Travis,
I’d like to have you consider an effort to identify the best Natural Gas producers to invest in now.
Stansberry thinks The Gods of Gas, the Rice Brothers / EQT and possibly Driftwood are the best options for a long term hold now.
I’ve been with you a long time and have never asked you this type of question because it doesn’t have any clues for the Thinkolater.
Any interest? Thanks, Kris
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I own a little EQT — it’s the biggest natural gas producer, with huge reserves and arguably the most efficient production operations, so it’s a pretty easy bet on US natural gas, even though with prices pretty weak it’s been a disappointing bet of late. I haven’t looked into more opportunistic plays on natural gas, mostly because unless you have strong conviction that gas prices will be much higher in a few years, it’s either an efficiency question (who can drill and complete most inexpensively) or a transportation question (whose reserves are best connected to pipelines, or can benefit from global arbitrage through LNG exports). EQT is tough to beat on the first one, and the LNG export trains are disastrously expensive and slow to build so you need optimistic financiers or customers who think gas demand and LNG import prices in Europe and Asia will rise enough in five years (when the project can be operating) to make up for the high cost of financing, particularly in a world where much safer investment can earn 5-10% returns.
I don’t think there’s much to be gained in looking for explorers who can identify big natural gas reserves, there’s a glut of gas in the US, and there are major LNG export growth projects in Qatar and Australia and elsewhere, so the natural expectation should be that the arbitrage of LNG shipping gradually becomes less of a windfall for the exporters, which is tough because those facilities have massive financing costs… so I have to accept that I don’t really have any conviction about how the LNG or pipeline stories will play out. I haven’t been willing to invest in the long term LNG projects, but I do like the established pipelines, if only because they become more valuable as it becomes harder to build new pipelines… but even in that area, I’m happy owning “average” and buying the AMLP ETF, I haven’t put in the time to have an expert opinion on which pipelines might be more valuable than others.