SHALE STOCK CARNAGE: August Was A Bad Month For Frackers

August turned out to be a terrible month for shale stocks.  Several of the shale companies suffered huge single-day price declines at the beginning of the month due to poor earnings.  Unfortunately, for investors, I believe this is just the beginning for more bad news and lower stock prices in the shale industry over the next few years.

While many of the shale stocks took a shellacking in August, the major oil companies held up relatively well, even though oil price declined about $5.  For example, ExxonMobil’s stock price was only down 9%, based on an 8% drop in the oil price. Below, we can see that Whiting Petroleum was hit hard the most, by losing 63% of its value since the beginning of the month, followed by Oasis, (-44%), Concho (-30%), Laredo (-27%), and Continental Resources (-26%):

So, we can clearly see that Continental Resources, the best of the worst in the group, saw it’s stock price fell nearly three times more in percentage terms versus ExxonMobil.  Thus, the shale stocks continue to underperform against the major oil companies.

And, if we look at a longer-term chart, the situation for many of these stocks looks like it has gone from BAD to HORRIBLE:

This chart shows the change in the stock performance of these companies since their peaks in 2014.  ExxonMobil is on the top showing that it is down 13% since 2014. However, the biggest LOSERS are Whiting (-97%), Oasis (-93%), and Laredo (-90%).

Whiting Petroleum’ stock before the company issued a 1-4 Reverse Split, was trading at a high of $90 in 2014.  Today the stock closed at $6.78.  But, if we remove the 1-4 reverse split, the stock is truly only worth $1.69, based on that $90 price in 2014.  If we look at the chart today, the reverse split pushed Whiting’s stock price up to $360 in 2014…LOL.

In many cases, when a company issues a 1-4 Reverse Split, it usually means TROUBLE is ahead.  By doing a reverse split, it artificially pushes the stock price up to give the company some “Wiggle Room” in the stock market.  Ironically, when Whiting did the reverse split, the stock was trading at $6.68, and by the next day, it revalued to more than $26 a share.  Unfortunately, Whiting has lost a great deal of that wiggle room as the stock is now down 75% since the reverse split.

Now, more than two months ago, I warned that if Whiting fell below its critical $16 support level that has held since 2016, it’s stock price would likely fall quite rapidly.  Here is that chart I posted back in June:

With Whiting now trading at $6.78, that’s nearly $10 below that Major Support Level.  And do you remember that I also warned about Oasis at the very same time:

Oasis was trading at $5.38 back in May, but is now trading at $2.90:

While Whiting and Oasis are the worst performers in the group, I listed above, I believe the rest will catch up in time.  We must remember, Concho Resources was trading at nearly $100 a share at the beginning of the month, but closed at $69 today. So, here is a warning to shale investors… WATCH OUT BELOW.

Lastly, if you haven’t watched my newest video, SHALE OIL NEXT VICTIMS:  The Major Oil Companies, I recommend that you check it out:

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4 oz
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4 oz

That’s Steve. Certainly a lot to be watch as the Labor Day weekend approaches.

dale
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dale

Excellent work as usual. Thanks Steve.

Theravaida
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Theravaida

Good, very good.

Get rid of these cancers. Shale oil “innovation” represents(ed) “the worst that humanity has to offer” (to borrow a phrase from Chris Duane).

Theravaida
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Theravaida

Steve, after your earlier Art Burman related response on August 22, I noticed that a day later (August 23) he won’t even let you post replies to him. That is an extreme form of either insecurity or paranoia or some form of douchebaggery. I can’t belive Art Burman has unraveled so fast & making himself look so petty in a professional sense, that even replying to his public posts is getting under his skin. (!?!) If he had any issue w/ your reply he could respond to the substance (not person). OR if he just doesn’t want to deal w/… Read more »

Geedard
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Geedard

Great analysis Steve.

Any thoughts how the “Perfect storm brewing for LNG” might further exacerbate the plight for Shale producers?

Story link: https://oilprice.com/Energy/Energy-General/A-Perfect-Storm-Is-Brewing-For-US-LNG.html

petedivine
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petedivine

I wouldn’t be too hard on Art. I’m guessing someone told him the decline of shale is a national emergency and reviewed the ramifications a shale decline would imply for U.S. society going forward. That would explain a lot, not just for Art but also for recent U.S. geopolitical insanity.

Theravaida
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Theravaida

I would. Does Art Berman (incidentally, I notice I misspelled his name as Burman above) care about telling the truth? Somewhat reminds of the stellar investigative reporter Bethany McLean w/ her reporting on shenanigans of Enron, Chesapeake Energy/Aubrey McClendon (how exactly did he really die BTW?!?) & now has jumped into the fray for exposing the unimaginable combined clown-show of Elon Musk w/ Tesla/Solar City/SpaceX/etc. But: When it came to investigating shenanigans of Patrick Byrne w/ Overstock, Bethany McLean inexplicably & abruptly did either a complete about-face or went into a total silent mode. It was so abrupt, there was… Read more »

Theravaida
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Theravaida

P.S. Also, not to beat a dead horse, but:

I remember not too long ago when Art Berman had what I considered a very respectful appearance on Chris Martensen’s (whom I incidentally very much respect as well) Peak Prosperity Podcast. I realize people in alternative space aren’t supposed to create an echo-chamber like mainstream fake news w/ everybody agreeing w/ everyone else on everything & genuine substantive differences are supposed to be respected. But the disrespectful, personal & somewhat vindictive manner in which Art seems to have done his about-face still has me very baffled.

HardRock
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HardRock

Amusing – this guy says EXXON is a buy! https://seekingalpha.com/article/4288567-37-years-distribution-growth-buying-exxon-10-year-lows-offers-compelling-risk-adjusted

Steve – you should post your analysis there and debate this clown