oil price resilience fuels another big energy stock rally this week (ete, amid, jpep, cclp, xco)
TRANSCRIPT
Oil Price Resilience Fuels Another Big Energy Stock Rally
This Week
f
Image Source: JP Energy Partners.
Oil surged 8% this week despite the fact that the producers' meeting between OPEC and Russia did not lead to an
expected agreement to freeze production. Crude was unfazed by that outcome, instead ending the week at nearly $45 a
barrel, which is a 2016 high. Instead of focusing on the disappointing Doha meeting, oil traders see that production
declines in the U.S. are starting to take hold and will lead to a rebalancing of the oil market later this year.
What:JP Energy Partners (NYSE: JPEP) jumped more than 22% this week.
So What: Key driver: The energy market
rally Oil prices proved to be resilient
after the collapse of talks between OPEC and Russia to freeze production last weekend
That provided all the fuel energy stocks needed to rally this week, with MLPs in particular enjoying a big week
Now What: In addition to the
improvement in oil prices, a number of MLPs announced key strategy changes including raising fresh capital and reducing their distributions to better weather the downturn
Key takeaway: This was a case where the rising tide lifted all boats
What:American Midstream Partners (NYSE: AMID) rallied 23.2% this week.
So What: Key driver: The oil price and
MLP rally Much like JP Energy Partners,
American Midstream Partners was caught up in the combined oil price/MLP rally this week
Though, the company did announce that it will release its first quarter results on May 9
Now What: There’s a growing possibility that
the company will follow its MLP peers and announce a reduction to its distribution at that time, especially since many of the peers that have made these announcements have seen their unit price spike
Key takeaway: Investors seem to be banking on a strategy change from American Midstream
What:EXCO Resources (NYSE: XCO) rallied 27.3% this week.
So What: Key driver: The crude oil rally The cash strapped company had
to reduce its 2016 capex budget to a mere $85 million, which is 69% lower than last year, due to weak commodity prices
However, with those prices improving the company could have a bit more breathing room than anticipated
Now What: Any excess cash flow would
enable the company to continue to chip away at the debt weighing down its balance sheet
Key takeaway: With oil moving higher, investors see a light at the end of the tunnel for EXCO Resources
What:Energy Transfer Equity (NYSE: ETE) surged over 32% this week.
So What: Key driver: A tax issue Energy Transfer has been
involved in a drama-filled merger with Williams Companies
That deal, however, is on the verge of falling apart due to a potential tax issue
Now What: That’s welcomed news for
investors that don’t want the deal to go through because of concerns that the incremental debt needed to close the transaction could be the undoing of the company
Key takeaway: Investors are growing more hopeful this deal will soon die
What:CSI Compressco (NASDAQ: CCLP) jumped 32.4% this week.
So What: Key driver: The distribution
is staying put for now While a number of MLPs
recently announced distribution decreases, CSI Compressco announced this week that its payout was remaining status quo for the time being
Now What: This helped calm worries
that another payout reduction was in the cards after the company already cut the payout once this year
Key takeaway: With the payout staying put, investors can keep their minds at ease
This could be the next billion-dollar iSecret