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The US Needs To Use Their Natural Gas Before They Lose It


The Dynamic Wealth Report
October 28, 2011

by Corey Williams, Editor

Over the last few years, the rules of the natural gas game have changed.

Less than a decade ago, the US was importing natural gas in order to meet the growing demand.  You see, everyone thought the US was running out of natural gas.

As demand outpaced supply, the price of natural gas reached new heights.  You can see the peaks in 2005 and 2008 in the chart below.

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Nat Gas Chart

Today, however, the US supply and demand picture is flipped on its head.

The US has discovered massive stores of natural gas.  In fact, we’ve found enough gas to supply the US for at least the next 100 years!

With so much supply, natural gas prices in the US have plunged.  And the US no longer needs to import natural gas from abroad.

Obviously, having a cheap and plentiful energy source right under our feet is great news.  It’s a valuable resource for our heavy energy consuming economy.

Unfortunately, we haven’t yet figured out how to put it to good use.

Sure, we’re building a few new gas powered power plants.  And we’re tinkering around with natural gas as an alternative transportation fuel.

But the sad truth is… we’ve dropped the ball when it comes to natural gas.  And if we’re not going to use it, somebody else will.

Simply put, future demand for natural gas isn’t going to come from the US.

The real growth opportunities for natural gas are overseas.  Demand for natural gas in Asia and Europe is accelerating faster than they can increase production.  As a result, the price of natural gas is skyrocketing in many parts of the world.

As a result, the global balance of supply and demand is out of whack. And it’s creating an opportunity for US companies to profit by exporting our natural gas overseas.

As longtime readers know, I recommended jumping on this trend more than a year ago.  At the time, Cheniere Energy (LNG) was just laying out their plans to build a liquefied natural gas exporting terminal in Louisiana.

It was a ground floor opportunity with huge upside potential.

Since then, Cheniere’s stock shot up from around $2.50 to as high as $12.81.  And then it fell to as low as $3.12 recently.  That’s just how it goes with speculative investments… there are bound to be ups and downs.

The good news is LNG just took a big step toward elevating itself from speculative stock to growth stock.

Let me explain…

On Wednesday, Cheniere inked a 20 year, $8 billion deal with London-based BG Group (BG.L) to export natural gas from the US.

They’ll sell 3.5 million tons per year of liquefied natural gas to BG for 20 years.  The deal is expected to net LNG $410 million annually.

More importantly, the deal paves the way for Cheniere to secure financing needed to build the exporting terminal.  Once it’s completed, the terminal will have the capacity to export nine million tons per year!

Clearly, Cheniere is on the right path.

The announcement of the deal with BG Group sent LNG soaring.  The stock jumped from around $6 to more than $10.  And it’s up more than 70% in the last week!

Over the next year, we should see many more landmark developments. And they’ll likely send the stock soaring just like this one.

By the time Cheniere has their liquefied natural gas exporting terminal operating in 2015, I think their stock will be pushing $40 a share.

Take a look at adding LNG to your portfolio.  This little company is on the verge of becoming a juggernaut in the global liquefied natural gas market.


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Issue Date:
 Friday, October 28, 2011


Notable Highs and Lows

•  Bankrate (RATE) hit a new 52-week high of $19.17.  Their market cap is now just over $1.7 billion.

•  Avid Technology (AVID) hit a new 52-week low of $6.55.  They have a market cap of just under $258 million.

•  Red Hat (RHT) hit a new 52-week high of $51.75.  Their market cap is now over $9.9 billion.


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