Natural Gas Companies EOG and Southwestern are Energized

 |  Includes: EOG, SWN
by: TraderMark

We mentioned a few weeks ago how the charts for the exploration & development companies, specifically the ones with more focus on natural gas, were doing extremely well [Feb 11: An Interesting Development in Natural Gas]. Since then I've been keeping an eye on this space for news flow and everything coming out of this space has been quite bullish.

Some examples.... last week EOG Resources (NYSE:EOG) rose nearly 20% on updates on some finds

  • Shares of EOG Resources Inc (EOG) surged 18 percent to a new high on Thursday after the independent oil producer said it may have discovered one of the largest accumulations of natural gas in Canada so far.
  • It also raised its production forecasts, touting success in the Barnett Shale play in Texas and its lands in northwest Colorado, but did not factor in any volumes in the early-stage Canadian play.
  • Houston-based EOG said drilling on its acreage in northeastern British Columbia may have uncovered 6 trillion cubic feet of natural gas, which one analyst said would rank it among the largest gas resource plays in Canada.
  • EOG also said it is raising annual average production growth estimates for 2009 and 2010 to 13 to 15 percent from its prior forecast of 10 percent.

Southwestern Energy (NYSE:SWN) had a very impressive earnings report

  • Southwestern Energy Co. doubled its profit in the fourth quarter and set a two-for-one stock split as the natural gas producer capped off a month of big gains in its stock price.
  • The company said late Thursday that net income in the period rose to $71.6 million, or 41 cents a share, more than twice the $33.8 million, or 20 cents a share, it posted a year ago.
  • The company said most of the gains came from a 68% increase in oil and gas production and higher energy prices. Revenue climbed to $402.7 million from $214 million.
  • Friedman Billings Ramsey on Friday raised its price target on Southwestern Energy to $75 a share from $64 a share following the company's profit update. The move reflects FBR's higher net asset value for Southwestern.
  • "With shale production continuing to grow, expectation of average initial production rates continuing to improve, and a good possibility of more strong initial production results in weekly...filings (given the increased use of seismic and longer laterals), we believe that the positive news flow will continue," FBR said.

These are just examples of similar type of news flow throughout the sector. I'm continuing to review these names and revisit this space, which I haven't looked at for 2+ years. I don't really want to chase these names after such massive runs, but most likely with the world energy stresses, I'll be looking to get some exposure here when (if) the stocks pull back. There are just a sizeable number of names in the space, so figuring out which to include in a mini basket is what I am working through now.

Disclosure: No positions