Oct. 27, 2014, 9:44 AM
- Venezuela is canceling plans to sell its Citgo U.S. refining unit, the country’s finance minister says, apparently the victim of falling oil prices, declining refining margins, and unscheduled downtime among Citgo's refineries.
- Venezuelan officials indicated earlier this year that they were looking to sell Citgo for as much as $10B, and HollyFrontier (NYSE:HFC), Valero Energy (NYSE:VLO), Western Refining (NYSE:WNR), Tesoro (NYSE:TSO) and PBF Energy (NYSE:PBF) were speculated as potential bidders for Citgo's three U.S. refineries.
- Analysts at the risk consultancy Eurasia Group recently warned that a sale of Citgo would leave fewer assets for investors to target if Venezuela defaults.
Oct. 14, 2014, 6:57 PM
- Refiners implore Pres. Obama to remain firm on plans to scale back renewable fuel quotas for 2014, warning that if the administration gives in to Corn Belt demands for higher mandates, it could cause gasoline prices to spike.
- The EPA last year proposed cutting the amount of renewable fuel required for 2014 to 15.2B gallons, ~3B gallons below the amount prescribed in federal statutes, including up to 13B gallons from traditional corn-based ethanol and 2.2B gallons of advanced biofuels.
- But administration officials have hinted they could boost the final targets, justified in part because gasoline consumption has also risen since the proposal was first unveiled last year.
- Among signers of a letter to Obama were Valero (NYSE:VLO) CEO Joseph Gorder and Tesoro (NYSE:TSO) CEO Gregory Goff.
Oct. 14, 2014, 5:17 PM
Sep. 25, 2014, 6:15 PM
- Western Refining Logistics (NYSE:WNRL) agrees to acquire the southwest wholesale business from its sponsor Western Refining (NYSE:WNR) for $360M in cash and partnership units.
- The wholesale business includes ~79K bbl/day in fuel sales to third party customers and WNR's retail locations, crude oil trucking operations in the Permian and San Juan basins, and a lubricant products distribution business.
- WNR and WNRL also plan to enter into 10-year fuel supply and crude oil trucking agreements containing certain minimum volume commitments by WNR.
Sep. 10, 2014, 3:28 PM
- Energy stocks, especially refiners, are taking a beating following the latest EIA inventory report that said gasoline stockpiles rose by 2.4M barrels last week, helping send U.S. crude oil futures to 16-month lows (-1.2% to $91.61/bbl) and Brent crude to 17-month lows (-1.1% to $98.02).
- The report is bearish given the large increases in refined product inventories; "even though the crude drawdown was close to expectations, it seemed to disappoint," Again Capital's John Kilduff says.
- The EIA report followed the agency’s updated demand growth report issued yesterday and this morning’s release of OPEC’s report on the oil market; both see lower demand growth this year and next.
- Oil majors are mostly lower: XOM -0.6%, CVX -1.4%, COP -0.3%, but BP (+2.9%) and RDS.A (+1%) are higher.
- Refiners are hit hard: VLO -3.6%, PSX -1.5%, MPC -1.9%, HFC -2.5%, TSO -2.9%, WNR -4.1%, CVI -1.6%, ALJ -1.8%, PBF -3.5%, DK -1.8%, CLMT -1.8%.
- ETFs: USO, XLE, OIL, UCO, ERX, VDE, OIH, SCO, ERY, XOP, DIG, BNO, UGA, DTO, DBO, DUG, IYE, IEO, CRUD, PXE, USL, PXI, PXJ, DBE, FENY, UWTI, DWTI, DNO, RJN, RYE, FXN, SZO, OLO, JJE, DDG, ONG, RGRE, OLEM, TWTI, UBN
Sep. 9, 2014, 6:52 PM
- Venezuela's PDVSA reportedly is seeking preliminary offers for its U.S. unit Citgo Petroleum by the end of September, a deal that could fetch up to $10B.
