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Aug. 25, 2015, 7:05 PM
- Dividends of oil E&P companies such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Anadarko Petroleum (NYSE:APC) and Occidental Petroleum (NYSE:OXY) are “mostly safe" in the shaky commodity landscape despite Chesapeake Energy’s decision to suspend its payout, says Raymond James' Pavel Molchanov and his analyst team.
- Although the firm projects only one company - APC - out of 18 to fully cover the 2016 dividend payout out of cash flow at strip pricing, dividends likely will not be cut since "all the companies that have a healthy balance sheet today should still have a healthy balance sheet at the end of 2016, even if they maintain the current dividend."
- The only dividend payers with a current net debt/cap ratio above 50% are DNR and CRC - a red flag, but both companies’ dividend payouts represent quite small amounts of outlays relative to cash flow, the firm says, adding that the only companies whose leverage is likely to be lower at year-end 2016 than it was in Q2 2015 are HES and QEP.
- Among large-caps, the highest current leverage is at APC, at 45%, and NBL, at 38%, while the companies with the lowest current leverage are CVX, OXY and XOM, all at 15% or lower.
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. 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. 16, 2015, 11:34 AM
- Israel's cabinet has approved a regulatory framework that will pave the way for development of the Leviathan natural gas field.
- The plan will allow Texas-based Noble Energy (NYSE:NBL) and Israel's Delek Group (OTCPK:DGRLY) to keep ownership of the massive offshore deposit, but will require them to sell off other assets, including stakes in another large field called Tamar.
- Leviathan, with estimated reserves of 22T cf of gas, is slated to begin production in 2018 or 2019.
- Previously: Israel signs deal with Noble Energy, Delek to develop Leviathan gas field (Aug. 13 2015)
Aug. 13, 2015, 2:29 PM
- At least some E&P companies are still able to sell shares despite the oil price swoon, as Diamondback Energy (FANG -1.3%) raises $176M through a stock offering - its third this year.
- FANG has completed more follow-on stock sales than any other U.S. E&P firm this year, although at $623M it has not raised the most; Noble Energy (NBL +1.6%) and Whiting Petroleum (WLL -4.5%) each have sold more than $1B.
- Crude oil’s collapse has not stopped the sector raising more money so far in 2015 - $11.6B so far - than any entire year in at least two decades, which may indicate optimism about oil nearing a bottom and that at least some E&P companies are using capital more productively.
- If a FANG investor bought its three stock sales this year, weighted by the size of each, he actually would have gained 2%; while the shares of only 10 of 35 issues YTD are higher than the price at which they sold, the group as a whole has beaten the E&P sector average by almost eight percentage points this year, adjusted for size and offer date, WSJ's Liam Denning writes.
Aug. 13, 2015, 9:10 AM
- Noble Energy (NYSE:NBL) +1.9% premarket after Israel's government said it reached a deal that will pave the way for the development of the Leviathan natural gas field.
- The controversial deal initially revealed in June will allow NBL and Israel's Delek Group (OTCPK:DGRLY) to keep ownership of Leviathan but require the sale of other assets, including stakes in the Tamar deposit.
- The deal sets a price ceiling for gas sales to Israeli companies and commits the consortium to invest $1.5B into developing Leviathan over the next two years; the field contains ~22T cf of gas, which is expected to provide billions of dollars in revenue to Israel.
- PM Netanyahu earlier this week won crucial backing for the agreement from the central bank.
Aug. 10, 2015, 10:15 AM
- Bank of Israel Governor Karnit Flug backs a disputed government plan to develop the country's natural gas industry that would allow Noble Energy (NBL +1.5%) and Delek Group (OTCPK:DGRLY) to keep ownership of the Leviathan offshore field.
- Flug says would speed up development of Leviathan and other smaller fields, and would bring "more stable regulation of the natural gas economy," making it easier to progress with financing and development.
- The outline agreement lets NBL and Delek to keep Leviathan, with estimated reserves of 22T cf, but requires the companies to sell off other assets including stakes in the large Tamar deposit.
Aug. 3, 2015, 10:31 AM
- Noble Energy (NBL -2.2%) opens lower after reporting better than expected Q2 earnings but also a 47% Y/Y revenue decline and costs that are not falling as much as sales.
- While NBL's Q2 sales volumes rose 3.1% Y/Y to 299K boe/day, crude oil and condensate sales were cut in half to $483M, and natural gas revenue fell 28% Y/Y to $215M.
- NBL attributes the modest rise in Q2 total sales volume to the continued development of the DJ Basin and Marcellus shale plays, where combined production rose 28%.
