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Dec. 7, 2015, 7:30 AM
- Devon Energy (NYSE:DVN) agrees to acquire 80K net surface acres in the Anadarko Basin STACK play in Oklahoma from EnCap Investments’ Felix Energy for $1.9B, and will acquire 253K net acres in the Powder River Basin in Wyoming for $600M.
- DVN says the acquired Anadarko Basin properties include production of ~9K boe/day and estimated risked resource of 400M boe; the acquired Powder River Basin acreage includes production of ~7K boe/day (85% oil) and conservatively identifies 500 development-ready locations with potential for as many as 2,700 unrisked locations.
- DVN says the transactions will be funded with $1.35B of equity and $1.15B of cash on hand and borrowings.
- DVN also says it is marketing its Access Pipeline in Canada and plans to monetize various upstream assets across its portfolio; it has identified 50K-80K boe/day of production from non-core assets to divest throughout 2016.
Dec. 4, 2015, 3:25 PM
- U.S. crude oil settled 2.7% lower at $39.97 and Brent fell 1.9% to $43 after OPEC decided to roll over its policy of maintaining crude production in order to retain market share - a not unexpected outcome but one that offers no relief in sight for the oil industry's pain.
- "OPEC not cutting is going to put more pressure on oil prices," and the pressure on companies’ spending will feed through into their investment in increasing their production, says Jefferies equity analyst Jason Gammel. “It’s not as though they’ll shut down existing production, but over time their output will decrease."
- Don’t expect prices to stabilize until low prices force curtailments of pumping in the U.S., which will not happen until the end of next year, Goldman Sachs analyst Damien Courvalin.
- Energy stocks (-0.7%) are the only S&P industry sector to decline, as the rest of the market has rebounded from yesterday's drop; some of the big oils - XOM +0.3%, CVX +0.6% - have inched higher, and refiners are mostly higher, but it's another down day for most: DVN -1.2%, CLR -5.9%, MRO -2.3%, HES -1%, COP -0.8%, EOG -0.7%, APC -2.4%, ETE -9.3%, ETP -3.5%, EPD -2.4%, WMB -6.9%.
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, FCG, DIG, GASL, DTO, DUG, BGR, USL, XES, IYE, IEO, IEZ, DNO, FENY, PXE, PXI, PXJ, FIF, OLO, SZO, NDP, RYE, FXN, OLEM, DDG
Dec. 3, 2015, 7:51 AM
- Devon Energy (NYSE:DVN) is in talks to buy Felix Energy for ~$2B, including debt, Reuters reports.
- DVN owns oil acreage and an interest in oil and gas pipelines located close to Felix's assets in northern Oklahoma.
- A deal would represent a bet by DVN that crude oil prices will recover from their current $40/bbl lows to ~$65 sooner rather than later, according to the report.
- Besides DVN, other major players with investments in the are where Felix operates include Marathon Oil (NYSE:MRO), Newfield Exploration (NYSE:NFX), Continental Resources (NYSE:CLR) and Cimarex Energy (NYSE:XEC).
Dec. 2, 2015, 3:21 PM
- WTI crude oil settled below $40/bbl for the first time in more than three months, tumbling 4.6% to $39.94 as U.S. government data showed a 10th straight weekly increase in crude supplies.
- Meanwhile, Brent crude sank 4.4% to $42.49 on London’s ICE futures exchange, the lowest settlement since March 2009.
- The dollar's surge to 12-year highs after pro-rate hike comments by Janet Yellen also weighed on oil and other dollar-denominated commodities.
- Energy stocks suffered severe selling pressure: XOM -2.5%, CVX -2.2%, DVN -5.6%, CLR -5.5%, MRO -5.1%, HES -4.8%, TSO -3.8%, COP -3.7%, EOG -3.7%, APA -3.2%, PXD -3%, APC -2.8%.
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, DIG, DTO, DUG, BGR, USL, IYE, IEO, DNO, FENY, PXE, PXJ, FIF, OLO, SZO, NDP, RYE, FXN, OLEM, DDG
Dec. 2, 2015, 10:46 AM
Nov. 16, 2015, 5:37 PM
- SandRidge Energy’s (NYSE:SD) most important assets are at the epicenter of Oklahoma’s earthquake problem, which combined with SD's precarious financial position could cause the company to become insolvent if regulators shut down its disposal wells, according to an AP analysis.
- SD is the only independent, publicly traded driller that does not own a major stake in other oil and gas formations, and its cash crunch prevents it from moving operations to another region, the report says.
