Member Info for Lancygeo

Extract below taken from Q3 2021 market commentary.

‘To that end, we titled our 2Q2020 letter “On the Verge of an Energy Crisis”. At the time, no one agreed with us. Now headline after headline talks of an “unforeseen” energy panic. It looks like the energy crisis we discussed 14 months ago is now here.
If the energy crisis has arrived, where does Goehring & Rozencwajg see things 12 months from now? By the end of 2022, we believe global oil demand will have exceeded pumping capability for the first time in history. Just as no one agreed with our assessment of an emerging energy crisis this time last year, almost no one agrees us today either. Instead, conventional wisdom strongly believes OPEC spare capacity will be returned, eventually throwing the market into huge surplus in 2022.
When we say demand will exceed pumping capability, what do we mean and why is this so unprecedented? While it is true that demand has exceeded supply many times in the past, it has never -- according to our models -- exceeded pumping capability. What is the differ- ence? Supply is the amount of crude produced and sold into the market. Pumping capability, on the other hand, is a more subjective term that refers to total supply that could, in principle, be produced quickly with minimal additional capital spending. Therefore, while demand has exceeded actual production – most recently in 2006/2008 and 2020 – there has always been the availability of additional spare capacity. This will not be the case as soon as the end of next year. The consequences could be dire.’

http://gorozen.com/

Whilst we wait for news updates on all fronts, anyone not aware of Goehring & Rozencwajg would benefit from their invaluable research which includes quarterly market commentaries on lots of topics, commodities, oil & gas, etc. They write extensively on the current energy crisis which they predicted 18/24 months ago.

https://tradingeconomics.com/commodity/natural-gas

US natural gas futures steadied above $6.6 per million British thermal units, the highest since 2008, as traders remained on the edge over historically low storage levels and robust demand. Weather forecasts point to colder-than-normal temperatures in the northern half of the contiguous US beyond mid-April, which should keep pressure on US domestic inventory levels, which currently sit 17.1% below the five-year average, according to the latest EIA weekly report. On the supply front, preliminary data showed output in Appalachia, Virginia, declined on Tuesday. Additionally, the US continues to export LNG cargoes at near record levels, helped by demand in Europe, and an increasingly likely EU embargo on Russian oil and gas should keep overseas demand high over several months.

Current price 4.6255 USD/lbs

https://tradingeconomics.com/commodity/copper

Copper futures traded close to the $4.7-per-pound level, not far from an all-time high of $5 hit on March 7th amid a tight market as investors weigh lower supply from top producer Chile, disruptions caused by the war in Ukraine, and assess the impact of the latest Covid outbreak in China in both demand and supply. Copper output in Chile, the world's largest producer, fell 7% from a year earlier to 394,700 tonnes in February, following a 7.5% fall in January and a 1.9% decline in 2021 production. Meanwhile, Chinese authorities extended a lockdown in Shanghai, an industrial powerhouse and major port, further threatening global supply chains. Logistics operators report that restrictions are already making it harder to move goods around and keep factories operating at full capacity. Elsewhere, Peru's ministry of economy and finance said that the world’s second-largest copper supplier will target the excess profits that mining companies earned from rising metal prices around the world.

Goehring & Rozencwajg
2021 Q4 Market Commentary

Copper Inventories Draw
Favorable fundamental trends continued into the end of 2021. After surging almost 15% in 2000, China’s copper demand has fallen about 7% for the nine months of 2021, according to World Bureau of Metal Statistics (WBMS), however, most of this decline has been offset by growth in global copper demand outside of China. On the supply side, global copper supply has rebounded somewhat from 2020 COVID impacted declines, but copper mine supply continues to stagnate. Copper mine production today is only up slightly from where it was in 2016. Over the last six years, copper mine supply has shown minimal growth. Resil- ient demand and sluggish supply growth is now being reflected in global copper inventories.
Combined warehouse inventories of the Shanghai, London Metals exchange, and the COMEX peaked back in the summer of 2018 at almost 900,000 tonnes and declined steadily since. Today they stand at only 190,000 tonnes, a fall of almost 80%.
Back in the summer of 2005 combined copper inventories of all three exchanges covered daily global consumption by only 2 days-a dangerously tight situation, and it’s was no coinci- dence that copper prices surged 2.5 times in the next six months. Today, copper inventories cover daily consumption by only 3 days, and we are again approaching the dangerously low levels seen back in 2005.
Confirming the tightness in today’s copper market are the future market’s backwardation, defined as when commodity markets are tight and inventories are low, future prices will trade at big discounts to spot prices. Conversely, when inventories are sufficient, future commodity prices will trade higher than the spot prices-- a condition known as “contango.” In today’s COMEX copper future market, the July 2024 contract trades at $4.26 per lb. versus today’s copper spot price of $4.40—a discount of 14 cents to the spot market—which amply displays the tightness that crept into today’s physical copper market.
Copper prices have traded in a tight band over the last 12 months oscillating between $4.00 and $4.80 per pound. We believe we are setting up for the next big price spike. Investors should maintain significant exposure to copper related equities.

