Energy Stocks Suffer Amid Market Downturn

Energy shares plummeted last week as falling oil prices and a broad market decline took a toll on the sector. The Oil Daily 30 Composite Index lagged behind the Dow Jones Industrial Average, which dropped 385 points, or 4.8%, on the week. Despite the market's traditionally strong performance in January, energy stocks struggled, with more companies posting losses than gains.

Key Takeaways:

• Foreland Corp.'s shares rose 12% last week, while Costilla Energy Inc.'s shares advanced 9%, as the companies' resilience was attributed to enhanced recovery projects and successful drilling announcements.
• Costilla's hedging program, balanced reserve and production profile, and geographical diversity also helped compensate for the oil price slide, with officials estimating its first exploratory well will add 25-40 Bcf of gas to its reserves.
• Genesis Energy L.P. notched a moderate gain, boosted by the announcement of its regular quarterly dividend, which helped push the stock up 6%.
• Oil service and equipment companies were the hardest hit, with nine of the 10 biggest decliners, indicating a correction may be underway in the sector.
• Stocks in land contract drillers have fallen by nearly 50%, while share prices for offshore drillers have dropped by 25% to 40%, according to PaineWebber Inc.
• UTI Energy Corp. suffered the biggest loss last week, showing a 37% decline, with its stock plunging nearly 64% over the past 13 weeks.

Statistics:

• West Texas Intermediate (WTI) crude prices closed at $16.63 on the New York Mercantile Exchange on Friday.
• The Dow Jones Industrial Average dropped 385 points, or 4.8%, on the week.
• Foreland Corp.'s shares rose 12%.
• Costilla Energy Inc.'s shares advanced 9%.
• Genesis Energy L.P. shares rose 6%.
• UTI Energy Corp.'s shares declined by 37%.
• Stocks in land contract drillers have fallen by nearly 50% from their October/November highs.

Sources:

• The Oil Daily
• Dow Jones Industrial Average