natural gas stocks

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Jack Welch on Natural Gas Companies: It's "Like the Internet in 1990"

By , Money Morning -

Without unnecessary regulations, natural gas companies could trigger the next great American century, says Jack Welch.

In an interview on CNBC's Squawk Box, Welch explained why he believes an energy-rich and independent America in the 21st century could create a bigger boom in the economy than the Internet did in the late 20th century.

"We have a chance in this country to make this the American century," Welch said. "This gas thing is huge. The gas that we have found is in the first inning - it's like the Internet in 1990. This is the first inning of a great American century."

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The Hottest 2013 Natural Gas Story You've Never Heard

By , Contributing Writer, Money Morning -

The story for natural gas companies in 2013 is an improving one.

As Money Morning Global Energy Strategist Dr. Kent Moors explained last month, he believes natural gas prices in the U.S. will come back strong next year.

But the natural gas story is not just an American one.

Ask the average energy executive what region he or she is really excited about today and the answer you will get is one that was not even on many companies' radar a few short years ago - and one of which many investors are unaware.

2013 could be the year when investors become aware of the vast potential of the prolific natural gas fields in this region, potential that will be unlocked when gas from those fields is someday turned into liquefied natural gas (LNG) and sold to the energy-hungry markets of Asia.

I'm talking about the offshore waters of East Africa.

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2013 Natural Gas Prices: Now is the Time To Be Bullish

By , Global Energy Strategist, Oil & Energy Investor • @KentMoors_OEI -

Forget the Farmer's Almanac.

As we move into the winter season, two things are becoming clear. First, this one will be colder than last year, nationwide. Second, natural gas prices are moving up.

A colder season ahead is an almost statistical certainty. The likelihood of having a repeat of last year's mild winter is quite low. And my second assertion is now supported by several factors.

Until very recently, the changing of seasons was a determining factor in gas prices.

The warm winter throughout much of the U.S. last year certainly contributed to the dive that saw gas prices plummet to near $2 per 1,000 cubic feet (or million BTUs), the NYMEX futures contract unit.

The bigger issue, however, has been the game-changing entrance of unconventional natural gas supply in North America. Both the surplus of in-market stored gas and the ready availability of expanding reserves have been driving factors in lowering prices.

The amount of available gas is staggering.

Known reserves of shale and tight gas, coal bed methane, and remaining free standing volume now allow up to a 25% increase in supply per year into the foreseeable future.

Now, nobody would actually drill that much, because they would destroy the market (the classic example of "drilling" oneself in the foot).

But the ready availability was restraining pricing. That resulted in a period in which gas rig utilization has fallen each month - to its lowest level in over a decade. The industry has been slowing the introduction of accelerating volume into what had been an oversaturated market.

The hottest summer on record also contributed to a steady improvement in price. As the power-generating sector moves quickly toward low-priced gas as the fuel of choice, rising temperatures also increase the need for gas.

But now, at last, the balance is forming.

The inventory is now the smallest in the last two years, as demand picks up in petrochemicals, industrial usage, and even vehicle fuel prospects.

The major thrust is beginning.

This will not be a straight line for natural gas prices. Volatility cuts in both directions.

But one thing is clear.

The gas market is about to get a whole lot stronger...

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Natural Gas Companies: The Latest Must-Know News

By , Money Morning -

Natural gas companies watched their stocks tumble earlier this year with the price of nat gas, but some share prices have successfully reversed course.

Now natural gas prices, which have recently bounced around the $2.80 level after hitting a ten-year low in April, may be ready for another move up.

The fall in prices - from a high of $10.38 per million British thermal units (BTUs) in July 2008 to just $1.83 in April of this year - was primarily the result of a decade-long increase in U.S. gas production, which climbed by 21.6% from 2002 to 2011.

Now inventories are growing much slower and demand is increasing as electric utilities switch to natural gas from the more expensive coal. Other potential catalysts such as the weather, e.g. Hurricanes Debby and Isaac, could also send prices higher.

Natural gas prices rose more than 6% in the past week to $2.85 per million BTUs.

A rise in prices though doesn't guarantee a rise in all natural gas stocks, as there's a lot more than a price reversal happening in the industry.

For investors interested in natural gas companies, here's this week's wrap-up of what you need to know:

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As Prices Rise, Here's How to Play Natural Gas Companies

By , Money Morning -

The price of natural gas hit a 10-year low in April, sinking to $1.91 per MMBtu on April 19. Since then, natural gas prices are on the rise. In fact, prices have surged nearly 50%, to around $2.75 per MMBtu over the past four months.

