Wilbur Ross: Investing in Natural Gas and Ireland

By on May 16, 2012

Wilbur Ross - WL Ross & Co.Energy stocks (oil, coal, natural gas) have been remarkably weak lately. Chesapeake Energy (CHK), the large natural gas producer, recently hit its lowest price in over 3 years.

Wilbur Ross, “private equity legend and master of the turnaround,” was on CNBC’s Fast Money yesterday. ¬†Ross commented on the turnaround potential of natural gas.

Ross said he believed natural gas was very close to the bottom. He indicated it may take a couple of years for natural gas to rebound, but with the cutbacks in production that are coming and the continued growth in demand as gas replaces coal, that the outlook over the next several years is for a double or triple in the price.

Ross commented on Chesapeake Energy as having some good assets which would be very compatible with his operation if they came up for sale. He mentioned CHK’s problems having to do more with the “right hand” side of the balance sheet and perhaps corporate governance.

When asked what area of natural gas he was involved with, Ross said the shipping area with a relatively private company called Navigator which has smaller vessels which go to the more shallow ports in emerging countries.

The topic of Europe was brought up and Ross’s involvement with European banks. Ross quipped that there is no Europe and no one identifies themselves as a European. He considers the issues there country issues rather than EU issues. He said they bought into Bank of Ireland (IRE) which is essentially a play on high technology.

Ross pointed out that Ireland is the world’s largest net exporter of pharmaceuticals and mentioned some of the other high tech industries there. Ross also mentioned that Ireland has the lowest tax rate in Europe and a young, educated work force. But most importantly, he said Ireland dealt decisively with the problem by nationalizing the banks, knocking down the total cost of civil service by 13%, cut out capital spending and social services in the face of 14% unemployment.

The interview continued with Ross speculating on the future returns from his investment in IRE, and his view of the stability of the Irish recovery.

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