Energy Select Sector SPDR® ETF

MPLX crude pipelines are connected to supply hubs, and transport crude oil to Marathon Petroleum Corporation’s, or MPC’s, refineries and third parties.

ConocoPhillips’s (COP) total production volume in 2015 was 1,589 Mboe/d excluding Libya. This represents a 5% year-over-year growth after adjusting for asset dispositions and downtime.

The Permian Basin is one of the US’s primary drivers of oil production growth. Market Realist provides an overview of this prolific hydrocarbon asset with a primer piece: “Introduction to the Permian Basin”.

Companies in the midstream sector that are included in the XLE portfolio include Kinder Morgan, Oneok, the Williams Company, and Spectra Energy.

Chevron Corporation is currently trading at EV-to-2014E EBITDA of 5x, has an approximately $239 billion market cap, and ~$245 billion enterprise value.

Spectra Energy Corp. (SE), headquartered in Houston, Texas, owns and operates a large and diversified portfolio of natural gas–related assets in North America.

ONEOK Partners (OKS) is a master limited partnership (or MLP) engaged in gathering, processing, storing, and transporting natural gas and natural gas liquids (or NGLs) in the U.S.

The Energy Select Sector SPDR ETF (XLE) fell 0.66% in the week ended September 11. XLE tracks a diverse group of 45 of the largest American energy stocks in the S&P 500 Index (SPX).

In terms of profitability, OXY has the highest profit margins amongst its peers at 24.2%. OXY also has one of the highest dividend yields at 2.85%.

Crack spreads usually fall when crude oil prices (USO) increase by more than product prices, or when product prices fall more than crude oil prices.

We’ll explore whether record highs signal a top for equity markets or whether there’s still some room for growth in the current bull market.

Last week, the Baker Hughes oil rig count increased from 1,423 to 1,425, reaching the highest level since 2014 began.

Refining companies’ stock performance was affected by the abolition of the crude oil export ban in the United States.

On July 5, 2017, natural gas (UNG) active futures fell 3.8% and settled at $2.84 per MMBtu (million British thermal units), their lowest level since March 8, 2017.

Pacific Drilling’s (PACD) operating expense-to-revenue ratio stood at 37.5% at the end of 3Q16, similar to the previous quarter’s 37.3% and 3Q15’s 37.7%.

The U.S. onshore, or land-based, rig count increased by four rigs—from 1,865 to 1,869—during the week ending September 19. Land-based rigs include 13 inland water rigs. This is the highest onshore rig count in the past two years. It’s the highest rig count since August 17, 2012. This marks the eighth increase in the past ten weeks.

On July 10, 2017, ~71% of the 24 analysts covering ConocoPhillips (COP) had “strong buy” or “buy” ratings on its stock.

In 2015, Kinder Morgan (KMI) has put in place a strong project pipeline that can increase capex by 21% to ~$4.4 billion.

This transaction is a classic merger arb core position. The companies are reasonably big and liquid and the deal makes strategic sense. It’s fairly safe.

Overall, ExxonMobil’s Downstream business produced 46% less earnings in the fourth quarter of 2014 compared to the same quarter a year ago.

This was the seventh straight weekly decline in the Permian Basin oil rig count. Overall, the weekly US crude oil rig count was down 4%.

After Sanchez Energy’s (SN) 3Q16 earnings release on November 7, its stock rose ~2%.

The divergence between WTI and Brent narrowed last week, as a slowdown in Cushing offered a glimmer of hope, causing WTI to rise.

With large reductions in cash from operations and heavy burdens of fixed debt repayments, the ratio of debt servicing to operating cash flow rose in 2015.

National Oilwell Varco’s cash from operating activities (or CFO) rose by more than four times in 1Q16 compared to 1Q15.

In Latin America, BHI expects year-end product sales to increase. It also expects the offshore Mexico rig activity to increase.

EQT’s (EQT) current implied volatility is ~31%. While EQT’s peer Cabot Oil and Gas (COG) has a lower implied volatility of 28.2%, Chesapeake Energy (CHK) has a higher implied volatility of 49%.

On May 7, US crude oil June futures rose 1.4% and settled at $70.73 per barrel—the highest closing level since November 26, 2014.

For fiscal 2017, QEP Resources reported a negative FCF of -$1.4 billion, which is much higher than its negative FCF of -$544 million in 2016.

Apache’s stock has fallen almost 20% this year. However, since October, it has remained above approximately $47 on an average.

The crude oil production from OPEC and non-OPEC producers is expected to increase by 300,000 bpd–600,000 bpd in OPEC’s upcoming meeting.

For most of the last two years, WTI crude oil has been range-bound between ~$85 per barrel and ~$110 per barrel.

