Gabelli Maintains Buy on National Fuel Gas (NFG)

Gabelli is out with its report today on National Fuel Gas NFG, maintaining Buy. In a note to clients, Gabelli writes, "We value the business segments at $38 per share before including the value of the Marcellus using an EBITDA multiple for each segment (8.75X Utility and 9.5X Pipeline) as well as a value of $2.25/Mcfe of proved reserves. Using the midpoint of recent comparable transactions, the Marcellus acreage would be worth roughly $38 per share. Assuming gas prices of $5/Mcf or $6/Mcf, our DCF analysis results in Marcellus values of estimates of $39-$90/share for a consolidated total of $77 to $128 value per share, leaving meaningful upside at current levels considering we believe NFG holds premium, largely royalty-free acreage. We expect a JV announcement to result in more transparency to the value of Seneca's roughly 800,000 acre ownership position in the Marcellus Shale, including 745,000 acres in the PA fairway." NFG closed Monday at $71.60.