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Tesoro Logistics, LP: Buy The QEP Deal Dip?
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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?
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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
- 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.