Today - Saturday, February 28, 2015
- Despite HollyFrontier's (NYSE:HFC) lackuster Q4, which was largely expected given the extended El Dorado downtime, the tide appears to be turning for HFC, Deutsche Bank says.
- "Operational reliability is improving, with a light maintenance schedule for 2015. Mid-con refining margins are robust, with the Brent-WTI spread, contango benefit, and WCS profitability attractive and likely to widen further in the coming months."
- "Improved execution will need to be demonstrated, and growth catalysts remain somewhat underwhelming for now, but the outlook is clearly much brighter."
- Firm expects HFC to ramp up buyback activity in 2015, "aligning better with the rest of peers’ yield proposition (aggressive buybacks and regular yield)."
- Deutsche has a Hold recommendation and a $53 price target. Implied upside 20.5%.
Friday, February 27, 2015
- Exxon Mobil (NYSE:XOM) has been a strong relative performer since the oil price swoon, but Jefferies analysts see Chevron (NYSE:CVX) and Royal Dutch Shell (RDS.A, RDS.B) as better investor options right now.
- Jefferies does not expect XOM's March 4 analyst day will offer reasons to own the stock, and if capex guidance exceeds expectations and the share buyback program is eliminated, it could make the market question XOM's defensive qualities.
- The firm prefers CVX over an 18-month period due to its superior growth, although it suggests holding off until after the company's March 10 analyst meeting; CVX trades at a 29% EV/DACF discount to XOM on its 2016 estimates.
- Jefferies likes Shell as a defensive stock within the sector, saying its cash cycle and balance sheet are just as strong as XOM and it trades at a 42% EV/DACF discount vs. XOM on its 2016 estimates.
- Dresser-Rand (NYSE:DRC) says it will cut 8% of its global workforce, or ~650 jobs, because of the weak oil price environment, "taking appropriate measures to continue its emphasis on operating earnings growth, even in what is expected to be a relatively stable year in sales in 2015."
- DRC says the cutbacks are in response to ongoing market conditions and not in anticipation of its merger with Siemens (OTCPK:SIEGY).
- In its Q4 earnings report, DRC says results were hurt by several events - including the cost of the merger transaction, the price of oil and the movement in several non-U.S. dollar based trade currencies - that it believes masks an otherwise a strong operating performance.
- Pemex says it is in talks with oil service and rig providers to reduce daily rates, part of a series of actions it is considering to reduce spending after reporting a quarterly net loss of $7.75B and a 10% decline in sales.
- Pemex drilled 120 wells in Q4, 36% fewer than a year earlier, and oil output fell to 2.36M bbl/day in the quarter as production for the full year slumped to its lowest level since at least 1990.
- Pemex terminated service and drilling contracts with Diamond Offshore (NYSE:DO) last week; drilling rig contractors with the most exposure in offshore Mexico are Grupo Mexico (OTCPK:GMBXF) unit Perforadora Mexico, Paragon Offshore (NYSE:PGN) and DO.
- Petrobras (NYSE:PBR) denies it has hired JPMorgan Chase to handle the sale of oil exploration licenses in deep-sea areas off Brazil's coast.
- In a securities filing, PBR reiterated the need to reduce capital investments, dispose of assets and step up divestitures to preserve cash, but it also said JPM did not have a mandate to map out potential investors interested in acquiring licenses for its subsalt oil reserves.
- Reuters reported earlier this week that Petrobras had hired JPM to advise on the sale of ~$3B in assets, as fallout from Brazil's corruption scandal had shut access to financing.
- Rowan (NYSE:RDC) rallied 4.4% after saying during today's earnings conference call that Saudi Aramco likely would continue employing about a third of the company's 28 contracted rigs.
- RDC said it is in talks with Aramco to extend contracts for four of its drillships and is looking to win contracts for three jack-up rigs.
- Rival Hercules Offshore said yesterday that the Saudi company had terminated a drilling contract for one of its rigs.
