Fri, Sep. 4, 6:45 PM
- The Morgan Stanley commodity team lowers its crude oil price estimates, forecasting WTI at $51.07/bbl at the end of 2015, $56.45 at the end of 2016 and $60 at the end of 2017; the group had foreseen a 2017 price of $80.
- At the firm's recent Houston Energy Summit, EOG Resources (NYSE:EOG) was considered the most bullish in terms of expectations for oil prices, expecting "U.S. production to come off 100Mbld per month in year end" for a total decline from a peak of 700M bbl/day at year-end.
- Many other companies in attendance, including Anadarko Petroleum (NYSE:APC) and Apache (NYSE:APA), expect a more modest pickup in crude prices.
- Of all the companies in its coverage universe, Stanley sees InterOil (NYSE:IOC), Marathon Oil (NYSE:MRO) and Devon Energy (NYSE:DVN) as offering the highest upside to its price target.
Wed, Aug. 26, 10:22 AM
- Anadarko Petroleum (APC +0.9%) says it has secured ~90% of the offtake pledges it needs to bring a liquefied natural gas project in Mozambique to fruition and is awaiting state consent to export the fuel.
- APC has obtained pledges from Asian buyers for more than 8M metric tons/year of LNG, or ~90% of the contracts it needs to proceed with the 12M metric tons/year project, according to the company's manger in the country.
- Final government approvals are still needed for the project to proceed, and APC says reaching an investment decision depends on how quickly it can obtain the approvals.
- APC and its partners believe as much as 75T cf of gas may lie in the Area 1 prospect off Mozambique’s shores.
Tue, Aug. 25, 7:05 PM
- Dividends of oil E&P companies such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Anadarko Petroleum (NYSE:APC) and Occidental Petroleum (NYSE:OXY) are “mostly safe" in the shaky commodity landscape despite Chesapeake Energy’s decision to suspend its payout, says Raymond James' Pavel Molchanov and his analyst team.
- Although the firm projects only one company - APC - out of 18 to fully cover the 2016 dividend payout out of cash flow at strip pricing, dividends likely will not be cut since "all the companies that have a healthy balance sheet today should still have a healthy balance sheet at the end of 2016, even if they maintain the current dividend."
- The only dividend payers with a current net debt/cap ratio above 50% are DNR and CRC - a red flag, but both companies’ dividend payouts represent quite small amounts of outlays relative to cash flow, the firm says, adding that the only companies whose leverage is likely to be lower at year-end 2016 than it was in Q2 2015 are HES and QEP.
- Among large-caps, the highest current leverage is at APC, at 45%, and NBL, at 38%, while the companies with the lowest current leverage are CVX, OXY and XOM, all at 15% or lower.
Mon, Aug. 24, 5:36 PM
Fri, Aug. 21, 12:34 PM
- "It's worse than you think," says longtime China bear Jim Chanos, having a day on CNBC. "Whatever you might think, it's worse."
- "People are beginning to realize the Chinese government is not omnipotent and omniscient ... like many of us, sometimes they don't have a clue."
- Chanos is short Solar City (SCTY -8.9%), saying it's really a subprime finance company, burning a lot of cash, and with negative EBITDA ... "this environment ... scary."
- He remains short some of the bigger names in the energy exploration and production space - DVN, MRO, OXY, APC.
- I don't like Shell (RDS.A -1.8%) or Chevron (CVX -1.5%), he says, and believes neither Chevron's dividend nor its buyback are safe.
- ETFs: FXI, ASHR, CAF, YINN, PGJ, GXC, FXP, YANG, CHN, PEK, MCHI, TDF, XPP, YAO, GCH, ASHS, YXI, CN, CHXF, FCA, CNXT, CHNA, KBA, JFC, AFTY, CHAU, XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Wed, Aug. 19, 11:18 AM
- It's a broad decline for stocks this morning, with the S&P 500, DJIA, and Nasdaq all lower by 1% or more. Leading the way down are the energy names (XLE -2.5%) after an unexpected jump in oil inventories has sent the price of black gold down to new bear market lows at $41.30 per barrel.
