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Dec. 4, 2015, 12:41 PM
- Credit Suisse analyst Edward Westlake says favorable market conditions that drove the oil refining business this year will carry over into next year, making many refiner stocks strong buys.
- Global gasoline demand grew at 3x its historical rate in 2015, and while consensus expectations for gasoline demand predict a regression closer to the long-term trend in 2016, Westlake sees at least another year of strong demand growth remaining.
- The analyst says he has been surprised at Q4 performance so far , and predicts a 2016 environment conducive to earnings strength, especially among coastal names.
- Credit Suisse has Outperform ratings on these refiners: VLO +1.6%, NTI +0.5%, CLMT +1.5%, MPC +3%, TSO +1.2%, ALDW -2.3%, WNR +1.6%, PBF +0.2%, DK +1.7%.
Apr. 14, 2015, 5:40 PM
- Delek US Holdings (NYSE:DK) agrees to acquire a ~48% interest in Alon USA Energy (NYSE:ALJ) owned by Alon Israel in a cash and stock deal valued at ~$572M.
- DK says the investment - which could increase to a 49.99% stake at the company's discretion, with additional ownership above the threshold subject to approval of ALJ's board - broadens its asset diversity while offering future growth opportunities.
- ALJ +5.1% AH.
Mar. 31, 2015, 12:19 PM
- Delek US Holdings (DK -0.2%) discloses that it is in talks to buy some or all of Alon Israel Oil, one of Israel's largest fuel station and convenience store operators and the parent company of Alon USA Energy (ALJ +5.4%).
- A deal could give DK a stake in refineries and convenience stores in the U.S. and Israel; ALJ's refineries in Texas, California and Louisiana have an aggregate crude oil throughput capacity of 217K bbl/day and operates nearly 300 7-Eleven convenience stores in central and west Texas and New Mexico.
- Alon Israel had owned more than 50% of ALJ stock but now owns ~48% after giving up its majority stake through a share sale last month.
Dec. 15, 2014, 12:33 PM
- BofA Merrill analyst Doug Leggate stays cautious on the refining sector for 2015, although he sees a bullish opportunity in Phillips 66 (PSX +0.5%), which he upgrades to Buy from Neutral with a $90 price target.
- The expected recognition of value risks being materially overhyped compared to what is currently being recognized by MLPs, the analyst says, adding that absence of guidance on the cost impact on the remaining business, limited guidance on tax and lack of precision on disclosure prompts skepticism that the market is not getting ahead of itself.
- Leggate downgrades HollyFrontier (HFC -1.5%) to Neutral from Buy, and PBF Energy (PBF -1.9%) and Delek US (DK -1.9%) to Underperform from Neutral; he also lowers stock price targets for the three, as well as for Valero (VLO +0.4%), Northern Tier (NTI -2.5%) and Marathon Petroleum (MPC -1.1%).
Sep. 10, 2014, 3:28 PM
- Energy stocks, especially refiners, are taking a beating following the latest EIA inventory report that said gasoline stockpiles rose by 2.4M barrels last week, helping send U.S. crude oil futures to 16-month lows (-1.2% to $91.61/bbl) and Brent crude to 17-month lows (-1.1% to $98.02).
- The report is bearish given the large increases in refined product inventories; "even though the crude drawdown was close to expectations, it seemed to disappoint," Again Capital's John Kilduff says.
- The EIA report followed the agency’s updated demand growth report issued yesterday and this morning’s release of OPEC’s report on the oil market; both see lower demand growth this year and next.
- Oil majors are mostly lower: XOM -0.6%, CVX -1.4%, COP -0.3%, but BP (+2.9%) and RDS.A (+1%) are higher.
- Refiners are hit hard: VLO -3.6%, PSX -1.5%, MPC -1.9%, HFC -2.5%, TSO -2.9%, WNR -4.1%, CVI -1.6%, ALJ -1.8%, PBF -3.5%, DK -1.8%, CLMT -1.8%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, ERY, XOP, DIG, BNO, UGA, DTO, DBO, DUG, IYE, IEO, CRUD, PXE, USL, PXI, PXJ, DBE, FENY, UWTI, DWTI, DNO, RJN, RYE, FXN, SZO, OLO, JJE, DDG, ONG, RGRE, OLEM, TWTI, UBN
Aug. 8, 2014, 9:55 AM
- Delek US Holdings (DK +4.2%) is upgraded to Outperform from Market Perform with a $43 price target, up from $32, at Cowen, based on a 2015 sum-of-the-parts valuation that includes a mature DKL.
