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3 Oil Stocks that Have Run Out of Gas In 2022

Even if President Biden’s SPR releases do not lower energy prices, fears of an impending recession might. Given this backdrop, fundamentally weak energy stocks like Tellurian (TELL), NextDecade (NEXT), and Camber Energy (CEI), which seem to have run out of gas, might be avoided now. Read on…

Last week, President Joe Biden announced the sale of as much as 15 million barrels out of the U.S. strategic petroleum reserve (SPR) to address the widespread disruption caused in the oil market by the geopolitical situation in eastern Europe.

Even if this move does not lower energy prices, a recession might. A recession might lower the oil demand, creating downward pressure on prices. The United Kingdom-based bank Barclays PLC (BCS) has reportedly slashed its previous Brent crude forecast by $3 per barrel for 2022 and by $5 a barrel for 2023, citing slower demand growth.

Amid this market backdrop, we believe fundamentally weak stocks like Tellurian Inc. (TELL), NextDecade Corporation (NEXT), and Camber Energy, Inc. (CEI) might be best avoided as they appear to have run out of gas.

Tellurian Inc. (TELL)

TELL, operating as a natural gas business worldwide, also engages in developing natural gas production, liquefied natural gas (LNG) marketing, and infrastructure asset portfolios.

On September 19, TELL announced that it had withdrawn its proposed public offering of units, consisting of 11.25% senior secure notes due 2027 and warrants to purchase shares of its common stock, due to uncertain conditions in the high-yield market,

The same month, TELL lost two of its biggest potential customers - Shell plc (SHEL) and Vitol SA. TELL has scrapped energy deals with both companies after withdrawing the high-yield bond sale that would have funded the initial construction of its proposed multi-billion-dollar Driftwood LNG plants in Louisiana.

The total current liabilities of TELL came in at $237.94 million as of June 30, 2022, compared to $88.80 million as of December 31, 2021. For the six months ended June 30, net cash used in operating activities increased 169.7% year-over-year to $83.50 million. Net cash used in investing activities grew significantly from the prior-year period to $158.74 million.

TELL’s EPS for the fiscal first quarter of 2023 (ending March 2023) is expected to come at negative $0.19, down 35.7% year-over-year. Its revenue for the same period is estimated to be $133.83 million, indicating an 8.9% year-over-year decline.

The stock has lost 19.8% year-to-date and 49.5% over the past six months to close the last trading session at $2.47.

TELL’s POWR Ratings reflect a bleak outlook. The stock has an overall rating of F, which translates to a Strong Sell in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

TELL is also rated an F for Quality, Stability, and Value. In the Energy - Oil & Gas industry, it is ranked #92 of 118 stocks.

To see additional POWR Ratings for Growth, Sentiment, and Momentum for TELL, click here.

NextDecade Corporation (NEXT)

NEXT mainly carries out development activities on the Rio Grande LNG terminal facility located in the Port of Brownsville in southern Texas. The activities are related to the liquefaction and sale of LNG, alongside capturing and storing carbon dioxide emissions.

In September, NEXT announced a private placement of common stock, pursuant to which the company is expected to sell $85 million of common stock to ten institutional investors at $5.50 per share. The company intends to use the proceeds to continue development activity on the first three trains at its Rio Grande LNG project.

For the fiscal quarter ended June 30, NEXT’s total operating loss came in at $12.82 million, increasing 88.2% year-over-year. Net loss attributable to common stockholders rose 7.9% from the prior-year quarter to $16.69 million. For the same period, the net loss per common share was $0.13.

Analysts expect EPS for the third quarter ended September 2022 to come in at a negative $0.11, down 275% year-over-year. The company has also missed consensus EPS estimates in three of the trailing four quarters.

The stock has declined 3.3% over the past month to close its last trading session at $6.23. It has dropped 1.4% over the past five days.

NEXT’s POWR Ratings reflect its poor prospects. The stock's overall F rating translates to a Strong Sell in our proprietary rating system.

NEXT is rated a D for Sentiment and Quality and an F for Value and Growth. In the Energy - Oil & Gas industry, it is ranked #94.

In addition to the above, to see the additional POWR Ratings for Stability and Momentum for NEXT, click here.

Camber Energy, Inc. (CEI)

CEI is an independent oil and natural gas company, which acquires, develops, and sells natural gas, crude oil, and natural gas liquids (NGL) in Louisiana, Missouri, and Texas. 

In August, it was announced by CEI’s majority-owned subsidiary Viking Energy Group, Inc. that its majority-owned subsidiary, Viking Protection Systems, LLC, had filed a new patent application relating to its electric transmission line protection technology in the United States Patent & Trademark Office. However, the gains might take some time to emerge from this pending patent.

In the quarter ended June 30, CEI’s net income attributable to common stockholders decreased 92.7% from the year-ago quarter to $4.60 million. The income per weighted average number of common shares outstanding came in at $0.01, down 99.2% from the prior-year period. Loss from operations amounted to $0.97 million.

The company’s trailing-12-month ROTA of negative 560.72% compares with the industry average of 5.59%. Also, its trailing-12-month asset turnover ratio of 0.02% is 97.4% lower than the industry average of 0.60%.

The stock has declined 82.4% year-to-date and 81.9% over the past six months to close its last trading session at $0.15.

It’s no surprise that the stock has an overall D rating, which translates to a Sell in our proprietary POWR Ratings system.

CEI is also graded a D for Stability and Sentiment. In the Energy - Oil & Gas industry, it is ranked #90.

Click here to see the additional POWR Ratings (Value, Quality, Growth, and Momentum) for CEI.

TELL shares were trading at $2.61 per share on Tuesday afternoon, up $0.14 (+5.67%). Year-to-date, TELL has declined -15.26%, versus a -18.17% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.


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