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
Tue, Aug. 11, 11:49 AM
- Eight Credit Suisse analysts each recently picked their top energy stocks to buy in eight different subsectors.
- Alternative energy: SolarCity (NASDAQ:SCTY) is a “key beneficiary” in the trends toward residential solar and lower capital costs.
- Independent refining: Marathon Petroleum's (NYSE:MPC) deal for Hess' retail business is well timed.
- Integrated oil and gas; Marathon Oil's (NYSE:MRO) upstream cash margins “have room to rise as shale production rises and the oil price recovers.
- MLP: Genesis Energy (NYSE:GEL) is defensive in its direct exposure to commodity price weakness and offensive in distribution growth expected following its recent acquisition of offshore assets from Enterprise Products.
- E&P: Devon Energy (NYSE:DVN) has a strong hedge position and strong oil growth relative to peers.
- Oil services and equipment: Schlumberger's (NYSE:SLB) ability to optimize margins and cash flow even in a down market makes the stock attractive.
- Oilfield services and marine transport: Euronav (NYSE:EURN) has flexibility for fleet acquisitions and is free to return 80% of net income to shareholders via dividends.
- Small- to mid-cap E&P: PDC Energy's (NASDAQ:PDCE) three-year projection of up to 40% production growth from Wattenberg even if oil prices remain as low as $50/bbl is impressive.
- Earlier: Credit Suisse lifts view of MLPs, sees 40% upside on revision to mean yield
Tue, Aug. 4, 5:57 PM
- Devon Energy (NYSE:DVN) +2.5% AH after reporting better than expected Q2 earnings, helped by growth in its U.S. operations and cost reduction initiatives, even as revenues fell 25% Y/Y.
- DVN says Q2 total oil production averaged 270K bbl/day, up 32% Y/Y and beating the midpoint of guidance by 5K bbl/day, while U.S. oil production averaged a record high of 172K bbl/day, attributed to production from the Eagle Ford and Permian basin plays; including production from Canadian oil sands and heavy crude assets, Q2 total production averaged 674K boe/day, up 9% Y/Y.
- DVN guides its Q3 production outlook to 638K-676K boe/day and its full-year forecast to 649K-684K boe/day.
- Expects FY 2015 capital spending of of $4.4B-$4.8B, ~10% above the $4.1B-$4.4B range projected in February.
Tue, Aug. 4, 4:28 PM
Mon, Aug. 3, 5:35 PM
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Mon, Aug. 3, 8:38 AM
- Devon Energy (NYSE:DVN) appoints COO Dave Hager as its new President and CEO, succeeding John Richels, who announced plans to retire in December.
- Hager assumed his new roles on Aug. 1, the day after Richels' retirement became effective.
- Hager joined DVN in 2009, when he was named executive VP of exploration and production, after 30 previous years of experience in the oil and gas industry.
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
Mon, Jul. 20, 2:29 PM
- Whiting Petroleum (WLL -4.1%) is upgraded to Positive from Neutral with a $33 price target at Susquehanna, saying it now believes the valuations of many E&P stocks are finally starting to look more reasonable.
- Drivers from WLL include the company’s reserve growth potential via its positions in the Bakken and Niobara, and improvement in capital efficiency due to its focus on enhanced completions, Susquehanna says.
- The firm names Newfield Exploration (NFX -1.2%), Continental Resources (CLR -2.6%) and Devon Energy (DVN -2.3%) as its preferred oil names and Gulfport Energy (GPOR -3.7%) as its favorite gas play.
- Last week's news of sales of two WLL non-core conventional properties for $185M piques the interest of Capital One Securities, which says WLL's Belfield and Robinson Lake gas plants could be next on the chopping block and could take 2015 asset sale proceeds to the top end of WLL's guided range of $500M-$1B for the year.
Wed, Jul. 15, 9:59 AM
- Suncor (SU -0.4%) says it is planning a pilot project that will use radio frequencies to produce heavy crude oil, which it says is the first such production test of the technology on subterranean oil sands deposits.
- "If successful and commercially viable, [it] has the potential to improve economic and environmental performance in the oil sands by eliminating the need for water” to produce oil, according to SU’s general manager of oil sands strategic technology.
- SU and its partners, Devon Energy (NYSE:DVN), Cnooc's (NYSE:CEO) Nexen Energy unit and Harris Corp. (NYSE:HRS), will begin small-scale test production at a pair of wells at SU’s Dover site in Alberta.
- SU tells WSJ the pilot project will cost ~C$44M, and if successful will lead to a full commercial scale field test.
Fri, Jul. 10, 11:48 AM
- Devon Energy (DVN -0.1%) is upgraded to Outperform from Neutral with a $72 price target at Macquarie, on valuation and cash flow growth prospects.
