weekly price updates

Brent-WTI gap closed a bit, so overall mixed weak for oil prices.  Gas prices dropped, although it came after the weekly inventory report I think, so I’m not completely sure about why that was.  The portfolio was up a bit on the strength of good results from Chesapeake and Apache, and outperformed the S&P and E&P indexes.

Bakken news:

Whiting down this week.  There’s been a lot of talk about the rail cars used to carry bakken crude, and the DOT announced voluntary efforts to have companies start using higher spec rail cars due to the number of accidents we’ve been seeing.  There may be some worry that issues with rail born crude my cause a bakken bottleneck at some point.  Bad results from KOG may also have weighed on the sector.  

KOG was downgraded by suntrust to neutral on Monday, after being downgraded by Wunderlich last Friday on weak guidance.  Production for Q1 came in at 34mboed, down 6% QOQ!  This is incredibly bad even with the weather.  There was a bit of good news: they were having great results from downspacing tests.

CLR also missed on Thursday and the stock dropped.  They reported average net volumes of 148,400 boed, a 25% YOY increase for the quarter.  Lots of talk about changing up completions and downspacing tests. 

Oasis beat on Tuesday, coming in at 62 cents per share, implying 19x earnings on an annualized basis.

Overall trends: good results from the large cap companies, some positive results in the Permian as well, boosting stocks in these areas.  Tough results from KOG in the Bakken, and bad news flow made for a rough week there.  Marcellus names were down presumably because gas had a bad week. 

I haven’t had a chance to get through all the large cap earnings calls (and I won’t) but every one I’ve looked at beat.  One other large cap diversified companies is SWN, down 5% on the week due to gas prices.  They beat on Tuesday with operating cash flow of $617mm for the quarter easily exceeding $542 of capex, while growing production 23% YOY.  Earnings of $.66 per share implies a PE of 17x.  If we step back, I think all can agree this is an incredible result, with gas prices that most still consider to be too low.  They have been outspending cash flow for years now, and are turning free cash flow positive now.

Chesapeake had a good quarter but I was surprised at the degree of the positive reaction by the street.