Wed, Nov. 30, 3:28 PM
- Stephens analysts say “structurally oversupplied crude markets will take more time to balance” even with an OPEC production cut, which makes them reiterate support for their top six picks among oil services stocks: Baker Hughes (BHI +6.4%), Nabors Industries (NBR +22.8%), Schlumberger (SLB +5.2%), Oceaneering International (OII +6.8%), Superior Energy Services (SPN +17.8%) and Flotek Industries (FTK +13.6%).
- The firm says the companies "tend to have market leadership, stable balance sheets and/or cash flows, differentiated/diverse products or services or product line leadership.”
- Stephens says a production cut and follow-through could justify its base case to high case range for oil averaging $52/bbl in 2017 and $54/bbl in 2018, with low and high cases ~$10/bbl higher or lower in each year.
Wed, Nov. 30, 9:50 AM
- Shares of energy companies surge at the open, as hopes for an OPEC deal to cut production send crude oil futures soaring.
- Reports say Saudi Arabia is prepared to accept "a big hit" to production and agree to Iran freezing output at pre-sanctions levels.
- In early trading: XOM +2.2%, CVX +2.3%, RDS.A +3.6%, BP +3.4%, TOT +1.7%, STO +5.1%, PBR +8.1%, COP +7.2%, MRO +12.1%, APC +8%, DVN +12.7%, HES +9.5%, ENB +2.1%, PSX +0.8%, SLB +4.2%, HAL +8.3%, BHI +4.3%, KMI +4.8%, EPD +2.7%, ETP +3.8%, WMB +5.4%, RIG +11.3%, SE +2.2%, CHK +9.4%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, PXI, FIF, PXJ, RYE, NDP, GUSH, PSCE, DRIP, DDG, FXN, CRAK
Tue, Nov. 29, 10:20 AM
- Crude oil continues to slide - WTI now -3.8% at $45.27/bbl, and Brent -3.8% at $46.40/bbl - dragging oil and gas equities (XLE -2.1%) down with it.
- Iran's oil minister says he is not prepared to reduce supply, and Saudi Arabia says it would not participate in a production deal without Iran and Iraq.
- Reuters reports that Iran has written to OPEC saying Saudi Arabia needs to cut oil output to 9.5M bbl/day; Saudi has said it was prepared to reduce its production only by 500K bbl/day from current levels of 10.5M.
- In early trading: XOM -1%, CVX -1.7%, RDS.A -1.4%, BP -1%, TOT -0.3%, STO -1.8%, PBR -3.7%, COP -2.9%, MRO -4%, APC -2.8%, DVN -2.7%, HES -3.6%, ENB -2.3%, PSX -1.2%, MPC -0.8%, SLB -2.2%, HAL -2.3%, BHI -2.1%, KMI -1.4%, EPD -2%, ETP -2.2%, WMB -2.4%, SE -2.3%, CHK -2.6%.
- ETFs: XLE, VDE, ERX, OIH, XOP, FCG, ERY, GASL, DIG, DUG, BGR, XES, IYE, IEO, FENY, IEZ, PXE, GASX, FIF, PXJ, RYE, NDP, GUSH, DRIP, DDG, FXN, CRAK
Mon, Nov. 28, 7:49 AM
- Schlumberger (NYSE:SLB) says it has signed a preliminary agreement with Iran's government to technically evaluate an Iranian oil field, despite Pres.-elect Trump's vow to undo the nuclear pact with the country.
- SLB says the deal does not involve the execution of oilfield services operations and that it intends to comply with the laws and regulations of the countries where it operates.
- If completed, the deal would be SLB's first in Iran since European sanctions for the company to leave the country in 2010.
Thu, Nov. 10, 8:38 AM
- British oil and gas explorer Ophir Energy (OTCPK:OPGYF) says it signed an agreement with OneLNGSM, a joint venture between units Schlumberger (NYSE:SLB) and Golar LNG (NASDAQ:GLNG), to develop the Fortuna project in Equatorial Guinea.
- Ophir had said it could move forward without new partners for the Fortuna floating liquefied natural gas project as cost estimates had been cut by half to ~$450M and after SLB had walked away from the deal in June, but analysts say SLB's return to the project would be viewed positively by the market.
