Tumbling markets take toll on local firms
After a brief rebound Wednesday, crude oil prices continued to slide Thursday, dragging down most Oklahoma energy stocks.
At least 18 Oklahoma energy companies saw their stock prices tumble to new 52-week lows this week. The downturn over the past three months has erased the gains the stocks saw over the first three quarters when oil prices were rising.
Oil prices — and the broader stock market — have had an unusually volatile week, but the trend for most Oklahoma energy companies has been decidedly negative.
Domestic benchmark West Texas Intermediate crude tumbled $3.16 a barrel Monday, recovered $3.79 on Wednesday and gave back $1.61 Thursday, finishing the day at $44.61, off nearly 42 percent from a recent high of $76.41 on Oct. 3.
The broader stock market also has been volatile this week. After gaining a record more than 1,000 points on Wednesday, the Dow Jones industrial average shed more than 600 points Thursday morning before closing up more than 260 points at 23,138.82.
Oil prices notoriously are volatile. They jump or fall on fear and speculation, which may or may not be connected to supply-and-demand fundamentals.
Global markets are dealing with rapidly growing oil production in the United States and other parts of the world, and there is some fear that global economies could slow, lowering oil demand. But with oil prices based on so many highly speculative issues, it is difficult to know where prices are headed or how far they could go.
Adding to the pain for oil companies this year is that executives and directors have worked hard to drive up stock prices.
Oil company stocks experienced a muchneeded recovery late last year and early this year after suffering in 2014 and 2015 from tumbling commodity prices. Energy investors fled public markets, turning instead to private capital investing or other sectors.
Executives at many oil companies earlier this year began buying back stock and increasing dividends in attempt to lure investors back into the market and boost their stock prices.
In many cases, the plan was working, at least until tumbling oil prices undercut the effort.
Not surprisingly, most energy companies in Oklahoma and throughout the country set 52-week highs in early October or late September when oil prices were climbing.
October and $70 oil now seem very far away.
But there are a few bright spots for the industry.
Chesapeake Energy Corp. shares on Wednesday surged 27 percent off their 52-week low after the company said director and former chairman Archie Dunham bought $4 million in the company's stock, signaling his believe that the company is a good investment. Chesapeake shares added another 2 cents, or less than 1 percent, on Thursday to close at $2.21 a share.
Also, drilling throughout Oklahoma and the region continues to expand despite the recent oil price drop. We'll know more early next year about how the recent slump is affecting companies and their 2019 plans.