Sprott Analyst: Favorite Nat Gas/CBM Stocks, Part One
By: James Finch | Posted: 24th July 2006
We talked with Sprott Asset Management analyst Eric Nuttall. With bloated natural gas storage levels, Natural and CBM gas stocks have gotten crushed. Is there relief in sight? What are the fundamentals which might drive natural gas prices, and subsequently stock prices, much higher, and is this a good time to invest? Below are some of his favorites.
StockInterview: How do you sum up the natural gas equities market, right now?
Eric Nuttall: Currently, there are many very cheap natural gas weighted companies. Companies with active drilling programs, who are adequately financed and sitting on highly prospective acreage, are trading under three times 2007 cash flow. If the stock prices don't improve for the juniors, I would expect many seniors and trusts will jump at the opportunity to acquire existing production below what current finding and development costs would require through exploration or development drilling.
StockInterview: Let's review some of the more speculative companies we talked about this past spring, such as Crew Energy, Rockyview Energy and Canadian Spirit. How do you feel about them now?
Eric Nuttall: Crew (TSX: CR) is a very well run natural gas focused company. They are set to grow production per share over 40% this year and next, have a very active drilling program for the second half of the year. Canadian Spirit Resources (TSX: SPI) has been chopped in half from its peak, yet nothing but the price of natural gas has changed. We're still quite bullish on Canadian Spirit. Their play is in early stages, and production and economic risks are still there, but if they can repeat their previous rates, I think they could have a very large and economic project. Rockyview (TSX: RVE) recently cut their drilling capex by 67% taking a bit of momentum out of the story short-term. With a recovery in natural gas, the stock should rebound along with the rest of the group.
About the Author
Occupation: Writer
James Finch is a contributing editor for StockInterview.com and other publications. http://www.stockinterview.com
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Tags: stock prices, acreage, natural gas prices, tsx