Oil & Gas Stock Roundup: Refiners Sink, Nabors Unit to Merge with C&J Energy - Analyst Blog

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Oil prices suffered a weekly loss, as soft economic data - particularly weak GDP figures - and strong crude stockpiles raised concerns about the state of fuel and energy demand in the world's biggest oil consumer. Geopolitical forces also played their part in dampening sentiments, with tensions over Iraq subsiding to ease supply concerns in the Middle East. By end of trading on Friday in New York, West Texas Intermediate (WTI) crude futures were down 1.0% during the week to close at $105.74 per barrel.

Natural gas also slumped to a four-week low on another bearish supply data. This was partially offset by expectations of an uptick in electric power demand with forecasts of hotter-than-normal weather conditions across the Midwest to the Northeast U.S. Natural gas prices ended Friday at $4.41 per million Btu (MMBtu), down 2.7% over the week. (See last to last week's recap here: Crude Extend Gains; Williams, Shell Unveil Large Deals )

Recap of the Week's Most Important Stories

1. Shares of oil refiners tumbled last week following the relaxation of a four-decade ban on crude oil exports. The ruling is expected to eat upon the domestic crude supply glut and result in oil price increase. Eventually, the domestic and international prices would converge and refinery margins will deteriorate.

As a result, the U.S. companies - which are not allowed to export oil but can ship refined products such as gasoline and diesel - will lose the price advantage it has been enjoying of late. However, things do not appear to be that drastic. (Read More: Oil Export Ruling: No Cause to Panic for Refiners )

2. Land drilling contractor Nabors Industries Ltd. ( NBR ) announced that it has entered into an agreement with oilfield services provider C&J Energy Services Inc. ( CJES ) to merge its completion and production services businesses located in the U.S. and Canada with the latter for about $2.86 billion in cash and stock. (Read More: Nabors Unit and C&J Energy to Form New Company, Shares Rise )

3. Oklahoma City-based exploration and production firm Devon Energy Corp. ( DVN ) has agreed to sell natural gas-rich producing acreage across six U.S. states to Houston-based oil and gas producer Linn Energy LLC ( LINE ) for $2.3 billion. (Read More: Devon Energy to Sell All Non-Core US Assets to Linn Energy )

4. Canadian energy outfit Encana Corp. ( ECA ) entered into a deal to sell its Bighorn properties in Alberta to private-equity firm Apollo Global Management LLC ( APO ) for about C$2 billion ($1.8 billion). (Read More: Apollo Buys Encana's Bighorn Properties for $1.8 Billion ).

5. U.S.-listed shares of Brazilian energy giant Petroleo Brasileiro SA or Petrobras ( PBR ) fell over 4% following the announcement that it will have to shell billions of Brazilian reais for additional production rights at its Buzios field and nearby areas. (Read More: Petrobras' Big Oil Find Brings Greater Costs, Shares Fall )

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 -3.42% +0.93%
CVX -1.66% +5.16%
COP -0.08% +22.86%
OXY -2.19% +9.36%
SLB +8.01% +32.80%
RIG -1.77% -7.93%
VLO -13.08% +0.46%
TSO -6.14% +1.22%

Oilfield services giant Schlumberger Ltd. was the week's best performer among the market heavyweights, adding 8.0% to its stock price after signing a memorandum of understanding with Afghanistan-focused Bayat Energy to sell or lease oilfield equipments for use in the Central Asian country.

Expectedly, the biggest loser was a refiner - Valero Energy Corp. The downstream operator lost 13.1% during the week, pressured by the relaxation of the oil export ban.

Over the last 6 months, Schlumberger was again the leader of the pack with the company's shares advancing 32.8%. However, offshore driller Transocean Ltd. witnessed a 7.9% 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 Thursday's U.S. nonfarm payrolls report for June.

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DEVON ENERGY (DVN): Free Stock Analysis Report

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

ENCANA CORP (ECA): Free Stock Analysis Report

NABORS IND (NBR): Free Stock Analysis Report

APOLLO GLOBAL-A (APO): Free Stock Analysis Report

LINN ENERGY LLC (LINE): Free Stock Analysis Report

C&J ENERGY SVCS (CJES): 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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