Hot enough for ya? Hey, I'm with you. Here in the Charm City, temperatures have busted through 90 degrees for the fourth straight day in a row. And with the local humidity -- which is especially heavy this time of year -- temperatures feel more like the mercury is sitting over the100 degree mark.

Baltimore isn't the only town getting hit burned. The choking heat has descended upon all parts of the country, breaking records from New York to L.A.

Yesterday it was 118 in Kansas, 110 in northern California and 120 in South Dakota. Today it's a little better -- but not by much. Look at this:

These blistering temperatures have boosted power demand to record highs and has put a heavy strain electric resources across the United States.

Several grid operators, including the nation's largest, The Mid-Atlantic PJM, which serves over 51 million people, have asked customers to conserve electricity and for utilities to hold off from any maintenance as the situation was expected to linger for several days.

 

PJM believes electricity demand could reach an all-time high of 138,000 megawatts, breaking the current record of 133,763 MW set last summer.

Other operators around the country expect to break records as well. Take a look:

For now, generators are expected to have sufficient supplies to avoid any blackouts.

But if the extreme heat persists, a breakdown in electricity supply is inevitable.

And to the investing world that means two things: Higher valuations in natural gas companies and electricity providers.

Fortunately for us we already have at least one position in both sectors - Foothills Resource (OTC BB: FTRS) and MMC Energy (OTC BB: MMCN). Both companies have been very busy and I want to give you an update on each.

Let's start with Foothills and then Thursday I'll give you the update on MMC Energy.

Foothills Resources (OTC BB: FTRS) Update

There's no doubt about it...During the summer months, air conditioning put a heavy strain on the nation's electricity grid. And many times there simply isn't enough electricity to go around -- That's the reason we sometimes have black-outs and brown-outs.

To make up for the times when the system is overloaded, more power plants need to be brought online. As it turns out, natural gas-fired plants are always the first-string players because of their rapid start-up rates.

That means that all those supplies we were able to build up over the mild winter will quickly be used up as more and more gas-fired plants are brought online to combat power outages. Once that happens, natural gas prices will rise dramatically and bring up the valuations of producers and explorers like Foothills Resources (OTC BB: FTRS)

A few weeks ago I got a chance to talk to you about Foothills' $62 million deal. If you recall, the company acquired a 95% to 100% interest in four producing oil wells in Texas. These wells automatically give the company production of 820 (gross) barrels of oil per day.

More importantly this acquisition will bring immediate cash in the door for the company to develop its natural gas projects. And that's exactly what they're starting to do.

Earilier this month the company announced the beginning of a two well drill program starting with the Christiansen 3-15 well at Grizzly.

I first told you in the original recommendation that this field was first drilled back in 1964, by a company called Zephyr. The company tested gas at commercial rates flowing at an impressive 5 million cubic feet per day -- And that was from just one well.

So there's little doubt that the gas is there.

 

On July 10^th, Foothills announced that the company has reached a total depth of 4,815 feet and that preparation for production testing will soon be completed.

Preliminary results obtained from the Christiansen 3-15 well -- together with an in-depth analysis of electric log data and surveys obtained from the well -- indicate the well has encountered natural gas from the primary objective zones between 3,600 and 3,900 feet.

The completion and production equipment for the well are being sourced right now. And Foothills says it expects that the well will be ready for production testing in the next several weeks.

The second well, Vicenus 1-3, will be drilled to a depth of 5,900 feet and will be situated about one mile west of the Foothills Christiansen 3-15 well.

The Vicenus well is located only 1,000 feet from one of the wells that was drilled by Zephyr in 1964. Zephry's well tested 2.5 million cubic feet of gas per day! The Vicenus 1-3 will test the same zones as this old abandoned well -- which was never produced commercially because of the lack of a gas market -- plus prospective deeper zones.

The best part is that both of the Foothills wells are being drilled from existing well pads from which gas pipeline connections are already in place. So there's no need to muck around with any of that.

Foothills expects natural gas sales to begin almost immediately after the wells are tested and completed. That's why we need to get in this one now.

I know rig availability has delayed both wells by a few weeks, and it's possible we could see some more small delays. Either way, we've only got a small window of opportunity.

Based on what I know, I expect that these wells combined could produce upwards of 1 million cubic feet of gas per day.

And even with today's rock-bottom natural gas prices, that's over $2 million a year.

At last look natural gas was trading around $5.70 per MCF. But there's little doubt that natural gas will be trading so low for very much longer.

I expect natural gas prices to trade steady around $8 per MCF within the next few months -- and that's without the threat of a hurricane. Another Katrina size storm would easily send natural gas futures rocketing over the $10 mark again.

With gas prices averaging $8 per MCF Foothills may have an operating profit of around $240K per month.

But remember, this is just the beginning of the company's California operations. And on top of that, the recent Goose Creek acquisition adds a whole new dimension to the story.

A year from now this company, and its share price, will look a lot different than today.

Buy Foothills while she's still good-n-cheap.

There's nothing that gets under my skin more than missing a buying opportunity. Watching a stock increase ten-fold and not owning any is without a doubt heartbreaking. And once you missed the boat...well, there's no point in swimming after it. Luckily for us we still have a chance to get on board the Foothills Resources cruise line.

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