why denbury resources, western refining, and dcp midstream partners made big moves this week
TRANSCRIPT
Why Denbury Resources, Western Refining, and DCP Midstream Partners Made Big
Moves This Week
It was a relatively quiet week in the market. Despite the normal
movements during the week, the market basically ended up right
around where it started. Meanwhile, the price of oil pretty
much followed suit.
This led to a relative calm among energy stocks as there weren’t
many making big moves in either direction. That being said, there
were a couple of news-driven movers worth noting.Photo credit: TaxCredits.net
What:MLP DCP Midstream Partners’ (NYSE: DPM) stock jumped more than 10% this
week.
So What: Key driver: Parent companies
Phillips 66 and Spectra Energy announced plans to prop up DCP Midstream
Phillips 66 will contribute $1.5 billion in cash, while Spectra Energy will send over its shares in two pipelines
Now What: Both moves are intended
to shore up DCP’s balance sheet and ease its access to credit
Key takeaway: With its balance sheet worries now addressed, investors are much more comfortable with DCP’s future
What:Refiner Western Refining (NYSE: WNR) leapt more than 10% this week.
So What: Key driver: Western
Refining led the entire refining sector higher this week
This came on the heels of an EIA report that gasoline demand is up 4% from last year
Now What: Low oil prices are creating
incremental demand for gasoline, which is bullish for refiners
Key takeaway: As long as crude stays low, and drivers keep demanding gasoline, it points to higher profits for Western Refining
What:Oil producer Denbury Resources (NYSE: DNR) dropped more than 14% this week.
So What: Key driver: Not one, but
three analysts downgraded the stock this week
All three cited concerns with the company’s ability to navigate a long-term downturn in crude
Now What: Cowen downgraded Denbury
from Market Perform to Underperform
Credit Suisse downgraded it from Neutral to Underperform and gave it a $1 price target
UBS cut it from Neutral to Sell Key takeaway: Analysts fear that
Denbury will need to take action to reduce leverage if oil prices remain weak
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