The breakout of oil prices above $80 globally and $70 in North America have justifiably grabbed the headlines. But when it comes to most energy stocks, the outlook for natural gas is at least equally important to returns.
This issue of Energy and Income Advisor, we highlight current natural gas market dynamics and our near and longer-term forecast for supply, demand and prices. We then zero in on developments at several of the more natural gas heavy names in our EIA Actively Managed Portfolio and Focus List.
Dominion Energy's (NYSE: D) offer could do a lot to resolve uncertainty surrounding Dominion Midstream Partners LP's (NYSE: DM) future.
Last week, two more members of our Energy and Income Advisor Endangered Dividends List cut distributions. We strongly suspect they won’t be the last to do so before second quarter earnings reporting season is over.
Over the past two weeks the big story in energy markets has been oil price differentials, which was a major theme at this year's MLP and Energy Infrastructure Conference (MEIC) conference. However, scratch beneath the surface and there’s a lot more going on.
You can learn a lot about an industry by listening to earnings conference calls, digging into the quarterly numbers and financial results, but there's no substitute for boots-on-the-ground research.
The potential for OPEC to scale back its production agreement doesn't spell doom for oil prices.
Since the end of 2011, the average weekly closing price for front-month US natural gas futures is roughly $3.15/MMBtu, in-line with the current price of $3.12/MMBtu. In the short term, US gas storage levels are at the lowest levels in 15 years, supply growth is constrained and demand remains robust. That could lead to a spike in NYMEX gas futures to $4/MMBtu or higher this winter.
Endangered Dividends List companies are vulnerable for different reasons like cash flow, elevated debt levels, revenue pressure etc.
Ferrellgas Partners (NYSE: FGP) has exhausted a $50 million reserve for paying distributions. Under its debt covenants, the propane distributor MLP will have to suspend its distribution entirely, until the consolidated fixed charge coverage ratio recovers.
Talking Point #1: What’s your general view of the super major oils at this time? • Roger Conrad (RC): I became a shareholder of Chevron Corp (NYSE: CVX) when it acquired the former Texaco, which I believe was actually the first stock I ever bought. I was fresh out of business school and made an investment in Texaco’s dividend reinvestment plan, and I’m happy to report that I literally make more in dividends every year than my original investment.
Starting in September, we’re taking a giant step to simplify our Energy and Income Advisor Portfolio strategy. Our 3 Model Portfolios are divided into “Conservative” and “Aggressive” Holdings. The Conservative stocks are intended to be bedrock positions, where our objective is long-term capital appreciation and in most cases a rising stream of income. The Aggressive stocks carry more risk but also more upside potential and often very high yields to reward your wait.
Elliott and Roger on Oct. 29, 2018
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.