SandRidge Energy Inc. (SD), Chesapeake Energy Corporation (CHK): A Disappointing Quarter Leads to Buying Opportunities

Can Calumet Specialty Products Partners, L.P (NASDAQ:CLMT) bounce back? Several items suggest so. First, its Royal Purple division continues to enjoy increasing revenues. Revenue gains should continue as Wal-Mart Stores, Inc. (NYSE:WMT) recently approved Royal Purple as a vendor. Second, Calumet recently announced the acquisition of midstream assets from Murphy Oil Corporation (NYSE:MUR) which will allow Calumet to buy more oil directly from producers in Montana and South Dakota, thus reducing oil costs. In an email, the company would not quantify the impact of either the acquisition or the Walmart deal but viewed each deal as “a clear positive for the business.” Third, the EPA has acknowledged that its mandated renewable fuels standards may not be achievable, and this has led to a drop in the price of renewable identification numbers. Fourth, the Superior refinery is back online and will resume its contributions to earnings. Lastly, various refineries and production facilities will be expanded or upgraded in the coming two years with payback times ranging from months to four years.

Final Foolish Thoughts
Of these two companies, I like Calumet Specialty Products Partners, L.P (NASDAQ:CLMT)’s prospects best. Current oil prices will certainly help SandRidge Energy Inc. (NYSE:SD)’s revenues and future exploration activities. I suspect once the tension surrounding Syria dissipates, oil prices will decline and SandRidge will still be facing a funding gap in 2016. Calumet, on the other hand, suffered some big one-time expenses but has since closed deals that, well, are clear positives for its business. Currently, the company pays a 9% distribution and with the stock beaten down from one disappointing earnings report, I think this company has room to rebound with an attractive yield.

The article A Disappointing Quarter Leads to Buying Opportunities originally appeared on Fool.com.

Robert Zimmerman owns shares of Calumet Specialty Products Partners, L.P, Calumet Specialty Products Partners September 21 2013 35 puts, Calumet Specialty Products Partners November 16 2013 30 puts and SandRidge Energy. The Motley Fool has no position in any of the stocks mentioned. 

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