Dec. 16, 2014, 11:44 AM
- Exxon Mobil (XOM +2.1%), Suncor Energy (SU +6.9%) and ConocoPhillips (COP +4.8%) combine to offer $559M for exploration rights in the deepwater Flemish Pass, the largest-ever bid for a license in Canada’s Newfoundland and Labrador province.
- The region is where Statoil last year announced the huge Bay du Nord find, which is estimated to contain up to 600M barrels of light, sweet crude.
Dec. 15, 2014, 5:49 PM
- Canadian heavy crude is trading below US$40/bbl for the first time in five years, just as a surge of 14 new oil sands projects with a combined capacity of more than 266K bbl/day are scheduled to start next year.
- Oil sands projects scheduled to start next year include ConocoPhillips (NYSE:COP) and Total’s (NYSE:TOT) joint 118K bbl/day Surmont project and the 40K bbl/day expansion of Cenovus Energy’s (NYSE:CVE) Foster Creek project.
- Analysts say while oil sands producers may curtail future development, most existing operations will not be shut and those under construction will go ahead because of the investments involved and potential harm to future output; profitability for all but the lowest-cost producers will be squeezed, as Canadian crude produced from oil sands is some of the world’s most expensive to produce.
Dec. 11, 2014, 10:58 AM
- U.S. energy companies are wasting little time in starting to cut drilling, jobs and spending in the wake of declining oil prices, WSJ reports.
- In recent days, ConocoPhillips (NYSE:COP) said it would spend 20% less next year on drilling wells; EOG Resources (NYSE:EOG) said it would shed many of its Canadian oil and gas fields, close its Calgary office and lay off employees; and Matador Resources (NYSE:MTDR) said it may temporarily leave the Eagle Ford Shale area in Texas, where drilling recently fell to 190 rigs after hitting 210 rigs in July.
- Analysts say companies with a lot of debt, low rates of return and little chance of drilling their way to better profitability will be hurt if crude remains below $75/bbl; Global Hunter cites Triangle Petroleum (NYSEMKT:TPLM) as an example, although CEO Jon Samuels says the company is profitable at current oil prices.
- "A contraction is unavoidable,” says an economist for the Texas Alliance of Energy Producers.
Dec. 11, 2014, 10:45 AM
- Investors in giant gas export terminals from Australia to Canada are facing the prospect of losing nearly $250B plowed into the projects during the past seven years, as weaker oil prices threaten to wipe out returns.
- Oil-linked pricing means LNG producers stand to get much less revenue than expected on delivery of their first shipments, and oil prices have fallen so low that U.S. shale gas producers with plans to export the usually cheaper fuel to Asia suddenly find themselves facing a much tougher competitive environment.
- LNG prices in Asia have sunk below $10/MMBtu, while most Australian LNG projects would need to sell the commodity for at least $12-$14 to break even; for example, the breakeven point for the $54B Gorgon project under construction by Chevron (NYSE:CVX), Exxon (NYSE:XOM) and Shell (RDS.A, RDS.B), is ~$17.7/MMBtu.
- Other relevant tickers: LNG, TOT, COP, CEO, FCG, GASL, OTCPK:BRGXF, OTCQX:BRGYY, OTCPK:STOSF
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
Dec. 9, 2014, 10:58 AM
- ConocoPhillips' (COP +0.1%) move to cut next year's capital spending by 20%, including less on some large projects that are nearing completion, is a clear sign that big energy companies are taking a second look at their mega-projects costing billions of dollars as they face the fallout of declining oil prices, WSJ reports.
- Big companies seek out big projects in normal times, since they have the engineering expertise to develop fields beyond the grasp of smaller firms and need to keep adding reserves to offset production declines in mature areas, but oil at $63/bbl is not part of the equation; Shell (RDS.A +0.1%) says a new project must be able to break even at $70, and BP (BP -0.7%) says it uses a long-term planning price of ~$80 when considering new investments.
- Bernstein Research analyst Iain Pyle says companies will have to review big investments; if prices fail to rebound soon, “what we’re going to see is projects getting canceled.”
- Also: XOM -0.1%, CVX +0.2%.
Dec. 8, 2014, 11:15 AM
- Brent crude slumps to a new five-year lows after Morgan Stanley cut its 2015 Brent forecast, saying prices could average as little as $53/bbl although its base case scenario was for $70; the firm's earlier outlook saw oil at $98.
