Despite the spread of the omicron variant and consequent restrictions, the United States Energy Information Administration (EIA) reported that demand for petroleum products jumped 9% week-over-week in the…
run-up to the Christmas holiday weekend.
On top of that, the Weather Prediction Center forecasted freezing temperatures, heavy snowfall, and strong winds in parts of the country in early January, which is expected to affect natural gas production amid the rising demand. U.S. January futures for natural gas contracts gained 8.8% on Wednesday, marking the steepest intra-day rise since October. Moreover, U.S gas prices are expected to surge to $3.41 per gallon on average in 2022 and peak at almost $3.80 per gallon.
Given this scenario, Wall Street analysts expect a more than 40% upside in the natural gas stocks of Chesapeake Energy Corporation (CHK – Get Rating), Range Resources Corporation (RRC – Get Rating), and Tellurian Inc. (TELL – Get Rating)
Chesapeake Energy Corporation (CHK – Get Rating)
CHK acquires, explores, and develops properties for the production of oil, natural gas, and natural gas liquids (NGLs) from underground reservoirs in the United States. The company went public, after a financial restructuring process, on February 10, 2021.
On December 2, CHK announced the repurchase of $1 billion in an aggregate value of its common stock and warrants. This should improve shareholder returns.
On November 1, the company announced that it had completed the acquisition of Vine Energy Inc. (VEI). About this acquisition, Nick Dell’Osso, CHK President and Chief Executive Officer, said, “We are pleased to integrate the outstanding Vine operations and assets into our portfolio, strengthening our position in the Haynesville Shale with over 900 additional drilling locations, immediately improving our free cash flow profile and accelerating a significant return of capital to our shareholders at a time of favorable natural gas prices.”
For the fiscal third quarter ended September 30, CHK’s adjusted net income attributable to common stockholders increased 427.5% year-over-year to $269 million. Net cash provided by operating activities improved 16% from the prior-year quarter to $443 million. The company’s cash, cash equivalent, and restricted cash balance rose 180.4% from the same period last year to $858 million.
The consensus EPS estimate of $9.99 for the next year (fiscal 2022) indicates a 2.8% year-over-year increase. Likewise, the consensus revenue estimate for the upcoming year of $6.42 billion reflects a rise of 28% from the current year.
The stock has gained 45.7% since it went public on February 10 to close yesterday’s trading session at $65.57. It has gained 6.8% over the past month.
The 12-month median price target of $92.29 indicates a 40.8% potential upside. The price targets range from a low of $78.00 to a high of $115.00.
Range Resources Corporation (RRC – Get Rating)
RRC is an independent oil and natural gas company, NGLs, and oil company operating in the United States. The company explores, acquires, and develops natural gas and oil properties.
On November 3, RRC published its Corporate Sustainability Report. The company hopes to enhance its record of…
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