Zacks.com Announces that Gregory Spear Highlights the Following Stocks: Chesapeake Energy and Noble Energy

Business Wire, July 20, 2004

CHICAGO -- -There's always a bull market somewhere, and Gregory Spear believes that energy is that hot spot right now. Take advantage of this unusual and sustainable rally with this expert's market analysis and a pair of stock recommendations. Read about Chesapeake Energy (NYSE:CHK) and Noble Energy (NYSE:NBL). Gregory Spear is editor of The Spear Report newsletter. Click here for the full story exclusively on Zacks.com: http://at.zacks.com/?id=84

Here are the highlights from the Featured Expert column:

Peake Experience

There's always a bull market somewhere and this year that somewhere is the oil and gas patch, with that rally continuing even in the recent overall market correction. Gregory Spear and his team still believe that various circumstances have come together to produce an unusual and sustainable energy rally. It probably has much further to run, short-term corrections notwithstanding. Most likely it will be measured in years. Don't miss it. Buy those corrections, as Spear has been saying for months.

There is a bull market in natural gas and there is nothing on the horizon that Spear is aware of that could derail it, not even domestic terrorism. If al Qaeda were to attack our domestic energy infrastructure, as some are speculating they might, this would only serve to boost prices. It would take a full-blown depression to break the back of this bull.

Chesapeake Energy (NYSE: CHK) is the 6th largest independent producer of natural gas in the US. To put that in perspective, they produce about 1/3 the volume of Chevron (NYSE: CVX) or Exxon (NYSE: XOM). But when it comes to investing in natural gas, size does not matter. What matters is steadily increasing production and the rate of replenishment of reserves. Of course, most independent producers like CHK hedge their production, which means they take positions in derivatives to lock in a minimum return and smooth out seasonal price fluctuations. The real question is how well do they do that. CHK's current hedge positions guarantee them $35 for oil and $6/mcf for gas through 2005. That's great market timing work. While that means they won't benefit much from a spike in gas prices, they won't suffer due to price volatility either.

Noble Energy (NYSE: NBL) is a surprisingly diversified and international independent energy company. Noble is like a pint size Exxon, one hundredth the size of that Goliath, but developing a unique set of international skills like no other of its size. Overall, the company is growing production at a 17% rate, which is not stellar, but they have been quite consistent. Both production and reserves have been steadily rising over the past 4 years. While much of the growth is coming from international operations, which are extensive but just starting to produce real revenue, growth is now accompanied by debt reduction and cost reduction, which means higher margins. This is helping their bottomline. In early May Noble reported first quarter net income of $85 million, or $1.48 per share, a 145% year-over-year increase.

Read Gregory Spear's complete commentary, along with much more information on Chesapeake Energy and Noble Energy, by clicking: http://at.zacks.com/?id=85

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