Tue, Feb. 24, 10:59 AM
- Transocean (RIG -1.6%) is poised to be the first in a wave of energy-related debt issuers downgraded to junk status, according to a Barclays report that says RIG could be stripped of its investment-grade ratings soon after it reports earnings tomorrow.
- The cost of credit swaps used to protect RIG debt against default within five years has soared to 714 bps, a level associated with junk-rated companies, from less than 200 in September, Bloomberg says.
- Weatherford (NYSE:WFT), Nabors Industries (NYSE:NBR) and Canadian Oil Sands (OTCQX:COSWF) are among the other investment-grade energy companies at risk of a downgrade to junk by mid-2016, according to Barclays.
- As much as $20B of energy-related debt may be cut to junk within 18 months, expanding what is already the largest part of the high-yield, high-risk market by 11%, the report says.
Wed, Feb. 18, 3:15 PM
- RBC analysts think it's time to position for an oil recovery by buying oilfield services stocks such as Schlumberger (SLB -1.2%), Patterson-UTI (PTEN -0.4%), Nabors Industries (NBR +2.5%) and Precision Drilling (PDS +0.4%).
- The firm believes oil prices will bottom in H1 2015, improves during H2 and averages at least $75/bbl in 2016, and sees U.S. land drillers and intensive service companies providing the best returns in the early phases of cycle recovery.
- RBC notes that three of the top five performing stocks in the sector off the lows since 1997 have been PTEN, PDS and NBR; the firm considers SLB and NBR as best ideas, while PTEN is a small-cap best idea.
Mon, Feb. 9, 8:57 AM
- C&J Energy Services (NYSE:CJES) +2.8% premarket on news the two companies have agreed to reduce the cash portion of its deal to buy Nabors Industries' (NYSE:NBR) production services unit by $250M to $688M.
- Including stock, the deal was valued at $2.86B when it was announced in June.
- A court had halted the deal in November, finding C&J’s board’s failure to seek out other buyers might have shortchanged its investors, but a higher court ruling in December allowed the transaction to proceed.
Mon, Feb. 2, 6:55 PM
- Jefferies downgrades nine oil services stocks (NYSEARCA:OIH), noting there is still “material downside” to consensus estimates from lower oil prices.
- Despite its medium-term negative view on oil, Jefferies adds that it expects oil prices to start to recover in 2015 with prices rising to levels that support oil services in 2016; yet the firm does not expect the sector to recover quickly, and sees deepwater drilling particularly sluggish on high costs and “flat-to-modestly-lower activity.”
- Downgraded to Underperform: FTI, NBR, PTEN, RIG.
- Downgraded to Hold: CAM, PES, PDS, SLCA, FMSA.
Wed, Jan. 28, 3:59 PM
- Energy stocks are broadly lower as Nymex crude oil futures fell another $1.68/bbl (-3.6%) to $44.53 after today's inventory report showed the largest weekly supply buildup since 1982, but drilling contractor are whacked with especially large losses.
- Examples: NBR -11.7%, PTEN -8.6%, PES -10.9%, PDS -12.3%, KEG -6.5%; Helmerich & Payne (NYSE:HP), which reportedly has launched a round of steep layoffs, -6.3%.
- Among independent producers: DNR -9.7%, NFX -4.6%, SM -8.6%, SGY -10%, SD -9.7%, EOG -5.3%, PXD -6.8%, QEP -6%, APC -4.2%, XEC -3%.
- ETFs: XLE, ERX, VDE, OIH, XOP, ERY, FCG, DIG, GASL, DUG, IYE, XES, IEO, IEZ, PXE, PXI, FENY, PXJ, RYE, FXN, DDG
Fri, Jan. 9, 12:40 PM
- Nabors Industries (NBR -3.4%) and Helmerich & Payne (HP -1.7%) are both downgraded to Hold form Buy at KeyBanc (I, II) following this week's business update from HP, which reveals how quickly and dramatically U.S. rig activity is reacting to the drop in oil prices.
