Fri, Apr. 10, 5:17 PM
- The EPA agrees to issue final biofuel quotas for 2014 and 2015 under the federal Renewable Fuel Standard by Nov. 30 in a tentative settlement of an energy industry lawsuit which had challenged EPA delays in establishing the mandates.
- Refiners and biofuel producers have complained that the EPA's repeated delays in setting renewable fuel use requirements have led to uncertainty and volatility in biofuel markets.
- Refiners are required under the RFS to blend a certain amount of biofuels into gasoline and diesel based on the targets established by the EPA; potentially relevant tickers include VLO, TSO, PBF, PSX, ALJ, MPC, WNR, HFC, CVI.
- Biofuels producers also crave the certainty and market demand guaranteed by the annual targets, but they believe the EPA should not back down from setting aggressive renewable fuel quotas; potentially relevant tickers include REGI, FF, AMRS, GEVO, CDTI, SZYM, OTCPK:KIORQ.
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
Tue, Mar. 17, 2:58 PM
- Oil refinery stocks are not as expensive as they look, Deutsche Bank analyst Todd Ryan writes, as he recommends buying Valero Energy (NYSE:VLO), Marathon Petroleum (NYSE:MPC), Tesoro (NYSE:TSO) and Phillips 66 (NYSE:PSX).
- After stripping out implied MLP-related valuations, Ryan finds "reasonable" stock price multiples at ~5.0x, in line with average levels seen in late 2013 and early 2014; more importantly, revisions are likely to remain a steady tailwind, with nearly 10% upside to 2015 EBITDA estimates using fairly conservative assumptions of $5/bbl Brent-WTI for 2015.
- With an overall healthy refining backdrop, a healthy Q1 EPS setup as estimates look low, and higher investor appreciation for the retail business with comps trading at ~1.5x turns above the five-year average, Ryan sees further upside for the group over the near term.
Tue, Mar. 10, 11:37 AM
- U.S. coastal refiners "could be a shore thing" for investors, Credit Suisse says, noting that the group can buy domestic crude when it is too cheap or profit from discounted waterborne barrels.
- Tesoro (NYSE:TSO) is "leading the charge," the firm says; with more than 350K bbl/day of crude capacity offline in a finely balanced market with growing vehicle miles traveled, west coast margins have spiked and could remain elevated for some time.
- PBF Energy (NYSE:PBF) is upgraded to Outperform from Neutral, as it is a key beneficiary of low crude prices, an oversupplied crude market for mediums and heavies, plus leverage to WTI domestic pricing.
- Phillips 66's (NYSE:PSX) target price is raised to $100 from $85, as Credit Suisse believes the longer-term upside looks strong and intact.
- Among others in the group, the firm says Marathon Petroleum’s (NYSE:MPC) self-help is underestimated, and Valero’s (NYSE:VLO) rising cash returns to shareholders and Delek’s (NYSE:DK) rising free cash flow should drive a re-rating of their equity.
Mon, Mar. 9, 11:46 AM
- Phillips 66's (PSX +2.5%) price target is lifted to $100 from $85 at Credit Suisse, which reiterates its Outperform rating, after shares underperformed pure play refining peers late last year on the oil sensitivity of its midstream business and could continue in H1 given refining fundamentals are going to drive earnings upgrades this year.
- The firm says PSX management has come out fighting but the market has not yet taken noticed, citing a new PSX presentation with three messages: Management will be assertive with an implied $2B/year of MLP drops; excluding drops, mid-cycle EBITDA could grow to $9B-plus; and enterprise value should grow past $60B, using a reasonable multiple for PSX of 7x.
Thu, Mar. 5, 7:23 PM
- U.S. inventories are at their highest levels in at least 80 years, and the U.S. is running out of places to store it, prompting some analysts to predict already depressed prices could spiral even lower.
- When storage is full, there is pressure on those holding oil in storage to "dump that inventory,” says the CEO of energy consulting firm Perry Management, who believes the space shortage could cause prices to drop to as low as $30/bbl.
- U.S. oil production rose for the fourth consecutive week to a rate of 9.3M bbl/day, even as drilling rigs are being idled at a rapid clip; U.S. inventories also rose, for the eighth straight week, jumping 2.4% to 444M barrels, the U.S. Energy Information Administration reports.
- Producers are pumping nearly 1.5M bbl/day more crude than the world needs, due to a combination of slowing demand and rising production in the U.S., meaning oil put in storage today could be there for years; should the glut worsen, more producers could be forced to shut their wells, effectively storing the oil in the ground.
- Storage operators at Cushing, Okla., including Plains All American (NYSE:PAA) and Phillips 66 (NYSE:PSX), said recently they expect the tanks there to hit capacity - currently they are about two-thirds full.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, UWTI, USL, DWTI, DNO, SZO, OLO, TWTI, OLEM
Wed, Feb. 18, 7:45 PM
- Warren Buffett's decision to dump his entire $4B stake in Exxon Mobil (NYSE:XOM) is pointing investors toward more nimble producers such as Suncor (NYSE:SU) and Phillips 66 (NYSE:PSX) that can deliver higher returns during an oil price recovery.
