Natural Gas ETF

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

Natural Gas ETF

 

List of Natural Gas ETF

Ticker Symbol
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

Ticker Symbol
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
ERF Enerplus Corporation
NBL Noble Energy, Inc.
XEC Cimarex Energy Co.
EQT EQT Corporation
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
ECA EnCana Corp.
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.