Tue, Aug. 25, 10:43 AM
- Goldman Sachs analysts say the U.S. stock market correction has many more parallels with 1998 than 2008, which “suggest[s] a rebound ahead,” while predicting the S&P 500 will rise by 11% from current levels to reach 2,100 by year's end.
- The S&P fell 19% between July and August 1998, but "ultimately, the U.S. economy was relatively unaffected by overseas financial market gyrations in 1998, and we believe a similar situation will occur in 2015," Goldman says.
- The correlation between U.S. economic growth and Chinese growth is relatively low, Goldman says, estimating that a one percentage point drop in Chinese growth would translate into a 0.06 pp reduction in U.S. GDP.
- The best strategy for U.S. consumers, the bank advises, is to hold companies with high domestic revenues and avoid companies with high foreign sales.
- Goldman's list of the 25 most oversold stocks with high U.S. sales exposure: KMX, M, WFM, CHK, SWN, RRC, COG, PXD, OKE, MPC, NAVI, ETFC, LNC, BXP, KEY, RF, DFS, ANTM, CSX, NSC, UNP, JBHT, FSLR, ADS, PAYX
Fri, Aug. 14, 12:47 PM
- The Obama administration will allow limited sales of crude oil to Mexico for the first time, Reuters reports, citing a senior administration official who says the U.S. Commerce Department is "acting favorably on a number of applications" to export U.S. crude in exchange for imported Mexican oil.
- The shipments, likely to be lighter, high-quality shale oil, would help Mexico's aging refineries produce more premium fuels, while U.S. refiners would continue to get Mexican heavy oil, a better match for them than the light oil coming from Texas and North Dakota.
- Although limited in scope, the move toward freeing up trade will please U.S. oil producers such as Pioneer Natural Resources (NYSE:PXD) and ConocoPhillips (NYSE:COP), which say the restrictions force them to sell oil at below global market rates, and may add momentum to efforts mostly to repeal what advocates see as a relic of the 1970s.
- Among relevant oil stocks: XOM, CVX, BP, RDS.A, RDS.B, OAS, NOG, CLR, WLL, EOX, SM, SFY, PVA, GST, SN, CRK, BBG, CWEI
- Relevant refining stocks: VLO, HFC, MPC, TSO, WNR, ALJ, PSX, PBF, DK, NTI, ALDW
- ETFs: XLE, XOP, XES, IEO, IEZ, PXE, NDP
Wed, Aug. 5, 3:54 PM
- Pioneer Natural Resources (PXD +0.9%) closes in on a solid gain after Q2 earnings beat expectations and saying it still expects crude oil production to increase even in the face of the oil market downturn.
- PXD says it is maintaining a 10%-plus production growth forecast for 2015, reflecting an expected increase in Spraberry/Wolfcamp production growth from 20%-plus to 22%-24% offset by a reduction in the full-year growth rate for the Eagle Ford Shale.
- Q2 production totaled 197K boe/day (51% oil), reflecting strong Spraberry/Wolfcamp production growth the company says was driven by its successful horizontal drilling program.
- PXD says it put two additional rigs in Spraberry/Wolfcamp in July and will continue to add an average of two rigs a month and bring 100 new wells into production during the rest of the year, and then add eight more rigs in Q1 2016.
- Topeka Capital reiterates its Buy rating and $180 price target, saying PXD remains one of its top picks given a strong balance sheet, solid hedge book and position in the Permian Basin ahead of re-acceleration in what the firm believes will be an improved environment (Briefing.com).
Tue, Aug. 4, 4:41 PM
Fri, Jul. 31, 7:46 PM
- Giants Exxon Mobil (XOM -4.5%) and Chevron (CVX -4.9%) finished significantly lower at the close after each attempted a midday rally, in the wake of earnings misses marked by the continuing crude supply glut and price pressure.
- Oil ETFs fared not much better today: USO -3.2%, OIL -3.7%.
