Today - Monday, September 1, 2014
- Russia's Energy Minister Alexander Novak has announced that Moscow and Kiev will hold a new round of talks revolving their gas dispute on Sept. 6.
- The two are now awaiting the European Commission's decision whether their representative will join the negotiations.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, KOLD, UNL, NAGS, DCNG
Saturday, August 30, 2014
- "Most of the reason that banks are underearning relative to their historical norms ... is economic and not regulatory," says Richard Pzena (NYSE:PZN), who remains bullish on the TBTFs. Low interest rates, weak trading, and "government persecution" are the three factors, and - should these normalize - earnings could nearly double at Bank of America (NYSE:BAC) and Citigroup (NYSE:C), though JPMorgan's (NYSE:JPM) boost would be more modest. Goldman Sachs (NYSE:GS) is another favorite.
- Broad financial ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
- Another cheap sector is energy, says Pzena, and based on relative valuation against the broader market - whether price-to-book or price-to-earnings - the major integrated oil companies are selling near all-time lows.
- What the market is missing, says Pzena, is the nature of oil investment. The old days saw capital spending one year, and boosted volume the next. Projects nowadays are far larger and require several years of spending before returns roll in. "We think those big new projects are going to perform and produce decent returns." HIs favorites: BP, RDS.A, RDS.B, XOM, TOT.
- Broad energy ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, PXJ, FENY, RYE, FXN, DDG
- For owners of Kinder Morgan Partners (NYSE:KMP) worried about the coming tax bill as their units become absorbed into Kinder Morgan (NYSE:KMI), the harsh reality is that the longer they have benefited from reaping years of KMP's excellent returns, the worse they'll fare when tax time rolls around.
- Ethan Bellamy, an MLP analyst with Robert W. Baird, estimates investors who acquired units during 1992-2000 could owe $24.04-$25.22 per unit, investors who acquired units during 2001-10 could owe $10.78-$23.72, and investors who got their units during 2011-13 could owe from $4.62-$7.13.
- What's more, there's very little unitholders can do about it; while "death is the best tax planning for MLPs," the coming reorganization counts as a taxable sale, with KMP investors slated to receive $10.77 in cash and 2.1931 shares of the new firm for each unit they currently hold.
Friday, August 29, 2014
- Ivanhoe Energy (NASDAQ:IVAN) finished 55% higher today for no apparent reason, and the company stated it was unaware of any factors other than previously announced news that would explain why the stock soared on ~130x typical daily volume.
- IVAN pointed to Wednesday's news confirming its intention to engage in a new services contract to develop the Block 20 oilfield development project in Ecuador, but shares had gained only ~8% in the following two days.
- Despite today's move, shares are -47% YTD.
- Constellation Energy Partners (CEP +11.9%) is sharply higher on news after yesterday's close that its board had approved a plan of conversion to a Delaware limited partnership called Sanchez Production Partners.
- In connection with the conversion, an affiliate of Sanchez Oil & Gas would become the general partner of the resulting LP.
- CEP expects to seek unitholder approval of the plan by year-end.
- Energy Transfer Partners (ETP +0.2%) says it completed its deal to acquire Susser Holdings (NYSE:SUSS), which will ultimately bring the Stripes and Sunoco convenience stores under the same umbrella.
- ETP gains ownership of more than 640 convenience stores in Texas, New Mexico and Oklahoma; geographically, the deal compliments ETP's earlier acquisition of Sunoco, which has a major presence in the eastern and southeastern U.S.
- Athabasca Oil (OTCPK:ATHOF) says it has closed the sale of its 40% interest in the Dover oil sands project to PetroChina (NYSE:PTR) for $1.18B.
- Delays in completing the transaction have weighed on the stock price, and Athabasca says it can now focus on other projects and start a new chapter in its history.
- Shares are halted in Toronto.
- Russia's no. 2 oil producer Lukoil (OTCPK:LUKOY, OTC:LUKOF) says its H1 commercial hydrocarbon production rose by 3.2% Y/Y to 410M boe, as overall crude production for Q2 gained 7% to 2M bbl/day.
- Says production at the West Qurna-2 project in Iraq had reached 330K bbl/day, and expects to eventually peak at 1.2M bbl/day from estimated recoverable reserves of ~13B barrels.
- Lukoil says it plans to cut capital spending by as much as $2B starting from 2015 because of economic and political volatility, after H1 capex came in at $7.7B.
- Barclays regards Russian oil and gas companies as too risky for now, with no reason to assume any resolution to the Ukrainian crisis in the near term, but it sees Latin American energy stocks offering a more appealing set of risk/rewards.
- Of the firm's two Overweight ratings among emerging market energy stocks, the firm says Pacific Rubiales (OTCPK:PEGFF) offers a combination of relatively small size, expertise in heavy oil and is positioned to take part in Mexico's energy reform.
- The firm also likes Petrobras (NYSE:PBR), expecting near- to medium-term positive momentum following the Brazilian presidential election in October, but it remains concerned about production and reserve replacement at Ecopetrol (NYSE:EC).
- In South Africa, Barclays believes Sasol (NYSE:SSL) is entering a period of sustainable positive momentum, with a number of potential near- to medium-term catalysts which could boost valuation.
- China energy heavyweights Sinopec (NYSE:SNP) PetroChina (NYSE:PTR) have raised their outlook on the country's shale gas industry but stopped short of predicting a near-term boom.