- J.P. Morgan is reiterating its lukewarm outlook on XOM, "which has not yet fully pulled the trigger to just run at maintenance type levels," as well as ConocoPhillips (NYSE:COP), Chevron (NYSE:CVX) and Cenovus Energy (NYSE:CVE), which the firm says are "getting quite close to their sustaining capex/free cash flow potential already."
- Not everyone is so down on the supermajors; BlackRock favors the group because of their strong balance sheets, high dividends and integrated business models, and Ed Yardeni notes that the stocks remain attractive for income-oriented accounts.
Tue, Feb. 17, 8:58 AM
- Phillips 66 Partners (NYSE:PSXP) will launch a public offering of 5.25M common units, with an underwriters option to purchase up to an additional 787.5K units, to fund part of its acquisition of Phillips 66's (NYSE:PSX) equity interests in three pipeline systems.
- The facilities in the deal are the 200K bbl/day Sand Hills natural gas liquid pipeline system running from Texas’ Permian Basin and Eagle Ford Shale to the Gulf coast; the 175K bbl/day Southern Hills NGL system from the Midcontinent area to the coast; and the 660K bbl/day Explorer refined products pipeline that runs from the Gulf coast to the Midwest.
Tue, Feb. 17, 6:43 AM
- Widening its Texas operations, Phillips 66 Partners (NYSE:PSXP) has announced that it will buy Phillips 66's (NYSE:PSX) interests in three pipeline systems for a total of $1.01B.
- The deal includes two natural gas pipeline systems based in Texas, as well as a 19.46% interest in the Explorer Pipeline Company, which operates a pipeline carrying refined products between the Gulf and the U.S. Midwest.
- Phillips 66 Partners expects the deal to be accretive immediately.
Wed, Feb. 4, 12:46 PM
Thu, Jan. 29, 3:49 PM
- Phillips 66 (PSX +3.2%) hits session highs following better than expected Q4 earnings as profit from the sale of gasoline and other fuels tripled.
- PSX profited as pump prices for gasoline and diesel did not fall as quickly as oil prices, says Edward Jones analyst Rob Desai, noting that "as oil prices fell, they were able to basically squeeze out some extra margin from gasoline and retail customers so that’s really what helped that segment to report stronger results."
- Q4 earnings at PSX's marketing and specialties unit, which sells gasoline, diesel and aviation fuel through Phillips 66, Conoco and 76 brand stations, totaled $367M from $105M a year earlier.
- Earnings for the refining segment grew 23% to $517M, while the chemicals segment gained 2.3% to $267M.
- The company’s investment in DCP Midstream - a joint effort with Spectra Energy - resulted in a $12M loss; CEO Greg Garland says in today's earnings conference call that if natural gas liquids prices remain at current levels, “that probably doesn’t fix DCP for 2015. We’re still talking about restructuring options."
Thu, Jan. 29, 8:07 AM
Wed, Jan. 28, 6:31 PM
- Citigroup's energy team lowers earnings estimates by an average of 20% on U.S. refiners such as Marathon Petroleum (NYSE:MPC) and Phillips 66 (NYSE:PSX) even while reaffirming its bullish stance on the group, believing crude oil differentials eventually will widen back out over the next 12-18 months once oil storage reaches capacity.
- After running the numbers, Citi's estimates for MPC and PSX are above consensus, and figures MPC likely will post higher Y/Y earnings in 2015 despite the recent decline in crude spreads.
- However, the firm downgrades Tesoro (NYSE:TSO) to Neutral from Buy on valuation.
Wed, Jan. 28, 5:30 PM
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Tue, Jan. 20, 2:40 PM
- Phillips 66 (PSX +3%) is outpacing most of its refining peers following a weekend Barron's report that says shares could rise 50% after a 30% drop amid the oil price swoon.
- Using cash flow from refining, CEO Greg Garland is refashioning PSX into a giant that operates infrastructure for the transport, storage and processing of energy - all more profitable activities than refining, and all of which command higher valuations in the stock market.
- PSX's businesses have been hammered in the oil rout but prices will not drop forever, and PSX "has a great balance sheet and the benefits of diversification in tough markets," says Tudor Pickering's Bradley Olsen, who thinks the stock is worth $94 on a sum of the parts based on his 2015 estimates.
- J.P. Morgan analysts Phil Gresh and John Royall cite “the most diversified portfolio in the refining group, with the highest potential for more stable growth outside of refining" in calculating a price target of $74.
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
PSX vs. ETF Alternatives
Phillips 66 is a downstream energy company. The Company's segment includes Refining and Marketing (R&M), Midstream and Chemicals businesses. Its Chemicals business is conducted through its 50% interest in Chevron Phillips Chemical Company LLC.
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