SOURCE: Five Star Equities
NEW YORK, NY--(Marketwire - Jul 2, 2012) - Natural Gas prices have been on the rebound but fell last week after the U.S. Energy Information Administration (EIA) report showed gas inventories rose higher than analysts' predictions. "The net injection to U.S. natural gas storage was more than the consensus expectation and suggests a slight weakening in the market's underlying supply-demand balance," said Citi Futures Perspective analyst Tim Evans in a report. Five Star Equities examines the outlook for companies in the Natural Gas Industry and provides equity research on Chesapeake Energy Corporation (NYSE: CHK) and EnCana Corporation (NYSE: ECA) (TSX: ECA).
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According to the EIA report natural gas inventories increased by 57 billion cubic feet for the week ended June 22, above analysts' estimates of a 52 bcf increase. Current storage levels are already 75 percent full, levels not normally seen until late August. "When you are in a situation of possibly running up against storage capacity, an extra half-bcf a day over a few months can make a big difference," said Kyle Cooper, managing partner at IAF Advisors. "That's why you are seeing such huge reactions on very small changes."
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Chesapeake Energy recently announced plans to sell its midstream assets in three separate transactions for total expected cash proceeds of more than $4.0 billion. The midstream divestitures will also enable Chesapeake to reduce previously budgeted capital expenditures by approximately $3.0 billion over the next three years.
Encana recently reported it is planning to invest an additional $600 million during the remainder of 2012 to take advantage of positive initial results achieved in a number of oil and liquids rich natural gas plays. In addition to the revised capital guidance, the company also increased its expected total liquids production for the year by seven percent to 30,000 barrels per day (bbls/d).
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