natural gas exploration companies
Legendary investor T. Boone Pickens has been called the Warren Buffett of energy investing, and over the years he has built up quite a legacy.
From his days as a wildcatter drilling in unknown oilfields, Pickens went on to start his own oil company, Mesa Energy, take on the likes of Exxon Mobil Corp. (NYSE: XOM), and manage a hedge fund, BP Capital.
As the head of Mesa, Pickens became known as a corporate raider, caught up in the deal-crazy days of the 80s. His first deal was to purchase energy company Hugoton Production Co. - a move made famous by the fact the company was 30 times the size of his own.
And today, at age 84, Pickens is still buying up energy stocks.
When you analyze his current top 10 holdings, it becomes clear natural gas companies are among his favorites.
We here at Money Morning certainly agree natural gas companies are primed to profit from the surge in U.S. natural gas production, largely a result of fracking, which has dramatically changed our country's energy outlook.
Less than 10 years ago, it was estimated that as much as 15% of our domestic gas would have to be imported in liquefied natural gas (LNG) form by 2020.
But now, the U.S. is projected to be a net exporter of gas by 2020, accounting for 9%-12% of global LNG trade.
And by 2040, U.S. consumption of natural gas is projected to rise more than 25% from 2010 levels, and domestic natural gas production is expected to climb more than 45% during the same period, Exxon Mobil said in a recent energy outlook.
So how do investors best tap into this trend?
Why Britain is Looking to U.S. for 20 Years' Worth of LNG
With its domestic natural gas reserves nearly depleted, the U.K. is turning to a U.S. company to supply enough liquefied natural gas (LNG) to provide energy to nearly 2 million British homes for 20 years.
The deal has big implications for companies involved in the flourishing U.S. shale gas industry, in which gas is extracted through hydraulic fracturing, or fracking.
You see, fracking has led to an abundance of natural gas and will go a long way toward making the U.S. a net exporter of energy instead of a net importer in the coming years.
That, of course, will be a big boon to natural gas companies that export LNG.
Why Japan's Desperately Seeking U.S. LNG
The Fukushima nuclear disaster has had a dramatic impact on the country's nuclear industry - and that's opened the door for major developments for liquefied natural gas (LNG).
You see, two years after the Fukushima nuclear disaster in Japan, only a few of its more than 50 nuclear power plants have been restarted.
Before the nuclear disaster, Japan had relied on nuclear energy for 30% of the country's electrical power and had planned to increase that to 40%.
Now, the lack of nuclear power has left a big gap between demand for energy and supply.
That's why Japan has sharply increased its imports of liquefied natural gas. In fact, it's now the world's largest buyer of LNG.
In 2012, Japan imported a record 87.31 million tons of LNG, an increase of 11.2% from 2011. It imported LNG from sources including Qatar, Russia, Australia and Indonesia.
The LNG industry has reaped huge gains from Japan's surge in LNG use - and the industry stands to gain much more in coming years.
Why U.S. Natural Gas Companies Are Looking Forward to 2014
Natural gas companies in the United States hope the worst is behind them.
In 2012, natural gas prices plummeted to a two-decade low at below $2 per million BTU. This meant U.S. natural gas lost 87% of its value over a six-and-a-half year period. The low price was thanks to a glut of gas due to newer drilling technologies such as fracking.
But there is hope for a brighter future on the horizon for these companies.
As pointed out recently by Money Morning Global Energy Strategist Dr. Kent Moors, a liquefied natural gas (LNG) export surge is expected in this country starting in 2014. By 2020, forecasts are for the United States to become a force in global LNG trade.
The U.S. is projected to account for nearly 10% of global LNG trade by the end of the decade, from zero today.
"The demand scenario forming is a primary reason why the industry is gearing up for a major resurgence," explained Moors.
And while there are obstacles, Moors said the long-term outlook is filled with profit opportunity.
"The natural gas market is about to get a whole lot better," said Moors.
Natural Gas Companies Enjoy Price Climb Ahead of Earnings
There's not much to love about an ultra-hot U.S. summer - unless you're investing in natural gas companies.
The record-breaking temps (the U.S. is on pace for its hottest year ever) have made the country crank the AC, lifting natural gas prices and stocks.
"Hot weather forecasts and elevated cooling demands continue to provide a boost to the market," Addison Armstrong, director of market research at Tradition Energy, wrote in a research note Tuesday.
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These Natural Gas Companies Found the Next Energy Hotbed
Natural gas companies have struggled as the fossil fuel's overabundance in North American shale formations has led to decade-low prices.
But don't expect those cheap prices to be around long.
