Friday, April 13, 2012

Opportunity in the trashed gassy producers

It has been difficult not to notice the bearish stampede out of the natural gas producers, the uranium miners and the gold miners. The perception among investors was that if the related commodity prices in natural gas, uranium and bullion were to continue to fall, there was no point owning the related producers.

The price of natural gas has been in free-fall for months triggering a bearish stampede out of the natural gas producers. Some producers have had their prices driven down to historical negative price deviations from their long term moving averages – see the example list with the name, symbol and the per cent negative distance below the 40-week moving average – the bigger the number the more likely a recovery

Advantage Oil & Gas Ltd. AAV -27.33
Birchcliff Energy Ltd. BIR -45.78
Celtic Exploration Ltd CLT -34.79
Delphi Energy Corp. DEE -34.52
Fairborne Energy Ltd FEL -33.79
Progress Energy Resources PRQ -16.44
Tourmaline Oil Corp TOU -20.93

These oversold gassy producers will eventually ignore the current reality and anticipate the eventual return to higher gas prices. I do recall the many of todays mid cap gold producers trading for pennies in 2001.


dh12 said...

When I hear the "no end in sight for the drop in Nat gas prices" this is false. Producers are shutting in production and there is a movement now for the trucks and transportation fleet to switch from diesel to Nat gas to take advantage of the low prices. These two factors alone will support prices in the future. Great time to buy Nat gas cheap. In addition, we had a historically warm winter which is not likely to be repeated the next winters.

Anonymous said...

Hi Bill,

Long time follower of your blog. I've held Cheaspeake, chk, for such a long time, missed too many opportunities to trade it. It's been tanking again. Would you also include chk in your list?

Thanks for all the great info. said...


CHK has had a nasty 5-wave bear and the point & figure shows support at the current levels

A typical gassy torpedo - I would not give the stock away here

Bill C