Favorable Drilling Costs: Natural Gas Plays EQT Corp and Range Resources

Energy exploration companies are shifting drilling toward resources with greater potential for oil and natural-gas liquids. Nonetheless, investors willing to stick with more junior, natural gas plays could be handsomely rewarded in coming years, as drilling efficiency improvements are dramatically lowering breakeven prices – leading to improvements in operating margins.

The cost of capital required to break-even on drilling varies from one project to another, depending on shale geology, subsurface pressures, and infrastructure status (access to pipeline and gathering services). For example, prices currently average about $215 per drilled foot in the San Juan Basin of New Mexico, compared with $287 per drilled foot in the nearby Permian Basin section of West Texas. Against this backdrop, some U.S. natural gas companies, such as EQT Corp. (EQT-$68.58) and Range Resources (RRC-$75.19), are favorably positioned to outperform their peers and show improvements in Return on Invested Capital due to prudent investments in promising onshore assets and drill-bit technologies.

Continue Reading at YCharts: Drillers: Productivity Boom Transcends Gas Prices

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Credit Concerns With DISH - Sprint Nextel Deal

A DISH Network (DISH-$39.26) – Sprint Nextel (S-$7.09) deal offers multiple venues for revenue growth. DISH could offer subscribers triple-play services (high-speed internet, phone, and video) by merging its own satellite network with Sprint’s wireless network. In terms of cross-selling – excluding overlap – there is the equivalent of 17 million Sprint households that could be targeted for DISH Pay-TV services and approximately 14 million current DISH households that could potentially add about 35 million new mobile users to Sprint’s subscriber base.

Management opines that potential revenue and cost synergies could reach $37 billion, of which $11 billion would come from the spend side (alignment of sales & distribution channels and reduction of similar operations, such as call centers or billing and collections services).

Fitch Credit believes, however, that the deal is fraught with substantial execution and integration risks.

Continue Reading at YCharts: Dish Rally onSprint Deal: We Dish the Dirt

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

Exxon Mobil Looks to Favorable Future With Natural Gas

With the $41 billion acquisition of XTO Energy back in 2010, Exxon Mobil (XOM-$89.43) overnight became the largest producer of natural gas in North America, catapulting beyond erstwhile leader Chesapeake Energy (CHK-$19.29) and other big players, like ConocoPhillips (COP-$58.26), Southwestern Energy (SWN-$34.97) and Anadarko (APC-$83.32). In 2012, proved reserves and production totaled 14.47 trillion cubic feet equivalent (Tcfe) and 3.82 billion cubic feet daily, respectively, up from 7.47 Tcfe and 1.27 billion cubic feet daily in 2009.

In hindsight – at least on paper – the all-stock transaction still looks terrible. Though most deals are liquid rich these days, metrics for natural gas assets purchased in the past year show that the $2.89 per thousand cubic feet equivalent (Mcfe) of proven reserves paid by Exxon for XTO assets is more than double that of current deals.

Continue Reading at YCharts: A $41 Billion Mistake That Doesn’t Really Matter

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.