April 15, 2011

Time to Look at Natural Gas (Japan related)

Since the nuclear plants have been down in Japan, the general analysis was that their electricity needs in the short term will most likely  be met via natural gas. This thesis has recently been confirmed with TEPCO reporting that it would be building two additional gas turbines at its thermal power plants to increase capacity. However, Japan might still face rolling blackouts this summer as the additional capacity built would only be close to 1116 MW. (see TEPCO press release here)

TEPCO's press release states that they have ceased blackouts temporarily due to increased conservation by customers.

We had previously mentioned about possibly initiating positions in either Teekay LNG partners (TGP) or Golar LNG. However, due to funds rotation and technical signals we had waited. This proved fortunate as TGP announced an offering to raise money (priced at approx $38.7). This brought TGP down from the 42's to the high 30's. The general stock market weakness contributed to some additional pricing discount, making TGP even more attractive (assuming the distribution would be maintained or increased).

I am not making any predictions on GLNG. However, TGP I feel has some room to run. I have not analyzed GLNG that well.

End of the day, stock market is still a risky business and nothing hear can be counted as advice from a licensed professional as I am not one and I am not earning anything from you ;) :)

Happy Trading and Good luck

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