Are These Nine Methane Stocks On Fire, or Blowing Hot Air?

by: Stockerblog

Methane is a greenhouse gas with global warming potential. However, it is one of the cleanest burning fuels, as it is the purest form of natural gas and is much cleaner than burning coal. The sources of methane gas are natural gas fields, decaying organic wastes of solid waste landfills, such as manure, wastewater sludge, municipal solid waste and landfills, and coal deposits from coal bed methane extraction.

Coalbed methane generally consists of at least 95% methane unlike natural gas, which has methane plus significant quantities of ethane, propane, butane, and pentane, as well as carbon dioxide, nitrogen, helium and hydrogen sulfide. The heavy hydrocarbons need to be extracted before the natural gas is distributed, but methane can be used as fuel right away. Methane from coalbed reservoirs can be recovered economically, since it resides in coal seams at shallow depths.

  • CNX Gas (CXG) is a Pittsburgh, Pennsylvania-based producer of coalbed methane [CBM], and owns coalbed methane rights for 4.5 billion tons of proven coal reserves in Appalachia, the Illinois Basin, and other areas. The stock has a P/E of 41 and a PEG of 1.27.
  • Peabody Energy Corp. (BTU) produces coalbed methane, mines for coal, and develops mine-mouth coal-fueled generating plants. In addition, it converts coal to natural gas and other fuels. The stock has a P/E of 96, a PEG of 1.86 and a yield of 0.3%.
  • CONSOL Energy (NYSE:CNX), one of the methane gas pioneers, produces coalbed methane gas from its coal properties in the Northern and the Central Appalachian basin which it resells to wholesalers, and also develops oil and gas from properties in the Appalachian and Illinois Basins. The company is also involved in the mining of steam coal and metallurgical coal. The stock has a PE of 90, a PEG of 1.63, and a yield of 0.4%.
  • Range Resources Corp. (NYSE:RRC), which trades on the New York Stock Exchange, produces coalbed methane, and oil and gas in the eastern portion of the United States. The stock has a P/E of 62, a PEG of 1.68 and a yield of 0.3%.
  • Big Cat Energy Corporation [BCTE.OB] has patented technology, known as the ARID Tool, which is an aquifer recharge injection device, that allows coal bed methane extractors to re-inject water produced from producing coal seams. The stock recently generated negative earnings of $0.16 per share. This is an extremely low cap stock and should therefore be considered extremely speculative.
  • Far East Energy Corporation [FEEC.OB] is a Houston, Texas-based company which explores for, develops, and markets coalbed methane gas in the Shanxi Province in northern China and in the Yunnan Province in southern China. The stock recently generated negative earnings of $0.11 per share. This is an extremely low cap stock, and as a result, should be considered extremely speculative.
  • Gastar Exploration, Ltd. (NYSEMKT:GST) explores for and develops coal bed methane property in the Powder River Basin of Wyoming and Montana. It also explores and develop oil and gas properties in North America and Australia. The stock has a forward P/E of 42. The stock trades on the American Stock Exchange.
  • Quest Resource Corporation (QRCP) develops coal bed methane in the Cherokee Basin, which includes 15 counties in southeastern Kansas and northeastern Oklahoma. It also has a natural gas pipelines division. The stock has a forward P/E of 18.
  • Storm Cat Energy Corporation (NYSE:SCU) explores for coal bed methane in central Alberta. The company also explores and develop unconventional gas reserves from fractured shales, coal beds, and tight sand formations, including coalbed methane gas, as well as oil properties in Canada, Mongolia, and the United States. The stock has a forward P/E of 23. This is a very low cap stock that trades on the American Stock Exchange and therefore, should be considered very speculative.
  • Waste Management Inc. (WMI), which trades on the New York Stock Exchange, is the largest waste services company in the United States. The company is planning on spending approximately $400 million over the next five years to build methane gas to electricity plants at 60 landfills. Its facilities will be built in Colorado, New York, Texas, Virginia, Illinois, Massachusetts, and Wisconsin. The stock has a P/E of 16, a PEG of 1.52, and a yield of 2.9%.
  • Climate Exchange PLC (OTC:CXCHF) owns the Chicago Climate Exchange, Inc., which trades in the emissions of six gasses including methane, carbon dioxide, nitrous oxide, sulfur hexafluoride, perfluorocarbons and hydrofluorocarbons, and the European Climate Exchange, which provides futures contracts and options contracts of emissions, known as Carbon Financial Instruments. Goldman Sachs has taken a major position in this company. Its net profit margin was down 15.89%.

Disclosure:  The author does not own any of the above.

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