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.
Thu, Aug. 6, 2:59 PM
- Tesoro (TSO +3.3%) CEO Greg Goff says oil drilling in Utah's Uinta Basin has "dried up" because of low crude prices, and will affect availability of the waxy crude prevalent there after the refiner recently finished a $275M conversion project at its 57.5K bbl/day refinery in Salt Lake City to double waxy crude processing capacity to 22K bbl/day.
- Uinta trades at a discount to the WTI as it is more costly to produce and process; the discount narrowed as domestic crude prices plunged 58% Y/Y, prompting producers to pull back and focus on other more profitable oilfields.
- HollyFrontier (HFC +2.6%) also is set to start a similar conversion project at its Woods Cross refinery in Utah that will increase capacity to 45K bbl/day from 31K, with the ability to process up to 25K bbl/day of Uinta waxy crude.
- On today's earnings conference call, Goff declined to comment about talks reportedly held earlier this year to buy HFC, but said TSO fully intends to examine possible acquisitions from the midwest to the west coast, "pretty much staying out of the Gulf coast."
Thu, Aug. 6, 11:58 AM
- HollyFrontier (HFC +3.3%) enjoys a second straight day of gains after reporting a strong Q2 earnings beat, with Scotia Howard Weil upgrading shares to Sector Outperform from Sector Perform and raising its price target to $59 from $49 (Briefing.com).
- Weil notes the significant increase in share buybacks during Q2, leading it to believe HFC management is now ready to be more aggressive in using the balance sheet to return cash to shareholders.
- The firm says commentary during the Q2 conference call suggests HFC has an ambition to increase the value of the company by 50%, and it suspects a pathway toward this goal will be articulated at the Sept. 3 investor day.
- Also, Oppenheimer raises its target for the shares to $58 from $50 to reflect continued strong industry fundamentals and an improved company outlook.
Thu, Jul. 30, 11:16 AM
- HollyFrontier (HFC +4.4%) is higher following a Reuters report that Tesoro (TSO -2.5%) approached the company about a potential buyout but talks were not successful.
- The companies held discussions in this year's Q1 but were scuttled after HFC's board balked at TSO's proposed offer, which is not known, and other terms, according to the report.
- TSO is said to remain interested in a deal for HFC, which would provide access to the Rocky Mountain region, where refiners have seen margins rise as they have access to crude that can be difficult to transport to traditional refining centers on the Gulf coast.
Wed, Jul. 8, 3:49 PM
- The U.S. E&P industry is "between a rock and a hard place" entering earnings season, Deutsche Bank says, expecting continued headwinds for the group; while momentum has been building for moderate acceleration in activity levels in H2, macro concerns from China to Greece have weighed on crude prices and introduced an “additional layer of uncertainty.”
- Among the major integrated oils, the firm prefers EOG Resources (EOG -2.5%) and Anadarko Petroleum (APC -2.8%) into Q2 results but cuts its stock price target for Marathon Petroleum (MPC -2.6%) in half to $62.
- U.S. refiners, on the other hand, continue to defy fears of a collapse in margins, with demand strength and robust gasoline cracks again driving upside to earnings estimates; the firm sees 7% upside on average to current Q2 estimates for the group, with particular strength from Tesoro (TSO -1.2%), Valero (VLO -0.9%) and HollyFrontier (HFC -1.4%).
Fri, May 29, 11:15 AM
- Ethanol companies rise while refiners are off session highs after the EPA announces its renewables fuels mandate.
- The EPA proposes requiring 15.93B gallons of total renewable fuel in 2014, 16.3B gallons in 2015, and 17.4B gallons in 2016, but the proposal for the total renewable fuel requirement falls short of levels Congress mandated, which were 20.5B gallons in 2015 and 22.5B gallons in 2016.
- Also, the EPA cuts 2016 corn-ethanol quota to 14B gallons; U.S. law required 15B gallons of ethanol for 2016.
