Tuesday, November 28, 2006

Calls of Note Part 3

- Goldman Sachs is adding Quicksilver Resources (NYSE:KWK) to their Americas Buy List saying that while the Barnett Shale is considered by the Street to be one of the top fields for natural gas production growth in the US, they believe that there is controversy as to the quality of acreage in outer-lying parts of the play that has caused Quicksilver Resources shares to be unduly discounted. Current Street expectations are that acreage in the "core" part of the play in northern counties as well as "non-core" Johnson County is attractive, while other counties are unattractive. Firm believes the core and Johnson are more attractive but that there are still attractive drilling opportunities on Quicksilver's acreage. Sees 23% upside to $49 12-month price target.

Catalyst: Goldman believes that the combination of analyst meetings by EOG Resources (Nov.
29), XTO Energy (Jan. 23) and Quicksilver (Feb. 13) will provide both greater detail and focus on the Barnett. They believe that these meetings combined with greater drilling results from Somervell and Bosque counties could lead to a revaluation of Quicksilver shares, which is why the firm is upgrading the stock to Buy from Neutral.

Notablecalls: Expect to see buy interest. Would not chase.

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