Fed chair Jerome Powell had acknowledged earlier that rate hikes would cause pain for the economy. Following the expected 75-basis-point rate hike, the falling oil prices sunk further. Higher rates usually mean a stronger dollar, which in turn tames the prices of crude oil.
Moreover, Europe's energy crisis is close to costing 500 billion euros or $496 billion. Even with billions in government aid, the economic outlook remains grim. Analysts believe that Europe is set to tip into a severe recession by early 2023, with the economy contracting by 0.9% through the end of the year.
The slowing global maritime trade could threaten oil demand and, thus, prices. Given this backdrop, it might be best to avoid fundamentally weak oil stocks Tellurian Inc. (TELL) and Camber Energy, Inc. (CEI).
Tellurian Inc. (TELL)
TELL is a natural gas company focused on developing a natural gas production portfolio. The company produces liquefied natural gas (LNG) and engages in building up infrastructure assets.
On September 19, TELL announced that due to uncertain conditions in the high-yield market, it has withdrawn its proposed public offering of units consisting of 11.25% senior secured notes due 2027 and warrants to purchase shares of its common stock.
For the second quarter ended June 30, TELL’s net loss came in at $35 thousand. For the six months ended June 30, TELL’s net cash used in operating activities increased 169.7% year-over-year to $83.50 million, while the net cash used in investing activities rose 2,251.7% from the prior-year period to $158.74 million.
Analysts expect an EPS of a negative $0.05 for the fiscal year ending December 2022. Its revenue is estimated to be $386.62 million for the same year.
The stock declined 33.7% over the past six months to close its last trading session at $2.77. The stock has dropped 38.4% over the past month.
TELL’s POWR Ratings reflect its bleak outlook. The company 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.
It has an F grade for Value, Stability, and Quality and a D grade for Sentiment. The stock is ranked last in the 94-stock Energy - Oil & Gas industry.
Click here to see the additional POWR Ratings for TELL (Growth and Momentum).
Camber Energy, Inc. (CEI)
CEI is an independent oil and natural gas company that engages in the acquisition, development, and sale of crude oil, natural gas, and natural gas liquids (NGL) in Missouri, Louisiana, and Texas.
In the second quarter that ended June 30, CEI’s net income attributable to common shareholders decreased 92.7% from its prior-year quarter to $4.60 million. Its operating loss amounted to $969.21 thousand. The company’s net income per share declined 99.2% year-over-year to $0.01.
The stock has declined 86.9% over the past year and 77.4% over the past six months to close its last trading session at $14.33.
It’s no surprise that CEI has an overall D rating, equating to a Sell in our proprietary rating system.
It is graded a D in Stability and Sentiment. CEI is ranked #90 in the same industry.
Click here to see additional POWR Ratings for CEI (Growth, Value, Momentum, and Quality).
TELL shares were trading at $2.41 per share on Friday afternoon, down $0.36 (-13.00%). Year-to-date, TELL has declined -21.75%, versus a -22.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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