Cyprus Gas Find Worth Tens of Billions

http://www.rigzone.com/news/article.asp?hpf=1&a_id=113763

Ackman Eyes Former CN CEO to Run CP Rail

http://www.theglobeandmail.com/globe-investor/cps-activist-investor-eyes-former-cn-ceo-hunter-harrison/article2286688/

8 of Fairholme's 10 Largest Holdings Entering 2011 Down Over 40% For Year

He must be having a hard time getting up in the morning, or going to sleep at night.  One or the other.

http://seekingalpha.com/article/316611-the-fairholme-fund-s-year-to-forget-will-reverse-course-in-2012

Former Shell CEO - Block of Strait of Hormuz = Armageddon

Gurus Gone Wild December 29, 2011

Nygren on stocks vs bonds

Bill Nygren’s Best Investment Idea For 2012

Complimentary Grant's Interest Rate Observer

Grant


Some ideas from John Dorfman


Thunderstorm Capital’s John Dorfman’s Best Value Investment Ideas for 2012

Dumping Buffett Has Helped Sequoia Fund

Cutting Berkshire Helps Sequoia Fund

Iran Tensions Worsen

http://www.vancouversun.com/news/Iran+over+Strait+Hormuz+worsens/5923089/story.html

Crescent Point Energy

Quite a rise for this company over 10 years.

This is the way to run an oil company, make sure you have a more fairly valued stock price at times others are in distress so you can gobble them up by issuing stock:

"They've always been very operationally aggressive and financially conservative," he said. "So they never let their debt levels get very high, they always hedge and sell forward so that when the downdrafts come . . . Crescent Point is sitting there with a strong balance sheet and at least half of their production hedged.

"So their stock price stays strong and that's when they swoop in and take advantage of other companies that have to sell properties."

http://www.calgaryherald.com/business/Crescent+Point+Energy+just+getting+started/5902803/story.html 

Energy News December 29, 2011

Canadian Companies Flockin to the Bakken

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/canadian-companies-flock-to-n-dakotas-bakken-oil-play/article2285575/

Chesapeake Finds Another $865 million

http://www.upstreamonline.com/live/article295823.ece

Saudi budget

http://arabnews.com/economy/article554649.ece

Another Big Gas Find For Noble

http://www.rigzone.com/news/article.asp?hpf=1&a_id=113713

Q&A With Gulf Keystone Petroleum

http://www.proactiveinvestors.co.uk/companies/news/37294/company-qa-gulf-keystone-petroleum-primed-for-an-exciting-new-year-37294.html

Petrominerales November Presentation

PMGNovemberPresentation

US 5th Fleet Will Not Tolerate Disruption By Iran in Strait of Hormuz

Energy News December 28, 2011

Magnum Hunter Production up 455% in 2012

http://www.rigzone.com/news/article.asp?hpf=1&a_id=113689

Second phase of Kashagan to be completed 2018/2019

http://www.rigzone.com/news/article.asp?a_id=113680

Saudi breakeven oil price

http://www.businessweek.com/news/2011-12-27/saudi-oil-break-even-price-rise-to-71-5-next-year-ncb-says.html

Article on Struggles at Sears

At some point it has to be a buy doesn't it?  I certainly have no regrets that I haven't bought so far...

http://www.bloomberg.com/news/2011-12-28/sears-as-lampert-s-mismanaged-asset-loses-shoppers-flowing-to-macy-s.html

Iran Threatens to Stop Oil if Sanctions Widened

What does a person do with their oil stocks if Iran causes a short term oil spike to $150?  Take some profits on the resulting jump in stock prices and then buy back in when things cool down and the stocks retreat?

http://www.moneynews.com/StreetTalk/Iran-Oil-Flow-Sanctions/2011/12/27/id/422219

First Issue of the Newsletter Including the Homerun Portfolio

In an effort to get more ideas in front of both myself and readers I've now added a second portfolio to my weekly newsletter.

The first portfolio will be the Punch Card Portfolio which will be a concentrated portfolio that uses a "Heads I win, tails I don't lose much" strategy.

The second portfolio will be the Homerun Portfolio that is focused on stocks that have the potential for large rewards but also don't have much downside protection if things don't pan out.

It is tortoise vs the hare.  Punch Card vs Homerun.

The first issue of the newsletter including my first Homerun swing went out to readers today.

Can Tight Oil End US Oil Imports?

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/tight-oil-holds-promise-of-ending-us-oil-imports/article2283408/singlepage/#articlecontent

Petrobank's THAI - Mr. Market Currently Pays You To Own It

Cobalt November Presentation

CobaltNovemberPresentation

Recap of Sandridge's Mississippian Experience

SandRidge Announces Mississippi An Joint Venture

Looking at the Sandridge Billion Dollar JV

I wrote the following article and will likely write some more after I listen to the conference call discussing the Sandridge JV.

http://seekingalpha.com/article/315776-crunching-some-numbers-on-the-billion-dollar-sandridge-joint-venture

The amount of value created in these Mississippian plays is rather staggering.  $350 million invested, $1.8 billion returned through JVs and trusts, and Sandridge still holds 75% of the acreage.

Very Chesapeakian, with a similar discount in the stock price because of the balance sheet

Midway Energy

Appears a transaction is in the works:

Midway Provides Market Update

CALGARY, ALBERTA--(Marketwire - Dec. 22, 2011) - Midway Energy Ltd. ("Midway" or the "Company") (TSX:MEL) announced today that it has become aware that information may have entered the market with respect to certain potential transactions. The Company has not entered into any definitive agreement with respect to these transactions and will issue a press release when and if a successful transaction has been negotiated.

Sandridge Energy Announces Billion Dollar Joint Venture

http://phx.corporate-ir.net/phoenix.zhtml?c=196066&p=irol-newsArticle&ID=1642446

OKLAHOMA CITY, Dec. 22, 2011 /PRNewswire/ -- SandRidge Energy, Inc. ("SandRidge") (NYSE: SD) announced today that it has entered into a Joint Venture ("JV") with a subsidiary of Repsol YPF, S.A., a leading international energy company based in Madrid, Spain. Under the agreement, SandRidge will sell an approximate 25% non-operated working interest, or 250,000 net acres, in the Extension Mississippian play located in Western Kansas and an approximate 16% non-operated working interest, or 113,636 net acres, in its Original Mississippian play.

The 363,636 net acres in total will be sold to Repsol for an aggregate transaction value of $1 Billion. Repsol will pay$250 million in cash at closing and the remainder in the form of a drilling carry. In addition to paying for its working interest share of development costs, Repsol will pay an amount equal to 200% of its working interest to fund a portion of SandRidge's cost of development until the additional $750 million drilling carry obligation is satisfied.  Based on current drilling expectations, SandRidge anticipates the drilling carry obligation to be satisfied within three years. The JV will exclude all wells and acreage within the associated spacing units spudded prior to January 1, 2012 and all wells and acreage associated with SandRidge Mississippian Trust I. The transaction is expected to close in the first quarter and is subject to certain closing conditions.

