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Are Higher Crude Prices Still Benefiting Stone Energy?

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Crude oil prices and Stone Energy

Even though crude oil prices have rallied by ~90% from their lows in February 2016, Stone Energy is still languishing around its multiyear low set in May 2016. This is certainly not a good sign, especially when all other upstream companies have seen strong rallies from their bottoms.

S&P 500 (SPY) upstream companies like EOG Resources (EOG), Occidental Petroleum (OXY), and Southwestern Energy (SWN) saw their stock prices rise ~80%, ~26%, and ~127% from their all-time lows, respectively. The volatility in oil prices also impacts ETFs and ETNs like the ProShares UltraShort Bloomberg Crude Oil ETF (SCO), the Vanguard Energy ETF (VDE), and the VelocityShares 3x Long Crude Oil ETN (UWTI).

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Stone Energy’s failed advantage

After a prolonged downtrend of two years, Stone Energy’s stock price finally started to rise in May 2016. Higher trending crude oil prices caused one of the strongest bounces in SGY where it rose 844% in just eight weeks. But the SGY rally fizzled quickly, and currently, SGY is retesting its lows set in May 2016. This is worrisome because crude oil and natural gas prices are still trading close to their 2016 highs.

Stone Energy’s year-to-date performance

For 2016, Stone Energy is turning out to be one of the worst-performing stocks in the energy sector. For 2016, SGY is down ~89%, whereas other oil and gas producers like Energen (EGN), Denbury Resources (DNR), and SM Energy (SM) are up ~51%, ~87%, and ~103%, respectively. The SPDR S&P Oil and Gas Exploration & Production ETF (XOP) is up ~40% year-to-date.

In this series

Having looked at the failed rally in SGY stock in 2016 and its poor year-to-date performance, it’s evident that something is not right with the stock. We’ll try to look at possible fundamentally weak areas for SGY by studying its operational performance. We’ll study SGY’s operational strategies, quarterly productions, production mix, realized prices, hedges, and costs and margins.

Let’s start with SGY’s operational strategies.

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