Oil & Gas Stock Roundup: BP Suffers Legal Setback - Analyst Blog


Crude prices remained flat last week, as encouraging economic data was offset by a negative Q4 GDP revision and a climb in distillate inventories, while natural gas declined by a hefty 25% amid a bearish supply report and predictions of warmer weather.

Among the newsmakers, British major BP plc ( BP ) lost its bid to block seafood claims payments associated with the 2010 Gulf of Mexico oil spill settlement.     

Crude Oil:

Crude prices got a boost from upbeat U.S. manufacturing and consumer-spending reports that painted a positive picture of the economy. This has fueled hopes for robust fuel and energy demand in the world's biggest oil consumer. The commodity got some more support from the renewed political tensions in Ukraine that rattled global energy markets.

However, the bulls were offset by lower-than-expected fourth quarter GDP growth, concerns about an economic slowdown in China and forecasts for warmer weather conditions over much of the country. Crude prices were also pressured by a surprise rise in distillate stockpiles.  

As a result of these factors, by close of trade on Friday, West Texas Intermediate (WTI) oil settled at around $102.5 per barrel, essentially flat for the week. 

Natural Gas:

Natural gas crashed last week from its highest level in 5 years on the back of a tepid decrease in supplies and forecasts of a break in cold weather conditions.

The EIA's weekly inventory release showed that natural gas stockpiles held in underground storage in the lower 48 states fell by 95 billion cubic feet (Bcf) for the week ended Feb 21, below the guided range (of 102-106 Bcf drawdown). Moreover, the decrease was considerably lower than both last year's withdrawal of 165 Bcf and the 5-year (2009-2013) average reduction of 125 Bcf for the reported week.

To make things worse, milder weather forecasts - in bulk of the country over the next few days - are likely to limit natural gas' demand for heating. Additionally, with the commodity's price topping $6 recently, many utilities may switch to coal from the more costly natural gas, denting its prospects further.

Influenced by these factors, natural gas prices ended Friday at $4.61 per million Btu (MMBtu), down 25.0% over the week.

Energy Week That Was:

The week's energy coverage was dominated by the following news:

BP's Claim to Delay Spill Payments Rejected

Oil giant BP plc's request to a federal judge to delay oil spill compensation payments to seafood workers was denied. BP had appealed to U.S. District Judge Carl Barbier to put on hold the second phase of payments under the $2.3 billion Seafood Compensation Fund.

Per the lawsuit, alleged Texas lawyer Mikal Watts fraudulently claimed to represent 40,000 deckhands in the seafood compensation program, apart from using fake Social Security numbers and other fake documents that calls for prompt suspension of all payments. However, the judge was unconvinced and commented it would be several months before a second phase of payment is distributed if the seafood compensation plan is rejected at present.

Chesapeake Earnings Miss, Mulls Rig Unit Future

Natural gas producer Chesapeake Energy Corp. ( CHK ) slid 5% following fourth quarter earnings that miss analyst expectations by a wide margin, as it grapples with high spending in the face of constrained production. To assuage investors' concerns and raise much-needed cash, the company is considering plans to spin off or sell its oilfield services unit, Chesapeake Oilfield Services.

Apache to Focus '14 E&P on North America

U.S. energy firm Apache Corp. ( APA ) announced that it plans to invest $8.5 billion in exploration and production activities in 2014. A major chunk (about 64%) of this investment will be focused on onshore North America. However, this capex is considerably lower than the $10.0 billion spent last year on account of a smaller asset base.

Apache expects North America onshore liquids production to grow 15-18% in 2014. This will be a significant growth factor for the company considering the fact that the region's onshore assets comprise nearly 60% of Apache's total production. The company also projects a two-figure global liquids expansion and 5-8% global oil and gas production growth in 2014.

Forest Oil Plunges on Disappointing Q4

Shares of Denver-based oil and gas company Forest Oil Corp. ( FST ) plummeted almost 38% on Wednesday following a disappointing earnings announcement. The Hamilton, Bermuda-based company's underperformance was primarily due to lower volumes and realized prices. To make matters worse, Forest announced a significant decline in its year-end estimated proved reserves.

Stellar Result for EOG Resources

Independent energy explorer EOG Resources Inc. ( EOG ) delivered stellar fourth quarter results on the back of a striking improvement in its crude and liquids production. During the Oct-Dec period, EOG's total volume expanded 16.7% from the year-earlier level to 48.9 million barrels of oil equivalent, or 531.8 thousand barrels of oil equivalent per day. Crude oil and condensate production was 244.3 thousand barrels per day, up approximately 50.2% from the year-ago level.

Performance Chart of Some Major Companies:

The following table shows the price movement of the major oil and gas players over the past 5 days and during the last 6 months.


Last 5 Day's Performance

6 month performance

























Other Headline News on Energy:

QEP Resources Down on Weak Q4 Earnings

Domestic energy explorer QEP Resources Inc. ( QEP ) reported weaker-than-expected fourth quarter 2013 results, hamstrung by lower production. The unfavorable results led to a 12.6% share price fall on the NYSE, in after-market trade hours on Tuesday. Overall production at QEP Resources during the quarter was 75.1 billion cubic feet equivalent - 64.3% gas - down 10.5% from the previous-year period.       

Newfield Exploration Jumps on Earnings Beat

Oil and gas producer Newfield Exploration Co. ( NFX ) jumped more than 7% after coming out with strong earnings on the back of higher volumes. In particular, the company's domestic liquids production was up 11% sequentially, with impressive gains in Oklahoma's Anadarko Basin.

Petrobras Earnings Fall, Gives Spending Plan

Brazil's state-run energy giant Petrobras' fourth quarter earnings fell on lower output. However, the company's per ADR profits came ahead of estimates, owing to significant fall in exploration expenses along with reduced refining expenses. Additionally, Petrobras revealed its 2030 Strategic Plan, as per which it expects to place itself among the top five integrated oil firms in the world by 2030. To support the plan, management has decided to invest roughly $220.6 billion through 2014-2018.

This Week's Outlook:

Apart from the usual releases in this holiday shortened week - the U.S. government data on oil and natural gas - market participants await several key reports, including the ISM manufacturing and services indexes, construction spending, factory orders and employment data.

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APACHE CORP (APA): Free Stock Analysis Report

BP PLC (BP): Free Stock Analysis Report

CHESAPEAKE ENGY (CHK): Free Stock Analysis Report

EOG RES INC (EOG): Free Stock Analysis Report

FOREST OIL CORP (FST): Free Stock Analysis Report

NEWFIELD EXPL (NFX): Free Stock Analysis Report

QEP RESOURCES (QEP): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: WTI , APA , BP , CHK , EOG



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