Natural Gas Prices Surge -- Chesapeake Energy and Cheniere Energy Look to Benefit
May 17 2012 - 8:20AM
Marketwired
Natural gas prices have surged recently after being in a long
slump. Recent advances in technology have unlocked new reserves and
seen production skyrocket as a result. The United States Natural
Gas Fund is up nearly 20 percent over the last month, showing signs
of a long awaited recovery for the industry. The Paragon Report
examines investing opportunities in the Natural Gas Industry and
provides equity research on Chesapeake Energy Corporation (NYSE:
CHK) and Cheniere Energy, Inc. (NYSE: LNG).
Access to full reports can be found at:
www.ParagonReport.com/CHK
www.ParagonReport.com/LNG
Natural gas futures on Tuesday rose 2.8 percent to $2.50 /mmBtu.
The Energy Information Administration (EIA) is set to release
weekly gas inventory date Thursday. According a recent article in
the Wall Street Journal it is anticipated that the data will show
inventories rose significantly less than the year-ago level of 86
billion cubic feet and the five-year average of 91 bcf, on
increased demand from electrical utilities, who have recently
switched from coal to gas.
"Narrowing in the surplus ... [is] a more important driver of
natural gas pricing than the huge absolute supply level," said Jim
Ritterbusch, president of Ritterbusch & Associates. As a result
of this mentality, he said, "We are leaving open the possibility of
a further price advance to around the $2.61 area."
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Chesapeake's 1.5 million acres in the Permian Basin is estimated
to be $6.82 billion, $1.82 billion more than previous estimates,
based on prices Concho Resources Inc. paid for oil fields in the
same area. "This is probably going to be the biggest Permian asset
sale in quite a long time and perhaps a long time into the future,"
Chesapeake's CEO Aubrey McClendon said on a recent conference call.
"For a company that wants to get bigger in the Permian or wants to
get in the Permian, this is the best opportunity."
Cheniere Energy Partners L.P. recently announced that it has
agreed to sell $1.5 billion in stock to the Blackstone Group L.P.
Blackstone has agreed to buy 100 million units for $15 each, a 40
percent discount to Cheniere's Monday closing price. "Financing is
the last milestone we need to complete in order to proceed with the
construction of the first two trains of our Liquefaction Project at
Sabine Pass," said Cheniere Chief Executive Charif Souki.
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