FA L L O I L A N D G A S P L AY B O O K
Release date: 16 September 2009
Timing a Natural Gas Turnaround is Tricky:
Strategies to Profit from an Extended
Weakness in Natural Gas Prices


Preface:

Timing a Natural Gas Turnaround is Tricky:
Strategies to Profit from an Extended Weakness in Natural Gas Prices

Towards the end of 2008, it became apparent that natural gas supply would exceed natural gas demand. Since then, natural gas
prices have plummeted to levels not seen since 2002 as rising inventories and production from prolific shale gas continue to flood
the market. For the last six to nine months, people have continually expected the reduction in capital expenditures to reduce
supply enough to rebalance the market.

While current natural gas prices are unsustainable because it is below full cycle replacement costs, we are going to put forward the
argument that the crowd calling for a recovery may continue calling for quite a bit longer. Our Fall Oil and Gas playbook (1)
examines the main factors that could lead to an extended weakness in natural gas; (2) provides an outlook on domestic oil and gas
activity we expect to see in the following months; (3) scrutinizes key factors in companies which we believe will be important given
the current commodity pricing environment; and (4) suggests strategies and companies that are not dependent on a quick
rebound of natural gas pricing.

For further details, please read attachement