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U.S. Oil Growth Slows: Whither The Fields Of Glory?
- U.S. basins reveal steepening declines in production growth, from 103,000 barrels per day to 68,000, according to the EIA's recent drilling report.
- The reduced rig count and capital reductions are finally playing out in production terms.
- The Eagle Ford and Bakken indicate sharper reductions than the Permian Basin.
Texas Oil Producers' Shuffle 2014: Global Oil's Direction?
- Texas' top oil producers have vied for their places in the last three years, and some have left the charts completely while others "placed."
- Texas producers are a proxy for U.S. oil, and many firms are showing their strengths and weaknesses by their decisions and guidance.
- The global supply and demand dynamics ahead are not quite as gloomy as the past six months.
Occidental Petroleum Escaping The Oil Price Black Hole
- Occidental Petroleum's EOR (enhanced oil recovery) business has escaped the gravitational pull of the black hole of low oil prices.
- Conservative management and attractive asset choices leave Occidental in a decent position to ride out storms and capture any volatility-related upsides.
- Oxy will continue to grow production at a reasonable clip, with its Delaware Basin acreage and Al Hosn liquids key contributors.
- Oxy's production in Texas' prolific Permian Basin totals 15% of total production.
Energy Transfer Merger Creates Second Largest MLP, Scale Economies
- The merger between Energy Transfer Partners and Regency Energy Partners is a continuation of the trend in industry consolidation.
- From a management and operations standpoint, the consolidation of two Energy Transfer family MLPs will provide greater scale and capital efficiencies.
- The Energy Transfer merger is a sign of the times, with market forces cajoling efficiencies that should reward shareholders.
- As the U.S. re-pipes itself between states and basins, Energy Transfer's moving, processing and gathering volumes of hydrocarbons is a good play.
Post-Saudi Succession, Oil Markets Still Seeking An Elusive Equilibrium
- Following the passing of King Abdullah, the well-planned Saudi succession offered one source of stability to an unpredictable oil market.
- Saudi Arabia, the stable oil exporter to the world, has challenges ahead both domestically and regionally.
- While prices are expected to start recovering in the second half of 2015, geopolitical events could provide some added volatility as supply begins tightening.
- As mentioned before, global oil producers - Yemen, Libya, Russia, and Nigeria - to name a few, are troubled areas and may further add to oil price volatility.
- Predictably, producers connected to the oil market are responding to price, but the politics of state-owned players and ungoverned states add a layer of less predictable behavior.
Matador Resources Throws Its Hat Further Into The New Mexico Permian
- Through the new acquisition, Matador is expected to hold the largest Delaware Basin acreage position among small and mid-cap publicly-traded energy companies.
- The HEYCO transaction expands Matador's Permian Basin footprint and offers flexibility, which is very desirable in today's industry environment.
- Consolidation is underway in the industry and smart players are joining forces, as in the case of the Matador/HEYCO combining of assets.
- Matador not only added desirable Permian Basin acreage but a legacy of deep Permian expertise through the addition of HEYCO's leadership.
U.S. Oil Plays Strength, Prices And Potential
- U.S. oil production continues to increase, albeit at a slower pace.
- The Permian Basin continues to increase production at a higher rate than the other two major plays, the Eagle Ford and Bakken.
- Stock price volatility is moving in tandem with oil price declines, but more nuance is occurring as information about capital investment and production expectations advance.
- Assume OPEC will not cut production, which will bring sanity to one's outlook.
Update: Pioneer's Participation In Condensate Exports, And Mexico?
- The allowing of condensate exports for all producers is a bonus to a select group of producers when good news has been hard to find.
- The interim step of condensate exports may further open the door to lifting the crude oil export ban, in which Pioneer is a leading voice.
- As an Eagle Ford heavy weight (and Permian too), Pioneer's intrinsic value is starting to shine once again.
Oil Markets Through The Looking Glass (And Rocks) Of Chevron
- Chevron's assessment of upcoming global supply needs indicate $500 billion is needed annually for decades ahead.
- The Permian Basin is still trumpeted as having the best rocks for tight oil (shale oil) in North America.
- While Chevron's stock has dipped less over four years, these last months have hit the spectrum of producers equally hard.
- Current oil prices will not be sufficient to promote future investment, and thus, the price of oil will rebalance supply.
Jennifer Warren Positions For 2015: Finding Energy Innovators And Problem Solvers
- In 2015, I will continue to see how the balance of oil and gas-weighted firms plays out.
