Oil & Gas Stock Roundup: Sunoco's $3.3B Deal, SeaDrill's Bankruptcy Warning And More
Zacks Investment Research | Apr 11, 2017 03:52AM ET
It was a week where oil prices extended their hold over the $50-a-barrel level, while natural gas futures climbed to a 2-month high.
On the news front, fuel supplier Sunoco L.P. (NYSE:SUN) agreed to sell around 1,100 convenience stores and gas stations to Japanese retailer 7-Eleven for $3.3 billion, while offshore driller SeaDrill Ltd. (NYSE:SDRL) saw its stock sink on mounting bankruptcy fears.
Overall, the sector started the second quarter on a positive note. West Texas Intermediate (WTI) crude futures added 3.2% to close at $52.24 per barrel, while natural gas prices rose 2.2% to $3.261 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: ConocoPhillips' $13.3B Asset Sale, Exxon (NYSE:XOM)'s Guyana Oil Find and More .)
Scoring its third gain in 4 weeks, oil prices rallied to their highest level since early March following U.S. military action in Syria. A sudden airstrike of nearly 60 U.S. Tomahawk missiles reportedly bombed an airfield associated with Syrian President Assad, which is blamed for a massive poison gas attack in that country against insurgents of Assad’s regime. Prices were further aided by news of the unplanned production outage of the giant 180,000 barrels-per-day Buzzard field in the North Sea.
However, an unexpected weekly rise in domestic oil supplies to another all-time high and a burgeoning rig count – pointing to the ever-increasing shale drilling activities – kept prices under check.
Meanwhile, natural gas also turned higher after a much smaller-than-expected increase in weekly supplies.
Recap of the Week’s Most Important Stories
1. Downstream petroleum distributor Sunoco L.P. signed a deal with 7- Eleven – a subsidiary of Japan-based retail conglomerate Seven & i Holdings Co. Ltd. – to sell around 1,100 convenience stores and gas stations in Texas and other states for $3.3 billion. Sunoco will also enter into a 15-year agreement with 7-Eleven to sell 2.2 billion gallons of fuel annually.
The transaction, in line with Sunoco's plans to focus on its fuel supply business, is expected to close in the second half of this year. Post the announcement of the deal, shares of the company surged 20%. Sunoco currently carries a Zacks Rank #3 (Hold). You can see Unit Corp Inks Agreement to Increase Oklahoma Acreage .)
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.
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Company | Last Week | Last 6 Months |
XOM | +0.67% | -5.25% |
CVX | +0.79% | +6.20% |
COP | +4.29% | +15.74% |
OXY | +0.17% | -12.96% |
SLB | -0.70% | -3.65% |
RIG | +0.40% | +24.63% |
VLO | -1.53% | +20.59% |
TSO | -2.74% | -0.42% |
Over the course of last week, ‘The Energy Select Sector SPDR’ edged up 0.11%. Consequently, investors witnessed buying in most market heavyweights. The best performer was ConocoPhillips (NYSE:COP) – one of the world's largest independent oil producer – whose stock price jumped 9.32%.
Longer-term, over the last 6 months, the sector tracker is essentially unchanged. While the likes of offshore drilling giant Transocean Ltd. (NYSE:RIG) gained a handsome 24.63% during this period, Houston-based energy explorer Occidental Petroleum Corp (NYSE:OXY). was one of the major laggards, experiencing a 12.96% price decline.
What’s Next in the Energy World?
In this holiday-shortened week, market participants will be closely tracking the regular releases i.e. the U.S. government data on oil and natural gas. Energy traders will also be focusing on the Baker Hughes data on rig count.
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