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Betting on Natural Gas, Part II: Investing Ideas

Under movers, there are also the pipeline MLPs. My favorites right now are Energy Transfer Partners and its GP (ETP and ETE) and Enterprise GP Holdings (EPE).

Chesapeake: When Gas Prices Will Recover

It does sound to me like Aubrey has a handle on his company's financial situation and his hedge book. However, what worries me is that he seems to assume he can sell assets in every environment. He managed recent large sales to BP and Norsk Hydro in a very difficult environment, but that's not a reason to assume he can keep doing that. Remember what Charles Prince said about how Citi was still dancing?

The comment about Aubrey being a buccaneer really did it for me. The guy is hyper-aggressive. I happen to think he has a high chance of making it big. That said, there's downside risk in that if natural gas gets under, say, $4 for an extended period, I can see a situation in which he drives the company into the ground (meaning it needs a highly dilutive capital injection or files bankruptcy). Sub $4 natural gas is a bit of a doomsday scenario, but you can never tell what commodity prices will do.

Chesapeake Energy Unlikely To Remain this Cheap

Aubrey McClendon is a visionary CEO and a very aggressive operator. A recent WSJ article quoted an energy analyst who sits on Chesapeake's board, who commented that he repeatedly had to restrain McClendon's enthusiasm and that now some of their more aggressive purchases were causing them difficulty.

I doubt that Chesapeake is in danger of financial distress given their cash generation and their hedging. I think natural gas in the US has great potential. At the same time, commodity prices are volatile and the CEO is a bit of a cowboy. I'm long Chesapeake, but if I were to do this again I would buy a more conservative company like Cimarex Energy (XEC).

Boone Pickens' BP Capital Funds Down Significantly

Stive, is your site attempting to have me download a virus?

I think a lot of the fast money is moving out of oil and natural gas related investments, but the fundamentals still exist for high prices in the long run, even with a global recession, conservation and alternative energy.