- RDC wrote down the value of 12 of its oldest jack-up rigs by $438M during Q4, leading it to report an unadjusted loss compared with a profit in the year-earlier quarter; RDC's fleet utilization rate rose slightly to 86% in Q4.
- Clean Energy Fuels (NASDAQ:CLNE) jumped nearly 20% in today's trading after posting a surprise Q4 profit as revenue grew 55% Y/Y and beat analyst projections.
- CLNE's Q4 net income totaled $1.33M, or $0.01/share, reversing a $32.3M net loss during the same quarter last year; adjusted earnings were $10.37M, or $0.11/share, turning around from a $23.8M adjusted loss last year and easily beating analyst consensus.
- Q4 revenue rose 55.4% Y/Y to $132M, supported by higher volumes and improved station sales and beating analyst estimates by ~$20M; revenue included $28.4M of excise tax credits for alternative fuels other than ethanol, up from $7.3M last year.
- Deliveries jumped 30% Y/Y to 55.5M gallons, lifting the year-end total to more than 265M gallons.
- KBR (KBR -10.1%) sinks 10% after posting a wider Q4 loss and revenues fell 15% Y/Y and fell well short of expectations.
- KBR booked $1.16B in charges during Q4 to the restructuring of its business, which was announced in December with the intent of focusing the company on its oil and international government services businesses; KBR expects the move to cut costs by at least $200M/year by 2016, but said the heavy charges were prompted by higher impairment charges and tax reserves than initially expected.
- Q4 engineering and construction revenue fell 6% Y/Y to $1.04B, while government services revenue fell 53% to $111M from $237M a year earlier; its third business unit after the reorganization - non-strategic business such as a stand-alone power project - fell 18% at $200M.
- Issues in-line guidance for FY 2015, seeing EPS of $1.07-$1.22 vs. $1.16 analyst consensus estimate.
- BP is pushing back the start date for its contract with Helix Energy Solutions (HLX -2.2%) for the Q5000 well intervention vessel, sending HLX shares to 52-week lows.
- The well was scheduled to begin work in the Gulf of Mexico in Q3, but the amended agreement defers the start of the work to April 1, 2016.
- The amendment also contains certain other modifications that HLX says will give it greater flexibility to market the vessel to other potential customers, including prior to starting the work for BP.
- Exxon Mobil (XOM +0.4%) reaches a settlement with the state of New Jersey, agreeing to pay $250M in damages for the contamination of wetlands caused by two refineries, NYT reports.
- Lawsuits were first filed in 2004 by New Jersey's environmental protection agency and finally made their way to trial last year; the state had been seeking $2.6B for the primary restoration of the wetlands sites and an additional $6.3B for compensatory damages.
- The parties have not announced the deal publicly, and it still must be approved by the judge, but followers of the case did not know why New Jersey would suddenly settle a case that it had fought strenuously for more than a decade.
- Clayton Williams Energy (CWEI -4.6%) is downgraded to Neutral from Buy with a $52 price target, down from $68, at Roth Capital following worse than expected Q4 results.
- The firm cites proved reserves that rose 8% in 2014, finishing the year with 75.4M boe compared to year-end 2013's 70M boe, which it finds disappointing against the backdrop of $404M of capex in 2014.
- Roth says it has praised CWEI for its strong free cash and distributable cash record for the three years up to 2013, but it is critical of 2014 results.
- Hercules Offshore (HERO -28.2%) shares are crushed after this morning's downgrade to zero by Deutsche Bank analyst Mike Urban, who had maintained a Buy rating on the oil drilling services company for more than two years.
- Urban says he had remained positive on HERO relative to his negative view on the offshore driller sector because he did not foresee a lot of new competition to enter the shallow Gulf of Mexico area where the company had a commanding market position; that dominant position is no longer enough, he says, because "the collapse in oil prices has eviscerated demand.”
- Other stocks in the sector are rising today: RDC +3.6%, ATW +2.5%, RIG +2.4%, DO +2%, PKD +1.6%, HP +1.3%, ESV +1%.
- Valero Energy Partners (NYSE:VLP) agrees to acquire two terminal businesses from Valero Energy (NYSE:VLO) for ~$671M in cash and stock; VLP shares are halted.
