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 ).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free .
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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Zacks "Profit from the Pros" e-mail newsletter provides highlights of the latest analysis from Zacks Equity Research. Subscribe to this free newsletter today .
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report