Tue, Jun. 16, 5:45 PM
- The strained finances at U.S. E&P shale companies caused by collapsing crude oil prices is well known, and some analysts say the pain may be compounded by a steep drop in prices for natural gas liquids caused by oversupply, partly due to infrastructure constraints.
- SM Energy (NYSE:SM) said yesterday the price it is receiving for NGLs at the Mont Belvieu delivery point fell 36% Q/Q to $16.67/bbl and that the price declines would lower its 2015 total budgeted revenue by ~$25M while not affecting its drilling or production.
- Barclays recently said Chesapeake Energy (NYSE:CHK) could see 2016 cash flow cut by up to 3% if NGL price weakness persists, while Range Resources (NYSE:RRC) may see its cash flow cut by up to 5%; APC, DVN, PXD, QEP, SWN, ECA and EOG also could see reduced cash flow related to NGL pricing, the firm said.
- Analysts at Tudor Pickering have a more optimistic view and expect an NGL pricing recovery next year, as cresting U.S. nat gas and crude production looks to be flat-to-declining through 2016, giving U.S. infrastructure time to catch up; the firm upgrades SWN to Accumulate from Hold, with GPOR, MRD, COG, RICE and ECA as other top picks, and UPL and EQT recommended on weakness.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, KOLD, UNL, DCNG
Mon, Jun. 1, 2:57 PM
- Pioneer Natural Resources (PXD +1%) is upgraded to Buy from Hold with a $190 price target, up from $145, at Topeka Capital, which says the stock's recent underperformance and the just-announced Eagle Ford midstream sale and re-acceleration provide an excellent entry point in a premier Permian Basin growth and value story.
- PXD is best positioned to weather the downturn, as a more defensive name at current levels, given its Tier 1 assets, ample financial liquidity and strong hedge book, the firm says; the catalysts also may drive an unwinding short position from a recent widely publicized short thesis.
Mon, Jun. 1, 9:08 AM
- Enterprise Products Partners (NYSE:EPD) agrees to acquire EFS Midstream from Pioneer Natural Resources (NYSE:PXD) and Reliance Industries for $2.15B.
- EPD says it will pay in two installments, with the first $1.15B installment paid at closing and the final $1B installment paid by the first anniversary of the closing date; it expects the transaction to be immediately accretive to distributable cash flow.
- PXD and Reliance also say they will benefit from fee reductions under existing downstream processing and transportation contracts with EPD in exchange for extending the contract term to 20 years and dedicating additional Eagle Ford Shale volumes to EPD.
- EFS provides gas gathering, treating, compression and condensate processing services in the Eagle Ford Shale; its system includes ~460 miles of natural gas gathering pipelines, 10 central gathering plants, 780M cf/day of natural gas treating capacity and 119K bbl/day of condensate stabilization capacity.
Thu, May 21, 9:30 AM
- Alongside Goldman's list of 50 stocks appearing most as top holdings at hedge funds is its list of the 50 top shorts.
- New additions this quarter: Baxter Intl (NYSE:BAX), UPS, Marriott (NASDAQ:MAR), NextEra (NYSE:NEE), Ford (NYSE:F), National Oilwell Varco (NYSE:NOV), McDonald's (NYSE:MCD), M&T Bank (NYSE:MTB), CenturyLink (NYSE:CTL), Amgen (NASDAQ:AMGN), Pioneer Natural (NYSE:PXD), Duke Energy (NYSE:DUK), Seagate (NASDAQ:STX), AbbVie (NYSE:ABBV), Cisco (NASDAQ:CSCO).
- The full list (in order of $ value of short interest): AT&T (NYSE:T), Disney (NYSE:DIS), IBM, Verizon (NYSE:VZ), Intel (NASDAQ:INTC), Kinder Morgan (NYSE:KMI), Exxon (NYSE:XOM), Pfizer (NYSE:PFE), J&J (NYSE:JNJ), Deere (NYSE:DE), Caterpillar (NYSE:CAT), Exelon (NYSE:EXC), GE, Boeing (NYSE:BA), Halliburton (NYSE:HAL), Fox (NASDAQ:FOXA), Comcast (NASDAQ:CMCSA), UTX, Regeneron (NASDAQ:REGN), Merck (NYSE:MRK), salesforce.com (NYSE:CRM), AbbVie (ABBV), Conoco (NYSE:COP), Wal-Mart (NYSE:WMT), Eli Lilly (NYSE:LLY), Celgene (NASDAQ:CELG), Schlumberger (NYSE:SLB), AutoZone (NYSE:AZO), Wells Fargo (NYSE:WFC), Emerson (NYSE:EMR), McDonald's (MCD), Reynolds (NYSE:RAI), Target (NYSE:TGT), Accenture (NYSE:ACN), Coca-Cola (NYSE:KO).
