fear of fracking

[moneyisfornothing]

I bought a tranche at 5.50 - tough pill to swallow for sure.

I may try to buy some more if it falls further in the 5.00-5.25 range.

There is definitely value here - I don't know if this management team will unlock it but I know someone will at some point in the next couple of years because they are so far ahead technologically. Forget North America - there are huge unconventional oil plays in China and Europe that will be amenable to gasfracs. There are huge international plays in the desert where water trucking will be prohibitively expensive so gasfrac can go there. Right now they are trying to unlock NY which has banned all hydraulic fracks in the Tiogoba(?) region with eCORP as the partner in a very funny arrangement where there is a WI with the landholders set up and the landholders have agreed to allow gasfrac in to do the frack. Then there is Quebec.

This thing just shouldn't fail.

They have a big-time oil exec with lots of industry connections in charge now so I think he is going to make this work. He came out of retirement just to make this work. I think he'll get the job done. The last group were great scientists and engineers but they weren't businessman and that's where they failed - execution of their business plan.

I'll try to buy some more tomorrow to lower ACB but I'm starting to get a higher weight than I'd normally like on a smallcap.

PMR
by your posts it seems that u diligently do ur homework .
the stocks u r buying now are to be held if u have the stomach for it.
ur buying stocks that are following a commodity that is going through a catastrophic event.
if the mkts dip lower, those values that you and i are entering at will drift lower for sure.
I mentioned that i have time for another junior, FEL and if it drops to the 1.5 range ... i will think about it.
the sentiment in regards to those companies is extremely bearish atm.
by the way AAV hedged some of their production.
I have seen a bit of institutional interest on it , but by far not a lot at all
i am taking a contrarian approach.
I read in another post that you are a doctor.
I am impressed with your capacity to find time to trade since doctor's have a very busy life.
cheers and good luck

[PMREdmonton]

You know - I'm actually most comfortable when I'm contrarian. When everyone else is so sure that they are right, they are wrong a fair amount of the time.

The thing I always have to decide if we are talking value or growth and the approaches are entirely different.

For value you buy on fundamentals (i.e. profitability, cash flow, dividend yield) but you have to be careful and make sure you're not entering a value trap. RIM was a value trap in tech because they fell behind the technological curve in their industry. PBN was a value play because everyone was convinced they were using debt to pay the dividend but they weren't paying attention to the low P/E, low P/B, low P/CFO. Everyone was so convinced they were going belly up but I see all that FCF, increasing production and plenty of reserves and all I saw was value.

Growth is different because you have to vision to see what is the potential size of the market, why should this company get a foothold in this market, can they extract enough margin and market size to become profitable. I say yes to all these questions for GFS but is now time for the executives of GFS to execute - get those contracts signed and safely pump out those hydrocarbons for these E&P companies and make them happy customers. If you even just isolate yourselves to those plays where Gasfrac has the only solution to extract the hydrocarbons they should be wildly successful. If they can displace a bunch of hydraulic frackers from their stomping grounds that is even better. If they can convert those hydraulic frackers to become gas frackers and send GFS a cut that is even better.

This is a high conviction play for me.

Yes, I am a doctor. Investing in stocks is a hobby and a passion for me right now. I find it intellectually very stimulating and enjoyable. I can't believe I didn't get into it earlier in life.


Good luck with your investments.

[indexxx]

Some very encouraging articles on Seeking Alpha:

http://finance.yahoo.com/q?s=GSFVF.PK&ql=1

[JustAGuy]

Hmm... interesting how it dropped right back down at the end of day

[humble_pie]

not really interesting at all, gfs is like that

[dubmac]

Read this article about another perspective on the shale gas controversy in the US
This fellow (Berman) is a geologist who says, basically, that there is not as much proof as appears wrt the gas reserves estoimated in the big shale plays of the US.
https://secure.globeadvisor.com/serv...ANPARKINSONATL
who's right? dunno - but sure looks like he's a burr under the saddle of those gas companies!

[humble_pie]

thank you for the article, dubmac.

i'm an investor who is passionate about digging out & examining many sides to all big investing stories.

shale gas is a huge story for our times, with consequences - possible earthquake causation for example - stretching ahead for decades or even centuries into the future.

the most interesting & positive paragraph in your article comes at the end, where the natural gas supply association invited shale gas critic Berman to speak at their conference.

kudos to the NG supply association for being willing to involve itself directly in the controversy, apparently without the venom & spite to which Chesapeake stooped.

"Art Berman clearly has the best intentions," said Skip Horvath, president of U.S. gas producers' group the Natural Gas Supply Association, which invited Mr. Berman to speak to its members at a conference last month. "He's just out of step with the rest of the geological community."

[andrewf]

He was on Lang and O'Leary last night. He had some interesting things to say. I have been puzzled as to why gas producers are drilling so much given the rock-bottom prices in North America. He agrees that it doesn't seem rational, but that it is also sending a confusing message to consumers, inducing investment in natgas burning infrastructure like power plants and heavy trucks. He suggests that in the medium to long term, prices will rise and many of those investments will turn out to have been uneconomic.

Also eye-popping was the decline rates of up to 100% (halving output) per year. That would require a mammoth drilling effort just to keep output steady.

[OptsyEagle]

My understanding is that a lot of wells have a high content of Nat. Gas Liquids (NGL) that command a much higher price. As they drill for those they end up getting a crap load of regular natural gas, so they just sell it for whatever they get for it. It is this by-product, so to speak, that is adding to the price decline.

[PMREdmonton]

Yes, the guys drilling for NGL or oil don't care how much NG is in the well. It is just a by-product they sell so they don't care at all about the cost of NG so long as it is cheaper to send for processing than to burn off at the site, I would imagine. So no matter how low NG price goes these guys will continue to send their NG to the market.

There are a huge niumber of NG players right now whose wells are uneconomic and they will fail if this environment continues and they don't have the financial strength to continue operations. At first they may sell a few assets to keep up with payments of debt and what-not but eventually they will have to be swallowed up by a stronger company who can then put those assets on ice until the NG environment is stronger. I can imagine XOM pursuing some acquisitions. Ironically, CVE is not pretty strong and ECA is weak and they probably would have been better off as one integrated company. Perhaps they can merge again and then use the financial strength of CVE to buy assets to hold for the ECA side of the division when NG prices are stronger. CNQ is also a mixed producer but they are getting killed by the Cushing discount that has been going on for the past year so they aren't as strong as you would think despite the high oil prices.

Getting back to GFS, regulations keep pointing to better days ahead. There are some comments out there that by 2015 all frackers will have to collect the methane from production. Of course, with GFS's closed loop system this is extremely easy. For everyone else, they will have to develop new equipment to do this and this will add to the expense of their operations. Then there is the fear of frack water use in drought areas, frack water disposal affecting water supplies, frack water disposal causing earthquakes. I am shocked that this stock won't take off from its lows.

All they need is one more major to sign up with them and put their fleets to use and this thing should rocket. It is so obvious they have a bright future in so many of these unconventional fields where they offer better production, higher EUR and quicker payback of wells drilled despite the extra cost of the LPG (which is minimized for most companies which can recycle the propane injected).

I am set to buy another tranche when and if it falls to 4.75 but have a lot of skin in the game already and want to still be able to buy more if Armageddon hits.