Energy Business

Wall Street Flushes Oil and Gas Leaders on Price War and Coronavirus Fallout

SunTrust Robinson Humphrey downgraded more than 25 in its oil exploration and production universe. The firm now sees an oil price collapse as a price war kicked off this weekend as Saudi Arabia responded to Russia after it refused to endorse new production cuts for the OPEC+ group and after it refused to extend the existing oil cuts that end in three weeks, along with continued oil demand destruction due to COVID-19. The firm spoke with oil executives over the weekend and now suggests the E&P players are likely in for a bleak period, if the price war and COVID-19 impact last more than a quarter. The list of downgrades is too large to write out, but these are the tickers: APA, CPE, CDEV, CHK, XEC, CLR, DVN, FANG, ESTE, ERF, EOG, XOG, HPR, MGY, MRO, MTDR, NOG, OXY, OVV, PE, PXD, RTLR, REI, ROSE, VNOM, WLL and WPX. Many of those stocks were down 20% to 30% in early trading. Here is how some of those stocks have performed on Monday:

  • Apache Corp. (NYSE: APA) was down 15% at $20.70 on Friday’s sell-off and was indicated down another 30% or so at $14.20 on Monday morning, but by the afternoon its shares were down 45% at $11.35.
  • Chesapeake Energy Corp. (NYSE: CHK) was down another 18% to less than $0.18 on more than 150 million shares as of Monday afternoon.
  • Continental Resources Inc. (NYSE: CLR) was last seen down 45% at $8.11 on Monday afternoon.
  • Marathon Oil Corp. (NYSE: MRO) was downgraded to Hold, and STRH cut its target to $7 from $18, with shares last seen down 44% at $3.80 on Monday afternoon.
  • Whiting Petroleum Corp. (NYSE: WLL) was down 17% at $1.33 on Friday. While it previously saw a drop of 40% at $0.78, it was down about 28% at $0.955 on Monday afternoon.
  • WPX Energy Inc. (NYSE: WPX) was down 42% at $3.76 on Monday afternoon, down from a 52-week high of $15.33.

Even the infrastructure side of the equation was being hammered on Monday as the fallout will have a widespread effect. That sector already had decoupled from the old notion that it was insulated from the effects of lower oil prices. Robert W. Baird downgraded Energy Transfer L.P. (NYSE: ET) to Neutral from Outperform and lowered its target price to $9 from $15. Energy Transfer units were last seen down 21% at $8.04.

Tellurian Inc. (NASDAQ: TELL) was downgraded to Neutral from Outperform at Robert W. Baird, and its target price was slashed to $2 from $5. Tellurian was last seen down over 23% at $0.93 on Monday.

Indications were awful on Monday elsewhere in the master limited partnership and MLP-like infrastructure leaders. Enterprise Products Partners L.P. (NYSE: EPD) closed down 5.3% at $22.42 on Friday and was indicated down 19% at $18.11 on Monday. Enterprise Products Partners would now have a 9.8% indicated dividend yield, if it can be maintained in the quarters ahead. Kinder Morgan Inc. (NYSE: KMI) was down almost 1.9% at $19.33 on Friday but it was trading down over 10% at $17.25 on Monday. Cheniere Energy Inc. (NYSE: LNG) was last seen down over 14% at $38.84, and it has the sole approved LNG export terminal of its kind.

International oil giants were pinched as well. BP PLC (NYSE: BP) American depositary shares were down 4.1% at $31.25 on Friday, but the drop on Monday was almost 19% to $25.50. Total S.A. (NYSE: TOT) fell by 2.8% to $42.31 on Friday, followed by a 16.5% drop to $35.32 late on Monday.

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