PSX - Why Energy Companies Like Phillips 66 Centennial Resource Development and Halliburton All Jumped Higher on July 21
Shares of refiner Phillips 66 (NYSE: PSX) jumped nearly 7% in early trading on July 21. That gain was easily outdone by energy services giant Halliburton (NYSE: HAL), which rose 12%. But tiny U.S. oil driller Centennial Resource Development (NASDAQ: CDEV) was the bigger winner at the start of trading, with a gain of as much as 12% at one point in the morning. By noon EDT, Phillips 66's shares were up roughly 6.5%, but the gains at Halliburton and Centennial had both tapered to around 9% or so.
There's a lot to unpack here, but the big picture is that oil prices were on the rise today. That's particularly good news for Centennial Resource Development, which is trying to muddle through the current oil downturn with an onerous level of debt. The roughly $250 million market cap exploration and production company has around $1.1 billion in long-term debt and a financial debt-to-equity ratio of over 13 times. There are very real concerns surrounding the company's ability to survive the downturn, and any uptick in oil prices can only make things better. That said, oil remains stuck at a level that makes it hard for energy companies to turn a profit. So today's good oil news should be viewed cautiously here.
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