- Ophir says it will own a 33.8% stake in the JV, while OneLNG will own the rest; a final investment decision is expected in H1 2017 with first gas in H1 2020.
Tue, Nov. 8, 2:48 PM
- It's time to buy Baker Hughes (BHI -0.2%) now that the dust has settled regarding the company's merger with General Electric's (GE +0.6%) oil and gas business, Guggenheim analysts say.
- Guggenheim estimates the new company will generate $4.9B in EBITDA in 2018 - a bit less than the $5.2B-$5.5B forecast by the companies - and should trade at a peer average 10.6x EBITDA, implying a fair value for BHI of ~$63, but the firm believes synergies provide another ~$4 of upside if GE is able to realize greater cost savings.
- The firm also finds the industrial logic is sound: As Schlumberger (SLB -0.1%) has shown, regional and product line diversity enhance through-cycle returns and cash flow, which are benefits that the new BHI should be able to realize as a result of its pro forma portfolio.
Wed, Nov. 2, 3:56 PM
- Oil prices and energy equities plunged sharply as the latest inventory data showed U.S. stockpiles posted the largest weekly surge in 34 years, after the consensus outlook had pointed to only a modest rise.
- WTI crude oil -2.9% to settle at $45.34/bbl, its lowest since Sept. 27, and Brent crude -2.7% to $46.86, also its lowest since late September.
- “You could easily make the argument it’s the most bearish report of all time,” says Bob Yawger, director of the futures division of Mizuho Securities USA. “There’s nothing to support the market.”
- WTI, which already was turning lower in recent days, has now fallen 12% in just two weeks since hitting a one-year high on Oct. 19 and marks the third retreat from $50/bbl toward $40 within five months.
- Among individual stocks: XOM -0.1%, CVX -0.9%, RDS.A -2%, BP -0.2%, TOT -2.4%, COP -0.6%, MRO -3.6%, HES -1.3%, PSX -2.3%, MPC -3.4%, VLO -1.9%, SLB -1%, HAL -0.5%.
- ETFs: USO, OIL, XLE, UWTI, UCO, VDE, ERX, DWTI, OIH, SCO, XOP, BNO, DBO, ERY, DIG, DTO, USL, DUG, BGR, IYE, IEO, FENY, DNO, PXE, FIF, OLO, PXJ, RYE, SZO, NDP, GUSH, DRIP, DDG, FXN, OLEM
Mon, Oct. 31, 10:30 AM
- Baker Hughes (BHI -1%) erases opening gains to trade in the red, while General Electric (GE +0.9%) is higher amid plans to combine their oil and gas operations.
- The new company will be 62.5% owned by GE, with GE Oil & Gas CEO Lorenzo Simonelli serving as President and CEO; GE will fund a special one-time cash dividend of $17.50/share, or $7.4B, to existing BHI shareholders, who will own 37.5% of the new company.
- The deal creates a company with more than $32B in FY 2015 revenue that could cut costs to better compete with rivals such as Schlumberger (SLB -0.9%) to provide equipment and services to oil rigs and wells; the $32B combined revenue places the new company only 8%-9% behind SLB.
- The combined companies expect to generate $1.6B of synergies by 2020, primarily driven by cost savings; GE expects the deal to be accretive to 2018 EPS by $0.04 and 2020 EPS by $0.08.
- Analysts see a high likelihood of the deal's completion given little product overlap outside of the Artificial Lift business and the relatively smaller size of the deal vs. the rejected Halliburton-Baker Hughes (HAL -0.5%) tie-up.
- Moody’s, Fitch and S&P all affirmed GE’s credit ratings with stable outlooks following the announcement.
Mon, Oct. 31, 6:25 AM
- Banking on a recovery in crude prices, General Electric (NYSE:GE) is merging its oil and gas business with Baker Hughes (NYSE:BHI), creating a large, listed player, that could compete with rivals like Schlumberger (NYSE:SLB).
- GE will own 62.5% of the new company, which will have combined revenue of $32B, while Baker Hughes shareholders will own 37.5% and get a special one-time cash dividend of $17.50 per share after the deal closes (expected in mid-2017).
