Oil & Gas Stock Roundup: Prices Rally on Supply Data - Analyst Blog

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Both crude and natural gas prices moved up during the past week on falling stockpiles.

Among the newsmakers, Schlumberger Ltd. ( SLB ) reported strong fourth quarter earnings but Royal Dutch Shell plc ( RDS.A ) cautioned investors about sub-par performance.     

Crude Oil:

Crude prices increased last week on encouraging U.S. economic reports that fuelled hopes for robust demand in the worlds biggest oil consumer. In particular, a positive manufacturing data - the New York State factory report - and robust December retail sales reading bode well for future fuel demand growth.

Sentiments were further brightened by the Energy Information Administration (EIA) report that showed a big fall in inventories, the seventh in a row.

As per the EIA's weekly 'Petroleum Status Report,' crude inventories fell by a much larger-than-expected 7.66 million barrels for the week ending Jan 10 to 350.23 million barrels.

As a result of these factors, by close of trade on Friday, West Texas Intermediate (WTI) oil was firmly in the black and settled at $94.37 per barrel, gaining 2.1% for the week. 

Natural Gas:

Natural gas rallied last week on the back of a record decrease in supplies and forecasts of freezing 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 a massive 287 billion cubic feet (Bcf) for the week ended Jan 10. Though slightly below the guided range (of 300-304 Bcf drawdown), the decrease was significantly higher than both last year's withdrawal of 156 Bcf and the 5-year average reduction of 159 Bcf for the reported week.

Chilly weather forecasts - in the key U.S. consuming regions over the next few days - are likely to further spur natural gas' demand for heating.

Influenced by these factors, natural gas spot prices ended Friday at $4.33 per million Btu (MMBtu), up 9.6% over the week.

Energy Week That Was:

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

Schlumberger Sees Q4 Earnings Growth

The world's largest oilfield services provider Schlumberger Ltd. reported strong fourth quarter results, boosted by strong international exposure (mainly Middle East and Asia), focus on execution and integration capabilities. The company's adjusted earnings of $1.35 per share (excluding special items) beat the Zacks Consensus Estimate of $1.32 and came well ahead of the $1.04 per share earned a year ago. Total revenue of $11.9 billion was in line with the Zacks Consensus Estimate and up 7.4% from the year-earlier level of $11.1 billion.

Shell Foresees Weak Q4 Profit

Europe's oil giant Royal Dutch Shell has reported that it expects adjusted earnings in fourth quarter 2013 to be substantially lower than both the sequential and year-ago period's total adjusted profit. Hike in exploration costs, lower oil and gas output along with weak performance by the company's refining unit resulted in the tepid projection.

Based on current cost of supplies (CCS) and after adjusting one-time items, Shell anticipates its Oct-Dec 2013 earnings to be $2.9 billion. The figure reflects a significant decrease of 35.6% and 48.2% from $4.5 billion and $5.6 billion adjusted profits reported in the previous quarter and fourth-quarter 2012, respectively.

Apache Offers Q4 Operational Update

Upstream operator Apache Corp. ( APA ) said that its fourth quarter volumes were hurt by extreme weather in Oklahoma, Texas and New Mexico. However, the company did not provide any output projection for the three months. Further, Apache informed that owing to the sale of several non-core assets in the Gulf of Mexico, Canada and Egypt last year, total production for the Oct-Dec period is likely to decline from the previous quarter.  

Chevron to Develop Alder Field

Chevron North Sea Ltd. - the U.K. subsidiary of the U.S. energy major Chevron Corp. ( CVX ) - has taken a final investment decision to develop the Alder Field in North Sea. The British government has given the nod on the project, which is expected to come online in 2016.

The project is expected to process 14,000 barrels of condensate and 110 million cubic feet of natural gas per day. Located 17 miles from the operating Britannia field, it will be developed using a single subsea well tied to the Britannia platform.     

Petrobras Sets Pre-Salt Yield Record

Brazilian state-run energy giant Petrobras ( PBR ) provided an update on its proven reserves in the pre-salt region that comprise over a quarter of the company's total proven reserves.  The pre-salt reserves saw a 43% year-over-year growth in 2013 from the 42 wells drilled in the region, in addition to the strong results from the platforms at the Campos and Santos Basins. Petrobras also announced that it set a new pre-salt production record of over 390,000 barrels of oil per day (Bbls/d) on Jan 14, breaking the previous record of 371,000 Bbls/d.

Performance Chart of Some Major Companies:

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

Ticker

Last Week's Performance

6 month performance

XOM

-1.35%

+4.19%

CVX

-1.42%

-6.00%

COP

-1.97%

+2.29%

OXY

-3.49%

-1.65%

SLB

+2.31%

+9.03%

RIG

-3.79%

-6.13%

VLO

-3.42%

+48.14%

TSO

-8.57%

+1.62%

Other Headline News on Energy:

Core Labs Hikes Q1 Dividend

Oilfield service company Core Laboratories NV ( CLB ) raised its first quarter 2014 cash dividend payment by 56.25% to $0.50 per share, up from $0.32 paid during fourth quarter 2013. The new dividend will be paid on Feb 21, 2014, to shareholders of record as on Jan 24, 2014. If the revised dividend is maintained for the rest of the year, then the annualized dividend payout of the company would be $2.00 per share. 

Cimarex Unveils 2014 Capital Budget

Denver-based Cimarex Energy Co. ( XEC ) provided a glimpse of its 2014 capital expenditure plan. The oil and gas exploration and production (E&P) firm plans to invest roughly $1.8 billion this year. Cimarex intends to invest $1.4 billion in the Permian Region in 2014, up 40% from 2013 capital expenditures of approximately $1 billion. Of this, $1.2 billion will be invested in drilling and completing wells, including $600 million in the Wolfcamp shale.

Chesapeake Divests Chaparral Energy

Natural gas producer Chesapeake Energy Corp. completed the divestment of 100% of its ownership interest in Chaparral Energy Inc. to an unnamed buyer for $215 million. This sale of the Oklahoma City-based independent energy explorer is compatible with Chesapeake's current focus of refinement and building up a portfolio around core assets.

This Week's Outlook:

Apart from the usual releases - the U.S. government data on oil and natural gas - market participants await reading on jobless claims and Chinese GDP.

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APACHE CORP (APA): Free Stock Analysis Report

CORE LABS NV (CLB): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

PETROBRAS-ADR C (PBR): Free Stock Analysis Report

ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report

SCHLUMBERGER LT (SLB): Free Stock Analysis Report

CIMAREX ENERGY (XEC): 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: APA , CLB , CVX , EIA , WTI

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