Operating Leverage with Nat Gas Companies

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sl6886
Posts: 138
Joined: Tue Jul 14, 2020 7:57 am

Operating Leverage with Nat Gas Companies

Post by sl6886 »

Dan,

Noticed that Antero Management started making a hard commitment to return 25% of CF to Shareholders until a certain debt limit reached, and 50% or greater thereafter. Their debt is close to 1x EBIDTAX, if not below, and the underlying commodity they sell continues to move higher.

A recent article by G&R on the topic of Natural Gas postulated that sometime in 2022, the US Natural Gas market price would reach a parity with global prices. They listed peak production of the Marcelles and Haynesville fields among other reasons, but I was struck by their specificity (within 6 months and their overall tone of conviction).

I'm sure you read the same article. How much stock do you put in their forecast? They've been reasonably accurate during this cycle.
dan_s
Posts: 34471
Joined: Fri Apr 23, 2010 8:22 am

Re: Operating Leverage with Nat Gas Companies

Post by dan_s »

I think G&R's research is outstanding.
I think the direction of their natural gas price is correct, but I am not quite as bullish as Adam is. I do believe that if we have a hot summer and the storage deficit to the 5-year average expands to 800 Bcf by end of October (Antero's forecast), we will see HH gas prices over $10 this year.

Raymond James forecast is $9.25 in Q4. If you'd like to read the details behind RJ's ngas price forecast, send me an email: dmsteffens@comcast.net

If RJ's 2023 natural as price forecast is correct, all of our "gassers" should be doubles and maybe triples for us from where they are trading today.
Dan Steffens
Energy Prospectus Group
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