Today - Friday, December 6, 2013
11:19 AMEnergy takeover talk focuses on Northern Oil & Gas, Approach Resources
- There's ample reason to expect some consolidation among the patchwork quilt of small U.S. exploration and production companies drilling for oil, Barron's writes, focusing on two stocks that could rise at least 50%.
- A buyer could pay up for Northern Oil & Gas' (NOG -3.7%) cash flow, broad acreage holdings, and its knowledge of multiple operators in the Bakken Shale; using NOG's enterprise value of ~$1.5B, it trades at just 5.4x trailing EBITDA, while larger Bakken peers are trading at ~9x.
- Another attractive buyout candidate is Approach Resources (AREX +0.4%), which owns some of the cheapest reserves in the Permian Basin; AREX's assets likely are worth a good deal more given the rich price recently paid by Sinochem for a 40% stake in Permian player Pioneer Natural.
10:33 AMThompson Creek balance sheet worries are overdone, RBC says
- Solvency concerns have helped push Thompson Creek (TC +1.4%) shares more than 20% lower in recent days, but RBC Capital is telling clients the concerns are overblown.
- RBC's analysis suggests TC will not run into liquidity problems unless copper prices fall below $2.50/lb. and the ramp-up at the Mt. Milligan project is much more difficult than expected and takes longer than 15 months.
- The firm maintains its Sector Perform rating and $3.50 price target on the stock.
9:59 AMEni doesn't see Kashagan stoppage running into 2015
- Eni (E) CEO Paolo Scaroni doesn't expect the temporary stoppage of output at the giant Kashagan oil field to run into 2015, even as the consortium that runs it carries out tests after natural gas leaks.
- A prolonged halt at Kashagan, which has been plagued by years of delays and cost overruns, could be a drag on the finances of the consortium behind the project, which includes Eni, Exxon Mobil (XOM), Total (TOT) and Royal Dutch Shell (RDS.A, RDS.B).
- Scaroni also says Italy could produce up to 20% of its oil needs, but blames Italy's environmental regulations; he says that adopting regulations like those in force in Norway or the U.K. would allow Italy to double its domestic oil production.
9:08 AMDevon to put Canadian gas assets up for sale as low prices bite
- Devon Energy (DVN) is throwing in the towel on its Canadian business and will put most of its Canadian natural gas production up for sale, Financial Post reports.
- When the assets are sold at a price estimated to fetch at least $3B, DVN hopes to emerge as a heavy oil company with interests in Alberta oil sands and cold-flow heavy oil, two growing areas.
- "When we look out a few years, we don't see any major catalyst to move the price of natural gas substantially," Devon Canada president Christopher Seasons says.
8:55 AMNorway readies asset sales, Statoil ownership under review
- Norway is readying a proposal targeting asset sales that the government has signaled will include Statoil (STO), as the state loosens its grip on private enterprise.
- The government next fall will submit a report outlining which companies it will reduce its stakes in and how it will conduct the sales, Norway's industry ministry says.
- Prime Minister Erna Solberg has said the government would seek to cut its STO stake to 51% from 67%.
8:39 AMLukoil said to be in talks with oil majors to sell Venezuela stake
- Russian oil producer Lukoil (LUKOY, LUKOF) reportedly has been in talks with international majors about selling its stake in a consortium developing a large oil project in Venezuela.
- Lukoil has said it wanted to sell its 20% stake in the Russian Junin-6 consortium developing heavy oil in the Orinoco basin to focus on other projects; consortium leader Rosneft apparently made a low-ball offer, and Lukoil has since held talks with Cnooc (CEO), Sinopec (SNP), Statoil (STO), Chevron (CVX), Total (TOT) and various state-run firms.
- The Russian consortium owns a 40% stake in the project; Lukoil's stake in the consortium is said to be worth ~$200M.
8:18 AMConfusion reigns over InterOil's Papua New Guinea sale, shares halted
- InterOil (IOC) is halted after falling 21% premarket on news of the sale of a 61.3% stake in its Papua New Guinea gas fields to Total (TOT) for as much as $3.6B, as the clarity of the deal is questioned.
- The press release issued by IOC reads little like the one issued by TOT: Total says depending on the results of the delineation of the Elk and Antelope gas fields, "this could lead to a final investment decision by 2016 for the development of the fields and the construction of a liquefaction plant located onshore on the Gulf of Papua."
7:45 AMReuters: Chevron's $6.4B China gas project pushed back again
- The $6.4B Chuandongbei gas project being built by Chevron (CVX) in China faces further delays due to disagreements with partner PetroChina (PTR) over how to develop the fields, Reuters reports.
- The project, CVX's largest investment in China, is now not expected to deliver first gas until H2 2014, nearly seven years after the firms reached a 30-year deal to produce 7.6B cubic meters/year of gas.
- The complexity of the high-pressure, high sulfur project means higher operational risk and higher standards for technical processes, which may have contributed to the delays.
5:38 AMTotal in deal worth up to $3.6B for InterOil LNG interests
- Total (TOT) has agreed to acquire a 61.3% holding in InterOil's (IOC) Papua New Guinea natural-gas fields for as much as $3.6B as part of a plan to develop the reserves.
- Total will pay $613M up front, with the extra money dependent on the size of the resource and a final investment decision on building an LNG export facility.
- Should the Papua New Guinean government and landowners exercise rights to acquire a 22.5% interest in the project, Total will end up with a 47% holding and InterOil 30%. (PR)
5:27 AMBrean downgrades Bonanza Creek Energy, sees more upside in PDCE, SYRG
- Brean downgrades Bonanza Creek Energy (BCEI) to Hold from Buy.