- NBL raises its full-year sales volume forecast to 305K-320K boe/day from 300K-315K boe/day, and says it expects more than 15% annual production growth from assets recently acquired from Rosetta Resources, which includes 50K acres in the Eagle Ford Shale and 54K acres in the Permian.
- NBL says total organic capital spending in 2015 remains unchanged at $2.9B for legacy assets; Q2 costs fell 17% Y/Y and 13% Q/Q.
Aug. 3, 2015, 7:34 AM
- Noble Energy (NYSE:NBL): Q2 EPS of $0.26 beats by $0.20.
- Revenue of $730M (-47.1% Y/Y) misses by $159.74M.
Aug. 2, 2015, 5:30 PM
Jul. 22, 2015, 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
Jul. 21, 2015, 11:50 AM
- Noble Energy (NYSE:NBL) declares $0.18/share quarterly dividend, in line with previous.
- Forward yield 1.94%
- Payable Aug. 17; for shareholders of record Aug. 3; ex-div July 30.
Jul. 17, 2015, 12:58 PM
- Rosetta Resources (ROSE +1.2%) pumped 63K boe/day during Q2, 2% more than the same period last year and exceeding the high end of company estimates, the company said in its Q2 earnings report ahead of the expected close next Monday of its takeover by Noble Energy (NBL +1.2%).
- ROSE’s assets in the Eagle Ford Shale in South Texas and the Permian Basin in West Texas have been “under-appreciated,” and the Q2 results shed light on why NBL was eager to snap them up, Tudor Pickering analysts say.
- ROSE’s volumes are projected to add 66K boe/day to NBL’s portfolio, or ~18% of the company’s total output, and the Q2 results are "a positive read-through for Noble," Raymond James says.
- Even as ROSE pumped more oil, the company posted a $342M Q2 loss as it fetched a smaller price for its crude.
Jul. 16, 2015, 2:57 PM
- Global oil majors have $150B of firepower than can be used for M&A and have the ability to defer another $325B in capex on marginal projects; with so much cash available for potential deals and up to 15M bbl/day of production potentially available for purchase, Goldman Sachs analyst Ruth Brooker sees a pickup in M&A activity in the oil and gas space coming soon.
- The firm thinks shale production has the potential to double by 2025, and Brooker argues majors likely will take the current opportunity to increase their exposure to U.S. shale at historically low prices.
- Goldman sees seven companies as most likely to draw buyout attention from the majors: EOG, PXD, CLR, COG, NBL, APC, RRC.
Jul. 13, 2015, 5:38 PM
- Weakness in oil stocks should not be used as a buying opportunity, Barclays analysts say, viewing shares as significantly overvalued and appearing to discount an average oil price of $85-$90/bbl based on group average historical multiples.
- The firm removes Newfield Exploration (NYSE:NFX) and Cabot Oil & Gas (NYSE:COG) from its list of top oil and gas stocks, leaving only Canadian Natural Resource (NYSE:CNQ), EOG Resources (NYSE:EOG), Southwestern Energy (NYSE:SWN), Noble Energy (NYSE:NBL) and Concho Resources (NYSE:CXO).
- Barclays' bottom group consists of five Underweight rated stocks - CHK, OTCQX:COSWF, PXD, OXY and UPL - while WPX Energy (NYSE:WPX) is bumped off the bottom list to reflect an improved outlook as well as a 20%-plus share price decline.
Jul. 13, 2015, 10:25 AM
- Sterne Agee CRT’s Tim Rezvan reiterates his bullish views on Chesapeake Energy (CHK -3.1%), citing the latest short interest data which shows a 14.1% increase from mid-June to the end of June to 185M shares, 27.8% of shares outstanding and 8.1 days to cover; the increase in short interest increase from the end of February to the end of June was 163%.
- The firm upgraded CHK to Buy from Underperform on June 29, reflecting what it considered as oversold conditions, and Rezvan says the month-end short interest data validates the thesis and expect profit-taking from shorts to provide further support to CHK shares into Q2 earnings.
- The largest increase in short interest came from PetroQuest Energy (PQ +0.1%), which had a 16.1% increase to 7.2M shares (11% of shares outstanding, 5.0 days to cover); Noble Energy (NBL -1.1%) also showed a notable jump, with a 10.3% increase to 17.9M shares (4.6% of shares outstanding, 4.1 days to cover).
- CHK is sharply lower today, apparently in reaction to late Friday's court order for CHK to pay nearly $380M to bondholders.
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