US gas oversupply favors infrastructure and low-cost producers
Aggressive Permian Basin drilling is creating a massive byproduct natural gas glut, favoring midstream infrastructure players and low-cost operators over pure-play gas drillers.
The argument
The guest noted that US producers are drilling aggressively in the Permian Basin, causing Henry Hub gas prices to fall because byproduct gas must be lifted alongside oil. This dynamic benefits export infrastructure pioneers and operators with highly efficient or subsidized lifting costs.
The thesis, stress-tested
✓ What validates it
- ✓Permian byproduct gas volumes continuing to overwhelm local pipeline capacity
- ✓Expansion of US LNG export capacity and terminal approvals
▸ Risks discussed
- ▸Highly leveraged balance sheets of certain aggressive operators
- ▸Infrastructure bottlenecks preventing gas from reaching export terminals
Hear it yourself
"And you might, if you wanna pure play, look to Cheniere, which has been a pioneer in, LNG infrastructure construction in The US. With gold trading at new all time highs, gold producers are printing money."
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