Crude is looking pretty sweet to investors in the new year.
Oil prices last week hit their highest point in more than a year, lifting several of L.A.’s publicly traded oil and gas companies. Those enjoying the heat include BreitBurn Energy Partners LP and BNK Petroleum Inc., which have each registered double-digit percentage gains in recent weeks.
BNK, in particular, led all local stocks in gains during the first week of 2010 despite sluggish performance by the broader markets.
Though shares are lightly traded at just $1.37, the stock is up 27 percent from a month ago and a whopping 700 percent from a year ago. Jamie Somerville of Genuity Capital Markets is the only analyst to follow the company regularly, but he rates the stock a “buy.”
The Camarillo company, which holds interests in oil and gas fields in areas as varied as Oklahoma and Poland, announced in late December that it has been awarded an additional 300,000-acre oil and gas concession in an unnamed European country, bringing its total European land acquisitions in 2009 to 1.4 million acres.
Chief Executive Wolf Regener said the European pickups have fueled investor confidence in the stock.
“This is just more acknowledgement for the diversification we’re getting in Europe,” he said. “The more basins we’re getting into, the more acres we’re picking up (and) the lower risk we become.”
Thanks in part to falling reserves and cold weather on the East Coast, crude oil futures on the New York Mercantile Exchange climbed to more than $83 a barrel last week, the highest point since Oct. 9, 2008, when barrel prices topped $86.
What’s more, fund managers have increasingly looked to commodities at the beginning of the quarter, which could explain the rise in oil prices, said Antoine Halff, an analyst with Newedge USA LLC in New York.
“A lot of funds are optimistic that the economy’s coming around and that demand for energy will increase as a result,” he said.
The stock of Occidental Petroleum Co., L.A.’s largest oil company, closed Jan. 7 at a little less than $83, an increase of 9 percent from about a month earlier. However, the stock was down from its recent high-water mark of more than $84 on Nov. 16.
Like BNK and Occidental, BreitBurn has benefited from the industry rise of late.
Shares of L.A.-based BreitBurn, which specializes in acquiring older oilfields across the country and squeezing out additional production from them, are up 19 percent from a month ago, closing Jan. 7 at $12.46.
The past year has not been without challenges, however.
With falling commodity prices in early 2009, the company struggled with high debt loads, leading it to suspend partnership distributions, the equivalent of dividends. The master limited partnership has also been contending with an ongoing lawsuit from one of its largest shareholders.
Still, selling some of its natural gas contracts during the summer months helped BreitBurn pay down $150 million of its debt.
The moves, coupled with investor enthusiasm for its large oil and gas reserves in California and elsewhere, have helped the company take advantage of the surge in oil prices, analysts said.
