Why Dallas Cowboys owner Jerry Jones is betting big on natural gas
OPEC signals continued cuts amid rising US tensions with Iran
PRICE Futures Group senior analyst Phil Flynn on the outlook for oil prices.
Dallas Cowboys owner Jerry Jones knows a winner when he sees one.
Jones, who made a $140 million bet on the Cowboys franchise 30 years ago (today the team is worth almost $5 billion, according to Forbes) is now looking to do the same thing in the struggling natural gas sector.
Jones-controlled Comstock Resources is acquiring rival Covey Park Energy in a $2.2 billion deal, with the Dallas businessman putting up $475 million of his own money toward the deal. The move is a big bet on what may be this century’s most important global commodity, natural gas.
Jones, as reported by the Wall Street Journal, said that “I believe in natural gas in a big way, I don’t know of any individuals…that have put the kind of money out as I’ve put in this thing.”
Oh, sure you might say that the natural gas sector is beaten and battered, and its best days are behind it. Of course that’s also what they said about the Cowboys in 1989.
Jones saw something then in the struggling franchise, which has become the most valuable team in the NFL, according to Forbes. And today he is correctly seeing a big opportunity in the natural gas sector.
“I am excited to provide the funding and to team up with Denham Capital to combine the two companies to create the basin leader in the Haynesville shale. This combination is another step toward completing my vision to create an industry leading natural gas company,” Jones said in an online statement.
Of course, in the short-term, Jones may find making money on shale oil and gas may be as challenging as winning in the NFL. Record U.S. production and the lack of pipeline capacity has made it difficult or impossible to make profits.
Investors have been badly bruised, and many have given up on the sector. The Wall Street Journal points out that natural gas prices have fallen over 19 percent this year. Many analysts are predicting an endless era of low prices.
Jones understands that low prices eventually cure low prices. That is especially true when you are talking about natural gas, which is the world’s cleanest burning fossil fuel. Natural gas is probably near a long-term cyclical bottom, and a few years from now we might not believe that prices were ever this cheap.
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The world is going to see demand increase for natural gas because of its value as an energy source and a more friendly alternative to coal. The U.S. is now poised to become one of the biggest global players in the space — and Jones gets it.
Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at email@example.com.