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The Zacks Analyst Blog Highlights: Northern Oil and Gas, Penn Virginia, Contango Oil & Gas, Parsley Energy and Sanchez Energy - Press Releases

For Immediate Release

Chicago, IL - June 11, 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 Northern Oil and Gas Inc. ( NOG ), Penn Virginia Corp. ( PVA ), ContangoOil & Gas Co. ( MCF ), Parsley Energy Inc. ( PE ) and Sanchez Energy Corp. ( SN ).

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Here are highlights from Wednesday's Analyst Blog:

Nat-Gas Glut Means Low Prices Here to Stay

The supply glut from the shale drilling bonanza meant that May was another month when U.S. natural gas production from the Lower 48 states stayed strong.

As per the latest report from Bentek Energy - the forecasting unit of Platts - May natural gas production edged down less than 1% from the record highs of April to 72.6 billion cubic feet per day (Bcf/d). In fact, the May output was 7.2% higher year-over-year.

Thanks to the emergence of major shale plays yielding impressive results, Bentek analysis further suggests that average domestic natural gas supply will climb to 73 Bcf/d in 2015. To put things in perspective, U.S. production was averaging just 55.1 Bcf/d in 2009, only six years back.

The Shale Revolution

Over the last few years, a quiet revolution has been reshaping the energy business in the U.S. The success of 'shale gas' - natural gas trapped within dense sedimentary rock formations or shale formations - has transformed domestic energy supply, with a potentially inexpensive and abundant new source of fuel for the world's largest energy consumer.

With the advent of hydraulic fracturing (or fracking) - a method used to extract natural gas by blasting underground rock formations with a mixture of water, sand and chemicals - shale gas production is now booming in the U.S. Coupled with sophisticated horizontal drilling equipment that can drill and extract gas from shale formations, the new technology is being hailed as a breakthrough in U.S. energy supplies, playing a key role in boosting domestic natural gas reserves.

As a result, once faced with a looming deficit, natural gas is now available in abundance.

Growing Demand Supply Imbalance Pressurizes Price

While May becomes another month in terms of robust natural gas output, the commodity's demand has failed to keep pace with this rapid supply surge. In the past, winter weather has played a factor in boosting prices with demand for domestic natural gas exceeding available supply. But with no dearth of new supply, even this association is becoming more and more obsolete.

The Result: Prices Continue to Suffer

From a peak of about $13.50 per million British thermal units (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. In the absence of major production cuts, we do not expect much upside in gas prices in the near term.

Limited Upside for Gas Producers

This translates into limited upside for natural gas producing companies. In particular, those with Zacks Rank #4 (Sell) or Zacks Rank #5 (Strong Sell) like Northern Oil and Gas Inc. ( NOG ), Penn Virginia Corp. ( PVA ), Contango Oil & Gas Co. ( MCF ), Parsley Energy Inc. ( PE ) and Sanchez Energy Corp. ( SN ) look to be in the most trouble.

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NORTHRN OIL&GAS (NOG): Free Stock Analysis Report

PENN VIRGINIA (PVA): Free Stock Analysis Report

CONTANGO OIL&GS (MCF): Free Stock Analysis Report

PARSLEY ENGY-A (PE): Free Stock Analysis Report

SANCHEZ ENERGY (SN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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