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.
Fri, Apr. 17, 2:29 PM
- Anadarko Petroleum (APC -1.4%) is considering selling its multi-billion dollar stake in Mozambique's gas reserves, with Exxon Mobil (XOM -1.5%) and Qatar Petroleum showing interest, Reuters reports.
- APC reportedly could sell up to its full 26.5% stake in Mozambique's offshore Area 1 license in the Rovuma Basin; Area 1 holds more than 75T cf of recoverable gas, enough to meet at least four years of total European gas demand.
- The last Area 1 sale - a 10% stake that went for $2.64B in 2013 to India's ONGC - was seen as overpriced, and oil and gas prices have since plunged, making it difficult to value APC's asset.
- XOM could be the front-runner after Shell dropped out following its planned merger with BG Group, which will give it access to large gas assets in neighboring Tanzania.
Wed, Apr. 15, 12:32 PM
- Anadarko Petroleum (APC +2.1%) says it may close sales accords in the coming months that would enable it to authorize a Mozambican project that has the potential to make the country one of the top three liquefied natural gas exporters.
- A final investment decision depends on converting a non-binding heads of agreement that the APC-led project has in place for 8M metric tons/year of gas with customers in Japan, China, Thailand and Singapore into a sales contract.
- APC’s Area 1 and Eni’s (NYSE:E) Area 4 in the Rovuma Basin off Mozambique’s north coast together hold technically recoverable reserves of 120T cf, according to industry consultant Wood Mackenzie.
Thu, Apr. 9, 7:21 PM
- Radon levels have been rising measurably in Pennsylvania since 2004, when the fracking industry began drilling natural gas wells in the state, according to a new report by the Johns Hopkins Bloomberg School of Public Health.
- The report does not pinpoint the exact cause of rising radon readings or explicitly tie it to any activity, but it says that buildings in counties where natural gas is most actively being extracted have in the past decade had much higher radon measurements than buildings in low-activity areas, where no such discrepancies were found before 2004.
- Pennsylvania has long been known to have some of the highest indoor radon levels in the U.S., but the researchers say fracking of the Marcellus shale formation could exacerbate pathways for radon to enter buildings.
- Top Marcellus Shale producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
Thu, Apr. 9, 12:22 PM
- Statoil (STO +0.4%) says it made an oil discovery at its Miocene Yeti prospect in the deepwater Gulf of Mexico, but is still determining the size of the discovery in order to consider future appraisal options.
- STO says its drilling efficiency on Yeti is among the best of any well drilled in Walker Ridge, achieving a rate of 400 ft./day.
- STO is the Yeti operator with 50% interest, partnering with Anadarko Petroleum (NYSE:APC) with a 37.5% stake and Samson Oil owning 12.5% (NYSEMKT:SSN).
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.
Wed, Apr. 8, 7:59 AM
- Analysts at Jefferies now expect Royal Dutch Shell (RDS.A, RDS.B) to surpass Exxon Mobil (NYSE:XOM) as the world's largest publicly traded oil and gas producer by 2018, with output of 4.2M boe/day, following Shell's $69.6B deal to buy BG Group.
- But XOM has long been rumored as a potential bidder for BG, and Financial Times points out that it now has both the motive and the opportunity, raising the possibility that it could try to outbid Shell for BG.
- Like Shell, XOM is struggling to grow and will find it easier to raise production by dealmaking than by drilling; XOM’s output was ~4.3M boe/day in 2001 and 4M last year.
- With its greater size, low debt and AAA credit rating, XOM could muster a larger cash component in any offer than Shell’s 28% of its total offer of ₤13.50/share; however, hostile deals are very rare in the oil and gas industry.
- Whether or not BG is the perfect fit for XOM, Paul Sankey of Wolfe Research has suggested other midsized E&P specialists could prove tempting, including Hess (NYSE:HES), Continental Resources (NYSE:CLR), Devon Energy (NYSE:DVN), Apache (NYSE:APA) and Anadarko Petroleum (NYSE:APC).
Wed, Apr. 1, 3:30 PM
- Actavis (ACT -1%) should outperform following its purchase of Allergan, and FDA action dates for eluxadoline and cariprazine could also be catalysts.
- Though Occidental Petroleum is the team's top pick in energy, Anadarko (APC +1.1%) is the best short-term play on a recovery in oil prices.
- Strong fundamentals and easy year-over-year comps make AvalonBay (AVB -0.9%) a pick in apartment rentals.
- A favorable Supreme Court ruling in King vs. Burwell by the end of June provides plenty of upside possibility with little downside for HCA Holdings (HCA -0.8%).
- Also on the buy list are Ingersoll-Rand (IR -1.5%), Nvidia (NVDA +0.2%), UTX (UTX -1.1%), and Disney (DIS +0.4%).
- Making the underperform list is the Gap (GPS -2.2%) thanks to less room for cost cutting and a forecast for continued weakness in sales. Also a Q2 sell: Tesla (TSLA -1%) " lacks any real technological advantage over its competitors" says the team, seeing a significant Q1 loss, an increase in the already-high cash burn, and a questionable delivery outlook.
