Today - Wednesday, April 1, 2015
- Dynegy (DYN -2.1%) and NRG Energy (NRG -5.6%) are sharply lower after the FERC declined to approve a capacity performance plan submitted by the PJM Interconnection consortium and asked for answers to additional questions about the initiative.
- PJM operates a wholesale electricity market in the eastern U.S.; DYN is involved in the PJM and is looking to boost its share within the Regional Transmission Organization with proposed asset purchases, and a small part of NRG's capacity is within PJM.
- Deutsche Bank analyst Jonathan Arnold notes that FERC did not reject the proposal, but says FERC's action prolongs uncertainty for investors in the electric utilities that belong to PJM, which also include Exelon (EXC -1.8%), Public Service Enterprise (PEG -1.9%), American Electric (AEP +0.2%), PPL (PPL -0.4%) and FirstEnergy (FE -1.3%).
- A Dutch judge refuses to order a production halt at Europe's biggest gas field, Groningen, where production was temporarily reduced in February after the Dutch Safety Board warned of possible danger from earthquakes.
- A lawsuit by environmental groups challenges a decision by the country's Economic Affairs Minister to set 2015 production from Groningen at 39.4B cm of gas, down from 42.5B cm in 2014.
- The Groningen field is operated by state-owned Gasunie and output jointly exploited by the government and a joint venture between Royal Dutch Shell (RDS.A, RDS.B) and Exxon Mobil (NYSE:XOM).
- TransCanada (TRP +0.1%) says it expects to make a decision this week on the fate of its controversial proposed Cacouna marine oil terminal in Quebec, a feature of the Energy East pipeline project that opponents say would destroy beluga whale habitat.
- The Cacouna terminal has been a source of controversy for TRP since December, when a federal committee recommended beluga whales be classified as endangered and said the whale populations in the area had fallen to 1K from 10K.
- If built, Cacouna would be one of two export points for the oil carried along the $12B Energy East pipeline route; TRP has suspended work on the terminal and says it is considering other options than the facility planned for the shores of the St. Lawrence River.
- Petrobras (PBR +6%) board member Silvio Sinedino points to potential conflicts of interest on the company's next board, citing the nomination of Vale (NYSE:VALE) CEO Murilo Ferreira as chairman and the selection of the president of Brazil's BNDES development bank, Luciano Coutinho, as interim chairman.
- Vale is Brazil's largest diesel consumer and pays PBR ~1B reais/year ($300M) to fuel its mines and railways, while PBR buys raw materials from Vale for its fertilizer plants.
- Sinedino, who represents PBR workers' interests on the board and is one of three members not appointed by the government, also says PBR will not sell its fuel distribution unit as part of its ongoing $13.7B asset sale plan.
- Oil equipment maker Frank’s International (FI +1.6%) says it plans to cut up to 600 jobs, or ~13% of its workforce, in a bid to cut costs amid sharply lower crude oil prices.
- FI says it will cut the jobs in areas and businesses where it is seeing the sharpest decline in activity, but adds that safety remains a priority.
- Schlumberger, Halliburton, Baker Hughes and Weatherford International, the world’s four biggest oilfield services companies, have said they will cut more than 30K jobs combined.
- EIA Petroleum Inventories:
- Crude +4.8M barrels vs. +4.6M consensus, +8.2M last week.
- Gasoline -4.3M barrels vs. -0.9M consensus, -2M last week.
- Distillates +1.3 vs. -0.3M consensus, 0.0M last week.
- Futures +1.13% to $48.14.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, OLEM
- Exco Resources (XCO +2.7%) names a new chief executive as part of a new partnership with energy focused P-E firm Bluescape Resources to help turn around its flagging business.
- XCO appoints Bluescape Executive Chairman John Wilder as its Executive Chairman, while XCO President and COO Harold Hickey becomes XCO's President and CEO.
- Bluescape agrees to purchase $10M in XCO common shares from the company and an additional $40M shares in the open market within one year from closing, and will receive a cash retainer and warrant package.
- Petrobras (PBR +4.2%) signs a contract to obtain financing worth $3.5B from China Development Bank as part of a cooperation agreement covering 2015 and 2016.
