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What the rise in natural gas prices means for 3 of our energy stocks

Published Tue, Aug 23 20226:14 PM EDT

Paulina Likos @paulina_likos

With natural gas prices in the U.S. and around the globe off the charts high, we're looking at what that means for our energy stocks. Early Tuesday, U.S. natural gas surged to 14-year highs — over $10 per million British thermal units. But it turned sharply lower later and settled down about 4% at just over $9 after the expected restart of a shuttered liquefied natural gas plant was pushed back. That will keeping more gas in the U.S. for longer, boosting supply here, instead of exporting it. Tuesday's move was certainly a wild ride, but U.S. natural gas prices are still up about 12% month to date and more than 154% year to date. There are a number of domestic and global factors keeping prices elevated, including disruptions from Russia's war against Ukraine prompting concern about shortages in Europe. Here's the breakdown of natural gas as a percentage of commodity sales in the second quarter for our three pure oil-and-gas exploration and production companies — Coterra Energy (CTRA), Devon Energy (DVN) and Pioneer Natural Resources (PXD) — and our take on the potential for bigger and bigger things. Coterra Energy Natural Gas: $1.47 billion or 56% Oil: $876 million or 33% Natural gas liquids: $280 million or 11% The independent oil and gas producer gets more than half of its revenues from natural gas, which it sells to industrial players, local distribution as well as major energy companies. Natural gas is becoming an important resource for U.S. producers to supply the liquified natural gas market. We are bullish on natural gas because Europe is strapped for it as the ongoing war in Ukraine hampers production. Also, if oil were to fall further from this year's highs, it would a safe bet to have a name like Coterra. Energy companies tend to use hedges as a way for them to protect against commodity price volatility. While this helps on the downside, it can also preclude producers to benefit