Independent oil and gas investments in exploration development

FOSSIL OIL & GAS MANAGEMENT, LLC.

is an independent oil and gas company with management and consultants having over 100 years experience serving Texas and Louisiana Gulf Coast, and South and East Texas. Throughout most of 2008, the oil and gas industry had never seen higher prices for oil and gas in its 150 year existence. Oil companies were experiencing record profits. The industry appeared to be revisiting the oil boom of the early 20th century but with far greater results with Natural Gas and Condensate as an added commodity! It was a period of global demand for energy, tightening supply, lingering energy bill in our own country, and tax write off incentives in the tax code to attract capital to fund exploration and development opportunities. The opportunities were astounding through the first 3 quarters of 2008. The price of a barrel of crude oil hit a record $147.27 on 7/11/08. All this changed when the “economic crisis” caught most of us by surprise. Five years of increasing price gains for oil and natural gas was lost in five months. What we must remember is that crude oil traded at $17.85 per barrel in 2002 and by 2007 had jumped to $95.98 per barrel. Crude oil has begun its climb back up and has traded over $80 per barrel recently. Industry pundits are predicting that as the stock market recovers late 2009 and into 2010 our economy and the demand for crude oil and natural gas will do the same. The instability of the Middle East oil producing countries and the reduction of oil output by OPEC should also help prices continue to climb back up to respectable levels.

Industry economists predict worldwide consumption to be 115 million barrels of oil a day by 2030, a huge increase from current demand. World competition for fossil fuel sources will always exist, yet, big oil companies have reduced their drilling budgets from 30% in the mid-90's to under 18% today. Much of today’s world's oil has been nationalized, leaving the major USA oil companies scrambling for incredibly expensive international and deep water projects (Outer Continental Shelf – Gulf of Mexico). Thus, with the absence of the major oil companies drilling onshore, “the playing field has been leveled” and huge opportunities prevail to explore these vast onshore projects. FOSSIL OIL & GAS MANAGEMENT, LLC continues to manage its past joint venture operations.

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WTI spot price trend
Natural Gas spot price trend

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Industry News Updates!

Oil and Gas Industry At a Glance

America’s oil and natural-gas industrysupports more than nine million jobs.

U.S. petroleum imports in November ’09: 11,173,000 barrels per day

U.S. marketed natural-gas production in September ’09: 59.2 billion cubic feet per day

U.S. deliveries from primary storage of motor gasoline in November ’09: 9,035,000 barrels per day

U.S. deliveries from primary storage of distillate fuel oil in November ’09: 3,693,000 barrels per day

Total petroleum products delivered to the domestic market in November ’09: 18,857,000 barrels per day

(03/09/10)

Near Month Oil:			$81.87
Oil Nymex 12 month strip:			$83.93
Near Month Gas:			$4.53
Gas Nymex 12 month strip:			$5.16

Economic news continues to overrule fundamentals
Crude rolls forward despite bearish currency, storage & global
production numbers
Positive economic news helped near-term crude prices hit an 11-week high on Friday, side stepping a mounting body of bearish fundamental data pointing to weaker oil prices in the short to medium term. While a strengthening dollar managed to keep oil prices from hitting $90, bullish bets from money managers and passive investment vehicles could soon overwhelm the market. The result could be an increasingly volatile market in the coming months, with oil prices taking off and falling back.
Currency—
Uncertainty over the future value of the euro helped the U.S. dollar rally, keeping oil prices from breaking far beyond the $80 mark. The dollar is up around 9% from its low last year against a basket of competing currencies and continues to strengthen. While this strong rally in the dollar would normally pressure oil prices, its recent strength is only managing to keep prices from moving higher.

QuickLook
Gas 3/5/2010 3/6/2009 Year/Year %
Henry Hub Spot 4.55 3.94 15.5%
NYMEX Near Month 4.59 3.95 16.2%
NYMEX 12-Month Strip 5.13 4.80 6.9%
NYMEX 2011 Strip 5.70 5.80 -1.7%
Oil
WTI Cushing Spot 81.50 45.52 79.0%
NYMEX Near Month 81.50 45.52 79.0%
NYMEX 12-Month Strip 83.48 50.54 65.2%
NYMEX 2011 Strip 85.41 54.63 56.3%
Source: PLS Research

02/26/10 – American Gas Association reports:

Reported Prices – NYMEX crude oil futures have pushed back up to more than $78 per barrel in recent weeks, while natural gas prompt month futures and daily cash have fallen to below $5 per MMBtu. March 2010 futures went off the board at $4.82 per MMBtu and no futures contract for 2010 exceeded $5.84 at day’s end, February 24, 2010. What makes this interesting is that this natural gas market adjustment has come on the heels of significant weekly withdrawals from underground storage for the past two months. However, strong domestic production, imports from Canada and flexible LNG volumes are being interpreted positively in today’s view of market fundamentals, while near-term large-volume demand remains uncertain
.
Natural Gas Market Summary – expectations for natural gas supply and demand balance in the United States for 2010 seem to be clearly rationalized in the futures market where price stability is the current order. Said another way, two months does not make a trend, however, it does appear that gas prices have entered a period of relative stability despite cold, then warm, then cold weather, production freeze-ins and political uncertainties - factors that have previously influenced natural gas price volatility. In addition, analysts appear to be quickly turning from the fortunes of the 2009-2010 winter heating season and factoring in potential storage net injections, as well as natural gas into power generation for the coming summer, as part of the forward view
of 2010 natural gas markets.

Is a Natural Gas Comeback in Sight

After spending some serious time on the mat this summer, natural gas prices are showing some signs of life these days. Like a phoenix rising from the ashes, prices for the fuel have turned markedly higher.

And with some forecasters predicting the "coldest winter in a decade," traders are now beginning to make big bets that wintry weather could send the down-beaten commodity even higher still.

One them is our own energy expert, Chris Nelder, whose mid-simmer natural gas forecast is looking to be spot-on of late. Read more...

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