If weak gas and oil prices were supposed to devastate the industry, Gazprom (OGZPY) is one of the last companies to hear about it, as it has been producing great earnings. And with a P/E ratio of about 5, it is a great value play.
There have been two major catalysts behind Gazprom's great year. The most important has been the shrinking value of the ruble, and second, was the decision by Russia to lower export taxes earlier in 2015. That combination has driven nice results for the natural gas and oil giant.
In its latest quarter it generated $4.75 billion in net profit, a gain of 29 percent year-over-year. It also enjoyed an annual growth rate of 50 percent in the first half.
Investors need to understand that even in the midst of a low-price or depressed commodity market, there is more than one way for a company to make money. Those able to identify them, as in the case of Gazprom, will get in before prices are bid up.
The reason why Gazprom has been doing so well is its costs mostly are domestic, which means they're traded in rubles, while its sale are primarily in the U.S. dollar and euro. The difference in value between them is what is driving Gazprom's success.
Add to that its continual strong performance in Europe, which represents approximately 56 percent of its export business, and the deals with China which will be a serious revenue and earnings source for many years, and you can see why Gazprom should continue to surprise to the upside.
As for the ruble, it's under pressure from low gas prices, but when it moves up again, it will take the ruble with it. That means, unless the ruble really soars in response to a rise in gas prices, margin and earnings should continue to do very well.
In the meantime, it's good entry point for Gazprom, and if you believe there is more room for gas prices to drop, it'll get even better. But as it is, this is a great time to think seriously about taking a position in Gazprom, as risk/reward is aligned nicely.
Showing posts with label Natural Gas Prices. Show all posts
Showing posts with label Natural Gas Prices. Show all posts
Wednesday, September 2, 2015
Friday, October 19, 2012
Parets Likes Natural Gas, Coal, Over Crude
Saying crude oil at this time "is a mess," J.C. Parets said in regard to energy and commodities in general, investors need to look elsewhere for gains, as he sees the fall from $100 as a trend that is likely to continue at this time.
Parets, who is the founder of Eagle Bay Capital, sees the energy place to be as natural gas, and says coal is also worth a look, as it could move up on the sails of natural gas.
He said, "If we're right on natural gas and continue to see higher prices, I think we should continue to see higher prices for coal as well."
The trend that needs to be followed at this time in the sector is natural gas versus oil, not crude oil in and of itself.
The reason natural gas is so appealing to Parets is it continues to be way below its historic 10-year average in relationship to oil, which has been about 10-to-1. In the spring of 2012 it jumped to 54-to-1.
Friday, October 12, 2012
EIA Reports Says Energy Bills to Soar this Winter
In more bad news for the Obama administration, which has refused to pursue the rich resources of natural gas and oil in the United States, the Energy Information Administration said due to an expected colder winter, the price of fuel will jump almost 20 percent for those using heating oil as their heating source.
This will be especially true in the Northeast portion of the United States, where most consumers use heating oil. Higher demand will be the major driver of heating oil prices.
For those heating with the less expensive natural gas, prices are still expected to rise an estimate 15 percent.
Adam Sieminski, an administrator from the EIA, said, “it is going to be colder than last year and as a result of that, heating bills are going to be higher.”
“There has been a trend towards warmer weather so if we end up with somewhat above normal temperatures rather than just slightly below, that would reduce fuel oil needs and presumably would lead to better balance in the markets and somewhat lower prices.”
Approximately 80 percent of those using heating oil are located in the northeastern part of the country.
With Obama's faltering economy, this could easily turn even more voters against him at a time when they're hurting the most from higher energy costs.
Tuesday, October 2, 2012
Natural Gas Has Reached Bottom Says Brandt
Natural gas has reached a bottom according to commodity expert Peter Brandt, who say over the next several years natural gas prices should trend up.
Brandt says the significance of reaching a major bottom is the low price is now in place.
He says natural gas has been in a bear trend for 6-1/2 years, citing the fall in price from 15.780 in December 2005 for a nearby futures contract, down to 1.902 as of April 2012. That constitutes a plunge of 88 percent.
