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Chesapeake Energy, Encana Corp., Devon Energy Corp., Nabors Industries and Helmerich & Payne highlighted in Zacks Analyst Blog:

CHK ECA DVN NBR HP

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For Immediate Release

Chicago, IL – January 16, 2013 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Chesapeake Energy (CHK - Analyst Report), Encana Corp. (ECA - Analyst Report), Devon Energy Corp. (DVN - Analyst Report), Nabors Industries (NBR - Analyst Report) and Helmerich & Payne (HP - Analyst Report).

Today, Zacks is promoting Four daily picks are offered free.

Here are highlights from Wednesday’s Analyst Blog:

Natural Gas Supplies Tumble

 

The U.S. Energy Department's weekly inventory release showed a larger-than-expected decrease in natural gas supplies. Despite this drawdown, gas stocks continue to remain bloated, reflecting low demand amid robust onshore output.

About the Weekly Natural Gas Storage Report

The Weekly Natural Gas Storage Report – brought out by the Energy Information Administration (EIA) every Thursday since 2002 – includes updates on natural gas market prices, the latest storage level estimates, recent weather data and other market activities or events.

The report provides an overview of the level of reserves and their movements, thereby helping investors understand the demand/supply dynamics of natural gas.

It is an indicator of current gas prices and volatility that affect businesses of natural gas-weighted companies and related support plays like Chesapeake Energy (CHK - Analyst Report), Encana Corp. (ECA - Analyst Report), Devon Energy Corp. (DVN - Analyst Report), Nabors Industries (NBR - Analyst Report) and Helmerich & Payne (HP - Analyst Report).

Analysis of the Data

Stockpiles held in underground storage in the lower 48 states fell by 201 billion cubic feet (Bcf) for the week ended January 4, 2013, higher than the guided range (of 183–187 Bcf drawdown) as per the analysts surveyed by Platts.

The decrease represents the seventh withdrawal of the 2012-2013 winter heating season after stocks hit an all-time high in early November. Moreover, the draw was significantly higher than both the last year’s withdrawal of 90 Bcf and the five-year (2008–2012) average reduction of 132 Bcf for the reported week.
As a result of the ‘better-than-expected’ draw during the past week, the current storage level – at 3.316 trillion cubic feet (Tcf) – is down 88 Bcf (2.6%) from the last year though it is still 320 Bcf (10.7%) above the five-year average.

In fact, natural gas inventories in underground storage have persistently exceeded the five-year average since late September 2011 and ended the usual summer stock-building season of April through October at a record 3.923 Tcf (as of October 31, 2012).

A supply glut kept the natural gas prices under pressure during the couple of years or so, as production from dense rock formations (shale) – through novel techniques of horizontal drilling and hydraulic fracturing – remain robust, thereby overwhelming demand.

However, with the U.S. winter set to be colder than the unusually warm last one, we might expect some balancing of the commodity’s supply/demand disparity on the back of its more normalized use for space heating by residential/commercial consumers.

This, in turn, could improve the prices and buoy natural gas producers like Encana and Chesapeake.

Zacks Rank

Among the natural gas-associated companies mentioned above, Anadarko Petroleum, Chesapeake Energy, Ultra Petroleum, Encana, Nabors, Devon Energy, Patterson-UTI Energy and Halliburton are all Rank #3 (Hold) stocks, implying that these are expected to perform in line with the broader U.S. equity market over the next one to three months.

However, Talisman retains a Rank #5 (Strong Sell), while Helmerich & Payne’s Rank #2 (Buy) implies that the company is likely to outperform the broader U.S. equity market over the next one to three months.

Today, Zacks is promoting Four daily picks are offered free.

 

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
 

 

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