I think this week may be a wash for me, as I might nibble on some quarter positions for tranches here and there in the miners, but this week I wanted to research some natural gas in my spare time. I know ZERO about the sector. Not a good start, huh? I spent a year deep diving silver and learning all I can about it, very much so in the weeds to then determine nuanced supply and demand factors. Gold I know about with mining, but I’m much, much, much stronger on silver. This might be where I want to get in with $5,000, get out with $9,000 and call it a nice trade – OR stumble across some long term horses I can hold.

While I still hold that silver will moonshot to stupid high numbers, at some point, I want to try and pivot from my silver/gold holdings, at times, to play other things. I am highly interested in:

  1. oil
  2. natural gas
  3. copper
  4. uranium
  5. solar
  6. Car companies (as a technical play)
  7. battery metals (as a basket. I don’t want to hear about endless lithium companies, I like the ETFs/royalties here. Tried listening to a lot of podcasts on lithium and nickel and it just was not compelling to listen to)

I love silver the most because of all of the commodities, this one still has not hit its 1980s high. I believe this is the most stretched commodity on the planet from the inflation-adjusted mean of commodities, and it will have its day.

But that being said, Steve St. Angelo talks about energy problems about to happen in the next 10-15 years or so with peak oil. My buddy got me in on an oil exploration company, 88 energy, but to me, it is an endless dilution vehicle and a stock run by hype and not anything meaningful. In fact, what I fear is a lot of these are momentum plays with a lot of hype and very little substance. This is where my trepidation comes in to chase any of these. But it’s plain to see with natural gas, we are having an issue. This could mean stupid profits coming up when prices need to get janked up with high demand and little supply. While many told me I may have missed the boat, Oliver made a bold prediction that $9 natural gas is coming this winter, and being at $5.50 now – this is a nice move yet to make I want to play on. Maybe I take a $2,000 position in a company and get a 50% return and I’m out. Hustled for $1,000. I’m ok with that for some quick research.

With copper – this also may have some pullbacks with a struggling economy. I may not want to force it now, but I have Rio Tinto for my son, and I had a gold miner that also had a massive amount of copper upside. So some of my gold/silver items I like, may have an upside of copper. For example – Newmont has a massive silver upside, but Barrick has a major copper upside.

Uranium – I had UEC, CCJ, URA, URNM, and ISO 15 months ago. Held them for like 4 months. Zero move. Got rid of them. I’m an idiot. ISO went like 6x. While the uranium story is FAR from over, to me I felt like there’s a LOT of front running happening and then SPUT came out to justify the front running. I feel like there will be a strong pullback with these as a lot of profits are taken over perhaps 6 months – but what the hell do I know? This is a spastic industry, so it’s possible it can go hockey stick from here. Rule seems to think this is WAY ahead of itself – and to me, this smells like gold and silver in July 2020 where the juniors were bid WAY up, and the last 12-15 months washed out a lot of that.

Solar – I need to understand the big players here, because most people don’t grasp as energy prices rise, this becomes more appealing. Today, to get this to work, you need government subsidies. With 2-5 years of inflation of energy costs, this might become a hell of a lot more palatable.

Car companies – Tesla is at 349x P/E ratio, has more than 50% of all market cap. I was looking at electric cars but I have a RAM 1500. Stumbled across the Ford F150 lightning. I believe this truck is a game changer for Ford and I believe their stock is about to hockey stick with this. It might have 150 kWh storage? My two powerwalls will be a combined 27 kWh. This apparently then can power your home in a grid down scenario for up to 10 days? Holy Jesus. THIS to me is a game changer for Ford, and this technology may take a lot of Tesla market share over the next few years. The F150 is THE best selling auto in the US for 44 years. Not pickup. Auto. Now imagine you get buy in here? The price is $39,000 for the commercial model, which has 11 outlets and allows you to use tons of power tools from it with the giant battery. I saw a suggestion on a video that Ford should work with Home Depot and Lowe’s to put charging stations there. Genius. The range of the “full” version is 300 miles, but that’s with a 1,000 pound load – if you are just driving it back and forth to work, the video I watched suggested you might get a range of 480 miles from it. IF that’s the case, it’s compelling to me TODAY. I am considering waiting on this, to perhaps Q1 2022 to see how some of this with the market boils out. Ford P/E ratio is at 23x the last time I looked, but if the economy is due for a 10% pull back in the next 8 weeks, I can get in on that cheaper.

