ConocoPhillips Bids For Burlington Resources -- Natural Gas in Play (BR, COP)

"Q: Where do you think energy is going over the next 20 or 30 years? A: Natural gas is going to replace gasoline as a transportation fuel." -- T. Boone Pickens in an interview by Imogen Rose-Smith in the Dec./Jan. 2006 Trader Monthly.

Maybe this is why natural gas is such a hot commodity. Christopher Edmonds at RealMoney.com believes the ConocoPhillips (COP) purchase of natural gas producer, Burlington Resources (BR) is just the opening salvo in an energy mergers and acquisition cycle. Edmonds notes a number of other North American natural gas companies that could come into play.

Howard Simons also in Real Money covers the supply and demand situation for natural gas and notes some changes in the natural gas market. This has implications for a number of non-energy sectors in the stock market. His conclusion:

The natural gas stock market senses a scarcity premium for natural gas and a huge need for investment. This is the same sense conveyed by gas’ price, forward curve and volatility structures. The eventual result given the world’s vast gas reserves will be lower prices, but between now and eventually, there are a few bucks to be made.

Natural gas has entrenched itself as a major part of North America’s energy needs. Just as the rise in gasoline played a role in lowering consumer sentiment, so could continued high natural gas prices in a (currently) colder than normal winter.

P.S. If you are interested in learning more about energy investing, take a look at McDep.com.

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