Two top U.S. refining executives are leaving LyondellBasell Industries (LYB -0.6%) as the company nears an agreement to sell its Houston refinery, Reuters reports.
LYB reportedly has been seeking at least $1.5B for the 263K bbl/day refinery on the Houston Ship Channel, the company's only U.S. refinery; Reuters has reported that Valero Energy (VLO +0.2%), Cenvous Energy (CVE -1.1%) and Suncor Energy (SU -0.3%) have expressed interest, but Saudi Aramco says it has not bid on the refinery.
Also, LYB reportedly is working to restore production at the refinery after a Sunday power outage knocked all units out of production; the plantwide power loss is the second this year, and follows a series of smaller outages since January.
CVE's budget "strikes the right balance between growth, capital discipline and financial strength," RBC says it it inch the stock's price target higher to $25 from $24.
CVE also has made strides in streamlining costs, Raymond James analyst Chris Cox says, noting the company's plan to restart the previously deferred expansion at Christina Lake was ~20% lower than expected at $16K-$18K per bbl/day.
Nevertheless, Cox says other large-cap Canadian energy names offer a more compelling free cash flow profile and valuation; he maintains his Market Perform and $23 price target on CVE shares.
Cenovus Energy (NYSE:CVE) says it plans a 2017 capital budget of C$1.2B-C$1.4B, a 24% Y/Y increase from its forecast of C$1B-C$1.1B for 2016.
The 2017 budget includes a resumption of construction of the phase G expansion at the Christina Lake oil sands project and to invest in attractive conventional oil drilling opportunities with high-return potential in Alberta.
CVE plans to increase total oil production in 2017 by 14% Y/Y to 223K-240K bbl/day, with oil sands production seen rising 20% to 172K-184K bbl/day.
CVE also says it will seek to hold the line on per-barrel oil operating costs, and sees long-term oil sands sustaining capital at ~$7/bbl, about half the level in 2014.
The near-doubling of crude oil prices since February has eliminated the urgency for companies to sell assets in the Alberta oil patch, Suncor Energy (NYSE:SU) CEO Steve Williams says in shooting down expectations that the company would dip into its available capital to strike more deals.
Instead of pursuing more acquisitions, the CEO signaled in today's earnings conference call that SU would shift more of its capital toward dividends and share buybacks, news that helped lift shares to a 52-week high in tofay's trade.
Piper Jaffray analyst Guy Barber called it a “stellar quarter” for SU, highlighting the company’s 15% higher than expected cash flow numbers and the rebound in Syncrude's production.
Cenovus Energy (NYSE:CVE) President and CEO Brian Ferguson dismissed talk that the company would sell some of its undeveloped oil sands acreage, saying on his earnings call that CVE was planning to develop its assets at a “more modest pace” in the coming years.
CVE reported a Q3 loss of C$0.28/share, a sharp drop from the year-ago quarter when results were helped by the sale of its royalty assets, but Raymond James analyst Chris Cox called it a “solid beat” of expectations and noted the company already has achieved its $500M cost reduction target for the year.
Saudi Arabia is seeking to strengthen its U.S. market position by buying LyondellBasell's (LYB -1.9%) big oil refinery in the Houston Ship Channel, but negotiations take place as Congress is moving to allow families of victims of the 9-11 attacks to sue Saudi Arabia for supposed ties between government officials and the terrorists, NY Times reports.
Saudi Aramco is believed to be the top contender for the refinery, with competition from Valero (VLO -0.9%), Suncor (SU -2.4%) and Cenovus (CVE -4.7%).
The possible purchase comes as Saudi Aramco and Royal Dutch Shell are disbanding their Gulf of Mexico partnership, with the Saudis poised to gain control over the Port Arthur, Tex., refinery as well as some gasoline stations and storage facilities, while Shell will take over two smaller refineries in Louisiana that were jointly owned; Middle East oil experts say the loss of the two refineries would make the acquisition of the LYB refinery all the more vital in maintaining the Saudi's dominant market position along the Gulf coast.
Two Canadian energy companies today outlined preliminary plans to add new oil sands production at their Alberta operations, although analysts caution against concluding that oil sands growth would rebound rapidly, saying most companies would remain cautious.
Cenovus Energy (NYSE:CVE) said, as it released Q2 earnings, that it was performing engineering and rebidding work on a 50K bbl/day expansion of its Christina Lake thermal project, which was put on hold last year, and would decide whether to proceed by December.
MEG Energy (OTCPK:MEGEF) said in its Q2 earnings release that it could invest up to C$30M in its own project to raise production by 30K-40K bbl/day through this year's cost savings without raising its projected C$170M in 2016 capex.
"This is a very company-specific thing," says Desjardins analyst Justin Bouchard. For CVE, Christina Lake is "probably the best project out there, and they have got C$3.8B in cash."
Canadian Natural Resources (CNQ -0.3%) has bought up ~12K natural gas wells across Alberta over the last two years, pushing past Encana (ECA -1.2%) as Canada's top natural gas producer, according to a Reuters analysis of regulatory data.
"All these new wells have low production, but they were bought for pennies for the dollar," Raymond James analyst Chris Cox says, noting the wells are in adjacent properties which offer cost synergies, and "if you are expecting pricing to improve then you get an additional uplift."
CNQ's North American natural gas production rose 9% in 2015 and 35% in 2014, and while the company bought wells, most rivals sold assets or maintained a steady well count; Cenovus Energy's (CVE -0.6%) well count fell 2% in Alberta during 2013-15, and Penn West (PWE +0.3%) shed nearly 30% of its wells during the period.
Alberta introduced two new oil and gas royalty programs yesterday that the provincial government says will encourage producers to explore new areas, boost production and keep people working.
The Emerging Resources Program will apply to wells being drilled in the early stages of development, and allows producers to pay a flat 5% royalty rate, while the Enhanced Hydrocarbon Recovery Program is aimed at boosting production from aging wells.
Alberta’s NDP government within only a year has gone from threatening to increase oil and gas royalties to having to provide royalty incentives to stimulate drilling activity, Financial Post's Claudia Cattaneo writes.
Canadian oil and gas companies say they are not worried about the new North America-wide energy and climate change strategy announced yesterday by Canadian PM Trudeau, U.S. Pres. Obama and Mexican Pres. Nieto, which includes reducing methane gas emissions from the oil and gas industry by 40%-45%.
The Canadian Association of Petroleum Producers says “having our competitors held to a similar standard is going to be good for all of us," since Canadian producers already are under pressure to cut methane emissions and pay carbon levies.
TransCanada (NYSE:TRP) says it welcomed the agreement and cited its growing natural gas pipeline business in Mexico and its acquisition of Columbia Pipelines in the U.S. as evidence of the need for an interconnected energy system.
The pact would force the three countries to add renewables, nuclear projects or carbon capture and storage projects on coal-fired power plants that would raise the total to 50% from the current 37%.
The results may help dispel some concern that a spill of diluted bitumen would be more difficult to clean up, and help companies make the case for pipeline projects such as Kinder Morgan’s (KMI +0.9%) Trans Mountain expansion and Enbridge’s (ENB -0.1%) Northern Gateway pipeline.
The study follows a 2015 report by the U.S. National Academy of Science that showed diluted bitumen tended to sink quickly after being spilled in fresh water.