Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Ethereum EIP 1559 and Raven Coin - 21st Apr 21
Gold, USDX: The Board is Set, the Pieces are Moving - 21st Apr 21
World Economies Need to Find a Lot More COPPER! - 21st Apr 21
DogeCoin CRASH! Time to Start Mining BOODGIE Coin! Crypto Mania 2021 - 21st Apr 21
Pausing Stocks and Gold Fireworks - 21st Apr 21
Precious Metals and Miners Start of New Longer-Term Bullish Trend - P2 - 21st Apr 21
Looking For A Mortgage Broker? Here Is How To Hire One - 21st Apr 21
Amazon AMZN Stock PRIMEDAY SALE! Trend Analysis - 20th Apr 21
Stock Market Sentiment Speaks: You May Not Believe My 2021 Targets - 20th Apr 21
Stock Market Phase Two Projection - 20th Apr 21
Are Precious Metals & Miners Starting A New Longer-Term Bullish Trend? - 20th Apr 21
Inflation: First the Gain, Then the Pain… - 20th Apr 21
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

An Early Look at Things to Come

Stock-Markets / Financial Markets 2012 Nov 30, 2011 - 06:59 AM GMT

By: Money_Morning

Stock-Markets

Best Financial Markets Analysis ArticleDr. Kent Moors wites: I made it back late Saturday night from my meetings in Germany.

While I was there, the German Central Bank (the Bundesbank) was unable to sell its full complement of bonds... for the first time ever.


That resulted in an immediate market dive in both Europe and the United States. Thus far, investors have regarded Germany as a "safe haven" and the Continent's strength amidst an ongoing debt crisis.

Now fears have emerged that even the strongest of the European economies has begun to feel the pressure.

This sets the stage for a shaky upcoming week of discussions about Spanish and Italian bailouts, the future of the euro, and the eroding power structure in Brussels.

The impact of the credit situation also took center stage during my meetings in Frankfurt.
The topic of my meetings centered on how to fund an expanding number of energy projects in Poland.

Not just any projects, remember, but the exploitation of major unconventional shale gas basins that could literally change the energy face of Europe.

Unconventional gas includes gas from shale deposits, coal bed methane, and tight gas (fuel reservoirs locked in impermeable, hard rock).

As I've said before, access to shale deposits has transformed the North American energy picture in less than five years. Now, Poland has committed to the rapid development of its own shale formations.

In fact, in September, Polish Prime Minister Donald Tusk interrupted one of my presentations to a government commission meeting in Krakow to make this policy announcement! Still, it is one thing to announce an intention and another to see it through.

The Challenge: Making It Happen
In this case, fields need to be identified and geological exploration must take place.

These stages are followed by seismic readings, test holes being spud, data collection and interpretation, pad construction, and well completion. And all this needs to happen before the gas even begins to flow.

At that point, an entire network of compressor stations, processing facilities, and pipelines need to be available for companies to bring the gas to market.

This will likely be the most expensive single infrastructure project ever attempted in Poland. Some of the technology and know-how is already there domestically. But most needs to be financed and imported.

Now some of the work is underway. A few international majors, such as Exxon Mobil Corp. (NYSE: XOM) and Chevron Corp. (NYSE: CVX), along with a range of middle- and smaller-sized U.S., U.K., Polish, and other European companies, are already taking stakes in what should be a high-risk and high-return undertaking.

But while the prospects look promising, this optimism is based on fewer than 10 test wells and very spotty geological data. Most of the heavy lifting will have to be done from the beginning. That means billions upon billions of euros (and dollars, and zlotys, and pound sterling) are required in investment.

And that's where my meetings this past week in Frankfurt come into the picture.

Investment Strategies for a Cash-Strapped Continent
Against a backdrop of an intensified European credit crunch and the absence of traditional investment-generating vehicles, a new approach is forming.

Truly, this is "an early look at things to come."

Most of the necessary funding will come from what will become a staple in such undertakings - structured, closely held companies parlaying private investment into:

•Asset holdings; followed by
•the spinning off of equity issuances as tradable stock.
The first makes use of a considerable amount of capital off the table in Europe (because of the debt crisis) and the United States (resulting from economic uncertainty, concerns over debt contagion from the continent, the failure of the misnamed Congressional "Super Committee," or any number of other misgivings - take your pick).

The second, however, is a much more recent addition.

Following the success of Master Limited Partnerships (MLPs) in the U.S. market and asset holdings similar to them, this approach is now poised to serve as a major stimulus for the Polish.
MLPs control the midstream play in moving gas volume. But companies can adopt the MLP model for anything from lifting oil or gas to refining and processing the flow. As a result, American examples are also present in field operations, production trusts, distribution networks, even processing facilities and refineries.

Here is the interesting part.

In the United States, such partnerships by law are allowed to "pass through" all profits directly to the partners, without incurring corporate taxes. When the partnership, therefore, chooses to issue stock representing a portion of the entity, those shareholders commonly participate directly in profits through rather hefty dividends.

Expect to see similar structures emerging in Europe to fund the Polish energy push. The share issuances will likely be in higher volume capital markets such as Frankfurt, but the parent partnerships will be Polish.

Another opportunity could emerge from this story, too. And it may end up being the most exciting prospect of all.

Balancing Expectations
In the United States, concerns are emerging over excess leaseholds and declining prices for natural gas. Stated simply, there are now deposits that could produce a substantial volume of gas. However, they are currently off-line because that supply of gas would further depress already weak market prices.

These holdings have value, but they cannot be directly utilized until forward production balances stabilize.

I have proposed that such American holdings serve as collateral for European MLP-clones. That would provide a source for investment (based on the book value of the American holdings) while, at the same time, allowing U.S. owners of idle leases to realize some revenue flow from Polish projects.

Once the Polish projects are up and running, the holdings there can become sources of finance for developing deposits here in the United States, and, in the process, serve to balance gas expectations on both sides of the Atlantic.

These days, it seems, just about anything is possible.

I'll let you know what happens.

Source :http://moneymorning.com/2011/11/30/an-early-look-at-things-to-come/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules