Actually, upon further reflection, my post (#msg-41910755) might indeed be flawed because of a fallacy of composition that I have made; i.e. I conclude that the E&P Industry as a whole will not constrain capacity long enough to return to solid profit margins on the basis of what I believe to be a "maximize cash flow" attitude for some individual companies (notably SWN in the said posting).
This is an important point with respect to investments in SWN or other NG companies that are maximizing production as fast as they can. ... I shied away from a SWN (or NG) investment because I feared that their margins will be constrained by industry wide over production in the absence of a strong economic rebound; a constraint that would not justify current P/E ratios, in my opinion. ... Note, I hope for a strong rebound, but don’t want to depend upon it.
If the industry as a whole acts counter to my inference and actually constrains production during the early stages of a rebound, then companies such as SWN that will not participate in this constraint will profit greatly. ....
Currently, I’m sticking with my original assessment... SWN is too big to be ignored... if they and a few additional peers maximize production, I don’t think that others can hold back capacity voluntarily and thrive.
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