- The firm bases its upgrade on the shares' lagging performance relative to recent developments in the company's position, including enhanced refinery performance at El Dorado and Tyler stemming from light crude capacity expansions; $30M of DKL growth in the pipeline; and an improved balance sheet, with YTD net cash moving from $19M to $180M at the DK level.
Jul. 28, 2014, 11:32 AM
- Delek US Holdings (DK +1.9%) is upgraded to Focus Stock from Sector Outperform at Howard Weil, which sees Midland West Texas crude as a relative bright spot for downstream players with Permian exposure such as DK in the face of compressing crude differentials and margins (Briefing.com).
- Given DK's market cap, the firm believes the company is under-covered by both buy side and sell side alike, thus providing an opportunity to capture the recent blowout in Midland differentials.
Jun. 25, 2014, 10:18 AM
- Refiners take a beating in early trading, as a lift of the ban on U.S. oil exports is expected to narrow the WTI-Brent spread, which could cause refiners' profits drop if they are forced to pay higher prices to compete with international buyers for U.S. crude.
- “We don’t think the current system needs to be changed,” Valero Energy tells Bloomberg.
- Yesterday's rulings gave Pioneer Natural Resources (PXD +2.6%) and Enterprise Products Partners (EPD +1.4%) permission to ship ultralight oil to foreign buyers - a narrow ruling, but one that is likely to spark similar requests from other companies, and increase lobbying for a full lifting of the 40-year-old ban on exporting crude oil.
- Refining stocks are broadly lower: VLO -7.4%, PBF -5.8%, MPC -5.7%, WNR -5.5%, DK -5.4%, HFC -4.6%, ALDW -4.6%, TSO -3.8%, NTI -3.5%, PSX -2.9%, ALJ -2.7%, CVI -2.3%.
May 15, 2014, 7:51 AM
- Israel's Delek Group (DGRLY) says its stake in Delek US Holdings (DK) will fall to 9.8% and it will raise 954M shekels ($276M) from the sale of 9.2M shares.
- Delek Group, which owns stakes in the giant Tamar and Leviathan natural gas fields off Israel's Mediterranean coast, has been seeking to divest other holdings to raise funds.
- Also, Delek US announces the pricing of the secondary offering at $30/share.
- DK -2.5% premarket after falling 3.3% during yesterday's trade.
May 13, 2014, 5:02 PM
- Delek US Holdings (DK) -2.4% AH after announcing a secondary offering of 9.2M common shares by selling stockholders Delek Hungary Holding; the underwriters will have the option to purchase up to an additional 1.38M shares.
- DK will receive no proceeds from the offering.
Feb. 28, 2014, 2:48 PM
- Refiners mostly continue to languish after shares were hammered yesterday as the Brent-WTI spread narrowed to its tightest level since last October.
- Credit Suisse isn't too excited about the near-term outlook; while March-April could see some widening of the spread given the transfer of inventory from Cushing to the Gulf, summer crude spreads should remain tight given as East of Rockies refineries ramp up for peak gasoline demand.
- On individual stocks, the firm says Western Refining (WNR -3%) and Phillips 66 (PSX +0.1%) should benefit from other businesses, while Tesoro (TSO +1.1%) could benefit from being recognized as a “Gulf Coast Refiner” but Delek US (DK -3.5%) needs to show signs of earnings improvement before it's worth buying.
- ETFs: XLE, ERX, OIH, VDE, ERY, DIG, DUG, XES, IYE, IEZ, PXJ, PXI, PSCE, FENY, FXN, RYE, DDG.
Feb. 27, 2014, 3:46 PM
- Oil refiners are getting hit today as Brent crude falls to its lowest price in more than a week on rising tensions in Ukraine, shrinking the premium to West Texas crude to the narrowest level since October.
- Given Ukraine’s location, the country's situation obviously will impact Brent more than WTI; meanwhile, WTI’s losses are limited after U.S. government data yesterday showed crude supplies at Cushing, Okla., declining to a four-month low.
