The Polar Vortex Is Putting a Freeze on This Industry


Chicago during the Polar Vortex. Source: Edward stojakovic on Flickr.

Wicked winter weather is wreaking havoc on North America. Schools are closed, and flights are delayed as it's colder in some spots of America than in the South Pole. Not only that, but the deep freeze is putting a freeze on America's oil and gas industry.

Frozen production
We're seeing companies like ConocoPhillips and Continental Resources warn investors that oil and gas production won't meet expectations because of the cold. The rough winter forced ConocoPhillips to lower its fourth-quarter output to 1.475 million barrels of oil equivalent per day, or Boe/d. That's down from a forecast that had America's top independent oil companies producing as much as 1.525 million Boe/d on the quarter.

Meanwhile, North Dakota's top Bakken Shale producer Continental Resources had to temporarily halt well completion operations in the state. This could have an impact on its profits if the company's efforts to drill new wells remain frozen by the weather.

This week's deep freeze is just the latest in weather issues faced by American oil and gas companies this year. In November, severe winter weather forced Texas-focused Pioneer Natural Resources Company to warn its investors that production was held back. Pioneer noted that the weather significantly affected its production and drilling operations. It was hit hard by "heavy icing and low temperatures that resulted in power outages, facility freeze-ups, truck curtailments, and limited access to its production and drilling facilities" according to a press release issued by the company.

Thawing prices
However, what's bad news for some producers is good news for others. Rising natural gas prices is providing a boost to top producers. For example, Cabot Oil & Gas Corporation's stock is up more than 10% over the past month, and up 3% this week alone. As one of the lowest cost producers of natural gas in the country, Cabot Oil & Gas makes money even if gas prices are low. Because of that, it really turns on the profits when gas prices go up.

If winter's fury continues, it could fuel quite a rally for natural gas producers like Southwestern Energy Company . As the fifth largest natural gas producer in the U.S. Lower 48, Southwestern Energy has the fuel we need to keep warm this winter. Even better for its investors, as gas prices rise, so does the value of the company's natural gas reserves. Last year, the company was crushed when it was forced to write down nearly $3 billion in oil and gas properties because of the low price of natural gas. Rising gas prices ensure that won't happen again this year, and it might even make those properties valuable once again.

Investor takeaway
The Polar Vortex is freezing out most of America. It's causing some of our booming oil production to be shut down in parts of the country. However, it is helping to thaw out the price of natural gas. That could really fuel the returns of top natural gas producers like Cabot Oil & Gas and Southwestern Energy.

Here's how you can invest in America's energy boom
Record oil and natural gas production is revolutionizing the United States' energy position. That's one reason our weather is now impacting prices. To learn more about the boom, and how to invest in the companies set to profit from it, check our special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.

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Originally published