More Pain for Natural Gas Stocks

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The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves and advisor David Meier discuss topics across the investing world.

It looks like there might be more pain ahead for natural gas stocks, and that might result in gains for Denbury Resources. The Wall Street Journal recently pointed out that prices for natural gas liquids have fallen sharply recently. With many natural gas companies rushing to liquids, those with more exposure to oil are better positioned. That doesn't help companies like Chesapeake Energy or Devon Energy. But SandRidge Energy and EOGResources look much better positioned to handle the fall, as more of their production is in oil than natural gas liquids. We think Denbury Resources is the best option, though. The company sold its natural gas properties in 2010, choosing to focus on its core strength: using CO2 to extract oil from existing wells. We own shares of Denbury Resources and at less than $14, the stock looks very attractively priced for a long-term investment.

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The article More Pain for Natural Gas Stocks originally appeared on Fool.com.

David Meierhas no positions in the stocks mentioned above. John Reeves has no positions in the stocks mentioned above. The Motley Fool owns shares of Denbury Resources and Devon Energy and has the following options: long JAN 2013 $16.00 calls on Chesapeake Energy, long JAN 2013 $25.00 calls on Chesapeake Energy, long JAN 2014 $20.00 calls on Chesapeake Energy, and long JAN 2014 $30.00 calls on Chesapeake Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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