Shares of Helix Energy Solutions Group, Inc. HLX touched a 52-week low of $13.00 on Jun 25.
What Led to the Drop?
The fortunes of this offshore energy services provider have been greatly hurt by the persistently weak commodity pricing environment. This is due to the fact that Helix Energy Solutions provides deepwater oilfield services in the U.S. and the Gulf of Mexico.
The latest spate of fleet status reports – with news of idled rigs, shrinking dayrates and lack of new contracts – gives further indication that the worst for Helix Energy Solutions is yet to come.
The company’s crude exposure further increases the bearishness on the stock as the commodity has plunged over 50% since June last year. With crude prices anticipated to remain weak throughout 2015, financials are likely to stay pressed.
The West Texas Intermediate (WTI) crude has been trading around the $60 per barrel threshold for quite some time now. This is owing to plentiful supply of the commodity especially in the face of lackluster global demand.
The backdrop for oil trading has been muddled by the ongoing Greek debt impasse, concerns over further rise in Saudi crude production and news about the impending Iranian nuclear deal that has the potential to release more oil into the already oversupplied market. Moreover, a stronger dollar has made the greenback-priced crude more valuable for investors holding foreign currency.
Zacks Rank & Stock Picks
Currently, Helix Energy Solutions carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy sector are Transmontaigne Partners L.P. TLP, CNOOC Ltd. CEO and LRR Energy, L.P. LRE. All these stocks sport a Zacks Rank #1 (Strong Buy).
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