Brandt sees the first target in sight as breaking the 6.000 mark.
His recommendation is to buy on dips in the 10 percent to 15 percent range.
Of course there will be ups and downs during this upward trend, which is why pullbacks should be considered buying opportunities, as over time natural gas prices appear poised to start a good run up in price.
Thursday, November 4, 2010
Citigroup (NYSE:C) Downgrades EOG (NYSE:EOG), Eaten Up by Lowered Production Estimates
Not willing to commit more capital to the production of natural gas, EOG Resources Inc (NYSE:EOG) had its share price plunge as the cut their production estimates. Citigroup downgraded them from "Buy" to "Hold" in response.
Most of this is driven by the depressed prices of natural gas, which at least in the short term, aren't going to be moving up.
Natural gas companies with heavy exposure have been transferring capital to the oil sector or liquefied natural gas segment, which generate stronger margins and earnings at this time.
Even with lower production estimates, some question if EOG has the capital to pull it off.
EOG closed Wednesday at $88.64, plummeting $9.10, or 9.31 percent. Citigroup slashed their price target from $110 to $95.
Most of this is driven by the depressed prices of natural gas, which at least in the short term, aren't going to be moving up.
Natural gas companies with heavy exposure have been transferring capital to the oil sector or liquefied natural gas segment, which generate stronger margins and earnings at this time.
Even with lower production estimates, some question if EOG has the capital to pull it off.
EOG closed Wednesday at $88.64, plummeting $9.10, or 9.31 percent. Citigroup slashed their price target from $110 to $95.
Tuesday, October 26, 2010
Citigroup (NYSE:C) Upgrades RRI Energy (NYSE:RRI) on Long-term Outlook
Although Citigroup's Brian Chin didn't have a lot of good to say in the near term about RRI Energy (NYSE:RRI), over the long term he does believe the company will perform better, and raised his rating on them from "Hold" to "Buy."
Chin said:
"We project forward capacity prices will move higher because of increasingly restrictive EPA policies for power plants. This will tighten power supply in the Pennsylvania/Jersey/Maryland region, causing capacity prices to rise over the next 2-3 auctions. Catalysts for our thesis: The EPA will finalize its SO2 and Hazardous Air Pollutants rules over the next 12-18 months. RRI Energy is the most levered name to this dynamic, because it has no regulated utility to dilute its earnings.
"We continue to be bearish forward natural gas prices, and RRI remains levered to natural gas prices. The annual capacity auction takes place in May 2011, and even our forecast expects capacity prices to be relatively flattish next year. Our RRI upgrade then, is clearly more of a long term call on our part."
RRI closed Monday at $3.55, gaining $0.03, or 0.85 percent. Citi has a price target of $5.50 on the company.
Chin said:
"We project forward capacity prices will move higher because of increasingly restrictive EPA policies for power plants. This will tighten power supply in the Pennsylvania/Jersey/Maryland region, causing capacity prices to rise over the next 2-3 auctions. Catalysts for our thesis: The EPA will finalize its SO2 and Hazardous Air Pollutants rules over the next 12-18 months. RRI Energy is the most levered name to this dynamic, because it has no regulated utility to dilute its earnings.
"We continue to be bearish forward natural gas prices, and RRI remains levered to natural gas prices. The annual capacity auction takes place in May 2011, and even our forecast expects capacity prices to be relatively flattish next year. Our RRI upgrade then, is clearly more of a long term call on our part."
RRI closed Monday at $3.55, gaining $0.03, or 0.85 percent. Citi has a price target of $5.50 on the company.
Friday, September 24, 2010
Citigroup (NYSE:C) Initiates Coverage on Petrohawk Energy (NYSE:HK)
Citigroup (NYSE:C) started covering Petrohawk Energy (NYSE:HK), starting them off with a "Hold" rating.
Citigroup analyst Robert Morris said in a note to clients that the downward pressure on natural gas prices will continue, and until that changes, there won't be much happening to change the rating.
While Morris likes the move away from conventional natural gas sources in North America to shale projects, especially Eagle Ford and Haynesville, until the supply and demand scenario changes, gas prices will continue to be low in the midst of an abundant supply.