- Producers have key differences that make for advantages and disadvantages, like Chevron's downstream cushion. Exxon's edge over Chevron, Liam Denning notes: M&A. Its stock is down just 19% over the past year while the sector has tumbled 47%.
- As oil's selling point -- big cash distribution -- gets squeezed, Exxon is in relatively good shape. It's still raising its dividend, and it's cut its projected Q3 buybacks to just $500M (vs. zero for Chevron, Shell and BP).
- Exxon says it shops worldwide, but the U.S. may be a more natural hunting ground. Possible targets? According to Wolfe Research's Paul Sankey, Pioneer Natural Resources (PXD -2.4%) and Hess (HES -2.2%).
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
- Previously: ConocoPhillips -3.3% as dividend gets scrutiny out of earnings (Jul. 31 2015)
- Previously: Chevron -1.8% as earnings tumble, paced by $2.2B upstream loss (Jul. 31 2015)
- Previously: Exxon Mobil off 1.8% premarket after lowest profit since 2009 (Jul. 31 2015)
Wed, Jul. 22, 5:29 PM
- Pioneer Natural Resources (NYSE:PXD) reports Q2 production figures that fall short of its guidance due to lower than expected output in the Eagle Ford shale, but it maintains its FY 2015 outlook thanks to strong results from the Spraberry/Wolfcamp play.
- PXD says Q2 production averaged 197K boe/day (51% oil), below guidance of 198K-203K boe/day, and forecasts 2015 Eagle Ford production growth to be "nominal," primarily due to the delays in placing wells on production and performance issues during H1.
- However, PXD maintains its full-year production growth forecast at 10%-plus, as output from Spraberry/Wolfcamp is expected to grow by 22%-24% vs. its prior forecast of 20%-plus, reflects the continued strong performance of the horizontal drilling program.
Wed, Jul. 22, 2:37 PM
- A reduction in non-OPEC production eventually will provide an opportunity for U.S. producers to get back in the game, Credit Suisse analyst Mark Lear says as he upgrades the oil and gas E&P sector to Overweight and changes ratings for several individual stocks.
- Lear sees a handful of names with limited downside at WTI prices of ~$60/bbl and “decent” upside with prices in the $70’s, and expects a better year for natural gas in 2016 as dropoffs in production and higher demand could lead to higher winter prices.
- "We may be early,” but Credit Suisse assumes coverage at Outperform on some E&P stocks: EOG, EPE, PXD, DNR, APC, DVN.
- Upgraded to Outperform from Neutral: HES, CXO, CRZO, NBL
- Upgraded to Neutral from Underperform: MUR.
- Assumed coverage at Neutral: APA, DNR
- Assumed at Underperform: SD, SWN
- Downgraded to Underperform from Neutral: REXX, CRK
Thu, Jul. 16, 2:57 PM
- Global oil majors have $150B of firepower than can be used for M&A and have the ability to defer another $325B in capex on marginal projects; with so much cash available for potential deals and up to 15M bbl/day of production potentially available for purchase, Goldman Sachs analyst Ruth Brooker sees a pickup in M&A activity in the oil and gas space coming soon.
- The firm thinks shale production has the potential to double by 2025, and Brooker argues majors likely will take the current opportunity to increase their exposure to U.S. shale at historically low prices.
- Goldman sees seven companies as most likely to draw buyout attention from the majors: EOG, PXD, CLR, COG, NBL, APC, RRC.
Mon, Jul. 13, 5:38 PM
- Weakness in oil stocks should not be used as a buying opportunity, Barclays analysts say, viewing shares as significantly overvalued and appearing to discount an average oil price of $85-$90/bbl based on group average historical multiples.
- The firm removes Newfield Exploration (NYSE:NFX) and Cabot Oil & Gas (NYSE:COG) from its list of top oil and gas stocks, leaving only Canadian Natural Resource (NYSE:CNQ), EOG Resources (NYSE:EOG), Southwestern Energy (NYSE:SWN), Noble Energy (NYSE:NBL) and Concho Resources (NYSE:CXO).
