Southwestern Energy Company (SWN), Chesapeake Energy Corporation (CHK), EQT Corporation (EQT): The Most Popular Natural Gas Play in America

What’s next?
Going forward, production growth in the Marcellus is likely to outpace most other shale gas plays in the country. Bentek Energy projects that production volumes in the Northeast region of the country will increase to more than 10 billion cubic feet per day this year and rise to 17 bcf/d in 2017, with the Marcellus and Utica shales expected to account for the vast majority of this growth.

A low-cost Marcellus producer to consider
Some of the lowest-cost producers in the play include the aforementioned Range Resources Corp. (NYSE:RRC), Southwestern Energy Company (NYSE:SWN), and EQT Corporation (NYSE:EQT), as well as Ultra Petroleum Corp. (NYSE:UPL), which commands approximately 260,000 net acres in the play. The company boasted one of the lowest all-in costs per Mcfe in the entire industry last year and reckons that some of its deeper Marcellus wells can generate an IRR of 82% at a gas price of $4 per Mcf at the wellhead.

If gas prices rise significantly over the next few years — as I have argued they probably will — Ultra Petroleum Corp. (NYSE:UPL)’s Pinedale Field and Marcellus assets should generate some really strong returns, which is sure to boost the company’s earnings and its stock price. This is one company that’s definitely worth a second look.

The article The Most Popular Natural Gas Play in America originally appeared on Fool.com and is written by Arjun Sreekumar.

Fool contributor Arjun Sreekumar has no position in any stocks mentioned. The Motley Fool recommends Range Resources and Ultra Petroleum, owns shares of Ultra Petroleum, and has options on Chesapeake Energy and Ultra Petroleum.

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