Oil & Gas Stock Roundup: FMC Tech To Merge With Technip, Chevron Aims To Restart Gorgon

It was a week where oil prices marked its highest settlement in 7 months but natural gas futures ended lower.

On the news front, oilfield service providers FMC Technologies Inc. (NYSE:FTI) and Technip (PA:TECF) SA have agreed to merge in an all-stock deal worth $13 billion, while Chevron Corp. (NYSE:CVX) hopes to resume its Gorgon LNG operations soon.

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures gained 3.3% to close at $47.75 per barrel, natural gas prices fell 1.6% to $2.062 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Shell (LON:RDSa) Mulls $40B Spin-Off, Range Resources (NYSE:RRC) to Buy Rival .)

Oil prices moved north for the sixth time in 7 weeks on supply disruptions in Nigeria, Libya, Venezuela and Canada. Things were further helped by a continued decline in U.S. crude production.

On the other hand, natural gas fared badly after an encouraging inventory report was more than offset by mild temperatures across most parts of the country that restricted the commodity’s requirement for power burn.

Recap of the Week’s Most Important Stories

1. Oilfield service players FMC Technologies Inc. and Technip SA are merging in an all-stock deal of equal proportions, in a sign that consolidation is picking up in the energy space. The tie-up – which should close early next year – would combine Houston-based FMC Technologies, a major underwater energy equipment maker, with Paris-based Technip, an offshore oil and gas field developer.

The merged organization will do business as TechnipFMC (stock symbol not stated). Based on May 18 closing prices, the joined company will be worth $13 billion boasting of 2015 pro forma revenue of $20 billion, EBITDA of $2.4 billion and total order backlog – as of Mar 31, 2016 – of $20 billion.

Under the terms of the transaction, Technip shareholders will receive two shares in the new business for each share they hold, while each FMC Technologies share will be converted into one share of TechnipFMC. Post merger, Technip investors will own around 50% of the combined firm while FMC Technologies shareholders will own the remaining half. (See More: Petrobras Issues First International Bond in a Year .)

Price Performance

The following table shows the price movement of the major oil and gas players over the past week and during the last 6 months.

Company	Get The News You Want Read market moving news with a personalized feed of stocks you care about. Get The App Last Week	Last 6 Months
XOM	+0.19%	+9.43%
CVX	-1.41%	+8.79%
COP	-0.57%	-21.20%
OXY	-2.05%	-1.36%
SLB	+1.26%	-4.05%
RIG	-1.69%	-37.97%
VLO	+1.70%	-25.43%
TSO	+1.75%	-34.87%

Over the course of last week, ‘The Energy Select Sector SPDR’ was up 1.06% on supply outages. Consequently, investors witnessed a buying spree in most large companies. The best performer was downstream operator Tesoro Corp. (NYSE:TSO) that added 1.75% to its stock price.

Longer-term, over the last 6 months, the sector tracker is down 2.06%. Offshore drilling giant Transocean Ltd. (NYSE:RIG) was the main casualty during this period, experiencing a 37.97% price decrease.

What’s Next in the Energy World?

As usual, market participants will be closely tracking the regular weekly releases i.e. the U.S. government data on oil and natural gas. Moreover, oil prices will again guide market proceedings to a significant extent.

Zacks Investment Research

Written By: Zacks Investment Research