https://tradingeconomics.com/commodity/natural-gas

US natural gas futures rose to almost $6.5 per million British thermal units on Friday, closing on the highest level since 2008, as worries about global energy supplies exuberated by the war in Ukraine boosted the demand. On Thursday night, European Union countries agreed to ban coal imports from Russia and pledged to start working on an embargo on Russian oil, gas and nuclear fuel, putting additional pressure on energy markets. Shipments of LNG to Europe are already at record levels and the US is facing greater pressure to help Europe secure more supplies. Meanwhile, US natural gas inventory data showed a more-than-anticipated draw of 33 bcf last week to a nearly 3-year low and at around 17% below their five-year average, due to chilly temperatures in late March. Weather forecasts also pointed to wintry weather in parts of the US until mid-April, which could boost heating demand. For the week, the contract is set to surge more than 12% bringing the year-to-date gain to 70%.

I’m more than happy with the RNS….. it’s just a matter of patience :)

Please can you post a link to the RNS ?

Interestingly the markets closed on Thursday 1st April last year and reopened on 6th April because it was the Easter Bank holiday weekend. The sp went from 12p to 18.5p over the 5 sessions from the 1st to the 12th April. How much of this 50% + rise was due to new ISA money / increase in volume ? Will we see something similar over the next 5/6 sessions ?

Excellent find Wacky !
£6 billion in 1985 equates to approx £21 billion in today’s money using an online inflation calculator :)

Shareholderchar….. all very interesting points.
Hopefully one or more of our well researched posters will come back to you very soon.

Ongoing Shortages for Global Natural Gas

The article below is an excerpt from our Q4 2021 commentary. 

Without US liquefied natural gas (LNG), Europe may well have frozen literally to death this winter. We believe what is happening with global natural gas is a harbinger of things to come for the rest of the energy complex as well.

North American readers could be forgiven for not appreciating how fast international gas markets have turned from surplus to deficit. In May 2020, European 1-month ahead natural gas prices (as measured by the TTF index) reached $1.24 per mcf – an all-time low. By December 2021, prices had spiked to $59.97 per mcf (equivalent to $360 per barrel oil). Prices have pulled back but remain at $25 per mcf (equivalent to $150 per barrel oil) – higher than any other time in the past 20 years. LNG prices into Asia, as measured by the JKM Japan-South Korea Swap Index, bottomed at $2.00 per mcf in 2020, rallied to $49.00 in 2021 and have now settled back to $25 per mcf

Anyone buying in at 5p/6p last November will be over the moon with the current sp of circa 10p :)

Morocco
The Company's activities in Morocco continue to intensify ahead of mine construction and with this in mind, the board made the decision to launch a communications programme focussed on stakeholders within the Kingdom of Morocco. Led by the Company's in-country team, Emmerson and its operating subsidiary are now working with local agencies to amplify the work that is being done in the Khemisset region. A new website will be launched highlighting Emmerson's vision for a sustainable UK-Moroccan partnership. As shareholders will be aware, Morocco is one of the region's most dynamic economies, a growing gateway to Africa and a welcoming environment for foreign direct investment.
 
