The need for more energy infrastructure has become a hot topic. Investors are realizing that the artificial intelligence and data center buildout will require many gigawatts of electrical power—power that is not currently available.
Until small modular nuclear reactors (SMRs) become widely available, likely in the mid-2030s, natural gas will remain the energy source of choice to provide the stable, sustainable power that data centers will need.
The Marcellus Shale is in the Appalachian region of Pennsylvania and neighboring states. The United States Geological Survey estimates that there are 214 trillion cubic feet of natural gas in the Appalachian Basin. The USGS web page quotes Director Jim Reilly, explaining:
Watching our estimates for the Marcellus rise from 2 trillion to 84 trillion to 97 trillion in under 20 years demonstrates the effects American ingenuity and new technology can have…Knowing where these resources are located and how much exists is crucial to ensuring our nation’s energy independence.
The Marcellus is close to major population centers, such as Northern Virginia, which has a large number of data centers. Companies are looking to put data centers in Pennsylvania, too, so they can be close to the source of natural gas.
Natural gas producers have begun to enter into contracts for direct supply to companies seeking to produce energy for the tech sector. Pure play Marcellus natural gas producers are a way to play the AI infrastructure theme. Here are three stocks that drill 100% or close in the Marcellus:
Range Resources Corp. (RRC) was the first energy company to drill for gas in the region. Range has a $9.4 billion market cap and trades for 13 times earnings.
EQT Corp (EQT) recently bought its controlled midstream company. That move will significantly reduce expenses. EQT has a market capitalization of $36 billion and trades at 20 times earnings.
Antero Resources Corp. (AR) controls its publicly traded midstream company, Antero Midstream Partners LP (AM). If you like dividends, AM yields 4.7%. Antero Resources has a market capitalization of $10.5 billion and trades at 16 times earnings.
Any or all of these energy stocks should do very well as the AI need for power grows.
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