Oil & Gas Stock Roundup: CVX Starts Wheatstone Production, PSX Approves $3B Buyback
Zacks Investment Research | Oct 11, 2017 02:30AM ET
It was a week where both oil and gas prices turned lower.
On the news front, U.S. supermajor Chevron Corporation (NYSE:CVX) started production at its giant Wheatstone LNG project in Western Australia, while energy pipeline and logistics provider Phillips 66 (NYSE:PSX) announced a new $3 billion stock repurchase program.
Overall, it was a dismal week for the sector. West Texas Intermediate (WTI) crude futures lost about 4.6% to close at $49.29 per barrel, while natural gas prices declined 4.8% to $2.863 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: XOM Loses #1 Energy Spot, CVX Names New CEO .)
The U.S. oil benchmark registered its first decline in five weeks on renewed oversupply concerns. Market observers fretted over soaring U.S. exports that rose to a record – of nearly 2 million barrels per day – in the wake of widening Brent premium to WTI.
A discount in U.S. oil prices to the global benchmark Brent (or a larger spread) makes domestic crude attractive in overseas markets. Worryingly, higher exports are expected to encourage shale players to ramp up production, which is already at its highest level since July 2015.
The news of production resumption at Libya’s largest oil field and slipping compliance to OPEC’s output cut deal further dented the commodity.
Meanwhile, natural gas futures finished lower despite a smaller-than-expected increase in supplies. Unfavorable weather forecasts and strength in the commodity’s production, led to the nearly 5% drop in prices.
Recap of the Week’s Most Important Stories
1. Energy behemoth Chevron recently commenced production at its Wheatstone LNG project in Western Australia. This is a major milestone for the company as the first cargo is on track to set sail in the coming weeks. Chevron is the chief operator of the Wheatstone project owning a 64.14% stake.
The project is located 7.5 miles west of Onslow and is to process gas from Wheatstone and Iago fields, both of which are operated by Chevron. The company holds an 80.2 % interest in the offshore licenses containing the Wheatstone and Iago fields. The Wheatstone fields are estimated to contain over 4.5 trillion cubic feet of gas deposits.
The Wheatstone project consists of two liquefaction trains with a shipment capacity of 8.9 million metric tons per year of LNG. While the first liquefaction train has already started production, the second one is expected to become operational in another six months. The project provides Chevron and its partners an opportunity to serve the fast-growing economies of China and India along with other Asian countries. (Read more Ensco Acquires Atwood Oceanics, Broadens Customer Base )
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 | -0.6% | -0.9% |
CVX | -0.5% | +8.1% |
COP | -2.3% | -1.3% |
OXY | -1.6% | +1.6% |
SLB | -1.2% | -12.8% |
RIG | -2.6% | -15.4% |
VLO | +0.6% | +17.6% |
ANDV | +3.4% | +33% |
The Energy Select Sector SPDR – a popular way to track energy companies – generated a -0.6% return last week. The worst performer was offshore drilling rig operator Transocean Ltd. (NYSE:RIG) whose stock fell by 2.6%.
Longer-term, over the last 6 months, the sector tracker is down 3.1%. It was again Transocean that was the major laggard during this period, experiencing a 15.4% price decline.
What’s Next in the Energy World?
As usual, 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.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.
And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation. 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.