Making the bull case for natural gas

The recent surge in commodity prices hasn’t included natural gas. But Rob Lauzon of Middlefield Capital tells BNN that might be about to change, as the supply glut that helped suppress natural gas prices slowly clears.

“There has been a lot of flush production out of the shale gas in the United States,” he says. “There was a lot of drilling that occurred last year just to keep land leases…so I would call it unnecessary drilling in this low-priced environment.”

As the supply begins to level off, Lauzon says prices for the commodity will push higher.

“Those fundamentals will express themselves and we’ll see natural gas prices move to 6 or 7 dollars in the next 18 months.”

To play the natural gas market, Lauzon offers two stock picks:

Open Range Energy (ONR-T): Lauzon says Open Range operates in a low cost gas area and has developed an energy services business worth as much as $25 million annually.

Canelson (CDI-X): Lauzon says management has historically built up drilling and service providers and sold them for a profit for investors.