Oil & Gas Stock Roundup: BP & EOG's Q1, Marathon-Andeavor Deal & More
Zacks Investment Research | May 08, 2018 06:18AM ET
It was a week where oil prices reached their strongest level in over three years, while natural gas futures ended lower on a bearish inventory report.
On the news front, energy biggies BP plc (LON:BP) (NYSE:BP) and EOG Resources, Inc. (NYSE:EOG) came up with stronger-than-expected earnings reports, driven by higher oil prices and production, while refiner Marathon Petroleum Corp. (NYSE:MPC) agreed to acquire rival Andeavor (NYSE:ANDV) for more than $23 billion.
Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures gained about 2.4% to close at $69.72 per barrel, natural gas prices fell 2.2% to $2.711 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: CVX & RDS.A Earnings Impress, XOM & TOT Disappoint )
The U.S. oil benchmark settled at three-year highs on the possibility of United States re-imposing sanctions on Iran and sharp declines in output from Venezuela.
Of late, crude prices have been supported by indications that the Trump administration might lead America's exit from the landmark Iran nuclear deal if the European allies do not agree to toughen the terms by May 12. The return of sanctions would put pressure on OPEC’s third-largest oil producer’s energy industry and reduce global supply.
Fast falling production in Venezuela have added to the jitters. With the country tethering on the verge of an economic collapse, oil output has dwindled by almost 50% since the early 2000s. Venezuela currently churns out just around 1.5 million barrels per day, much lower that its pledge per the OPEC-led supply cuts.
Meanwhile, natural gas prices moved northward last week following a larger-than-expected increase in supplies – the first storage build of the injection season when demand is at its weakest ahead of the summer cooling period. Investors were further spooked by expanding dry gas production, which is currently at an all-time high.
Recap of the Week’s Most Important Stories
1. British energy giant BP plc reported strong first-quarter 2018 results on rebounding oil prices, record production and increased refinery throughput.
The company’s adjusted earnings of 78 cents per American Depositary Share (ADS) – on a replacement cost basis, excluding non-operating items – surpassed the Zacks Consensus Estimate of 67 cents and the year-ago quarter’s 46 cents. Total revenues were $69,143 million in the quarter, up from $56,386 million in the year-ago quarter.
Production averaged 2.605 million barrels of oil equivalent per day (MMBoe/d), 9% higher from the year-ago quarter and the most since the fourth quarter of 2010. Importantly, the Zacks Rank #1 (Strong Buy) company has now grown output for six quarters in a row. You can see Pioneer Natural Q1 Earnings Beat on Oil Price Rise )
Get The News You Want
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 | -1.1% | -6.9% |
CVX | -0.9% | +7.1% |
COP | +2.9% | +24.7% |
OXY | +0.9% | +13.4% |
SLB | -0.4% | +3.5% |
RIG | -2.7% | +7% |
VLO | +3.3% | +39.9% |
ANDV | +14.2% | +25.6% |
Despite to the week’s positive oil market sentiment, the Energy Select Sector SPDR – a popular way to track energy companies – was little changed last week. The best performer was independent refiner Andeavor whose stock jumped 14.2% after the company said it has reached an agreement to be acquired by rival Marathon Petroleum Corporation for $23.3 billion, while offshore operator Transocean Ltd. (NYSE:RIG) lagged the pack, down on the week by about 2.7%.
Longer-term, over six months, the sector tracker is up 5.6%. Downstream operator,Valero Energy Corporation (NYSE:VLO), is far and away the major gainer during this period, experiencing a 39.9% price fall.
What’s Next in the Energy World?
With the 2018 Q1 earnings season essentially over, market participants will get back to 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.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
Zacks Investment Research
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.