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Energy Sector Update for 03/29/2018: UNT,QES,GEVO,CLD


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Energy stocks were posting large gains on Thursday, with the NYSE Energy Sector Index adding nearly 1.6% in value while shares of energy companies in the S&P 500 also were up almost 1.6% as a group. West Texas Intermediate crude oil for May delivery was climbing 38 cents to $64.76 per barrel in New York while the global benchmark Brent crude May contract also has reversed course, rising 36 cents to $69.89 per barrel. May gas futures were 4 cents higher at $2.74 per 1 million BTU, extending their gains following a mildly bullish inventory report this morning. Among energy-related ETFs, United States Oil was little changed while United States Natural Gas was ahead by almost 1.3%. The Philadelphia oil-service sector index was up more than 1.7%.

In industry news:

US natural gas inventories fell 63 billion cubic feet to to 1.383 trillion cubic feet during the seven days ending March 23, marking the 19th week in a row there was a drawdown of natural gas in storage, according to the Energy Information Administration. The drop was slightly larger than the 55 billion cubic foot reduction last week expected by industry experts polled by S&P Global Platts Analytics but also was down from the 86-billion cubic foot draw recorded during the prior week. Demand has been slowing in recent weeks as warmer spring weather begins to reach more parts of the country, with combined residential and commercial-industrial consumption dropping around 2 billion cubic feet per day, according to Platts, which also says storage levels were more than 300 cubic feet below the five-year average with three more withdrawals likely yet this season. By April 6, natural gas stocks are projected to fall to 1.345 trillion cubic feet, or about 254 billion cubic feet below the five-year mean.

Among energy stocks moving on news:

+ Unit Corp ( UNT ) was continuing to build on its prior gains, rising 17% to a session high Thursday of $19.15 a share, after saying it sold a 50% stake in its Superior Pipeline Company subsidiary for $300 million to SP Investor Holdings, an investor group jointly owned by OPTrust and funds managed by Partners Group. The oil and natural gas exploration company expects to use proceeds from the deal to accelerate its upstream drilling subsidiary as well as in other capital projects or for paying down debt. All of Superior Pipeline's employees will transfer to Unit's Superior Midstream subsidiary prior to the transaction's scheduled close on April 3.

In other sector news

+ Quintana Energy Services ( QES ) was edging higher Thursday afternoon, trying to recover a more than 1% gain that followed it returning to a Q4 profit after revenue more than doubled year-ago levels. Net income for the oilfield-services company grew to $2.1 million during the three months ended Dec. 31 compared with a $35.9 million net loss during the last three months in 2016. Revenue jumped almost 125% over the year-ago period to $130.9 million. For 2017, Quintana generated a $0.05 per share net loss, improving on a $0.37 per share net loss in FY16 while revenue grew to $438 million from $210.4 million year over year. Analysts, on average, had been looking for the company to post a $0.07 per share net loss last year on $436.3 million in revenue. Quintana also said it converted $33.6 million of its outstanding debt from its recent initial public offering into common stock as well as terminating its existing revolving and term loan facilities and replacing them with a new $100 million senior secured asset-based revolving credit facility.

- Gevo ( GEVO ) dropped almost 10% on Thursday despite the biofuels and renewable chemicals company narrowing its Q4 net loss as revenue improved over year-ago levels. Excluding one-time items, its net loss during the October-to-December reporting period was $0.26 per share, paring a $1.14 per share loss during the same quarter in 2016 and matching the lone analyst call. Revenue climbed to $6.7 million from $5.8 million last year, exceeding the single-analyst estimate by around $1.3 millon.

- Cloud Peak Energy ( CLD ) slid almost 13% on Thursday after analysts at JPMorgan reduced its investment call for the coal miner to Underweight from Neutral.

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

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This article appears in: Investing , Energy
Referenced Symbols: UNT , QES , GEVO , CLD


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