- Barclays' bottom group consists of five Underweight rated stocks - CHK, OTCQX:COSWF, PXD, OXY and UPL - while WPX Energy (NYSE:WPX) is bumped off the bottom list to reflect an improved outlook as well as a 20%-plus share price decline.
Mon, Jul. 13, 11:32 AM
- Pioneer Natural Resources (PXD +1.1%) is upgraded to Overweight from Equal Weight with a $190 price target at Morgan Stanley on valuation after the stock has lagged Permian and large-cap peers, driven by macro and hedge-fund criticism despite offering best-in-class reserve upside, drilling inventory and growth potential.
- PXD's "inventory depth" will enable it to grow production more than peers and cause the market to assign the stock a consolidation multiple, Stanley says, adding that the Spraberry play could significantly add to PXD's inventory and future growth potential.
- PXD has shed 18% since early May, vs. a 7% decline in Permian peers and a 12% drop in E&Ps with Permian exposure, thus the firm believes the stock and sector pullback now provide a suitable entry point.
Wed, Jul. 8, 3:28 PM
- Pioneer Natural Resources (PXD -1.3%) says it plans to increase drilling activity in Texas following closing the sale of its Eagle Ford shale pipeline and processing business, despite the ~15% drop in crude prices since late June.
- PXD says it already has added two drilling rigs in the Permian Basin this month and plans to add an average of two per month during the balance of the year as long as the crude oil price "remains constructive."
- PXD plans to add eight horizontal rigs in Texas shale basins early next year, bringing the total rig count to 36, or the same number it had before the price of oil collapsed by more than half.
- PXD does not expect the increased drilling to have a big impact on 2015 production, which had been forecast to grow more than 10%, but it will push capital spending up $350M to $2.2B.
Tue, Jun. 16, 5:45 PM
- The strained finances at U.S. E&P shale companies caused by collapsing crude oil prices is well known, and some analysts say the pain may be compounded by a steep drop in prices for natural gas liquids caused by oversupply, partly due to infrastructure constraints.
- SM Energy (NYSE:SM) said yesterday the price it is receiving for NGLs at the Mont Belvieu delivery point fell 36% Q/Q to $16.67/bbl and that the price declines would lower its 2015 total budgeted revenue by ~$25M while not affecting its drilling or production.
- Barclays recently said Chesapeake Energy (NYSE:CHK) could see 2016 cash flow cut by up to 3% if NGL price weakness persists, while Range Resources (NYSE:RRC) may see its cash flow cut by up to 5%; APC, DVN, PXD, QEP, SWN, ECA and EOG also could see reduced cash flow related to NGL pricing, the firm said.
- Analysts at Tudor Pickering have a more optimistic view and expect an NGL pricing recovery next year, as cresting U.S. nat gas and crude production looks to be flat-to-declining through 2016, giving U.S. infrastructure time to catch up; the firm upgrades SWN to Accumulate from Hold, with GPOR, MRD, COG, RICE and ECA as other top picks, and UPL and EQT recommended on weakness.
- ETFs: UNG, UGAZ, DGAZ, BOIL, GAZ, KOLD, UNL, DCNG
Mon, Jun. 1, 2:57 PM
- Pioneer Natural Resources (PXD +1%) is upgraded to Buy from Hold with a $190 price target, up from $145, at Topeka Capital, which says the stock's recent underperformance and the just-announced Eagle Ford midstream sale and re-acceleration provide an excellent entry point in a premier Permian Basin growth and value story.
- PXD is best positioned to weather the downturn, as a more defensive name at current levels, given its Tier 1 assets, ample financial liquidity and strong hedge book, the firm says; the catalysts also may drive an unwinding short position from a recent widely publicized short thesis.
