Wednesday, December 17, 2014
- 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.
- 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.
- 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.
- Kirby (NYSE:KEX) -6.2% AH after issuing downside guidance for Q4, now seeing EPS of $1.10-$1.20 vs. its prior outlook of $1.30-$1.40 and $1.35 analyst consensus estimate.
- For FY 2014, KEX sees EPS of $4.84-$4.94, below previously announced guidance of $5.04-$5.14.
- KEX says most of the change in guidance is due to a disappointing ramp-up in its land-based diesel engine services market, as falling crude oil prices have led to customer cancellations and requests to delay delivery of projects; also, bad weather along the Gulf coast has impacted Q4 performance in its marine transportation markets.
- MEG Energy (OTCPK:MEGEF +10.3%) is the latest Canadian oil sands producer to adjust to uncertainty about oil prices, announcing a ~$900M reduction in its 2015 capital spending plan from what it announced less than two weeks ago.
- MEG is now aiming at $305M in capex next year, down ~75% from its previous estimate of $1.2B, which included $600M for mid-term growth initiatives at the Christina Lake oil sands project.
- “While our projects remain economic at current strip pricing, we believe it is prudent to reduce capital spending until we see a sustained improvement in commodity prices," the company says.
- Pacific Rubiales Energy (OTCPK:PEGFF +13.4%) agrees to sell 43% of its interest a Colombia pipeline and power transmission unit to the World Bank's International Financial Corp. and a group of investors for $320M.
- The agreements will provide PEGFF with $240M cash to be received by year-end, another $80M in Q1 2015, plus a commitment for an additional $60M to develop future infrastructure projects.
- PG&E (PCG +0.3%) is downgraded to Hold from Buy with a $52 price target, down from $54, at Deutsche Bank, which says it is now clear that the California Public Utilities Commission will not issue final decisions in the San Bruno investigations by year-end; previously, the firm had believed the CPUC would feel some pressure to resolve the cases by then.
- The firm feels PCG eventually can regain its premium valuation, but such a path continues to be uncertain and potentially lengthy.
- Clean Energy Fuels (CLNE +8%) is up sharply after it was selected to build and operate a compressed natural gas fueling station for the Jacksonville (Fla.) Transportation Authority in a deal valued at $8.1M.
- CLNE also was hired to retrofit both of the transit authority's existing maintenance centers to accommodate the new CNG fleet.
- CLNE also says the Morongo Basin Transit Authority in California has renewed its CNG facility maintenance contract, and that its supply contract with Kroger's Fred Meyer Stores unit is expected to reach 1M gallons of liquefied natural gas in 2015.
- New York Gov. Cuomo's administration says it will ban fracking statewide, citing health concerns and what it considers as limited economic benefits to drilling.
- NY's acting health commissioner said at a cabinet meeting in Albany today that studies on fracking’s effects on water, air and soil are inconsistent, incomplete and raise too many “red flags” for the state to allow it; the state Department of Environmental Conservation will now issue a legally-binding recommendation prohibiting fracking.
- The state has had a de facto moratorium on fracking for more than six years, so nothing really changes with today's decision.
- Parts of New York sit atop the gas-rich Marcellus shale formation, whose top producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
- FBR Capital chooses Noble Energy (NBL +8.8%), Schlumberger (SLB +4.6%), Synergy Resources (SYRG +6%), Consol Energy (CNX +3.4%) and SunEdison (SUNE +0.7%) as its top energy and natural resources stocks for 2015.
- FBR likes NBL's strong combination of shale assets that are still immature in their adoption and application of technology, which is scalable; a strong balance sheet; and a portfolio that offers abundant exploration risk/reward potential.
- SLB is FBR's favorite energy stock among those whose secular earnings power is clearly the most likely to significantly expand over the next five years and/or is underestimated at current market multiples.
- SYRG offers investors exposure to industry-leading production growth and a solid balance sheet, a unique combination for a small-cap equity, the firm says.
- The fundamentals underlying oil and gas pipeline MLPs have fallen much less than energy stocks in recent days, acording to Forbes' John Dobosz, who suggests seeking out MLPs with a long history of rising distributions, payouts well covered by cash flow, a strong balance sheet and an investment-grade credit rating.
