In the last two weeks, crude oil (USO) and natural gas (UNG) producer Stone Energy (SGY) saw its stock price underperform crude oil prices. Stone Energy’s stock price fell from $36.71 to $24.32. Crude oil prices fell marginally from $53.78 per barrel to $53.33 per barrel during the same period. Stone Energy’s production contains ~61% liquids. Its price depends more on crude oil prices.
On February 28, 2017, Stone Energy announced that it successfully executed the financial restructuring plan and reduced its debt load by ~$1.2 billion. According to the company’s press release, as part of the financial restructuring, it created 20 million new shares. Of the shares, 95% were allocated to “pre-petition holders of the Company’s unsecured notes” and the remaining 5% were allocated to “pre-petition stockholders.” Stone Energy stockholders also received ~3.52 warrants per new stock with an exercise price of $42.04 per share.
Stone Energy’s price rallied strongly from the low of $20.93 in November 2016 to the high of $70.86 in December 2016. Since then, Stone Energy’s stock price appears to be in a downtrend. Currently, Stone Energy is trading below its 50-day moving average and 200-day moving average. On March 3, 2017, Stone Energy’s stock price closed at $24.32. Its 50-day and 200-day moving averages are $40.16 and $48.90, respectively.
Did Stone Energy’s peers also underperform?
Stone Energy’s peers Devon Energy (DVN), Marathon Oil (MRO), and Occidental Petroleum (OXY) fell ~2%, ~1%, and ~2%, respectively, in the last two weeks. For oil and gas exploration and production companies (XOP), their underperformance was more evident in light of a positive performance by the S&P 500 (SPY) over the last two weeks.
In the next part, we’ll analyze the possible trading range for Stone Energy stock for this week based on its implied volatility.