Seeking Alpha

Michael Fitzsimmons

 
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  • Tesoro Logistics, LP: Buy The QEP Deal Dip?
     • Wed, Oct. 22 TLLP 14 Comments

    Summary

    • Tesoro Logistics has announced it will buy QEP Resources' midstream assets for $2.5 billion.
    • The MLP will tap the debt and equity markets to fund the transaction.
    • Current unitholders will get a 45% haircut to achieve sub-30% growth in DCF and adjusted EBITDA.
    • Despite being down 10% this morning, this deal is not a compelling reason to invest in TLLP.
    • Investors might be better served by looking at QEP Resources: QEP has a $4.4 mkt cap and will receive $2.5 billion in cold hard cash.
  • DCP Midstream Partners: Yielding 5.6% And Perfectly Positioned For The Shale Gas Renaissance
     • Tue, Oct. 21 DPM 18 Comments

    Summary

    • The DCP Midstream enterprise is arguably the #1 midstream operator in the US.
    • The associated MLP, DPM Midstream Partners, has a 5.6% yield and is excellently positioned for growth.
    • Despite an anemic Q2 EPS report, the drop-down and organic growth story is firmly in place.
    • I rate DPM VERY ATTRACTIVE for income oriented MLP investors.
  • Birchcliff Energy: Dramatically Oversold And Offering 50% Upside
     • Mon, Oct. 20 BIREF 15 Comments

    Summary

    • Birchcliff Energy has dropped 40% since June on irrational selling of a natural gas stock based on falling oil prices.
    • The company is growing per share production at a 27% clip, yet has a P/E of only 12.
    • First half 2014 EPS came in at $0.44/share - up 400% compared to last year.
    • The company's current estimated EV is trading at a discount to proved reserves NPV-10.
    • This stock could easily return 50% over the next year. Birchcliff is a STRONG BUY.
  • How Libya Sunk The Oil Frackers' Stocks, Plus The Conoco Story
    Editors' Pick • Wed, Oct. 15 COP 133 Comments

    Summary

    • Libya was producing 1.65 million bpd of crude in 2010.
    • During parts of 2013, exports fell by ~1.4 million bpd.
    • Recently, Libyan production jumped by nearly 500,000 bpd from Q2 to Sept./Aug.
    • The rapid step-function changes in Libyan production was the single-biggest reason behind the collapse of oil prices and domestic frackers' stock prices.
    • Meantime, ConocoPhillips looks very attractive after a $20 drop in the stock.
  • Spectra Energy Partners: A 4.8% Yield And 27 Consecutive Quarters Of Increased Distributions Growth
     • Wed, Oct. 15 SEP 5 Comments

    Summary

    • Spectra Energy Partners is one of the biggest natural gas pipeline operators in the US.
    • That said, the MLP's recent focus on liquids transport are a positive near-term growth catalyst.
    • The recent energy sector sell-off due to lower oil prices caused Spectra to be oversold even though it has no oil price exposure.
    • Spectra Energy Partners is a BUY and has potential for 20% total returns (annually) over the next 3 years.
  • Spectra Energy: Profit On Higher Natural Gas Volumes Without Commodity Price Risk
    Tue, Oct. 14 SE 23 Comments

    Summary

    • Spectra Energy is one of the largest natural gas midstream companies in North America.
    • The company is guiding for an 8-9% CAGR in the dividend.
    • The recent energy sector sell-off has the stock down ~14% even though it is not exposed to lower oil prices.
    • Spectra now yields 3.6% and could return 20% over the next 12 months by just returning to its recent high of $43.
  • Phillips66: A Great Long-Term Investment In 'Shale USA' Despite Lower Oil Prices
    Tue, Oct. 14 PSX 12 Comments

    Summary

    • Phillips 66's future growth will be in Midstream and Chemicals, businesses that will thrive despite lower oil prices.
    • Adjusted EBITDA growth in Midstream & Chemicals of an estimated ~$6.50+/share is expected by 2018.
    • PSX is selling at a large discount to the S&P500 in terms of both P/E and dividend yield.
    • PSX is a BUY as price volatility opportunities present themselves. Then hold it for the long-term.
  • Peyto Exploration Boosts Guidance In A Very Bullish Operational Update
    Wed, Oct. 8 PEYUF 21 Comments

    Summary

    • Peyto has already met the high end of year-end production guidance - and did so under budget.
    • Year-end guidance is boosted from 81,500 boe/d to 85,000 boe/d.
    • Expansion of the Oldman North gas plant is completed and fully operational.
    • I reiterate my STRONG BUY while lowering my year-end price target to $38.
  • PetroQuest: Click 'Buy More Shares' Now
     • Wed, Oct. 8 PQ 36 Comments

