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Efficiency improvements "terrifying" for nat gas price outlook, analyst says

Published 08/07/2017, 06:59 PM
Updated 08/07/2017, 06:59 PM
© Reuters.  Efficiency improvements "terrifying" for nat gas price outlook, analyst says
  • Natural gas futures settled $0.02 higher today at $2.80/MMBtu, but Alliance Bernstein analyst Jean Ann Salisbury lowers her gas price outlook to account for high grading, declining initial production rates and lower improvement rates from the shift from oil to gas in the Utica shale.
  • Salisbury calls gas well efficiency improvements "terrifying" - the average gas initial production rate of wells is up 34% Y/Y compared to a 7% compound annual growth rate during the 2012-15 period - and she says it is unrealistic to expect such rates to continue.
  • The analyst is generally bearish in its outlook for gassy E&P companies, expecting more production but weaker prices, and bullish for gassy and NGL midstream; Alliance Bernstein has Outperform ratings on Enterprise Products Partners (NYSE:EPD), Energy Transfer Equity (NYSE:ETE) and Williams Cos . (NYSE:WMB).
  • ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, KOLD, UNL, DCNG, GAZB
  • Now read: Enterprise Products Q2 Earnings: First Thoughts

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