Energy

  • Today - Monday, January 16, 2017
    • At a court hearing this Thursday, shareholders of Peabody Energy (OTCPK:BTUUQ) will seek to be part of a reorganized company, Barron's reports.
    • The reason stakeholders are fuming is that after Peabody started the bankruptcy process, coal prices went through the roof (contracts spiked from $81 a metric ton to $285 over the last year).
    • But even with the appointment of an equity holders' committee, it's unlikely that the bankruptcy will leave anything for existing shareholders (Peabody creditors have already agreed to support the plan that cancels the stock).
  • Friday, January 13, 2017
    • North Dakota Gov. Burgum tells Reuters that he believes the Dakota Access Pipeline eventually will be built, and asks protesters at the site to help clean up their camp before spring floodwaters arrive.
    • "The world's going to change dramatically" when Trump moves into the White House as far as resolving the pipeline," Burgum says. "I would expect that [Energy Transfer Partners (ETE, ETP)] will get its easement and it will go through."
    • Dakota Access opponents have argued that construction would damage sacred lands of the Standing Rock Sioux tribe and any leaks could pollute the tribe's water supply.
    • But Burgum hopes protesters will clean their camp before it becomes its own threat to the environment: More than 300 vehicles, dozens of temporary dwellings and other debris have been abandoned at the campsite, which sits in a flood plain that is likely to be overrun by spring rain and snowmelt.
    • News that Argentina's government worked out a deal to attract billions of investment dollars in the Vaca Muerta shale sent shares of state oil company YPF up 24% for the week and sparks hope that the country can eventually fulfill its promise as an important energy player.
    • YPF owns 50% of the concessions at Vaca Muerta, which contains the second-largest reserves of shale gas in the world; YPF President Miguel Angel Gutiérrez says that without the new agreement, companies would be investing as much as 30% less this year in Argentina's unconventional resources.
    • One of the constraints removed by the deal involves the minimum number of workers that union contracts say must be on hand to work at each well, as old rules were discouraged companies from bring new fracking technology - which requires fewer employees - to Argentina
    • But even with an improved cost structure, analysts say Vaca Muerta may remain largely untapped until world oil prices recover further.
    • ConocoPhillips (COP +1%) says it discovered oil in the Greater Mooses Tooth Unit in the northeast region of National Petroleum Reserve Alaska.
    • The Willow discovery wells, Tinmiaq 2 and 6, were drilled early 2016 and encountered a respective 72 ft. and 42 ft. of net pay, and Tinmiaq 2 initial tests show recoverable resource potential of 300M barrels or more.
    • COP estimates Willow could produce as much as 100K bbl/day, and forecasts initial commercial production as early as 2023.
    • The discovery is 78% owned by COP and 22% by Anadarko Petroleum (APC -0.3%).
    • Exxon Mobil (XOM -0.1%) plans to overhaul a gasoline producing unit and the hydrocracker at its 560K bbl/day Baytown, Tex., refinery in March, Reuters reports.
    • The 90K bbl/day gasoline-producing Fluidic Catalytic Cracking Unit 2 and the 25K bbl/day Hydrocracking Unit 1 will be shut along with other units during the overhaul, according to the report.
    • Baytown is the second largest U.S. refinery and XOM’s largest.
    • The U.S. weekly active oil rig count fell by 7 to 522, the first decline following 11 weeks of gains, according to the latest Baker Hughes survey.
    • The overall rig count, which includes one additional natural gas rig to 136 and a miscellaneous rig, dropped by 6 to 659.
    • The numbers are little changed from a year ago at this time, when 515 oil rigs and 135 gas rigs were employed, totaling 650 rigs.
    • ETFs: USO, UNG, OIL, UWTI, UGAZ, UCO, DGAZ, DWTI, SCO, BNO, BOIL, DBO, GAZ, DTO, USL, KOLD, UNL, DNO, OLO, SZO, DCNG, OLEM
    • Former Exxon Mobil (XOM +0.2%) CEO and secretary of state nominee Rex Tillerson may have to testify on the day before Pres.-elect Trump's inauguration in a lawsuit that claims the U.S. government failed to protect future generations from global warming.
    • The suit was brought by a group of youth plaintiffs, although several fossil fuel industry groups have legally intervened on the defense’s side, including the American Petroleum Institute.
    • The lead attorney tells Business Insider that the plaintiffs' questions will focus on what XOM scientists knew about climate change and for how long; Tillerson sidestepped similar questions posed during his confirmation hearing, but likely would need to be far more forthcoming when under oath in a federal lawsuit.
    • Sanchez Energy (SN +22.8%) skyrockets higher to 52-week highs in early trading following its $2.3B deal, in a 50/50 partnership with Blackstone (BX +0.1%), for Anadarko Petroleum's (APC +0.6%) Eagle Ford Shale assets in south Texas.
