Natural Gas Price now over $4.00
Posted: Tue Nov 13, 2018 7:06 pm
The December and January NYMEX contracts closed on November 13th at $4.05 and $4.10. My "Revised SWAG" is that the January contract will go over $4.50 before Christmas.
In my valuation model for Gulfport Energy (GPOR) if I assume that their realized price for gas will be just $3.00/mcf in Q4 and $2.75/mcf in 2019 my valuation goes to $31.25/share.
> GPOR closed at $9.49 today (Nov 13)
> GPOR has ~78% of their Q4 natural gas production already hedged at $3.01
> GPOR already has the lowest PE ratio in the Sweet 16, to the downside risk on this trade is extremely small
GPOR, RRC and GDP are my Top Picks for natural gas. Just an average winter will drain U.S. natural gas storage to dangerously low levels and there will be regional shortages in the first quarter. The "Bidding War" for natural gas has just begun and I now think it is a lock that we see double digit gas prices on the spot market.
Go here ( https://ycharts.com/indicators/natural_gas_spot_price ) and take a hard look at what the price of natural gas did in early 2014. We started the winter of 2013-2014 with 3,800 Bcf in storage. This winter we are going to have less than 3,200 Bcf in storage on November 16 and demand for U.S. natural gas is MUCH HIGHER than it was in 2014.
In my valuation model for Gulfport Energy (GPOR) if I assume that their realized price for gas will be just $3.00/mcf in Q4 and $2.75/mcf in 2019 my valuation goes to $31.25/share.
> GPOR closed at $9.49 today (Nov 13)
> GPOR has ~78% of their Q4 natural gas production already hedged at $3.01
> GPOR already has the lowest PE ratio in the Sweet 16, to the downside risk on this trade is extremely small
GPOR, RRC and GDP are my Top Picks for natural gas. Just an average winter will drain U.S. natural gas storage to dangerously low levels and there will be regional shortages in the first quarter. The "Bidding War" for natural gas has just begun and I now think it is a lock that we see double digit gas prices on the spot market.
Go here ( https://ycharts.com/indicators/natural_gas_spot_price ) and take a hard look at what the price of natural gas did in early 2014. We started the winter of 2013-2014 with 3,800 Bcf in storage. This winter we are going to have less than 3,200 Bcf in storage on November 16 and demand for U.S. natural gas is MUCH HIGHER than it was in 2014.