Consequently, Petrohawk has the right production pieces in place, but until the fundamentals for gas prices improve, conditions will stay the same no matter how much resources a company may have.
This is why many natural gas companies have added oil assets recently in order to offset their exposure to natural gas pricing.
It's hard to see anything that will change this for some time.
Petrohawk closed Thursday at $14.95, gaining $0.24, or 1.63 percent. Citigroup has a price target of $19 on them. Not bad in these types of circumstances.
Citigroup analyst Robert Morris said in a note to clients that the downward pressure on natural gas prices will continue, and until that changes, there won't be much happening to change the rating.
While Morris likes the move away from conventional natural gas sources in North America to shale projects, especially Eagle Ford and Haynesville, until the supply and demand scenario changes, gas prices will continue to be low in the midst of an abundant supply.
Consequently, Petrohawk has the right production pieces in place, but until the fundamentals for gas prices improve, conditions will stay the same no matter how much resources a company may have.
This is why many natural gas companies have added oil assets recently in order to offset their exposure to natural gas pricing.
It's hard to see anything that will change this for some time.
Petrohawk closed Thursday at $14.95, gaining $0.24, or 1.63 percent. Citigroup has a price target of $19 on them. Not bad in these types of circumstances.
Wednesday, August 4, 2010
Chesapeake (NYSE:CHK) Level for Second-quarter Earnings, Revenue Up
Chesapeake Energy Corp. (NYSE:CHK) earnings were almost the same as last quarter, even though revenue in the quarter jumped 20 percent.
Earnings for the quarter came in at $235 million, or 37 cents a share, slightly down from the $237 million, or 39 cents a share last year in the same quarter.
Revenue on the other hand rose to $2.01 billion, increasing by 20 percent from $1.67 billion last year.
After excluding one-time items, the company generated profits of 75 cents a share, up from the 69 cents a share analysts had estimated.
The company was punished from a $214 million loss from it hedging strategy in gas, oil and interest rates. Redeemed debt with a charge of $42 million was the other major factor.
In the end, this is about the abundance of natural gas, which it'll take Chesapeake some time to decrease its exposure to.
At this time it accounts for the majority of production of Chesapeake, with oil and natural gas liquids making up 10 percent of the overall production of the company. Chesapeake said they're going to continually work on increasing liquids going forward.
According to CEO Aubrey McClendon, Chesapeake will have liquid production coming in at about 25 percent of overall production, and 40 percent of revenue from production.
To limit the consequences of low natural gas prices, the company will also cut back on drilling of their natural gas wells until prices rebound to at least $6 per 1,000 cubic feet.
Earnings for the quarter came in at $235 million, or 37 cents a share, slightly down from the $237 million, or 39 cents a share last year in the same quarter.
Revenue on the other hand rose to $2.01 billion, increasing by 20 percent from $1.67 billion last year.
After excluding one-time items, the company generated profits of 75 cents a share, up from the 69 cents a share analysts had estimated.
The company was punished from a $214 million loss from it hedging strategy in gas, oil and interest rates. Redeemed debt with a charge of $42 million was the other major factor.
In the end, this is about the abundance of natural gas, which it'll take Chesapeake some time to decrease its exposure to.
At this time it accounts for the majority of production of Chesapeake, with oil and natural gas liquids making up 10 percent of the overall production of the company. Chesapeake said they're going to continually work on increasing liquids going forward.
According to CEO Aubrey McClendon, Chesapeake will have liquid production coming in at about 25 percent of overall production, and 40 percent of revenue from production.
To limit the consequences of low natural gas prices, the company will also cut back on drilling of their natural gas wells until prices rebound to at least $6 per 1,000 cubic feet.
Thursday, June 24, 2010
Natural Gas Inventory Pushes Prices Down
Natural gas inventory showed it was on the higher side of expectations, driving natural gas prices down 1.2 percent on Thursday.
Inventory levels increased by 81 billion cubic feet for the 48 states for the week ending June 18, according to statistics from the Energy Information Administration.
