Rising production offsets price concerns

Article Excerpt

Natural gas prices have almost doubled in the past year, but junior producers’ shares have not kept pace. That’s partly because many of them produce oil as well as gas, and oil prices have fallen in the last 12 months. As well, investors worry that ongoing shale discoveries will keep increasing gas supplies, which will push prices back down. Even so, the long-term outlook for gas demand and prices is positive. Here are two producers with strong growth prospects and attractive yields. ARC RESOURCES $27.53 (Toronto symbol ARX; Shares outstanding: 311.1 million; Market cap: $8.8 billion; TSINetwork Rating: Speculative; Dividend yield: 4.4%; www.arcresources.com) produces oil and natural gas in western Canada. The company’s average daily output of 95,472 barrels of oil equivalent (including natural gas) is weighted 61% to gas and 39% to oil. In the three months ended March 31, 2013, cash flow per share rose 4.8%, to $0.65 from $0.62. Production increased 2.1%, and a 22.2% rise in…