Seeking Alpha: Range Resources Another Growth-Oriented Marcellus Play

Within the world of natural gas-weighted E&P companies, Cabot Oil & Gas (COG), Southwestern Energy (SWN), and Range Resources (RRC) often seem to get grouped together in coverage and analysis. Along with other names like Chesapeake Energy (CHK), Ultra Petroleum (UPL), and EQT (EQT) these are some of the more interesting names leveraged to the expansion on shale gas production from the United States.

Even moreso than for Southwestern, Cabot, and Ultra Petroleum, Range Resources' value seems skewed toward ongoing drilling and production/reserve growth. With over 10,000 drilling locations in the Marcellus alone and a very interesting position in Oklahoma and Kansas, that forward-looking skew to the valuation doesn't seem unreasonable. I am concerned about the returns on capital here, though, as well as the balance sheet-adjusted production growth and while the valuation is interesting, I wouldn't recommend ignoring those concerns.

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Range Resources Another Growth-Oriented Marcellus Play

Seeking Alpha: Differentials All The Difference For Cabot Oil And Gas

There are a lot of numbers supporting an argument that Cabot Oil & Gas (COG) is one of, if not the, best dry gas producers in the country. The company has shown exceptional capital productivity, as well as low lifting and finding & development costs. Add that to some top-notch acreage in the Marcellus, and Cabot has delivered top-notch adjusted production growth and returns on employed capital.

That's not what is driving the shares right now, though. All of the positives at Cabot seem to be taking a back seat to worries that production growth in the Marcellus will overwhelm takeaway capacity and force Cabot to accept weak differentials. This is most definitely a risk, as every $0.25/mmbtu has a roughly $5 to $6 impact on NAV, but I believe growth-hungry midstream and pipeline companies will address these infrastructure challenges, leaving Cabot meaningfully undervalued today.

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Differentials All The Difference For Cabot Oil And Gas 

Investopedia: A New Era For Chesapeake Energy

Chesapeake Energy (NYSE:CHK) had a well-earned reputation as the riverboat gambler of the natural gas world. If there was a hint of meaningful natural gas in an area, you could usually count on Chesapeake to be among the those bringing out the biggest checkbook to gobble up acreage. The end result of that policy was a large reserve base, but also a stretched-out balance sheet and weak profitability as natural gas prices plunged.

Now the company starts a new period. A new CEO brings at least the hope of better capital allocation, while an aggressive divestiture program should help fill the funding gap. While I think Chesapeake's economic returns are going to be impacted for some time to come by the aggressiveness of past days, I do believe the shares may offer decent value today if you believe in the future of natural gas usage in the U.S.

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Investopedia: Rates Are A Risk, But PVR Partners Still An Interesting Distribution Play

I've been a fan of PVR Partners, LP (NYSE: PVR) (formerly known as Penn Virginia) for quite a while and through the company's migration from an Appalachian coal royalty trust to a more diversified business that now generates about two-thirds of its earnings from midstream natural gas operations. While the company took on a lot of debt to acquire Chief and that business has not ramped up quite as quickly as once hoped, and the company is facing generally slower growth in natural gas than expected, I believe the long-term appeal of this partnership is solid.

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Investopedia: Hess Has Good Assets, But What About Management?

Everybody loves a bargain, but it's always important to ask why a potential bargain is as cheap as it is. In the case of Hess (NYSE:HES), a diverse set of high-quality assets and a hefty weighting toward U.S. liquids and overseas natural gas would normally seem to be a very good thing. Management has seemed disturbingly lackadaisical about economic returns and capital allocation, though, and investors need to have a strong cause for believing that management can deliver growth in production and shareholder value before entering a position here.

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Investopedia: The Next Energy Debate - Should The U.S. Pass Gas?

Energy is an essential component to modern life, so it's not all that surprising that there are heated debates over energy policy. In years past, the United States has seen debates over energy efficiency (and the extent to which the government should require/force it), renewable energy, whether to subsidize biofuels, whether and where to build more refineries, whether to drill in protected areas, whether to permit fracking and so on.

Now a new debate is heating up and pitting industry against industry. The question is whether the U.S. government should place any limits on exports of natural gas in the form of liquefied natural gas (LNG). Potentially billions of dollars are at stake and the resolution of this question will go a long way toward determining just who claims those billions.

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http://www.investopedia.com/stock-analysis/2013/The-Next-Energy-Debate---Should-The-U.S.-Pass-Gas-XOM-DOW-NUE-CHK0204.aspx

Investopedia: Freeport McMoRan Announces A Real Doozy

Shareholders of copper giant Freeport-McMoRan (NYSE:FCX) had been waiting a while for the company to "do something," and they certainly got their wish on Wednesday, though almost certainly not in the fashion they were expecting. While many analysts and investors had been looking for Freeport-McMoRan to announce a big move with its capital, either a sizable buyback/special dividend or further diversification in mining, almost nobody expected the big move into energy that the company announced Wednesday morning.

