The price of natural gas has been hammered over the past year. As the following chart shows, it has fallen by about 36%, from roughly $4 per Mcf to under $3 per Mcf.

Henry Hub Natural Gas Spot Price Chart

Henry Hub Natural Gas Spot Price data by YCharts.

This is largely the result of natural gas production that has surged to record levels. Production has more than kept pace with solid demand, which has also been on a record-setting pace. Nonetheless, the United States has more gas than it can use, which is why natural gas storage amounts are now at a 12-year high. That doesn't bode well for producers at the moment, as it is keeping a lid on natural gas prices, and therefore producers' cash flow and returns.

However, new demand drivers for gas are on the horizon. The first of many natural gas export facilities is expected to send its initial cargoes abroad later this year. Meanwhile, an estimated $100 billion in petrochemical facilities are expected to be constructed on the U.S. Gulf Coast over the next few years to take advantage of cheap natural gas. These new facilities are expected to pull demand higher, likely increasing the price of natural gas, which of course bodes well for producers. Three stocks to watch while the industry waits for this scenario to unfold are Antero Resources (NYSE:AR)EQT Corp. (NYSE:EQT), and Southwestern Energy (NYSE:SWN)

This trio is stepping on the gas
While natural gas prices are low, that's not impacting the growth plans of Antero Resources, EQT, or Southwestern Energy. As the slide below shows, these three companies have the highest production growth rates in the entire energy industry for companies of their size.

Source: Antero Resources Investor Presentation.  

EQT and Southwestern Energy in 2015 are expected to increase production by about 25% year over year, while Antero should grow its output by more than 40%. These companies can drive such robust growth because all three operate in the very best sections of the Marcellus and Utica shale plays. As this next slide illustrates, these specific sections of the Marcellus have the best breakeven prices in the entire shale gas industry.

Source: Antero Resources Investor Presentation.

To put these prices into perspective, EQT expects to earn an after-tax rate of return of about 40% on liquids-rich southern Marcellus wells at a $3 gas price. That's much higher than the company would earn on wells drilled in the central parts of the Marcellus shale, which would only earn a 10% return at $3 gas. These strong returns, despite weak gas prices, are fueling 25%+ production growth from these three drillers.

What investors need to watch
Where things get exciting is when gas prices begin to rise. For example, EQT's returns on southern Marcellus wells would spike to upward of 109% on wells drilled when natural gas is at $4 per Mcf. Meanwhile, even wells drilled in the central Marcellus would begin to become compelling -- returns there would jump to 26%. Both Antero and Southwestern would see a similar surge in returns as gas prices improve. Not only would returns of future wells be improved, but cash flow from wells that are already producing would also spike. For example, a move from $3 gas to $3.25 gas would push Southwestern Energy's net cash flow up by nearly $200 million for the year, to about $1.8 billion.

Investor takeaway
Antero Resources, EQT Corp., and Southwestern Energy have three of the lowest-cost gas positions in the country. As a result, all three can economically drill natural gas wells right now. However, things will really get exciting when the price of natural gas moves past $4; that's when their returns and cash flow will surge. This is what makes these three stocks worth watching.