Tom Ward, Chairman and CEO, stated, "We are excited to announce this Joint Venture with Repsol, a global energy leader, and we are pleased that they share our confidence in the development potential of this vast Mississippian oil play. We compare the scope of this play to the Bakken and believe it will be transformational for the Mid-Continent region of the United States. SandRidge has led the way in developing the Mississippian Play and has now drilled more than 195 horizontal wells, representing nearly half of all the horizontal wells drilled in the play to date.   As a result of the drilling carry and its lower working interest, SandRidge's 2012 CapEx is expected to decline to $1.6 Billion from a previous budget of $1.8 Billion.   This JV with Repsol puts us on a clear path to bridge the 2012 funding gap with non-debt capital and to execute our three year plan to triple EBITDA and double oil production while lowering our debt to EBITDA ratio.

Energy News December 22, 2011

Corridor Resources - no luck finding a JV partner

http://www.rigzone.com/news/article.asp?a_id=113556

Coastal Energy Keeps on Rolling

http://www.rigzone.com/news/article.asp?a_id=113544

RAM Energy Announces Major Recapitalization

http://www.businesswire.com/news/home/20111222005173/en/Ram-Energy-Resources-Announces-Agreement-550-Million

Kurdistan - Safe, Secure, With Billion Barrel Prospects

http://www.geoexpro.com/article/Kurdistan_Safe_and_Secure_with_Billion_Barrel_Prospects/0b73975b.aspx

Gurus Gone Wild December 22, 2011

2009 Interview With Buffett Where He Explains His Love for Wells Fargo

Buffett Explains Why He Has So Much Invested in Wells Fargo

Second Curve's Tom Brown (yes he survived the financial crisis somehow) Speaking to Bloomberg About BAC

Banking Guru Tom Brown (Second Curve) and John Mauldin Discuss Bank of America, Jefferies and Europe

Fortune Profiles Blackstone's Steve Schwarzman

Fortune Profile of Private Equity Guru – Steve Schwarzman

The Next Homerun In the Energy Sector

http://seekingalpha.com/article/315380-go-unconventional-for-the-next-home-run-investment-in-the-energy-sector

Westfire Sale Could Be At a Big Premium

http://seekingalpha.com/article/315095-westfire-energy-puts-itself-in-play-could-fetch-a-100-premium-on-the-current-stock-price

Kazakhstan Unrest

Energy News December 20, 2011

Noble Increases Leviathan Reserve Estimate

http://www.rigzone.com/news/article.asp?hpf=1&a_id=113459

Westfire Energy Could Be Sold

http://www.upstreamonline.com/live/article294876.ece

Gulf Keystone Petroleum Latest Presentation

gkpinvestorpresentation1213october2011

Gulf Keystone Calls Exxon Rumor Baseless

http://www.marketwatch.com/story/gulf-keystone-report-of-exxon-approach-baseless-2011-12-19

Why Encana Refutes the EPA Pavillion Conclusions

ECA News 2011-12-12 General Releases

Whitecap Makes Viking Acquisition

http://www.wcap.ca/uploads/Whitecap_-_Compass_Press_Release_-_December_15_2011.pdf

Exxon Mulling Takeover of GKP That is 5X Current Stock Price

http://www.independent.co.uk/news/business/news/exxon-woos-gkp-to-gain-kurdish-base-6278531.html

http://www.reuters.com/article/2011/12/18/us-exxon-gulf-keystone-paper-idUSTRE7BH0FV20111218?feedType=RSS&feedName=innovationNews&rpc=43

Gurus Gone Wild December 18, 2011

David Winters and Chris Davis Visit With Wealthtrack

David Winters and Chris Davis Interviewed By Wealthtrack

Bill Gross Talking About Fixed Income in 2012

12 Minutes With Bill Gross – Responding to Criticism of Him Missing the Rally in Treasuries

Berkshire Invests In Another Solar Energy Venture

Buffett Already Investing in Another Solar Plant – Here He is Discussing Energy/Oil Depletion

Einhorn Short Euro Sovereign Debt

David Einhorn Profiting From a Decline in European Sovereign Debt

An Opportunity in Connacher Oil and Gas

Connacher Oil and Gas Turns Down Acquisition Offer – Will The Secret Suitor Now Go Hostile?

John Wright / Petrobank 2011 Article

http://v100.albertaventure.com/recovery-play/

Connacher Oil and Gas November 2011 Presentation

ConnacherNov2011

CIBC and Credit Suisse on Petrobakken

PetroBakken Estimates Revised at Credit Suisse - $17 target

Analyst Actions: PetroBakken Estimates Revised at Credit Suisse After Changes in Oil Price Forecasts

Brent price forecast unchanged but NYMEX weakness could persist near-term. "Credit Suisse has updated its commodity price view to reflect downward adjustment to NYMEX natural gas prices and a narrower differential between WTI and Brent. The Brentoil price forecast itself is unchanged. For NYMEX gas, Credit Suisse expects weakness to persist near-term as production takes time to fall in response to falling rig counts (mitigating factors include wells behind pipe, liquids drilling and efficiency gains). The long term view of the NYMEX gas price is unchanged at $5.50. The Brent forecast continues to reflect a 3.4% global GDP growthrate for 2012 with downside demand risk balanced by real supply risk across MENA and other significant producers (e.g., Venezuela, Russia, Nigeria). Please see our full report for complete details of changes, including for Edmonton Par, AECO and the WCS differential."

Revising PetroBakken Estimates After New Oil Price Forecasts. "Incorporating our new oil and gas price forecasts and recent guidance for production, capital expenditures and a new DRIP program for 2012, we have made the following changes to full year estimates for PetroBakken. Our 2011 EPS/CFPS go from C$1.36/3.51 to C$1.50/3.71 while 2012 go from C$1.36/4.55 to C$1.45/4.50. Our 2013 EPS estimate is also lowered to C$2.32 from C$2.36."

Maintains C$17 Price Target. "With only modest changes to our 2012 and 2013 estimates, we are maintaining our target of C$17 at this time. Our target is based on 4.00x 2013E EBIDAX of C$1,227 million, a ~35% discount to mid-cap peers given lower liquidity and capital structure uncertainties, including refinance of convertible debt."

