One reason could be the oil price bullishness because of which natural gas prices could increase too. CGD companies have the potential to pass on gas cost increases to customers. But to what extent would be the question. If not 100%, then margins could erode. But still even if NG prices are in an upcycle, it doesn’t make sense that MGL should trade at such a low multiple.
Came across this interesting piece.
- US exports of LNG moving higher since 2015. Expected to be 20% of production by 2019 end. Major source of global LNG supply. This will potentially cause domestic US gas prices to increase. But globally prices should dip or stay where they are.
- China is going to be a major buyer of LNG, perhaps causing shortage of supplies.
- New investments in LNG production are falling.
- Demand is going to outstrip supply over the next 1.5 decades. Unless major new investments are announced.
Weekly Natural Gas Recap - When Do Natural Gas Producers Become A Buy? https://seekingalpha.com/article/4163023?source=ansh $AR, $CHK, $COG, $EQT, $LNG, $RRC, $SWN