Sep. 29, 2014, 10:24 AM
- Sumitomo will set up a special investigation into how it lost nearly $1.8B in Texas shale oil and Australian coal mining, after writedowns connected to the investments almost completely wipe out its full-year earnings forecast.
- Most of the losses were incurred at the shale oil project it shares with Devon Energy (NYSE:DVN); in 2012, Sumitomo paid DVN $340M for 30% of the project in the Permian Basin, agreeing to supply another $1B to fund most of the cost of drilling wells, but now it says it wants to sell most of its share since it is “difficult to extract the oil and gas efficiently."
- The company also plans to stop production at the Isaac Plains coal mine in Australia's Queensland state it co-owns with Vale (NYSE:VALE) by the end of January.
- “Even by the standards of trading companies, this is not good,” says the co-head of Japan equities at Mirabaud Securities, drawing parallels to Mitsui's costly exposure to BP’s blowout in the Gulf of Mexico.
Sep. 10, 2014, 10:32 AM
Aug. 6, 2014, 8:58 AM
- Devon Energy (NYSE:DVN) +1.2% premarket after Q2 earnings matched estimates and revenues rose 46% Y/Y, easily beating expectations, helped by production growth in high-margin oil, as well as higher prices.
- Q2 production of oil, natural gas and natural gas liquids, excluding production associated with divestiture properties, rose 14% Y/Y to 620K boe/day, driven by growth in oil production, which jumped 34% to 205K bbl/day; oil production from U.S. operations surged 79% Y/Y.
- Q2 revenue from oil, natural gas and natural gas liquids sales totaled $2.7B, up 21%, attributable to the increase in high-margin oil production combined with improved oil price realizations; these factors resulted in Q2 oil sales increasing to more than 60% of DVN's total upstream revenues.
- Overall average realized prices including hedging impacts climbed 20%, including growth of 6% for oil.
Aug. 6, 2014, 8:03 AM
Aug. 5, 2014, 5:30 PM
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Jul. 7, 2014, 2:39 PM
- Devon Energy (DVN -1.1%) is upgraded to Buy from Neutral with a $96 target price, raised from $75, at Citigroup, which says the market is not recognizing DVN's midstream assets via its ownership interest in Enlink and Enlink Midstream and the potential for future dropdowns from its Canada and Eagle Ford midstream assets.
- Citi also sees DVN boosting its total production at a 6% compounded annual growth rate through the end of the decade on a 10% growth rate in oil.
- Shares of DVN and most other energy companies are lagging today, as prices for West Texas crude fall for the seventh straight day, the longest stretch of losses since Dec. 2009.
Jul. 3, 2014, 3:20 PM
- A recent surge of low-magnitude earthquakes in Oklahoma probably is the result of the underground disposal of vast quantities of wastewater generated by oil and gas extraction, according to a new study published today in the journal Science.
- The researchers also calculated that four of the highest-volume wells in Oklahoma are capable of triggering ~20% of recent central U.S. quakes, and found that such induced quakes could potentially occur more than 30 km from the well.
- The Cornell geophysics professor who led the study says the results suggest regulators and oil companies should avoid disposing of wastewater near major faults and do a better job monitoring the activity.
- Among energy firms with a significant Oklahoma presence: CHK, CLR, APA, DVN, SD, EOG, MRO, OKE, OKS, GPOR, WPX, WMB, WPZ, LPI, CWEI, NFX, NGL, COG, WLL, NBL, MPO, PQ, XEC.
Jul. 1, 2014, 2:52 PM
- Linn Energy’s (LINE +0.8%) $2.3B asset purchase from Devon Energy (DVN -0.1%) earns the praise of Raymond James analysts, who note that LINE plans to sell its high-decline Granite Wash assets to fund the deal, meaning the company is not likely to need to tap debt or equity markets for related funding.
- The firm estimates LINN may need to reserve only 20% of EBITDA to maintain the cash flow from the new assets vs. ~40% of EBITDA likely need to maintain the Granite Wash; through this transaction and the Permian divestiture program, LINN could reduce its overall capital budget by ~$400M.
- LNCO -0.3%.
Jun. 30, 2014, 12:17 PM
- Devon Energy (DVN +0.2%) received a better than expected price in its $2.3B deal to sell non-essential U.S. assets to Linn Energy (LINE +1.6%), Wells Fargo analyst David Tameron says.
- DVN brought in well above the high end of expectations, which the firm presumes was $1.2B-$1.4B; the divestment helps further delever DVN’s balance sheet, and management expects to reduce net debt by ~$4B by year-end.
- LNCO +2.6%.
