Weak Prices Gassing Energy Producers

The United States has still not embraced natural gas anywhere to the extent it should as part of its energy infrastructure, and yet the major gas producers keep drilling and pumping away. The exploitation of shale gas reserves has been a resounding success, but the impact on prices has been severe - from peak prices in the mid-teens in 2005 and 2008 (and talk of possible "peak gas" and gas shortages), natural gas prices for December now languish below $4. That makes it tough to make a buck in the gas business. 

A Mixed Bag In Calendar Q3
At first glance, there does not seem to be much cause for worry in the gas patch. Netting out the impact of derivatives and other hedges, Ultra Petroleum (NYSE:UPL) reported revenue growth of 15%, Chesapeake (NYSE:CHK) posted 23% growth, Devon (NYSE:DVN) delivered 13% growth and EOG (NYSE:EOG) saw revenue rise about 9%. In the cases of Ultra and Chesapeake, output was likewise strong, with growth of 21% and 23%, respectively.

Profitability was also relatively solid on the whole. Ultra saw operating income more than double (up about 120%), while Chesapeake logged 11% EBITDA growth and Devon saw EBITDA grow 22%. EOG was admittedly a laggard here, though, as EBITDA fell almost 9%.

Please click below for the full piece:
http://stocks.investopedia.com/stock-analysis/2010/Weak-Prices-Gassing-Energy-Producers-CHK-EOG-DVN-UPL-HAL-BHI1108.aspx

Can The U.S. Switch To Natural Gas?

There is nothing like a big oil spill (or several years of high gasoline prices) to get investors and some environmentalists talking about natural gas again. The arguments have been around for years and go something like this: Natural gas is relatively abundant in the United States, it can offer positive pollution trade-offs to oil and gasoline, and it is the only immediate option with a reasonable chance to supplant imported oil in powering vehicles. 

As another summer has rolled by, however, North America really does not seem all that much closer to the sort of natural gas-fueled future that people like T. Boone Pickens would recommend. Still, for those investors who believe in the possibility, there are a few investment plays to explore while the idea is still in its extended infancy.

To read the complete piece, please go to:
http://stocks.investopedia.com/stock-analysis/2010/Can-The-U.S.-Switch-To-Natural-Gas-UPL-CHK-KMP-CLNE-PTRY-GTLS-DRC-WPZ-PCG0827.aspx

Ultra Petroleum - Low-Cost, High-Quality

Sometimes the best you can hope for is to own a good house in a tough neighborhood. In what has been a tough market for natural gas, shareholders of Ultra Petroleum (NYSE:UPL) have done relatively better than most. 

And why not? Ultra is a low-cost producer in the field, and couples that with significant production growth. The real question is whether or not the market will continue to value Ultra when the inevitable rally comes in natural gas prices. 


For the full piece, please go to:
http://stocks.investopedia.com/stock-analysis/2010/Ultra-Petroleum---Low-Cost-High-Quality-UPL-CHK-ECA-SWN-APA-DVN-COG0803.aspx

Of course it figures ... less than an hour after I post my "sorry, possibly no posts today", an Investopedia piece goes up!

If You Can't Beat 'Em, Buy 'Em

Here is today's piece from Investopedia.
http://stocks.investopedia.com/stock-analysis/2010/If-You-Cant-Beat-Em-Buy-Em-XOM-XTO-HAL-RIG-UPL0415.aspx

Interesting coincidence that the APA-ME deal was announced this morning as well, given the theme in this piece.

Although a couple of deals does not necessarily make a trend, investors should get ready for a wave of M&A in the energy sector. We saw the Exxon Mobil (NYSE:XOM) - XTO Energy (NYSE:XTO) deal a few months ago, the deal between Arena Resources (NYSE:ARD) and SandRidge Energy (NYSE:SD)about a week ago and now the announced transaction between Haliburton (NYSE:HAL) and Boots & Coots (AMEX:WEL).

I believe these are just the first moves in a larger trend. With the credit and equity markets a little closer to normal, rising energy prices and increasing pressures on large energy company executives to "do something," merger and acquisition activity is going to look like an increasingly attractive option to many CEOs. 

The rest of the story at: 
http://stocks.investopedia.com/stock-analysis/2010/If-You-Cant-Beat-Em-Buy-Em-XOM-XTO-HAL-RIG-UPL0415.aspx