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Oil & Gas Stock Roundup: Crude Under $101, Whiting-Kodiak Combo Creates Bakken Behemoth

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Oil prices suffered another weekly loss, slumping to a two-month low as geopolitical forces played their part in dampening sentiments. While tensions over Iraq subsided to ease supply concerns in the Middle East, the resumption of output from Libya’s largest oilfield also pressured crude. Additionally, a smaller-than-expected drop in oil stockpiles and concerns about the European banking system dragged down the commodity.

However, some of the negative sentiment was counterbalanced by the robust initial claims numbers and positive vibes from the Federal Reserve’s policy meeting. By the end of trading on Friday in New York, West Texas Intermediate (WTI) crude futures were down 2.8% during the week to close at $100.83 per barrel.

Natural gas fared even worse, hitting a six-month low over the course of the week on a larger-than-average supply gain. This was further aggravated by expectations of tepid electric power demand with forecasts of cooler weather conditions across most parts of the Midwest and Northeast U.S. Natural gas prices ended Friday at $4.15 per million Btu (MMBtu), down 5.1% over the week. (See last to last week’s recap here: Crude Falls Further, Chesapeake Completes Spin-Off)

Recap of the Week’s Most Important Stories

1.    Whiting Petroleum Corp. (WLL - Free Report) announced that it will acquire Kodiak Oil & Gas Corp. in a transaction valued at $6 billion, comprising $3.8 billion in stock and $2.2 billion of debt assumption of Kodiak. The transaction, uniting the two Denver, CO-based exploration and production companies, would make the combined entity the largest producer in the North American prolific shale play Bakken and Three Forks. (Read More: Whiting Petroleum to Buy Kodiak, Become Top Bakken Producer)

2.    Oilfield services behemoth Halliburton Co. (HAL - Free Report) declared that it has entered into a deal with Petrotech (Xinjiang) Engineering Co Ltd., a unit of China-based SPT Energy Group Inc. that provides oilfield technical services. Per the agreement, both companies will form a joint venture (JV) firm − Xinjiang HDTD Oilfield Services Co. Ltd. – which will conduct hydraulic fracturing and production enhancement operations to exploit tight oil and gas reserves in the Chinese province of Xinjiang. (Read More: Halliburton, Petrotech in JV to Tap Chinese Oil & Gas Reserves)

3.    U.S. energy major Chevron Corp. (CVX - Free Report) issued a second-quarter 2014 interim update covering the first two months of the quarter.  The company expects earnings to increase sequentially. This quarterly growth is attributable to gains from asset sales (mainly upstream-related assets) and an absence of impairment charges. However, foreign exchange losses are expected to widen from the first-quarter level. (Read More: Chevron Q2 Interim Update Hints at Sequential Earnings Rise)

4.    U.S. refining company Valero Energy Corp’s (VLO - Free Report) share price fell 3.4% in after hours trading following its second quarter guidance. Valero said that though it expected to post higher second-quarter 2014 income than a year ago, the profit would be lower than street expectations mainly due to seasonal weakness in its biggest Gulf Coast market.

5.    Independent refiner and midstream services provider Phillips 66’s (PSX - Free Report) board of directors authorized an increase in its 2014 capital budget and also approved an additional share-repurchase program. The company said that it will boost its capital expenditures by about $1.2 billion in 2014 to $3.9 billion, while giving consent to a $2 billion stock buyback scheme over and above the existing program.  (Read More: Phillips 66 Raises 2014 Capital Spending)

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.



Last Week

Last 6 Months


























Over the course of last week, big stocks barely moved. Still, refiner Valero Energy was the week's best performer among the market heavyweights, adding 0.8% to its stock price. On the other end of the spectrum, the biggest loser was oilfield services giant Schlumberger Ltd. (SLB - Free Report) , which fell 0.5% during the period.

However, over the last 6 months, it was again Schlumberger that was the leader of the pack with the company’s shares advancing 30.4%. But offshore driller Transocean Ltd. (RIG - Free Report) witnessed an 8.7% 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 Fed Chairman Janet Yellen’s statement on monetary policy. Energy traders will also be watching the U.S. June retail sales numbers and a host of Chinese economic data.  

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