these energy stocks got annihilated this week

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These Energy Stocks Got Annihilated This Week

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Page 1: These Energy Stocks Got Annihilated This Week

These Energy Stocks Got Annihilated This Week

Page 2: These Energy Stocks Got Annihilated This Week

Despite Friday's big rally, the price of oil slumped below $30 a barrel this week causing a steep drop in energy stocks.

Companies with weak balance sheets were hit particularly hard, with a number of energy stocks plunging more than 30% this week. Leading the way, according to S&P Capital IQ data,

were Chesapeake Energy (NYSE: CHK), NGL Energy Partners (NYSE: NGL), California Resources (NYSE: CRC), Unit Corp (NYSE: UNT), and Teekay Offshore

Partners (NYSE: TOO).

Page 3: These Energy Stocks Got Annihilated This Week

What:Teekay Offshore Partners (NYSE: TOO) dropped 34% this week.

Page 4: These Energy Stocks Got Annihilated This Week

So What: Key driver: An unexpected

contract termination Due to weak oil prices,

Repsol has decided to close down the Varg oil deposit in the North Sea because it has been cash flow negative since last August

Page 5: These Energy Stocks Got Annihilated This Week

Now What: Because of that, it is terminating

its contract with Teekay Offshore for the field’s floating production vessel, which will leave the area later this summer

Key takeaway: With oil companies starting to shut down unprofitable fields, it has investors worries that more contract cancelations could be on the way

Page 6: These Energy Stocks Got Annihilated This Week

What:

Unit Corp (NYSE: UNT) slumped 35% this week.

Page 7: These Energy Stocks Got Annihilated This Week

So What: Key driver: Plunging oil prices Unit is a diversified energy

company with not only exploration and production assets, but drilling and midstream assets

Despite that diversification, all three segments are under pressure due to weakening commodity prices

Page 8: These Energy Stocks Got Annihilated This Week

Now What: Not only have weak oil prices

impacted cash flow at its production business, but those weak prices have crimped demand for its drilling rigs and cut into the margins it earns on volumes from its commodity-based midstream contracts

Key takeaway: In other words, all three of segments are growing weaker along with the price of oil

Page 9: These Energy Stocks Got Annihilated This Week

What:NGL Energy Partners (NASDAQ: CPLP) slumped 39% this week.

Page 10: These Energy Stocks Got Annihilated This Week

So What: Key driver: A weak

earnings report and watered down guidance

NGL Energy Partners reported adjusted EBITDA of $113.5 million, which was well below the $144.8 million it earned in the year-ago quarter

Page 11: These Energy Stocks Got Annihilated This Week

Now What: Because of the impact weak oil prices

are having on the hydrocarbons recovered from its water solutions business, the company is watering down its guidance

NGL Energy Partners now expects full-year EBITDA to be $450 million, which is down from its previous guidance of $500 million

Key takeaway: Investors don’t like when companies water down their guidance

Page 12: These Energy Stocks Got Annihilated This Week

What:California Resources (NYSE: CRC) fell more than 41% this week.

Page 13: These Energy Stocks Got Annihilated This Week

So What: Key driver: Plunging oil prices

caused investors to bail on the company’s bonds and its stock

On Thursday California Resources stock inexplicably plunged more than 25%

That day its bonds were the most actively traded in the market, with its 8% senior unsecured notes due in 2022 slumping 3% to just $0.19 on the dollar.

Page 14: These Energy Stocks Got Annihilated This Week

Now What: That sell-off in the bond

market made equity investors worried that its credit was deteriorating

Key takeaway: Investors are starting to give up all hope that this company makes it through the downturn without having to restructure in bankruptcy

Page 15: These Energy Stocks Got Annihilated This Week

What:Chesapeake Energy (NYSE: CHK) plunged 43% this week.

Page 16: These Energy Stocks Got Annihilated This Week

So What: Key driver: Bankruptcy fears Chesapeake Energy’s stock

crashed on Monday on a report that the company had hired attorneys for restructuring

That report was subsequently denied by the company, saying it "has no plans to pursue bankruptcy and is aggressively seeking to maximize value for all shareholders"

Page 17: These Energy Stocks Got Annihilated This Week

Now What: Analysts and investors aren’t so

sure the company will make it through the downturn without restructuring

UBS reiterated its sell rating while slashing its price target from $2 to $0.50 per share

Key takeaway: It doesn’t look good for Chesapeake Energy