Not only does the sheer size of the transactions make this a risky move for Freeport-McMoRan, but so too do the details. In buying Plains Exploration & Production (NYSE:PXP) and McMoRan Exploration (NYSE:MMR), Freeport is buying two companies that are not exactly non-controversial assets in their own right. Consequently, this looks like a pretty high-risk/high-reward transaction for this copper mining giant.

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Investopedia: Exelon's Discount May Offer An Opportunity

It feels like investors and analysts have spent the better part of two decades arguing that power prices in regions like the Midwest and Mid-Atlantic should be higher than they are. Along the way, several independent power producers ((including Dynegy (OTC:DYNIQ)) have faltered badly as consumer-friendly regulators and stubbornly lower power prices have made this a perennial "wait 'til next year" market. With power prices recently testing historical lows, Exelon (NYSE:EXC) shares have been quite weak. Is this an undervalued high-quality utility story, or just another utility doomed to struggle with lower-than-expected power prices in its core regions?

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http://www.investopedia.com/stock-analysis/2012/Exelons-Discount-May-Offer-An-Opportunity-EXC-CHK-DUK-AEP0919.aspx

Investopedia: Apache Buy Today For Tomorrow's Rewards

So far, 2012 has looked like a year of risk aversion in the energy space. By and large, the bigger you look, the better your returns have been - the stocks of companies like Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) have done pretty well, while companies like Anadarko (NYSE:APC) and Apache (NYSE:APA) have languished by comparison. Although I see that Apache's recent production growth guidance cuts aren't going to make it the hottest property in the space, I still believe that investors ought to consider owning this name for its combination of long-term potential and near-term value.

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Investopedia: Occidental Petroleum Has Taken A Different Path

There are a lot of odd things about Occidental Petroleum (NYSE:OXY) in the context of the broader energy sector. While investors have generally cheered the decisions of companies like ConocoPhillips (NYSE:COP) to separate from their refining and/or chemical businesses, Oxy seems in no particular hurry to match. Likewise, Oxy has a pretty good record of cash flow production and returns on internal investment, and while management has received rather generous compensation, they actually seem to run the business like a business.

Not that any of that has helped all that much lately. Oxy has fallen along with many other energy companies, and there are the usual worries here about the company getting stuck between rising production costs and declining realizations. All of that said, today's valuation suggests investors ought to take another look at this company as a longer-term quality energy play.

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Investopedia: Debt Complicates The Ultra Petroleum Waiting Game

There's not much more digital ink to be spilled on the state of the natural gas environment. Massive supply increases from basins like the Marcellus have pushed prices down to uneconomical levels, and those producers who can are switching over from natural gas to oil and liquids. Unfortunately, while Ultra Petroleum (NYSE:UPL) is one of the best-run natural gas companies, the company's reserve base is almost completely natural gas and potential declines in production and profits could pressure liquidity in the coming year.

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Investopedia: Like Utilities, Penn Virginia Is Switching To Gas

The Penn Virginia Resource Partners (NYSE:PVR) that you knew and loved is soon to be a very different company. With a large acquisition of a private midstream gas company, Penn Virginia is largely becoming a gas gathering and processing company that also happens to have coal assets. While this is a deal with solid rationale behind it, current investors may well be troubled by the dilution involved and the fact that company will move from its plans to be a balanced coal and midstream gas company to a gas-heavy partnership.

The Deal of the Day
Penn Virginia announced Tuesday morning that it is going to acquire privately-held Chief Gathering LLC for $1 billion. While the company says that $200 million of the price will be paid in equity and the remainder in cash, that's not really true. $580 million of the "cash" is coming from the sale of common units and new Class B units that ultimately convert into common units.

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Investopedia: GeoResources - A More Obscure Play On Well-Known Formations

Almost anyone who pays attention to the oil and gas space is familiar with the robust growth in activity in the Eagle Ford and Bakken regions of the U.S. Companies like Chesapeake Energy (NYSE:CHK), Anadarko (NYSE:APC) and EOG (NYSE:EOG) are major names in the Eagle Ford, while Continental (NYSE:CLR) and Kodiak Oil & Gas (NYSE:KOG) attract a lot of attention for their Bakken assets.

Amidst this, GeoResources (Nasdaq:GEOI) is a relatively lesser known name. Although it's not exactly undiscovered (about 14 sell side analysts cover it and over 75% of shares are owned by institutions), the relative valuation of other smaller Bakken/Eagle Ford plays suggests investors are not fully onboard the story just yet.

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http://stocks.investopedia.com/stock-analysis/2012/GeoResources-A-More-Obscure-Play-On-Well-Known-Formations-GEOI-CLR-CHK-KOG0410.aspx

Investopedia: Clean Energy Building It, Will The Customers Come?

There are a lot of pieces that have to lock into place, more or less simultaneously, for any sort of large-scale conversion to natural gas as a vehicle fuel in North America. Engine manufacturers have to know that truck builders (and buyers) will buy the engines, fleet operators need to know that they'll have a place to fuel up and fueling station operators need to know that there will be enough vehicles out there to pay for the fueling infrastructure.

Oddly enough, while there has been a lot of hot air over the years about the conversion to natural gas, it seems to actually be in the process of happening, and Clean Energy (Nasdaq:CLNE) is playing a major role. Now the question remains: Can Clean Energy earn long-term economic rents on its infrastructure, or will competitors let Clean Energy take on the risk and whittle away their rewards?

