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Cabot Oil & Gas Is Rising despite Weakness in the Energy Market

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Natural gas–weighted stocks’ returns

On May 15–22, our list of natural gas–weighted stocks fell 10%, while natural gas April futures fell 2.2%. On average, natural gas–weighted stocks underperformed natural gas futures during this period.

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Why is Cabot Oil & Gas rising?

The following natural gas–weighted stocks were the outperformers in the trailing week:

  • Cabot Oil & Gas (COG) rose 2.2%.
  • Southwestern Energy (SWN) fell 8%.
  • Gulfport Energy (GPOR) fell 9.2%.

During this period, Cabot Oil & Gas had a negative correlation with energy commodities and the S&P 500 Index (SPY), which might explain its outperformance. In the trailing week, US crude oil prices fell 1.3%, while the S&P 500 Index rose 0.2%. Trade war tensions are the main reason behind the weakness in the broader market.

Cabot Oil & Gas’s EPS was $0.73 in the first quarter—12.3% above analysts’ consensus estimates. Cabot Oil & Gas’s realized natural gas sale prices were $3.35 per thousand cubic feet including hedges—7.7% higher on a sequential basis despite a 23.1% decline Henry Hub natural gas active futures.

These natural gas–weighted stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). They operate with production mixes of at least 60.0% in natural gas.

Cabot Oil & Gas since natural gas’s 17-year low

Between March 3, 2016, and May 22, 2019, natural gas active futures rose 55.2% from a 17-year low. Our list of natural gas–weighted stocks fell 48.8% during the same period.

Cabot Oil & Gas (COG) has risen 23.1% since March 3, 2016. Cabot Oil & Gas was the only gainer on our list of natural gas–weighted stocks during that period. Let’s take a look at the natural gas–weighted stocks that fell the most during this period:

  • Antero Resources (AR) fell 71.1%.
  • Range Resources (RRC) fell 73.4%.
  • Gulfport Energy fell 74.1%.
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