We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Oil & Gas Stock Roundup: M&A Activity Takes Center Stage
Read MoreHide Full Article
It was a week when both oil and natural gas prices posted losses.
On the news front, the headlines revolved around merger and acquisition deals involving Crestwood Equity Partners LP , SilverBow Resources (SBOW - Free Report) , EQT Corporation (EQT - Free Report) and Magellan Midstream Partners LP .
Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures decreased 2.3% to close at $81.25 per barrel, while natural gas prices dropped 7.9% to end at $2.55 per million British thermal units (MMBtu).
In particular, the crude price action turned negative for the first time in eight weeks on concerns over demand in China and the possibility of more rate hikes in the near future. A stronger greenback also plagued the dollar-denominated commodity.
Meanwhile, natural gas performed worse as the heat wave in parts of the United States dissipated even as production remained robust.
Recap of the Week’s Most Important Stories
1. Energy infrastructure provider Crestwood Equity Partners LP signed an agreement with larger rival Energy Transfer LP (ET - Free Report) to divest its stock in an all-equity transaction valued at $7.1 billion.
In recent years, the U.S. energy sector has witnessed intensified buying and selling after significant profits left producers exceptionally wealthy. The importance of pipeline networks continued to increase due to the need to connect remote wells to export facilities. Notably, energy companies are acquiring stakes in pipeline companies to neutralize declines in their hydrocarbon businesses.
Per the terms of the deal, Crestwood common unitholders will receive 2.07 Energy Transfer common units for each of its common units. Once the deal closes, Crestwood unitholders will own 6.5% of Energy Transfer’s outstanding common units. (Crestwood Signs Deal to Divest Stakes in All-Stock Deal)
2. Houston, TX-based upstream energy company SilverBow Resources, has agreed to buy Chesapeake Energy’s remaining assets in the Eagle Ford Shale for $700 million. The deal, which is strategically aligned with SilverBow's long-term goals, is set to fortify the company’s presence in South Texas and bolster its foothold in the prolific shale play.
The acquisition is seen as an important development for SBOW that enhances the company's operational reach and underscores its commitment to extracting value from strategic resources. The transaction — likely to close by this year-end — encompasses approximately 42,000 acres in Dimmit and Webb counties, adding to SilverBow’s already robust inventory.
The purchase price of $700 million is structured as a $650 million upfront cash payment plus a $50 million deferred cash payment due 12 months after the deal concludes. SilverBow's financing plan encompasses a combination of cash reserves, borrowings under the company's credit agreements, and incremental commitments from lenders. In fact, SBOW has secured an extra $425 million under its credit facility to fund the deal. (SilverBow's South Texas Asset Buy Streak Continues)
3. Natural gas producer EQT Corporation and private equity firm Quantum Energy Partners’ $5.2-billion cash-and-stock merger faces antitrust concerns. The Federal Trade Commission (“FTC”) recently approved a consent order in an attempt to address these apprehensions. The consent order forbids the two companies from cooperating and exchanging confidential, competitively sensitive information.
In the Appalachian Basin — the largest natural gas-producing region in the United States — Quantum and EQT are direct competitors in the production and sale of natural gas. According to the FTC, permitting Quantum CEO VanLoh to join the board of EQT would result in an illegal overlap for companies that directly compete with one another to produce and sell natural gas from the Appalachian Basin.
The FTC's consent order provides profound structural relief by prohibiting Quantum from holding an EQT board position, requiring Quantum to sell its EQT shares, forbidding the sharing of anticompetitive information, dissolving a separate anticompetitive joint venture between the two parties and imposing additional restrictions to safeguard competition. (EQT-Quantum Energy Deal Faces FTC Check to Protect Competition)
4. Pipeline company Magellan Midstream Partners has taken a significant step to engage investors toward its pending merger with another midstream firm ONEOK, Inc. In this context, the Zacks Rank #2 (Buy) partnership has started sending informative materials to its unitholders outlining the key details and merits of the proposed transaction. This is aimed at encouraging them to cast their votes in favor of the merger before the scheduled special meeting next month.
The proposed transaction involves ONEOK's acquisition of all outstanding units of MMP through a mixture of cash and stock. Per the terms of the deal, Magellan Midstream unitholders stand to receive $25 in cash and 0.667 units of ONEOK common stock for each MMP common unit held.
The materials being dispatched to unitholders are comprehensive in nature and contain an overview of the tax implications considered by Magellan before approving the merger. To make things clearer and transparent, a video featuring president and CEO Aaron Milford discussing the advantages of the transaction and its alignment with MMP’s goals has been made available. (Magellan Urges Unitholder 'Yes' Vote on ONEOK Deal)
Price Performance
The following table shows the price movement of some major oil and gas players over the past week and during the last six months.
With oil and gas moving down for the week, stocks were mostly negative. The Energy Select Sector SPDR — a popular way to track energy companies — fell 1.2% last week. But over the past six months, the sector tracker has increased 5.7%.
What’s Next in the Energy World?
As usual, market participants will closely track the regular releases to look for guidance on the direction of the commodities. In this context, the U.S. Government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to the trends in U.S. crude/natural gas production, is closely followed too.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Oil & Gas Stock Roundup: M&A Activity Takes Center Stage
It was a week when both oil and natural gas prices posted losses.
On the news front, the headlines revolved around merger and acquisition deals involving Crestwood Equity Partners LP , SilverBow Resources (SBOW - Free Report) , EQT Corporation (EQT - Free Report) and Magellan Midstream Partners LP .
