Jul. 9, 2014, 6:30 PM
- A new EIA report underscores the remarkable comeback of the Permian Basin, which boomed in an earlier era, faded and now leads the U.S. in oil production.
- Daily crude oil production in the Permian, which lies under much of west Texas and part of eastern New Mexico, has increased from a low of 850K barrels in 2007 to 1.35M barrels last year.
- The increased production is concentrated in six low-permeability formations: the Spraberry, Wolfcamp, Bone Spring, Glorieta, Yeso, and Delaware.
- Among the top Permian producers: OXY, PXD, APA, KMP, XOM, COG, CVX, EOG, EGN, XEC, FANG.
Jun. 26, 2014, 1:47 AM
- Following yesterday's reports that the ban on U.S. oil exports will begin to narrow, the White house has announced that there has been no change to its policy.
- Pioneer Natural Resources (PXD) and Enterprise Products Partners (EPD) received permission this week to ship condensates to foreign buyers, leading reports to surface about a change to export policy. However, U.S. law allows for refined oil, even minimally refined, to be exported under the name fuel, instead of crude oil.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, OLO, OLEM, TWTI
Jun. 25, 2014, 7:17 PM
- The decision to allow two Texas companies to export condensates looks like a win for Eagle Ford Shale crude producers at the expense of refiners and companies planning to build processing plants along the Gulf coast.
- Today's selloff in refiners reflected concern that the groups will lose some of their competitive edge if condensate exports become common: Valero Energy (NYSE:VLO), the largest U.S. refiner, dropped 8.3%, PBF tumbled 10.7%, PSX fell 4.2%, and HFC slid 6.7%.
- Oppenheimer notes that PXD, DVN, MRO, COP and MUR produce the most Eagle Ford condensate, and could benefit if U.S. condensate prices close some of the gap with European prices; EOG, the largest Eagle Ford producer, produces little condensate and likely benefits little from the lifting of the condensate ban.
- Investor reaction toward Gulf Coast gathering and processing MLPs such as EPD, MMP, KMP and NGLS was more muted, since plans to build splitters in Texas may be undermined by even modest rule changes in the crude export ban that allow Eagle Ford producers to sell condensate after running it from the wellhead to their own nearby - and much cheaper - distillation towers.
Jun. 25, 2014, 10:18 AM
- Refiners take a beating in early trading, as a lift of the ban on U.S. oil exports is expected to narrow the WTI-Brent spread, which could cause refiners' profits drop if they are forced to pay higher prices to compete with international buyers for U.S. crude.
- “We don’t think the current system needs to be changed,” Valero Energy tells Bloomberg.
- Yesterday's rulings gave Pioneer Natural Resources (PXD +2.6%) and Enterprise Products Partners (EPD +1.4%) permission to ship ultralight oil to foreign buyers - a narrow ruling, but one that is likely to spark similar requests from other companies, and increase lobbying for a full lifting of the 40-year-old ban on exporting crude oil.
- Refining stocks are broadly lower: VLO -7.4%, PBF -5.8%, MPC -5.7%, WNR -5.5%, DK -5.4%, HFC -4.6%, ALDW -4.6%, TSO -3.8%, NTI -3.5%, PSX -2.9%, ALJ -2.7%, CVI -2.3%.
Jun. 24, 2014, 6:20 PM
- Pioneer Natural Resources (PXD) +4.2% AH and Enterprise Products Partners (EPD) +1% after WSJ reports the U.S. government has taken steps to allow the two companies to export condensate that could be turned into jet fuel or diesel.
- Under current rules, companies can export refined fuel, such as gasoline and diesel, but not oil itself; the government's new approach reportedly redefines some ultra-light oil as fuel after it has been minimally processed, making it eligible for sale abroad.
- The first shipments - which could begin as soon as August - likely will be small but ultimately could include much of the 3M bbl/day of oil energy companies are pumping from shale, industry experts say, depending on how regulators define what qualifies for export.
Jun. 17, 2014, 10:56 AM
- Pioneer Natural Resources (PXD -0.7%) is downgraded to Accumulate from Buy on valuation at Global Hunter, but the firm raises its target price to $260 from $220.
- Despite the lower rating, Hunter says it is still "groupies who remain mesmerized" by the potential of PXD's Permian peer group-leading inventory level, core-of-the-core position, and logistical prowess, and is actually increasing its NAV-based price target as confidence in PXD's asset base continues to increase.
- Oppenheimer says PXD shares are expensive but for good reasons, driven by PXD's large acreage position and strong growth potential in the Permian Basin, one of the most attractive resource plays in North America; the firm maintains its Perform rating (Briefing.com).
Jun. 10, 2014, 3:45 PM
- Aubrey McClendon would seem to be overpaying in his $2.5B purchase of 63K acres in the Permian Basin "unless he knows more than we do," Jim Cramer says while acknowledging that McClendon - a "genius" a buying energy-rich land - probably does.
- Some companies have figured out the "code" to drilling in the Permian Basin, and McClendon is unlikely to have overpaid in the long run, Cramer says.
- McClendon's American Energy Partners is not publicly traded, but investors can benefit from the Permian Basin boom by buying stocks such as Pioneer Natural Resources (PXD), EOG Resources (EOG) and Cimarex Energy (XEC), Cramer believes.
