MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Saturday, May 26, 2012
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9:25 AM Considering coming out of cash and and wading back into the markets? Look at energy, says Real Money's Daniel Dicker, particularly offshore drilling companies. Offshore profitability is almost entirely based on crude oil pricing, and Dicker is convinced that crude oil prices will find a bottom well above $100/bbl. This will make the most challenging offshore operations, using the deep and ultra deep water rigs owned and leased by companies like SeaDrill (SDRL), Transocean (RIG), Ensco (ESV) and Rowan (RDC) increasingly profitable through 2012-13. 6 Comments
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Friday, May 25, 2012
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5:55 PM Now that he owns 7.6% of Chesapeake (CHK), what can Carl Icahn accomplish? Having Icahn around can at least stiffen the spines of the other shareholders, and he's seeking the removal of four board members. But his best results typically come when the company he targets ends up selling itself - and CHK, with its complicated capital structure, wouldn't be an easy sell. 2 Comments
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5:25 PM A mild, dry winter during 2011-12 plus continued advances in unconventional drilling enabled producers to boost oil production from North Dakota’s Bakken formation to record highs, ConocoPhillips (COP) says. This month, North Dakota surpassed Alaska to become the second oil-producing state in the U.S., following Texas. Comment!
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4:04 PM Carl Icahn discloses a 7.56% stake in Chesapeake Energy (CHK +1.5%) via 13D filings. Icahn: "If you continue to arbitrarily refuse the request we have made for shareholder representation, we, as activists, will immediately take whatever 'actions' we feel are necessary to protect the value of this company." 10 Comments
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3:51 PM India's oil minister says a decision will be made on gasoline rates in a few days, as the country's government faces a barrage of criticism over an 11.5% increase in the price of the fuel. The minister doesn't specify whether prices will be cut, but says the recent increase was necessary due to a weak Indian rupee and higher global crude oil prices. Comment!
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3:34 PM Fresh off a big contract win to provide hardware and software for China National Petroleum's Turkmenistan gas fields, Recon Technology (RCON +12.2%) shares spike again on rumors of a potential contract with Sinopec (SNP). Comment!
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2:47 PM A shareholder group led by NY State Comptroller Thomas DiNapoli urges Chevron (CVX) to settle a 20-year legal battle against indigenous people in the Ecuadorian rainforest. But the Ecuadorian court's damage award in the alleged dumping of oil waste - $18B - isn't chump change, and CVX says the case is fraught with fraud. 4 Comments
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11:59 AM In "a moment of major promise and considerable danger," Royal Dutch Shell (RDS.A) will begin drilling test wells off the coast of northern Alaska in July, opening a new frontier in U.S. oil exploration. "We never expected a Democratic president... to open up the Arctic Ocean for drilling," Sierra Club's Michael Brune laments. 4 Comments
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11:47 AM The labor crunch in Canada’s oil patch is not yet as bad as it was leading up to 2008, but Matt Underhill warns it could become far worse if firms do not adapt and expand their recruiting tactics. A recent report found Canada’s energy industry would need 40K more people in the next few years just to replace those planning to retire. Comment!
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11:21 AM GreenHunter Energy (GRH +4.2%), fresh off announcing an enhanced Eagle Ford presence through the development of seven new salt water disposal wells, says it has expanded its Appalachian equipment assets to service oil and gas operators active in the Marcellus and Utica shale plays. 2 Comments
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11:12 AM Analysts at Pritchard Capital say insiders at energy companies such as Newfield (NFX), W&T Offshore (WTI), Bill Barrett (BBG), Swift Energy (SFY) and Hess (HES) have been buying shares. While not a guarantee of a bottom, the firm finds the trend encouraging and "a sign that the stocks are presenting some very good values at current levels." 1 Comment
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10:37 AM S&P cuts its credit rating on Exterran (EXH -2.6%) to B+ from BB, citing weakness in the energy service provider's domestic contract compression and international fabrication businesses that have hurt EXH's operating performance and increased its debt leverage. Comment!
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10:24 AM Chesapeake (CHK +1.8%) shares open higher on news of Carl Icahn's bet on the company, but Antoine Gara reminds that the Icahn rumors aren't a reason for investors to start buying. With or without Icahn, asset sales are the make or break issue as CHK tries to bridge a big funding gap. Also worth noting: The last time Icahn held a big CHK stake, he was in and out with barely a ripple. 1 Comment
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9:56 AM An EU ban on Iran's oil could have major consequences for European oil companies in Asia, as the way many oil transactions are carried out in Asia could result in the companies inadvertently breaking the rules. Even best efforts to comply with the sanction law could be undermined by a widespread industry practice of blending fuel oil from several sources. Comment!
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9:43 AM Gulfport Energy (GPOR +2.9%) is upgraded to Outperform by RBC Capital, which notes shares have been cut nearly in half due to concerns over GPOR's Utica shale play. But Utica drilling is going well, the firm says, and should ultimately bring good economics with even relatively modest assumptions. GPOR has the most leverage to Utica of any public E&P, with 62,500 net acres. Comment!
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8:27 AM BP confirms its Nabucco pipeline project to import natural gas from Azerbaijan to Europe will take on a far more limited scope and reach only Europe's border with Turkey. The decision appears to mark the end of a key strategic initiative that had political backing from the EU and U.S. to reduce Russian dominance over European gas supplies. 2 Comments
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5:37 AM Total (TOT) and Inpex Japan's (IPXHF.PK) are seeking $20B in loans for Ichthys, their Australian LNG project, Reuters reports. It would be the largest set of project finance loans in the world, although it's made more attractive by Inpex already having secured sales contracts with Japanese utilities who need a replacement of nuclear power. 1 Comment
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5:02 AM After 2 days of talks, the most that Iran and the P5+1 could agree to yesterday was to meet again in Moscow in June. Teheran wants the right to enrich uranium and the sanctions scrapped, particularly the looming oil embargo, before it stops its march to nuclear weapons. The West says Iran must first shut down its enrichment program. 3 Comments
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