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In a report published Wednesday, BMO Capital Markets analyst Carl Kirst upgraded the rating on National Fuel Gas Co.
NFG from Market Perform to Outperform, and raised the price target from $58.00 to $70.00.
In the report, Kirst noted, “We're raising our rating on NFG to Outperform as we think this integrated E&P (57% by EBITDA) and infrastructure (43%) company offers those utility investors with a higher risk appetite, a lower-risk way to gain significant gas price exposure to a rebalancing and improving commodity market. Most notably, we think investors have largely written off the company's extensive 720K acres in the western Marcellus (WDA). The confluence of both improving natural gas prices and improving well results could provide a tipping point to achieving double-digit returns in the WDA, with incremental shareholder value to follow. In one particular WDA area, Rich Valley, we've seen initial expectations for well reserves of 4-5 Bcfe move to 5-8 Bcfe in the last 12 months, and a pilot development drilling program this summer should highlight this improvement.”
National Fuel Gas Co. closed on Tuesday at $58.87.
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