Placing Your Bets in the Upstream Sector: What to Consider PART 5 OF 5
Natural gas-weighted stocks in the trailing week
Between August 7 and August 14, 2017, natural-gas-weighted stocks fell 1.1% compared to a 5.6% rise in natural gas active futures during this period. These natural-gas-weighted stocks are from the SPDR S&P Oil & Gas Exploration & Production ETF (XOP) and operate with a minimum of a 60% production mix in natural gas.
Gulfport Energy (GPOR) outperformed peers and rose 5.5% in the last five trading sessions. In fact, it had the highest correlation with natural gas prices during this time period, as we discussed in part three of this series.
Natural-gas-weighted stocks that followed with the biggest rises were Cabot Oil & Gas (COG) and Rice Energy (RICE). These two stocks rose 0.5% and 0.3% in the seven calendar days to August 14, 2017.
During the last five trading sessions, Chesapeake Energy (CHK) fell 6.4% and was the biggest loser among our list of natural-gas-weighted stocks. In fact, CHK was among the top five gas-weighted stocks that had the highest correlation with oil prices during this period. US crude oil fell 3.6% in the trailing week. It had the strongest negative correlation with natural gas prices between August 7 and August 14, 2017. Please refer to part three and part four of this to learn more.
Other natural-gas-weighted stocks like Antero Resources (AR) and WPX Energy (WPX) fell 4.7% and 3%, respectively, and underperformed their peers.
Between March 3, 2016, and August 14, 2017, natural gas active futures rose 80.4% compared to a gain of 13.8% in these natural-gas-weighted stocks. On March 3, 2016, natural gas active futures settled at their 17-year low.
Natural-gas-weighted stocks that gained the most with natural gas’s recovery between these two dates are as follows:
- Rice Energy (RICE): 172.8%
- WPX Energy (WPX): 90.4%
- Cabot Oil & Gas (COG): 11.1%
Natural-gas-weighted stocks that weren’t able to follow natural gas’s recovery between these two dates are as follows:
- Southwestern Energy (SWN): -29.4%
- Range Resources (RRC): -44.7%
- Gulfport Energy (GPOR): -53.1%
So, natural gas prices outperformed gas-weighted stocks in the trailing week, and since their 17-year low in 2016.
Read our Upstream Premier to know more about upstream stocks.