- Costs are coming down sharply, SNP Chairman Fu Chengyu said at the company's H1 results briefing earlier this week, citing the cost of shale gas drilling at the Fuling field - the country's largest shale gas project - which has been falling steadily to ~60M yuan ($9.8M) per well.
- PTR Vice Chairman and President Wang Dongjin said the company is keeping its drilling cost at 55M yuan per well and will strive to keep it under 50M.
- But Fu and Wang both ruled out the possibility of a shale gas boom in the near future, saying costs must come down much more and gas prices must rise further to justify a substantial step-up in investment.
- Vestas Wind Systems (OTCPK:VWDRY) says it has won a 30 MW order for taller-than usual wind turbines in Finland that are able to reap more power during low winds.
- The order for nine V126-3.3 MW turbines from Reconcept GmbH is for the Ylivieska Pajukoski project in Finland’s Ylivieska region, and includes a 12-year service contract.
- The towers will have a height to the hub of 137 meters (449 ft.), allowing for longer rotors that generate more energy in areas with low wind speeds.
- Vermilion Energy (VET +0.2%) is looking for acquisitions as it is set to be flush with cash from a gas project in Ireland, Bloomberg reports.
- President and COO Anthony Marino expects assets in Alberta and Saskatchewan to be the most probable targets of deals, while still considering possible purchases from Australia to Europe; VET also may boost its dividend, expand investment in existing properties and reduce debt.
- VET expects its 19% stake in Royal Dutch Shell’s (RDS.A, RDS.B) Corrib gas project offshore Ireland will boost annualized free cash flow by C$3/share when it starts in mid-2015; its projected C$8.67/share cash flow in the next 12 months would be the largest after Canadian Natural Resources among Canadian producers worth more than C$2B.
- Duke Energy (DUK +0.4%) files a plan with Indiana utility regulators to modernize the state's electric grid to deliver power to more than 800K homes, businesses and industries.
- DUK says its seven-year, $1.9B plan uses a combination of advanced technology and infrastructure upgrades to improve service to its customers and provide them with better information about their energy use.
- "Sand is the new gold," as share prices surge for U.S. companies which supply sand to energy producers in response to the growing use of fracking to extract oil and natural gas from shale formations.
- U.S. Silica (SLCA -0.4%), the biggest producer, has posted 52-week highs in nine of the past 10 trading sessions and has more than doubled YTD; Emerge Energy (EMES +0.9%) and Hi-Crush Partners (HCLP +2.7%) have posted respective YTD gains of 218% and 78%.
- Demand for fracking sand next year will be 96% higher than in 2015, with shortages continuing for years, Morgan Stanley analyst Ole Storer predicts in raising his 12-month price target for SLCA to $80.
- The U.S. government will resume issuing oil and gas leases next year for federal lands in California after a new study found limited environmental impacts from fracking and other enhanced drilling techniques.
- The study conducted by California's Council on Science and Technology concluded the current level of fracking and other well-stimulation techniques did not seem to be poisoning water supplies or increasing earthquake risks in the state.
- The research could prove a springboard for California to increase fracking activity during the coming years.
- ETFs: XLE, ERX, VDE, OIH, ERY, XOP, DIG, DUG, IYE, IEO, PXE, PXJ, FENY, RYE, FXN, DDG
- Valero Energy (NYSE:VLO) has restarted production at a corn ethanol plant in Indiana that was shuttered more than two years ago by its previous owner.
- VLO bought the plant in March from Aventine Renewable Energy Holdings for $34M, boosting the number of its ethanol plants to 11.
- The plant is expected to boost VLO’s ethanol production to 1.3B gallons/year, putting it behind only Archer Daniels Midland and Poet LLC in ethanol production.
- Libya's largest oil port Es Sider is now receiving supplies from oil fields, with Waha Oil Co. supplying 22K bbl/day after oil in storage at the port started to be shipped last week, ending a year-long stoppage.
- Libya's oil production has jumped to more than 600K bbl/day, 4x the level in late May, as the country's oil industry steadily recovers despite fighting between rival militias in the capital of Tripoli.
- Waha Oil is a partnership between Libya's National Oil Co. and U.S. companies Marathon Oil (NYSE:MRO), Hess (NYSE:HES) and ConocoPhillips (NYSE:COP).
8:27 AM| Comment!
- SNC-Lavalin (OTCPK:SNCAF) reportedly is one of four companies expressing interest in bidding for work on unconventional gas in Saudi Arabia, which is pushing ahead with plans to develop challenging shale deposits.
- The Saudi Aramco project will involve building processing facilities, wellheads and pipelines for the gas in Turaif in the northern part of Saudi Arabia where the big Waad al-Shamal mining project is under development.
- The three other interested bidders are said to be South Korea's GS Engineering and Construction, Italy's Maire Tecnimont and Japan's JGC.
- The EU has failed to broker a truce to resolve the natural gas dispute between Russia and Ukraine during talks in Moscow today, though the Russian energy minister promises to maintain gas supply to Europe for the winter.
- Russia repeated previous offer to sell gas to Ukraine at a discount of $100 per 1,000 cubic meters of gas, but Ukraine must pay at least $1.45B of its debt to Russian gas monopoly Gazprom (OTCPK:OGZPY) before any talks on the restructuring of the rest of $5.3B debt can start.
- If Ukraine cuts off Russian gas transit, it would hit Europe, which sources ~30% of its natural gas from Russia.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, KOLD, UNL, NAGS, DCNG