Energy Sector Update for 08/28/2017: AMID,TRCH,DNR

Top Energy Stocks

XOM -0.38%

CVX -0.53%

COP -1.17%

SLB -0.78%

OXY -0.14%

Energy stocks have pared some of their prior declines, with the NYSE Energy Sector Index sinking over 0.5% while shares of energy companies in the S&P 500 were down over 0.6% as a group. Crude oil for October delivery settled $1.30 cents lower at $46.57 per barrel while September natural gas futures rose 3 cents to $2.93 per 1 million BTU.

In company news, American Midstream Partners ( AMID ) was near its best levels of Monday trading, more than halving its 5% decline to a session low of $12.60 per equity unit that followed analysts at RBC Capital today reducing their investment rating for the company’s stock to Sector Perform from Outperform and also trimming their price target for the company’s stock by $4 to $14 per unit.

In a note to clients, RBC said the company has leaned more heavily on sponsor support than it expected to hit 2017 targets. The analysts also note the partnership plans to materially grow its 2018 earnings before interest in taxes, depreciation and amortization following a deal earlier this month to sell its propane marketing and services business to SHV Energy for $170 million in cash.

But “current assets won’t get it there in our view, so we expect more [acquisitions and divestitures] announcements forthcoming,” the analysts wrote, adding that although American Midstream’s management team is experienced, “visibility is more limited to hit targets.”

In other sector news,

(+) TRCH, Begin hydraulic fracturing at it first horizontal well in the Permian Basin in Texas. The 29-stage process is expected to take about one week using around 11 million pounds of sand and 350,000 gallons of water.

(-) DNR, Temporarily suspends operations at its Oyster Bayou, Conroe, Hastings, Webster and Manvel oilfields in the Houston area and representing abou 16,000 barrels per day due to severe flooding resulting from Hurricane Harvey.

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