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The Zacks Analyst Blog Highlights: Gulfport, QEP, Chesapeake, Southwestern and Antero

Zacks Equity Research
Investors need to pay close attention to Anadarko Petroleum (APC) stock based on the movements in the options market lately.

For Immediate Release

Chicago, IL –March 26, 2019 – 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 Corp. GPOR, QEP Resources Inc. QEP, Chesapeake Energy Corp. CHK, Southwestern Energy Co. SWN and Antero Resources AR.

Here are highlights from Monday’s Analyst Blog:

Natural Gas Falls After Smaller-than-Average Supply Decrease

The U.S. Energy Department's weekly inventory release showed a slightly smaller-than-expected decrease in natural gas supplies. Moreover, the drawdown fell short of the five-year average. Influenced by these factors, natural gas prices ended Friday at $2.753 per million Btu (MMBtu), down 1.5% over the week.

The EIA Inventory Data

Stockpiles held in underground storage in the lower 48 states fell by 47 billion cubic feet (Bcf) for the week ended Mar 15, just below the guidance (of 48 Bcf decline) as per the analysts surveyed by S&P Global Platts. The decrease was also significantly lower than both the five-year (2014-2018) average net shrinkage of 56 Bcf and last year’s drop of 87 Bcf for the reported week.

Following past week’s supply decline, at 1.143 trillion cubic feet (Tcf), natural gas inventories are 556 Bcf (32.7%) under the five-year average and 315 Bcf (21.6%) below the year-ago figure.

Fundamentally speaking, total supply of natural gas averaged around 93.5 Bcf per day, essentially unchanged on a weekly basis as dry production remained flat. Meanwhile, daily consumption fell 6.2% to 91.3 Bcf primarily due to weaker residential/commercial sector demand amid higher-than-normal temperatures in California and the U.S. Northeast.

Volatile Last Few Months for the Fuel

While natural gas has rallied more than 8% over the past month, it’s still 44% below the four-year high of $4.929 per MMBtu reached in mid-November. The early onset of winter, together with the lowest level of stocks in 15 years, demand from power plants and growing LNG shipments lifted the commodity to almost $5 per MMBtu.

But the euphoria didn’t last long as mild weather in December and early January led to smaller withdrawals that markedly reduced the storage deficit and sent prices lower.

What Lies Ahead?

The fundamentals of natural gas consumption continue to be favorable. The demand for cleaner fuels and the commodity’s relatively lower price has catapulted natural gas' share of domestic electricity generation to 35%, from 25% in 2011. Moreover, new pipelines to Mexico, together with large-scale liquefied gas export facilities have meant that exports out of the U.S. are set for a quantum leap. Finally, higher consumption from industrial projects will likely ensure strong natural gas demand.  

However, record high production in the United States and expectations for explosive growth through 2020 means that supply will keep pace with demand. Therefore, prices are likely to trade sideways but for weather-driven movements.

Want to Own a Natural Gas Stock Now?

The uncertain natural gas fundamentals (considering its seasonal nature) is responsible for the understandable reluctance on investors’ part to dip their feet into these stocks.

Moreover, most natural gas-heavy upstream companies like Gulfport Energy Corp., QEP Resources Inc., Chesapeake Energy Corp., Southwestern Energy Co., etc. carry a Zacks Rank #3 (Hold), which means that investors should preferably wait for a better entry point before buying shares in them.

If you are looking for a near-term natural gas play, Antero Resources might be an excellent selection. The company has a Zacks Rank #1 (Strong Buy).

This Denver, CO-headquartered company’s expected EPS growth rate for three to five years currently stands at 20%, comparing favorably with the industry's growth rate of 18.8%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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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 https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Southwestern Energy Company (SWN) : Free Stock Analysis Report
QEP Resources, Inc. (QEP) : Free Stock Analysis Report
Chesapeake Energy Corporation (CHK) : Free Stock Analysis Report
Antero Resources Corporation (AR) : Free Stock Analysis Report
Gulfport Energy Corporation (GPOR) : Free Stock Analysis Report
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