ConocoPhillips: Outperformer among Oil-Weighted Stocks


May. 23 2019, Published 8:05 a.m. ET

Oil-weighted stocks’ returns

On May 15–22, our list of oil-weighted stocks fell 3.6%—compared to the 1.3% fall in US crude oil July futures. On average, our list of oil-weighted stocks underperformed US crude oil prices.

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ConocoPhillips outperformed oil-weighted stocks

Let’s take a look at the oil-weighted stocks that rose the most in the last five trading sessions:

  • ConocoPhillips (COP) rose 1.6%.
  • Pioneer Natural Resources (PXD) rose 1.1%.

Despite a correlation of 59.7% with oil prices, ConocoPhillips’s share prices rose by nearly two percentage points. The higher Brent-WTI spread might be behind ConocoPhillips’s outperformance. The company’s net income sensitivity with every $1 change in Brent grades of crude oil per barrel is $150 million. The same relationship with WTI crude oil is ~$30 million–$40 million. Pioneer Natural Resources will likely benefit from the higher Brent-WTI spread because of exposure to Brent oil pricing. On May 22, the Brent-WTI spread expanded to $9.57, which is $0.18 below its highest level since March 12.

Underperformers among oil-weighted stocks

Now, let’s look at the oil-weighted stocks that underperformed their peers and US crude oil prices in the last five trading sessions:

  • Callon Petroleum (CPE) fell 8.1%.
  • Denbury Resources (DNR) fell 9.5%.
  • Whiting Petroleum Corp (WLL) fell 14.1%.

Not only weakness in oil prices, but investors’ disappointment following Whiting Petroleum’s first-quarter earnings results could be behind the double-digit fall. Since Whiting Petroleum’s first-quarter earnings results, the stock prices have fallen 21.1%. For the same quarter, Whiting Petroleum reported an adjusted net loss of $0.16 per diluted share compared to analysts’ estimates for an income of $0.20 per share.

These oil-weighted stocks are part of the SPDR S&P Oil & Gas Exploration & Production ETF (XOP). They operate with production mixes of at least 60% in liquids based on the latest quarterly production data.


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