- I believe in the approach of investing in the 'sustainable infrastructure' space.
- A holistic approach is needed to accommodate these demands at the least cost with the highest purpose use of resources.
U.S. Oil Tells A Tale Of Futures Past
- As more information is revealed by time, the U.S. E&P industry increasingly has indicators that are more positive than negative.
- The latest EIA drilling report shows declines in new drilling permits but also shows the impact of drilling permit changes and production in an earlier price decline environment.
- The Bakken, Permian Basin, Eagle Ford and Niobrara plays are the most likely areas to hold up under this stress test environment of lower oil prices.
- Geopolitical risk is still of concern - though markets shrugged it off yesterday, today and even tomorrow may be a different story.
Halliburton's Position On The Front Lines Offers Firsthand Insights, Indicators
- Halliburton indicates that the immediate impact of the lower price environment has fallen in the international camp, but North America is next.
- The company reminds investors about conventional oil production and mature fields as a source of revenue growth moving forward, restating this opportunity again from the 2013 Analyst Day.
- National oil companies own approximately 73% of the world's reserves, and the power has shifted back to these producers, as witnessed by steeply declining oil prices.
- In a low-price environment, "there is nowhere to hide." Halliburton offers investors a window into the industry's tectonic shifts.
State Of Crude Oil Lacks Color And Form: A Reporting
- Oil price volatility is at an all-time since 2012.
- Majors say look at longer term energy fundamentals, in which energy demand growth trumps.
- Capital expenditures in the fourth quarter 2014 and in 2015 could be significantly less given the large decline in crude oil prices thus far, notes the U.S. Energy Information Administration.
Oil Prices Will Rise Based On Fundamentals And Geopolitics
- Oil prices may bounce around until some order of confidence is restored in the movements of market actors.
- Geopolitics are the greatest source of volatility ahead.
- Oil market fundamentals are a better guide than sentiment and market reactions.
- U.S. shale oil production may be slightly down, but not out, and the case for exports may be strengthening. Other countries want U.S. exports.
Saudi And OPEC Move: It's Just Good Business
- OPEC's decision to hold its production quota steady at 30 million barrels per day is rational.
- U.S. markets have reacted in a well-known commodity fashion.
- What actually changed in the world of oil supply and demand between November 26th and December 1st to cause E&P stocks to decline nearly 5% in some cases? Expectations.
Energy Transfer's Lake Charles LNG Exports (Analyst Day, Part 2)
- Energy Transfer's LNG project continues to be refined and communicated as the mega-project evolves.
- The LNG project leverages the existing Lake Charles assets owned by Energy Transfer toward higher value added, a smart re-purposing effort that captures the U.S. LNG export trend.
- In comparison with other U.S. LNG projects, Energy Transfer's LNG project is cost-competitive and even advantaged in a capital sense: brownfield site aspects offer some tailwinds.
Energy Transfer: Play-By-Play Paradigm Shift
- The Analyst Day at Energy Transfer did not disappoint, with attention to detail on the ground and in the presentation room apparent.
- Across the many U.S. oil and gas plays, Energy Transfer's assets connect and sync up to create value for shareholders and customers.
- Energy Transfer is unique in its overall geographic diversification, as well as the various ways in which it touches hydrocarbon molecules multiples times.
- LPG exports, a new Bakken pipeline and LNG exports are just a few growth initiatives on the menu of opportunities in a target-rich oil and gas environment.
RSP Permian: A Resilient Small-Cap Permian Player
- Prudent financial and operations management are rewarding RSP Permian shareholders.
- Being in the right ZIP code helps, but an experienced leader who has weathered booms and busts matters too.
- Given an acquisitions orientation, the consequences of low oil prices for some E&P firms may provide opportunities for RSP Permian.
Encana's Value Drive Also Offers Volumes From Texas Oil Plays
- Encana continues to highlight its new chapter in the North America energy story, focusing on efficiencies, better margins and cash flow.
- While seemingly coming from the rear of the industry pack, according to markets past, the best may yet be to come.
- The addition of a Permian oil position via the Athlon acquisition and the Eagle Ford offers a new foothold into the highest-producing oil plays in the U.S.
OPEC's World Oil Outlook And Pivot To Asia
- OPEC published its recent global oil market outlook, which offers a slightly different and instructional viewpoint.
- OPEC sees its share of crude oil/liquids production reducing in light of increases in U.S. and Canada production.
- OPEC also indicates a pivot toward Asia, where it sees the greatest demand for its primary exports in the future.
