Oil & Gas Stock Roundup: ExxonMobil, Chevron, Transocean & More
Zacks Investment Research | Jun 19, 2018 05:04AM ET
It was a week where oil prices extended their recent declines but natural gas futures moved above the critical $3 threshold.
On the news front, Exxon Mobil Corporation (NYSE:XOM) announced plans to spend more than $2 billion to build a massive pipeline in the Permian Basin and smaller rival Chevron Corporation (NYSE:CVX) started production from the second LNG unit at the Wheatstone project in Australia. Meanwhile, Transocean Ltd. (NYSE:RIG) announced its intent to retire four rigs.
Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures lost about 1% to close at $65.06 per barrel, natural gas prices rose some 4.6% to $3.022 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Devon's Asset Sale, Exxon's Brazil Win & More )
The U.S. oil benchmark booked fourth weekly drop in a row on fears of supply increase, climb in domestic production, and increasing rig count.
Of late, oil futures have been dragged down by reports that top suppliers Saudi Arabia and Russia are likely to step up output amid reduced supply from Iran and Venezuela.
The commodity was also spooked by the federal government’s EIA report that showed production climbing to a fresh record.
Data showing U.S. drillers adding oil rigs for fourth consecutive week brought further downside.
Meanwhile, natural gas prices moved northward last week on warm weather forecasts that should lead to rising power sector demand.
Recap of the Week’s Most Important Stories
1. ExxonMobilintends to construct a pipeline in the Permian Basin, in line with its plan to allocate more than $2 billion for midstream asset expansions in the crowded shale play.
The largest publicly traded integrated energy firm along with Plains All American Pipeline will likely invest billions of dollars for building a pipeline that will transport crude to the Gulf coast region from the Permian Basin.
The Permian faces a dearth of pipeline capacity for transporting oil to Gulf Coast export facilities, major refinery terminals and principal hubs like Cushing. This has forced Midland operators to sell stranded oil at a big discount to that in Cushing.
The latest announcement seems that ExxonMobil is following the same path to construct pipeline networks in the Permian so that explorers can boost oil production. In fact, the integrated energy firm is willing to lift Permian production three times through 2025. (Read more Pioneer Natural to Dispose Entire Raton Stake: Here's Why )
Price Performance
Get The News You Want
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 | -3.5% | -2% |
CVX | -1.9% | +5.1% |
COP | -5.9% | +26.4% |
OXY | -2.5% | +18.2% |
SLB | -3.7% | +2.7% |
RIG | -8% | +28.8% |
VLO | -3.8% | +32.3% |
MPC | -6.9% | +15.5% |
Reflecting the negative oil market sentiment, the Energy Select Sector SPDR – a popular way to track energy companies – generated a -2.9% return last week. The worst performer was independent oil refiner and marketer Marathon Petroleum Corporation (NYSE:MPC) whose stock fell 6.9%.
But longer-term, over six months, the sector tracker is up 8%. Another downstream operator, Valero Energy Corporation (NYSE:VLO) is far and away the major gainer during this period, experiencing a 32.3% price appreciation.
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. However, all eyes are on the oil producers’ meeting set for Jun 22 in Vienna, which will decide what happens next regarding their supply curb policy.
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