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India and China have been contemplating the development of domestic shale resources for some years now. The successes of US and Canadian oil and gas E&P companies in producing natural gas from shale, the rapid increase in North American natural gas reserves, driven largely by shale, the continued expansion in commercially productive shale basins in North America and the impressive advances in the family of technologies needed to profitably produce natural gas(and now gas liquids and oil in the Eagle Ford, Barnett and Bakken basins, for example ) from shale basins has impressed both the governments and the domestic oil and gas companies of India and China.Both countries suspect that their own shale resources are considerable and that natural gas from shale can, in a decade, materially limit the present rapid growth in imported natural gas via international pipelines and LNG. The national security and domestic income and jobs implications are also obvious to these two nations. In both these Asian countries the transition from studying to active, sustained and substantial investment is very near.Complete Story »

David Hunkar submits: The BP Deepwater Horizon oil spill has triggered outrage among the general public and may lead to heightened regulatory environment for the offshore drilling industry. Already the Obama administration has suspended shallow-water drilling in the Gulf of Mexico until producers resubmit plans to meet the revised safety and environmental rules. In the months and years to come, additional restrictions may be put in place to prevent future disasters and potentially increasing the cost of oil exploration. In this scenario, Canada’s oil sands for the US oil supply attain greater importance. Renowned consultancy IHS CERA recently published a report titled “The Role of Canadian Oil Sands in U.S. Oil Supply”. Some of the key takeaways from this report are noted below:Complete Story »

Bill Francis submits: Overall I agree with Mr. Groppe that natural gas is an undervalued commodity at $4 mcf. However, I am going to use some other arguments that correlate with his to drive my point home. Although all of the rig activity seems to be going to the shale plays, I believe there are clearly reasons for why they don’t make up a larger portion of the gas supply. Creative and fast moving Independents have been at the forefront of attempting to retain their leasing through drilling, while at the same time keeping production low. I think this spells for a move higher, but how high will likely depend on the European LNG market, and what price the producers want to start opening the choke at. I want to delve into Groppe’s observation about the percentage of our rig fleet being thrown into drilling these shale plays. Horizontal rigs are almost strictly going towards drilling unconventional shale gas, so it should be a good indicator as to what type of plays operators are drilling. At the beginning of 2002, right before the ramp up of the Barnett, high spec horizontal rigs accounted for 6% of total drilling activity in America, with shale gas producing next to nothing. As of May 14 the number of horizontal natural gas rigs totaled 605 or approximately 64% of our nation’s fleet. In the Haynesville arena alone, there are now 177 rigs dedicated to the Shale in NW Louisiana and East TX. That’s almost 20% of the entire nation’s fleet dedicated to drilling one basin. So yes, we can clearly see a shift towards the majority of new wells being of the unconventional shale nature. That’s not new info.Complete Story »

Miriam Metzinger submits: Stocks discussed on the lightning round session of Jim Cramer's Mad Money TV Program, Thursday April 15. Bullish Calls:JPMorgan (JPM): "JPMorgan is a Monster on the Midway."Complete Story »

Kurt Wulff (McDep Associates) submits: Rising stock market trends measured by prices compared to a 200-day average are positive for accelerating demand for natural gas and gains for natural gas investments. Declining natural gas price trends by the same measure may have the best chance for reversing in the summer or fall when investors, producers and consumers look to seasonal strength in the winter of 2010-2011. Longer term, a steep, 60% discount for natural gas compared to oil offers the promise of strong appreciation in the commodity and the stocks. Quantitatively speaking, a median McDep Ratio of 0.94 for small cap and income stocks implies a long-term natural gas price of $7.50 a million btu compared to a futures market price of $6.05 for the next six years. Natural gas reserves backing stocks will last more than twice as long as the period for futures prices. Median distribution yield of 9% a year for 15 income stocks appears attractive in the context of a negative real rate on near-term treasury securities.Demand RisingComplete Story »

Kurt Wulff (McDep Associates) submits: Buy-recommended EnCana Corporation (ECA) offers unlevered appreciation potential of 8% to a McDep Ratio of 1.0 where stock price would equal Net Present Value (NPV) of $35 a share. Fourth quarter results, released on February 11, support our estimate for unlevered cash flow (Ebitda) in 2010. Following the November 30 spinoff of buy-recommended oil producer, Cenovus Energy (CVE), EnCana intensifies its concentration on natural gas to 93% of NPV.We call EnCana the best large cap clean energy investment for at least three reasons. First, we believe natural gas is the runaway first choice as clean energy, particularly with the promise of more abundant economical supply. Second, EnCana’s 93% concentration on natural gas is the highest among large cap stocks. Third, the company is well-managed, starting at the top. Chairman David O’Brien has a long record of value creation from the day he took over at resource-rich Canadian Pacific and turned the conglomerate into a series of high performing independent companies.Complete Story »

