I don't expect gas to go up without corrections on the way but it's great to see Nov 10 futures @ $5.13 as I type.
I haven't the time to do the seasonal adjustment ATM but Obhama's recent comments probably signalled an end to the bear market for North American gas for te time being.
Many a flea bitten energy companies (not just GDN) have potential to realise substantial gains if they have capacity to bring gas to market at a time when 1) there has been insufficient recent drilling to keep short lifespan shale wells flowing 2) the government is encouraging a generational shift to gas {possible with incentives to come} and 3)POO is rising.
My gut feel is that Gas won't go much beyond the $5.50 to $6 range in the near to medium term because there is 1) plenty of gas in the ground (shale drilling will now increase) and 2) it takes time make a switch to das and for various POO flow on effects to wirk their way through the market. Idle wells that are currently marginal can also be turned on. If gas hit the $7 tp $8 range by Christmas a million tails may be worth a million dollars BUT THIS WON'T HAPPEN IMHO for the reasons stated. My seasonal average price target for gas during 2011 is in the vicinity of $6 per mcf tops.
This bodes very well for GDN (and others BCC,SSN,GGP ... or up the food chain to AZZ etc), as all have gas that currently holds limited book value, and none can explore for gas without significant dilutive placements or farm ins to support the process.
Assuming reasonable flows from P#3, my gut feel (not my investment advice) is that $5.50 may see tails nicely in the money.
GDN Price at posting:
4.4¢ Sentiment: Hold Disclosure: Held