May 29, 2014, 2:56 PM
- Pioneer Natural Resources (PXD +3.9%) powers higher after FBR Capital raises its price target to $275 from $250 to reflect expectations of positive drilling results.
- FBR says its visit with the company added to its comfort with the existing assessment of material NAV and production growth upside for the platform; FBR believes production growth over the next three to five years could be materially higher than guidance and expectations.
- Jim Cramer reminds viewers that PXD owns ~20K potential drilling locations, ensuring it can sustain high production growth rates for years.
May 6, 2014, 6:59 PM
- Pioneer Natural Resources (PXD) +2.7% AH after posting better than expected Q1 earnings and revenues thanks to continued success at tight-oil fields in Texas.
- Q1 production rose 5% Y/Y to 172K boe/day, primarily driven by successful Spraberry/Wolfcamp and Eagle Ford Shale horizontal drilling programs and the full recovery of weather-related production curtailments during Q4; continues to forecast 2014 production growth of 14%-19% based on $3B planned drilling capex.
- Increased its drilling rig program in the northern Spraberry/Wolfcamp to 16 horizontal rigs from five at year-end 2013; total horizontal wells placed on production in the Spraberry/Wolfcamp and Eagle Ford Shale are expected to increase to 175 in H2 from 125 in H1.
May 6, 2014, 4:11 PM
Apr. 8, 2014, 5:36 PM
- Failure to allow U.S. crude oil exports could result in a big drop in the U.S. drilling rig market, Pioneer Natural Resources (PXD) CEO Scott Sheffield says.
- The CEO also says a predicted oversupply of crude oil from the sharp and continuing production rise from prolific shale and unconventional basins could also result in a more than $30/bbl price differential for U.S. crudes to Brent.
- The rig count would drop quickly if WTI, which now hovers near $100/bbl, were to drop to $70, Sheffield says; a rig drop might start with marginal plays, but "eventually every play" would shut.
Mar. 10, 2014, 11:30 AM
- Pioneer Natural Resources (PXD -1%) is expanding its fleet of drilling rigs in the northern part of Texas’ Spraberry field to 16 from five this quarter, bucking the trend among bigger explorers such as Shell that are writing down U.S. shale assets and shrinking their footprints after drilling money-losing wells.
- Escalating costs are creating a squeeze on the biggest oil producers that is eroding profitability, Chevron CEO John Watson says, but PXD's lack of exposure to the costliest and riskiest international projects, such as liquefied natural gas complexes and ultra-deepwater oil platforms, shields it from some of the pressures impacting larger peers.
- PXD’s cost to extract the equivalent of a barrel of crude declined 4.8% to $13.36 during Q4 2013.
- PXD is spending ~$8M per well to drill sideways through the Spraberry field, and some of those wells probably will gush 1M barrels or more before they peter out decades from now, according to a presentation published on the company’s website March 7.
Mar. 7, 2014, 6:25 PM
- A drilling surge in the Permian Basin appears to account for this week's increase in the U.S. oil rig count, which jumped by 13 to a record high 1,443 in the latest tally by Baker Hughes (BHI).
- “While it’s one of the oldest fields in the U.S., there are multiple producing formations there, and companies are learning how to optimize horizontal drilling in them," WTRG Economics' James Williams says. "The growth is evidence that they’re figuring it out."
- Indeed, as Permian crude production per rig is expected to climb to 98K bbl/day this month, up from 83K a year ago, according to the U.S. Energy Department.
- While Pioneer Natural Resources (PXD), for example, is drilling in a 300-ft. thick shale shale formation in Texas' Eagle Ford play, the Permian offers shale depths of 3,500 ft., “so this is why this area has really substantial running room going forward,” COO Timothy Dove says.
- Other top Permian producers: CXO, APA, COG, CVX, OXY, EGN, END.
Feb. 19, 2014, 5:09 PM
Feb. 11, 2014, 9:57 AM
- Pioneer Natural Resources (PXD -2.4%) opens sharply lower after Q4 earnings beat estimates but said production would grow 14%-19% in 2014.
- Nevertheless, Goldman Sachs maintains its Buy rating on the shares, noting PXD's 2014 growth is expected to be back-end loaded due to horizontal pads ramping up in the Permian during H2; the firm believe PXD should exceed its 18.5% guidance midpoint through 2016 and maintains its outlook for 20% 2015-17 growth.
Feb. 10, 2014, 5:09 PM
- Pioneer Natural Resources (PXD) -2.1% AH after reporting an unadjusted Q4 loss of $1.37B, or $9.82/share, including of $1.5B loss related to discontinued operations and assets held for sale, vs. a year-ago profit of $28M, or $0.22/share, a year earlier.
- Forecasts 14%-19% production growth from continuing operations in 2014 based on planned drilling capital expenditures of $3B; growth will be second-half weighted as PXD ramps up its drilling program in the northern Spraberry/Wolfcamp from five rigs at year-end 2013 to 16 rigs by the end of Q1.
- Added proved reserves of 141M boe during 2013, equating replacement of 211% of PXD's FY 2013 production of 67M boe.
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