Overall, it was a bullish week for the sector. While resurgent West Texas Intermediate (WTI) crude futures climbed 3.5% to close at $59.15 per barrel, natural gas prices slumped around 8% to $2.78 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Weatherford Posts Q1 Loss, to Cut 10,000 Jobs.) Oil prices gained for the sixth time in past 7 weeks, encouraged by the U.S. Energy Department's latest inventory release that showed supplies at the Cushing, Oklahoma storage hub fell for the first time since November. This is seen as a precursor to a slowdown in oil production leading to a subsequent drop in the commodity’s bloated supply level. Things were further helped by the Baker Hughes report that showed another drop in oil-directed rigs – the 21st in succession – indicating a brake in shale drilling activities. Natural gas fared even better amid predictions of robust cooling demand with forecasts of warmer-than-average temperature in the Midwest and Northeast regions of the U.S. A lower-than-expected supply increase added to the optimism. Recap of the Week’s Most Important Stories 1. Integrated supermajors like Exxon Mobil Corp. and Chevron Corp. must be glad they did not let go their refineries, when many others did. Both the companies reported better-than-expected first quarter earnings – amid plunging commodity prices – on improved downstream results that saw refining margins climb on lower input costs. What’s more, the big firms have been able to grow production after spending billions in capital expenditures. Both the companies reported year-over-year increase in first quarter volumes. 2. Houston-based independent exploration and production company ConocoPhillips COP reported narrower-than-expected first quarter loss on improved volumes. Daily production averaged 1.610 million barrels of oil equivalent (MMBOE) in the quarter, up from 1.532 MMBOE in the year-ago quarter. However, sales decreased from the year-ago level and also missed the Zacks Consensus Estimate by a considerable margin, plagued by sharply lower oil realizations. Average realized price for oil was $48.05 per barrel compared with $101.59 in the year-earlier quarter. ConocoPhillips expects to deliver 2–3% production growth in 2015. For the second quarter of 2015, production from continuing operations is expected at 1,555–1,595 MBOED, excluding Libya. (See More: ConocoPhillips Q1 Loss Lower than Expected, Revenues Miss) 3. Oil Refiner Valero Energy Corp. VLO came out with strong first quarter earnings on the back of higher refining throughput margins and lower refining operating expenses. Throughput margins increased to $12.39 per barrel from the year-ago level of $10.90 per barrel. Though total operating cost per barrel inched up 0.5% year over year to $5.66 during the quarter, refining operating expense per barrel was $3.95 compared with $3.99 in the year-ago quarter. (See More: Valero Surpasses Q1 Earnings and Revenue Estimates) 4. Ohio-based independent oil refiner and marketer Marathon Petroleum Corp. MPC reported strong first quarter results, owing to higher crack spreads and lower costs. Total refined product sales volumes were 2,246 thousand barrels per day (mbpd) compared with 1,964 mbpd in the year-ago quarter. Throughput improved from 1,650 mbpd in the year-ago quarter to 1,852 mbpd. Marathon Petroleum reported expenses of $15,770 million in first-quarter 2015, 31.4% lower than $22,984 million in the year-ago quarter. In a separate development, the fourth largest U.S. refiner announced a 2-for-1 stock split to be distributed in the form of a stock dividend. (See More: Marathon Petroleum Q1 Earnings & Revs Top, Plans Stock Split) 5. Downstream operator Phillips 66 PSX posted adjusted first-quarter 2015 earnings of $1.51 per share, ahead of the Zacks Consensus Estimate of $1.40 and the year-ago earnings of $1.47 per share. Marked improvement in the company’s refining segment led to the outperformance. The increase in operating income primarily resulted from the higher realized refining margin, which at $12.26 per barrel, was the highest in eight quarters. (See More: Phillips 66 Beats Q1 Earnings Estimates on Refining Strength) 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 +1.75% -6.27% CVX -2.04% -7.46% COP -0.42% -4.09% OXY +0.93% -3.56% SLB +0.79% -3.79% RIG +11.50% -36.28% VLO -3.26% +17.06% TSO +0.80% +23.35% Over the course of last week, offshore driller Transocean Ltd. RIG rode the oil price resurgence was the week's best performer among the market heavyweights, adding 11.5% to its stock price. On the other hand, the biggest loser was downstream operator Valero Energy Corp. VLO, which fell 3.3% during the period. With refiners being buyers of crude, a strengthening commodity price has triggered fears for weaker margins. Over the last 6 months, another refiner Tesoro Corp. has been the chief beneficiary on the bourses with its shares advancing 23%. Investors have rewarded the company for its continued focus on shareholder returns. On the other hand, Transocean was the laggard, as it witnessed a 36% price decline over the same time frame on the back of rig oversupply that has led the industry into a cyclical downturn. 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 a series of crucial economic reports, including those on jobless claims and nonfarm payrolls. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report CHEVRON CORP (CVX): Free Stock Analysis Report VALERO ENERGY (VLO): Free Stock Analysis Report CONOCOPHILLIPS (COP): Free Stock Analysis Report EXXON MOBIL CRP (XOM): Free Stock Analysis Report TRANSOCEAN LTD (RIG): Free Stock Analysis Report PHILLIPS 66 (PSX): Free Stock Analysis Report MARATHON PETROL (MPC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research
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