Bear market capitulation lows are formed when the strongest players in the most effected sectors finally relinquish their relative strength and ultimately succumb to the bear’s grip.

For all intents and purposes, the U.S. shale production areas are broken into two geologic formations: Utica/Marcellus and Permian Basin.

The Permian basin is viewed as the more robust geologic formation and is also in close proximity to the refiners and shipping terminals along the gulf coast.

Utica/Marcellus shale operators CONSOL Energy Inc. (NYSE: CNX), Antero Resources Corp (NYSE: AR), and EV Energy Partners, L.P. (NASDAQ: EVEP) are trading near all-time lows.

• Consol Energy is trading at 0.38X book value and is 56.51 percent below its 200 day SMA. Deutsche Bank downgraded the firm to sell on 11/3/15.
• Antero Resources is trading at 1.03X book value and is 27.67 percent below its 200 day SMA. Goldman Sachs initiated coverage at a Buy on 11/17/15.
• EV Energy is trading at 0.11X book value and is 71.39 percent below its 200 day SMA. Raymond James upgraded the firm from Underperform to Market Perform on 11/10/15.

Mr. Market hasn’t messed with Texas, yet. The Permian Basin and “Sprayberry” operators have held up much better than their Utica/Marcellus competitors.

• EOG Resources Inc (NYSE: EOG) is trading at 2.90X book value and is only 15.82 percent its 200 day SMA. JP Morgan initiated coverage at neutral on 12/9/15.
• Pioneer Natural Resources (NYSE: PXD) is trading at 2.07X book value and is only 11.20 percent below its 200 day SMA. Raymond James upgraded the shares from outperform to Strong Buy on 12/1/15.
• Concho Resources Inc (NYSE: CXO) is trading at 1.78X book value and is only 16.76 percent below its 200 day SMA. Raymond Shares upgraded the shares from outperform to strong buy on 12/1/15.

When you compare this sample of 3 Utica/Marcellus players to the 3 Permian players, in terms of multiples to book value, distances from 200 day SMA, and analyst upgrades, the street hasn’t quite tossed in the towel on what appears to be one of the few bright spots remaining amongst the domestic shale oil sector carnage.

Update: Towel Tossing

Crude oil is down this week as China collapses and CCC credit spreads over Treasuries are at cycle highs.

Perhaps the greatest capitulation headline of all: “OPEC won’t cut production today because they want to sell at a price higher than zero because we will be living in a world where oil is worthless in ten years."

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