    • The deal looks favorable for SN given an implied purchase price of less than $35K per boe/day, low-cost optionality on “considerbale upside potential," enahnced scale, and third-party “validation from a savvy energy investor,” according to FBR analyst Chad Mabry, who rates SN at Outperform.
    • The sale price “seems low” relative previous news stories stating that $3B-$3.5B was possible, but those estimates likely included APC selling midstream assets which may be worth ~$1B, says Drexel Hamilton's Robert Christensen, who rates APC a Buy.
    • SN says the deal more than doubles its drilling inventory and adds 33.5K boe/day to production; it says it will fully fund its 50% of the acquisition with cash on hand and commercial bank and preferred equity commitments at a newly formed non-recourse subsidiary.
    • Hess’ (HES +0.6%) 4.8% decline yesterday following a 2017 oil production growth forecast that disappointed investors is a buying opportunity, J.P. Morgan analysts say as the firm retains its Overweight rating and $65 price target on the shares.
    • Hess' longer-term earnings power “has actually improved” given its expanded resource base in Guyana, and its short-cycle exposure should deliver stronger operating leverage in 2018 on higher Bakken activity and lower mix of infrastructure spending, JPM says.
    • AltaGas (OTCPK:ATGFF) confirms it is in discussions regarding a potential transaction, but does not name the other party, after WSJ reported it is in merger talks with WGL Holdings (NYSE:WGL) in a deal worth $5B-$6B.
    • WSJ said a deal could be announced this month but that regulatory or political pushback could be potential obstacles to any tie-up between WGL and AltaGas; Exelon spent nearly two years seeking approval from D.C. regulators for its purchase of Pepco Holdings.
    • Bloomberg reported in November that WGL was considering a sale after fielding interest from Iberdrola, but those talks are said to have ended.
    • State-owned energy group PetroVietnam says it signed an agreement with Exxon Mobil's (NYSE:XOM) Vietnamese unit to develop the country's biggest gas project for power generation.
    • The Blue Whale project is Vietnam's biggest gas project, with an estimated 150B cm of reserves, and aims to produce the first gas for power plants by 2023.
    • The signing occurred during a visit to Vietnam by U.S. Secretary of State Kerry.
    • Williams Partners (NYSE:WPZ) says it delivered a record amount of natural gas on its Transco gas pipeline to meet demand driven by cold weather in Transco’s market area that includes the eastern seaboard.
    • Transco, the largest-volume natural gas transmission system in the U.S., also established a new three-day market area delivery record during Jan. 7-9, averaging 13.6M dekatherms.
    • Expansions to the system during 2015-16 contributed to the new volume records, and further expansion is underway that will add even more capacity during 2017.
    • Cnooc (NYSE:CEO) says its the Penglai 19-9 comprehensive adjustment project, located in the Bohai Sea, has started production.
    • The project is expected to reach its peak production of ~13K bbl/day of crude oil in 2019; there are 57 planned producing wells in total.
    • Cnooc owns a 51% working interest in the Penglai 19-9 oil field and is the operator, while partner ConocoPhillips (NYSE:COP) holds the remaining 49%.
    • "Compliance won't be 100%, it never is," OPEC delegates told Reuters, stating the group is unlikely to fully deliver on its target to cut production.
    • According to the officials, 80% compliance would be good, with as low as 50% acceptable.
    • OPEC planned to slash its output by 1.2M barrels per day to 32.5M bpd from Jan. 1, while Russia and other non-members expected to cut about half as much.
    • Crude futures -1% to $52.48/bbl.
    • ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM, OILK, OILX
  • Thursday, January 12, 2017
    • Anadarko Petroleum (NYSE:APC) agrees to sell its Eagle Ford Shale assets in south Texas to Sanchez Energy (NYSE:SN) and Blackstone (NYSE:BX) for $2.3B; SN and BX make the purchase together as a 50/50 partnership.
    • The sale includes 155K net acres with current production of 67K boe/day (70% liquids), 300M boe in proved reserves and estimated total resource potential exceeding 1.1B boe.
    • APC says the acreage represents all of its oil and gas-producing assets in the Eagle Ford, but its sponsored Western Gas Partners (NYSE:WES) MLP will continue to own and operate midstream assets there.
    • SN says the deal more than doubles its drilling inventory, adds 132 high rate of return DUCs, increases its resource potential by more than 550M boe and provides a path for strong growth within projected cash flow.
    • Peabody Energy (OTCPK:BTUUQ) says a group of banks, including affiliates of Goldman Sachs, JPMorgan Chase and Credit Suisse, has pledged $1.5B in loans to help it exit bankruptcy in the coming months.
    • The cash will be used to cover claims by BTU's secured lenders and provide "a strong foundation" for its capital structure when it exits Chapter 11 bankruptcy it filed last April, court documents say.
    • BTU expects to emerge from Chapter 11 in Q2 with a plan, supported by most of its creditors, to cut more than $5B of debt and raise new capital through a $750M private placement and a $750M rights offering.
    • Uranium Resources (NASDAQ:URRE) -21.7% AH after proposing a public offering of common stock; the actual size or terms are not yet determined.
