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Tags: oil | stocks | shock | price | low

Stifel Analyst: 6 Stocks That Can Survive Oil Shock, Even if It Lasts Years

Stifel Analyst: 6 Stocks That Can Survive Oil Shock, Even if It Lasts Years
(Dreamstime.com)
 

By    |   Thursday, 02 April 2020 08:30 AM EDT

Some analysts are extending their forecasts for extremely low prices beyond 2021 as the coronavirus crisis continues to upend the global economy.

For example, Stifel analyst Michael Scialla reduced his West Texas oil-price projection to $32 in 2020 and $34 in 2021, in line with the futures markets. And he thinks that the low prices could potentially last even longer, Barron's explained.

Scialla found six oil producers he thinks can make it through this kind of environment, largely because they have managed their debt well and don’t have overwhelming maturities coming up, Barron's said

The stocks he recommends include:

  1. Bonanza Creek (BCEI);
  2. EOG (EOG);
  3. Noble Energy (NBL);
  4. PDC Energy (PDCE);
  5. Parsley (PE);
  6. Cimarex (XEC).

“All six of the stocks we are upgrading can withstand this environment, even if price weakness persists over the next four years,” Scialla wrote. “By our estimates, all of these companies will have sufficient liquidity to retire debt maturing between 2020-2023.”

However, the playing field could soon change for volatile oil prices.

Crude oil futures jumped 10% on Thursday after U.S. President Donald Trump said he expected Saudi Arabia and Russia to reach a deal soon to end their oil price war.

Trump said he had talked recently with the leaders of both Russia and Saudi Arabia and believed the two countries would make a deal to end their price war within a "few days" - lowering production and bringing prices back up, Reuters reported.

Trump also said he had invited U.S. oil executives to the White House to discuss ways to help the industry "ravaged" by slumping energy demand during the coronavirus outbreak and the Saudi Arabia/Russia price war.

"Oil prices are seeing their biggest gains in two weeks this morning...There are two key factors...both of which, however, are not enough to save oil prices from further declines," Rystad's head of oil markets Bjornar Tonhaugen said in a daily note.

"The first, U.S. oil diplomacy efforts towards Saudi Arabia and Russia ... The second big news driving the positive sentiment was rumors that China will speed up its crude purchases for their strategic stockpiles."

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StreetTalk
Some analysts are extending their forecasts for extremely low prices beyond 2021.
oil, stocks, shock, price, low
349
2020-30-02
Thursday, 02 April 2020 08:30 AM
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