    Summary

    • Shares in PetroQuest, down 33% since July, are dramatically oversold.
    • Oil production grew 99% in Q2 and EPS is set to grow ~400% yoy.
    • Recent Cotton Valley wells are coming in ~50% higher than previous wells and have strong economics.
    • PetroQuest is a STRONG BUY and could easily double by this time next year, if not sooner.
  • EnLink Midstream Partners Buys Chevron's Henry Hub Services Expanding South Louisiana Footprint
     • Mon, Oct. 6 ENLK 4 Comments

    Summary

    • EnLink is an MLP formed earlier this year when Devon and Crosstex combined midstream assets.
    • EnLink has a clearly visible path to growth with Devon drop-downs being one catalyst.
    • In addition, EnLink just signed an agreement with Chevron which will substantially increase the company's presence in strategic South Louisiana.
    • EnLink is very ATTRACTIVE, and has the potential for 20% distribution growth in addition to excellent unit price appreciation potential.
  • Enable Midstream Partners: A 4% Dividend And Excellent SCOOP Prospects
     • Thu, Oct. 2 ENBL 33 Comments

    Summary

    • Enable Midstream has strategically located gas gathering, processing, and pipeline transport assets in Oklahoma.
    • The company has the best access to cheap capital in the MLP sector.
    • Low cost capital combined with excellent SCOOP growth prospects is an unbeatable combination.
    • Enable Midstream is a STRONG BUY for income oriented investors and will easily deliver a distribution CAGR of 11%.
    • Oh, and don't be surprised if the units double in price over the next 24-36 months driven by excellent growth in liquids volumes.
  • OGE Energy: An Excellent Utility With Growing Exposure To Midstream Operations In Prolific Shale Plays
     • Wed, Oct. 1 OGE 2 Comments

    Summary

    • OGE is an electric utility company with growing exposure to midstream operations via interest in an MLP.
    • Enable Midstream Partners has midstream operations in the prolific SCOOP, STACK, and emerging Springer shale plays of Oklahoma.
    • OGE will likely deliver a 10% total return over the next 12 months. In 2015, MLP distributions to GP OGE will grow as its 60% claim on IDRs kick-in.
    • Total returns could then accelerate to the 15-20% range as midstream contributions to EPS grow.
  • EnLink Midstream: A GP With Excellent Prospects Including A 20% Dividend Growth Target
     • Tue, Sep. 30 ENLC 10 Comments

    Summary

    • EnLink Midstream LLC was formed when Devon Energy and Crosstex Energy combined midstream assets.
    • The partnership plans to double in size by 2017 - Devon drop-downs and organic growth projects leading the way.
    • The company expects the top IDR threshold to be met in Q4 and is guiding for a 20% growth rate in the dividend.
    • I rate EnLink Midstream, LLC as ATTRACTIVE for dividend growth investors with a 20-25% annual total return objective over the next 24 months.
  • Caza Oil & Gas Hits A Gusher In The Bone Spring - But Is It Enough?
     • Sat, Sep. 27 CAZFF 45 Comments

    Summary

    • Caza hits a very prolific Bone Spring well in Lea County, NM: choked-back 24-hr gross rate of 2,621 boe.
    • This bodes well for the company's 4,800 net acres in the southeast corner of New Mexico.
    • However, near constant new share issuance, debt, and low insider ownership is worrisome.
    • I'll pass on Caza for now, but investors looking for a high risk/reward opportunity should keep an eye on shares going forward.
  • Cenovus: More Than Meets The Eye
     • Sat, Sep. 27 CVE 49 Comments

    Summary

    • Cenovus is a top-tier oil sands producers which just announced first oil at Foster Creek phase F.
    • The company has a strategic upstream partnership with ConocoPhillips and a 50/50 JV in two refineries with operator Phillips 66.
    • The company's little known and under-appreciated natural gas business is a cash cow.
    • The company is very appealing after a sharp sell-off took the stock from $32.50 to $28. The forward yield is 3.8%.
  • The SCOOP On Marathon's Massive Oklahoma Resource Upgrade
       • Wed, Sep. 24 MRO 18 Comments

    Summary

    • Marathon Oil recently increased its 2P reserves in Oklahoma by a whopping 310 million boe.
    • 2P reserves in Oklahoma are now 1 billion+ boe.
    • Oklahoma is strong catalyst going forward - joining the Eagle Ford & Bakken.
    • Marathon appears to be on track to become very "EOG like" over the next year or two.
    • As a result, MRO could gain 50% over the next 18-24 months. It is a STRONG BUY.
  • Cenovus & ConocoPhillips: FCCL Partnership Is Powering Inter Pipeline's Stock Higher
       • Tue, Sep. 23 IPPLF 44 Comments

