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May 6, 2015, 7:38 AM
- In a stunning election result, voters in Canada's energy-rich Alberta province swept aside the four-decade hold on power by the ruling Progressive Conservative Party and elected an New Democratic Party majority government that wants to raise corporate taxes and increase oil and gas royalties.
- NDP leader Rachel Notley - who has vowed to raise the corporate tax rate to 12% at a time energy companies are reeling from layoffs and project cancellations amid weaker oil prices - is expected to succeed Jim Prentice as Alberta’s premier.
- Notley has said she would not lobby for the proposed Keystone XL pipeline to link Alberta’s oil deposits to refineries in Texas, and that she is against the Northern Gateway pipeline from Alberta to the British Columbia coast.
- She also has promised another review of oil royalties at a time other oil producing areas around the world that are also struggling with low oil prices are expected to make their terms more appealing.
- Relevant tickers: ENB, SU, TRP, IMO, CNQ, CVE, OTCQB:HUSKF, OTCQX:COSWF, XOM, BP, RDS.A, RDS.B
May 5, 2015, 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
May 1, 2015, 6:03 PM
- The Petronas-led group planning a liquefied natural gas export terminal on Canada’s Pacific coast is offering C$1.15B ($950M) over 40 years to one First Nations community to approve the project.
- Pacific NorthWest LNG is offering the payments to the Lax Kw’alaams First Nation so it can build the unit on traditional lands at the port of Prince Rupert in British Columbia.
- The facility is part of a C$36B plan by Petronas to ship gas reserves from Canada’s westernmost province by tanker to growing energy markets in Asia.
- The project is one of 19 LNG developments proposed for B.C., including from heavyweight players Shell (RDS.A, RDS.B), Chevron (NYSE:CVX) and Exxon (NYSE:XOM).
May 1, 2015, 3:57 PM
- Chevron's (CVX -1.9%) top priority is maintaining a dividend that’s “competitive and growing,” CFO Patricia Yarrington said in today's earnings conference call, but WSJ's Maxwell Murphy writes that the company needs a surge in cash flow to maintain its dividend and capital spending.
- In its Q1 earnings report, CVX said its operating cash flow was $2.3B - less than a quarter of its combined capex and dividend; the company's $33.9B debt now tops that of rival Exxon (NYSE:XOM) even though CVX has roughly half the annual revenue.
- Yarrington said CVX will take a multi-pronged approach to generating enough cash, boosting cash flow through production growth while trimming its cost structure and capex budget, and selling assets; she said CVX had disposed of $10B in assets over the past 16 months, putting it well on track to achieve its $15B four-year plan.
May 1, 2015, 3:15 PM
- Exxon Mobil (XOM +1.4%) is maintained with an Outperform rating at Wells Fargo following strong Q1 results, citing XOM's modest growth, strong balance sheet, industry leading access to capital - important if attractive acquisition opportunities arise - and a decades-long commitment to shareholder returns.
- The firm raises its FY 2015 EPS estimate to $4.48 from $3.62 based on the Q1 EPS beat, higher non-U.S. gas price realizations, and slightly lower upstream operating expenditure, and believes shares should reach the $93-$97 range based on 18x its 2016 EPS forecast of $5.25.
- Morgan Stanley analysts are underwhelmed, however, rating the stock at Underweight, believing XOM "will participate yet unlikely lead in a commodity recovery we expect will unfold over the next 12 months and see upside potential and yield support."
- Coming down somewhere in between, J.P. Morgan sees XOM as mostly a defensive, dividend-oriented play and rates the stock as Neutral.
May 1, 2015, 8:17 AM
- Gasoline prices at the pump are up across the U.S. after a rebound in crude oil prices, but nowhere is the jump as severe as in California, where prices have surged by a third in the past week and by ~$1/gal in the past month.
- The swift rise is because of problems at some refineries in the state: Last week, Chevron's (NYSE:CVX) Richmond refinery reported it was flaring, and Tesoro (NYSE:TSO) indicated it was experiencing minor issues at its Martinez refinery - The incidents trimmed output, worried traders and sent wholesale prices shooting up.
