Why Penn West Petroleum, Energy XXI, and Stone Energy Exploded Higher This Week

The price of crude oil jumped this week, heading from $45 per barrel to more than $50 a barrel at one point. This fueled strong

gains among oil stocks; however, according to S&P Capital IQ data,

the best gains were made by Penn West Petroleum (NYSE:

PWE), Energy XXI (NASDAQ: EXXI), and Stone Energy (NYSE:

SGY).

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What:Oil and gas producer Stone Energy (NYSE: SGY) skyrocketed more than 55.9% this

week.

So What: Key driver: With no news,

the only catalyst this week was oil induced buying

Short covering also likely played a roll in the rally as 27.2% of the float was sold short as of the end of September

Now What: One of the reasons Stone

was so heavily shorted is because it has a lot of debt, but higher oil prices make that debt more manageable

Key takeaway: Investors are growing less concerned now that oil appears to be on the upswing

What:Oil producer Energy XXI (NASDAQ: EXXI) nearly doubled, leaping more than 96%

this week.

So What: Key driver: Higher oil prices Energy XXI did make a

move to bolster its liquidity as it filed to sell up to $500 million worth of mixed securities

EXXI also had its credit rating downgraded by S&P

Now What: Short covering was also

likely a big fuel behind the buying this week

Key takeaway: Higher oil prices, plus the potential for improved liquidity, had investors breathing a huge sigh of relief

What:Canadian oil producer Penn West Petroleum’s (NYSE: PWE) stock more than

doubled, as it was up 121.7% this week.

So What: Key driver: While higher oil

prices helped, M&A news fueled Penn West this week

First, Penn West sold a non-core asset for roughly $200 million, with plans to use the cash to pay down debt

Now What: In addition to that, there was

speculation in the market that Penn West itself is an acquisition target, especially after a notable acquisition overture was announced in Canada

Key takeaway: Higher oil, better liquidity, and M&A movement has investors buying

This could be the next billion-dollar iSecret