PetroBakken Energy Ltd.
2012 Guidance & Current Production Point To Sustained Growth

 

 

 PetroBakken (PBN-SO) announced its 2012 capital budget yesterday,

guiding to spending of $700MM - essentially in line with our forecast and
down from 2011 spending of ~$900MM. Spending is expected to result in a
2012 exit rate of 50,000 – 54,000 Boe/d.

 

 

 PetroBakken also noted that in early December current production was over

48,000 Boe/d, with over 1,450 Boe/d of shut-in production awaiting tie-in.
The company continues to forecast 2011 exit production of over 49,000
Boe/d.

 

 

 PBN announced that it is implementing a DRIP program to support inflows in

2012. Of note, PBN has guided to a base decline rate of 30-35% in 2012
(vs. 40% in 2010). In addition, the company announced the appointment of
Brett Wilson (co-founder of First Energy) as a Director.

 

 

 We are maintaining our Sector Outperformer rating on PetroBakken, with an

unchanged price target at $21.00. PBN currently trades at a 2012E
EV/DACF multiple of 4.4x and a P/Risked NAV of 41% (vs. group averages
of 8.0x and 74%, respectively).

Energy News December 16, 2011

8 in 10 Americans Support Shale gas drilling

http://www.rigzone.com/news/article.asp?a_id=113394

3 Energy Investment Ideas from Bill Bonner

http://www.theenergyreport.com/pub/na/12026

13 Observations From Exxon's 2012 Energy Outlook

http://seekingalpha.com/article/314322-13-predictions-from-exxon-mobil-to-guide-your-investing-process

Kodiak Chairman on BNN Today

Kodiak (KOG) Chairman - 10 to 15 Years of Drilling Ahead of Them

http://watch.bnn.ca/headline/december-2011/headline-december-15-2011/#clip586525

Gurus Gone Wild - December 15, 2011

John Paulson Offers Idea To Address EuroMess

John Paulson Writes a Letter Offering a Solution to the Euro Crisis

What Bill Nygren is Buying (I Bet It Ain't Washington Mutual This Time)

Oakmark’s Bill Nygren – Large Cap Equities Are Incredibly Attractive Today

Biryni Likes Himself Some Apple

Laszlo Birinyi – Avoid Financial Stocks; Buy Apple and Hermes

Warren's Former Daughter in Law Still Trying to Profit of the Family Name

Mary Buffett, Buffett Author and Former Daughter-in-Law, on His Investment Philosphy

Canaccord on Petrobakken

Who's the guy on the white horse? PetroBakken swung higher alongside improved oil prices and strong 2012 production guidance. The company announced that production in early December had reached over 48,000 BOE. It also said it expects to end 2011, a 23% increase over Q3/11 production levels. Also with 1,450 BOE shut in awaiting tie-in, the company expects to meet its targeted 2011 exit rate of over 49,000 boepd. For 2012, PetroBakken announced a $700-million capital program that will see over 240 horizontal well bores drilled (including bilaterals) to achieve production per share growth of 15% and a 2012 exit rate of 50,000-54,000 BOE/d. Canaccord Genuity Oil & Gas Analyst Brian Kristjansen had forecast $600 million to give production per share growth of 12.9%, although with a lower exit. The company also indicated it was implementing a DRIP, offering a 5% discount on share price for those who reinvest. The company's DRIP program will see PetroBank Energy (PBG) shareholders (who own 59% of PetroBakken) commit to 50% participation. Assuming an average participation rate of 30% amongst the remaining shareholders, Kristjansen expects this to reduce the cash burden of the company's dividend by approximately $75 million in 2012. He see this is as the first step in improving liquidity in advance of February 2013 where up to $750 million in convertible debentures can be put back to the company. He also believes the company's banking syndicate will look favourably upon the DRIP and we could expect a bank line increase in the near-future. Also of note, Brett Wilson, FirstEnergy Capital Corp. co-founder, has been appointed as a director. Kristjansen recently picked up (speculative) bullish coverage on the stock based on its enviable assets in top resource play, high light-oil weighting delivers industry leading netbacks and leverage concerns have beaten the share price to attractive levels.

December Petrobakken Presentation

New presentation now up

http://www.scribd.com/doc/75771191/PBN-2011-12-14-corp-pres

Good news in that they are willing to disclose the identification of 100 drilling locations in the new light oil plays (the mysterious 120,000 acres in the Duvernay, Swan Hills, Nordegg, Montney)

That is with only 3 test wells drilled, so they liked what they saw.  That drilling location number will grow to be sure.

Also a slide detailing decline rates, hopefully the market can start to understand the business model of a company focused exclusively on resource plays with little legacy production

Gurus Gone Wild December 14, 2011

Dan Loeb Love Letters to Yahoo's Board of Directors

A Collection of Dan Loeb (Third Point) Love Letters to the Board of Yahoo

Kyle Bass On CNBC

Kyle Bass Hits CNBC This Morning – His First CNBC Appearance In Several Months

Kyle Bass on BNN

Kyle Bass – Betting on a Collapse, Canadian Business Network Dec. 13, 2011

Biglari Holdings Annual Shareholder Letter

Biglari Holdings 2011 Annual Letter to Shareholders

Chesapeake COO Writes E-Mail on EPA Fracking Issue

http://seekingalpha.com/article/313797-chesapeake-energy-chief-operating-officer-questions-the-epa-s-fracking-findings

Oil Markets Set to Tighten as Depletion Overrides New Supply

Tightening oil supplies from 2012 to 2015


http://www.financialsense.com/financial-sense-newshour/guest-expert/2011/12/14/chris-skrebowski/oil-markets-set-to-tighten-as-depletion-overrides-new-supply

Ackman Adds More Canadian Pacific Railway

http://www.marketwatch.com/story/pershing-ups-stake-in-canadian-pacific-railway-2011-12-13

Rosetta Resources Disappointing Alberta Bakken Results

For now anyway.  Over time someone might figure out how to get this done economically:

http://seekingalpha.com/article/313569-rosetta-resources-tanks-on-uninspiring-alberta-bakken-well-results

Why is it so Hard To Apply Common Sense to the Fracking Debate?

http://seekingalpha.com/article/313506-why-is-it-so-hard-to-apply-common-sense-in-the-fracking-debate

Energy News December 13

Citi - Oil Tail Risks

 Citi is raising its oil price expectations for 2012. In our base case we now expect

Brent to trade in a range of $100 to $120 and to average $110 for the year. This is in
line with the bull case in our previous forecast, which has come about due to better
than expected demand and much worse than expected supply. Going forward, our
global supply and demand balances are moderately bearish for 1Q12, as is our price
outlook, but from then on we expect stronger balances and prices. We are not very
optimistic on oil demand growth, modeling just +0.8-mb/d in 2012 and +1-m b/d in
2013, based on Citi’s GDP expectations of 3.0% and 3.6% (PPP-adjusted) respectively.
We are, however, optimistic on supply, forecasting 1.1-m b/d of non-OPEC supply
growth, and coupled with the return of Libya this requires a cut by OPEC of some 500-k
b/d if they want to keep the market tight and prevent a return to inventory builds. We
think OPEC recognizes this reality, and take recent statements from OPEC members
about how high their recent production has been as posturing in preparation for the
upcoming quota reallocation.

