MARKET CURRENTS
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MARKET CURRENTS
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Wednesday, May 22
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5:58 PM A theme bubbling up at the start of the annual MLP conference (where attendance is up 38% Y/Y): the largely retail ownership of MLPs is slowly shifting as more institutions get interested in MLPs. Individuals tend to be unwilling to sell MLPs as the deferred tax burden rises, and more institutional ownership could fuel more trading or short-short selling in MLPs. 3 Comments
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4:35 PM ONEOK (OKE) confirms comments from today's annual meeting, where it said it expects to increase its dividend by 55%-65% between 2012 and 2015, driven primarily by incremental earnings and cash flow to ONEOK from growth at ONEOK Partners (OKS). Comment!
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3:46 PM Credit Suisse stresses a more defensive posture in MLPs, focusing attention on large, relatively liquid, investment-grade MLPs or affiliates with exposure to the coming crude oil production boom in North America. Its eight favorite MLPs to buy now: WMB, QRE, LNG, TRGP, CQP, XTEX, ACMP, GEL. 8 Comments
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3:33 PM Teekay Offshore Partners (TOO +0.7%) secures an agreement with Statoil (STO) to provide a floating storage and offtake unit for work in the North Sea. TOO says it will spend $220M to purchase the one-third of the shuttle tanker Randgrid it doesn't already own for conversion into the FSO; completion is scheduled for Q1 2017. Comment!
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3:19 PM The Portland-Montreal Pipeline is the latest battleground in a protracted campaign by anti-oil sands’ groups to choke off Canadian access to U.S. markets. The operator of the little-known pipeline linking Montreal and Maine is studying how to make the line the first route to get Canadian oil sands crude to an Atlantic deepwater port, but the plan relies on supplies that may not be available for years. 5 Comments
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2:58 PM OGE Energy's (OGE -1.7%) power systems "suffered a lot of damage" from the Oklahoma tornado, CEO Peter Delaney says, and some of the 500K customers currently without power "won't have any infrastructure remaining to take any power." Delaney predicts ~$20M in damage to OGE's systems. Comment!
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2:48 PM Petrobras (PBR -3.2%) has $20B in cash reserves and isn't facing cash flow difficulties as suggested by some market rumors, PBR President Maria das Gracas Silva Foster tells a Brazilian lawmakers, adding that a recent $11B bond sale was aimed at more growth and investment, not at meeting pending obligations. Comment!
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2:33 PM Total (TOT -0.7%) approves a €1B project ($1.29B) to modernize its Antwerp refining and petrochemical platform, the company's largest in Europe. TOT says the project is part of its strategy of focusing investment on its large integrated platforms to position them among the most competitive in the industry. Comment!
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12:55 PM Pioneer Natural Resources (PXD +5.4%) surges after at least two firms - UBS and RBC - raise their price targets after encouraging results from PXD's first horizontal Wolfcamp shale well. The 24-hour initial production rate of 1,572 boe/day is considered very solid and comparable to the Hutt well in its northern acreage, which yielded an initial rate of 1,693 boe/day. Comment!
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12:26 PM WPX Energy (WPX +4.1%) shares post their third straight strong gain, rising 14% so far this week from news that hedge fund Taconic Capital took a position in the company and said it was engaged with management to boost shareholder value. 1 Comment
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12:15 PM North American Energy (NOA +14.8%) is a turnaround story, Barron's writes, cutting costs, slashing spending, selling assets and paying down debt since CEO Martin Ferron joined last June. FrontFour Capital predicts shares could rise to $78 based on an enterprise value of 3.5x forecast 2014 EBITDA. Worth noting: Ferron has amassed 775K shares, a sign of his commitment and NOA's potential. 1 Comment
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11:58 AM BP (BP +0.4%) has allocated $2.85B to develop Iraq's Rumaila oilfield in 2013, up from $2.2B last year, with plans to drill new 300 oil wells over the next five years, according to the head of the joint management committee for the field. Boosting output from Iraq's most prolific oilfield is vital for the country to realize its ambition of raising oil exports to 6M bbl/day by 2017. 2 Comments
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11:49 AM Noble Energy (NBL +0.7%) confirms it made a natural gas discovery at the Karish prospect offshore Israel, as its Karish-1 probe drilled to a total depth of 15,783 ft. had uncovered 184 ft. of net natural gas pay. NBL estimates 1.6T-2T cu. ft. of discovered gross resources. (earlier) Comment!
