Why Penn West Petroleum, Energy XXI, and Stone Energy Exploded Higher This Week
The price of crude oil jumped this week, heading from $45 per barrel to more than $50 a barrel at one point. This fueled strong gains among oil stocks; however, according to S&P Capital IQ data, the best gains were made by Penn West Petroleum (NYSE: PWE), Energy XXI (NASDAQ: EXXI), and Stone Energy (NYSE: SGY). Photo credit: TaxCredits.net
What: Oil and gas producer Stone Energy (NYSE: SGY) skyrocketed more than 55.9% this week.
So What: Key driver: With no news, the only catalyst this week was oil induced buying Short covering also likely played a roll in the rally as 27.2% of the float was sold short as of the end of September
Now What: One of the reasons Stone was so heavily shorted is because it has a lot of debt, but higher oil prices make that debt more manageable Key takeaway: Investors are growing less concerned now that oil appears to be on the upswing
What: Oil producer Energy XXI (NASDAQ: EXXI) nearly doubled, leaping more than 96% this week.
So What: Key driver: Higher oil prices Energy XXI did make a move to bolster its liquidity as it filed to sell up to $500 million worth of mixed securities EXXI also had its credit rating downgraded by S&P
Now What: Short covering was also likely a big fuel behind the buying this week Key takeaway: Higher oil prices, plus the potential for improved liquidity, had investors breathing a huge sigh of relief
What: Canadian oil producer Penn West Petroleum’s (NYSE: PWE) stock more than doubled, as it was up 121.7% this week.
So What: Key driver: While higher oil prices helped, M&A news fueled Penn West this week First, Penn West sold a non-core asset for roughly $200 million, with plans to use the cash to pay down debt
Now What: In addition to that, there was speculation in the market that Penn West itself is an acquisition target, especially after a notable acquisition overture was announced in Canada Key takeaway: Higher oil, better liquidity, and M&A movement has investors buying
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