 Beyond supply and demand, our base case expects oil prices to be supported by
several other factors: geopolitical risks, Russian domestic demand, the rise of
the non-OECD, higher macro correlations, and inflation tail risks. Citi’s views
warrant cautious optimism on risk assets (our global equity strategists are targeting a
20% gain in the MSCI AC World equity index, which should be supportive for oil).
Monetary expansion would be supportive for commodity prices in general, and Citi is
expecting QE3 in the US, rate cuts in Europe and a return to an easing cycle in China;
and finally geopolitics, which we expect to be a dominant theme in oil markets
throughout 2012 and 2013.

 We think the world is operating with about 2.5-m b/d of spare production
capacity. Virtually all of which is in Saudi Arabia, with the rest scattered around
other core Gulf OPEC members. Absent any supply disruptions, we expect to see a
marginal increase in spare capacity, but the margin remains so slim and the potential
disruptions so numerous that we believe risks are slanted heavily to the bullish side of
the ledger. Tensions between Israel and Iran top the list, but en EU embargo on Iranian
oil, sanctions on Syria, succession and the possibility of strife in Saudi Arabia, elections
in Venezuela and Angola and ongoing violence in Nigeria and Yemen are on the list but
do not complete it.

 Our base case is constructive for oil prices. Our bull case, to which we assign a
25% probability, is that one of the many possible geopolitical risks to supply comes to
fruition, in which case we expect oil prices to spike higher and to take a real toll on the
global economy. Our bear case comes from a disintegration of the Euro (something our
economists estimate is a 5% probability event), or a hard landing in China. Either of
these would take oil down more than a peg or two.

Petrobank 2012 Capital Plan

"The Kerrobert project is an attractive investment with break-even cash flow estimated to occur at less than 1,000 barrels of oil production per day at current commodity prices. We plan to provide an operational update for our Kerrobert project in the first quarter of 2012."

They are targeting 7,200 barrels a day and is breaks even at 1,000 barrels a day.  Of course first they have to get to 1,000 barrels a day.

http://www.petrobank.com/files/710.PBG-2011-12-13-pressrelease.pdf

Daniel Yergin on the Keystone Pipeline

Petrobakken - Operational Update, 2012 Guidance

Interesting to note that Petrobank is giving up half of its dividend and enrolling in the DRIP.  I would not have thought that Petrobank could afford to give up $53 million in cash flow.  What does that suggest about:

- performance of Kerrobert wells
- potential for a joint venture at May River



http://finance.yahoo.com/news/PetroBakken-Announces-W-Brett-ccn-4193402865.html?x=0

We are very pleased to announce the appointment of W. Brett Wilson to the Board or Directors of PetroBakken. We are confident Mr. Wilson's 25 plus years of investment banking experience, primarily as co-founder of FirstEnergy Capital Corp., will be a valuable addition to our ongoing strategic direction and governance team at PetroBakken.


Operational Update

Production in early December has reached over 48,000 barrels of oil equivalent per day ("boepd") (87% light oil and NGLs), a 23% increase over third quarter 2011 production levels, based on field estimates. Our Bakken business unit production is over 23,000 boepd and our Cardium business unit production now exceeds 14,750 boepd (with over 1,450 boepd currently shut-in awaiting tie-in to gas conservation systems), with the remainder of the production generated by our Saskatchewan conventional and AB/BC business units. We continue to forecast a 2011 exit production rate of over 49,000 boepd.

Initial 2012 Capital Plan

We are also pleased to announce our initial capital plan for 2012, which allow us to build on our 2011 operational success. We anticipate capital development expenditures of approximately $700 million, primarily focused on horizontal drilling and completions, predominantly in the Bakken and Cardium light oil plays. We expect that this drilling-focused activity will generate a 2012 exit production rate of between 50,000 and 54,000 boepd. Our estimated year-over-year average production growth will exceed 15%, on an absolute and per-share basis. We expect this initial 2012 program to be executed entirely from funds from operations, with surplus cash flow available to fund dividends and debt repayment.

For 2012 we estimate that our corporate base decline rate will be in the range of 30-35%. In 2010, our base production declined approximately 40%, while the 2011 base decline rate is now forecast at approximately 35%. We have been encouraged by the results of our recently completed wells, and we are also beginning to see the benefit of the continued maturation of our producing assets with a significant proportion of our production now coming from older, shallower decline, horizontal wells.

Capital plans for 2012 will focus primarily on our light oil resource plays in southeast Saskatchewan for the Bakken and central Alberta for the Cardium, as well as our Mississippian conventional light oil play in southeast Saskatchewan. The majority of our 2012 capital spending is expected to be used to drill, complete and equip ("DC&E") over 183 net wells (due to bilateral wells this represents over 240 net horizontal well bores) for approximately $545 million. The plan also includes investments of approximately $155 million in facilities, land, seismic, recompletions and direct administration capital.

In southeast Saskatchewan, we expect to drill 96 net Bakken wells (including approximately 58 net bilateral wells) and 35 net conventional wells. Overall, we plan on spending $290 million of DC&E capital in southeast Saskatchewan, comprised of $225 million in the Bakken (including EOR spending) and $65 million in our conventional Mississippian plays. We will also continue to invest in our EOR pilots to evaluate several injection configurations, primarily using natural gas. Currently, we have five pilot projects underway that are in various stages of implementation. It is expected that we will have our second pilot on injection in Q1 2012, with three others being added by the end of Q3 2012.

In Alberta and British Columbia we plan to drill 49 net wells for DC&E capital of $225 million in our Cardium business unit and three wells in our AB/BC business unit for $30 million. The majority of our Cardium drilling will be focused on West Pembina. In our AB/BC business unit, activity will further delineate and evaluate our new oil resource plays building on our 2011 drilling program where we have drilled three wells and are currently drilling one additional well. At this time, we estimate we have identified over 100 drilling locations in the new oil resource play areas.

As part of our ongoing balance sheet management, and to reward continuing support from existing shareholders, we are pleased to announce the implementation of a DRIP. The DRIP provides eligible holders of common shares resident in Canada the opportunity to reinvest their monthly cash dividends in PetroBakken shares at a 5% discount to the then current market prices. Petrobank (59% shareholder of the Company) has indicated an intention to participate in the DRIP with respect to 50% of their PetroBakken shares, which will amount to $53 million in additional liquidity to the Company on an annual basis. Subject to the receipt of approval of the Toronto Stock Exchange, the DRIP will be implemented for the January 2012 dividend, which is payable in mid-February 2012. Additional information regarding the DRIP can be found below.

