Today - Thursday, December 12, 2013
6:28 PMCheniere Energy subsidiary IPO upsized by 20%
- Cheniere Energy (LNG) says the IPO for its Cheniere Energy Partners LP Holdings (CQH) subsidiary has been upsized to 36M shares from an initial size of 30M; the $20/share price is within the initial $19-$21 range.
- CQH is designed as a vehicle to own limited partner units of Cheniere Energy Partners (CQP).
6:03 PMAnadarko -12.5% AH as Kerr-McGee unit held liable in Tronox spinoff
- Anadarko Petroleum (APC) -12.5% AH after a bankruptcy judge rules its Kerr-McGee unit acted improperly in the 2005 spinoff of Tronox (TROX) and should pay for environmental cleanup and to compensate people who claim damage from toxins.
- The U.S. government had sought to recover $25B to clean ~2,700 polluted sites and compensate about ~8,100 tort claimants; a trust set up to pay plaintiffs calls for 88% of the judgment to go to trusts for cleanup, according to court papers, with the remainder going to toxin claimants.
- The judge says APC and Kerr-McGee intended to “hinder and delay" when they transferred out and spun off oil and gas assets.
3:18 PMApache, Marathon Oil downgraded at Citigroup on valuation
- Apache (APA -0.4%) and Marathon Oil (MRO +1.5%) are downgraded to Neutral from Buy at Citigroup, citing valuation.
- The firm maintains its $95 price target on APA, based on the stock achieving 2014-15 EV/DACF multiples of 5.7x/5.6x based on normalized prices of $90/bbl for WTI and $4.50/MMbtu, and 96% of its revised sum-of-the-parts NAV assessment, which is now $99/share under lower oil price projections.
- The MRO downgrade is accompanied by a reduced $40 price target, down from $42, based on the stock achieving 2014-15 EV/DACF multiples of 6.2x/5.7x based on normalized prices of $90/bbl and $4.50/MMBtu, and 100% of its sum-of-parts NAV assessment based on commodity price forecasts.
2:46 PMAGL gets regulator OK to install new pipelines, will invest $215M
- AGL Resources (GAS +0.9%) unit Atlanta Gas Light says it received regulatory approval to install new pipelines and other facilities to improve capacity and pressure in the six countries comprising metro Atlanta.
- GAS plans to invest ~$215M during the next four years to improve core transmission and distribution facilities to minimize the risk of service disruption during periods of extreme cold weather.
2:34 PMMexico's Congress approves energy bill allowing foreign investment in oil
- Mexico's Congress approves the landmark energy bill allowing foreign investment in oil, ending the government's 75-year monopoly on crude production.
- Under the new law, Mexico will offer profit-sharing and production-sharing contracts and licenses to foreign firms, but will maintain ownership of the oil while allowing the firms to book reserves, a crucial concern for oil companies that depend on reserves for valuation and borrowing.
- The measure still needs approval from 17 of Mexico’s 31 state governments before becoming law, and there's plenty of opposition.
- ETFs: UNG, USO, OIL, UCO, GAZ, UGAZ, SCO, BOIL, DBO, DTO, BNO, DGAZ, UNL, CRUD, KOLD, USL, NAGS, DBE, GASZ, RJN, DNO, SZO, OILZ, UWTI, DWTI, OLO, DCNG, UOIL, JJE, RGRE, ONG, DOIL, OLEM, TWTI, UBN
12:57 PMZion granted oil exploration license, shares +34.5%
- Zion Oil & Gas (ZN +34.5%) is soaring today after the company confirmed Israel awarded a petroleum exploration license for its 98,842 acre Megiddo-Jezreel License.
- Under the license terms, ZN is to identify and submit a drilling prospect in the license area by July 1, 2015; enter into a drilling contract by Oct. 1, 2015; and spud a well to a minimum proposed total depth of ~4K meters by Dec. 1, 2015.
12:19 PMU.S. should lift domestic oil export restrictions, Exxon says
- Exxon's (XOM) annual energy outlook this year has a stark message: We are entering an era of abundance, and it’s time the U.S. started exporting oil.
- "We are not dealing with an era of scarcity" as was the case during the 1973 Arab oil embargo when the U.S. imposed restrictions on exporting domestic oil; "we need to rethink the regulatory scheme and the statutory scheme on the books."
