As the 3Q2010 earnings season begins, BMO Capital Markets analysts are predicting that the biggest North American independents will report “slightly higher” cash flow from the year-ago period and double-digit production growth.

In a note to clients, the BMO team, led by Randy Ollenberger, previewed the 3Q2010 earnings and production forecast for its North American “senior” producers, considered the biggest independents in the United States and Canada.

Cash flow year/year (y/y) is forecast to be higher from the year-ago quarter, but compared with 2Q2010, it will be down because lower commodity prices “were met with largely flat production overall,” said the analysts.

However, “we expect median production will average 16% higher than the same period last year largely driven by the continued success of North American resource plays,” said Ollenberger and his colleagues.

Natural gas-weighted producers whose output is forecast to lead the list are Southwestern Energy Corp., whose production is expected to be 42% higher y/y; Cimarex Energy Co., 36% higher; and EQT Corp., 35% above year-ago production.

“The strong growth from Southwestern is due primarily to development of the Fayetteville Shale,” said the analysts. “For Cimarex, the growth came largely from its conventional Gulf Coast operating area, while EQT was able to grow its production from the Marcellus Shale play.”

The weakest production growth among BMO’s natural gas producers universe is Devon Energy Corp., whose output is forecast to fall 9% y/y as a result of its international asset sales.

“Following the return of shut-in production, completion of delayed tie-ins and increasing drilling activity in the spring, which yielded strong 2Q2010 production, we expect median quarter-over-quarter production growth to be relatively flat at 1%,” said the BMO team. Sequentially from 2Q2010, Apache Corp. “stands ahead of its peers, with quarterly growth expected to be 13%” because of its property acquisition from BP plc.

Cabot Energy Corp.’s output also is seen up sequentially by 12% “as a result of strong growth from its operations in the Marcellus Shale,” while EOG Resources Inc. “is expected to grow quarterly production 11% following drilling success in its U.S. resource plays.”

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