We are expanding our hedging program to hedge up to 20,000 bopd of our net production in the first half of 2012 in order to provide further cash flow security. This is an increase to our past practices in which we hedged approximately 25% of our production. To-date, we have 12,750 bopd hedged for the first half of 2012 at an average floor of $80.49 and a ceiling of $113.92. For the second half of 2012 we have 8,500 bopd hedged at an average floor of $76.62 and a ceiling of $119.77. This increased hedging program has been adopted to allow us to lock in strong oil prices as we move into 2012.

Gurus Gone Wild December 12, 2011

Biglari Annual Letter

Biglari Holdings 2011 Annual Letter to Shareholders

Yacktman On Pepsico

Value Investor Donald Yacktman On Why Prefers PepsiCo to Coca-Cola

Interview Transcript - Steve Forbes and Tilson

Transcript of Steve Forbes Interview with Whitney Tilson

Energy News December 12

Opposition to shale gas exploration in New Brunswick

http://www.rigzone.com/news/article.asp?hpf=1&a_id=113254

Petrominerales Brings Cobra 2 on at 5,000 bopd

http://www.petrominerales.com/wp-content/uploads/2011/12/PMG-2011-12-11-eng.pdf

Economic Surge in Ohio County

http://www.ohio.com/news/local/gas-exploration-sparks-economic-surge-in-carroll-county-1.249839

Iran Military to Practice Closing Strait of Hormuz

http://af.reuters.com/article/energyOilNews/idAFL6E7NC2B520111212

EPA Fracking Fears May Not Stand Up

http://www.calgaryherald.com/business/fracking+fears+stand/5841283/story.html

Kodiak Oil and Gas CEO Talkin Bakken

Updated Petrominerales Analyst Targets

Stock price $16

The lower number is the revised target, the higher number is the previous target.


Petrominerales

(PMG-TSX)

Action Analyst Rating Price Date

Target Dundee Securities $28.75 « $50.75 12/09/11

Target Jennings Capital Buy $34.00 « $44.00 12/08/11

Target Scotia Capital Sector Perform $33.00 « $37.00 12/07/11

Target, Downgrade CIBC World Markets Sector Perform « Sector Outperform $29.25 « $34.50 12/07/11

Target UBS Securities $23.00 « $35.00 12/07/11

Target Haywood Securities $36.00 « $39.00 12/07/11

Target RBC Capital Markets $43.00 « $46.00 12/07/11

More on the EPA and Pavillion

6 Questions for the EPA

http://www.energyindepth.org/six-questions-for-epa-on-pavillion/

Wyoming Governer Calls EPA results scientifically questionable

http://governor.wy.gov/media/pressReleases/Pages/GovernorMeadImplicationsofEPA.aspx

Petroleum Association of Wyoming chimes in

http://images.skem1.com/client_id_8990/PAW_News_Release_12-08-2011_0429_PM_MST.pdf

Original Encana Letter to Pavillion residents

http://www.energyindepth.org/wp-content/uploads/2009/09/wy_pavillion-area-letter_-final-8-28-09-2.pdf

Chesapeake's $13 Billion Funding Need

http://seekingalpha.com/article/312715-why-won-t-the-stock-market-believe-in-chesapeake-energy-s-business-model

Gurus Gone Wild December 9, 2011

Fourth Annual Pershing Square Challenge

Videos from the 4th Annual Pershing Square Challenge

Marc Faber Brings His Joy For Gloom to Fox

Marc Faber Pops Up on Fox Business News And Suggests We Should Dissolve the Euro

Klarman in Litigation With Bank of America

Seth Klarman Has a Bone to Pick with Bank of America

Transocean Not Free and Clear From Spill Liability

http://www.ft.com/intl/cms/s/0/f45416cc-21f7-11e1-8b93-00144feabdc0.html#axzz1g378KZ8l

Frack Storm Shows Need for Better Regulation

A rare balanced viewpoint:

http://www.reuters.com/article/2011/12/09/column-us-fracking-regulation-idUSL5E7N92V020111209

RISK MANAGEMENT


No form of energy is without risk. Conventional oil and gas wells leak. Nuclear power stations melt down. Coal-fired power stations emit lots of mercury and greenhouse gases. And wind farms kill migrating birds and disfigure the landscape.

Like any other technology, fracking imposes its own costs and benefits, but there is no reason to think it is inherently any worse than conventional oil and gas production or other forms of energy.

The first frack job dates back to 1947, and up to 95 percent of all oil and gas wells drilled today are hydraulically fractured, accounting for 43 percent of total U.S. oil production and 67 percent of natural gas production, according to a report prepared by the National Petroleum Council for the U.S. Department of Energy.

From time to time, it is inevitable fractured wells will contaminate drinking waters. There is no such thing as zero risk. The challenge is to manage risks carefully and ensure those affected are properly compensated when things go wrong.

In theory, it should be possible to design a system of intelligent regulation that maximises the benefits from unlocking unconventional gas and oil reserves while minimising adverse impacts on local communities -- from groundwater contamination, disposal of briny waste water, use of freshwater supplies and the enormous increase in traffic.

In practice, this remains a depressingly distant goal. EPA, environmental groups and the oil and gas industry must all share the blame for inadequate fracking regulation and an increasingly hostile political environment for a technology that promises to transform the energy supply picture in coming decades -- but only if voters allow it to be deployed more widely.

Energy News - December 8

Pipeline destroyed in Syria

http://www.rigzone.com/news/article.asp?a_id=113225

Mexico a natural gas Superpower?

http://www.rigzone.com/news/article.asp?a_id=113232

GOP locks Keystone into tax bill

http://www.upstreamonline.com/live/article293406.ece

The EPA Press Release

Denver, Colo. –December 8, 2011) The U.S. Environmental Protection Agency (EPA) today released a draft analysis of data from its Pavillion, Wyoming ground water investigation. At the request of Pavillion residents, EPA began investigating water quality concerns in private drinking water wells three years ago. Since that time, in conjunction with the state of Wyoming, the local community, and the owner of the gas field, Encana, EPA has been working to assess ground water quality and identify potential sources of contamination.


