Quicksilver Resources is quick to spot the most-promising assets

Posted Mar 13th 2008 5:40PM by Joseph Lazzaro
Filed under: Commodities, Oil, Stocks to Buy

Readers of this space know that the oil/natural gas and oil/natural gas services sectors have been two preferred sectors. And with good reason: solid-growth emerging markets have increased the value of oil, natural gas and a host of other commodities, which bodes well for energy suppliers and those who service them. Quicksilver Resources is one such oil/natural gas play.

Quicksilver Resources (NYSE: KWK) explores for, acquires, produces, and sells natural gas, natural gas liquids and crude oil primarily in the United States and Canada. The company also markets and transmits natural gas.

Analysts like KWK's increased average daily production for liquid natural gas, reserves of 1.55 trillion cubic feet of natural gas equivalent, and sector position.

Further, the company is likely to record another, solid double-digit production increase for both natural gas and oil in F2008, the latter on better drilling results. The Reuters F2008/F2009 EPS consensus estimates for KWK are $1.10/$1.31.

The risks? A sustained U.S. recession would lower domestic natural/ liquefied gas demand, hurting Quicksilver's results.

The First Call mean rating for KWK is: Buy. (24 firms.) Mean 2008 target: $40. (high: $54, low: $31.)

Stock Analysis: Quicksilver Resources is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from KWK's shares. Sell / Stop Loss if you were to purchase shares in this company: $22.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

Tags: KWK, natural gas, oil, Quicksilver Resources