Gas-weighted juniors: One buy, one hold

Article Excerpt

Focusing on natural gas production is riskier than diversifying between gas and oil, because gas can stay depressed for much longer. However, gas has begun rising lately. If that trend continues, it could pay off hugely for gas-focused stocks like these two. DELPHI ENERGY $1.68 (Toronto symbol DEE; SI Rating: Speculative) (403-265-6171; www.delphienergy.ca; Shares outstanding: 92.3 million; Market cap: $155.1 million) explores for oil and gas in Alberta and B.C. Natural gas makes up 87% of its overall daily output. In the three months ended June 30, 2009, Delphi’s average daily output rose 9.8%, to 6,809 barrels of oil equivalent (this measurement includes natural gas) from 6,202 barrels. Despite the higher production, Delphi’s cash flow per share fell 44.8%, to $0.16 from $0.29 a year earlier. That’s because of lower oil and gas prices. Delphi recently raised $16.5 million by selling 13.5 million shares at $1.25 each. It will use the funds to drill on its properties. It may also make acquisitions. The company’s…