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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (34678)	6/7/2009 2:37:49 PM
From: E_K_S	Respond to of 78744

Some interesting developments with Centerpoint Energy Inc. (CNP) and the Haynesville Shale discovery (touted as the largest natural gas field in the continental U.S). There Will Be Gas Forbes.com Jesse Bogan, 06.05.09, 07:00 PM EDT Welcome to northwest Louisiana, where natural gas is flowing, property prices are popping and not everyone is happy. forbes.com From the article: "...Johnson says the pipeline infrastructure is full, though help is on the way from Energy Transfer Partners ( ETP - news - people ) and CenterPoint Energy Gas Transmission. Additionally, he says, pressure decline rates aren't yet known. "The oldest producing Haynesville Shale well is probably just a year old at best. That isn't enough time," he says. "Everybody is trying to put pie in the sky, but you don't know what the pie is."..." ================================================================ In this case too much of a good thing is positive for CNP. The development of the Haynesville Shale fields assures CNP 100% utilization of their pipeline infrastructure. CNP makes their money not on the daily rates for NG but how much gas they move through their pipelines. Energy Transfer Partners L.P. (ETP) ( finance.yahoo.com ) may be one to look at too, but they are not cheap. Selling near their 52 week high, and towards the higher end of the sector PE range at 12, they are poised to benefit from the future growth from the development of the Haynesville Shale fields. ETP pays a nice dividend of $3.58 per year or about 8.20% annual yield. Analysts peg their 2010 annual earnings between $3.30/share and $4.78/share. The company carries a lot of debt too. If their earnings come up short, their dividend will be cut and their huge debt will continue to loom over their head (especially for future capital investment projects). I continue to add to my CNP as I consider it a lower risk and better value play than ETP. Both companies carry far too much debt but CNP seems to be better diversified in their pipeline assets and other business segments. EKS