Drilling Down Into Why Seadrill Partners, California Resources Corp and NRG Energy

All Plunged More Than 20% This Week

It was a rough week in the energy patch, with dozens of stocks dropping by double digits. While most of the moves were oil-driven, there were a couple of company-specific

catalysts worth pointing out. Three of the bigger movers this week, according to S&P Capital IQ data, were Seadrill

Partners (NYSE: SDLP), California Resources (NYSE: CRC), and NRG Energy (NYSE: NRG).

What:Utility NRG Energy (NYSE: NRG) slumped more than 21% this week.

So What: Key driver: Long-time

CEO David Crane resigned, effective immediately

With the CEO abruptly leaving, and no reason given, investors bailed on the company

Now What: NRG was also slapped with a sell

rating by Citi, citing a low valuation for the company’s coal fleet

The rating was vindicated the next day after the company sold two power plants the next day – one being a coal-fired plant – for just $138 million

Key takeaway: With a weak fleet and its CEO fleeing, investors are jumping ship

What:Oil and gas producer California Resources (NYSE: CRC) dropped more than 21% this

week.

So What: Key driver: Another 5% slide

in oil prices, which are now south of $40 a barrel, is weighing heavily on the stock

Investors fear that the company’s high debt level and lack of geographic diversity are weakening its ability to manage through the downturn

Now What: The company’s main focus right

now is on deleveraging its balance sheet and it hopes to announce at last one asset monetization before the end of the year

Key takeaway: This stock will likely remain weak until investors see a meaningful improvement in both oil prices and the company’s balance sheet

What:Deepwater driller Seadrill Partners (NYSE: SDLP) slumped more than 25% this

week.

So What: Key driver: Seadrill Partners

was downgraded from outperform to perform at Oppenheimer

Despite adequate distribution coverage, Oppenheimer believes that Seadrill Partners will have no choice but to reduce its distribution

Now What: Given that investors aren’t

rewarding its high payout, the company is better off using the cash to bolster its balance sheet

Key takeaway: With a payout cut on the horizon, investors are fleeing before it’s too late

This could be the next billion-dollar iSecret