- Lazard is running the sale process for Citgo on behalf of PDVSA and is said to have sent offering materials to potential buyers; Deutsche Bank is separately exploring a sale of PDVSA's 50% stake in the Chalmette refinery in Louisiana it owns alongside Exxon.
- HollyFrontier (NYSE:HFC), Valero Energy (NYSE:VLO), Western Refining (NYSE:WNR), Tesoro (NYSE:TSO) and PBF Energy (NYSE:PBF) are speculated as logical bidders for Citgo's U.S. refineries in Lemont, Ill.; Lake Charles, La.; and Corpus Christi, Tex.
Aug. 5, 2014, 6:02 AM| Comment!
Jul. 28, 2014, 12:40 PM
- Refiner stocks are dropping, in line with the margin squeeze that could result from the drop in crude oil prices, Barron's Dimitra DeFotis writes.
- Rising violence in Libya continues to affect energy assets, but attempts for peace between Israel and the Palestinians over the weekend may be taking some of the risk out of energy markets; Brent prices are down nearly 1% to $107.76/bbl, narrowing the spread with West Texas crude, off 0.3% to $101.74.
- ALJ -3.3%, TSO -1.6%, WNR -0.9%, HFC -0.8%, VLO -0.6%, PSX -0.4%, MPC -0.2%.
Jul. 15, 2014, 5:38 PM
Jul. 15, 2014, 11:33 AM
- Valero Energy (VLO -0.2%) climbs off sharp early losses after reporting Q2 guidance below Wall Street consensus.
- Wells Fargo analysts expect Q2 throughput volumes will be generally as expected, while capture rates will fall short of prior expectations likely due to weaker crack spreads; it lowers its Q2 and FY 2014 EPS estimates to a respective $1.18 and $5.87 from $1.31 and $6.00.
- Raymond James analysts continue to “tread lightly” with the refiners, skeptical that WTI-Brent spreads can reach heights needed to drive EPS expectations higher for 2015 and beyond.
- Other refiners are mostly higher after early losses: TSO +0.7%, HFC +0.3%, MPC +0.7%, PSX +0.4%, ALJ -0.5%, WNR +0.4%, CVI +0.8%.
Jul. 11, 2014, 3:18 PM
- Citigroup analyst Faisal Khan says he is moving toward a more bullish view of the U.S. refining sector after a bout of selling amid low expectations.
- Khan points to continued growth in U.S. and Canadian oil production, "sticky" oil prices due to Middle East volatility, U.S. oil price differentials that are "somewhat contained" at $5-$10/bbl, and headway on refining closures in the Atlantic basin that is only a matter of time.
- As a result, the Citi team upgrades Marathon Petroleum (MPC +2.2%) to Buy from Neutral, as well as HollyFrontier (HFC +2%) to Neutral from Sell on valuation, but downgrades Alon USA Partners (ALDW -0.8%) to Neutral on the belief that Midland-Cushing differentials have peaked.
- Valero Energy (VLO +1.7%) and Western Refining (WNR +2%) remain the firm's favorites - VLO because it sees “crude-on-crude competition on the U.S. Gulf Coast resulting in greater feedstock discounts at Valero’s high conversion refineries," and WNR for its restructuring potential.
Jul. 7, 2014, 3:27 PM
- Western Refining (WNR +1.9%) is upgraded to Buy from Neutral with a $55 price target, raised from $43, at Citigroup, which sees a potential restructuring helping to unlock shareholder value.
- Citi believes WNR could restructure into a holding company with the limited and general partnership interests in Northern Tier Energy (NTI -0.9%) and Western Refining Logistics (WNRL -1.4%), which would allow WNR to generate a ~10% free cash flow yield over its forecast period.
Jun. 30, 2014, 10:47 AM
- Last week's surprise move by the U.S. government to allow the export of condensate products hit the refining sector hard, but the analyst team at Cowen remains bullish on top refiners, believing actual crude exports are highly unlikely and there is no change to the spirit of the law.
