Though Seventy Seven Energy Inc (NYSE:SSE) shares soared by over 21.5% on a single day; it is again trading on a flat note now. In the last trading session, the company’s shares were down by 0.84% and closed at $4.70. The company is a diversified oil company and offers a range of wellsite equipments and services in the U.S.
Seventy Seven Energy Inc (NYSE:SSE) being from the oil-related sector could not escape the heat that hammered the oil stocks due to oil slide. While oil prices are free falling, a yet another decline came yesterday after Saudi Arabia questioned the need to cut oil production. Resultantly, the benchmark U.S. oil prices tanked below a level of $60, its lowest mark since July 2009. Yesterday, Saudi Arabia has clearly stated that it is more concerned about its market share. Oil prices are under severe pressure, after OPEC’s three largest members, Saudi Arabia, Iraq and Kuwait did not budge on cutting the oil output. In fact, Saudi Arabian Oil Minister, Ali Al-Naimi, asked, “Why should I cut production? This is a market, and I’m selling in the market. Why should I cut?”
The statement from the minister signals that the worries for oil companies are far from over. OPEC’s decision is going to hurt non-opec regions in a big way. OPEC members have promised a steep discount in oil prices to Asian counterparts, and the situation will not improve until and unless one objects or decides to cut the output.
At The Cost Of Oil Companies
Thus, till such time, companies like Seventy Seven Energy Inc (NYSE:SSE) will be forced to underperform and might have to resort to cost cuts and other measures to keep themselves afloat. The Energy Department in the U.S. said that the gasoline price will ease to $2.60 per gallon in 2015, representing a 23% decrease over a year. If that comes to reality then, U.S. households will save roughly $550 in 2015, at the cost of these oil companies though.
Seventy Seven Energy Inc (NYSE:SSE) technically looks one of the best wealth destroyers as its downmove in the last few weeks has been so assuring in its nature. The price action can easily be seen taking the pattern of a sharp fall, then a sideways consolidation followed by more fall. We have already seen 3 drops and 3 consolidations in as many months but the stock looks destined for more downside. A level of $3 or even $2 can easily be seen by the month-end.