Oil & Gas Stock Roundup: Crude Extends Slide, Icahn Bets on Cheniere Energy - Analyst Blog

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It was a week where oil prices tumbled to their lowest close in more than 4 months but natural gas futures gained for the first time in 3 weeks. On the news front, the top story came from billionaire investor Carl Icahn's 8.18% stake buy in natural gas exporter Cheniere Energy Inc.LNG .

Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures dived 6.9% to close at $43.87 per barrel, natural gas prices gained 3% to $2.80 per million Btu (MMBtu). (See the last 'Oil & Gas Stock Roundup' here: Crude Slump Batters Exxon, Chevron Profits .)

Oil prices extended their losing streak and fell for the sixth straight week, the backdrop being another increase in the number of crude-directed rigs. An upwardly moving rig count has underlined concerns about an expansion in the commodity's global supply glut. The recent turn of events in Greece, Iran and China also created pressure. Finally, a stronger dollar has made the greenback-priced crude more valuable for investors holding foreign currency.

Meanwhile, natural gas fared much better amid predictions of strong summer cooling demand with majority of the central and southern U.S. reeling under extreme heat. The U.S. Energy Department's weekly inventory release - showing a smaller-than-expected increase in the commodity's supplies - also helped to push up prices.

Recap of the Week's Most Important Stories

1. Shares of Houston-based natural gas company Cheniere Energy Inc. jumped more than 8% following the announcement that Carl Icahn has taken a 8.18% stake in the company. The activist investor spent slightly more than $1 billion to accumulate 19.4 million shares of Cheniere Energy.

Carl Icahn believes that the shares of the firm are undervalued and hence have the potential to rise in the near future. In particular, he is confident about the Houston-based firm becoming the first company to export huge amounts of natural gas from the U.S. shale formations by the end of 2015. Cheniere Energy also has contracts from natural gas buyers for a long period of 20 years. Its first cargo should be ready for shipping by the end of this year. Another point that impressed Carl Icahn is the company's plan to construct its second export terminal at Corpus Christi, TX. (See More: Cheniere Energy Up After Carl Icahn Takes 8% Stake .)

2. In an attempt to augment its acreage in Permian Basin, the largest U.S. oil company by market value Exxon Mobil Corp.XOM inked two agreements to acquire horizontal development rights in 48,000 acres in the Midland Basin core.

The two agreements involve purchase and farm-in of the area adjacent to XTO Energy Inc.'s existing acreage in Martin and Midland Counties. The agreements will also provide Exxon Mobil rights to all intervals within the basin. XTO, which is a subsidiary of Exxon Mobil, will operate the acreage. The above-mentioned agreements are in sync with the company's strategy to boost its position in the highly productive Permian Basin. (See More: Exxon Mobil Augments its Acreage in Permian Basin .)

3. U.S. energy firm Apache Corp.APA reported second quarter net income in contrast to the Zacks Consensus Estimate of a net loss, reflecting strong North American liquids production. The production of oil and natural gas (excluding divested assets and non-controlling interests) averaged 488,602 oil-equivalent barrels per day (BOE/d) (65% liquids), up 9% year over year. However, the company's performance deteriorated from the year-ago adjusted profit amid a plunge in oil prices.

To counter the commodity price freefall, Apache has decided to focus on controlling costs. As part of that endeavor, Apache has improved considerably on its cost structure in North America by spending 25% less year over year on average per-well drilling and completion. Lease operating expenses have also come down significantly, while Apache strives to cut down on general and administrative expenses. (See More: Apache Q2 Earnings Crush Loss Estimate on Production Gains .)

4. Irving, TX-based Pioneer Natural Resources Co.PXD also overcame the weak crude pricing environment to beat earnings estimates. In particular, the independent oil and gas explorer's strong production growth helped it outperform. Total output in the reported quarter averaged approximately 196.6 thousand barrels of oil equivalent per day (MBOE/d), up 12% year over year. The improvement was attributable to robust yield from core growth assets - Spraberry field and Wolfcamp Shale.

For 2015, Pioneer increased capital spending projection to $2.2 billion from the prior guidance of $1.85 billion. The rise in capital spending is owing to the company's plans of increasing its rig count in the northern Spraberry/Wolfcamp regions in the latter half of this year by an average of two rigs per month. (See More: Pioneer Natural Beats on Q2 Earnings, Ups '15 Capex View .)

5. Houston, TX-based leading upstream energy firm Marathon Oil Corp.MRO posted narrower-than-expected second quarter loss, thanks to higher production from the U.S. resource plays and cost-control initiatives. The company reported North American production available for sale of 274,000 oil-equivalent barrels per day (BOE/d), up from 227,000 BOE/d in the second quarter of 2014. But again, the bottom line deteriorated considerably from the year ago period amid a freefall in oil prices. For 2015, Marathon Oil upwardly revised the lower end of its output target and now sees volumes in the 375,000-390,000 BOE/d band, achieving a 5-7% year over year production growth. The company also reiterated its goal to limit capital spending to $3,300 million in 2015 as it focuses on controlling costs amid plummeting oil prices. (See More: Marathon Oil Q2 Loss Narrower than Expected, Revenues Miss .)

Price Performance

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

Company Last Week Last 6 Months
XOM -0.09% -13.08%
CVX -0.86% -21.90%
COP -0.98% -26.05%
OXY +2.31% -10.88%
SLB +1.98% -0.34%
RIG +12.98% -21.33%
VLO +5.55% +24.64%
TSO +10.68% +22.99%

Over the course of last week, the best performer was offshore driller Transocean Ltd.RIG that added 13% to its stock price, while the biggest loser was Houston-based independent exploration and production company ConocoPhillipsCOP , which edged down 1% during the period.

Over the last 6 months, downstream operator Valero Energy Corp. (VLO) was the chief beneficiary on the bourses with its shares advancing 24.6%. On the other hand, ConocoPhillips was the laggard again, as it witnessed a 26.1% price decline over the same time frame.

What's Next in the Energy World?

Apart from the usual releases in this week - the U.S. government data on oil and natural gas - market participants will be closely tracking a series of crucial economic reports, including the retail sales numbers.

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PIONEER NAT RES (PXD): Free Stock Analysis Report

CONOCOPHILLIPS (COP): Free Stock Analysis Report

APACHE CORP (APA): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

TRANSOCEAN LTD (RIG): Free Stock Analysis Report

MARATHON OIL CP (MRO): Free Stock Analysis Report

CHENIERE ENERGY (LNG): 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 Nasdaq, Inc.

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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