Friday, March 4 WTI Crude opened at $34.66 per barrel, up 5.74 percent or, $1.88 from last Friday. Energy industry stock prices are on the rise as a result. According to a Nasdaq article WTI trading price improvement is in part due to small production drop in U.S. crude oil. Crude stockpiles are still at the highest numbers since 1930, roughly 518 million barrels. However, these levels fell to 9.08 million barrels per day last week.
Shrinking production continues as companies continue to fight to keep their heads above water with low prices. Most oil and gas producers are highly leveraged companies. They hold large quantities of debt. Low oil prices leave investors with little confidence in this industry and make financing debt difficult. Many companies are attempting to find other solutions to covering current debt due.
Anadarko follows industry trend and downsizes
Anadarko Petroleum Corporation (NYSE: APC) announced in a March 1 press release that they will be reducing capital investments by almost 50 percent and reduce dividends for the coming year. U.S. onshore activities will be the area in which the company makes the majority of capital reductions. The Delaware and DJ basins are to be reserved for a time in which prices are more favorable.
The companies rig count will reduce by 80 percent to just five rigs. This is following the trend of other major oil producers including Whiting Petroleum and Chesapeake Energy earlier this year. Investors have reacted positively. APC stock opened this morning at $43.47, up 14.3 percent from last week.
Chesapeake stock continues to improve after McClendon indictment and death
Chesapeake Energy Corporation (NYSE: CHK) opened this morning at $4.59 per shareup from its close last week at $2.70 per share, a 70 percent value increase. This is following an indictment of former CEO and cofounder Aubrey McClendon earlier this week for allegedly conspiring to rig bids for oil and gas leases in Oklahoma.
The following day McClendon died in a single-car automobile accident. Chesapeake shares are up due to the expectation that because of McClendon’s death, the company will not be indicted, as well as the slight price surge, according to an article on Yahoo! Finance.
Nigeria sues in international courts for the first time
Chesapeake is not the only company facing legal issues, though. Royal Dutch Shell is facing international suits by Nigerian communities in the U.K. over oil spills in West Africa as reported by a Wall Street Journal article. Pollution in water and Niger Delta fishing grounds are environmental concerns. Spills are estimated at between 2008 and 2014.
Shell claims the spills are primarily the result of oil thieves, but will nonetheless clean up any environmental damage. Despite the legal battle Royal Dutch Shell stock, which trades on multiple exchanges depending on class and country, prices have not changed significantly.
Clean Power Plan stay denied by Supreme Court Chief Justice
In other legal news, the Supreme Court denied a request by 20 states for a stay of the Environmental Protection Agency (EPA) Clean Power Plan, which will require reduced carbon emissions.
Chief Justice John Roberts denied the request without comment or referring it to the entire court, according to the Wall Street Journal. The new regulations will cost more than $50 billion a year according to a Washington Post story, and the consumer cost of energy could increase up to 16 percent as reported by the Daily Caller.