- Phillips 66 (PSX -2.8%) has dropped 3.5% YTD, while Delek US (DK -5.3%) has plunged 17%, Valero (VLO -4.3%) has slipped 3.8%, Holly Frontier (HFC -3.1%) has fallen 8.2% and Marathon Petroleum (MPC -4.4%) is off 8.5% in 2014.
- Other decliners today: TSO -1.5%, ALJ -5.4%, WNR -4.2%, CVI -3.4%, CLMT -0.7%.
- ETFs: USO, OIL, UCO, SCO, DBO, DTO, BNO, CRUD, USL, DNO, UWTI, SZO, DWTI, OLO, OLEM, TWTI
Jan. 10, 2014, 2:40 PM
- Chevron's (CVX -1.9%) earnings guidance isn't impressing investors; it expects Q4 profit to be "comparable" with Q3 when it posted net income of $4.95B, but analyst consensus had estimated Q4 to come in at $5.69B.
- Unlike last year, when CVX’s refining business was a drag on earnings while its upstream business was strong, now refining is providing the boost - good news for Exxon Mobil (XOM +0.1%) and refiners, Morgan Stanley says.
- MS thinks most U.S. refiners will show a Q/Q improvement in capture rates, helping XOM more than CVX due to its significantly more absolute North American refining capacity; marketing margins also are improving sharply, a positive indicator for refiners with retail operations such as Marathon Petroleum (MPC), Tesoro (TSO), Phillips 66 (PSX), Western Refining (WNR) and Delek US (DK).
Jan. 8, 2014, 2:45 PM
- A potential collapse this year in domestic crude prices could push refiners higher, including Phillips 66 (PSX -0.3%) and PBF Energy (PBF +0.7%), Howard Weil says.
- "From a global perspective, macro [refining & marketing] dynamics are improving into ’14 with significant crude supply growth placing a theoretical ceiling on oil prices/feedstock costs while underlying demand growth remains intact, thereby supporting product prices," the firm writes.
- However, the firm endorses a slight tactical shift toward more defensive posturing with a focus on lower beta names and companies that screen at a discount from a valuation perspective, thus it cuts Delek US (DK -3.4%) and Tesoro (TSO -2%) to Sector Perform and raises PSX and PBF to Sector Outperform.
- Noble Energy (NBL -0.2%), Whiting Petroleum (WLL -0.2%) and Concho Resources (CXO -1.3%) are upgraded to Focus Stock.
Dec. 20, 2013, 3:18 PM
- Shrinking crude spreads - WTI has gained 7.2% while Brent has risen just 1.7% so far in December - likely will hold back refiners during the first six months of 2014, Cowen's Sam Margolin says.
- Extremely favorable refining conditions from last month are deteriorating amid higher utilization and continued reduction in crude imports, limiting supply and causing U.S. prices to melt higher, the firm explains, adding that investors need to "manage near-term expectations" while "remain(ing) constructive on the refining story for 2014."
- Margolin keeps Outperform ratings for Western Refining (WNR +4%), Marathon Petroleum (MPC +2.6%), Tesoro (TSO +0.4%), Valero (VLO +1.4%) and PBF Energy (PBF +1.7%); HollyFrontier (HFC +2.4%), Delek (DK +2.3%), Northern Tier (NTI +0.6%), Alon USA (ALJ +1.7%) and Calumet Specialty Products (CLMT +3.8%).
Dec. 11, 2013, 12:52 PM
- Tesoro (TSO -1.8%) apparently didn't offer enough good news at yesterday's analyst day, as shares tumble despite the general perception from the meeting as "incrementally positive."
- The key messages in the meeting surrounded progress of the synergy capture from the Carson acquisition, continued margin improvement through feedstock and product optimization and driving additional logistics growth.
- TSO sees rail unloading capacity along the U.S. west coast for North Dakota crude oil growing to nearly 1M bbl/day through 2015; TSO's $100M rail-to-barge project in Washington is the largest of the offloading projects announced so far.
- Imperial Capital raises its TSO price target TSO to $63 from $57, and Howard Weil lifts its target to $66 from $62.
- Other refiners are lower too: VLO -1.3%, PSX -0.7%, MPC -1.8%, WNR -2.6%, HFC -1.6%, ALJ -1%, NTI -0.2%, DK -1.9%, CLMT -2.7%.
Delek US Holdings Inc is an integrated energy company. The Company is engaged in petroleum refining, transportation, storage and wholesale of crude oil and intermediate and refined products and convenience store retailing.
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