- Written by Andrew Snyder, Editorial Director, Inside Investing Daily
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The markets are chaotic and uncertain. But if we trust the facts and understand the numbers, the opportunities are endless.
I got an email from a friend late last night. It was simple. But the message was deep.
"I visited John today," it started. "When he saw me, he smiled and said, 'It won't be long now.' Then he went back to sleep."
That's all. I didn't need any more. A couple of lines told the whole story.
If only everything leading up to our last breaths were so simple... so matter-of-fact.
In the investing world, nothing is clear-cut. There's too much intervention. Too much meddling. So many painkillers that the patient is oblivious to his fate.
By all measures, our debt-swollen economy needs to die. It wants to roll on its side, close its eyes and take an eternal breath.
But it can't die... at least, not peacefully... not with any sort of dignity.
That's why I've shunned all but the most basic of investments. As I said last week, unless we can pick it up, measure it and determine its true worth... it's dead to me.
It is one of the reasons I love natural gas. The data is immense.
Take the Utica formation, for instance. The opportunity grows with every fresh set of numbers.
Early this month, Devon Energy (DVN:NYSE) gave us a glimpse of its latest drilling efforts in Ohio.
Not so good. It struck out.
"This is a difficult play," said the company's exploration boss, David Hager, "and not everyone is going to succeed."
It turns out the company drilled too far to the western end of the Utica formation. It was in Ohio's Medina County. All of the good wells, we are quickly learning, are further east, in places like Harrison County.
That's where companies like Gulfport Energy (GPOR:NASDAQ) are drilling. The company has found tremendous success with its sideways Utica wells...
And its share price shows it.
Here is some data to whet your whistle and set you straight about the fate of the nation's energy sector.
Gulfport's Wagner well produces a hair over 17 million cubic feet of natural gas, along with more than 430 barrels of oil and 1,881 barrels of natural gas liquids, per day.
A typical non-horizontal well in Ohio spews out just 50,000 cubic feet of gas and less than 1 barrel of oil per day.
Again... thanks to horizontal drilling, it's 17 million versus 50,000. And 430 versus 1.
But here's the most important fact. Companies like Gulfport are not in eastern Ohio looking for natural gas. No... gas is too cheap to target.
They're after all of that $95 oil... and the butane, propane and ethane that come with it. The gas is just a sideshow.
A very large, game-changing sideshow.
To understand what I mean, imagine for a second that you are a gold miner. But for every ounce of gold you pull from the ground, you pull up a pound of silver.
You're not going to throw that silver aside. You'd be stupid. Instead, you'll sell it and get whatever you can for it.
That is exactly what's happening in the natural gas market. Despite all of the hoopla over potential natural gas exports and the "slowdown" in drilling, the fact is we still have more gas today than ever before.
It's not because drillers are targeting gas. They want the oil, but the gas comes along for the ride.
The numbers don't lie. The chart proves that rig count is down but production is up.
That's why -- despite the chaos on Wall Street -- I have absolutely no problem investing in the energy sector. There's immense opportunity.
Invest in a company like Devon... and you'll strike out. But find a stock like Gulfport, and you could take home a 50% gain in the next six months.
We don't need a connection in Washington to sort the winners from the losers. We don't need to rely on Bernanke or some European banker to put profits in our pockets.
We just need numbers.
With the right numbers and the knowledge of how to us them, there's no reason to be forced into the "safety" of Treasuries. Even when markets are as chaotic as they are today, there are still plenty of ways to get the job done... to create wealth.
They may be unconventional -- they certainly won't grab your arm and whisper, "Here I am" -- but follow and understand the data, and the job is simple.
There is nothing as clean as the narrow void between life and death in the investing world. There never will be -- not unless the free-market forces are allowed to roam unhinged.
But that's OK. Uncertainty about tomorrow is far better than knowing the next day will never come.
From the inside,
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