Oil and Gas Stock Daytrading List
Jul 22, 2017 Trading Blog
In the last post, I described the general requirements that I look for in my everyday list of daytrading stocks. I’m probably a little different than most daytraders who wander from sector to sector chasing the hot stock of the day. My opinion is that daytrading is easier when you focus on a constant list of stocks and learn everything about them and their characteristics. If you know how they normally act, then you also know when they are acting strange, which is usually a great signal for a trade.
My primary list of daytrading stocks includes all E&P stocks. I also have a secondary list of services stocks that I will cover in a later post. My everyday stock list is for intraday income generation only. They provide an easy way to make the most of overall momentum in the sector. The E&P daytrading stocks include: APA, APC, CLR, COP, DVN, EOG, NBL, NFX and PE for oil, COG, EQT and RRC for gas. A dozen stocks, that’s it. Nothing crazy or new in that list, just a group of boring, steady, dependable stocks that react to a high degree with the overall sector and the XOP. Get to know them well and make them the starting point of every day. I’ll cover the first three in this post and cover the rest in the next few posts.
Apache Corporation – Apache has a market cap of 19 Billion and trades an average of 3.7 million shares per day. During the first 30 minutes of the day the spread can vary to about 5 cents, but for most of the day the stock operates with a 1-3 cent spread making entry and exit easy and affordable. The average daily range over the last couple weeks is about $1.40. Rarely do you see APA make moves of more than 50 cents before encountering significant liquidity.
On the fundamental side, APA produced 397,792 BOE/day in Q1 2017, with a production mix of 51% oil, 14% NGL, 35% gas. Their major areas of production are Egypt (22% of total production), North Sea (15% of total production), Mid-continent/Gulf Coast (11% of total production), Permian (37% of total production). The remaining production was from Canada, however those operations were divested and Apache’s main focus will be their newest discovery at Alpine High in the Southern Delaware. The Alpine High project is considered their ticket to future growth once all the infrastructure is put in place. The Egypt and North Sea projects function as stable cash flow.
Anadarko Petroleum – Anadarko has a market capitalization of 25.2 Billion and trades an average of 5.1 million shares per day. During the first 30 minutes the spread can sometimes run 8-10 cents, but itsettles into a 1-2 cent spread during the remainder of the day. The average daily range over the last two weeks is $1.23. Anadarko can make 50-60 intraday moves before it pulls back or consolidates.
Anadarko had a Q1 2017 total production of 672,000 BOE/day, with a production mix of 53% oil, 15% NGL, 32% gas. Their gross production for Q1 was 795,000, however like Apache, they have divested several portions of their business in the Eagle Ford and Marcellus regions. They now focus on three areas of production, which have become known as the three D’s: DJ Basin, Delaware Basin and Deepwater. During Q1, he DJ Basin was 36% of total production, Delaware Basin 8% total production, Gulf of Mexico 24% of total production and International 17% of total production. The future growth of the business has been shifted to US onshore where they expect to grow production to 650,000 BOE/day by 2021.
Continental Resources – Continental has a market capitalization of 12.2 billion and trades an average of 3.2 million shares per day. The spread on the stock is not always tight and can widen to 3-4 cents during the day, but on average it keeps about a 2 cent spread. The average daily range of the last couple weeks is $1.31. Continental has a personality that is somewhat volatile and moves can be very quick and come out of the blue. It is not uncommon to see it go on runs of 70-80 cents before hitting any liquidity.
Continental had a Q1 daily production rate of 214,000 BOE/day with a mix of 56% liquids and 44% gas. It is one of those aggravating companies who doesn’t conveniently break their liquids production down into oil/condensate and NGL’s and each of their plays are a very different mix. Honestly, I have no idea how they come up with that 56/44 figure, as each area of their production is broken down individually and the rough math combining all those areas comes out to 60% oil, 16% NGL and 24% gas. The only thing I can figure with this company is that they are lumping NGL’s in with gas in their earnings release PR.
Continental operates in two primary areas, the Bakken and the SCOOP/STACK area. The Bakken area constitutes 54% of their total production and the mix there is 80% oil, 10% NGL and 10% gas. The SCOOP is 30% of total production with a mix of 25% oil, 30% NGL and 45% gas. The STACK is about 12% of production with a mix of 60% oil, 10% NGL and 30% gas. The issue that turns some investors off to Continental is their above average debt level. They have a Debt to Capital ratio of about 60% and a Debt to EBITDAX of about 3.3x. But this shouldn’t concern us too much as daytraders, just be aware if you ever consider this one for a longer term investment.
I will cover COP, DVN, EOG and NBL in the next post on Sunday.