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11:15 AM Rosetta Resources (ROSE -0.3%) is downgraded to Hold from Buy at Cowen, which thinks significant credit is priced in for vertical drilling potential in Permian assets. The firm's long-term positive view on ROSE is based on focused Eagle Ford development drilling, strong cash flow growth and a conservative balance sheet. Comment!
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10:55 AM Suntech's (STP -14.8%) local creditors claim the Chinese solar panel maker's bankrupt Wuxi subsidiary owes them a combined 15.6B yuan ($2.5B), as a debt restructuring process expected to last months begins. The restructuring of STP's domestic debts is being closely watched by its overseas creditors, whom analysts say are likely to take a haircut. Comment!
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10:45 AM Oil pipelines are essential to Canada's economic growth in the same way railroads were in the 1880s, Enbridge's (ENB) Al Monaco tells Bloomberg's Canada Economic Summit: “Canada is an export-driven resource economy. This is our foundation." Pipelines should be “symbols of unity” like the cross-Canada railroad that enabled western grain farmers to get their wheat to market, a TD Bank exec adds. (also) Comment!
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10:30 AM EIA Petroleum Inventories: Crude -0.3M barrels vs. consensus of -0.62M. Gasoline +3.0M barrels vs. consensus of -0.1M. Distillates -1.1M barrels vs. consensus of -0.3M. Comment!
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9:43 AM CVR Partners (UAN -7.4%) prices its 12M-share secondary offering, from which it will receive no proceeds, at $25.15/share. Albert Alfonso thinks the offering may prove a buying opportunity, noting the offering is not dilutive for UAN and common units outstanding will remain unchanged; global demand for urea ammonium nitrate is strong as farmland per capita decreases. Comment!
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9:22 AM Entergy's (ETR) Palisades nuclear plant in Michigan reportedly is expected to remain offline until at least early summer after being closed following a water leak earlier this month. Palisades says it will replace the bottom of a water tank. Comment!
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8:48 AM Kazakhstan will decide by July whether to exercise its option to buy ConocoPhillips' (COP) 8.4% stake in the huge Kashagan oil field, which has attracted interest from companies in China and India. The government has a right to buy the stake, which it could sell for ~$5B, as part of an international consortium developing the field, or to decide on a buyer. 1 Comment
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8:36 AM Cleantech Solutions (CLNT) +22.2% premarket on news it has become a certified supplier of components to Sinopec (SNP) and China National Petroleum (PTR). As a certified supplier, CLNT is able to market its components to the subsidiary companies of Sinopec and CNPC throughout China, CEO Jianhua Wu says. Comment!
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8:21 AM Chesapeake Energy (CHK) +1.7% premarket as Susquehanna upgrades the stock to Positive from Neutral, believing CHK should get a boost from both higher oil and gas prices and its new CEO. The firm boosts its valuations for CHK's oil and gas reserves, saying investors have become more comfortable with higher prices; asset sales so far have been of "mixed quality." Comment!
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8:09 AM Royal Dutch Shell (RDS.A, RDS.B) is unlikely to proceed with the planned sale of its holding in Australia’s Woodside Petroleum this year as it refuses to sell too low, CFO Simon Henry says. Shell is Woodside’s largest shareholder, with a 23% stake; it sold a 10% stake in 2010 at A$42.23/share, but Woodside stock closed yesterday at A$37.66. Comment!
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7:54 AM A Chevron (CVX) executive working in Indonesia is re-arrested as part of a probe into alleged corruption, despite a court order six months ago clearing him of any wrongdoing. The case adds to mounting concern among multinational companies over rising economic nationalism in Indonesia. 2 Comments
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5:59 AM Since February, BP has stepped-up challenges to compensation awards stemming from the 2010 Gulf oil spill. The company now objects to 9.3% of awards administered by Patrick Juneau who oversees settlement claims, that's up from just 4% earlier in the year. The company's lawyers are challenging the way Juneau calculates losses, although they have so far been unsuccessful. If an appeal of a District Court decision upholding Juneau's interpretation is denied, BP says it will be "irreparably harmed." 4 Comments
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