- Chevron (CVX -2.9%), ConocoPhillips (COP -3.8%), EOG Resources (EOG -4.3%), Apache (APA -4.1%), Hess (HES -3.6%), Marathon Oil (MRO -5.5%), Noble Energy (NBL -3.1%), Anadarko (APC -3.6%).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Thu, Aug. 13, 7:27 PM
- Oil companies are bracing for "lower for longer” prices as a global supply glut persists, dragging U.S. crude to the lowest close since March 2009 at just above $42/bbl.
- More capitulation notes are out; Oppenheimer's Fadel Gheit wrote today that the "new normal" for oil in a recovery would be $65-$75, and that "the vast majority of oil companies are living beyond their means, with operating cash flow falling short of capital investments and dividend... Unless oil prices rebound significantly above future strip prices, oil stocks could sink further, as takeover premiums shrink with potential sellers significantly outnumbering potential buyers."
- The world’s biggest producers will need to trim investments by another $26B, Jefferies believes; capital spending will have to fall 10% next year, according to Banco Santander.
- CNBC's Bob Pisani says when energy stocks staged a brief bounce recently, investors repeated a frequent mistake: They tried to buy oil stocks ahead of a recovery in crude oil, instead of the other way around.
- The result today was heavy losses for many of the sector's big names: CHK -6.6%, MRO -5.4%, COP -2.8%, APC -2.4%, SWN -4.2%, RRC -4.4%, RIG -6.5%, DVN -3.9%, APA -2.6%, BHI -2.9%, CAM -3.5%.
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
Wed, Aug. 12, 8:09 AM
- Mozambique names deputy trade minister Omar Mitha as new chairman of the state oil company, months before decisions are due on projects that could make the country the world’s third-biggest liquefied natural gas exporter.
- Anadarko Petroleum (NYSE:APC), which has said it targets a final decision on whether to develop a project in the country before year-end, estimates it has 100T cf of gas in its offshore concession.
- Eni (NYSE:E) has the rights to a neighboring resource and is working with APC to develop the infrastructure needed for gas liquefaction.
- Mitha is a native of Cabo Delgado, the province where the APC and Eni projects are located.
Tue, Aug. 4, 3:28 PM
Wed, Jul. 29, 2:49 PM
- Anadarko Petroleum (APC +4.8%) pushes to strong gains a day after reporting an unexpected Q2 profit by boosting oil production but keeping operating costs low.
- All of APC’s large projects are advancing, and "new discoveries, which will likely be unappreciated in this market, should add long-term value, all else being equal,” says Stifel analyst Michael Scialla.
- CEO Al Walker noted in today's earnings conference call that oil prices have fallen faster than service costs in places such as the Wattenberg field in Colorado, one of APC's major regions, but even an increase in crude prices might not bring the company back to into expansion mode because margins - not top-line revenue growth - are most important.
- Case in point: The cost to bring a well into production has fallen by ~45% this year in the Wattenberg, as drilling costs in the area have fallen below $1M per well, meaning APC will be able to drill 70 wells in the area this year vs. 35 last year.
- APC says the Delaware Basin in west Texas has offered up similar efficiencies, and the company plans to bring an eighth drilling rig into the region and is considering a ninth, as costs have come down by ~$1M per well.
Tue, Jul. 28, 5:28 PM
- Anadarko Petroleum (NYSE:APC) -1.1% AH after reporting better than expected Q2 earnings but revenues fell 40% Y/Y to $2.64B from $4.44B a year ago.
- APC says improved drilling practices and ongoing operating efficiencies helped deliver more than 18K bbl/day of higher-margin oil sales volumes above its guidance during Q2.
- Following Q2 production of 77M boe (846K boe/day), APC says it is adjusting its FY 2015 sales volumes to 298M-302M boe (816K-827K boe/day), and sees Q3 total sales volumes of 71M-73M boe (772K-793K boe/day).
