uploads/2016/01/upstream8.jpg

Analyzing Upstream Players’ Moving Averages

By

Updated

Moving average

Upstream oil and gas companies are trading 14.7% below their moving averages. As of January 31, 2016, the upstream companies in the following table traded 15% below their respective moving averages. As of January 15, 2016, these upstream companies were trading about 27% below their 100-day moving averages. At that point, front-month crude futures were trading around $29.42.

Upstream players like Pioneer Natural Resources (PXD) and EQT (EQT) are trading 5% and 0.5% below their 100-day moving averages. Pioneer Natural Resources operates with a production mix of 32% in natural gas and 46% in oil. EQT operates with a production mix of 90% in natural gas and 5.6% in crude oil.

Article continues below advertisement

Other upstream players like Hess (HES) and Marathon Oil (MRO) operate with a production mix of 63% and 59% in crude oil. They’re trading 19.5% and 36% below their 100-day moving averages. These two stocks are highly weighted to oil compared to other upstream players. As of January 15, Hess and Marathon Oil were trading 28% and 48% below their respective 100-day moving averages.

Analysts’ estimates

The above table shows several upstream companies’ moving averages and forward target prices. Wall Street analysts’ consensus estimates suggest a 31.6% upside for these upstream companies—compared to the 37.4% upside estimates for large-cap refineries. As of January 15, when crude was near its multiyear lows, Wall Street analysts’ estimates indicated 66.5% upside for these upstream companies over the next 12 months.

Over the next 12 months, Marathon Oil and Hess could see rises by as much as 62% and 32%, respectively, from the levels on January 29.

Wall Street analysts’ estimates for three other major upstream companies over the next 12 months are as follows.

  • ConocoPhillips (COP) could see a 33% rise
  • EOG Resources (EOG) could see a 15% rise
  • Pioneer Natural Resources could see a 25% rise

In the next part, we’ll discuss the moving averages and analysts’ estimates for US (SPY)-based downstream companies.

Advertisement

More From Market Realist