Energy Prospectus

Cheniere's pact with BG to export LNG from the US is sure to produce controversy and debate on the wisdom of exporting our relatively cheap NG.

It may act as a floor for our low NG prices and make production of NG much more profitable. Any predictions on how this will shake out?

Disclosure:After avoiding NG companies for years I purchased a full position in XEC this week and and plan on picking up a diversified portfolio of NG companies on price dips.

http://fuelfix.com/blog/2011/06/12/pund ... ke-in-u-s/

http://seekingalpha.com/article/302423- ... nt-ramp-up

There is a lot of gas out there. I believe it will struggle to stay over $3.50/mcf. With a very cold winter we could see $4/mcf for a few months this winter.

Working gas in storage was 3,794 Bcf as of Friday, October 28, 2011, according to EIA estimates. This represents a net increase of 78 Bcf from the previous week. Stocks were 17 Bcf less than last year at this time and 201 Bcf above the 5-year average of 3,593 Bcf. In the East Region, stocks were 39 Bcf above the 5-year average following net injections of 32 Bcf. Stocks in the Producing Region were 140 Bcf above the 5-year average of 1,080 Bcf after a net injection of 39 Bcf. Stocks in the West Region were 22 Bcf above the 5-year average after a net addition of 7 Bcf. At 3,794 Bcf, total working gas is within the 5-year historical range.

IMO the best way to play natural gas is to buy companies that also have promising liquids plays. XEC and CRZO fit that bill. I also like the upstream MLPs. They are buying gas production at rock bottom prices and they will move higher with gas prices eventually. The upstream MLPs offer investors outstanding tax deferred dividend yield while they wait on a rebound in gas prices. Take a look at our MLP Watch List.

Natural gas will eventually become the cornerstone of the U.S. energy plan.