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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Dennis Roth who wrote (178218)	5/6/2013 7:43:56 AM
From: Dennis Roth	2 Recommendations Read Replies (3) \| Respond to of 206176

E&P Stock Perspectives Per The February EIA-914 Production Data Marcellus & Texas Debottlenecking Boost Production 2 May 2013 ¦ 12 pages ir.citi.com February EIA-914 Data Potential Headwind For Gas-Leveraged E&P Stocks – U.S. onshore natural gas production in February was ~69.2 Bcf/d, or a ~1.0 Bcf/d sequential increase (January was revised upward by 0.2 Bcf/d to 68.2 Bcf/d), which was above our projection for a ~0.1 Bcf/d decline versus January. After a 0.4 Bcf/d sequential drop in January, we had expected that heightened well freeze-offs would underscore a further drop in February. But infrastructure debottlenecking in the Marcellus and in Texas appeared to have more than offset well freeze-offs. Also, U.S. onshore natural gas production in February was ~1.7 Bcf/d higher than in February of 2012. Notably, U.S. onshore natural gas production was up sharply year over year despite nearly every company in our E&P coverage group having reduced or minimized gas-directed activity over the prior year. Thus, the resumption in strong domestic onshore natural gas production in February could yield some headwinds for the more gas-leveraged names including UPL, CHK, ECA, COG and SWN if this data dampens the recent natural gas price momentum. Marcellus Shale Production Resumes Its Rapid Growth... – The biggest sequential production increase was in the “Other States” category, which includes Pennsylvania and North Dakota, where output rose by ~0.5 Bcf/d in February, after increasing by just 0.2 Bcf/d sequentially in January and declining 0.1 Bcf/d in December. The sequential uptick accelerated due to Marcellus and Bakken infrastructure build outs to alleviate bottlenecks as output capacity continues to rise. Aside from a handful of producers including RRC, NBL and CHK, drilling and development activity in the Marcellus is primarily focused on the dry gas portions of the play in Northeastern PA. ...With ‘Associated’ Gas Volumes In Texas and New Mexico On The Rise – Natural gas production in Texas rose ~0.3 Bcf/d in February, after declining in each of the prior four months, due to an increase in associated gas production in the Eagle Ford shale and Permian Basin. This resulted from producers, including APA, CXO, EOG, MRO and PXD, continuing to ratchet up their oil/liquids drilling in these plays while adding natural gas pipeline takeaway and gas processing capacity. Meanwhile, natural gas production in New Mexico (again, primarily Permian basin) increased ~0.2 Bcf/d sequentially with some help from warmer weather. Amongst our coverage group, CXO and APA having leading positions in the New Mexico portion of the Permian Basin. While Output In Rest of Lower-48 Declined Modestly – Elsewhere in the Lower- 48, natural gas output declined ~0.1 Bcf/d in Louisiana underscored by declines in the Haynesville shale, and ~0.1 Bcf/d in the offshore Gulf of Mexico due to natural field declines, while output in Wyoming and Oklahoma was relatively flat. As a result, total U.S. natural gas production increased 0.9 Bcf/d sequentially in February to ~73.2 Bcf/d.