EPA constructed two deep monitoring wells to sample water in the aquifer. The draft report indicates that ground water in the aquifer contains compounds likely associated with gas production practices, including hydraulic fracturing. EPA also re-tested private and public drinking water wells in the community. The samples were consistent with chemicals identified in earlier EPA results released in 2010 and are generally below established health and safety standards. To ensure a transparent and rigorous analysis, EPA is releasing these findings for public comment and will submit them to an independent scientific review panel. The draft findings announced today are specific to Pavillion, where the fracturing is taking place in and below the drinking water aquifer and in close proximity to drinking water wells – production conditions different from those in many other areas of the country.

Natural gas plays a key role in our nation’s clean energy future and the Obama Administration is committed to ensuring that the development of this vital resource occurs safely and responsibly. At the direction of Congress, and separate from this ground water investigation, EPA has begun a national study on the potential impacts of hydraulic fracturing on drinking water resources.

“EPA’s highest priority remains ensuring that Pavillion residents have access to safe drinking water,” said Jim Martin, EPA’s regional administrator in Denver. “We will continue to work cooperatively with the State, Tribes, Encana and the community to secure long-term drinking water solutions. We look forward to having these findings in the draft report informed by a transparent and public review process. In consultation with the Tribes, EPA will also work with the State on additional investigation of the Pavillion field.”

Findings in the Two Deep Water Monitoring Wells:

EPA’s analysis of samples taken from the Agency’s deep monitoring wells in the aquifer indicates detection of synthetic chemicals, like glycols and alcohols consistent with gas production and hydraulic fracturing fluids, benzene concentrations well above Safe Drinking Water Act standards and high methane levels. Given the area’s complex geology and the proximity of drinking water wells to ground water contamination, EPA is concerned about the movement of contaminants within the aquifer and the safety of drinking water wells over time.

Findings in the Private and Public Drinking Water Wells:

EPA also updated its sampling of Pavillion area drinking water wells. Chemicals detected in the most recent samples are consistent with those identified in earlier EPA samples and include methane, other petroleum hydrocarbons and other chemical compounds. The presence of these compounds is consistent with migration from areas of gas production. Detections in drinking water wells are generally below established health and safety standards. In the fall of 2010, the U.S. Department of Health and Human Services’ Agency for Toxic Substances and Disease Registry reviewed EPA’s data and recommended that affected well owners take several precautionary steps, including using alternate sources of water for drinking and cooking, and ventilation when showering. Those recommendations remain in place and Encana has been funding the provision of alternate water supplies.

Petrominerales Hunt For Big Game in Peru Commences

Veraz Petroleum Ltd. Announces Spud of La Colpa 2X Well


CALGARY, ALBERTA--(Marketwire - Dec. 8, 2011) - Veraz Petroleum Ltd. ("Veraz" or the "Company") (TSX VENTURE:VRZ) is pleased to announce the commencement of the drilling of the La Colpa 2X well, situated on Block 126 in east central Peru. Veraz has a 20% working interest in this project which is operated by Petrominerales Ltd..

'Veraz has been engaged in this project for over five years and we are very excited to commence this drilling program. I would like to acknowledge the hard work and commitment of our staff as well as the tremendous support and assistance provided by our partner, Petrominerales Ltd.' commented Mr. Oppe Cosijn, President and Chief Executive Officer of Veraz.

In the August 2011 Operations Update, it was suggested that the La Colpa 2X well would be drilled in two stages with the shallow zones being tested before year-end 2011. Because of weather related delays there is insufficient time to accomplish this and the partners have decided to drill to a total measured depth of approximately 2900m with logging and testing to follow. Drilling and testing of the La Colpa 2X well are anticipated to be completed in the first quarter of 2012. Once this is accomplished the drilling rig will be moved to the Sheshea 1X location in anticipation of the commencement of drilling operations there.

And A Little Bit More On Encana / Fracking

http://online.wsj.com/article/SB10001424052970203501304577086472373346232.html

The EPA itself said the Wyoming field differs from most fracking sites because the fracking "is taking place in and below the drinking water aquifer and in close proximity to drinking water wells"—unlike most sites where fracking is done far below the water table.


Petroleum engineers and other industry experts cautioned against extrapolating the EPA's Wyoming results to other parts of the country, saying the wells at issue and the region's geology were atypical of areas that have undergone fracking.


The gas-bearing rock being fractured in Wyoming was only about 1,220 feet deep. And some of the water wells extended down 800 feet. By comparison, in Texas and Pennsylvania most of the rocks being fracked are several thousand feet deeper than water wells.

And, unlike gas-rich geologic formations such as the Marcellus in Pennsylvania and Barnett in Texas, the Wyoming field doesn't have a rock barrier that sits atop the gas reservoir.

"It is not something we can say, 'If it's happening here, it can happen anywhere,' " said Ian Duncan, a research scientist at the Bureau of Economic Geology at the University of Texas. "There is such a large difference in the amount of rock between where the fracking is going on and where the water is."

The report cited problems with how the wells were constructed, including intervals where the wells had no cement casing or weakened cement. EPA officials said this could be related to the age of the wells, some of which date to the 1950s, and varying state regulations over the years.

Environmental groups have cited the potential for poor well construction as a risk and said the report shows the need for tighter rules. "Even if you just set aside the fracking issue, the EPA found a lot of problems. These wells were not constructed properly, they weren't cemented properly," said Amy Mall of the Natural Resources Defense Council.

The EPA announcement irked Wyoming authorities. Gov. Matt Mead issued a statement saying the draft analysis "is scientifically questionable and more testing is needed."

Tom Doll, the state's oil and gas supervisor, said "more sampling is needed to rule out surface contamination or the process of building these test wells as the source of the concerning results."

Encana Response to the EPA Release

On December 8, 2011, the U.S Environmental Protection Agency (EPA) published a draft report on its investigation of groundwater near Pavillion, Wyoming. The EPA's news release stated: "The draft report indicates that ground water in the aquifer contains compounds likely associated with gas production practices, including hydraulic fracturing."


The EPA's draft report and current view is based on a possibility, not a conclusion built upon peer-reviewed science. The cause of the compounds in the water remains inconclusive.

We live and work in the communities where we operate and we care about the impacts of energy development on the environment. We work very hard to ensure our operations do not impact groundwater. That's why Encana has worked extensively with the EPA and the Wyoming Department of Environmental Quality in their investigations into this matter. Encana disagrees with the EPA's statement that the source of the compounds in the groundwater is likely associated with hydraulic fracturing from natural gas development.

The Pavillion area natural groundwater has a long history of poor quality. Recent drinking water sample results are consistent with studies published by the U.S. Geological Survey and others over the past 50 years, prior to natural gas development in the area. The poor water quality is due to sulfates, sodium, total dissolved solids and pH which commonly exceed state and federal drinking water standards. The nature of the area geology is that natural gas has always been known to exist at shallow depths in the Pavillion natural gas field.

It's important to note that:

The EPA tested domestic water wells and found no indication of impacts from oil and gas development.

