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The Zacks Analyst Blog Highlights: McGraw-Hill, Bill Barrett, Linn Energy, Forest Oil and Apache

  The Zacks Analyst Blog Highlights: McGraw-Hill, Bill Barrett, Linn Energy,
                            Forest Oil and Apache

PR Newswire

CHICAGO, April 3, 2013

CHICAGO, April 3, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include McGraw-Hill Companies Inc.
(NYSE:MHP), Bill Barrett Corp. (NYSE:BBG), Linn Energy LLC (Nasdaq:LINE),
Forest Oil Corp. (NYSE:FST) and Apache Corp. (NYSE:APA).

(Logo: http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)

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from the Pros newsletter: http://at.zacks.com/?id=5513

Here are highlights from Tuesday's Analyst Blog:

EIA Reports Bullish Nat Gas Draw

The U.S. Energy Department's weekly inventory release showed a
larger-than-expected decrease in natural gas supplies on account of cold
temperatures that spurred the commodity's demand for heating.

About the Weekly Natural Gas Storage Report

The Weekly Natural Gas Storage Report – brought out by the Energy Information
Administration (EIA) every Thursday since 2002 – includes updates on natural
gas market prices, the latest storage level estimates, recent weather data and
other market activities or events.

The report provides an overview of the level of reserves and their movements,
thereby helping investors understand the demand/supply dynamics of natural
gas. It is an indicator of current gas prices and volatility that affect
businesses of natural gas-weighted companies and related support plays.

Analysis of the Data

Stockpiles held in underground storage in the lower 48 states fell by 95
billion cubic feet (Bcf) for the week ended Mar 22, 2013, higher than the
guided range (of 83–87 Bcf drawdown) as per the analysts surveyed by Platts,
the energy information arm of McGraw-Hill Companies Inc. (NYSE:MHP).

The decrease represents the 18th withdrawal of the 2012-2013 winter heating
season after stocks hit an all-time high in early November last year.
Moreover, the draw was in contrast to last year's injection of 45 Bcf and the
five-year (2008–2012) average addition of 6 Bcf for the reported week.

Following the past week's reduction, the current storage level – at 1.781
trillion cubic feet (Tcf) – is down 642 Bcf (26.5%) from the last year but is
still 61 Bcf (3.5%) above the five-year average.

In fact, natural gas inventories in underground storage have persistently
exceeded the five-year average since late Sep 2011 and ended the usual summer
stock-building season of April through October at a record 3.923 Tcf (as of
Oct 31, 2012).

A supply glut kept the natural gas prices under pressure during the couple of
years or so, as production from dense rock formations (shale) – through novel
techniques of horizontal drilling and hydraulic fracturing – remain robust,
thereby overwhelming demand.

However, with the U.S. winter colder than the unusually warm last one, we are
experiencing some balancing of the commodity's supply/demand disparity on the
back of its more normalized use for space heating by residential/commercial
consumers.

This, in turn, could improve the prices and buoy natural gas producers,
particularly smaller players like Bill Barrett Corp. (NYSE: BBG), Linn Energy
LLC (Nasdaq: LINE) and Forest Oil Corp. (NYSE: FST). With an improvement in
the companies' ability to generate positive earnings surprises, they can then
move higher from their current Zacks Rank #3 (Hold).

Apache Acquires 14 GoM Leases

U.S. energy firm Apache Corp. (NYSE:APA) recently claimed 14 leases in the
central region of the U.S. Gulf of Mexico (GoM) in an auction under the U.S.
Bureau of Ocean Energy Management. The addition will fortify its already
significant foothold in the region.

Apache was apparently the highest bidder in nine shallow water blocks and five
deepwater blocks in the lease sale. The auction took place in New Orleans and
received 407 bids from 52 companies on 320 tracts.

Among the nine shallow water blocks, Apache formed joint ventures on seven in
the Main Pass area as an operator and held 75% working interest in the same.
Apache holds 100% working interest in the remaining two shelf leases.

In each of the five deepwater blocks – which were acquired in DeSoto Canyon,
Green Canyon and Mississippi Canyon lease areas – Apache holds 50% working
interest.

The company spent $2.2 million for the shelf and $24.6 million for deepwater
blocks. With this addition, Apache will get hold of over 500 leases in the GoM
region in total.

Apache currently carries a Zacks Rank #3 (Hold), implying that it is expected
to perform in line with the broader U.S. equity market over the next 1 to 3
months.

We think Apache is in a better position to weather the current uncertain
environment than many of its peers in the exploration and production space,
given its solid production growth outlook, strong financial health and
diversified asset base.

However, Apache's long-term production and reserve growth primarily depends on
its acquire-and-exploit model. Apache may find it difficult to complete
accretive transactions in the future, which could negatively impact its growth
rate.

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Recommendations and target prices are six-month time horizons.

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