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Oil Stocks Got Eviscerated This Week

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Williams Companies, Seadrill, Chesapeake Energy, Denbury Resources, and Whiting Petroleum were among the most notable oil stocks that lost more than 10% of their value this week.

Publicada em: Economia e finanças
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Oil Stocks Got Eviscerated This Week

  1. 1. Oil Stocks Got Eviscerated This Week
  2. 2. This was an awful week for the market, which is now off to its worst start...ever. Among the weights pulling down the market were the price of crude, which plunged below $30 per barrel for the first time since 2004. That led to a very steep drop in oil stocks, including Williams Companies (NYSE: WMB), Seadrill (NYSE: SDRL), Chesapeake Energy (NYSE: CHK), Denbury Resources (NYSE: DNR), and Whiting Petroleum (NYSE: WLL).
  3. 3. What: Williams Companies (NYSE: WMB) slipped more than 15% this week.
  4. 4. So What:  Key driver: Credit downgrades and merger concerns  Williams’ credit was downgraded by Moody’s and Fitch this week  These downgrades pushed its credit rating into junk territory
  5. 5. Now What:  Making matters worse, reports surfaced that suggested the Williams’ merger with Energy Transfer Equity was looking shaky  Key takeaway: Investors are gravely concerned that Williams’ deal will fall apart, leaving it a much weaker stand-alone entity
  6. 6. What: Seadrill (NYSE: SDRL) sank 18% this week.
  7. 7. So What:  Key driver: Seadrill’s market outlook and analyst downgrades  Seadrill CEO Per Wulff said this week that market conditions could remain challenging through 2017
  8. 8. Now What:  Meanwhile, analysts were harsh:  Cowen slashed Seadrill’s price target from $8 to $3  J.P. Morgan analysts said that Seadrill will require "major evasive action" to avoid covenant breaches in 2016 or 2017  Key takeaway: Investors and analysts just don’t see any reason to own Seadrill
  9. 9. What: Chesapeake Energy (NYSE: CHK) slumped 22% this week.
  10. 10. So What:  Key driver: Debt concerns and a downgrade  One of Chesapeake Energy’s bonds fell to just $0.29 on the dollar  That price shows grave concern from the market about the company’s ability to pay back its debt
  11. 11. Now What:  Meanwhile, analysts from Guggenheim slashed its 2016 outlook on the company, expecting it to lose $0.59 per share, which is $0.05 per share worse than its previous outlook  Key takeaway: Investors and analysts are worried that Chesapeake Energy isn’t going to make it through this downturn
  12. 12. What: Whiting Petroleum (NYSE: WLL) fell more than 26% this week.
  13. 13. So What:  Key driver: Two analyst downgrades  Morgan Stanley downgraded Whiting from equal weight to underweight, while reducing its price target from $23 to $4
  14. 14. Now What:  UBS downgraded Whiting from buy to neutral, and slashed its price target from $19 to $7  Meanwhile, Barrington gave up covering the entire energy sector, including Whiting, saying that it was just too speculative to recommend oil stocks right now  Key takeaway: Analysts are getting fed up with the continued drop in crude and its impact on companies like Whiting
  15. 15. What: Denbury Resources (NYSE: DNR) slumped more than 26% this week.
  16. 16. So What:  Key driver: Trouble with its bond exchange  Denbury Resources’ proposed bond exchange is getting push back from bondholders
  17. 17. Now What:  The company was forced to sweeten the deal to fix some loopholes  Key takeaway: The fact that the company needs to pursue a bond exchange deal has investors worried that it’s financially stressed
  18. 18. This could be the next billion- dollar iSecret