SOURCE: Paragon Financial Limited

Paragon Financial Limited

May 17, 2012 08:20 ET

Natural Gas Prices Surge -- Chesapeake Energy and Cheniere Energy Look to Benefit

The Paragon Report Provides Stock Research on Chesapeake Energy and Cheniere Energy

NEW YORK, NY--(Marketwire - May 17, 2012) - Natural gas prices have surged recently after being in a long slump. Recent advances in technology have unlocked new reserves and seen production skyrocket as a result. The United States Natural Gas Fund is up nearly 20 percent over the last month, showing signs of a long awaited recovery for the industry. The Paragon Report examines investing opportunities in the Natural Gas Industry and provides equity research on Chesapeake Energy Corporation (NYSE: CHK) and Cheniere Energy, Inc. (NYSE: LNG).

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Natural gas futures on Tuesday rose 2.8 percent to $2.50 /mmBtu. The Energy Information Administration (EIA) is set to release weekly gas inventory date Thursday. According a recent article in the Wall Street Journal it is anticipated that the data will show inventories rose significantly less than the year-ago level of 86 billion cubic feet and the five-year average of 91 bcf, on increased demand from electrical utilities, who have recently switched from coal to gas.

"Narrowing in the surplus ... [is] a more important driver of natural gas pricing than the huge absolute supply level," said Jim Ritterbusch, president of Ritterbusch & Associates. As a result of this mentality, he said, "We are leaving open the possibility of a further price advance to around the $2.61 area."

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Chesapeake's 1.5 million acres in the Permian Basin is estimated to be $6.82 billion, $1.82 billion more than previous estimates, based on prices Concho Resources Inc. paid for oil fields in the same area. "This is probably going to be the biggest Permian asset sale in quite a long time and perhaps a long time into the future," Chesapeake's CEO Aubrey McClendon said on a recent conference call. "For a company that wants to get bigger in the Permian or wants to get in the Permian, this is the best opportunity."

Cheniere Energy Partners L.P. recently announced that it has agreed to sell $1.5 billion in stock to the Blackstone Group L.P. Blackstone has agreed to buy 100 million units for $15 each, a 40 percent discount to Cheniere's Monday closing price. "Financing is the last milestone we need to complete in order to proceed with the construction of the first two trains of our Liquefaction Project at Sabine Pass," said Cheniere Chief Executive Charif Souki.

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