energy stocks rally sharply this week
Post on 16-Apr-2017
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Energy Stocks Rally Sharply This Week
Market rumors that OPEC and non-members might finally be willing to coordinate an oil production cut sent crude oil higher this week. That sparked a rally in energy with
five of the top movers, according to S&P Capital IQ data, being EP Energy (NYSE: EPE), Enerplus (NYSE: ERF), Gaslog
Partners (NYSE: GLOP), Pengrowth Energy (NYSE: PGH), and American Midstream Partners (NYSE: AMID).
What:EP Energy (NYSE: EPE) rebounded nearly 17% this week.
So What: Key driver: The oil price
rally Oil is moving closer to the
company’s $36 per barrel break-even point on new wells in the Eagle Ford and Altamont
Now What: That said, the company’s
Wolfcamp acreage is farther away from profitability given its $41 per barrel break-even point
Key takeaway: Investors like the fact that oil is moving closer to the company’s break-even points
What:
Enerplus (NYSE: ERF) popped 19% this week.
So What: Key driver: The oil price
rally Enerplus expects that its
production will decline in 2016 from 106,000 BOE/d to a range of 100,000-105,000 BOE/d
Now What: That said, the company
needs oil at $50 to pay for the capex needed to deliver that production
Key takeaway: Investors are hoping that the current oil price rally continues so that Enerplus can generate enough cash flow maintain its production
What:Gaslog Partners (NYSE: GLOP) surged more than 26% this week.
So What: Key driver: Fourth-quarter
earnings Gaslog reported its highest
ever quarterly performance for revenue, profit, and distributable cash flow
The company also increased its distribution by 10%
Now What: Even with that distribution
increase, the company’s distribution coverage ratio was a very robust 1.43 times
Key takeaway: Gaslog is one of the few MLPs that is in a position to grow its distribution, which is something investors are cheering
What:Pengrowth Energy (NYSE: PGH) jumped 33% this week.
So What: Key driver: The oil price
rally Right now Pengrowth’s
primary goal is to survive the downturn
It recently suspended its dividend and slashed its capex to run at a $30 oil price in 2016
Now What: The company has now
reduced capex spending from $904 million in 2014 to just $60-$70 million in 2016
Key takeaway: Pengrowth has put itself in a position to survive at $30 oil, with anything over that price being a plus
What:American Midstream Partners (NYSE: AMID) jumped more than 42% this week.
So What: Key driver: Holding the
line on its distribution American Midstream
Partners announced that it will maintain its current distribution at $0.4725 per quarter
Now What: Analysts thought that American
Midstream would need to cut its payout due to its higher leverage, tight distribution coverage ratio, and growth capital requirements
Key takeaway: Investors are starting to buy into the company’s ability to maintain its distribution, especially with crude oil heading higher
This could be the next billion-dollar iSecret
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