This current downtrend is mostly due to continued falling of natural gas prices, correct? No doubt prices will rise once heating season begins. Here is my other question. How does the heating season actually affect this stock? If it is a mild winter in U.S., but cold winter in Canada, would this stock see more growth because of increased usage in Canada, or is it simply dependent as a premium factor on oil and gas prices?
Actually, PWI is more 65% NG since a recent purchase of oil properties in the US, but it is still regarded as a NG weighted, and takes the hits associated. Don't get me wrong, I own about 1000 shares of PWI, and will not sell any for next couple of years. Don't put PWI ib same category with AAV(:
The current downtrend is certainly attributable to the drop in ng prices, however this downtrend has been in place months and other ng canroy's are not getting hit nearly this bad. What does that tell you? This is more company specific. AAV is priding itself on paying exhorbitant dividends while waiting for natural gas prices to rebound. They recently lowered the dividend and will be re-evaluating lowering it again this fall. Do NOT forget that the WORST time to own canroys is yet infront of you. The fall injection period is generally the period of weakest demand for oil and natural gas. And with supply ample we could seen prices take another hit. We'll soon be finding out whether or not ng storage will be available for this season. If it is not, expect the spot price to plummet for a short period of time, i.e. months. The current battle over ng prices is between the sustained belief by the bulls that ng should have some correlation with oil, so therefore its significantly underpriced and the Bears saying that ng storage is nearly full and ng does not deserve the 'fear premium' given oil, so therefore it is currently overpriced. Personally, I'm very bearish and have been for months on AAV. I think you'll see another fallout in its price unless we have a hurricane that brutalizes the gulf ng facilities. There is simply too much supply. I would also be surprised to see anything more than a light fundamental rise in ng prices this winter ($7-9.00), due to the fact that increased coal demand has taken the place of previous ng usage.
as far as AAV goes, beware the poor balance sheet. there are too many good major canroys with great balance sheets to be messing with this one. if we get some panick sellers come further ng price declines and another dividend cut I would consider buying. somewhere around the $14 level.