Today - Monday, December 9, 2013
12:59 PMTransGlobe Energy -6.2% on 2014 guidance
- Shares of TransGlobe Energy (TGA -6.2%) are weak after the Egypt and Yemen focused oil and gas company provided 2014 funds flow guidance of $146M, an 8% Y/Y increase.
- Production guidance for 2014 is seen at 20K-21K bbl/day of oil, an 11% increase; production averaged 12K bbl/day in October and 11.9K in November.
12:54 PMStatoil makes Arctic oil find in boost for Johan Castberg project
- Statoil (STO +0.9%) discovers as much as 50M barrels of oil at its Skavl prospect in the Barents Sea, in a boost to its delayed Johan Castberg project.
- Skavl, the third well in a drilling campaign of at least five wells, is the first crude discovery in a campaign of exploration to strengthen the Castberg project, which was delayed after costs and taxes rose and because of uncertainty over resource estimates.
12:41 PMGulf Keystone soars on Excalibur decision not to appeal Kurdistan ruling
- Shares of Gulf Keystone Petroleum (GUKYF, GFKSY) are higher after Excalibur Ventures says it will not appeal a court judgment which dismissed all claims asserted against the company's Kurdistan operations.
- Excalibur's decision not to appeal ends a long period of uncertainty for Gulf Keystone, during which its 30% interest in the Shaikan oil field was in jeopardy.
- Gulf Keystone also is plotting a boardroom shakeup that could jeopardize a fragile truce between the company and leading investors, Sky News reports.
12:23 PMNewfield Exploration -4% after issuing production, capex outlook
- Newfield Exploration (NFX -4%) slides after updating its production and capital investment outlook for 2014-16, including plans to spend ~$1.6B in 2014.
- Production is expected at 44M-48M boe, or 10%-20% higher than 2013 estimated production of ~40M boe; 2014 domestic liquids production is seen increasing 30% Y/Y.
- NFX plans 2014 capex of ~$700M in the Anadarko Basin, its largest investment region; it plans to run eight operated drilling rigs in its SCOOP and STACK plays.
11:59 AMMemorial Production Partners earns a Buy from UBS
- Memorial Production Partners (MEMP -0.5%) is initiated with a Buy rating and $25 price target at UBS, which feels investors could continue to undervalue the young MLP pending more performance history.
- The firm believes MEMP provides one of the more attractive yields (~11%) in the upstream space with what the firm feels is a limited risk profile vs. peers, it boasts a reserve base transitioning from gas-focused to a more balanced oil/gas mix, it's diversifying geographically, and distributions have been well supported and grown significantly with acquisitions.
11:48 AMReuters: Gulf firms consider bid for Occidental's Middle East stake
- Three state-owned Gulf firms are considering a joint bid for a minority stake in Occidental Petroleum's (OXY +0.6%) Middle East and North Africa unit, a deal that could be worth $8B-$10B, three banking sources tell Reuters.
- Abu Dhabi's Mubadala Development, Qatar Petroleum and Oman Oil reportedly have formed a consortium and have picked Citigroup to advise them.
- OXY said in October it planned to sell a minority stake in its MENA operations as part of a restructuring meant to lift its valuation.
11:34 AMEni reopens flow stations on key Nigeria pipeline
- Eni (E +0.3%) is reopening flow stations on a key Tebidaba-Brass oil pipeline in Nigeria that was sabotaged over the weekend; the pipeline normally carries 75K bbl/day of high-quality Brass grade for export.
- The Nigerian army said locals had blown up parts of the pipeline in a dispute with the company, so Eni shut the flow stations serving the pipe.
- Oil theft occurs frequently on the line, which was shut down for months earlier this year.
10:58 AMTalisman, Ecopetrol say Colombian oil field is commercially viable
- Ecopetrol (EC +0.2%) and Talisman Energy (TLM -0.6%) declare the commercial viability of the Akacias oil field they have been exploring together, which they say will add at least 35M barrels of reserves for both the companies and Colombia's dwindling supply.
- EC expects production at Akacias to reach 25K bbl/day by late 2015 from the current 5.5K bbl/day, and says the field "clearly shows the heavy crude potential in the area of Llanos, which is the focus of the exploratory campaign to reach Ecopetrol's target of producing 1M of clean barrels in 2015 and 1.3M barrels in 2020."
- Last week, EC announced the commercial viability of another oil area, Eastern Cano Sur, in the same region.
