Thu, Jan. 8, 12:06 PM
- Big oil companies including Exxon (NYSE:XOM), Shell (RDS.A, RDS.B) and BP soon must decide whether to risk upsetting investors by cutting dividends, risk earnings by cutting projects, or take on more debt in the hope that oil prices will soon recover, according to a WSJ report.
- A Citi analysis shows spending on dividends and capital investment was 24% higher than cash flow in 2013; Shell, for example, had $40B in net cash flow in 2013 but its capital spending and dividend payments outstripped cash flow by 36%, while XOM's shareholder payouts and investment are seen exceeding cash flow by 22% in 2015.
- Estimated capex and dividends also are expected to exceed cash flow by 20% or more this year at ConocoPhillips (NYSE:COP), Chevron (NYSE:CVX), Eni (NYSE:E), Total (NYSE:TOT) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY).
Mon, Jan. 5, 12:18 PM
- Energy stocks severely underperform the broader market, with the sector -4.2% vs. the S&P 500's -1.4%, as U.S. oil prices briefly slip below $50/bbl for the first time since April 2009; Nymex crude recently was -4.4% at $50.37, while Brent crude -5.9% at $53.08.
- Among the day's biggest losers: DNR -9%, RIG -7.6%, NBR -4.8%, CHK -5.9%, SDRL -9.1%, SD -12.3%, NOV -5.9%, PSX -6.2%, APA -5.9%, DVN -4.4%, EOG -6%, SU -5.2%, OXY -4.2%, APC -8.7%, PWE -9%, ECA -5.5%, MRO -5.3%.
- Global oil majors, which have been seen as less vulnerable to falling oil prices, are posting big losses: XOM -2.7%, COP -4.5%, CVX -3.8%, BP -5.8%, RDS.A -4.6%, TOT -6.5%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, FCG, DIG, PBW, BNO, GASL, DTO, DBO, DUG, IYE, XES, IEO, QCLN, IEZ, UWTI, PXE, USL, PXI, FENY, DWTI, PXJ, DNO, PSCE, RYE, SZO, PUW, FXN, OLO, DDG, HECO, TWTI, OLEM
Sun, Jan. 4, 11:25 AM
- BP (NYSE:BP) is set to lose hundreds of millions of dollars in earnings and dividend income from its 19.75% stake in Rosneft (OTC:RNFTF) as a result of the plunge in crude prices and financial turmoil that has sent the ruble tumbling, FT reports.
- The loss is expected to weigh heavily on BP’s overall profits in the fourth quarter, driving down the group’s EPS.
- Rosneft accounted for nearly a third of BP’s total oil and gas output for the first nine months of 2014.
- Previously: BP reiterates long-term Russian strategy after sanctions news (Jul. 29 2014)
Fri, Jan. 2, 2:55 PM
- Europe largely missed out on last year's $383B in oil and gas sector M&A activity, but Europe likely will get a bigger piece of the action in 2015 if current oil prices persist, according to Reuters' Fiona Maharg-Bravo.
- Net debt at smaller explorers such as Tullow Oil (OTCPK:TUWLF, OTCPK:TUWOY), Premier Oil (OTC:PMOIF), Afren (OTCPK:AFRNF) and EnQuest (OTC:ENQUF) could all reach 3x EBITDA if oil remains at $60/bbl through 2015, Barclays estimates.
- BG Group (OTCPK:BRGXF, OTCQX:BRGYY) has long been a target, and the new CEO starts in March; BP faces big liabilities in the Gulf of Mexico and volatility in Russia, it’s not clear if Shell (RDS.A, RDS.B) will make a move, while Exxon (NYSE:XOM) and other U.S. majors could be tempted.
Dec. 30, 2014, 2:28 PM
- BP (BP -1.4%) has launched an internal review of whether its own traders were involved in a forex manipulation scandal that led six banks to collectively pay $4.3B in fines, the FT reports.
- Bloomberg reported in March a Lloyds deals had tipped off a BP trader about a $499M pound/dollar forex order. At the time, BP denied any of its forex traders had taken part in improper trading activity.
- Though its main task is to manage forex risk, BP's treasury trading unit also acts as a profit source ... provided its traders make successful bets.
