MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Wednesday, June 19, 2013
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5:45 PM "I have become Mr. Linn Energy (LINE). I don't want to be. I happen to like the stock" Jim Cramer writes, citing the Berry Petroleum (BRY) merger: "It's an incredibly valuable property, much more than I think most people realize." Short-term traders should stay away, but for long-termers, the Berry deal - if it goes through - is a huge win for LINE shareholders. "If it doesn't, it will be because the bear raid worked." 4 Comments
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5:15 PM Memorial Production Partners (MEMP) files for a public offering of ~12.4M common units, all of which will be offered by selling unitholders. MEMP will receive no proceeds from the offering. Comment!
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4:50 PM PetroQuest Energy (PQ) agrees to acquire shallow water Gulf of Mexico producing properties from an unnamed seller for ~$193M. Average daily net production from the acquired assets in May was ~1,100 barrels of oil and 19K cu. ft. of natural gas. Also, PQ sees overall 2013 production of 105M-110M cfe/day and capex of $95M-$110M. Comment!
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4:24 PM SandRidge Energy (SD) +2.4% AH after naming CFO James Bennett as its new CEO and president, and appointing lead independent director Jeffrey Serota as interim non-executive chairman. Tom Ward is out, as the board decides new leadership is in the best interests of the company. 4 Comments
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3:59 PM Cyprus' cabinet approves a preliminary deal with Noble Energy (NBL), Delek Drilling (DGRLY.PK, DK) and Avner Oil Exploration (AVOGF.PK) to develop a ~$10B liquefied natural gas terminal on the island, the government says without providing details. Cyprus aims to begin LNG exports in 2020 and to process not only its own gas but also supplies from Israel and possibly Lebanon. (earlier) 1 Comment
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1:59 PM Inergy (NRGY -37.5%) completes its distribution to unitholders of the ~56.4M common units it previously held in Inergy Midstream (NRGM -1.3%), marking the first step in Crestwood Midstream's (CMLP +1%) takeover of NRGY, which is expected to close by Q3. Raymond James calls the move a "structural cleanup" ahead of CMLP's takeover. Comment!
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12:59 PM Sonoco Products (SON -1.4%) is downgraded to Neutral from Outperform with an amended price objective of $37 by Robert W. Baird, which says that while SON management is pursuing the right strategy of portfolio optimization and a bias toward share buybacks, YTD share outperformance has left the risk-reward ratio less compelling. Comment!
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12:26 PM Richard Zeits sees a potential double or triple for Penn Virginia (PVA +1.3%) in the next 2-3 years, citing the market's failure to fully appreciate PVA's transformational Eagle Ford acquisition. PVA is "akin to an LBO situation," Zeits writes: quality assets with significant potential upside, a focused business plan, and in-place financing where "disciplined and effective operational execution may lead to substantial rewards." Comment!
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12:12 PM Noble Energy (NBL +1%) moves higher as a group of Israeli cabinet members, including the finance and energy ministers, approve the export of 40% of natural gas from the offshore Leviathan field; the decision needs full cabinet approval next week. The ministers estimate the exports will bring $60B to Israel’s economy in the next 20 years. The quota doesn’t apply to the neighboring Tamar field, also operated by NBL. Comment!
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11:56 AM Cyprus and Israel's Delek Drilling (DK, DKDRF.OB) are in talks about developing a $10B liquefied natural gas terminal on the island to tap the east Mediterranean's vast gas discoveries and serve buyers in Europe and Asia. A delegation from Delek, which is developing Israel's giant Leviathan and Tamar gas fields with Noble Energy (NBL), recently visited Cyprus to discuss the project. 2 Comments
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11:31 AM Superior Energy (SPN +0.8%) is initiated with an Outperform rating and $34 target price at Cowen, which believes SPN stands to benefit from strategic entrances into international markets, growth in North American unconventional drilling activity, and strengthening activity in the deepwater Gulf of Mexico. Comment!
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11:20 AM Patriot Coal (PCXCQ.OB) says a restructuring plan that would pump hundreds of millions of dollars into the company is in the works, thanks to the help of two key creditors that are discussing backstopping a rights offering of new equity. 4 Comments
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10:56 AM Heard at Bloomberg's energy forum: The U.S. shale bonanza is seen as overdone, and the U.S. will continue to need crude from Canada’s oil sands because rising production from U.S. shale formations is too expensive to maintain. The U.S. is "still importing a lot of oil... I don’t see U.S. oil self-sufficiency, perhaps, ever," says the head of Devon Energy's (DVN) Canadian division. 3 Comments
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10:36 AM Iraq's Kurds are set to complete a new oil pipeline to Turkey which could export more than 1M bbl/day by 2015, a move sure to provoke further anger from the Baghdad government as the autonomous region increases control over oil resources in its region. The plan is backed by Turkey, and Genel Energy (GEGYF.PK) is thought to be planning to send its Taq Taq output through the pipeline. Comment!
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9:57 AM Diamondback Energy's (FANG +1%) target is raised to $42 from $35 at Wunderlich, whose increased confidence in the Wolfcamp B formation and FANG's potential in four other zones for the future cause it to raise its price target multiple to account for the increased value. Also, FANG says its stock offering priced at a 0.7% discount to Tuesday's close and was boosted to 6M shares. Comment!
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9:44 AM Mexico is on the brink of ending a near 80-year monopoly in its oil and gas industry, as the government proposes opening up to profit-sharing deals and JVs to allow the exploration of increasingly difficult reserves. Pemex is known for inefficiency, corruption and large losses, but as a national symbol for many Mexicans, any moves are likely to involve liberalizing, not privatizing. 3 Comments
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9:22 AM The U.K.'s BG Group (BRGYY.PK) reportedly has applied with Canadian authorities for a license to export liquefied natural gas from British Columbia, which could make it the fourth project to be granted export permission from Canada. Known as Prince Rupert LNG, the proposal calls for the first two of three planned liquefaction trains capable of processing 3.3B cu. ft./day to start up by 2021. Comment!
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9:12 AM Imperial Oil (IMO) says it will convert its crude oil refinery in Dartmouth, Nova Scotia into a terminal operation after failing to find a buyer willing to operate the refinery. IMO expects to record a Q2 charge of up to ~C$280M related to the conversion. IMO already operates terminal facilities in Dartmouth as well as in four other locations in Atlantic Canada. Comment!
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8:55 AM Linn Energy (LINE) and LinnCo (LNCO) are upgraded to Outperform at Howard Weil, which believes the Berry Petroleum (BRY) merger could be a great catalyst, providing improved organic targets and an oilier profile. While LINN's primary focus is closing the BRY deal, H2 could prove exciting with an improved organic growth program and the potential for additional large acquisitions. LINE +1.6% premarket. 14 Comments
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8:46 AM Statoil (STO) says it is on track to reach its Norway production targets of more than 1.4M bbl/day of oil and 2.5M boe/day in 2020. STO's production guidance for FY 2013 also stays firm and is expected to be lower than in the previous year. STO produced more than 2T boe in FY 2012. (also) Comment!
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