Hello everyone!
Welcome back to your weekly newsletter. Hope everyone had a great week.
What has happened to Natural Gas prices in the last 6 months?
NG prices were an astonishing $9.375 / mcf (per thousand cubic feet) last August, and it has plummeted to a $2.58 as I write this. Earlier this week pricing actually dipped below $2 / mcf for a few hours. Imagine if oil prices dropped from $76 per barrel to $24! YIKES!!!
I found an informative article from OilPrice.com citing the following reasons for the dramatic decline…
“Mild weather and high production continue to weigh on the benchmark U.S. natural gas prices, which are now down by $6 per MMBtu compared to the middle of December and by more than $9 per MMBtu from August 2022. The crash from August and February is nearly 80%.
Last week’s Weekly Natural Gas Storage Report by the EIA showed that stocks of working gas in storage were 328 Bcf higher than last year at this time and 183 Bcf above the five-year average.”
Here at King, part of the strategy is to balance the portfolio with both Oil and NG drilling projects, to mitigate against economic risk associated with only focusing on one hydrocarbon. Right now we are primarily focused on producing Oil wells…obviously.
Companies in gassier regions like East Texas, Western Louisiana, and Marcellus Shale in Pennsylvania are dropping rigs left and right.
King is in the middle of developing some NG wells. Fortunately, we are in a position to stage the completion of them in such a way that we can further mitigate risk and maximize opportunity…relatively speaking. There’s no way to completely avoid the impact of low prices. But it is possible to bring them online in a more fruitful season.
All this volatility in pricing reminds me of one of my heroes, Trevor Rees-Jones. He’s worth reading about.
In 2016, Forbes published an article about him and his interesting outlook about markets that hit the bottom: As Oil Busts, This Texas Tycoon Sees a Land of Opportunity. In short, he has repeatedly bought low and sold high, making billions in the process. In one stretch of 7 years, he transacted 7 deals for more than $7 billion.
And he’s at it again. In January of 2022, NG prices were hovering around $5 / mcf. He sold his Marcellus project to Chesapeake for $2.4 billion. There are signs he will be active again with this recent pricing volatility…a great time to buy low.
In fact, his approach and success was influential in the creation of the King ADD strategy (Acquire, Develop and Divest). I was honored to get to know him personally, even enjoying a plane ride with him a few years ago to visit his Scout Camp, funded by his foundation. It’s a great honor to have spent tim with him and learn from him. Thank you, Trevor!
Check out this can’t-miss read and it’s contrarian message that impacted me.
I have been accused of being a contrarian at times. I guess that is just part of being curious about things. It’s probably why I love the oil business so much.
Anyway, on that note, of me being a contrarian, I recently read the book Die with Zero. Obviously that would appear to be an exercise in learning about something that directly conflicts with the mission here at King to multiply value for partners, and part of my own personal mission to provide for my family even after I’ve left this earth.
I don’t want to spoil it, but I can say that this book is NOT about frivolous spending. Nor is it all about giving away your wealth to charity. One thing it did for me was trigger memories of conversations with my mom…about how to get more life out of some of her “wealth”.
My mom wasn’t wealthy per se, by some of today’s standards of wealth. But later in life, she was more well off than most. And I always wanted her to invest more thought and effort into doing more with what God blessed her with. I love her and miss her every day.
Thanks for reading today. Don’t forget about the Podcast and the Recommended Reads…keep scrolling to get to them.
FOX News Radio asked Jay Young to come on for an interview with Need to Know With Jeff Angelo on WHO Iowa to give his thoughts on the latest with gas prices.
Recommended Reads
Is the Price Cap on Russian Crude Working?
China is Crushing the Competition in Clean Energy Spending
From Zero-Covid to Energy Demand Explosion: The Impact of China’s Reopening
Check out King’s Chief Growth Officer Eric Rice as He Talks About the Market
Titus (Book in the Bible That’s Teaching Me About Stewardship from God’s View)