Natural gas storage levels were expected to rise from 78 billion cubic feet to 82 billion cubic feet.
Overall natural gas stockpiles are at 2.624 trillion cubic feet, which is 0.5 percent lower than levels at the same time last year, but over 13 percent higher than the five-year average.
Inventory levels increased by 81 billion cubic feet for the 48 states for the week ending June 18, according to statistics from the Energy Information Administration.
Natural gas storage levels were expected to rise from 78 billion cubic feet to 82 billion cubic feet.
Overall natural gas stockpiles are at 2.624 trillion cubic feet, which is 0.5 percent lower than levels at the same time last year, but over 13 percent higher than the five-year average.
Friday, June 4, 2010
US Natural Gas Fund (NYSE:UNG) Soaring
The supply of natural gas in relationship to demand has put downward pressure on heavily exposed natural gas companies and natural gas ETFs like US Natural Gas Fund (NYSE:UNG).
That has changed over the last couple of weeks, as the US Natural Gas Fund has surged by over 12 percent during that time.
It has been March since UNG has traded at current price levels.
With nothing much in the supply equation changing, other than the evil attempt by some Democrats to limit access to the natural gas resources in the Marcellus Shale, it's probably backwardation at this time which has been driving the price of UNG recently.
Backwardation refers to the time future gas prices drop below expected future spot gas prices. That favors an ETF fund like UNG.
That has changed over the last couple of weeks, as the US Natural Gas Fund has surged by over 12 percent during that time.
It has been March since UNG has traded at current price levels.
With nothing much in the supply equation changing, other than the evil attempt by some Democrats to limit access to the natural gas resources in the Marcellus Shale, it's probably backwardation at this time which has been driving the price of UNG recently.
Backwardation refers to the time future gas prices drop below expected future spot gas prices. That favors an ETF fund like UNG.
Saturday, May 22, 2010
Williams Companies (NYSE:WMB) a Takeover Target?
Although there are no known overtures from giant oil and gas companies to woo Williams Companies (NYSE:WMB), the way the market will probably go over the long term makes them a possible target in the future.
What Williams does is produce and transport gas in a number of regions in the U.S. and Canada, and even though the price of natural gas has downward pressure on it, that won't necessarily cut into their transport costs, as natural gas will have to be moved, no matter what the price is at the moment.
So on the transportation side they are probably more attractive than on the production, which has an enormous number of competitors, as well as supply for many years.
With energy companies gravitating toward oil because of the vast supply of natural gas, Williams may not be as attractive as some think they are, unless they expand the transportation business to make it so.
For a large company looking to expand their natural gas play in the future, Williams could be a potential and attractive candidate in that regard, although they'll probably have to wait until the natural gas prices rise, which could take some years to do.
What Williams does is produce and transport gas in a number of regions in the U.S. and Canada, and even though the price of natural gas has downward pressure on it, that won't necessarily cut into their transport costs, as natural gas will have to be moved, no matter what the price is at the moment.
So on the transportation side they are probably more attractive than on the production, which has an enormous number of competitors, as well as supply for many years.
With energy companies gravitating toward oil because of the vast supply of natural gas, Williams may not be as attractive as some think they are, unless they expand the transportation business to make it so.
For a large company looking to expand their natural gas play in the future, Williams could be a potential and attractive candidate in that regard, although they'll probably have to wait until the natural gas prices rise, which could take some years to do.
Monday, May 10, 2010
MAG Silver (TSE:MAG), Platinum Group Metals (TSE:PTM) Founder Likes Natural Gas
The founder of precious metal mining companies like MAG Silver (TSE:MAG), Platinum Group Metals (TSE:PTM), R. Michael Jones, likes what he sees in the natural gas sector, and is pursuing it with his latest startup, Nextraction Energy Corp. (TSE-V:NE).
Nextraction Energy targets gas development in the U.S., primarily shale gas which has been so abundantly discovered, and over the long-term will change the energy picture around the world, and bring the focus back on the U.S., which used to be the largest oil producer in the world.
