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Yesterday, 12:58 PM
- Crude oil at $30/bbl is blowing a hole in the insurance that U.S. shale drillers bought to protect themselves against a crash, Bloomberg reports.
- Companies including Callon Petroleum (CPE -5.6%), Noble Energy (NBL -3.5%), Pioneer Natural Resources (PXD -3.6%), Marathon Oil (MRO -8%), Rex Energy (REXX -1.8%) and Bonanza Creek Energy (BCEI -11.4%) used a three-way hedge strategy that does not guarantee a minimum price if oil falls below a certain level; while three-ways can be cheaper than other hedges, they leave drillers exposed to sharp declines and risk worsening a cash shortfall for companies trying to survive the worst oil crash in 30 years.
- For example, CPE CFO Joseph Gatto told investors in December that the company had hedged ~4K bbl/day in 2016, or 40% of its projected output, at $56/bbl; roughly half of those contracts are worth significantly less at $30/bbl because CPE employed three-ways.
Thu, Jan. 21, 3:49 PM
- Crude oil futures settled more than 4% higher on the back of perceived oversold conditions, despite a higher than expected inventory build; March WTI jumped 4.2% to settle at $29.53/bbl after trading as high as $30.25, while Brent surged 4.9% to $29.25.
- Crude prices were supported by the inventory increase in this morning's EIA report, which was less than the API’s report released on Wednesday, says Phil Flynn, senior market analyst at Price Futures Group; also, reports of Libyan oil tanks on fire eased speculation that Libya would be exporting more oil soon.
- Also supportive for prices, oil production in the lower 48 states edged lower for the first time in seven weeks, “which is at least ‘less bearish’ for the extremely oversupplied global oil market,” says Tyler Richey of The 7:00’s Report.
- The energy sector is bouncing after hitting a multiyear low yesterday: XOM +1.4%, CVX +2.7%, RDS.A +3.8%, BP +3.7%, TOT +2.3%, STO +4.5%, COP +6.2%, MRO +12.2%, APC +10.3%, OXY +2.1%, EOG +6.4%, PXD +2.7%, APA +8.2%, HES +7%, KMI +15.5%, EPD +3.3%, ETP +6.8%.
- ETFs: UNG, USO, OIL, XLE, UGAZ, UCO, DGAZ, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, BOIL, GAZ, DBO, DWTI, ERY, FCG, DIG, GASL, DTO, DUG, KOLD, BGR, USL, XES, IYE, IEO, UNL, IEZ, DNO, FENY, PXE, PXI, FIF, PXJ, OLO, SZO, NDP, RYE, DCNG, FXN, OLEM, DDG
Wed, Jan. 6, 10:54 AM
- Pioneer Natural Resources (PXD -6.9%) is sharply lower after upsizing its public offering to 12M shares from 10.5M and pricing the offering at $117/share, resulting in expected gross proceeds of $1.4B.
- The share sale shows capital markets are still willing to back the shale industry even as crude oil trades at the lowest in 11 years, and if followed by other top shale producers it could lead to a shallower than expected drop in U.S. oil production, putting further downward pressure on crude prices.
- Earlier: Pioneer Natural to launch 10.5M-share offering, lifts Q4 production guidance
Wed, Jan. 6, 9:18 AM
Tue, Jan. 5, 5:41 PM
Tue, Jan. 5, 4:44 PM
- Pioneer Natural Resources (NYSE:PXD) -4.1% AH after announcing a public offering of 10.5M common shares, with an underwriters option to purchase up to an additional 1.575M shares.
- PXD says it plans to use the proceeds for general corporate purposes, including continuing to actively develop its acreage position in the Spraberry/Wolfcamp play in west Texas while maintaining a strong balance sheet during the current period of low commodity prices.
- PXD also says it expects Q4 2015 production of 213K-215K boe/day, above the top end of its prior outlook for 206K-211K boe/day, driven by its strong Spraberry/Wolfcamp horizontal drilling program; during the quarter, PXD placed 44 Spraberry/Wolfcamp horizontal wells on production, as expected.
- PXD says it may write down the value of its Eagle Ford Shale oil and gas properties by $800M-$1B and pipe inventory by $50M-$70M during Q4.
- PXD's preliminary 2016 capital spending program is expected at $2.4B-$2.6B, with 10%-15% Y/Y production growth vs. 2015; PXD is reducing its horizontal rig count in the Eagle Ford Shale to four rigs from six, with potentially further decreases if low commodity prices continue to adversely affect well returns.
