US Oil and Gas Equities Fall for Second Straight Week Amid Decline in Crude Oil Prices

Strategic Insights -

Last week's modest decline in the US stock market was mirrored in the performance of US oil and gas equities, which fell for the second consecutive week. The Oil Daily Composite Index dropped 1.8% on the week, with the Dow Jones Industrial Average slipping 0.5% to close at 11,224. The price of front-month benchmark West Texas Intermediate oil retreated 60¢/barrel, driven by diminishing concerns over potential disruptions to Iraqi supplies and increasing inventories of refined products.

Key Takeaways:

  • The Oil Daily Composite Index fell by 1.8% last week, with Atlanta-based petrochemical producer Georgia Gulf making the week's biggest advance despite its relatively modest gain of 14%.
  • Montana Power Co. shares rose 11% after its telecommunications unit secured a contract to build a fiber-optic network for AT&T.
  • AES, a Virginia-based power plant developer, saw its shares surge 9% after it threatened to abandon a 720-megawatt natural gas-fueled power plant in Londonberry, New Hampshire, unless the state Supreme Court rules by March 1.
  • St. Mary Land & Exploration rose nearly 8% after announcing positive drilling results from prospects in the Lower-48 states.
  • Calgary-based synthetic oil producer Suncor made a modest gain of 6% after management revealed plans to sell conventional oil assets for net proceeds of about C$100 million (US$68 million).
  • Chief Executive Rick George stated that Suncor has hedged 44% of its 2000 production at an average price of US$17.92.
  • Snyder, Texas-based land drilling contractor Patterson Energy posted the biggest loss, with shares plummeting more than 23% after the company's stock was trading near $16 a month ago.
  • Biomass stocks saw little activity, but biomass energy drove 45% fewer projects in 2000, compared to 1999 (Source: ETNews, Jan 17).

Statistics:

  • The price of front-month benchmark West Texas Intermediate oil retreated 60¢/barrel on the week.
  • The Dow Jones Industrial Average slipped 0.5% to close at 11,224.
  • Georgia Gulf shares rose 14% on the week.
  • Montana Power Co. shares increased 11%.
  • AES shares surged 9%.
  • St. Mary Land & Exploration shares rose nearly 8%.
  • Suncor shares made a modest gain of 6%.

Sources:

  • TOD Dec.12,p3
  • TOD Dec. 10,p2
  • TOD, Dec. 9,p1
  • ETNews, Jan 17