    • URRE says it plans to use the proceeds to fund ongoing business activities, which may include technical studies, restoration commitments, capital expenditures, debt reduction, working capital and other general corporate purposes.
    • Dover (NYSE:DOV) -1.8% AH after reaffirming its FY 2016 earnings above analyst consensus estimates but forecasting 2017 earnings below consensus.
    • While reaffirms its 2016 adjusted EPS outlook at $3.00-$3.05 vs. $2.92 consensus, DOV sees 2017 EPS of $3.40-$3.60, below $3.65 consensus, on in-line 2017 revenue growth of 10%-12% vs. consensus for 10.9% growth.
    • DOV expects most of its businesses to post revenue and earnings growth in 2017, and it anticipate the continued recovery in North American upstream oil and gas markets.
    • WPX Energy (WPX -1.4%) -2.8% AH after saying it agrees to acquire $775M worth of assets that will increase its Permian Basin operations to more than 120K net acres and deepen its drilling inventory of top-tier Delaware Basin locations.
    • WPX says the deal includes 6,500 boe/day (55% oil) of existing production from 23 producing wells, two drilled but uncompleted horizontal laterals, 18,100 net acres and 920 gross undeveloped locations in the geologic sweet spot of the Delaware Basin.
    • WPX expects the deal to be immediately accretive and accelerate its deleveraging progress without increasing its projected 2017 capex.
    • To help fund the deal, WPX launches a 42M-share public offering, with an underwriters option to purchase up to an additional 6.3M common shares.
    • Magellan Midstream Partners (MMP -0.4%) is downgraded to Outperform from Strong Buy with a $73 price target, trimmed from $78, at Raymond James, which says MMP's ultra-defensive characteristics may result in shares lagging peers as oil prices continue to recover throughout 2017 and beyond.
    • At the same time, James upgrades several other energy MLPs: EnLink Midstream Partners (ENLK -1.2%), Crestwood Equity Partners (CEQP -0.4%) and Targa Resources (TRGP -0.1%) to Outperform from Market Perform, and Holly Energy Partners (HEP -0.9%) and NGL Energy Partners (NGL +4.3%) to Market Perform from Underperform.
    • WGL Holdings (WGL +7.4%) spikes after Dow Jones reports that Canada's AltaGas (OTCPK:ATGFF +0.9%) is in merger talks with the U.S.-based gas utility in a $5B-$6B deal.
    • WGL's market value has jumped to $4.3B amid the prospect of a sale, and would be a big bite for AltaGas, which was valued at C$5.6B (US$4.3B) and has a C$3.8B debt load.
    • WGL operates Washington Gas, which has more than 1M customers in the D.C. area, while AltaGas’ utilities serve 560K Canadian customers.
    • Cameco (CCJ +1.9%) is upgraded to Buy from Hold with a $21 price target, hiked from $14.50, at TD Securities, which says the 10% production cut from Kazakhstan’s state-owned uranium producer may mean prices have bottomed off recent 12-year lows.
    • TD expects nuclear utilities will see the production cuts as significant, which also will lead to an increase in term contracting.
    • The firm also notes that CCJ made capacity curtailments of its own in 2016 that equated to ~7M lbs. of annual production.
    • Shares also are upgraded to Neutral from Underperform at BofA Merrill Lynch.
    • FuelCell Energy (FCEL -5.1%) is sharply lower after reporting a Q4 loss that came in worse than expected on 52% lower revenues Y/Y.
    • Q4 product sales totaled just $8.4M vs. $43.8M in the prior-year quarter, and the company retained two fuel cell projects totaling 7 MW that will generate long term recurring electricity sales rather than quarterly product revenue; FCEL says the transition to retaining select projects rather than selling the projects at commissioning contributed to the reduced sales.
    • FCEL says seven projects are operating or under construction, totaling 17.7 MW; total backlog was $432M as of Oct. 31, vs. $381M a year prior.
    • MEG Energy (OTCPK:MEGEF -6.8%) late yesterday unveiled a 2017 capex budget of C$590M, up from just C$125M spent last year, with ~C$320M planned for the Christina Lake expansion project.
    • MEG says it plans to drill new wells and implement production-enhancing technology on part of the steam-driven Christina Lake project, where aims to boost production by 20K bbl/day by 2019, a 25% increase from the current 80K bbl/day.
    • To fund its capex for the year, MEG plans to raise C$450M through a bought deal offering 58.1M subscription receipts at $7.75 each.
    • The company also forecasts 2017 total production of 80K-82K bbl/day, vs. 81.5K-82.5K during Q4 2016.
    • Nigeria’s oil union suspends a planned three-day strike that began yesterday after the government brokered a deal between workers and oil companies, including units of Chevron (CVX -0.1%) and Exxon (XOM -0.5%).
    • The union says talks will continue in two weeks “to assess implementation of resolutions reached.”
