Today - Tuesday, March 11, 2014
- The collapse in Plug Power (PLUG -40.8%) has pulled down other alternative fuel shares, as investors turned away from FuelCell Energy's (FCEL -21.6%) better than expected Q4 results to focus on Citron Research's report that said PLUG would be fairly valued at 50 cents.
- Citron's Andrew Left has since taken to the CNBC airwaves to say PLUG has no unique technology and PLUG's management cannot be trusted.
- Ballard Power (BLDP -26.6%), which earned 11% of its revenue last year by supplying the fuel cell stacks that run PLUG’s forklifts, also takes a beating.
- Faring better is Capstone Turbine (CPST +7.9%), off earlier five-year highs but still sharply higher, as the maker of microturbines has been moving slowly toward profitability.
- Brazil's federal tax authority filed a series of new tax claims against Petrobras (PBR -1.5%) between October and January, and the state-run company is challenging five tax assessments that total 8.77B Brazilian reais ($3.74B).
- PBR says it has presented its defense against each of the claims and is awaiting judgment; the company considers the chance of losses to be "possible, but not probable, and accordingly we have not established any provision."
- But investors should not brush off the claims; Vale agreed to pay 22.33B reais to settle a similar series of disputes over taxes on its foreign operations, which contributed to a record $6.45B Q4 net loss.
- Two contractors performing maintenance work at Tesoro’s (TSO -0.4%) Golden Eagle refinery in northern California suffered burns yesterday when they were splashed with sulfuric acid, an accident that occurred in the same processing unit where two employees were burned by acid last month.
- The first incident prompted state and federal regulators to raise broader questions about how TSO runs the plant; TSO said an investigation by the U.S. Chemical Safety Board was biased and that the agency overstepped its bounds.
- TSO claims yesterday's accident is unrelated to the Feb. 12 chemical release.
- NRG Energy (NRG +1.7%) agrees to acquire Dominion Resources' (D -0.2%) retail electric business for an undisclosed sum, in a bid to expand its presence in the northeastern U.S. and Texas.
- Dominion's retail electric business serves more than 600K customers in northern states from Illinois to New York, while its Cirro Energy brand is focused on Texas.
- NRG has made a steady series of deals to boost its retail power business and its collection of power plants; it became the biggest wholesale electric company in the U.S. last year after it acquired GenOn Energy for ~$1.7B, and it is buying coal plants, wind farms and other assets out of bankruptcy from an Edison International subsidiary.
- Edison Mission Energy wins court approval of a plan to exit Chapter 11 protection through a $2.64B asset sale to NRG Energy (NRG +1.7%) that will give NRG coal-burning power plants in the Midwest that may boost revenue if natural gas prices rebound.
- Edison Mission’s non-bankrupt parent, Edison International (EIX -1%), agreed last month to a nearly $1B settlement that resolved the unit’s tax, pension and other liabilities.
- NRG is paying $2.29B in cash and $350M in stock for the assets; EIX will continue to own what’s left of Edison Mission after the sale.
- The meteoric rise in Plug Power (PLUG +2%) is weakened after Citron Research says the fair value of the stock is a mere $0.50, which is a blended average of all of the company's recent capital raises.
- PLUG will issue earnings and guidance on Thursday and warns investors they "cannot trust management guidance... not even a little bit," saying the company has "a history of broken promises and failure to deliver."
- Citron claims Wal-Mart and Fedex are PLUG customers only to take advantage of the 1063 Treasury Program that gives tax credits for renewable energy.
- The summary from Citron's report: "No profits. No unique technology. No scalability. No demand. No brand equity. No media hype. No analyst support."
- The stand-off appears to have ended in Libya, where the country’s navy has taken control of a North Korea-flagged oil tanker that was attempting to buy $30M-plus of crude from a militia that took control of the country’s three biggest ports last summer.
- Though the militia controls the As Sidra port, the oil belongs to Waha Oil, a joint venture between Libya’s state-run National Oil Corp. and western companies Marathon Oil (MRO), Hess (HES) and ConocoPhillips (COP).
- Libya holds Africa’s largest oil reserves, including some of the world's highest-grade crude, yet production has slumped to ~275K bbl/day from 1.4M last July.
- Recon Technology (RCON +6.7%) says its BHD petroleum technology division received a new oilfield access certificate authorizing it to provide horizontal fracturing equipment and services for Sinopec (SNP).
- RCON and partner Baker Hughes (BHI) have so far provided fracturing equipment utilized at one of SNP's Northeast oilfield's wells.
- Roth Capital raises its price target on high-flying Hydrogenics (HYGS -2.7%) to $40 from $14 and keeps its Buy rating following recent Q4 results.
- The firm notes Q4 gross margin was light at 24.6% and profit missed on higher than expected operating expenses; the company affirmed guidance, which calls for a 30% gain in profits in 2014 and achieving profitability in H2 2014.
- Roth expects power-to-gas to serve as a source of long-term revenue growth, while in the short term HYGS is seeing increased customer interest for larger projects; although it is difficult to predict timing, it believes HYGS may secure large-scale orders in 2014.