- The firm believes continued improvements in DVN's Eagle Ford operations could further shorten the cash flow pay-back period for diversification into additional potentially high returning domestic projects.
- Macquarie adds that DVN's Canadian oil sands development projects could provide "scalability and a source for leverage to an oil price rally."
Thu, Jul. 9, 12:49 PM
- Devon Energy (DVN +1.5%) is added to the Top Picks list at FBR, which believes DVN's defensive position combined with leverage to emerging areas including the Permian, Rockies and SCOOP/STACK, offers more near-term re-rating potential.
- The firm sees several near-term catalysts including more confidence around downspacing and stacked pay potential in the Permian and continued de-risking and well improvement in the Anadarko Basin given an active H2 schedule.
- FBR feels the past few quarters are a strong testament to the success of DVN's strategic re-positioning and transition to becoming a top-tier operator in its five core areas (Briefing.com).
Wed, Jun. 24, 6:57 PM
- A spike in earthquakes across Oklahoma is forcing the state's energy regulator to urgently consider tougher restrictions on drilling activity, calling it a "game changer."
- During the June 17-24 period, Oklahoma experienced 35 earthquakes of magnitude 3.0 or greater, according to the Oklahoma Geological Survey, with some of the quakes occurring in the Oklahoma City metro area where there are no high-volume wastewater injection wells.
- The spike in quakes comes two months after drillers were ordered by the Oklahoma Corporation Commission, which regulates the oil and gas industry, to stop disposing wastewater below the state's deepest rock formation.
- Oklahoma's elected officials have been reluctant to shackle an industry that directly generated more than 7% of state revenues last year in the form of production taxes from companies such as Devon Energy (NYSE:DVN), SandRidge Energy (NYSE:SD), Chesapeake Energy (NYSE:CHK) and Continental Resources (NYSE:CLR).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG
Wed, Jun. 17, 11:32 AM
- Devon Energy (DVN -0.8%) is downgraded to Perform from Market Perform at Oppenheimer, which also removes its $70 price target, saying DVN's weak results are masked by hedging gains.
- Despite higher benchmark strip prices, continued production growth, cost savings and efficiency improvements, Oppenheimer sees 2016 earnings coming in significantly below 2015, which benefited from hedging gains.
- The firm expects DVN to face cash flow deficits of $900M this year and $1.9B next year.
Tue, Jun. 16, 5:45 PM
- The strained finances at U.S. E&P shale companies caused by collapsing crude oil prices is well known, and some analysts say the pain may be compounded by a steep drop in prices for natural gas liquids caused by oversupply, partly due to infrastructure constraints.
- SM Energy (NYSE:SM) said yesterday the price it is receiving for NGLs at the Mont Belvieu delivery point fell 36% Q/Q to $16.67/bbl and that the price declines would lower its 2015 total budgeted revenue by ~$25M while not affecting its drilling or production.
- Barclays recently said Chesapeake Energy (NYSE:CHK) could see 2016 cash flow cut by up to 3% if NGL price weakness persists, while Range Resources (NYSE:RRC) may see its cash flow cut by up to 5%; APC, DVN, PXD, QEP, SWN, ECA and EOG also could see reduced cash flow related to NGL pricing, the firm said.
- Analysts at Tudor Pickering have a more optimistic view and expect an NGL pricing recovery next year, as cresting U.S. nat gas and crude production looks to be flat-to-declining through 2016, giving U.S. infrastructure time to catch up; the firm upgrades SWN to Accumulate from Hold, with GPOR, MRD, COG, RICE and ECA as other top picks, and UPL and EQT recommended on weakness.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, KOLD, UNL, DCNG
Thu, Jun. 4, 6:32 PM
- Chesapeake Energy (NYSE:CHK) hit a 52-week low today amid a double whammy of negative news concerning the natural gas market.
- The U.S. Energy Information Administration said storage levels grew by 132B cf in the week ended May 15 to 2.2T cf, 51% more than a year ago; the weekly surplus is the largest in 12 years and the second largest in EIA records that date back to 1994.
- Many analysts believe the oversupply eventually will push another fall in gas prices; "The market was ready for a large injection, but it's still extremely bearish," one said.
- Also, the Natural Gas Supply Association said in its 15th annual Summer Outlook assessment of the natural gas market that it expects production to set records and inflict downward pressure on prices compared with summer 2014.
- "Even with record-setting demand expected, production is also projected to set summer records," says Bill Green, NGSA chairman and Devon Energy (NYSE:DVN) VP of downstream marketing.
- ETFs: XLE, VDE, ERX, OIH, ERY, FCG, DIG, GASL, DUG, BGR, IYE, FENY, FIF, PXJ, RYE, FXN, DDG
Wed, Jun. 3, 11:05 AM
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