Actionable news
All posts from Actionable news
Actionable news in ETE: ENERGY TRANSFER EQUITY L.P.,

2 Strong Plays In A Struggling Natural Gas Market

Once heralded as the bridge to an oil-free energy future, natural gas seems to have been relegated to stepchild status in the hierarchy of carbon fuels. Why?

It's cheap, clean, efficient and plentiful. That's part of the problem. The Energy Information Administration (EIA), estimate that there are 388.8 trillion (yes… trillion) cubic feet of proven natural gas reserves in the United States. That's a lot of product to be pumped along with the 20+ trillion cubic feet of dry natural gas we pump annually.

And we keep discovering more. Take a peek at a 20-year study of the spot price.

View photo

After a couple of flirts with ridiculous prices, we're pretty much back to where we started when I still had hair and wore size 32 jeans.

The other challenge is lack of industry consolidation. The top 10 U.S. natural gas producers control 31% of the market. That's a decent number. But compare that to the top 10 petroleum producers who tap 52% of the market. Thin margins due to low prices don't get companies excited about acquisitions.

[More from Sitting On A Loser? Read This Before You Sell Another Stock]

So with prices in the toilet and lack of merger activity, can investors make any money with natural gas? The answer is "yes". I've found two companies that are thriving despite challenging sector fundamentals.

Spectra Energy Corp. (NYSE: SE) -- Spectra is weathering the energy meltdown thanks to its diversified portfolio of gas related assets. Although the company is primarily known as a midstream company (processing, storage, transportation and marketing), it also operates a regulated transmission and distribution business that currently serves 1.4 million customers in Ontario, Canada. The relative safety of the transmission and distribution operations work to offset the inherent risks associated with the...