With L.A. pump prices breaking the $4-per-gallon mark, petroleum stocks would seem to be the biggest winners. But two smaller oil stocks were among last week’s biggest losers on the LABJ Stock Index as shareholders took profits after months of rising crude prices.
BNK Petroleum Inc., of Camarillo, which trades on the Toronto stock market, fell 9.2 percent to close at $4.87 for the week ended March 9. (See page 32.) It had seen a dramatic increase from 15 cents in May 2009.
Similarly, BreitBurn Energy Partners LP of Los Angeles lost 7.1 percent to close at $20.66 for the week. It had seen a low of $5.30 as recently as mid 2009.
BNK and BreitBurn both focus on producing crude oil and natural gas. BNK also pursues shale gas land acquisitions in Europe and has natural gas reserves in the Los Angeles basin, Michigan, Wyoming and Florida.
Both stocks have benefited from the run-up that has seen crude oil prices rise about 25 percent in the last year. But, late last week, the increase in crude appeared to be slowing on fears of slowing global economic recovery, despite continuing unrest in oil-producing countries Libya and Saudi Arabia.
Bernard Colson, an analyst with Oppenheimer & Co. in Kansas City, Mo., said BreitBurn’s fourth quarter 2010 earnings report might have caused “some disappointment” among analysts, in terms of the company’s guidance for 2011.
Wall Street analysts’ consensus was for $223 million in adjusted earnings for 2011, but the company projected earnings between $195 million and $205 million.
Colson said BreitBurn’s small cap peer group – including EV Energy Partners, Legacy Reserves and Linn Energy – were down in tandem last week. Larger oil stocks such as Chevron and Exxon also were down a few percent. Shares of L.A.’s largest oil company, Occidental Petroleum Corp., have been shedding value for the past few weeks.
Some of the downward action could be attributed to profit-taking after several months of gains, according to Colson. But he said long-term demand for petroleum doesn’t appear to be weakening, especially with growth in China.
As for BNK, Jamie Somerville, an analyst with T.D. Newcrest in Toronto, said the company is exploring for shale gas in European countries where petroleum is much more expensive than the United States – making him optimistic about the company’s long-term prospects.
Somerville, who specializes in what he termed “high-risk oil and natural gas companies,” said BNK’s stock price was consistent with other companies he covered. “There’s a worry that high oil prices might stunt the fragile global economic recovery,” he said.