10:47 AMValero, HollyFrontier, Marathon upgraded by J.P. Morgan on wider oil spreads
- J.P. Morgan is the latest investment banker to turn bullish on refiners, upgrading HollyFrontier (HFC +2%), Valero Energy (VLO +1.8%) and Marathon Petroleum (MPC +0.9%) on its expectation for a larger difference between Brent and West Texas oil prices.
- The firm revises its view on oil prices, forecasting Brent prices averaging $105.50/bbl for 2014 and $100.30 for 2015 vs. WTI prices of $91.50/bbl for 2014 and $85.30 for 2015, suggesting a $14-$15 differential, which should increase U.S. refining margins.
- In particular, the firm believes HFC's inland refining system is "well positioned to benefit from growth in production of disadvantaged inland North American crudes, and expect(s) HFC to capture Brent-WTI price differentials as higher gross margins across the majority of its throughput."
- HFC is upgraded to Overweight from Underweight, VLO and MPC are raised to Neutral from Underweight, and Phillips 66 (PSX +1.5%) and Tesoro (TSO +1.2%) are maintained at Overweight.
9:55 AMCheniere, Bechtel agree to $9.5B in contracts for Corpus Christi project
- Cheniere Energy (LNG +2.6%) agrees to two contracts worth a combined $9.5B with Bechtel to the engineering, procurement and construction of liquefied natural gas trains and facilities in Corpus Christi, Tex.
- Starting next year, Bechtel will build three LNG trains, three LNG storage tanks, and two berths to accommodate vessels with a capacity of up to 267K cubic meters.
- Besides the Corpus Christi project, Cheniere also is developing six LNG trains for the Sabine Pass Liquefaction project in Louisiana; Bechtel is a contractor on that project.
9:42 AMAlpha Natural to sell its Marcellus JV for $300M, shares +5.9%
- Alpha Natural Resources (ANR +5.9%) jumps higher at the open after agreeing to sell its 50% interest in its shale joint venture to Rice Energy for $300M; ANR and Rice formed the venture in 2010 to develop a portion of ANR’s Marcellus natural gas holdings in Pennsylvania.
- Rice Energy plans an IPO that could value the company at up to $2.5B; of the $300M received by ANR in the Marcellus deal, $200M will be in the form of Rice common stock at the company's IPO price.
- More sales could be ahead, as ANR says it will continue to evaluate all possibilities for creating value from the balance of our Marcellus position" of ~10K acres.
9:12 AMEqual Energy to be acquired by Petroflow Energy for $5.43/share
- Equal Energy (EQU) agrees to be acquired by Petroflow Energy in a deal totaling $230M, or $5.43/share, a 23% premium to the $4.43 closing price on Nov. 18 when EQU said its strategic alternatives process had successfully resulted in exclusive negotiations for a proposed transaction.
- Montclair Energy had been attempting the acquire EQU for months but failed to come up with an acceptable offer.
8:57 AMPetrobras could raise fuel prices in 2014, CEO says
- Petrobras (PBR) could raise fuel prices next year, CEO Maria das Gracas Foster says, after a new mechanism to bring domestic prices in line with international levels was implemented.
- The inability to push through automatic fuel price adjustments has raised questions about Foster's future at the company, but she says she "definitely had not" considered resigning; she also denies a rift between her and Brazil Finance Minister Guido Mantega, who also serves as PBR's chairman and has said any increases to domestic fuel prices can't stoke inflation.
8:47 AMOil Search in talks to join InterOil, Total in Papua New Guinea project
- Oil Search International (OIS) says it is in talks about getting involved in development of the Elk and Antelope oil discoveries in Papua New Guinea, which may contain more than 5T cu. ft. of natural gas.
- Just three days ago, InterOil (IOC) agreed to sell a majority interest in the discoveries to Total (TOT) in a deal worth up to US$3.6B, depending on how much gas is confirmed to be there.
- TOT had hinted at a selldown when confirming the deal with IOC but didn’t name a prospective partner; one way to facilitate OIS’s entry into Elk-Antelope could be an equity swap involving part of its stake in the Taza oil and gas discovery in Iraq's Kurdistan.
- IOC +4.8%, TOT -0.6% premarket.
8:19 AMNoble Energy eyes new appraisal for natural gas off Cyprus
- Noble Energy (NBL) says it could launch a fresh appraisal of natural gas resources off Cyprus next year and look for new hydrocarbon sources in the same area.
