26% Annual Return And Halliburton
Chris DeMuth Jr. • 44 Comments
Chris DeMuth Jr. • 44 Comments
Thu, Dec. 1, 10:21 AM
- The price of oil pushed through $50 per barrel today, and is currently posting a 2.9% advance on the session at $50.91.
- The S&P 500 is flat and Nasdaq is down 0.45%, but the XLE has tacked on another 1.8% to yesterday's big rise.
- Mid-cap movers: Enerplus (ERF +8.2%), Southwestern Energy (SWN +7.9%), Range Resources (RRC +5.3%), Weatherford (WFT +7.1%), Ensco (ESV +8.2%), Crescent Point (CPG +6.3%).
- Among the large players: Exxon (XOM +1.1%), Chevron (CVX +2%), Shell (RDS.A +2.2%), (RDS.B +2.3%), BP (BP +2.4%), ConocoPhillips (COP +2%), Marathon (MRO +3.1%), Halliburton (HAL +2.3%)
Wed, Nov. 30, 2:30 PM
- Oil and gas names continue to surge following the news that OPEC will cut production.
- Among the 36 energy stocks in the benchmark SPDR Energy ETF, 13 are up by at least 10%: MRO +21.6%, RIG +19.6%, MUR +15.7%, DVN +15.2%, NFX +15.2%, HES +14.8%, APC +13.6%, HAL +13.6%, CXO +11.3%, XEC +10.9%, EOG +10.5%, COP +10.4%, CHK +10%.
- Continental Resources (CLR +23.6%) soars to a 52-week high, making founder and CEO Harold Hamm, already the wealthiest U.S. energy billionaire, another $3B richer.
- Offshore drillers are broadly sporting double-digit gains: ESV +24.8%, ATW +20.6%, RIGP +18.7%, SDRL +16.5%, DO +15.7%, RDC +15%.
- "For all E&P stocks, this is a bullish call for sure, because price is directly correlated with cash flow," says Luana Siegfried, energy equity research associate at Raymond James, which sees U.S. crude reaching $60/bbl by year-end.
- MarketWatch's Philip van Doorn writes that pending earnings estimate increases from analysts ought to set a floor under the energy sector and support even higher prices for oil stocks.
Wed, Nov. 30, 9:50 AM
- Shares of energy companies surge at the open, as hopes for an OPEC deal to cut production send crude oil futures soaring.
- Reports say Saudi Arabia is prepared to accept "a big hit" to production and agree to Iran freezing output at pre-sanctions levels.
- In early trading: XOM +2.2%, CVX +2.3%, RDS.A +3.6%, BP +3.4%, TOT +1.7%, STO +5.1%, PBR +8.1%, COP +7.2%, MRO +12.1%, APC +8%, DVN +12.7%, HES +9.5%, ENB +2.1%, PSX +0.8%, SLB +4.2%, HAL +8.3%, BHI +4.3%, KMI +4.8%, EPD +2.7%, ETP +3.8%, WMB +5.4%, RIG +11.3%, SE +2.2%, CHK +9.4%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, PXI, FIF, PXJ, RYE, NDP, GUSH, PSCE, DRIP, DDG, FXN, CRAK
Tue, Nov. 29, 10:20 AM
- Crude oil continues to slide - WTI now -3.8% at $45.27/bbl, and Brent -3.8% at $46.40/bbl - dragging oil and gas equities (XLE -2.1%) down with it.
- Iran's oil minister says he is not prepared to reduce supply, and Saudi Arabia says it would not participate in a production deal without Iran and Iraq.
- Reuters reports that Iran has written to OPEC saying Saudi Arabia needs to cut oil output to 9.5M bbl/day; Saudi has said it was prepared to reduce its production only by 500K bbl/day from current levels of 10.5M.
- In early trading: XOM -1%, CVX -1.7%, RDS.A -1.4%, BP -1%, TOT -0.3%, STO -1.8%, PBR -3.7%, COP -2.9%, MRO -4%, APC -2.8%, DVN -2.7%, HES -3.6%, ENB -2.3%, PSX -1.2%, MPC -0.8%, SLB -2.2%, HAL -2.3%, BHI -2.1%, KMI -1.4%, EPD -2%, ETP -2.2%, WMB -2.4%, SE -2.3%, CHK -2.6%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, FIF, PXJ, RYE, NDP, GUSH, DRIP, DDG, FXN, CRAK
Wed, Nov. 2, 5:50 PM
Wed, Nov. 2, 3:56 PM
- Oil prices and energy equities plunged sharply as the latest inventory data showed U.S. stockpiles posted the largest weekly surge in 34 years, after the consensus outlook had pointed to only a modest rise.
