Resolute Energy Corp (NYSE: REN)
Along with most companies in the oil production sector, Resolute Energy has had a strong time in the market recently. The gains, of course, have been fueled by a recent OPEC deal to freeze production. Since the deal, we’ve heard from leaders of oil production nations who have backed the deal. However, things went sideways in a big way when a Russian leader said he is against the deal. Today, we’ll talk about the comments, why it was such a surprise, how the stock reacted to the news, and what we can expect to see from REN moving forward.
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REN Takes A Dive As Igor Sechin Disavows The OPEC Oil Deal
As mentioned above, Resolute Energy is having a tough time in the market today, and for good reason. At the end of the day, the company’s revenue is heavily dependent on oil spot market prices. Unfortunately, news released today sent spot prices falling.
That news was that Igor Sechin said that he does not back the oil deal and would not take part. This is incredibly important as Sechin is the President of Russia’s state owned oil company, Rosneft. Rosneft also happens to be one of the top oil producers in the world! In his comments, Sechin questioned why he would take part in a cut. He said that Rosneft would not cut or freeze oil production under any agreement with OPEC. He also reminded the world that Russia is not an OPEC member nation! As a result of these comments, the price of oil is sliding today, sending REN spiraling out of control.
Why This Came As Such A Surprise
Recently, REN investors cheered the OPEC deal and Russia’s willingness to take part. In fact, just days ago, Russian President Vladimir Putin said that “Russia is ready to join the joint measures to cap production and is calling for other oil exporters to join…” So, the news released today is in sharp contrast when compared to what we heard from Putin just days ago.
How The Stock Is Reacting To The News
Ultimately, we know that the news moves the market. Any time positive news is released with regard to a publicly-traded company, we can expect to see gains. However, the news that was released today shook the entire oil industry. No matter where you look in the industry, you’re likely going to see red. Unfortunately for Resolute Energy, they are not immune to the declines. At the moment, the stock is taking a dive. Currently (12:09), REN is trading at $28.65 per share after a loss of $1.05 per share (3.54%) thus far today.
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What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see from Resolute Energy. At the end of the day, whether the stock rises or falls will have a lot to do with what we see from the OPEC deal in the coming months. Ultimately, Russia is not part of the deal, and that is concerning because they are the largest producer in the world. However, if OPEC can gain enough backing from around the world, we could see the supply and demand come to a better balance, which would lead to gains in oil and, ultimately, REN. Nonetheless, betting on that happening at the moment would be a very risky bet.
What Do You Think?
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