The 2013 All-America Research Team: Natural Gas, No. 2: Richard Gross

In his 15th sector appearance, Barclays analystRichard Grossis elevated from runner-up No. 2. He also earns second place in Master Limited Partnerships. As companies migrate more of their assets into the master limited partnership ownership structure, Gross points out, the sector is “rapidly evolving from a diversified gas group into increasingly pure plays or more-focused entities.” He expects this value-creating trend to persist and drive performance. Shale development is spurring investment opportunities, the analyst adds, and exposing pockets of weakness in gas infrastructure, with production from areas like the Marcellus formation in the Appalachian Basin of the Northeastern U.S. supplanting supplies from the Gulf Coast to the northeast, for instance. As a result, a repurposing of gas assets into those for crude oil and natural-gas liquids will become more commonplace, he explains. Accordingly, Gross directs clients toward upstream producers, such as Pittsburgh’s EQT Corp., which has a favorable position in the Marcellus site; and Birmingham, Alabama–based Energen Corp., given its exposure to several oil prospects in the Permian region of Texas and New Mexico. He also favors MLP holding companies that have been able to create high-growth, high-yield entities. Examples include Houston’s Kinder Morgan and Targa Resources Corp.; and Tulsa, Oklahoma–based Oneok and Williams Cos. —Carolyn Koo