Today - Monday, December 9, 2013
9:55 AMCheniere, Bechtel agree to $9.5B in contracts for Corpus Christi project
- Cheniere Energy (LNG +2.6%) agrees to two contracts worth a combined $9.5B with Bechtel to the engineering, procurement and construction of liquefied natural gas trains and facilities in Corpus Christi, Tex.
- Starting next year, Bechtel will build three LNG trains, three LNG storage tanks, and two berths to accommodate vessels with a capacity of up to 267K cubic meters.
- Besides the Corpus Christi project, Cheniere also is developing six LNG trains for the Sabine Pass Liquefaction project in Louisiana; Bechtel is a contractor on that project.
9:42 AMAlpha Natural to sell its Marcellus JV for $300M, shares +5.9%
- Alpha Natural Resources (ANR +5.9%) jumps higher at the open after agreeing to sell its 50% interest in its shale joint venture to Rice Energy for $300M; ANR and Rice formed the venture in 2010 to develop a portion of ANR’s Marcellus natural gas holdings in Pennsylvania.
- Rice Energy plans an IPO that could value the company at up to $2.5B; of the $300M received by ANR in the Marcellus deal, $200M will be in the form of Rice common stock at the company's IPO price.
9:12 AMEqual Energy to be acquired by Petroflow Energy for $5.43/share
- Equal Energy (EQU) agrees to be acquired by Petroflow Energy in a deal totaling $230M, or $5.43/share, a 23% premium to the $4.43 closing price on Nov. 18 when EQU said its strategic alternatives process had successfully resulted in exclusive negotiations for a proposed transaction.
- Montclair Energy had been attempting the acquire EQU for months but failed to come up with an acceptable offer.
8:57 AMPetrobras could raise fuel prices in 2014, CEO says
- Petrobras (PBR) could raise fuel prices next year, CEO Maria das Gracas Foster says, after a new mechanism to bring domestic prices in line with international levels was implemented.
- The inability to push through automatic fuel price adjustments has raised questions about Foster's future at the company, but she says she "definitely had not" considered resigning; she also denies a rift between her and Brazil Finance Minister Guido Mantega, who also serves as PBR's chairman and has said any increases to domestic fuel prices can't stoke inflation.
8:47 AMOil Search in talks to join InterOil, Total in Papua New Guinea project
- Oil Search International (OIS) says it is in talks about getting involved in development of the Elk and Antelope oil discoveries in Papua New Guinea, which may contain more than 5T cu. ft. of natural gas.
- Just three days ago, InterOil (IOC) agreed to sell a majority interest in the discoveries to Total (TOT) in a deal worth up to US$3.6B, depending on how much gas is confirmed to be there.
- TOT had hinted at a selldown when confirming the deal with IOC but didn’t name a prospective partner; one way to facilitate OIS’s entry into Elk-Antelope could be an equity swap involving part of its stake in the Taza oil and gas discovery in Iraq's Kurdistan.
- IOC +4.8%, TOT -0.6% premarket.
8:19 AMNoble Energy eyes new appraisal for natural gas off Cyprus
- Noble Energy (NBL) says it could launch a fresh appraisal of natural gas resources off Cyprus next year and look for new hydrocarbon sources in the same area.
- An appraisal drilling to verify the 2011 find has yielded on average 4.1T cu. ft. of gas, Noble's Israel partners Delek Drilling (DKDRF) and Avner Oil (AVOGF) said last week, lower than the 5T cu. ft. announced in October soon after the conclusion of the appraisal on the well.
- Based on the assessment of data, NBL could by April 2014 decide on where a fresh exploratory drill will take place.
7:48 AMQEP Resources acquires Permain Basin properties for ~$950M
- QEP Resources (QEP) agrees to acquire oil and gas properties in the Permian Basin from an unnamed seller for ~$950M.
- Current net production of the acquired properties is ~6,700 boe/day (68% crude oil) with total estimated net recoverable resources of up to 300M boe.
- QEP plans to fund the purchases with proceeds from its revolving credit facility and cash on hand, and expects to sell various non-core E&P assets during H1 2014.
Sunday, December 8, 2013
5:29 AMMexico unveils radical bill to open up energy market
- Legislators in Mexico are today due to start debating a draft bill to open up the country's energy industry and end the decades-long monopoly of state-run Pemex, which suffers from inefficiency, falling output and chronic under-investment.
