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Monday's Energy Stocks: Parsley Energy sheds 11% on merger with Jagged Peak

Broader markets capped Monday, Oct. 14, trading with slight losses as Washington confirmed that a partial trade agreement with China has been reached, while China is reportedly seeking more talks to finalize the details.

The Dow Jones Industrial Average dipped 0.11% to 26,787.36, and the S&P 500 declined 0.14% to 2,966.15.

Shares of Permian Basin producer Parsley Energy Inc. slumped 10.55% on more than 5x average trading volume to close at $15.18, and neighboring producer Jagged Peak Energy Inc. shed 1.47% on about 11x average volume to $6.72, after the companies agreed to merge in an all-stock deal valued at about $2.27 billion. The merger consideration includes Jagged Peak's net debt of about $625 million as of June 30.

Parsley's executives believe that the deal will make the combined company a "preeminent" Permian Basin producer, but cost-conscious investors hammered its stock after the deal was announced.

ConocoPhillips was down 0.53% in below-average trading to $56.13. The company is set to raise $1.39 billion from the sale of its Australia-West assets and operations to Santos Ltd. for use for general corporate purposes.

The assets include a 37.5% interest in the Barossa project and Caldita field, a 56.9% interest in the Darwin LNG facility and Bayu-Undan field, a 40% interest in the Poseidon field and a 50% interest in the Athena field.

Total SA struck a deal to acquire a 37.4% stake in integrated gas utility Adani Gas Ltd., the largest foreign investment in India's city gas distribution sector by an energy major. The deal represents a net acquisition cost of about $600 million over 2019 and 2020 for Total.

Total's shares closed 0.67% lower on light volume on the New York Stock Exchange to $50.65.

Among other notable stock price movements, Pioneer Natural Resources Co. dropped 1.98% in light trading to $129.89, and EQT Corp. declined 1.76% on below-average volume to $9.49, while Apache Corp. gained 2.43% in brisk trading to $21.94.

The S&P 500 Energy Sector saw a 0.12% decrease to 427.54, and the Alerian MLP Index slipped 0.81% to 221.65.

PPL Corp. added 2.29% on nearly triple average volume to $32.15 following an Oct. 12 Financial Times report, citing people close to the discussions, that the company was in discussions with Avangrid Inc. about merging all or portions of their businesses. A full merger, which could create a company worth more than $67 billion, would be the biggest deal in the U.S. utility space in 2019. Avangrid, owned ultimately by Spain-headquartered Iberdrola SA, receded 0.64% on below-average volume to $49.55.

Sempra Energy was down 0.04% on light volume to $145.43, after agreeing to sell its equity interests in its Chilean businesses to a State Grid Corp. of China subsidiary for $2.23 billion in cash, subject to adjustments for working capital and net indebtedness and other adjustments.

FirstEnergy Solutions Corp. has filed a new reorganization plan that details its separation from FirstEnergy Corp. and its emergence from bankruptcy as a privately held company. FirstEnergy Corp. shares dipped 1.00% in light trading to $47.41.

Among other electric and diversified utilities, two California-headquartered companies dealing with threats of wildfires declined. PG&E Corp. fell 4.36% in active trading to $7.67, and Edison International shed 1.78% on average volume to $70.06. Also, Algonquin Power & Utilities Corp. dropped 2.20% on more than 5x average volume to $13.33, and NiSource Inc. closed 2.06% lower on light volume to $28.54.

The S&P 500 Utilities Sector finished 0.67% lower to 322.23.

Market prices and index values are current as of the time of publication and are subject to change.