Roughly half the companies in our Energy and Income Advisor coverage universe have now reported Q4 results—and a more or less equal percentage of our Actively Managed Portfolio and High Yield Energy List stocks.
That still leaves a lot of news and numbers to come in a quarter where mountains of filing requirements tend to delay their release. But from what we’ve seen so far, it’s clear that quality is asserting itself in the energy sector.
Mainly, despite multiple headwinds, the best in class are still thriving as businesses. In contrast, companies with real weaknesses as businesses are imploding, and almost at the same rate they were in 2016 when the price of oil sank to just $26 and change.
It’s not hard to see the sell-off in oil prices and energy stocks in recent weeks has broadly corresponded to the spike in news interest surrounding the Wuhan Coronavirus. But, here's the good news.
Recently released Q4 results from some giant oil services providers have flashed a clear warning to investors in US midstream energy companies:There’s a sector-wide stress test in progress, and it’s not likely to let up at least until the second half of 2020.
The Alerian MLP Infrastructure Index has dropped more than 20 percent since late July. The chief catalyst for the most recent decline: Growing concern that falling North American rig deployment will stall oil and gas production in 2020.
What’s it going to take for Energy Transfer LP (NYSE: ET) to get a little respect?
Eagle Ford, Texas-based midstream company Sanchez Midstream Partners (NYSE: SNMP) eliminated its quarterly distributions this week after the bankruptcy filing of its largest customer and general partner, Sanchez Energy Corp (OTC: SNECQ). The important question for most energy sector investors now is where the hammer will fall next.
What’s the most important takeaway from energy sector Q4 results so far? There are still a number of companies yet to report. That means plenty of room for surprises between now and the end of February. As readers can see in the Portfolio discussion section, that’s when the last of our recommended companies will release their numbers and update 2020 guidance.
GasLog Partners (NYSE: GLOP) will pay a Q4 distribution of 56.1 cents per share on February 21. That’s approximately 2 percent higher than the Q3 payment of 55 cents per share. Then in May, the tanker will slash its payout to a rate of just 12.5 cents a share, a cut of 77.7 percent.
Alliance Resource Partners (NSDQ: ARLP) is cutting its quarterly distribution by roughly -26 percent to 40 cents a unit. That follows management’s release of dismal Q4 results, including declines of -14.8 percent and -28.6 percent in EBITDA, respectively.
Crude oil prices and the broader stock market started out 2020 with a bang – the S&P 500 reached an all-time closing high of 3,329.62 on January 17th while West Texas Intermediate (WTI) oil prices jumped to $63.27/bbl on January 6, 2020 surpassing the highs set in September immediately following attacks on Saudi Arabian oil infrastructure.
At a time when the US shale oil and gas industry is getting used to living on less, one corner of the energy sector is still red hot: Liquefied natural gas exports. We continue to be unenthusiastic about this group. Here’s our take on the state of LNG.
Elliott and Roger on Feb. 27, 2020
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