Highlighting the Kingdom of Morocco's standing as desirable investment destination, the Emmerson team were delighted to be involved in two events showcasing the country's appetite and support for direct foreign investment. The "Morocco: Gateway to Africa" and "Morocco Now" events, both held in London in March 2022, were highly productive and brought together business leaders, investors and representatives from the Moroccan government with the objective of demonstrating the country's geopolitical stability, economic growth potential and world leading renewable energy capabilities.

https://www.lse.co.uk/rns/EML/q1-activities-update-uto2klcfctfw1ab.html

Global potash market
The war in Ukraine is bringing about a wide range of global consequences, the most important and immediate of which are humanitarian, for those most directly affected by this catastrophe. It is also having a major impact on the global potash market, as 38% of the world's recent potash supply has originated from Russia and its ally Belarus. Russia and Ukraine are also, under normal circumstances, major wheat exporters. With food security an increasing concern in the context of rising wheat and other agricultural commodity prices and global population growth (particularly in Africa), fertilizer production, which is the primary use of potash, has escalated in criticality.
 
Potash prices underwent significant increases in 2021, growing from the long-term average price assumption of approximately US$400/t at the time of the Khemisset Feasibility Study in June 2020 to around US$800/t by the end of 2021. Recent published spot prices for potash have now reached US$1,100/t.

Everyone is entitled to their opinion as indeed am I.
I value the contributions on this bb from all the LTHs, they have been here for some time.
I’m fortunate to have a core holding at a 4p average which is similar to others who have been invested for the last 2/3 years. Foolishly or otherwise I decided against selling up last year at 20p/22p because I believe that PRD will in time realise it’s true VALUE….. for the newbies or those looking to buy in, please dyor.
Incidentally, PG hasn’t sold a single share either, I wonder why ? :)

‘WHAT IS GERMANY'S GAS PLAN?

Berlin's "Emergency Plan Gas" has three crisis levels.

The first level, which the government has triggered, is the early warning, when there are signs a supply emergency could develop. The second is alarm, when a disruption to supply or extraordinarily high demand upsets the usual balance but can still be corrected without intervention.

The third level is emergency, when market-based measures have failed to remedy shortages. At this stage, Germany's network regulator, the Bundesnetzagentur, must decide on how to distribute remaining gas supplies across the country.

WHO IS FIRST AFFECTED?

If Germany does not secure enough gas, industry will be hit first. It accounts for a quarter of German gas demand.

"This means that industrial production gets lost, that supply chains get lost," Leonhard Birnbaum, chief executive of German energy group E.ON, told public broadcaster ARD. "We are certainly talking about very heavy damages."

Private households will have priority over industry, while hospitals, care facilities and other public sector institutions with special needs would be last to be affected by a disruption.‘

Goehring & Rozencwajg
Q4 2021 Market Commentary
The above publication is dated 23rd February 2022…… of course a lot has happened in the world since then.

Goehring & Rozencwajg
Q4 2021 Market Commentary

‘How could so many people get it so wrong for so long?
As we go to print, the International Energy Agency (IEA) has just announced the largest set of upward demand revisions in its history. For several years, we have discussed how the IEA chronically underestimates demand; these revisions suggest we were right. Despite the significance of the shift, most people were not even aware it took place. After a full decade of investor apathy (or outright hostility), it is difficult to change people’s minds.
What follows is a study of unintended consequences and the impacts of massive capital distortions. For nearly a decade, the energy industry has underinvested in its upstream business; it was naïve to think this wouldn’t have any impact.
Oil prices stand at eight-year highs and we believe they are heading higher. How high could crude rally in this cycle? We would not be surprised if prices ultimately spiked to between $150 and $200 per barrel. Natural gas prices reached $300 per oil-equivalent barrel in Q4, and the fundamentals in the oil markets are as bullish, if not even more so.
Volatility will likely increase as well. Global inventories are at their lowest seasonal levels ever, leaving us extremely vulnerable to any supply disruption, just as geopolitical turmoil seems to be accelerating. OECD inventories peaked in the summer of 2020 at the height of COVID lockdowns at 4.8 bn barrels – 245 mm barrels more than normal for that time of the year. Inventories are currently down to 4.1 bn bbl – 327 mm barrels less than normal for this time of year. Relative to seasonal averages, oil inventories have never been lower in our dataset going back to 1995.’