Energy Prospectus

Notes below are from HFI Research"

We recently discussed our bullish thesis on natural gas in an article where we make the case that the 14.6 bcf/d demand increase from LNG by 2030 will drive prices significantly higher.

U.S. natural gas E&Ps are the most direct way to play the natural gas bull market. These companies have direct and heavy exposure to Henry Hub natural gas prices.

Henry Hub is the NYMEX natural gas futures contract on which most LNG supply agreements are based. LNG operators typically price their product to customers at a margin above the Henry Hub price to limit the cash flow volatility that would occur if they were exposed to the commodity price.

E&Ps in the U.S. gassy basins—namely, the Haynesville and the Marcellus/Utica—both have access to Henry Hub pricing. In Canada, some operators receive Henry Hub pricing, but due to the marketing and transportation requirements involved in sending gas from Canada to the U.S. Gulf Coast, these agreements come at a greater cost compared to their U.S. peers. Moreover, most Canadian natural gas operators are exposed to the regional AECO benchmark, which typically trades at a steep discount to Henry Hub due to oversupply and egress constraints.

The dependence on Henry Hub pricing for the U.S. relative to Canadian names makes it easier to model the cash flows. Our price targets assume a natural gas price of $5.50 per mcf beginning in Q4 2025.
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MY TOP PICKS for natural gas are AR, CTRA, CRGY, EQT, OVV and RRC

Last Look on Friday, March 14

Prompt-Month Henry Hub (April 25) was down $0.007 on the day, to settle at $4.104

Prompt-Month WTI (April 25) was up $0.63 on the day, to settle at $67.18

All of our Sweet 16 are very profitable at the prices above. My forecasts are based on the following natural gas prices:

2025
Q1: $3.50
Q2: $3.75
Q3: $4.25
Q4: $4.75

2025: $4.00

Energy Secretary Chris Wright said Friday that work on a proposed pipeline to bring natural gas through New York to help supply energy to New England could start by the end of this year.

Wright said in an appearance on FOX Business Network's "Mornings with Maria" that he thinks it's "highly likely" that the so-called Constitution Pipeline, along with other unspecified pipelines, will move forward this year.

The Constitution Pipeline would take natural gas from Pennsylvania to a hub near Albany, New York, where it would be routed through other pipelines to New England. The project was blocked in 2020 by the state of New York when it denied the company the necessary permits amid opposition from environmental activists.

This is what happens when the president puts qualified people in key positions:

"It's just such a win, win, win. This will lower costs for people in the New York area, for New England. Not just heating costs, which is a big deal – old houses are heated by fuel oil, natural gas is just so much cheaper and it burns cleaner," Wright said. "It'd also lower electricity prices, which, of course, everyone would cheer for that as well, and allow businesses in New England or in the New York City area to expand and grow their businesses and grow more jobs."