Concentrating as we have on oil and the ongoing recovery in certain oily E+P’s, we’ve kind of ignored natural gas for the most part – and mostly for good reason.
But natural gas has staged a heckuva rally, albeit from insanely low numbers, and with it we’ve seen some terrific possible gains in some Marcellus and Utica players, provided we could have timed the entry right.
Sometimes, it’s not about the quality of the stocks we buy – it’s about the underlying commodity that we’re betting on. Nowhere is that more evident than in Natural gas, where the price has ballooned from near $1.50/mcf to closer to $3 – and taken some of even the worst, most badly leveraged natural gas producers with it.
But, we’ve spent enough time in natural gas purgatory to begin picking at some names – there is an ongoing upwards pressure on price that’s being provided by the current slow pace of pipeline building, best personified by the failed Williams’ (WMB) Constitution pipeline and Kinder Morgan’s (KMI) Northeast Energy Direct pipes. The coming demand pressure of LNG from Cheniere’s (LNG) two export plants and Dominion’s (D) planned Cove Point plant increases the likelihood of natural gas’s price turnaround to be permanent, if not particularly fast.
So, where to go? Speaking of Cheniere, which has already been recommended and has nothing really to gain from natural gas prices…