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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
This could be the next billion-dollar iSecret