BUD, I'm not so certain nat gas will go higher from here. I am personally thinking nat gas prices will be closer to the $7-$9 range than the $9-$10 range (Henry Hub) going forward.
But with worldwide demand (at least in areas willing to build/spend the $ to invest in LNG stations and equipment) for LNG likely picking up going forward, that should keep some pressure on dry gas prices (LNG conversion from dry is not very efficient, so basically there is nat gas wasted in the process so demand for more nat gas to convert to liquid form internationally should keep prices a bit higher than previously IMO only).
Also, the angle of nat gas being 'cleaner' per BTU than coal and oil makes it more environmentally practical than oil and coal. And nat gas is used widely to produce electricity already so it is fairly easy to build new/depend on nat gas power plants vs coal fired power plants near term, with more efficient and cleaner alternative sources picking up later in the cycle IMO.
If nat gas manages to go higher for extended amounts of time than the current $9 approx level then I think MXC is almost a tablepounder (just need to get clarity of what kind of energy policy will be pushed by whomever is elected to figure out whether that would make MXC a tablepounder or not IMO).
Lots of little things though to like with MXC. Tight fiscal mngmnt is the first thing I like (tight share structure, quick to pay down debt, when cash is available it is often used to do shareholder friendly things like share buyback). Just need to see recent production boosts continue:)
With the borrowed debt taken on to fund the nat gas royalty interest in wells dropping from 7.25% to 5.25% rate, the company should get a window of time to pay back on that debt fairly effectively at the lower rates before worrying about interest rates jumping back up again. The timing (for once on this company LOL) is propitious. Still need to see the impact though of the acquisition on the nat gas #s and that won't be known until June.
Good luck.
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