From the sounds of it, preliminary discussions before Wednesday's meeting of the Organization of Petroleum Exporting Counties, or OPEC, aren't going so well, taking the price of U.S. crude down 4% at one point Tuesday to $45.18 per barrel and oil and gas companies' stock prices down with it.
At volatile times like these, companies that have strong balance sheets will be better able to sustain further commodity shocks and those that don't won't. So analysts at Seaport Global Securities Inc. looked into which oil and gas producers it covers are least levered -- and which ones are carrying a lot of debt. "Headed into the wild world of OPEC, know whose balance sheet is a fortress or at risk if things start looking 2014-ish," they said.
The analysts said that the industry overall looks to be in pretty good shape on the bank line front with the median exploration and production company only 8% drawn on total capacity. Hedge coverage for next year isn't as strong, however, with median names coming in at 35% hedged at $49.19 per barrel.
Companies that haven't drawn down on their revolvers (excluding letters of credit) include some of the strongest names in the business, including Apache Corp. (NYSE:APA), Concho Resources Inc. (NYSE:CXO), Marathon Oil Corp. (NYSE:MRO), Noble Energy Inc. (NYSE:NBL), Pioneer Natural Resources Inc. (NYSE:PXD) and Cimarex Energy Inc. (NYSE:XEC).
Those with more than 40% of their revolver capacity filled -- and thus are at more risk if oil prices head south -- include Abraxas Petroleum Corp. (NYSE:AXAS), Bonanza Creek Energy Inc. (NYSE:BCEI), Gastar Exploration Inc. (NYSE:GST), Contango Oil & Gas Co. (NYSE:MCF), Rex Energy Corp. (NASDAQ:REXX), Range Resources Corp. (NYSE:RRC), Stone Energy Corp. (NYSE:SGY) and Sundance Energy Australia Ltd. (NASDAQ:SNDE).
On a forward-looking net debt-to-Ebitda basis, the analysts found that the stronger names include Pioneer and Cimarex as well as Cabot Oil & Gas Corp. (NYSE:COG), Energen Corp. (NYSE:EGN), EQT Corp. (NYSE:EQT), Earthstone Energy Inc. (NYSE:ESTE), Diamondback Energy Inc. (NYSE:FANG), PDC Energy Inc. (NASDAQ:PDCE), Ring Energy Inc. (NYSE:REI) and Synergy Resources Corp. (NYSE:SYRG).
The weaker companies on that same basis, meanwhile, include Bonanza Creek, Gastar and Stone as well as Bill Barrett Corp. (NYSE:BBG), Chesapeake Energy Corp. (NYSE:CHK), Clayton Williams Energy Inc. (NYSE:CWEI), Jones Energy Inc. (NYSE:JONE), Oasis Petroleum Inc. (NYSE:OAS), Petroquest Energy Inc. (NYSE:PQ), Rex Energy Corp. (NASDAQ:REXX), SM Energy Co. (NYSE:SM), Sanchez Energy Corp. (NYSE:SN), Whiting Petroleum Corp. (NYSE:WLL), WPX Energy Inc. (NYSE:WPX) and W&T Offshore Inc. (NYSE:WTI).
It may be best to steer clear of those names, at least for the time being.