- XOM is increasingly optimistic about how much oil can be recovered with today’s technology, predicting 65% of the world’s crude will be untapped by 2040.
- XOM forecasts global demand for gas will rise by 65% by 2040, with natural gas on track to supply 25% of global energy requirements; demand for coal will rise until 2025, but coal’s share of the global energy mix will fall from 25% today to below 20%.
11:58 AMFortum to sell Finnish power distribution grid for $3.5B
- Finnish utility Fortum (FOJCY, FOJCF]]) agrees to sell its local power distribution grid to a group of institutional investors led by First State Investments and Borealis Infrastructure for €2.55B ($3.5B).
- The deal is the latest in a series of regulated grid sales made by large energy firms wanting to cut debt and focus on their power generation businesses instead, while highlighting the rising popularity of established infrastructure assets for pension funds and other institutional investors seeking safe returns in a low interest rate world.
11:49 AMJim Cramer touts Marathon Oil as undervalued
- Marathon Oil (MRO +0.6%) shares barely moved yesterday despite positive news from the company's analyst day - in fact, they've been flat for a month - but Jim Cramer thinks bargain hunters may have a deal in MRO at ~$36/share.
- MRO said it plans to raise its rig count in the Bakken and the Eagle Ford by 20%, and they're doubling their rig count in Oklahoma's Woodford shale, areas Cramer believes will transform the oil industry and the nation.
- Cramer likes MRO's plan to sell off cash cow North Sea assets to raise cash and simplify its holdings and calls the increased share buyback "very meaningful," yet the stock is selling for just 11.8x next year's earnings estimates.
11:25 AMChevron, Poland's PGNiG to cooperate on shale gas exploration
- Chevron (CVX -0.4%) signs a preliminary deal with Poland’s PGNiG that may lead to the joint exploration for shale gas in the country.
- If exploration proves successful, the companies would set up a 50-50 joint venture that would take in CVX’s two licenses in the southeast of the country and PGNiG’s pair in the same region; the collaboration is intended to increase economies of scale by sharing risk and exploration cost.
- Poland is the most advanced European country in its shale gas production effort, but Exxon and others have departed amid unclear regulations and mixed well results.
10:25 AMChevron's Gorgon LNG project blows out by another $2B, now at $54B
- Tucked away inside Chevron's (CVX -0.6%) announced $39.8B 2014 capex budget is another cost blowout on the development of its Gorgon LNG project in Australia: The latest estimated cost is $54B, vs. a $52B estimate offered a year ago and $37B when the final investment decision was taken in 2009.
- The timetable for first gas from Gorgon, which will have the capacity to produce 15.6M metric tons/year, slips to Q1 2015 from the original 2014 target.
- CVX says the project's economics remain attractive, following a sharp increase in oil prices since construction began; Gorgon's Asian customers are locked into contracts typically lasting 20 years that are linked to the fluctuating price of oil.
- Operator CVX owns 47.3% of Gorgon, while Shell (RDS.A, RDS.B) and Exxon Mobil (XOM) each hold 25%.
9:56 AMTsakos, Statoil in crude tanker construction and chartering deal
- Tsakos Energy (TNP +1.7%) announces a strategic partnership with Statoil (STO -0.9%) for the construction and chartering of 5-9 purpose-built Daewoo Aframax crude tankers with a contract term of 5-12 years including options.
- Gross revenues from the project are expected to range between minimum of $250M up to $1B.
7:57 AMCenovus to cut capex 13%, expects oil production to rise 10%
- Cenovus Energy (CVE) plans a capital budget in the $2.8B-$3.1B range for 2014, a 13% Y/Y decrease, as it cuts back on exploration activities while projecting a 9% drop in operating cash flow to $3B-$3.7B.
- ~90% of CVE's capex will be invested in its upstream oil assets; it plans to invest $680M-$760M to expand Foster Creek, a 12% Y/Y decrease, and $750M-$820M at Christina Lake, a 15% Y/Y increase.
- CVE still expects oil output to rise 10% Y/Y to 190K-208K bbl/day, driven by Foster Creek and Christina Lake.