Jones especially likes the emerging markets possibilities, where natural gas will serve them as an efficient energy supplement or replacement for oil, which will cost much less.
While in the short term natural gas is expected to remain depressed in price, over the long term it could rise some and stabilize, offering a predictable stream of income for companies positioned to take advantage of it.
But this is definitely a long-term play, as natural gas companies gravitate toward oil for profits in the low-margin, existing natural gas market.
Nextraction Energy targets gas development in the U.S., primarily shale gas which has been so abundantly discovered, and over the long-term will change the energy picture around the world, and bring the focus back on the U.S., which used to be the largest oil producer in the world.
Jones especially likes the emerging markets possibilities, where natural gas will serve them as an efficient energy supplement or replacement for oil, which will cost much less.
While in the short term natural gas is expected to remain depressed in price, over the long term it could rise some and stabilize, offering a predictable stream of income for companies positioned to take advantage of it.
But this is definitely a long-term play, as natural gas companies gravitate toward oil for profits in the low-margin, existing natural gas market.
Friday, May 7, 2010
Canadian Natural Resources (TSE:CNQ) Natural Gas Gamble
Canadian Natural Resources (TSE:CNQ) (NYSE:CNQ) is implementing a contrary strategy as their competitors are, as they're going to spend about $960 million to acquire natural gas properties, rather than shore up on oil assets, which most energy companies with a large exposure to natural gas have been doing.
The company believes the price of natural gas will eventually rebound, where they will at that time reap the benefits of their acquisitions.
This is risky, as huge amounts of natural gas are available, and unless that changes, it's hard to understand what CNR thinks will happen to change the supply/demand equation.
Even if demand goes up, which is easily could, there is so much natural gas available that it's highly unlikely prices would skyrocket as a result.
The enormous amount of shale gas reserves in the U.S. make supply a major factor in any of these decisions. This could be a big mistake by Canadian Natural Resources, but over the long term anything could happen, but I don't see it at this time.
The company believes the price of natural gas will eventually rebound, where they will at that time reap the benefits of their acquisitions.
This is risky, as huge amounts of natural gas are available, and unless that changes, it's hard to understand what CNR thinks will happen to change the supply/demand equation.
Even if demand goes up, which is easily could, there is so much natural gas available that it's highly unlikely prices would skyrocket as a result.
The enormous amount of shale gas reserves in the U.S. make supply a major factor in any of these decisions. This could be a big mistake by Canadian Natural Resources, but over the long term anything could happen, but I don't see it at this time.
Wednesday, May 5, 2010
Chesapeake Energy (NYSE:CHK) Oil, Gas Liquid Shift
Chesapeake Energy (NYSE:CHK) beat analysts' expectations for the first quarter, with earnings reaching $590 million, or 92 cents a share. Last year in the same quarter lost $5.7 billion, or $9.63 a share.
Revenue for the quarter increased to $2.8 billion, up from $2 billion last year.
Going forward, Chesapeake said they're going to shift capital expenditures to natural gas liquids and oil, and a glut of natural gas on the market has driven prices down.
Analysts had been looking for 70 cents a share after excluding one-time items, while Chesapeake's adjusted profit far exceeded that, ending the quarter at 82 cents a share.
Revenue for the quarter increased to $2.8 billion, up from $2 billion last year.
Going forward, Chesapeake said they're going to shift capital expenditures to natural gas liquids and oil, and a glut of natural gas on the market has driven prices down.
Analysts had been looking for 70 cents a share after excluding one-time items, while Chesapeake's adjusted profit far exceeded that, ending the quarter at 82 cents a share.
Agrium (TSE:AGU) Earnings Loser for Quarter
While it was an improvement over last year, first-quarter profits for Agrium (TSE:AGU) (NYSE:AGU) were disappointing, as they posted a loss of $7 million, or 4 cents a share.
Last year during the same quarter Agrium lost $60 million, or 38 cents a share.
Costs of natural gas hit the company especially hard, as hedges made the company pay more than they would have otherwise.
What was particularly disappointing were the profits related to crop-protection and seed sales, which failed to meet analysts' expectations. Fertilizer sales at the retail and wholesale level were where analysts thought they would be.
