Energy stocks have been sizzling over the past few months. That comes as oil prices have surged amid rising inflation and worsening geopolitical concerns. A potential military action between Israel and Iran has further heightened tensions.

Though prices have broadly surged, one part of the energy complex has gotten left out of this rally. Natural gas prices are below $2 per Million Btu (British thermal units), which is near the lowest price seen in the past 25 years. Some of this is weather-related. An unseasonably warm winter caused less natural gas usage than normal and has led to high inventory levels.

Another concern is that the Biden administration has moved to pause approval of new export facilities for liquefied natural gas (LNG). Previously, this had been a fast-growing industry. The U.S. has plentiful and cheap natural gas while other markets such as Europe and Southeast Asia have fewer developed gas reserves and are willing to pay much higher prices for imported LNG.

This became particularly relevant with the invasion of Ukraine. Europe shifted from Russian gas to imported LNG from overseas. However, this model is now under threat as the Biden administration is blocking new export projects on environmental grounds. Jamie Dimon, CEO of JPMorgan Chase (NYSE:JPM), fired back, saying: “This is not only wrong but also enormously naïve,” in a recent letter. He warned that Biden’s decision would cause economic harm and undermine the security of U.S. allies.

It remains to be seen how this ultimately play out. A potential Trump victory in November could totally shift the playing field. For now, however, these are three natural gas stocks to avoid given the current problems.

San Juan Basin Royalty Trust (SJT)

San Juan Basin Royalty Trust (NYSE:SJT) is a trust which earns revenues on a portion of oil and gas sales from its land acreage in New Mexico’s San Juan basin.

The trust does not operate the property directly. Rather, Hilcorp is the operator and takes the economic risk around running and managing the energy assets. The trust is entitled to a portion of the revenues that Hilcorp generates from the trust’s land acreage.

SJT stock has delivered highly volatile, but on average generous, dividend payouts over the decades from its unique royalty structure. However, 2024 and 2025 are going to be exceptionally difficult with natural gas prices below two dollars. The trust will struggle to pay any dividend at all going forward.

To confirm that, you can look back to past times when natural gas was below two dollars. SJT‘s dividend often tumbled to just a penny per share a month. Sometimes it was suspended entirely.

In this case, there’s another problem. Not only are natural gas prices exceptionally low right now, but in addition Hilcorp is planning to drill two new wells, which will cost $34 million. SJT has to reimburse Hilcorp for capital expenditure before dividends can continue on its properties.

Between rock bottom natural gas prices and this capital expenditure burden, SJT could go many months without paying a dividend. As investors primarily owns shares for the dividend, SJT shares could plunge when the dividend is likely suspended later this year.

Antero Resources (AR)

Antero Resources (NYSE:AR) is a natural gas company focused on fields in the northeastern U.S. The company nearly went bankrupt in 2020 with the stock falling into penny stock territory amid operating losses and a liquidity squeeze.

Investors have apparently forgotten about that near-death experience, with shares trading near $30 today. That is simply incredible as it puts Antero at a jaw-dropping 70 times estimated 2024 earnings.

It simply isn’t common for natural resources companies to trade at that sort of price-to-earnings (P/E) multiple. The company also slashed its 2024 capital expenditures budget amid plunging profitability and the difficult industry environment.

Investors are seemingly optimistic that Antero is pivoting away from natural gas and towards natural gas liquids to some extent, which may offer higher prices in the market. However, given Antero’s spotty past track record, investors should consider a wait-and-see approach before assigning a huge valuation for a business model that is not fully proven. In any case, with the 40% rally in recent weeks despite worsening industry conditions, AR stock is a strong sell today.

Tellurian (TELL)

Tellurian (NYSE:TELL) is an energy company that had primarily been seeking to try to develop LNG export terminals. It also operates an upstream energy business.

Even prior to the Biden Administration’s unexpected LNG export ban, Tellurian was in grave trouble. The company has historically lost tremendous sums of money and the balance sheet is in poor shape with the company facing a huge debtload and interest burden.

Tellurian has struggled to secure adequate funding for planned LNG terminals. This led to a collapse in the share price. The CEO also recently left the company. Tellurian already appeared to be running out of time, and the export ban further adds to the misery.

With the stock price in the 50 cent range, traders might be under the assumption that shares are cheap and worth a potential lottery ticket bet at this price.

However, due to the massive amount of dilution over the years, Tellurian actually still has a market capitalization of $400 million. That’s a gigantic sum for a company whose business model has seemingly failed and whose CEO just stepped down. The company has less than $80 million of cash remaining and continues to run large operating losses. Unless something miraculous happens in the near-future, bankruptcy could well be the ultimate outcome for Tellurian.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.