Cheaper oil foils energy stocks; Chesapeake off
This story has been updated to correct the name of the company initiated with a neutral rating by Goldman Sachs.
NEW YORK (MarketWatch) --
Crude oil futures fell below $94 a barrel for the first time since late 2011, sending energy stocks lower.
Moving deeper into the red as the day wore on, the NYSE Arca Oil Index (XOI) dropped 1.4%, while the NYSE Arca Natural Gas Index (XNG) moved down 2.3%. The Philadelphia Oil Service Index (OSX) dipped 2.5%.
Energy stocks in the S&P 500
fell 2.7%, on average, including a 9.4% loss from Alpha Natural Resources (ANR) , a 6.8% drop by
Chesapeake Energy (CHK) fell 5.6% to $14.65 as attempts by the company to reassure investors didn't help its shares beyond a modest one-day rise in the previous session.
A move by the company to line up a new $3 billion line of credit met with resistance on Wall Street.
"We come away from the call slightly more negative on Chesapeake," analysts at Stern Agee said in a note to clients after the company's latest conference call on Monday. "Inflated spending, funded by debt and asset sale proceeds remain in place. We believe the company is walking a tightrope as it maintains spending amid a weakened cash flow outlook."
Among other stocks in the spotlight,
The well has been leaking since March 25 at an estimated cost to the French oil conglomerate of $2 million a day, according to a report by Dow Jones Newswires. If successful, the top kill would stop the flow of natural gas well before a relief well could be completed in the next six months. Total said 200 workers were evacuated from the platform at the time of the mishap. Total shares dipped 0.5%.
Goldman Sachs analyst Brian Singer issued upbeat comments on independent oil and gas producers as they bear down on new shale prospects in the U.S.
"We continue to hold an attractive coverage view on exploration stocks due to a combination of rising oil prices, improving resource bases and mergers and acquisitions," Singer said in a note to clients. "In the next six months, we expect a pickup of well results from oil drilling in new plays or new areas in existing play."
Singer on Tuesday initiated Midstates Petroleum Co. (MPO) with a neutral rating. He also reiterated a conviction-list buy rating for Pioneer Natural Resources (PXD) and a buy on