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  • Today - Thursday, October 2, 2014

  • 8:25 AM
    • Walter Energy (NYSE:WLT) +5.7% premarket after The Guardian says BHP Billiton (NYSE:BHP) or Rio Tinto (NYSE:RIO) may be interested in buying the coal company for $5/share.
    • Clarkson Capital is out with a note saying the paper has passed along many rumors on U.S. coal activity over the years and none have proven true (Briefing.com).
    | Comment!
  • 7:49 AM
    • Crude oil is selling off again, with Brent crude oil hitting a 28-month low just above $92/bbl and WTI tumbling to $88.57, after Saudi Arabia cut its official selling prices for its customers across all regions in November.
    • The Saudis were expected to cut output in the coming months to support prices, but the price cuts seem to suggest a drastic reduction in output may not happen, at least not in the near term.
    • "Such measures give rise to doubts about OPEC's long-standing strategy of striving above all for price stability,” a Commerzbank analyst says.
    • But crude has been dropping for months, and Jefferies points to four reasons behind the sustained slide: weak global demand with Q3 estimates up only 800K bbl/day vs. 2013, a surge in Libyan production, dollar strength, speculators.
    • ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DNO, DWTI, SZO, OLO, TWTI, OLEM
    | 3 Comments
  • Wednesday, October 1, 2014

  • 6:49 PM
    • Railcar makers sold off today after railroad and oil lobbyists asked the government to delay the imposition of new rules that would require the use of safer railcars for hauling crude oil: GBX -10.2%, TRN -7.7%, ARII -5.9%, RAIL -4.2%.
    • Jim Cramer sees a potentially "disastrous" situation for the railcar companies, warning that extended battle could weigh on earnings expectations.
    • UBS analyst Eric Crawford says it should not have come as a surprise that the users of railcars want more time, as it indicates how important the transportation of crude by rail has become; it also shows there is not an oversupply of tank cars, and the lobbyists' position should lessen worries that railcar orders are at risk of being cancelled.
    | 12 Comments
  • 5:58 PM
    • Italian prosecutors investigating Eni (NYSE:E) over the purchase of a Nigerian oilfield three years ago allege that at least half the $1.1B paid was used for bribing local politicians, intermediaries and others, Reuters reports, citing official documents.
    • The prosecutors have placed the Italian oil company, former CEO Paolo Scaroni and current boss Claudio Descalzi under investigation for alleged international corruption surrounding the deal for the OPL 245 offshore oilfield concession in 2011.
    • Production from the deepwater oilfield is expected to begin in 2016 and is estimated to hold up to 9.2B barrels of crude, equivalent to nearly 25% of Nigeria's total proven reserves.
    | 1 Comment
  • 5:44 PM
    • Forest Oil (NYSE:FST) says it completed the audit procedures which caused a delay in filing its latest 10-Q, with no changes to previously reported financial results.
    • FST files amended 2013 10-K and Q1 and Q2 2014 quarterly reports on form 10-Q with no changes to the financial statements; disclosures include a "going concern" opinion due to the fact that, as previously disclosed, FST has determined that by year-end 2014 the ratio of its total debt to EBITDA may exceed the maximum allowed under its bank credit facility.
    | Comment!
  • 4:39 PM
    • Centrus Energy, formerly USEC, says President and CEO John Welch will step down Oct. 17, and appoints Chief Restructuring Officer John Castellano as interim CEO as the board begins the process of selecting a permanent CEO.
    • Mikel Williams is elected Chairman, after serving on the USEC board since 2013 and leading a variety of advanced tech and manufacturing companies.
    | Comment!
  • 3:59 PM
    • Crude oil prices tumbled to their lowest levels in more than a year on news that Saudi Arabia lowered the official selling prices for its crude oil, which would suggest the Saudis may not reduce output in the coming months to keep prices high.
    • Brent crude fell 0.5% to $94.16/bbl, the lowest settlement since June 28, 2012, while WTI crude for November delivery also fell 0.5% to $90.73, its lowest price since April 23, 2013.