    • The 250K-member union was protesting job cuts, wrongful termination of contracts and redundancies in the oil industry; earlier this month, the union suspended a similarly planned strike at a lubricant facility operated by Total's local unit after reaching an agreement.
    • Royal Dutch Shell (RDS.A +0.5%) workers in Gabon launch an "unlimited" strike at all the company's operations in the country, although it is not clear if oil production has been affected.
    • Shell is trying to sell its Gabon assets, which could be worth as much as $700M, leaving workers worried about layoffs or being moved to new locations, the workers' union says.
    • Gabon is Africa's fourth largest oil producer with a production of 220K bbl/day, dominated by Shell and Total (TOT +1.2%).
    • Exxon Mobil (XOM -0.6%) reports positive results from its Payara-1 well offshore Guyana, encountering more than 95 ft. of high-quality, oil-bearing sandstone reservoirs.
    • The discovery is XOM's second off the coast of Guyana, in a another reservoir 10 miles from the Liza field discovered in 2015, which is estimated to contain 100M-150M boe.
    • In addition to the Payara discovery, XOM says appraisal drilling at the Liza-3 well has identified an additional high quality, deeper reservoir directly below the Liza field, which is being evaluated for development.
    • XOM is operator of the exploration project and holds a 45% stake, with Hess (HES -6.3%) and Cnooc (CEO -1.2%) holding respective 30% and 25% stakes.
    • Crude oil prices rally for a second straight day, with WTI +1.4% at $52.98/bbl, supported by reports that key OPEC members were cutting production as promised and on forecasts of strong demand growth in China.
    • Saudi Energy Minister Khalid al-Falih said today that the kingdom has cut production to its lowest in nearly two years, and that the OPEC deal would accelerate the rebalancing of the global oil market.
    • Iraq's oil minister says his country has cut its oil exports by 170K bbl/day and was cutting them by another 40K bbl/day this week, and Kuwait's oil minister says his country has ct its oil output by more than it promised under the OPEC deal.
    • Crude prices also are helped by China's forecast for domestic crude demand to reach a record 594M tons this year (~12M bbl/day) and net crude imports to rise 5.3% to 396M tons (~8M bbl/day) in 2017.
    • ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM
    • Hess (HES -7.9%) shares suffer a punishing reversal from pre-market highs, now down more than 7% and the biggest decliner on the S&P 500, after the company provided its 2017 budget and production outlook.
    • Cowen analyst Charles Robertson says the guidance was lower than expected, suggesting the ramp-up in the Bakken region is taking longer than forecast.
    • HES's 2017 production outlook of 300M-310M boe/day, excluding Libya, was below the consensus estimate of ~320M, while the $2.25B capex budget came in short of expectations of $2.4B, Robertson says.
    • Hess (NYSE:HES+1.5% premarket after announcing a 2017 E&P capex budget totaling $2.25B, up 18.4% Y/Y from $1.9B in 2016.
    • Hess says 2017 production rising 8%-12% from the beginning of 2017 to year-end due to additional rigs in the Bakken, the restart of drilling at Valhall and the start-up of North Malay Basin in Q3; Bakken net production in 2017 is forecast to average 95K-105K boe/day.
    • Hess also says Q4 results will include a ~$3.8B noncash charge to establish valuation allowances against net deferred tax assets as of Dec. 31, as required under accounting standards following a three-year cumulative loss.
    • British Columbia Premier Clark says her five conditions for approval of Kinder Morgan's (NYSE:KMI) Trans Mountain pipeline have been met, as the provincial government grants environmental approval for expansion of the pipeline.
    • Last month, Clark said B.C. was still working with the federal government on spill response and preparing to negotiate an economic benefits package with KMI that reflects the province's risks associated with the pipeline and increased tanker traffic.
    • B.C.’s approval comes with 37 conditions on top of the National Energy Board’s 157 conditions, including consultation of aboriginal groups, development of a species-at-risk plan, and a plan to mitigate and monitor the impact of the project on grizzly bears.
    • Global macroeconomic numbers have responded "positively" to the agreement between OPEC and non-OPEC producers to pare output, according to OPEC Secretary General Mohammad Barkindo.
    • Crude-producing countries will decide in May whether to extend their collective output cuts beyond the first half of the year, he added, stating OPEC isn't targeting a specific price for crude.
    • Crude futures +0.2% to $52.34/bbl.
    • ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, USL, DNO, OLO, SZO, OLEM, OILK, OILX
  • Wednesday, January 11, 2017
    • A Massachusetts judge today denied a request by Exxon Mobil (NYSE:XOM) to exempt it from a request by the state's attorney general to hand over decades worth of documents on the company's views on climate change.
    • State AG Maura Healey, one of two state prosecutors investigating XOM's climate policies, says the ruling "affirms our longstanding authority to investigate fraud," adding that the company "must come clean" about whether it misled its shareholders and the public in what it knew about climate change.
