SOURCE: The Bedford Report

The Bedford Report

November 22, 2011 08:16 ET

SandRidge Energy and Magnum Hunter Resources Ready for the Future - Profitable in the Present

The Bedford Report Provides Equity Research on SandRidge Energy & Magnum Hunter Resources

NEW YORK, NY--(Marketwire - Nov 22, 2011) - Oil and gas explorers have turned to more profitable business segments in recent quarters. With natural gas prices stagnating this year, explorers have focused on the more lucrative oil and liquids markets to keep profits strong. Natural gas prices could be due for a turnaround in the near future, however, as demand is expected to surge. The Bedford Report examines the outlook for companies in the Oil and Gas sector and provides equity research on SandRidge Energy, Inc. (NYSE: SD) and Magnum Hunter Resources Corporation (NYSE: MHR). Access to the full company reports can be found at:

The US Energy Information Administration (EIA) has observed markedly higher levels of volatility in the pricing of WTI crude since early August. This coincides with similar volatility in global stock markets in the wake of the US and European debt crises, and highlights the extent of the correlation that has developed between financial and oil markets. The price of oil ended last week lower than it began, despite a surge of trading that temporarily pushed crude above $100 at midweek for the first time since July.

Gas prices, meanwhile, have remained low for most of 2011. As a result, several high profile oil and gas explorers are increasing production of more lucrative oil and liquids as oil trades at its highest level relative to gas. US oil production will reach 5.92 million barrels a day in 2012, up 4 percent from 2011 and the highest amount since 1998, according to the US Energy Department. Meanwhile Gas output is forecast to grow a mere two percent to 66.87 billion cubic feet a day in 2012, slower than the 6.1 percent increase this year.

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While in the doldrums at the moment, gas demand is expected to surge higher in the long term. The retirement of coal-fired plants due to toughening environmental standards in the US would increase the share of total electric power generation fueled by natural gas by 6 percentage points, according to Fitch Ratings.

SandRidge Energy, Inc. explores, develops, and produces natural gas and crude oil in the United States. Third-quarter production, which was an almost equal mix of gas and liquids, rose 14 percent to 6.18 mmboe. For the full year, the company cut its output forecast to 23.4 million barrels of oil equivalent (mmboe) from 23.9 mmboe, citing constraints at one of its facilities, and underperformance in the Gulf Coast and Gulf of Mexico area.

Magnum Hunter Resources develops oil and natural gas wells primarily in West Virginia, North Dakota, Texas, and Louisiana. The company narrowed its third quarter loss as sales more than tripled, driven by a sharp rise in production. MHR produced 5,270 barrels of oil equivalent on a daily basis during the quarter -- nearly triple the 1,308 barrels of oil equivalent it produced during the prior year period.

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