Global oil prices dipped suddenly this morning after President Trump tweeted that OPEC was propping them up.
“Looks like OPEC is at it again,” Trump wrote. “With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”
As a result, the price of Brent crude fell to $72.95 per barrel from its peak of $74.08. WTI crude dropped as low as $67.56 per barrel, from a peak of $68.59. The price of Brent already recovered by afternoon, up 0.26% to $73.97 per barrel. WTI crude remained off 0.19% at $68.20.
Oil prices echo a bum day for stocks in general, with the S&P 500 down 1.06%. The Dow Jones Industrial Average also dived 1.02%.
While Trump’s comments address the move of oil prices higher, they also respond to an OPEC meeting in Saudi Arabia on Friday. There, member states remained agreed to limiting the amount of oil they produced to stabilize collapsing prices since 2016. The agreement to hold production at 1.8 million barrels is set for expiration at the end of the year.
Since their initial agreement to pull back on production, commercial stock levels of oil have fallen from a peak of 3.12 billion barrels in July 2016 to 2.83 billion in March 2018, although the supply continues to exceed levels seen before the market tanked.
As far as the outlook for energy, Charles Schwab, which has a “marketperform” rating on the sector, believes it “hasn’t kept up with the price rise of oil over the past year – a break from historical precedent and one that isn’t likely to last.”
“This is part of the reason why we have kept a market weighting on the group—it can be fairly volatile and change direction pretty quickly, much as we’ve seen over the past month—with the energy sector being the best performing group,” said Schwab analyst Brad Sorensen in a report, Energy Sector Rating: Marketperform.
Many energy stocks of the S&P 500 traced oil’s move downward after Trump’s comments Friday. Those that tumbled the most were: Range Resources Corp. (RRC, Financial), Cabot Oil & Gas Corp. (COG, Financial), EQT Corp. (EQT, Financial) and Schlumberger Ltd. (SLB, Financial).
Range Resources Corp.
Stock price: down 3.7%
Forth Worth-based Range Resources, with a $3.41 billion market cap, operates its natural gas, natural gas liquids and oil business in the Appalachian Basin and northern Louisiana.
In the fourth quarter, the company reported a 168% increase in revenues from the prior year to $679 million. Net income increased 238% to $221.19 million, or 89 cents per diluted share.
For 2018, Range Resources anticipates a production increase of 11% to 2.23 Bcfe per day. Over the next five years, the company hopes to achieve $1 billion in cumulative free cash flow.
Over the past year, the company’s stock declined 50%, trading around $13.70 on Friday.
It has a price-earnings ratio of 10.2, price-book ratio of 0.58 and price-sales ratio of 1.41.
Cabot Oil & Gas Corp.
Price decline: 2.0%
With a $10.64 billion market cap, Cabot Oil & Gas is an independent oil and gas company with 9.7 trillion cubic feet of gas equivalent and a focus in the Marcellus Shale in northeast Pennsylvania.
For the fourth quarter, the company presented investors $400.5 million in revenue, up from $316.49 million in the fourth quarter the previous year. Its net loss narrowed to $44.4 million from $292.76 million for the same periods.
Cabor repurchased 2 million of its shares at a price of $27.72 over the quarter. The board approved a share repurchase program of 30 million shares, with an estimated cost around $729 million. It plans to use part of the $1.2 billion in cash from the sale of an Eagle Ford Shale property to fund the buy back.
For full-year 2018, Cabot expects growth in production of 10-15%.
Cabot stock dipped 4% over the past year to $23.10.
The stock has a price-earnings ratio of 100.35, price-book ratio of 4.23 and price-sales ratio of 6.28.
EQT Corp.
Price decline: 1.6%
EQT Corp., the largest natural gas company in the U.S., has a $12.53 billion market cap. The company has 21.4 trillion cubic feet of gas equivalent, natural gas liquids and crude oil reserves on 4 million acres across the Marcellus shale and Ohio Utica. It also engages in horizontal drilling, otherwise known as fracking.
EQT Corp.’s fourth-quarter operating revenues soared to $1.13 billion, which is an increase from $379.02 million the prior-year quarter. It reported net income of $1.28 billion (including a tax benefit of roughly $1.2 billion), up from a net loss of $191.96 million in fourth quarter 2016. Diluted earnings per share rose to $5.83 from a net loss of $1.11.
Growth came as sales volumes soared 96% and the average realized price increased edged up 0.12%.
Proved reserves at the company rose 59% as of year-end.
EQT has a price-earnings ratio of 5.89, price-book ratio of 0.96 and price-sales ratio of 2.98.
Its shares have dropped 25% in the past year to $47.40.
Schlumberger Ltd.
Price decline: 1.4%
Schlumberger, with a $95.95 billion market cap, is the world’s largest provider of drilling, processing and production technology to the energy industry.
It announced its first quarter results Friday. The company saw a 4% decline in year-over-year revenue to $7.8 billion. Net income totaled $525 million, an improvement from its $179 million net income a year prior.
The company expected lower results for the quarter due to what its CEO, Paal Kibsgaard, called “transitory factors,” such as “seasonal reductions in activity in the Northern Hemisphere and planned project startup costs including the equipment mobilization, reactivation, and redeployment associated with recent contract wins.”
Meanwhile, it repurchased 1.4 million of its shares at an average price of $69.79 per share, or around $97 million.
Shares of Schlumberger slid 7% in the past year, to $69.20 Friday.
The company has a price-book ratio of 2.6 and price-sales ratio of 3.16.
