Profit From Fracking's Indispensable Resource

In This Issue: Profit From Fracking's Indispensable Resource Long Trip for the Midstream Australia's Central Bank Chief Dislocates His 'Jawbone' A Critical Resource Shortage Every year frackers use 140 billion gallons of a surprising resource. And now supplies have reached critically low levels. Drillers are in an all-out rush to lock up supplies from wherever – and whomever – they can get it from. I've found two surprising companies that have a stranglehold on vital supplies of this material. Both are happily selling at ridiculous premiums. To discover how this situation could turn every $1,000 you invest into $11,109… just click here. Profit From Fracking's Indispensable Resource 12/15/2014 America's energy revolution is in danger of losing steam---and you'll never guess why. (Hint: it has nothing to do with oil prices.) It's because a vital resource every fracker needs is in dangerously short supply, touching off a mad dash to secure as much of it as possible. Ordinary Americans lucky enough to be sitting on supplies of this material could easily make in excess of $400,000 a year. Folks like Barry Fuhrman of Mertzon, Texas. He has enough of this resource to fill 20 or 30 trucks for frackers every day. At $60 a truckload, that's $36,000 a month. "I could easily sell 100 truckloads a day if I was open to it," he says. He's far from alone. A Massive Scarcity Premium There's such a shortage of what Barry loads onto trucks that energy explorers are paying 29 times market prices just to make sure they don't run out. They're so desperate they'll even pay four times the market rate to buy this resource used. Anadarko Petroleum recently did just that, inking a $9.5-million, five-year deal to lock up access to 2.4 billion used gallons of it. We'll show you exactly what this resource is in just a minute. We'll also reveal two companies happily selling it at outrageous premiums. Together, they'll easily give you the opportunity to turn every $1,000 you invest into $11,190 ... starting tomorrow. That's how acute this shortage is. But first, we want to tell you why demand for this vital liquid will keep marching higher. The Material Frackers Can't Live Without Unless you've been living under a rock for the past several years, you know about the billions of barrels of oil and trillions of cubic feet of gas being pulled out of shale rock formations here in the U.S. It's all thanks to a technology called hydraulic fracturing, or fracking. And shale production will continue to rise in 2015, according to the latest numbers from the Energy Information Administration (EIA). But here's the bad news: the entire shale revolution could be in serious jeopardy. You see, fracking is a highly specialized, complicated process. And just like great chefs, all drillers go to great lengths to conceal the methods and "ingredients" they use. But there's one substance they all need, and they use massive amounts of it. And when we say massive, we're not kidding. Each fracked well needs anywhere from 2 million to 8 million gallons of this fluid. Some use as much as 13 million gallons. In all, the Environmental Protection Agency says frackers use 140 billion gallons of it every year. So what is the vital material that lets folks like Barry Fuhrman---the farmer I introduced you to earlier---get rich selling it to frackers? We're talking about water. We know what you're thinking: "What? There's no water shortage. Every time I turn on my faucet, it comes out. Every time I want to take a shower, it's there." Of course, that's all true. But supply is only one part of the story. "The Oil of the 21st Century" Water covers 70% of the Earth, but 97% of it is salt water, which is useless to frackers. Their "secret formulations" need fresh water. That leaves 3% of the world's water, but there's an even bigger problem with that 3%. It's located far from where fracking takes place. According to a study by the climate watchdog Ceres, 36% of America's fracked wells are in regions experiencing groundwater depletion. It gets worse, though. Nearly half of all fracked wells since 2011 are in high or extremely high water-stress areas---and 55% are in areas experiencing droughts. That's a big problem for frackers, and it's already hitting their bottom lines. Right now, the industry pays up to $8 million to develop a well, and water sourcing makes up 10% to 20% of those costs. Total spending in Texas's Eagle Ford shale is expected to reach $30 billion this year. That means water sourcing will cost them up to $6 billion. And that's just one shale play. Water sourcing could cost frackers in the Texas Permian Basin another $4 billion. Now multiply those costs across all the shale plays in North Dakota, Colorado, Pennsylvania, West Virginia and California, and you start to get the picture. No wonder Bob Shaver, director of the water appropriations division for the North Dakota Water Commission, says, "To me, water is going to be the oil of the 21st century." It's a monumental problem for the drillers. But it's a massive profit opportunity for investors like you. So without further ado, we want to show you... How to Make the Frackers' Pain Your Gain The desperate combination of water scarcity and rising demand has created a unique