Oil & Gas Stock Roundup: Apache's Canadian Exit, Halliburton's Acquisition & More
Zacks Investment Research | Jul 11, 2017 04:26AM ET
It was a week where both oil and gas prices were down again.
On the news front, independent producer Apache Corp. (NYSE:APA) announced its departure from Canada’s energy sector, while world’s second largest oilfield services group Halliburton Co. (NYSE:HAL) bought pumping technology provider Summit ESP for an undisclosed sum.
Overall, the sector started the third quarter on a bearish note. West Texas Intermediate (WTI) crude futures lost 3.9% to close at $44.23 per barrel, while natural gas prices fell 5.6% to $2.864 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Carrizo & Shell (LON:RDSa)'s Acquisitions, Conoco's Asset Sales & More .)
Suffering its sixth loss in seven weeks, oil prices were pressured by rising U.S. oil production and surge in drilling rig count number of rigs searching for oil in the country) – both pointing to growing shale output that continues to be the biggest headwind for the market. Investors were also spooked by surging volumes from Libya and Nigeria, two African countries exempt from the OPEC-led agreement to cut production.
These factors more than offset the U.S. Energy Department's bullish inventory release that showed a significant decline in oil and gasoline inventories.
Meanwhile, natural gas also turned sharply lower following a larger-than-expected increase in weekly supplies and worries over the fuel’s tepid demand on the back of bearish weather predictions.
Recap of the Week’s Most Important Stories
1. US energy explorer Apache Corp. is set to exit Canada following its latest deal with local oil producer Paramount Resources Ltd. Through the deal worth C$459.5 million ($354 million), Apache is divesting its Canadian unit. This is the company’s third sell-off in the last two months in Canada.
Paramount Resources will pay the stipulated amount along with working capital and other monetary adjustments. The deal, expected to be completed by Aug 2017, will add 1.6 million acres to the acquirer's portfolio of which 185,000 acres have good prospects and 45,000 acres are yet to be developed. Apache Canada's assets are mainly located in the provinces of Alberta and British Columbia.
The deal is in line with Apache's plan to streamline its portfolio and shift focus from Canada to its assets in the US, UK North Sea and Egypt. This strategy will help the company to manage its resources efficiently and engage in high growth areas, especially in the Permian Basin.
Apache expects the aggregate proceeds from these three transactions to be around $713 million (C$ 927 million). These will be utilized to fund Apache's capital program of 2017-18, decrease debt and enhance its overall liquidity. (Read more: Petrobras to Offload Assets in Paraguay and Maromba .)
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Price Performance
The following table shows the price movement of some the major oil and gas players over the past week and during the last 6 months.
Company | Last Week | Last 6 Months |
XOM | -1.04% | -7.16% |
CVX | -0.52% | -11.29% |
COP | -1.94% | -13.78% |
OXY | -2.05% | -14.86% |
SLB | -0.21% | -23.41% |
RIG | -1.86% | -49.24% |
VLO | +1.46% | +2.36% |
TSO | +2.62% | +19.14% |
Over the course of last week, the Energy Select Sector SPDR – a popular way to track energy companies – fell by -0.54%. The worst performer was Houston-based energy explorer Occidental Petroleum Corp. (NYSE:OXY) whose stock price was down -2.05%.
Longer-term, over the last 6 months, the sector tracker is down -13.95%. The major laggard during this period was offshore drilling powerhouse Transocean Ltd. (NYSE:RIG) , experiencing a -49.24% price decline.
What’s Next in the Energy World?
Meanwhile, market participants will be closely tracking the regular releases i.e. the U.S. government statistics on oil and natural gas - one of the few solid indicators that comes out regularly. Energy traders will also be focusing on the Baker Hughes data on rig count.
More Stock News: 8 Companies Verge on Apple-Like Run
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