Feature Article

In this issue of EIA, we focus our attention on the Model Portfolio and High Yield Energy List companies reporting Q3 results since our previous issue and that we did not review in the October 30 Alert “Raising Crestwood and ONEOK, Sticking with Energy Transfer.”

Barring a recovery rally of unprecedented magnitude, it seems certain 2020 will go down as one of the worst years ever for oil and gas stocks, up and down the energy value chain.

Fallout from the pandemic temporarily knocked the bottom out of demand for refined products and fuels and turned a strategic retreat by producers into a full-on rout. And wild campaign rhetoric alleging an impending ban on hydraulic fracturing certainly didn’t help investors’ fear factor.

When you’re gearing up to ride a prospective recovery in a battered sector, it’s critical to be sure you’re riding the swiftest and surest horses. And that means keeping an eagle eye on individual company performance. Here are our initial takeaways from the Q3 earnings reports and guidance updates we’ve seen.

Calendar Q3 earnings reporting season is now underway. Over the next few weeks, we’ll see how our EIA Portfolio and High Yield Energy List companies are stacking up in the worst operating environment in at least a generation, and how well they’re positioned for the sector recovery we believe is now unfolding. Here’s what’s ahead:

After a long hiatus, energy M&A has heated up this year, first with Chevron Corp’s (NYSE: CVX) takeover offer for Noble Energy (NYSE: NBL) and now the proposed merger of equals between Devon Energy (NYSE: DVN) and WPX Energy (NYSE: WPX). Here are our thoughts for long overdue sector consolidation.

Calendar Q3 earnings reporting season is coming up fast. Here are confirmed and expected dates for EIA Portfolio and High Yield Energy List companies’ releases and analyst calls.

US natural gas prices enjoyed quite a run this summer, jumping more than 91% from a 25-year low on June 26^th of $1.432/MMBtu to a late-August high of $2.743/MMBtu. While that’s impressive, we’d caution about getting bullish on gas this year as we see little chance for sustained upside in US natural gas prices above the $2.75-$3.00/MMBtu range this winter. We continue to see a retest of this summer’s lows in gas, or even worse, as more likely.