Revenue for the quarter increased to $1.85 billion, based on demand growing for base fertilizers.
Last year during the same quarter Agrium lost $60 million, or 38 cents a share.
Costs of natural gas hit the company especially hard, as hedges made the company pay more than they would have otherwise.
What was particularly disappointing were the profits related to crop-protection and seed sales, which failed to meet analysts' expectations. Fertilizer sales at the retail and wholesale level were where analysts thought they would be.
Revenue for the quarter increased to $1.85 billion, based on demand growing for base fertilizers.
Thursday, April 22, 2010
Petrobras (NYSE:PBR) Gas, Oil Production Down in March
Petrobras (NYSE:PBR) reported gas and oil production in March was down slightly, with gas and oil production combined reaching 2.556 million barrels of oil equivalent on a daily basis.
In February total gas and oil production for Petrobras was 2.561 barrels of oil equivalent a day, 0.2 percent more than March.
Domestic oil production for March increased to an average of 1.994 million barrels a day, a 0.3 percent gain. In February that came to 1.988 million billions a day for oil.
Internationally, crude oil production fell for the company, as it averaged 149,600 barrels of crude daily, dropping from the 151,400 average in February.
The main reason for the overall decline in March gas and oil production was decreasing demand for natural gas, as Petrobras has lowered its output in response to lower usage.
Natural gas production domestically dropped to 66.7 million cubic meters a day, falling from the 68.1 million cubic meters a day used in February.
In February total gas and oil production for Petrobras was 2.561 barrels of oil equivalent a day, 0.2 percent more than March.
Domestic oil production for March increased to an average of 1.994 million barrels a day, a 0.3 percent gain. In February that came to 1.988 million billions a day for oil.
Internationally, crude oil production fell for the company, as it averaged 149,600 barrels of crude daily, dropping from the 151,400 average in February.
The main reason for the overall decline in March gas and oil production was decreasing demand for natural gas, as Petrobras has lowered its output in response to lower usage.
Natural gas production domestically dropped to 66.7 million cubic meters a day, falling from the 68.1 million cubic meters a day used in February.
EnCana (TSE:ECA) Production Goals Doubled
Even though natural gas prices are depressed at this time, EnCana (TSE:ECA)(NYSE:ECA) Corp. leadership says they're going to continue with their goal of doubling production over the next five years.
CEO Randy Eresman said on the earnings call of the company that even though natural gas prices are below $4 per million BTUs, that won't last forever, and eventually prices will rise again.
"We believe that the current low-price environment is unsustainable," he said. "We expect to see price improvements in the future, but that may take some time to unfold. We'll continue to maintain a longer-term perspective in how we execute our strategy."
Assuming Encana achieves their production goal, they will supply close to 10 percent of all natural gas used in North America at that time.
As far as natural gas prices go, Eresman is right, and eventually they will go up again, and Encana and other smart players in the game should reap solid rewards for some time, along with their shareholders.
Encana is a long-term play though, and needs to be considered that if investing in the company.
CEO Randy Eresman said on the earnings call of the company that even though natural gas prices are below $4 per million BTUs, that won't last forever, and eventually prices will rise again.
"We believe that the current low-price environment is unsustainable," he said. "We expect to see price improvements in the future, but that may take some time to unfold. We'll continue to maintain a longer-term perspective in how we execute our strategy."
Assuming Encana achieves their production goal, they will supply close to 10 percent of all natural gas used in North America at that time.
As far as natural gas prices go, Eresman is right, and eventually they will go up again, and Encana and other smart players in the game should reap solid rewards for some time, along with their shareholders.
Encana is a long-term play though, and needs to be considered that if investing in the company.
Natural Gas Prices Up on Lower Storage Levels
Investors in natural gas were surprised that storage levels had expanded less than anticipated, sending prices up, settling at $4.128 per 1,000 cubic feet on the New York Mercantile Exchange, an increase of 17.3 cents.
Original estimates by the energy department were natural gas levels were going to reach as high as 80 billion cubic feet, while growing by only 73 billion cubic feet; close to 1.83 trillion cubic feet for the week ending April 16.
