13 Feb What Happened, Natural Gas?
A few months ago, natural gas players were living “high on the hog”. Many companies heavy in natural gas like Chesapeake killed it in 2022! News was good all around and production was at peaks just recently in Texas.
I posted on LinkedIn and warned people not to be swayed by the Natural Gas Siren song over a month ago.
Did I have some crystal ball into the future? I wish!
I could see with the combination of warm winters throughout the world and oversupply in regional markets that natural gas prices would fall dramatically. It happens a lot with natural gas supply and demand cycle. It kills pubco stock prices and local economies like Round Up.
So, what’s the play now for Natural Gas?
The good news is that condensate prices is still relatively high, and if your wells have high BTUs, you should be OK. If you’re producing marginal gas in an area that is flooded with product, it may be a good time to shut in.
I’m not seeing a price rebound for 5 months, so any new development programs that are strictly natural gas should be avoided unless local market conditions demand it. Beware of the “BOEPD” abbreviation when evaluating programs, as you need to see the breakdown of production and learn the contract price from the gas purchaser is offering.
If you’re looking at the long game, smaller Natural Gas producing leases will be available at low prices soon and can be turned back on in days in most cases for future market capture.
Natural Gas is a fickle mistress. One day you’re raking in cash, and in a few short weeks, you’re digging for coins in your car to pay for mental therapy.