Keith Schaefer Blog | There Is Less Than One Day's Surplus Of Natural Gas | Talkmarkets - Page 2
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There Is Less Than One Day's Surplus Of Natural Gas

Date: Thursday, October 6, 2016 10:48 AM EDT

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There are 92 rigs drilling for natural gas in the United States right now. That is down 94% from its peak and down 50% from just a year ago.

Everyone has bought into the idea that the country is going to be flooded with natural gas for decades to come.But guess what… if we aren’t drilling wells the production just isn’t going to be there.

We are going to need natural gas production and it isn’t going to be available

The market is going to need to do what markets do. It is going to provide producers with a shocking price response in order to motivate them to drill.

The rapidly vanishing inventory surplus tells us that supply growth is rolling over. Our problem is that the production decline can’t be turned around with the flip of a switch.

When the Market figures this out investors and consumers will get a reminder of how volatile this commodity can be. It has been a while since we have had such a reminder, but when the market suddenly gets tight it's a commodity that can double, triple or more within months.

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 Don’t Waste This Opportunity On A Mediocre Company

Right now, natural gas producers are in a lot of trouble from the last few years of very low prices.

A countless number of mid and small cap natural gas producers have gone out of business during this downturn. Even the big natural gas producers like Chesapeake Energy (CHK -NYSE) and Southwestern (SWN-NYSE) are so weighed down by debt that they only focused on survival.

Any extra cash flow these companies get from higher natural gas prices will help repair their balance sheets… not grow production.

That's why natural gas production will respond very slowly when the commodity price jumps.

As an investor, you can smell that fact that there is a rare short-term opportunity to profit here. You’ve got your head wrapped around something the market hasn’t… that natural gas production can’t turn on a dime.

That is what good investors do. While everyone else has their heads turned around looking at what has happened we are using our brains and figuring out what is going to happen.

Investment decisions are made by looking through the windshield…. not in the rear view mirror. So how do investors take advantage of this opportunity?

It's NOT by owning a company like a Chesapeake or Southwestern that is handcuffed by debt. That is risky and not what a good investor does. Now is the time to be selective, to really take advantage of what is about to happen.

We are going to want to buy the best natural gas producer to profit from this. You owe it to yourself to make the effort to find the absolute best opportunity possible.

I make my business out of finding these opportunities and I’ve got the perfect natural gas producer to own right now.
 
Tell me if this is what you think an exceptional opportunity might look like….

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