Natural gas production out of the Marcellus continues to outshine even the sunniest predictions. Already this year production from the play is up about 50% over last year. This has year-end projections totaling about 3.2 trillion cubic feet, which is the equivalent of 550 million barrels of oil. For perspective, the U.S. imports roughly 300 million barrels of oil each month. What this means is that the Marcellus’ production can meaningfully reduce our need for foreign oil as the nation makes the switch to consume more of our own natural gas. Despite the past growth that has gotten us to this point, the future still looks very bright. This is why I believe that the play has the potential to really drive the future returns of the following five stocks.
Range Resources Corp. (NYSE:RRC)
With an estimated resource potential of up to 49 trillion cubic feet equivalent, or Tcfe, Range Resources Corp. (NYSE:RRC) is sitting on a simply massive resource base in the Marcellus. Given what it sees, the company is confident that it can grow its production by 20%-25% per year for the next several years. Best of all, this isn’t growth at all costs as its cash flow growth is expected to outpace its production growth as its low cost structure is driving returns.
Chesapeake Energy Corporation (NYSE:CHK)
While Chesapeake Energy Corporation (NYSE:CHK) has been devoting a majority of its capital on its more liquids-rich plays like the Eagle Ford and the Greater Anadarko Basin, the Marcellus is still one of its core plays. In its northern dry-gas-focused area the company was able to grow its production by 58% year over year, while it also enjoyed a 56% year-over-year jump in production in its southern wet-gas portion. With a massive position in the play, Chesapeake Energy Corporation (NYSE:CHK) is in the position to really benefit from the growth of the Marcellus.
EQT Corporation (NYSE:EQT)
Like Range, EQT Corporation (NYSE:EQT) believes that it too has massive resource potential in the Marcellus. While the company has just over 4.2 Tcfe of proved reserves on its books, it sees the potential for that to grow to more than 15 Tcfe of reserves as it proves what it really has on its Marcellus acreage. Also like Range, EQT Corporation (NYSE:EQT) uses an industry-leading cost structure to profit from the play even as natural gas prices remain low. It’s these extensive reserves which, when combined with a lost cost basis, that will fuel EQT Corporation (NYSE:EQT)’s growth for years to come.