 

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Investopedia: Statoil - Iffy Operations, But Serious Potential Value

There are not many freebies in oil and gas, so if an investor wants to own an E&P company trading at a low valuation, there is a price to be paid in quality. The question with Norway's Statoil (NYSE:STO) is just how much of a discount is really fair. Although Statoil does indeed have issues with its cost structure and reserve base, the company's above-average growth potential and capacity for additional deals argues that the discount today is too steep.

Familiar Problems Show up in Q4  
Statoil's fourth quarter results weren't too surprising to long-term followers of this story. Although production slightly beat expectations, it grew less than 1% overall, as declines in Norwegian production offset better than 25% growth from international projects.


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Seeking Alpha: Chart Industries Running Hot And Cold

It takes time to reorganize a country's energy infrastructure, let alone the world's, but there are nevertheless real signs of progress when it comes to natural gas. While the LNG story is still dominated by large energy companies looking to monetize huge natural gas fields in remote corners of the world, there has been progress towards the use of LNG in place of gasoline or oil in many applications around the world.

As that process continues, the potential for Chart Industries (GTLS) should only improve. That said, while there is a pretty hot future in keeping gas very cold, the company's current financial performance and valuation leave something to be desired.

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Chart Industries Running Hot And Cold

Investopedia: Apache Still Cheap Enough To Pay

Despite a long-term record that should place it among the best-run energy companies, Apache (NYSE:APA) is more often criticized for whatever it isn't than what it is has always been. Apache is never the company to play when oil is hot, nor is it the company to play when natural gas is the place to be. Apache is never the name to consider when a particular play or geology is in the news.

What Apache is, though, is a company with an enviable record of cash generation and per-barrel margins and a company with a record of producing excellent economic returns in place where others fear to tread. Apache's balance and diversification means it will never be the hottest name in the sector, but the value here is such that investors who want a dependable play on oil and gas should take a serious look.

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http://stocks.investopedia.com/stock-analysis/2012/Apache-Still-Cheap-Enough-To-Pay-APA-XOM-DVN-CHK0215.aspx

Investopedia: Will Low Prices Gas Halliburton's Margins?

With oil prices hovering near the triple-digit mark, it would make sense that the big energy service companies would be strong. But then who ever said the market always makes sense? With investors worried that the plunging price of natural gas will curtail activity (and margins) in North America, the Big Four ((Schlumberger (NYSE:SLB), Halliburton (NYSE:HAL), Weatherford (NYSE:WFT) and Baker Hughes (NYSE:BHI)) have been relatively weak of late. Unfortunately, while Halliburton's fourth quarter results weren't all that bad, margins worries look to be the story for 2012.

Fourth Quarter Results - Over Here, Over There  
On a headline basis, there wasn't all that much wrong with Halliburton's quarter. The company's revenue was better than expected and earnings were basically OK. Margins, though, are going to drive the discussion.

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http://stocks.investopedia.com/stock-analysis/2012/Will-Low-Prices-Gas-Halliburtons-Margins-HAL-SLB-BHI-WFT0124.aspx

Investopedia: Exxon Mobil - Biggest and Best, But Blah?

Investment advisers often recommend that investors seek out the best operators in an industry for their portfolio. When it comes to oil and gas, it is hard to do much better than Exxon Mobil (NYSE:XOM). While this company has gargantuan reserves, a well-earned reputation as a superior capital allocator, and ample cash to share with its investors, it sometimes seems as though Exxon is overlooked in favor of more exciting names. Though Exxon does not boast the highest potential returns in the energy space, investors looking for a lower-beta play may yet want to give it serious thought. 

Ho-Hum Third Quarter  
For better or worse, there were no major surprises in Exxon's third quarter results. Production slid 4% as the XTO acquisition rolls off and liquids production was incrementally weaker (down 7%). Realizations, the price Exxon gets for its oil and gas, were fairly strong - liquids prices rose from 35 to 45% by geography, while weak U.S. gas prices were offset by higher prices in Europe. All told, revenue rose about 31% from last year.

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Investopedia: Statoil Buys Into Bakken

By most standards, Norway's Statoil (NYSE:STO) is a quality name in the world of major energy companies. Unfortunately for its shareholders, the company's stock price has been bedeviled by worries regarding the company's production volumes, reserve growth and dependence on Norway's offshore energy fields. With Monday's announcement that the company is acquiring Bakken specialist Brigham Exploration (Nasdaq:BEXP), Statoil management is making a solid argument that the company is not sleeping on opportunities to leverage its balance sheet into solid reserve growth.


The Terms
Statoil and Brigham announced that the companies had reached an agreement whereby Statoil will acquire Brigham for $36.50 per share in cash, for a total enterprise deal value of $4.7 billion. That price translates into a roughly 20% premium to Friday's close.


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http://stocks.investopedia.com/stock-analysis/2011/Statoil-Buys-Into-Bakken-STO-BEXP-BHP-CHK-WLL-CRED-CLR1018.aspx