Today - Thursday, August 21, 2014
- Plains All American Pipeline (PAA -0.5%) announces plans to construct a 440-mile pipeline from its Cushing, Okla., terminal to Valero's (VLO +0.2%) Memphis refinery, to provide capacity of up to 200K bbl/day of domestic sweet crude.
- PAA expects total project investment of ~$900M and completion in late 2016.
- PAA says the Diamond pipeline project is underpinned by a long-term shipping agreement with VLO and a related contract for storage and terminalling services at the Cushing terminal.
- VLO holds an option until Jan. 2016 to become a partner in the pipeline and purchase a 50% interest.
- A planned $2B deal between Rosneft (OTC:RNFTF) and oil trader Vitol has been scrapped, FT reports, in the clearest sign yet that tougher western sanctions are hurting the Russian state oil group’s ambitions.
- Vitol, the world’s largest independent oil trader, had been in talks to raise the money from international banks to make an advance payment to Rosneft in exchange for future oil supplies, but sources say the deal has been shelved in the wake of the latest round of sanctions.
- Bankers and traders say the latest round of sanctions likely will discourage western banks from financing new such prepayment deals, even if existing deals are unaffected.
- Penn West Petroleum (PWE -0.6%) says holders of its unsecured notes have provided waivers that give it until at least Oct. 14 to fix defaults arising from the previously announced restatement of more than four years of financial results that revealed hundreds of millions in expenses had been classified incorrectly.
- PWE previously received waivers from the defaults under its bank lending agreements; it announced last week it had access to up to $660M under the bank facility, of which $250M had been drawn.
- Russia's Gazprom (OTCPK:OGZPY) says it has started seaborne shipments of oil to Europe from its Novoportovskoye field in the Arctic.
- Gazprom says more than 80K metric tons of the new Novy Port oil classification, light and low-sulphur, was scheduled to be delivered from the field by two tankers during the 2014 ice-free season.
- Meanwhile, Gazprom says Ukraine's outstanding debt for gas supplies stood at $5.3B as of Aug. 1 and calls on Ukraine's government to ensure that gas continues to transit without disruption to Europe.
- Eni (NYSE:E) says it has started production at the offshore Deka gas project in Egypt in a joint venture with BP, with the first of five development wells in operation producing 1.8M cubic meters/day of gas.
- Deka's production is expected to reach its peak in Q1 of next year with a total gross gas rate of ~6.5M cubic meters/day.
- Eni, the biggest foreign energy player in Egypt, produced ~228K boe/day last year.
- Even as chaos continues to engulf the country, Libya said yesterday that oil exports would resume shortly from the Es Sider terminal, the country's largest and capable of exporting 350K bbl/day of crude, after being shut for the past year.
- Libya’s production is now well over 500K bbl/day, still below peaks reached under Gadhafi's rule but a significant addition to global oil supply.
- Crude oil futures are falling in Europe on news of the increased Libyan supply as well as weak overnight data on Chinese manufacturing; October Brent crude on the ICE exchange fell $0.71 to $101.57.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM, TWTI
- Petrovietnam has entered talks with banks to secure financing for a seven-year loan of up to $1.8B for its bid to buy a stake in Murphy Oil's (NYSE:MUR) Malaysian oil and gas assets.
- The $1.8B offer tops a $1.5B bid previously made by India's Oil & Natural Gas and Oil India. Mitsubishi (OTCPK:MSBHY) is also bidding on the assets.
- After a year-long blockade, Libya has restarted oil exports from its largest port, resolving some mistrust between rebel leaders and the government.
- Despite the ongoing clashes and violence still raging in main cities, the OPEC member's oil production has risen in the past few weeks to around 560K barrels a day.
- The new production is well above the 100K bpd seen earlier this year, but still short of the 1.4M bpd a year ago.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM, TWTI
Wednesday, August 20, 2014
- In a victory for Big Oil, an Alaska ballot measure to repeal a 2013 law that drastically cut the amount of taxes major oil companies in the state had to pay appears headed for defeat.
- A measure on Alaska’s primary ballot yesterday would have reinstated the state’s progressive oil taxes, originally installed in 2007 and dismantled last year in an effort to lure oil companies to the state.
- ConocoPhillips (NYSE:COP) and BP, the two biggest oil producers in the state, called it a victory; COP, which has said it plans to spend $2B to drill more wells in Alaska's Alpine and the Kuparuk fields, says the new tax plan has improved the investment climate in the state.
- BP has said the new tax code enables it to invest $1B into Prudhoe Bay, the field that has produced 12B barrels of oil over several decades and could pump 12B more before it is completely spent.
- An advertisement from Peabody Energy (NYSE:BTU) promoting coal as an energy source is misleading in its use of the phrase “clean coal,” according to the U.K.'s regulator for advertising standards.
- Upholding a complaint from the World Wildlife Fund, the regulator says consumers were likely to interpret the advertisement as a claim that “clean coal” processes don’t produce carbon dioxide or other emissions, and the ad must be changed before it runs again.