- WTI crude oil -2.9% to settle at $45.34/bbl, its lowest since Sept. 27, and Brent crude -2.7% to $46.86, also its lowest since late September.
- “You could easily make the argument it’s the most bearish report of all time,” says Bob Yawger, director of the futures division of Mizuho Securities USA. “There’s nothing to support the market.”
- WTI, which already was turning lower in recent days, has now fallen 12% in just two weeks since hitting a one-year high on Oct. 19 and marks the third retreat from $50/bbl toward $40 within five months.
- Among individual stocks: XOM -0.1%, CVX -0.9%, RDS.A -2%, BP -0.2%, TOT -2.4%, COP -0.6%, MRO -3.6%, HES -1.3%, PSX -2.3%, MPC -3.4%, VLO -1.9%, SLB -1%, HAL -0.5%.
- ETFs: USO, OIL, XLE, UWTI, UCO, VDE, ERX, DWTI, OIH, SCO, XOP, BNO, DBO, ERY, DIG, DTO, USL, DUG, BGR, IYE, IEO, FENY, DNO, PXE, FIF, OLO, PXJ, RYE, SZO, NDP, GUSH, DRIP, DDG, FXN, OLEM
Mon, Oct. 31, 10:30 AM
- Baker Hughes (BHI -1%) erases opening gains to trade in the red, while General Electric (GE +0.9%) is higher amid plans to combine their oil and gas operations.
- The new company will be 62.5% owned by GE, with GE Oil & Gas CEO Lorenzo Simonelli serving as President and CEO; GE will fund a special one-time cash dividend of $17.50/share, or $7.4B, to existing BHI shareholders, who will own 37.5% of the new company.
- The deal creates a company with more than $32B in FY 2015 revenue that could cut costs to better compete with rivals such as Schlumberger (SLB -0.9%) to provide equipment and services to oil rigs and wells; the $32B combined revenue places the new company only 8%-9% behind SLB.
- The combined companies expect to generate $1.6B of synergies by 2020, primarily driven by cost savings; GE expects the deal to be accretive to 2018 EPS by $0.04 and 2020 EPS by $0.08.
- Analysts see a high likelihood of the deal's completion given little product overlap outside of the Artificial Lift business and the relatively smaller size of the deal vs. the rejected Halliburton-Baker Hughes (HAL -0.5%) tie-up.
- Moody’s, Fitch and S&P all affirmed GE’s credit ratings with stable outlooks following the announcement.
Fri, Oct. 21, 10:22 PM
- Raymond James analyst Pavel Molchanov has long been bearish on ExxonMobil (NYSE:XOM), and now he recommends the same advice for current InterOil (NYSE:IOC) shareholders following XOM's buyout: Sell.
- Molchanov says XOM is poorly positioned to take full advantage of a sustained oil price recovery, as the company's structural overweight to refining, chemicals, and (within upstream) non-LNG gas does not directly benefit from rising oil prices; he also says XOM shares already are pricing in long-term oil prices at an above-consensus WTI at $70/bbl.
- For current IOC shareholders, Molchanov says sell the post-buyout shares and use the proceeds to reinvest into any of a wide range of oil-levered stocks such as Halliburton (NYSE:HAL), Hess (NYSE:HES), Marathon Oil (NYSE:MRO) and Whiting Petroleum (NYSE:WLL).
- Molchanov believes the IOC founder's last-ditch attempt to delay XOM’s purchase will not succeed; the next hearing is scheduled for Oct. 31.
Thu, Oct. 20, 6:36 PM
- Schlumberger (NYSE:SLB) -0.4% AH after Q3 earnings beat expectations but fell 82% Y/Y on 17% less revenue and increased expenses related to the Cameron acquisition earlier this year.
- Excluding results from Cameron, SLB says its Q3 land revenue in North America rose 14% Q/Q, attributed to higher drilling and fracturing activity, although pricing improvements were limited as much of the increase in activity was driven by small companies.
- CEO Paul Kibsgaard says SLB foresees improved activity in onshore North American, Middle Eastern and Russian markets next year, but visibility remains limited since customer spending for 2017 is still in the planning process.
- SLB's results come a day after rival Halliburton (NYSE:HAL) posted a small Q3 profit that it attributed to U.S. energy company customers starting to return to drilling this summer.
