This past week has been a tough one for investors as the market took another tumble, fueled this time by trade war fears. Given that sentiment, it wasn't a good week to be reporting fourth-quarter earnings, which was the case for many oil stocks. Several got punished for reporting less-than-stellar numbers and outlooks, including California Resources (NYSE: CRC), Carrizo Oil & Gas (NASDAQ: CRZO), Halcon Resources (NYSE: HK), Ultra Petroleum (NASDAQ: UPL), and Bill Barrett (NYSE: BBG). While it's easy to justify most of those sell-offs, one stood out as not making any sense.
Still struggling
California Resources led the downdraft, tumbling 33% this week after reporting fourth-quarter results. While the California-focused oil producer didn't lose as much money during the quarter as feared, production declined 6.6% due to several issues, including wildfires in the state during December. On top of that, costs increased because of higher maintenance and energy expenses. Those issues showed that California Resources still has a long road to recovery ahead of it before it's back on solid ground.
Oil pumps under a red and blue sky.
Image source: Getty Images.
A bit of a head-scratcher
Bill Barrett also had a rough week, with the oil company's stock tumbling more than 17%. That sell-off came in spite of the fact that the company reported a $1.1 million profit for the fourth quarter while analysts expected a loss. Investors, however, overlooked that result and instead focused on the company's outlook. Bill Barrett warned that due to a third-party infrastructure issue, production in the first quarter would remain flat with last quarter, which is a disappointment for a company that increased output 37% last year. Further, the company didn't provide a forecast beyond the first quarter.
That said, the reason Bill Barrett didn't give a longer-term outlook is that the company is in the process of merging with Fifth Creek Energy, which will significantly improve its balance sheet and scale. The company will probably provide a longer-term forecast after the deal closes later this month, which will likely show that the combined entity can deliver enhanced production and profit growth in the coming years.
A better deal on a soon-to-be better company
Halcon, California Resources, Ultra, and Carrizo all sold off for understandable reasons since these smaller producers are still struggling in the aftermath of the oil market downturn. That said, it's harder to justify Bill Barrett's sell-off since it's about to become a much stronger company that should reaccelerate after getting past a temporary infrastructure issue in the first quarter. That's why I think Bill Barrett seems like an even more compelling option for investors looking for a fast-growing, though higher-risk, oil stock after selling off this week.
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Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.