- The firm expects the impact of a reduced number of working rigs and a drop on spot market dayrates to significantly hurt profitability at the two companies, at least until demand stabilizes; customers are sharply curtailing their drilling programs and releasing rigs as they come off contract.
- KeyBanc forecasts NBR's contracted rigs in the lower 48 states falling from an average of ~200 in Q4 2014 to 170 in Q1 2015, and to average 155 for full-year 2015.
Wed, Jan. 7, 3:23 PM
- Oil driller Helmerich & Payne (HP -6.5%) is the day's biggest S&P 500 loser after saying rates for its high-tech rigs have tumbled 10% Q/Q and warns of more softness ahead because of falling crude oil prices.
- "Drilling activity and spot dayrate pricing are now expected to significantly decline in the U.S.," HP says in a presentation which indicates deteriorating utilization and dayrates among land drillers is spreading farther and faster than expected.
- HP says the idle and available number of its FlexRigs has risen to 26 from 15 since Dec. 11, and sees expects to see another 40-50 FlexRigs become idle in the next 30 days from its current total of 287 but does not foresee further idling beyond that point.
- SunTrust analysts think HP’s rig count will wind up lower by the mid-30s in percentage Q/Q, cutting their 2015 EPS estimates on HP to $2.60, well below the consensus of $5.56, and slashing their price target to $56 from $70.
- Credit Suisse's James Wicklund, who offered little optimism for the oil service sector today, also slashed his estimates on land drillers HP, Nabors Industries (NBR -3.6%), Precision Drilling (PDS -2.1%) and Patterson-UTI (PTEN -3.6%) - "the result is ugly."
Mon, Jan. 5, 12:18 PM
- Energy stocks severely underperform the broader market, with the sector -4.2% vs. the S&P 500's -1.4%, as U.S. oil prices briefly slip below $50/bbl for the first time since April 2009; Nymex crude recently was -4.4% at $50.37, while Brent crude -5.9% at $53.08.
- Among the day's biggest losers: DNR -9%, RIG -7.6%, NBR -4.8%, CHK -5.9%, SDRL -9.1%, SD -12.3%, NOV -5.9%, PSX -6.2%, APA -5.9%, DVN -4.4%, EOG -6%, SU -5.2%, OXY -4.2%, APC -8.7%, PWE -9%, ECA -5.5%, MRO -5.3%.
- Global oil majors, which have been seen as less vulnerable to falling oil prices, are posting big losses: XOM -2.7%, COP -4.5%, CVX -3.8%, BP -5.8%, RDS.A -4.6%, TOT -6.5%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, XOP, ERY, FCG, DIG, PBW, BNO, GASL, DTO, DBO, DUG, IYE, XES, IEO, QCLN, IEZ, UWTI, PXE, USL, PXI, FENY, DWTI, PXJ, DNO, PSCE, RYE, SZO, PUW, FXN, OLO, DDG, HECO, TWTI, OLEM
Dec. 23, 2014, 6:19 PM
- Although the energy sector led today's stock advance, a raft of companies downgraded by Global Hunter mostly took it on the chin - none more so than Key Energy (NYSE:KEG), which plunged 15% after shares were cut to Reduce from Neutral with a $1.50 price target that was reduced from $2.50.
- Also downgraded to Reduce were HERO -6.1%, NBR -3.2%, DO +1.3%.
- Lowered to Neutral were HAL +0.5%, GEOS -8.9%, HP -2.9%, BAS -2.5%, PKD -2.5%, BHI +0.6%, BBEP -0.2%, MEP +0.1%.
- Downgraded to Accumulate: PES -3.5%, PTEN -1.1%, NGLS +2.9%.
- The firm upgraded five stocks - ATW, NOV, OII, RES and SPN - all of which gained in today's trading.
