With natural gas falling from $2.47 to $2.12 over just the last seven days - plummeting from what appeared to be the first series of higher highs in over a year - we thought now would be as good a time as any to update our "Monitoring of the Marcellus" risk management and data-visual series. As with prior coverage, we'll use 12-Month Default Probabilities, Credit Default Swap (CDS) pricing, aggregate Marcellus exposure per E&P - in both natural gas breakeven-pricing and trillion cubic foot equivalent ownership (TCFE) terms, and EBITDA growth/contraction rates in our credit-risk and valuation analysis.
We take a data-first, as of last close, spatial view of the Marcellus and try to determine what story the unbiased data is telling. We also try to identify outliers -from both a long and short standpoint - across several ownership durations that might be able to help investors generate alpha. This deep into the current credit cycle we recommend being extremely data-reliant - but not data blind - in that margin for error is virtually non-existent. We also recommend investors pay particularly close attention to the rate of change for credit data as, again, this has historically been highly predictive. Credit data is virtually always a leading indicator of equity pricing direction.
We hope you enjoy our BI-derived, data-visual dashboards and that this presentation provides something of value in risk management.
Good luck and enjoy.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.