- California has been dealing with tight supply after a February explosion at Exxon's (NYSE:XOM) Torrance refinery, and it might take until July before operations there return to normal.
- TSO also is undergoing unplanned maintenance work to solve a problem at its Los Angeles facility, and CVX has shut some units in El Segundo for planned maintenance work.
- Refinery events are seen and treated as trade secrets, so any action by oil companies can cause a pop in the market, oil analyst Tom Kloza says: "There's a few big companies that if all of a sudden they're seen buying aggressively in the market, it's going to prompt speculations like, ‘Oh, they're having problems.'"
Apr. 30, 2015, 3:25 PM
- BP (BP -0.8%) says production has started at the Kizomba Satellites phase 2 development in Block 15 offshore Angola, in the first of its planned start-ups for 2015 to be followed up later in the year with the Greater Plutonio phase 3 project in neighboring Block 18.
- The project develops 190M barrels of oil with peak production estimated at 70K bbl/day, and is expected to increase total Block 15 production to 350K bbl/day.
- The project is operated by Exxon Mobil (NYSE:XOM) with a 40% interest, BP has a 26.67% stake, Eni (NYSE:E) has 20% and Statoil (NYSE:STO) has 13.33%.
Apr. 30, 2015, 9:19 AM
- Exxon Mobil (NYSE:XOM) +1.3% premarket after reporting a smaller than expected drop in Q1 earnings, as production and refining results rose even as lower crude prices ate into earnings.
- Q1 earnings from XOM's downstream refining and marketing business more than doubled to $1.7B, up $854M in the year-ago period, benefiting from cheaper crude and by its international operations.
- However, Q1 earnings in the upstream E&P business fell 63% Y/Y to $2.86B even as production increased 2.3% to 4.2M boe/day, benefiting from new developments in Papua New Guinea, Canada, Angola, Indonesia, and U.S. onshore liquids plays; earnings in the chemical segment slipped 6.2% to $982M.
- Q1 total costs fell to $61B from $91B in the year-ago quarter; capital spending totaled $7.7B, down 9% Y/Y.
- XOM also says it expects to buy back $1B in shares in Q2, in line with the reduced level it targeted for Q1.
- "It was a strong quarter," said Edward Jones analyst Brian Youngberg, adding that XOM's diversified model tends to hold up better in a weaker oil market.
Apr. 30, 2015, 8:05 AM
- Exxon Mobil (NYSE:XOM): Q1 EPS of $1.17 beats by $0.35.
- Revenue of $67.62B (-36.7% Y/Y) beats by $14.47B.
- Shares +1.6% PM.
Apr. 29, 2015, 2:34 PM
- Exxon Mobil (NYSE:XOM) declares $0.73/share quarterly dividend, 5.8% increase from prior dividend of $0.69.
- Forward yield 3.33%
- Payable June 10; for shareholders of record May 13; ex-div May 11.
Apr. 28, 2015, 3:59 PM
- The Dutch parliament votes to reverse the burden of proof in disputes over damages to buildings caused by gas production at the Groningen field.
- Under the motion approved by the Dutch parliament, the company that operates the Groningen field - a joint venture including Shell (RDS.A, RDS.B), Exxon (NYSE:XOM) and the government - would have to provide evidence that disputed damage claims are bogus, rather than claimants having to show evidence they are legitimate.
- The decision could be an expensive one: An recent estimate commissioned by the province of Groningen estimated as many as 212K buildings may have been damaged by earthquakes caused by gas production, with costs of compensation and strengthening buildings running as high as €30B over the next 30 years.
Apr. 28, 2015, 3:28 PM
- BP (BP +1%) and Total (TOT +2.3%) can thank much of their higher than expected profits in the latest quarter to steep increases in profits from refining, as the big slump in oil prices has meant refineries can process much cheaper crude and generate higher profits on fuels such as diesel or gasoline.
