Thu, Mar. 26, 5:49 PM
- After oil's drop from more than $100/bbl to ~$50 in just months, oil producers are using hedges as a source of income rather than just as a form of insurance to lock in minimum prices for oil, Dow Jones reports.
- Carrizo Oil & Gas (NASDAQ:CRZO), for example, has placed several hedges on ~12K bbl/day that guaranteed it at least $91/bbl on average, locking in a $166M gain which exceed its $163M in total revenue last quarter, and added new contracts guaranteeing a minimum price of $50/bbl for some of its oil this year and next as protection in case oil prices fall further.
- Continental Resources (NYSE:CLR) dropped nearly all its oil hedges when crude was still priced at ~$80 in early November, earning $433M from the move and using the cash to cover operating costs and keep its investment grade credit rating.
- Cashing in hedges is part of the survival strategy being used by Energy XXI (NASDAQ:EXXI), which booked a $377M loss in its latest quarter; it got $73M in January and February for cashing in some of this year's hedges, and put on new hedges at lower prices; similarly, Parsley Energy (NYSE:PE) says it brought in $63M in recent months by cashing in some of its hedges.
- But companies are notoriously bad at choosing when to put on and take off hedges; though many U.S. oil firms, especially smaller producers, routinely use hedges to lock in prices, many were less hedged than usual heading into the oil price plunge that started last June.
Mon, Mar. 16, 4:42 PM| Comment!
Tue, Feb. 24, 6:32 AM| Comment!
Mon, Feb. 23, 5:30 PM
- AIXG, ALKS, AMT, BMO, CBRL, CEQP, CLDT, CLDX, CMCSA, CMLP, COT, CRNT, CRZO, CYRN, DAKT, DCI, DPZ, DRH, DYAX, ECL, EXAS, EXLS, EXPD, FDML, GLDD, GTLS, HD, IART, IPXL, M, MNKD, NEO, ODP, PCRX, PF, PLL, RLGY, SAFM, SAH, SHLX, SHOO, SPAR, SPWR, SUI, THRM, TOL, TREX, TRXC, UTHR, VAL, VSI, WEN, WIN, WLK, WPC, ZINC
Thu, Feb. 12, 11:33 AM
- Pennsylvania Gov. Tom Wolf is proposing a new 5% severance tax on natural gas extraction in the state, saying the measure could generate $1B or more.
- The measure could face some pushback in the state's Republican-controlled legislature, but some kind of fracking tax could pass, as lawmakers from both parties already have proposed taxes from 3.2% to 8%.
- Like other major natural gas producing states, Pennsylvania already has a severance tax on the value of the gas extracted at the wellhead.
- Top Marcellus Shale producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
Mon, Feb. 2, 11:49 AM
- Sterne Agee's Tim Rezvan analyzed the hedge portfolios of E&P companies who are very much "in the money" and formally aggregated estimated values of hedge portfolios for companies he covers, and his results show the values vary widely across the group.
- Among the oil-focused producers, Denbury Resources (DNR +8.1%) is far and above all others with a hedge portfolio worth $811M, 33% of current market cap; other standouts include Gastar Exploration (GST +5.5%), Oasis Petroleum (OAS +6.2%), Carrizo Oil & Gas (CRZO +5.4%) and Approach Resources (AREX +9.1%).
- Rezvan says he expects rhetoric to continue from operators over the next three months on monetizing all or some hedges to raise cash. saying "the question will be if operators go naked on the hedge side in an outright bet on an oil price rebound, or if they simultaneously layer in costless collars around strip pricing."
Tue, Jan. 27, 7:59 AM
- Carrizo Oil & Gas (NASDAQ:CRZO) announces a 2015 drilling and completion capex plan of $450M-$470M, a ~35% decline from 2014 spending.
- Reports preliminary total production estimate for Q4 is 37.7K boe/day and 22.1K bbl/day of oil, both exceeding the high end of company guidance.
- CRZO increasing its type curve EUR for the Eagle Ford Shale to 510K boe per well from 499K boe due to continued strong performance across its position.
- In the Utica Shale, CRZO's second well, the Brown 1H, was brought online Jan. 15, which averaged 502 bbl/day of condensate and 1.1M cf/day of rich natural through the first five days of production.
Wed, Jan. 21, 2:03 PM
- “Companies will start to sell off the family silver” amid sustained low oil prices, and Halcon Resources (NYSE:HK) and Goodrich Petroleum (NYSE:GDP) are among energy companies that need to keep an eye on their liquidity the most and are thus the most likely candidates to sell assets, analysts say.
- HK has the most debt relative to its market value among similar-sized North American peers, according to Bloomberg data, and its plan to cut 2015 drilling to just three rigs vs. earlier plans for as many as 11 opens up the possibility that it could try to sell some of the acreage where it is not currently drilling, SunTrust's Neal Dingmann says.
- Analysts also tab Clayton Williams Energy (NYSE:CWEI), Denbury Resources (NYSE:DNR) and Penn West Petroleum (NYSE:PWE) as energy companies most likely to sell assets.
- Also, Dingmann names top Bakken producers Continental Resources (NYSE:CLR) and Whiting Petroleum (NYSE:WLL) as potential targets of takeover interest as producers with stronger balance sheets that have become more affordable with oil’s plunge; other analysts mention Carrizo Oil & Gas (NASDAQ:CRZO) and PDC Energy (NASDAQ:PDCE) as potential candidates.
