"We are increasing our weighting to gassy exploration and production stocks. We believe we are moving into a period where we are able to see much more clearly what is going to happen. We believe the oil price will be stable, while the gas price is going to recover over multiple years. This is going to cause a great boom for U.S. natural gas companies. They are oversold at the moment and they are going to recover very nicely over time."
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Forecast for Energy Sector in 2013
Forecast for Energy Sector in 2013
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Forecast for Energy Sector in 2013
I agree with this. Now is definitely the time to add more exposure to gas but you need to do it in the right way. The financial returns on oil projects will remain better than natural gas, so add companies that have both but lots of gas reserves HBP. EOG looks very attractive and CRZO also fits the bill. - Dan
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"There are many people who say U.S. gas is going to remain very cheap for a very long time, and they are wrong. I agree the natural gas price won't get very expensive, but it will move from being ridiculously cheap to a long run price per mcf, of, say, $6 maybe next year but more likely in 2014 or 2015. The current spot price is $3. It went as low as $2. For much of the last decade, it was trading at $8, and it went up to $12 to $14. And today, it trades in Europe at about $9; and in Asia, it's about $15. And natural gas at $6 will still be very cheap compared to oil - 40% of oil's value per BTU - energy content - if oil is $90 per barrel.
And these gassy E&P companies will grow these gas shales that they have now developed in a much more measured way than over the last five years. And as they grow steadily, demand from the electricity utility sector will grow commensurately, and likewise, gas will go on replacing oil for heating."
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"There are many people who say U.S. gas is going to remain very cheap for a very long time, and they are wrong. I agree the natural gas price won't get very expensive, but it will move from being ridiculously cheap to a long run price per mcf, of, say, $6 maybe next year but more likely in 2014 or 2015. The current spot price is $3. It went as low as $2. For much of the last decade, it was trading at $8, and it went up to $12 to $14. And today, it trades in Europe at about $9; and in Asia, it's about $15. And natural gas at $6 will still be very cheap compared to oil - 40% of oil's value per BTU - energy content - if oil is $90 per barrel.
And these gassy E&P companies will grow these gas shales that they have now developed in a much more measured way than over the last five years. And as they grow steadily, demand from the electricity utility sector will grow commensurately, and likewise, gas will go on replacing oil for heating."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group