Davy Bui submits: Scanning the 13F-HR SEC filing of Paulson and Co. suggests that John Paulson employs an active trading strategy. Readers can best view Paulson's moves in spreadsheet format but some broader themes do emerge:

• Similar to some of the other money managers already profiled here (Berkowitz, Klarman), Paulson is bullish in the financial sector, as evidenced by sizable new positions in Wells Fargo (WFC), JP Morgan Chase (JPM) warrants, CIT Group (CIT) and Bank of America Units to complement his already huge holding of the bank's common stock (BAC). Paulson's fund also added substantively to existing stakes in Citigroup (C) and Suntrust Bank (STI).
• While Paulson made some big moves in the financial sector, his single largest new add was Comcast (CMCSA), the cable and now media company.
• Upon examining its holdings, it is evident the fund heavily employs a merger arbitrage strategy. The three large divestitures -- Schering Plough (SGP), Wyeth (WYE) and Liberty Media -- were all related to corporate merger/spin-off activity.
• Perhaps the most intriguing insight to be gleaned from Paulson's holdings is that he appears to be a financial sector bull and a gold bug. The single largest holding revealed in the filing is the gold ETF (GLD) and the fund also has large stakes in several gold miners: AngloGold Ashanti (AU), Gold Fields (GFI) and Kinross Gold (KGC). Apparently, Paulson has taken the stance that the financial sector can thrive despite the massive economic uncertainty that a large gold holding would imply. Or, perhaps one is a hedge on the other.

Martin Whitman is receding more into the background these days and letting other managers helm the funds at Third Avenue. As such, Third Avenue's 13F-HR filing (available here in spreadsheet format) may not be a good reflection of Whitman's thinking. Whitman has always been a big proponent of moving into the financial sector at times of crisis but this time around, he was too early and picked some bad stocks to play. Despite numerous funds and managers, Third Avenue's filing was rather sedate:Complete Story »

Zacks.com submits:
EnCana Corporation (ECA) – Canada’s largest natural gas producer – reported solid fourth quarter results, helped by higher-than-expected volumes and lower costs (see conference call transcript here). Operating earnings per share, stripping out one-time items, came in at 50 cents, which were 6 cents above the Zacks Consensus Estimate.Estimate Revisions TrendComplete Story »

Zacks.com submits:
By Dirk van DijkThe U.S. Trade Deficit rose in December to $40.18 billion from $36.39 billion in November, $33.39 billion in October and slightly below the $41.86 billion deficit a year ago. This was a very disappointing number since the consensus expectations were for the deficit to only come in at $35.8 billion.Complete Story »