- The measures would allow private oil companies to explore for, produce, and refine oil and gas, as well as share and market the resources they extract. Firms would also be able to include the projected income of long-term contracts on their balance sheets, something that is crucial for obtaining funds. However, the proposals stop short of offering firms full-blow concessions - a loaded term in Mexico.
- If the bill becomes law, it could add 50-100 bps to Mexico's GDP and prompt rating agencies to give the country's debt a positive outlook, says economist Pedro Tuesta.
- Congress is expected to pass the legislation this week, as it's supported by the main opposition party as well as by the government, although it faces significant public hostility.
- ETFs: UNG, USO, OIL, UCO, EWW, GAZ, SCO, UGAZ, BOIL, DBO, DTO, BNO, DGAZ, UNL, CRUD, KOLD, USL, NAGS, DBE, GASZ, RJN, DNO, SZO, OILZ, UWTI, DWTI, OLO, DCNG, UOIL, JJE, UMX, RGRE, ONG, DOIL, SMK, OLEM, TWTI, UBN
5:15 AMFreezing weather hits airlines, freight companies
- Airlines have canceled over 1,000 flights, while freight companies and online retailers have delayed deliveries, due to severe winter weather across the U.S., particularly in the south.
- American Airlines (AAMRQ, LCC) has been especially affected after more than 400 flights from Dallas/Fort Worth, American's largest hub, were scrapped.
- FedEx (FDX) and UPS (UPS) have also felt the impact of the weather, while eBay (EBAY) has warned of shipment delays.
- Meanwhile, ice storms have cut power to over 200,000 homes from Texas to Tennessee.
- More freezing weather is predicted for tomorrow.
- It's likely to take a while for the economic cost of the storm to be calculated. Insurer Aon (AON) reckons that the losses from the tornadoes and thunderstorms that hit the U.S. last month will top $1B. Allstate (ALL) may take a large hit after towns in Illinois, where it is the second-biggest insurer, were among those to feel the full wrath of the storms.
- ETFs: KIE, IAK, KBWP, KBWI
4:38 AMBP enjoys another court win
- U.S. District Judge Keith Ellison has blocked an attempt by BP (BP) shareholders to join together in a class action suit against the company over accusations that it misled them before and after the 2010 Gulf of Mexico oil spill, which led to a steep fall in the firm's stock price.
- However, Ellison gave the plaintiffs 30 days to file a new motion so they can re-argue their case.
- Ellison based his decision on a Supreme Court ruling in March that a class action against Comcast was improperly certified.
- Ellison's verdict came after BP won a favorable decision earlier last week over the compensation it has to pay out for the spill. That decision could save the company hundreds of millions of dollars.
Friday, December 6, 2013
10:50 PMShell cleared to expand Jack Pine oil sands project in Canada
- Canada's government approves a major expansion of the Jack Pine oil sands mine operated by Royal Dutch Shell (RDS.A, RDS.B), despite an environmental review that warned of severe and irreversible damage.
- The decision clears the way for Shell to raise production at the Alberta mine by 100K bbl/day, bringing total output at the joint venture with Marathon Petroleum (MPC) and Chevron (CVX) to 300K bbl/day; the mine is part of the larger Athabasca oil sands project, which has current production capacity of 255K bbl/day.
- Shell says it hasn't made a final investment decision on moving ahead with the expansion but is reviewing the government's terms.
7:15 PMBP cites escort service receiving $173K as abuse of Gulf spill damage claims
- Perhaps BP has a point: The court-appointed lawyer supervising the damage claims following the 2010 Gulf of Mexico oil spill disaster confirms he approved a $173K payout to an “adult escort service” BP said was filed with unsigned and undated financial documents.
- A new BP ad appearing in several national newspapers proclaims: “The IRS wouldn’t accept this claim. But the Gulf Settlement Program did.”
- At least for now, BP doesn’t need to worry about such payments, as Judge Barbier has temporarily suspended settlement payments to businesses while he reconsiders BP's arguments against compensating those that cannot trace losses directly to the spill.
6:21 PMInterOil shares slashed by more than a third as deal uncertainty to linger
- InterOil (IOC) fell 37% today after agreeing to sell Total (TOT) a majority stake in its Papua New Guinea natural gas discoveries for a price that won’t be known for at least a year.
- IOC priced the deal at $1.5B-$3.6B, but it won’t receive a definitive price until at least 2015, Raymond James analyst Pavel Molchanov says, adding there are "some elements of uncertainty/ambiguity" still to be resolved.