    • In today's Senate confirmation hearing, former Exxon Mobil (NYSE:XOM) CEO and Secretary of State nominee Rex Tillerson appeared to distance himself slightly from the views of his probable future boss, saying "the risk of climate change does exist, and that the consequences of it could be serious enough that actions should be taken."
    • Pres.-elect Trump once suggested that climate change was a hoax created by the Chinese to help make U.S. manufacturing less competitive.
    • Tillerson also appeared to differ from Trump’s promise to tear up the Paris Agreement on reducing global emissions, but noted Trump's "America first" policy and said participation in global climate agreements may be subject to considerations about their impact on U.S. business.
    • The former CEO declined to address XOM’s past positions on climate change; the company potentially could face legal or investor sanctions given some ongoing state investigations.
    • Kosmos Energy (NYSE:KOS) -3.9% AH after it filed to sell 30M common shares for funds affiliated with Warburg Pincus and Blackstone; KOS will receive no proceeds from the sale.
    • KOS had finished +1% in regular trading after disclosing that its production estimate for the TEN project remains consistent with forecast of 3-4 cargo liftings in FY 2017.
    • KOS also anticipates that a facility shutdown of up to 12 weeks may be required during 2017 for its Jubilee field.
    • First Solar (NASDAQ:FSLR) led the way on the S&P 500 today, soaring +4.8%, likely in reaction to the $10M investment in Enphase Energy (NASDAQ:ENPH) won from investors T.J. Rodgers and John Doerr; ENPH finished +27.4%.
    • FSLR is up 9% YTD even as analysts such as CFRA’s Angelo Zino see 2017 as a challenging year, as panel manufacturers will need to contend with oversupply, not to mention an uncertain regulatory environment with a Trump presidency.
    • Other solar companies also rose today: SPWR +4.8%, TSL +2.5%, CSIQ +2%, JKS +1.4%, JASO +0.8%.
    • ETFs: TAN
    • Kinder Morgan's (NYSE:KMI) Trans Mountain pipeline extension project wins environmental approval from British Columbia's provincial government, clearing its last major regulatory hurdle.
    • The approval comes with 37 conditions intended to address concerns raised by communities and aboriginal groups.
    • The federal government approved the $6.8B expansion in November after the National Energy Board recommended moving ahead if 157 conditions are met.
    • Pacific Gas & Electric (PCG +1.4%) announces belt-tightening moves that will reduce its 23K-member workforce and save ~$300M/year.
    • PG&E plans to cut 450 support services jobs from more than a dozen functional areas across the company, eliminate 800 non-employee contractors, reduce the number of officers by eight positions, and will not fill 500 open, non-critical positions.
    • PG&E says most of the cost reductions will come from reductions in spending on materials and contracts, renegotiating terms with vendors, and reducing expenses for professional services and discretionary expenses.
    • Transocean (RIG +4.2%) enjoys strong gains after GE Oil & Gas (GE +0.1%) announces a new contractual service agreement, valued at ~$180M, that will attempt to further maximize productivity and lower operating costs for RIG.
    • GE says it will provide condition-based monitoring and maintenance services for pressure control equipment on seven of RIG’s rigs over the next 10-12 years, in a change from event and calendar-based maintenance.
    • GE says the agreement builds on its new business model based on service to address the industry shift toward maximizing productivity and cutting operating costs.
    • U.S. crude oil climbs 3.2% to $52.45/bbl after EIA data showed that refiners processed a record amount of crude and that supplies fell at the Cushing, Okla., storage hub.
    • U.S. refiners churned 17.1M bbl/day of crude into fuel last week, the highest weekly figure going back to 1982, while Cushing stockpiles, which have been rising in recent weeks, fell by 579K barrels.
    • Prices recovered after initially falling in reaction to a higher than expected rise in total crude oil inventories to 4.1M barrels, and U.S. production jumped to more than 8.9M bbl/day during the week, the highest read since April.
    • But analysts say the stockpile gains largely were driven by an increase in oil imports, which rose to their highest level since 2012 as shipments of crude that were delayed at the end of last year for tax purposes are starting to appear.
    • Refiners are higher: PSX +1.5%, VLO +0.8%, MPC +1.9%, TSO +1.1%, HFC +2.1%, WNR +0.9%, PBF +0.3%, CVI +0.7%, DK +0.4%.
    • ETFs: USO, OIL, UWTI, UCO, DWTI, SCO, BNO, DBO, DTO, UGA, USL, DNO, OLO, SZO, OLEM
    • Legal experts say Enbridge (ENB +0.2%) may be set for a bruising legal battle in Wisconsin after a Native American tribe last week voted against renewing land use agreements on its Line 5 pipeline, potentially shutting down a conduit that has been in operation since the 1950s.
    • ENB says it is reaching out to the Bad River Band to restart negotiations, but legal experts say that if talks fail, the company is not likely to be able to have state or federal authorities force the tribe to allow Line 5 to operate if it is on tribal lands.
