This week will be a volatile one for the energy sector as Fall conference season starts with a major oil and gas conference in New York City, while investors continue to deal with volatile commodity prices caused by Hurricane Isaac.
Investopedia Broker Guides: Enhance your trading with the tools from today's top online brokers.
Fall Conference Season
The week after the Labor Day holiday is the beginning of conference season for the energy sector, and companies typically use this as a platform to disclose updates on development programs or entry into new plays. The Barclays CEO Energy/Power Conference begins on Tuesday, September 4, and will see presentations from all the major exploration and production operators as well as oil service companies.
Investors should pay particular attention to Halliburton (NYSE:HAL) on Tuesday morning, which may disclose an update on conditions in the North American land market. BHP Billiton (NYSE:BHP) also presents September 4 and may provide insight on the strength of drilling activity in many natural gas basins in North America.
SEE: A Guide To Investing In Oil Markets
Hurricane Isaac Hangover
Oil and gas production in the Gulf of Mexico is slowing getting back to normal after Hurricane Isaac made landfall last week. The U.S. Bureau of Safety and Environmental Enforcement (BSEE) reported that at the peak, approximately 1.3 million barrels per day of oil production and 3.3 billion cubic feet per day of natural gas production were shut-in due to the storm. This was 95% of all oil production and 73% of all natural gas production in the Gulf of Mexico.
The BSEE said that only part of this production has been put back on line, with 987,000 barrels of oil and 2.5 billion cubic feet of natural gas still shut in as of Sept. 2, 2012.
SEE: What Determines Oil Prices?
Exploration and Development
The industry reported additional partnerships and programs designed to continue the search for oil and gas resources. Statoil (NYSE:STO) finalized a partnership with Rosneft, the state-owned Russian oil company, to jointly develop oil and gas resources on four offshore license areas in the Russian Arctic. Statoil will own 33.33% of the joint ventures which cover areas in the Barents Sea and the Sea of Okhotsk. The company is obligated to a six well program in these areas from 2016 to 2021.
Statoil also has its own exploration program in the Arctic and plans to drill nine offshore wells in 2013 in the Norwegian sector of the Barents Sea. The company also plans a major increase in its Arctic research budget during the year.
Bakken Players in Play?
Reuters reports that some analysts are highlighting what they see as cheap valuations of some operators in the Bakken. Some of the companies that might be taken out by a larger operator due to this discounted value include Kodiak Oil & Gas (NYSE:KOG), Whiting Petroleum (NYSE:WLL), Oasis Petroleum (NYSE:OAS) and Northern Oil and Gas (NYSE:NOG), all of which are cheap on price-to-earnings or acreage value.
The Bottom Line
Energy investors should be accustomed to volatility by now and this week will bring more of the same as the effects of Hurricane Isaac ripples across the commodity markets and a major energy conference may roil the market.
At the time of writing, Eric Fox did not own shares in any of the companies mentioned in this article.