With a number of energy companies already reporting earnings, the obvious trend is this: balance sheets need to be repaired.
To do so, many companies, such as Chesapeake Energy (CHK), have announced plans to sell assets in order to buy back debt. Others, such as Encana (ECA), have cut 2016 capital spending in excess of 50% in order to weather the storm. And still others, such as Enbridge (ENB), are issuing equity to cover short-term debts.
With Canada-based Enbridge's announcement on Thursday that it plans to issue $1.45 billion in equity, the total amount of equity issued in the energy sector so far this year is $9.48 billion, up 3.4% over the same period last year, according to data compiled by Bloomberg. Last week, Devon Energy (DVN) announced that it was issuing $1.3 billion in equity after telling analysts it had no plans to issue equity.
Meanwhile, Encana has emerged as somewhat of a battleground stock since the Canadian company reported earnings on Wednesday. Analysts at CIBC lowered their rating on the company to Underperformer from Sector Performer. Meanwhile, an analyst team at Jefferies led by Jonathan Wolff maintains a Buy rating on the stock, even though it acknowledged the company is an "edgier" pick due to its leverage.
Outside of Canada, shares of Oklahoma-based WPX Energy (WPX) plunged 13% in midday trading after the company reported losses of $5.58 a share in the fourth quarter, largely due to recording a $2.3 billion non-cash impairment tied to its oil and gas properties. (The shares ended the day down 4%.)
During a call with analysts, CFO Kevin Vann said debt reduction was "priority number one" for the company. It repurchased $28 million of its 2017 notes at a discount which reduces $400 million maturity by a total of $96 million, the company said in its earnings release. As of Wednesday's release, WPX has $3.2 billion in net long-term debt, which is rated BB- by Standard & Poor's.
WPX Energy also announced that is scheduled to receive $1.2 billion in cash in the first half of the year from the sale of its Piceance subsidiary and its San Juan Basin gathering system.
Elsewhere in the energy space, on Wednesday USA Today reported that 359 stocks listed on the major U.S. exchanges trade for $1 or less, representing an increase of 38% from a year ago. USA Today took a closer look at the 42 "penny stocks" which are part of the Russell 3000 index and found that 16 of them were energy companies.
All said, looking like tough times for energy even as crude ticks up in late Thursday trading.