What changed?

One, the sector came out of a very mild winter that saw very poor demand for natural gas.

Two, the onset of summer - and a particularly hot one, at that - has had the exact opposite effect.

This summer's record-setting heat has wreaked serious havoc on the economy. The price of everything we consume has been to some degree impacted by the heat, and natural gas is no exception. As temperatures have risen, utility companies have had to rely more and more on natural gas to generate electricity.

What's more, due to strengthened environmental regulations, coal-fired power plants are coming off-line, and their capacity is being replaced by natural gas.

On the supply side, prices were also juiced by last week's Energy Information Administration report that supplies increased by 24 billion cubic feet, missing expectations of a rise between 27 million bcf and 31 million bcf.

While prices are up, they're still hovering below $3. Since much of the country is still in the throes one of the hottest summers on record, there's still some money to be made.

What's more, analysts are predicting a colder winter than last year, which should bring some stability to prices when the heat wave subsides.

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Three Natural Gas Stocks Ready to Ride the Price Rebound

By , Money Morning -

Natural gas prices have gone from $1.85 per million British thermal units in April to $3.14 Tuesday - a seven-month high - for a 70% increase in three months.

Natural gas prices declined to a decade-low in 2012 thanks to oversupply. But with unusually mild winter weather followed by scorching summer heat, natural gas has seen a slight resurgence in prices over the last few weeks.

This gives investors hope natural gas has broken out of its rut.

The price change started last month. On June 14, natural gas futures saw a 12% jump, hitting $2.46 per million British thermal units (BTUs) after a surprising bullish storage report, according to CNBC.

At that time, CitiFutures energy analyst Tim Evans told CNBC that the U.S. Energy Information Administration (EIA) natural gas weekly storage report meant "there's not much reduction in coal-to-gas switching as had been anticipated or that production may have declined a bit in the latest period."

Regardless, Evans said, "it's a bullish surprise, and supportive" of prices.

Indeed, prices have continued rising as July has delivered record-breaking hot temperatures.

In its July Short-Term Energy Outlook on July 10, the EIA reported Henry Hub natural gas prices (NG-W-HH) in 2012 will have an average of $2.58 per million BTU; this comes in a little higher than June's $2.55 estimate, although still well below 2011's $4 estimated average.

But this is pushing natural gas toward a slight improvement in 2013 as the EIA has forecast prices increasing $0.64 (25%), to $3.22 per mm BTU.

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These Natural Gas Stocks Will Bounce Back As Demand Rises

By , Contributing Writer, Money Morning -

Now is the perfect time to invest in natural gas stocks.

To many investors, that may seem counterintuitive. After all, natural gas has been the red-headed stepchild of energy for years.

But prices for this plentiful alternative fuel are just beginning to turn higher after a four-year slide that saw values slashed by more than 80%.

That price decline - from a high of $10.38 per million British thermal units (BTUs) in July 2008 to just $1.83 in April of this year - was primarily the result of a decade-long increase in U.S. gas production, which climbed by 21.6% from 2002 to 2011.

That trend finally has begun to reverse, as the rate of inventory build-up has fallen steadily for almost three months. What's more, the size of the current natural gas surplus relative to year-ago levels has fallen by 23% since late March.

Three big reasons explain this shift:



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Natural Gas Stocks Ready to Surge on Demand from Asia

By , Contributing Writer, Money Morning -

Ramped up production and ample supply have weighed on natural gas prices over the past year, pressuring natural gas stocks.

But news out of Asia this week delivered support for a long-term bull market for natural gas.

The International Energy Agency (IEA) reported Tuesday that worldwide demand for the fossil fuel is expected to increase some 17% over the next five years, thanks in a big way to China.

Despite recent signs of a slowing economy in the Asian nation, Chinese consumption of natural gas is expected to double during the period, according to the IEA. China's demand for the fuel is forecast to grow 13% a year through 2017.

"Asia will by far be the fastest-growing region, driven primarily by China, which will emerge as the third largest gas user by 2013," the IEA wrote. "There are no doubts that China will become a major importer of gas. The question for external suppliers is how much pipeline gas and LNG China will need in five or 10 years."

