Why Natural Gas Is The Most Important Fuel Of the Next Decade

Natural gas could be the single most important energy source of the next decade. 

For investors who want both profitability and longevity, the natural gas sector is the very first place to look.

The math is simple: 

Big banks are fleeing oil. 

The coal industry is in terminal decline. 

And renewable energy is years or even decades away from meeting global demand.

So while the multi-trillion-dollar ESG trend is cutting off financing for oil and coal, the global energy transition to renewables is helpless without a bridge fuel.

A fuel that is abundant, cleaner than oil or coal, and cheap to produce.

That fuel is natural gas. 

Big money is banking on this bridge. 

And the trend has already begun, with some players racing to one of the most profitable natural gas frontiers in the world… Colombia.

A combination of skyrocketing demand and falling supply have left the Latin American nation desperate for the world’s most sought after transition fuel, making it a great case study for the coming global natural gas resurgence.

In fact, while prices for natural gas in the U.S. have spent most of the year below $2 per thousand cubic feet, prices in Colombia have climbed as high as $7/mcf. 

That’s a 250% premium on a resource that costs roughly $0.60 to produce and transport to the market. [seems low as the proposed pipeline tariff is $.70]

Colombia truly is a producer’s paradise… 

And right now, a top exploration and production team in this most profitable venue is NGX Energy International (TSX.V:GASX; OTCMKTS:PENYF). 

With one of the most successful management teams in the Colombian E&P space, working in one of the best natural gas frontiers on the planet, NGX is likely to be the first of many natural gas success stories in the coming years.

Natural gas is the near-term future of energy, and Colombia’s government is fully behind it.

Colombia: The Big Margin Bonanza

Colombia’s natural gas prices are some of the highest in the world. Imagine gas contracts at $5/mcf and above, or spot prices that reach to $7/mcf.

And then imagine near-zero volatility. 

Three charts tell the whole story: 

Colombia’s natural gas supply is about to be cut in half at a time when demand is set to rise over 50% …

Existing producers can’t keep up …

And prices are strong: Take a look at the prices (after transportation) that Canacol (CNE-TSX), one of the biggest producers in Colombia, has been getting for its gas, consistently: 

Now, consider that amid the skyrocketing demand, declining supply and high natural gas prices, Colombia’s proven reserves are dwindling … Proved gas reserves are almost half what they were in 2009.

That means it desperately needs another major discovery. 

It’s the perfect setup for NGX Energy (TSX.V:GASX; OTCMKTS:PENYF) … which is parked right next to one of Colombia’s biggest producing natural gas plays … giant Ecopetrol’s Chuchupa: 

And that play is in major decline. 

Nothing more poignantly illustrates Colombia’s natural gas conundrum than this. Chuchupa has produced nearly half of the country’s gas–for 35 years. 

3 Blocks–All of Them Potential Kingmakers for Colombia 

NGX Energy owns 3 key natural gas assets that could end up generating many times in cumulative cash flows compared to its current market valuation…

#1 Maria Conchita

Maria Conchita is a 32,518-acre block located in the Guajira Basin in Colombia’s Caribbean coast. 

This is the block right next to giant Chuchupa to the north.

NGX has completed 3-D seismic testing on Maria Conchita and successfully re-entered its first well hitting substantial gas projected to yield 14 – 20 MMcf/d with 2 additional re-entry wells and 3 new wells planned in the near-future. 

#2 SN-9

The SN-9 block is NGX’s flagship exploratory 311,353-acre block, in which NGX has a 72% interest. 

And again, it’s the closelogy. This block is adjacent and upstructure to Canacol Energy, Colombia’s largest independent gas producer, which has booked natural gas reserves of 624 Bcf and production of 200 MMcf/d.

The news flow on this one should also be fast-paced, with NGX about to start drilling and seismic already indicating gas. 

It will be drilling up to four conventional exploration wells here in the initial phase to depths of 4,500 – 6,000 feet and at a budgeted cost of $4.5-6 million per well for completion. 

But the full drill will be 36 wells and NGX is hoping to hit up to 1 trillion cubic feet based on management’s best-case estimates.  

NGX (TSX.V:GASX; OTCMKTS:PENYF) is anticipating potential production from this block at 180 MMscfd based on management estimates. That means it’s another potential Canacol–but with a tiny market cap company, so the upside potential is huge if it reaches its target. 

#3 Tiburón

Tiburon is NGX’s…