Oil Production Rising And Gold Rally Stalling
New York (Nov 6) Earnings season is underway in the E&P sector and for the smaller players the quarterly releases usually have drilling results being released for the first time. A wealth of information is about to become public for the first time and give investors insight into how successful, or unsuccessful, various companies have been in their pursuit of resources. The next two weeks have large number of shale explorers reporting their results and we expect the market to be surprised by quite a few of the drill results that have been held back to be released with quarterly numbers.
Stock To Watch:
Gulfport Energy released their quarterly results last night after the close and saw a spike in their shares on the news. The company also announced that it would sell shares in Diamondback Energy to raise more cash, thus once again deferring the need to dilute its shareholders as it raises capital to continue its aggressive drilling program in the Utica. For the quarter, Gulfport produced 12,976 BOEPD and they expect this number to steadily rise in 2014 as they bring on another 64-71 net wells. Management's estimated guidance for production in 2014 is to be between 50,000-60,000 BOEPD.
The company's press release announcing the quarterly results is located here and the conference call transcript is located here.
The price of gold has flattened out lately but with the Fed set to relax their purchases of debt instruments in the first half of 2014 we would look to not have gold exposure via the gold names or stock ETFs, but rather the physical commodity if we absolutely had to. In fact, there might be an interesting trade available here for readers who are traders where going short the miners and long the physical metal plays out well. Currently our strategy is simply to stay away as gold does not look to have any fresh legs for new runs at this time and with the Fed preparing to move against it by allowing rates to rise and easy money to end, a bullish strategy outside of becoming a bear is hard to devise.