- GE +1%; BHI +6.6% premarket
Sun, Oct. 30, 10:50 PM
- The roughly $30B deal would see the creation of a new publicly-traded entity comprised of Baker Hughes (NYSE:BHI), GE's oil and gas business, and some cash from GE, reports the WSJ.
- The new company would have more than $25B in annual revenue and thus be of large enough scale to better compete with rivals like Schlumberger (NYSE:SLB).
- The structure of the deal also gives GE control of Baker Hughes without having to shell out for an outright acquisition.
- Previously: WSJ: GE, Baker Hughes could reach deal as soon as next week (Oct. 28)
Fri, Oct. 21, 10:58 AM
- Schlumberger (SLB -2.7%) says it sees early signs of recovery in the oil drilling industry activity in most parts of the world, after reporting mixed Q3 results that were helped by improved North American activity.
- "The only place where we don't see any signs of recovery at this stage is in Asia", CEO Paal Kibsgaard said in today's earnings conference call, adding that he expects solid growth in the Middle East and Russia in 2017, and that he has seen a slight uptick in investment and activity in Latin America, Europe and Africa.
- "It is critical for us to recover the large pricing concessions we have made over the past two years," Kibsgaard said on the call, and recent oil price gains had strengthened its negotiations with customers, but there were no "material movements" on pricing during Q3.
- SLB said it is looking to gain market share in onshore North America, as demand for its high-end drilling technologies was rising with more oil companies looking to drill longer laterals; at the same time, it warns that the fracking market continued to be oversupplied with a "large number of very hungry players."
Thu, Oct. 20, 6:36 PM
- Schlumberger (NYSE:SLB) -0.4% AH after Q3 earnings beat expectations but fell 82% Y/Y on 17% less revenue and increased expenses related to the Cameron acquisition earlier this year.
- Excluding results from Cameron, SLB says its Q3 land revenue in North America rose 14% Q/Q, attributed to higher drilling and fracturing activity, although pricing improvements were limited as much of the increase in activity was driven by small companies.
- CEO Paul Kibsgaard says SLB foresees improved activity in onshore North American, Middle Eastern and Russian markets next year, but visibility remains limited since customer spending for 2017 is still in the planning process.
- SLB's results come a day after rival Halliburton (NYSE:HAL) posted a small Q3 profit that it attributed to U.S. energy company customers starting to return to drilling this summer.
Thu, Oct. 20, 4:18 PM
Wed, Oct. 19, 5:35 PM
Wed, Oct. 19, 8:21 AM
- Halliburton (NYSE:HAL) +0.9% premarket after posting a surprise Q3 profit, as it begins to win back business from oil producers that are beginning to ramp up operations.
- HAL says sales in its primary North American market gained 9% Q/Q to $1.66B, its first North American sales boost since the downturn began in late 2014, and operating results rose by $58M, which represents 41% incremental margins; CEO Dave Lesar cites improving rig count growth and “relentlessly managing costs."
- HAL's sales in the U.S. and Canada had plunged by more than two-thirds during the downturn as customers cut spending; despite the Q/Q improvement, Q3 North American sales still were 33% lower than ay ear ago.
- Lesar, who has talked about a turnaround on the horizon, says HAL is cautious about Q4 activity due to holiday and seasonal weather-related downtimes, but "it does not change our view that things are getting better for us and our customers.”
- Schlumberger (NYSE:SLB) is scheduled to report earnings on Thursday, and Baker Hughes (NYSE:BHI) is expected to report next Tuesday.
Tue, Oct. 11, 12:49 PM
- Norwegian oil service workers have ended a three-week strike that halted operations on 17 drilling rigs after the Industri Energi union won its pay demands with employers.
- The strike at subcontractors to the oil industry included workers at Schlumberger (SLB -0.9%), Halliburton (HAL -1.4%), Baker Hughes (BHI -0.9%) and Oceaneering (OII -0.8%).
- An extended strike had threatened closure of Statoil's (STO -2.1%) Melkoeya liquefied natural gas plant and Royal Dutch Shell's (RDS.A, RDS.B) Nyhamna gas processing plant.