from Kerm's Korner:
Q1 To Favour Gas In Independents Earnings
First quarter 1998 earnings will magnify the relative strength in natural gas prices versus crude oil for independent exploration and production companies, Gerard Klauer Mattison said in a research report.
Henry Hub natural gas prices averaged $2.17 per million British thermal units, down 13 percent from the year ago quarter, while West Texas Intermediate crude oil averaged $15.93 barrel in the quarter, down 31 percent from a year ago.
"We believe this is indicative of continuing strong supply/demand fundamentals for U.S. natural gas," analysts Robert Christensen and Benjamin Shyman said.
Natural gas-sensitive names include Swift Energy Co with 87 percent natural gas in 1998 production, Coastal Corp , 83 percent gas, Sonat Inc , 80 percent gas, Burlington Resources Inc 76 percent, Enron Oil & Gas Co , 85 percent, and Consolidated Natural Gas Co 77 percent.
Conversely, companies with the most crude oil in their hydrocarbon mix could offer the worst quarterly comparisons.
Pioneer Natural Resources Co has 52 percent oil, Apache Corp 43 percent, Devon Energy Corp 41 percent, Anadarko Petroleum Corp 38 percent, Pogo Producing Co 37 percent, Seagull Energy Corp , 29 percent, Questar 27 percent and Western Gas Resources Inc with its large natural gas liquids.
"Safer haven energy stocks, such as integrated pipelines with diversification (pipelines, energy marketing, gas distribution and refining) could generate earnings surprises.
Integrated pipeline stocks, all of which we believe can beat 1Q98 consensus estimates include: buy-rated Coastal and Enron," the analysts said. |
