Ultra Petroleum Corp. (UPL), Chesapeake Energy Corporation (CHK), Rosetta Resources Inc. (ROSE): The Low Cost Gas Drillers

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That said, the upside has been impressive, with earnings jumping from less than $0.40 a share in 2010 to about $3.00 last year. If gas prices continue to head higher, the company’s profits have the potential to keep advancing. That could mean share price gains for more aggressive investors.

Bigger Issues

For Chesapeake Energy Corporation (NYSE:CHK), natural gas prices have actually been less of an issue than corporate matters. Indeed, activist investor Carl Icahn took on the company and its former founder and CEO in a very public way. Icahn was able to get the CEO ousted after he took on a huge amount of debt while buying natural gas properties leading into the precipitous fall in gas prices.

The CEO was viewed as a “land man,” meaning he was good at buying land and less focused on drilling. The ouster left the company’s shares higher, but didn’t remove the problems of too much debt. Asset sales have been the order of the day of late, including a sale to a Chinese company that some industry watchers suggest was made at too low a price.

The company recently brought in a new CEO who is an industry veteran and trained as a petroleum engineer. Although the company still has issues to solve, refocusing on working its own land just as natural gas prices start to rise should notably aid in the turnaround effort. That said, this stock isn’t appropriate for investors who shy away from corporate drama.

Natural Gas is Back?

It’s too soon to say that natural gas is back, but it certainly is back from the dead. That should mean increasing profits at drillers who can get the commodity out of the ground cheaply. Ultra Petroleum Corp. (NYSE:UPL), Chesapeake Energy Corporation (NYSE:CHK), and Rosetta Resources Inc. (NASDAQ:ROSE) all fit that bill. Ultra is the most diversified option, but Rosetta Resources Inc. (NASDAQ:ROSE) is the one putting up the numbers right now. Chesapeake Energy Corporation (NYSE:CHK), meanwhile, has so much news surrounding it that investors should be prepared for corporate events taking center stage for at least a little longer.

The article The Low Cost Gas Drillers originally appeared on Fool.com and is written by Reuben Brewer.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool recommends Ultra Petroleum. The Motley Fool owns shares of Ultra Petroleum and has the following options: Long Jan 2014 $20 Calls on Chesapeake Energy, Long Jan 2014 $30 Calls on Chesapeake Energy, Short Jan 2014 $15 Puts on Chesapeake Energy, Long Jan 2014 $30 Calls on Ultra Petroleum, Long Jan 2014 $40 Calls on Ultra Petroleum, and Long Jan 2014 $50 Calls on Ultra Petroleum. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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