This is from a few days ago not sure if it's been posted somewhere:
Here are seven stocks for the natural-gas rebound:
Southwestern Energy was among the first energy companies to recognize the vast potential for natural gas in the Fayetteville Shale reservoir in Arkansas. As the first mover, it got some of the juiciest positions. Still in the early stages of exploiting its 880,000 acres, Southwestern is a favorite natural-gas play of Friedman, Billings, Ramsey analyst Amir Arif, who has a price target of $52 on the stock.
Chesapeake Energy followed Southwestern to the Fayetteville Shale reservoir and is the largest leaseholder there. Through other aggressive acquisitions, the company has built extensive holdings in Louisiana, Texas and the Appalachian basin. Prudential Equity Group's Jason Gammel believes the company's reserve potential is nearly twice its 8.3 trillion cubic feet equivalent of proven reserves. Chesapeake owns drilling rigs and rig companies, which serve as a hedge against higher rig costs. The company also has most of its 2007 and more than half its 2008 natural-gas production hedged at levels substantially higher than today's prices. Lehman Brothers analyst Jeffrey Robertson has a $41 price target on the stock.
Devon Energy (DVN, news, msgs) is the sixth-largest natural-gas producer in the United States, just ahead of Chesapeake. It has a large position in a promising deep-water natural-gas play in the Gulf of Mexico. Devon also has sizable natural-gas reserves in Texas' Barnett Shale and a stake in the Alberta oil sands. "Devon has a host of new projects slated to come online over the next few years, which should meaningfully boost production," says Morningstar's Justin Perucki. It's a favorite natural-gas play of Khani at Friedman, Billings, Ramsey. The latter has an $80 price target on the stock.
Instead of exploration, XTO Energy sinks nearly all of its time and money into acquiring oil and gas reserves in established areas and exploiting them with new technology. The strategy has worked "brilliantly," says Morningstar's Chenoweth. XTO's operating margins and return on capital are among the best for independent producers. Natural gas makes up about 80% of XTO's proven reserves. Petrie Parkman's Joseph Magner has a $57 price target on the stock.
Goodrich Petroleum is a small-cap play on the promising Cotton Valley Trend in eastern Texas and northern Louisiana. Earlier this year, Goodrich was increasing production 20% a quarter. One factor that could boost growth: Goodrich planned to begin its first horizontal well in the Cotton Valley Trend this month. Horizontal drilling can produce higher rates of return at lower costs. Devon recently posted "very positive results" from a Cotton Valley horizontal well test, says Bear Stearns analyst Ellen Hannan. She has a $40 price target on Goodrich.
Delta Petroleum (DPTR, news, msgs) has a solid base of productive assets. But owning shares of this small company is really a bet that Delta hits it big with exploration projects for natural gas in the Columbia River Basin in Washington state and an oil formation called the Central Utah Overthrust. Petrie Parkman's Larry Busnardo says both hold "staggering exploration potential" that could double or triple Delta's reserve base. One caveat: The company says test wells should yield results over the next three to six months. If tests come up dry, the stock could fall sharply because a lot of money is already riding on this bet.
Petrohawk Energy (HAWK, news, msgs) has been building its assets through acquisitions, with the goal of being bought out over the next six to 18 months. Friedman, Billings, Ramsey's Khani thinks a buyout could happen in the second half of next year -- at $21 a share. The stock recently sold for $10.90. Insiders are betting on a big markup. Since March, they've bought $2.6 million worth of stock for prices between $10 and $12.85.
articles.moneycentral.msn.com |