Battery metals – with my whole thesis of HOW we might defeat the energy cliff issue, I like the idea of chasing battery metals ETFs. In this case, I’d like the experts track down the best nickel and cobalt out there. I don’t have bandwidth for all of this. And with newer battery tech, they may get away from cobalt – and I don’t want to be 10% in a cobalt producer. I want their people to do this research and I play this. This may be also how I play uranium with URNM, as I don’t like the idea of having to research 800 uranium companies.

With this – I got some responses I wanted to look into for my natural gas requests…

Gas –

  • Cheneire Energy – “A play on the arbitrage between US and European/Asian natural gas prices. They’ve been taking advantage of spot market volatility to lock in long term supply contracts at favorable pricing.” @JG_Nuke
  • “Tellurian $TELL with an interesting project in Louisiana. The other is Crew Energy $CWEGF located in NE British Columbia. Excellent potential for growth”. @crunchy_canook
  • “Ng energy in Colombia ramping up and new wells coming. Read wiki on ceo.ca” – @cdeluhery
  • “Energy newsletter would be @ericnuttall. $SHP.ax is my potash fertilizer fav and $gasxf (NG energy) for nat gas.” – @kilo74854455
  • $CTRa $EQT (best pick right now) and $COp for natural gas $MOS and $NTR for fertilizer I called out these plays back in august but nobody listened to me then, fertilizer is better now, nat gas season will be ending soon best to buy in summer” – @Gbear55608436
  • “XOP has some nat gas stocks in it, and we’ve looked at WMB and EQT as well as the FCG nat gas ETF. Not recommending, just letting you know what we’ve analyzed before.” – @Oliver_MSA
  • “Crew energy just reduced their operating costs by 18% and became a pure play nat gas company. I believe they are also held on the XOP but double check that.” and “Plenty of room to go. Just getting started.” and “From what I understand fertilizers Wil have much higher input costs that will drastically effect their profits going forward. Something to be mindful of. My play would be mosiac.” and “Cwegf just reduced their operating costs and dropped their non nat gas assets. Great move imo” and “I see nat gas increasing through late December early January and even still picking up more next year.”. @Redwolf8888
  • “Most small deep value natural gas stocks have been acquired or destroyed.” – @2020Upstream
  • “Suggest you look into Tellurian” – @jembma
  • $BLSP if they ever become current again” and “I’m also heavily in $KWBT, but also they are not tradeable at this moment.” – @RandomD42250410
  • “Nate…. Start looking at @abaxx_tech from gold community’s own @JoshCrumb Start here from @James_Duade https://youtu.be/Tgjal_81P7s Then search @MacroVoices for Abaxx content. @currtism22
  • “For fertilizers, I hold $MOS, $IPI and $BG, thanks to @badcharts1. For natural gas, I just bought $GASXF, thanks to @drjimjonesceo.” – @DavidAnon8
  • “Luke and James’s 2021 Q3 Abaxx Review. Initially aired live on Twitter S… https://youtu.be/TAExXUE6eXM via @YouTube Also a good listen” – @flashrose52
  • “Look at EPSN. Small cap nat has with huge insider ownership, great assets and a focused management.” – @scottbedford

Where to start?

The above is a LOT to digest!! Where do you start with this? I can’t just throw a dart at some of these and throw thousands in to them? There are some lessons I learned with gold and silver mining. Jurisdiction, teams, and resource.

Furthermore, if I’m a generalist, perhaps I invest in the GDX or GDXJ? I am thinking I might go the path of that above. There’s a few to look at here

  1. URNM for uranium
  2. XOP
  3. FCG

For individual gas companies, I see Tellurian (Tell), NG (gasxf), EQT, and crew energy (CWEGF) mentioned a few times. I think I’m going to stay away from fertilizers, as I know even less about that, but it does stand to reason if the input costs on that go sky high with nat gas, this pushes the product price up but MIGHT squeeze margins if people buy less of it.

