Seeking Alpha
  • Today - Thursday, December 18, 2014

  • 2:11 PM
    • Germany's BASF (OTCQX:BASFY) and Russia's Gazprom (OTCPK:OGZPY) are calling off a swap of natural gas storage and trading assets the two companies had planned for the end of this year because of the difficult political environment.
    • The planned swap would have seen BASF subsidiary Wintershall transfer a jointly operated natural gas trading and storage business to Gazprom, and the Russian gas company would have obtained a 50% share in the activities of a unit that explores for and produces oil and gas in southern areas of the North Sea; in return, Gazprom and Wintershall were to develop jointly two additional blocks at a gas field in Siberia.
    • Because of the deal's collapse, BASF now expects this year's EBIT to be slightly rather than considerably higher this year since it will not collect income from divestitures related to the transaction; BASF also says it will book expenses of €113M for 2013 and €211M for 2014.
    | Comment!
  • 12:54 PM
    • Phillips 66 (PSX -0.2%) is upgraded to Buy from Hold while fellow refiner Valero Energy (VLO -2.2%) is downgraded to Hold from Buy at Deutsche Bank.
    • On PSX, the firm notes that fears of margin pressure on the CPChem and DCP segments are somewhat warranted given the oil price backdrop, but still thinks shares are pricing in a fairly draconian scenario as investors overstate PSX’s exposure; on its sum-of-the-parts analysis, the firm thinks investors are getting the refiner segment essentially for free.
    • Deutsche Bank cites valuation and its more cautious view on the sector in its VLO downgrade, as concerns around persistent weakness in Gulf coast refining margins coupled with currently narrow WTI-Brent differentials keep it on the sidelines for now.
    | 6 Comments
  • 12:35 PM
    • Peabody Energy (BTU +0.6%) is one of two remaining bidders for a contract to develop the Tavan Tolgoi coking coal deposit in Mongolia, which holds 7.4B tons of the coal used to make steel.
    • Development of the mine has stalled since a botched tender in 2011 that saw the Mongolian government rescind an agreement that would have allowed BTU, China Shenhua and OAO Russian Railways to operate the mine.
    • A unit of Mongolia Mining (OTCPK:MOGLF), which already mines coal at another site in the Tavan Tolgoi coal basin, leads a group making the other bid.
    | Comment!
  • 11:59 AM
    • Kirby Corp. (KEX -7%) sinks to 52-week lows after the barge operator cut its outlook for both Q4 and FY 2015, citing problems in its land-based diesel engine services market and weak demand related to falling oil prices.
    • The reduction in revenue and profit in the land-based diesel engine services market, particularly in the manufacturing of new pressure pumping units, was the most significant factor in the change in Q4 expectations.
    • FBR Capital lowers its stock target price to $100 from $145 but remains buyers, believing slower near-term growth already is reflected in the stock, and KEX has historically used these periods of dislocation to consolidate the market.
    | Comment!
  • 11:43 AM
    • RBC upgrades Baker Hughes (BHI -1.2%) to Outperform from Sector Perform with a $72 price target, but the praise isn't earning the gains enjoyed by Key Energy (KEG +38.1%) and Superior Energy (SPN +4.5%) after the firm's similar upgrades.
    • RBC likes BHI in its belief that sentiment will start to shift on North American land names as the oil price improves throughout 2015; BHI and Halliburton both generate ~50% of their operating income in North America, the firm notes.
    • BHI continues to trade at a discount to the deal price of its merger with HAL, and should trade closer to the deal price throughout the year assuming U.S. government hurdles are met.
    | Comment!
  • 11:29 AM
    • Cheniere Energy (LNG +6.5%) moves sharply higher on news of its 20-year contract to supply natural gas to a utility company in Portugal.
    • EDP Energias de Portugal (OTCPK:EDPFY) will buy 770K tons/year of liquefied natural gas once operations begin at the third train of the export facility being developed by LNG near Corpus Christi, Tex.; deliveries from the third train are expected to occur as early as 2019.
    • LNG says it has entered into sales agreements aggregating ~8.42M tons/year of gas and is in discussions with additional counterparties for agreements that would commence with Train 3.
    | Comment!
  • 10:59 AM
    • Synergy Resources (SYRG -0.2%) says it plans 2015 capex spending of $270M, up from earlier expectations for a $200M program, with drilling and completion of 48 net operated and non-operated wells.
    • SYRG believes it will be able to accomplish drilling 20% more net wells for less capital through a combination of efficient operations and modifying its completion design.
    • SYRG sees 2015 production growth exceeding 100%, with FQ2 (March) output of 8.8K-9.4K boe/day and exiting in August with a production rate of more than 13K boe/day.
    | Comment!
  • 10:46 AM
    • Royal Dutch Shell (RDS.A, RDS.B) says it has resumed production of Nigerian EA crude oil and lifted its force majeure on the grade after completing repairs to a mooring platform damaged by weather in June 12.
    • Also, Shell is selling its retail, commercial fuels and supply and distribution logistics businesses in Norway to ST1 for an undisclosed sum; the move follows sales of refineries in the U.K., Germany, France, Norway and the Czech Republic, as well as downstream businesses in Australia and Italy.
    | Comment!
  • 10:33 AM
    • Comstock Resources (CRK -8.4%) says it is suspending oil drilling activity in its Eagle Ford shale properties in south and east Texas and in the Tuscaloosa Marine shale in Mississippi.
    • CRK has four operated rigs drilling on its Eagle Ford shale properties; it will release two of the rigs in early 2015 and move the other two rigs to Louisiana to start up a drilling program on its Haynesville shale natural gas properties.
