By Laura Sanicola
Natural gas producers are missing the energy rally. While crude prices have surged, U.S. natural gas prices have barely budged since the Iran war started. Shares of "dry gas" producers like Expand Energy and Comstock Resources, facing a new reality of lower prices, are down double digits this year.
Producers aren't suffering in tandem, though. Supplies of natural gas liquids, or NGLs, have been held up in the Strait of Hormuz blockade. That's helping U.S. producers such as Range Resources and Antero Resources, up 14% and 7% respectively this year.
The laggards look cheap -- particularly Expand and Comstock. The catch is that rising U.S. oil production is likely to keep natural gas prices depressed (since gas is a byproduct). While there's a healthy demand story, additional supply keeps hitting the market, keeping prices below even modest estimates baked into the stocks.
Analysts like Antero, which is selling dry gas to LNG plants above the U.S. benchmark and is making more money off NGLs like propane and butane. They're also bullish on EQT, whose ownership of Appalachian pipelines gives it a way to move more gas toward prospective power demand in Virginia and the Carolinas. Expand Energy is dicier, though it's making moves now that could pay off down the line.
Gas Pains
Natural gas prices can be more fickle than oil, making forecasts an even trickier art. U.S. prices often trade between $2-to-$4.50/MMBtu but they're highly weather dependent: mild winters and summers leave more supply in storage, while cold snaps and heat waves quickly tighten the market and send prices higher. Despite some hot weather in Europe and Asia last week, inventories were high enough from a mild winter to keep prices lower than previously forecast.
Forecasts for U.S. Natural Gas Prices Are Falling
More gas is coming. Drillers like Diamondback Energy don't mind selling gas at a loss in Texas to reap the profits of high oil prices, says Gabriele Sorbara, a managing director at brokerage Siebert Williams Shank.
Investors are also snapping up acreage to crank out the gas for LNG. Japanese LNG buyers including Tokyo Gas, JERA, and Mitsubishi have purchased gas fields in Louisiana and East Texas near Gulf export terminals. If they can turn cheap U.S. gas into profitable LNG, they may be willing to keep developing supply even when the Henry Hub benchmark is weak, Sorbara says.
On the demand side, there's vibrant growth from LNG exports and electricity generation.
The U.S. Energy Information Administration expects natural gas exports to grow nearly 21% by 2027 as new LNG facilities ramp up. Consultancy Wood Mackenzie expects the U.S. to add 63 gigawatts of gas-fired generation capacity by 2030, more than twice the net increase over the past five years.
Yet the U.S. is still likely to overproduce, resulting in prices that go nowhere or slip from here. The EIA now forecasts Henry Hub at an average $3.50 in 2026, down from $4 six months ago. The EIA sees it at $3.18 in 2027, down from a forecast $4.59 in January.
"Supply came ahead of this demand wave, and now we're in this air pocket where it's unlikely that we're going to see $4 gas prices as a floor soon," Sam Margolin, an energy analyst at Wells Fargo, told Energy Insider.
Dry gas producers are trying to avoid being "price takers" for the commodity. Instead, they aim to gain more control over distribution and prices, while lowering production costs.
Here's how some of the better positioned companies are handling it and the outlook for their stocks.
U.S. Gas Supply Is Expected to Outpace Demand
Antero Resources
Denver-based Antero looks well equipped for lower gas prices. The firm produces natural gas and related fuels in Appalachia, a region where gas often sells at a discount due to limited pipeline access and long distances to big demand hubs like LNG terminals.
Yet Antero has profitable ways out of Appalachia. The company can move 2.3 billion cubic feet a day of gas to LNG markets, usually at higher prices than Henry Hub, according to JPMorgan analysts.
Antero also produces a large amount of propane and butane, which are pricier than before the war. Its recent acquisition of HG Energy added land and drilling sites in West Virginia, where Antero says it produces about half the state's natural gas, while lowering costs.
The company has been asked to bid on more than five billion cubic feet a day of potential supply tied to power plants and data centers, half of the potential market it sees through 2030.
Better pricing has helped improve profitability and should lift profits steadily. Analysts expect $4.67 a share in 2027 and $5.33 in 2028, according to consensus estimates. At recent prices, the stock trades at eight times 2026 expected earnings, the lowest since 2022. Its average price target is $50.90, 38% above recent levels, according to FactSet.