- "Oil prices face their greatest threat since 2009," analysts Adam Longson and Elizabeth Volynsky say, with Q2 2015 likely marking the peak period of dislocation in the absence of OPEC intervention.
- Brent -3.4% to $66.71, WTI -3.1% to $63.81.
- Energy stocks are getting smashed again, exacerbated by ConocoPhillips' (COP -3.3%) 20% reduction of its 2015 capex plans to $13.5B.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, DIG, BNO, DTO, DBO, DUG, IYE, XES, IEO, CRUD, IEZ, UWTI, PXE, USL, PXI, FENY, DWTI, PXJ, DNO, RYE, SZO, FXN, OLO, DDG, OLEM, TWTI
Dec. 8, 2014, 8:44 AM
- ConocoPhillips (NYSE:COP) sets its FY 2015 capital budget at $13.5B, a ~20% Y/Y decrease which reflects lower spending on major projects, several of which are nearing completion, as well as the deferral of spending on North American unconventional plays.
- Despite the lower investment level, COP says it expects to achieve ~3% production growth from continuing operations, excluding Libya.
- The ~$5B allocated toward development drilling programs and ~$4.8B focused on sanctioned major projects represent significant reductions from 2014.
- COP -1.2% premarket.
Dec. 5, 2014, 6:28 PM
- The rout in oil prices has knocked $46M off the potential compensation for Nabors Industries (NYSE:NBR) CEO Anthony Petrello, the highest-paid oil executive in the U.S., whose future pay passed $100M in July but has fallen to $58M as shares in the company plunged 57% during the last five months.
- “The land rig sector, of which Nabors is the biggest, is facing some severe headwinds on the earnings and cash flow they will make," says Credit Suisse analyst James Wicklund.
- Petrello’s losses are almost twice as much as those of the next four highest-paid U.S. oil CEOs combined; Exxon’s (NYSE:XOM) Rex Tillerson, Conoco's (NYSE:COP) Ryan Lance, Schlumberger’s (NYSE:SLB) Paal Kibsgaard and Chevron's (NYSE:CVX) John Watson lost an average 19%, or ~$24M, of the value of their compensation since July 3, according to Bloomberg data.
Dec. 5, 2014, 5:38 PM
- The Eagle Ford shale formation in south Texas produced its billionth barrel of oil some time last month, according to analysts at research firm Wood Mackenzie.
- Eagle Ford now accounts for 16% of total U.S. oil production, and the firm forecasts E&P spending of $30.8B in the region next year, ~22% of the total $139.3B expected in U.S. onshore spending.
- Eagle Ford is widely considered the most profitable U.S. shale field, and many analysts speculate the break-even price for production to remain profitable is ~$50/bbl in much of the play.
- Top Eagle Ford producers include EOG, CHK, COP, MRO, BHP, APC, APA, BP, COG, CRZO, CWEI, CRK, XOM, GDP, HES, MTDR, MUR, NFX, PVA, PXD, ROSE, RDS.A, RDS.B, SN, SM, STO, SFY, TLM, ZAZA
Dec. 3, 2014, 11:32 AM
- The energy sector (XLE +1.5%) continues its momentum from yesterday, leading the way again as the best performing sector in early trading with crude oil rising 1.2% so far today and reports that U.S. well permits fell 40% last month.
- Top performers include Clayton Williams (CWEI +7.7%), Transocean Partners (RIGP +10.6%), Gaslog (GLOG +13.8%) and Energy XXI (EXXI +15.7%).
- Other leading energy names are showing stronger recoveries as they clear last Friday's bearish gap zone: XOM +0.2%, CVX +0.4%, COP +2.5%, OXY +2.5%, DVN +2.9%, EOG +2.5%, HES +2.2%, MUR +1.5%, NBL +2.3%, PXD +4.2%, SU +3%, CNQ +1.9%.
- Some analysts warn that the worst may not be over, however, as much of the advance is being driven by investors repurchasing ETFs they used to make short bets; investors also could opt to sell oil shares at a loss in coming weeks to reduce tax burdens.
Nov. 28, 2014, 7:25 AM
- OPEC yesterday decided to hold production numbers despite the bear market in oil. WTI crude is down about $5 per barrel to $69.