- Cowen remains bullish for the longer term and sees potential for a meaningful feedstock advantage for U.S. refiners emerging later this year, with U.S. crude production inflecting at 9M bbl/day and Gulf Coast imports baselining at 2.8M-3M bbl/day.
- Cowen's five favorite refiners are MPC, PBF, TSO, VLO, WNR; the condensate export issue took a toll on the stocks, and investors can buy some of them as much as 15% cheaper than two weeks ago.
Jun. 27, 2014, 4:53 PM
- All U.S. crude oil that is processed by a distillation tower - not just condensate - is exempt from the crude export ban, potentially widening the amount of petroleum U.S. producers can send to markets abroad, Reuters reports, citing U.S. government and industry sources.
- By focusing on how the oil is treated rather than what it is, this week's ruling allowing two companies that produce condensate to export the oil if it is processed by a distillation tower appears to open an option for companies that produce traditional crude to get around the export ban by lightly boiling their own oil, the report says.
- The new interpretation of the ruling will add to the speculation over how much of the U.S. shale oil boom might reach overseas markets.
- ETFs: USO, OIL, XLE, UCO, ERX, VDE, OIH, SCO, ERY, DIG, BNO, DTO, DBO, DUG, IYE, CRUD, USL, PXJ, FENY, UWTI, DWTI, DNO, RYE, SZO, FXN, OLO, DDG, OLEM.
- Domestic oil stocks: OAS, NOG, KOG, CLR, WLL, EOX, SM, SFY, PVA, GST, SN, CRK, BBG.
- Global majors: XOM, CVX, BP, RDS.A, RDS.B.
- Refiners: VLO, HFC, MPC, TSO, WNR, ALJ, PSX, PBF, DK, NTI, ALDW, CVI.
Jun. 27, 2014, 3:59 PM
- Refiners are lower again today after a slight bounce yesterday, as investors resume wariness over the U.S. government's move to allow exports of ultra-light crude oil.
- But Credit Suisse analysts say there’s more to the drop in refiners: U.S. refining is still linked to the world, there is overcapacity in global refining and the risk premium in the oil price is rising, and this week the market was reminded that the lightest barrels (condensate) in U.S. production can be exported (via distillation towers) at relatively low cost, creating more runway for black oil.
- The firm downgrades Holly Frontier (HFC -2.5%), and says Tesoro (TSO -0.7%) needs to beat convincingly in 2Q earnings... to drive further relative upside”; however, Marathon Petroleum (MPC -1.7%) "is becoming significantly more interesting after underperforming,” while it sees most potential in niche refiners such as Delek US (DK -3.4%) and Western Refining (WNR -0.9%).
- Also: VLO -1.1%, ALJ -2.5%, PSX -0.7%, PBF -3.5%, CVI +0.4%, CLMT +1.5%.
Jun. 26, 2014, 3:33 PM
- Most refiners recover part of yesterday's big drop, which some say was an overreaction to the U.S. government move to allow two oil companies to export ultra-light crude oil for the first time: TSO +2.8%, VLO +2%, PSX +1%, CVI +0.7%, CLMT +0.7%, WNR +0.6%, MPC +0.2%, ALJ -1%, PBF -0.6%, HFC -0.3%.
- The death of U.S. refiners is "greatly exaggerated," Cowen analysts say: "The spirit of the law - that hydrocarbon liquids produced in the U.S. must be processed in the U.S. - remains in place, and permits for condensate exports do not constitute precedent for crude oil... We continue to see potential for a meaningful feedstock advantage for U.S. refiners emerging later in 2014."
- Ned Davis Research, however, thinks the news is "potentially game changing for refiners," since it signals a change in the government’s position on oil exports more broadly and noting that it is the export ban, plus inadequate pipeline infrastructure, that has fed recent refiner outperformance.
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