Commodities Daily: Rising Costs A Real Issue For Oil Companies [View article]
Nice observations linked to strong data analysis.
Total - from my vantage point, the most forward thinking and aggressive of the major IOC's.
Dont believe much can be done on the cost side of the equation, next move for most of these companies is either a M&A binge or in the case of COP and possibly RDS - becoming a target themselves.
What The Future Chevron Will Look Like [View article]
The truth sometimes is quite painful...
Like all the majors, CVX is having a difficult time making up for depletion and accessing quality acreage. They badly need a major acquisition like a BP or a APC or even a KOS.
Shell (RDS.A) has pulled out of talks to acquire a stake in Anadarko Petroleum's (APC) gas discoveries off the coast of Mozambique in East Africa, due to a high price. Instead, Shell will focus on projects off the coasts of Benin, Gabon and South Africa on the other side of the continent. While these projects are more uncertain, they could be more lucrative, as West African prospects tend to provide more oil than gas. [View news story]
Benin, Gabon - neither has shown any potential for a massive gas find on the scale of Mozambique.
South Africa deepwater - highly speculative.
Deepwater Nigeria - the gas is there but approvals take far too long for any meaningful medium term impact on Shell's financials. Shell discovered the super giant 'Bonga Southwest' oil field in 2001 (deepwater Nigeria). Twelve years later they are nowhere even close to a FID.
Shell either needs the big acquisition - or risks being gobbled up itself. And if not Mozambique - where ?
Anadarko Petroleum (APC -1.2%) is rich in catalysts and cheap on valuation, Jefferies says in reiterating its Buy rating, lifting its price target to $111 from $96, and raising EPS estimates for Q2, FY 2013 and '14. The firm cites a potential Mozambique JV and Gulf of Mexico exploration results; Tronox remains an overhang, but APC has enough valuation upside and liquidity to absorb a hit. [View news story]
Nice call even though APC down today with the rest of the energy complex.
Anadarko currently drilling the Calao prospect, block CI-103 deepwater Cote de Ivorie (45% WI). Positive results would confirm the block as another Ghana TEN type analogue. Huge in my opinion.
1 Of These 3 Will Be The Next Supermajor [View article]
Nice article, for what it's worth I would make the following ranking on the three:
#1 - Anadarko. A truly global portfolio with significant assets in Africa, South America, Gulf of Mexico and US land. A premier explorationist, second to none of the majors. Macondo and Tronox have put a temporary hitch to their growth. Ready to take off once their litigation woes are behind them.
#2 EOG. Laser focused US land player. No offshore or international assets. Very, very good at what they do - factory drilling. Downside is the most levered to oil prices and absolutely could not withstand under $80/BBL.
#3 Apache A mix between Anadarko and EOG. Seems that they have not yet put all the pieces together and management paints a confused / muddled picture . The most attractive of the three from a valuation standpoint.
Disclosure - long Anadarko. Have been long in the past on Apache and EOG.
Goldman Sachs believes the selloff in oil service stocks creates a buying opportunity, as it sees Q1 earnings growing at a faster rate driven by completion work. The firm expects Halliburton (HAL) to report in-line Q1 results and recommends buying on the recent pullback, suggests Basic Energy (BAS) on better utilization, and likes Nabors Industries (NBR) on relative valuation. [View news story]
I went long the OIH Tuesday.
Schlumberger comment that started the selloff - it may be true that revenues for US LAND are off. But I expect this to be fully offset by Gulf of Mexico and International.
Venezuela - what can be said other than that has been a disaster for all the service companies for years - with no end in sight.
The big Shenandoah oil deposit, potentially one of the largest discoveries ever in the Gulf of Mexico, could contain 500M-1B boe, Citi analyst Robert Morris says in backing his Buy ratings for Anadarko (APC +3%), Cobalt (CIE +7.7%) and Marathon (MRO +0.8%). The discovery could boost APC's profits by $3-$6/share, CIE's by $2.50-$5/share and MRO's by $0.75-$1.50. [View news story]
Actually I find this Shenendoah appraisal to be a confirmation that 'peak oil' is here and is real.
This isnt a field that was casually discovered a 30 minute drive outside of Dallas.
The well depth is 31,000 feet - six miles down.
Bottom hole pressures are around 20,000 psi.
Well costs are over $100MM.
Anadarko is literally betting the company every time they drill one of these deepwater wells - as BP found out during Macondo.
The big Shenandoah oil deposit, potentially one of the largest discoveries ever in the Gulf of Mexico, could contain 500M-1B boe, Citi analyst Robert Morris says in backing his Buy ratings for Anadarko (APC +3%), Cobalt (CIE +7.7%) and Marathon (MRO +0.8%). The discovery could boost APC's profits by $3-$6/share, CIE's by $2.50-$5/share and MRO's by $0.75-$1.50. [View news story]
Another find for APC.
