Mon, Aug. 24, 3:27 PM
- Chevron (CVX -5%) is upgraded to Neutral from Underperform with a $100 price target at BofA Merrill, which expects CVX’s net debt to stabilize with major projects beginning to contribute in 2017 and a drop in spending to maintenance levels.
- The firm says it has been concerned throughout the past year that CVX's cash burn would dilute equity value through peak spending at the same time that oil prices collapsed, but it no longer sees a risk, as CVX is discounting below strip prices but with a dividend.
- CVX requires sustained spending of $15B-$16B to hold production flat for an extended period,” BofA's Doug Leggate explains, adding that at $45-$50 oil, cash flow by 2017 would be closer to $29B so that the dividend is "more than covered" by cash flow in an ex-growth environment.
- ConocoPhillips (COP -6.2%) is the firm's top pick among the big oils after the stock has been hit hard, which the analyst thinks reflected unwarranted concerns regarding COP's dividend; at current strip prices, Leggate believes COP's upside is second only to Buy-rated Exxon Mobil (XOM -5.3%).
- However, the firm downgrades HollyFrontier (HFC -3.5%), Marathon Petroleum (MPC -7.2%) and Valero (VLO -4.7%) to Underperform and cuts Continental Resources (CLR -10.1%), Marathon Oil (MRO -8.4%), Noble Energy (NBL -5.4%) and Whiting Petroleum (WLL -8%) to Neutral.
Fri, Aug. 14, 12:47 PM
- The Obama administration will allow limited sales of crude oil to Mexico for the first time, Reuters reports, citing a senior administration official who says the U.S. Commerce Department is "acting favorably on a number of applications" to export U.S. crude in exchange for imported Mexican oil.
- The shipments, likely to be lighter, high-quality shale oil, would help Mexico's aging refineries produce more premium fuels, while U.S. refiners would continue to get Mexican heavy oil, a better match for them than the light oil coming from Texas and North Dakota.
- Although limited in scope, the move toward freeing up trade will please U.S. oil producers such as Pioneer Natural Resources (NYSE:PXD) and ConocoPhillips (NYSE:COP), which say the restrictions force them to sell oil at below global market rates, and may add momentum to efforts mostly to repeal what advocates see as a relic of the 1970s.
- Among relevant oil stocks: XOM, CVX, BP, RDS.A, RDS.B, OAS, NOG, CLR, WLL, EOX, SM, SFY, PVA, GST, SN, CRK, BBG, CWEI
- Relevant refining stocks: VLO, HFC, MPC, TSO, WNR, ALJ, PSX, PBF, DK, NTI, ALDW
- ETFs: XLE, XOP, XES, IEO, IEZ, PXE, NDP
Wed, Aug. 5, 4:19 PM
Tue, Aug. 4, 5:35 PM
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Fri, Jul. 24, 12:54 PM
- No new well completion reports have been filed in North Dakota since July 10, the longest gap this year, according to the state’s Department of Mineral Resources.
- The slump in reported completions is unusual and coincides with the fall in oil prices which has seen wellhead prices for Bakken crude drop below $50/bbl; Reuters' John Kemp says if the slump continues for much longer, it could be a sign that shale producers are deferring putting more wells into production to save cash and wait for better prices.
- The number of wells reported completed so far in July is running far below the previous level and well below the number the DMR estimates is needed to hold production steady, Kemp writes.
- Top Bakken producers include CLR, HES, EOG, WLL, XOM, OAS, NOG, EOX, MRO
Mon, Jul. 20, 2:29 PM
- Whiting Petroleum (WLL -4.1%) is upgraded to Positive from Neutral with a $33 price target at Susquehanna, saying it now believes the valuations of many E&P stocks are finally starting to look more reasonable.
- Drivers from WLL include the company’s reserve growth potential via its positions in the Bakken and Niobara, and improvement in capital efficiency due to its focus on enhanced completions, Susquehanna says.
- The firm names Newfield Exploration (NFX -1.2%), Continental Resources (CLR -2.6%) and Devon Energy (DVN -2.3%) as its preferred oil names and Gulfport Energy (GPOR -3.7%) as its favorite gas play.
- Last week's news of sales of two WLL non-core conventional properties for $185M piques the interest of Capital One Securities, which says WLL's Belfield and Robinson Lake gas plants could be next on the chopping block and could take 2015 asset sale proceeds to the top end of WLL's guided range of $500M-$1B for the year.
