I bought some shares of UEC for $1.71. This is not a full position. It is just a couple percent of my account.

I consider this a leveraged addition to my CCJ position. That CCJ position is quite large, banking on a recovery in uranium. I wanted to add some more, but diversify a little, with the potential for a big payoff.

UEC recently secured a finance deal and have done very well bringing operations on line. They’re exceptionally small, and I cannot condone buying them in size. Small fluctuations could snuff them out.

However, I am a believer in uranium. Forces around the globe are converging. My main play is CCJ, but if pricing recovers, UEC will skyrocket in ways CCJ could only dream of.

___________________________________________

Update: here’s UEC’s capital spending on projects. Look at all the projects they’ve brought online in just a few years. There are good things coming down the pipeline.

Comments »

I bit into the 8% selloff this morning. By the time I got a nibble, it was a 6% selloff.

I don’t expect this to last. The earnings miss is a non-issue for a small company in a rapidly growing industry. And the hit was largely one time items that shouldn’t be a recurrent problem.

HCLP is a buy here on any dip. Especially as validation of the growing demand for frac sand continues to come in.

Comments »

BAS is up 4% this morning after announcing earnings last night. The earnings themselves were unspectacular, but I think capital is beginning to catch on to the idea, judging by the gap up.

BAS has managed to close earnings losses by about half (so far) while keeping revenues approximately flat (-4% year over year), which in this environment with such steep competition for rig hours is an impressive feat.

The real story here is BAS’ cash position, which actually increased despite everything else. They now are sitting on $100 million, up from $96 million last quarter – and keep in mind that this time last year they were only sitting on $104 million.

The company has made a few big acquisitions over the last couple quarters, including a salt water disposal company last December. Total capital investment was $139.9 million for the last 12 months. During that same time, BAS’ long term debt increased by $82 million. So I think I can see clear value being created by the operation, the losses notwithstanding.

The real game BAS is playing here is best laid out by their CEO Roe Patterson (emphasis mine):

“With respect to acquisition opportunities, seller expectations still remain high. We expect valuations to come more into balance over the next two quarters so we will continue to conserve our liquidity until we see those opportunities. We currently anticipate spending about $165 million for capital expenditures in 2013, adding mainly higher margin rental equipment and salt water disposal wells, along with maintenance and sustaining capital.”

BAS is positioning themselves to buyout the competition at fire sale prices. That’s the real play. I first got on to this company, actually, when I was looking through the space for potential investments, and realized nobody had any cash on hand.

BAS was the first company, after checking a few dozen, that actually had suitable cash reserves.

The natural gas price collapse that occurred throughout 2011 (nice work, Aubrey…) struck the well services industry hard. I’d say BAS has a hunch a subset of their competitors might start to get in trouble here shortly – why else wait? It’s not like energy services firms (at least the publicly traded ones) are commanding high multiples these days.

The rig services guys are killing themselves right now to stay in business. This cut throat competition can’t hold up indefinitely. BAS has a mark of it falling through sometime in the next two quarters. That’s when they’ll make their big moves.

Comments »

My HCLP position is up another 5% this morning, pressing gains. The agreement to settle the Baker Hughes lawsuit coupled with a six year supply agreement was a big deal.

This partnership is one of the rare examples of me buying into an expensive equity position. I normally toe the line within certain valuations. However, I was willing to pick up the “pricey” HCLP partnership units because I like the prospects going forward. The partnership is small and the fracking revolution is young.

My expectation is for the HCLP and BAS positions to transform into cash cows over the next five years.

Comments »

My latest position, the partnership HCLP, raised its distribution last night by 3%.

The partnership is on a tear, and I expect that trend to continue well into the future, as fracking kicks into high gear.

We have an energy revolution here. It’s time for the pig-dogs of OPEC to lick our boots.

Comments »

Just felt you should know HCLP is continuing its run this morning…

Not much else happening though. Silver just took a second blow to the knee, and CCJ is circling the drain.

The CCJ melancholy is a three year recurring melodrama of such bad performance, I’d get up and leave my box if I didn’t own the theatre.

This is a part of the dance, which plays itself out over and over and over again.

Dispair at the state of nuclear power mixed with cowardly shareholders causes a thirty percent flush out, from which data releases eventually overcome and show to be unfounded, until optimism for a resolution of the nuclear energy concerns pushes us back to the top of the range from where the whole, trashy show can get started again.

Burlesque variety of performances have better plot lines than this…

The last round of CCJ earningst that were released showed that realized prices for CCJ’s uranium actually increased year over year, at the same time “market prices” plunged from $50 per lb to the $36 price they command today.

Until I see some data suggesting that Cameco is actually being affected by the doldrums of the rest of the nuclear energy sector, I have no reason to take any of this seriously.

Comments »