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Envestor First is a publication and investor network operating since 2008 sharing ideas from investors, managers, executives & analysts with real-time ideas, research, interviews, charts focused on commodity supercycles to the private, institutional and public investment community.
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  • Why Didn't Natural Gas Bounce Like Oil? 7 comments
    Nov 24, 2010 6:27 PM | about stocks: UNG, SWN, CHK

    As many of our readers and investment partners know we have been calling on an oil boom since the beginning of 2009. This has proved to be very valuable to us over the last year and we have no plans to stop beating the drum anytime soon. The questions many investors are still asking is why didn't natural gas bounce like oil?

    That's easy. Once the United States discovered an abundant supply of natural gas in its shale basins, the fear that this country would run out of this critical source of energy basically disappeared.

    This new supply of natural gas is changing the way the United States views energy. In the past, we expected to have to use imports to meet our energy needs. But that may not be the case going forward. But make no mistake. natural gas is going to bounce. In fact, once the United States is able to export liquefied natural gas, conventional natural gas prices will rise to match worldwide natural gas futures contracts.

    Anybody following the news lately knows we are in a modern day land grab going on in key shale areas of the country. The following map shows these areas.

    US Shale Deposits Petro Lucre

    US Shale Deposits

    Given what we now know about the U.S. natural-gas market, it's time to look at the catalysts that will ultimately send prices higher. First, however, let's do a quick review of where natural gas is today. This key U.S. energy source is:

    • Near its yearly lows, while other commodities are already breaking out to yearly highs.
    • Is discounted in the terms of its BTU values here in the U.S. market.
    • Prone to price changes based on seasonal shifts in demand.
    • Slated to increase in price as the price disparity is exploited in the domestic U.S. market.
    • Destined to remain a key energy source in the U.S. market, since this is the only major market in the world with significant and highly innovative storage capacity.

    Natural gas is destined to be a major commodity story in the months and years to come, as winter demand kicks in and international spot prices continue to rise, and as the U.S. dollar drops in overall value. It's time for us to go along for the ride.

    It's time to invest in natural gas, one of the few key commodities that failed to take part in the global bull market in commodities. The devaluation of the U.S. dollar is causing a price arbitrage event to appear in the U.S. natural gas market, where prices are much lower than they are in the rest of the world.

    In the next five years, a group of energy companies will be building LNG-export faculties in the United States. That is going to close the market-price gap between liquefied natural gas and conventional natural gas. While the world has a lot of natural gas available, most of it is trapped in non-exporting or easily accessible locations. We can expect that natural gas is going to bottom soon, as the weather gets progressively colder in the days and weeks to come. Let's invest in natural gas while it's still out of favor.

    With this information we urge our readers and investment associates to consider natural gas as a rare opportunity to acquire projects, stocks and etf's at discount prices. Check out stocks such as CHK and SWN. We recommend you check out UNG as the best ETF to take advantage of the anticipated gas boom over the next couple years as well as a great short-term trade during volatile winter predictions for 2010.

    This is not an offer to buy or sell securities. Oil & Gas investment carries very high risks. The information contained within this post has not been nor will it be verified by Petro Lucrum, Inc. D.B.A. Turn Key Oil and is subject to change at any time. We are not a United States Securities Dealer or Broker or United States Investment Adviser. Do your own due diligence and consult with a licensed professional before making any investment decisions. Please read our full disclaimer before making any decisions.

    Sources cited: seekingalpha.com/article/236665-three-wa...

    Stocks: UNG, SWN, CHK
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Comments (7)
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  • Mr. Twigs
    , contributor
    Comments (106) | Send Message
    "In the next five years, a group of energy companies will be building LNG-export faculties in the United States." Who is going to build LNG export facilities?
    25 Nov 2010, 10:29 AM Reply Like
  • Luckydad
    , contributor
    Comments (79) | Send Message
    Cheniere (LNG) is currently leading the pack. They have received approval from the Feds and have several customers lined up with sign letters/contracts contingent on the opening of their facility in 2015 or sooner.


    They are far ahead of any competitor for U.S. export.


    The other nice thing about them is that there business plan includes processing for import as well - which they are already set up for. This allows them to profit regardless of the swing of the trade door.
    13 May 2011, 09:41 AM Reply Like
  • EnvestorFirst
    , contributor
    Comments (31) | Send Message
    Author’s reply » We are trying to keep up w/ these guys as much as we can. You are right about them leading the pack, I am excited to see where they go.
    20 May 2011, 11:11 AM Reply Like
  • Luckydad
    , contributor
    Comments (79) | Send Message
    Do you think they will get back up to thier 35$ mark ?
    21 May 2011, 08:04 PM Reply Like
  • EnvestorFirst
    , contributor
    Comments (31) | Send Message
    Author’s reply » I am hopeful. What are your thoughts?
    23 May 2011, 01:55 PM Reply Like
  • Luckydad
    , contributor
    Comments (79) | Send Message
    I am feeling good about my prediction of it hitting $11 and $12, to settle at $11 by summer, even though it came earlier than expected. I don't see a next spike until they announce how they are going to handle the notes due in May 2012. I see several possibilities in handling it such as refi or equities, but there will be different affects resulting from the direction they take. Such uncertainty could take the stock back down below $10 for a brief period until the dust settles. But, I do see them getting above $35 in a year or so.
    25 May 2011, 09:32 AM Reply Like
  • EnvestorFirst
    , contributor
    Comments (31) | Send Message
    Author’s reply » You make some valid points, and I hope you are right!
    25 May 2011, 12:08 PM Reply Like
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