SOURCE: Five Star Equities

Five Star Equities

April 12, 2012 08:20 ET

Chesapeake Energy and EnCana Shares Dip as Natural Gas Hits $2

Five Star Equities Provides Stock Research on Chesapeake Energy and EnCana

NEW YORK, NY--(Marketwire - Apr 12, 2012) - Natural gas prices continue to free-fall, and for the first time in over a decade, prices dropped to $2 on Wednesday. "The gas market has been somewhat lucky in prior years, because we had several hot summers and several cold winters. But their luck ran out, and it ran out in a big way," said Amber McCullagh, senior analyst for research and consulting firm Wood Mackenzie. Five Star Equities examines the outlook for companies in the Oil & 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 numbers put out by the U.S. Energy Information Administration (EIA), U.S. storage facilities are holding 60 percent more gas than normal. This glut of natural gas has forced prices to drop by 59 percent from last summer's peak of $4.85. The EIA predicts natural gas storage will be at record highs of 4.04 trillion cubic feet by October, levels hit 2.5 trillion cubic feet in March.

Companies are being forced to move rigs out of natural gas fields to more profitable fields bearing crude oil and higher-value natural gas liquids. "There's really not that many ways out of it," said Alan Lammey, energy analyst for Weatherbell Analytics. "They either have to change their game plans and start going after more oil-based plays, or they have to file bankruptcy or sell their assets."

Five Star Equities releases regular market updates on the Oil & Gas Industry so investors can stay ahead of the crowd and make the best investment decisions to maximize their returns. Take a few minutes to register with us free at and get exclusive access to our numerous stock reports and industry newsletters.

Chesapeake Energy Corporation recently announced three oil and gas asset monetization transactions for total proceeds of approximately $2.6 billion in cash. Chesapeake has completed the sale of preferred shares of a newly formed unrestricted, non-guarantor consolidated subsidiary, CHK Cleveland Tonkawa, L.L.C. (CHK C-T), and a 3.75% overriding royalty interest in the first 1,000 new net wells to be drilled on CHK C-T leasehold and certain wells contributed at closing for proceeds of $1.25 billion.

Encana Corporation recently announced that it is executing on its plan to leverage the exploration and development of certain of its oil and liquids-rich assets through partnership opportunities designed to maximize recognition of the value inherent in its large asset base. Encana is conducting exploration on several prospective oil and liquids-rich opportunities and is planning to develop several new key liquids resource plays from this vast inventory.

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