Overall, it was a bearish seven-day period for the sector. West Texas Intermediate (WTI) crude futures decreased 2.3% to close at $81.25 per barrel, while natural gas prices dropped 7.9% to end at $2.55 per million British thermal units (MMBtu).
In particular, the crude price action turned negative for the first time in eight weeks on concerns over demand in China and the possibility of more rate hikes in the near future. A stronger greenback also plagued the dollar-denominated commodity.
Meanwhile, natural gas performed worse as the heat wave in parts of the United States dissipated even as production remained robust.
Recap of the Week’s Most Important Stories
1. Energy infrastructure provider Crestwood Equity Partners LP signed an agreement with larger rival Energy Transfer LP (ET - Free Report) to divest its stock in an all-equity transaction valued at $7.1 billion.
In recent years, the U.S. energy sector has witnessed intensified buying and selling after significant profits left producers exceptionally wealthy. The importance of pipeline networks continued to increase due to the need to connect remote wells to export facilities. Notably, energy companies are acquiring stakes in pipeline companies to neutralize declines in their hydrocarbon businesses.
Per the terms of the deal, Crestwood common unitholders will receive 2.07 Energy Transfer common units for each of its common units. Once the deal closes, Crestwood unitholders will own 6.5% of Energy Transfer’s outstanding common units. (Crestwood Signs Deal to Divest Stakes in All-Stock Deal)
2. Houston, TX-based upstream energy company SilverBow Resources, has agreed to buy Chesapeake Energy’s remaining assets in the Eagle Ford Shale for $700 million. The deal, which is strategically aligned with SilverBow's long-term goals, is set to fortify the company’s presence in South Texas and bolster its foothold in the prolific shale play.
The acquisition is seen as an important development for SBOW that enhances the company's operational reach and underscores its commitment to extracting value from strategic resources. The transaction — likely to close by this year-end — encompasses approximately 42,000 acres in Dimmit and Webb counties, adding to SilverBow’s already robust inventory.
The purchase price of $700 million is structured as a $650 million upfront cash payment plus a $50 million deferred cash payment due 12 months after the deal concludes. SilverBow's financing plan encompasses a combination of cash reserves, borrowings under the company's credit agreements, and incremental commitments from lenders. In fact, SBOW has secured an extra $425 million under its credit facility to fund the deal. (SilverBow's South Texas Asset Buy Streak Continues)
3. Natural gas producer EQT Corporation and private equity firm Quantum Energy Partners’ $5.2-billion cash-and-stock merger faces antitrust concerns. The Federal Trade Commission (“FTC”) recently approved a consent order in an attempt to address these apprehensions. The consent order forbids the two companies from cooperating and exchanging confidential, competitively sensitive information.
In the Appalachian Basin — the largest natural gas-producing region in the United States — Quantum and EQT are direct competitors in the production and sale of natural gas. According to the FTC, permitting Quantum CEO VanLoh to join the board of EQT would result in an illegal overlap for companies that directly compete with one another to produce and sell natural gas from the Appalachian Basin.
The FTC's consent order provides profound structural relief by prohibiting Quantum from holding an EQT board position, requiring Quantum to sell its EQT shares, forbidding the sharing of anticompetitive information, dissolving a separate anticompetitive joint venture between the two parties and imposing additional restrictions to safeguard competition. (EQT-Quantum Energy Deal Faces FTC Check to Protect Competition)
4. Pipeline company Magellan Midstream Partners has taken a significant step to engage investors toward its pending merger with another midstream firm ONEOK, Inc. In this context, the Zacks Rank #2 (Buy) partnership has started sending informative materials to its unitholders outlining the key details and merits of the proposed transaction. This is aimed at encouraging them to cast their votes in favor of the merger before the scheduled special meeting next month.
You can see the complete list of today’s Zacks #1 Rank stocks here.
The proposed transaction involves ONEOK's acquisition of all outstanding units of MMP through a mixture of cash and stock. Per the terms of the deal, Magellan Midstream unitholders stand to receive $25 in cash and 0.667 units of ONEOK common stock for each MMP common unit held.
The materials being dispatched to unitholders are comprehensive in nature and contain an overview of the tax implications considered by Magellan before approving the merger. To make things clearer and transparent, a video featuring president and CEO Aaron Milford discussing the advantages of the transaction and its alignment with MMP’s goals has been made available. (Magellan Urges Unitholder 'Yes' Vote on ONEOK Deal)
Price Performance
The following table shows the price movement of some major oil and gas players over the past week and during the last six months.
Company Last Week Last 6 Months
XOM -0.8% -0.9%
CVX -1% -0.8%
COP 0% +12.6%
OXY -2.7% +9.1%
SLB -2.7% +9.6%
RIG -4.4% +32.8%
VLO -3.9% +0.4%
MPC -2.9% +16.4%
With oil and gas moving down for the week, stocks were mostly negative. The Energy Select Sector SPDR — a popular way to track energy companies — fell 1.2% last week. But over the past six months, the sector tracker has increased 5.7%.
What’s Next in the Energy World?
As usual, market participants will closely track the regular releases to look for guidance on the direction of the commodities. In this context, the U.S. Government’s statistics on oil and natural gas — one of the few solid indicators that come out regularly — will be on energy traders' radar. Data on rig count from the oilfield service firm Baker Hughes, which is a pointer to the trends in U.S. crude/natural gas production, is closely followed too.