Southwestern Energy (SWN), a natural gas–weighted exploration and production company focused in the Appalachian Basin, was the weakest upstream stock in the week ending September 28. Southwestern Energy fell 10.8% last week. The company’s decline despite gains in natural gas prices could be attributed to a target price cut by Morgan Stanley. Morgan Stanley lowered Southwestern Energy’s target price to $3 from $6.
Natural gas formed ~85.0% of Southwestern Energy’s average daily production in the second quarter. The remaining ~15.0% is liquid—12.3% NGLs and 2.7% crude oil. Southwestern Energy is focused on increasing its NGLs (natural gas liquids) production amid strong crude oil prices.
Ring Energy (REI), a Permian-focused exploration and production company, continued to be among the weakest upstream stocks for the second consecutive week. The stock fell 10.6% last week. Overall, Ring Energy has lost 28.7% since the beginning of 2018. However, analysts are still bullish on Ring Energy with 100% “buy” recommendations. The company is trading below the low range ($16) of analysts’ target price. The average target price of $18.80 offers a 77% upside from the current price.
Laredo Petroleum (LPI), a pure play Permian-focused exploration and production company, was the third-weakest upstream stock last week. The stock fell 7.1%. Lardeo Petroleum saw a sharp rally following the announcement of its inclusion in the S&P SmallCap 600 Index. However, the rallies were sold into. Now, Laredo Petroleum has fallen 23.0% in 2018.