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 disputes 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
Wed, May 13, 6:19 PM
- North Dakota recorded a surprising jump in oil and natural gas production in March, as producers successfully wring efficiencies out of existing operations in an attempt to maintain production even at depressed prices.
- The state's oil producers pumped nearly 1.2M bbl/day in March, up ~15K from February, while natural gas output rose 14% to 47.2M cf, according to the Department of Mineral Resources.
- The agency says 189 North Dakota wells were completed in March at locations owned by Exxon Mobil (NYSE:XOM), Hess (NYSE:HES), Continental Resources (NYSE:CLR) and ConocoPhillips (NYSE:COP), as "these four appear to be more in tune with having normal cash flow, and continue to complete their wells in a more aggressive manner."
- But in a sign of divergent strategies in the state, EOG Resources (NYSE:EOG) and Marathon Oil (NYSE:MRO) continue to delay fracking.
- Other top Bakken producers include WLL, OAS, NOG and EOX
Wed, May 13, 5:42 PM
- U.S. oil exploration and production companies could be back drilling again sooner than expected, Susquehanna analysts say, seeing an improving landscape for many oil projects due to higher well productivity and lower service costs.
- Commentary from several Permian operators has indicated the possibility of boosting activity levels in H2, and the firm thinks producers likely will start adding rigs if oil prices remain over $60/bbl in H2, when there should be more clarity around the upcoming OPEC meeting and possible lifting of Iran sanctions, both of which have been cited as variables that could drive oil prices lower.
- Susquehanna has a generally bullish view on E&P stocks at current prices, and has a Positive rating on CLR, DVN, EOG, GPOR, NFX and RRC.
Mon, May 11, 4:59 PM
- Oil production from seven major U.S. shale plays is expected to fall by 86K bbl/day in June, according to the latest report from the Energy Information Administration.
- Oil output at the Eagle Ford shale play in South Texas is forecast to see the biggest decline, down 47K bbl/day, while production at the Bakken shale play, centered in North Dakota, is expected to drop by 31K bbl/day, the report says.
- "The data shows that production in the Bakken and Eagle Ford [plays] peaked in March at 1.33M bbl/day and 1.73M bbl/day, respectively," says WTRG Economics energy economist James Williams.
- Among the top Eagle Ford producers: EOG, BHP, COP, CHK, MRO, APC
- Among the top Bakken producers: CLR, EOG, WLL, HES, XOM, OAS, NOG, EOX, MRO
Wed, May 6, 5:49 PM
- Continental Resources (NYSE:CLR) +2.8% AH after posting a smaller than expected Q1 loss, as cost cuts helped offset low oil prices.
- CLR says its drilling and completion costs for most of its operated wells have fallen a greater than expected 15% since year-end, mostly the result of lower service costs, and it now expects to realize service cost reductions of up to 20% by mid-year and further savings from drilling and completion efficiencies.
- Says Q1 EBITDA was $439.4M vs. $775.4M in the year-ago quarter, reflecting the decline in average commodity prices
- CLR's Q1 production totaled 18.6M boe, or 206.8K boe/day, up 7% Q/Q and 36% higher than in Q1 2014, with the biggest jump in North Dakota, where it is the second largest oil producer.
- CLR says it believes oil prices will rise later this year but is not raising production expectations, although it expects to be cash flow neutral by the middle of the year.
Wed, May 6, 4:27 PM| 2 Comments
Tue, May 5, 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
Tue, May 5, 5:35 PM
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Mon, May 4, 12:27 PM
- Pioneer Natural Resources (PXD -2.6%) plunges following negative comments on PXD and other frackers by Greenlight Capital's David Einhorn at the Ira Sohn conference.
- Einhorn calls for shorting PXD, which he dubs "the motherfracker," and says PXD loses $0.20 of present value for every $1 invested, is burning cash and is not growing.
- Of the sector, Einhorn says fracking companies offer an "almost infinite supply of negative return investment opportunities."
- Einhorn says he also is short WLL -2.5%, CXO -1.2%, CLR -1%, EOG -0.7%.
Tue, Apr. 28, 2:51 PM
- The ex-wife of Continental Resources (CLR +0.2%) CEO Harold Hamm lost her bid to reopen the divorce case in which she was awarded only $1B of what she said was her former husband’s much larger fortune.
- The Oklahoma Supreme Court ruled in favor of Hamm and granted his motion to dismiss the appeal by Sue Ann Hamm, his wife of 26 years.
- While Hamm’s fortune was estimated at $16B when the divorce became final last year, plunging oil prices cut that valuation by as much as 40% before recovering to an estimated $14.8B currently, Bloomberg calculates.
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.
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.
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