Today - Monday, March 10, 2014
- Petrobras (PBR -3%) jumps into the global bond market with plans to raise at least $3B from the sale of six sets of dollar-denominated bonds, including fixed-rate bonds and floating-rate debt; total demand for the bonds reportedly has reached ~$12B so far.
- PBR is borrowing to finance the development of offshore oil fields that account for a large part of its $221B spending plan for the next five years, which has turned PBR into the region's most indebted company.
- Kirby Corp. (KEX -1.1%) is added to the Top Picks list at FBR Capital, which notes KEX's core marine transportation unit continues to exhibit solid growth, driven by the transport of petrochemicals, black oil and refined products, and the firm expects demand for these volumes to only accelerate over the next three years.
- FBR thinks fundamentals driving KEX's diesel engine services unit bottomed in 2013, and it expects the segment to be a major contributor to earnings growth in 2014 and beyond.
- While expecting steady, consistent growth in the marine business, the firm says it "would not be surprised" to see growth juiced by M&A activity in the near term, particularly in the coastal barge market.
- Husky Energy (HUSKF) says its reserves growth outpaced production last year as a result of the addition of reserves in its oil sands business, the full-scale development of the Ansell liquids-rich gas resource play and increased heavy oil recovery from thermal developments in western Canada.
- Husky's 2013 reserves replacement ratio was 166%, and the average proved reserves replacement ratio realized over the past three years was 172%.
- Husky raises its 2014 production guidance to 330K-355K boe/day and says it is on track to achieve its 2012-17 production growth rate target of 5%-8%.
- Last week's momentum in alternative energy shares continues into the new week, as Plug Power (PLUG +10.4%), FuelCell Energy (FCEL +11.6%), Ballard Power (BLDP +10.2%) and ZBB Energy (ZBB +15.1%) open sharply higher.
- FCEL earnings come out after the close today, and PLUG results are set for a Thursday release.
- Callon Petroleum (CPE) reaches agreement with Lone Star Value Management to expand the size of its board to eight directors from six, and appoints two of the hedge fund's suggested candidates to fill the newly-created directorships.
- Earlier this year, Lone Star had called for a review of strategic alternatives at CPE, which initially had labeled the criticisms "ill-advised and self-serving."
- U.S. Geothermal (HTM) says its Oregon USG Holdings subsidiary has made its first distribution of profits from the Neal Hot Springs geothermal project.
- HTM's share of this first distribution is $4.6M out of a total distribution to the partners of $7.7M, which represents profits generated from the project since initial operation began in Nov. 2012.
- Oregon USG is owned 60% by HTM and 40% by Enbridge (ENB).
- Sasol (SSL) says its fiscal first-half profit rose 26% Y/Y, helped by higher chemical prices and a weaker rand against the dollar.
- Earnings excluding one-time items rose to 18.4B rand, or 30.19 rand/share in the six months through December, from 14B rand, or 24.01/share a year earlier.
- SSL will pay a record interim dividend of 8 rand/share, a 40% increase Y/Y.
- Says it was hit by a one-time 5.7B rand writedown due to costs associated with its Canadian shale gas operation and sale of its stake in Iran-based Arya Sasol Polymer Co.
- Says its Louisiana plant that converts ethylene into other chemical products will be fully operational by the middle of this year.
Saturday, March 8, 2014
- After this week's scathing setback in a U.S. court, Ecuadorean villagers trying to get billions of dollars from Chevron (CVX) for pollution in the Amazon rainforest are ready to refocus on pending suits in other countries.
- While the U.S. district judge's decision will bar enforcement in the U.S. of the $18B judgment against Chevron in Ecuador because the villagers' American lawyer used "corrupt" means, it is not binding in cases elsewhere.
- Of cases pending in Canada, Brazil and Argentina, the Canadian case seems to have progressed the farthest, with an Ontario appeals court in December ruling that Canada should be a forum to hear Ecuadoreans' claims.
- The Patton Boggs law firm that assisted the U.S. lawyer trying to enforce the Ecuador judgment has suggested 24 countries where the plaintiffs could potentially find better luck.
- Chevron hopes this week's ruling will be a game changer for the remaining cases, but those cases could take several more years to fully play out.
Friday, March 7, 2014
- A drilling surge in the Permian Basin appears to account for this week's increase in the U.S. oil rig count, which jumped by 13 to a record high 1,443 in the latest tally by Baker Hughes (BHI).
- “While it’s one of the oldest fields in the U.S., there are multiple producing formations there, and companies are learning how to optimize horizontal drilling in them," WTRG Economics' James Williams says. "The growth is evidence that they’re figuring it out."
- Indeed, as Permian crude production per rig is expected to climb to 98K bbl/day this month, up from 83K a year ago, according to the U.S. Energy Department.
- While Pioneer Natural Resources (PXD), for example, is drilling in a 300-ft. thick shale shale formation in Texas' Eagle Ford play, the Permian offers shale depths of 3,500 ft., “so this is why this area has really substantial running room going forward,” COO Timothy Dove says.
- Other top Permian producers: CXO, APA, COG, CVX, OXY, EGN, END.
- YPF says Q4 profit surged 88% to 1.9B Argentine pesos ($241M) on higher revenue from sales and production, beating analysts’ estimates.
- YPF also says it boosted crude production by 6.3% Y/Y while natural gas output rose 10.2%.
- YPF produces ~35% of Argentina's oil and gas and accounts for more than half of the fuel sold in the country.
- Earlier this week, YPF said it signed two contracts totaling ~$1.2B to lease 15 drilling rigs to develop Vaca Muerta, which contains an estimated 27B barrels of shale oil; Helmerich & Payne (HP) will provide 10 of the rigs.
- Energy Transfer Partners (ETP) announces plans to build a pipeline to transport oil from the Bakken shale in North Dakota to multiple refineries in the Midwest and Gulf Coast regions.
- ETP says it will launch an open season next week to assess market interest in the project, but did not reveal the pipeline's capacity and provided few details.
- ETP already is developing the Trunkline conversion project designed to take up to 420K bbl/day Bakken and Canadian crude from Illinois to Louisiana.
- The growing consensus is that fuel cell companies are transitioning from money losers to money makers, "similar to where solar was in 2011 and 2012, compellingly priced and poised for share-price increase," and are no longer the pawns of short sellers.
- Cowen analysts, who helped kick off the craze early this week they said Plug Power (PLUG +26.1%) could amass more contracts with current customers and possibly expand overseas, are out today saying FuelCell Energy's (FCEL +14.3%) Q4 earnings, expected Monday, have the potential for upside.
- Fuel cell companies are capping a spectacular week: FCEL +79%, PLUG +71%, BLDP +42%, ZBB +132%.
2:57 PM| 3 Comments
- Royal Dutch Shell (RDS.A, RDS.B) says its Houston-to-Houma oil pipeline in southeast Texas leaked 364 barrels of oil yesterday when work crews accidentally punctured the line.
- The accident occurred in an open pasture in Port Neches, Tex.; the pipeline, which moves oil from Texas east into Louisiana, was shut down and isolated after the leak.
- Shell says it doesn't know when the line, which can carry up to 360K bbl/day, will resume operations.
- Alpha Natural Resources (ANR -9.4%) is hit hard after Goldman Sachs last night cut its rating on the shares to Sell and lowered its price estimates for coal; other sector names are following suit.
- Goldman also cut its price estimate for met coal this year to $141/metric ton from $150 and lowered projections for next year and 2016 following increased Australian output, an expected slowdown in the growth of Chinese imports, and “limited U.S. supply rationalization."
- The firm maintains a Neutral rating on Walter Energy (WLT -5.6%) but cuts its price target to $10 from $12.
- Also: BTU -4.2%, ACI -4%, CNX -1.5%, OXF -1.6%, JRCC -1.5%, CLD -0.7%, KOL -2.1%.
- Two energy investors presenting at Capital Link's MLP stress the desirability of crude oil and natural gas liquids over natural gas, and the importance of geographic diversity in suggesting six MLPs to buy now.
- Kyri Loupis, head of energy and infrastructure at Goldman Sachs, likes Oiltanking Partners (OILT), Lehigh Gas Partners (LGP) and EQT Midstream Partners (EQM) - smaller MLPs with strong growth prospects, healthy balance sheets and small distribution obligations to general partners.
- Dan Spears, a portfolio manager at Swank Capital, prefers larger pipeline players Access Midstream Partners (ACMP), Energy Transfer Equity (ETE) and NGL Energy Partners (NGL).
- Cabot Oil & Gas (COG +0.8%) is upgraded to Buy from Accumulate at KLR Group, which notes that COG's largest catalyst for growth is the Appalachian Basin Marcellus Shale, projecting ~41% production growth in 2014 as it plans to start a six-rig program to begin drilling this year.
- The firm's new $48 target price is based on the NPV of free cash flow over the life of a company using a reasonable discount rate; COG's valuation applies a 12.5% discount rate to determine the NPV of its free cash flow.