Thu, Jul. 16, 2:57 PM
- Global oil majors have $150B of firepower than can be used for M&A and have the ability to defer another $325B in capex on marginal projects; with so much cash available for potential deals and up to 15M bbl/day of production potentially available for purchase, Goldman Sachs analyst Ruth Brooker sees a pickup in M&A activity in the oil and gas space coming soon.
- The firm thinks shale production has the potential to double by 2025, and Brooker argues majors likely will take the current opportunity to increase their exposure to U.S. shale at historically low prices.
- Goldman sees seven companies as most likely to draw buyout attention from the majors: EOG, PXD, CLR, COG, NBL, APC, RRC.
Thu, Jul. 9, 12:26 PM
- Energy stocks are setting the pace for today's trading, outperforming a positive broader market as crude oil prices bounce back by more than $1 on extended nuclear deal talk deadlines with Iran and China's stock market turnaround.
- Among top gainers so far: CHK +4%, WLL +3%, DNR +3%, NOG +8.1%, CLR +2.9%, SWN +2.5%.
- Oppenheimer's Fadel Gheit is unmoved, believing oil prices "could stay lower and for longer than expected based on the low level of M&A activities as the gap in expectation between potential buyers and sellers remains wide."
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
Mon, Jul. 6, 3:15 PM
- WTI crude oil settled at a three-month low $52.53/bbl, -7.7%, on a confluence of worries about the Greece debt drama, China’s stock markets and a new flood of Iranian oil; Brent crude fell to $56.50, -6.3%, to snap its 100-day MA.
- WTI has dropped 10% over three straight sessions and Brent more than 7% lower in two consecutive days, breaking out of the narrow trading band of the past three months and risking a deeper slide ahead.
- The energy sector (XLE -1.3%) is easily the worst performing equity group today: CLR -7.4%, NOG -7.8%, OAS -8.5%, DNR -6.7%, WLL -6%.
- Oil supermajors also are sharply lower: XOM -1%, COP -2.8%, CVX -1.1%, BP -3.3%, TOT -3%.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, TWTI, OLEM
Wed, Jun. 24, 6:57 PM
- A spike in earthquakes across Oklahoma is forcing the state's energy regulator to urgently consider tougher restrictions on drilling activity, calling it a "game changer."
- During the June 17-24 period, Oklahoma experienced 35 earthquakes of magnitude 3.0 or greater, according to the Oklahoma Geological Survey, with some of the quakes occurring in the Oklahoma City metro area where there are no high-volume wastewater injection wells.
- The spike in quakes comes two months after drillers were ordered by the Oklahoma Corporation Commission, which regulates the oil and gas industry, to stop disposing wastewater below the state's deepest rock formation.
- Oklahoma's elected officials have been reluctant to shackle an industry that directly generated more than 7% of state revenues last year in the form of production taxes from companies such as Devon Energy (NYSE:DVN), SandRidge Energy (NYSE:SD), Chesapeake Energy (NYSE:CHK) and Continental Resources (NYSE:CLR).
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, BGR, IYE, IEO, FENY, PXE, FIF, PXJ, NDP, RYE, FXN, DDG
Fri, Jun. 12, 6:44 PM
- North Dakota oil production fell 1.8%, or nearly 22K bbl/day, in April to ~1.17M bbl/day after recording a surprising jump in March, as weak crude prices led producers to ease production.
- The number of drilling rigs operating in North Dakota stands at 76, the lowest since December 2009, according to the latest monthly report from the state's Department of Mineral Resources.
- The agency director has said he expects the state’s oil production to remain at 1.1M-1.2M bbl/day until oil prices recover.
- April natural gas production was up slightly at 1.54B cf/day from 1.51B cf/day in March.
- Unimpressed commentator Gregor McDonald tweets: "Sorry America, but 9,525 wells in the North Dakota Bakken producing on average 116 bbl/day is more cartoon than triumph."
- Top Bakken producers include: CLR, EOG, XOM, HES, COP. MRO, WLL, OAS, NOG, EOX
Wed, Jun. 10, 12:58 PM
- The rapid contraction in the Bakken oil price discount may indicate a faster than expected production decline in the area, dealers say.
