Chesapeake: Get In Now For A Gas Price Recovery
Each week it seems that the spot price for natural gas moves to a new low and the current price is over 50% below where gas was selling for a year ago. The natural gas exploration and production companies have shifted to other markets – primarily natural gas liquids – and it seems like a bottom is forming for natural gas. The best company in which to invest for a gas price recovery may be Chesapeake Energy (CHK).
The discovery and exploitation of shale gas plays in the continental U.S. has led to an explosion – pun intended – of gas production in the United States. Unfortunately, the large amount of supply coming on to the market plus a warmer-than-typical winter in 2011-2012 has pushed the price of gas down to levels two-thirds lower than the prices received as recently as 2009. As the largest producer of natural gas in the U.S., Chesapeake Energy has done more than its share to cause the current natural gas over supply / low price situation.
Many of the energy exploration companies have shifted most of their drilling away from dry natural gas and are now drilling for crude oil or the much higher value natural gas liquids. For example, EOG Resources (EOG) has shifted from being one of the largest natural gas drillers and producers before 2006 to almost exclusive production of liquid energy products now.Chesapeake Energy has also shifted much of its efforts to finding and producing natural gas liquids, yet the company has maintained a position to profit handsomely from an increase in the price of dry natural gas.Â To continue reading, click here.