Next big exploration catalysts are results for Phobos in GOM, deepwater Kenya and the Cote de Ivorie Block CI-103 Paon deliniation.
Long APC, short APR puts, short various APR/MAY calls
Hugo Chavez's death leaves a big question mark over the country's oil fields, whose capacity has declined due to chronic underinvestment and hostility to foreign firms. "Instability in Venezuela is the real risk, because that could have a dramatic impact on global oil supplies," says Rice University's Mark Jones. Despite Chavez's hostility to the U.S., Venezuela supplies 1M bpd of oil to America out of total production of 2.5M bpd. [View news story]
PDVSA is a political / social arm of the regime - not an oil company any longer.
None of the service companies can export dollars are the contracts are primarily based in Bolivars. Payment from PDVSA is slow / uncertain and bolivars are subject to the high inflation rate - 40% annually.
It will be difficult to entice any of the foreign oil companies back in - once burned shame on you, twice shame on me. Government has already decreed that agreements will no longer be subject to international arbitration. There is some effort by the Chinese - but they are even tired of the game.
My sense is that the oil biz in Venezuela has not yet hit rock bottom.
CNBC's 5 Top Stocks With The Potential To Pop [View article]
Comments on three of your picks
APA - OK, could get a lift from Canadian and Missisipian positions. Alaska if they ever find anything of significance in the Cook Inlet.
AAPL - OK, heartbreak hotel, should be good over the longer term. Problem is locating the entry point, resistance forming at the 440 level ?
NFX - Has a few big problem. Complacency and inneffective management are the headliners. Uinta Basin acreage is good but waxy crude selling at significant discount to WTI. Bakken, Eagle Ford and Cana Woodford positions are too small to be sustainable. Made some big bets internationally, low margins, now under divestment.
Harvest Natural Resources (HNR) announces the termination of the deal to sell its Venezuelan interests for $725M as the Indonesian government - the owner of the buyer - votes not to approve. Shares -23.5% to $7.01, but the stock was below $5 before the deal was announced last summer. (PR) [View news story]
Venezuela - heartbreak hotel for the entire oil biz.
PDVSA claims they will drill 10500 wells in the Orinoco and ramp production to 4MM BOPD over the next 5 years. Pure fantasy of course.
Pacific Drilling: A High Potential, Young Offshore Drilling Company [View article]
Not detailed but a very real negative is heavy exposure to a volatile and difficult market in Nigeria. Rates are high due to risk factor and generally higher operating costs.
Dual gradient drilling has the best application in the high pressure regime in the Gulf of Mexico - somewhat suprising that it has not caight on - possibly because this is a Chevron innovation and 'not invented here' syndrome.
Commodities Daily: Rising Costs A Real Issue For Oil Companies [View article]
Total - from my vantage point, the most forward thinking and aggressive of the major IOC's.
Dont believe much can be done on the cost side of the equation, next move for most of these companies is either a M&A binge or in the case of COP and possibly RDS - becoming a target themselves.
What The Future Chevron Will Look Like [View article]
Like all the majors, CVX is having a difficult time making up for depletion and accessing quality acreage. They badly need a major acquisition like a BP or a APC or even a KOS.
Shell (RDS.A) has pulled out of talks to acquire a stake in Anadarko Petroleum's (APC) gas discoveries off the coast of Mozambique in East Africa, due to a high price. Instead, Shell will focus on projects off the coasts of Benin, Gabon and South Africa on the other side of the continent. While these projects are more uncertain, they could be more lucrative, as West African prospects tend to provide more oil than gas. [View news story]
South Africa deepwater - highly speculative.
Deepwater Nigeria - the gas is there but approvals take far too long for any meaningful medium term impact on Shell's financials. Shell discovered the super giant 'Bonga Southwest' oil field in 2001 (deepwater Nigeria). Twelve years later they are nowhere even close to a FID.
Shell either needs the big acquisition - or risks being gobbled up itself. And if not Mozambique - where ?
Apple Getting Crushed In Most Important Battle [View article]
Anadarko Petroleum (APC -1.2%) is rich in catalysts and cheap on valuation, Jefferies says in reiterating its Buy rating, lifting its price target to $111 from $96, and raising EPS estimates for Q2, FY 2013 and '14. The firm cites a potential Mozambique JV and Gulf of Mexico exploration results; Tronox remains an overhang, but APC has enough valuation upside and liquidity to absorb a hit. [View news story]
Anadarko currently drilling the Calao prospect, block CI-103 deepwater Cote de Ivorie (45% WI). Positive results would confirm the block as another Ghana TEN type analogue. Huge in my opinion.
1 Of These 3 Will Be The Next Supermajor [View article]
#1 - Anadarko. A truly global portfolio with significant assets in Africa, South America, Gulf of Mexico and US land. A premier explorationist, second to none of the majors. Macondo and Tronox have put a temporary hitch to their growth. Ready to take off once their litigation woes are behind them.
