Today - Wednesday, January 28, 2015
- GE and Statoil (NYSE:STO) launch an R&D partnership to work on ways to cut greenhouse gas emissions, in a bid to show that fossil fuels can have a long-term future under increasingly tough climate regulations.
- The two companies are seeking technologies that can reduce emissions and cut costs, for example by reducing the wasteful flaring of associated gas released during oil production, FT reports.
- The partnership is a first for GE’s oil and gas services division, which believes technologies to cut the use of fuel and other resources will prove commercially attractive at a time of weak oil prices.
- Kinder Morgan's (KMI -1.3%) proposed Freedom Pipeline, which would move West Texas crude to California, is getting more interest from west coast refiners, according to the head of the company's natural gas pipeline unit.
- A revamped proposal for the pipeline includes adding a facility at the front end in Texas to provide crude blends that better match the Alaska North Slope crude that California refineries typically process; the new proposal also involves shipping condensate that could be exported from California.
- If approved, the pipeline project would open another outlet for processed condensate exports that so far have been shipped from the U.S. Gulf coast.
- National Oilwell Varco (NOV -4.9%) hits a 52-week low after shares are downgraded to Underperform from Neutral with a $43 price target, down from $60, at Credit Suisse, which says NOV appears to be the most negatively impacted stock by many negative data points coming through its 2-3 year outlook.
- The firm says NOV is an exceptionally well-managed company, but believes the rig systems business - 44% of estimated 2014 EBIT - will be hurt by an expected lack of new deepwater rig orders through 2016 and its exposure to slowing North American and international activity due to lower oil prices.
- Peabody Energy (BTU -3.5%) is downgraded to Hold from Buy at BB&T, which notes that the share price is hardly cheap considering it bakes in metallurgical coal prices ~11% above the most recent quarterly benchmark.
- BTU says that even under a higher met coal price scenario, BTU still would have estimated net debt/EBITDA of 6.6x and a negative free cash flow yield; the company's projected numbers and the anticipated macro environment for coal simply do not justify a Buy rating, the firm says.
- Plug Power (PLUG -7.2%) says it has "received a lot of criticism for underdelivering," which it cites as a reason to lower its guidance for FY 2015 revenues to "in excess of" $100M, below $123M analyst consensus estimate.
- In its business update conference call, PLUG says it expects to achieve $200M in 2015 bookings with sales of more than 3,300 GenDrive units and GenDrive product gross margins of greater than 29%.
- PLUG also says it recently closed two "significant" deals but does not provide specifics.
- Ultra Petroleum (UPL -7.6%) is downgraded to Sell from Neutral with an $11 target price, down from $13, at Goldman Sachs, citing the deflationary pressures in the oil market which the firm believes will be felt in natural gas.
- Goldman sees some greater downside risk to UPL’s production given its weaker balance sheet relative to E&P peers and higher cost gas assets relative to Marcellus and Utica peers; the firm also views UPL's focused Pinedale and Uinta as merely average assets.
- Petrobras (PBR -10%) plunges after releasing its delayed Q3 results but failing to announce a writedown related to the corruption scandal at the company, which had been seen as step toward restoring credibility.
- In unaudited results, PBR said Q3 net profit fell 8.8% to $1.18B and EBITDA tumbled 10% to $4.5B, but that it was "impracticable" to give a figure on the financial damage from the alleged bribery and kickback scheme at this time.
- Earlier this month, some creditors agreed to accept unaudited Q3 results as long as they were released by the end of this week, but some analysts say the Brazilian government may still have to provide PBR with emergency funding, which would strip the company of its investment-grade credit rating and endanger the country’s investment-grade status.
- PBR did report a charge of 2.7B reais related to the construction of two refinery projects in northeast Brazil after deciding not to move forward with them; it also said its new 2015 budget would total U.S. $31B-$33B after averaging ~$44B/year as part of its plan to spend more than $220B by 2018.
- Enterprise Products Partners (EPD -1.1%) says it is investigating the cause of an explosion that erupted from a pipeline break earlier this week in West Virginia.
- The Appalachia-to-Texas Express ethane line is new and started moving fuel only last year; it originates in Pennsylvania and brings ethane from the Marcellus and Utica shale formations to the storage site in Mont Belvieu, Tex.
- The fire occurred in a remote area and did not cause injuries or structural damage, and EPD said the affected portion of the line was quickly isolated and shut off.
- Chevron (CVX -2.2%) says it plans to work with BP (BP -2.1%) and ConocoPhillips (COP -1.7%) to explore and appraise 24 jointly held offshore leases in the northwest part of Keathley Canyon in the deepwater Gulf of Mexico.