- Source: Benzinga
Fri, Mar. 27, 10:57 AM
- Royal Dutch Shell (RDS.A, RDS.B) is among oil companies that are scaling back investments in China amid falling prices and expensive and geologically risky projects, WSJ reports.
- Shell isn't alone: In the past year, Anadarko (NYSE:APC) and Noble Energy (NYSE:NBL) have completed deals to sell operations in China, Hess (NYSE:HES) says it is quitting a shale exploration deal with PetroChina, and BP has withdrawn from three exploratory blocks in the South China Sea.
- "These companies thought $100 oil was going to stay," says the regional head of Asia-Pacific oil and gas research at Nomura. "They have to prioritize the projects based on returns, and the projects in China tend to be lower return, other things being equal, simply because of higher costs."
Fri, Mar. 20, 5:20 PM
- Despite the steep drop in energy prices, most investment-grade E&P companies face little risk of default because they are well-managed, diversified and have plenty of cash, according to analyst Philip Adams of bond rating firm Gimme Credit.
- Companies Adams believes are in strong positions - with a starting cash position greater than his estimated free cash flow deficit - include Suncor (NYSE:SU), Chesapeake Energy (NYSE:CHK), ConocoPhillips (NYSE:COP), Hess (NYSE:HES) and Anadarko Petroleum (NYSE:APC).
- Adams is “throwing in the towel" on only one company: WPX Energy (NYSE:WPX).
- He expects energy prices will rise this year due to less drilling, disruptions in countries such as Libya and new regulations that curtail fracking, but warns that the glut will worsen if Iran rejoins the market.
Wed, Mar. 18, 3:43 PM
- Stifel analysts say oil prices could be headed even lower, but that investors should buy high quality E&P companies with strong assets and/or balance sheets before prices bottom.
- Stifel says the current cycle resembles previous patterns where large-cap E&P stocks lead the oil price, which in turn leads the rig count, thus the firm does not expect shares of the strong companies to track an oil price bottom; small-cap energy stocks, however, followed oil prices closely through the last cycle and even lagged the commodity’s recovery.
- The firm is favorably disposed to Anadarko Petroleum (APC +2.4%), Cabot Oil & Gas (COG +1%), EOG Resources (EOG +4.2%), Noble Energy (NBL +5.3%), Rosetta Resources (ROSE +5.3%) and Whiting Petroleum (WLL +8.6%).
Wed, Mar. 18, 10:12 AM
- Anadarko Petroleum (APC +0.2%) says it will exercise its option to purchase a 20% equity interest in the 550-mile Saddlehorn pipeline planned by Magellan Midstream Partners (MMP -0.8%) and Plains All-American Pipeline (PAA -0.6%).
- The pipeline is aimed to transport crude out of the DJ Basin and potentially the broader Rocky Mountain region, and into storage facilities in Cushing, Okla.; MMP and PAA will each own 40% interests in the pipeline, with MMP as the construction manager and pipeline operator.
- Saddlehorn will have a maximum capacity of 400K bbl/day, but initial capacity is targeted at ~200K bbl/day.
- The project is estimated to cost $800M-$850M and should go online in mid-2016.
Tue, Mar. 17, 7:40 PM
- Crude oil production at three major U.S. shale oil fields - the Eagle Ford in south Texas, the Bakken in North Dakota, and the Niobrara in Colorado and adjacent states - is projected to fall this month for the first time in six years, the Energy Information Administration says.
- Net production from the three fields is expected to drop by a combined 24K bbl/day, but overall losses likely will be masked by production gains in the Permian Basin in west Texas and other regions.
- It is one of the first signs that idling hundreds of drilling rigs and billions of dollars in corporate cutbacks are starting to affect the U.S. oil patch, but it also shows that drilling technology and techniques have advanced to the point that productivity gains may be negligible in some shale plays.
- Top Eagle Ford producers: EOG, BHP, COP, CHK, MRO, APC
- Top Bakken producers: CLR, EOG, WLL, HES, XOM, OAS, NOG, EOX, MRO
- Top Niobrara producers: NBL, APC, ECA, CHK, EOG, WPX
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.
Tue, Mar. 17, 2:28 PM
- The positives clearly outweigh the negatives for E&P stocks such as EOG Resources (NYSE:EOG), Anadarko Petroleum (NYSE:APC) and Noble Energy (NYSE:NBL), J.P. Morgan's Joseph Allman says of his three preferred stocks in the sector.
- Allman is "slightly bullish" on the group because of an improving oil market improving, low oil prices with futures in contango, declining service costs, improved wells with new completion designs, and room for improved sentiment as investors remain tentative.
- The best companies - with high quality assets that give investors the most leverage to the best parts of the best plays, plus strong balance sheets and operating and/or financial catalysts - can still perform very well in this market, Allman writes.
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