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Sep. 23, 2015, 11:31 AM
- Investors should “position themselves defensively” in the global oil supermajor sector, Macquarie analyst Iain Reed believes, foreseeing a slow oil price recovery with a risk of the 1985-90 slump repeating itself.
- The situation is not likely to have a positive impact on most of the supermajors, particularly in the upstream divisions of the companies, where earnings have been eroded years of significant cost inflation, Reed says.
- The analyst thinks Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) should be avoided, rating both stocks at Underperform; XOM is trading at an unjustified premium valuation, Reed says, and CVX's performance likely will be restricted by the slow oil price recovery.
- Reed rates Total (NYSE:TOT) and Royal Dutch Shell (RDS.A, RDS.B) with Outperform ratings, seeing TOT as a first mover in cost reduction and production growth, and Shell as an underperformer.
Sep. 23, 2015, 4:41 AM
- Total (NYSE:TOT) said it will reduce capex to a range of $20-$21B in 2016 and $17-$19B a year beyond that as it adjusts to lowered expectations for growth. Operating expenses at Total will also be slashed.
- The actions will help the French oil major cover its dividend, according to CFO Patrick de la Chevardiere.
Sep. 22, 2015, 2:02 PM
- Total S.A. (NYSE:TOT) declares €0.61/share quarterly dividend, in line with previous.
- Payable Oct. 29; for shareholders of record Sept. 25; ex-div Sept. 23.
Sep. 22, 2015, 12:50 PM
- U.S. federal energy regulators allege traders at Total (TOT -2.5%) manipulated the natural gas market in the southwest U.S. between June 2009 and June 2012.
- FERC staff say the scheme involved making "largely uneconomic trades for physical natural gas during bidweek designed to move indexed market prices in a way that benefited the company's related positions."
- In recent years, FERC has alleged violations of similar types of trading manipulation by JPMorgan Chase, which paid $285M in fines in 2013, and Barclays and BP, which are still fighting FERC allegations against them.
Sep. 22, 2015, 11:56 AM
- Teck Resources (TCK -9.2%) slumps to a 52-week low after Total's (TOT -2.8%) sale of its 10% stake in the Fort Hills oil sands project to Suncor (SU -1.3%) raises several questions for 20% stakeholder TCK.
- TCK's stake is valued at $620M, based on yesterday's deal, while TCK's net carrying value for the position at the end of June was $2.3B.
- But that does not mean a writedown is coming, TD Securities analyst Greg Barnes says, because TOT's sale was based on its desire to cut capital spending, not a valuation of the project.
- If TCK were to write down its Fort Hills stake, Barnes says the company's debt covenants would cause concern, causing its debt-to-capital ratio to tumble to 32% as of the end of June.
- Thus the odds of TCK selling its Fort Hills stake are "minimal," according to Barnes, while acknowledging the company's participation in the project will remain unpopular with investors in the current macro environment.
Sep. 21, 2015, 3:58 PM
- Total (TOT -1.7%) is expected to announce a new exploration strategy, more cost savings, asset sales and growth targets at its Sept. 23 investor day that will signal to the market it is adapting to the current low oil price environment.
- Citi analysts "expect a broad reset of the business plan under the new CEO Patrick Pouyanne... who looks to be bringing a different culture to the organization, one where cost-control and profitability are prioritized."
- Also in focus will be TOT's dividend, which remained unchanged for Q2, but investors are wary about the company's ability to maintain the payout while oil prices look likely to remain low.
- TOT cut its exploration budget to $1.9B this year from $2.8B in 2014, and hired a new head of exploration, Kevin McLachlan, who is expected to present the strategy update in London.
Sep. 21, 2015, 12:58 PM
- Teck Resources (TCK -5.8%) is reiterated with an Outperform rating at FBR following Suncor Energy's (SU +1.2%) announced agreement to purchase an additional 10% interest in the Fort Hills oil sands project from Total (TOT -1.3%) for C$310M; TCK has a 20% interest in the project.
- FBR analyst Lucas Pipes values TCK's share at C$1.945B, with today's transaction "right in-line with our valuation when considering Suncor’s incremental capital increase."
- Pipes believes TCK’s interest in Fort Hills greatly reduces its overall risk profile, and is encouraged by SU’s continued commitment to the project; he also likes TCK for its low-cost exposure to met coal and zinc, two commodities he sees as "better positioned in the current market environment."
Sep. 21, 2015, 9:19 AM
- Suncor Energy (NYSE:SU) agrees to acquire an additional 10% working interest in the Fort Hills oil sands project in Alberta from Total (NYSE:TOT) for $310M, increasing its partnership share in the $15B project to 50.8%.
- As a result of the deal, SU's incremental capital increase to Fort Hills is estimated at just over $1B, of which ~$700M is remaining project spending.
- SU says project engineering is more than 90% complete and construction more than 40%, placing Fort Hills on track for first oil in Q4 2017.
