How Did Natural Gas–Weighted Stocks Perform?



Natural gas–weighted stocks and natural gas

Between July 18 and July 25, 2016, an equally weighted basket of natural gas–weighted stocks fell 6.2%. These stocks operate with a production mix of at least 60% in natural gas (UNG) (BOIL) (UGAZ) (FCG). They’re also part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). This compares to a 0.74% rise in natural gas futures contracts for September delivery for the same period. The stock returns are adjusted for dividends.

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Best and worst natural gas stocks

Below are the returns for the best-performing and worst-performing stocks from our basket of natural gas–weighted stocks from July 18 to July 25, 2016.

Natural gas–weighted stocks that outperformed their peers over this period include the following:

  • Chesapeake Energy (CHK) – 11.7%
  • Southwestern Energy (SWN) – 6.4%
  • EQT (EQT) at -2.1%

Natural gas–weighted stocks that underperformed natural gas during this period include the following:

  • Contango Oil & Gas (MCF) at -24.9%
  • Comstock Resources (CRK) at -21.5%
  • Rex Energy (REXX) at -11.1%

In the previous part of this series, we saw how natural gas impacted these stocks. However, the performance of these natural gas–weighted stocks could also be related to their earnings and the movement of crude oil (USO) (UCO) prices.

Performance of natural gas–weighted stocks and natural gas since 2016 lows

On March 3, 2016, natural gas futures touched a 17-year low of $1.64. From March 3 to July 25, 2016, natural gas rose 65.2%. Our basket of equally weighted upstream stocks fell 6.9% over the same period.

The fall in gas-weighted stocks compared to natural gas could be attributed to the recent softness in crude oil prices. Here’s how some of the companies in the basket performed over this period.

The following natural gas–weighted stocks were among the outperformers:

  • EXCO Resources (XCO) – 111.7%
  • Rice Energy (RICE) – 10.1%
  • Contango Oil & Gas (MCF) at -3.9%

The following natural gas–weighted stocks didn’t fare as well:

  • Rex Energy (REXX) at -74.3%
  • Chesapeake Energy (CHK) at -37.9%
  • Comstock Resources (CRK) at -56.1%

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