Oklahoma energy stocks lead volatile third-quarter growth
Oklahoma’s energy stocks were the biggest winners in a volatile third quarter marked by natural disasters and uncertainty.
The S&P 500 recorded its eighth consecutive quarterly gain, and more than half of Oklahoma’s stocks gained ground in the period.
Tulsa-based energy services company Matrix Service Co. far outpaced other Oklahoma stocks, boosting its share price by 63 percent to $15.20 in the third quarter.
The company likely will benefit from the back-to-back-to-back hurricanes as it helps rebuild and expand oil and gas, utility and other infrastructure damaged by the storms. But Matrix’s share price began climbing well before the weather turned sour.
The company in late July announced a deal with pipeline company TransCanada on an ongoing electrical infrastructure project. Matrix last month said it had a 34 percent increase in project awards received during the fiscal year that ended June 30.
“Matrix is not a hurricane story yet as there hasn’t been time to rebuild,” said Jake Dollarhide, president of Longbow Asset Management Co. in Tulsa. “All of the customer segments they serve have been in a simultaneous bear market for the past several quarters. But now mining, utilities and energy, their customers are starting to show signs of life.”
Matrix was followed by Tulsabased Laredo Petroleum Inc. (up 22.9 percent), Midstates Petroleum Co. Inc. (up 22.7 percent) Continental Resources Inc. (up 19.4 percent) and WPX Energy Inc. (up 19.1 percent).
“The one thing most of those companies have in common is that they’re heavy on oil,” Dollarhide said. “We finally saw some legs on the energy companies this quarter. This could be the start of something special for
Matrix is not a hurricane story yet as there hasn’t been time to rebuild. All of the customer segments they serve have been in a simultaneous bear market for the past several quarters.”
Jake Dollarhide, president of Longbow Asset Management Co.
the U.S. energy sector.”
The broader market grew in the third quarter despite widespread uncertainty, Dollarhide said.
“This quarter saw three major hurricanes, the most significant nuclear threat in recent memory, really no tangible legislation or progress out of Washington, D.C., in terms of health care, tax reform, infrastructure and immigration,” he said. “The market was up once again in spite of the odds stacked against it, in spite of all
the negative noise coming from every direction at every moment.”
The gains, however, were far from universal.
Oklahoma City-based chemicals company LSB Industries Inc. shares tumbled 23 percent in the third quarter to close at $7.94 Friday.
The company this week said a minor fire at its Pryor ammonia plant will cost at least $4 million and shut down production for more than a month.
“The stock market this year has been tough on a lot of companies that have executed well,” Dollarhide said. “It’s been challenging for companies that are at
the top of their game. For any company that has not executed as well and has had self-inflicted wounds like LSB Industries, it’s been extra challenging.”
The other companies at the bottom of the Oklahoma stocks were Tulsabased NGL Energy Partners (down 18 percent) and Broken Arrow-based telecommunications company ADDvantage Technologies Group Inc. (down 15 percent).
“This is a nervous up market,” Dollarhide said. “This market will go up as long as you don’t give it anything to worry about. But if it senses uncertainty or negativity, it will punish
certain industries or companies.”
Heading into the fourth quarter, Dollarhide said he expects continued overall market gains.
“U.S. stock investors have been very fortunate in the last three or four years that even if they have a challenging September or a volatile October, they have received a strong end-ofthe-year rally, or Santa Claus rally,” he said.
“All signs point to the Fed raising interest rates again in December, but interest rates are still historically low. I would not be surprised to see the market up another 3 or 4 percent if not higher.”