Energy Stocks Plunge Again This Week
The gut-wrenching volatility continued in the energy sector this week after oil prices bounced around quite a bit, but remained
in the low-$30 a barrel range. That low price, along with a bevy of company specific news items, weighed heavily on
energy stocks this week. Five of the worst performers were, according to S&P Capital IQ data, National Oilwell
Varco (NYSE: NOV), Oceaneering International (NYSE: OII), Capital Product Partners (NASDAQ: CPLP), Ardmore Shipping (NYSE: ASC), and Marathon Petroleum (NYSE:
MPC).
What:Oceaneering International (NYSE: OII) dropped 11% this week.
So What: Key driver: An early
contract termination Oceaneering announced
this week that BP had exercised its right to terminate its contract for the Bourbon Oceanteam 101 six months early
Now What: The contract will now end in
May of this year, instead of January of next year
BP will reimburse Oceaneering for costs incurred to demobilize the vessel
Key takeaway: The early contract termination cuts off this revenue source a bit earlier than expected
What:National Oilwell Varco (NYSE: NOV) slumped nearly 13% this week.
So What: Key driver: Fourth-quarter
earnings National Oilwell Varco
reported earnings of $0.23 per share, which missed the consensus estimate by $0.21 per share
Revenue was also down 18% from last quarter
Now What: CEO Clay Williams summed
up the current environment saying, “tumbling oil prices brought capital austerity and sharply lower oilfield activity, which is intensifying as we enter 2016”
Key takeaway: In other words, things could get worse before they get better
What:Capital Products Partners (NASDAQ: CPLP) slumped 15% this week.
So What: Key driver: New time charters
for two of its vessels The Agamemnon and
Archimidis were both chartered for 12 months for work that starts in April
With these charters the company increases its charter coverage to 93% in 2016 and 72% in 2017
Now What: Prior to this, both vessels
had been dry-docked Key takeaway: Investors
didn’t like the terms, nor the fact that the start dates are still a couple of months away
What:Ardmore Shipping (NYSE: ASC) fell more than 15% this week.
So What: Key driver: Fourth-quarter
earnings Ardmore Shipping reported
earnings of $0.21 per share, which missed the consensus estimate by $0.04 per share
Shipping rates pulled back early in the fourth quarter, which led to weaker results
Now What: Subsequent to the end of the
quarter the company refinanced its debt, which reduced its interest costs and extended its debt maturities
Key takeaway: Investors just weren’t thrilled with the quarter
What:Marathon Petroleum (NYSE: MCP) plunged 20% this week.
So What: Key driver: Fourth-quarter
earnings and slower growth from its MLP
Marathon earned $0.35 per share during the quarter, which was $0.34 per share below the consensus estimate
The culprit was a $0.44 per share pre tax charge to revalue inventories to reflect the current market
Now What: The company also said that it
would slow the pace of distribution increases at its MLP MPLX because cash flow has been impacted by declining volumes
MPLX had been projected to grow its payout 25% this year, but now sees growth at 12%-15%
Key takeaway: Investors didn’t like the change in outlook
This could be the next billion-dollar iSecret