North American natural gas companies are poised to benefit the most from the surge in Asian demand for the fuel. The region is positioning itself to become a major net exporter of liquefied natural gas (LNG) over the next five years as new projects come on line, the IEA said. The agency added that Asian LNG producers, such as Malaysia and Indonesia, stand to become net importers as local demand balloons and output wanes.

China won't be alone in increasing demand. The IEA estimates U.S. natural gas consumption will increase 13% by 2017, and European demand will grow by 7.9%.

By 2017, the agency says, low natural gas prices should lead to gas generating almost as much electricity as coal in the United States.

"The continued boom in unconventional gas in the U.S. may even herald the end of the hundred-year dominance of coal in U.S. power generation. In 2005, when the first shale well was fractured, coal produced almost three times as much power in the U.S. as gas. By 2017, the race will be almost even," the IEA reported.

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Natural Gas Companies: Exporters Stymied by Permit Delays

By , Contributing Writer, Money Morning -

Just days after Forbesexplained how American natural gas exports will positively change the world, the U.S. Energy Department released news that could delay natural gas companies seeking to export the fuel.

The DOE announced it will temporarily halt granting new licenses for companies to export liquefied natural gas (LNG) until an economic study is completed later this fall.

Despite finishing in January the first part of a critical study on the impact of LNG exports on U.S. energy production, prices, and consumption, the rest remains incomplete. Until this section is finished and evaluated by members of Congress and executive officials, the DOE will also suspend assessments of proposed export sites.

"The second part of the study, which will assess the broader economic effects of increased natural gas exports, is ongoing," Energy Department spokesman William Gibbons wrote in a release Wednesday. "We expect to be able to release the comprehensive study results late this summer."

The DOE has delayed permits and assessments of proposed sites mainly due to worries from Congressional members. Congress remains concerned about the long-term U.S. energy security and the potential that natural gas prices could increase dramatically as exports begin.

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Good News for Natural Gas Stocks

By , Contributing Writer, Money Morning -

Finally-encouraging news for beaten down natural gas stocks.

The fossil fuel welcomed words from the International Energy Agency (IEA) Tuesday that gushed about the boom in unconventional natural gas over the next two decades. The agency said the incoming supply increase would let the United States and other countries enjoy cheaper energy and shift the export reliance away from the Middle East.

IEA Chief Economist Faith Birol told Reuters that growth in shale and other new available forms of natural gas could mirror gains made in conventional gas in Russia, the Middle East and North Africa combined.

"Unconventional natural gas will fracture the status quo and will be a complete game changer with major geopolitical implications," Birol said.

Over the past years, high natural gas prices were a driving force behind new ventures into previously unavailable, unconventional gas reserves including tight-gas, shale gas and coal-bed methane resources.

But recently, ample stores and waning demand have weighed on natural gas prices, taking the commodity down to record low levels.

However, things are about to change.



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Good News for Natural Gas Stocks

By , Contributing Writer, Money Morning -

Finally-encouraging news for beaten down natural gas stocks.

The fossil fuel welcomed words from the International Energy Agency (IEA) Tuesday that gushed about the boom in unconventional natural gas over the next two decades. The agency said the incoming supply increase would let the United States and other countries enjoy cheaper energy and shift the export reliance away from the Middle East.

IEA Chief Economist Faith Birol told Reuters that growth in shale and other new available forms of natural gas could mirror gains made in conventional gas in Russia, the Middle East and North Africa combined.

"Unconventional natural gas will fracture the status quo and will be a complete game changer with major geopolitical implications," Birol said.

Over the past years, high natural gas prices were a driving force behind new ventures into previously unavailable, unconventional gas reserves including tight-gas, shale gas and coal-bed methane resources.

But recently, ample stores and waning demand have weighed on natural gas prices, taking the commodity down to record low levels.

However, things are about to change.

Forecasts differ as for when the natural gas price channels will start churning and push domestic prices higher, but the tide will turn as the fuel becomes more widely used.

Jim Brick, macro-energy analyst at research consultant Wood Mackenzie, told Forbes he believes the U.S. could start exporting 3.2 billion cubic feet of LNG a day by 2030, as America moves away from its reliance on foreign energy sources and takes on a more advanced role as a worldwide energy supplier.

And as surplus domestic supplies begin to dwindle, natural gas prices will take off.

Mike Breard of Hodges Capital deems the chance of natural gas doubling in five years is better than the odds of oil doubling over the same period. The jump, according to Breard, could be sudden.

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