, some of the nation's largest producers have announced plans to scale back production.

    Jen Snyder, head of North American gas for research firm Wood Mackenzie told the Washington Post, "There hasn't been enough demand to use all the supply being pushed into the market."

    Where prices go from here depends a great deal on the weather.

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  • How to Profit on the Natural Gas Surplus The recent mild winter and the unparalleled potential in new shale gas production have combined to result in a depressed pricing market for natural gas.

    The rise in demand for everything from electricity to petrochemical feeder stock, liquefied natural gas (LNG) exports, and even usage in vehicle fuels, will start driving that price up over the next two years.

    You already know that, of course.

    We've talked about it many times before.

    But now there's something else on the horizon that is likely to provide a boost to investor prospects even sooner.

    Utilities, one of the main beneficiaries of the gas boom, are moving to capitalize on the accelerating transition in power generation.

    And in the process, two important trends are emerging that will be of interest to retail investors.

    First, the low current prices and the prospect of rapid increases in extraction rates, if the market warrants, are allowing electricity managers the opportunity to plan for multi-year cost projections.

    That, in turn, is propelling the intensified replacement of aging capacity with new gas-fueled plants.

    As Pacific Gas & Electric Co. (NYSE: PCG) CEO Tony Earley noted this week, infrastructure investment becomes a priority when projected fuel prices are low. The system has to be upgraded and replaced in any event, as large segments of it reach the point of "retirement."

    Earley also has advanced the idea that the power industry needs to speak with one voice in its dealings with regulators and policy makers.

    This need for solidarity has been reflected in comments from other leaders in the power industry as well.

    As policymakers increase capital expenditure spending in infrastructure replacement and expansion, we are also likely to see a renewed interest in developing a consensus on where the next "generation of generators" is going to be moving.

    And one of the drivers coming onto the scene moves right into familiar - and profitable -territory, at least for us.

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  • The Natural Gas Act: Another Washington Boondoggle With gasoline fast approaching $4 a gallon and heading toward $5 this summer, it's no surprise that politicians are panicking.

    In Washington D.C., everything is an emergency. Legislation is always the antidote.

    So now politicians are pushing the Natural Gas Act as a solution to high gas prices, rather than allowing the market to work.

    Of course, none of them want to take the time to understand the true reasons why gas is going to $5 a gallon.

    That would require a basic understanding of business or economics, something few in Congress seem to have.

    Instead, what you can expect is the typical Washington response-a task force to investigate speculation in the oil futures markets.

    U.S. President Barack Obama announced one last week without recognizing the futures markets actually improve liquidity and oil production certainty.

    It's how Washington works. The Natural Gas Act is just more of the same.

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  • Natural Gas Q&A: Lies, Damn Lies, and Statistics It has been a while since I responded to your many emails.

    So, as we await the latest developments in the European debt mess, today seems like a good time to answer a few. This time around, I am addressing some of your questions and comments that deal with natural gas.

    By the way, my staff and I read all of the input and feedback you send our way, and we're very grateful for it. Please email me at customerservice@oilandenergyinvestor.com. (I can't offer any personalized investment advice, but I can address your questions and comments in future broadcasts.)

    Let's get started...

    Q: I've just read recently several articles stating that the EIA has revised downward its estimate of our natural gas shale reserve potential by deciding to accept, unconditionally, the most recent U.S. Geological Survey stating that the Marcellus, Eagle Ford, Barnett, and other shale formations hold only 20% of the heretofore accepted reserves. This is an 80% reduction! This changes everything if true.

    That's the question - is this bogus, or is there factual evidence to conclusively support this new estimate? ~ Howard B.

    A: Howard, this reminds me of a famous statement from the 19th-century British Prime Minister Benjamin Disraeli (though the comment is also variously ascribed to Mark Twain, Alfred Marshall, and many others): "There are three ways to hoodwink the masses - lies, damn lies, and statistics."

    The Energy Information Administration (EIA) - a unit of the U.S. Department of Energy - continues to wrestle with the distinction between reserves and extractable reserves.

    The first is the volume of gas indicated by field tests and analysis. The second is gas available for extraction at current methods. I would also stipulate as "extractable" reserves only the volume that market conditions allow.

    When you equate the two, we are still in the same ballpark.

    Current estimates put no more than 20% of known reserves as "extractable." As technologies improve, that figure could improve, too.

    For now, the EIA estimate falls in line with most others.

    So to answer your question, nothing much has changed here, aside from some government bureaucrats wanting their figures to be more accurate.

    Q: Kent, your work appears to be expanding into areas of advisement that could affect the future profitability and wellbeing of nations and their business relationships with existing partners. A delicate balancing act if there ever was one! If such arrangements are not handled carefully, could sanctions and/or military skirmishes be the outcome? Are we facing the possibilities of "gas wars"? ~ Fred P.

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  • Double Your Profits in the New Age of Natural Gas I recently got an e-mail from one of my Oil & Energy Investor subscribers, who posed a very interesting question. Take a look:

    I bought a nice position in Cheniere Energy Partners LP (AMEX: CQP). It is not clear to me if they are in a position to benefit earnings-wise from future expansions of the business. Is a future dividend increase in the cards?
    - Harry M.

    The broadening initiative to export liquefied natural gas (LNG) from the U.S. to Europe and Asia has put a few companies in the spotlight.

    Cheniere is certainly one of them.

    Actually, we are dealing here with two tradable securities - Cheniere Energy Inc. (AMEX: LNG) and Cheniere Energy Partners LP (AMEX: CQP).

    With Cheniere, we have both the company pioneering the LNG exports (Cheniere Energy), and the partnership controlling the company's Sabine Pass terminal on the Gulf of Mexico at the border between Louisiana and Texas (Cheniere Partners).

    As my Energy Advantage advisory service subscribers will tell you, we're always discussing the new age of natural gas. This includes the impact LNG trade will have on profitability, and the position of Cheniere in this process. And Cheniere Partners is just one of the high dividend/high return stocks I have identified for them.

    Lucrative LNG

    As you probably already know, LNG is a major remedy for the accelerating glut of American and Canadian unconventional natural gas production, which runs the risk of oversaturating the market and depressing prices.

    Exporting the gas, on the other hand, taps into widening international demand and carries the prospect of actually improving profitability for gas producers in North America, even while the domestic need for the energy does not keep pace with rising supply.

    In so doing, U.S. and Canadian producers are simply paralleling developments already in place in Australia, New Guinea, Russia, and above all Qatar - the first dominant gas producer in the world to commit all of its exports to LNG shipping.

    This worldwide trend has transformed the LNG trade from import to export.

    As recently as five years ago, we were still talking about importing more LNG into the United States, as conventional production declined.

    Now with shale gas (along with coal bed methane and tight gas), the unconventional sources provide more available gas than we ever imagined.

    The issue now is how to export the surplus gas.

    Enter Cheniere's Sabine Pass terminal.

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