Chesapeake (CHK), Range Resources (RRC), Ultra Petroleum (UPL), ATP (ATPG), GMX (GMXR), Sandridge (SD) Natural Gas Resources Undervalued

Here's a look at Chesapeake (CHK), Range Resources (RRC), Ultra Petroleum (UPL), ATP (ATPG), GMX (GMXR) and Sandridge (SD), which appear to have their natural gas resources undervalued.

We searched for exploration and production (E&P) companies with undervalued natural gas reserves. We think Exxon Mobil's (XOM) purchase of XTO, in addition to the flurry of deals completed by Chesapeake (CHK) has put a floor on valuations, going forward. The best deals around include the lowest cost producer in Marcellus, Range Resources (RRC), and Wyoming, Ultra Petroleum (UPL).

We think mixed oil and gas players in the deepwater, such as ATP Oil and Gas (ATPG), are also likely to fare well, given that there remains plenty of commodity price upside from here. GMX Resources (GMXR) and Sandridge (SD) tipped their hats toward oil in the near-term by introducing themselves to significant oil plays. The names we found are below.

GMX Resources (GMXR) announced on January 28 that it would buy 67,724 net acres of horizontal oil resources within the core development areas of the Bakken / Sanish-Three Forks Formation in the Williston Basin (Bakken) and the Niobrara Formation in the Denver Julesburg (DJ) Basin. The 67,724 net acres is includes 26,087 net acres in the Williston Basin, North Dakota and Montana targeting the Bakken/Sanish – Three Forks Formation and approximately 41,637 acres in the DJ Basin in Wyoming targeting the Niobrara Formation. In addition, this provides 342 additional horizontal drilling locations. The purchase is to be made in $1.8 million in cash and up to 2.7 million shares of stock.






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