Top 5 Large Cap Gainers Yesterday and What to Expect Now

Includes: CHK, CNX, EOG, HES, PBR
by: Rash Menaria

Following is the list of top 5 large cap (10 bn plus m. cap.) gainers from Wednesday (Feb 23).

Company Name


% Change

Chesapeake Energy Corporation






EOG Resources



Petroleo Brasileiro SA (ADR)



Hess Corp.



All of these companies are from Oil and Gas sector and with oil scaling over $100 the sector is likely to be in focus. Here are some of the specifics about these stocks and what to expect from them going forward, individually:

Chesapeake Energy Corporation:

Chesapeake Energy Corporation (CHK) continued to rise after good quarterly results bringing total gains in the last two days to ~ 13%. CHK reported recurring, diluted Q4 EPS/CFPS of $0.70/$1.38 vs. consensus of $0.65/$1.53. The main catalyst driving share, however, is the sale of CHK’s Fayetteville Shale assets for $4.75 billion in cash to BHP Bilton (NYSE:BHP). CHK still plans to sell its 25.8% ownership in Frac Tech Holdings, LLC and 20% ownership in Chaparral Energy Inc. during the first half of this year. These additional divestitures and/or joint ventures are likely to act as a catalyst for the stock going forward.

CONSOL Energy:

Consol Energy (CNX) gained ~7% yesterday. However, its shares may not do well going forward as we are entering into a weak natural gas seasonal cycle with the end of the heating season approaching and the beginning of the storage refill season. Given CONSOL Energy’s sensitivity to NatGas and thermal coal, it is unlikely to outperform its peers during this seasonal part of the cycle.

EOG Resources:

Despite disclosing last week a much higher than expected 2011 capex budget of $6.4-$6.6 billion vs. consensus of $5.6 bn, (EOG)’s shares have outperformed since its 4Q10 results release. The price appreciation is partly due to a short-covering rally given its oil exposure and high short interest position. With the passing of the negative capex catalyst, the market appears to be justifying EOG’s near term valuation premium with its liquids driven production growth. The stock may continue to do well as there is no negative catalyst in the near term that would prompt the stock to correct.

Petroleo Brasileiro SA (ADR):

Petrobras (PBR) reported its first production figures for 2011, Wednesday. After reaching its record peak in Dec. 2010, the company posted a 2.5% MoM drop in domestic oil output averaging 2,069k bpd for January. Despite the decrease it is still a good level and also the company's second-highest domestic oil output. According to Petrobras, the production decrease was as a result of scheduled maintenance stoppages as well as to the movement of the platforms FPSO Cidade de São Vicente and FPSO Cidade de Rio das Ostras. The stock may continue to do well in the near term.

Hess Corp.:

Hess Corp (HES) gained ~5% yesterday. With more exploration catalysts in 2011 than 2010, stock may outperform the sector going forward. Following are the main ones to watch:

  1. North Red Sea Block 1, 80% w.i., 1st well to be completed in late 1Q and 2nd to be drilled immediately after;
  2. Cape Three Points in Ghana, 100% w.i., well to be spud in Feb;
  3. Semai Block 5 in Indonesia, 100% w.i., Adalan prospect to be drilled in late 1Q; and
  4. Total-operated CA-1 block in Brunei, 13.5% w.i., to spud in 3Q. Onshore, HES plans 15 additional exploration wells in the Eagle Ford and will spud the 1st of 6 exploration wells in the Paris Basin in late 1Q.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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