Profit from a natural gas rebound

Article Excerpt

Natural gas prices are now at $3.61 U.S. per thousand cubic feet. That’s down from their high of almost $4.40 in April 2013 but well above the low of $1.82 in April 2012. The long-term outlook for gas demand and prices is positive. Here are two producers with strong growth prospects and attractive yields. ARC RESOURCES $26.49 (Toronto symbol ARX; Shares outstanding: 312.4 million; Market cap: $8.2 billion; TSINetwork Rating: Speculative; Dividend yield: 4.5%; produces oil and natural gas in Western Canada. The company’s average daily output of 93,436 barrels of oil equivalent (including gas) is weighted 61% to gas and 39% to oil. In the three months ended June 30, 2013, cash flow per share rose 14.0%, to $0.65 from $0.57. Production fell slightly, but a 91.6% rise in gas prices more than offset the lower output. ARC’s long-term debt is $755.0 million, or a low 9.2% of its market cap. It trades at 10.3 times its forecast…

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