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TheStreet Open House

Natural Gas Ready to Explode

Stocks in this article: DVN EOG SWN CQP

Impact fees are more easily passed, still give local governments reasonable recourse to companies for environmental and safety concerns and avoids some of the complications of dealing with the state government.

The point is clear. This is just a sampling from the last week of news stories that are becoming more frequent as the natural gas train picks up steam.

It's so obvious that it hardly bears repeating: Compared to crude oil-based fuels, natural gas is cheaper, greener and entirely domestic. These unbelievable advantages ensure that natural gas will continue to gain traction in replacing oil and be the inevitable fuel to take us from reliance on fossil fuels to the renewable and sustainable energy sources that we all wish would be available tomorrow, but still have decades of development ahead of them.

2011 looks like it will be the turning point. Already, natural gas is trading well over $4/mMbtu, on its way, I believe, to $7 sometime in the next year. If you could only invest in one sector in energy for 2011, I believe natural gas shows the greatest potential for profit.

I still like Devon (DVN - Get Report) , with its great leadership and nimbleness in switching from dry to liquids and the previously mentioned Newfield Resources.

I also like EOG Resources (EOG - Get Report). Despite its movement to concentrate more upon crude oil in the short term, it can move back to natural gas at a moment's notice as soon as market conditions improve, and it recently raised another $1.5 billion through a flawless debt offering to continue expansion.

I'm going to add two other recommendations: Southwestern Energy (SWN - Get Report), because of its "best-of-class" exposure into the Fayetteville shale play and Cheniere Energy (CQP - Get Report) as a valuable dedicated liquid natural gas play.

But no matter how you decide to play it, the time is finally right: After two years of awful margins and restricted markets, natural gas is ready to make 2011 its year. Time to get on the train.

At the time of publication, Dicker was long Devon and EOG Resources. This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.
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