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RichardTC

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RichardTC

Re: rayrohn post# 21654

Thursday, 02/09/2006 11:55:57 AM

Thursday, February 09, 2006 11:55:57 AM

Post# of 112057
If you're going to buy NG producers based on your beliefs on NG prices, you should factor in the cost of production vs. NG futures prices. Basically, do a rough cash flow analysis and determine how sensitive cash flows are to incremental changes in futures prices. The next step would be compare historical relationships (this can be messy) and decide if it's worth the risk. Personally, I think it's inefficient to trade NG stocks if you have an opinion about NG futures prices.
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