EQT
EQT, a 2025 Energy Insider pick, operates in the same region as Antero. It's betting on local demand, rather than pushing more gas out to sea.
On its latest earnings call, the company said it's in talks for billions of cubic feet a day of supply tied to power plants, data centers, and new pipeline projects. The biggest data centers deals haven't fully materialized and wouldn't necessarily give EQT a premium for its gas, but they would help lock in demand and lift the production outlook.
Gas Companies With Room to Run
The company's LNG strategy is smaller and further out; about 15% of its volumes will be contracted by 2030. EQT pays a small dividend, giving the stock a 1.2% yield. The company says buybacks are likely to be the main way it returns cash to shareholders, after cutting debt levels to free up more cash flow.
FactSet shows an average Overweight rating on the stock with a $71 target, about 30% above recent prices of $54. Estimates call for $4.79 a share of earnings this year and $4.69 in 2027. Shares trade around 11 times earnings for the next couple of years.
Expand Energy
Expand, created through the merger of Chesapeake Energy and Southwestern Energy, is now the largest independent natural gas producer in North America with major positions in Appalachia and the Haynesville region of Louisiana and East Texas.
Shares are down 16% this year, leaving the stock around $93. Expand's scale hasn't offered much protection as gas forecasts have fallen. It's also more exposed to benchmark U.S. gas prices than rivals like Antero.
The company is in a transition phase. Expand parted ways with CEO Nick Dell'Osso earlier this year and is searching for a replacement. The company moved its headquarters to Houston.
Its strategy, broadly, is to sell more gas directly to LNG facilities, utilities, power generators, and data center developers. Expand also wants to be known as more of an energy marketer than pure producer. That is to say, it wants to find more ways to capture price differences across the supply chain rather than sell benchmark-linked gas.
One new venture is a 20-year deal tied to Delfin LNG, a planned floating export project off the Louisiana coast. Expand has agreed to buy 1.15 million metric tons of LNG a year from Delfin's first vessel at a price linked to Henry Hub, potentially allowing it to sell the cargoes into higher priced overseas markets.
Delfin approved the project last week, but production isn't expected to begin until 2030 and Expand's contract would start in 2031.
Through it all, earnings should rise at a steady, but not spectacular clip. Analysts expect $8.91 a share this year and $9.14 in 2027.
At roughly 10 times expected 2026 earnings, Expand trades at a discount to EQT, but a premium to Antero. It looks less expensive on Ebitda, with investors assigning relatively little value to its enormous production base.
Wall Street is bullish on the stock. The average target is about $131, about 42% above recent levels at $93 per share.
Chart of the Week: Thermal Coal Export Prices Hit New Highs
Seaborne thermal coal prices are at their highest levels in more than two years, but don't expect that to lift profits for U.S. coal miners. U.S. export capacity is constrained and most domestic production remains tied to U.S. power plants.
President Donald Trump is trying to lift exports, using the Defense Production Act to steer $700 million to coal infrastructure. The package includes $75 million for a long-delayed Oakland export terminal that could ship 12 million tons annually to Asia, though it isn't expected to open before 2028.
Coal stocks rallied after Trump's announcement on Thursday but reversed Friday with Peabody falling 10%, Alpha Metallurgical and Warrior Met dropping 6%, and Core Natural Resources losing 5.5%.
The market appeared to realize that most of the funding won't flow directly to miners or materially lift near-term earnings.
Barron's Guide To Wealth: Energy Edition
Check out Barron's latest Guide To Wealth, including stories on the best renewables stock opportunities, a case for midstream/MLPs, and a post-war view on energy.
OPIS Video: Just How Low Are Oil Stockpiles?
The U.S. has only released a third of the 172 million barrels of crude oil it committed to releasing from its strategic reserves. Commercial gasoline and diesel stocks have less of a buffer. I break down what that means for refiners with Denton Cinquegrana, chief oil analyst at OPIS, here.
Barron's Energy Roundup
Refiner Gains U.S. independent refiners keep benefiting from strong profit margins on turning crude oil into fuels like gasoline, jet fuel and diesel. While refiners are ramping up output, refined fuel inventories are below their 10-year seasonal average, according to EIA data. Marathon Petroleum hit an all-time high of $267.21 a share last week. Other major refiner stocks posted gains too.
Refiners are also benefiting from a dip in U.S. crude prices, down 17% since mid-May, as the market bets on a peace deal that gets more oil flowing from the Strait of Hormuz before inventories reach danger levels.
