Northern Explorations Ltd. (OTC.BB:NXPN - News) ("Northern," "Norex" or the "Company") wishes to restate its position that Natural Gas is currently an undervalued opportunity with near term upside potential.
As reported on June 10th, Norex Management agreed with reports that a fundamental picture was developing that could result in a short-term cap on gas at $4 due to expectations of an inventory increase of at least 100 billion cubic feet. Certain analysts at that time indicated a need to see real evidence that storage injections are being curtailed in order to see a return in demand that would justify predicting a sustained rally.
The Company went on to point out a number of key factors that could well predicate a return to demand. These included a well documented U.S. natural gas production drop of 1.1 percent to 57.93 billion cubic feet per day from 2008 production as lower prices prompted drillers to idle rigs. Reduced exploration is predicted to accelerate this decline in output into 2010 with production forecast to fall 2.6 percent next year to 56.42 billion cubic feet a day as reported by the Energy Department. Furthermore, the number of rigs drilling for natural gas has dropped 56 percent from a peak of 1,606 in September and is at its lowest in more than six years, according to data from Baker Hughes Inc.
Norex Energy's Management indicated then, and continues to believe that this combination of reduced exploration and production will inevitably end in an upswing in prices. The start of this resurgence could well be fueled early as temperatures climb during the late summer months leading to increased energy demand, especially in those states such as California that rely heavily on natural gas powered electrical generation systems. A combination of hot summer months, turbulent, stormy fall weather, limited exploration and lowered overall natural gas production could lead to a significant demand increase and resultant price spike within a very short period of time.
In support of this theory, Neil McMahon, a London-based analyst at Sanford C. Bernstein & Co. recently stated, "U.S. natural-gas demand from industry and increased power generation will cause the gas market to 'tighten,' pushing up prices. The market will 'tighten considerably toward the end of the year,' while delays in starting new liquefied natural gas projects will also bolster prices." Lower costs may prompt power generators to use more of the fuel, boosting prices as LNG proves unable to offset a decline in U.S. onshore gas production, Bernstein said.
ABOUT NOREX ENERGY (NORTHERN EXPLORATIONS LTD.) (OTC.BB:NXPN - News)
Norex Energy (Northern Explorations Ltd.) is an energy exploration Company currently developing natural gas projects across North America. The Company has acquired a working interest in natural gas assets located in Texas as well as projects in California and Alberta, Canada. The projects contain documented gas reserves and associated plant, pipeline and infrastructure currently in place.
Notice Regarding Forward-Looking Statements
All statements contained in this Press Release, other than statements of historical facts, that address future activities, events or developments are forward-looking statements, including, but not limited to, statements containing the words "believe," "anticipate," "expect" and words of similar import. These statements are based on certain assumptions and analyses made by us in light of our experience and our assessment of historical trends, current conditions and expected future developments as well as other factors we believe are appropriate under the circumstances. However, whether actual results will conform to the expectations and predictions of management is subject to a number of risks and uncertainties that may cause actual results to differ materially. Such risks include, among others, the following: international, national and local general economic and market conditions: our ability to sustain, manage or forecast our growth; raw material costs and availability; new product development and introduction; existing government regulations and changes in, or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuations and difficulty in forecasting operating results; changes in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; and other factors referenced in this and previous disclosures. Consequently, all of the forward-looking statements made in this Press Release are qualified by these cautionary statements and there can be no assurance that the actual results anticipated by management will be realized or, even if substantially realized, that they will have the expected results or consequences to or effects on our business operations.
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