Investors respond differently to upstream companies’ capex plans


Dec. 4 2020, Updated 10:53 a.m. ET

Stock prices vary for upstream companies

In this series, we’ve been looking at various upstream companies’ capex plans for 2015. Continental Resources (CLR), ConocoPhillips (COP), and Apache Corporation (APA) have reduced their 2015 capital spending budgets. Encana Corporation (ECA) has increased its budget. Most of the companies expect higher production in 2015. Many of these companies are components of the Energy Select Sector SPDR ETF (XLE) and the SPDR S&P 500 ETF (SPY).

Since the companies disclosed their plans, investors’ reactions have varied. In this environment of crude oil prices declining sharply and staying low, investors continue to favor stocks that are increasing investments.

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The laggards

Continental Resources’ (CLR) shares have fallen by ~28% since the company first disclosed its 2015 capex (capital expenditures) budget and production plans. On November 22, Continental Resources revised its budget down. Since then, its share price has witnessed an even sharper fall of 31%. Read part 5 of this series to know why.

Apache Corporation’s (APA) shares have fallen by ~14% since November 20 when it disclosed its 2015 plans. The company lowered its 2015 capex budget by 15% compared to 2014. On the same date, the company announced its natural gas and NGL (natural gas liquids) asset sale. Read part 6 of this series to find out the details.

The contrarian

ConocoPhillips (COP) lowered its capital budget for 2015 by 20% compared to its 2014 estimates. However, investors haven’t punished the stocks. Since December 8, ConocoPhillips’ (COP) share price has increased by 7%. Read part 8 of this series to know more of the details.

EOG Resources’ (EOG) 2015 capex plans are not available yet. However, the company increased its 2015 production plans. Since November 4, the day the company disclosed its 3Q14 financial results and production plans for the next year, its share price has gone up by ~4%.

The leader

Encana Resources (ECA) increased its 2015 capital spending budget by 10% and increased its 2015 production growth estimates by 72% compared to 2014. Since December 16, the day it disclosed its budget, its share price has jumped ~10%. Read part 10 of this series to know more about this.


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