BreitBurn Energy Partners (BBEP) Stock Plummets After Oil Prices Touch Five-Year Low

NEW YORK (TheStreet) -- Shares of BreitBurn Energy Partners LP (BBEP)  fell 18.24% to $10.80 on heavy trading volume today as oil prices sank to a five-year low.

Brent crude declined to $67.53 a barrel on Monday, its lowest price since October 2009, according to BBC News. U.S. crude dropped 50 cents to $65.65 a barrel and hit an intraday low of $63.72, the lowest price since July 2009.

By the end of the trading day, about 9.23 million shares of BBEP had changed hands compared to the average of 1.76 million.

Separately, crude markets jumped more than 3% by the end of the trading day on Monday, rebounding from the five-year slump on fear that the high U.S. shale output blamed for the oil glut may be shrinking, Reuters reports.

Data reviewed by Reuters on Monday showed the new low-price environment for oil might have started affecting U.S. shale production, with a 15% drop in permits issued for new shale wells in October.

Shares of BBEP are up in after-hours 0.28% to $10.83.

TheStreet Ratings team rates BREITBURN ENERGY PARTNERS LP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate BREITBURN ENERGY PARTNERS LP (BBEP) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, growth in earnings per share and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity and a generally disappointing performance in the stock itself."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • BBEP's very impressive revenue growth greatly exceeded the industry average of 6.4%. Since the same quarter one year prior, revenues leaped by 153.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • BREITBURN ENERGY PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, BREITBURN ENERGY PARTNERS LP continued to lose money by earning -$0.40 versus -$0.60 in the prior year. This year, the market expects an improvement in earnings ($0.20 versus -$0.40).
  • The debt-to-equity ratio is somewhat low, currently at 0.91, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that BBEP's debt-to-equity ratio is low, the quick ratio, which is currently 0.56, displays a potential problem in covering short-term cash needs.
  • BBEP has underperformed the S&P 500 Index, declining 21.69% from its price level of one year ago. The fact that the stock is now selling for less than others in its industry in relation to its current earnings is not reason enough to justify a buy rating at this time.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BREITBURN ENERGY PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.

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