- Improved efficiencies have allowed APC to increase its production by 13%, or 35K bbl/day of oil a day this year, CEO Al Walker, which is “enhancing our relative cash margins and enabling us to drill more than 100 additional wells this year, all while staying within our capital guidance.”
- APC also says its liquefied natural gas project in Mozambique continues to advance, and contractors have been chosen for initial development of onshore facilities.
Tue, Jul. 28, 4:20 PM
Mon, Jul. 27, 5:35 PM
- AFL, AIZ, AJG, AKAM, APC, ARI, ATML, ATR, ATRC, AXS, BBRG, BGFV, BLDP, BMR, BOOM, BWLD, BXMT, CALX, CAP, CEB, CHRW, CINF, CLMS, CTXS, CUZ, DHT, EEFT, EQR, ESRX, ETH, EW, EXAC, EXAM, GAS, GCA, GILD, GPRE, HA, HT, HURN, IACI, IPHI, KIM, LNDC, MTSI, NATI, NCR, NEU, NGD, NUVA, NVDQ, NVMI, OIS, PEI, PNRA, RGR, RNR, RPXC, RRC, RSYS, RUBI, SLCA, SM, SPWR, SSW, TSS, TWTR, ULTI, VDSI, VR, VRSK, VRTU, WNC, WRI, WSH, X, YELP
Wed, Jul. 22, 2:37 PM
- A reduction in non-OPEC production eventually will provide an opportunity for U.S. producers to get back in the game, Credit Suisse analyst Mark Lear says as he upgrades the oil and gas E&P sector to Overweight and changes ratings for several individual stocks.
- Lear sees a handful of names with limited downside at WTI prices of ~$60/bbl and “decent” upside with prices in the $70’s, and expects a better year for natural gas in 2016 as dropoffs in production and higher demand could lead to higher winter prices.
- "We may be early,” but Credit Suisse assumes coverage at Outperform on some E&P stocks: EOG, EPE, PXD, DNR, APC, DVN.
- Upgraded to Outperform from Neutral: HES, CXO, CRZO, NBL
- Upgraded to Neutral from Underperform: MUR.
- Assumed coverage at Neutral: APA, DNR
- Assumed at Underperform: SD, SWN
- Downgraded to Underperform from Neutral: REXX, CRK
Thu, Jul. 16, 2:57 PM
- Global oil majors have $150B of firepower than can be used for M&A and have the ability to defer another $325B in capex on marginal projects; with so much cash available for potential deals and up to 15M bbl/day of production potentially available for purchase, Goldman Sachs analyst Ruth Brooker sees a pickup in M&A activity in the oil and gas space coming soon.
- The firm thinks shale production has the potential to double by 2025, and Brooker argues majors likely will take the current opportunity to increase their exposure to U.S. shale at historically low prices.
- Goldman sees seven companies as most likely to draw buyout attention from the majors: EOG, PXD, CLR, COG, NBL, APC, RRC.
Wed, Jul. 8, 3:49 PM
- The U.S. E&P industry is "between a rock and a hard place" entering earnings season, Deutsche Bank says, expecting continued headwinds for the group; while momentum has been building for moderate acceleration in activity levels in H2, macro concerns from China to Greece have weighed on crude prices and introduced an “additional layer of uncertainty.”
- Among the major integrated oils, the firm prefers EOG Resources (EOG -2.5%) and Anadarko Petroleum (APC -2.8%) into Q2 results but cuts its stock price target for Marathon Petroleum (MPC -2.6%) in half to $62.
- U.S. refiners, on the other hand, continue to defy fears of a collapse in margins, with demand strength and robust gasoline cracks again driving upside to earnings estimates; the firm sees 7% upside on average to current Q2 estimates for the group, with particular strength from Tesoro (TSO -1.2%), Valero (VLO -0.9%) and HollyFrontier (HFC -1.4%).
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