opportunity for the two companies we mentioned earlier, both of which have a stranglehold on the water frackers need so badly. Right now, there are over 26,000 private water companies that control 11% of America's water supply. But these two are the only publicly traded ones that sell water to the drillers. We've put everything you need to know about them in a new special report called "How to Bank Massive Profits From Fracking's Most Precious Resource." Inside, you'll discover all the lucrative details, including ticker symbols and prices to pay for each. This groundbreaking new report is yours free with a no-risk 90-day trial to our Utility Forecaster advisory. One of these companies has already handed our subscribers gains of 1,019%. That's good enough to turn $1,000 into $11,190 ... and $5,000 into a life-changing $55,950! More importantly for you, though, it's perfectly capable of doing that again. From portfolio-busting share-price growth to strong---and growing---dividends, this water company offers it all. It's a "must buy" for any investor. We can't wait to tell you all about it and our other "stranglehold profit-maker" in this exclusive new report, which is just waiting for you to download it. Click here to get the full story now. Editor's note: If you're an income-seeker (and who isn't?), you'll love the high---and rising---yields these two dividend machines throw off. Folks like Terry Phillips from Enid, Oklahoma, can attest to the power rising dividends have on your finances. Just a month ago, he cashed a check for $9,180. And Sam Little banked a cool $13,709 during the same round of payouts. Now you can join them with no risk and no obligation. Don't wait a moment longer. Go here to get started right away. Two Companies with a Stranglehold on Fracking's Indispensible Resource A vital material every fracker needs has become dangerously depleted. This critical shortage has drillers in a frenzy to lock up precious supplies. And I've found two companies that control a lion's share of it. I'll show you how to turn every $1,000 you invest into $11,190 when you click here. Long Trip for the Midstream 12/12/2014 By David Dittman The International Energy Agency cut its oil demand growth forecasts for 2015 on Friday, noting that the steep decline in crude prices has failed to stimulate buying. The report sent Brent crude, the international benchmark, a new five-year low of $61.35 and West Texas Intermediate (WTI) crude, now down more than 10% this week, further below $60 to $57.34. The steep and continuing declines for the key crude oil benchmarks--Brent and WTI are both down 46% since mid-June--have hammered share prices of exploration and production (E&P) companies around the world. And companies with hopes of exporting liquefied natural gas (LNG) to energy-starved Asian nations are also sweating, as LNG prices are, for the most part, tied to crude. We have significant exposure in the Utility Forecaster Portfolio to volatility in the energy sector, via producers as well as midstream companies that transport, store and process output. Super Oil Chevron Corp (NYSE: CVX) is now down 22% from its July 24, 2014, 52-week high of $134.85. MDU Resources Group Inc (NYSE: MDU), which recently announced its intention to sell its E&P unit in order to de-risk its overall financial and operating profile, has sunk to $22.03 as of this writing from $35.93 on April 24, 2014. Canada-based ARC Resources Ltd (TSX: ARX, OTC: AETUF), whose production for the third quarter was 61% natural gas, is down 32% in US dollar terms, including dividends, since mid-June. Energen Corp (NYSE: EGN), which cut its dividend by 86.7% after it sold Alabama Gas Co, the regulated gas utility the cash flow from which supported the payout, to The Laclede Group (NYSE: LG), has suffered a 36% selloff since June 19. In addition to energy producers, the commodity rout has had significant implications for energy midstream companies, including CenterPoint Energy Inc (NYSE: CNP), which gets about 35% of its earnings from its stake in Enable Midstream Partners LP (NYSE: ENBL). CenterPoint is down 12% since mid-November, its recent slide trailing by a week WTI crude's cross below $80 per barrel on Nov. 3. Enable Midstream is down 24%, matching WTI's decline, despite management's assertion that less than 30% of its gross margin has commodity price exposure. At the same time, sustained low oil prices may reduce growth prospects. CenterPoint, which we added to the UF Income Portfolio Aggressive Holdings in November 2014, is buoyed by its solid regulated electric and gas utility operations in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma and Texas. Management teams from all of our Income Portfolio MLP holdings recently provided commentary and context during the recently completed Wells Fargo 13th Annual Energy Symposium. Energy Transfer Partners LP (NYSE: ETP) has come back about 10% from its Nov. 26, 2014, 52-week high amid questions about the viability of BG Group Plc's (London: BG/, OTC: BRGXF, ADR: BRGYY) Lake Charles LNG project given the drop in Brent oil prices and rumblings of the cancelation of various LNG projects given less attractive economics. The bottom line is that Lake Charles remains the most economical of BG's LNG projects. And Energy Transfer