Eurozone Uncertainty Strikes Oil Service Stocks

Brittney Barrett |

 U.S. stocks declined across the board on Monday, with the market surrendering over 2 percent of the 14 percent rally that has occurred over the past two weeks. Equities retreated following statements from Germany that seemed to correct perceptions that the urgency in the Eurozone would be met with a fast fix. The ongoing challenges facing European banks was compounded by a regional manufacturing report that seemed to directly reject much of last week’s positive economic indicators. Sectors were hit broadly, but none as dramatically as the oil service sector.

Crude for November fell sharply for the day on the New York mercantile Exchange, with futures returning to $85.88 a barrel, reversing gains built on what was expected to be an optimistic meeting of the developed nations scheduled for today. When the outcome failed to please, crude began a retreat.



Following crude lower were oil service shares, especially from Halliburton (HAL), which announced earnings today. Halliburton earned 94 cents per share on projections of 91 cents but this didn’t help shares of the company as competition overseas and the lower price of crude were mentioned as sources that could threaten the performance next quarter. Some fear that the current onshore drilling boom, which has contributed to a record breaking $1 billion in operating income for the company, will have to end as environmentalists continue to contest the fracturing technology. “Fracking” as it is commonly referred has helped the company access oil and natural gas but may not be a long term solution. Additionally, weaker results overseas led some investors to worry about the company’s reliance on domestic strength and begin profit taking after the recent rally.

Elsewhere, El Paso Corp. (EP) bucked the broader trend and added a massive 24 percent to its share price following the company’s agreement to the terms of a $38 billion buyout offer from Kinder Morgan (KMI). Shares of the latter also ascended following the announcement, although much more moderately.

Another less enthusiastically received acquisition announcement came from AmeriGas Partners LP (APU), which announced plans to purchase the propane division of Energy Transfer Partners LP (ETP) for a deal worth $2.9 billion. Shares of AmeriGas tumbled while ETP gained.

Ongoing disputes from the April 2010 BP explosion also impacted trading today with Andarko Petroleum rallying following the company’s agreement to pay BP a $4 million settlement for its involvement in the oil spill. Shares of BP also rose.

Shares of the major oil names like Exxon (XOM) and Marathon (MRO), Chevron (CVX) and Hess (HES) all declined in trading with Marathon taking the hardest hit. For the most part the losses were minor. Most of the companies are lower but only moderately so for the year with the exception of Marathon which has lost over 25 percent in 2011.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
HES Hess Corporation 43.46 -0.59 -1.34 3,394,405 Trade
CVX Chevron Corporation 103.25 -1.38 -1.32 5,304,114 Trade
MFC.PR.N:CA Manulife Financial Corporation Non-Cumulative Rate 22.05 -0.04 -0.18 7,100
MRO Marathon Oil Corporation 11.85 -0.25 -2.07 12,368,309 Trade
KMI Kinder Morgan Inc. 20.69 0.13 0.63 17,070,830 Trade
XOM Exxon Mobil Corporation 80.12 -0.74 -0.92 12,268,605 Trade
BP BP p.l.c. 34.68 -0.42 -1.20 3,725,586 Trade
APU AmeriGas Partners L.P. 45.06 -0.02 -0.04 74,745 Trade
HAL Halliburton Company 44.38 -1.00 -2.20 11,819,179 Trade

Comments

Emerging Growth

Inovio Pharmaceuticals Inc.

Inovio Pharmaceuticals Inc is a clinical stage biopharmaceutical company. The Company develops active DNA immunotherapies and vaccines in combination with proprietary electroporation delivery devices to prevent and treat cancers and…

Private Markets

Almond Smart Home Router by Securifi

Securifi sells user friendly touch screen routers that also have support for IoT/home automation.Securifi’s Almond revolutionized wireless router setup with its easy to use Touchscreen Interface in 2012. Now our…

MyForce, Inc.

As parents, we constantly worry about the safety of our loved ones. The media bombards us with incidents from across the nation school shootings, frequent assaults on campuses, and crimes…