Dec. 24, 2014, 8:11 AM
- BP is in discussions with Russia's Rosneft (OTC:RNFTF) that could give it a direct stake in an eastern Siberia oil field believed to have large petroleum reserves, according to multiple reports.
- A proposed deal for the Taas-Yuriakh field, which could be valued at $700M-$800M, probably would not be subject to Western sanctions that prohibit companies from exporting technology for tapping shale and Arctic reserves to Russia.
- Output from the field, located near a pipeline to the Pacific coast, will be used to supply eastern refineries and China; production is expected to exceed 100K bbl/day in 2017, and the area also holds 155B cm of natural gas reserves.
Dec. 22, 2014, 7:10 PM
- While the U.S. government wants BP to pay $16B-$18B in fines related to the 2010 Gulf of Mexico oil spill, the company is opening the latest round of its legal battle by arguing in a court filing that it should pay a lesser penalty partly because of the falling price of crude oil.
- In a filing to the Louisiana District Court, BP suggests that "a per-barrel penalty at the lower end of the statutory range would satisfy the goals of [the Clean Water Act].”
- Judge Barbier in New Orleans will conduct a non-jury trial next month to set pollution fines for BP and its well partner, Anadarko Petroleum (NYSE:APC).
- Meanwhile, BP says it signed a joint venture deal with Azerbaijan's Socar to explore for and develop potential prospects in the shallow water area around the Absheron Peninsula of the Caspian Sea.
Dec. 22, 2014, 3:23 PM
- S&P revises its outlook to negative for BP, Royal Dutch Shell (RDS.A, RDS.B) and Total (NYSE:TOT), as it cites “the dramatic deterioration in the oil price outlook” in forecasting still more negative free cash flow in 2015 extending possibly into 2016, given fairly inflexible capital expenditure and high dividends.
- S&P says debt and dividends for Europe's oil majors have increased 50%, leaving them less flexibility in dealing with a cash crunch; BP has an indicated dividend yield of 6.85%, followed by 5.7% for TOT and 5.25% for Shell.
- S&P also says it may cut the ratings on Eni (NYSE:E) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY).
Dec. 22, 2014, 10:45 AM
- Natural gas prices fall 9.5% to near two-year lows at $3.133/mmBtu, in the biggest one-day percentage loss since February and the lowest intraday price since January 2013, on mild weather forecasts and inventory that is above year-ago levels.
- Prices are now down more than 15% in three straight losing sessions and are 30% lower than the six-month high closing price of $4.489/mmBtu it hit just a month ago.
- Weather has been unseasonably warm for December, limiting demand for home heating and allowing relatively low stockpiles to catch up to where they were a year ago and encouraging traders to sell based on the belief that supply is relatively healthy.
- Gas producers are among the biggest early decliners: XOM -1.1%, CHK -7.3%, APC -2.6%, SWN -6%, DVN -2.2%, COP -2.3%, BP -1.5%, COG -4%, BHP -1.9%, CVX -1.3%, ECA -5.1%, EQT -4.3%, RDS.A -1.7%, UPL -12%, WPX -6.9%, EOG -1%, OXY -1.1%, RRC -6.1%, APA -2.3%, AR -3.2%, CNX -3%, QEP -4.8%, LINE -4.9%, NBL -1.6%, SM -2.6%, XEC -4.2%, PXD -2.9%, NFX -5.1%.
- ETFs: UNG, DGAZ, UGAZ, BOIL, GAZ, FCG, GASL, KOLD, UNL, NAGS, DCNG
Dec. 19, 2014, 9:53 AM
- BP (BP +1.1%) is forced to shut down its living quarters platform on the Vahall field in the North Sea after Norwegian safety authorities refused to extend its consent for the 34-year-old accommodation facility.
- BP has sought permission to use the platform beyond this year as it needs more workers at the field; analysts have said that development work would have to slow down if the request was denied.
Dec. 17, 2014, 6:41 PM
- The BP-led partnership developing Iraq’s giant Rumaila oilfield is set to invest $1.7B next year in a drive to increase production by 50% at the project to 2.1M bbl/day by the end of the decade.
- The figure represents an increase of 800K bbl/day from current production and will account for 3% of global oil production, according to BP’s Energy Outlook 2035.