- The assets, located at the Houston Ship Channel and on the Mississippi River in Louisiana, consist of storage tanks with a combined 13.6M barrels of storage capacity.
- Upon closing, VLP will enter into 10-year terminaling agreements with the VLO subsidiaries.
- VP expects the acquired businesses to contribute ~$75M of EBITDA in their first full year of operation.
- EnerNOC (ENOC -21.4%) plunges after reporting better than expected Q4 results but issuing downside guidance for Q1 and FY 2015.
- ENOC now sees a Q1 loss of $1.36-$1.29 vs. analyst consensus estimates of a $0.97 loss, with revenues of $48M-$53M vs. $55.5M consensus; for the full-year it guides to a $1.77-$1.66 loss vs. analyst consensus for a $1.62 loss, with revenues of $410M-$430M vs. $519.5M consensus.
- Needham downgrades shares to Buy from Strong Buy with an $18.50 target, down from $25, noting that ENOC has been and remains a big picture story but believes the wildcard of its grid operator business is creating a reset in the revenue model that disrupts the growth trajectory.
- Gulfport Energy's (GPOR +0.8%) price target is raised to a Street-high $60 from $50 at Wunderlich, which says GPOR's Q4 earnings were "impressive" but even more so was the company's guidance that calls for another 80%-100% growth in production on significantly lower spending as the Utica and Gulfport assets "begins to flex its muscle."
- The firm says additional positives included 300% reserve growth and monetization plans for non-core assets that also could prove incremental, which should allow GPOR to remain a top-tier growth player.
- In reiterating its Buy rating, Sterne Agee says GPOR continues to post best-in-basin pricing on natural gas and natural gas liquids, which is attributed to its takeaway optionality from the Cadiz processing complex in Ohio.
- RBC raises its price target to $57 from $55, citing GPOR's production guidance even amid fa 42% reduction in capex; Canaccord ups its target to $54 from $46 and says GPOR may be the best positioned name in its coverage universe when considering the company's production growth with little balance sheet stress (Briefing.com).
- Goodrich Petroleum (GDP +3.6%) trades higher despite missing expectations for Q4 earnings and revenues, but the company did improve liquidity.
- GDP says it will issue $100M of 8% senior secured notes due 2018 together with warrants to purchase up to 4.88M common shares at an exercise price of $4.66, a 10% premium to yesterday's closing stock price.
- GDP's Q4 production slipped to 6.3B cfe vs. 7.4B cfe in the prior-year period, but oil output jumped 46% Y/Y to 531K barrels of oil from 364K a year ago; confirms its earlier oil production outlook of 4.8K-5.2K bbl/day in 2015, which includes completion deferrals into the second half of 2015.
- Says it reduced well costs in the Tuscaloosa Marine Shale by 23%, helped by a 35% drop in drilling days and reduced service costs.
- GDP earlier had revised its planned FY 2015 capital spending to $90M-$110M after $333M in capex during 2014.
- Chesapeake Energy (CHK -2.4%) discloses that it expects to write down the value of its oil and gas properties in Q1, with more writedowns in subsequent quarters if prices stay low, according to its latest 10-K filing.
- "Based on the first-day-of the-month prices we have received over the 11 months ended February 2015, we expect to have a material writedown in the carrying value of our oil and natural gas properties in the first quarter of 2015," CHK says.
- Ballard Power's (BLDP -5.5%) stock price target is cut to $2.75 from $3 at Cowen following disappointing Q4 earnings and revenues.
- While Q4 revenue of $15.6M was flat, the firm notes that adjusting BLDP's 19% gross margin for a $3.5M warranty provision puts the number in single digits; BLDP management says Q4 is not an indicative run rate, even when adjusted, but Cowen is concerned with the trending rate.
- The firm says it still sees long-term compound average revenue growth above 15% but due to depressed margins, an uptick in operating expense expected for 2015, and a lack of visibility for telecom backup, it finds the stock fairly valued.
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs