MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Today - Tuesday, June 18
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6:43 PM Even if the U.S. approves the Keystone pipeline (TRP), analysts say it won't be enough to sop up Canada's oil glut and would only temporarily alleviate the lack of pipeline infrastructure, meaning Canadian crude oil probably will remain the cheapest in the world. But a decision blocking Keystone would make the problem worse, reducing spending on oil sands projects by ~$9.4B during 2014-17. Comment!
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5:41 PM Canada hikes the liability cap for oil spills in Atlantic and Arctic waters to C$1B, up from the respective $30M and $40M limits under existing rules. The changes deal only with offshore activity, which is poised to accelerate as companies begin assessing prospective new fields on the East and Arctic coasts. 1 Comment
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5:20 PM TransCanada (TRP), which says Keystone XL will be the safest pipeline ever built, isn’t planning to use infrared sensors or fiber-optic cables to detect spills along the system’s 2,000-mile path to Texas refineries from fields in Alberta, Bloomberg reports. The pipeline would have to be spilling more than 12K bbl/day before its currently planned internal spill-detection systems would trigger an alarm. 3 Comments
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4:53 PM Today's 14% jump caps a five-day 60% advance in Zion Oil & Gas (ZN) on no apparent news, but this isn't the first time ZN shares have seen such wild swings. Evan Buck urges extreme caution in the company that's "definitely not a kosher investment," highlighting Delek US Holdings (DK) and Noble Energy (NBL) as far wiser plays on Israel's natural gas finds. Comment!
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3:52 PM Another day, another Gulf state industrial explosion, as a Florida Gas Transmission natural gas line, owned by Energy Transfer Partners (ETP -0.8%), exploded in rural Louisiana this morning. No injuries or significant property damage was reported; a section of the pipeline was shut and natural gas rerouted to customers along other parts of the system. (earlier: I, II) 1 Comment
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3:16 PM Some of today's bounce in Linn Energy (LINE +3%) is attributed to comments by Leon Cooperman in his letter to shareholders which said his hedge fund remained "comfortable" with the stock. Cooperman argues LINE has capitalized the costs of its energy hedges in accordance with GAAP, and notes Citigroup and Credit Suisse value LinnCo (LNCO -0.8%) at $35.92 and $39.64, above the current share price. (earlier) 12 Comments
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2:58 PM Marathon Oil's (MRO +3%) outlook is upgraded to positive from stable by Fitch Ratings, which cites strong growth in its shale liquids plays, particularly at Eagle Ford. MRO also boasts a sizable, multi-year inventory of drilling opportunities in the shale plays that provides good visibility on future production and reserve growth, raising Fitch's confidence that it should be able to sustain its positive momentum. 1 Comment
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2:47 PM Schlumberger (SLB +1.9%) acquires Gushor, a Canadian geochemistry company that supports exploration and production companies working with heavy oil and oil sands, for an undisclosed sum. SLB says Gushor will complement its leading fluids and rocks technology portfolio with geochemical and fluid property analysis capabilities. Comment!
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2:35 PM Chevron (CVX +0.2%) says it plans to sell its 40% stake in five Nigerian shallow-water oil leases to local firms, the latest oil major seeking to dispose of assets in Africa's biggest producer. Nigeria wants more direct ownership of its oil and gas, either through the state oil company or local firms, raising concerns among foreign firms that they may lose smaller assets for nothing if they don't sell now. Comment!
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2:19 PM Gevo (GEVO +22.5%) has restarted commercial production of isobutanol at its plant in Luverne, Minn. CEO Patrick Gruber says there was some microbial contamination at the plant that Gevo has since learned how to control and manage by making equipment modifications, changing fermentation conditions and improving operating procedures. Comment!
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11:50 AM Newfield Exploration (NFX +3.6%) is upgraded to Buy from Hold with a $29 price target at Stifel Nicolaus, which cites an upcoming increased proved NAV from expected ~$1.15B in H2 international asset sales, upside to 2013 guidance (possibly with Q2 results), and delivery of growth showing up from its domestic core areas. Comment!
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11:50 AM SolarCity (SCTY +3%) trades higher this morning after the company reported earlier that its 2013 megawatts deployed is now estimated to be around 270MW, up from mid-May guidance of 250MW. Comment!
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11:35 AM KBR (KBR +1.6%) shares move higher following positive comments by Deutsche Bank, which notes the energy engineering services company's "significant advantage" given its ability to compete from a vertically integrated position in liquefied natural gas, and sees upside potential from new wins for its ammonia business. Comment!
