Fracking techniques unleashed one of the largest natural gas production boom in the US history. Natural gas like US crude oil production has been on a tear since the wide adoption of fracking drilling.
Natural gas production has spread across the continental US with map below highlight source of 5 largest natural gas production states.
Investors looking to invest in ETFs that holds natural gas futures can use the range of ETFs below to take long and short, either unlevered or leveraged positions either on the commodity or stocks of pure natural gas explorers and producers.
Top 5 US Gas Producing States
List of Natural Gas ETF
|UNG||United States Natural Gas Fund, LP|
|KOLD||Ultra Short Bloomberg Natural Gas|
|UGAZ||VelocityShares 3X Long Natural Gas ETN|
|DGAZ||VelocityShares 3X Inverse Natural Gas ETN|
|UNL||United States 12 Month Natural Gas Fund|
Natural Gas ETF
United States Natural Gas Fund (UNG) is a exchange listed fund that gives investors direct exposure to nearest maturity contracts.
Only front month maturity natural gas contracts are included in UNG. United States 12 Month Natural Gas Fund (UNL) provides exposure to natural gas movements in the medium term. Instead of holding contracts in the nearest month which is considered the spot price. UNL holds a spread of contracts over a 12 month period.
By holding a number of natural gas future contracts over the next 12 months. Investors in UNL would have a medium term exposure to the nat gas price in contrast to spot month futures which are more sensitive to short term gyrations in the market.
Leverage Natural Gas Funds
2x Short Natural Gas ETF
Ultrashort Bloomberg Natural Gas (KOLD) is a leveraged 2x short fund for those that want to take a short position in the natural gas commodity.
3x Natural Gas ETF
VelocityShares 3X Long Natural Gas (UGAZ) and VelocityShares 3X Inverse Natural Gas (DGAZ) provides 3 times the spot exposure to changes in natural gas prices. These ETFs are designed for those that would like a leverage exposure to natural gas prices.
One downside of investing in commodity ETFs rather than stock of producers is that there is not inherent cash flow. Simply, there are no dividends from future contracts. Long term investors would be best served by owning stocks rather than commodities directly as there are also upper limit in gains from owning the commodity it self.
List of Natural Gas Stock ETF
|FCG||First Trust ISE-Revere Natural Gas Index Fund|
|GASL||Direxion Daily Natural Gas Related Bull 3x Shares|
First Trust ISE-Revere Natural Gas Index Fund (FCG) provides natural gas equity exposure through exploration and production companies. There are more than 30 companies included in FCG which eliminate some degree of individual risk of the producers. However investors should note this is still a concentrated play on the sector.
Direxion Daily Natural Gas Related Bull 3x Shares (GASL) uses the same natural gas stock index as FCG but provides investors with 3x the leverage.
For those that would like individual natural gas stock exposure. List of natural gas companies are provided below.
|Symbol||Natural Gas Stock Name|
|XCO||EXCO Resources, Inc.|
|GDP||Goodrich Petroleum Corporation|
|SM||SM Energy Company|
|SD||SandRidge Energy, Inc.|
|MHR||Magnum Hunter Resources Corp.|
|RICE||Rice Energy Inc.|
|RRC||Range Resources Corporation|
|NBL||Noble Energy, Inc.|
|XEC||Cimarex Energy Co.|
|MTDR||Matador Resources Company|
|COG||Cabot Oil & Gas Corporation|
|STO||Statoil ASA (ADR)|
|SYRG||Synergy Resources Corporation|
|DVN||Devon Energy Corporation|
|APC||Anadarko Petroleum Corporation|
|WPX||WPX Energy, Inc.|
|SWN||Southwestern Energy Company|
|QEP||QEP Resources, Inc.|
|CHK||Chesapeake Energy Corporation|
|UPL||Ultra Petroleum Corp.|
|GPOR||Gulfport Energy Corporation|
|LINE||Linn Energy, LLC|
|TLM||Talisman Energy Inc.|
|VNR||Vanguard Natural Resources, LLC|
|SGY||Stone Energy Corporation|
|CRK||Comstock Resources, Inc.|