Energy stock investors will be primed for the latest OPEC+ meeting this week, which takes place on Thursday.
But the big picture will be important to keep in mind. And that picture was also put out this week by OPEC in its latest round of forecasts. The most important part of those forecasts was the supply deficit now being predicted for August of 1.5 million barrels per day.
That’s right: from an historic oil glut last year in the wake of the outbreak of COVID-19, we are now headed toward a supply shortage. This is happening even though OPEC has started to increase output.
The real driver here is the combination of a year spent with oil companies afraid to increase production rates or capacity (due to the pain of last year and fear of future lockdowns from the virus) and the massive boom developed-world economies are experiencing right now as the world reopens.
Because so little has been invested in creating or setting up new production capacity over the past year, shortage conditions could worsen.
This is amplified further by rising concerns that Iran’s new hardline leadership regime will be even more difficult to deal with in terms of the establishment of a new nuclear deal. For the past few months, the oil market has been working to price in a jump in global oil exports from the lifting of Iranian sanctions as this was earmarked by the incoming Biden administration as a key foreign policy priority.
That looks like a shaky thesis at this point.
As a result, investors will be watching the oil market more closely, leading to interesting action in stocks in the space, including SM Energy Co (NYSE:SM), PDC Energy Inc (NASDAQ:PDCE), Viking Energy Group Inc (OTCMKTS:VKIN), Callon Petroleum Company (NYSE:CPE), Southwestern Energy Company (NYSE:SWN), Camber Energy Inc (NYSEAMERICAN:CEI), and PBF Energy Inc (NYSE:PBF), a few of which we will discuss more thoroughly below.
Callon Petroleum Company (NYSE:CPE) has come roaring back following the worst of the pandemic lockdowns, rallying more than 750% in the past 10 months as a leadership option in the small-cap energy space.
The company bills itself as an independent oil and natural gas company focused on the acquisition, exploration, and development of high-quality assets in the leading oil plays of South and West Texas.
Callon Petroleum Company (NYSE:CPE) recently nnounced that Kevin Haggard has been appointed Senior Vice President and Chief Financial Officer (“CFO”), effective May 17, 2021. Mr. Haggard brings more than 20 years of leadership experience across energy and finance. Most recently, he served as Vice President and Treasurer of Noble Energy, where he directed the company’s global corporate finance and treasury operations and maintained relationships with the company’s key capital providers.
“I look forward to welcoming Kevin to the Callon team,” said Joe Gatto, Chief Executive Officer and President of Callon. “Kevin’s expertise as a seasoned financial leader with deep experience in both the upstream sector and in investment banking will serve us well as we continue working towards our deleveraging goals. He has a track record of taking strategic action and building impactful teams and relationships across organizations. In speaking with him, it is also clear that Kevin shares Callon’s values and brings leadership skills that will help continue developing the Callon team and advancing our sustainability focus, all with the goal of delivering meaningful long-term value to our stakeholders.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. CPE shares have been moving higher over the past week overall, pushing about 3% to the upside on above average trading volume.
Callon Petroleum Company (NYSE:CPE) pulled in sales of $359.9M in its last reported quarterly financials, representing top line growth of 24.1%. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($24.4M against $672M, respectively).
Camber Energy Inc (NYSEAMERICAN:CEI) is particularly interesting given its pending merger with its majority-owned subsidiary, Viking Energy Group Inc (OTCMKTS:VKIN).
The strategic combination will give CEI investors strong exposure to historically rich oil and gas properties spread across Oklahoma, Texas, Louisiana, Mississippi, and Kansas, with significant exposure to the Gulf Coast.
Camber Energy Inc (NYSEAMERICAN:CEI) recently Viking’s financial results for the quarter ended March 31, 2021. The results show that Viking has been remarkably consistent as a performer despite the wild ups and downs in the oil market associated with the global pandemic health crisis. In Q1 2019, Viking brought in over $9.3 million in revenues. That grew to nearly $11.8 million in Q1 2020. It was also bested this year with the company’s $10.49 million in Q1 2021 revenues during a period that preceded any large-scale economic reopening.
James Doris, President and Chief Executive Officer of both Camber and Viking, commented, “We are pleased with Viking’s Q1 results, especially following the unprecedented conditions experienced in 2020. We are extremely encouraged with the foundation we have established, and are intensely focused on pursuing growth opportunities.”
Viking just posted record topline performance overall last year, driving 2020 revenues above $40 million – up over 400% from 2018.
Camber Energy Inc (NYSEAMERICAN:CEI) shares have been trending to the upside since forming a key low in May down near the $0.50/share level. The stock marched up to the $0.75/share area earlier this month. It has pulled back to test support at the 50-day MA in the $0.65/share area as we approach month and quarter end.
PBF Energy Inc (NYSE:PBF) bills itself as one of the largest independent refiners in North America, operating, through its subsidiaries, oil refineries and related facilities in California, Delaware, Louisiana, New Jersey and Ohio.
PBF Energy Inc. also currently indirectly owns the general partner and approximately 48% of the limited partnership interest of PBF Logistics LP (NYSE:PBFX).
PBF Energy Inc (NYSE:PBF) recently reported first quarter 2021 income from operations of $57.7 million as compared to loss from operations of $1,366.8 million for the first quarter of 2020. Excluding special items, first quarter 2021 loss from operations was $317.8 million as compared to loss from operations of $134.0 million for the first quarter of 2020. PBF Energy’s financial results reflect the consolidation of PBF Logistics LP (NYSE: PBFX), a master limited partnership of which PBF Energy indirectly owns the general partner and approximately 48% of the limited partner interests as of quarter-end.
Tom Nimbley, PBF Energy’s Chairman and CEO, said, “PBF’s first quarter results reflect the continuing challenges of lower demand brought on by the pandemic. Our refineries operated well and at rates which mirrored demand.” Mr. Nimbley continued, “We did see sequential improvement during the quarter. We ran higher in March than we did in January which reflects more favorable market conditions as the progressive vaccine rollout lead to improving demand. However, even with rising demand, the independent refining sector is facing unsustainable headwinds as a result of escalating compliance costs under the RFS program. If the program is not fixed, it will likely result in a reshaping of the U.S. refining industry and a greater reliance on foreign energy.”
Even in light of this news, PBF has had a rough past week of trading action, with shares sinking something like -7% in that time. That said, chart support is nearby, and we may be in the process of constructing a nice setup for some movement back the other way.
PBF Energy Inc (NYSE:PBF) managed to rope in revenues totaling $4.9B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of -6.7%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.5B against $3.4B, respectively).
