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Energy sector underperforms in August, utilities top S&P 500 sectors

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Energy sector underperforms in August, utilities top S&P 500 sectors

During August, the S&P 500 Energy index retained its position as the lowest-performing sector compared to the broader S&P 500 index, just as it was in July. The S&P 500 Energy index saw a negative total return of 8.1% in August, according to S&P Global Market Intelligence data.

The S&P 500 Utilities index, however, was the top performer as it produced a total return of 5.2% in August and outperformed the S&P 500 index, which recorded a decline of 1.6%.

Midstream services provider ONEOK Inc. led the best performers on the S&P 500 Energy index, with a return of 3.1% in August. In mid-August, ONEOK closed a $2.0 billion offering of senior notes, raising approximately $1.97 billion of net proceeds.

Noble Energy Inc. saw a total return rise of 2.8% in August. On Aug. 5, news broke that Noble Midstream Partners LP received a takeover bid from Williams Cos. Inc. and Global Infrastructure Partners. Noble Energy saw its shares jump early in the month on news of improved production and reduced costs during the second quarter.

The worst performer among S&P 500 Energy companies in August was Concho Resources Inc., with a 25.0% negative total return, after announcing plans to reduce production in the second half of 2019. During its second quarter earnings call, Concho's management acknowledged making major mistakes developing the Permian Basin's Wolfcamp Shale. Analysts were also largely unimpressed, saying they believed Concho's production cutbacks were a result of overspending earlier in the year and a lack of spacing between wells in its Dominator project.

The list of five bottom performers on the S&P 500 Energy index also included Halliburton Co., Devon Energy Corp., Schlumberger Ltd., and Helmerich & Payne Inc.

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WEC Energy Group Inc. topped the S&P 500 Utilities Index in August, with a total return of 12.8%. On Aug. 26, the company's Wisconsin utilities and state consumer groups announced a settlement, which if approved by state regulators, would result in the WEC utility subsidiaries seeing slightly smaller-than-requested returns on equity. WEC Energy said the agreements call for a return on equity of 10% for Wisconsin Electric Power Co., 10.2% for Wisconsin Gas LLC and 10% for Wisconsin Public Service Corp.

WEC was followed by American Water Works Co. Inc., with a return of 11.4%. American Water Works' California subsidiary on Aug. 30 announced a deal to acquire Bass Lake Water Co.'s potable water distribution system.

Also in the top five performers for August on the S&P 500 Utilities index, CMS Energy Corp. had a total return of 9.0%; Evergy Inc. had an 8.2% return; and Duke Energy Corp. posted an 8.1% return.

Edison International saw a negative total return of 3.0% in August.

AES Corp. was at the bottom of S&P 500 Utilities index performers with a negative return of 8.7% in August. The company was identified as a supplier of lithium-ion battery system for Tesla Inc. in a recent battery fire incident report.

The list of five bottom performers on the S&P 500 Utilities index also included PPL Corp., NiSource Inc. and CenterPoint Energy Inc.

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