Wilson & Stonaker, L.L.C.

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2nd Quarter 2009 Report NATIONAL AND INTERNATIONAL Even with the world in recession, we are still seeing some impressive real estate deals being made. According to Real Capital Analytics, deals from all over the world were consummated over the last twelve months. Last quarter I reported that Cambridge Energy Research had predicted that they thought the outlook for natural gas was in an oversupply because of the Barnett Shale in Fort Worth and the advanced technology which allows the industry to get significant increases from shale deposits across the country and around the world. That prediction was reinforced this quarter by a report from The Potential Gas Committee, a group headquartered at the Colorado School of Mines. The group believes that the US now has a total resource base of 1,836 trillion cubic feet of natural gas, about 515 Tcf more than the organization’s 2006 estimate of 1,320.9 Tcf, a 39 percent increase. The full report can be accessed on the Web at http://www.mines.edu/Potential-Gas-Committee-reports-unprecedented-increase-in-magnitude-of-U.S.-natural-gas-resource-base . It is worth reading if you believe energy can play a huge effect on inflation in the US. And to further complicate things, the International Energy Agency stated this month in its 2009 Medium-Term Oil Market report that world oil demand will grow an average of 0.6 percent, or 540,000 barrels a day annually for the next five years, reaching 89 million barrels a day in 2014. This is a significant downward revision from just a year ago when the group predicted a 1.6 percent annual increase per year from 2008 to 2013. Again, cheap energy will be a help in keeping prices down across the board. Let’s just hope that the weak economy and pull back in exploration does not translate into energy shortages later down the road. And, speaking of energy, the Iraqi government put some of the best oil and gas exploration deals on the block on June 30 in the most significant attempt to open up the country’s oil industry since it was nationalized by Saddam in 1972. The government set a price reserve. Only one contract was taken, a pairing of BP and China National Petroleum Corp for the largest field offered, Rumaila near the southern city of Basra which has a proven reserve of 17 billion barrels. Evidently the other deals were thought to be too dangerous. The Consumer Confidence Index went down this month after rising smartly since March and now stands at 49.3 from 54.8 in May. This is significant because so much of the US economy, about 70%, depends upon consumer spending in stores. And, we are now saving as a nation, much to the chagrin of our President and his team. The good thing about this is that it will make our citizens much more credit worthy once they decide to start spending again. But until then, the cash registers are ringing much less. Taken from the Conference Board Website. The nation is still shedding jobs. Unemployment has been on a steady increase since January 2007. It doesn’t look like this will change anytime soon. I saw one package of loans going to auction in California this quarter.

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