- Two MLPs that fit these criteria, Dobosz writes, are Enterprise Products Partners (EPD +3.2%) and Magellan Midstream Partners (MMP +3.9%); he also likes Sunoco Logistics Partners (SXL +5.2%), which is expected to increase revenue 15% to $22B in 2015, with EBITDA rising 20% and distributions growing 18% this year.
- Spectra Energy Partners (SEP +2.3%), Western Gas Partners (WES +2.7%) and Energy Transfer Partners (ETP +2.4%) are appealing because of consistently rising distributions and revenues, Dobosz adds.
- Par Petroleum (PARR +6.3%), the Texas-based owner of Hawaii's largest oil refinery, names Joseph Israel as it new President and CEO effective Jan. 5, replacing William Monteleone.
- Israel was COO of Alon USA Energy and a senior VP of Hunt Refining.
- Monteleone will become Par's senior VP of mergers and acquisitions, as well as a member of the board of directors.
- Ivory Coast's government says it has signed production sharing agreements with Exxon Mobil (XOM +3.2%) for two ultra-deepwater blocks in the Gulf of Guinea.
- The deal covers Ivory Coast's CI-602 and CI-603 blocks, which cover 3,874 sq. km and 5,543 sq. km respectively and vary in depth from 3K-4K meters.
- Ivory Coast is seeking investors for seven new ultra-deepwater blocks.
- Senior management at Petrobras (PBR +5.1%) may have to resign to avoid further delays in the release of the company's audited Q3 earnings report, CEO Maria das Graças Foster says.
- The CEO says she had spoken to Brazilian Pres. Rousseff about the potential resignations, including her own, amid the investigation into an alleged corruption scheme involving the company.
- The potential for new management seems to be lifting shares, which have fallen to their lowest level in a decade - just above $6, after trading for more than $20 just four months ago.
- Rice Midstream Partners (NYSE:RMP), an MLP spun out of Rice Energy (NYSE:RICE), opened at $15.79, 4.3% below its IPO price.
- The 25M-share offering priced at $16.50, well below the expected price range of $19-$21.
- RMP operates midstream assets in the Appalachian Basin, and its revenues come from natural gas gathering services and compression services; nat gas futures have declined in recent weeks, but nothing close to the price hit suffered by crude oil.
- FMC Technologies (FTI +2.3%) says it has won a $268M subsea systems contract for the Chevron-led (NYSE:CVX) Agbami deepwater project offshore Nigeria.
- FTI says it has supported the Agbami field development for several years, and the new subsea equipment agreement will provide additional production and help extend the life of the project.
- Penn West Petroleum (NYSE:PWE) -1% premarket after announcing a 79% dividend cut and a 26% reduction to its capital budget in response to plunging oil prices.
- PWE says it will cut its dividend to C$0.03 from C$0.14, starting with Q1 2015, and will reduce its 2015 capital budget to C$625M from C$840M.
- 2015 production guidance is lowered by ~5% to 90K-100K boe/day.
- PWE also is suspending its DRIP plan.
- Husky Energy (OTCQB:HUSKF) says it is targeting capital spending of C$3.4B (US$2.9B) in 2015, ~C$1.7B less than it expects to spend this year on major projects, as it reduces spending on major projects in western Canada by ~42% to $1.8B.
- Husky foresees total 2015 production of 325K-355K boe/day, compared with 341K boe/day it expects to produce this year; ~40K bbl/day in new production is expected to come onstream in H2 from at least two major projects, the Sunrise oil project in Alberta and an offshore natural gas project in the South China Sea.
- Husky says it is leaving its dividend intact.
- Rosetta Resources (NASDAQ:ROSE) announces a 2015 capital budget of $700M-$800M, with the flexibility to spend up to $900M.
- ROSE says ~54% of total spending will be allocated to development activities in the higher rate of return project areas of the Eagle Ford shale in south Texas and ~40% on further delineation activities in the Delaware Basin in west Texas; it plans to run 1-2 rigs at Eagle Ford and 2-3 horizontal rigs in the Delaware Basin.
- ROSE expects FY 2015 production of 76K-82K boe/day.