The Top 5 Natural Gas Companies

Applying the four points above, these are the top five natural gas producers to watch. They have all moved up sharply in recent trading and are primed for further advances:

• Chesapeake Energy Corp. (NYSE: CHK): Up 16%, December 8-18.
  
• Devon Energy Corp. (NYSE: DVN): Up 9%.
  
• EOG Resources Inc. (NYSE: EOG): Up 8.5%.
  
• Newfield Exploration Co. (NYSE: NFX): Up 19%.
  
• Range Resources Corp. (NYSE: RRC): Up 18%.
  

All of these companies are focused. They're well managed. They have efficient, cost-effective operations. They're well located. And they're of moderate size. They also share another interesting characteristic: They're all primarily shale gas producers.

Devon and EOG are leaders in the Barnett Shale (Texas), Newfield in the Woodford Shale (Oklahoma), Range in the Marcellus, where Chesapeake, already a major shale gas producer in the southwestern U.S., is now the largest lease holder. And there are other producers coming up right behind them.

As the Exxon acquisition of XTO indicates, majors are looking to add companies having developed shale gas production. That will put the aforementioned five in play as M&A targets.