BlackRock Fund Manager Likes Coal, Nat Gas, Oil Producer Plays

Todd Shriber
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In an interview with Barron's, BlackRock fund manager Dan Rice said Exxon Mobil's $41 billion purchase of XTO Energy is not going to be the only acquisition in natural gas sector by the largest U.S. oil company. Rice mentioned Range Resources, Petrohawk Energy and Chesapeake Energy as the natural gas firms that look like the best acquisition targets.

Those names were not mentioned in conjunction with Exxon (XOM), but Rice added Exxon can ''spend a lot of money on shale plays.'' Range Resources (RRC) and Chesapeake (CHK) have frequently been mentioned as takeover targets following Exxon's recently announced buy of XTO (XTO).

Rice expects natural gas prices to rise to $6.50 next year and assuming global GDP growth of 2%, oil prices could average $85-$90 a barrel. He said 85% of his portfolio is in producer stocks, with 25% invested in coal names, 40% in natural gas producers and 20% in oil producers.

Coal names mentioned in the interview included Alpha Natural Resources (ANR), Arch Coal (ACI), Massey Energy (MEE), Peabody Energy (BTU) and Consol Energy (CNX).

Natural gas plays mentioned in order of preference were Petrohawk, Southwestern Energy (SWN), Goodrich Petroleum (GDP), EXCO Resources (XCO), Ultra Petroluem (UPL) and Chesapeake.