Today - Friday, February 27, 2015
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- Crude oil futures rebounded today, with Brent heading for its biggest monthly gain since May 2009, as a reduction in rig counts and healthy growth in Chinese demand this year supported prices.
- China's implied oil demand is set to grow 3% in 2015, announced China National Petroleum this morning, surpassing the International Energy Agency's forecast of 2.5%.
- Brent prices have risen by around 15% so far this month from January's close of $52.99.
- Crude futures +2.3%, after dropping 5.5% yesterday.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
Thursday, February 26, 2015
- Pengrowth Energy (NYSE:PGH) +5.9% AH even as it posts $506M in net Q4 losses compared with a $91M loss in the year-ago quarter, and says it is deferring spending on the second phase of its Lindbergh oilsands project and cutting its dividend in half to protect its balance sheet.
- PGH wrote down $994M in the quarter, including a $451M writedown in the book value of the company’s assets, which it says was the result of the precipitous decline in oil prices.
- Says it had hedged ~75% of its 2015 estimated oil production at $93.96/bbl and 54% of its estimated gas production at $3.73/MMcf.
- PGH completed the first phase of Lindbergh oil sands project in Q4 but produced no oil from the facility, which is designed to produce 12.5K bbl/day.
- PGH earlier said it would reduce 2015 capital spending by 74% Y/Y to $200M.
- DryShips (NASDAQ:DRYS) fell 2.9% in today's trade after Q4 earnings fell short of analyst estimates.
- Arctic Securities sees no recovery in sight for dry bulk or drilling, reiterating its Sell rating and $0.70 target price; it sees the firm crude tanker market lasting into 2015, but notes that the tanker business is marginal compared to dry bulk and drilling.
- DRYS' recent equity issue allowed for a full repayment of convertible notes and solve near-term funding issues, but $200M of debt is set to mature in Q3 and a $120M loan from Ocean Rig (NASDAQ:ORIG) must be refinanced within the next 12 months; Arctic says this could prove to be difficult if dry bulk asset values continue to decline in tandem with the ORIG share price.
- Southwestern Energy (NYSE:SWN) +0.5% AH after Q4 earnings and revenues topped expectations, and it sees 2015 production rising despite reduced investment spending and lower gas and oil prices.
- SWN says it cutting its planned 2015 capital spending to ~$2B, 17% less than in 2014 and down 22.5% from its December projection of $2.6B; at the same time, it projects production to increase to 940B-955B cfe.
- Q4 gas and oil production rose 14% Y/Y to 201B cfe; gas sales gained 4.2% to $672M, while oil sales jumped to $9M from $4M a year earlier.
- SWN's Q4 average realized price, including hedging effects, fell to $3.52 from $3.68 for natural gas, while oil prices fell to $60.51/bbl from $98.41.
- Credit Suisse says the recent rally in oil prices and in oilfield services stocks (NYSEARCA:OIH) is a classic dead cat bounce, and that as soon as U.S. storage gets full - and it is close - crude prices will fall, bringing expectations and stocks down with it.
- The firm says its sector outlook is increasingly negative as companies report increased pricing pressure, a record drop in the activity barometer of the rig count, and offshore rigs and projects confronting headwinds that could take a couple of years to fix.
- Relevant stocks: SLB, HAL, BHI, CAM, HLX, SPN, NOV, FET, DRQ, FTI, OIS
- Halcon Resources (NYSE:HK) is reiterated with a Buy rating and a $3 price target, raised from $2.50, at MLV, which cites surprises in its Q4 results including a strong reserve report and reaffirmation of its borrowing base.
- Investors had been focusing on HK's balance sheet and liquidity, so the recent reaffirmation of its borrowing base at $1.05B is a significant event, MLV says after it had expected a nearly 15% reduction to ~$900M.
- The firm says HK’s liquidity position is protected by one of the strongest hedge books in the sector, including 90% of 2015 estimated oil volumes hedged at a weighted average floor price of ~$87/bbl which should translate into realized gains of $350M-plus this year, or about one-third of revenue.
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