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The Zacks Analyst Blog Highlights: Halliburton, Baker Hughes, EOG Resources, Parsley Energy and Pioneer Natural Resources
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For Immediate Release
Chicago, IL – June 4, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Halliburton Company (HAL - Free Report) , Baker Hughes Company (BKR - Free Report) , EOG Resources, Inc. (EOG - Free Report) , Parsley Energy, Inc. and Pioneer Natural Resources Company .
Here are highlights from Wednesday’s Analyst Blog:
How Are Improving Crude Prices Triggering Rapid Shale Recovery?
As crude oil prices are recovering from historic lows to more than $35 per barrel, the early signs of shale recovery are in sight. This highlights shale’s preparedness to quickly adjust to crude pricing. However, this might create a greater challenge for OPEC as the group will be forced to extend production curbs.
Backdrop
Supply glut and demand destruction caused by coronavirus-induced lockdowns pushed oil prices to historic lows, triggering producers to lower output in April and May. In March, domestic oil production declined around 13% from a record high of 13.1 million barrels a day, primarily aided by the shale production cut. This also caused a significant number of job losses in the industry. Oilfield service providers — who are heavily dependent on upstream energy companies’ capital budget — had to reduce costs, which in some cases came in the form of layoffs. Even big oilfield service providers like Halliburton Company and Baker Hughes Company followed suit.
Currently, global economies are gradually lifting lockdowns and travel bans. This means that energy demand is bound to improve in the coming days. As such, there is optimism surrounding shale production.
Debt Burden Demands Cash Flow
With debt burden choking most of the U.S. upstream companies, any chance of generating cash flow is a major positive. As such, the WTI crude price moving past the mid-$30s mark is enough to put the companies back on track since the upstream firms are likely to operate some wells profitably in the current price environment. Also, it will enable producers to lock in higher prices for their commodities. The free market structure enables domestic producers to quickly react to the price change.
Shale Players React
EOG Resources, Inc., one of the biggest shale producers, stalled 125,000 barrels per day of output in May. Due to the changing market environment, the company is now expected to bring much of the curtailed production back online in the third quarter, as stated by EOG Resources’ E&P head Kenneth Boedeker in an RBC Capital Markets conference.
Another shale player, Parsley Energy, Inc. also intends to resume the vast majority of its curbed production this month. This Zacks Rank #3 (Hold) company had to shut down 400 wells in March. Although these producers will likely resume output, it is expected in the form of opening up of paused wells rather than drilling brand new wells. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, the potential production cut extension by OPEC for the next few months will pave the way for more domestic producers to resume output. However, any significant rise in shale production can influence OPEC’s decision. Rising crude prices will help shale producers generate more cash flow and reduce debt level. Upstream players like Pioneer Natural Resources Company operating in the Permian Basin, the most prolific basin in the United States, can benefit from the gradual rise in prices. As such, investors in the energy industry are currently monitoring the shale players and their reaction to improving price levels.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Halliburton, Baker Hughes, EOG Resources, Parsley Energy and Pioneer Natural Resources
For Immediate Release
Chicago, IL – June 4, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Halliburton Company (HAL - Free Report) , Baker Hughes Company (BKR - Free Report) , EOG Resources, Inc. (EOG - Free Report) , Parsley Energy, Inc. and Pioneer Natural Resources Company .
Here are highlights from Wednesday’s Analyst Blog:
How Are Improving Crude Prices Triggering Rapid Shale Recovery?
As crude oil prices are recovering from historic lows to more than $35 per barrel, the early signs of shale recovery are in sight. This highlights shale’s preparedness to quickly adjust to crude pricing. However, this might create a greater challenge for OPEC as the group will be forced to extend production curbs.
Backdrop
Supply glut and demand destruction caused by coronavirus-induced lockdowns pushed oil prices to historic lows, triggering producers to lower output in April and May. In March, domestic oil production declined around 13% from a record high of 13.1 million barrels a day, primarily aided by the shale production cut. This also caused a significant number of job losses in the industry. Oilfield service providers — who are heavily dependent on upstream energy companies’ capital budget — had to reduce costs, which in some cases came in the form of layoffs. Even big oilfield service providers like Halliburton Company and Baker Hughes Company followed suit.
Currently, global economies are gradually lifting lockdowns and travel bans. This means that energy demand is bound to improve in the coming days. As such, there is optimism surrounding shale production.
Debt Burden Demands Cash Flow
With debt burden choking most of the U.S. upstream companies, any chance of generating cash flow is a major positive. As such, the WTI crude price moving past the mid-$30s mark is enough to put the companies back on track since the upstream firms are likely to operate some wells profitably in the current price environment. Also, it will enable producers to lock in higher prices for their commodities. The free market structure enables domestic producers to quickly react to the price change.
Shale Players React
EOG Resources, Inc., one of the biggest shale producers, stalled 125,000 barrels per day of output in May. Due to the changing market environment, the company is now expected to bring much of the curtailed production back online in the third quarter, as stated by EOG Resources’ E&P head Kenneth Boedeker in an RBC Capital Markets conference.
Another shale player, Parsley Energy, Inc. also intends to resume the vast majority of its curbed production this month. This Zacks Rank #3 (Hold) company had to shut down 400 wells in March. Although these producers will likely resume output, it is expected in the form of opening up of paused wells rather than drilling brand new wells. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, the potential production cut extension by OPEC for the next few months will pave the way for more domestic producers to resume output. However, any significant rise in shale production can influence OPEC’s decision. Rising crude prices will help shale producers generate more cash flow and reduce debt level. Upstream players like Pioneer Natural Resources Company operating in the Permian Basin, the most prolific basin in the United States, can benefit from the gradual rise in prices. As such, investors in the energy industry are currently monitoring the shale players and their reaction to improving price levels.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.