MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Saturday, May 18, 2013
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8:25 AM Refining Canada’s oil sands produces petroleum coke, called "the dirtiest residue from the dirtiest oil on earth." It's piling up along the Detroit River, NYT reports, thanks to a Marathon Petroleum refinery that began refining Canadian oil sands in November. Detroit’s pile will not be the only one. Canada’s efforts to sell more products from oil sands to the U.S., which include transporting it through the proposed Keystone pipeline, are pulling more coking south to U.S. refineries, creating more waste product. 16 Comments
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Friday, May 17, 2013
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9:17 PM The European investigation (I, II) into oil benchmark pricing raises rarely voiced questions about the appropriate way to set prices. FT notes that Platts' reporters cover 400+ wholesale energy prices everyday and the information available to them is limited to what commodities houses and Big Oil are willing to disclose. The process is complicated by the fact that myriad factors ranging from small discrepancies in quality to the type of hull on transport tankers, make the process inherently subjective. Nevertheless, the ordeal looks quite a bit like the Libor and ISDAFIX probes: a benchmark to which trillions of dollars of assets are tied is determined by key players away from the public eye. Comment!
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5:52 PM The permit approval for the Freeport gas export project opens up the dam for other pending applications, but the pace of coming decisions is still unknown, analysts say, adding that similar projects building from existing facilities are best placed to secure approval and financing. Meanwhile, Cheniere Energy (LNG) has reaffirmed its operating target date of late 2015 for the export terminal it is building at Sabine Pass, La. 9 Comments
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5:31 PM Venezuela reportedly will allow its state-owned energy company to form joint ventures with PetroChina (PTR) and Chevron (CVX) to manage $6B in loans designed to reverse declining oil output. Agreements have been reached on terms of a $2B credit from CVX for the Petroboscan venture and a $4B loan from China for Sinovensa. Similar deals may be in the works with Shell (RDS.A) and Repsol. 3 Comments
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5:14 PM The NYSE cancels rogue trades in Anadarko Petroleum (APC) from the final second of the trading day that took the stock from $90 to one cent in some trades. NYSE initiated a "clearly erroneous execution review,” resulting in cancellation of trades executed at or below $87.56/share in that last second. 5 Comments
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4:44 PM It looks like investors will have to wait for any supersized dividend from Gazprom (OGZPY.PK). Citigroup analysts say the Russian gas giant will pay a dividend of 5.99 rubles/ADR, or ~25% of net income according to Russian accounting standards; investors had been hoping the company would pay 25% of net income based on international financial reporting standards. (earlier) 3 Comments
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4:33 PM Dow Chemical (DOW) issued a somewhat surprising statement after the approval of the Freeport liquefied natural gas export project, saying it "provides the greater clarity and certainty that businesses need to make investment decisions... Dow will adopt a wait and see approach regarding further approvals." Dow has argued against unfettered exports, saying they could lead to price spikes that could harm the economy. 1 Comment
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3:58 PM TC Pipelines (TCP +2.6%) is upgraded to Buy from Neutral with a $51 price target at BAML on plans to acquire additional equity interests in Gas Transmission Northwest and Bison. The firm views TCP's recently announced drop-down as alleviating most concerns about uncertainty around the ability to re-contract pipeline capacity on attractive terms and below peer-average distribution growth. Comment!
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3:41 PM Deutsche Bank raises its price target on Buy-rated Access Midstream Partners (ACMP +1.4%) to $57 from $46 after the MLP's analyst day introduced guidance for 20% EBITDA growth into 2015. A peak in organic capex this year, a 1.4x distribution coverage ratio, and no need for equity issuance for three years show a potential for distribution growth to top expectations. Comment!
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2:58 PM A bankruptcy judge approves $6.9M in bonuses for Patriot Coal (PCXCQ.OB) executives and workers, overruling the objection of union members who face wage and benefit cuts. Patriot and the United Mine Workers union still await a ruling from the judge over whether the company can impose wage and benefit cuts upon its union workers and retirees. 1 Comment
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2:21 PM Tesoro (TSO +5.3%) says the FTC approved its purchase of BP's 240K bbl/day Carson, Calif., refinery and other assets. The commission found the deal would not substantially lessen competition among seven refiners for gasoline in California, the largest U.S. gasoline market. Tesoro Logistics (TLLP +3.5%) will acquire the first portion of Carson logistics assets from TSO for $640M. Comment!
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2:07 PM Michael Talbert is voted out as board chairman at Transocean (RIG -1.7%) and will be replaced by Icahn-nominee Samuel Merksamer. But that was Icahn's only victory, as shareholders re-elected the other four company nominees. Earlier today, shareholders rejected Icahn's $4 annual dividend proposal, supporting the company's more modest $2.24. Comment!
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1:05 PM The Obama administration approves ConocoPhillips-led (COP +0.3%) Freeport LNG as the second U.S. liquefaction project to gain federal approval to export chilled natural gas to countries without free trade agreements with the U.S. The decision is an important harbinger for the remaining 19 applications to export gas to non-FTA countries. 13 Comments
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12:49 PM Transocean (RIG -1.2%) shareholders reject Carl Icahn's proposal for a $4/share annual dividend and vote in favor of the company's proposed $2.24/share dividend. More than 75% of all voted shares reportedly were in favor of the company’s proposal. Comment!
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12:43 PM Tetra Technologies (TTI +4.6%) is upgraded to Outperform with a $12 target price, up from $10, at RBC Capital, which says TTI appears to be in the early phases of a transformation that will help boost free cash flow generation. The firm believes the current share price offers an attractive entry point to take advantage of TTI's repositioning strategy. Comment!
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12:20 PM Quicksilver Resources (KWK -4.4%) announces a multi-year profit improvement plan it says will focus on prioritizing its core brands, globalizing key functions and reducing its cost structure, Briefing.com reports. KWK expects the plan will improve EBITDA by $150M by 2016. Also, KWK will be replaced in the S&P 400 after the close of trading May 23. Comment!
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11:58 AM Major oil producers launch a joint program to beef up their Arctic oil spill response plan in a bid to convince the Arctic Council they are ready for large-scale development in the region. There are plenty of doubters, of course, and incidents such as BP 2010 Gulf of Mexico spill and Shell's recent problems north of Alaska with two drill ships don't help. 5 Comments
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11:38 AM Jim Cramer chooses MLPs Kinder Morgan Partners (KMP) and Enterprise Products Partners (EPD) as antidotes to potential froth in the broader stock market. Cramer likes KMP's strategic acquisitions during recent years and is bullish on its outlook. On EPD, Cramer praises the management team and likes its track record of executing growth projects and integrating acquisitions. 16 Comments
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11:23 AM While a razor-thin margin one way or the either is anticipated in next Monday's vote on Freeport McMoRan's (FCX) takeover bid for Plains Exploration (PXP), FCX shares could be poised to rise on either outcome. But all bets are off if FCX sees the bid on the verge of defeat and decides to sweeten the pot after saying it wouldn't do so. A higher offer could further pressure shares, already -16% since the deal was announced. Comment!
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10:58 AM Vertex Energy (VTNR +3.1%) is started with a Buy rating and $4 price target at Wunderlich, which cites flexibility in responding to price/supply fluctuations across the collection/resale markets for used oil. In addition to economies of scale and low capital requirement, the spread between VTNR's feedstock and its end products are more highly correlated than fully re-refined Group II base lube oils, the firm says. Comment!
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