    • Saudi Arabia cut its November oil prices, Reuters reports, marking the fourth straight month of price cuts, indicating it is more focused on maintaining market share in a lower-price environment than on keeping prices high.
    • The kingdom did reduce output in August, but analysts say more drastic cuts would be needed to rebalance the market, as North American production soars and Libyan exports continue to grow.
    • ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DNO, DWTI, SZO, OLO, OLEM
    | 1 Comment
  • 3:26 PM
    • U.S. refineries lowered the crude oil they processed by the most in eight months, to 16M bbl/day and down 3.8% from the previous week, as plants began normal seasonal maintenance.
    • Plants typically schedule maintenance in September and October when units move from maximizing gasoline output to producing winter fuels.
    • Examples: Maintenance has begun at Total’s (NYSE:TOT) 225K bbl/day Port Arthur, Tex., refinery, Phillips 66’s (NYSE:PSX) Lake Charles refinery is conducting planned maintenance, and Motiva Enterprises' Norco, La., refinery began planned work this week.
    • ETFs: USO, OIL, UCO, SCO, BNO, UGA, DTO, DBO, CRUD, USL, UWTI, DNO, DWTI, SZO, OLO, OLEM
    | 1 Comment
  • 3:16 PM
    • Westport Innovations (WPRT -25.1%), already reeling after cutting its revenue guidance, is downgraded to Hold from Buy with a $20 price target, down from $45, at Lake Street Capital.
    • WPRT had made strides in reducing costs and introducing next-generation products, the firm says, but the launch of key new programs - Volvo and Weichai-HPDI - now looks to be pushed out 12 months as HPDI 2.0 injectors are launched and incorporated into engine designs.
    • Lake Street believes several months could pass before improvement is clear, with limited near-term catalysts and lower growth ahead while WPRT works through the transition; shares can recover later in 2015 as WPRT executes and demonstrates resumed revenue growth and new engine rollouts.
    | 2 Comments
  • 2:39 PM
    • Suncor Energy (SU +0.1%) is upgraded to Buy from Neutral at Citi, which sees 7%/year production growth during 2015-20 generating an average free cash flow yield of ~8% vs. a yield forecast of ~5.6% for global oil majors.
    • The firm notes that SU has enhanced returns on its existing $25B of capital-in-place oil sands assets over the past 18-24 months, and is streamlining its operations to lower sustaining capital spending and operating expenses while producing more from its existing project.
    • SU has cut 2014 capex by ~$1B, but the firm estimates further cuts to annual spending of $500M-$1B through 2020 which should generate another 20%-25% in free cash flow, allowing the company to achieve its return on capital employed goal of 15%.
    • Citi now has Buy ratings on all four major integrated oil producers in Canada, which also includes Cenovus Energy (NYSE:CVE), Husky Energy (OTCQB:HUSKF) and Imperial Oil (NYSEMKT:IMO).
    | 1 Comment
  • 2:25 PM
    • BP (BP -0.5%), facing as much as $2.5B in claims by U.S. shareholders for lost stock value connected to the 2010 Gulf of Mexico oil spill, must fight suits by foreign investors seeking millions of dollars more, a judge rules.
    • U.S. District Judge Keith Ellison says U.S. securities law does not bar foreign investors who bought BP common shares on exchanges overseas from pursuing their claims under English law in his court.
    • The judge earlier allowed U.S. pension funds holding London shares the right to sue under British law; BP had said the foreign funds were attempting to avoid the harsher British court system, where plaintiffs would have to pay both sides’ costs if they lost.
    | 11 Comments
  • 2:11 PM
    • Russia has cut natural gas supplies to EU member Slovakia by 50% in its latest reduction in energy supplies to an EU country that is helping Ukraine build gas supplies ahead of winter.
    • Slovakia began supplying natural gas to its eastern neighbor as an act of solidarity after Russia's Gazprom (OTCPK:OGZPY) stopped supplying Ukraine with gas in June.