Much of the discrepancy came from mild weather which had caused analysts to believe natural gas storage levels would rise higher.
Possible increased usage from the manufacturing sector and natural gas production being less than thought are reasons given for the storage levels being less than estimated.
Original estimates by the energy department were natural gas levels were going to reach as high as 80 billion cubic feet, while growing by only 73 billion cubic feet; close to 1.83 trillion cubic feet for the week ending April 16.
Much of the discrepancy came from mild weather which had caused analysts to believe natural gas storage levels would rise higher.
Possible increased usage from the manufacturing sector and natural gas production being less than thought are reasons given for the storage levels being less than estimated.
Monday, April 19, 2010
EnCana (TSE:ECA) Wishing it Kept Oil Assets?
When EnCana (TSE:ECA) spun off its oil assets last year into a new company named Cenovus Energy (TSE:CVE), it seemed a good move in light of the possibilities natural gas seemed to offer, they may have regrets now as many natural gas companies are adding oil assets to combat what could be an oversupply of natural gas for years head.
Of course the diffentiator for EnCana was its focus on unconventional natural gas, which should give it a cost advantage over its competitors, and hopefully increase revenue, and ultimately profits as a result.
The emerging shale gas play has been somewhat disruptive to that strategy, as the amount of shale gas in the U.S. is so high, it has put downward pressure on natural gas prices, and could for years to come.
Having said that, I do think natural gas will move up in price, even with the large supply. What has been priced into natural gas has been the large quantity available in the market which investors are starting to understand.
Once that is priced in completely, which it may be close to becoming, it seems over time that will change, and natural gas prices will start to edge up along with the share price of the natural gas companies like EnCana.
Long-term, natural gas should be a good play, based on the low cost of entry at this time. The only place it seems it can go is up.
Of course the diffentiator for EnCana was its focus on unconventional natural gas, which should give it a cost advantage over its competitors, and hopefully increase revenue, and ultimately profits as a result.
The emerging shale gas play has been somewhat disruptive to that strategy, as the amount of shale gas in the U.S. is so high, it has put downward pressure on natural gas prices, and could for years to come.
Having said that, I do think natural gas will move up in price, even with the large supply. What has been priced into natural gas has been the large quantity available in the market which investors are starting to understand.
Once that is priced in completely, which it may be close to becoming, it seems over time that will change, and natural gas prices will start to edge up along with the share price of the natural gas companies like EnCana.
Long-term, natural gas should be a good play, based on the low cost of entry at this time. The only place it seems it can go is up.
Friday, April 16, 2010
Jim Rogers Likes Natural Gas in the Energy Sector
Jim Rogers on Natural Gas
Jim Rogers was recently talking investing in energy, and stated he's not selling energy at this time, even though it has doubled over the last 12 months.
It seems he's not buying energy, but he said if he was, natural gas would be his choice, as natural gas prices are depressed, while oil has been high for some time.
Rogers said, "If I were buying energy, I would probably buy natural gas rather than oil just because it’s so depressed. I don’t like to buy when things are up. I like to buy things when down, when people are unhappy that’s when I like to buy things."
I think Jim Rogers may be being a little coy here, as I'm sure he's putting some major money into natural gas, which has nowhere to go but up, and with Rogers liking long-term plays, natural gas fits right into that strategy.
Jim Rogers was recently talking investing in energy, and stated he's not selling energy at this time, even though it has doubled over the last 12 months.
It seems he's not buying energy, but he said if he was, natural gas would be his choice, as natural gas prices are depressed, while oil has been high for some time.
Rogers said, "If I were buying energy, I would probably buy natural gas rather than oil just because it’s so depressed. I don’t like to buy when things are up. I like to buy things when down, when people are unhappy that’s when I like to buy things."
I think Jim Rogers may be being a little coy here, as I'm sure he's putting some major money into natural gas, which has nowhere to go but up, and with Rogers liking long-term plays, natural gas fits right into that strategy.
Subscribe to:
Posts (Atom)