    • Line 5 has not leaked since it was built in 1953, but the tribe's concerns about the pipeline's age echoed worries in Michigan following a 2010 leak of 20K barrels of crude into the Kalamazoo River in Michigan from ENB's Line 6B, the largest onshore oil spill in U.S. history.
    • Oil drillers will double the number of final investment decisions this year compared to last year, which would mean the industry may pull the trigger on 20 large multiyear projects in 2017, energy research firm Wood Mackenzie forecasts.
    • The total would still fall well short of the 2010-14 average of 40/year, but they generally would be smaller, more efficient projects, and capex per boe averages $7, down from $17 per boe for 2014 projects, Wood Mackenzie says.
    • Exploration and production spending for 2017 is set to rise 3% Y/Y to $450B, according to the firm's global upstream outlook.
    • ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, FIF, PXJ, RYE, NDP, GUSH, DRIP, DDG, FXN, CRAK
    • Braskem (BAK +2%) agrees to sell its chemical distributor quantiQ Distribuidora for 550M reais ($172M) to GTM Holdings, Latin America's leading independent distributor of chemical products.
    • BAK, which recently signed a leniency deal with Brazilian and U.S. authorities over its involvement in Brazil's graft and bribery scandal, appears to be seeking to sell assets as it seeks to cut costs by 400M reais/year.
    • BAK is jointly controlled by Brazil’s Odebrecht and Petrobras.
    • El Paso Electric (EE -0.3%) is initiated with a Hold rating and $48 price target at Williams Capital, which sees limited upside potential for the stock at this time even as the underlying characteristics of the company are attractive.
    • With rate base growth of 4%-5% and regulatory lag to catch up on, the firm sees above average EPS growth of ~6.5% for EE compounded through 2020.
    • Williams also expects a sizable dividend increase in 2017 at EE and an overall increase to the $1.60-$1.65 level by 2020, a 7.2% compound annual growth rate that translates into 30%-35% dividend growth over the next four years.
    • Exxon Mobil (XOM +0.7%) is downgraded to Market Perform from Outperform at Wells Fargo, which cites the stock's premium valuation as well as updated production estimates, margin expectations and commodity price deck.
    • Wells says it had expected XOM to pursue an acquisition during the oil price downturn as a way to deliver growth and returns, but the window likely has closed for now.
    • The firm maintains its Outperform ratings on ConocoPhillips (COP +0.9%), Occidental Petroleum (OXY) and Canadian Natural Resources (CNQ -0.6%), citing low-cost production (NYSE:COP), favorable position in the Permian Basin (NYSE:OXY) and strong production growth (NYSE:CNQ).
    • Shares of uranium producers shoot higher for a second straight day after spot prices for the commodity surge 10% after Kazakhstan's state nuclear-fuel company said the country would not produce as much uranium as planned this year.
    • Analysts say the announcement from Kazakhstan, the world’s biggest producer, may mark an inflection point for the market and could lead to higher prices.
    • In today's trade: URRE +32.4%, UEC +14.8%, DNN +8.7%, URG +6.8%, UUUU +5.5%, CCJ +4.1%, after big gains yesterday.
    • Uranium prices have largely been in free fall since the 2011 disaster at Japan's Fukushima Daiichi nuclear power plant, sliding to a 12-year low of $18/lb. in December, but prices yesterday jumped above $24 for the first time since September.
    • ETF: URA
    • SM Energy (NYSE:SM) announces plans to run a formal bid process for the sale of its Divide County area assets in the Williston Basin, and expects to close a transaction around mid-year 2017.
    • SM says sale proceeds from the planned Williston exit and from the pending sale of non-operated Eagle Ford assets will allow it to fully fund its drilling program, while improving liquidity and the ability to reduce outstanding debt.
    • SM says associated December production for the Divide County assets up for sale was 10.7K boe/day.
    • Petrobras (NYSE:PBR) says it expects to increase spending this year to $19B on exploration, production and refining projects, indicating that efforts to cut debt and preserve cash are helping the company regain investment capacity.
    • PBR's ~$22B in current cash holdings should be enough to allow the company to undertake activities for two and half years, CEO Pedro Parente says.
    • PBR also says it reached its oil production target for the second consecutive year at 2.144M bbl/day for 2016, 0.8% higher Y/Y and in-line with its 2.145M target.
    • Shares -0.9% premarket.
    • Tullow Oil (OTCPK:TUWLF, OTCPK:TUWOY) says CEO and founder Aidan Heavey will step down in April, to be succeeded as CEO by current COO Paul McDade, and become chairman for a maximum of two years.
    • Analysts largely welcome McDade's appointment, as the move clears up uncertainty about Heavey's future at the company.
    • However, shares are -3% in London trading, as the news was accompanied by an operations update that sees 2016 revenue coming in 19% lower Y/Y to $1.3B as well as lower than expected production.
    • Archer Daniels Midland (NYSE:ADM) -5.6% premarket as China sharply increases punitive tariffs on imports of distillers dried grains, a by-product of corn ethanol that is used as animal feed, from levels first proposed last year.
