Industry Spotlight
Huge U. S. natural gas play
Shares of energy companies that staked out drilling rights around northwest Louisiana — site of what is emerging as the largest U. S. onshore natural gas reservoir — are soaring. Data suggest the area, known as the Haynesville shale, holds ultimate recoverable gas reserves of 250 trillion cubic feet, says Aubrey McClendon, chief executive of Chesapeake Energy (CHK). Some analysts suggest that figure may be at the upper range of what is possible.
That’s more than enough natural gas to supply the entire nation for over a decade.
Besides Chesapeake, other big Haynesville shale players are Goodrich Petroleum (GDP) and Petrohawk Energy (HK) Their share price gains have been “phenomenal,” says Friedman, Billings, Ramsey analyst Rehan Rashidin. In the last five months, Chesapeake is up 73 percent, Goodrich up 266 percent and Petrohawk up 198 percent.
Besides investors, people who own drilling rights in the 3.5 million-acre area are making a fortune.
When Plains Exploration & Production (PXP) last week bought access to 110,000 acres of Haynesville shale, one analyst put the implied price per acre at more than $25,000. That compares with $17,000 per acre three weeks earlier, and a few hundred dollars a couple years ago.
Analysts think shares can rally further. Calyon Securities USA and Stifel Nicolaus maintain a “buy” rating on Chesapeake.
