By - Rupam Roy
- Diamondback said it has closed its previously announced acquisition of FireBird Energy LLC.
- The TPL stock grew over 100 per cent YTD.
- Revenue of NOV Inc. (NOV) jumped 41 per cent YoY in Q3 FY22.
The market has gone through a bumpy road in the ongoing year against elevated inflation, and soaring interest rates, among other concerns. The geopolitical tensions between Russia and Ukraine have contributed most to the soaring commodity prices on a global scale.
However, despite most of the market segments ending up in the negative territory, the energy segment has comparatively fared well through the year, mainly due to the higher oil and gas prices. The Russia-Ukraine war has triggered massive disruption and price volatility in the commodities, contributing to higher food prices in 2022.
The oil prices inched significantly higher following Moscow's invasion of Kyiv. In contrast, US President Joe Biden ordered to release of millions of barrels of oil from the US Strategic Petroleum Reserve, to meet the demands.
This has helped improve the production and supply cycle globally while dragging gasoline prices to pre-war levels in August. However, the prices again witnessed a surge after OPEC+ countries decided to trim their production, pushing President Biden to consider additional release from the reserve.
While the energy sector is one of the essential segments that empowers the global economy, the increasing prices have weighed on the consumers' sentiment in recent months. Given the energy prices, many investors have also explored opportunities in the segment.
Having said that, the stocks also performed well amid the soaring commodity prices while attracting investors' attention. Some of the prominent energy companies are Enterprise Products Partners LPP (NYSE: EPD), Diamondback Energy, Inc. (NASDAQ: FANG), Texas Pacific Land Corporation (NYSE: TPL), NOV Inc. (NYSE: NOV), and Antero Resources Corporation (NYSE: AR).
Today, we would be exploring these firms' financial highlights and stock movements, for more insights into their recent performances.
The leading American midstream natural gas and crude oil pipeline firm, Enterprise Products Partners LP, holds a dividend yield of 7.65 per cent. The stock of the major North American provider of midstream energy services surged over 10 per cent YTD and about 15 per cent YoY.
The EPD stock added nearly two per cent QTD through December 6, when it closed at US$ 24.22.
Enterprise Products Partners LP reported an operating income of US$ 1.71 billion in Q3 FY22., against an operating income of US$ 1.51 billion in Q3 FY21.
Meanwhile, its fully diluted earnings per common unit were US$ 0.62 apiece compared to US$ 0.52 per share in the same comparable period.
The Midland, Texas-based independent oil and natural gas firm, Diamondback Energy Inc's dividend yield was 2.06 per cent. The firm's stock, which primarily engages in hydrocarbon exploration services, rose around 33 per cent YTD and around 32 per cent YoY.
The FANG stock rose over 14 per cent QTD through its close of US$ 138.21 on December 7 and was at its 52-week high of US$ 168.95 on November 15, 2022.
On November 30, the energy firm closed its acquisition of all leasehold interests and related assets of FireBird Energy LLC.
In Q3 FY22, Diamondback Energy Inc's available net income was US$ 1.18 billion versus an income of US$ 649 million in Q3 FY21.
The energy-focused real-estate firm, Texas Pacific Land Corporation holds a market cap of US$ 19.02 billion. The firm's stock, which claims to own over 880,000 acres in 20 West Texas counties, rose 100 per cent YTD and about 98 per cent YoY.
The TPL stock added about 40 per cent QTD through its close of US$ 2472.73 on December 7 and was at its 52-week high of US$ 2,739 on November 11, 2022.
Texas Pacific Land Corporation reported a net income of US$ 129.83 million on revenue of US$ 191.11 million in Q3 FY22, against an income of US$ 83.83 million, on revenue of US$ 123.69 million in Q3 FY21.
NOV Inc, formerly known as Oilwell Varco, is a major company in the energy industry, and its P/E ratio was 699.23. The stock of the firm, which provides equipment and solutions related to oil and gas drilling, production, and other related services, rose around 55 per cent YTD and about 69 per cent YoY.
The company would report its final quarter and annual financial results on February 7, 2023. In Q3 FY22, its revenue rose 41 per cent YoY to US$ 1.89 billion, and its net income was US$ 0.08 per diluted share, against a loss of US$ 0.18 per diluted share in Q3 FY21.
The American hydrocarbon exploration firm, Antero Resources Corporation holds a market cap of US$ 9.42 billion. The company's stock, which has its reserves in the Appalachian Basin, rose 77 per cent YTD and around 90 per cent YoY.
In Q3 FY22, Antero Resources Corporation's income was US$ 1.72 per diluted share on revenue of US$ 2.06 billion, against a loss of US$ 1.75 per diluted share on revenue of US$ 533.88 million in Q3 FY21.
While the energy sector looks attractive to many due to its robust performances in recent months, there are certain factors that investors should keep in mind before exploring opportunities in the segment. For instance, some analysts believe that energy stocks could be highly volatile compared to other sectors, and thus are likely to experience extreme price swings.
The higher energy prices might have helped the sector grow in 2022, but an absence of any positive catalyst might impact or subside the recent growth.
However, as said earlier, energy is one of the essential things globally, and its demand will likely stay stable irrespective of the prices.
But, inflation and higher interest rates have weighed on consumer sentiment so far, forcing them to cut their spending on certain things. In addition, many environment-focused investors and consumers are now focusing on the alternative energy or clean energy segment.
Consumers are shifting their focus to electric vehicles, green energy, and other related segments to fulfill their requirements. In addition, the global push towards the clean energy segment also has helped it gain traction among the market participants.
The S&P 500 energy sector advanced over 54 per cent YoY and about 53 per cent in 2022, while the broader index declined over 14 per cent YoY and about 17 per cent YTD. However, in the ongoing quarter, the S&P 500 index rose nearly 10 per cent through December's first week, while its energy segment jumped over 17 per cent.