Pioneer Defends Its Turf Regardless Of OPEC
- Pioneer raised $1 billion in a new equity offering designed to scale up infrastructure and cost efficiencies for the long haul.
- Pioneer's production forecasts have remained largely unchanged.
- Pioneer's seemingly defensive moves also are really smart offensive maneuvers.
- The magnitude of the Spraberry/Wolfcamp shale infrastructure build out is compared to that of the Alaskan North Slope efforts.
Shale Oil Production Offers Positive Talking Point For Chevron
- Oil production from the Permian Basin is forecast to be 10% higher than earlier estimates.
- Chevron, and a very few other Majors, have fared better than most E&P firms in the industry's current malaise.
- Timed in a conservative manner, technological advances and applying best practices have allowed Chevron to leapfrog other peers.
Viper Energy's Venom Less Lethal, But Not Harmless
- Viper Energy Partners is a mineral rights MLP playing off of the shale revolution's many opportunities.
- The MLP's unit price was hit hard likely because of its novel approach, underlying drivers and market overreactions.
- The idea of a mineral rights-based MLP is clever and its development is worth following - and the Midland Basin is the perfect petri dish.
Permian Oil And Infrastructure And Al Hosn Gas Are Value Levers For Occidental Petroleum
- The Permian Basin is a major focal point of domestic growth for Occidental Petroleum, one of the largest acreage holders in the Permian.
- OXY is not afraid to be opportunistic with its balance sheet if oil prices stay in lower ranges.
- The re-designed OXY is a result of the U.S. shale revolution and the knock-on effects of technological advances.
- OXY's diversified value proposition is an attractive feature of the stock.
Global Oil Markets: There And Back Again
- The oil market narrative is changing, with U.S. supply a new protagonist.
- While U.S. oil supply moderated price volatility in 2013, today it may be helping solidify a new price floor.
- The impact of future demand growth from non-advanced economies weighs more heavily on supply, demand and price fundamentals than short-term factors.
Flowserve's Global Footprint: Dancing With Resource And Infrastructure Trends
- Flowserve offers global and sector diversification in locations where growth is occurring.
- Flowserve's management has shown resilience in the face of economic crises and progressiveness in its targeted sectors.
- The trends connected to resource efficiency and related technological advances and infrastructure investment bode well for Flowserve.
Global Oil Markets Finding A New Groove?
- Saudi Arabia, the oil market swing producer, is presented with challenging decisions ahead.
- U.S. shale oil production has become a wild card for global market players.
- Fundamentals of supply and demand drive oil prices, but right now demand seems to be driving.
Fundamentals Of Pioneer, The Permian Basin And Oil Prices
- Leading oil producers continue to see their stocks decline.
- Fundamentals point to possible market overreaction.
- Producers are not panicking, just markets.
- "Holding the fort" may be the best investor strategy, if one is able.
Oil Market Karma Reversed?
- Ample U.S. oil production is helping push down WTI prices. Brent crude prices are also weighed down by a well-supplied market.
- E&P firms have been punished alongside oil price declines, possibly too harshly.
- Geopolitical risk is not speaking as clearly to oil markets as pre-U.S. oil production.
Update: Pioneer Sale Potential In Eagle Ford Is JV Partner's Interest
- Bloomberg noted Pioneer's willingness to sell Eagle Ford assets for $4-4.5 billion; this news has been corrected to reflect JV partner Reliance's interests, not Pioneer's.
- Industry oil production and E&P re-organizations are combining for interesting opportunities.
- Pioneer Eagle Ford production was 47,000 boe p/d in the second quarter, up from 43,000 in the first quarter.*.
U.S. Energy Investing: New Actively-Managed MLP ETF Seeks Superior Total Return
- The growing master limited partnership (MLP) investment space continues to parallel growing investor interest in real assets.
- A first actively-managed MLP ETF signifies that novel approaches offer opportunity to access the investment class in more nuanced ways.
- The U.S. midstream sector is expected to grow, with $346 billion projected in investment in midstream, downstream and energy-related chemicals value chains between 2012 and 2025.*.
What Permian Opportunity Did Encana Buy?
- The recently announced Athlon acquisition diversifies Encana's geographic footprint in a premier U.S. basin.
- The addition of Permian Basin acreage also offers added profitability in the form of a greater oil-weighted portfolio for Encana.
- While no two Permian pure-plays are the same, some similarities can be compared and contrasted to help investors understand the relative scale of players.