Mon, Jun. 1, 9:08 AM
- Enterprise Products Partners (NYSE:EPD) agrees to acquire EFS Midstream from Pioneer Natural Resources (NYSE:PXD) and Reliance Industries for $2.15B.
- EPD says it will pay in two installments, with the first $1.15B installment paid at closing and the final $1B installment paid by the first anniversary of the closing date; it expects the transaction to be immediately accretive to distributable cash flow.
- PXD and Reliance also say they will benefit from fee reductions under existing downstream processing and transportation contracts with EPD in exchange for extending the contract term to 20 years and dedicating additional Eagle Ford Shale volumes to EPD.
- EFS provides gas gathering, treating, compression and condensate processing services in the Eagle Ford Shale; its system includes ~460 miles of natural gas gathering pipelines, 10 central gathering plants, 780M cf/day of natural gas treating capacity and 119K bbl/day of condensate stabilization capacity.
Thu, May 21, 9:30 AM
- Alongside Goldman's list of 50 stocks appearing most as top holdings at hedge funds is its list of the 50 top shorts.
- New additions this quarter: Baxter Intl (NYSE:BAX), UPS, Marriott (NASDAQ:MAR), NextEra (NYSE:NEE), Ford (NYSE:F), National Oilwell Varco (NYSE:NOV), McDonald's (NYSE:MCD), M&T Bank (NYSE:MTB), CenturyLink (NYSE:CTL), Amgen (NASDAQ:AMGN), Pioneer Natural (NYSE:PXD), Duke Energy (NYSE:DUK), Seagate (NASDAQ:STX), AbbVie (NYSE:ABBV), Cisco (NASDAQ:CSCO).
- The full list (in order of $ value of short interest): AT&T (NYSE:T), Disney (NYSE:DIS), IBM, Verizon (NYSE:VZ), Intel (NASDAQ:INTC), Kinder Morgan (NYSE:KMI), Exxon (NYSE:XOM), Pfizer (NYSE:PFE), J&J (NYSE:JNJ), Deere (NYSE:DE), Caterpillar (NYSE:CAT), Exelon (NYSE:EXC), GE, Boeing (NYSE:BA), Halliburton (NYSE:HAL), Fox (NASDAQ:FOXA), Comcast (NASDAQ:CMCSA), UTX, Regeneron (NASDAQ:REGN), Merck (NYSE:MRK), salesforce.com (NYSE:CRM), AbbVie (ABBV), Conoco (NYSE:COP), Wal-Mart (NYSE:WMT), Eli Lilly (NYSE:LLY), Celgene (NASDAQ:CELG), Schlumberger (NYSE:SLB), AutoZone (NYSE:AZO), Wells Fargo (NYSE:WFC), Emerson (NYSE:EMR), McDonald's (MCD), Reynolds (NYSE:RAI), Target (NYSE:TGT), Accenture (NYSE:ACN), Coca-Cola (NYSE:KO).
Thu, May 14, 12:28 PM
- U.S. shale oil companies that cut production when prices plunged are prepared to return rigs to operation as prices rise, WSJ reports.
- Last week: EOG Resources (NYSE:EOG) said it would ramp up output if U.S. prices hold at recent levels, Occidental Petroleum (NYSE:OXY) boosted planned production for the year, Pioneer Natural Resources (NYSE:PXD) said it hopes to increase drilling and add two new rigs per month from July if prices continue to rise, Whiting Petroleum (NYSE:WLL) said it would ramp up production at ~$70/bbl, and Continental Resources (NYSE:CLR) CEO Harold Hamm said that $70 oil is a price "that turns it on for us.”
- These companies are among those seen as swing producers that can boost production when prices are high and cut back when they fall.
- “U.S. supply could quickly rebound in response to the recent recovery in prices,” says one commodities economist. “Based on the historical relationship with prices, the fall in the number of drilling rigs already looks overdone, and activity is likely to rebound over the next few months."
- Earlier: Oil drilling could resume sooner than advertised, Susquehanna says
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