Energy Prospectus

I realize NG is out of favor but any thoughts on this recent collapse.

There are many factors that I see impacting Natural Gas. Here are some of my observations...

Market:
While long-term fundamentals support growing domestic and international natural gas demand, the near-term market is over-supplied. To compound the near-term view, new pipeline capacity is coming online which will put flared gas on the market. Given commitments by OPEC to extend production cuts further, the exposure to secondary gas domestically out of Permian seems exponential.

Our only hope to balance supply/demand was LNG. With no end to the trade war, domestic LNG exports will lag.

Fears of global slowdown depressing natural gas demand. And growth in LNG.

Natural gas storage returning toward 5-year average.

Company-Based:
Although not specific to RRC, the continued pursuit of stock buybacks by companies going into what could be a difficult pricing environment. Best to build a war chest or start paying down lines of credit.

Maintaining levels of production in an over-supplied market.

Hedges are running out and they'll be subject to pricing in an over-supplied market.

As forward-pricing reduces, risk of asset write-down increases.

Need for company consolidation

NGL prices also down until Q4. AR, GPOR, RRC and SWN should all be profitable this thanks in part to their hedges, but Wall Street is extremely bearish on the gassers.