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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: bruwin who wrote (62314)	8/3/2019 9:44:01 AM
From: E_K_S	Read Replies (2) \| Respond to of 78717

I wonder how much the WMB stock price variation is due to the price of NG. Many of their pipeline service contracts are calculate based on some average cost of NG. I know some of the pipeline companies have changed their service contracts to some base flat fee plus a variable fee that uses the NG price. This helps stabilize their revenues and still allows for higher fees based on vol of NG moved through the pipeline. During the last five years NG have fluctuated between $4/MMBTU and $2/MMBTU. This price swing would account for the variation in the EV/EBITDA ratio I believe. Especially if you look at the last 8 months $3/MMBTU (high) to todays price of $2.12/MMBTU (low). Even those MLPs w/ their revised fixed rate fee contracts are lower (but not as bad as fees based on 100% of the NG price). So, it appears that the current stock price is reflecting the multi year low in NG prices and one component of the value proposition is that eventually NG prices will revert to the multi year mean price around $3/MMBTU. EKS