Let’s see if we can find what companies are in the XOP and FCG ETFs? These last two MSA looked into, and are not recommending – but this at least tells me who some of the major companies are?

The XOP seems to be SPDR.

This looks to have a lot of the majors in it. I like it. If one of these has an oil spill or accident, it might ding a little, but not hurt the whole of my investment.

When looking at the charts, this looks a bit frothy.

However, if you zoom out and look at the weekly charts – the weekly is still frothy, but take a look at the peak. That’s a 3x from here?? Wow.

What about FCG?

These have a lot of the same names as XOP, but different ratios. I see TELL in this one. Let’s look at the charts.

This chart’s RSI cooled a bit, but this looks like a 6x since May?

When looking at the weekly, goes back to 2008…

What strikes me as troublesome was this was $3 something a few months back and $160 at its high? Dear god. That’s a what, 40x loss if you held?

Even the XOP is up 3x from a few months back. From its peak to its trough over the last few years is a 10x down.

For the FCG, the highest contributor here is Conoco Phillips (COP) listed above by someone as their company pick. Let’s look at that chart.

Look at those waves. Looks to be near a high with resistance and at a peak. Look at that RSI. Don’t want to chase this thing, and if it makes up 5% of FCG, I don’t want to ride the wave down.

So with the ETFs, I’m looking at XOP over FCG just to minimize volatility. However, this looks to be more of petroleum play than a nat gas play. I think I may take a full position in XOP just to hold for quite a bit – but after the holidays.

With the companies, I just looked up NG energy in Columbia, the GASXF. Ouch. I’m not going near this. Maybe it’s a great turnaround story. Don’t know. Might be internet hype. I’m not a fan of Colmbia for business, as there was a miner there awhile back I had for a cup of coffee and got out. What strikes me is this chart. It has doubled in the last 6 months, but I don’t know anything about this company other that it got the shit beaten out of it. Some talked about newsletters above, I’ll check them out – but just looking at charts, this is a HELL NO.

TELL here has been around for 30 years of charts and was much higher, and it’s been in steady decline since a sharp drop in 2017.

RSI around 50. Lots of upside but I do see a bit of a down trend line that looks like it might have met resistance. There’s an up trend line as well and we might have some triangle fun here.

I cannot tell you which way this will break, but this at least has my interest for a further look.

But what do they do? They are in the FCG, are these guys oil producers?

Hmmm….nat gas. That’s what I’m looking for. The charts I have for them go back to 1973, so it’s not like these guys are new to the game. They have a turnkey LNG project and pipeline projects. My “gut” here is telling me IF we run into a LNG crisis here in any way, these guys might be part of the solution.

So let me check their 10-k for annual report. Let’s see how their finances look? It looks like they have $64m in debt and $37m in revenue. These guys are not Exxon type players, is my first reaction. I later found a list of the top 15 natural gas producers, and to put it into perspective, the 15th largest had a market cap 30x this and revenues 100x. However, TELL seems to have losses per share the last few years. Total shareholder equity looks to be about $109m market cap – Etrade has them at a $1.2b mkt cap – so not a small company, but not a $40b Exxon. It was $167m at the beginning of 2020, but we also saw what Mar 2020 did to everything. It looks like they had $13m of positive cash flow, but it seems they issued $103m in stock, and we might be seeing share dilution as the reason a lot of this is having problems. They also borrowed $50m. This seems to me the equivalent of a junior miner company when you compare it to the big boys.

What I see from them is a nice project that could be a huge benefit to them and the pipeline which might be nice. This might be a decent play for the winter for gas sales if gas hits $9, but I also like some of the long term prospects cooking with their massive gas project. It says turnkey, so if we are running into some nat gas issues here, perhaps these guys build?

This seems to be a high risk play here, and I think I may take a half position on Friday after the jobs report. Maybe buy a quarter today and the rest after the jobs. To pay for this, I think I’m going to get out of my full position of 88 energy to then speculate on another as well.

