uploads///XOG Q GOU Price and Crude

Extraction Oil & Gas Stock Moving in Lockstep with Crude Prices

By

Dec. 7 2016, Published 2:49 p.m. ET

Extraction Oil & Gas

On October 12, 2016, Extraction Oil and Gas (XOG) started trading on the NASDAQ Global Select Market. Extraction Oil & Gas is a Denver-based E&P (exploration and production) company with operations in the Greater Wattenberg Field of Colorado’s DJ (Denver-Julesburg) Basin.

XOG offered ~33.3 million shares of its common stock at $19.00 per share, above its estimated price range of $15.00–$18.00 per share.

Extraction Oil & Gas (XOG) raised $683.7 million through its IPO. It used $90 million of the net proceeds from its IPO to redeem in full some of its convertible preferred securities, and it used $291.6 million to repay borrowings under its revolving credit facility.

XOG intends to use the remaining net proceeds of $302.1 million for general corporate purposes, including funding its 2016 and 2017 capital expenditures.

Article continues below advertisement

In lockstep with crude oil prices

As seen in the chart above, Extraction Oil & Gas has been trading above its IPO price of $19 per share since its debut on the NASDAQ Global Select Market on October 12, 2016. One prominent correlation that has emerged for XOG stock is its movement in lockstep with crude oil prices.

Other upstream companies in the DJ Basin

Anadarko Petroleum (APC), Noble Energy (NBL), and Whiting Petroleum (WLL) also have operations in the Wattenberg Field of the DJ Basin. Noble Energy and Anadarko Petroleum consider the DJ Basin as a core area, and they direct a majority of their respective capital budgets to that area.

In this series…

On December 5, 2016, Extraction Oil & Gas (XOG) hosted a conference call to provide an update on recent operations as well as guidance for fiscal 2017 and fiscal 2018. In the course of this series, we’ll take a deep dive into the details presented in the conference call.

We’ll study Extraction Oil & Gas’s production, areas of operations, drilling inventory, and break-even prices. We’ll also look at the company’s guidance for the next two years, its hedging strategies, and Wall Street analysts’ recommendations for XOG stock.

Let’s start with Extraction Oil & Gas’s operational details.

Advertisement

More From Market Realist