A very rough week indeed.
Crude sold off off 3-4%, the S&P declining 2.7% and the Energy index
funds off between 4.2 and 6.2%. All of
the Permian stocks (which in my opinion are overvalued as a group) sold off
between 6.4 and 8.75%. Bakken stocks did nearly as poorly.
My three holdings at the beginning of the week, and since I
started this blog, have been WLL, APA, and CHK.
I blew out of CHK earlier this week after they pre-reported that they
had sold gas at a horrendous differential to NYMEX over the quarter. I don’t want to own them through earnings,
because the market hardly reacted at all to that report. It may have been because it was buried with
other more pleasant news. These
shockingly large differentials make me nervous about any gas producer in the
Marcellus region.
APA has held up remarkably well, partly because investors
were pleased that they announced their intention to divest from the large LNG
projects in Canada and Australia.
WLL, has been riding a wave of upgrades and positive sentiment
since they announced the KOG acquisition/merger, but ended the week down about
5%.
Overall, I’m content to let my WLL and APA positions ride. The stocks I’m looking at with an eye towards
buying on weakness are MRO, due to its very low valuation, and EOG, the premium
US tight oil stock. CHK and COG are the
two gas stocks that I’m also most inclined to buy, but there are a number of
issues that need more clarity before I’d feel comfortable with these.
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