Oil & Gas Stock Roundup: Marathon's Libya Sale, SeaDrill's Restructuring, Canadian Natural's Q4 & More
Zacks Investment Research | Mar 06, 2018 04:26AM ET
It was a week where oil ended lower but natural gas futures extended gains.
On the news front, upstream player Marathon Oil Corp. (NYSE:MRO) sold its assets in Libya for $450 million, while offshore driller SeaDrill Ltd. (NYSE:SDRL) announced a new restructuring plan. Meanwhile, energy biggie Canadian Natural Resources Ltd. (TO:CNQ) came out with strong fourth-quarter results.
Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures lost 3.6% to close at $61.25 per barrel, natural gas prices rose 1.4% to $2.695 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Concho & Devon's Q4, EQT's Spin-Off & More )
The U.S. oil benchmark declined for the fourth time in seven weeks. The major culprit was the Energy Department's inventory release, which revealed that crude stockpiles recorded a higher-than-expected weekly build.
The commodity was further pressured by soaring U.S. production, wherein output rose to 10.3 million barrels per day -- the most since the EIA started maintaining weekly data in 1983.
The Trump administration’s planned tariffs on imported steel and aluminum also adversely impacted oil prices on fears that the move will make pipelines, refineries and petrochemical plants costlier.
Meanwhile, natural gas prices moved higher last week after exports hit an all-time high Investors were also encouraged by forecasts of cooler weather, leading to the heating fuel’s strong demand.
Recap of the Week’s Most Important Stories
1. In a bid to deepen its focus on U.S. shale plays, Marathon Oil offloaded its oil acreage in Libya to France-based supermajor TOTAL S.A. (NYSE:TOT) . The $450 million deal marks the exit of Marathon Oil from Libya.
Per the deal, Marathon Oil divested 16.3% interest in the Waha acreage in Libya. Other partners in Waha concessions include Libya’s national oil company with 60% stake, along with ConocoPhillips (NYSE:COP) and Hess Corp (NYSE:HES). with 16.3% and 8.2% stake, respectively. At the end of 2017, Marathon Oil held 199 million barrels of oil equivalent (boe) of proved reserves in Libya.
The transaction is just another move by the company to further streamline its portfolio. Over the last two years, Marathon Oil has successfully positioned itself into the Delaware Basin and low cost-high margin STACK/SCOOP resource plays while exiting non-core property assets with limited upside. (Read more QEP Resources Reports Surprise Q4 Earnings, Sales Beat )
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 | -0.4% | -1.2% |
CVX | +1.6% | +3.4% |
COP | -1.6% | +21.6% |
OXY | -3.4% | +8.6% |
SLB | +0.8% | +1.7% |
RIG | +1.2% | +9.8% |
VLO | +0.2% | +34.9% |
ANDV | -0.5% | -5% |
In line with the week’s negative oil market sentiment, the Energy Select Sector SPDR – a popular way to track energy companies – generated a -0.6% return last week. The worst performer was Houston-based energy explorer Occidental Petroleum Corp. (NYSE:OXY) whose stock fell 3.4%.
But longer-term, over six months, the sector tracker is up 5.8%. Independent refiner Valero Energy (NYSE:VLO) was the major gainer during this period, experiencing a 34.9% 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.
Additionally, investors will keep an eye on the ongoing 37th CERAWeek in Houston – an annual energy conference by IHS Markit – to get insights on the industry.
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