Thu, Oct. 20, 3:25 PM
- Halliburton (HAL -0.6%) is the pre-eminent way to play the recovery in North American oil services activity, according to DA Davidson, one of at least 10 firms to reiterate Buy ratings for the stock and/or raise its price target following HAL's surprise Q3 profit.
- Davidson sees a disconnect between the U.S. rig count and HAL's lower North American revenues, as smaller operators who are less service intensive were the first to put rigs back to work, and the firm expects service intensity to rise notably in the coming quarters as large operators bump up their capex in 2017.
- BofA Merrill Lynch reiterates its Buy rating and lifts its price target to $56 from $53, believing HAL’s higher North American exposure leaves it well positioned for an anticipated recovery of drilling and completion activity, and noting HAL shares typically outperform peers during an oilfield activity recovery.
- Jefferies says HAL remains its top pick in oilfield services, as it stays focused on exposure to secular growth and believes the company's competitive position globally can help drive rapid margin improvement off the bottom.
Wed, Oct. 19, 2:48 PM
- Halliburton (HAL +5.1%) CEO Dave Lesar says he is determined to raise prices for the company's services to boost profits after seeing North American sales rise for the first time during the oil price downturn.
- "In the U.S., we believe we now have the highest market share we’ve ever had," Lesar said in today's earnings conference call. "At this point, if we have to give some of it back to move margins up, we might take that approach."
- CFO Mark McCollum emphasized the point, saying "We’re definitely going to need some price to get back toward the historic margins that we’ve had in the past. We’re going to be pushing as hard as we can to get back to 20% as quick as we can."
- HAL’s Q3 margin of operating loss was 4.1% but that was better than expected, UBS analyst Angie Sedita says, as "impressive cost controls across all regions led to higher margins across the board with operating income 65% above our forecasts. We view the results as a modest positive for the stock."
Wed, Oct. 19, 8:21 AM
- Halliburton (NYSE:HAL) +0.9% premarket after posting a surprise Q3 profit, as it begins to win back business from oil producers that are beginning to ramp up operations.
- HAL says sales in its primary North American market gained 9% Q/Q to $1.66B, its first North American sales boost since the downturn began in late 2014, and operating results rose by $58M, which represents 41% incremental margins; CEO Dave Lesar cites improving rig count growth and “relentlessly managing costs."
- HAL's sales in the U.S. and Canada had plunged by more than two-thirds during the downturn as customers cut spending; despite the Q/Q improvement, Q3 North American sales still were 33% lower than ay ear ago.
- Lesar, who has talked about a turnaround on the horizon, says HAL is cautious about Q4 activity due to holiday and seasonal weather-related downtimes, but "it does not change our view that things are getting better for us and our customers.”
- Schlumberger (NYSE:SLB) is scheduled to report earnings on Thursday, and Baker Hughes (NYSE:BHI) is expected to report next Tuesday.
Wed, Oct. 19, 6:51 AM
Tue, Oct. 18, 5:30 PM
Tue, Oct. 18, 3:58 PM
- Halliburton (HAL +1.6%) is higher ahead of its earnings report tomorrow, and analysts at DA Davidson expects Q3 results to beat expectations due to the company's market share gains and the recovery of the North American rig count.
- The firm foresees a Q3 loss of $0.05 and revenue of $3.95B vs. Wall Street consensus of a $0.07 loss and $3.9B in revenue, and while "it may take a few more quarters for larger operators (HAL’s core customer base) to adjust capex budgets and increase activity, a slight miss would only add to the trajectory of future earnings."
- Davidson, which has a Buy rating on HAL, expects a significant uptick in the service level intensity “as larger operators gain comfort with the recovery in commodity prices and adjust 2017 capex budgets higher.”
Tue, Oct. 18, 10:45 AM
- Halliburton (NYSE:HAL) reports earnings tomorrow morning. DA Davidson expects a beat (revenue/EBITDA/EPS of $3.95B/$486M/$(0.05) vs. consensus of $3.90B/$469M/$(0.07)).
- "Based on the strength of the recovery in the North American rig count and continued market share gains during the downturn, we expect HAL’s 3Q16 results to largely beat current top and bottom line expectations. Although, it may take a few more quarters for larger operators (HAL’s core customer base) to adjust capex budgets and increase activity, a slight miss would only add to the trajectory of future earnings."
- "We expect the level of service intensity to increase significantly in coming quarters as larger operators gain comfort with the recovery in commodity prices and adjust 2017 capex budgets higher."
- Increases price target to $57 from $54. Implied upside 23%.