The EPA drilled two deep monitoring wells into a natural gas reservoir and found components of natural gas, which is an entirely expected result. Natural gas developers didn't put the natural gas there, nature did.

The characterization of the ground water as highly contaminated is not supported by the data. Encana continues to test and document well bore integrity under the direction of the Wyoming Oil and Gas Conservation Commission.

The EPA report is of concern to the State of Wyoming and members of Congress. Wyoming Governor Matt Mead and Oklahoma Senator James Inhofe, who sits on the Senate Committee on Environment and Public Works, have called for more research. Senator Inhofe has expressed concern that the EPA has pre-determined results that remain inconclusive.

Encana remains committed to seeing that the investigations into determining the source of the compounds found in the Pavillion groundwater are backed by sound science that is reviewed by independent peers.

More on Encana Pavillion Fracking Contamination

http://www.theglobeandmail.com/report-on-business/encana-on-defensive-over-groundwater-fouled-by-fracking/article2264884/

There are important distinctions between the fracking around Pavillion and the fracking used in major new shale oil and gas plays, such as Marcellus, Bakken and Haynesville. In shale plays, industry typically fractures rock from the horizontal leg of deep wells located at depths of one to three kilometres.


In Wyoming, the fracturing happens from vertical wells – an important difference – that are shallower, ranging from a kilometre to 372 metres below the surface. Some water wells in the area go down to 244 metres, creating a relatively close linkage.

In addition, the EPA notes what may be imprudent industry practices. Only two gas wells around Pavillion have “surface casing” – a protective metal sleeve inside a well that is cemented in place to prevent drilling fluids from leaking out – that goes deeper than the deepest water wells. That means almost every gas well has unprotected stretches at depths people draw water from.

The EPA itself, in a news release Thursday, said conditions in Wyoming are “different from those in many other areas of the country.” But in an interview, spokesman Larry Jackson said it’s possible that what’s happened at Pavillion has “commonalities that could result in similar findings elsewhere.”

Connacher Gets a Takeover Offer - Pops 50%

I wrote about and had a look at buying some shares in September around 50 cents.  Closed today at 92 cents.  Don't own any for %#$%'s sake.

Patience.  What I do own is just as cheap and less risky.

http://seekingalpha.com/article/312779-connacher-oil-gas-the-latest-canadian-energy-takeover

Exxon's 2012 Outlook For Energy

XOM2012EnergyOutlook

EPA Implicates Fracking in Water Contamination for 1st Time

But before we panic:

The EPA also emphasized that the findings are specific to the Pavillion area. The agency said the fracking that occurred in Pavillion differed from fracking methods used elsewhere in regions with different geological characteristics.



The fracking occurred below the level of the drinking water aquifer and close to water wells, the EPA said. Elsewhere, drilling is more remote and fracking occurs much deeper than the level of groundwater that anybody would use.

http://www.usatoday.com/money/industries/energy/environment/story/2011-12-08/epa-fracking-pollution/51745004/1

Petrobakken - November 2011 Presentation

2011 11 09 PBN Corp Pres With Appendices FINAL

Bill Gates and China Discussing New Nuclear Reactor

http://www.guardian.co.uk/environment/2011/dec/07/bill-gates-china-nuclear-reactor

Gurus Gone Wild December 7, 2011

Michael Lewis Discussing USA debt

Michael Lewis Interview – The United States Is Going to be Facing Third World Problems

Where David Winters is Finding Value

David Winters Interview – Thinks There Are Many Great Companies on Sale

Icahn Discussing His Commercial Metals Bid

Carl Icahn Discussing His Hostile Bid for Commercial Metals

60 Minutes On Prosecuting Wall Street

60 Minutes Prosecuting Wall Street – Why Hasn’t Anyone Been Charged for Creating the Financial Crisis?

Skywest Merger Closes

Get drilling some oil wells now please

http://www.newswire.ca/en/story/890585/skywest-energy-corp-and-marquee-petroleum-ltd-announce-closing-of-the-plan-of-arrangement

Chanos Interview - Moody's/S&P Have China Wrong

http://www.reuters.com/article/2011/12/06/us-investment-summit-chanos-idUSTRE7B52IN20111206

Jim Rogers Talking to Maria - Now Suggesting a Depression in 2013

Jim looks so little........

Gurus Gone Wild December 6

John Mauldin Has An Idea to Create Housing Demand:

John Mauldin Video – Housing Demand and Europe Crisis

New Market Commentary from Muhlenkamp:

Muhlenkamp December 5, 2011 Market Commentary - Fear of Recession Largely Over

Jeremy Grantham Q3

Jeremy Grantham Q3 2011 Letter

Energy News - December 6

Articles will be added to this thread through the day.

Stubbornly High Oil Prices Here to Stay:

http://www.citywire.co.uk/money/get-ready-for-stubbornly-high-oil-prices/a549783?re=17036&ea=66817&utm_source=BulkEmail_Money_Daily&utm_medium=BulkEmail_Money_Daily&utm_campaign=BulkEmail_Money_Daily

Transocean - Stock Depressed for Good Reasons

http://seekingalpha.com/article/312079-transocean-4-valid-concerns-but-the-price-is-still-tempting

Best Opportunities in 50 Years - Loews Chief Investment Strategist Rosenberg

In my 50 years on Wall Street, it is rare that I've been so attracted to some of the best and finest companies. I will name a few, but generally speaking, I feel like a kid in a candy store, because I don't know where to begin.

http://online.barrons.com/article/SB50001424052748703922804577066323160174632.html?mod=BOL_article_snippet_popview#articleTabs_panel_article%3D1

Just How Much Gas is Jim Bob (MMR) Sitting On?

http://www.forbes.com/sites/peterricchiuti/2011/12/06/bullish-on-american-oil-and-gas-consider-these-2-stocks-under-rocks/

Andrew Ross Sorkin on the Cooperman Letter to Obama

http://dealbook.nytimes.com/2011/12/05/a-rich-mans-grievance-with-obama/?ref=business

Sasol Executive on Shale Gas and Europe

Metallica Tour Delayed By European Debt Crisis

Gurus Gone Wild - Chanos, Faber, Rogers, Ross, Sir Richard

Greenwald and Charlie Munger's Favorite Investor

Bruce Greenwald Moderates Panel Discussion That Includes Charlie Munger Favorite Li Lu

Faber Oh So Gloomy on China

Marc Faber - All Gloom and Doom for China

Stephen Roach Thinks Chanos Don't Know China

Stephen Roach (Chairman Morgan Stanley Asia) Thinks Chanos Is Wrong on China

Bob Rodriguez on the European Crisis

Bob Rodriguez – Memo to FPA Colleagues on European Debt Crisis

Sir Richard Branson Weighs in on Europe

Maverick Guru Sir Richard Branson Discussing His Northern Rock Partnership with Wilbur Ross

