For Immediate Release
Chicago, IL – March 28, 2012 – 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 Ultra Petroleum
Corp. ( UPL), Talisman Energy
Inc. ( TLM), Encana Corp. ( ECA),
Williams Companies ( WMB) and Exterran
Holdings Inc. ( EXH).
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Here are highlights from Tuesday’s Analyst
Blog:
Bearish on Ultra Petroleum’s
Future
Shares of Ultra Petroleum Corp. ( UPL) are
currently trading close to its 52-week low of $22.51. The natural
gas producer has seen its share price fall more than 30% since the
beginning of December last year, as investors have been selling the
stock for its weak fundamentals and tepid outlook. The
disappointing fourth quarter results have added to this
bearishness.
Houston, Texas-based Ultra Petroleum is an energy firm engaged
in the acquisition, development, exploration and production of oil
and gas properties. The company’s operations are focused on the
Green River Basin of southwest Wyoming, mainly covering the
Pinedale and the Jonah fields.
As of year-end 2011, Ultra Petroleum had 4.98 trillion cubic
feet equivalent (Tcfe) in proved reserves, of which more than 96%
was natural gas and about 41% was developed. Production averaged
245.3 billion cubic feet equivalent (Bcfe) during the year,
comprising 97% gas and 3% crude oil/ liquid hydrocarbons. Ultra
Petroleum’s high natural gas exposure raises its sensitivity to gas
price fluctuations, compared to its more-diversified independent
peers with higher oil production.
The company recently reported lower-than-expected EPS for the
December quarter – 58 cents versus the Zacks Consensus Estimate of
61 cents – adversely affected by lower natural gas prices.
A supply glut has pressured natural gas prices during the past
year or so, as production from dense rock formations (shale) –
through novel techniques of horizontal drilling and hydraulic
fracturing – remain robust, thereby overwhelming demand.
As a matter of fact, natural gas prices have dropped over 50%
from 2011 peak of $4.92 per million Btu (MMBtu) in June to the
current level of around $2.30 (referring to spot prices at the
Henry Hub, the benchmark supply point in Louisiana). Incidentally,
prices hit a 30-month low of $2.01 earlier this month.
To make matters worse, a near-record mild weather across most of
the country curbed natural gas demand for heating all winter,
leading to an early beginning for the stock-building season. The
grossly oversupplied market continues to pressure commodity prices
in the backdrop of sustained strong production.
This has forced Ultra Petroleum – and other natural gas players
like Talisman Energy Inc. ( TLM), Encana
Corp. ( ECA), etc. – to announce drilling curtailments.
The company has reduced its 2012 capital budget by 38% year over
year to $925 million. Ultra Petroleum's investment for development
drilling has been slashed even more drastically, down 50% to just
$650 million from the $1.3 billion expended last year.
While subscribing to management’s outlook, we believe the
realignment of Ultra Petroleum’s strategy will take some time to
bear results and we expect the company to continue to struggle
unless the outlook for natural gas prices improves.
Given these concerns, we expect Ultra Petroleum to perform below
its peers and industry levels in the coming months. As such, we see
little reason for investors to own the stock. Our long-term
Underperform recommendation is supported by a Zacks #5 Rank
(short-term Strong Sell rating).
Williams Gets Venezuela Asset
Price
Williams Companies ( WMB) announced that it
will receive a total payment of $312 million from Venezuela's
state-run oil company – Petroleos de Venezuela SA or PDVSA – for
the assets of the joint ventures – WilPro Energy Services (El
Furrial) Limited and WilPro Energy Services (PIGAP II) Limited.
Under the industry nationalization program that began in 2007,
PDVSA had seized the gas compression and treatment properties in
2009.
An initial payment of $84 million in cash was made to Williams
along with an additional $63 million for the stake in Accroven SRL
that included two natural gas liquid (NGL) extraction plants, an
NGL fractionation unit plus storage and refrigeration facilities.
Williams will receive the remaining $165 million as periodic cash
payments through the first quarter of 2016.
In March 2011, Williams filed for arbitration on the PDVSA
seizures with the International Centre for Settlement of Investment
Disputes, formed by the World Bank Group. The company has agreed to
suspend the proceeding of the arbitration, pending full payment by
PDVSA.
Williams, through one of its subsidiary, enjoyed a respective
66.66% and 70% ownership interest in El Furrial and PIGAP II
ventures. Houston, Texas based energy firm Exterran
Holdings Inc. ( EXH) partnered Williams in the aforesaid
joint ventures.
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ENCANA CORP (ECA): Free Stock Analysis Report
EXTERRAN HLDGS (EXH): Free Stock Analysis Report
TALISMAN ENERGY (TLM): Free Stock Analysis Report
ULTRA PETRO CP (UPL): Free Stock Analysis Report
WILLIAMS COS (WMB): Free Stock Analysis Report
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