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As We Close in on the Alibaba IPO, Here's What You Need to Watch For

It isn’t often that a really “hot” initial public stock offering lives up to the pre-deal hype.

But Thursday’s IPO of China e-commerce heavyweight Alibaba Group Holding Ltd. (NYSE-WI: BABA) is shaping up to be everything the most ardent market mavens have been saying.

Alibaba is on track to become the largest U.S. initial public offering ever.

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  • Natural Gas

  • How a Crude Oil Prices Slump Could Bury these Countries As crude oil prices fall far below $100 a barrel, the trend is affecting the most oil-dependent economies in the world.

    You see, whether we're talking about a country or a company, having a "competitive advantage" is one of the most important principles involved in succeeding in business.

    Just like a company, a country does not want its competitive advantage to diminish as it protects its financial viability and economic future.

    But this is exactly what's happening with Saudi Arabia and other Middle Eastern oil exporting nations. Read More...
  • Natural Gas: Following T. Boone Pickens into the Energy Patch An iconic Southwestern energy patch player, T. Boone Pickens has built a legacy over the decades that proves the old Texas saying: "It's not the size of the dog in the fight, but the size of the fight in the dog."

    In the wild days of the 1980s, made famous by a generation of traders who emulated the likes of Gordon Gekko, few could ever match the Pickens eye for the big deal.

    Never eat anything bigger than your head?.... Pickens never heard that one.

    As the head of Mesa Energy, his first deal was to purchase the Hugoton Production Company - made notable by the fact the company was 30 times the size of his own.

    His thirst for Goliaths continued for decades to come. He once even went after Gulf Oil, which is now Exxon Mobil.

    The point is Pickens has never shied away from risk when he saw reward. And for all his bold achievements there is always less "crazy" there than there seems to be.

    And if you're looking for a guy who knows:

    • How Wall Street traders and Texas wildcatters think.
    • Who can read a geological map.
    • Who can manage a hedge fund.
    • And who can make money in a volatile industry... Pickens is your guy.
    He's the Warren Buffett of the energy patch.

    That's why there is more there than meets the eye in his unique venture into the natural gas market with Clean Energy Fuels Corp. (Nasdaq: CLNE). Pickens is its founder and largest individual shareholder.

    To continue reading, please click here...
  • The Natural Gas Budget Shortfall
    State policy leaders around the country are coming to realize the long-term importance of natural gas exports to the health of their economies.

    They are struggling to pass their 2013 budgets this year.

    The recent low in natural gas prices is doing more than just hamstring production around the country. It's also slashing government budget forecasts due to the loss of tax revenue associated with natural gas sales.

    So much so, that states are predicting steep decreases in revenues through 2014.

    USA Today reported this week that "Energy-producing states are bracing for lower tax revenue from the plummeting price of natural gas, which is just above half of what some states forecast when they put together budgets for 2013 and beyond."

    Low natural gas prices could cost Wyoming $125 million next year, and that the state will likely have to enact budget cuts of 8% for the year 2014 if prices don't recover by then. In Oklahoma, just a $1 drop in gas prices leads to a roughly $70 million shortfall for the state each year.

    It's a rather staggering figure.

    But Oklahoma's state Treasurer Ken Miller states that the "free market" will work itself out over the long term and natural gas prices will rise, particularly as large-scale coal-fired power plants convert to natural gas use.

    More on that in a second.

    As we've said before, the price rebound is inevitable. But we have to look at how we got here and where we're going to make sense of this situation.

    First, the major technological breakthroughs in fracking and horizontal drilling have significantly increased the amount of unconventional resources available around the country. So much natural gas has been produced, combined with an unseasonably warm winter, that natural gas prices have slumped significantly.

    This has naturally affected producers in the short-term, although midstream storage and pipeline companies remain healthy due to their contract structures as value chain suppliers.

    But low natural gas prices won't last forever. Overtime, we're going to see prices begin to rise for four reasons.
    To continue reading, please click here...
  • Natural Gas Reality Check: President Obama Got This One Right In the past two weeks, a maelstrom of emails has been hitting my inbox from concerned readers, investors, academics, and even some prominent journalists.

