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The Zacks Analyst Blog Highlights: Chesapeake Energy, Range Resources, QEP Resources, EOG Resources and Devon Energy

Zacks Equity Research

For Immediate Release

Chicago, IL – August 18, 2015 – 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 the Chesapeake Energy Corp. (CHK), Range Resources Corp. (RRC), QEP Resources Inc. (QEP), EOG Resources Inc. (EOG) and Devon Energy Corp. ( DVN).

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Here are highlights from Monday’s Analyst Blog:

Natural Gas Slips on Bearish Build

The U.S. Energy Department's weekly inventory release showed a larger-than-expected increase in natural gas supplies. Following the bearish inventory news, natural gas prices plunged 5% but then recovered somewhat to end the week at $2.80 per million Btu (MMBtu). Nevertheless, with production remaining plentiful and expected to outpace demand for most of 2015, the commodity is likely to stay depressed for a while.

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.

Analysis of the Data

Stockpiles held in underground storage in the lower 48 states rose by 65 billion cubic feet (Bcf) for the week ended Aug 7, 2015, above the guided range (of 53–57 Bcf gain) as per the analysts surveyed by Platts, the energy information arm of McGraw-Hill Financial Inc. The increase – the nineteenth successive weekly injection – was also more than the 5-year (2010–2014) average addition of 48 Bcf for the reported week though it lagged last year’s build of 79 Bcf.

Following the most recent climb, the current storage level – at 2.977 trillion cubic feet (Tcf) – is up 521 Bcf (21.2%) from last year and is 81 Bcf (2.8%) above the five-year average.

Prices Drop After Bearish Storage Data

Gas prices skidded almost 5% to $2.79 per MMBtu – their steepest one-day drop since March – Thursday in a selloff spurred by the above-average injection into storage. However, the commodity edged up 0.5% later in the week on predictions of strong late summer cooling demand with forecasts of warmer weather across majority of the country over the next few days.

Nevertheless, from a peak of about $13.50 per MMBtu in 2008 to below $3 now – sinking in between to a 10-year low of under $2 in 2012 – the plummeting value of natural gas represents a decline of around 80% over seven years. With production from the major shale plays remaining strong and the commodity’s demand failing to keep pace with this supply surge, natural gas prices have been held back. Even the summer cooling demand has been of little help.

Gas-Weighted Companies to Suffer

The price weakness translates into limited upside for natural gas-weighted companies like Chesapeake Energy Corp. (CHK), Range Resources Corp. (RRC), QEP Resources Inc. (QEP), EOG Resources Inc. (EOG) and Devon Energy Corp. ( DVN).

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CHESAPEAKE ENGY (CHK): Free Stock Analysis Report
 
RANGE RESOURCES (RRC): Free Stock Analysis Report
 
QEP RESOURCES (QEP): Free Stock Analysis Report
 
EOG RES INC (EOG): Free Stock Analysis Report
 
DEVON ENERGY (DVN): Free Stock Analysis Report
 
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