Throughout 2023, energy companies struggled compared to the large rally in 2021 and 2022. The benchmark for energy companies is the Energy Select Sector SPDR Fund (NYSEARCA:XLE), which had a share price decline of 1% in 2023. In 2024, crude oil prices are expected to remain around the $80 per barrel range. OPEC+ recently made supply cuts with hopes of supporting the market. But, the energy sector could become more violent if growing geopolitical issues continue to escalate.
Below, I chose three energy stocks in the crude oil industry with a recent decline in share price and an uncertain future regarding the volatile environment of the energy industry.
Core Laboratories (CLB)
Core Laboratories (NYSE:CLB), located in Houston, Texas, is an equipment manufacturer for the energy industry. It provides analysis equipment for the oil reservoirs, sampling equipment and laboratory examination of crude oil. It also provides services regarding well construction.
Over the past year, Core Laboratories saw its share price decline by 7.5%. The company provided somewhat lackluster earnings for its third quarter. Total revenue remained practically unchanged, and net income rose by 23% compared to the year before.
Last month, Citi Research rated Core Laboratories as one of the top energy companies to sell going into 2024.
Most recently, Core Laboratories provided financial results that were nothing special. With the overall energy market in a downturn, it hasn’t performed its best. It will be essential to pay attention to the company’s international exposure, where it is experiencing some positive results.
RPC (RES)
RPC (NYSE:RES), located in Atlanta, Georgia, is a company operating as an oilfield servicer. It also manufactures equipment used in the natural gas and oil properties exploration. RPC provides the industry with tools for cementing, well maintenance, coiled tubing, pressure pumping, snubbing and rental equipment. It also offers consulting and other management services. RPC primarily operates in the U.S. but has customers in Africa, Asia, the Middle East and South America.
On October 25, RPC announced its third-quarter earnings for 2023. The report showed net income drop by 74% and revenue fall by 28% year-over-year (YoY). The company’s technical services segment experienced a 30% decrease in revenue because RPC reported lower-than-expected pressure pumping sales — the segment’s primary revenue stream. Its support services saw a slight rise in total revenue of 15% due to an increase in the company’s rental tool service YoY.
Throughout 2023, the company saw its share price fall over 15% due to reduced revenue in its oilfield services, most notably its pressure pumping segment. The overall downturn continues to affect the energy industry now. Along with Core Laboratories, RPC was an energy company added to Citi Research’s list of top-rated sell stocks.
RPC’s difficulty remaining profitable is because of uncertainty regarding the slowing growth of drilling operations. It is a sign to investors that it may not be a great pick as an energy company.
Expro Group Holdings (XPRO)
Expro Group Holdings (NYSE:XPRO) is an energy service company operating in the U.S. and internationally. Expro engages in well construction, drilling and management, with a focus on offshore and international markets.
Over the past year, Expro saw a drop in its share price of 7% primarily due to its recent earnings report, which was worse than expected. On October 26, the company released its third-quarter earnings report, which stated total revenue increased by 11% and net loss shrank by approximately 22% YoY. Expro quarter-over-quarter, revenue dropped by 7%. In the second quarter of 2023, the company reported a net income of $9 million. In the third quarter, it had a net loss of $14 million. Following its earnings release, the stock price fell 21%.
With lower activity similar to RPC, this is a company investors should probably avoid due to the overall uncertainty surrounding its profitability and energy services environment.
As of this writing, Noah Bolton did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