In fiscal 3Q15, the gross profit of frontline midstream operator Williams Companies (WMB) fell 28.6% on a YoY basis. Williams Companies’ sales grew by 11.3%.

US crude oil February futures rose 5.6% in the trailing week.

ConocoPhillips’s (COP) Barnett assets have a relatively small contribution to its overall production. In 2016, COP’s Barnett assets produced only 11 MBoepd.

In the seven calendar days to February 8, 2018, OIH, XOP, XLE, and AMLP fell 13.6%, 12.7%, 11.8%, and 8.2%, respectively.

Marathon Petroleum’s (MPC) total debt almost doubled in 3Q15 compared to the same quarter in the previous year.

It’s expected distillate production will grow by the end of 2014. Refineries have built new facilities to produce more distillates than gasoline in anticipation of strong global demand growth.

As of August 2, 2017, Devon Energy (DVN) had an implied volatility of ~40.7%, which is lower than its implied volatility of ~33.6% on July 25, 2017.

Natural gas production from the lower 48 states of the US increased slightly by 0.6% to 79.82 Bcf as of May 20, 2015—compared to the previous week.

The total debt for Williams Companies (WMB) and Energy Transfer Equity (ETE) grew by 87% and 32%, respectively, on a YoY (year-over-year) basis in fiscal 3Q15.

US commercial crude oil inventories rose by ~9.5 MMbbls (million barrels) in the week ending on February 10, 2017—compared to the previous week.

Last week, natural gas prices didn’t increase despite forecasts for cooler weather. The forecast called for weather that would be cooler, but not cold enough to cause freezing temperatures.

At the end of 1Q18, Continental Resources had total debt of ~$6.2 billion, which is close to the company’s short-term goal of $6.0 billion.

Stocks that are leading the rise in the Energy Select Sector SPDR Fund this week include Chesapeake Energy, Andeavor, and FMC Technologies.

Offshore drilling (XLE) (IYE) is a capital-intensive industry requiring a large amount of money to keep rigs active and well-maintained.

Kinder Morgan (KMI) beat analysts’ 1Q15 earnings per share estimate, but Wall Street lowered its 2Q15 estimate to $0.191 compared to $0.216 in 1Q15. That’s a decrease of 11.6%.

Natural gas prices in the northeastern US have increasingly been below the Henry Hub price. This is primarily because of the Northeast’s increased access to Marcellus natural gas production.

Donald Trump’s policies are aimed at strengthening job markets in the United States (VFINX) (IVV).

In this part, we’ll discuss XOM’s cash flow from investing activities (or CFI). We say “from,” but items under this type of cash flow are usually negative.

Whiting Petroleum (WLL) has an implied volatility of ~68.16%, which is ~12% higher than its 15-day average of ~61%.

There are several reasons why the gloomy GDP estimate is not cause for panic. The slowdown in GDP growth seems to be a temporary setback.

The last three trading sessions in May are likely to be influenced by geopolitical issues rather than economic data.

Hess’s (HES) key management objectives include taking several steps to counter lower commodity prices. These include capital and cost reductions.

ION Geophysical’s (IO) year-to-date returns as of May 11 were 37.5%.

Recent readings have shown that inflation has stabilized, which is a good thing, but signs of an imminent acceleration in inflation are still scant.

The United States seems to be in the process of departing a regime of financial repression, i.e. one where a government takes measures to channel funds into its own debt.

According to the U.S. Energy Information Administration (or EIA), the Permian Basin is the largest crude oil–producing region in the US.

Whiting Petroleum (WLL) stock rose 5.3% in the week ending December 29 from the previous week. However, the stock fell ~47.6% by the end of 2017.

Chevron (CVX) announced its third quarter earnings on October 30, 2015. Chevron saw new positions in 870 institutional investors’ portfolios in fiscal 2Q15.

Every week, the U.S. Energy Information Administration (or EIA) reports figures on crude inventories, or the amount of crude oil stored in facilities across the U.S.

In 4Q14, Sunoco’s adjusted revenues fell short of estimates by ~19%.

The U.S. total rig count decreased by 17 rigs—from 1,913 to 1,896—during the week ending August 22. This marked the first rig count decline in the past five weeks. The decline was also the largest since late September 2013.

WTI (West Texas Intermediate) crude oil’s discount to Brent crude oil widened in the week ended August 14 over the previous week.

For 2Q17, analysts expect Southwestern Energy to report revenues of ~$814 million. On a YoY basis, its 2Q17 revenue expectations are ~56% higher.

The price of natural gas (UNG) rose ~5% last week. It rose from $2.92 per mmBtu (million British thermal units) to $3.07 per mmBtu. ConocoPhillips’s production volume mix contains ~40% natural gas.

