Natural Gas Investing: Why Most Investors Are Flat Wrong (UNG, CHK, APC, GAZ, NAGS, UNL)

Andrew Snyder: Natural gas is going to revolutionize our energy industry. But the profits are not going to show up where most investors are looking. The vast majority of investors are dead wrong when it comes to natural gas. It is no fault of their own, though. It’s the product of a dishonest government and an industry that is scared for its life.

Here’s the truth.

America is not the king of natural gas. Nobody is.

Sure, we’ve got a ton of gas. It’s more than enough to transform our entire energy industry. But Europe has just as much, if not more — Poland is quickly becoming a gas dominator.

It’s the same situation in South America. China, too.

Don’t forget Australia is about to become the world’s largest gas exporter. And even though it refuses to admit it (that’s another great story), Russia would be awash with gas if it opened its arms to fracking.

My guess, though, is Africa will be the eventual dominator.

Take Tanzania, for instance. Global watchdogs have warned the country to prepare for a flood of foreign cash in the next few years. They say massive sums of money will change hands as drillers work to tap a reserve believed to hold 60 trillion cubic feet of natural gas.

This vast supply has caught the eyes of the industry big boys… BP, Petrobras, Statoil, Exxon Mobil and Shell are spending big money in the region. There are already plans for 23 new wells this year.

Some of those wells will be dug in Tanzania’s southern neighbor, Mozambique. The country has a GDP of just $9.9 billion… yet it sits on a gas reserve worth an estimated $800 billion.

If you’re wondering who’s the big player in the region, I’ll solve the mystery. It’s Anadarko (NYSE:APC) — the same company fighting to maintain its profits in the oversupplied Marcellus region.

While so many investors focus on America’s gas boom, the prospectors at Anadarko say Africa’s east coast is “one of the most important natural gas fields discovered in the last 10 years.”

After announcing another big find last fall, Anadarko revealed its plans for a one-of-a-kind LNG export terminal off of Africa’s coast. It’s more proof this is a big wrinkle in the American gas dream.

Anadarko says it can pull 30 trillion cubic feet of gas from the region. For comparison, drillers say they can recover about 50 trillion cubic feet from the Marcellus region. But thanks to news last week… even that figure is questionable.

Most investors thought the news that Chesapeake Energy (NYSE:CHK) cut its gas production was the reason natural gas prices jumped. The truth is a quiet report out of the Energy Information Agency spooked the market.

In a big move, the government group cut the nation’s shale gas reserve estimate by over 40% — from 827 trillion cubic feet to just 482 trillion cubic feet. And remember… only a fraction of that gas is economically recoverable.

What’s worse… the group now says the Marcellus could supply the nation’s current gas demand for just six years. Two weeks ago… that figure stood at 17 years.

America still has a ton of natural gas. It’s way more than we need. And it will transform the way we produce energy.

We’re already seeing the first stages.

But mark my word, we are not the dominator so many say we are. It is like I told Unconventional Wealth subscribers late last year — this gas glut is global.

There is gas everywhere.

In that issue, I recommended a stock that will dominate as global gas reserves hit the market. My prediction was that its shares would “double and then double again.”

It looks like we nailed the mark. At the same time Obama chatted up his plans for natural gas and the EIA was chatting down our reserves… our stake was worth one-month gains of over 30%.

Again, there are big, big profits ahead thanks to natural gas. But I promise you this… they won’t come from the places most investors have looked.

One final word… if you combine the estimated reserves of just two of the dozens of companies drilling in the Marcellus region — Range Resources and Chesapeake Energy — you’ll see what I’m talking about.

These two companies and their investors own a mere fraction of the deposit’s acreage, yet the estimates of the gas available in their leases trump the government’s estimate of the entire Marcellus region.

It’s proof… somebody is lying.

Related ETFs: United States Natural Gas Fund (NYSEArca:UNG), Dow Jones-AIG Natural Gas Total Return ETN (NYSEArca:GAZ), Teucrium Natural Gas Fund (NYSEArca:NAGS), United States 12 Month Natural Gas Fund (NYSEArca:UNL).

Written By Andrew Snyder From The Taipan Publishing Group

Andrew Snyder is the Editorial Director of Taipan Publishing Group and the Managing Editor of Taipan Insider.  Andy’s first year in the world of finance and investing involved  learning the intricate details of the financial industry, as an advisor.  He specialized in handling the vast portfolios of very wealthy clients,  where he excelled at making them even wealthier. Since then Andy has  received his MBA, published an award-winning book and been published in  numerous publications. He has also appeared on Fox News and other media  outlets.

With his  background in research combined with his hedge fund-style education and  knowledge of the market, Andy is acclaimed for his no-nonsense style of  writing and his sharp, deep-thinking analysis. His goal is to use his  knack for Wall Street research and analysis to lead his readers to  little-known profit opportunities. Andy’s readers  have described him as unshakeable, suspiciously knowledgeable and just a  bit nutty; these qualities have led him to uncover market-moving events  and turn them into reliable, double- and triple-digit gains.

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