The days are long gone when natural gas is just used heavily in the winter. In fact, more and more utilities are switching from coal to natural gas as it is far less polluting and much easier to access and store. Jefferies analysts took a field trip to Pittsburgh to visit some of the top Marcellus and Utica producers. They came back with some fairly bullish data points, shared in a new report.

With both shales still producing well, and demand perking up, the Jefferies team is positive on three area producers that are rated Buy. When visiting with executives at the producers, the analysts found the commentary supportive to their own view of tightening natural gas supply and demand balances and better pricing.

Here are three top natural gas producers rated Buy at Jefferies.

CONSOL Energy

This company has almost been cut in half from highs printed last summer. CONSOL Energy Inc. (NYSE: CNX) is one of the largest independent natural gas exploration, development and production companies, with operations centered in the major shale formations of the Appalachian basin. CONSOL Energy deploys an organic growth strategy focused on rapidly developing its resource base. As of December 31, 2014, CONSOL Energy had 6.8 trillion cubic feet of proved natural gas reserves. The company’s premium coal assets are sold to electricity generators and steel makers, both domestically and internationally.

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The Jefferies analysts point out that company management noted that operations in the Marcellus continue to become more efficient as CONSOL drills longer laterals, utilizes more stages and uses more proppant. The efficiency may be helping to drive earnings that have seen a nice streak of beating estimates over the past half year. In fact, in those reports, CONSOL has beaten estimates by at least 25% in both cases.

CONSOL investors are paid a 0.9% dividend. The Jefferies price target for the stock is $38. The Thomson/First Call consensus target is at $36.79. Shares closed Wednesday at $27.39.
EQT

EQT Corp. (NYSE: EQT) is expected to have a stunning 99% of its production come in as natural gas. This may prove huge for investors if another ruthless summer shows up, which some are now predicting. The company’s superior cost structure and above-average growth may help them exploit stable and rising natural gas prices. With an increasing reserve structure and a projected higher number of Marcellus wells to be drilled in the coming five years, the company exhibits industry-leading organic growth momentum.

The company is one of the top holdings in Steve Cohen’s Point72 asset management portfolio, and it continues to be well liked across Wall Street as one of the top plays for the Marcellus shale.

EQT investors are paid a tiny 0.2% dividend. Jefferies has a $113 price target, and the consensus target is $97.72. EQT closed Wednesday at $85.78 per share.

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Range Resources

This company is another top stock to buy for possible gains in natural gas this summer and for the rest of the year. Range Resources Corp. (NYSE: RRC) holds interests in developed and undeveloped natural gas and oil leases in the Appalachian and Southwestern regions of the United States. The company owns 7,582 net producing wells and approximately 1.4 million net acres under lease in the Appalachian region, as well as 653 net producing wells and approximately 383,000 net acres under lease in the Midcontinent region.

The Jefferies team reports that the company will be sending more gas to the Midwest and Ontario as it likes the large, in place pipeline system, significant storage and additional coal to gas displacement opportunities. The company continues to pursue an organic growth strategy targeting high-return, low-cost projects within its large inventory of low-risk development drilling opportunities.

Shares have been walloped to the tune of almost 45% over the past year. Range Resources investors are paid a small 0.3% dividend. The Jefferies target is a set at $73, and the consensus target is $71.53. The stock closed Wednesday way below those levels at $52.93.

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With natural gas being increasingly relied on by the largest utilities, year-round demand is strengthened through the non-winter months. With the price finally firming, this may be a good time for investors to consider these top stocks to buy.

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