Nov. 28, 2014, 7:25 AM
- OPEC yesterday decided to hold production numbers despite the bear market in oil. WTI crude is down about $5 per barrel to $69.
- A premarket look at the top 10 holdings of the XLE: Exxon Mobil (NYSE:XOM) -4.1%, Chevron (NYSE:CVX) -4.1%, Schlumberger (NYSE:SLB) -4.6%, ConocoPhillips (NYSE:COP) -4.4%, EOG Resources (NYSE:EOG) -4.3%, Pioneer Natural Resources (NYSE:PXD) -4.8%, Occidental Petroleum (NYSE:OXY) -4.3%, Haliburton (NYSE:HAL) -4.7%, Anadarko Petroleum (NYSE:APC) -5%, Williams Companies (NYSE:WMB) -1.6%.
- ETFs: ERX, VDE, OIH, XOP, ERY, FCG, DIG, PBW, GASL, DUG, IYE, XES, IEO, QCLN, IEZ, PXE, PXI, FENY, PXJ, PSCE, RYE, PUW, FXN, DDG, HECO
Nov. 17, 2014, 3:59 PM
- In the wake of Halliburton's (NYSE:HAL) $34.6B offer for Baker Hughes (NYSE:BHI), it appears the next hot sector for M&A action is energy: More consolidation is likely, given the weakness for stocks in the oilfield services subsector, low interest rates, and as a drop in demand for oil increases cutthroat pricing competition.
- Speculation is running rampant as investors try to figure out who is next in an industry that is sure to undergo some more consolidation; some names identified as possible candidates include Kodiak Oil and Gas (NYSE:KOG), Marathon Oil (NYSE:MRO), Northern Oil and Gas (NYSEMKT:NOG), Anadarko Petroleum (NYSE:APC), Pioneer Natural Resources (NYSE:PXD).
- GE could go after National Oilwell Varco (NYSE:NOV) to show it is serious about the energy industry after last year’s purchase of pumpmaker Lufkin, Royal Bank of Canada says, and Oppenheimer says even BP could be an acquisition candidate.
- But Morgan Stanley does not see offshore drillers getting in on the action, as larger players like Diamond Offshore (NYSE:DO), Transocean (NYSE:RIG) and Seadrill (NYSE:SDRL) are still addressing dividend concerns while smaller companies such as Atwood Oceanics (NYSE:ATW) and Pacific Drilling (NYSE:PACD) still trade close to replacement value.
Nov. 12, 2014, 6:45 PM
- Whether or not there is an oil "price war," the U.S. shale industry is flinching only a little, essentially committing to concentrate their efforts where they will be most effective rather than admit defeat, according to an FT report.
- To be sure, activity is starting to slow: Continental Resources (NYSE:CLR), Rosetta Resources (NASDAQ:ROSE) and ConocoPhillips (NYSE:COP) are among leading shale oil companies that have announced reductions in their capital spending plans, and EOG suggested as much last week when it said it would make sure its capital spending plus dividend payments were in line with the cash flow it has coming in.
- If statements from shale industry leaders are even broadly accurate, oil prices may have to go much lower before U.S. oil production starts to fall; EOG CEO William Thomas says that even if oil fell to $40, his company could still earn a 10% return in some areas, such as the Bakken and Eagle Ford.
- Although they may be drilling less than they had expected, oil companies also will focus on maximizing production from the rigs they are already using, which encourages continued expectations for output growth from the likes of Devon Energy (NYSE:DVN), EOG, CLR and Pioneer Natural (NYSE:PXD).
Nov. 11, 2014, 11:26 AM
- A new report from J.P. Morgan says hammered stocks in the energy exploration and production sector may have bottomed, even if the price of oil hasn’t yet.
- JPM says investors looking to buy energy stocks should buy the E&P names with operational momentum and strong balance sheets, including Anadarko Petroleum (NYSE:APC) and EOG Resources (NYSE:EOG), which the firm sees as potential takeover candidates.
- The firm also likes Noble Energy (NYSE:NBL), Pioneer Natural Resources (NYSE:PXD) and Cimarex Energy (NYSE:XEC).
