The Second-Worst-Performing Upstream Stock Year-to-Date
Bonanza Creek Energy’s year-to-date performance
On December 1, 2017, Bonanza Creek Energy (BCEI) was the second-worst-performing stock in 2017 from the oil and gas production—or upstream —sector in the US. Year-to-date, BCEI has fallen sharply from its 2016 close of $113.81 to $27.99 on December 1—a sizeable decrease of ~75.0%.
Year-to-date in 2017, BCEI has significantly underperformed crude oil (USO), natural gas (UNG), and the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). Year-to-date, crude oil has risen ~9.0% whereas natural gas has fallen ~18.0%.
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Year-to-date, XOP has fallen ~12.0%. In comparison, the SPDR S&P 500 ETF (SPY) rose ~18.0% in 2017.
Bonanza Creek Energy’s revenues and earnings
In 9M17, Bonanza Creek Energy (BCEI) reported revenues of ~$142.0 million—about 4.0% lower than its 9M16 revenues of ~$148.0 million. In 9M17, BCEI reported a net loss of $15.0 million from its net loss of ~$59.0 million in 9M16.
BCEI reported a steep decline in operating cash flows in 9M17 when compared with 9M16. In 9M17, BCEI reported operating cash flows of -$8.0 million from ~$30.0 million in 9M16.
Sandridge Energy and BCEI
On November 15, 2017, Bonanza Creek Energy entered into a merger agreement with Sandridge Energy (SD) in which BCEI shareholders would receive $19.20 in cash and $16.80 in SD stock for each BCEI share.
While commenting on the merger, BCEI’s chairman of the board, Jack Vaughn, noted, “This transaction represents an attractive opportunity for our shareholders to monetize a portion of their holdings through the cash consideration as well as to participate in the continued upside of the combined company.
“We believe our Niobrara and Codell assets and expertise will provide a strong complement to the SandRidge story and are excited to partner with SandRidge in growing the combined company.”
Next, we’ll compare the year-to-date returns from EP Energy (EPE) with the broader market and energy commodities. We’ll also take a look at EPE’s fundamental metrics.