    • CRK says it has budgeted $307M for its 2015 drilling and completion activities; it plans to drill 14 Haynesville/Bossier shale natural gas wells and five wells on its east Texas and south Texas Eagle Ford shale acreage; it plans to refrac 10 of its existing Haynesville shale producing wells as part of the 2015 program.
    | Comment!
  • 10:31 AM
    | 5 Comments
  • 9:59 AM
    • RBC recommends increasing weightings and exposure to oil service stocks (OIH +2.5%) heading into 2015, as it says oil prices will start to improve in H2 of next year and that oil service stocks typically discount this move by 6-9 months.
    • Down cycles such as 2000-02 and 2008-09 suggest North American land drillers and service companies provide the best returns off business cycle lows, RBC says as it expects a similar dynamic this time.
    • RBC upgrades Key Energy (KEG +24.6%) and Superior Energy (SPN +7.5%) to Outperform, and downgrades FMC Tech (FTI +1.8%), Franks (FI +4.9%), Oceaneering (OII +0.2%) and Oil States (OIS +2.3%) to Sector Perform; the firm also says since 1985 three of the top five performing stocks off lows have been Patterson-UTI (PTEN +6.6%), Precision Drilling (PDS +4%) and Nabors (NBR +7.2%).
    | 2 Comments
  • 9:19 AM
    • Teekay Offshore Partners (NYSE:TOO) says it has won a contract to supply its Petrojarl I FPSO for work in waters off Brazil by the partners at Brazil's Atlanta heavy-oil field.
    • In connection with the contract, TOO agrees to purchase the Petrojarl I FPSO from parent Teekay Corp. (NYSE:TK) for $57M; the unit then will be upgraded at a shipyard for a fully built-up cost of ~$240M.
    • The FPSO is scheduled to commence operations in H1 2016 under a five-year charter contract with the Atlanta group; TOO expects the charter contract to generate annual cash flow from vessel operations of $55M-$60M.
    | Comment!
  • 8:46 AM
    • Enerplus (NYSE:ERF) says it plans a 2015 capital budget of $635M, a 23% reduction from its 2014 forecast, which it says will deliver modest production growth and preserve financial strength amid commodity price uncertainty.
    • ERF expects 2015 production of 103K-108K boe/day, or 0%-5% Y/Y growth.
    • Sees debt-to-funds flow below 2x at the end of 2015, even if WTI averages US$65/bbl for the year.
    • On the dividend, ERF cautious it is "prepared to make adjustments as necessary to the dividend depending on the severity and duration of the downturn."
    | 3 Comments
  • 8:19 AM
    • Enbridge (NYSE:ENB) says it safely shut down and isolated its Line 4 pipeline at the Regina Terminal in Saskatchewan overnight after ~1,350 barrels of oil were released from the line within an on-site pumping station.
    • The shutdown of the 796K bbl/day pipeline has disrupted the flow of Canadian oil supplies to the U.S. Midwest; ENB does not yet know when the line will return to service, but the company has not declared force majeure.
    • If Line 4 remains down, Midwest refiners may lean on pipelines bringing supply north from the Gulf Coast, including the Capline system operated by Marathon Petroleum (NYSE:MPC), analysts say.
    | 2 Comments
  • 8:05 AM
    • LyondellBasell (NYSE:LYB) names Bhavesh Patel as its new CEO, effective Jan. 12, succeeding James Gallogly, who had previously announced his plans to retire.
    • Patel has served as executive VP for Olefins and Polyolefins Europe, Asia & International and Technology since Oct. 2013 after joining LYB in 2010.
    | Comment!
  • 6:23 AM
    • Oil extended its biggest advance in more than a week amid speculation that the market might be looking to find a bottom and that the plunge to five-year lows may have been excessive.
    • Brent crude rallied 3.7% to $63.47/bbl, as some traders bet a six-month price rout could be ending as more energy firms cut investment budgets. WTI jumped 3.9% to $58.67.
    • ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
    | 2 Comments
  • 5:52 AM
    • Worthington (NYSE:WOR): FQ2 EPS of $0.55 misses by $0.13.
    • Revenue of $871M (+13.1% Y/Y) in-line.
    • Press Release
    | Comment!
  • Wednesday, December 17, 2014

  • 6:41 PM
    • The BP-led partnership developing Iraq’s giant Rumaila oilfield is set to invest $1.7B next year in a drive to increase production by 50% at the project to 2.1M bbl/day by the end of the decade.
    • The figure represents an increase of 800K bbl/day from current production and will account for 3% of global oil production, according to BP’s Energy Outlook 2035.
    • The agreement was made under a recently revised technical service contract that extended the partnership to 2034; Rumaila in September reached accumulated production of 2B bbl under the contract, which was initially signed in 2009.
    | Comment!
  • 5:35 PM
    • Marathon Oil (NYSE:MRO) says it expects a 2015 capital spending budget of $4.3B-$4.5B, or ~20% below 2014 levels, adding that it needs extra time to finalize the budget given continuing changes in oil prices and the expected impact on oilfield service costs.
    • MRO says the capital program will reflect a significant weighting to its high return investment opportunities in its U.S. resource plays and lower exploration spending, with total 2015 production growth (excluding Libya) anticipated in the high single digits.
    | 1 Comment
  • 5:19 PM
    • Chevron (NYSE:CVX) says it is canceling plans to drill for oil in the Beaufort Sea in Canada's Arctic because of economic uncertainty in the industry as oil prices fall.
    • In a letter to Canada's National Energy Board, CVX said it withdrew from a hearing into Arctic drilling rules because it is delaying indefinitely any plans to drill in the EL 481 block.
    | 1 Comment
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