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Natural Gas

  • 27-05-2010 4:18pm
    #1
    royaler83
    Registered Users, Registered Users 2 Posts: 497 ✭✭


    I believe natural gas will see a steady rise in the next 3-5 years. What is the the best way to go about 'buying natural gas'?
    Would i be better buying into a gas exploration company or how do i go about buying any commodity for that matter.

    Thanks in advance


Comments

  • #2
    Raskolnikov
    Registered Users, Registered Users 2 Posts: 10,148 ✭✭✭✭Raskolnikov


    It depends on how risky you want to get.

    From my research, one of the lowest cost gas explorers with good management is Contango Oil & Gas (symbol MCF). This company has a proven record of over 20% compounded returns since inception. They have hedged a lot of their prices over the coming years, so while the downside is protected, they won't gain as much if gas prices were to spike.

    If you want to expose yourself to more risk, you could consider a stock like Postrock Energy (symbol PSTR). They are entirely exposed to gas, are highly-levered and highly dependent on gas prices picking up in at least the medium term. Due to the debt, there is a chance of bankruptcy, however, if gas prices went $8+, these guys would benefit most and the stock price would probably go up 10 times.

    For the record, I own a little MCF.


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