    Summary

    • Inter Pipeline was up 2.5% Friday on a big jump in volume.
    • This week, first oil was achieved at Foster Creek phase F - a 50/50 JV between Cenovus and Conoco Phillips.
    • Phase F is expected to grow production to 30,000 bpd over the 12-18 months. Inter Pipeline has the commercial transport contract.
    • Total Foster Creek/Christina Lake ("FCCL") production is expected to grow to 740,000 barrels of bitumen per day.
    • Based on FCCL production growth, I reiterate my STRONG BUY recommendation on IPPLF and have $45 price target.
  • The S&P500 Leaves Energy Stocks In The Dust
    Sun, Sep. 21 IXC, XLE 67 Comments

    Summary

    • Falling oil and gas prices have put pressure on energy stocks.
    • Lackluster demand combined with additional supplies, and a stronger US dollar are largely responsible for the weakness.
    • Floating storage of crude oil may be an indicator oil prices could fall further.
    • High quality dividend yielding energy companies are the safest place to be until oil demand picks up.
  • Here's WATT All The Fuss Is About
    Wed, Sep. 17 WATT 25 Comments

    Summary

    • Energous, a company specializing in wireless charging, is grabbing big headlines since its IPO.
    • The wireless power tx/rx market is expected to explode to an estimated $8 billion by 2018.
    • While the company has filed at least 65 patents applications, none have been issued.
    • A small company has 4 patents issued that appear to be tangentially relevant to Energous' technology.
    • WATT appears to have some serious FCC and UL approval hurdles. Pass on this one.
  • Conoco Phillips Is Not Exiting The North Sea
    Wed, Sep. 17 COP 62 Comments

    Summary

    • Despite erroneous reports that COP is exiting the North Sea, nothing could be further from the truth.
    • The Jasmine project, now online, consists of four of the most prolific wells in the company.
    • In addition, the company also has excellent North Sea assets off the coast of Norway.
    • COP shareholders, let alone the people of Scotland, have absolutely nothing to worry about with regard to the North Sea's viability.
    • The investment thesis in COP remains firmly in place. It is a BUY and long-term core energy holding.
  • Oryx Petroleum: An Outsized And Compelling Risk/Reward Proposition
       • Fri, Sep. 12 ORXPF 40 Comments

    Summary

    • Oryx Petroleum holds a 65% working interest in the Hawler license in the Kurdistan region of Iraq.
    • Hawler is a world class oil field and Oryx has a 4-for-4 exploratory well success rate.
    • In 2014, Oryx has ramped production from 0 to ~5,000 bpd & expects 25,000 bpd by year-end.
    • As a result, cash flow per share will jump dramatically in 2015 and again in 2016 as the company heads toward 100,000 bpd.
    • The security risks that have kept a lid on the stock is exactly why Oryx presents a compelling risk/reward opportunity today.
  • Callon Petroleum Expands Permian Footprint With Core Midland Basin Acquisition; Stock Will Expand Too
       • Tue, Sep. 9 CPE 34 Comments

    Summary

    • Callon Petroleum scoops up 3,862 net acres in the sweet-spot core of the Midland Basin.
    • For the $213 million price tag, the deal includes existing production of 1,465 boe/d (68% oil).
    • The acreage is considered de-risked for 3 zones and contains 4 more prospective benches.
    • If Callon continues to execute in Permian, the stock could easily hit $15 over the next 12 months (up 50%).
    • Long term, the risk/reward profile is excellent: Callon could be 3-4x higher by the end of 2016.
  • E-Bikes And Tablets: Two More Bullish Catalysts For Undervalued Battery Maker Highpower Technology
    Editors' Pick • Thu, Sep. 4 HPJ 47 Comments

    Summary

    • Highpower has a number of recent bullish catalysts, including news today it was supplying batteries for Acer's new tablet.
    • Another strong catalyst is battery demand from the fast growing worldwide electric bike market.
    • Highpower has an all new state-of-the-art manufacturing facility and can easily add another production line as demand rises.
    • Highpower Technology has a very small float and market-cap. The company is a STRONG BUY.
  • Dril-Quip: Share Buybacks And A Strong Backlog Bode Well For Oil Equipment Firm
    Editors' Pick • Thu, Sep. 4 DRQ 21 Comments

    Summary

    • Dril-Quip initiated a $100 million stock repurchase program in June.
    • The company has no long-term debt, the best margins in the biz, and a current backlog of $1.32 billion.
    • The worldwide floating rig rate continues to grow at a nice clip (estimated ~8%), a bullish catalyst.
    • DRQ is down 8.5% YTD despite growing first half EPS by ~14%. Stock is a solid BUY.
  • ConocoPhillips: A Significant Shift Of Capital Toward High-Margin Development Programs
    Thu, Sep. 4 COP 61 Comments