Refiners that sell diesel and jet fuel into the Midwest and West Coast look set to benefit most, especially Phillips 66, Delek, and Par Pacific, according to analysts at Mizuho and Tudor Pickering and Holt.
In addition to strong margins, the latter two are likely to benefit from a partial waiver of obligations to blend biofuels into their gasoline pool or buy expensive credits to comply with federal standards. The EPA is expected to make that decision later this summer.
Stocks impacted: Phillips 66 (PSX), Delek $(DK)$, Par Pacific (PARR)
Utility Wins Utilities scored two important victories with regulators last week.
Pennsylvania-based PPL won approval for a $275 million annual rate increase in Pennsylvania, equal to about 80% of its original request.
Mountain West utility Xcel Energy agreed to a proposed $225 million increase in Colorado, or 63% of what it sought, while preserving a 9.3% allowed return on equity and nearly all the financing structure it requested.
Both companies plan to spend heavily to serve rapidly growing electricity demand, while regulators face pressure to shield households from higher bills.
PPL's Pennsylvania territory sits at the center of a contentious collision between data center growth and affordability. PJM is struggling to add power plants and transmission lines quickly enough to meet projected demand, capacity costs have risen sharply, and PPL says prospective data centers are seeking enormous amounts of electricity.
Xcel operates across the central and western United States. The utility is also preparing for a potential surge in demand from data centers around Denver, alongside growth from electric vehicles, heat pumps, and Colorado's transition from coal.
The decisions eased concern that regulators would force utilities to absorb more costs. Pennsylvania utility PECO had withdrawn $510 million of proposed rate increases in April after Gov. Josh Shapiro attacked the filing over affordability, raising fears that PPL might also face a punitive result. In Colorado, the central concern was that Xcel could build too little infrastructure to serve new demand or too much, leaving customers paying for underused plants and wires.
Jefferies analysts called PPL's decision better than feared and argued it largely removes the regulatory overhang.
UBS was more restrained, arguing Pennsylvania regulators gave little guidance about how they'd treat utility profits in future cases. UBS maintained a Buy on Xcel, arguing the Colorado deal gives the utility a clear path to improve its return in the state, where it has been earning roughly 7.3% -- well below the 9.3% return on equity the settlement allows. That should support expected earnings growth of roughly 9% a year, among the fastest in the industry.
Mizuho argues that Xcel is one of the rare utility stocks that's still relatively cheap while its asset base becomes more valuable.
Stocks impacted: Xcel Energy $(XEL)$, PPL $(PPL)$
Solar's Moment of Truth First Solar has been falling as investors try to digest a one-two punch that may hit sales and profits.
The first jab had nothing to do with solar. A surprisingly strong jobs report drove bond yields higher on Friday, triggering a broad selloff in solar and other richly valued growth stocks, including First Solar.
The second punch may or may not land, depending on the outcome of a new Section 232 tariff investigation on imported polysilicon and products made from it.
Most competing solar panels use polysilicon and are manufactured abroad. First Solar makes more expensive utility-scale modules in the U.S., using a different semiconductor material.
The Trump administration opened the investigation because the U.S. remains heavily dependent on a China-dominated supply chain for conventional solar equipment. The administration could announce a decision as soon as next week.
A narrow measure covering only raw polysilicon, an exclusion of finished panels, or a lower than expected tariff, would offer First Solar little benefit. It could even hurt sales -- and the stock -- because most foreign competitors ship completed panels into the U.S. A broader measure that also covers imported cells and finished modules would make those competing products more expensive and could help First Solar charge higher prices and win new orders.
Even a favorable decision wouldn't eliminate First Solar's other risks, including weakness in new bookings, project delays, high interest rates, and the challenge of expanding production while curbing costs.
First Solar may now need both a strong tariff package and evidence that it will translate into new orders.
Stocks impacted: First Solar $(FSLR)$, Enphase $(ENPH)$, SolarEdge (SEDG)
Read More Barron's Energy News
Read More LinkThis Boring Electrical Device Is the Next Hot Data Center Play. Some Stocks Have Doubled.
AI Data Centers Are Driving a Battery Boom. Finding the Right Stocks Is the Hard Part.
The Iran War Has Created Investing Opportunities. What the Pros Are Doing.
Fluence Energy Stock Surges 44%. Nvidia's Market Influence Expands to Energy.
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 08, 2026 05:55 ET (09:55 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments