Nice post Inceptus.
Here is the real rub though guys. This study focuses on water contamination mostly and so they need fracing to be able to study this. A lot of articles, like the Gazette recently wrote that they heard they want the fracing and producing to happen so that they can study this. You can't study water contamination, watershed etc without actually going forth and doing it.
Arcand said that they will get out a regulatory framework as quickly as possible, and this is what Jason was talking about as well when I posted what he replied to me with. I mean he said nothing has changed, and he is right and Inceptus you can see this.
I would be very worried if they said a full blown moratorium, but as Arcand said that is inaction. They want this shale, they need and they know that...the thing is they threw the environmentalists a bone and they are happy and at the same time they are letting the industry move forward. In the meantime, they are working on a hydrocarbon legislation and getting royalties in place. I mean you really can't ask for much more than that. The only wells I new that would be fraced this year were the ones drilled, so 13 in total for the industry...nothing is stopping that and that was what Jason said.
I'm hearing two things in reports. Arcand said any new fracing for exploration is allowed, but will have to go through this new study committee so they can also study at the same time. That imo would be perfect, you kill two birds with one stone...you get the industry proving the play and seeing if it is viable, and then you get the study taking place and not wasting time.
I'm also hearing that this fracing should be for "science and study"...well exploration is just that isn't it? We're not tieing in gas lines, no pipelines, no selling of gas...so does this mean we keep exploring with the studying happening along side us? It is a bit vague, no doubt...but Charest is in a tough place...but he knows the importance of this industry on energy independance and revenue...so that's why they are allowing it to keep drilling and moving forward. With a hand full of horizontals, there is nothing in place yet to say we have a viable industry.
This "study", can only go forward if the industry keeps drilling, so they need the industry imo to keep drilling. Fracing will not happen of $15M for a well picked by the committee...they will need to reach a common ground. I think it's a smart idea to have them come see how fracing works, that way they can speak to engineers and know what we in Alberta know...as opposed to being completely in the dark...this alone will create social acceptability because it will be coming for a committee that was sent their by the BAPE etc.
I understand that moving forward without the BAPE would be tough, because we'd be hearing noise from them all the time...this allows both to move forward and ease a lot of minds. I also now understand that it would be good to get municipalities involved...they can work together with the industry and I think allowing them to have a say in the matter won't create so much resistance as they're now a part of the business process...and in business you come to a common understanding.
In regards to trading. we're all QEC holders...me since 2004. I know the swings and how news is interpreted. Frankly me and my dad have been buying heavy since the start and so my average is very low and we hold a substantial share, but I know he has the money to put in some bids anyway at these levels. And yes, over-reaction as most think this is a complete stop...but it isn't. Hopefully companies will soon say something.
Actually if you read through all the articles, the real hardcore environmentalists are upset, because they say, and I quote from the Gazette:
Article out today, saying QEC target is $1.50 still...if zero value is given to AB, BC, SASK, and QC acerages, then $1.00. So I mean I think we're all smart enough to know the cheap levels we are at. The Norwegians cut targets today no question, but the lowest is $1.50-$4 still.
We're in a weird place such as Quebec, because of the culture etc on these things...but this is a great way to get it moving. And to have the government drawing up royalties and legislation quickly is an important sign...you don't do that if you're no going to go ahead with things.
Nice to see a lot of institutional buying today though, mostly for QEC and GMR...didn't check the others. And putting it into perspective...400K shares gapped us down, only at 1.8M for the day...and we sit on 230M shares...it only tells me a lot of people are sitting on their shares. Goes to show you relative to what we have as shares, it isn't a complete slaughter. Seeing 15+M shares down would be big, as it would equate to a larger percentage of the O/S...but this isn't. I looked at institutional records for QEC...and over the past 3 months, holdings have gone up from 26% to 31%...so that's a good sign. I hope that the company steps in and buys here, because we're valuing everything at basically nothing, which is ridiculous.
Frankly, the potential of shale play and reward is huge...I got into QEC for the BC wells, that turned up dry. It was down to 0.35 and I was buying big...and it kept sliding...then $6 after a couple months. Go look at companies like Southwestern Energy SWN I believe. The started out trading like QEC...but today they trade at almost $40. This was in a matter of a few years. There are no more shale plays to discover in NA unfortunately...I was lucky to get in early on this, and I'll stick it out and add cheap if opportunity strikes.
I read an article that say producers are saying that they're banking on low prices for a while, so they need to lower costs, but some just can't. So what plays will be able to survive and make money...Marcellus is definitely one, and so is Quebec in a full production phase.
I know we're all at different stages of our lives and timelines for investing, so what I do might be diff than Inceptus, or Pulp etc. For me I would be shattered if I saw a moratorium, but as Jason said, that is dead now and very positive. Drilling is still given a green light but more will be under supervision (regulation), which is what we all expected and what we need so that this study goes well. The timeline for full production is 2014, still hasn't changed.
Rocco
