With the arrival of colder than normal weather since last week,the price of natural gaz ran up to 5.50 or so last week but has been coming down for three consecutive days at the 4.75 level. At what price does ARC benefit the most form nat. gaz?The consensus is that ARC is cheap and should be added at this price.WHat are your views on the volatility of nat gaz and would 30.00$ be a realistic target price for ARC within a period of twelve months? Many thanks,
Jean
We've learned over the years not to try to predict the weather, and by default natural gas. ARX is a bit more expensive than some in the sector, but still on the cheap side. With some co-operation from commodities, we could see $30 as quite realistic. It was $31+ in June, and growth is expected (consensus). The balance sheet is decent. The dividend has shown growth. Gas dropped more than a dollar this week. Reasons include warmer-than-expected U.S. weather forecasts through late December reduced anticipated heating demand, shifting outlooks from cold snaps to milder conditions across the eastern and southern regions. Near-record production held steady at about 109.6-109.7 billion cubic feet per day in the Lower 48 states, supporting elevated storage levels roughly 3-5% above seasonal norms despite recent large withdrawals. Bottom line, we really have no idea what gas is going to do, but think ARX is still attractive for representation in the sector.