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Oil-weighted stocks are oil-sensitive
The oil-weighted shares below may be sensitive to fluctuations in oil prices based on their correlations with US crude oil futures in Q2 2019 to date:
- Hess (HES): 73.8%
- Denbury Resources (DNR): 68%
- Carrizo Oil & Gas (CRZO): 67.7%
- California Resources (CRC): 67%
- ConocoPhillips (COP): 66.6%
All of these oil-weighted shares are part of the SPDR S & P ETF for Oil and Gas Exploration and Production (XOP). They operate with production mixtures of at least 60.0% liquids based on their latest quarterly production data. Liquids include crude oil, condensates and natural gas liquids.
Denbury Resources and US crude oil at less than $ 50
Up to now, US crude oil prices have fallen to double digits and Denbury Resources has seen the largest decline in oil-weighted stocks. Last quarter, Denbury Resources had a production mix of about 97% oil and the rest of natural gas. As of May 31, MNR had covered approximately 40,500 barrels per day for the second quarter of 2019, representing approximately 68% of last-quarter oil production. The weighted average floor prices of NYMEX WTI crude oil and Argus LLS (Light Louisiana Sweet) were $ 57.19 and $ 64.22 per barrel, respectively.
However, much of the NYMEX WTI coverage was carried out using a three-way necklace whose threshold price was set at $ 48.84 per barrel. On June 12, WTI crude oil prices were $ 51.14 per barrel. If futures contracts on WTI crude oil fall below the threshold prices, this could affect the price of the shares of the DNR. For Argus, much of it was covered by trade. DNR EPS is expected to increase by approximately 20% in the second quarter of 2019 sequentially.
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