- A premarket look at the top 10 holdings of the XLE: Exxon Mobil (NYSE:XOM) -4.1%, Chevron (NYSE:CVX) -4.1%, Schlumberger (NYSE:SLB) -4.6%, ConocoPhillips (NYSE:COP) -4.4%, EOG Resources (NYSE:EOG) -4.3%, Pioneer Natural Resources (NYSE:PXD) -4.8%, Occidental Petroleum (NYSE:OXY) -4.3%, Haliburton (NYSE:HAL) -4.7%, Anadarko Petroleum (NYSE:APC) -5%, Williams Companies (NYSE:WMB) -1.6%.
- ETFs: ERX, VDE, OIH, XOP, ERY, FCG, DIG, PBW, GASL, DUG, IYE, XES, IEO, QCLN, IEZ, PXE, PXI, FENY, PXJ, PSCE, RYE, PUW, FXN, DDG, HECO
Nov. 14, 2014, 5:32 PM
- Freeport LNG's project to export liquefied natural gas from Texas becomes the third major proposed terminal to receive full federal authorization, as the U.S. Department of Energy approves Freeport to ship 1.8B cf/day from Quintana Island, Tex., to countries that do not have free trade agreements with the U.S.
- FERC, which is responsible for review of a gas export facility's design, engineering and environmental footprint, authorized the construction and operation of the proposed facility in an order issued July 30.
- ConocoPhillips (NYSE:COP) and Dow Chemical (NYSE:DOW) are part of Freeport LNG's ownership structure.
Nov. 13, 2014, 3:20 PM
- U.S. crude oil prices break below $75/bbl for the first time in more than three years, brushing aside an IEA report showing a surprise 1.735M barrel inventory drawdown as well as remarks by the Saudi oil minister dismissing talk of an oil price war among producers.
- West Texas crude settled today at $74.21/bbl, -3.9% and breaking below an important support level; during the past three years, futures have tested but not broken through that level three times.
- Brent crude recently was trading below $78, -3%.
- Global oil majors are all lower: COP -1.9%, BP -1.4%, CVX -1.4%, XOM -1.1%, TOT -0.9%, RDS.A -0.7%.
- Oil services companies and offshore drillers suffer even sharper drops: SDRL -4.4%, SLB -4.2%, HAL -3.9%, BHI -3.9%, RIG -3.8%, DO -3.5%, NBL -2.9%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, DIG, BNO, UGA, DTO, DBO, DUG, XES, IYE, IEO, CRUD, IXC, IEZ, PXE, USL, UWTI, IPW, FENY, PXJ, UHN, DWTI, DNO, RYE, FXN, SZO, GNAT, OLO, DDG, FILL, OLEM, TWTI
Nov. 12, 2014, 6:45 PM
- Whether or not there is an oil "price war," the U.S. shale industry is flinching only a little, essentially committing to concentrate their efforts where they will be most effective rather than admit defeat, according to an FT report.
- To be sure, activity is starting to slow: Continental Resources (NYSE:CLR), Rosetta Resources (NASDAQ:ROSE) and ConocoPhillips (NYSE:COP) are among leading shale oil companies that have announced reductions in their capital spending plans, and EOG suggested as much last week when it said it would make sure its capital spending plus dividend payments were in line with the cash flow it has coming in.
- If statements from shale industry leaders are even broadly accurate, oil prices may have to go much lower before U.S. oil production starts to fall; EOG CEO William Thomas says that even if oil fell to $40, his company could still earn a 10% return in some areas, such as the Bakken and Eagle Ford.
- Although they may be drilling less than they had expected, oil companies also will focus on maximizing production from the rigs they are already using, which encourages continued expectations for output growth from the likes of Devon Energy (NYSE:DVN), EOG, CLR and Pioneer Natural (NYSE:PXD).
Nov. 12, 2014, 8:14 AM
- A joint venture backed by Petronas, ConocoPhillips (NYSE:COP) and Royal Dutch Shell (RDS.A, RDS.B) says it started gas production from the Kebabangan gas field off Malaysia.
- The partners expect production to reach 500M cf/day of natural gas by next April, and could process up to 825M cf/day of gas, 80K bbl/day of crude oil and 22K bbl/day of condensate.
- Petronas holds a 40% stake in the JV, while COP and Shell each hold 30%.
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