You see, by 2040 there will be nearly 9 billion people on the planet, up from about 7 billion today. Most of the growth surge will come from emerging economies, meaning energy demand in those regions will hit new highs.
A recent report by Exxon Mobil Corp. (NYSE: XOM) predicts that while energy demand will remain essentially flat in developed economies, demand in emerging markets will rise by nearly 60%.
This growth is good news for natural gas, since the world increasingly favors lower-carbon energy sources. In fact, the International Energy Agency (IEA) predicts natural gas will surpass oil as the planet's number one source of energy beginning in 2035.
What's more, emerging economies are big importers of liquefied natural gas (LNG), the fuel's most portable form. That's why the world's biggest oil and natural gas companies are placing huge bets that LNG is the "new oil."
And most of their Monopoly-sized wagers are saying Australia's the place to find it.
Here's why Australia will be the globe's next energy hotbed.
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These High-Yield Natural Gas Stocks are Cheap Buys
Cheap natural gas has made this a year for price pullbacks among natural gas stocks and related investments.
Look at United States Natural Gas Fund (NYSE: UNG), the exchange-traded fund following the price of the fuel. In July 2011 it was selling for over $45 a share.
UNG hit a 52-week low of $14.25 on April 19.
Now it's climbed back up to near $20, but still well off its 52-week high of $50.52.
But don't think this price lull is permanent. There are many reasons the fuel will be more in demand - and eventually, more pricey.
"Natural gas doesn't give cancer...it'sa very useful product, very cheap per Btu -- much less than oil, and is less pollutive than oil or coal," said legendary investor Wilbur Ross, who is long-term bullish on natural gas, in a recent interview. "There may be a little more downward blip but I think the worst part has got to be over."
Still, no one wants to "catch a falling knife."
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How Natural Gas Companies Could Save You 25% on Fuel
Thanks to new developments from natural gas companies, fuel costs might soon be falling by as much as 25% for some individuals.
Royal Dutch Shell PLC (NYSE: RDS:A, RDS.B) plans to spend $250 million on a liquefied natural gas (LNG) plant and filling stations in what is the biggest single investment yet in making frozen gas a transport fuel.
LNG has been a hot topic of late as an overabundance of fuel from North America's shale rocks has made the U.S. the world's largest natural-gas producer and led to decade-low natural gas prices.
Chad Porter, the COO of Ferus, a Calgary-based oil services company, tested the savings of running vehicles on LNG compared to diesel and liked what he saw.
Porter told Bloomberg News that he estimated switching from diesel to LNG as a transport fuel will lower his fuel bill by 22%, or $1 a gallon at the tank.
That helps make the case for switching to engines that run on liquefied natural gas.
"LNG holds great potential as a transport fuel," Mark Williams, Shell's director for downstream, said in a speech this month. "North America, for example, now has a century of gas supplies at current consumption rates. So gas is likely to gain market share in transportation."
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Natural Gas Companies: A Contrarian Bet on Higher Prices
The decline in natural gas stocks has been anything but natural lately.
With ample stores and cheap prices, natural gas-related equities have taken a beating and continue to be battered.
While it is always difficult to call a bottom, the tide may be turning for natural gas companies despite the latest data.
The price of natural gas fell again last week after the government reported an unexpectedly large increase in supply. To date, natural gas prices have slumped to levels not seen in 10 years.
Recent Energy Information Administration (EIA) reports reveal that the energy industry continues to deliver gas at a faster rate than Americans can consume it.
U.S. supplies grew by 42 billion cubic feet in the week ended March 30, pushing the country's total supply to 2.5 trillion cubic feet. According to Platts, a premier source for energy prices, industry analysts had expected supplies to grow between 33 billion to 37 billion cubic feet.
With natural gas stores bursting at the seams, some of the nation's largest producers have announced plans to scale back production.
Jen Snyder, head of North American gas for research firm Wood Mackenzie told the Washington Post, "There hasn't been enough demand to use all the supply being pushed into the market."
Where prices go from here depends a great deal on the weather.
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The Top Five Natural Gas Companies to Watch
NEW YORK - I've briefed Wall Street before. This time, however, the 57th floor conference room is packed. Some heavy hitters invited me to explain why natural gas is the upcoming energy play.
By the size of the crowd, it seems the word is getting around.
The last time interest was this high, natural gas contracts on the New York Mercantile Exchange (NYMEX) were racing past $14 and the dominant players were making a fortune. We're about to see them try it again. Exxon Mobil Corp.'s (NYSE: XOM) recent acquisition of shale gas producer XTO Energy Inc. (NYSE: XTO), for example, is only the first of several moves we're about to see as the sector shakes itself out again.
This time, however, average investors can move early and reap the benefits.