- PBR’s new financial director, Ivan Monteiro, signed the loan agreement during a visit to China this week, and outlined plans to tap the facility again in the near future.
- The highly indebted oil producer is turning to China for funding as Brazil's corruption scandal keeps it out of international bond markets.
- Chesapeake Energy (NYSE:CHK) +2.4% premarket after Chairman Archie Dunham discloses the purchase of 1M CHK shares worth $13.98M.
- The purchases occurred on March 27 at an average price of $13.9793; Carl Icahn recently bought more CHK shares at an average price of $14.15.
- Dunham is now listed as beneficially owning ~2.635M CHK shares.
- Atlantic Power (NYSE:AT) agrees to sell its wind generation projects, consisting of five projects located in Idaho and Oklahoma, to TerraForm Power (NASDAQ:TERP) for $350M in cash.
- AT also will deconsolidate $249M of project debt and $239M of non-controlling interest related to tax equity interests at the Canadian Hills project and the minority ownership interests at Rockland and Canadian Hills; on that basis, the total enterprise value of the deal is ~$837M.
- Dominion Midstream Partners (NYSE:DM) agrees to acquire Dominion Carolina Gas Transmission from Dominion Resources (NYSE:D) for ~$495M.
- DM says the deal supports its intention to grow distributions to unitholders at a compounded annual growth rate of ~22%/year through the end of the decade.
- DM expects the addition to be immediately accretive to its distributed cash flow per unit.
- Consol Energy (NYSE:CNX) says its CNX Coal Resources thermal coal business, formed as an MLP, has filed for an IPO.
- The unit's initial assets are expected to consist of a 20% stake and operational control of Consol's Pennsylvania mining complex, which comprises three mines and related infrastructure.
- The MLP is planning to list its units on the NYSE under the ticker CNXC.
- Exxon Mobil (NYSE:XOM) is said to be escalating plans for a multi-billion dollar expansion of its 344K bbl/day Beaumont oil refinery that could make it the largest U.S. plant and fourth largest in the world.
- XOM reportedly has filed for four Texas permits requesting state approval to increase emissions and install new equipment at the refinery.
- Reports last year had indicated XOM was considering doubling the current capacity by 2020, but now it may go as high as 850K bbl/day by the end of the decade.
- If the Beaumont refinery becomes the country's largest, XOM would have three of the top five refineries by capacity in the U.S., with its Baytown, Tex., plant currently ranking second and its Baton Rouge, La., complex fourth.
- Talks between Iran and six world powers to settle a dispute around Tehran's nuclear program have extended beyond Tuesday's deadline, as the parties came closer to a deal but failed to agree on crucial details such as the lifting of U.N. sanctions.
- Oil futures are edging lower on the news amid speculation that more Iranian crude could flood into world markets if a last-minute deal is reached.
- Crude futures -0.8% to $47.23/bbl.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
Tuesday, March 31, 2015
- More than 40 oil companies including Chevron (NYSE:CVX), BP and Ecopetrol (NYSE:EC) have sought access to geological data under Mexico’s first oil auction in 76 years, as interest in the process is holding up despite low oil prices, says the country’s hydrocarbons regulator.
- The tally comes as Mexico prepares for the third tender in the auction in April, which will include mature fields onshore that already have been producing but where new technology is needed to recover the remaining oil and gas.
- Tenders are planned later in the year for discovered offshore fields with extra-heavy oil, for deep waters where global oil majors seek to participate, and for unconventional resources such as those in shale rock formations.
- Kinder Morgan (NYSE:KMI) and Keyera (OTC:KEYUF) announce a 50-50 joint venture to build a new crude oil storage terminal in Edmonton, Alberta.
- The JV will build 4.8M barrels of crude oil storage at the new Base Line Terminal, and says "strong, creditworthy customers" have entered into long-term, firm take-or-pay agreements; capacity at the new terminal has potential to increase to 6.6M barrels, depending on future demand.
- KMI says it will invest C$342M for an initial 12-tank buildout, with commissioning expected to begin in H2 of 2017; separately, KMI will invest up to an additional C$69M for connecting pipelines and related infrastructure, for a total project investment of C$411M.
- The terminal is under development on land owned by Keyera and will be operated by KMI.
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