Colin’s Insight

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Friday, July 25, 2008
Wednesday, July 23, 2008
Wednesday, June 25, 2008

Energy for the long haul

Is there going to be an increasing demand for energy over the long haul? We certainly think so.

I was attending a conference some weeks ago and the keynote speaker was lamenting the rising cost of gas at the pump, and the crowd was enthusiastically agreeing with him. Then the speaker did something interesting, and asked the crowd “how many of you stopped driving your cars when gas hit $75 per tank?” No hands went up. “How many of you will stop driving at $100 per tank?” Still no hands went up. He was up to $300 per tank before a significant number of hands were raised – which means that the public's tolerance for “pain at the pump” has a long way to go before we start to vote with our wallets, and simply stop buying.

CNV has our eye on a variety of energy opportunities these days, particularly in areas of Natural Gas and Uranium. The uranium sector fell out of favour over the last year and companies have paid a heavy price, but the fact that uranium stocks have been hit as hard as they have been has no real correlation to future supply and demand realities. Oil and Gas were at all time highs and as of last week pulled back somewhat, which sent a ripple effect through the stock market, but that doesn't mean that the demand for energy is going to lessen in the coming years. Far from it – the United Nations is predicting world population growth from 6.4 billion in 2004 to 8.1 billion by 2030, and expects global energy demand to grow substantially over that same period, and the Energy Information Administration (EIA) projects world marketed energy consumption to increase by 50 percent using the same timeframe. Companies that offer abundant and dependable sources of energy will be poised to benefit greatly over the long term.

The global appetite for energy is one of the reasons that we believe there is tremendous opportunity in the Natural Gas sector – particularly for companies that see strong cash flow potential – and while a pull back on commodity prices almost always seems to disproportionally punish the related stocks, the long term viability of companies with solid assets, management and production remains undiminished, and we will continue to look for opportunities in these and related sectors.

Energy for the long haul….

Is there going to be an increasing demand for energy over the long haul? We certainly think so.

I was attending a conference some weeks ago and the keynote speaker was lamenting the rising cost of gas at the pump, and the crowd was enthusiastically agreeing with him. Then the speaker did something interesting, and asked the crowd “how many of you stopped driving your cars when gas hit $75 per tank?” No hands went up. “How many of you will stop driving at $100 per tank?” Still no hands went up. He was up to $300 per tank before a significant number of hands were raised – which means that the public's tolerance for “pain at the pump” has a long way to go before we start to vote with our wallets, and simply stop buying.

CNV has our eye on a variety of energy opportunities these days, particularly in areas of Natural Gas and Uranium. The uranium sector fell out of favour over the last year and companies have paid a heavy price, but the fact that uranium stocks have been hit as hard as they have been has no real correlation to future supply and demand realities. Oil and Gas were at all time highs and as of last week pulled back somewhat, which sent a ripple effect through the stock market, but that doesn't mean that the demand for energy is going to lessen in the coming years. Far from it – the United Nations is predicting world population growth from 6.4 billion in 2004 to 8.1 billion by 2030, and expects global energy demand to grow substantially over that same period, and the Energy Information Administration (EIA) projects world marketed energy consumption to increase by 50 percent using the same timeframe. Companies that offer abundant and dependable sources of energy will be poised to benefit greatly over the long term.

The global appetite for energy is one of the reasons that we believe there is tremendous opportunity in the Natural Gas sector – particularly for companies that see strong cash flow potential – and while a pull back on commodity prices almost always seems to disproportionally punish the related stocks, the long term viability of companies with solid assets, management and production remains undiminished, and we will continue to look for opportunities in these and related sectors.

I wanna be a race car driver…

A friend who is in software sales told me a story recently; he and his family were having dinner when his 5 year old son said “I want to be a fireman or a racecar driver when I grow up”. Which my friend thought was great as any of us would. Then his son said something that totally rocked him “did you want to be a software salesman when you were a little boy Daddy?” he asked. Despite the fact that my friend had a great career and made a respectable living, of course the answer was “No”. 

Then his wise-beyond-his-years son really socked him one and asked “why would you do something that you don't love Daddy?” Ouch! Well, he knew that his son was onto something, and you can probably guess that my friend doesn't sell software anymore.

The point of that little story is that it really is true that people thrive when they are doing something that they love to do, though that something isn't always so easy to find. The team at Canadian Nexus believes that we are among the very lucky ones to have found something that we genuinely love doing, and in the future I will use this space to share some of my thoughts from along the way. Thoughts on what I believe make for a great company or a mediocre one, what opportunities we find exciting and perhaps some that we find rather dull, good moves made and bad moves learned from.

I look forward to sharing those thoughts and others with you, and hope that I can help shed some light on why we do what we do, and what makes Canadian Nexus tick.

All the best… Colin

Colin Bowkett is a partner of Canadian Nexus Ventures Ltd. based in Vancouver, B.C., Canada. Canadian Nexus Ventures is a team of financial and market experts whose combined skill sets, experience and international contacts provide a unique advantage in identifying, building and sustaining risk capital and business development opportunities. It is a privately held company that develops projects for both the private and public markets. For more information, click here to http://www.canadiannexus.com/