uploads///Performance of Different Production Mix

Low Crude Oil Prices Hurt XOP Stocks with a High Production Mix

By

Jan. 12 2016, Updated 7:47 a.m. ET

Performance by production mix

WTI (West Texas Intermediate) crude oil has fallen by more than 10% this month, as of January 9. Within the SPDR S&P Oil & Gas Exploration & Production ETF (XOP), the stocks operating with a production mix of crude oil greater than 90% have fallen by 14.6%. The basket of stocks includes Kosmos Energy (KOS), Denbury Resources (DNR), and VAALCO Energy. This series analyzes the financial performance of companies operating with various production mixes. The graph below shows this month’s performance of XOP companies by production mix.

Stocks operating with a production mix of 70%–90% in crude oil have fallen by 13%, whereas stocks operating with a production mix less than 70% in crude oil have fallen by 11.4%. Apart from global factors, companies with high exposure to crude oil have been affected by the fall in crude oil prices.

Article continues below advertisement

Why crude oil may fall even lower

Top oil exporters like Russia (RSX) and Middle Eastern countries are involved in a market share war. As their economies depend on oil, the only way to drive revenue is to increase production. As supply surpasses demand, prices fall. Moreover, Iran could increase crude oil supply as soon the sanctions are lifted, which would worsen oversupply concerns. Among large cap upstream companies, ConocoPhillips (COP) has already fallen 7.2% so far this month.

In the next part of this series, we’ll discuss the sales performance of various companies based on their different production mixes.

Advertisement

More From Market Realist

  • Open sign on a sidewalk
    Macroeconomic Analysis
    Top Reopening Stocks to Play the Shifting Market Sentiment
  • Morgan Stanley sign and stock numbers
    Macroeconomic Analysis
    Morgan Stanley's Buyback Stock Picks in 2021
  • Black Wall Street sign is sign of ethical investing
    Macroeconomic Analysis
    Ethical Investing Stocks and Funds for Your 2021 Portfolio
  • New York City skyline and Goldman Sachs logo
    Macroeconomic Analysis
    Goldman Sachs: Options Trade Picks to Play Earnings Season Volatility
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.