Five U.S. Companies Could Benefit Huge From New EPA Coal Regulations

One sector’s nightmare is often another sector’s gain. With the focus away from coal-fired plants, many utilities will increase their use of natural gas to generate electricity for their customers. Sure, some will go the solar route, but in areas with limited days of sunshine, like the Midwest and Northeast, that is hardly a cure-all. The biggest winners will be the large domestic natural gas producers. Here are five top domestic natural gas producers, based on research from RBC, that could see a huge windfall if the new EPA guidelines become a reality.

Exxon Mobil Corp. (NYSE: XOM) is the biggest natural gas producer and also the country’s biggest oil company, and it is one of the most profitable corporations in the world. Exxon has operations in every continent but Antarctica. Its oil and gas operations range across several states, from Pennsylvania to Colorado, and it also has wells in the Gulf of Mexico and off the California coast. Exxon produces nearly 50% more gas than its closest competitor. Daily production is more than 3.5 billion cubic feet. The stock pays investors a 2.7% dividend. The Thomson/First Call price target for the stock is $100.67. Exxon closed Tuesday at $100.39 a share.

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Chesapeake Energy Corp. (NYSE: CHK) calls itself the most active driller in the country, with operations in 15 states, from the Rockies to Texas to Pennsylvania. The company is a good example of how “independent” doesn’t necessarily mean small. As of last year, the company owned an interest in 45,800 wells, of which 38,900 were primarily gas wells. Daily they produce almost 3 billion cubic feet. Investors are paid a 1.2% dividend. The consensus price target is $30.47. The stock closed Tuesday at $29.25.

Anadarko Petroleum Corp. (NYSE: APC) is one of the biggest independent oil and gas producers in the country, with exploration or production work in all major domestic drilling areas, as well as in South America, Africa, Asia and New Zealand. Worldwide, natural gas makes up just over half of Anadarko’s reserves, but 87% of the new wells it drilled in the United States last year were gas wells. The company has daily production of more than 2.6 billion cubic feet. Investors are paid a 1% dividend. The consensus price target is $116.87. Anadarko closed Tuesday at $101.84.

Devon Energy Corp. (NYSE: DVN) is an independent driller primarily active in the United States. More than 70% of Devon’s U.S. reserves are in natural gas, with most of that lying in the Barnett Shale in Texas. The company plans to invest more than $1.1 billion this year in the Eagle Ford Shale and drill more than 200 wells. Daily production is just under 2 billion cubic feet. Investors are paid a 1.3% dividend. The consensus price target for the stock is posted at $79.46. Devon Energy closed Tuesday at $74.70.

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Southwestern Energy Co.‘s (NYSE: SWN) exploration and production business has operations in the Fayetteville Shale in Arkansas, the Marcellus Shale in Pennsylvania, as well as other plays in Texas, Arkansas and Oklahoma. The company is also expected to be a big beneficiary of the increase in the price of natural gas, as its daily production has grown to almost 1.8 billion cubic feet per day. The consensus price target is $47.35. Southwestern closed Tuesday at $46.46.

There is no guarantee that the stringent EPA initiatives will go into effect. One can be sure that politicians from both parties in coal-producing states will raise-the-roof over the impending cutback of utility use of coal. The reality may be that we are closer to seeing the end of coal use to produce electricity than some might think, which would be just fine for these and other top domestic natural gas production leaders.