I went through the transcripts of various dry gas producers and dumped the relevant portions of Seeking Alpha. I’ll probably just do that sort of thing on my own site going forward.
Executive Summary:
- In the past, higher prices have repeatedly sent natural gas producers into a drilling frenzy.
- This usually kills the rally dead in its tracks, making long-term prices worse in the process.
- CEO statements suggest they have finally learned their lesson.
Post Mortem
I bought a very non-diversified basket of natural gas names starting in 2019 that skewed towards generating income in case I was wrong about the timeframe of the move: Antero Resources, Antero Midstream, Tidewater Midstream and a preferred share of Pembina Pipeline. The positions were profitable but I sold out completely with the increase in oil prices …
My main concerns were that the basket wasn’t very diversified and the easy money had been made. Antero at $1.50 is an easy call if you believed the company could refinance its debt, at $10 you need to have a level of conviction about natural gas prices and an understanding of drilling cycles that I have no interest in acquiring.