- Ethanol exposed companies are mostly higher: ADM +0.7%, GPRE +4.2%, PEIX +4.1%, REX +1%, DAR +2%, CZZ -2.2%.
- Among refiners: HFC +0.3%, TSO +1.3%, VLO +0.8%, WNR +1.9%, PBF -1%.
- Biofuel related stocks: GEVO -8.3%, SZYM -2.7%, CDTI -1%, REGI -0.7%.
Thu, May 7, 11:49 AM
- HollyFrontier (HFC +3.7%) is upgraded to Outperform from Sector Perform with a $49 price target, raised from $40, at RBC, which cites improving operation execution, a new drop strategy and a large new buyback program.
- The firm likes HFC's new drop strategy in which it will build out new refining projects and then drop a portion to Holly Energy Partners (NYSE:HEP) to cover the costs; the new drop strategy of using its MLP to fund new refining capital projects will prove to be accretive going forward, RBC says.
- The firm says it no longer sees HFC as strictly a name that trades around the WTI-Brent spread, and now sees a true investment case to be made.
Fri, Mar. 27, 5:38 PM
Wed, Mar. 18, 3:24 PM
- Crude oil prices, in the doldrums yet again after U.S. inventories hit record highs for a 10th week and supplies at the futures' Cushing delivery hub hit a peak, turned around to finish higher following the Fed policy statement.
- Nymex crude rose 2.5% to settle at $44.66/bbl, pushing off earlier lows of $42.25 and the lowest intraday level since March 2009; Brent is up 4.5% at nearly $56.
- The gain could prove only a momentary recovery, however, as "speculation is going to grow about operational capacity being hit in Cushing and what that portends for prices,” according to Again Capital John Kilduff, adding that he sees U.S.crude testing $40 soon.
- U.S. refiners are enjoying big gains as the Brent/WTI spread surpasses $11: TSO +5.1%, CLMT +4.7%, CVI +4.8%, HFC +4.6%, MUR +4.5%, WNR +4.4%, VLO +3.9%, RDS.A +3.9%, CVRR +3.7%, MPC +3.3%, PSX +3.2%, ALJ +3.2%.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
Thu, Feb. 19, 9:53 AM
- HollyFrontier (HFC -1.5%) says its board has authorized a new $500M share repurchase program, using funds that had previously been allocated to its $0.50/share special dividend; the regular dividend of $0.32/share remains unchanged.
- Cutting the special dividend is no surprise given the compression of the Brent/WTI spread vs. when HFC initiated the special dividend in 2011, Wells Fargo writes as it reiterates its Market Perform rating on the stock; HFC likely will be in a negative net free cash flow position in 2015, so it was on an unsustainable path supporting both a regular and special dividend and a share repurchase program, the firm says.
Fri, Jan. 2, 5:11 PM
- HollyFrontier (NYSE:HFC) -1.6% AH after saying it expects a lower of cost or market inventory adjustment to result in a FY 2014 pretax charge of $350M-$400M because of falling crude oil prices.
- HFC also says maintenance at its El Dorado refinery in Kansas took 10 days longer than planned and required significant repairs, which caused a shift towards a lighter and sweeter crude slate post-turnaround and limited its overall crude charge in the quarter to 359K bbl/day.
Dec. 15, 2014, 12:33 PM
- BofA Merrill analyst Doug Leggate stays cautious on the refining sector for 2015, although he sees a bullish opportunity in Phillips 66 (PSX +0.5%), which he upgrades to Buy from Neutral with a $90 price target.
- The expected recognition of value risks being materially overhyped compared to what is currently being recognized by MLPs, the analyst says, adding that absence of guidance on the cost impact on the remaining business, limited guidance on tax and lack of precision on disclosure prompts skepticism that the market is not getting ahead of itself.
- Leggate downgrades HollyFrontier (HFC -1.5%) to Neutral from Buy, and PBF Energy (PBF -1.9%) and Delek US (DK -1.9%) to Underperform from Neutral; he also lowers stock price targets for the three, as well as for Valero (VLO +0.4%), Northern Tier (NTI -2.5%) and Marathon Petroleum (MPC -1.1%).
