This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Wall Street Piles on Natural Gas Stock Bearishness

Stocks in this article: CHK CRK SWN EQT COG

Comstock and Chesapeake, though, are already trading at or near 52-week low levels, implying that the market has already shunned these stocks based on the natural gas outlook. Cabot Oil & Gas, on the other hand, after rising 102% last year, is exposed to great risk for a decline in market valuation. Cabot shares have fallen 16% in the past five trading sessions.

On Friday, Cabot found some support from the market, up 1%, even as the energy sector continued to fall by 1% and Chesapeake shares declined by 2%. The key to the Cabot gas story is that it's drilling in the most economic gas region, the Marcellus shale, which according to some industry estimates can support natural gas prices as low as $2.25 to $2.50.

The negative news flow about natural gas pricing, in fact, led Cabot to release specific pricing information on Thursday and commentary from its CEO taking issue with market price quotes that Cabot thinks are inaccurate.

"I felt compelled to respond to the continued misinformation around our pricing that continues to find its way into discussions." Dan Dinges, Cabot CEO said in a release. "These commodity prices, while not where we want them, still afford our Marcellus project a significant rate of return around 55 to 60 percent before hedges because of their best in class characteristics."

Dinges added, "We have always been known for our discipline and this environment will not change that. We were successful in reducing our debt between 2010 and 2011, even with a robust investment program that created significant growth. We will continue to evaluate the best path forward for 2012, balancing rates of return with growth and cash flow."

Stifel took a broad view of the natural gas pricing weakness impact and the E&P stocks generally, lowering price targets on Cimarex Energy (XEC), EQT (symbol), Newfield Exploration (NFX), and Southwestern Energy (SWN) -- though all of the revised price targets still remain above current market values for these stocks, and Stifel rates Southwestern and EQT as "deep value" plays among gas stocks.

In general, Stifel said valuation for the group isn't attractive relative to risks related to 2012 guidance, margin compression from inflation, and even in cases where crude oil has been a driver for gains in exploration and production stocks, the lack of sustainability in a crude oil trade buttressed by geopolitical tensions between Iran and the West.

2 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs