Saturday, April 19, 2014
- The Obama administration is indefinitely extending its review of the Keystone XL pipeline (TRP), probably delaying a decision on the project until after November's U.S. midterm elections.
- The State Department - which has had the project under review for nearly six years - says it needs more time to prepare its recommendation to Pres. Obama because of ongoing litigation in Nebraska that is unlikely to be resolved before next year; the department was set to close a review process with eight other federal agencies on May 7.
- Pipeline supporters are criticizing the delay as a political ploy, but the move looks likely to keep environmental activist money flowing into the election races; billionaire Tom Steyer, who has pledged to spend $100M to support candidates who back strong policies to fight climate change, is praising the delay as "good news."
- ETFs: XLE, ERX, OIH, VDE, ERY, DIG, DUG, IYE, PXJ, PXI, PSCE, FENY, FXN, RYE, DDG
Thursday, April 17, 2014
- Duke Energy (DUK) says it incurred ~$15M in costs related to February's coal ash spill in North Carolina, and warns it is not yet able to estimate further costs.
- DUK says other costs to remediate the spill into the Dan River - possibly including regulatory directives, pending litigation and long-term environmental impact costs - "aren't expected to be material to the company."
- Triangle Petroleum (TPLM) was one of the day's biggest gainers in the energy space, +10% despite reporting FQ4 earnings that trailed analyst expectations.
- Revenues rose 257% Y/Y to $85.5M, roughly in-line with Wall Street consensus; for FY 2014 (ended Jan. 31), production volumes rose 295% Y/Y, and net proved reserves increased 175% over year-end 2013.
- Arch Coal (ACI +0.5%) says it requested federal authorities investigate potential misconduct involving vendors and personnel in West Virginia, and the U.S. Attorney’s office in Charleston, W. Va., is leading the probe.
- Local media reports that at least one employee at ACI’s Mountain Laurel complex has been fired in connection with an alleged billing and kickback scheme.
- Although Schlumberger's (SLB -0.8%) Q1 Gulf of Mexico deepwater drilling revenue fell due to operational delays, "the outlook for deepwater drilling activity in the Gulf of Mexico remains strong for the full year," CEO Paal Kibsgaard said in today's earnings call.
- "The industry bellwether posted a solid earnings number in a tough quarter [and] signaled a robust North American market," Barclays says.
- Stephens analyst Michael Marino reiterates an Overweight rating on the stock, expecting slow and steady revenue growth and solid incremental margins on a higher deepwater mix, overall efficiency gains and potential pricing gains in North America.
- FBR Capital reiterates its own Outperform rating, noting SLB’s share repurchases and reiteration of guidance.
- Athabasca Oil (ATHOF) says it has exercised its option to sell its 40% stake in the planned Dover oil sands project to partner PetroChina (PTR) for C$1.32B ($1.2B) after the project received final approvals from Alberta's government.
- PTR can now build Dover, which could eventually produce as much as 250K bbl/day of oil sands bitumen; Athabasca plans to use the proceeds to develop its other oil sands and light oil projects in Alberta.
- A former BP (BP +1%) manager and senior responder during the 2010 Deepwater Horizon oil spill agrees to pay $224K to settle charges of insider trading, the SEC says.
- The employee, Keith Seilhan, now works as VP for Gulf of Mexico deepwater operations at Stone Energy (SGY +1.7%).
- BP's early public estimates of the flow rate of the spill were significantly lower than the actual rate; the SEC said Seilhan, knowing the magnitude of the spill and the company's potential liability, profited from the sale of $1M of BP securities.
- Baker Hughes (BHI +4%) Chairman/CEO Martin Craighead said in today's earnings call that growing U.S. well counts, led by the Permian Basin, are increasing demand for the company's products given the increasingly complex nature of oil production.
- Management said it sees strong commodity prices supporting spending by its customers; for Q2, it expects a seasonal drop in its North America business to be more than offset by gains in other segments, leading to earnings growth similar to Q1.
- FBR Capital reiterates an Outperform rating on the stock, writing that the quarter demonstrates why the stock has been its top pick in the group.
- Kinder Morgan Partners (KMP -0.8%) is reiterated with an Underweight rating and $82 price target at Morgan Stanley, which says it can't see KMP outperforming peers on distribution growth that is below the industry average.
- Acknowledging KMP's cash flow stability from quality pipeline assets and geographic diversity, the firm sees accretion via projects and acquisitions as limited by a large asset base and a high general partner cash incentive share (45%-plus) which caps distribution growth upside.
- The firm says KMP's oil production business (15%-20% of cash flow) creates material future asset/reserve replacement risk, and dropdowns from KMI (into KMP and EPB) likely will be finished by 2014, creating the need to continue to develop new organic projects.
- KMI +1.2%, KMR +0.5%, EPB +2.2%.
- SandRidge Energy (SD +3.7%) pushes solidly higher following positive comments last night from Jim Cramer.
- "Because SandRidge is so hated by Wall Street, the analysts can't see the incredible turnaround happening in front of their faces," Cramer said, noting that SD has delivered three consecutive quarters where the company beat earnings estimates and raised guidance since James Bennett took over as CEO.
