The energy sector has commanded more than its fair share of headlines in recent months, with crude oil prices being a major focus of investors since the start of the U.S./Israel-Iran war. And while oil prices have sharply declined lately, that market is still very much a talking point among investors right now.
Meanwhile, another key fuel—natural gas—is being strangely ignored in comparison.
What makes the market’s seeming lack of interest strange is that natural gas is a primary energy source for powering what is arguably this year’s biggest story, viz., the AI data center build-out. While other fuels are used for generating the massive amounts of electricity used by AI (including coal and uranium), natural gas is predicted to be the most dominant source of new power for AI-driven data center growth for the rest of this decade.
Moreover, natural gas is the single largest source of electricity in the entire country, accounting for over 40% of all utility-scale power generation. With grids being taxed by power demand like never before, the importance of this fuel source cannot be understated.
While crude oil and liquefied natural gas (LNG) prices surged in the wake of the Iran war, with WTI crude oil futures peaking at around $120 a barrel in April, Henry Hub natural gas futures on the NYMEX—the benchmark for U.S. natural gas prices and a key input cost for gas-fired power plants serving AI data centers—have remained relatively stable in 2026. In fact, gas futures prices have spent most of June hovering around $3.25, which is much closer to a five-year low than the five-year high at $10 per MMBtu.
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Indeed, large speculators (which include hedge funds) are quite bearish on natural gas right now, which is often a contrarian indication that the market is ripe for a short-covering rally. As revealed in the trend of Commitments of Traders (COT) data, large speculators were net short about 173,000 natural gas contracts as of mid-June, placing positioning near the bearish end of its recent historical range.
This can be viewed as potentially bullish from a sentiment standpoint since the market is arguably over-saturated with bearish bets, in turn making the market vulnerable to an unexpectedly bullish catalyst for higher natural gas prices—such as hot summer weather, stronger LNG exports, AI-driven power demand or lower production.
There’s no disputing that gas-fired power generation remains the backbone of the U.S. electricity supply. That means that of the catalysts mentioned above, AI data center and power sector (i.e., utilities) demand are arguably the most important right now, with LNG export growth providing additional support for the bullish case for Henry Hub prices.
If you agree with my proposition that rising Henry Hub prices, supported by AI-driven demand and LNG export growth, are likely to be seen at some point in the coming months, there are a couple of ways to position for it. Both of them involve exposure to natural gas-related companies currently undergoing situations that resemble operational or strategic turnarounds.
2 Turnarounds to Play Rising Natural Gas Prices
One of them is Expand Energy (EXE), a pure-play upstream natural gas operator which is the result of the 2024 merger of Chesapeake Energy and Southwestern, making it the largest independent gas producer in North America. It operates in two major natural gas shale fields in the U.S.: the Haynesville Shale in the Gulf Coast region and the Marcellus Shale in the Appalachian region. As such, it’s highly leveraged to Haynesville gas (which closely tracks Henry Hub prices) and LNG growth.
While most analysts view Expand as more of a cyclical recovery case than a classic operational turnaround, some commentators consider the company to be undergoing something of a strategic turnaround in the form of a management change to bring about a transformation.
The “self-imposed turnaround” (in the words of one analyst) involves a recent change of management, with the goal of trying to improve its marketing efforts and margins while also expanding its total inventory. What’s more, the new management is positioning the company for an expected increase in demand from LNG exports and power generation.
Since the company’s earnings are highly exposed to Henry Hub prices, it means a significant improvement in the domestic gas market would translate into higher realized sale prices per MMBtu for the outfit. This makes Expand an intriguing stock—especially in view of its current price near a 20-month low.
Comstock Resources (CRK) is an independent natural gas operator in the Haynesville and Bossier shales located in North Louisiana and East Texas. The company targets regional Gulf Coast markets, the LNG export corridor and rising AI data center power demands.
While management isn’t framing its current strategy as a classic restructuring, it does have some characteristics of a turnaround. Comstock was the victim of heavy leverage, driven by past acquisitions, but is now focused on paying down debt while gradually improving leverage ratios.
To that end, it just sold a 27% equity interest in its Pinnacle Gas Services midstream subsidiary to investment firm State Street for $600 million, with sale proceeds to be used to extinguish and retire all preferred equity securities and outstanding indebtedness at Pinnacle. (Comstock will retain a 73% controlling common equity interest in Pinnacle and continues to manage and operate the business under a services agreement.)
Alongside its debt reduction goal, Comstock is also focused on disciplined drilling with an emphasis on free cash flow and modest growth, rather than aggressive expansion (its past mistake). Like Expand, Comstock is also highly leveraged to Haynesville gas prices and LNG growth; accordingly, it stands to benefit from the anticipated improvement in the domestic gas market.
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