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11:17 AM Penn Virginia (PVA +1.1%) says it received $21.4M from the exercises of preferential rights related to the recent $400M Eagle Ford Shale acquisition, resulting in expectations for 2013 cash flows and capex to decrease by 1%-1.5% each while 2013 production is expected to decrease by ~1%. Comment!
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10:54 AM With liquidity a relevant topic lately among coal companies, Alpha Natural Resources (ANR +2.1%) proactively tells a Brean Capital analyst it is confident in its current liquidity to meet $417M in debt obligations due in 2015 without tapping equity, which ANR sees as a poor option at today's prices. ANR also says it isn't inclined to employ its current liquidity toward additional acquisitions. Comment!
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10:41 AM Walter Energy (WLT +12%) finally turns around since dropping 12% after delaying plans to refinance existing debt, as Morgan Stanley steps in to say WLT's potential upside has finally grown too large to ignore. Other coal names (KOL +0.6%) also move higher, perhaps aided by Sterne Agee's slightly improved view for the sector:ACI +4.2%, CLF +3.2%, ANR +3%, BTU +1.3%. Comment!
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10:02 AM Chesapeake Energy (CHK) on Monday named as chief compliance officer a lawyer it had previously hired to respond to an SEC investigation. Patrick Craine was hired to augment CHK's regulatory and legal compliance efforts after last year handling the SEC's inquiry into the controversial perk that granted former CEO Aubrey McClendon a share in each of CHK's wells. 1 Comment
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9:48 AM BHP Billiton (BHP -1.2%) is revisiting plans to develop a coking coal deposit in Australia's Queensland state, seeking environmental approvals to extend production at two mines and retaining the option of another underground mine to develop more of the Red Hill deposit. The move comes even as BHP downplays the strength of extra demand from China amid an expected glut of steel in Asia. Comment!
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9:29 AM Tesoro (TSO) said late Monday it struck a deal to sell its Kapolei refinery and other assets in Hawaii to Par Petroleum (PARR.OB) for $300M-$350M. Par will pay TSO $75M, plus working capital of $225M-$275M, for the idled 94K bbl/day refinery; the deal includes the purchase of retail stores and associated logistics. Comment!
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9:09 AM Danish shipper A.P. Moller-Maersk (AMKAF.PK) says the world’s three biggest shipping container operators have entered an alliance to reduce fuel consumption and improve service and operations. The P3 alliance, which also includes MSC Mediterranean Shipping and CMA, will operate a capacity of 2.6M containers between Asia and Europe, across the Pacific and Atlantic oceans. 2 Comments
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8:58 AM Goldman Sachs removes Williams Cos. (WMB) from its Conviction Buy List and lowers its price target to $40 from $45, and cuts Williams Partners (WPZ) to Neutral from Buy with a $52 price target, down from $58. Goldman believes last week's explosion at the Geismar chemical plant adds material risk to near-term growth of both WMB and WPZ, putting dividend growth targets at risk. WMB -1.9% premarket. Comment!
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8:37 AM Diamondback Energy (FANG) launches a secondary offering of 5M common shares, with ~3.4M shares are being sold by Wexford Capital and 1.6M by Gulfport Energy (GPOR). FANG, which had 37.2M shares outstanding as of March 31, won't get any proceeds from the offering. Comment!
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8:24 AM First production from the Majnoon field being developed by a consortium led by Royal Dutch Shell (RDS.A) is expected in July with total output reaching 175K bbl/day by year's end, according to the top energy advisor to Iraq's Prime Minister. But not likely to please the government is news that Chevron (CVX) and Total (TOT) are expanding exploration rights in Kurdish territory (I, II). Comment!
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8:10 AM Duke Energy (DUK) names Lynn Good as its next president and CEO, succeeding Jim Rogers, who will continue to serve as chairman of the board until his Dec. 31 retirement. Good had served as DUK's executive VP and CFO since 2009, and had held management positions at Cinergy, Deloitte & Touche and Arthur Andersen. 3 Comments
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7:40 AM China National Petroleum (PTR) and France's Total (TOT) reportedly are set to finalize an agreement with Tethys Petroleum (TETHF.PK) to develop oil and gas assets in Tajikistan. "Based on the audited figure, there is enough gas in Tajikistan in our area to supply China's natural gas demand in the next 25 years," Tethys' executive chairman says. Comment!
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2:55 AM Talisman Energy (TLM) has reportedly approached potential buyers, including private-equity firms, for its shale assets in the Eagle Ford basin in south Texas with a view to raising $2B. The speculation could come as a bit of a surprise, because while Talisman has said it is looking to offload non-core assets, its Eagle Ford interest is seen as core. Comment!
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