- As a result, BP's underlying pre-tax replacement cost profit from downstream businesses in Q1 more than doubled to $2.2B, while pre-tax profits from oil and gas production, or upstream, collapsed to $600M from $4.4B a year ago.
- At TOT, Q1's adjusted net operating income from refining and chemicals more than tripled Y/Y to $1.1B, almost matching contributions from upstream of $1.36B, which fell 56%.
- Global majors with high downstream exposure such as Shell (RDS.A, RDS.B) and Exxon (NYSE:XOM) should benefit from the strong refining environment, which BP expects to last into Q2, according to Edison Investment Research.
- Despite the plunge in upstream earnings, analysts noted that both BP and TOT enjoyed strong increases in production after years of unimpressive growth, meaning earnings should recover quickly as soon as oil prices rise.
Apr. 27, 2015, 9:56 AM
- Statoil (STO +1.3%) must move ahead with the delayed expansion of the Snorre oil and gas field in the North Sea because it is a time-critical investment, Norway's energy minister says.
- STO last month delayed a decision on the $4B Snorre upgrade, which could yield an additional 300M barrels of oil, saying margins on the project were too low, particularly after the recent drop in crude prices; STO expects to decide in late 2016 whether to move ahead with building a new platform and extending the field's lifetime to 2040.
- Exxon Mobil (NYSE:XOM) owns a 17.4% share of Snorre.
Apr. 27, 2015, 7:44 AM
- In his "We Are Full of Bull" note this morning, Morgan Stanley's Adam Parker says the economy will accelerate in Q2 and Q3, bringing stocks along for the ride. If investors are gun-shy thanks to record levels for the averages, Parker suggests looking for names with decent long-term earnings forecasts trading at a discount to the market.
- The ten largest U.S. stocks trading at a discount, but with above-average expected growth rates: Apple (NASDAQ:AAPL), Citigroup (NYSE:C), Gilead (NASDAQ:GILD), Union Pacific (NYSE:UNP), Actavis (NYSE:ACT), Twenty-First Century Fox (NASDAQ:FOXA), Time Warner (NYSE:TWX), Ford (NYSE:F), BlackRock (NYSE:BLK).
- Conversely, one might want to avoid those stocks selling for substantial premiums. The ten largest stocks trading at a premium to the market while growing at a below-average rate: Exxon (NYSE:XOM), Procter & Gamble (NYSE:PG), Chevron (NYSE:CVX), Coca-Cola (NYSE:KO), Pepsico (NYSE:PEP), Schlumberger (NYSE:SLB), MMM, McDonald's (NYSE:MCD), UPS, Nike (NYSE:NKE).
- Source: Bloomberg
Apr. 25, 2015, 7:25 AM
- Texas regulators have ordered Exxon Mobil's (NYSE:XOM) XTO Energy subsidiary and another company to prove their wells near Fort Worth are not causing earthquakes.
- On Friday the Texas Railroad Commission, which regulates the state’s oil and gas industry, told both companies they need to appear at hearings scheduled for June to justify why their wells should not be shut down.
- The action follows a Southern Methodist University study released this week that linked a rash of small earthquakes in the area to nearby natural gas wells and the injection of wastewater deep underground.
- Also this week, the U.S. Geological Survey reported that an increase in seismic activity in Texas, Oklahoma and six other states "very likely" was caused by wastewater injection from oil and gas operations.
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, XES, IYE, IEO, IEZ, FENY, PXE, PXJ, RYE, FXN, DDG
Apr. 22, 2015, 12:57 PM
- Exxon Mobil (XOM +0.6%) agrees to pay more than $5M as part of a settlement for the 2013 rupture of a pipeline in Arkansas that was carrying oil sands from Canada.
- XOM’s Pegasus pipeline failed in March 2013, spewing 134K gallons of oil in a suburban housing development near Mayflower, Ark.
- XOM will pay $3.19M in federal civil penalties and must comply with a series of government requirements, including placing spill-response equipment in three places along the pipeline route before it can reopen; XOM also must pay state and local fines of $1.88M.
Exxon Mobil Corporation is engaged in energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products.
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