    • China's Commerce Ministry, responding to complaints from the country's fledgling ethanol industry, ruled that anti-dumping duties will range from 42.2% to 53.7%, up from 33.8% in its preliminary decision in September.
    • The decision is considered a blow to the larger U.S. ethanol industry, particularly ethanol trader ADM, producer Valero Energy (NYSE:VLO) and grains handler Andersons (NASDAQ:ANDE).
    • The decision could escalate a trade dispute between the U.S. and China, and Pres.-elect Trump has threatened to impose punitive tariffs on certain Chinese goods coming into the U.S..
    • Canada's largest alternative-asset manager has submitted proposals regarding its interest in buying the yieldcos of bankrupt solar company SunEdison (OTCPK:SUNEQ).
    • Brookfield Asset Management (NYSE:BAM) would purchase all of TerraForm Power (NASDAQ:TERP) for $11.50 per share in cash, or a total consideration of $1.6B, and may even raise its offer to $12.50 per share if can also buy TerraForm Global (NASDAQ:GLBL).
  • Tuesday, January 10, 2017
    • Argentina's government announces a deal with labor unions and energy companies aimed at luring investors to the Vaca Muerta shale, which contains the world's second largest reserves of shale gas but is largely unexplored.
    • In return for the investment commitments, the government says it will extend a subsidy that enables companies to sell gas at $7.50/MMBtu and eliminate a 15-year-old export duty on oil and oil products; unions promise more flexible working conditions, as high labor costs have been a barrier to Vaca Muerta's development.
    • Argentina's Pres. Macri proclaims a “new era” for the country’s languishing energy sector, which will see foreign companies including Chevron (NYSE:CVX), Exxon Mobil (NYSE:XOM), BP, Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT) as well as state oil company YPF invest an initial $5B in 2017, rising to $15B in subsequent years.
    • Williams Cos. (NYSE:WMB) finished at the bottom of the S&P 500 in today's trade, tumbling 10.7%, while Williams Partners (NYSE:WPZ) finished flat, following news of its plans to restructure its general partner interest in its MLP subsidiary.
    • In analyst actions, Jefferies downgraded WMB to Hold from Buy, seeing the moves as under-appreciating WMB's incentive distribution rights and limiting its long-term upside potential, while Stifel upgraded WPZ to Buy from Hold, believing management has positioned WPZ for a sustainable future of growth.
    • Raymond James analysts are "relatively constructive" on the revamped Williams' financial footing: WMB "is is giving up longer-term leveraged growth potential in exchange for longer-term stability and a shorter-term boost to its dividend, while [WPZ] is giving up some of its cash payout in exchange for a much more visible (and favorable) outlook from here on out."
    • Besides addressing leverage, a simpler structure could lend itself to renewed M&A interest for WMB, Bloomberg's Liam Denning writes.
    • Enphase Energy (NASDAQ:ENPH) after announcing a $10M strategic investment from T.J. Rodgers and John Doerr.
    • As part of the new investment, ENPH appoints Rodgers, founder and former CEO of Cypress Semiconductor, to its board; Doerr is chairman of Kleiner Perkins Caulfield & Byers.
    • Gastar Exploration (NYSEMKT:GST) declares special cash dividends on 8.625% Series A preferred stock and 10.75% Series B preferred stock, for $12.1M in total declared dividend payments.
    • GST also enters into related amendment of its credit agreement, in which it agrees to pay down debt under its revolving credit facility by at least an additional $8.1M by April 30.
    • Parsley Energy (NYSE:PE) -2.5% AH after agreeing to acquire, in unrelated transactions, undeveloped acreage and producing oil and gas properties adjacent to its existing operating areas in the Midland Basin and Delaware Basin for a combined $607M, plus Delaware Basin mineral interests for $43M.
    • To fund the deal, PE launches a 20M-share public offering, with an underwriters an option to purchase up to an additional 3M common shares.
    • PE also unveils 2017 capex guidance of $750M-$900M, which plans to a 75% increase in net lateral footage and production growth of nearly 60% from 2016.
    • Denison Mines (DNN +12.5%) surges on news that it will increase its ownership stake in the Wheeler River uranium project to 66% from the current 60% by the end of 2018.
    • The JV partners agree to allow for a one-time election by partner Cameco (CCJ +10.3%) to fund half of its ordinary share of joint venture expenses in 2017 and 2018, with DNN funding CCJ's shortfall contribution in exchange for part of CCJ's interest.
    • The JV parties also approve a C$12.5M 2017 budget for the program.
    • NuStar Energy (NS -2.6%) is lower after repeating guidance for FY 2017 EBITDA of $600M-$650M and Q4 EPS coming in at a loss of $0.30-$0.40, including a ~$60M non-cash charge during Q4 to adjust the carrying value of the Axeon term loan, according to a slide presentation.