Dec. 28, 2015, 11:45 AM
- WTI crude is down 3.2% to $36.90/barrel, and Brent crude down 2.5% to $36.95/barrel, leaving prices close to 11-year lows. Energy industry firms are among the biggest decliners on a day the S&P is down 0.6%.
- Fears about excess supply appear to be weighing once more. OPEC figures point to a global oil supply glut of more than 2M barrels (over 2% of global demand); a smaller glut is expected next year. Meanwhile, Japanese government data indicates the country's oil product sales fell to a 46-year low in November, and European data suggests the continent's oil product demand growth turned negative in October.
- The biggest casualties include Whiting Petroleum (WLL -9.9%), Oasis Petroleum (OAS -8.2%), Vanguard Natural Resources (VNR -12.5%), Denbury Resources (DNR -8%), SandRidge Energy (SD -8.1%), SandRidge Permian Trust (PER -10.9%), SandRidge Mississippian Trust (SDT -7.5%), U.S. Silica (SLCA -6.2%), Marathon Oil (MRO -6.7%), C&J Energy Services (CJES -8.1%), MV Oil Trust (MVO -9.2%), Bonanza Creek (BCEI -6.4%), Parker Drilling (PKD -7.9%), and Continental Resources (CLR -5.9%).
- Other notable decliners include Kinder Morgan (KMI -5%), Williams Partners (WPZ -4.4%), EOG Resources (EOG -3.4%), Cheniere Energy (CQP -3.6%), SeaDrill (SDRL -3.5%), Encana (ECA -2.8%), Devon Energy (DVN -2.7%), Ensco (ESV -3.8%), Hercules Offshore (HERO -4.7%), Atwood Oceanics (ATW -4.9%), Helmerich & Payne (HP -3.8%), and Pioneer Natural (PXD -2.6%).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG, DRIP, GUSH
Dec. 9, 2015, 10:36 AM
- Concho Resources (CXO +2.3%) and Pioneer Natural Resources (PXD +4.3%) are named J.P. Morgan's top large-cap picks among E&P companies focused on the Permian Basin, which the firm says is positioned at the low end of the U.S. tight oil cost curve and thus poised to benefit from efficiency and productivity gains.
- CXO boasts a deep inventory of high rate of return locations in the Delaware Basin; given the company's success there, the firm sees the potential for a "positive rate of change" in the Midland Basin.
- Even though PXD has lagged its Permian peers over the past 12-18 months on a weaker capital efficiency metric, the firm expects the company to realize a positive turn in capital efficiency along with differential oil growth to drive outperformance.
- Parsley Energy (PE +4.2%) and Diamondback Energy (FANG +4.4%) are JPM's top small- and mid-cap picks; Cimarex (XEC +1.7%), Energen (EGN +1.8%) and RSP Permian (RSPP +2.6%) are rated Neutral, while Laredo Petroleum (LPI +4.7%) is tagged with an Underweight rating.
Dec. 7, 2015, 10:35 AM
- The energy sector (-4.5%) paces the opening decline, as WTI crude oil prices -4% at $38.35/bbl following a 2.7% slide on Friday after OPEC's failure to agree on a production target to reduce the oil glut.
- Investors are betting on oil prices staying lower for even longer after OPEC's non-decision, pushing U.S. crude futures for delivery nearly 10 years away below $60/bbl, Reuters reports.
- But the oil glut is set to continue as much because of the U.S. as of OPEC, as U.S. shale drillers have only trimmed their pumping a little, and rising oil flows from the Gulf of Mexico are propping up U.S. production; the overall output of U.S. crude fell just 0.2% in September, the most recent monthly federal data available, and is down less than 3%, to 9.3M bbl/day, from the peak in April.
- Goldman Sachs says it expects oil prices to remain "lower for longer," with a risk that prices could fall as low as $20/bbl.
- In early trading: XOM -2.9%, CVX -4.1%, BP -3.2%, RDS.A -4.2%, COP -4.6%, MPC -3.2%, MRO -7.4%, PSX -2.8%, HES -4.9%, APC -6.1%, OXY -3.1%, EOG -5.8%, DVN -9.3%, PXD -7.2%, APA -3.9%, CHK -8%, CLR -9.1%.