- "Attractive, linear growth and long-lived inventory make this a solid story, but we find the upside in PDC Energy (PDCE) and Synergy Resources (SYRG) as more compelling at this point despite richer multiples."
- NBL analyst meeting on December 18th might give reason to revisit NAV assumptions.
3:08 AMStatoil, ExxonMobil stake another big gas find off Tanzania
- Statoil (STO) and its JV partner ExxonMobil (XOM) make another big gas discovery off Tanzania - their fifth in the region - confirming Tanzania's emergence as a new energy region. The find, called Mronge-1, can be seen here.
- Today's find contains 2-3 trillion cubic feet (tcf) of gas, or 360-540 million barrels of oil equivalent (boe), bringing the total gas resources in the license the firms hold to 17-20 tcf or 3.06-3.6 billion boe.
- BG (BRGYY, BRGXF) and Ophir Energy (OPGYF) have also found gas off Tanzania. BG and Statoil are planning to build an LNG plant in Tanzania to ship the gas to Asia.
- STO operates the area on behalf of Tanzania Petroleum Development Corporation and owns a 65% stake; XOM owns the other 35%.
Thursday, December 5, 2013
6:51 PMKeystone South won't deliver oil before mid-January
- TransCanada (TRP) tells shippers the Gulf coast portion of its Keystone pipeline won’t be in service before mid-January, three days after it had told regulators it anticipated beginning service Jan. 3.
- Prices for West Texas crude had jumped on the initial news, narrowing WTI's discount to Brent prices,
- Plans for the southern segment show it will be able to move 700K bbl/day of crude to Port Arthur, home to 6.1% of U.S. refining capacity; Motiva Enterprises (RDS.A, RDS.B), Valero Energy (VLO) and Total (TOT) all operate plants there.
6:03 PMBallard +22.4% AH, inks MOU with Van Hool for buses, joint proposals
- Ballard Power Systems (BLDP) shares fly 22.4% higher AH after the company signs a non-binding Memorandum of Understanding with Van Hool, Europe's 4th largest bus manufacturer, in support of manufacturing/deploying zero emission fuel cell buses.
- The two companies intend to jointly submit proposals under the EU Hydrogen Fuel Cell Joint Undertaking and under future calls of the Horizon 2020 program, which has an incremental budget of €700M.
- 27 Van Hool buses powered by Ballard fuel cell modules will be deployed in 2014 and a dedicated service/parts center will be established in Belgium to support the buses.
5:56 PMUkraine, under Russian pressure, is no-show to sign gas import deal
- Ukrainian officials failed to show to sign a deal that could open up a natural gas supply route via Slovakia, WSJ reports, raising concerns that Ukraine was walking away from an agreement the European Union spent months brokering.
- The deal would have opened up a major gas supply route to Ukraine that could have greatly reduced the country's dependence on Russian supplies, but Pres. Yanukovych's government had warned it may put the deal on hold, citing trade pressure from Russia.
- Russia's Gazprom (OGZPY) meets a quarter of the EU's gas needs, the bulk of which flows via Ukraine, and supplies the vast majority of Ukraine's energy needs.
5:25 PMU.S. Silica in 4.5M-share secondary offering, -3.5% AH| 2 Comments
5:19 PMCallon Petroleum the latest Permian producer to warn of lower production
- Callon Petroleum (CPE) is the latest Permian producer to warn about the impact of recent severe weather on its operations, lowering its FY 2013 production guidance for Permian operations to 2,150-2,250 boe/day, ~4% below previous guidance.
- Laredo Petroleum (LPI) warned yesterday that more than half of its wells can't pump oil and gas, while the remainder are producing less than normal, and Energen (EGN) said Tuesday that power outages and other weather effects will hurt its Q4 bottom line.
- Apache (APA) and Pioneer Natural (PXD) said their Permian operations were been affected but haven't yet provided details.
- The cold weather power outages aren't likely to affect the long-term outlook for the companies, according to Iberia analyst Eli Kantor, but more freezing weather is expected to settle on the area through the weekend.
4:49 PMCameco ends JV exploration program with Uranium Resources| Comment!
4:31 PMGolar LNG to sell Golar Igloo to GMLP, to be funded by 5.1M-unit offering
- Golar LNG (GLNG) agrees to sell its ownership interest in the company that will own and operate the Golar Igloo floating storage and regasification unit to Golar LNG Partners (GMLP) for $310M.
- To fund the deal, GMLP plans a public offering of 5.1M common units, to include GLNG offering 3.4M common units as a selling unitholder.
- GLNG -1.9%, GMLP -4.9% AH.
3:57 PMExxon downgraded at Raymond James as limited upside seen
- Exxon Mobil (XOM -0.4%) is downgraded to Outperform from Strong Buy at Raymond James, which expects a more limited upside for shares after rising 10% so far in Q4.
- The firm says the tactical rating change should not obscure its fundamentally constructive outlook on XOM in the context of its below consensus 2014 oil price forecast ($95/bbl for Brent, $83 for WTI).
- Although some of the easy money has been made, the firm thinks XOM is set to generate at least as much free cash flow in 2014 as in 2013, despite its lower oil price outlook and without allowing for any spending reductions.
3:06 PMSuperior Energy +1.2% after J.P. Morgan starts coverage
- Superior Energy (SPN +1%) is initiated with an Overweight rating and $32 price target at J.P. Morgan, which sees SPN as a compelling investment alternative as a diversified, mid-cap service company that retains some of the characteristics of a small cap yet with considerably less volatility.
- Setting itself apart from the smaller U.S. land service companies, the firm says SPN boasts three key elements: a base U.S. land business that generates free cash flow, international expansion that pulls in product lines, and core earnings strength from its rentals business and Gulf of Mexico exposure.