    • NS says several projects have been completed or are under development with an unnamed customer to increase distillate and propane supply throughout the Upper Midwest for a ~$80M investment; construction on remaining projects should be completed by Q4 2017.
    • NS also says it is working with Pemex to develop a project to transport liquefied petroleum gas and refined products from the U.S. into Mexico, with $125M costs originally planned for 2016 now expected in 2017-18 due to delays.
    • American Electric Power (AEP -0.3%) is upgraded to Outperform from Market Perform at Wells Fargo, which says AEP warrants a premium valuation because of its strong EPS and dividend growth prospects, organic investment opportunities and healthy financial position.
    • Wells estimates that AEPTHC, which houses AEP’s regulated electric transmission businesses, will account for 70% of the company's EPS growth during 2018-20, with AEPTHC’s EPS compound annual growth rate will surpass 20% during 2016-20.
    • The firm also likes AEP's plans to invest up to $1B in contracted renewables during 2017-19, with an emphasis on wind generation, a strategy it says is based mostly on the belief that the company’s scale and financial position makes it an attractive long-term partner for renewable developers.
    • Sunrun (RUN +4.3%) shoots higher on news of a new solar partnership with U.K.-based National Grid (NGG -1.3%) that includes a joint marketing agreement, a collaborative grid services pilot program, and a $100M direct investment by NGG in RUN's rooftop solar systems.
    • The joint venture will sell solar power systems to homes and businesses, and develop products and services for a power grid adapting to a new model of small-scale local generation.
    • Ed Fenster, RUN’s chairman, says the deal is unusual in forging an alliance between a traditional utility and a rooftop solar business.
    • Canada's National Energy Board officially appoints three new members to a panel that will restart the stalled review of TransCanada's (TRP -0.3%) proposed Energy East pipeline.
    • The previous Energy East pipeline panel stepped down amid questions about a potential conflict of interest last year after the NEB's chairman and vice chair were accused of a conflict of interest for meeting privately with a paid consultant for TRP to discuss public opinion related to the controversial project.
    • Energy East would carry 1.1M bbl/day of crude oil from Alberta and Saskatchewan to refineries in eastern Canada and a marine terminal in New Brunswick.
    • Canadian oilfield services provider Savanna Energy Services (OTC:SVGYF) says it will open its books this week to potential suitors interested in a deal with the company.
    • Savanna says it also plans to explore strategic alternatives, which may include a sale of the company among other options.
    • Savanna, which says it has been receiving interests from bidders, reiterates its recommendation to shareholders to reject last month's takeover offer from Total Energy Services (OTC:TOTZF).
    • The European Union approves a restructuring plan for French nuclear firm Areva (OTCPK:ARVCF), saying a planned €4.5B ($4.76B) capital injection would not unduly distort competition.
    • The ruling will allow Areva to restart as a smaller company focused on uranium mining and nuclear fuel production and recycling.
    • The EU says the planned state aid is subject to conditions, including a positive conclusion to tests being conducted by the French Nuclear Safety Agency, and approval of the divestment of Areva's reactor business under EU merger rules.
    • Oil and gas activities in the North Sea braces for short-term disruptions after Lockheed Martin (LMT +0.1%) grounds all Sikorsky S92 helicopters worldwide for safety checks following an accident last month on a North Sea oil platform.
    • An S92 experienced a technical fault when it was coming in to land, leaving "significant gouge marks" on the deck of the platform.
    • The global fleet consists of more than 275 S-92s, with 11 nations using them for head of state missions.
    • Duke Energy (DUK -0.3%) acquires three California solar power projects from SunPower (SPWR +0.1%) totaling 55 MW for an undisclosed sum, expanding its solar presence in the state by 50%.
    • The sites include the 20 MW Rio Bravo I, the 20 MW Rio Bravo II and the 15 MW Wildwood Solar II solar power plants, all adjacent to two existing solar sites owned by Duke Energy Renewables.
    • Southern California Edison (EIX -0.4%) is purchasing the power generated by the plants under 20-year agreements.
    • Williams Cos. (NYSE:WMB) -10.4% as volume tops 6.1M shares ahead of the open, making the stock the most actively traded in the premarket.
    • WMB announced after yesterday's close that it would increase its dividend for the March quarter by 50% to $0.30/share and issue 65M common shares to finance the purchase of 289M units of Williams Partners (NYSE:WPZ) at $36.09/unit; WMB priced the 65M-share offering at $29.
    • WMB says it will use the proceeds from the sale to help boost its stake in WPZ to 72%; WPZ -1.2% premarket.
    • Noble Energy (NYSE:NBL) buys the rights to drill in 7,200 acres in west Texas’ Delaware Basin from an unnamed seller for $300M, a move that fills holes in NBL’s existing acreage and allows the company to drill longer horizontal wells.
    • NBL says the properties include current production of 2,400 boe/day, expanding its total Delaware position by ~20% to 47.2K net acres and 12K boe/day.
    • NBL says it recently added a third drilling rig to the basin and is “aggressively moving forward with development."