Energy Stocks Plunge Again This Week

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Energy Stocks Plunge Again This Week

Transcript of Energy Stocks Plunge Again This Week

Page 1: Energy Stocks Plunge Again This Week

Energy Stocks Plunge Again This Week

Page 2: 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). 

Page 3: Energy Stocks Plunge Again This Week

What:Oceaneering International (NYSE: OII) dropped 11% this week.

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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

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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

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What:National Oilwell Varco (NYSE: NOV) slumped nearly 13% this week.

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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

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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

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What:Capital Products Partners (NASDAQ: CPLP) slumped 15% this week.

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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

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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

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What:Ardmore Shipping (NYSE: ASC) fell more than 15% this week.

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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

Page 14: Energy Stocks Plunge Again This Week

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

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What:Marathon Petroleum (NYSE: MCP) plunged 20% this week.

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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

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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