The business: One of the major natural gas producers. Owns one of the most efficient sources. Recently bought Twin Eagle, a natural gas marketer. The business synergy is that this increases their pricing power, since they can leverage knowledge of price spreads by geography, season, and buyers.
The risks: the synergy remains unproven, execution remains to be seen. the CEO that led the acquisition resigned. They have not been able to find a permanent replacement. The on paper explanation is company HQ was relocating, he didn’t want to move.
The business is rate sensitive, given the capex needed to keep up production. As rates increase, may be further downward pressure before the winter season sets in. It is also sensitive to NG prices, which have been depressed.
The upside: NG prices may pick up by mid 2027-2028 and onwards. The long years of supply glut will slowly adjust. Data centers may use NG. Global trades in LNG may pick up. If the integration with Twin Eagle is successful, they stand to increase profit margins and volumes.
Current valuation: $20B, PE \~8. Pays a dividend of 2.6%. Q2 26 FCF 343M. Latest EV/FCF is cheap but lumpy due to gas price fluctuations
Curious what everyone thinks this stocks upside sits? And timing to get in, or not?