Q4 Results
Posted: Thu Feb 09, 2017 3:12 pm
Take a hard look at PXD's 5-day stock chart. That is what can happen to a company's stock price when it reports solid Q4 results combined with a big increase in proven reserves. Clear guidance also helps. Now keep in mind that many of our Sweet 16 are growing production at a much faster pace than PXD.
I am expecting all of the other Sweet 16 to report solid Q4 results. That does not mean they will all see similar spikes in their stock price, but if oil & gas prices hold up, they should get a positive market response. They are all strong companies with lots of running room.
I have been doing this for a long time. At the end of January and early February is when investors get worried because of the "information void" that happens each year. Many of you will admit your own frustration with the lack of data.
Why does this happen?: It takes much longer to put out Q4 results because it takes the auditors longer to complete all of their Sarbanes-Oxley compliance work, the annual audit work and the year-end reserve report. I worked a lot of long hours at Hess during January and February when I was the USE&P Division Controller.
Oil Prices: As I have been telling you for months in my weekly podcasts, WTI is likely to flop around in the $50-$55 range through March. 3rd party confirmation that OPEC members are cutting production and the annual Q2 spike in demand should push oil prices higher.
NGL prices: PXD reported a 27% increase in their realized NGL prices from Q3 to Q4 ($12.90 to $16.39 per barrel). Some analysts are now forecasting that NGLs will ramp to 50% of WTI. If that happens, it will be a nice revenue boost for many of our Sweet 16. NGLs are not created equal, so there is wide range of realized prices. Very few companies hedge their NGLs.
Natural gas prices: I still believe the speculative traders that set the gas price do not comprehend how much tighter the U.S. gas market is going to be this summer than it was last year. I will talk about this in my next podcast. Keep in mind that the price you see for gas is the front month NYMEX futures contract. Today's price is for March deliveries at Henry Hub. Obviously, the gas market in March will be fine. We have more than enough gas in storage to meet demand today. However, U.S. gas production is lower today than it was in 2015 and demand is going to be lot higher: Go to this link and see what January 2018 gas is trading for: http://www.cmegroup.com/trading/energy/ ... l-gas.html
I am expecting all of the other Sweet 16 to report solid Q4 results. That does not mean they will all see similar spikes in their stock price, but if oil & gas prices hold up, they should get a positive market response. They are all strong companies with lots of running room.
I have been doing this for a long time. At the end of January and early February is when investors get worried because of the "information void" that happens each year. Many of you will admit your own frustration with the lack of data.
Why does this happen?: It takes much longer to put out Q4 results because it takes the auditors longer to complete all of their Sarbanes-Oxley compliance work, the annual audit work and the year-end reserve report. I worked a lot of long hours at Hess during January and February when I was the USE&P Division Controller.
Oil Prices: As I have been telling you for months in my weekly podcasts, WTI is likely to flop around in the $50-$55 range through March. 3rd party confirmation that OPEC members are cutting production and the annual Q2 spike in demand should push oil prices higher.
NGL prices: PXD reported a 27% increase in their realized NGL prices from Q3 to Q4 ($12.90 to $16.39 per barrel). Some analysts are now forecasting that NGLs will ramp to 50% of WTI. If that happens, it will be a nice revenue boost for many of our Sweet 16. NGLs are not created equal, so there is wide range of realized prices. Very few companies hedge their NGLs.
Natural gas prices: I still believe the speculative traders that set the gas price do not comprehend how much tighter the U.S. gas market is going to be this summer than it was last year. I will talk about this in my next podcast. Keep in mind that the price you see for gas is the front month NYMEX futures contract. Today's price is for March deliveries at Henry Hub. Obviously, the gas market in March will be fine. We have more than enough gas in storage to meet demand today. However, U.S. gas production is lower today than it was in 2015 and demand is going to be lot higher: Go to this link and see what January 2018 gas is trading for: http://www.cmegroup.com/trading/energy/ ... l-gas.html