- Disposal wells that inject wastewater byproducts into lower rock layers are a key to making the Mississippi Lime play economical, and one in six wells Oklahoma regulators have placed under a microscope belongs to SD, accounting for nearly 85% of the company’s 125 active disposal sites.
- Other drillers including Devon Energy (NYSE:DVN) and Chesapeake Energy (NYSE:CHK) also operate dozens of disposal wells in the area regulators and state geologists are examining, but the other companies have less to fear because each has assets around the U.S., the report says.
Nov. 12, 2015, 3:27 PM
- Devon Energy (DVN -1.3%) is upgraded to Buy from Neutral with a $57 price target at Guggenheim, which believes DVN may be willing to sell non-core upstream assets in an attempt to optimize growth in the core regions at strip prices.
- DVN CEO Dave Hager has identified East Texas, Miss Lime, Granite Wash and Southern Midland Basin as areas that are not receiving capital at low oil prices, and Guggenheim thinks the assets could be monetized as they are inferior to DVN’s core opportunities in the Delaware Basin, Cana Woodford and Eagle Ford.
- Operators typically express a reluctance to sell Midland Basin acreage even if the position is non-core, but the firm estimates proceeds for the other assets could top $1B, with any sale of Southern Midland Basin more than doubling the proceeds.
Nov. 3, 2015, 5:59 PM
- Devon Energy (NYSE:DVN) +2.8% AH after Q3 earnings, excluding $5.9B in adjustments for writedowns and other one-time items that resulted in a $3.51B loss, beat expectations.
- DVN says it delivered record oil production of 282K bbl/day, up 31% Y/Y, marking the fifth consecutive quarter the company has exceeded oil production expectations, and raises its full-year 2015 oil production guidance by 2% to a mid-point of 276K bbl/day, which would represent 31% Y/Y growth.
- Q3 revenue fell 33% Y/Y to $3.6B, as the increased production was offset by lower average selling prices.
- DVN again lowers its 2015 capital spending estimate, this time by $100M to $3.8B-$4B, and says it plans to aggressively pursue cost reductions and maintain the flexibility of capital programs.
Nov. 3, 2015, 4:22 PM
- Devon Energy (NYSE:DVN): Q3 EPS of $0.76 beats by $0.24.
- Revenue of $3.6B (-32.6% Y/Y) misses by $380M.
Nov. 2, 2015, 5:35 PM
- ACHC, AFG, AIV, AMSG, ASH, ATVI, AWR, BIO, BKH, CBPO, CBS, CERN, CHEF, CHUY, CIM, CKP, CSU, CSV, CVC, DAC, DENN, DHT, DK, DKL, DVA, DVN, ECYT, ENPH, ENSG, EPIQ, ETSY, EVRI, FANG, FARO, FIVN, FLTX, FMI, FOGO, GHDX, GMED, GRPN, HCI, HL, HLF, HRZN, IAG, IPHS, IRWD, ITRI, IVR, JCOM, KEG, LLNW, MPO, MTZ, MXL, MYGN, NFX, NYMT, OAS, OCLR, OESX, OFIX, OKE, OKS, ORA, PAA, PAGP, PAYC, PBPB, PKD, QUAD, REGI, RIGL, RLOC, RP, RPAI, RXN, SLW, SSNI, SUPN, TDW, TMH, TSLA, TSRA, TX, UNTD, USNA, VNDA, WBMD, WR, WTR, X, XEC, XOXO, XXIA, Y, ZAGG, ZEN, ZNGA
Oct. 30, 2015, 3:04 PM
- Looking at things on a price-to-book basis, energy stocks are selling for just 55% of the broader S&P 500, according to a note this week from BAML - the lowest level since 1986. On average, energy has been 85% as expensive as the S&P.
- Book values can change, but do tend to be more stable than earnings - while ExxonMobil's EPS is expected to fall 45% this year, its book value is seen slipping just 1%.
- Jack Hough takes a look at three names trading at particularly large discounts:
- Chevron (CVX +1.5%) sells for 1.1x book vs. a 10-year average of 1.74x. Though cash flow has turned negative, JPMorgan's Phil Gresh says the risk of a dividend cut is "near zero."
- Apache (APA +1.2%) sells for 1.07x book vs. a 10-year average of 1.5x. The company has a recent market cap just under $18B, with $6.5B in available liquidity, including $3B in cash - putting it in position to buy assets on the cheap.
