Energy

Energy Sector Gutted Monday by Price War, Coronavirus

Art Wager / Getty Images

When Russia last week refused to fall in line with Saudi Arabia and OPEC to reduce crude oil production, a chain reaction in the world’s oil markets began that, by Monday morning, had spread to global equities markets. Crude prices are down around 20% and, in the United States, the major market indexes are down by 5% or more.

The sell-off reflects investor uncertainty about the breadth of the coronavirus outbreak in the United States and in other parts of the world. According to the Kaiser Family Foundation, there have been just 213 reported cases of the COVID-19 infection in the United States with 11 deaths. Virtually no one believes those totals have anywhere to go but up.

The knock-on effects as the coronavirus outbreak spreads include waves of job losses and impacts on energy businesses that have no connection with fossil fuels.

24/7 Wall St. is tracking dozens of exploration and production companies to help gauge the impact of both the coronavirus and the budding price war in oil. Here are the 10 of those companies that posted the biggest losses in the first hour of Monday trading.

Diamondback Energy Inc. (NASDAQ: FANG) closed at $48.56 on Friday, down from a year-to-date high of $96.54, and it was down nearly 49% at $24.76 Monday morning.

Whiting Petroleum Corp. (NYSE: WLL) closed at $1.33 on Friday, down from a year-to-date high of $8.16, and it was down about 42% at $0.77 Monday morning.

Apache Corp. (NYSE: APA) closed at $20.70 on Friday, down from a year-to-date high of $33.59, and it was down nearly 42% at $12.10 Monday morning.

Marathon Oil Corp. (NYSE: MRO) closed at $6.83 on Friday, down from a year-to-date high of $14.01, and it was down nearly 41% at $4.06 Monday morning.

Continental Resources Inc. (NYSE: CLR) closed at $14.85 on Friday, down from a year-to-date high of $36.20, and it was down about 39% at $9.05 Monday morning.

Parsley Energy Inc. (NYSE: PE) closed at $10.52 on Friday, down from a year-to-date high of $20.13, and it was down nearly 37% at $6.64 Monday morning.

Pioneer Natural Resources Co. (NYSE: PXD) closed at $105.12 on Friday, down from a year-to-date high of $148.88, and it was down 34% at $69.23 Monday morning.

Hess Corp. (NYSE: HES) closed at $49.72 on Friday, down from a year-to-date high of $70.96, and it was down nearly 31% at $34.37 Monday morning.

Devon Energy Corp. (NYSE: DVN) closed at $26.07 on Friday, down from a year-to-date high of $26.98, and it was down about 31% at $9.22 Monday morning.

Occidental Petroleum Corp. (NYSE: OXY) closed at $10.52 on Friday, down from a year-to-date high of $47.51, and it was down nearly 29% at $18.61 Monday morning.

Many of these firms focus on the shale plays in Texas and North Dakota and may be hit hard by a price war with the Russians and the Saudis on one side and U.S. shale producers on the other. No profits, no dividends.

Occidental is dogged by the leverage it took on to acquire Anadarko, and many of the others are also going to be stretched to meet interest payments, maintain capital spending, and pay dividends.

The two largest U.S. integrated firms, Exxon and Chevron, both traded down sharply Monday morning, but investors appear to believe the companies’ deep pockets will both keep the oil and the dividends flowing.

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