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Energy companies have just started to post first-quarter 2025 results, with Kinder Morgan, Inc. KMI having already reported. In the earnings release and transcript, KMI highlighted that natural gas demand will keep growing strongly in the United States and globally. So, what’s the cleanest, most focused investment to ride the natural gas demand trend? Are Range Resources Corporation RRC and Antero Resources Corporation AR well-positioned to capitalize on the rising demand for natural gas?
Kinder Morgan Optimistic on Natural Gas Demand
KMI's earnings call transcript for the first quarter of 2025 expressed optimism regarding natural gas demand. The midstream energy player stated that from 60 billion cubic feet per day (Bcf/D) in 2005, natural gas demand in the United States surged to 109 Bcf/D in 2024, indicating a substantial increase of 80% over the two-decade period. Kinder Morgan expects natural gas demand in the domestic market to increase by another 20 to 28 Bcf/D by the end of this decade. The prime reason for the growth is the rise in LNG exports, with Europe and Asia willing to import more gas from the United States.
Kinder Morgan also highlighted the increasing need for natural gas power plants with rising electricity consumption from data centers.
Gas Explorers & Producers in the Spotlight
Improving demand for natural gas will thus be reflective of the higher price of the commodity. In its latest short-term energy outlook, the U.S. Energy Information Administration (EIA) estimated the average natural gas spot price for 2025 at $4.30 per million British thermal units (Btu), almost double than $2.20 per million Btu in 2024.
With the pricing environment of the commodity remaining favorable, incentives to explore and produce more of the commodity will rise. Thus, energy companies involved in exploring and producing natural gas are now in the spotlight as they will be able to sell their volumes at higher prices, thereby generating more cash flows for shareholders.
2 Stocks to Buy Right Away
Range Resources
Range Resources is among the top 10 natural gas producers in the United States. In the natural gas-rich Appalachian basin, RRC has a strong footprint. Range Resources boasted that it has enough premium drilling locations in the prolific resource to keep producing gas for more than three decades. Thus, the handsome pricing environment of natural gas is highly beneficial for Range Resources. Notably, RRC, carrying a Zacks Rank #2 (Buy), is likely to see earnings growth of 30.4% when it reports first-quarter 2025 results on April 22.