Surging Natural Gas Prices

How are the surging natural gas prices affecting drilling this year, and what about going into 2022?  Are the gas companies taking advantage of these higher prices?  What`s next?

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Permalink Reply by Ralph cramdon on December 13, 2021 at 4:32am

Farmgas asks .. Which gas operators represent the Future .... AR , EQT . CTRA , NFG , RRC , CHK all worth a look , they all are reliant on oil / gas prices .... Operators like AR have had a great year ... Although good quality , CNX seems to be stuck in the mud and awaiting a decent suitor ... SWN is having its own issues .... 

 CTRA just about fully unhedged 2022 , CHK roughly 50% , AR 50% , EQT heavily hedged , cnx nearly fully hedged , don't kn ow on NFG  .... AR printing $$$ with its focus on Liquids , how long will liquids stay on premiums ??? Place your bets !!!! Gas has a great future as a transition bridge , but do you buy these stocks when gas is trading at $4 ??? Place your bets ....... Sometimes early winter is a good time to buy IF cold weather becomes a headline maker .......  

Permalink Reply by farmgas on December 13, 2021 at 7:03am

The first Polar Vortex is forecasted for late December into January.  That sounds positive for future gas prices.  Any forecasts who might be a decent suitor for CNX?

Permalink Reply by Ralph cramdon on December 13, 2021 at 12:38pm

Who will buy CNX ??? If I was a buyer , I would wait for the cycle to repeat itself and buy when gas gets once again below $3 .... which it might on its current path ...... EQT or RRC would be a natural fit , but EQT has bought a lot of outfits lately ,,, RRC is still cleaning up its Balance sheet from its Deep Pink fiasco ...... 

 Out of the Blue COG merged with Permian player XEC ,, this caught everyone by surprise ..... Sitting on the sidelines with Cash ..... Interest Rates and the denial of Inflation in Washington has the potential to spook this bloated market ....... 

Permalink Reply by farmgas on December 15, 2021 at 11:17am

A suitor company would need to be interested in their Central PA holdings.  How would that match-up with EQT or RRC?  They have holdings in SWPA.  Would a private gas company have interest in them? The Feds are suggesting an increase in interest rates next year and beyond.  Inflation is forecasted thru the middle of next year. 

Permalink Reply by Ralph cramdon on December 16, 2021 at 2:27am

CNX does have a SW PA presence ,,,... Its my understanding that central region is more likely to be Utica vs Marcellus ... Utica has plenty of promise , but to date it seems to be much more expensive to drill .... Marcellus is currently the name of the game ... Would a private outfit be interested in CNX ??? Doubtful as most bigger  private outfits are financed by Investment outfits who eventually plan to cash out via sale or IPO on the open market .... 

 I do like the sector , just not ready as of today to invest a ton of money into it ...... Production continues to rise which I find bothersome ........ Weather is the big unknown ........ 

Permalink Reply by farmgas on December 21, 2021 at 4:16am

The increased production factor is somewhat confusing to me to understand.  I believe this increase is due to turning in line (TIL) previously drilled wells or completing unfinished wells (DUC).  At some point new wells will need to be drilled and added to the inventory of wells.  The question for me is when will this drilling be needed to sustain production levels needed for maintain profitability?  Surely that has to be soon!  

Permalink Reply by Ralph cramdon on December 22, 2021 at 2:35am

Farmgas wrote

The increased production factor is somewhat confusing to me to understand.  I believe this increase is due to turning in line (TIL) previously drilled wells or completing unfinished wells (DUC).  At some point new wells will need to be drilled and added to the inventory of wells.  The question for me is when will this drilling be needed to sustain production levels needed for maintain profitability?  Surely that has to be soon!  .

 Here is a surprising fact ... NYSE listed producers only supply 35 % of the oil in the US , the rest is privately produced , by Mom and Pops and also Pension Funds , Investment Houses etc ... So public Companies have 'promised ' not to increase effort , the private outfits are  off to the races ... After suffering gas prices below $2 , the recent $5 price is plenty of incentive to drill and hedge that future production to the Max ..... 

 THE EQT ' s of the Industry seem to need roughly 50% of their Income to fund enough drilling to maintain a flat year over year production profile .......... Gas Inventories have staged a huge rebound and are now near 5 year averages ... This warm weather in the East is putting a big damper on what  was poised to be an exceptional year for producers .....  Which outfits to Invest in ? Looking for the lowest cost producers is always a good place to start ........Then looking for the ones with the most potential is another parameter to search for .....  

Permalink Reply by farmgas on December 23, 2021 at 2:49am

Little confused what you mean by public companies promise not to increase effort.  Won`t these large gas companies have a problem with meeting market increases if it spikes upward.  Cold weather can happen, and who knows what will happen between Russia supplying gas to Europe?  The need for LNG is poised to go even higher.   Is the problem really with domestic consumption?

Permalink Reply by Ralph cramdon on December 23, 2021 at 11:58am

Europe is terribly short on N gas ... BUT the LNG sector is constrained by how much it can ship , currently in the 12 B  /day range .. it takes years to build new docks for shipment ... Domestic consumption is weather dependent which has been warm ... add ever increasing  production  and gas inventories are poised to go above 5 year averages .... I would be hedging every foot of production if I was  a producer .... 

  oil / gas production is always increasing in the Permian , another major contributor to US production .... I like gas . but with bulging inventories , I sit on the sidelines ........ 

Permalink Reply by Ralph cramdon on December 27, 2021 at 1:25am

Nat GAs at $3.60 today . a fall from $6 just two months ago ......... Caution is the word for Investors 

Permalink Reply by farmgas on December 27, 2021 at 3:02am

How about buyers for stagnant gas companies?

Permalink Reply by Ralph cramdon on December 27, 2021 at 4:13am

Farmgas , what is a 'stagnant ' gas company ? Is that one whose price has failed to move ? 

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