• Fed's exit strategy. Heavy snowfall prompted the cancellation of a congressional hearing yesterday, but Bernanke released the testimony he'd prepared on how the Federal Reserve plans to tighten credit once the economy has sufficiently recovered. Bernanke said the interest rate on excess reserves might replace the federal-funds rate as the main policy tool for a time, and suggested the Fed might begin raising its discount rate soon. However, Bernanke stressed that changes in the discount rate should not be taken as a sign of an imminent rate hike.
• Fed looks to money market funds. Sources say the Federal Reserve is in talks with money-market mutual funds to help drain up to $1T from the financial system as officials prepare for the first interest-rate hike since June 2006. The Fed is also said to be considering reverse repurchase agreements with Fannie Mae (FNM) and Freddie Mac (FRE).
• Air Products launches hostile bid. Air Products and Chemicals (APD) launched a hostile tender offer for Airgas (ARG) after its bid was rejected earlier this week. The offer is for all outstanding common shares for $60/share in cash. Separately, the SEC is reportedly investigating unusual activity in Airgas call options that occurred before Air Products and Chemicals announced a $5.1B bid for the company. Air Products made its unsolicited bid on Feb. 5, causing Airgas shares to jump as much as 44%. A burst of activity in select Airgas call options before the bid was announced has regulators concerned that the takeover news was leaked early and used to profit on the Airgas stock spike.
• EU discusses Greek aid. European Union leaders meet today and may create a framework for a Greek rescue package. One possibility is to provide Greece with loan guarantees as long as Prime Minister George Papandreou quiets street protests and further cuts the country's budget deficit. A Spanish official said countries were being spurred to action because "it's about the credibility of the euro," but German citizens, with a longstanding commitment to fiscal responsibility, are loathe to see their country involved in a bailout and "will wish they had their Deutsche Mark back" if a rescue goes through.
• AIG: Mind your grades, get a bonus. AIG (AIG) is rolling out a new compensation system that will rate employees relative to their peers on a scale of 1 to 4, and will dole out bonuses according to employees' rankings. The approach, called a "forced distribution" system, has been used by large companies such as GE (GE) to help reward top employees and weed out underperforming ones over time. Only 10% of employees will get the top "1" ranking, 20% will be ranked as "2," 50% will be ranked as "3," and the remaining 20% will be ranked as "4."
• CME to buy Dow Jones stake. CME Group (CME) reached a deal to take a 90% stake in Dow Jones Indexes (NWS). CME will pay Dow Jones $607.5M for the stake, and Dow Jones will retain a management role in the Dow Jones Industrial Average.
• TARP losses, gains. The Treasury officially recognized the loss of its $2.3B investment in CIT Group (CIT) yesterday. Despite the loss, the Treasury expects the cost of TARP to continue to fall and expects to turn a profit on aid provided directly to the banking sector. To that end, PNC (PNC) announced yesterday that it had completed its TARP payment by redeeming $7.6B of preferred government shares, and Fifth Third Bancorp (FITB) will "most likely" repay its $3.4B of TARP funds in the second half of the year.
• Treasury considers partial Citi sale. The Treasury is said to be considering the sale of a $2.2B investment in Citigroup's (C) junior debt in order to lock in a profit from the firm's bailout. Officials are debating whether it's best to sell the securities, known as trust preferreds, before or after the government sells its 27% equity stake.
• Small banks struggle with soured loans. Soured commercial real-estate loans are still tripping up the economy, according to a report by the Congressional Oversight Panel. Specifically, there are nearly 3,000 small banks that may have to dramatically cut their lending as losses on those loans may reach as high as $200B-300B. Concern about banks' exposure to commercial real estate has been building for months, and Elizabeth Warren, head of the oversight panel, warns that those banks "are about to get hit by a tidal wave of commercial-loan failures."
• Google goes optic for zippy internet. Google (GOOG) says it will start offering ultrafast internet service to a select number of consumers, building its own fiber-optic networks with the aim of serving 50,000 to 500,000 people. For Google, it's a major step into supplying internet connections rather than the services that run on them, though Google says developing the former will help grow the latter. However, the move is risky and doesn't have the necessary scale to compete with industry giants, leading some to say it's as much about politics as it is about technology.
• New antitrust hurdle for Live Nation Entertainment. Live Nation Entertainment (LYV) will be subject to a second antitrust review in the U.K. after a court ruling said regulators had failed to fully consider the input of a competitor in the market for ticket sales. If antitrust officials reverse their earlier approval of the $889M merger, Live Nation Entertainment may be required to make changes to its U.K. operations.
• U.K.'s Brown sees progress on global bank tax. U.K. Prime Minister Gordon Brown said the world's leading economies are close to agreeing on a global bank tax, noting that public opinion has shifted in favor of the tax since Obama's decision last month to raise $90B from a U.S. bank fee. The U.K. hopes to lock in global agreement on the bank tax at the G-20 summit in June.
• Rio employees face Chinese trial. After being detained for seven months, four Rio Tinto (RTP) employees will now stand trial in China on accusations of stealing commercial secrets and taking bribes. Nearly all criminal cases that go to trial in China end in conviction. Australia urged the Chinese to deal with the trials quickly and transparently, but a lawyer involved in the cases said the proceedings won't be made public because they involve commercial secrets.
• Lending, property prices surge in China. China's lending jumped to 1.4T yuan ($203B) in January, more than in the three previous months combined, as banks extended more credit ahead of an expected tightening in monetary policy. Property prices climbed the most in 21 months, rising 9.5% from the year before.
• Motorola may roll out new plan for units. Motorola (MOT) is said to be reconsidering its strategy of selling off its largest unit, which makes set-top boxes and wireless-networking gear. Instead, the company may try to separate out the various businesses, by auctioning the network unit and spinning off the set-top box business with its handset business into a new public company. That would leave Motorola at one-third of its current size.
• Travelport IPO isn't going anywhere. U.S. travel group Travelport delayed its planned £1.2B IPO in London, blaming market volatility for its difficulties in winning investor support. The decision is a blow to majority-owner Blackstone (BX) and its plans to list several other companies this year. It also bodes poorly for the IPO market generally, since news of Travelport's flotation was taken as a sign of a possible IPO revival.
• MySpace CEO steps down. After less than a year at the helm, News Corp. (NWS) announced that Owen Van Natta is stepping down as CEO of MySpace. The social networking site has struggled to keep up with rival Facebook.
• Trade balance. December's trade balance was -$40.2B vs. -$36.8B expected and -$36.4B prior. Exports rose 3.3% to $142.7B. Imports rose 4.8% to $182.9B.

