The initial phase of the natural-gas boom in the U.S. produced a glut of gas and low prices. Now the business will be built on high prices, with gas becoming an export product and with premiums paid for natural gas that can be shipped overseas.
Savvy investors should focus on natural-gas producers that can reach the export market and look carefully at where companies that provide pipelines and other infrastructure are expanding their networks.
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Cheniere is an example of a company poised to capitalize on exports. Its stock has more than doubled during the past year on the prospects of it being able to export natural gas from its terminal near the Texas-Louisiana border. Cheniere is developing the capacity to liquefy the gas at the terminal so that it can ship the gas overseas.
Meanwhile, Chesapeake Energy (CHK) CEO Aubrey McClendon is concentrating his new company, American Energy Partners, on leases in areas such as Ohio's Utica Shale, where there are plenty of pipelines available to send the gas to ports and eventually to global markets.
Chesapeake itself is spinning out its drilling operations as Seventy Seven Energy, which will trade under the ticker symbol SSE. The company will give investors a new pure play in oil and gas production.