Sefton - A tiny and very undervalued oil company

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Energy firms cheering
Gas producers rise on higher prices, buyout in North Texas
12:00 AM CST on Wednesday, December 14, 2005
By ELIZABETH SOUDER / The Dallas Morning News


Between a high buyout bid and record natural gas prices, the cheers from Barnett Shale producers and owners could almost be heard in Dallas on Tuesday.
Natural gas prices hit a fresh closing-price high Tuesday, up 1 percent at $15.378 per million British thermal units.
That boosted shares of natural gas producers, along with news Monday that major oil company ConocoPhillips wants to enter the Barnett Shale play by buying Burlington Resources Inc. of Houston.
"And so it begins – oil company dominos," Pickering Energy Partners said in a research note. "Commodity prices finally high enough, long enough to kick off consolidation."
Shares of the largest players on the Barnett Shale, a vast natural gas field in North Texas, rallied Tuesday. Devon Energy CP shares closed at $67, up 1 percent.
Shares of XTO Energy Inc. were up 1.4 percent at $46.23.
Some smaller producers of unconventional natural gas fields across the U.S. benefited as well, because they could also be takeover candidates.
Among the targets on Pickering's list: Houston's EOG Resources Inc. closed 0.5 percent higher at $79.16, Bill Barrett Corp. was up 4 percent at $42.03, and Noble Energy Inc. was up 2.4 percent at $43.76.
While natural gas producers and royalty owners cheer, the rest of the population bemoans higher natural gas bills and energy prices.
Atmos Energy CP shares dropped 4 cents to $26.41 because natural gas costs rose for the North Texas gas utility.
The company charges customers the wholesale price of natural gas, without any markup.
Atmos chief executive Robert Best said high prices also dampen demand for natural gas as people turn down their thermostats to save money. That could shave $5 million to $7 million off Atmos' profit on its delivery service for fiscal 2006, he said.
And if November bills were shocking, just wait. Mr. Best said the highest bills tend to come in January to March. He's not optimistic natural gas prices will drop by then.
"There are some things that could moderate prices in the next few years, but not this year," he said.
In the next few years, if the U.S. builds more facilities to important liquefied natural gas from overseas, supply could rise and cut prices, he said.