- On the other hand, Papua New Guinea has substantial gas resources, and the deal "brings in a world-class LNG operator,” one energy consultant says, which "will give people confidence that these reserves can now be monetized."
5:48 PMCheniere's new export deal sent shares 13% higher this week
- Cheniere Energy (LNG) jumped more than 13% this week after it announced its first deal to liquefy and ship natural gas from a planned facility in Corpus Christi to Indonesia, with components that were more lucrative than the company's prior liquefied natural gas contracts.
- The fixed rate for the contract of $3.50/Mbtu was higher than LNG's prior contracts to ship natural gas from the Sabine Pass export facility under construction in Louisiana that is scheduled to be the first to ship U.S. natural gas overseas.
- A variable component of the deal was less lucrative, however, with LNG agreeing to charge Pertamina an 11.5% premium on any gas it liquefies and ships, down from the standard 15% it had so far secured in other contracts.
5:27 PMStatoil set to drop plan power plan for Johan Sverdrup, citing rising costs
- Statoil (STO) will pull the plug on its ambitious plan to power the giant Johan Sverdrup field off Norway via an ultra-high capacity subsea cable from shore, blaming spiraling costs, Upstream reports.
- STO's retreat on the prestigious electrification project likely will upset environmentalists and some in Norway's parliament.
4:58 PMPhillips 66 expects 40% capex rise next year
- Phillips 66 (PSX) announces plans for $2.7B in capital spending for 2014, ~40% higher than its 2013 capital target, mostly to expand its midstream and chemicals businesses.
- In midstream, PSX plans to spend $1.4B in its natural gas liquids operations and transportation business lines, an increase of more than $800M vs. 2013.
- In chemicals, PSX expects its share of capex in the CPChem joint venture with Chevron will reach $1B, a substantial Y/Y increase.
- Earlier today, PSX unveiled a new $2B stock buyback program.
3:30 PMGolar LNG Partners -6.2% but still seen positively after expected deal
- Golar LNG Partners (GMLP -6.2%) is defended at Clarkson Capital, which reiterates its Outperform rating and $38 price target after GMLP reveals plans to offer 5.1M units; parent Golar LNG (GLNG +0.4%) will sell 3.4M GMLP units as part of the offering.
- The acquisition of the Golar Igloo from GLNG was expected before the vessel begins service on a five-year contract to Kuwait National Petroleum in March 2014, the firm says; the transaction value is in-line with expectations, and the firm believes GMLP has solid distribution growth potential and strong unit coverage.
3:11 PMPetrobras shuts down key refinery in wake of fire
- Petrobras (PBR -0.4%) says it has shut down its Repar refinery, which accounts for ~10% of Brazil's crude oil processing, to repair damage from a fire that damaged the plant last week.
- PBR says the outage would not affect fuel supplies, but it is already struggling with a refining shortfall and can ill afford to lose processing capacity for any extended period without further hurting its finances.
- The union representing workers at the refinery posted images of the damaged unit; workers are voting on a potential strike over unsafe conditions at the refinery in the wake of the fire.
2:59 PMKeystone supporters and foes alike await vital report
- Supporters and foes of TransCanada's (TRP) Keystone XL pipeline are bracing for the release of an environmental analysis from the U.S. government that could determine the $5.4B project’s fate.
- “If that report comes out and it says Keystone is not going to have a significant climate impact, it will be hard for Obama to ignore his own agency’s finding,” says a senior campaigner for Friends of the Earth.
- The report “will likely be the key indicator showing whether Pres. Obama approves the project or not," says a spokesman for Oil Sands Fact Check, a group supported by oil producers.
- The U.S. State Department said this week there isn’t a timeline for releasing the analysis; the consensus is that it will come out early next year.
2:27 PMInvestor sentiment in big oil stocks may rise, HSBC says
- Big oil has remained out of favor with investors, but the companies’ robust underlying cash flows aren't being recognized, and investor sentiment may shift next year, HSBC says as it tags Royal Dutch Shell (RDS.A +2.8%) and BP (BP +0.8%) with Overweight ratings.
- The sector is under-owned by large institutional investors that hold stocks for the long term, so “it may not need too much of a shift in sentiment towards the sector to prompt increased weightings,” HSBC adds.
- Shell is a "good buy-and-hold stock for long-term investors, particularly those with a cautious market outlook,” the firm says, while BP is "close to the end of [its] rehabilitation period."