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Natural Gas Drives US Electricity Generation: 3 Stocks to Gain

As efforts to reduce greenhouse gas emissions intensify, natural gas is anticipated to maintain its critical role in the U.S. electricity generation mix. Its abundant availability and reliability make it a valuable complement to intermittent renewable energy sources like solar and wind. Therefore, it is intriguing to examine the potential gains for natural gas exploration and production (E&P) firms, considering the significant contributions of this commodity to electricity generation in the United States.

Natural Gas: Dominant Energy Source

Natural gas is the largest source of electricity in the United States, surpassing coal and nuclear power. Its share of total electricity generation has increased significantly over the past decade. This year, natural gas will contribute 42% to U.S. electricity generation compared with 16% for coal and 19% for nuclear, per data from the U.S. Energy Information Administration.

The benefits of using natural gas for electricity generation include reduced emissions, ample availability and cost-efficiency. Notably, natural gas combustion is cleaner than coal, emitting fewer pollutants while producing electricity. Additionally, the United States boasts extensive natural gas reserves, largely owing to advancements in shale gas extraction techniques like hydraulic fracturing and horizontal drilling.


Regarding cost-effectiveness, technological progress in extraction methods has substantially lowered natural gas prices, enhancing its appeal as a fuel source for generating power.

Gas E&P Companies to Gain?

Given the substantial contribution of natural gas to domestic electricity generation, E&P firms operating in promising gas-rich regions stand to benefit. Consequently, investors may wish to keep an eye on prominent energy corporations such as Antero Resources Corporation AR, Range Resources Corporation RRC and EQT Corporation EQT.

At present, all three stocks have a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Antero Resources is among the leading natural gas exploration and production companies, having a strong footprint in the prolific Appalachian Basin in West Virginia and Ohio. The company’s production outlook looks bright on a highly economic and low-cost inventory of drilling locations. Antero Resources has a strong balance sheet, as reflected in its investment-grade credit ratings.

Range Resources is among the top 10 producers of natural gas and natural gas liquids in the United States. It is a pure-play Appalachian producer having a bright production outlook. The company has been active in the Marcellus Shale, which is among the largest natural gas fields in the United States, known for its extensive reserves and economic viability for production, and has significant reserves of natural gas within this formation.

EQT is also a well-known natural gas producer, having a footprint in the prolific Appalachian Basin. The company has entered into an agreement to purchase Equitrans Midstream. This move will establish a top-tier vertically integrated natural gas enterprise, poised to become a leading force in the global energy market.

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