- Despite today's losses, shares have gained 68% YTD.
- Knightsbridge Tankers (VLCCF +11.1%) is upgraded to Buy from Neutral with a $16 target price at Global Hunter following yesterday's news of an agreement to purchase six Capesize bulk carriers.
- Global Hunter views the deal as especially well timed considering the recent strength of the dry bulk market, particularly the Capesize segment; the firm says the $360M cost is in line with its assessments of such vessels.
- The firm believes VLCCF is now positioned to generate substantial cash flow and pay a growing dividend.
- PowerSecure International (POWR +10.2%) surges to a new all-time high following a strong Q4 earnings beat on a 57% surge in revenue, driven by gains in its energy efficiency and utility infrastructure businesses.
- Revenue backlog stands at an all-time high of $248M; operating margin decreased to 4.8% vs. 6.7% in the year-ago quarter, driven by the decrease in gross margins and partially offset by a decrease in operating expenses as a percentage of revenues.
- POWR is upgraded to Buy from Hold with a $30 price target at Maxim Group, which cites the record backlog, its pipeline of opportunities and expectations for margins to gravitate higher throughout 2014-15; Baird raises its price target to $29, also citing expected margin expansion.
- Clean Diesel Technologies (CDTI +127.9%) explodes to a 52-week high after announcing it has begun production of catalysts featuring its high-performance Mixed Phase Catalyst technology for Honda's 2015 Acura TLX model.
- Along with the Acura TLX, CDTI also provides catalysts to Honda for North American versions of its four- and six-cylinder Accord, Acura TSX and RLX, as well as Hybrid and Plug-In Hybrid models.
- Chevron (CVX -0.6%) reaffirms its strategies and long-term growth outlook at its annual analyst meeting, but cuts its 2017 production forecast to 3.1M boe/day from earlier guidance of 3.3M boe/day.
- Expects increasing worldwide energy demand to prompt "significant" production growth over the rest of the decade: "This compelling growth profile, combined with flattening capital spending levels these next few years, should serve as a strong catalyst for value creation for our shareholders in the years ahead," CEO John Watson says.
- Sees $10B in asset divestment proceeds from 2014-16.
- FuelCell Energy's (FCEL) FQ1 results aren't slowing down the recent buying frenzy in its shares, +16.8% premarket after revenue jumped 22% Y/Y and losses narrowed amid growing demand for multi-megawatt fuel cell parks.
- Inquiries and activity levels globally remain high, FCEL says, and the company is on track to close orders worth multiple megawatts of power capacity.
- Backlog totaled $327M at Jan. 31, 2014 vs. $428M a year ago.
- No FQ2 guidance is provided; consensus estimates for the quarter are an EPS loss of $0.03 on sales of $48.8M.
- Alternative energy stocks continue to rise at a torrid pace: PLUG +9.5%, BLDP +11.7%, HYGS +5.1%, ZBB +18.8%, CPST +13.2%, OPTT +9.9% premarket.
- Petrobras (PBR) sold $8.5B of bonds yesterday, cementing its position as Latin America’s biggest debt issuer.
- Investors snapped up the bonds after PBR offered yields that were as much as 0.45 percentage point higher than existing bonds, helping overcome concerns that the sale would create a glut of supply.
- PBR is raising funds as it seeks to develop the biggest offshore oil find in the Americas in more than 30 years; it sold $5.1B of bonds denominated in euros and pounds on Jan. 7 after raising $11B in a six-part sale in May, the most ever for an emerging market issuer.
- SunCoke Energy (SXC) reveals plans to drop down the company's entire domestic coke business to SunCoke Energy Partners (SXCP) and announces its strategic intent to exit the coal mining business.
- SXC plans initially to drop down a 33% interest in the Haverhill and Middletown cokemaking operations; although terms have not been finalized, SXC expects SXCP to finance the transaction through a combination of equity and debt.
- Says severe winter weather across its operations and challenges at its Indiana Harbor cokemaking facility knocked 60K tons off coke production; SXC lowers expectations for Q1 adjusted EBITDA by $10M-$15M and FY 2014 adjusted EBITDA to finish at the low end of its $230M-$255M guidance.
- Major oil companies are facing a legal limbo over Black Sea energy prospects because of Crimea's decision to hold a referendum over whether to secede from Ukraine and join Russia.
- A consortium that includes Exxon (XOM) and Shell (RDS.A, RDS.B) planned to invest $735M on drilling two wells off Crimea, while Eni (E) has a license to explore in the region.
Monday, March 10, 2014
- Canadian Natural Resources (CNQ) remains haunted after nearly a year of unexplained leaks at its Primrose oil sands production site, as Alberta's energy regulator turned down its application to resume steaming operations in the affected area "in light of the ongoing investigation into the leaks at Primrose."
- The decision came on Friday, just a day after CNQ CEO Steve Laut told analysts the issue was “totally solvable” and that the company hoped to restart steaming in the impacted area in March or April.
- The mysterious subterranean leaks of oily water, which now total more than 7K barrels of crude, were first detected last May and led regulators to impose an indefinite ban on some steaming operations at Primrose.
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