- Devon Energy (DVN +2%) sells for 0.88x book vs. its 10-year average of 1.47x. The profits are expected to fall by more than half this year, the company is growing production and cutting well costs in key properties.
Oct. 28, 2015, 3:35 PM
- Devon Energy (DVN +0.5%) says it has cut 150 employees in Canada, or ~15% of its workforce of 1,050 in the country, as the company significantly reduces its capital spending "for the foreseeable future."
- The employees are split roughly evenly between its Canadian headquarters in Calgary and its three-phase Jackfish thermal oil sands facility near Fort McMurray in Alberta.
- DVN said it produced an average of 98K bbl/day of heavy oil in Canada during its Q2, up 27% Y/Y thanks to an additional 23K bbl/day from its Jackfish 3 project expansion.
Oct. 23, 2015, 12:37 PM
- Southwestern Energy's (SWN -6.6%) $2.8B impairment and Freeport McMoRan's (FCX -0.5%) $3.7B charge are just the beginning, as Barclays estimates at least $20B in charges are coming during Q3 for just six companies, as reported by Bloomberg.
- SWN’s $2.8B writedown was double Barclays’ forecast, which also predicts ceiling-test impairments for Apache (APA -0.1%), Chesapeake Energy (CHK -2.3%), Devon Energy (DVN -0.1%), Encana (ECA -2%) and Newfield Exploration (NFX +0.1%).
- "Many companies will have writedowns as the price of oil is about half of where it once was and gas is also down,” says T. Rowe Price's Timothy Parker, but "it won’t generally hurt the companies because very few have debt covenants that are linked to book value, which the writedowns affect."
Oct. 14, 2015, 6:54 PM
- The recent bounce in oil stocks such as Chevron (NYSE:CVX), Occidental Petroleum (NYSE:OXY), Marathon Oil (NYSE:MRO), Devon Energy (NYSE:DVN), Hess (NYSE:HES) and EOG Resources (NYSE:EOG) may not prove sustainable but their dividends are mostly safe, Deutsche Bank analysts say.
- The firm expects stock performance "to remain choppy, with coming negative revisions, challenging valuation and commodity volatility still weighing on the near-term outlook," but with H2 crude balances showing signs of improvement, MRO, HES and EOG could enjoy a ~30% increase in 2016 CFO for each $10/bbl move in crude.
- Deutsche Bank says dividends at MRO may be at risk, but believes the remaining dividends are safe, suggesting current yields of the integrated oils are overly discounted vs. the S&P 500, European oil majors and respective historical averages.
- The firm says it continues to favor OXY and EOG among large-caps, MRO and DVN for leverage to a bounce, and CVX among yield-focused integrateds.
Oct. 8, 2015, 1:57 PM
- Oppenheimer energy analysts expect just one of the 15 pure-play E&P companies it covers to report positive EPS in Q3, just two to post positive EPS in Q4, and only two to finish in the green for 2016.
- Devon Energy (DVN +1.5%) is the only large E&P Oppenheimer expects to post a profit in Q3 and one of only two, along with Range Resources (RRC +1.5%), seen recording a profit in Q4.
- The firm sees Anadarko Petroleum (APC +2.4%), Hess (HES +4.1%) and Murphy Oil (MUR +3.5%) as the hardest hit stocks in Q3, forecasting respective EPS losses of $0.76, $0.91 and $1.13.
- Oppenheimer projects only ConocoPhillips (COP +1.2%) and Occidental Petroleum (OXY +1.9%) coming through with a profit for full-year 2016.
Oct. 7, 2015, 5:37 PM
- Schlumberger (NYSE:SLB) is out and Frank's International (NYSE:FI) is in, praising FI's “self-help improvements with a good underlying business.” as Credit Suisse analysts update their top energy stock picks in 10 different subsectors.
- Credit Suisse names Devon Energy (NYSE:DVN) as its favorite oil and gas E&P stock, which should ultimately outperform despite near-term oil price risk “given its defensive valuation, top quartile oil growth profile, and further accretion potential from EnLink."
- Top independent refiner is Marathon Petroleum (NYSE:MPC), as the firm believes the synergy of the company’s recently-acquired Hess retail business is exceeding plans, and it is confident MPC will continue to benefit from self-help initiatives.
- Among MLPs, Genesis Energy (NYSE:GEL) is defensive in terms of its direct exposure to commodity price weakness and offensive in terms of the distribution growth expected following its recent acquisition of offshore assets from Enterprise Products Partners.
- Other subsector favorites:MRO, PDCE, EURN, SCTY
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