What is the only commodity that has not been played as a recovery theme? Gas. I am bullish UK Gas winter 2010 as LNG supply dries off and diverts into Asia, and on coal-to-gas switch (those CCGTs will burn gas to 60% utilization)

Statoil is the master hand managing pipeline gas volumes into the UK. Look at NBP pipeline volumes. Statoil is carefully managing up to 40mcm every day… The ONLY UK gas recovery play that trades at 10xPE (15% discount to peers).

I like Statoil ahead of expected bullish Q3 previews (out in 1 week) and Q3 report (out 4 Nov.) And because it’s the only UK gas exposed name that manages the volumes for profit, not cash.

Company specifics set to be great on the parameters that give higher multiples: Q3 production growth (gas) +10%, EPS growth ahead and Reserve Replacement improving for 2009 (to be published in the Q4 report in February).

With gas bottomed down at $4/Mcf and the oil price at $75 and a P/E of 10-11x, the Statoil share should be NOK170-173.