Wed, Jan. 14, 3:59 PM
- While Imperial Capital cuts 2015 earnings estimates across its coverage area of small-cap energy exploration companies, it raises its stock price targets on Carrizo Oil & Gas (NASDAQ:CRZO) and Synergy Resources (NYSEMKT:SYRG) based upon strong liquidity positions and low breakevens.
- CRZO is a low-cost Eagle Ford producer that achieves above breakeven returns at $50/bbl crude pricing at current cost structure, growing to more than 40% with expected cost reductions; the firm says CRZO boasts best-in-class execution, noting the company raised its guidance several times last year due to its geological and geophysical operations teams’ ability to improve performance.
- SYRG is one of the best-positioned companies in the group and does not need to reduce capex to improve liquidity, with subsequent lower earnings jeopardizing debt covenants; even after a recent $125M acreage acquisition, SYRG maintains a very low level of debt, with a calendar 2015 net debt/EBITDA ratio of 1.0x and liquidity coverage of 2.0x.
Dec. 17, 2014, 2:20 PM
- 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.
Dec. 5, 2014, 5:38 PM
- The Eagle Ford shale formation in south Texas produced its billionth barrel of oil some time last month, according to analysts at research firm Wood Mackenzie.
- Eagle Ford now accounts for 16% of total U.S. oil production, and the firm forecasts E&P spending of $30.8B in the region next year, ~22% of the total $139.3B expected in U.S. onshore spending.
- Eagle Ford is widely considered the most profitable U.S. shale field, and many analysts speculate the break-even price for production to remain profitable is ~$50/bbl in much of the play.
- Top Eagle Ford producers include EOG, CHK, COP, MRO, BHP, APC, APA, BP, COG, CRZO, CWEI, CRK, XOM, GDP, HES, MTDR, MUR, NFX, PVA, PXD, ROSE, RDS.A, RDS.B, SN, SM, STO, SFY, TLM, ZAZA
Nov. 6, 2014, 10:59 AM
- Carrizo Oil & Gas (CRZO -1.2%) is lower despite reporting Q3 results that surpassed analyst estimates on both EPS and total revenues, buoyed by strong production from its Eagle Ford and Marcellus shale assets.
- CRZO says Q3 production volumes totaled 33,587 boe/day, up 12% Y/Y, and raises its 2014 crude oil production growth target to 63%.
- Drilled 15 gross operated wells in the Eagle Ford shale during the quarter, and recently began completion operations at its second operated well in the Utica Shale.
- Says it continues to evaluate midstream solutions for its Utica production, with negotiations at "an advanced stage."
Nov. 6, 2014, 6:34 AM| Comment!
Nov. 5, 2014, 5:30 PM
- AAON, AAP, AAWW, AEE, AES, AINV, AKRX, AMCX, AMRC, AMSC, AOL, APA, AZN, BBG, BCE, BCRX, BDBD, BKCC, BR, CDW, CECE, CECO, CNK, CNQ, COTY, CPN, CRZO, CVC, CYNI, DNOW, DTV, ERJ, FSYS, FUN, FUR, GEO, GLP, GNRC, GOLD, HAIN, HII, HNR, HSC, HSIC, HSP, HZNP, IT, KATE, KERX, KLIC, LIN, LMIA, LPI, MITL, MPEL, MWIV, NAVB, NRF, NTWK, NXTM, ONE, OWW, PBH, PDCE, PERI, PHMD, PKD, PMC, PNK, POZN, PRFT, PRGO, PRIM, PTCT, RDNT, RGEN, SATS, SCMP, SFUN, SFY, SGM, SLH, SNI, SNMX, SRPT, TAP, TCPC, TDC, TEDU, THS, TK, TNDM, TPH, TU, VC, VIVO, WAC, WD, WEN, WIN, ZEUS
Oct. 28, 2014, 11:32 AM
- U.S. energy company CEOs remain confident they can still make money in a world of $80 crude oil prices, according to a Bloomberg report.
- The industry is used to price swings, Halliburton (NYSE:HAL) CEO David Lesar tells Bloomberg; if crude floats at $80-$100, "that’s a range that the service industry and our customers can easily live within."
- “We think there’s a lot of economic oil at $75... meaning we earn 15%, 16%, 17% returns,” Occidental (NYSE:OXY) CEO Stephen Chazen said during OXY's earnings conference call last week.
- Harold Hamm of Continental Resources (NYSE:CLR) even says prices could fall to $50/bbl before he would start worrying, and tells CNBC that his company has not yet altered any drilling schedules in response to the drop in crude prices.
- Some of the best operators can profit at low prices because they’re learning how to drill wells more efficiently and getting more production at lower costs; SM Energy (NYSE:SM) is getting 40% more production for a 10% increase in the cost of each well, and Carrizo Oil & Gas (NASDAQ:CRZO) has nearly doubled its cash flow/bbl from two years ago.
Oct. 27, 2014, 11:14 AM
- Carrizo Oil & Gas (CRZO -4.6%) says Q3 production volumes averaged 33,587 boe/day, up 12% Y/Y and up 1% Q/Q, which the company says was driven by strong results in each of its operating regions and more than offset the sale of Barnett Shale properties during Q4 2013.
- Q3 oil production averaged ~20K bbl/day, up 64% Y/Y and 8% Q/Q, while natural gas and NGL production averaged 81.5K cfe/day.
- CRZO says it completed the acquisition of Eagle Ford Shale assets from Eagle Ford Minerals for $250M, and will fund the deal through an offering of $250M of senior notes due 2020.
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