Booms, Busts, and Recoveries Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Booms, Busts, and Recoveries

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: tradermike_1999 who started this subject	5/9/2003 5:34:15 PM
From: energyplay	Read Replies (2) of 74559

What Price, Gas Chris Edmonds , TheStreet.com Natural gas prices are still moving higher as inventories continue to show only anemic growth. Early signs of summer -- at least in the Southwest and West -- are worrying pundits that it will be nearly impossible to get natural gas storage back to 3 trillion cubic feet (tcf) by November, the beginning of the traditional heating season. Talk at this week's American Gas Association conference in Phoenix was focused on how high natural gas prices can go. Let's put the storage issue in perspective: To get back to 3 tcf by November -- the level analysts call "full" -- producers would need to put about 12 bcf of gas a day into storage. That has never happened in the U.S. The highest level was just more than 11 bcf/d in 2001, the height of the last drilling frenzy. With natural gas production remaining flat and forecasts not much better, it's hard to imagine refilling before winter. "We now estimate that 2003 North American gas production will run generally flat vs. the 2002 exit rate, but down 1.6% on an annual basis," J.P. Morgan energy analyst Shannon Nome told clients this week. "We believe risks to our estimate remain skewed to the downside, as we have not yet incorporated new guidance from companies that have reported into our survey. In general, guidance has been somewhat disappointing." That could mean much higher natural gas prices as we approach winter. Although prices should remain in the $4.50-$5.50 per mmbtu range through spring (now at the top end of that range), the forward futures curve suggests that investors expect the price to firm into winter, with December and January contracts already trading above $6 per mmbtu. From an equity perspective, the investment focus should be on companies that are focused on finding natural gas. Larger names would include XTO Energy (XTO:NYSE - news - commentary) , Devon (DVN:Amex - news - commentary) and EOG Resources (EOG:NYSE - news - commentary) . The key is to find companies that can actually show production increases over the balance of the year. Those that can't find gas at these prices are names to avoid.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next