Thu, May 14, 12:28 PM
- U.S. shale oil companies that cut production when prices plunged are prepared to return rigs to operation as prices rise, WSJ reports.
- Last week: EOG Resources (NYSE:EOG) said it would ramp up output if U.S. prices hold at recent levels, Occidental Petroleum (NYSE:OXY) boosted planned production for the year, Pioneer Natural Resources (NYSE:PXD) said it hopes to increase drilling and add two new rigs per month from July if prices continue to rise, Whiting Petroleum (NYSE:WLL) said it would ramp up production at ~$70/bbl, and Continental Resources (NYSE:CLR) CEO Harold Hamm said that $70 oil is a price "that turns it on for us.”
- These companies are among those seen as swing producers that can boost production when prices are high and cut back when they fall.
- “U.S. supply could quickly rebound in response to the recent recovery in prices,” says one commodities economist. “Based on the historical relationship with prices, the fall in the number of drilling rigs already looks overdone, and activity is likely to rebound over the next few months."
- Earlier: Oil drilling could resume sooner than advertised, Susquehanna says
Tue, May 5, 8:55 PM
- David Einhorn's critical presentation pushed Pioneer Natural Resources (NYSE:PXD) 5% lower over the past two days, but Wolfe Research's Paul Sankey is out in defense of PXD and fracking companies generally, in large part because of their “takeover attractiveness."
- "Pioneer is the single most attractive takeover target to Exxon Mobil (NYSE:XOM), and the entire group Einhorn listed as short candidates based on a value-destructive business model has takeover merits," Sankey writes, adding the potential for a takeout is at least part of why the market is overvaluing PXD.
- Einhorn said investors in PXD and fracking companies overall - he also mentioned CXO, EOG, WLL and CLR - have been willing to largely ignore their high capital expenditures, but Sankey believes the U.S. energy revolution "is in its very early stages, and efficiency and operational performance continues to grow at high pace,” making long-term projections for both expenditures and production challenging.
- Previous: Pioneer Natural sinks 2.5% as Einhorn slams PXD, other frackers
Tue, May 5, 6:46 PM
- Pioneer Natural Resources (NYSE:PXD) -0.5% AH after posting an unexpected Q1 loss, but PXD says it continues to deliver strong well results and that cost-cutting has helped improve margins.
- Analysts had estimated PXD’s profits would fall more than 90% Y/Y but did not go so far as to predict a loss; revenues fell 8% Y/Y but beat estimates.
- PXD says Q1 sales volumes averaged 194K boe/day, up 17% Y/Y, and it continues to forecast 10% production growth this year; Spraberry/Wolfcamp production is forecast to rise by at least 20% Y/Y.
- PXD says its $1.85B planned capital budget for FY 2015 is a 45% reduction from last year’s capital spending for continuing operations.
- Says it had $383M of cash on hand at the end of the quarter vs. more than $1B at the beginning of 2015, but CEO Scott Sheffield maintains the company is in healthy financial shape and may increase drilling activity in H2.
Tue, May 5, 4:17 PM
Tue, May 5, 3:58 PM
- EOG Resources (EOG -4.8%) plans to increase drilling activity as soon as oil prices stabilize at $65/bbl - probably in Q4 2015 - CEO William Thomas said on today's earnings conference call.
- Thomas anticipates EOG would return to double-digit growth in 2016, and in this year's Q3 may begin finishing wells that it has left half-drilled, with a decision likely in July; "We don’t want to get in a hurry... We don’t want to jump-start completions" and then see the price fall, the CEO said.
- Thomas joins Pioneer Natural Resources (NYSE:PXD), whose CEO Scott Sheffield said last month he was preparing for a return to growth and may begin adding rigs as soon as June.
- EOG also said current well costs are already running at or below 2015 plan levels across all its major plays, and that it is protecting its balance sheet by meeting its cash flow and capex expectations for the year.
Mon, May 4, 12:27 PM
- Pioneer Natural Resources (PXD -2.6%) plunges following negative comments on PXD and other frackers by Greenlight Capital's David Einhorn at the Ira Sohn conference.
- Einhorn calls for shorting PXD, which he dubs "the motherfracker," and says PXD loses $0.20 of present value for every $1 invested, is burning cash and is not growing.
- Of the sector, Einhorn says fracking companies offer an "almost infinite supply of negative return investment opportunities."
- Einhorn says he also is short WLL -2.5%, CXO -1.2%, CLR -1%, EOG -0.7%.
Mon, Apr. 27, 5:13 PM
- Select energy E&P stocks are ready to be bought on weakness following the recent rally in the space, Cowen says as it names Anadarko Petroleum (NYSE:APC), Pioneer Natural Resources (NYSE:PXD) and Range Resources (NYSE:RRC) its top picks; the three are started at Outperform with respective price targets of $72, $216 and $73.
