The buzz about natural gas seems to be building daily. Natural gas, the cleaner-burning fuel, is on the upswing while coal, the not-so-clean burning fuel, is on the downswing, or at least losing favor in some circles.
Rex W. Tillerson, the CEO of Exxon Mobile Corp., the world’s largest publicly traded oil and gas company, took a stand on the subject June 4 at the 25th World Gas Conference in Malaysia. Perhaps he’s biased toward gas and perhaps the Asia-Pacific setting, where energy demand is skyrocketing, helped taint his remarks. But they set a strong stage for natural gas and its “historic rise to prominence in global energy markets,” noted Tillerson, whose company also announced this week that it was investing in a coal-seam gas venture in Australia.
Tillerson, noting that the world is now at a “historic moment in the evolution of energy markets,” touted natural gas as “quickly becoming a key enabler of economic growth and environmental progress around the world.” Tillerson’s complete speech can be found at www.exxonmobil.com/speeches.
Despite all the buzz, the price of oil and natural gas has been dropping, due at least in part to the softness of demand in places like China and Europe, according to some experts. These price drops have beaten down the stock prices of many of the natural gas companies at least in the short term. With the natural gas prices finally coming back, is it time for a rebound?
Here are some randomly chosen small cap companies that do businesses in the natural gas industry (althought not necessarily “pure plays.”)
Dover, DE-based Chesapeake Utilities Corp. (NYSE: CPK, http://www.chpk.com) is a diversified utility company that provides natural gas distribution services and sells natural gas in Delaware, Maryland and Florida. While its stock is relatively thinly traded (only about 35,000 shares a day) its price has stayed relatively strong for about a year and its 52-week range is narrow, only $36-$44.53. Market cap is $415 million. The stock closed June 8 at $43.29, up 29 cents on the day.
Midland, TX-based Natural Gas Services Group (NYSE: NGS, http://www.ngsgi.com) makes natural gas compression equipment for the natural gas industry in the U.S. After dipping down to about $11 last September, the stock has recovered somewhat. It closed June 8 at $13.59, up 10 cents on the day. Market cap is $166 million and 52-week trading range is $10.92-$17.22.
Oklahoma City-based Gulfport Energy Corp. (Nasdaq: GPOR, http://www.gulfportenergy.com) is focused on exploration along the Louisiana gulf coast and in West Texas, as well as oil sands development. Its market cap is now $1 billion. A year ago this stock was being featured as a “hot stock” and was trading in the mid-$30 range. But it has been heavily sold lately. Its 52-week range is now $16.42-$37.80 and it closed June 8 at $18.82, up 8 cents on the day.
Denver-based Forest Oil Corp. (NYSE: FST, http://www.forestoil.com) engages in the exploration, development and production of natural gas and natural gas liquids, along with oil in the U.S. It’s primarily focused on areas of Texas and north Louisiana. Its stock is trading at the bottom of its 52-week range (&7.43-$28.22) and on June 6 was upgraded to buy from hold by Cannacord with a price target of $12. Also, Real Money’s Bret Jensen picked it as a ‘Risk On’ Energy Play for QE3 (http://www.thestreet.com/story/11573008/1/jensen-two-risk-on-energy-plays-for-qe3.html?puc=_atb_html_pla1&cm_ven=EMAIL_atb_html) on June 8. It’s market cap is about $900 million. FST closed June 8 at $7.87, down 35 cents for the day.
Radnor, PA-based Penn Virginia Corp. (NYSE: PVA, http://www.pennvirginia.com) is an independent oil and gas company engaged in the exploration, development and production of natural gas and oil in various onshore regions of the U.S. PVA has natural gas interests in East Texas and Mississippi. Its 52-week trading range is $3.92-$15.47 and its market cap is $244 million. It closed June 8 at $5.39, down 9 cents on the day.