Playing the shale gas boom - Chart Industries

Fri Jun 7, 2013 7:00am EDT
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By Nichola Groom

June 7 (Reuters) - What a difference a decade makes.

Ten years ago, Chart Industries Inc was on the verge of bankruptcy after taking on too much debt during a spree of acquisitions that included an equipment maker for storing cryogenic liquids like liquefied natural gas.

Today, those products, as well as others that are used to make, transport and store LNG, have made Chart a winner in the U.S. shale gas boom and transformed the company into a darling of those seeking to cash in on the push to use natural gas as a fuel for transportation and industry.

Over the last few years, investment firms including Artisan Partners Asset Management Inc, Vanguard and BlackRock have acquired stakes of more than 5 percent in Chart, and they have enjoyed quite a ride. The stock has doubled in the last two years, including a 43 percent gain in 2013 alone. Some on the Street have signaled that it may be time to take profits, but big hitters in the stock are sticking with it.

"We think this is really just beginning," said Jim Canty, a portfolio manager with Clough Capital Partners in Boston, calling Chart "close to a pure play on the natural gas boom."

The rapid growth in shale gas output thanks to hydraulic fracturing has brought new investment in plants to produce LNG for both domestic and overseas consumption. But to move natural gas, it first must be supercooled into liquid form.

Enter Chart, which makes heat exchangers and tanks used in making and storing LNG. The company's products are also used in LNG fueling stations, which companies like Clean Energy Fuels , ENN Group and Royal Dutch Shell Plc are building in the United States for the small but growing number of natural gas-fueled trucks. Chart also make tanks that are used on those vehicles, rounding out its unique presence all along the LNG-for-transport supply chain.

Chart, which has a market capitalization of more than $2.8 billion, is the No. 1 or 2 supplier in all of its main product lines and has little direct competition among publicly traded companies, according to analysts.   Continued...