management expects the project to proceed as planned. Energy Transfer is pursuing a potential equity investment in another LNG project. This investment would happen before the IPO of the Lake Charles LNG MLP. According to management, this project is nearly as economic as Lake Charles and would come into service after Lake Charles. Energy Transfer Partners has some mild exposure within its midstream business but is largely insulated from lower prices. The Lone Star joint venture's cash flows are mostly fee-based, with frac-or-pay or demand-charge contracts on its pipelines. And its retail distribution business is benefitting in this environment from widening margins. Enterprise Products Partners LP (NYSE: EPD) expects oil prices to recover in response to a supply correction. Regardless of current prices, Enterprise Products believes that crude and natural gas liquids (NGL) production will likely still increase year over year in 2015. Even under its low-case scenario--a 25% to 35% reduction in oil completions and $65 per barrel WTI pricing--management expects crude oil production to increase at a 3% to 4% compound annual growth rate and NGL production to grow by 5% to 6% annually through 2020. In light of the weakness in the crude market, the level of shipper support for the MLP's proposed Bakken-to-Cushing crude oil pipeline will likely not be adequate to pursue the project. As for potential M&A transactions, management recently noted that although valuations may become more attractive with the pullback in crude prices, it will remain disciplined and only focus on strategic deals. Enterprise Products, which continues to anticipate a strong organic growth backlog, has earmarked $6 billion for CAPEX in 2015 and 2016, primarily tied to previously defined projects. Kinder Morgan Inc (NYSE: KMI), which has completed the deal to consolidate Kinder Morgan Energy Partners LP, Kinder Morgan Management LLC and El Paso Pipeline Partners LP, may be the best way to play offense and defense in the midstream space. Now the third-largest energy company in the US, Kinder Morgan's scale, diversification and track record of growth throughout market cycles make it a solid option for new money during volatile periods such as this. That's not to mention the current yield of 4.4%, management's forecast of 10% annual dividend growth and the significantly improved cost of capital resulting from the consolidation transaction, which will help it capitalize on M&A opportunities as smaller fry struggle due to commodity price and E&P CAPEX uncertainty. The stock has held up quite well during the current tumult and at $39.82 as of this writing is trading 6% below its Nov. 26, 2014, 52-week high of $42.32. Management of Plain All American Pipeline LP (NYSE: PAA), which is down 21% since Sept. 8, expects oil prices to recover to approximately $80 per barrel by the end of 2015. Although a number of shale plays in the U.S. remain economic even at current oil prices, Plains All American believes producers will reign in CAPEX in 2015--and therefore the pace of production growth--to match spending levels with projected cash flow under a lower commodity price environment. Management believes a sustained low case scenario for oil would only be applicable if global demand growth further slows and/or if OPEC intentionally attempts to keep the price of oil low in order to hurt U.S. shale producers, which it considers a highly unlikely scenario. Plains All American noted that even if crude oil prices settled into a new normal of $65 to 75 per barrel, North American crude oil supply would likely still continue to increase, which should support continued growth in the MLP's distribution, albeit at a slower rate than in an $80-plus crude environment. Management expects supply growth in the Eagle Ford Shale and Permian Basin to remain robust even under current oil prices. While production growth could slow slightly in the Permian, the rate of growth would likely just revert back to levels projected for the play earlier this year by industry consultants. The selloff presents a compelling opportunity for investors to establish positions in Plains All American Pipeline, the subject of our December 2014 UF Income Spotlight feature as one of top ideas for new money right now. This article originally appeared in the Utility & Income column. Never miss an issue. Sign up to receive Utility & Income by email. Just the Profitable Facts Fracking has made the United States an energy powerhouse again. And best of all, the government says the party is just getting started. But there's a problem. A dangerous resource shortage is threatening to slam the brakes on our dreams of energy independence. Drillers are in a frenzy – and paying ridiculous prices – to lock up a material that they use 140 billion gallons of each and every year. This fast-moving situation gives you a way to turn every $1,000 invested into $11,109. I'll show you how when you click here. Australia's Central Bank Chief Dislocates His 'Jawbone' 12/12/2014 By Ari Charney The Australian dollar has fallen to USD0.825, down nearly 25% from its cycle high in mid-2011, and Reserve Bank of Australia Governor Glenn Stevens wants it to go even lower. In an interview earlier this week with The Australian Financial