Nov. 5, 2014, 8:32 AM
- Pioneer Natural Resources (NYSE:PXD) -4.2% premarket after announcing plans to sell its Eagle Ford Shale Midstream venture with India’s Reliance Industries (OTC:RLNIY); the two companies will sell their stakes in a joint process.
- PXD says the divestment will allow it to redeploy capital to its core oil-rich Spraberry/Wolfcamp assets in the Permian Basin of west Texas.
- Based on a $100M cash flow estimate from the Midstream venture for next year, PXD's interest could be valued as high as $1.2B.
- PXD says it is not selling its Eagle Ford exploration business it owns with Reliance, in which PXD holds a 46% stake, Reliance 45%, and Newpek LLC the remaining 9%.
- Separately, PXD said Q3 earnings rose to $2.58/share from $0.65 a year earlier, and announces plans to sell 5.75M common shares in a public offering.
Nov. 4, 2014, 4:27 PM| Comment!
Oct. 14, 2014, 3:31 PM
- Global growth, foreign-exchange, oil, and small caps are the subject of every client inquiry, says David Kostin. His team's recommendation: Buy "American exceptionalism."
- In Kostin's view, U.S. economy and corporate fundamentals are still strong, with economic growth expected by Goldman economists to be 3.2% next year, the fastest expansion since 2005. Europe is expected to grow just 1%.
- What his team likes are those stocks of companies which have a high proportion of domestic sales, plus sectors like Consumer Staples (XLP -0.1%) and Discretionary (XLY +0.7%) which stand to benefit from lower oil prices (plunging again today).
- As for small caps (IWM +0.9%), Kostin is wary, noting downward earnings revisions have boosted small cap P/E ratios even as prices have declined.
- The list of S&P 500 names capturing two or more of Kostin's themes: GT, GM, PCLN, AMZN, CMCSA, LOW, DG, TSN, ADM, CVS, AVP, WAG, PXD, HAL, JPM, BAC, SCHW, PNC, MS, C, GNW, LNC, MET, THC, AET, UNH, ESRX, HUM, WLP, BIIB, GILD, DAL, CMI, FLR, CRM, JBL, MA, FB, MU, FSLR, VMC, MON, T.
Oct. 10, 2014, 6:34 PM
- India's Reliance Industries (OTC:RLNIY) is seeking a buyer for its stake in the Eagle Ford Basin oil and natural gas joint venture with Pioneer Natural Resources (NYSE:PXD), a sale that could raise up to $4.5B, Reuters reports.
- PXD is the operator of the wells in the JV, which could complicate the sale process; it owns 46% of the venture and sold a 45% interest to Reliance for $1.2B in 2010.
- The property for sale produces 115K boe/day, with 60% of the production in liquids rather than gas.
Oct. 8, 2014, 8:10 AM
- Pioneer Natural Resources (NYSE:PXD) is pushing forward with a sale of its oil and gas operations in the Eagle Ford shale which could fetch $4B-$4.5B, Bloomberg reports.
- It would be the second time PXD has sought to sell the assets, and it appears to have lowered its price expectations from the $5B or more the company was seeking earlier this year.
- PXD is said to be working with Citigroup and Tudor Pickering Holt to find buyers for the assets.
Sep. 30, 2014, 10:34 AM
- The positive market reaction following Encana's deal for Athlon Energy and other recent transactions may put pressure on inventory short majors and other large-cap companies to pursue M&A activity to increase their quality inventory in the U.S. onshore market, according to a UBS report.
- UBS lists six top potential targets, some of which already are swirling in the rumor mill, including Pioneer Natural Resources (NYSE:PXD), with its own fracking fleet and huge Midland Basin play making it a very attractive but expensive target.
- The firm's other five top M&A candidates: COG, CXO, OAS, RRC, WLL.
Sep. 29, 2014, 4:36 AM
- Pioneer Natural Resources (NYSE:PXD) expects to double its U.S. exports of condensate to 50K barrels per day next year.
- The U.S. shale resources explorer, along with Enterprise Product Partners (NYSE:EPD), received permits in June to export the ultra-light oil, after the country eased its 40-year ban on oil exports.
