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Today, 8:25 AM
- Large energy companies will slash dividend payouts by a total of $12B this year, bringing global payouts down 9% Y/Y to $147B, according to Markit's dividend forecasting unit.
- Ten of the world's large-cap oil and gas companies are set to cut their dividend in 2016, Markit predicts, including ConocoPhillips (NYSE:COP), which already has slashed its payout for 2015 but likely will announce additional cuts by year-end.
- The other nine large-cap energy firms Markit sees cutting their dividend this year: Anadarko Petroleum (NYSE:APC), Ecopetrol (NYSE:EC), Eni (NYSE:E), Kinder Morgan (NYSE:KMI), Noble Energy (NYSE:NBL), Sinopec (NYSE:SNP), Cnooc (NYSE:CEO), PetroChina (NYSE:PTR) and Woodside Petroleum (OTCPK:WOPEF, OTCPK:WOPEY).
Thu, Feb. 11, 5:55 PM
- The Department of Energy has approved ConocoPhillips' (NYSE:COP) request to export 40B cf of liquefied natural gas from its Kenai terminal in Alaska over the next two years starting Feb. 19.
- The approval will allow COP to export gas to any country the U.S. has a free-trade agreement with or any other country with which trade is not prohibited by U.S. law.
- The Kenai terminal was the first LNG export facility in the U.S.; most of the gas exports from Kenai have gone to Japan since the plant entered service in 1969.
Fri, Feb. 5, 10:38 AM
- ConocoPhillips (COP -5.5%) continues its slide following yesterday's dividend cut decision just two months after the company said the “dividend remains the highest priority use of our cash.”
- Scotia Howard Weil downgrades COP to Sector Perform from Sector Outperform with a $40 price target, lowered from $55, seeing a near-term window where the story will screen poorly relative to other options in the energy space.
- RBC Capital cuts its price target to $50 from $61, expecting investors to remain on the sidelines for now with the dividend more or less in line with its E&P peers (Briefing.com).
- UBS cuts its price target to $38 from $42, noting that COP materially lags Chevron in production growth as well as dividend yield while trading at a ~2x premium.
- Barclays maintains an Overweight rating with a $50 price target, expecting shares to recover over the following couple of weeks and outperform peers.
Thu, Feb. 4, 6:57 PM
- Investors punished ConocoPhillips (NYSE:COP), sending shares down 8.6% in today's trade, after cutting its dividend by two-thirds and resulting in a dividend yield of 2.6%, in line with the average yield of 2.4% for independent E&P companies but below the 4.4% average of oil majors.
- Several analysts on COP's earnings conference call asked what the company now has to offer investors, following decades of offering lower growth but strong shareholder distributions through buybacks and a growing dividend.
- CEO Ryan Lance called the decision to cut the payout "gut wrenching," but he believes the business still offers a competitive dividend and a low-cost supply of oil and gas resources that will generate free cash at a lower break-even price.
- Paul Sankey of Wolfe Research questioned the magnitude of the cut, saying COP’s problems were less dire than those at many of its rivals, adding that he was concerned that "you've capitulated at the bottom" of crude oil prices.
- Wells Fargo’s Roger Read, on the other hand, argues the company “did what had to be done," seeing COP's position as now "fundamentally strengthened for a sustained lower oil price environment."
Thu, Feb. 4, 8:42 AM
Thu, Feb. 4, 8:19 AM
- ConocoPhillips (NYSE:COP) -5.8% premarket after missing Q4 earnings estimates and cutting its dividend by 66%.
- COP lowers its guidance for 2016 capex by 17% to $6.4B from a December outlook for $7.7B, primarily driven by reduced activity in the continental U.S., and guidance for 2016 operating costs by 9% to $7B from $7.7B.
- "While we don't know how far commodity prices will fall, or the duration of the downturn, we believe it's prudent to plan for lower prices for a longer period of time," says Chairman/CEO Ryan Lance.
- COP says Q4 production 1,599 MBOED, an increase of 32 MBOED Y/Y, primarily due to new production from major projects and development programs, as well as improved well performance; the total realized price was $28.54/boe, vs. $52.88/boe in the year-ago quarter.