- The move marks a significant strategic retreat for BP, which will sell to CVX half its equity interests in the Gila and Tiber fields, huge deepwater discoveries found during the past decade, as it continues to scale back its balance sheet and cut costs; financial terms are not disclosed.
- CVX and COP agreed to joint ownership interests in the Gibson exploration blocks east of Gila.
- In Gila and Gibson, CVX will be the operator and own 36% interests, with BP holding 34% and COP 30%; in Tiber, CVX and BP each will own 31%, Petrobras (NYSE:PBR) 20% and COP 18%.
- Gazprom (OTCPK:OGZPY) says it has canceled a plan to expand its Nord Stream natural gas pipeline because of the weak gas market and political tensions between Russia and the west.
- Existing capacity through Nord Stream, which runs under the Baltic Sea and serves Germany, is enough for now and there is no immediate need for an expansion, Gazprom says.
- Nord Stream consists of two pipes with an annual capacity of 55B cm, enough to supply ~10% of the European Union's annual gas needs; the construction of two more pipes would have doubled capacity.
- Aregntina's YPF and China's Sinopec (NYSE:SNP) sign an MOU aimed at eventually partnering to develop oil and gas projects in the South American country.
- SNP, which is already Argentina's fourth-leading oil producer, has no experience in unconventional oil in the country, but a potential partnership could entail YPF helping develop its conventional output while the Chinese company would invest alongside YPF to raise shale oil production.
- YPF already has partnered with Chevron and Malaysia's Petronas to develop shale oil in Vaca Muerta, and has been courting international investors to boost unconventional energy output one of the world's top shale oil and gas prospects.
- Hess (NYSE:HES) -1.7% premarket as Q4 earnings fall short of Wall Street expectations, as lower gas prices dragged down earnings despite increased production.
- Q4 oil and gas production averaged 362K boe/day, up 18% Y/Y, with Bakken output of 102K boe/day representing a ~50% Y/Y increase.
- HES expects overall FY 2015 production to average ~350K boe/day, up ~10% Y/Y, driven by a full year of production from the Tubular Bells field in the Gulf of Mexico following first production in late 2014.
- HES says it plans to reduce its spending in the Bakken oil patch by 18% Y/Y to $1.8B, with technology as well as lower oil prices factoring into the decision; the company expects to drill almost as many wells as it did last year while running only half of the drilling rigs.
- HES announced Monday it was cutting its overall capex budget for 2015 by 16% to $4.7B.
- Noble Energy (NYSE:NBL) and the Cyprus government are discussing the potential exploitation of the 4.5T cf Aphrodite gas field discovered in 2011, the country's energy minister says.
- Delek Drilling and Avner Oil each own 15% of Aphrodite, with NBL controlling the rest; Aphrodite is adjacent to the much larger Leviathan field in Israeli waters in which the three companies also hold a concession.
- The minister also says discussions had almost concluded with Total (NYSE:TOT) on modifying an existing exploration permit after initial results showed no tangible reserves in an area where it was licensed.
- Cenovus Energy (NYSE:CVE) cuts its capital spending budget by an additional $700M, the second time Canada's no. 2 independent oil producer has announced capex cuts in response to lower oil prices.
- CVE says the cuts will focus largely on conventional operations in southern Alberta and Saskatchewan, where it will suspend the bulk of its drilling program for the year; it will continue to fund optimization and expansion programs at its Christina Lake oil sands project, as well as the expansion at Foster Creek.
- In December, CVE projected spending of C$2.5B-C$2.7B, a ~15% reduction from 2014 levels; it is now targeting spending of C$1.8B-C$2B.
- CVE also plans to “realign” its workforce in the coming weeks in line with its revised spending plans and to cut the size of its contract workforce.
- Reduces its oil production forecast for 2015 to 195K-212K bbl/day from 197K-214K bbl/day it forecast in December.
- South Africa's Sasol (NYSE:SSL) says it is delaying investment plans for a giant gas-to-liquids plant expected to be built in Louisiana, part of a broader plan to save cash amid lower oil prices.
- The plant, to be located next to an $8B ethane cracker in Lake Charles, La., had been estimated to cost as much as $14B, making it one of the biggest planned foreign investments in the U.S.; Louisiana officials had seen the plant as a potential growth and jobs-creation engine for the state.
- SSL says it will proceed with construction of a smaller planned ethane cracker and plant in the area that would produce ethane-based products such as plastics and chemicals. Sasol said that by moving forward on that smaller project it could reassess whether to go ahead with the bigger GTL investment.
- Weatherford International (NYSE:WFT) discloses that it is eliminating the COO position, with Dharmesh Mehta moving a role as executive VP for corporate strategy.
- The COO position will not be filled as the company adopts a flatter management structure, in an effort to cope with the new global oil environment.
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