- The buying frenzy pushed Bakken delivered at Clearbrook, Minn., to trade just $0.35/bbl below the West Texas benchmark last week, dealers say, the narrowest discount since July 2013; four months ago, it traded at a $7.50 discount.
- Also, midwest refiners ran the most crude ever for the month of May thanks to a light maintenance slate and robust margins, triggering a bidding war for light barrels.
- Regardless, the disappearing discount offers a partial reprieve for large producers such as Continental Resources (NYSE:CLR) and Hess (NYSE:HES) after the past year slashed global oil prices by as much as 60%.
- Other top Bakken producers include: EOG, WLL, XOM, OAS, NOG, EOX, MRO
Mon, May 18, 7:45 PM
- Goldman Sachs had a lot to say about all corners of the energy sector today in addition to the cut in its long-term oil price forecast, its Sell recommendations for oil majors BP, Statoil (NYSE:STO) and Chevron (NYSE:CVX), and its gloomy outlook for offshore drillers Transocean (NYSE:RIG), Diamond Offshore (NYSE:DO) and Atwood Oceanics (NYSE:ATW).
- Goldman awards a Buy rating for Exxon Mobil (NYSE:XOM), "the only U.S. or European major that can generate sufficient free cash flow to cover its dividend near $60/bbl in 2016-17"; while the firm says other oil majors will be struggling to keep the dividend flat, XOM will be in a position to increase the dividend for the next several years.
- With its expectation for long-term weakness in oil and gas prices, Goldman sees risk exposure in many names that are reliant on commodity prices, suggesting selling LINE, DPM, NGLS, while predicting PAGP and NS would benefit from a removal of the U.S. crude oil export ban.
- The firm thinks many midstream MLP names now offer attractive valuations, recommending ENB, EPD, ETE, PAA, SXL, WNRL.
- Goldman sees an upturn for frac sand provider Emerge Energy (NYSE:EMES), upgrading shares to Buy from Neutral.
- Other Buys: CLR, NFX, CQP, HEP.
- Other Sells: TRP, TCP, GPOR, MUR, GTE
Fri, May 15, 6:20 PM
- Continental Resources (NYSE:CLR) CEO Harold Hamm told a University of Oklahoma dean last year that he wanted certain scientists there dismissed who were studying links between oil and gas activity and the state's increase in earthquakes (I, II), according to e-mails examined by Bloomberg.
- Hamm is a major donor to the university, which is the home of the Oklahoma Geological Survey, and he has strongly disputed allegations that he tried to pressure the survey's scientists.
- The assertions are not new, but the newly surfaced e-mails provide more specific examples of Hamm's deep displeasure with earthquake reporting coming from the OGS.
Thu, May 14, 12:28 PM
- U.S. shale oil companies that cut production when prices plunged are prepared to return rigs to operation as prices rise, WSJ reports.
- Last week: EOG Resources (NYSE:EOG) said it would ramp up output if U.S. prices hold at recent levels, Occidental Petroleum (NYSE:OXY) boosted planned production for the year, Pioneer Natural Resources (NYSE:PXD) said it hopes to increase drilling and add two new rigs per month from July if prices continue to rise, Whiting Petroleum (NYSE:WLL) said it would ramp up production at ~$70/bbl, and Continental Resources (NYSE:CLR) CEO Harold Hamm said that $70 oil is a price "that turns it on for us.”
- These companies are among those seen as swing producers that can boost production when prices are high and cut back when they fall.
- “U.S. supply could quickly rebound in response to the recent recovery in prices,” says one commodities economist. “Based on the historical relationship with prices, the fall in the number of drilling rigs already looks overdone, and activity is likely to rebound over the next few months."
- Earlier: Oil drilling could resume sooner than advertised, Susquehanna says
Thu, May 14, 10:56 AM
- Saudi Arabia's "dire action" to flood the crude oil market and squeeze out U.S. producers will backfire, and the Saudi claim of success is premature, Continental Resources (NYSE:CLR) founder and CEO Harold Hamm says.
- "They used predatory pricing to cut the price of oil down to nothing where they think we can't make it, but I think they've almost guaranteed us an outlet to world markets," Hamm tells CNBC.
- The Saudi move could help rally support in D.C. for lifting the decades-old U.S. crude oil export ban, Hamm says; a bipartisan bill introduced yesterday by two senators from oil-producing states aims to make that happen.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, TWTI, OLEM
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