The New Energy Crisis and the Stocks that Benefit (RRC, VKIN, LNG, CHK, DVN, CNX, CEI)

The energy crisis of 2021 is well underway, as natural gas in Europe and Asia come up well short of needs for the production of broad power, and other commodities, including crude oil, are pulled into the basic power equation at far higher than normal levels to compensate.

Naturally, the main culprit is the pandemic and our difficult process of re-coordinating in its wake due to a number of idiosyncratic factors and the general theme of a combination of perverse incentivization and poor logistical response time. 

In the very big picture, one might assign blame to the simple fact that we haven’t been through a global pandemic in the age of information technology, so the fact that everything got out of sync is probably not a shocker from thirty thousand feet. 

In any case, the day-to-day experience of what is clearly evolving into an energy crisis is starting to grab the spotlight as power pricing soars in major markets like the UK, Europe, and Asian.

According to the FT, the latest price gains mean gas in the UK and Europe is trading at more than $200 a barrel of oil equivalent — or almost three times the price of crude — with inflationary effects threatening to ripple through economies reliant on gas for heating and power generation.

Naturally, all of this casts a bright spotlight on stocks with exposure to the space. As such, we take a closer look at some of the more interesting publicly traded names that fit this description.

Chesapeake Energy (NASDAQ:CHK) bills itself as a company whose operations are focused on discovering and responsibly developing its large and geographically diverse resource base of unconventional oil and natural gas assets onshore in the United States.

The company has been a leading name in the space over the past two decades and it’s no wonder to see such interest returning to shares during the current shortage.

Chesapeake Energy (NASDAQ:CHK) most recently announce that it has entered into a definitive agreement pursuant to which Chesapeake will acquire Vine, an energy company focused on the development of natural gas properties in the over-pressured stacked Haynesville and Mid-Bossier shale plays in Northwest Louisiana. 

Mike Wichterich, Chesapeake’s Board Chairman and Interim Chief Executive Officer, commented, “This transaction strengthens Chesapeake’s competitive position, meaningfully increasing our free cash flow outlook and deepening our inventory of premium gas locations, while preserving the strength of our balance sheet. By consolidating the Haynesville, Chesapeake has the scale and operating expertise to quickly become the dominant supplier of responsibly sourced gas to premium markets in the Gulf Coast and abroad.”

CHK shares have been on fire along with the rest of the natural gas space as tightening markets in the EU and Asia deal a ripple effect across major energy markets and around the world. The stock has ripped over 30% higher since the middle of August.

Chesapeake Energy Corporation’s (NASDAQ:CHK) managed to rope in revenues totaling $1.4B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 106.2%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($622M against $1.9B, respectively).

Viking Energy Group Inc (OTC US:VKIN) is a potential bargain play in the space given its more speculative status and the sharp pullback shares have seen following its big run higher last month.

The stock took off on a short squeeze and its majority owner, Camber Energy Inc (NYSEAMERICAN:CEI) continues to be the focus of interested short-side attacks after the bruising bears in the name took in September. VKIN shares squeezed as much as 900% higher last month before being hit in recent days. That said, even after the attack, the stock is still up over 200% since September 1.

Viking Energy Group Inc (OTC US:VKIN) most recently announced that it has entered into an Exclusive Intellectual Property License Agreement with ESG Clean Energy, LLC regarding ESG’s patent rights and know-how related to stationary electric power generation, including methods to utilize heat and capture carbon dioxide. 

The license is exclusive for all of Canada, and is non-exclusive for up to twenty-five locations in the United States. According to its release, the ESG Clean Energy System is designed to generate clean electricity from internal combustion engines and utilize waste heat to capture approximately 100% of the carbon dioxide (CO2) emitted from the engine without loss of efficiency, and in a manner designed to facilitate the production, for sale, of precious commodities, such as distilled/de-ionized water, UREA (NH4), ammonia (NH3), ethanol, and methanol.

“In my view this transaction positions us as an industry leader in terms of being able to assist with the power generation needs of commercial and industrial organizations while at the same time helping them reduce their carbon footprint to satisfy regulatory requirements or to simply follow best ESG-practices,” commented James Doris, President and Chief Executive Officer of Camber. “We are excited to be able to use the platform of Simson-Maxwell Ltd., our recently acquired majority-owned subsidiary, to promote the ESG Clean Energy System.”

Viking Energy Group Inc (OTC US:VKIN) currently owns key interests in oil and gas fields in Texas, Louisiana, and Mississippi that collectively contain more than 145 active wells. Far from being a defunct player, the company is actively engaged as a participant in the oil and natural gas markets, which represent two of the strongest assets in the financial world at present. And it has growing potential as a new participant in the carbon capture boom.

Cheniere Energy, Inc. (NYSEAMERICAN:LNG) continues to be a central focal point for the natural gas space given its strong branding around the liquid natural gas theme. Liquid nat gas is the most readily transportable and allows the US nat gas market to contribute to stabilizing the massive disruptions on display in Europe and Asia.

The company engages in liquefied natural gas (LNG) related businesses. It owns and operates LNG terminals, and develops, constructs, and operates liquefaction projects near Corpus Christi, Texas, and at the Sabine Pass LNG terminal. 

Cheniere Energy, Inc. (NYSEAMERICAN:LNG) recently announced that its Board of Directors has approved a comprehensive, long-term capital allocation plan designed to achieve an investment grade balance sheet, return significant capital to shareholders over time, and continue to invest in accretive organic growth.

“Over the past five years, we have successfully executed on our operating, commercial and financial goals, which now serve as the foundation for this comprehensive capital allocation plan for Cheniere’s stakeholders. The Plan is built from our guiding principles of maintaining a strong, sustainable balance sheet, funding financially disciplined accretive growth, and returning capital to shareholders through share repurchases and dividends,” said Jack Fusco, Cheniere’s President and Chief Executive Officer. “Our accomplishments over the past five years have led us to this point, and the Plan helps ensure Cheniere’s long-term success by strengthening our financial position, commencing meaningful shareholder returns, and committing to our disciplined approach to deploying growth capital.”

LNG shares have powered over 25% higher in the past three weeks as shortage conditions in the natural gas market have intensified.

Cheniere Energy, Inc. (NYSEAMERICAN:LNG) managed to rope in revenues totaling $3.4B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 39%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($2.2B against $3.5B, respectively).

Other top players in the Natural Gas space include Range Resources Corp. (NYSE:RRC), Cabot Oil & Gas Corporation (NYSE:COG), Devon Energy Corp (NYSE:DVN), and CNX Resources Corp (NYSE:CNX).

Please make sure to read and completely understand our disclaimer at https://www.wallstreetpr.com/disclaimer. We may be compensated for posting this content on our website by EDM Media LLC. For questions, comments or suggestions please contact ir@edm.media.

Published by Alan Masterson

Alan has over 25 years of trading experience in the U.S. equity markets. He began his career in finance working on a program trading desk specializing in over-the-counter stocks. His career progressed from that point to his current position as senior trader on an institutional trading desk. In the evenings, Alan teaches economics at a local community college. He has contributed articles to various publications over the last six years, including feature articles for an economics magazine and various financial blogs. You may contact Alan via his email (alanmasterson@wallstreetpr.com) or his Google+ page (https://plus.google.com/103338576216002376250).