- Pioneer sells condensate from its Eagle Ford shale site to Enterprise, which markets the oil to foreign buyers.
Sep. 24, 2014, 11:59 AM
- A new research note from the Credit Suisse energy team points out that West Texas crude oil could drop into the low $80s, but the top companies in the booming Permian Basin have the ability to continue to make money, and they have sold off dramatically.
- Leading the firm's top five Permian picks is Diamondback Energy (FANG -1.6%), a strong performer despite the selloff; FANG's average well produces 80%-90% liquids, which results in high margins, and the company could be a potential takeover candidate given its high quality assets in west Texas.
- Credit Suisse also likes Athlon Energy (ATHL -0.3%), Concho Resources (CXO +0.1%), Pioneer Natural Resources (PXD -0.8%) and Cimarex Energy (XEC +0.2%).
Sep. 24, 2014, 10:33 AM
- Occidental Petroleum (OXY +0.6%) is added to the US 1 List at BofA/Merrill with a $130 price target, saying OXY's combination of share repurchases, competitive debt adjusted per share growth and a prospective sector leading dividend above ~4% can drive a re-rating over the next 12 months.
- BofA sees OXY using proceeds from asset sales for buying back as much as 13% of its outstanding shares, as well as posting another year of strong dividend growth, perhaps serving as a catalyst to bring OXY in line with other large-cap dividend stocks.
- Pioneer Natural Resources (PXD -0.8%) is removed from the US 1 List.
Sep. 17, 2014, 2:32 PM
- Investors have been lulled by a lack of volatility, but October is on the way, reminds Goldman, and it's time to buy options (volatility) on a number of companies where the market has yet to price in event risk.
- "On average since 1928, October realized volatility has been 19 vs 15 for all other months," say the Goldman team of John Marshall and Katherine Fogertey. "In recent years, October volatility has been even higher and even more of a standout."
- Bristol-Myers Squibb (NYSE:BMY), Dish Network (NASDAQ:DISH), Intel (NASDAQ:INTC), Ford (NYSE:F), J.C. Penney (NYSE:JCP), and Pioneer Natural Resources (NYSE:PXD) are all names, they say, that have key events in October for which the options market has not priced in elevated volatility.
Sep. 8, 2014, 6:43 PM
- The energy sector has seen little M&A activity despite a growth shortfall and cheap borrowing rates, but UBS analysts think a focus on incremental returns may lead to less exploration and more deals as resource prices on the market have fallen.
- The firm figures four large-cap E&P companies - Anadarko Petroleum (NYSE:APC), EOG Resources (NYSE:EOG), Marathon Oil (NYSE:MRO) and Pioneer Natural Resources (NYSE:PXD) - could prove tantalizing acquisition targets, but the buyer likely would need very deep pockets.
- In the case of EOG, UBS says the company's strong position in the three biggest tight oil plays - the Eagle Ford, Bakken and Permian - make it a perfect fit for an integrated major looking to expand in those areas.
Sep. 8, 2014, 12:32 PM
- The day's five biggest decliners in the S&P 500 are all energy companies - Newfield Exploration (NFX -5.6%), EOG Resources (EOG -3.6%), Anadarko Petroleum (APC -2.9%), Cimarex Energy (XEC -3.3%) and Pioneer Natural Resources (PXD -3.4%) - as crude oil prices slide to new lows, including Brent crude's first move below $100/bbl in more than a year.
- Brent crude dropped $1.12, or 1.1%, to $99.70/bbl after falling to as low as $99.36, a 16-month low, while U.S. crude slipped more than a percent to below $92 after settling at $93.29 on Friday for its sixth weekly drop in seven.
- Traders are concerned crude demand won't keep up, with data from the U.S. and China, the world's top oil consumers, suggesting their economies aren't growing as quickly as had been hoped.
- ETFs: USO, OIL, UCO, SCO, XOP, BNO, DTO, DBO, IEO, CRUD, PXE, USL, DBE, UWTI, DWTI, DNO, RJN, SZO, OLO, JJE, ONG, RGRE, OLEM, UBN
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