Despite the brouhaha in both Washington, DC and Wall Street on the dire outlook for natural gas in North America, a potential shortage — as in an inability to refill storage — is “extremely unlikely” for the coming winter heating season, said Credit Suisse First Boston (CSFB) analysts in a new report.

The research team of Curt Launer, Philip Salles and Faisel Khan reviewed companies in the CSFB natural gas sector that have recently reported second quarter earnings as well as those still ahead. Among other things, the analysts said the recent dividend increases announced by Kinder Morgan Inc. and Equitable Resources as “harbingers of a favorable industry trend.”

Analysts said they “remain somewhat surprised by the amount of attention given to natural gas supply issues…” adding that their “expectation is that price will ration demand and that storage will be full and ready for the ’03-’04 winter heating season.”

While full storage could lead to a “conclusion of lower natural gas prices ahead, especially in the six-12 month time frame, we look for ‘higher lows’ compared to the recent long-term average prices to result in increased valuations for the exploration and production units of the companies in our coverage.” The “greatest benefits” in that time frame are expected at El Paso Corp., Equitable, Questar and Williams, among companies CSFB covers.

For more information on the research, contact Launer at (212) 538-4269 or curt.launer$csfb.com

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