NEW YORK (AP) ¿ Oil and gas exploration and production companies face pressure as near-term catalysts are limited, natural gas prices are likely to remain relatively low and stock values remain high, an analyst said Friday as he downgraded stocks in the sector.

Jefferies & Co. analyst Subash Chandra lowered his rating for W&T Offshore Inc., Vanguard Natural Resources LLC and Continental Resources Inc. to "Hold" from "Buy."

Houston-based W&T Offshore's opportunity to increase its production and reserves at current commodity prices and services costs appears light, Chandra said, assigning a $12 price target. Excluding acquisitions, he expects a double digit decline in production and reserves in 2010, despite resuming a modest drilling program in 2010.

Shares of the company closed at $11.78 on Thursday.

Given expectations that natural gas prices will remain under stress for some time, Chandra expects shares of Vanguard Natural Resources to face pressure.

Natural gas prices have struggled in recent months. In the third quarter of 2009, prices ranged between $2.50 and $5 per 1,000 cubic feet. That's far short of last year's levels, when prices nearly reached $14 per 1,000 cubic feet.

Chandra's price target for Vanguard fell to $18 from $18.50. Shares fell 3.2 percent to $17.52 in premarket trading.

Shares of Continental Resources are trading at a substantial premium, Chandra said as he downgraded the stock.

"Growth rates will have to accelerate to justify the premium," Chandra said. Still, he raised his price target for the company to $44 from $43. Shares of Continental closed at $39.23 on Thursday.

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