Oct. 9, 2014, 2:57 PM
- J.P. Morgan has a favorable outlook on the refining sector heading into Q3 earnings, as the group has sold off since September on a combination of factors, including fears about the crude export ban being lifted and narrowing crude differentials, despite good product cracks.
- Two of the biggest drops among refiners have been suffered by Valero Energy (VLO -2.7%) and HollyFrontier (HFC -2.6%), each ~13% since the group's peak; of the two, JPM likes VLO going into the quarter, particularly in the event of any favorable updates around capital allocation.
- The firm thinks Tesoro (TSO -3.2%) is set up for another solid quarter but that investors must be expecting it, given that shares are down only ~3%.
Sep. 10, 2014, 3:28 PM
- Energy stocks, especially refiners, are taking a beating following the latest EIA inventory report that said gasoline stockpiles rose by 2.4M barrels last week, helping send U.S. crude oil futures to 16-month lows (-1.2% to $91.61/bbl) and Brent crude to 17-month lows (-1.1% to $98.02).
- The report is bearish given the large increases in refined product inventories; "even though the crude drawdown was close to expectations, it seemed to disappoint," Again Capital's John Kilduff says.
- The EIA report followed the agency’s updated demand growth report issued yesterday and this morning’s release of OPEC’s report on the oil market; both see lower demand growth this year and next.
- Oil majors are mostly lower: XOM -0.6%, CVX -1.4%, COP -0.3%, but BP (+2.9%) and RDS.A (+1%) are higher.
- Refiners are hit hard: VLO -3.6%, PSX -1.5%, MPC -1.9%, HFC -2.5%, TSO -2.9%, WNR -4.1%, CVI -1.6%, ALJ -1.8%, PBF -3.5%, DK -1.8%, CLMT -1.8%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, ERY, XOP, DIG, BNO, UGA, DTO, DBO, DUG, IYE, IEO, CRUD, PXE, USL, PXI, PXJ, DBE, FENY, UWTI, DWTI, DNO, RJN, RYE, FXN, SZO, OLO, JJE, DDG, ONG, RGRE, OLEM, TWTI, UBN
Aug. 6, 2014, 11:46 AM
- HollyFrontier (HFC +2.4%) powers higher despite Q2 earnings that missed analyst estimates, as the refiner says it foresees significantly higher margins from turning crude oil into other fuels and asphalt in the current quarter.
- Q2 margins shrank 28% Y/Y to $14.54/bbl produced, but were roughly in line with analyst expectations and offset by higher than expected throughput volumes, Raymond James analysts say, adding that this had been "a common theme this refining earnings season."
- HFC processed 472,590 bbl/day in the quarter, 13% more than a year earlier, but expects to process 405K bbl/day in Q3 due to work at its refineries in El Dorado, Kan., and Artesia, N.M.
- CEO Mike Jennings said in this morning's earnings call that the assets of Venezuela's Citgo would be "a good fit" if they are for sale, adding that the company always looks at M&A possibilities.
Jul. 28, 2014, 12:40 PM
- Refiner stocks are dropping, in line with the margin squeeze that could result from the drop in crude oil prices, Barron's Dimitra DeFotis writes.
- Rising violence in Libya continues to affect energy assets, but attempts for peace between Israel and the Palestinians over the weekend may be taking some of the risk out of energy markets; Brent prices are down nearly 1% to $107.76/bbl, narrowing the spread with West Texas crude, off 0.3% to $101.74.
- ALJ -3.3%, TSO -1.6%, WNR -0.9%, HFC -0.8%, VLO -0.6%, PSX -0.4%, MPC -0.2%.
HFC vs. ETF Alternatives
HollyFrontier Corp is an independent petroleum refiner. It produces high-value light products such as gasoline, diesel fuel, jet fuel, specialty lubricant products, and specialty and modified asphalt. It operates in two segments; Refining and HEP.
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