Earnings: Thursday Before Open

• EnCana (ECA): Q4 EPS of $0.50 beats by $0.08. Revenue of $2.7B (-44.2%) vs. $3B. (PR)
• Macerich (MAC): Q4 EPS of $0.90 misses by $0.01. Revenue of $201M (-17.2%) vs. $200M. (PR)
• Marriott International (MAR): Q4 EPS of $0.32 beats by $0.06. Revenue of $3.3B (-12.1%) vs. $3.2B. (PR)
• Teradata (TDC): Q4 EPS of $0.45 beats by $0.08. Revenue of $496M (+0.6%) vs. $478M. (PR)

Earnings: Wednesday After Close

• Activision (ATVI): Q4 EPS of $0.49 beats by $0.05. Revenue of $2.5B vs. $2.2B. Sees Q1 EPS of $0.02 vs. $0.08, on sales of $525M vs. $741M (Company plans one release in last week of March). Sees 2010 EPS of $0.70 vs. $0.73, on sales of $4.4B vs. $4.8B. Shares +3.3% AH. (PR, earnings call transcript)
• Allstate (ALL): Q4 EPS of $1.09 beats by $0.08. Revenue of $8.1B (+23%) in-line. “We successfully executed our first priority of keeping Allstate financially strong by achieving excellent underwriting margins and improving our capital position." Shares +0.2% AH. (PR)
• Amkor Technology (AMKR)Q4 EPS of $0.21 beats by $0.12. Revenue of $668M (+21.7%) vs. $549M. Shares -3.7% AH. (PR, earnings call transcript)
• Arris Group (ARRS)Q4 EPS of $0.32 beats by $0.05. Revenue of $300M (+2.6%) vs. $276M. (PR, earnings call transcript)
• Biomed Realty Trust (BMR): Q4 FFO of $0.31 in-line. Revenue of $88M (+6%) vs. $89M. (PR)
• Boston Scientific (BSX)Q4 EPS of $0.13, in-line. Revenue of $2.08B (+3.8%) vs. $2.07B. Guidance for Q1 and FY10 revenues in-line. Shares -3.1% AH. (PR)
• DENTSPLY International (XRAY): Q4 EPS of $0.48 misses by $0.01. Revenue of $569M (+12%) vs. $556M. (PR)
• Highwoods Properties (HIW): Q4 FFO of $0.60 beats by $0.01. Revenue of $114M (-1%) in-line. (PR)
• Masco (MAS)Q4 EPS of $0.02 beats by $0.05. Revenue of $1.9B (-3.0%) vs. $1.96B. Shares -0.6% AH. (PR)
• Prudential Financial (PRU): Q4 EPS of $1.07 misses by $0.04. Revenue of $6.8B (+16%) vs. $6.86B. Sale of Wachovia Securities JV brought $4.5B in cash vs. initial 2003 book value of $1B. Shares -2.6% AH. (PR)
• Realty Income (O): Q4 FFO of $0.47 beats by $0.01. Revenue of $82M (-1%) in-line. (PR)

Today's Markets

• In Asia, Nikkei +0.3% to 9964. Hang Seng +1.9% to 20291. Shanghai +0.1% to 2986. BSE +1.4% to 16153.
• In Europe at midday, London +0.8% to 5175. Paris +0.4% to 3650. Frankfurt +0.1% to 5542.
• Futures: Dow +0.44% to 10029. S&P +0.52% to 1069. Nasdaq +0.44%.

Thursday's Economic Calendar

• 8:30 Initial Jobless Claims 10:00 Business Inventories 10:30 EIA Natural Gas Inventory 1:00 PM 30-Yr Note Auction 4:30 PM Money Supply 4:30 PM Fed Balance Sheet
• Notable earnings before Thursday's open: ALU, AN, BWA, ECA, ECL, EXPE, FLIR, LH, MAC, MAR, NRG, OHI, PEP, PGN, PLD, PM, PTEN, TDC, VIA.B
• Notable earnings after Thursday's close: ACL, BGC, CAKE, CEPH, DCT, MFE, RSG

Seeking Alpha editors Eli Hoffmann and Jason Aycock contributed to this post.Complete Story »