Wednesday, December 11, 2013
6:34 PMCN Rail's Mongeau: Moving dangerous goods by rail "integral to our way of life"
- Canadian National Railway (CNI) chief Claude Mongeau says he appreciates concerns about moving dangerous goods by rail through urban areas in the wake of last summer's Lac-Mégantic disaster, but he says it would be impractical to reroute the shipments because many of the goods are integral to the way we live.
- While much of the focus has been on the movement of crude oil, even more dangerous and flammable goods are moved every day - styrene to make shoes and rubber, polypropylenes that make eyeglasses and other plastics, chlorine to purify water, propane for home use.
- Despite a string of recent derailments, the CEO says CNI has one of the best safety records among large North American rails.
- "The dangerous goods we move are worth $25B... and we move them very safely," Mongeau says.
5:54 PMChevron unveils $39.8B 2014 capex program, ~$2B less than 2013
- Chevron (CVX) announces plans for a $39.8B capital spending budget next year, ~$2B less than expected for 2013, which it says was a relative peak year for such spending.
- The bulk of the new capex program is budgeted for upstream crude oil and natural gas exploration and product projects, with only 8% of spending planned for downstream businesses that manufacture, transport and sell gasoline and other fuel products.
- CVX also expects 2014 will represent a peak year for spending on its Australian liquefied natural gas projects as they move closer to starting production.
- Separately, former Utah governor and U.S. ambassador to China Jon Huntsman is named to the company's board.
5:53 PMOld Dominion, Brunswick replacing Arch Coal, Regis in S&P 400
- Old Dominion (ODFL) and Brunswick (BC) will be replacing Arch Coal (ACI) and Regis (RGS) in the S&P MidCap 400 following the Dec. 20 close. The latter companies will take the positions held by the former ones in the S&P SmallCap 600.
- Also: Teradyne, which is getting kicked out of the S&P 500 to make room for Facebook, will replace Scholastic (SCHL) in the S&P 400. Scholastic, in turn, will replace Lincoln Educational (LINC) in the S&P 600.
- ODFL +0.7% AH. ACI +0.9%.
5:43 PMReuters: Morgan Stanley launches sale of U.S. oil terminal business
- Morgan Stanley (MS) has launched a formal effort to sell its controlling stake in U.S. oil terminal and transport business TransMontaigne (TLP), Reuters reports, in what appears to be its first definitive step toward disassembling its vast energy trading group.
- The TransMontaigne MLP includes 48 fuel terminals with nearly 24M barrels of storage capacity on the Gulf coast, in Florida, the Midwest and across the Southeast, including along the strategically important Colonial Pipeline that ships gasoline and diesel from the Gulf to the East Coast.
- Stanley's trading division accounts for ~60% of the MLP's revenues due to long-term contracts to use its terminals, and some of these contracts could be sold as part of the package.
- A number of potential buyers including Qatar, a Chinese oil major and Russia's Rosneft have been rumored in the past year, but this report says likely potential buyers include MLP subsidiaries of major refiners or midstream companies.
4:48 PMUNS Energy +30% AH after Fortis agrees to acquire for $60.25/share
- UNS Energy (UNS) agrees to be acquired by Fortis (FRTSF), Canada's largest investor-owned gas and electric distribution utility, for $60.25/share, a 31% premium to today's closing price.
- The $4.3B deal, which includes the assumption of ~$1.8B in debt, would provide additional capital and new resources for UNS subsidiaries including Tucson Electric Power and UniSource Energy Services.
- Fortis serves more than 2.4M through its electric utilities in five Canadian provinces and two Caribbean countries, a natural gas company in British Columbia, and a gas and electric utility in New York.
- UNS +30.2% AH.
3:58 PMEPA official says exceeding 10% ethanol in fuel isn't feasible
- Shares of ethanol makers slide as an EPA official tells a congressional panel it’s not feasible for gasoline refiners to use as much ethanol next year as had been mandated, which is why the agency proposed easing the requirement.
- Producers of ethanol, biodiesel and advanced biofuels have criticized the EPA’s proposal, saying it undercuts a growing, domestic industry.
- ADM -1.5%, BIOF -3%, GPRE -3.8%, REGI -4.8%, SYNM -5.7%, PEIX -9.6%, KIOR -12.8%.