Tue, Sep. 22, 5:45 PM
- With the outlook for oil prices uncertain, Deutsche Bank's energy analyst team prefers four stocks - Occidental Petroleum (NYSE:OXY), EOG Resources (NYSE:EOG), Devon Energy (NYSE:DVN) and Marathon Oil (NYSE:MRO) - which have “high asset quality, manageable outspend and a visible line of sight towards improving capital efficiency."
- Consensus estimates imply a modest drop in U.S. exit rate oil production in 2016, but increased drilling efficiencies, an accelerated draw-down in capital efficient DUC well inventory, and an increasingly oil-weighted allocation of onshore capital suggest the group may be able to "keep on keeping on," the firm says.
Tue, Sep. 15, 12:56 PM
- House Republicans plan to vote later this month on a bill to lift the 40-year-old U.S. ban on crude oil exports, a move that would please oil companies lobbying Congress but potentially rattle global oil markets already facing volatility and lower prices.
- More than a dozen oil companies including Continental Resources (NYSE:CLR), ConocoPhillips (NYSE:COP) and Marathon Oil (NYSE:MRO), have pushed Congress to lift the ban, arguing that unrestrained U.S. oil exports would eliminate market distortions, streamline U.S. production and boost the economy.
- Some refiners focused on the domestic market such as Phillips 66 (NYSE:PSX), Valero (NYSE:VLO) and Marathon Petroleum (NYSE:MPC) and consumer interest groups oppose the move, saying it would raise gasoline prices.
- Energy stocks are mostly higher today as crude oil rebounds from recent declines.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
Thu, Sep. 10, 1:07 PM
- Marathon Oil (MRO +1.1%) says it plans to suspend new venture funding for its conventional exploration program and re-direct the funds to its oil fields in the Gulf of Mexico and off the coast of west Africa.
- CEO Lee Tillman tells investors at a Barclays conference says MRO will spend $100M on its conventional exploration program next year, 60% less than the $250M it spent on exploring those plays this year; MRO had spent $500M in 2014.
- Tillman says the company is in the early stages of planning its 2016 capital budget but already has found $600M it can trim.
Fri, Sep. 4, 6:45 PM
- The Morgan Stanley commodity team lowers its crude oil price estimates, forecasting WTI at $51.07/bbl at the end of 2015, $56.45 at the end of 2016 and $60 at the end of 2017; the group had foreseen a 2017 price of $80.
- At the firm's recent Houston Energy Summit, EOG Resources (NYSE:EOG) was considered the most bullish in terms of expectations for oil prices, expecting "U.S. production to come off 100Mbld per month in year end" for a total decline from a peak of 700M bbl/day at year-end.
- Many other companies in attendance, including Anadarko Petroleum (NYSE:APC) and Apache (NYSE:APA), expect a more modest pickup in crude prices.
- Of all the companies in its coverage universe, Stanley sees InterOil (NYSE:IOC), Marathon Oil (NYSE:MRO) and Devon Energy (NYSE:DVN) as offering the highest upside to its price target.
Mon, Aug. 31, 3:49 PM
- West Texas crude oil surged 8.8% to $49.19/bbl, capping a three-day rally that added more than 27% to the price - the largest three-day rally since January 2009 - after U.S. oil production data showed output falling and OPEC said it would talk with other producers about low prices.
- Brent crude rallied 7.4% to $53.80, as the spread between the two benchmarks widened to more than $5 intraday after narrowing to $4.33.
- "Oil markets are hungry for any evidence of a fall in production, anywhere,” says Global Hunter's Robert Hastings.
- The SPDR Energy ETF (XLE +1.2%) jumped after being down as much as 2.5% early in the day, and the Market Vectors Oil Services ETF (OIH +2.3%) reversed a 2.6% loss at its intraday low.
- However, trading volumes were lower and volatility perhaps greater than usual due to a U.K. holiday.
- Andrew Keene tells CNBC he is selling today's pop, noting that XLE is again trading at its 20-day MA and "we haven't traded above this moving average since May."
- Among the shares of some of the more active energy companies, Chevron (CVX +0.5%) and Exxon Mobil (XOM +0.4%) are higher after respective early losses of 3.1% and 2.4%; also, COP +5%, PSX +2.6%, SLB +2.2%, RIG +4.1%, HAL +2.4%, WLL +8.3%, MRO +3.4%, NFX +5.1%, LINE +5.7%.
- Other ETFs: VDE, ERX, XOP, ERY, FCG, DIG, GASL, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
Mon, Aug. 24, 3:27 PM
- Chevron (CVX -5%) is upgraded to Neutral from Underperform with a $100 price target at BofA Merrill, which expects CVX’s net debt to stabilize with major projects beginning to contribute in 2017 and a drop in spending to maintenance levels.
- The firm says it has been concerned throughout the past year that CVX's cash burn would dilute equity value through peak spending at the same time that oil prices collapsed, but it no longer sees a risk, as CVX is discounting below strip prices but with a dividend.
- CVX requires sustained spending of $15B-$16B to hold production flat for an extended period,” BofA's Doug Leggate explains, adding that at $45-$50 oil, cash flow by 2017 would be closer to $29B so that the dividend is "more than covered" by cash flow in an ex-growth environment.
- ConocoPhillips (COP -6.2%) is the firm's top pick among the big oils after the stock has been hit hard, which the analyst thinks reflected unwarranted concerns regarding COP's dividend; at current strip prices, Leggate believes COP's upside is second only to Buy-rated Exxon Mobil (XOM -5.3%).