Enterprise Products Partners (EPD) is the largest company by market capitalization and enterprise value, or EV, among its closest peers. By market cap, Williams Companies (WMB) follows next.

Distillate demand and stock levels drive crude demand and crude prices. As a result, energy investors watch distillate inventories closely.

In this environment of crude oil prices declining sharply and staying low, investors continue to favor stocks that are increasing investments.

Despite COG’s recent negative stock market movement, the fact that it was able to hold its own and sustain significant levels of production should ensure that it maintains relatively high stock market returns.

MLP sluggishness continued last week. The Alerian MLP Index, which tracks the performance of 50 energy infrastructure MLPs, ended the week 4.4% lower.

Denbury reported a better-than-expected loss of ~$6.5 million, as analysts were expecting an even bigger loss of ~$11.4 million.

Chevron has cut spending on the Kitimat liquefied natural gas project (or LNG) in Canada due to falling crude prices.

On February 5, the DOE reported an increase in crude oil inventories of 0.44 million barrels—much lower than analysts’ expectations of a build of 2.27 million barrels.

As of May 2, 40 analysts have given recommendations on SWN, including five “strong buys,” five “buys,” 27 “holds,” two “sells,” and one “strong sell.”

Among downstream companies, Alon USA Energy (ALJ) was trading 1% below its 20-day moving average on March 4, 2016, after rising above this moving average in the previous day’s trade.

On July 19, 2017, natural gas August futures closed at $3.07 per MMBtu (million British thermal units), 0.7% below their previous settling price.

Energy stocks are rising this week. The Energy Select Sector SPDR ETF (XLE) has risen 1.2% from June 18–20.

We’ll now turn to EOG Resources (EOG)—our third-largest oil and gas producer, based on the fiscal 2017 data.

Energy Transfer (ET) stock continues to trade weak. The stock hit a new 52-week low of $12.75 on December 18.

Five of the seven firms covering Total (TOT) have rated it a “buy” or “outperform.”

A large portion of ExxonMobil’s earnings come from “non-operating” sources. This reflects the sheer scope of the company’s operations.

Between September 7 and 14, US equity indexes rose.

Oil rig counts decreased last week, down ~4% since June Last week, the Baker Hughes oil rig count decreased from 1,367 to 1,361. Oil rig counts have been on a slight downward trend since mid-year. Rigs drilling for oil peaked this year in June, at 1,413, but have since fallen about 4%. Though the drop […]

Rig counts tell us how many rigs are actively drilling for oil and gas. They can be an indication of oil and gas producers’ confidence.

On Friday, June 5, Baker Hughes released the weekly natural gas rig count report. As expected, natural gas rigs fell by three to 222 for the week ending June 5.

In the trailing week, OIH rose 0.5%—the only energy ETF on our list that closed in the green. US crude oil futures rose 2.6%.

Crude oil (USO) prices rose from last week’s close of $68.58 per barrel to $70.53 per barrel on June 26—an increase of ~3%.

On November 15–21, US equity indexes had the following correlations with US crude oil January futures.

Last week (ended June 2, 2017), crude oil prices continued their weekly declining trend, falling from $49.80 per barrel to $47.66 per barrel.

ONEOK is trading 4% above its 50-day moving average and 8% above its 200-day moving average.

The unexpected fall in crude oil inventory supported crude oil prices. The fall in US imports might have led to the fall in the US oil inventory.

Midstream’s earnings recovery in year-to-date 2014 was aided by higher natural gas liquids (NGL) prices.

Baker Hughes (BHI) reported that the US crude oil rig count rose by 11 to 758 on June 16–23, 2017. Rigs rose 1.5% week-over-week and 129.8% year-over-year.

Ocean Rig (ORIG) recorded general and administrative expenses of $26.9 million in 2Q16, as compared to $19 million in 1Q16.

Range Resources’ (RRC) offer of $15.75 per share was a 17% premium to Memorial Resource Development’s (MRD) price before the deal was announced.

In 3Q15, Valero noted a rise in its gross refining margin by $2.6 per barrel to $14.4 per barrel, compared to what we saw in 3Q14.

On October 13, Halliburton proposed to acquire Baker Hughes’ shares without prior notice. After receiving BHI’s counter proposal, Halliburton refused to increase its first value proposal.

Last week, the S&P Mid-Cap 400 (IVOO), the S&P 500 (SPY), and the Dow Jones Industrial Average (DIA) fell 5.2%, 4.6%, and 4.5%, respectively.

Total petroleum production increased by 4% in fiscal year 2014 (or FY14). However, the highlight was the increase in liquids production. It was supported by a 73% increase in Onshore U.S. liquid volumes and nearly doubled production at Atlantis. This is important to note because liquid volumes are more profitable.