2 Energy Winners, and Another Way to Play Marcellus Gas: Cabot Oil & Gas Corporation (COG), Linn Energy LLC (LINE), Williams Partners L.P.(WPZ)

US energy production continues to make headlines, and recent earnings announcements show that, for the most part, Americans can make a buck off this growing industry.  Marcellus shale gas continues to power the profits of Cabot Oil & Gas Corporation (NYSE:COG) .  In addition to reviewing Cabot’s results, I’ll offer an alternative investment for Marellus shale gas.  Linn Energy LLC (NASDAQ:LINE) also continues its winning ways. Alas, Chesapeake Energy Corporation (NYS: CHK) continues to languish.

Making money from Marcellus gas

Cabot Oil reported its 4Q 2012 and 2012 annual results and they trounced analysts’ expectations. Expectations had been bearish, but any concerns were crushed by Cabot Oil & Gas Corporation (NYSE:COG) earning 27 cents a share, well over the 22 cents a share consensus. More good news came from the natural gas reserves front. Cabot reported its 2012 year end reserves increased 27% over 2011. And that growth was all organic. Gas production rose 43%, oil production rose 67%, cash flow increased 30% and revenue cleared $1 billion for the first time in the company’s history. Its findings costs were the lowest in the company’s history.

And the future? Cabot revealed a $1 billion capex program focused mainly on its Marcellus shale gas play with approximately $300 million dedicated to its oil plays in Oklahoma and Texas. Analysts have raised expectations for gas production, earnings and stock price. Cabot projects a 35 to 50% increase in production for 2013. Any wonder Cabot stock rose more than four points in four days?

In stark contrast, Devon Energy (NYSE:DVN) reported a loss for the 4Q 2012 and the 2012 fiscal year. Much of the loss stemmed from asset impairment charges. While Devon increased oil, natural gas, natural gas liquids production, revenues fell. Midstream operations contributed to corporate finances, but not enough to offset the impairment charges.

While Devon transitions from a largely natural gas producer to a more balanced oil and gas energy company, the company has increased dividends (current yield around 1.5%) and repurchased shares. Give them some credit, Devon seems to understand the concept of shareholder value. On the other hand, over 900,000 shares were sold by insiders over the past six months; not an encouraging sign.

While Devon Energy Corp (NYSE:DVN) transitions, Linn Energy LLC (NASDAQ:LINE) progresses

Linn Energy reported impressive results recently. Earnings rose 40% for the year and distributions grew with it. Organic production growth and acquisitions contributed to the company’s financial performance. Lease operating expenses declined, reserve replacement was 150% before acquisitions, and $2.9 billion in acquisitions and joint ventures seem to have largely paid off. Investors have benefited from it all with courtesy of Linn’s 7.6% distribution and steady distribution growth.

To me, the big news centers on future plans. The company plans $1.1 billion in capex for 2013 with approximately 35% of that focused on its lucrative Granite Wash oil play. The purchase of Berry Petroleum gives Linn Energy LLC (NASDAQ:LINE) exposure to California oil plays, an additional $300 to 500 million in capex and should allow for a larger distribution but a lower distribution payout ratio. Corporate executives in no way ruled out future acquisitions in 2013.