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The Zacks Analyst Blog Highlights: Gulfport, Antero, Cabot Oil, QEP and SilverBow
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For Immediate Release
Chicago, IL –December 7, 2018 – 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: Gulfport Energy Corporation (GPOR - Free Report) , Antero Resources (AR - Free Report) , Cabot Oil & Gas Corporation , QEP Resources Inc. and SilverBow Resources, Inc. (SBOW - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
OPEC Can Affect Natural Gas Prices, Too: Here's How
OPEC or the Organization of the Petroleum Exporting Countries – the international cartel of oil producers – and its allies are scheduled to meet at its headquarters in Vienna, Austria today. As usual, the outcome of the gathering of the group's 15-member countries from the Middle East, Africa and Latin America, and several other major producers, including Russia, is expected to have far-reaching implications for all involved in the oil trade – from retail stations to budgets of oil-dependent nations.
The meeting is aimed to discuss production strategy but assumes greater significance in the backdrop of oil prices recently sliding to their lowest in more than a year and Washington’s piling pressure to stop them from climbing.
But apart from crude oil, the OPEC summit also seem to have added a twist to the future direction of natural gas prices. This shouldn’t come as a surprise though, considering that associated gas from shale oil drillers constitute a major portion of the fuel's new production in the United States.
Natural Gas Surges 41% in November
Natural gas, which is used by consumers to heat their homes in winter, has climbed to four-year highs recently. Prices are up around 55% since the start of the year and soared 41% last month, making it the market’s best-performing commodity of November.
Natural gas recently broke the $4 per MMBtu mark for the first time since November 2014 with cooler weather conditions resulting in strong demand for the heating fuel. Despite skyrocketing production, natural gas entered the winter season with stockpiles at their lowest in 15 years. At 3.054 trillion cubic feet (Tcf), current natural gas inventories are 720 Bcf (19.1%) under the five-year average and 644 Bcf (17.4%) below the year-ago figure.
Having hit a four-year high of $4.837 per MMBtu recently, there is potential for further price gains with bulk of the winter heating season still to come.
How Will the OPEC Meeting Affect Gas Prices?
Odds are in favor of an oil production cut at the OPEC meeting. The cartel members and Russia are expected to commit to cutting output by 1 million-1.4 million barrels per day from October levels in an attempt to drain inventories and crude boost prices. Such an arrangement might probably prop up oil prices but as a consequence jump-start more shale drilling in the United States.
Often being a byproduct of oil production, more drilling by the shale industry will also lead to higher natural gas volumes. For example, there is a backlog of more than 3,600 drilled but uncompleted wells in the Permian Basin – mainly reflecting pipeline bottlenecks out of the region – that can be brought online pretty quickly once the operators sense higher oil prices in the offing. As it is, natural gas production from the Marcellus and Utica shale regions continue unabated. In fact, dry gas output in the United States averaged 88.5 Bcf per day per EIA's recent weekly report, up approximately 12.5% from the year-ago level.
To conclude, sustained higher oil prices could see natural gas production increase further, and hence limit its impressive rally.
On the contrary, an OPEC stand against the production cut could send WTI prices to around $40 per barrel and drive down domestic shale production. While many operators have repositioned themselves to adapt to the new $50 oil reality and even thrive at those prices, a sub-$50 might discourage more production from U.S. shale companies. This, in turn, will limit the volume of associated natural gas output and aid the commodity’s nascent rally.
Strike While the Iron Is Hot
Meanwhile, strong natural gas prices augur well for upstream companies like Gulfport Energy Corporation, Antero Resources, Cabot Oil & Gas Corporation, QEP Resources Inc. and SilverBow Resources, Inc. Moreover, each of these firms has a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy), which means that they are expected to offer substantial upside potential from the current price levels.
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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/performancefor information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Gulfport, Antero, Cabot Oil, QEP and SilverBow
For Immediate Release
Chicago, IL –December 7, 2018 – 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: Gulfport Energy Corporation (GPOR - Free Report) , Antero Resources (AR - Free Report) , Cabot Oil & Gas Corporation , QEP Resources Inc. and SilverBow Resources, Inc. (SBOW - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
OPEC Can Affect Natural Gas Prices, Too: Here's How
OPEC or the Organization of the Petroleum Exporting Countries – the international cartel of oil producers – and its allies are scheduled to meet at its headquarters in Vienna, Austria today. As usual, the outcome of the gathering of the group's 15-member countries from the Middle East, Africa and Latin America, and several other major producers, including Russia, is expected to have far-reaching implications for all involved in the oil trade – from retail stations to budgets of oil-dependent nations.
The meeting is aimed to discuss production strategy but assumes greater significance in the backdrop of oil prices recently sliding to their lowest in more than a year and Washington’s piling pressure to stop them from climbing.
But apart from crude oil, the OPEC summit also seem to have added a twist to the future direction of natural gas prices. This shouldn’t come as a surprise though, considering that associated gas from shale oil drillers constitute a major portion of the fuel's new production in the United States.
Natural Gas Surges 41% in November
Natural gas, which is used by consumers to heat their homes in winter, has climbed to four-year highs recently. Prices are up around 55% since the start of the year and soared 41% last month, making it the market’s best-performing commodity of November.
Natural gas recently broke the $4 per MMBtu mark for the first time since November 2014 with cooler weather conditions resulting in strong demand for the heating fuel. Despite skyrocketing production, natural gas entered the winter season with stockpiles at their lowest in 15 years. At 3.054 trillion cubic feet (Tcf), current natural gas inventories are 720 Bcf (19.1%) under the five-year average and 644 Bcf (17.4%) below the year-ago figure.
Having hit a four-year high of $4.837 per MMBtu recently, there is potential for further price gains with bulk of the winter heating season still to come.
How Will the OPEC Meeting Affect Gas Prices?
Odds are in favor of an oil production cut at the OPEC meeting. The cartel members and Russia are expected to commit to cutting output by 1 million-1.4 million barrels per day from October levels in an attempt to drain inventories and crude boost prices. Such an arrangement might probably prop up oil prices but as a consequence jump-start more shale drilling in the United States.
Often being a byproduct of oil production, more drilling by the shale industry will also lead to higher natural gas volumes. For example, there is a backlog of more than 3,600 drilled but uncompleted wells in the Permian Basin – mainly reflecting pipeline bottlenecks out of the region – that can be brought online pretty quickly once the operators sense higher oil prices in the offing. As it is, natural gas production from the Marcellus and Utica shale regions continue unabated. In fact, dry gas output in the United States averaged 88.5 Bcf per day per EIA's recent weekly report, up approximately 12.5% from the year-ago level.
To conclude, sustained higher oil prices could see natural gas production increase further, and hence limit its impressive rally.
On the contrary, an OPEC stand against the production cut could send WTI prices to around $40 per barrel and drive down domestic shale production. While many operators have repositioned themselves to adapt to the new $50 oil reality and even thrive at those prices, a sub-$50 might discourage more production from U.S. shale companies. This, in turn, will limit the volume of associated natural gas output and aid the commodity’s nascent rally.
Strike While the Iron Is Hot
Meanwhile, strong natural gas prices augur well for upstream companies like Gulfport Energy Corporation, Antero Resources, Cabot Oil & Gas Corporation, QEP Resources Inc. and SilverBow Resources, Inc. Moreover, each of these firms has a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy), which means that they are expected to offer substantial upside potential from the current price levels.
You can see the complete list of today’s Zacks #1 Rank stocks here.
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Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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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/performancefor information about the performance numbers displayed in this press release.