Which Upstream Stocks Outperformed the Energy Space?


Mar. 4 2019, Published 1:06 p.m. ET

Energy stocks

In the week ending March 1, Chesapeake Energy (CHK) rose the most among the energy stocks under review in this series, 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)

In addition to US energy companies, a few foreign-headquartered integrated energy companies listed in the United States are also under review including Imperial Oil (IMO) and China Petroleum & Chemical (SNP).

On February 27, Chesapeake Energy’s earnings were better than expected. In the last three trading sessions, the stock has risen ~19%. Apart from earnings, a rise of 4.4% in natural gas prices might have propelled the stock. Chesapeake Energy is a natural gas–weighted stock.

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Other strong performers

Other stocks from the upstream subsector, California Resources (CRC), Callon Petroleum (CPE), and Southwestern Energy (SWN) were third, fourth, and fifth among the energy stock outperformers. XOP fell the least among the major energy subsector ETFs. The sentiments surrounding the earnings results might have supported these upstream stocks despite a 2.5% fall in US crude oil prices. Southwestern Energy is a natural gas–weighted stock like Chesapeake Energy, which will likely benefit from over a 4% rise in natural gas prices.

On February 26, Callon Petroleum announced an adjusted EPS of $0.17 for the last quarter—15% below analysts’ consensus estimates. On February 27, Callon Petroleum rose 10.4%. Based on the company’s guidance midpoint, Callon Petroleum’s total production in 2019 is expected to rise 23.1% compared to 2018—a possible positive development for the company’s stock prices. On February 27, California Resources announced an adjusted net income of $0.53 per diluted share for the last quarter—nearly 600% above analysts’ consensus estimates.

Oilfield services stock McDermott International (MDR) was the second outperformer among energy stocks last week. OIH was the only ETF that closed in the green. On February 25, McDermott International reported an adjusted net loss of $1.55 per diluted share—compared to analysts’ consensus estimates for a profit of $0.17 per share. On February 26, McDermott International announced that “it was awarded a sizeable contract (between $1 and $50 million) by Precision Mechanical, Inc. for a double wall liquid hydrogen sphere at the John F. Kennedy Space Center in Cape Canaveral, Florida. The scope of the contract includes the engineering, procurement and construction of the sphere, which will be the largest ever built for NASA.” On the same day, the stock rose nearly 8%.


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