    • Gazprom earlier reduced gas flows to Poland, which also is supplying Ukraine with gas; Hungary, which had been supplying gas to Ukraine, last week halted all gas shipments there and says it is now receiving all contracted supplies of gas from Russia.
    | 8 Comments
  • 12:59 PM
    • Plains All American Pipeline (PAA +0.2%) subsidiary Plains Midstream Canada faces a potential shutdown of its operations on allegations it did not comply with the National Energy Board, which says it is investigating the company.
    • The NEB says Plains Midstream Canada is not in compliance with a corrective action plan the regulator first demanded from the company after a 2010 audit; it then followed up in January and March of this year and determined the plan had still not been put in place.
    • Until last month, Plains had been closely monitored by Alberta energy regulators over two oil spills in the province dating back to 2011, but the reason for the new federal probe is unclear.
    | 1 Comment
  • 12:43 PM
    • Gulf Keystone Petroleum (OTCPK:GUKYF) has returned all staff to its operations in Iraqi Kurdistan after evacuating international contractors from the region amid escalating violence in August.
    • The company says it is on target to produce 40K bbl/day of oil at its Shaikan wells after producing ~23K bbl/day since Aug. 28.
    • It says ~30% of output from the field is being sold to the domestic market, with 220K barrels sold since Aug. 28 that have generated gross revenue of $9.4M.
    | Comment!
  • 12:15 PM
    • Frontline (FRO +15.1%) powers higher after teaming with Tankers International to form a new company, VLCC Chartering, to create a larger fleet with more flexibility and more options for cargo owners and a single point of contact.
    • VLCC Chartering will have a combined fleet of nearly 60 large tankers, which means it will control nearly 10% of the 639-ship market.
    • The new venture is expected to reduce voyage related expenses and improve net earnings of the very large crude carriers operated by both companies.
    | 1 Comment
  • 10:59 AM
    • Baker Hughes (BHI +0.2%) is providing details about the mix of chemicals it uses to help coax oil and gas out of the ground, becoming the first major oilfield services company to disclose its fracking chemicals.
    • Beginning today, BHI is listing all chemicals used in fracking a well, along with their maximum concentrations, in reports on fracfocus.org, the online national registry where the public can look up well details in several states.
    • BHI says the policy is designed to "increase public trust in the process of hydraulic fracturing" while still protecting its proprietary recipes.
    | Comment!
  • 10:49 AM
    • Noble Energy (NBL -0.3%) says it plans to resume exploration drilling in the Falkland Islands in 2015 following the acquisition and evaluation of a 3D seismic program over portions of its 10M acre position.
    • NBL says the latest prospect, called Humpback, has an estimated resource potential of 1B boe.
    • NBL also updates guidance for its Q3 exploration expense to $230M-$240M, including ~$75M related to the Scotia well decision; due to the increased exploration expense, it expects a Q3 adjusted effective tax rate of 35%-38%.
    | Comment!
  • 10:31 AM
     
    • EIA Petroleum Inventories:
    • Crude -1.4M barrels vs. +0.9M expected, -4.3M last week.
    • Gasoline -1.8M barrels vs. -0.8M expected, -0.4M last week.
    • Distillates -2.9M barrels vs. -0.2M expected, +0.8M last week.
    • Futures +1.15% to $92.21
    | 1 Comment
  • 10:15 AM
    • Argent Energy Trust (OTC:ANGYF +5.1%) says it has initiated a strategic review process and will consider options such as a sale of some or all of its assets.
    • Argent believes it is not getting recognition for the strategic direction implemented in April, which has resulted in a stabilized production base and a focus on debt repayment.
    | Comment!
  • 10:06 AM
    • Fluor (FLR -0.5%) opens at a 52-week low despite an upgrade to Buy from Neutral at DA Davidson, which cites a combination of improving industry fundamentals, low current valuation levels and higher prospective earnings.
    • FLR has generated substantial growth over the past decade despite volatile end-market demand for capital spending, which the firm says reflects responsiveness to market opportunities and effective growth strategies.
    • With current backlog of $40B, equivalent to 21 months of revenue, FLR maintains good visibility regarding revenue potential, the analyst says.
    • Shares have dropped recently due to overall market concerns, lower oil prices, weak mining prospects and project delays, but valuation is near the low end of historical ranges and below peers.
    | Comment!
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