- Following the purchase, TOT will own 29.2% of the project and Teck Resources (NYSE:TCK) will continue to own the remainder.
Sep. 16, 2015, 12:59 PM
- Integrated oil companies will see a huge collective negative cash flow position this year and next, with capex set to be cut further as oil prices struggle to a minimal increase in 2016, according to a Moody's forecast.
- Despite cost cuts, Moody’s still expects the industry to face a 20% contraction in 2015 free cash flows to a negative position of nearly $80B in 2015, as the ratings agency’s outlook for the global integrated oil and gas industry remains negative into next year.
- Moody’s expects the industry’s total debt load will increase, with cash balances declining as companies sell assets to cover dividends and capital spending, although most companies have resisted dividend cuts so far.
- Relevant tickers: XOM, CVX, BP, RDS.A, RDS.B, TOT, STO
Sep. 15, 2015, 4:57 PM
- Newpark Resources (NYSE:NR) says revenues softened in August in its U.S. Fluids and Mats businesses, and expects segment operating results to remain relatively flat Q/Q, citing customers in the Northeast region that have reduced activities in both completions and drilling, reducing rental fleet utilization.
- NR also says it is "evaluating further cost actions" in its North American business units.
- Also, NR says it was awarded a contract by Total (NYSE:TOT) to provide drilling fluids and related services for an exploratory ultra-deepwater well offshore Uruguay; it expects the project to begin in Q2 2016 and generate ~$10M of revenue.
Sep. 10, 2015, 8:11 AM
- Total (NYSE:TOT) agrees to sell a majority stake of 50% plus one share in Geosel Manosque to a 50-50 consortium of EDF Invest and Ardian in a deal that values TOT's interest at €265M ($297M), excluding inventory.
- TOT says it will retain 3.4% of Geosel, which owns the Manosque underground storage facility in southeast France.
- TOT says the sale is part of its program to sell $10B in assets by 2017.
Sep. 9, 2015, 5:43 PM
Sep. 5, 2015, 8:25 AM
- ConocoPhillips (NYSE:COP) says it could support a United Nations climate change agreement if it met its own policy principles, including creating a "level playing field" among energy sources and between countries, and avoiding technology mandates.
- COP's partial endorsement comes as pressure grows on U.S. oil majors to join European peers including Shell (RDS.A, RDS.B), BP, Total (NYSE:TOT) and Statoil (NYSE:STO) who backed UN climate negotiations and a global carbon pricing system to reduce carbon emissions.
- COP and U.S. peers such as Exxon (NYSE:XOM) and Chevron (NYSE:CVX) face competing demands from green and investor activist groups as well as industry lobby groups worried that a UN deal will call for a total phase-out of fossil fuels.
Sep. 1, 2015, 3:58 PM
- Citigroup's energy analysts defend their bullish take on big oil stocks such as ConocoPhillips (COP -2.6%), Total (TOT -2.1%) and Statoil (STO -4.5%), pointing to 30-year valuation lows, upside asymmetric risk on oil prices and signs that managements are doing enough to turn the corner on better capital allocation and cost-cutting.
- Favoring COP, TOT and STO, the firm says its sector investment criteria are (1) growth - companies that have near-term growth are less reliant on simply cutting costs; (2) better capital allocation - combined with growth, it should deliver 2-3x the ROE uplift than cost-cutting can; and (3) a strong enough balance sheet to manage the early part of the cycle.
- Citi is staying away from Exxon Mobil (XOM -4%) because of its valuation premium to peers and low growth and from Chevron (CVX -3.2%) due to its slow response in a lower commodity world.
Sep. 1, 2015, 12:59 PM
- ConocoPhillips (COP -3.6%) says it has safely delivered its first barrels of oil at its Surmont 2 in-situ oil sands facility in Canada that has been under construction for five years.
- COP says the project in northwestern Alberta will extract heavy oil buried too deep to mine using steam to heat up the thick crude to allow it to flow; the company says Surmont is the largest steam-assisted gravity drainage system in the world.
- It is COP's second and larger phase of a 50/50 joint venture in the Canadian oil sands with Total (NYSE:TOT); the two projects combined are expected to bring up 150K bbl/day, with the second facility building up production to 118K bbl/day through 2017.
Sep. 1, 2015, 10:17 AM
- Total (TOT -1.2%) agrees to sell its service station network and commercial sales, supply and logistics assets located in Turkey to Turkish conglomerate Demirören for €325M (~$356M).
- TOT says it will maintain a petroleum product marketing presence in Turkey through its lubricant activities, including a blending plant in Menemen and odorless LPG operations.
Total SA is an integrated oil and gas company. It explores and develops oil and gas properties, liquefied natural gas, petrochemicals and specialty chemicals. It is also engaged in trading and shipping of crude oil and petroleum products.
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