Wilbur Ross Also on Europe

Vulture Investing Guru Wilbur Ross Back from Europe and Discussing His Firsthand View of the Crisis

More From Chanos and Rogers

15 Minutes with Jim Chanos and Dylan Ratigan Interviewing Jim Rogers

WealthTrack Interview With Michael Mauboussin

WealthTrack Interview With Legg Mason’s Michael Maubbousin

Energy News - December 5

Articles I've been reading today.  Will update this post as I find more:

They like shale gas drilling in Poland:

http://www.naturalgaseurope.com/shale-gas-brings-hopes-smiles-in-poland-b-3824

Progress on pipeline to bypass Strait of Hormuz:

http://www.cbsnews.com/8301-505245_162-57336490/uae-says-oil-pipeline-bypassing-hormuz-almost-done/

Will Obama shut down shale?

http://www.rigzone.com/news/article.asp?a_id=113028&hmpn=1

Chris Martenson Video - Global Energy Situation is not a Fixable Problem

BP CEO Thinks $90 to $100 is Reasonable for Oil

I think that would work nicely for my oil weighted portfolio as well.  I'm afraid it might be headed considerably higher though:

Punch Card Portfolio Issue #13

Three months into the Punch Card Portfolio newsletter and weekly issue #13 will be sent to subscribers tonight.

The portfolio currently has 10 positions and has sold another 6 prior holdings.

A bit more active than I expected to be, but we had some lucky timing in front of market rallies.  I'm not opposed to taking short term gains if they are large enough.

Send me an e-mail if you would like to sample a back issue.

Energy News - December 4

Check back for regular energy news (updated periodically):

Iran Shoots Down US Military Drone:

http://www.theglobeandmail.com/news/world/iran-shoots-down-unmanned-us-spy-plane-news-agency/article2259511/

Iran Claims $250 oil if exports blocked:

http://ca.news.yahoo.com/iran-says-oil-over-250-exports-banned-102435950.html

Canada won't be captive supplier of US Energy (per PM Harper):

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/canada-wont-be-captive-supplier-of-us-energy-pm-says/article2258846/

ConocoPhillips Buying Back Shares and Focusing on Shale:

http://www.rigzone.com/news/article.asp?a_id=113090&hmpn=1

War on Iran = Oil Armageddon

http://in.reuters.com/article/2011/11/30/iran-oil-idINDEE7AT08720111130?rpc=401&feedType=RSS&feedName=businessNews&rpc=401

Iran Oil Embargo By Europe:

http://www.usnews.com/news/articles/2011/11/30/iran-oil-embargo-could-hurt-europe-and-help-china-russia

Silver to Outperform in 2012?

The Sprott guys have been pumping silver, not sure I'm smart enough to get on board.  I'll stick with my oil equities for now:

http://www.forbes.com/sites/afontevecchia/2011/12/02/silver-to-rise-on-currency-commodity-industrial-triple-whammy/

Yoho Resources Early to the Duvernay

http://www.albertaoilmagazine.com/2011/11/brian-mclachlan-talks-about-his-duvernay-gamble/

Very difficult to get information on this play.  Petrobakken has 120k acres in 4 new plays in Alberta which they assembled starting a couple of years ago. 

An Eye On China

http://www.cnbc.com/id/45510044

http://www.nytimes.com/2011/12/03/opinion/will-china-stumble-dont-bet-on-it.html?_r=1&ref=opinion

http://www.thestreet.com/story/11330407/1/kass-the-china-syndrome.html?kval=dontmiss

http://www.bloomberg.com/news/2011-11-30/china-cuts-reserve-requirement-for-banks-as-europe-crisis-threatens-growth.html

High Oil Prices to Get Higher

http://www.ft.com/intl/cms/s/0/609485b6-1ced-11e1-a134-00144feabdc0.html#axzz1fPUJJTRx

Carl Icahn Sends Third Letter to Commercial Metals

December 2, 2011


Board of Directors
Commercial Metals Company
6565 North MacArthur Boulevard, Suite 800
Irving, Texas 75039

Ladies and Gentlemen:

On Monday, we informed you and publicly announced that Icahn Enterprises LP would purchase Commercial Metals Company at $15 per share, in cash, without any financing or due diligence conditions. Disappointingly, it is Friday afternoon, the week is over, and we have still not heard from you.

We are sure that you are keenly aware that since our announcement, over 22 million of the Company's shares have traded. This represents over 19% of the Company's outstanding shares, and is 200% higher than the average weekly trading volume over the past 52 weeks. To allow your shareholders to trade such heavy volumes without responding to our offer is completely irresponsible – but wholly consistent with the pattern of irresponsibility demonstrated by the Company over the years.

Icahn Enterprises (which currently has, on a consolidated basis, $22.4 billion of assets, including in excess of $13 billion in liquid assets, which are cash and marketable securities) made a legitimate offer to acquire your Company, and to be clear, we continue to be immediately ready to meet with you to document the transaction. We are not asking for any due diligence or financing conditions. All that we are asking is that you allow your shareholders to decide if they wish to sell their company.

We have received a number of inquiries from shareholders this week, as we are sure you have too. Shareholders deserve an answer; it is incumbent on this Board to respond to our offer. To that end, if you continue to disregard your duties and have not contacted us by 9:00 a.m., New York City time, on Monday, December 5, 2011, to schedule a meeting to discuss our offer, please be forewarned that we intend to take matters into our own hands.

Carl C. Icahn

More With Kyle Bass and Professor Greenwald

Hour-Long Conversation with Kyle Bass About the Sovereign Debt Crisis

Columbia’s Greenwald on Investor Psychology

Goldman Sachs 2012 Commodity Price Forecasts

http://www.businessinsider.com/goldman-sachs-commodities-outlook-2011-12?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+businessinsider+%28Business+Insider%29&utm_content=Google+Reader#brent-crude-oil-is-expected-to-rise-15-by-year-end-1

Selected Articles

On the German fear of inflation:

http://www.nytimes.com/2011/12/02/world/europe/haunted-by-20s-hyperinflation-germans-balk-at-euro-aid.html?_r=1

Krugman on Europe:

http://www.nytimes.com/2011/12/02/opinion/krugman-killing-the-euro.html?_r=1

The unconventional resource revolution:

http://www.marketwatch.com/story/shale-gas-gives-rise-to-era-of-energy-independence-2011-12-02

More From Kyle Bass on the Sovereign Debt Crisis

http://www.youtube.com/watch?v=5V3kpKzd-Yw&feature=mfu_in_order&list=UL