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, FCG, DIG, GASL, DTO, DUG, BGR, USL, XES, IYE, IEO, IEZ, DNO, FENY, PXE, PXI, PXJ, FIF, OLO, SZO, NDP, RYE, FXN, OLEM, DDG
Dec. 2, 2015, 3:21 PM
- WTI crude oil settled below $40/bbl for the first time in more than three months, tumbling 4.6% to $39.94 as U.S. government data showed a 10th straight weekly increase in crude supplies.
- Meanwhile, Brent crude sank 4.4% to $42.49 on London’s ICE futures exchange, the lowest settlement since March 2009.
- The dollar's surge to 12-year highs after pro-rate hike comments by Janet Yellen also weighed on oil and other dollar-denominated commodities.
- Energy stocks suffered severe selling pressure: XOM -2.5%, CVX -2.2%, DVN -5.6%, CLR -5.5%, MRO -5.1%, HES -4.8%, TSO -3.8%, COP -3.7%, EOG -3.7%, APA -3.2%, PXD -3%, APC -2.8%.
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, DIG, DTO, DUG, BGR, USL, IYE, IEO, DNO, FENY, PXE, PXJ, FIF, OLO, SZO, NDP, RYE, FXN, OLEM, DDG
Jul. 31, 2015, 7:46 PM
- Giants Exxon Mobil (XOM -4.5%) and Chevron (CVX -4.9%) finished significantly lower at the close after each attempted a midday rally, in the wake of earnings misses marked by the continuing crude supply glut and price pressure.
- Oil ETFs fared not much better today: USO -3.2%, OIL -3.7%.
- Producers have key differences that make for advantages and disadvantages, like Chevron's downstream cushion. Exxon's edge over Chevron, Liam Denning notes: M&A. Its stock is down just 19% over the past year while the sector has tumbled 47%.
- As oil's selling point -- big cash distribution -- gets squeezed, Exxon is in relatively good shape. It's still raising its dividend, and it's cut its projected Q3 buybacks to just $500M (vs. zero for Chevron, Shell and BP).
- Exxon says it shops worldwide, but the U.S. may be a more natural hunting ground. Possible targets? According to Wolfe Research's Paul Sankey, Pioneer Natural Resources (PXD -2.4%) and Hess (HES -2.2%).
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
- Previously: ConocoPhillips -3.3% as dividend gets scrutiny out of earnings (Jul. 31 2015)
- Previously: Chevron -1.8% as earnings tumble, paced by $2.2B upstream loss (Jul. 31 2015)
- Previously: Exxon Mobil off 1.8% premarket after lowest profit since 2009 (Jul. 31 2015)
May 5, 2015, 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.
May 4, 2015, 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%.
Feb. 11, 2015, 3:58 PM
- Pioneer Natural Resources (PXD -3.9%) has been pummeled today after reporting disappointing Q4 results that missed estimates on production, earnings and cash flow, and providing weak 2015 production guidance; PXD also said it would cut 2015 capex by 45% to $1.85B because of low oil prices.
- In response, Barclays downgraded shares to Underweight with a $97 price target, saying the guidance implies that PXD would not be able to grow at an oil price of less than $70/bbl if it were not hedged.
- Most analysts maintained their Hold or Market Perform ratings but were surprised by the extent of the 2015 budget reductions; only Credit Suisse, with an Outperform rating and $170 price target, sounded optimistic, focusing on the positive rate of change in well performance, a key factor enhancing capital efficiency.
- For WSJ's Liam Denning, PXD is "pointing the way to a new - and subdued - normal for oil prices," noting that the company emphasized it would bring rigs back on and raise output if oil recovers sustainably this year.
Feb. 11, 2015, 9:13 AM
Feb. 3, 2015, 2:49 PM
- Veteran energy analyst Christopher Eades recommends a half-dozen safe oil majors, oilfield services firms and transport MLPs as the best bets to ride out the current storm - Halliburton (HAL +4%), Pioneer Natural Resources (PXD +2.2%), Hess (HES +3.2%), Occidental Petroleum (OXY +2.1%), Enterprise Products Partners (EPD +1.4%) and Plains All American Pipeline (PAA +2.4%) - all companies with strong balance sheets, strong growth prospects, and healthy yield levels with no dividend cuts on the table.
- Eades says he is "more enthusiastic about MLPs than I've been in some time," as the group has essentially given up two years’ worth of gains yet cash flow fundamentals have been largely unchanged - "to me, that sounds like a good opportunity, particularly in a world still so starved for yield."
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