US and Canadian oil and gas producers have long coveted exports of liquefied natural gas (LNG) as a potential release valve for the domestic oversupply of natural gas, a product of the industry’s aggressive drilling in the Marcellus Shale and other prolific unconventional resource plays.
Although surging output from US shale fields enabled the US to offset declining volumes from the Gulf of Mexico and overtake Russia as the world’s leading producer of natural gas, upstream operators’ drilling success hasn’t necessarily translated into financial outperformance.
Robust production from prolific unconventional fields sent North American natural-gas prices spiraling lower, while the no-show winter of 2011-12 increased this oversupply and depressed prices even further in the first half of 2013.
Prices have recovered somewhat in the new year, thanks to robust demand for heating during the frigid 2013-14 winter. However, the price of the commodity has merely recovered to historically depressed levels from ultra-depressed levels.
Looking for arbitrage opportunities, the US oil and gas industry pushed hard for the Dept of Energy to approve increased LNG exports via specialized tankers. A quick glance at the difference between Henry Hub prices and international prices underscores the appeal of US LNG exports to companies on either side of the trade.
In this issue, we survey the push for LNG exports in North America and highlight our favorite plays on this trend, as well as some names to avoid.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on May. 30, 2017
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