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.

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.

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.

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%.

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

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.

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

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.

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.

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.

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

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).

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.

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

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

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.

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.

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.

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

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.

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%.

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.

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.

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.

The U.S. rig counts dropped last week, but are still up significantly year-to-date and have increased by 103, or 6%.

The US energy sector was badly affected by the recent market sell-off in February 2018.

Reducing oil prices are good news for e-commerce players. Oil prices have declined by about 60% over the past six months.

Following Oasis Petroleum’s (OAS) fiscal 4Q15 earnings release, OAS stock rose 3%. The stock has declined 71% year-over-year.

Many parties in the energy industry and investing community monitor oil and gas rig counts as one measure of drilling activity.

Kinder Morgan (KMI) rose 2.9% in the week ended Monday, June 5, 2017, recovering from some of its previous losses.

Natural gas prices started the week by falling ~2.4% to $3.67 MMBtu (million British thermal units) on Monday. This was the lowest close in 11 months.

Changing oil prices have changed the segment dynamics within Total (TOT). The Upstream segment, which contributed 48% of the net adjusted operating earnings in 1Q15, contributed 27% in 1Q16.

Rising refinery utilization and declining US output will support crude oil prices. This is positive for crude oil prices.

Crude oil prices have remained buoyant lately, with last week’s rally mostly driven by higher-than-expected U.S. GDP growth.

In May, no drilling permits were issued in the shallow waters of the Gulf of Mexico. In the first five months of 2018, only two were issued.

Although not considered safe haven assets, in the current context of high geopolitical risk and consequently volatility, investors could consider investing in sectors like energy and large cap companies.

Apache was trading 11.8% below its 100-day moving average. Since November 27, 2015, the stock has struggled to cross its 100-day moving average.

Things were going pretty well for Mexico until 2004 when its oil production started declining. The decline was as a result of Cantarell’s—Mexico’s largest oilfield— depleting reserves.

Schlumberger recorded topline and bottom-line growth in its North American operations due to continued efficiency improvements and new technology.

Inflation remains subdued by all measures. Since inflation is way below the Fed’s long-term target, the Fed can afford to keep interest rates lower for a little longer.

Approximately 35% of Wall Street analysts tracking ExxonMobil (XOM) rate it a “buy.” Approximately 10% of the analysts recommend a “sell.”

After analyzing BP’s (BP) 2Q15 performance by segment, we’ll now discuss its year-to-date (or YTD) revenues and earnings.

On Friday, August 29, prices closed at $95.96 per barrel. On Tuesday, prices dropped to $92.88—a 3% decrease. On Wednesday, prices came back to $95.54 per barrel, again ~3% higher than the previous day’s market close.

Inventories provide a useful snapshot of distillate demand and supply trends, particularly near and during the winter months.

Record-high production levels have ensured that adequate supply of natural gas is available before the winter starts. The EIA anticipates that inventory levels will be 3,532 bcf by the end of this month.

The WTI-Brent spread remained relatively unchanged last week, but has closed in significantly since year-end 2012.

Devon plans to rapidly grow production in the Eagle Ford over the next few years.

After EQT’s 3Q17 earnings release on October 26, its stock fell ~1.3%. The stock likely fell due to the 3Q17 revenue miss and fall in natural gas prices.

Petrobras’ (PBR) oil and gas production from Brazil was more than 90% of its total upstream energy production. In 2013, ~96% of its total reserves were in Brazil.

US crude oil (USO) (USL) April futures fell 6.3% between March 2, 2017, and March 9, 2017. The fall in XLE corresponded with weakness in crude oil prices.

Baker Hughes (BHI) is a leading supplier of oilfield services, products, technology, and systems to the worldwide oil and natural gas industry.

Last week (ended May 26), crude oil prices fell from $50.67 per barrel to $49.80 per barrel.

Noble Corporation plans to release its 2Q17 results on August 3, 2017, after the markets close. It will have a conference call on August 4, 2017.

Rig counts in the Permian Basin can gauge drilling activities for upstream companies. The Permian Basin rig count is now at its lowest since May 2011.

Valero Energy (VLO) released its fourth quarter earnings on January 29. The company reported a net income of $1.2 billion.

The previous parts of this series (parts 8 and 9) explained the counterintuitive relationship between low natural gas prices, falling rigs, and rising natural gas production. Oil rigs have a simpler relationship with crude oil prices and oil production.

The lower 48—representing the largest business segment in COP—consists of operations located in the U.S. lower 48 states plus Latin America.

Early last week, WTI crude oil had eased to close to $99 following Libya’s restarting exports from major ports and abating fears over supply disruptions in Iraq.

Chesapeake Energy (CHK) stock has been choppy in the last few weeks, and its stock has been following the movements in energy prices. Since the beginning of 2017, CHK stock has fallen 28%.

The spread between WTI crude and Brent crude moved wider on Libya supply disruptions.

The EIA estimates that global crude oil supply outages fell by 38,000 bpd to 2,284,000 bpd in November 2016—compared to the previous month.

In 4Q14, revenues in the Drilling and Evaluation segment increased 6.5% to $3.29 billion from $3.09 billion recorded in 4Q13.

Unlike most energy stocks, Cabot Oil & Gas (COG) stock has increased this year. Since January, Cabot Oil & Gas stock has risen ~10%.

In 4Q14, Schlumberger’s revenues from its North American operations increased 18.5% to $4.32 billion.

U.S. total rig count increases by six The U.S. total drilling rig count increased by six rigs, from 1,883 to 1,889, during the week ending August 1 according to Baker Hughes, which publishes rig counts every week. The number of oil rigs increased by 11, while the number of natural gas rigs decreased by five. […]

Let’s see which energy company stands out as the most efficient in reducing debt loads and improving leverage ratios and which ones are laggards.

Baker Hughes will release the weekly crude oil rig count report on July 24, 2015. The crude oil rig count fell by seven to 638 for the week ending July 17.

Analysts had expected a decrease of 2.5 million barrels in crude inventories last week. We’ll discuss actual changes in the crude inventory in this series.

Oil traded flat on the latest inventories data, with a large build in crude oil stocks but declines in gasoline and distillate stocks.

Between 3Q12 and 3Q14, HAL’s adjusted earnings per share (or EPS) has increased 78%. HAL has drawn the attention of Wall Street analysts to review the results and give their recommendations and target price.

In its Short-Term Energy Outlook (or STEO) report, the U.S. Energy Information Administration (or EIA) forecasted higher natural gas prices this winter.

Chesapeake Energy’s 4Q15 EV-to-EBITDA multiple is in-line with its historical average of ~5.8x. The market value of its equity declined by ~71% year-over-year.