If demand is rising and OPEC + Russia want to speed up the accent of the oil price (as time is not on their side) by limiting production they can easily get oil back to a more reasonable price quickly.
Accordingly, I cannot see oil sitting at $45 or even $55 in twelve months time. I personally believe $60+ is where it will be at.
As such, Shale will be more than profitable (than its current price) with a future price of $60+ (And I do believe AKK will be very profitable with WTI at $60 per barrel).
Whether shale is the best long term investment - to be honest, I care little. What I want to know before I choose a trade is that:
1) The company I am trading in can get a big jump in SP with the change of the oil cycle from bear to bull.
2) The company I am trading in has recently had a highly depressed SP but can uncoil like a spring if they have a few good pre-production news announcements and support by macro oil conditions. I look for this so I can potentially double my money in a short time.
What I don't do:
1) Stick around in companies long term (any for that matter).
3) Try to figure out if a company will be profitable long term (especially in the cyclical mining industry!)
What I truly believe about AKK:
1) AKK will obtain sufficient flow rates from it's current mine program.
2) Production will be initially slow for AKK (in the first six months) where AKK will look to demonstrate that their three wells can produce shale in a way that makes AKK economical upon ramp up.
3) AKK will then CR and look to quickly ramp up their number of wells.
4) As AKK ramps up it's well numbers - AKK will be supported by an increasing WTI per barrel price to the benefit of AKK.
Essentially - By the time a potential 'day of reckoning' comes for AKK - I would have reviewed AKK enough to have made the choice to still be in or out. I would have also most likely entered and exited AKK multiple times. I would expect any investor/ trader to do this on stocks (especially miners) - no set and forget!
So where you see 'shale junk' I see a company whose SP can quickly spring out and upwards upon the right conditions.
I believe those conditions are right for AKK now.
Sector not everyone looks at equities from a long term investment proposition perspective. Some people day trade, some people swing trade and some people may only stay in a trade for 1 or 2 months.
So Sector when you go out and preach hatred upon AKK or shale in general you assume you know what peoples trading or investing styles are - and you think you know it better than them.
Looking at any mining company - no matter the industry type - from a rigid long term investment perspective is fraught with danger. Accordingly, don't assume those of us who are with AKK are in for the long term. As such, please respect that and don't get preachy.
AKK Price at posting:
0.7¢ Sentiment: Buy Disclosure: Held