    What's got everyone so heated?

    It seems a lot of people are concerned, confused, and even outraged over a recent Executive Order signed by President Barack Obama regarding the development of unconventional natural gas formations here in the United States.

    The executive order, issued on April 13, calls for greater coordination in federal oversight of "fracking" - a revolutionary, yet-still-nascent process of extracting natural gas from rock bed.

    Concerns stretched from sector performance questions all the way to the highly alarming and somewhat foolish argument that such an order precipitates a "government takeover of the natural gas industry."

    Now, I'm overly cautious when the government announces any role in business. But when you take a close look, this announcement is actually rather benign.

    And yes, I know it's easy to get caught up in the immediacy or negative impacts of a single act. But in the age of 24-hour media, we usually only hear a fraction of the real story.

    The truth is there's a lot to like here.

    That's why I'd like to take a few minutes today to explore the ongoing developments in this story, set a few eager minds at ease, and explain a few benefits - yes, benefits - of this Presidential directive.

    To continue reading, please click here...

  • Natural Gas Prices: A Timeline for Investors… and State Budgets State policy leaders around the country are going to realize the immense importance of LNG exports to the health of their economies as they struggle to pass their 2013 budgets this year.

    The recent low in natural gas prices is doing more than just hamstring production around the country. It's also slashing government budget forecasts due to the loss of tax revenue associated with natural gas sales.

    So much so, that states are predicting steep decreases in revenues through 2014.

    Click here to continue reading...

  • 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...
  • Good News for Investing in Natural Gas: U.S. Government Approves Sabine Pass Plant That breeze gusting through the streets this morning isn't the sign of a coming storm.

    That's a collective sigh of relief coming from those investing in natural gas companies after a torrid first quarter for the sector. Natural gas prices have collapsed below $2 per 1,000 cubic feet for the first time in a decade.

    And that's not even adjusted for inflation...

    But on Tuesday came the first positive sign in months.

    The U.S. government approved the development of the Sabine Pass plant, the first natural gas export facility in the lower 48 states.

    CNN Money reports:

    "The Federal Energy Regulatory Commission [FERC] voted in favor of Texas-based Cheniere Energy's plan to build a giant natural gas liquefaction and export terminal at Sabine Pass, which straddles the Texas-Louisiana boarder just north of the Gulf of Mexico.

    Although environmentalists have threatened to sue to stop the 500-acre, $10 billion project, Cheniere says it plans to start building before July."

    To continue reading, click here...
  • 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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  • The Truth About $6 Gas, $200 Oil and the Quest for Energy Independence No one needs to tell the average American about the impact of oil and gas prices. If they don't feel it in their wallets every day, they hear about it on the news every night.

    But surprisingly, amid all the rhetoric, there have been no real answers to some of the key questions driving the energy debate... until now.

    Is President Obama truly responsible for high gas prices, and can his opponents really bring them back down?

    What role has Federal Reserve Chairman Ben Bernanke's loose monetary policy played in soaring energy costs?

    Is more domestic drilling the answer?

    Renowned energy expert Dr. Kent Moors answers all of these questions - and more - below.

    Dr. Moors, an adviser to six of the world's top 10 oil companies and a consultant to governments around the world, also talks about the effect political turmoil in the Middle East could have on energy prices in the immediate term and how North America will gain energy independence in 15-20 years.

    Here's what else Moors - a bona-fide energy expert - had to say...

    Dr. Moors on Gas Prices

    Can a U.S. President actually impact gas prices- at least enough to get gasoline back to $2.50 a gallon? Or is this just talk? I don't know whom to believe anymore...

    To continue reading, please click here...

  • 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.

    Click here to continue reading...

  • 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.

    To continue reading, please click here...
  • Start Seizing Master Limited Partnership (MLP) Profits Last week, Kent challenged me to offer you a way to make some money in energy.

    I started scanning the energy and agricultural stocks I monitor, and began combing financials, looking for some undervalued little company about to pop.

