The Zacks Analyst Blog Highlights: Ultra Petroleum, Talisman Energy, Encana, Exxon Mobil and ConocoPhillips - Press Releases
March 19 2012 - 3:30AM
Zacks
For Immediate Release
Chicago, IL – March 19, 2012 – 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 Ultra Petroleum
Corp. ( UPL), Talisman Energy
Inc. ( TLM), Encana ( ECA), Exxon
Mobil Corp. ( XOM) and ConocoPhillips (
COP).
Get the most recent insight from Zacks Equity Research with the
free Profit from the Pros newsletter:
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Here are highlights from Friday’s Analyst
Blog:
Nat Gas Storage Still Abundant
Stockpiles held in underground storage in the lower 48 states
fell by 64 billion cubic feet (Bcf) for the week ended March 9,
2012, above the guidance range (of 56–60 Bcf draw) as per the
analysts surveyed by Platts.
The decrease – the sixteenth consecutive withdrawal of the
2011-2012 winter heating season after stocks hit an all-time high
in mid-November – is higher than last year’s draw of 60 Bcf though
it was unable to match the 5-year (2007–2011) average drawdown of
79 Bcf for the reported week.
However, notwithstanding the healthy shrinkage during the past
week, the current storage level – at 2.369 trillion cubic feet
(Tcf) – is now up 735 Bcf (45.0%) from last year and 807 Bcf
(51.7%) over the five-year average. With this huge and sharply
widening natural gas surplus, inventories in underground storage
are likely to end the winter close to their highest level of 2.1
Tcf set in 1983.
A supply glut has pressured natural gas prices during the past
year or so, as production from dense rock formations (shale) –
through novel techniques of horizontal drilling and hydraulic
fracturing – remain robust, thereby overwhelming demand.
As a matter of fact, natural gas prices have dropped
approximately 55% from 2011 peak of $4.92 per million Btu (MMBtu)
in June to the current level of around $2.25 (referring to spot
prices at the Henry Hub, the benchmark supply point in Louisiana).
Incidentally, prices hit a 30-month low of $2.07 earlier this
week.
To make matters worse, mild weather across most of the country
have curbed natural gas demand for heating all winter, indicating a
grossly oversupplied market that continues to pressure commodity
prices in the backdrop of sustained strong production.
This has forced several natural gas players to announce
drilling/volume curtailments. Exploration and production outfits
like Ultra Petroleum Corp. ( UPL),
Talisman Energy Inc. ( TLM) and
Encana ( ECA) have all reduced their 2012 capital
budget to minimize investments in development drilling.
On the other hand, Oklahoma-based Chesapeake – the
second-largest U.S. producer of natural gas behind Exxon
Mobil Corp. ( XOM) – and rival explorer
ConocoPhillips ( COP) have opted for production
shut-ins to cope with the weak environment for natural gas that is
likely to prevail during the year.
However, we feel these planned reductions will not be enough to
balance out the massive natural gas supply/demand disparity and
therefore we do not expect much upside in gas prices in the near
term. In other words, there appears no reason to believe that the
supply overhang will subside and natural gas will be out of the
dumpster in 2012.
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CONOCOPHILLIPS (COP): Free Stock Analysis Report
ENCANA CORP (ECA): Free Stock Analysis Report
TALISMAN ENERGY (TLM): Free Stock Analysis Report
ULTRA PETRO CP (UPL): Free Stock Analysis Report
EXXON MOBIL CRP (XOM): Free Stock Analysis Report
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