ConocoPhillips (NYSE:COP) may be a more attractive vehicle for investment in the sector, with a P/E ratio of 10.07, and a dividend yield of 4.24%. ConocoPhillips (NYSE:COP) is not totally dependent on the Freeport Project, and therefore has other sources of revenue. Natural gas, as a commodity, is subject to volatile price swings, which may impact the profitability of an export business.
Chesapeake Energy
There are more pure play natural gas companies for investors. Chesapeake Energy Corporation (NYSE:CHK) is a natural gas and oil exploration company. Chesapeake Energy Corporation (NYSE:CHK) has been in the news over the past year due to the ousting of its CEO Aubrey McClendon. McClendon and the Chesapeake Energy Corporation (NYSE:CHK) board were accused of inappropriate business dealings that allowed McClendon to have a personal ownership interest in each well the Company drilled; McClendon eventually left the Company. The negative news hurt the share price, but Chesapeake Energy Corporation (NYSE:CHK) has recovered and is up over 33% year to date. The Company reported first quarter operating cash flow of $1.176 billion, an increase of 29% from the prior year quarter.
SandRidge Energy and Chevron
SandRidge Energy Inc. (NYSE:SD) is another natural gas exploration company encountering some difficulties as of late. Like Chesapeake Energy Corporation (NYSE:CHK), SandRidge Energy Inc. (NYSE:SD) has come under fire for the business dealings of its CEO Tom Ward. Click here to read more about Ward and SandRidge. Ward has been paid $117 million as compensation by SandRidge since 2007, and shareholder activists are questioning whether this compensation is appropriate. SandRidge’s share price is down over 20% year to date. The stock is heavily shorted with a short float of 14.27%.
Similar to ConocoPhillips (NYSE:COP), Chevron Corporation (NYSE:CVX) is a larger natural gas play that is investing heavily in shale oil natural gas production. Chevron Corporation (NYSE:CVX) has a P/E ratio of 9.14, and a dividend yield of 3.29%. Chevron appears to be more stable, although the share price is likely heavily influenced by the price of crude oil.
Final thoughts
Liquid natural gas may be an important part of the United States’ energy economy in the coming years. However, Cheniere Energy, Inc. (NYSEMKT:LNG) is heavily dependent on the success of the single line of exporting natural gas, whereas other companies such as Chevron and ConocoPhillips (NYSE:COP) are more diversified. Although Chesapeake Energy Corporation (NYSE:CHK) and SandRidge are more traditional pure natural gas plays, both companies have suffered from management issues recently. Investors should closely examine the best way to invest in the future of liquified natural gas. Discover the secrets of Insider Monkey’s market-beating strategy here.
Disclosure: none
