Monday, December 9, 2013
6:30 PMU.S. seen becoming net chemical exporter, thanks to shale boom
- The U.S. is poised to become a net exporter of chemicals thanks to the shale oil boom, FT reports; the American Chemistry Council forecasts net U.S. chemical exports of ~$2.7B this year and expects exports to rise 45% over the next five years to nearly $30B by 2018.
- U.S. companies such as Exxon Mobil (XOM), Dow Chemical (DOW), Chevron (CVX) and Phillips 66 (PSX) are among the leaders in investing in new capacity, but even producers from Asia and the Middle East are looking at projects in the U.S.
- Dow's Andrew Liveris speaks for big companies that want curbs on U.S. exports of liquefied natural gas to ensure their energy cost advantage; with five LNG projects now approved for export sales by the Obama administration, "where they are right now seems to be fine," he says.
6:12 PMTriangle Petroleum EPS $0.18, beats on revenue| 1 Comment
5:42 PMAlon USA jumped 7% today after Deutsche Bank upgrade
- Deutsche Bank upgraded refiners Alon USA Energy (ALJ +7.4%), Valero (VLO), Phillips 66 (PSX) and Delek US (DK) to Buy from Hold, citing a bullish outlook given the over-supply of light sweet crude and the limitation of the crude export ban.
- Cabot Oil & Gas (COG) also is upgraded as shares have lagged due to a combination of regional pricing and growth fears; DB believes both are overplayed and sees the stock as relatively attractive vs. Marcellus peers.
- The firm downgraded Noble Energy (NBL) and Continental Resources (CLR) to Hold from Buy primarily on valuation; NBL remains a best-in-class company but its high quality multi-year program is increasingly understood and de-risked by the Street.
5:13 PMOil begins flowing through Keystone XL's southern leg
- TransCanada (TRP) says it has begun moving oil into the Keystone XL pipeline’s southern leg, which runs from Oklahoma to the Texas coast, and is on schedule to begin deliveries by the end of the year.
- TRP will need to fill the new pipeline system before it can begin delivering oil to refineries along the Gulf coast, and it plans to do so with ~3M barrels of oil in the coming weeks.
- The line will be capable of bringing up to 700K bbl/day of oil to the coast, providing more supplies of crude to refineries.
4:26 PMTrinity Industries, Element Financial Corp. in $2B railcar deal
- A new subsidiary of Trinity Industries (TRN) enters into a strategic alliance with Element Financial Corp. which is set to acquire a new portfolio of railcars.
- Element will initially purchase some $500M of leased railcars from Trinity Industries Leasing Company ($100M of which will be bought by the end of the year).
- After the initial $500M purchase, Element will buy another $500M worth of railcars, this time from TrinityRail.
- Finally, Element is expected to make another $1B worth of purchases in 2015. This lot will include both newly manufactured cars and existing leased cars.
- For more on the deal, see here.
3:44 PMLaredo Petroleum unveils $1B capex budget for 2014
- Laredo Petroleum (LPI -0.2%) announces a $1B capital budget for 2014, with 84% focused on drilling and completion activities, in a program LPI expects will drive a ~30% annual growth in production volumes from its Permian Basin properties.
- LPI forecasts total 2014 production of 12.2M-12.7M boe (58% oil), or 33.4K-34.8K boe/day, highlighted by the beginning of ramping up development drilling activities at its Permian-Garden City asset.
3:23 PMAlpha Natural +14% after asset sale, but Citi says big problems remain
- Alpha Natural Resources (ANR +14%) powers higher after agreeing to sell its 50% interest in its Marcellus shale joint venture for $300M in cash and stock.
- Sterne Agee believes the deal valued the assets significantly above its estimates and previous Marcellus transaction comps, and notes that ANR has another 10K acres of Marcellus gas assets in its portfolio with more opportunities to create substantial value.
- Citigroup maintains its Sell recommendation, however, saying strong earnings headwinds remain in 2014 vs. 2013 since ANR will not benefit from higher priced met coal contracts as it did at the end of 2012.
2:43 PMFire triggers shutdown of Entergy nuclear reactor in Arkansas
- A nuclear reactor at Entergy's (ETR -1%) Arkansas One power plant shut itself off this morning after a fire broke out at a nearby electrical switchyard; the Nuclear Regulatory Commission says the plant's protective shutdown system operated as designed and no radiation was released.
- The fire is the second incident at the plant this year that has forced a sudden shutdown of the Unit 2 reactor; the same unit also automatically shut down in March when a crane collapsed as it was moving a heavy piece of equipment out of a building adjacent to Unit 2's nuclear island.
2:14 PMCabot Oil & Gas +3.8% on Marcellus shale success
- Cabot Oil & Gas (COG +3.8%) is powering higher after providing an update on its Marcellus shale properties, where it recently turned-in-line its first 10-well pad with a combined peak production rate of 201M cf/day and a combined average 30-day production rate of 168M cf/day.
- Topeka Capital calls the Marcellus results "phenomenal" and says the news means lower well costs and additional NAV upside; the firm says COG remains its top pick, one of the best domestic resource plays with superior economics in the dry gas Marcellus shale, top tier production growth, clean balance sheet and strong potential free cash flow generation
- COG also says it sold some legacy assets for $123M and had bought back 4.8M shares during Q4.
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.
8:36 AMTullow Oil comes up dry in Ethiopia well
- Tullow Oil (TUWLF, TUWOY) says it will plug and abandon the Tultule-1 wildcat well in the South Omo block in Ethiopia as a dry hole.
- The well reached a total depth of 2,101 meters and was targeting a reservoir section similar to the sands drilled in the nearby Sabisa-1 well, where oil shows were encountered, but these sands were not penetrated in Tultule-1.
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.