The stock market price of natural gas-weighted companies spiked from late Friday through Tuesday as prospects for a more profitable product heightened when the U.S. Department of Energy (DOE) broke the log-jam and announced it was conferring a worldwide liquefied natural gas (LNG) export license on a second project (see Daily GPI, May 20).
The Amex Natural Gas Index started Friday at $763, leaped to $772 after the DOE announcement in the early afternoon, then to a $785 high Monday and about $790 on Tuesday midday. Investors clearly were betting that other projects would be approved soon, opening a new (very competitive) global market for natural gas. Among individual stocks, ConocoPhillips, a part owner of the Freeport LNG export Terminal project on Quintana Island, TX, which received a seal of approval Friday for exports to non-free trade agreement (FTA) countries, jumped from a low under $63 early Friday to a $64 close on Monday and at midday Tuesday was hovering above $64.70.
Results were muted for The Dow Chemical Co., another Freeport owner (by accident rather than design), and a heavy user of domestic natural gas. Dow has repeatedly spoken out against exports for the past two years and appeared nonplussed when its inherited export terminal walked off with the prize.
The entry of a Gulf Coast rival in the LNG export field wasn’t particularly good news for Cheniere Energy, developer of the Sabine Pass, LA LNG project, the first one approved by DOE for a non-FTA export license (see Daily GPI, May 23, 2011) and by the Federal Energy Regulatory Commission a year later for terminal construction (see Daily GPI, April 17, 2012). Cheniere’s stock has shown an up-and-down, but not-going-anywhere pattern since Friday’s announcement.
Looking toward that new market, a number of companies with 90%-plus of assets in natural gas doing most of their business in North America registered price spikes. WPX Energy (100% natgas) went from under $18.50 of Friday to high of $19.76 Monday and rising to $20.40 at midday Tuesday. Southwestern Energy (99% natural gas) went from a low of $38 and change early Friday to near $40.16 at midday Tuesday. EQT Corp. (also with 99% of assets in natural gas), rose from just under $78 early Friday to $81.48 on Monday and a high of $81.70 Tuesday.
Encana Corp. (96% in natural gas) rose from $18.60 Friday morning to $18.89 at the close, to $19.74 on Monday and the mid-$19.80s at midday Tuesday. Other standouts with 90%-plus of resources in natural gas and rising stock market values were EXCO Resources, Ultra Petroleum, Bill Barret Corp., Comstock Resources Inc., Carrizo Oil & Gas Inc., Cabot Corp. and Chesapeake Energy.
In the 80%-plus natural gas resource category, standouts included Range Resources Corp. and Penn Virginia.
All of this may be getting just a smidgen ahead of the market since Freeport still doesn’t have its FERC construction authorization and you’re probably looking at 2017 for the first exports. Nevertheless, handicappers were speculating that it wouldn’t be long before several more LNG projects are approved. Sempra’s Cameron LNG in Hackberry, LA, and Dominion Cove Point, in Lusby, MD, and Trunkline LNG and Southern Union in Lake Charles, LA, are hoping their day will come now that the administration has opened the barn door.
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