Appalachian Gas Valuations: A Beautiful Future Emerges From An Ugly Past

Appalachian Gas Valuations: A Beautiful Future Emerges From An Ugly Past

Share to Linkedin Three years ago, I wrote an article about the state of valuations for Appalachian gas companies. I used imagery from Sergio Leone's classic: The Good, The Bad, and The Ugly as a theme. At the time, bad and ugly dominated over the good. Henry Hub prices were hovering around $2 per mcf. Valuations were depressed, and Appalachian gas producers were struggling. Clint Eastwood would have lost that climactic gunfight if that world had remained. It has not remained. Today's solid earnings and strong balance sheets are a far cry from what they were then. Stock prices have risen alongside a fresh confidence that $4 and $5 gas prices will be sustainable for a while. Mercer Capital's sector statistics tell the story. This is an archived snapshot of these producers in 2019: A lot has changed in the past three years that has strengthened and stabilized stock prices, margins, earnings multiples, and production multiples alike. The Appalachian public comp group saw markedly strong stock price performance over the past year (through December 28th), led by Antero and EQT. The remaining members of the comp group showed more modest 1-year price increases. Stock prices dipped in mid-September but reversed