#2 EOG. Laser focused US land player. No offshore or international assets. Very, very good at what they do - factory drilling. Downside is the most levered to oil prices and absolutely could not withstand under $80/BBL.
#3 Apache A mix between Anadarko and EOG. Seems that they have not yet put all the pieces together and management paints a confused / muddled picture . The most attractive of the three from a valuation standpoint.
Disclosure - long Anadarko. Have been long in the past on Apache and EOG.
Goldman Sachs believes the selloff in oil service stocks creates a buying opportunity, as it sees Q1 earnings growing at a faster rate driven by completion work. The firm expects Halliburton (HAL) to report in-line Q1 results and recommends buying on the recent pullback, suggests Basic Energy (BAS) on better utilization, and likes Nabors Industries (NBR) on relative valuation. [View news story]
Schlumberger comment that started the selloff - it may be true that revenues for US LAND are off. But I expect this to be fully offset by Gulf of Mexico and International.
Venezuela - what can be said other than that has been a disaster for all the service companies for years - with no end in sight.
The big Shenandoah oil deposit, potentially one of the largest discoveries ever in the Gulf of Mexico, could contain 500M-1B boe, Citi analyst Robert Morris says in backing his Buy ratings for Anadarko (APC +3%), Cobalt (CIE +7.7%) and Marathon (MRO +0.8%). The discovery could boost APC's profits by $3-$6/share, CIE's by $2.50-$5/share and MRO's by $0.75-$1.50. [View news story]
This isnt a field that was casually discovered a 30 minute drive outside of Dallas.
The well depth is 31,000 feet - six miles down.
Bottom hole pressures are around 20,000 psi.
Well costs are over $100MM.
Anadarko is literally betting the company every time they drill one of these deepwater wells - as BP found out during Macondo.
The big Shenandoah oil deposit, potentially one of the largest discoveries ever in the Gulf of Mexico, could contain 500M-1B boe, Citi analyst Robert Morris says in backing his Buy ratings for Anadarko (APC +3%), Cobalt (CIE +7.7%) and Marathon (MRO +0.8%). The discovery could boost APC's profits by $3-$6/share, CIE's by $2.50-$5/share and MRO's by $0.75-$1.50. [View news story]
Next big exploration catalysts are results for Phobos in GOM, deepwater Kenya and the Cote de Ivorie Block CI-103 Paon deliniation.
Long APC, short APR puts, short various APR/MAY calls
Hugo Chavez's death leaves a big question mark over the country's oil fields, whose capacity has declined due to chronic underinvestment and hostility to foreign firms. "Instability in Venezuela is the real risk, because that could have a dramatic impact on global oil supplies," says Rice University's Mark Jones. Despite Chavez's hostility to the U.S., Venezuela supplies 1M bpd of oil to America out of total production of 2.5M bpd. [View news story]
None of the service companies can export dollars are the contracts are primarily based in Bolivars. Payment from PDVSA is slow / uncertain and bolivars are subject to the high inflation rate - 40% annually.
It will be difficult to entice any of the foreign oil companies back in - once burned shame on you, twice shame on me. Government has already decreed that agreements will no longer be subject to international arbitration. There is some effort by the Chinese - but they are even tired of the game.
My sense is that the oil biz in Venezuela has not yet hit rock bottom.
CNBC's 5 Top Stocks With The Potential To Pop [View article]
Low production / higher water cut due to waterflood / waxy crude selling at discount to WTI.
CNBC's 5 Top Stocks With The Potential To Pop [View article]
APA - OK, could get a lift from Canadian and Missisipian positions. Alaska if they ever find anything of significance in the Cook Inlet.
AAPL - OK, heartbreak hotel, should be good over the longer term. Problem is locating the entry point, resistance forming at the 440 level ?
NFX - Has a few big problem. Complacency and inneffective management are the headliners. Uinta Basin acreage is good but waxy crude selling at significant discount to WTI. Bakken, Eagle Ford and Cana Woodford positions are too small to be sustainable. Made some big bets internationally, low margins, now under divestment.
Harvest Natural Resources (HNR) announces the termination of the deal to sell its Venezuelan interests for $725M as the Indonesian government - the owner of the buyer - votes not to approve. Shares -23.5% to $7.01, but the stock was below $5 before the deal was announced last summer. (PR) [View news story]
PDVSA claims they will drill 10500 wells in the Orinoco and ramp production to 4MM BOPD over the next 5 years. Pure fantasy of course.
Pacific Drilling: A High Potential, Young Offshore Drilling Company [View article]
Dual gradient drilling has the best application in the high pressure regime in the Gulf of Mexico - somewhat suprising that it has not caight on - possibly because this is a Chevron innovation and 'not invented here' syndrome.
Fayetteville Shale: Operating Analysis, Infrastructure, Economics, Outlook [View article]
The data certainly does not support a general increase in natural gas prices to the ' $5 to $6/MMcf level' anytime soon.