- An appraisal drilling to verify the 2011 find has yielded on average 4.1T cu. ft. of gas, Noble's Israel partners Delek Drilling (DKDRF) and Avner Oil (AVOGF) said last week, lower than the 5T cu. ft. announced in October soon after the conclusion of the appraisal on the well.
- Based on the assessment of data, NBL could by April 2014 decide on where a fresh exploratory drill will take place.
7:48 AMQEP Resources acquires Permain Basin properties for ~$950M
- QEP Resources (QEP) agrees to acquire oil and gas properties in the Permian Basin from an unnamed seller for ~$950M.
- Current net production of the acquired properties is ~6,700 boe/day (68% crude oil) with total estimated net recoverable resources of up to 300M boe.
- QEP plans to fund the purchases with proceeds from its revolving credit facility and cash on hand, and expects to sell various non-core E&P assets during H1 2014.
Sunday, December 8, 2013
5:29 AMMexico unveils radical bill to open up energy market
- Legislators in Mexico are today due to start debating a draft bill to open up the country's energy industry and end the decades-long monopoly of state-run Pemex, which suffers from inefficiency, falling output and chronic under-investment.
- The measures would allow private oil companies to explore for, produce, and refine oil and gas, as well as share and market the resources they extract. Firms would also be able to include the projected income of long-term contracts on their balance sheets, something that is crucial for obtaining funds. However, the proposals stop short of offering firms full-blow concessions - a loaded term in Mexico.
- If the bill becomes law, it could add 50-100 bps to Mexico's GDP and prompt rating agencies to give the country's debt a positive outlook, says economist Pedro Tuesta.
- Congress is expected to pass the legislation this week, as it's supported by the main opposition party as well as by the government, although it faces significant public hostility.
- ETFs: UNG, USO, OIL, UCO, EWW, GAZ, SCO, UGAZ, BOIL, DBO, DTO, BNO, DGAZ, UNL, CRUD, KOLD, USL, NAGS, DBE, GASZ, RJN, DNO, SZO, OILZ, UWTI, DWTI, OLO, DCNG, UOIL, JJE, UMX, RGRE, ONG, DOIL, SMK, OLEM, TWTI, UBN
5:15 AMFreezing weather hits airlines, freight companies
- Airlines have canceled over 1,000 flights, while freight companies and online retailers have delayed deliveries, due to severe winter weather across the U.S., particularly in the south.
- American Airlines (AAMRQ, LCC) has been especially affected after more than 400 flights from Dallas/Fort Worth, American's largest hub, were scrapped.
- FedEx (FDX) and UPS (UPS) have also felt the impact of the weather, while eBay (EBAY) has warned of shipment delays.
- Meanwhile, ice storms have cut power to over 200,000 homes from Texas to Tennessee.
- More freezing weather is predicted for tomorrow.
- It's likely to take a while for the economic cost of the storm to be calculated. Insurer Aon (AON) reckons that the losses from the tornadoes and thunderstorms that hit the U.S. last month will top $1B. Allstate (ALL) may take a large hit after towns in Illinois, where it is the second-biggest insurer, were among those to feel the full wrath of the storms.
- ETFs: KIE, IAK, KBWP, KBWI
4:38 AMBP enjoys another court win
- U.S. District Judge Keith Ellison has blocked an attempt by BP (BP) shareholders to join together in a class action suit against the company over accusations that it misled them before and after the 2010 Gulf of Mexico oil spill, which led to a steep fall in the firm's stock price.
- However, Ellison gave the plaintiffs 30 days to file a new motion so they can re-argue their case.
- Ellison based his decision on a Supreme Court ruling in March that a class action against Comcast was improperly certified.
- Ellison's verdict came after BP won a favorable decision earlier last week over the compensation it has to pay out for the spill. That decision could save the company hundreds of millions of dollars.
Friday, December 6, 2013
10:50 PMShell cleared to expand Jack Pine oil sands project in Canada
- Canada's government approves a major expansion of the Jack Pine oil sands mine operated by Royal Dutch Shell (RDS.A, RDS.B), despite an environmental review that warned of severe and irreversible damage.
- The decision clears the way for Shell to raise production at the Alberta mine by 100K bbl/day, bringing total output at the joint venture with Marathon Petroleum (MPC) and Chevron (CVX) to 300K bbl/day; the mine is part of the larger Athabasca oil sands project, which has current production capacity of 255K bbl/day.
- Shell says it hasn't made a final investment decision on moving ahead with the expansion but is reviewing the government's terms.