My guess is this year could be a good year for natural gas sales? It might be too small for you to see, but last year they had $30.4m in natural gas sales and $7m in LNG sales. This is about 100x smaller than the revenues of EQT.

So – this could be a bust for me, but so far my best lead. Before I buy, I want to check out some of these newsletters to get their take? I also want to read through an investor presentation for TELL because I want to see why this has been in a massive decline since 2015.

Next up is EQT – this was the 15th largest company on the list I mentioned above, so I think I might lean in to this a little more.

When you go to their site, this pops up…

THIS is kind of what I was looking for. If gas prices DO move up 80% in the next 3 months, these guys could move up a lot. Let’s check their charts.

This is interesting…

If you look at a lot of companies above, they look mired in a downtrend of sorts, but if THESE guys are THE largest natural gas producer and the other companies are perhaps more oil-based, it might show why these guys hit the bottom with others in March 202, but they look to have beaten the trend. RSI is friendly, it does not appear over-stretched on the weekly. Been around since 1979. One of the big boys. I found this in the FCG index above, then went to the SPDR site to download all holdings in the XOP and found a 2% weight to EQT. So if anyone buys either of those ETFs, they are buying EQT shares. I like.

This checks all the boxes for me, with the advantage they are located in my state and 3 hours away. This might be my entry for gas from a larger position. This was also one of the companies that Oliver looked into. He did not recommend. My point is it was on their radar. They may have had reasons to buy or pass, but this was not part of the discussion.

Last up is Crew energy mentioned by some. I did not see this listed in either ETF. This tells me it’s a smaller market cap. Let’s see what they do…

Listed as CR.TO on their page, so looks to be Canadian? These guys on the charts for the OTC only go back to 2012.

Like many of these companies, they have trends down to March 2020 and all seem to be making their way back. Look at that crazy RSI a few weeks ago???

A year ago, these guys were $.36, now $2.55? That’s an 8x or so in a year? WTF? Looking at their finances, I see something I don’t have a risk tolerance for, in a 3-4 month trade…

I’m seeing a loss of $203m and only $137m in sales. Obviously 2020 sucked for a lot of people, but in 2019 the sales were only about 33% more. But in 2019 they made $12m and in 2020 lost $203m. Then, we look below at total debt of $357m. $296m in senior unsecured notes?? What rate are they paying? $35m bank loan?

So ok – 2020 sucked, so let’s just check the most recent quarter, as the charts went up 8x. Is it justified? I don’t see how you pay that debt down, but let’s look.

6 month sales of $154m? That’s on pace for a $308m year? OK. Interesting. Let’s look at what else though. During that time, over Q1 and Q2, they lost another $21m? Debt now is at $373m?

This company might have some projects coming up or a lot of hype or something, but an 8x move in a year? This is too rich for my blood. I’m out.

Conclusion

I think I’m selling my $2,000 in 88 Energy this week. I want to kick the tires on some newsletters and research out there to see if my thinking is on straight. I then plan on putting $1,000 in TELL and then $3,000-$4,000 in EQT. While I’m looking at a play through winter here, both of these might be of interest to hold longer. TELL is on the smaller side, and EQT is a mammoth. TELL could be something that goes 5x over a few years, and EQT might have a solid 20-40% move on much higher prices, and is less risk.

I want to also look into some of these newsletters and grow my understanding of these industries to maybe add a few more positions. I didn’t even understand the measures of energy or how much they produce relative to their peers. Planning on researching that. I could list off a lot of silver and gold miners and their production equivalents, but I don’t know this about natural gas. What I do NOT know about this sector I could fill a library with. Based off of the suggestions I got, I think I have two solid investments – pending more due diligence.

My next ask will be on Uranium. Lots of fan favorites out there, but I hear there’s a lot of juniors that may never produce one pounds. Many of these charts are broken to the upside and may have $60 uranium already baked into the price. What I will be asking about are the best companies, the best juniors, and who are the best analysts and newsletters out there. The Silver Chartist covers some of these – but in his portfolio most of these made 200-300% moves.