The U.S. Just Assassinated an Iranian General---and the Riskiest Oil Stocks Are Flying

Ben Levisohn Sector Focus Energy APA CHK CLR MTDR NBL PDCE REI SM WLL XOM Apache Ring Energy Chesapeake Energy Continental Exxon Mobil Matador Resources Noble Energy PDC Energy SM Energy Whiting Petroleum Energy Crude Oil/Natural Gas Upstream Operations Trusts/Funds/Financial Vehicles Natural Gas/Oil Exploration Exchange Traded Funds Financial Services Investing/Securities Qassem Soleimani Neal Dingmann Asia Developing Economies Persian Gulf Region Iran Middle East North America United States Western Asia Equity Markets Commodity Markets Energy Markets Derivative Securities Commodity/Financial Market News Crude Oil Markets Content Types Crude Spot Market Commentary Energy Commentary Factiva Filters C&E Exclusion Filter IWE Filter Routine Market/Financial News APA.AU CHK CLR I/EQS I/EXT I/IAV I/OIS M/ENE M/FCL MTDR N/CMKT N/DJN N/DRV N/EGY N/EPR N/MKT N/NRG N/PET N/STK N/WER NBL PDCE R/ARA R/ASI R/IR R/ML R/NME R/US REI SM WLL XOM Energy Select Sector SPDR ETF XLE Barrons.com Barrons 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subcat com code petd relevance 26 significance passing onlinesignificance passing-mention confidencerange high exchange Nasdaq exchangeisocode XNAS co EXXN co|EXXN symbol XOM country US codetype co displayname Exxon Mobil extractedtext Exxon Mobil source MANUAL code xom name Exxon Mobil significance prominent onlinesignificance prominent exchange U.S.: NYSE exchangeisocode XNYS chartingsymbol STOCK/US/XNYS/XOM fcode EXXN status modified co WHIPC co|WHIPC symbol WLL country US codetype co displayname Whiting Petroleum extractedtext Whiting Petroleum source MANUAL code wll name Whiting Petroleum significance prominent onlinesignificance prominent exchange U.S.: NYSE exchangeisocode XNYS chartingsymbol STOCK/US/XNYS/WLL fcode WHIPC status modified co CHSPKE co|CHSPKE symbol CHK country US codetype co displayname Chesapeake Energy extractedtext Chesapeake Energy source MANUAL code chk name Chesapeake Energy significance prominent onlinesignificance prominent exchange U.S.: NYSE 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Oil prices are spiking after the U.S. assassination of top Iranian general Qassem Soleimani, and Whiting Petroleum, Chesapeake Energy, SM Energy, Ring Energy and Matador Resources are among the big winners.

The U.S. Just Assassinated an Iranian General—and the Riskiest Oil Stocks Are Flying

Oil prices are spiking after the assassination, and Whiting Petroleum, Chesapeake Energy, SM Energy, Ring Energy and Matador Resources are among the big winners.

https://www.barrons.com/articles/whats-moving-premarket-oil-gold-airlines-energy-companies-51578055706 https://www.wsj.com/articles/after-soleimanis-death-the-balancing-act-in-the-middle-east-just-got-tougher-11578033833 https://www.barrons.com/articles/dow-jones-industrial-average-set-to-tumble-after-u-s-airstrike-kills-iranian-general-51578053879 https://www.barrons.com/articles/oil-prices-are-steady-why-are-risky-energy-companies-unpopular-as-ever-51573732800 mailto:Ben.Levisohn@barrons.com The U.S. Just Assassinated an Iranian General—and the Riskiest Oil Stocks Are Flying By Ben Levisohn Getty Images Risky oil stocks are flying as oil prices spike amid renewed Middle East tensions.

The market’s riskiest oil stocks are getting a boost as oil prices spike following the U.S. assassination of Iranian general Qassem Soleimani.

WTI crude oil futures, the U.S. benchmark, have gained 4% to $63.64 a barrel at 8:18 a.m. today, while Brent crude, the European benchmark, have risen 4,1% to $69 a barrel. While the Dow Jones Industrial Average looks set to drop more than 200 points at the open, the Energy Select Sector SPDR ETF (XLE) is up 1.1% to $61.23 in premarket trading.

That’s no surprise given that energy stocks make their money by selling or processing oil. And it’s the riskiest oil stocks that are up the most Friday morning. While Exxon Mobil (XOM) has advanced just 0.9% to $71.55, the oil explorers with the highest leverage ratios are have gained far more—some in the double digits.

A look at the S&P 1500’s best performing stocks in premarket trading is a who’s who of leveraged oil explorers. Whiting Petroleum (WLL), with a leverage ratio of about 2.5 times, according to SunTrust research released on Dec. 9, has gained 13% to $8.15, while Chesapeake Energy (CHK), with a leverage ration of 4.7 times, is up 8.8%. Other big movers include SM Energy (SM), Ring Energy (RING) and Matador Resources (MTDR).

There’s basic math behind some of those advances. Whiting’s leverage ratio drops to 2.1 times with oil at $65 dollars, while Chesapeake’s falls to 4.2 times, according to SunTrust.

SunTrust’s Neal Dingmann isn’t sure that oil can stay above $60 a barrel—it didn’t following the attack on Saudi Arabia—but believes it will stay above $55. “As such, most E&Ps are likely to benefit from the higher prices though those with most exposure (least hedged) to oil should benefit the most,” he writes. “Further, we believe the latest geopolitical events could cause investors to take more risk causing them to invest even in those companies with more leverage.”

He expects Centennial Resource (CDEV), Whiting, PDC Energy (PDC), Noble Energy (NBL), Continental (CLR), and Apache (APA) to outperform during today’s oil spike.

Write to Ben Levisohn at Ben.Levisohn@barrons.com

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