- The agreement was made under a recently revised technical service contract that extended the partnership to 2034; Rumaila in September reached accumulated production of 2B bbl under the contract, which was initially signed in 2009.
Dec. 15, 2014, 2:42 PM
- The European Commission gives conditional clearance for BP (BP -3.1%) to acquire jet fuel business Statoil Fuel and Retail Aviation (NYSE:STO), subject to conditions.
- The competition authorities say BP had committed to divesting SFRA's activities at Stockholm, Malmo, Gothenburg and Copenhagen airports to remove concerns that increased concentration there would have led to price increases of fuel for airlines.
Dec. 12, 2014, 12:58 PM
- BP (BP -1.9%) must cut jobs because costs are higher than at its global competitors, and some sites or plants may be shut or sold, CEO Bob Dudley reportedly told staff this week.
- "In many parts of BP, we have higher costs and larger teams than other companies operating at a similar scale,” Dudley said in an internal memo to staff obtained by Bloomberg.
- BP plans to cut $1B-$2B from a previous capital spending budget for 2015 of $24B-$26B, it said earlier this week.
Dec. 10, 2014, 3:49 PM
- OPEC no longer exists in any meaningful sense and crude prices will slump to $50/bbl over coming months as market forces shake out the weakest producers, Bank of America warns.
- Francisco Blanch, BofA’s commodity chief, says OPEC is “effectively dissolved” after it failed to stabilize prices at its last meeting, and “the consequences are profound and long-lasting.”
- At least 15% of U.S. shale producers are losing money at current prices, and more than half will be under water if U.S. crude falls below $55, the bank says, adding that the high-cost producers in the Permian basin will be the first to feel the pain and may have to cut back on production soon.
- Following the 40% drop in oil prices, "the bulk of the damage to the sector is now done," Deutsche Ban's Lucas Herrmann says, "but it's hard to see what's going to drive share prices higher."
- Nevertheless, Herrmann upgrades BP to Buy from Hold, citing the likelihood that its troubles in the Gulf of Mexico and Russia will see a turning point in 2015.
- ETFs: XLE, ERX, VDE, OIH, XOP, ERY, FCG, DIG, GASL, DUG, IYE, XES, IEO, IEZ, PXE, FENY, PXJ, RYE, FXN, DDG
Dec. 10, 2014, 3:26 PM
- As BP (BP -2.1%) looks to cut costs further in the face of collapsing crude oil prices, the company faces an identity crisis in the long term and dividend doubts in the short term.
- Investors can see the benefits of capital discipline, but FT's Christopher Adams ponders what kind of company BP wants to be after already shrinking enormously - production has dropped nearly 30% since 2009 - and where are the discoveries that will power growth and keep it among the supermajors.
- Bringing online new projects in the Gulf of Mexico, including an expansion of Thunder Horse field, will be essential if BP is to finally move clear of more than $40B in post-spill provisions; analysts say BP’s position in the high-margin Gulf of Mexico and expertise in deepwater drilling give it the best chance to weather the slide in oil prices.
Dec. 10, 2014, 12:58 PM
- Energy stocks are slammed across the board as oil prices take another nosedive (I, II), with the losses heaviest on shares of small, U.S.-based oil and gas producers.
- “Financial leverage is being thrown out the window, and everything else is being purged as well,” says Simmons analyst Bill Herbert, who adds that cuts to production budgets in the coming year likely will mean more pain for oil service companies.
- Among the hardest-hit shares: TPLM -15.2%, CRK -12.4%, GDP -11.9%, NOG -9.5%, AREX -8.6%.
- Investors have been less quick to dump shares of integrated oil companies, but today they have been smacked too: XOM -2.8%, CVX -2.9%, COP -2.3%, BP -2%, RDS.A -2.2%, TOT -2.3%.
- Today's worst performers on the S&P 500 include OKE -8.2%, DNR -7.4%, NE -5.6%.
- Service companies also are down: SLB -2.6%, HAL -2.7%, WFT -6.6%, BHI -2%.
- ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, XES, IEZ, PXI, FENY, PXJ, RYE, FXN, DDG
BP vs. ETF Alternatives
BP PLC provides energy products and services. The company explores for oil and natural gas and also engages in supply and trading of crude oil, petroleum, petrochemicals products and related services.
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