This column was originally published on RealMoney on July 31 at 3:09 p.m. EDT. It's being republished as a bonus for readers.

Earnings from energy companies will continue to come in at a frenetic pace this week, and with natural gas trading up nearly 40% from recent lows, there is all of a sudden significantly more interest in what energy companies have to say.

Although my message has been consistent over the past several months -- don't get too worked up about short-term weakness in natural gas, because we are just one positive weather event away from higher prices -- the recent acceleration in gas prices is still surprising. It shows just how fragile the natural gas market is likely to be in the coming months.

Just one heat wave, moving west to east, was enough to move natural gas with the force once reserved for major hurricanes and bone-chilling cold. Combined with the outage of a major nuclear plant in Michigan, triple-digit temperatures have pushed natural gas prices close to $8 per million BTU from the mid-$5 range less than two weeks ago.

Among bulls, there is hope a sustained heat wave (some forecasts are calling for up to three weeks of sweltering weather) will reduce the natural gas storage surplus and help stabilize what could be an otherwise volatile gas market until winter.

While there is plenty of summer ahead, higher natural gas prices have repiqued interest in energy stocks. Many readers have asked for a road map to a busy week of earnings reports in the sector, and I'm happy to oblige. Here is a daily guide to numbers to watch:


There has been a relatively quiet start to the week, but Hercules Offshore ( HERO), an operator of lift boats and jack-up drilling rigs in the Gulf of Mexico, reported a solid quarter and talked about how tight the market is and its current pricing power.

While a smaller player in its core businesses, the report bodes well for Superior Energy ( SPN), a larger lift-boat player, as well as companies like Rowan ( RDC) that own jack-up rigs in the Gulf of Mexico.

Hercules also noted what I have said for months -- a number of jack-up rigs are likely to leave the Gulf of Mexico for bluer waters (the nautical version of greener pastures), and that will tighten supply even further, suggesting at least another year of higher jack-up day rates in the Gulf of Mexico.

Even without a major hurricane season in 2006, the damage from Katrina and Rita last year still has every available boat at work repairing and assessing damage. A storm or two in the Gulf this year would only extend the workload and support higher pricing for lift boats into the future.


I see three themes for Tuesday. Dawson Geophysical ( DWSN), a small but important seismic provider, is expected to beat estimates comfortably and provide a solid outlook. A preview of how strong Dawson's business is likely to be came from TGC Industries ( TGE), whose revenue growth and backlog growth (adjusted for weather) were robust.

Dawson is likely to talk about adding a 12th seismic crew (a group responsible for placing, shooting and recording seismic images) that will work for Chesapeake Energy ( CHK) in Appalachia, and it may even consider adding a 13th crew. In addition, while Dawson doesn't report a work backlog number, demand for its services is likely to remain robust.

I'd also look for Dawson to talk a little more about an early, but important, relationship with Schlumberger's ( SLB) WesternGeco unit to jointly market Geco's advanced Q system seismic processing in the U.S. Remember, Schlumberger reported very strong seismic results from WesternGeco. That also should be a tell for a solid quarter from Dawson.

Watch Valero ( VLO), whose forecasts are also likely too low. Jim Cramer did an exceptional job dissecting this story after the ConocoPhillips' ( COP) call last week and I believe he was spot on. Numbers will likely have to come up after the call as the outlook will remain the same -- gasoline demand is strong and we haven't built a new refinery in the U.S. for 30 years. As a result, those who own refineries should make plenty of money.

Finally, NS Group ( NSS) reports. Although there is pressure on the oilfield tubular markets from imports, NS Group's product mix is likely to save it from the fate of Lone Star Technologies ( LSS), which suffered a nasty blowup.


Two key exploration and production companies report Wednesday: Southwestern Energy ( SWN) and Ultra Petroleum ( UPL). Watch Southwestern's talk about progress in cost reduction and production enhancement in the Fayetteville Shale. The more wells that Southwestern drills, the better it gets. With gas prices moving higher, Southwestern may well again become a growth darling of energy investors.

Speaking of darlings, Ultra's growth profile has provided plenty of juice for investors in the past several years. A key to Ultra's call will be discussion of deeper zones in the Pinedale Anticline, its primary exploration and development focus. Questar ( STR) was cautious in its views last week; I expect Ultra to be a little more upbeat about what it sees.

Deep Breath Thursday

Between the utility and energy sectors, many companies report on Thursday. There is no way you can cover 40 companies in one day, so I'll make it easy for you.

At 10:00 a.m. EDT, listen to the Hornbeck Offshore ( HOS) call. A smaller version of Tidewater ( TDW) with more advanced equipment, Hornbeck's offshore supply boat business in the Gulf of Mexico continue to work near full capacity and at higher day rates. In addition, its tank barge business, which ships petroleum products up and down the Atlantic seaboard, is very busy. I look for a solid quarter from Hornbeck, and numbers will also likely move higher after the call.

Confirmation of Nabors' ( NBR) strength is likely to come from two reports on Thursday: Patterson-UTI Energy ( PTEN) and Pioneer Drilling ( PDC). While Patterson might have felt a bit of a pinch due to lots of Texas rain, both should be bullish about the outlook for the land-rig market, and with $8 natural gas, they aren't likely to hear Chicken Little questions about the sky falling on the rig market.


Tetra Technologies ( TTI) is the name to watch Friday. This Gulf of Mexico service and production company should deliver bullish commentary on the service business in the Gulf of Mexico and is likely very busy in the repair, remediation and deconstruction business in the Gulf as a result of last year's storms.

If you made it this far, you deserve a weekend. Enjoy the week: It's one that is likely to provide powerful messages for energy investors.
At time of publication, Edmonds held none of the issues mentioned, although holdings can change at any time.

Christopher S. Edmonds is partner and managing director of research at Pritchard Capital Partners, a New Orleans energy investment firm. He is based in Atlanta. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. While Edmonds cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.