Oil & Gas Prices - Sept 24

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Oil & Gas Prices - Sept 24

Post by dan_s »

Opening Prices:
> WTI is down 34c to $39.59/Bbl, and Brent is down 32c to $41.45/Bbl.
> Natural gas (OCT futures contract) is up 10.3c to $2.228/MMBtu.

Ignore the ngas price above. The wild ride for the October NYMEX futures contract over the last two weeks is just the result of several funds being forces to close out their long positions because they cannot take physical delivery. This is just a mini version of what caused the front month WTI contract to go negative in May. This winter we are going to see much higher natural gas prices.
At the time of this post, the November HH contract is trading at $2.84 and the December contract is trading at $3.26.


Comstock Resources (CRK) is trading at a DEEP DISCOUNT to my valuation.
> This company is backed by the wealth of Jerry Jones, owner of the Dallas Cowboys.
> It is free cash flow positive this year and will be extremely profitable in 2021 if their realized gas price is just $2.50/mcf.
> It is almost a pure play on the Haynesville Shale, which has the top netback gas prices in the country.
> ~98% of Comstock's production is natural gas and NGLs.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Oil & Gas Prices - Sept 24

Post by dan_s »

Closing Prices:
> WTI prompt month (NOV 20) was up $0.38 on the day, to settle at $40.31/Bbl. < Note that the front month oil contract rolls over a week before the ngas contract.
> NG prompt month (OCT 20) was up $0.123 on the day, to settle at $2.248/MMBtu. < The NOV 20 contract closed up $0.069 at $2.863 and DEC 20 closed up $0.082 at $3.311.

So, by the end of October the DEC 20 contract will be the front month. Just three months ago it was just "wishful thinking" to hope for natural gas to be over $3.00 in November.

Consider this: Natural gas is still super cheap compared to oil. Six mcf of gas has about the same energy content at one barrel of oil. I'm old enough to remember when gas prices were approximately 1/6th the price of WTI. If that happened today, ngas would be over $6.70/MMBtu. Imagine what our five gassers (CRL, EQT, RRC, GDP and GPOR) will do it if that happens.

If we get a cold December, there is a good chance we see $4.00/MMBtu in January.
Dan Steffens
Energy Prospectus Group
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