- COP also revised its FY 2016 production guidance to be essentially flat with 2015 production of 1,525 MBOED, and sees Q1 production at 1,540-1,580 MBOED.
Thu, Feb. 4, 7:59 AM
Thu, Feb. 4, 7:07 AM
Wed, Feb. 3, 6:37 PM
- As ConocoPhillips (NYSE:COP) prepares to report Q4 earnings before the market opens tomorrow, Credit Suisse's Edward Westlake argues the company should consider cutting its dividend to $2.3B, or a 5% yield.
- "We like dividends, but" Westlake questions how responsible the current ~7.6% payout is, and believes COP would need $60/bbl oil to comfortably cover the cost of both the dividend and its spending plans.
- Analysts are expecting a Q4 loss of $0.64/share, reversing a $0.60 profit in the year-ago quarter, on revenue of $9.06B, which would mark a 23% Y/Y decline; for the full year, a $1.14 loss is expected, compared with a 2014 profit of $5.30, while revenue of $32.11B would mean a 42% Y/Y drop.
- Earlier: Likelihood of ConocoPhillips dividend cut more than 50%, Barclays says (Jan. 25)
Wed, Feb. 3, 5:30 PM
- ABC, ABG, ABMD, ARW, AZN, BCE, BCO, BR, BSX, BZH, CARB, CFX, CHTR, CI, CLX, CMI, CMS, COP, COTY, CRS, CS, CSL, CUB, DFT, DLPH, DNKN, EQM, EQT, GLPI, GRUB, HIMX, ICE, IT, ITG, KELYA, LQDT, LVLT, MD, MHFI, MHO, MMC, MMP, MMS, MSCI, MSG, NAO, NYT, ODFL, OXY, PBH, PM, PPL, PRLB, PTEN, RDS.A, RFP, RL, RSTI, SBH, SNA, SPH, SQNS, STRA, TDC, TDY, TE, TPX, UTEK, VLP, VMC, WEC, XYL
Wed, Jan. 27, 6:43 PM
- Exxon Mobil (NYSE:XOM) is "starting to look relatively expensive," driven by its relative safety stock status, one of several energy stock thoughts J.P. Morgan analyst Phil Gresh expresses after updating his models for lower oil prices.
- Gresh also thinks ConocoPhillips (NYSE:COP) still looks a bit expensive, though less so than before the stock's recent underperformance, with the main near-term risk remaining the duration of the low price environment and related balance sheet and dividend considerations.
- Chevron (NYSE:CVX) and Occidental Petroleum (NYSE:OXY) still have above average total return potential, and Canadian Natural Resources (NYSE:CNQ) is beginning to look relatively interesting if it can manage through the current period of low prices and high committed capex, Gresh says.
Mon, Jan. 25, 6:49 PM
- Investment in Canada’s oil and gas industry is forecast to fall again this year, as the price of the heavy crude produced from Alberta's oil sands has fallen so low that some companies are losing money on every barrel they sell, and are looking at ways to cut production.
- The Canadian Association of Petroleum Producers predicts the industry will invest C$42B in 2016, 13% less than in 2015 and 48% less than in 2014 - a steeper decline than investment in oil and gas production worldwide, which is expected to drop by 40% during 2014-16, according to Wood Mackenzie.
- On top of plummeting prices, Alberta's new left-leaning government plans to cap carbon emissions from the oil sands, a move that threatens to strand billions of barrels of crude; companies including Exxon (NYSE:XOM), BP, Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP), Shell (RDS.A, RDS.B), Marathon Oil (NYSE:MRO), Total (NYSE:TOT), Statoil (NYSE:STO) and Cnooc (NYSE:CEO) have invested in Alberta megaprojects to tap the world's third largest oil reserves, smaller only than Saudi Arabia and Venezuela.