    Then I stopped.

    I already knew a failsafe way to ace Kent's challenge. And so do you. We talk about it all the time.

    It's the midstream sector of the energy supply chain, particularly in Master Limited Partnerships or MLPs

    And it's the best and easiest way to make money in energy today.

    I want you to understand the value of these companies that are involved in the gathering, transport, and storage of oil and gas. Not in terms of just how important they are to the industry, but also how important they can be to generating very strong returns for your wallet.

    Because if you're ignoring them, you're missing out.

    Big time.

    That's why today I'm going to share with you one investment opportunity in Kent's Energy Advantage portfolio that is blowing the doors off and making investors a killing.

    And you can join in.

    MLPs: The Golden Age Continues

    The United States is in the early stages of one of the greatest financial booms in its history.

    Technological advances in horizontal drilling have allowed companies to access natural gas and oil resources once thought to be unattainable.

    Upstream gas drillers continue to develop shale deposits in Pennsylvania, New York, Utah, and other states. So someone has to take care of all the gathering, feeder and transport pipelines, terminals, storage facilities, fractionating, and initial processing of these fuels.

    This is what has made Master Limited Partnerships (MLPs) such attractive opportunities.

    These midstream companies make their money by charging transport fees for the fuels they process. And over the past few years, these fees have remained almost constant, even though natural gas prices have dropped considerably.

    MLPs offer investors the opportunity to make profits in two ways.

    • The stock appreciates in value, due to growth in the sector and strong financial returns.
    • The stock pays higher-than-average yields and quarter distributions to investors (otherwise known as dividends).
    The yield benefit is driven by the fact that all company profits are distributed directly to partners and the investors, bypassing corporate taxes.

    And when we identify MLP plays that do both at the same time, that's when we really start to see some profits.

    A 139% Return in Under Three Years

    MLPs are attractive investments. So are the indices that track their overall performance.

    And for the last 18 months, Energy Advantage readers have benefited from growth of one fantastic index.

    The JPMorgan Alerian MLP Index ETN (NYSE: AMJ) tracks the performance of the booming energy MLP sector. Created in 2009, the market cap-weighted index currently pays an attractive yield of 5%, while the underlying share price has doubled in a little less than three years.

    The index offers many of the same benefits of investing in a traditional MLP. The two biggest benefits are those opportunities to acquire a strong yield and to reinvest those dividends into appreciating shares.

    This two-step process unleashes the power of income investing.

    Just how much potential are we talking about?

    To continue reading, please click here...

  • 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 (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.

    To continue reading, please click here...

  • 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.

    To continue reading, please click here...

  • Merger Mania Returns to Natural Gas Today we're going out into the Moroccan desert to evaluate shale gas fields here. It's early morning, and I am now awaiting my "ride."

    They tell me his name is Saad, which means "happiness" in Arabic. Seems a strange name for what I'm still hoping is a Jeep.

    Nonetheless, I have a few moments before he shows up to reflect on my government meetings in the capital city of Rabat.

    This is an impressive city, with large areas of greenery and beautiful gardens. It also boasts one of the largest palace grounds I have ever seen.

    Our meetings dealt with setting the legislative and regulatory agenda for shale gas development in the country. Morocco has been exploiting shale oil for more than a decade, but the gas is new. And it's creating some problems for the existing Oil Law.

    If all goes according to schedule, the first evaluation wells will be spud over the next few months. That means there is little time left, before drilling starts, to establish the production, environmental, and royalty/profit ground rules.

    One thing, however, is already apparent - both here and elsewhere internationally: Having a known volume of gas in the ground is one thing; being able to provide the working structure necessary to exploit it is quite another.

    Without Infrastructure, Field Development Will Languish

    Yesterday I traveled some 1,250 kilometers round trip, between Agadir in the south and the capital city of Rabat (north of Casablanca).

    It's a 16-hour train ride, all told. But the trip would have been much more difficult only a year ago. That's because the new 250-kilometer extension of the motorway between Agadir and Marrakech is barely one year old.

    Click here to continue reading...