Energy stocks

Between January 4 and January 11, upstream stock QEP Resources (QEP) gained the most among our selected energy stocks, which include the following ETFs:

  • the Alerian MLP ETF (AMLP)
  • the Energy Select Sector SPDR ETF (XLE)
  • the VanEck Vectors Oil Services ETF (OIH)
  • the VanEck Vectors Oil Refiners ETF (CRAK)
  • the SPDR S&P Oil & Gas Exploration & Production ETF (XOP)

XOP rose the second-most among major energy subsector ETFs. On January 7, QEP announced that it had received “a preliminary proposal from Elliott Management Corp. (‘Elliott’) to acquire the Company for $8.75 per share in cash, subject to certain conditions including, among others, satisfactory completion of due diligence and negotiation of definitive documentation.” On the same day, QEP rose 40.3%.

These Upstream and Oilfield Stocks Outperformed Energy Last Week

In addition to US energy companies, some foreign-headquartered integrated energy companies listed in the United States were also included:

  • Imperial Oil (IMO)
  • China Petroleum & Chemical (SNP)
  • Total (TOT)
  • YPF (YPF)
  • Petrobras (PBR)
  • BP (BP)

Other strong performers

Upstream stocks Chesapeake Energy (CHK) and SM Energy Company (SM) were the second- and fifth-strongest gainers among our selected energy stocks last week, and oilfield services stocks CARBO Ceramics (CRR) and Nabors Industries (NBR) were the third- and fourth-strongest. Among major energy ETFs, OIH was the top gainer.

On January 9, CHK reported its preliminary fourth-quarter results and operational details. On the same day, CHK rose ~12.7%. CHK has hedged ~16 MMbbls (million barrels) of 2019 oil production at $58.61 per barrel, higher than WTI’s forecast for 2019. Moreover, CHK has hedged 7 MMbbls of its 2019 forecast production in Eagle Ford at $6 higher than WTI prices.

LLS (Louisiana Light Sweet) crude oil versus WTI at Cushing, or the LLS-WTC spread, fell to $4.5 per barrel on December 27, 2018, its lowest point since August 24, 2018. LLS is the benchmark for most light sweet crude produced in the Eagle Ford region in Texas.

On January 10, CRR announced that it would be reporting its fourth-quarter earnings results on January 31. Analysts’ consensus estimate suggests that CRR will report EPS of -$0.50.

Energy commodities and the broader market

Moreover, the broader market’s rise and oil’s recovery may have helped the above-mentioned energy stocks, which also beat energy commodities and the broader market last week. US crude oil February futures rose 7.6%, natural gas February futures rose 1.8%, and the S&P 500 rose 2.5%.

In the next article, we’ll discuss the top underperformers in the energy sector.

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