Mon, Jan. 25, 2:58 PM
- ConocoPhillips (COP -7.1%) has a "slightly more than 50% probability" that it will need to cut its dividend "over the next couple of quarters," unable to sustain one of the industry's most generous payouts in the face of plummeting crude oil prices and an $5.5B-$6B cash burn cash in 2015, Barclays analysts say.
- The firm also believes COP should act when the company reports Q4 results in early February and that it should reduce the dividend by at least 75%.
- Barclays thinks such a cut would dramatically improve COP’s long-term competitive position, as the company would become one of the sector’s lowest breakeven cost producers, and its improved flexibility would allow the company to grow production, cash flow and the dividend on a sustainable basis from the new baseline, even at oil prices as low as $45-$50/bbl.
Thu, Jan. 21, 3:49 PM
- Crude oil futures settled more than 4% higher on the back of perceived oversold conditions, despite a higher than expected inventory build; March WTI jumped 4.2% to settle at $29.53/bbl after trading as high as $30.25, while Brent surged 4.9% to $29.25.
- Crude prices were supported by the inventory increase in this morning's EIA report, which was less than the API’s report released on Wednesday, says Phil Flynn, senior market analyst at Price Futures Group; also, reports of Libyan oil tanks on fire eased speculation that Libya would be exporting more oil soon.
- Also supportive for prices, oil production in the lower 48 states edged lower for the first time in seven weeks, “which is at least ‘less bearish’ for the extremely oversupplied global oil market,” says Tyler Richey of The 7:00’s Report.
- The energy sector is bouncing after hitting a multiyear low yesterday: XOM +1.4%, CVX +2.7%, RDS.A +3.8%, BP +3.7%, TOT +2.3%, STO +4.5%, COP +6.2%, MRO +12.2%, APC +10.3%, OXY +2.1%, EOG +6.4%, PXD +2.7%, APA +8.2%, HES +7%, KMI +15.5%, EPD +3.3%, ETP +6.8%.
- ETFs: UNG, USO, OIL, XLE, UGAZ, UCO, DGAZ, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, BOIL, GAZ, DBO, DWTI, ERY, FCG, DIG, GASL, DTO, DUG, KOLD, BGR, USL, XES, IYE, IEO, UNL, IEZ, DNO, FENY, PXE, PXI, FIF, PXJ, OLO, SZO, NDP, RYE, DCNG, FXN, OLEM, DDG
Wed, Jan. 20, 6:38 PM
- ConocoPhillips (NYSE:COP), ExxonMobil (NYSE:XOM), Marathon Oil (NYSE:MRO) and Occidental Petroleum (NYSE:OXY) are retained with Outperform ratings at Wells Fargo, which says the average upside potential for the four in its international E&P and integrated oil group is 38% at the top end of its valuation range and 25% at the lower end.
- From both a debt-adjusted cash flow and enterprise value/EBITDA standpoint, MRO and Market Perform-rated Chevron (NYSE:CVX) and Murphy Oil (NYSE:MUR) carry the most discounted valuations, the firm says.
- Among oil services stocks, the firm likes Halliburton (NYSE:HAL), RPC (NYSE:RES), Patterson-UTI Energy (NASDAQ:PTEN), U.S. Silica (NYSE:SLCA) and Nabors Industries (NYSE:NBR) to survive the downturn while maintaining the financial flexibility to thrive and take share in a North American recovery.
- Earlier: Wells Fargo's MLPs most likely to cut distributions: ETE, ETP, WMB, WPZ, AMID, APLP, CCLP, CEQP (Jan. 15)
Wed, Jan. 20, 5:57 PM
- As ConocoPhillips (NYSE:COP) continues to tumble, -4.5% in today's trade and -25% YTD, its yield has surged past 8.5% and brought inevitable questions about the sustainability of the dividend.
- Cowen analysts say COP's first priority remains its dividend, with capex cuts and non-core asset sales from its large resource base serving as its primary levers; COP is not desperate to sell, Cowen says, and would utilize its strong A-rated balance sheet to maintain the dividend.
- But "there’s only so much cost cutting, asset selling and borrowing a company can do before there’s nothing left," Barron's Ben Levisohn writes.
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