Obama Suddenly Like Natural Gas: Should You Also Like Natural Gas Stocks? EGN, GDP, XCO

Given that President Obama is going to take a liking to the country's booming natural gas output in his upcoming State of the Union address on Tuesday, should you consider natural gas stocks like Energen Corporation (NYSE: EGN), Goodrich Petroleum Corporation (NYSE: GDP) and EXCO Resources (NYSE: XCO) – all of which put in good gains on Monday? While it may sound strange that an administration which has gone out of its way to hamper new drilling, new pipelines (the Canada-to-Texas Keystone oil sands pipeline) and the oil and gas industry itself with new regulations in favor of chasing windmills and solar industry, we have plenty of natural gas that cannot be ignored. In fact, natural gas prices are being held down by all the new supplies being discovered along with unseasonably warm winter weather. Hence and as a long time shareholder of Energen (EGN), I have been thinking of selling some of my shares and investing in master limited partnership (MLP) pipeline stocks as pipelines are not impacted by the price of the commodity flowing through them plus MLPs pay juicy dividends. Hence, here is a closer look at natural gas stocks Energen Corporation (EGN), Goodrich Petroleum Corporation (GDP) and EXCO Resources (XCO):

Energen Corporation (NYSE: EGN)

Energen Corporation is an energy holding company involved in the development, acquisition, exploration and production of oil, natural gas and natural gas liquids in the continental USA plus in the purchase, distribution and sale of natural gas in central and north Alabama. On Monday, Energen Corporation rose 4.04% to $53.03 (EGN has a 52 week trading range of $37.22 to $65.44 a share) for a market cap of $3.82 billion. It should be noted that Energen Corporation along with Goodrich Petroleum Corporation and EXCO Resources jumped after Chesapeake Energy (NYSE: CHK), the country’s second largest natural gas producer, announced a production cut that should help to shore up prices for the short-term. What I have always liked about Energen Corporation is that its both an oil and natural gas production stock and a single-state natural gas utility – meaning some of the production pricing risk is offset by its utility. I also have a substantial capital gain in the stock having invested over a decade ago. Nevertheless, I would suggest that other investors take a closer look at Energen Corporation and decide on its merits for themselves.

Goodrich Petroleum Corporation (NYSE: GDP)

Goodrich Petroleum Corporation is an independent oil and gas company engaged in the exploration, development and production of oil and natural gas properties primarily in Northwest Louisiana and East Texas, including the Haynesville Shale, Cotton Valley trends and the Eagle Ford Shale trend. On Monday, Goodrich Petroleum Corporation rose 11.02% to $15.61 (GDP has a 52 week trading range of $9.91 to $23.80 a share) for a market cap of $564 million. Investors should note that Goodrich Petroleum Corporation has recently announced its 2012 growth and spending guidance that included a per-well cost reduction $2.5 million – a surprise for investors. Goodrich Petroleum Corporation has also announced that it intends to increase oil production growth by 130% to 160% – a good thing should natural gas prices remain low.

EXCO Resources (NYSE: XCO)

EXCO Resources is an independent oil and natural gas company engaged in the exploration, exploitation, development and production of onshore North American oil and natural gas properties principally located in East Texas, North Louisiana, Appalachia and the Permian Basin in West Texas. On Monday, EXCO Resources rose 8.78% to $8.55 (XCO has a 52 week trading range of $7.66 to $21.04 a share) for a market cap of $1.84 billion. It should be noted that back in November, EXCO Resources announced that it has been approached for at least 10 deals in the range of $50-$100 million each as the company is looking to get into more liquids-rich plays and get past the challenge of having small working interests in a low natural gas price environment. Specifically, EXCO Resources reported that it was looking at four deals in the Bakken, three or four deals in Eagle Ford plus three or four deals in West Texas. In other words, EXCO Resources is trying to position itself in a way that will insulate it from low natural gas prices.

The Bottom Line. Despite low prices for natural gas prices and other headwinds, there is something that investors and President Obama alike can find to like about natural gas stocks Energen Corporation (EGN), Goodrich Petroleum Corporation (GDP) and EXCO Resources (XCO).