After two years as the best-performing sector in the market, this year energy stocks have fallen, along with oil and natural-gas prices.
Commodity prices have dropped because oil and gas supply has outpaced demand despite the crisis created by Russia’s invasion of Ukraine, and OPEC’s decision to curtail production. U.S. supplies of both oil and natural gas have risen, and oil producers in other parts of the world are pumping more too. Meanwhile, recession fears have weighed on global consumption.
The
Energy Select Sector SPDR
exchange-traded fund (ticker: XLE) is down 7% this year. But a handful of energy names have bucked the trend, and risen.
The top names stand out for a few reasons—they’re either focused on natural gas or are impacted by news of mergers and acquisitions.
| Company / Ticker | Recent Price | Market Cap (in Billions) | YTD Price Change | P/E 2023 |
|---|---|---|---|---|
| Equitrans Midstream / ETRN | $9.04 | $4 | 34.9% | 18.0 |
| EQT / EQT | 39.18 | 14 | 15.8 | 15.8 |
| Range Resources / RRC | 28.10 | 7 | 12.3 | 11.6 |
| Civitas Resources / CIVI | 64.84 | 5 | 11.9 | 6.7 |
| PDC Energy / PDCE | 68.34 | 6 | 7.7 | 5.4 |
Note: As of June 23.
FactSet.
Equitrans Midstream
(ETRN) is an outlier because the company is the majority owner of a unique natural-gas pipeline. The Mountain Valley Pipeline in Virginia and West Virginia was singled out in the bill that raised the debt ceiling this month. Sen. Joe Manchin (D-WV) got language into the bill expediting the regulatory and legal process around the pipeline. With those hurdles out of the way, the stock has soared.
EQT
(EQT) and
Range Resources
(RRC) are natural-gas producers. Although natural-gas prices have fallen this year, investors are confident that the industry will be in a better place in a little more than a year. For now, natural-gas supply is outpacing demand, but by late 2024, new export capacity is expected to come online, allowing producers to send more of their product overseas as liquefied natural gas (LNG).
Civitas Resources
(CIVI) and
PDC Energy
(PDCE) are oil and gas producers with most of their operations in Colorado.
Chevron
(CVX) agreed to buy PDC on May 22 at a 14% premium to its average share price over the prior 10 days. Civitas’ stock also got a boost after the announced transaction—it’s one of the few remaining independent Colorado producers, theoretically making it an acquisition target if other large oil companies want to follow in Chevron’s footsteps.
Write to Avi Salzman at [email protected]
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