    Summary

    • ConocoPhillips is transitioning from high investment in major capital projects to more cap-ex toward high-margin development.
    • COP is directing the majority of capital toward the portfolio's highest return projects.
    • This will enable the company to deliver on its promise of a 3-5% growth in production and margins.
    • The company reiterates its commitment to a strong dividend to reward shareholders.
  • Dividend Growth Investors: It Pays To Own Peyto Exploration
       • Tue, Sep. 2 PEYUF 39 Comments

    Summary

    • Peyto Exploration had an excellent 1H of 2014, posting $0.81/share of net income as compared to full-year 2013's $0.96.
    • The company recently said production growth would "meet or exceed" the high-end of its previous guidance.
    • Peyto historically pays a high % of net income as dividends. This implies a big increase in the dividend is coming.
    • Peyto is on track to roughly double EPS yoy. It is undervalued and a STRONG BUY.
  • Chevron: New Gulf Of Mexico Production A Significant Growth Catalyst
    Tue, Sep. 2 CVX 12 Comments

    Summary

    • Large Gulf Of Mexico projects will start up in Q3, Q4, and in 2015.
    • Together, the three largest projects will add ~100,000 bpd (net) production.
    • The company is also ramping up production in the Permian Basin and is now the largest producer there.
    • CVX is undervalued by any measure as compared to the S&P500: dividend yield, P/E, and price-to-book.
    • I rate CVX a BUY and have a $139 year-end price target.
  • Chinese EV Battery Market Just Another Bullish Catalyst For Extremely Undervalued Highpower Technology
       • Fri, Aug. 29 HPJ 193 Comments

    Summary

    • After extensive testing, China's regulators have approved Highpower's 20 Ah lithium-ion battery solution for the huge domestic PHEV and EV market.
    • This large-scale battery news comes on the heels of a small-scale battery solution for Timex smart watches.
    • HPJ has rechargeable battery solutions across the market spectrum; institutional ownership in the stock is increasing.
    • As a result of increasing growth prospects, I am reiterating my 2014 price target of $8.40/share and adding a $11.50 PT for 2015.
    • The stock's market cap is simply too small in relationship to the huge potential of the Li-Ion rechargeable battery market.
  • Midyear Update: Petroleum & Resources Hopes Exxon And Chevron Join The Game
    Thu, Aug. 7 PEO 27 Comments

    Summary

    • Closed-end fund PEO's total market return for the first half of 2014 was a respectable 14.7%.
    • However, the funds top two holdings are laggards: Exxon and Chevron.
    • In addition, PEO has another problem: a huge discount to NAV.
    • Bottom line: PEO suffers from the same issue XOM and CVX have; executive management unwilling to take obvious steps to unlock shareholder value.
  • New Zealand Oil & Gas: Reap A 7.6% Dividend Yield While You Wait For Stock To Double
       • Thu, Aug. 7 NZEOF 57 Comments

    Summary

    • New Zealand Oil & Gas has two very profitable assets in production: Tui and Kupe.
    • The company recently settled a royalty dispute which will result in an increase of $1-2 million/year in net Kupe royalties.
    • Market value is ~$200 million above net cash at Q2 end, despite low-risk highly visible 10-year revenue stream est. to be $1.1 billion.
    • Add in two recent commercial discoveries and a plethora of New Zealand E&P permits, and NZOG looks set to double over the next 12 months.
  • Hess' MLP Will Unleash Even More Shareholder Value
    Editors' Pick • Mon, Aug. 4 HES 26 Comments

    Summary

    • Hess Corp. has announced plans to unleash shareholder value by forming an MLP.
    • Hess expects Tubular Bells' (57% WI, operator) first oil in September; expected to contribute 25,000 boe/day after ramp up.
    • Hess management is shareholder friendly (after pressure from Elliot Associates).
    • HES is undervalued and presents a relatively low-risk 20% price appreciation potential over the next 12 months.
  • Holly Energy Partners: A Dividend Growth Powerhouse With A 6% Yield
       • Sat, Aug. 2 HEP 19 Comments

    Summary

    • Holly Energy Partners is an MLP with a strategic long-term relationship with refiner Holly Frontier.
    • HEP has increased unit distributions every quarter since going public in 2004 and currently yields 6%.
    • 100% of revenue is fee-based and 85% of revenue is tied to low-risk long-term minimum volume commitments.
    • The partnership is in an excellent geographic position to benefit from growing production from the Permian, Uinta, and Niobrara basins.
    • As a result, investors can expect HEP to deliver a 20% total return over the next 12-months.