6 Jul

Upstream Losses This Week: LGCY, HK, WTI, SN, and XEC

WRITTEN BY Nicholas Chapman

Upstream losses

In this article, we’ll move on to the worst performers from the oil and gas production, or upstream, sector in the US for the current week. To compile the list of the worst upstream performers this week, we’ll use oil and gas producers with market capitalizations greater than $100 million and an average trading volume greater than 100,000 shares last week.

Upstream Losses This Week: LGCY, HK, WTI, SN, and XEC

Legacy Reserves

In the week starting July 2, 2018, Legacy Reserves (LGCY) decreased from $6.90 to $6.22, a decrease of almost 9.9%. Legacy Reserves fell in the first two days of the week.

On June 25, Legacy Reserves signed an MoU (memorandum of understanding) regarding the settlement of Delaware merger litigation. Legacy entered into the MoU to avoid costs, disruption, delay, and distraction of further litigation. According to the MoU, the settlement will effectively resolve all claims by holders of Legacy’s preferred units.

According to LGCY’s press release, the terms of the merger transaction will be amended where “each outstanding 8% Series A Preferred Unit shall be converted into the right to receive 2.92033118 shares of common stock of New Legacy and each outstanding 8% Series B Preferred Unit shall be converted into the right to receive 2.90650421 shares of common stock of New Legacy (approximately 27.6 million total shares).”

HK, WTI, SN, XEC also see losses

On the list of top decliners, Legacy Reserves (LGCY) is followed by Halcon Resources (HK), W&T Offshore (WTI), Sanchez Energy (SN), and Cimarex Energy (XEC). HK, WTI, SN, and XEC are down ~5.9%, ~4.2%, ~3.8%, and ~3.7%, respectively.

On June 25, Cimarex Energy (XEC) announced the sale of its oil and gas assets located in Ward County, Texas, for ~$570 million in cash to Callon Petroleum (CPE). Currently, these assets produce ~6.8 Mboepd (thousand barrels of oil equivalent). The transaction is expected to close in Q3 2018.

Overall, the First Trust Natural Gas ETF (FCG), which represents an index of energy stocks that derive a substantial portion of their revenues from the exploration and production of natural gas, is down ~0.9%.

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