Dec. 19, 2014, 5:36 PM
Dec. 19, 2014, 12:56 PM
- The Delaware Supreme Court overturns a lower court ruling that had halted a deal by C&J Energy Services (CJES +0.7%) and Nabors Industries (NBR +6.1%), saying there was not enough evidence showing the C&J board had short-changed its shareholders.
- A lower court last month held up C&J’s merger with a Nabors unit, finding C&J’s board did not adequately shop the company; the situation was unusual in part because C&J's board and management would keep control, while the new entity is to be incorporated in NBR’s home of Bermuda and 53% controlled by NBR.
Dec. 18, 2014, 5:54 PM
- Analysts say big U.S. land drillers that operate new, faster rigs are best placed to weather the downturn brought by weaker crude oil prices and could gain market share from smaller drillers with high debt levels and outdated equipment.
- Companies with considerable debt such as Nabors Industries (NYSE:NBR) and small private firms with less efficient rigs will scramble to keep them in operation; those with new rigs, such as Helmerich & Payne (NYSE:HP) at Patteron-UTI (NASDAQ:PTEN), will have more leeway to negotiate lower rates with producers and keep or even expand their business.
- The top 3-4 players had 65%-70% of the most modern rigs and the oil slump gives them a chance to win market share from small firms that make up about half of the U.S. land drilling sector, RBC Capital analyst Kurt Hallead says.
- HP has a debt-to-EBITDA ratio of less than 1, PTEN's is 2.3x while NBR is 7.4x.
Dec. 18, 2014, 9:59 AM
- RBC recommends increasing weightings and exposure to oil service stocks (OIH +2.5%) heading into 2015, as it says oil prices will start to improve in H2 of next year and that oil service stocks typically discount this move by 6-9 months.
- Down cycles such as 2000-02 and 2008-09 suggest North American land drillers and service companies provide the best returns off business cycle lows, RBC says as it expects a similar dynamic this time.
- RBC upgrades Key Energy (KEG +24.6%) and Superior Energy (SPN +7.5%) to Outperform, and downgrades FMC Tech (FTI +1.8%), Franks (FI +4.9%), Oceaneering (OII +0.2%) and Oil States (OIS +2.3%) to Sector Perform; the firm also says since 1985 three of the top five performing stocks off lows have been Patterson-UTI (PTEN +6.6%), Precision Drilling (PDS +4%) and Nabors (NBR +7.2%).
Dec. 9, 2014, 8:12 AM
- Jefferies downgrades oil service stocks Schlumberger (NYSE:SLB), Oceaneering (NYSE:OII) and Nabors Industries (NYSE:NBR) as it lowers its Brent oil price forecast for 2015 to $72/bbl from $90, as well as an average 16% for 2015, 2016 and 2017.
- The firm expects oil prices to remain under pressure from temporary oversupply and sluggish global economic growth through H1 of next year, and remains concerned about longer-term deepwater development in light of oil prices vs. cost structures.
- Jefferies views Royal Dutch Shell (RDS.A, RDS.B) as the most defensive oil stocks in an environment where overall integrated oil earnings will drop 30% in 2015 and 21% in 2016.
Dec. 5, 2014, 6:41 PM
- C&J Energy Services (NYSE:CJES) postpones a $650M acquisition loan intended to fund the purchase of a unit of Nabors Industries (NYSE:NBR) due to the uncertainty of current market conditions, but says the decision "in no way impacts our ability to finance or complete the deal.”
- C&J agreed in June to buy NBR’s completion and production services business in the U.S. and Canada in a cash and stock deal then valued at $2.86B; C&J obtained a $1.3B commitment from Citigroup to finance the cash portion of the transaction and refinance debt.
- CJES shares fell 3% to a record low of $13.49 in today's trade and have plunged 60% from this year’s peak of $33.78 at the end of June.
- Earlier this week, a unit of Atlas Energy (NYSE:ATLS) is said to have put on hold a $155M loan it was seeking to refinance debt.
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.
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