- However, the firm downgrades HollyFrontier (HFC -3.5%), Marathon Petroleum (MPC -7.2%) and Valero (VLO -4.7%) to Underperform and cuts Continental Resources (CLR -10.1%), Marathon Oil (MRO -8.4%), Noble Energy (NBL -5.4%) and Whiting Petroleum (WLL -8%) to Neutral.
Fri, Aug. 21, 12:34 PM
- "It's worse than you think," says longtime China bear Jim Chanos, having a day on CNBC. "Whatever you might think, it's worse."
- "People are beginning to realize the Chinese government is not omnipotent and omniscient ... like many of us, sometimes they don't have a clue."
- Chanos is short Solar City (SCTY -8.9%), saying it's really a subprime finance company, burning a lot of cash, and with negative EBITDA ... "this environment ... scary."
- He remains short some of the bigger names in the energy exploration and production space - DVN, MRO, OXY, APC.
- I don't like Shell (RDS.A -1.8%) or Chevron (CVX -1.5%), he says, and believes neither Chevron's dividend nor its buyback are safe.
- ETFs: FXI, ASHR, CAF, YINN, PGJ, GXC, FXP, YANG, CHN, PEK, MCHI, TDF, XPP, YAO, GCH, ASHS, YXI, CN, CHXF, FCA, CNXT, CHNA, KBA, JFC, AFTY, CHAU, XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Wed, Aug. 19, 11:18 AM
- It's a broad decline for stocks this morning, with the S&P 500, DJIA, and Nasdaq all lower by 1% or more. Leading the way down are the energy names (XLE -2.5%) after an unexpected jump in oil inventories has sent the price of black gold down to new bear market lows at $41.30 per barrel.
- Chevron (CVX -2.9%), ConocoPhillips (COP -3.8%), EOG Resources (EOG -4.3%), Apache (APA -4.1%), Hess (HES -3.6%), Marathon Oil (MRO -5.5%), Noble Energy (NBL -3.1%), Anadarko (APC -3.6%).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
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
Thu, Aug. 6, 2:22 PM
- Marathon Oil (MRO -1.3%) President/CEO Lee Tillman said in today's earnings conference call that MRO could sell 70% of its crude inventory at a profit with U.S. oil at $50/bbl, but that the company will still operate with discipline in the low oil price environment.
- Tillman said MRO will maintain its 4.2% dividend yield while looking to sell non-core assets and continuing to reduce spending, as it cuts 2015 capex to $3.3B from earlier plans for $3.5B with the ability for further reduction later in the year and the likelihood of a "materially lower" 2016 budget.
- The CEO said MRO is in the process of selling $100M in natural gas assets in east Texas, north Louisiana and Oklahoma, and that the company plans to sell at least $500M in non-core assets with no set deadline in mind.
- In an analyst note, Raymond James' Pavel Molchanov says MRO’s Q2 earnings came in near expectations and that its dividend yield and historical track record of capital discipline are positive indicators going forward.
Wed, Aug. 5, 6:45 PM
- Marathon Oil (NYSE:MRO) is flat AH after swinging to a Q2 loss on a 48% Y/Y drop in revenue, as the collapse in crude prices trumped the company's efforts to balance its budget, including boosting its production and trimming its spending.
- MRO says its total worldwide production from continuing operations excluding Libya averaged 407K boe/day, up 6% Y/Y, with U.S. production of 220K boe/day up nearly 30% over the year-ago quarter, as production costs in North America fell 30% Y/Y.
- MRO reaffirms its full-year production guidance of 5%-7% worldwide Y/Y growth, excluding Libya, to 375K-390K boe/day, and 20% growth for the U.S., within a $3.3B capital spending budget, down from its previously reduced budget of $3.52B and 40% below 2014's total $5.5B in capital spending.
- Despite moderating its drilling activity - in the Eagle Ford Shale, for example, MRO reduced its number of wells to 52 in Q2 from 91 during Q1 - the company still logged production increases thanks to continuing efficiency improvements in drilling and completions.
Wed, Aug. 5, 5:10 PM
Wed, Jul. 29, 5:05 PM
Fri, Jul. 24, 12:54 PM
- No new well completion reports have been filed in North Dakota since July 10, the longest gap this year, according to the state’s Department of Mineral Resources.
- The slump in reported completions is unusual and coincides with the fall in oil prices which has seen wellhead prices for Bakken crude drop below $50/bbl; Reuters' John Kemp says if the slump continues for much longer, it could be a sign that shale producers are deferring putting more wells into production to save cash and wait for better prices.
- The number of wells reported completed so far in July is running far below the previous level and well below the number the DMR estimates is needed to hold production steady, Kemp writes.
- Top Bakken producers include CLR, HES, EOG, WLL, XOM, OAS, NOG, EOX, MRO
Wed, Jul. 15, 5:57 PM
- The oil market "could be oversupplied for longer than we previously anticipated,” Jefferies analysts say, while highlighting Chevron (NYSE:CVX), Occidental Petroleum (NYSE:OXY) and Marathon Oil (NYSE:MRO) are their energy sector favorites.
- The firm likes CVX because of "one of the strongest balance sheets in the sector," with capital spending probably peaking this year at $35B and leverage expected to peak at 16% as major capital projects are delivered; production growth should average 6.4% in 2015-17, "a pace that generally drives an integrated oil company to outperformance."
- OXY's defensive characteristics - a strong balance sheet and progressive dividend - remain attractive, and the transformation of the stock to a Permian growth story is now materializing, Jefferies says.
- The firm expects MRO can grow production mid-single digit through at least 2018, while trading well below peers at 4.9x EV/DACF based on 2017 estimates.
Marathon Oil Corp is an energy company engaged in the exploration, production and marketing of liquid hydrocarbons and natural gas, production and marketing of products manufactured from natural gas and oil sands mining.
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