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T. Boone Pickens sees natural gas prices rising to $4.50 or $5 in the next year and perhaps $6...

T. Boone Pickens sees natural gas prices rising to $4.50 or $5 in the next year and perhaps $6 by 2015, and suggests two energy favorites: National Oilwell Varco (NOV), due to its huge shale opportunity for development with support remaining for oil domestically and internationally, and Pioneer Natural Resources (PXD), pointing to its 900K acres of assets, particularly in the Permian basin.
Comments (10)
  • This prediction may be a bit optimistic. Keep in mind that the advantage of natural gas over coal as a fuel for the generation of power is lost when natural gas rises much above $4.
    2 Nov 2012, 11:20 AM Reply Like
  • Typical Booster! Facts: Natural Gas storage hit record levels earlier than previous seasons, with the strong possibility of continued milder than normal weather we risk a repeat of last year's plunge in gas prices to nearer to 2 dollars. O yeah! Mr. Picken's does not have any interest in talking up the price of gas now, does he (my sarcasm). I would stay away from natural gas until after this February.
    2 Nov 2012, 11:28 AM Reply Like
  • Substantial natural gas price rises are totally dependent on rising use of natural gas. Transportation, chemicals, exports, electric turbines etc. Pickens is the best salesman for natural gas. Too bad we don't have more leaders like him. He has all the money he needs, he is looking out for the future of the American economy.

     

    Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, vans, buses, locomotives, aircraft, ships, tractors, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It lowers CO2 emissions. Over 2,400 natural gas story links on my blog. An annotated bibliography of live links, updated daily. The big picture of natural gas. http://bit.ly/Ts1NXO
    2 Nov 2012, 12:42 PM Reply Like
  • buy buy buy...UNG.....
    3 Nov 2012, 12:59 AM Reply Like
  • ronwagn, you are right, Pickens is a salesman of natural gas. I also believe that natural gas has a better future than now (includng possible exports of gas out of North America) and that it is a very positive story - but it takes time and money to switch. For example, in Canada, they are only now taking about reversing the gas pipeline from Sable Island to Eastern United states and bringing gas from Pennsylvania (expensive reserves in Sable would be shut-down). So the question is when are prices going to stop coming down? It is all about supply and demand at a point in time which is now - I believe North-American natural gas prices cannot be sustained at below 4 dollars in the long term but they certainly can go below in the short term. With record levels of gas in storage it is difficult to argue that we have a shortage and that prices are going up. As it is, the price of December Natural Gas dropped by 12 percent in the past two weeks and is lower than at the beginning of October. Remember last years heating season.
    4 Nov 2012, 03:41 PM Reply Like
  • producers will curb supply to increase demand, they all invested in wells and drilling which dropped the price, we have a hit a floor, all major write downs have happened. we are going up... export terminals are being built for long term demand. this is the meal ticket. as aaron rodgers would say go long... coal will pace LNG.
    7 Nov 2012, 10:37 PM Reply Like
  • Coal prices are the roof for natural gas prices. Natural gas will remain far cheaper than gasoline and diesel and will moderate their price as time goes on. This is a worldwide phenomenon. Natural gas is everywhere in the world, it just needs development and there are plenty of people who will travel to show them how and sell them the equipment!
    8 Nov 2012, 10:34 AM Reply Like
  • By the time we export in great quantity the window for high profits will be closing.
    8 Nov 2012, 10:35 AM Reply Like
  • Two comments: First, k2caliguy, you need to think this more clearly. You say "producers will curb supply to increase demand" this does not lead to clear thinking! producers can curb supply to increase prices yes - but they can only do that through collusion and govts will and should go after you if you engage in collusion. Without collusion, the guy that cuts back is worse off and the guy that does not is better off - not a workable situation. Normally the kind of oversupply situation we are seeing is corrected one of two ways: first, the less efficient producers to drop out of the market (usually done by going broke). The second avenue is through an expansion of domestic markets through increased sales resulting from lower prices (and long term adjustments in capacity to use the excess gas), or an expansion in exports which at the moment is limited by policy in US or export capacity (also currently the case in both the US and Canada). In the long term, we are likely to see a combination of the last kind of solutions. However, in the short-term we are limited to North American supply and demand. and I suspect weather driven winter heating demand will likely dictate the short term direction of prices. At writing time, the temperatures have been above normal....should this trend continue, I expect you would make some money selling gas short.

     

    Ronwagn is correct in his obervation that coal establishes an upward limit (combined with regulatory off-coal moves). However, in the short-term we are in a natural gas oversupply situation so the upper bound established by coal is not in play. If you are trying to make some money in the stock market, I would argue that you need to consider the short-term trends (excess gas supplies), because as John Manyard Keynes wisely pointed out, "in the long-run we are all dead". On the positive side, govt seems to be promoting a switch to natural gas, particularly for electricity generation.

     

    In a couple of years, when (and IF) the regulatory situation changes to allow gas exports and the capacity to export lines-up, we will see a quick rebalancing of (world) markets and North American natural gas prices will increase. However, this will take a minimum of a couple of years in my opinion - and that may be optimistic.
    11 Nov 2012, 02:26 PM Reply Like
  • In the meantime we are exporting coal also. We may end up using very little, but selling it to others. Strangely, the Europeans are more afraid of fracking than of coal pollution. Then again, I believe that natural gas will become the choice fuel everywhere. I hope to live to see that day. It is an obsession for me. It will also moderate gasoline and diesel prices. Some engines burn a blend of diesel and natural gas. I am opposed to gas to liquids. It is IMHO a waste of energy, and more costly.
    11 Nov 2012, 07:48 PM Reply Like
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