Energy has been the worst-performing S&P 500 sector so far this year, losing 10.8 percent year-to-date. The top 15 U.S. oil companies by market capitalization have felt the sting of the failed oil price recovery.
This week, the U.S. dollar got a boost from the Fed’s historic decision to trim its balance sheet by initiating the balance sheet normalization program next month, starting to unwind the stimulus program it launched at the height of the 2008 crisis.
This week, WTI oil prices have traded mostly at above US$50, and some big U.S. oil producers have performed quite well on the stock market.
We’ll look into what happened to the stocks of the top 5 U.S. oil & gas gainers, and why
#1 Anadarko Petroleum Corp (NYSE:APC) – one of the biggest independent oil and natural gas exploration and production companies, Anadarko saw its shares jump by 13.44 percent this week, as of late Friday morning.
The stock’s rally should not come as a surprise because the corporation announced on Wednesday that its board had authorized a US$2.5 billion share-repurchase program through the end of 2018.
“We believe this is a very attractive use of our cash given the value of our assets and the highly accretive nature of this program,” Anadarko Chairman, President and CEO Al Walker said. “At the current share price, this represents approximately 10 percent of the company’s outstanding common shares, and we will initially target $1 billion of share repurchases prior to year-end 2017,” the manager noted.
According to some analysts, Anadarko’s share repurchase program is a short-term bet, and could mean that the company hopes for oil prices to increase, or that it is hoping for a takeover.Related: U.S. Shale: Water Is the New Oil
Just two months ago, Anadarko announced a cut in its capital expenditure plans for 2017, when it reported underwhelming Q2 results.
Anadarko’s stock surged to $49.29 by late Friday morning, leading the top gainers’ list on the S&P 500. The 52-week range for the stock is between US$39.96 and US$73.33. Anadarko shares have risen by 16.92 percent over the past month, but are down over 20 percent over the past year.
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#2 ConocoPhillips (NYSE:COP) shares rose 7.27 percent this week, as of late morning Friday trading, hitting $49.60, after closing at $48.70 on Thursday. The 52-week range is US$39.00—US$53.17.
Conoco made the news headlines this week after the cities of San Francisco and Oakland filed lawsuits against Chevron, Exxon, ConocoPhillips, BP, and Shell for the effect of their activities on climate change: higher sea levels.
Unlike many of its competitors, Conoco has seen its stock gain over 16 percent over the past month, and 24.50 percent over the past year.
Earlier this year, Conoco sold part of its Canadian assets and its San Juan Basin assets to strengthen its balance sheet. Analysts believe that the aggressive asset sales will boost Conoco’s profit, but warn that these deals could reduce operations, and hence production, in coming years.
Conoco said on September 12 that production from its Eagle Ford field had returned to pre-Hurricane Harvey rates of around 130,000 barrels of oil equivalent per day, and kept its 2017 production guidance unchanged.
#3 Devon Energy Corp (NYSE:DVN) was the second biggest gainer this week in the top 15 U.S. oil companies by market capitalization. Its shares rose by 6.08% over the past week, as of late-morning trading on Friday, when shares had reached $35.62. Devon Energy’s 52-week range is US$28.79—US$50.69. The stock is up 17.19 percent over the past month, but over 16 percent over the past year.
Oklahoma City-based Devon Energy said in early August that it was lowering E&P capital investment by US$100 million, to range from US$1.9 billion to US $2.2 billion this year.
“With this updated outlook, the company has not made any changes to its planned activity levels in 2017 and is on track to increase to approximately 20 rigs by the end of 2017,” Devon said when it reported Q2 figures and announced it had achieved asset sales of US$340 million, or around one-third of its targeted US$1 billion in sales of non-core assets over the next year.
#4 Continental Resources (NYSE:CLR) shares rose 5.71 percent by late-morning Friday trading, hitting $37.94, after closing at US$37.66 on Thursday. The 52-week range is US$29.08—US$60.30. Over the past month, Continental Resources has gained 16.20 percent, but dropped over 21 percent over the past year.
The Energy Information Administration (EIA) is overestimating U.S. crude oil production, Continental Resource’s chief executive Harold Hamm said in an interview with Fox Business this week. Hamm was notably the only shale oil major executive who warned against the too-quick boosting of shale oil production after the OPEC-non-OPEC output cut deal from the end of last year.Related: Can Oil Prices Hit $60 In 2018?
#5 Pioneer Natural Resources (NYSE:PXD) was the fifth top gainer among the 15 biggest U.S. oil firms. Its shares rose 4.56 percent this week, by late-Friday-morning trading, reaching $142.96 after having closed Thursday at US$142.01 on Thursday. The 52-week range is US$125.46—US$199.83. Over the past month, Pioneer’s stock gained 11.66 percent over the past month, but is down over 22 percent over the past year.
Keep in mind that in early August, Pioneer’s stock tumbled by more than 10 percent in one day and went through a rough month in August after the company said that it had encountered problems with wells in the Permian.
“We did fall behind operationally on our completions in the Spraberry/Wolfcamp in large part due to unforeseen drilling delays…we now find we have a higher percentage of what we kind of refer to as train wreck wells, where we have all kinds of problems,” Pioneer Natural Resources’ President and CEO Timothy Dove said at the Q2 results conference call.
Compiled and Published by GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.