- Cramer also likes SD's real estate assets, particularly the Mississippian play, where the company owns 1.8M acres; SD has 10 years worth of drilling inventory, and new technology could extend that to 20 years or more, he says.
- Deutsche Bank analysts raise their price targets on top oil service stocks (OIH), seeing increasing strength in a North American cyclical recovery with current forward earnings estimates perhaps proving to be conservative.
- Basic Energy Services (BAS) gets a big price boost to $43 from $18, citing a recent activity update that indicated utilization levels had increased across all the company’s business segments.
- Other top stocks rated Buy at the firm, including those whose price objectives have been raised: BHI, EXH, HAL, PTEN, PES, SLB.
- The outlook for Chesapeake Energy (CHK +1.7%) is on the upswing because CEO Doug Lawler has made substantial progress since taking the helm last June, top shareholder Southeastern Asset Management says in a letter today.
- Lawler’s “capital discipline and operational effectiveness will reward shareholders,” according to the owner of ~10% of CHK shares.
- Lawler has voiced plans to cut spending 20% this year, bringing it down to less than half of 2012 levels as CHK sells assets and spins off its oilfield services division.
- Royal Dutch Shell (RDS.A, RDS.B) says its plan to build a huge new petrochemical plant in western Pennsylvania is making progress, but there’s still no guarantee the project actually will be constructed.
- Shell has an option to purchase a 300-acre industrial site on the Ohio River, and demolition of a zinc factory there has begun, but a Shell exec says that doesn’t necessarily mean the ethane cracker plant will be built; in other states, such as Colorado, Shell invested tens of millions of dollars in proposed projects before deciding to shut them down.
- Shell says it has signed long-term contracts with ~10 energy companies to supply the proposed plant which would convert ethane from Marcellus and Utica shale oil and gas into more profitable chemicals.
- Cloud Peak Energy (CLD -1.5%) is "a good stock in a dirty business," Barron's says in making the case for a potential 30% upside in what it sees as undervalued shares, but CLD isn't enjoying the usual Barron's bounce.
- CLD trades at a discount to its larger peers despite its clean balance sheet and improving free cash flow profile, and a rise in thermal coal prices could have a dramatic impact on profits and the stock; every $1/ton increase in the Powder River spot price adds ~$46M to CLD's EBITDA.
- Most other coal names also are lower: BTU -1.5%, CNX -0.3%, ACI +0.2%, ANR -1.3%, WLT -2.1%, WLB -0.1%.
- Canada’s National Energy Board approves an application for a 25-year license for the export of liquefied natural gas from the planned Triton LNG project, owned by AltaGas (ATGFF) and Idemitsu.
- Eight planned LNG facilities have been granted export licenses to take gas from western Canada's shale fields to high-paying Asian markets, though none have yet received final approval by their backers.
- Discovery Minerals (DSCR) and Syngar Technologies form a joint venture to exploit opportunities in the industrial hemp sector.
- In 2010, Syngar licensed the "Pulsed Wave Ultra Sound Wave" (PLUSWave) technology for use in the development of biofuels. It utilizes pulsed ultrasound waves at specific power levels and set time intervals to stimulate the fermentation activities of microorganisms.
- PLUSWave will enable DSCR to use non-food grade cellulose in the biofuel fermentation process instead of food grade stock such as corn.
- Effective immediately, the JV will sell sub-licenses to Canadian hemp producers waiting to access the U.S. market.
- Royal Dutch Shell (RDS.A, RDS.B) announces an exploration discovery offshore Malaysia and sees potential for further exploration in the area.
- The successful Rosmari-1 well, located 135 km offshore in Block SK318, was drilled to a total depth of 2,123 meters and encountered more than 450 meters of gas column.
- Shell says it plans further exploration, as the finding is a positive indicator of the gas potential in an area of strategic interest.
- Layne Christensen (LAYN) files to delay its 10-K report, saying business has been adversely affected by the continuing global mining exploration slowdown and harsh weather conditions in much of the U.S.; as a result, it would not have been in compliance with the minimum EBITDA covenant in its prior credit agreement.
- Says 10-K will reflect a substantial increase in net loss for the year ended Jan. 31, 2014 vs. the same period in 2013.
- Schlumberger (SLB) +0.3% premarket as Q1 earnings rose 26% Y/Y despite a harsher than usual weather in North America and Russia that dented demand for its drilling, well completion and other services.
- Revenue jumped 19% from the Middle East and Asia, rose 12% from North America, edged up less than 1% from Europe/CIS/Africa, and fell 7% from Latin America.
- SLB predicts a rise in spending among clients of more than 6% this year, evenly split between the international and North American markets and driven by the independent and national oil companies.
- Baker Hughes (BHI) +3.9% premarket after reporting a 23% Y/Y gain in Q1 earnings and a nearly 10% jump in revenue, in results that beat expectations.
- The North American segment, BHI's largest geographic business by revenue, posted a 6.6% gain in revenue to $2.78B, a 24% improvement in the Middle East and Asia Pacific region, and a 17% advance in the Europe, Africa and Russia Caspian segment; Latin America revenue shrank 10%.
- North America margins improved by 200 bps despite a drop in well count caused by severe winter weather in the Rockies and northeast U.S.