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Stone Energy Stock Underperformed in the Last 2 Weeks



Stone Energy

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.

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Financial restructuring

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.

Price action

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.


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