Jun. 30, 2014, 9:12 AM
- Linn Energy (LINE, LNCO) agrees to acquire U.S. oil and gas properties from Devon Energy (DVN) for $2.3B.
- The assets currently produce ~275M cfe/day (~80% gas), with total proved reserves of 1.3T-1.5T cfe and total resource potential of ~3T cfe.
- The asset package is comprised of ~900K net acres across the Rockies, Mid-Continent, east Texas, north Louisiana and south Texas regions with ~4,500 total wells; LINN says it has identified 1K-plus future drilling locations and ~600 recompletion opportunities.
- LINN says the acquisition will be financed ultimately through the sale of its Granite Wash assets and other non-producing acreage in its portfolio.
- DVN says the deal covers remaining U.S. assets it had targeted for divestiture, and that the sale of Canadian and U.S. non-core properties over the past few months has generated $5B-plus in proceeds at an accretive multiple of nearly 7x 2013 EBITDA.
- LINE +0.3%, DVN +0.4% premarket.
Jun. 25, 2014, 7:17 PM
- The decision to allow two Texas companies to export condensates looks like a win for Eagle Ford Shale crude producers at the expense of refiners and companies planning to build processing plants along the Gulf coast.
- Today's selloff in refiners reflected concern that the groups will lose some of their competitive edge if condensate exports become common: Valero Energy (NYSE:VLO), the largest U.S. refiner, dropped 8.3%, PBF tumbled 10.7%, PSX fell 4.2%, and HFC slid 6.7%.
- Oppenheimer notes that PXD, DVN, MRO, COP and MUR produce the most Eagle Ford condensate, and could benefit if U.S. condensate prices close some of the gap with European prices; EOG, the largest Eagle Ford producer, produces little condensate and likely benefits little from the lifting of the condensate ban.
- Investor reaction toward Gulf Coast gathering and processing MLPs such as EPD, MMP, KMP and NGLS was more muted, since plans to build splitters in Texas may be undermined by even modest rule changes in the crude export ban that allow Eagle Ford producers to sell condensate after running it from the wellhead to their own nearby - and much cheaper - distillation towers.
Jun. 23, 2014, 3:59 PM
- Suncor Energy (SU +0.5%) and five partners say they will build a $165M water technology development center at SU’s Firebag oil sands facility in northern Alberta.
- The facility, being developed as a joint industry project under Canada’s Oil Sands Innovation Alliance, will test water treatment and further develop recycling technologies.
- SU’s partners in the project are Canadian Natural Resources (CNQ), Devon Energy (DVN), Nexen (CEO), Shell (RDS.A, RDS.B) and Husky Energy (HUSKF); SU will construct, own and operate the center but will collaborate with the others on design, construction and operations.
Jun. 11, 2014, 10:21 AM
- Devon Energy (DVN +1.3%) nears new 52-week highs after BofA resumes coverage of the shares with a Buy rating and $100 price target; when adjusted for the value of its public holdings, the firm believes DVN stands on the lowest multiple in the sector.
- BofA says DVN management has surpassed its expectations, starting with EnLink providing a public marker for a previously overlooked midstream business, but with options to monetize retained interests at an accretive multiple.
Jun. 9, 2014, 11:49 AM
- EOG Resources' (EOG +1.1%) crude oil production surged 42% in Q1, and if business stays on course, as expected, the E&P company could enjoy a 32% jump in earnings this year, according to a weekend profile in Barron's.
- EOG's enterprise value is 6.9x this year's estimated EBITDA, roughly in line with the EV/EBITDA multiples accorded competitors Chesapeake Energy (CHK) and Devon Energy (DVN), but the story says it deserves a loftier multiple than the group, given its significant drilling inventory, superior production growth, lower debt ratio, and 15.6% return on equity vs. an average of 9.5% among peers.
- EOG raised its 2014 goal for growth in crude oil production to 29% from a prior 27%, and for total energy production to 12% from an earlier 11.5%, but its estimates often prove conservative, sparking expectations for more upward revisions as the year unfolds.
Jun. 4, 2014, 12:26 PM
Jun. 3, 2014, 10:53 AM
- Devon Energy (DVN +1.5%) is upgraded to Outperform from Market Perform with an $85-$90 price target range at Wells Fargo, which cites improving production visibility that should drive 20%-plus crude growth over the next few years driven by Permian and Eagle Ford fields and from Canada.
- Wells says expanding margins and EBITDA expected to grow ~32% over the next few years, while posing debt-adjusted growth per share of 8% in 2015 and 12% in 2016, place it near the top of large cap names.
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