- Cowen says its top picks have low-cost assets and high quality balance sheets that will allow them to emerge from the oil price downturn with higher margins.
- Devon Energy (NYSE:DVN), Noble Energy (NYSE:NBL) and Cimarex Energy (NYSE:XEC) also are initiated with Outperform rating, while Apache (NYSE:APA) and Continental Resources (NYSE:CLR) are started at Market Perform.
Wed, Apr. 22, 6:53 PM
- Nomura came out bullish today on the energy E&P sector - issuing Buy ratings for MRO, PXD, EOG, CLR, APC, NFX, RRC, CNQ, CXO, ECA and SU - even as the firm does not foresee a V-shaped rebound in crude oil prices.
- Nomura believes core North American shale plays do not represent the economic marginal cost of supply in the world, which runs counter to commonly held views that largely see shale occupying the high end of the cost curve; thus as oil rebounds, so will investment in the shales, which should support prices, the firm says.
- In such an environment, Nomura says selecting stocks will depend on factors such as ”the reinvestment opportunity set, impact of oilfield technology, continued efficiencies, potential new geologic plays, management acumen and balance sheet strength."
- The firm is Neutral on DVN, HES, MUR, OAS, UPL, WLL, XEC, COG, COP and SWN; it rates NBL, APA, DNR, CHK and CVE as Reduce.
Wed, Apr. 22, 3:44 AM
- Two days after Senator Lisa Murkowski said she would introduce legislation this year to allow U.S. crude exports, Pioneer Natural Resources (NYSE:PXD) CEO Scott Sheffield has put the chances of lifting the ban in 2015 at 40% to 50%.
- The chief executive, which has recently held talks with members of Congress and the Obama administration about removing the decades-old restriction, also sees an 80% to 90% chance that American E&P companies will be allowed to export crude by early 2017.
- Last year, the Commerce Department gave Pioneer and Enterprise Products Partners permission to begin selling an ultralight oil product called condensate.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, TWTI, OLEM
Wed, Apr. 8, 7:30 PM
- Analysts say Shell's (RDS.A, RDS.B) move to buy BG Group is telling potential acquirers that one of the biggest players is now confident enough to make a big play, and that the worst may be over in the big slide in oil and gas prices.
- The deal also may be the starting gun for a wave of M&A activity that oil industry observers have been predicting since crude prices started to slump in June.
- For starters, BG's U.S. shale assets likely will become candidates for divestiture after the Shell deal closes; in buying BG, Shell has made the choice to double-down on global liquefied natural gas and de-emphasize U.S. shale.
- Among the biggest players, Exxon (NYSE:XOM) and BP could contemplate deals - perhaps even with each other, as has been speculated, since BP ranks among the cheapest major producers relative to estimated profit.
- BG itself could whet the appetite of XOM's Rex Tillerson, who recently said there was "no limitation" to what he might buy - but he will be especially selective after getting burned by 2010's XTO purchase.
- Companies with prime acreage in oil-rich shale fields in Texas, North Dakota and Colorado have become a lot cheaper in recent months; Anadarko (NYSE:APC), Cabot Oil & Gas (NYSE:COG), Pioneer Natural Resources (NYSE:PXD), Occidental (NYSE:OXY), Continental Resources (NYSE:CLR), Concho Resources (NYSE:CXO) and Tullow Oil (OTCPK:TUWLF) are among those at topping analysts’ lists.
- Galp Energia (OTC:GLPEF) may draw interest from buyers because, like BG, it offers access to oil assets in Brazil.
Tue, Mar. 17, 7:12 PM
- Most of the top 15 shale oil producers in the U.S. are heavily concentrated in basins expected by NavPort to be severely affected by the decline in prices, with one major exception: ConocoPhillips (NYSE:COP).
- COP has the lowest well completion concentration in basins expected to suffer the greatest production cuts this year, implying less disruption than other shale competitors, according to NavPort, which collates oil well and rig data using regulatory reports.
- All 14 of the other top producers tracked by NavPort have at least two-thirds of well completion concentrated in the basins rated with "strong" or "severe" exposure: CHK, APC, EOG, DVN, SWN, MRO, APA, SD, XOM, CLR, PXD, NBL, BHP, WLL.
- Operators concentrated in basins that have been less severely affected - such as the Woodford, Utica and Haynesville basins - should enjoy more production than their peers through a higher volume of well completions, NavPort says.
- The study sees the Mississippi Lime, Granite Wash, Bakken and Permian basins suffering at least a 40% Y/Y reduction in drilling.
Wed, Mar. 4, 4:29 PM
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