PaineWebber Ups 2000-01 Natural Gas Spot Estimates
Dow Jones Newswires
By Christina Cheddar
NEW YORK -- PaineWebber Inc. analysts became the latest on Wall Street to lift their natural gas composite spot forecasts.
"With current natural gas flows not keeping up with various sources of demand, the U.S. natural gas market remains in an unbalanced state," said analysts Ronald Barone and James Yannello. "This situation could deteriorate further as increasing gas-fired power generation demand begins to regularly compete with increasing storage injection demand, possibly triggering severe summer price spikes and a shortfall in desired fall storage levels."
The analysts raised their 2000 projection for the 12-region composite spot price to $2.85 per million British Thermal units from $2.50/MMBtu, the analysts said.
The 2001 composite spot projection was boosted to $2.60/MMBtu from $2.50.
The more bullish outlook for natural gas is expected to trickle to the bottom line of several companies who are leveraged to natural gas prices, the analysts said.
Barone and Yannello raised the earnings estimates of El Paso Energy Corp. (EPG), Coastal Corp. (CGP), Energen Corp. (EGN), Questar Corp. (STR), Equitable Resources Inc. (EQT), National Fuel Gas Corp. (NFG).
The analysts also reiterated ratings for Dynegy Inc. (DYN), Enron Corp. (ENE) and Williams Cos. (WMB).
According to First Call/Thomson Financial analyst Chuck Hill, Wall Street has been moving natural gas composite spot estimates steadily upward. In the first two weeks of May, 10 of the 28 analysts reporting spot price forecasts have made "substantive" revisions to their estimates, Hill said. "All but one were more than a few pennies," he said.
For 2000, the current consensus estimate is $2.63/MMBtu, Hill said. That estimate excludes PaineWebber's change Friday morning, which should drive up consensus by about a penny, Hill said.
Estimates for the year range from $2.38/MMBtu to $2.85/MMBtu, placing PaineWebber's latest estimate at the top of the range.
Earlier Friday morning, the June contract traded around $3.33 to $3.34/MMBtu.
Estimates for 2001 range from $2.25/MMBtu to $2.90/MMBtu, with a consensus projection of $2.56/MMBtu, excluding PaineWebber's revision, First Call/Thomson Financial said.
The positive outlook for natural gas has already contributed to stock increases in the group, said PaineWebber's Ronald Barone and James Yannello. The analysts said they think there is an opportunity for further advances.
The stocks mentioned in the report were mixed in Friday's trading. For example, El Paso Energy shares were recently at 48, down 1/2, or 1%, while National Fuel Gas shares were off 11/16, or 1.3%, at 50 1/4.
Meanwhile, Williams Cos. shares were at 39 7/16, up 2 3/64, or 5.5%, while Coastal Corp. shares had gained 1/16, or 0.1%, at 57 3/16.
-Christina Cheddar; Dow Jones Newswires; 201-938-5166; christina.cheddar@dowjones.com
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I hope their will be further advances as I am in EPG.
Jack |
