Natural Gas Prices Analysis by Jefferies : Lower Natural Gas Prices May Slow Growth
March 2nd, 2010 | File Under : Natural Gas - Oil and Gas - Trade & Market
A Jefferies analyst downgraded Basic Energy Services Inc. Monday, saying weak natural gas prices may slow growth at the oil and gas company.
Activity levels and profit margins in Basic Energy’s natural gas business “are still likely to struggle in a $5 natural gas environment,” analyst Judson Bailey wrote in a research note.
On Monday, natural gas traded at just over $4.77 per 1,000 cubic feet.
About 40 percent of Basic Energy’s revenue comes from natural gas activity, Bailey said, and a lower price for gas could be ”notable drag” on the company’s profitability.
Bailey lowered his rating on Basic Energy to “Hold” from “Buy,” and also reduced his estimates for 2010.
Shares closed Friday at $9.45, up 6 percent for the year to date.
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