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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. 9, 2015, 2:26 PM
- The House passes legislation that would lift the 40-year-old ban on oil exports, giving the oil industry one of its top congressional priorities.
- But the real test is in the narrowly divided Senate, where stand-alone export legislation is far less likely to advance; in the 261-159 House vote, only 26 Democrats joined 235 Republicans to support the measure, held down by the Obama administration's opposition.
- More than a dozen oil companies - including Continental Resources (NYSE:CLR), ConocoPhillips (NYSE:COP), Encana (NYSE:ECA), Hess (NYSE:HES), Marathon Oil (NYSE:MRO) and Apache (NYSE:APA) - have been pressing the issue with Congress, arguing that allowing oil exports would eliminate market distortions, create jobs and stimulate more U.S. petroleum production; it also would help companies fetch a higher price on the global oil market.
- "An extra dollar or two for the price of our product today is very important because our margins are incredibly squeezed,” says ECA's Doug Suttles.
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, DIG, DTO, DUG, BGR, USL, XES, IYE, IEO, IEZ, DNO, FENY, PXE, PXJ, FIF, OLO, SZO, NDP, RYE, FXN, OLEM, DDG
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
Sep. 28, 2015, 7:02 PM
- Wolfe Research's Paul Sankey says he is bracing for some ugly Q3 earnings reports among oil and gas producers and a soft environment well into 2016, arguing that with oil prices stuck ~$45/bbl for West Texas crude, "there is real bankruptcy risk for probably one-quarter of the U.S. oil industry.”
- The analyst advises clients to stick with quality companies that can weather a prolonged stretch of soft prices, which means larger independent producers such as EOG Resources (NYSE:EOG), Anadarko Petroleum (NYSE:APC) and Chevron (NYSE:CVX) among the majors.
- Sankey says “all will be fine in due course,” although the next 6-12 months could be “tough sledding” for their businesses.
- Sankey likes a number of refiners, who will benefit from cheap crude oil, including Valero Energy (NYSE:VLO), Marathon Oil (NYSE:MRO), Western Refining (NYSE:WNR) and HollyFrontier (NYSE:HFC).
Sep. 24, 2015, 7:15 PM
- North Dakota regulators approve an industry-backed proposal to delay further cuts to associated gas flaring by 10 months while also easing more long-range flaring reduction targets.
- Gov. Dalrymple and the two other members of the North Dakota Industrial Commission voted to change the date when companies must capture 85% of natural gas produced from their wells to Nov. 1, 2016.
- The regulators agreed with industry arguments that the delays and revisions were needed because of the lack of new gas capture and pipeline infrastructure, which have been delayed for a variety of reasons, including low oil and gas prices, right-of-way disputes and pad size limitations.
- Top North Dakota producers include CLR, HES, EOG, WLL, XOM, OAS, NOG, EOX, MRO
Sep. 22, 2015, 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.
Sep. 15, 2015, 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
Sep. 10, 2015, 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.
Sep. 4, 2015, 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.
Aug. 31, 2015, 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
Aug. 24, 2015, 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.
Aug. 21, 2015, 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
Aug. 19, 2015, 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
Aug. 13, 2015, 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
Aug. 11, 2015, 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
Aug. 6, 2015, 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.
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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