By Steve Gelsi
Energy stocks fell Tuesday as Wall Street mulled oil prices
below $60 a barrel and more difficult long-term prospects for major
oil companies facing pressure to replace aging wells.
OPEC also looms on investors' collective radar screen this week,
with the oil cartel expected to avoid any further cuts in
production at a confab this week.
Against this backdrop, the Amex Oil Index (XOI) dropped 1.3% to
919, the Amex Natural Gas Index (XNG) lost 2.2% to 405, and the
Philadelphia Oil Service Index (OSXX) declined 0.4% to 161.
While mega-projects such as the Thunder Horse project in the
Gulf of Mexico are helping production, oil majors such as BP (BP)
continue to be squeezed by maturing fields and capital-spending
cutbacks, even while maintaining dividend payments.
"Above all, the majors need to reassure investors that the
regular distributions of cash are sustainable," wrote Liam Denning
in The Wall Street Journal's Heard on the Street column on Tuesday.
"That means, when it comes to replacing barrels, proving they can
go out and find, not buy, more Thunder Horses."
Among energy stocks in the spotlight, Exxon Mobil (XOM) fell
1.1% to $68.03. The leader in the oil and gas sector is slated to
hold its annual meeting on Wednesday. Some shareholders are
concerned about the company's move to spend $104 billion in stock
buybacks in recent years rather than boosting reserves, according
to a Bloomberg article on Tuesday.
Royal Dutch Shell (RDSA) Executive Director Linda Cook is
stepping down from the oil major on June 1 after a power struggle
surrounding the retirement of Chief Executive Jeroen van der Veer
this summer. A 29-year employee of the company, Cook headed the
company's massive natural-gas business. Shares of Royal Dutch Shell
dropped 0.6% to $51.12.
PetroChina's (PTR) shares dipped 1.2% to $107.13 in trades on
the New York Stock Exchange. The state-run oil company has proposed
a $1 billion purchase of a minority stake in Singapore Petroleum
Co.
Among analyst ratings, FBR on Tuesday upgraded Southwestern
(SWN) to outperform from market perform. Shares fell 4 cents to
$40.07.
Credit Suisse shuffled ratings on several energy firms by
upgrading Noble Energy (NBL) and Occidental (OXY) to outperform
from market perform and downgrading EOG Resources (EOG) and Ultra
Petroleum (UPL) to underperform from neutral.
-Steve Gelsi; 415-439-6400; AskNewswires@dowjones.com
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