LNG: One Amazing Chart

LNG

The chart is the stock price of Cheniere Energy Inc (ticker: LNG) which partially owns and operates the Sabine Pass LNG terminal in Louisiana, and the Creole Trail Pipeline to this terminal.  They recently entered into a 20 year agreement to sell LNG to Iberdrola in Spain.

Consolidation of Shale Gas Producers

This is a decent article from Bloomberg News:  http://www.bloomberg.com/news/2014-05-26/shakeout-threatens-shale-patch-as-frackers-go-for-broke.html  The article is about smaller natural gas production firms having to lever up (increase borrowing) to stay afloat.

This is why I think the best bet in the natural gas production industry is large firms.  As natural gas prices have fallen, this places more pressure on smaller firms which (1) generally don't have cash flows from other operations such as oil, and (2) don't have the ability to access capital markets at low rates. The longer natural gas prices stay low, the more likely the smaller firms are to go bankrupt (or be pressured into divesting assets) -- either way the assets will end up being acquired by the larger firms at a low price.  This is classic industry consolidation.

Once natural gas prices do increase, I think the biggest winners will be the large companies which have used the leaner times to acquire assets --  BP, Exxon, Chevron, EOG, etc.