- The agency rejects a complaint from the WWF that BTU’s statement that “energy poverty” is the biggest human and environmental crisis was misleading and unsubstantiated.
- ConocoPhillips (COP +0.7%) works its way higher after BMO Capital raises its price target for the shares to $80 from $70 and boosts its EPS estimates through 2016, citing improving upstream margins.
- In modeling COP's cash generation to test its ability to grow upstream margins at its target of 3%-5% compound annual growth rate to 2017, BMO says its analysis provides for just 2%-3% growth but sees upside if COP can grow its Lower 48 unconventional volumes faster than expected - highly possible given COP's successful development program, the firm says, as resources already have been substantially increased.
- FuelCell Energy (FCEL -7.1%) is slammed by a variety of factors, particularly remarks from a Toyota exec at the JPMorgan Auto Conference who said filling up a tank of vehicles powered by hydrogen fuel cells could cost $50, nearly twice as expensive as gasoline.
- Also, a StreetSweeper article predicts "stubborn challenges" ahead for FCEL, including the likely loss of its biggest customer, an inability to scale, and "if FCEL is really on the verge of profitability, why does it keep selling shares?"
- Finally, Jim Cramer told his Mad Money audience that he would stay away from the stock: “These are just total rank speculation stories. I can’t go there.”
- ConocoPhillips (COP +0.7%) beat out BP (BP -0.1%) to win one of the most contested tracts of today's western Gulf of Mexico lease sale, entering the event's highest apparent bid of $16.7M for Alaminos Canyon block 431.
- However, BP easily submitted the most bids (32) and was the apparent high bidder on 27, totaling $22.8M, while BHP was next with 14 bids comprising $21,8M; Chevron (NYSE:CVX) submitted just five bids but tallied the highest sum of high bids, totaling $25.8M.
- Shell (RDS.A, RDS.B) made just one offer in the sale, for territory near its Perdido developments; its $1.75M bid was enough to win Alaminos Canyon block 905, edging out the only other competitor, Stone Energy (NYSE:SGY).
- Miller Energy (MILL +3.9%) reports an 11.7% Q/Q increase in proved reserves to 11.7M boe from the 10.5M boe, with $361M in total proved reserve PV-10 from $448M reported at the end of April.
- Brean Capital reiterates its Buy rating and $9 price target, believing the increase in proved reserves vs. a negative revision earlier this year - which the firm thinks was much more closely related to a change in the company's independent reserve engineering firm than to any change in asset quality or ultimate deliverability - should assuage investor concerns (Briefing.com).
- Separately, MILL plans a public offering of its 10.5% Series D fixed rate/floating rate cumulative redeemable preferred stock; the company expects to use the proceeds for general corporate purposes.
- A 15-mile section of the Ohio River has been reopened for limited traffic as clean-up of a 5K-gal. fuel oil spill from a Duke Energy (DUK -0.7%) power plant continues.
- DUK says a "good portion" of the oil had been cleaned up from the surface of the river, and the Greater Cincinnati Water Works says drinking water intakes from the river have been reopened.
- Meanwhile, North Carolina state House and Senate leaders say they have reached agreement on legislation to make DUK curb pollution from its 33 coal ash dumps in the state and require closure of all unlined coal ash ponds within 15 years.
- Norway's oil fund reports a 3.3% profit on its investments in Q2, and its investments in Russian government bonds, banks and energy companies were broadly unchanged, but the fund's chief executive warns the effect on European equities from tensions between Russia and the West could hurt future earnings.
- Oil and gas sector stocks were the fund's best Q2 performers; among individual stocks, Apple, Royal Dutch Shell (RDS.A, RDS.B) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY) contributed the most to earnings.
- The Norwegian Oil and Gas Association weighs in with a report says the country risks discouraging investment in its oil industry if it repeats surprise tax increases and political meddling in projects.
- CenterPoint Energy (CNP +0.4%) is upgraded to Buy from Hold with a $29 target price at Argus, based primarily on an expanding infrastructure improvement program and the new Enable Midstream Partners MLP formed as a joint venture between CNP, OGE Energy and ArcLight Capital Partners.
- CNP has a solid base of regulated utility assets and a well-managed non-regulated interstate gas pipeline and storage operation, Argus says; CNP is committed to electric and gas service expansion strategies in its regulated service territory, and sees significant growth opportunities in its non-regulated segment.
- BP (BP -0.4%) has hired SandRidge Energy (SD -1.5%) COO David Lawler as the chief executive for its newly separated U.S. Lower 48 Onshore business.
- SD had promoted Lawler to COO in April 2013 following two years as executive VP of operations; previously, he had led PostRock Exploration and spent a decade with Shell in a variety of roles.
- BP's business in the continental U.S. operates in multiple gas basins from the onshore Gulf coast north through the Rocky Mountains, and its portfolio includes an unconventional resource base of ~7.6B boe across 5.5M acres and an interest in ~20K wells.
- SD says it is beginning a search for Lawler's replacement, while also promoting senior VP Craig Johnson to executive VP of operations.