As of June 26, Gulfport Energy (GPOR) had risen ~6.9% from last week’s close of $11.62 to $12.42, above its 50-day and 200-day moving averages of $10.31 and $11.59, respectively.
Year-to-date in 2018, Halcon Resources (HK) is turning out to be the worst-performing energy stock from the US oil and gas production, or upstream, sector.
Having looked at the percentage gainers, we’ll now move on to the percentage losers from the oil and gas production—or upstream—sector in the United States this week.
Russia’s energy minister reported that Russia is targeting to produce ~10.9 MMbpd of crude oil in 2016 compared to 10.7 MMbpd in 2015. It’s the highest in 30 years.
On July 18, 2016, Stone Energy Corporation (SGY) had the highest implied volatility among the upstream stocks. SGY’s implied volatility is ~287.4%, which is ~34.3% more than its 15-day average of 213.9%.
August West Texas Intermediate crude oil futures contracts trading on the NYMEX rose slightly by 0.59% and closed at $45.95 per barrel on July 15, 2016.
As of July 8, 2016, Stone Energy Corporation (SGY) has the highest implied volatility among upstream stocks. The company’s implied volatility is 272.7%, which is ~60.9% lower than its 15-day average of 169.5%.
In the previous three parts of this series, we covered bullish catalysts for crude oil prices. Now, let’s look at some important bearish drivers for crude oil prices in 2016.
August West Texas Intermediate crude oil futures contracts fell by ~2.8% and settled at $46.33 per barrel on Monday, June 27, 2016. Prices fell for the second day due to the aftermath of the Brexit vote on June 24.
The EIA (U.S. Energy Information Administration) reported that Cushing crude oil inventories fell by 1.3 MMbbls to 65.2 MMbbls for the week ending June 17 compared to the previous week.
The EIA reported that US on-highway diesel fuel prices fell by 0.4% week-over-week to $2.42 per gallon on June 20. Prices fell for the first time in ten weeks.
As of March 31, 2016, Halcón’s total debt stood at ~$2.88 billion. With only ~$9 million in cash and cash equivalents, its net debt was ~$2.87 billion.
On April 27, the EIA released its weekly crude oil inventory report. The US crude oil inventory rose by 2 MMbbls to 540.6 MMbbls between April 15 and April 22.
On April 26, 2016, the API (American Petroleum Institute) released its weekly crude oil inventory report. It showed that US crude oil inventory fell 1.1 MMbbls for the week ended April 22.
The EIA reported that the weekly US crude oil production fell by 14,000 bpd (barrels per day) to 9 MMbpd (million barrels per day) for the week ending April 1, 2016.
AlixPartners surveyed 134 public companies in the US and Canada. The surveys showed that they had a cumulative long-term debt of more than $353 billion in 2015.
On March 22, 2016, the API estimated that the US crude oil inventory rose by 8.8 MMbbls (million barrels) for the week ending March 18, 2016, compared with the previous week.
The recent uptick in crude oil prices benefits crude oil producers like Halcón Resources (HK), Hess (HES), Sanchez Energy (SN), Energy XXI (EXXI), and Goodrich Petroleum (GDP).
On March 14, OPEC’s delegates reported that Russia, Saudi Arabia, Venezuela, and Qatar will meet in Doha in April. The meeting will renew talks to stabilize the oil market.
OPEC’s (Organization of the Petroleum Exporting Countries) crude oil production fell by 79,000 bpd (barrels per day) to 33.1 MMbpd (million barrels per day) in February 2016 compared to January 2016.
On February 24, 2016, the EIA (U.S. Energy Information Administration) reported that the US distillate inventory fell by 1.7 MMbbls (million barrels) to 160.7 MMbbls for the week ending February 19, 2016.
Crude oil prices fell below the key psychological mark of $30 per barrel on February 19. The double bottom pattern suggests that crude oil prices could trend higher.
NYMEX-traded WTI crude oil futures for March delivery fell and closed at $29.64 per barrel on February 19. Oil prices fell due to long-term oversupply concerns.
The EIA reported that Cushing crude oil stocks rose by 523,000 barrels to 64.7 MMbbls for the week ending February 5, 2016—the highest number since April 2004.
The EIA (U.S. Energy Information Administration) reported that US crude oil production fell marginally by 14,000 bpd (barrels per day) to 9.2 MMbpd (million barrels per day) for the week ending January 22, 2016.
The API released its crude oil inventory report on January 26. It reported that the US crude oil inventories rose by 11.4 MMbbls for the week ending January 22.
The CFTC’s COT report states that hedge funds reduced their long positions for the week ending January 12, 2016. The net long positions fell by 20,673 contracts to 163,504 contracts during the week.
The net debt of US oil and gas exploration and production companies increased from $81 billion in 2010 to $169 billion by 1H15. The main reason is the catastrophic fall in crude oil prices.
August WTI crude oil futures contracts settled above $52 per barrel for third day. Crude oil prices closed above the key support level of $52 per barrel as of July 14.
Exco surged more than 14% in the last two trading sessions. It entered into a service agreement with Bluescape Resources. It will invest $10 million in Exco.
Although Halcon’s quality of earnings is among the weakest in the group, its asset turnover ratio and projected earnings growth are in line with its peers.
Halcon Field Services, a subsidiary of Halcon Resources, has undertaken three major projects in the Tuscaloosa Marine Shale in Mississippi and Louisiana.
For the week ending November 26, 2014, the number of horizontal rigs decreased by one from the previous week’s count. Currently, there are 1,371 horizontal rigs.
The number of horizontal rigs increased when large quantities of oil and gas in shale formations were discovered in the US. Rig counts can gauge companies’ upstream activity.
For the week ending November 14, 2014, the number of horizontal rigs increased by seven from the previous week’s count. Currently, there are 1,369 horizontal rigs.
Horizontal wells increase the length of the well that’s exposed to the reservoir. This increases production. In vertical drilling, a well goes straight down until it reaches the formation.
For the week ending October 31, 2014, the number of horizontal rigs decreased by two from the previous week’s count. Currently, there are 1,353 horizontal rigs.
Lower WTI crude will hurt U.S. oil producers’ profitability. These companies include Whiting Petroleum, Halcon Resources, Laredo Petroleum and Pioneer Natural Resources.
For the week ending September 26, 2014, the number of horizontal rigs increased by six to 1,347—compared to 1,341 last week. This is the highest horizontal rig count on record.
In 2014, Halcon Resources (HK) outperformed the industry and broader market. HK’s stock has returned ~34% year-to-date (or YTD). On an annualized basis, this means a return of ~50%. In comparison, the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has returned ~12% YTD—or ~17% annualized.
