Meteorology serves traders but is worthless to natural gas https://michaela34.substack.com/p/meteorology-serves-traders-but-is
Timing the market is a mug's game
I look at natural gas producers based on basic analysis of profit and loss. Peyto (PEY.TO) reports an operating cost per Mcf of CAD$0.35 and Birchcliff (BIR.TO) an operating cost per Mcf of CAD$0.57 (CAD$3.50 per Boe divided by 6.1, includes cost of liquids). Both companies are quite profitable at natural gas prices in the ranges shown in the table. Birchcliff projects CAD$483 million of cash flow in 2023 at prices of $70 WTI for oil and $3.00/Mcf for natural gas.
I bought Birchcliff at $0.88 per share in 2020 and Peyto at about $1.00 per share. They pay dividends of $0.80 and $1.32 per share respectively and, sure, they will cut dividends if prices fall far enough. But my approach to energy investing is to buy at depressed prices and hold the position for decades (if I am lucky enough to live for more decades, which at my age is a riskier bet than any of the stocks I own).
My point is that the sell-off in natural gas prices and the related softness in natural gas producers’ shares is more opportunity than a problem, as I set out in more detail in a recent article.