Today's stock selection:
AP XTO Energy 2nd-qtr earnings, revenue surge as production increases amid high crude, gas prices FORT WORTH, Texas (AP) -- Oil and natural gas producer XTO Energy Inc. said Tuesday its second-quarter profit jumped more than 30 percent as production increased amid record-high energy prices.
XTO Energy 2Q profit surges as production jumps
Tuesday July 22, 10:06 am ET
For the period ended June 30, the company posted profit of $575 million, or $1.11 per share, up 33 percent from a profit of $432 million, or 91 cents per share, in the year-ago period.
Wow! The August natural gas (“gas”) contract has fallen from a little over $13 per Million BTU to 10.57 at market close today, about a 20% drop in less than two weeks. Is it going to stay down, or pop back up? In favor of staying down there is increasing production from the U.S. deepwater, reduced demand from industries that supply house building materials, electricity from new windmill farms reducing the need for gas generated electricity and a build of 104 Billion Cubic Feet in the week ending July 11, 2008 (“the last week”).
Even taking these factors into account, however, I believe that we will see a price recovery. If the low pressure wave in the Caribbean turns into a hurricane, we will see an extraordinarily fast recovery. But even if it does not, there are many factors that point to higher natural gas prices.
There are a number of ways to make money from an increase in gas prices. There is an ETF, having the ticker symbol UNG, which tracks the price of gas. Also, energy producer XTO Energy, Inc. (XTO) is known for producing a high proportion of gas in its hydrocarbon mix and tends to be affected by changes in gas prices more than other energy producers. I would rate both of these a buy.
Yes, XTO shares are down some 8% today, but I see it as a buy opportunity.