Review, Mr. Stevens said he now believes that the exchange rate should be in the vicinity of USD0.75, a level at which the currency hasn't traded for a sustained period in roughly eight years (excluding the Global Financial Crisis). That would represent a fall of nearly 10% from current levels, a dismal prospect in the near term for U.S. investors who are already suffering losses from the downturn in the resource space. Of course, from the perspective of Australian policymakers, a lower exchange rate will be crucial in helping the country's economy find growth in new areas now that investment in the mining sector is on the wane. Indeed, one of the primary aims of the Reserve Bank of Australia's (RBA) current rate-cutting cycle has been to push the Australian dollar lower. However, the central bank didn't have much success on that front until the middle of last year, when the U.S. Federal Reserve announced it was considering how to curtail its extraordinary stimulus. That finally caused traders to reevaluate the relative fundamentals of each currency. While the prospect of higher rates in the U.S. suggested that growth was poised to accelerate, Australia's economic trajectory and its accompanying monetary policy seemed headed in the opposite direction. During the commodities boom, Australia's resource riches helped fuel the perception that the country's currency is backed by hard assets. The Australian dollar's ascendance--it peaked at USD1.10 in mid-2011--helped attract foreign investors who enjoyed having their gains and income from dividends enhanced by currency appreciation. More recently, however, the RBA repeatedly noted that the level of the exchange rate had become disconnected from economic fundamentals. In fact, it's emphasized this point every month in Mr. Stevens' statements on the bank's monetary policy. "But the Australian dollar remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices in recent months," he observed in his most recent statement earlier this month. The higher exchange rate has been disastrous for Australian companies attempting to compete overseas. So in addition to keeping interest rates at historic lows with an eye toward dropping them even lower, the RBA is also hoping to engineer a sustained decline in the exchange rate. To that end, Mr. Stevens and his deputies have engaged in periodic jawboning, or attempting to talk the currency down in their public statements, though such efforts have rarely achieved a lasting effect. Based on past remarks, we had previously assumed the central bank was targeting an exchange rate somewhere between USD0.80 and USD0.85. After all, by his own admission in this week's interview, when the aussie was trading near USD0.90 a year ago, Mr. Stevens had said at that time that it would be better for the country if the exchange rate fell to USD0.85. So we were admittedly surprised by his latest remarks that USD0.75 would be preferable to current levels. While a further drop of 10% in the exchange rate would be pretty significant in the world of currency trading, if the RBA lowers rates just as the Fed finally starts to raise rates again, then the exchange rate could very well be at that level by the third or fourth quarter of next year. The majority of economists have yet to update their models since Mr. Stevens offered his latest take. For now, the consensus forecast among economists is for the aussie to fall to USD0.81 by the fourth quarter. Although such depreciation is painful for our existing holdings, assuming the exchange rate does hit USD0.75 at some point in the next year or so, then it could present an incredible opportunity for investors with a medium- to long-term horizon. Not only will that level allow U.S. investors to buy Australian assets at extremely favorable prices, there will also be a window of time during which the growth stimulated by a lower exchange rate won't yet be reflected in share prices. And, of course, commodity prices may still be depressed, meaning investors will still have a chance to buy some of our favorite resource plays on the cheap. As such, investors with new money to invest could position their portfolios quite advantageously for the next commodity supercycle. This article originally appeared in the Down Under Digest column. Never miss an issue. Sign up to receive Down Under Digest by email. How to Profit from Every Fracker's Pain America's energy boom is in great danger of losing steam. A critical resource shortage has created a mad rush by drillers to lock up precious supplies. I've found two companies that control vast amounts of this material. Their fortunes are set to rise as the supplies dwindle. Gains of 1,019% are not out of the question. Here's how to profit right along with them. You are receiving this email at benjamart.ss.stock@blogger.com as part of your subscription to Investing Daily's Stocks To Watch, published by Investing Daily. To ensure delivery directly to your inbox, please add postoffice@investingdaily.com to your address book today. Email Preferences | About Us | Premium Services | Contact Us | Privacy Policy Copyright 2014 Investing Daily. All rights reserved. Investing Daily, a division of Capitol Information Group, Inc. 7600A Leesburg Pike West Building, Suite 300 Falls Church, VA 22043-2004 U.S.A.