Fri, Aug. 28, 6:38 PM
- The silver lining for integrated energy companies during the oil price rout - refining - shows signs of fading, as analysts and executives eye prospects for lower refining profits in H2 of this year as summer gasoline consumption eases, WSJ reports.
- Jefferies analysts warn that “signs of weakness have appeared more broadly" for refiners, citing average global refining margins that contracted 15% last week.
- Refining profits are not expected to crash as oil prices have, and major oil firms’ downstream businesses likely will continue to perform reasonably well as weak oil prices and rising consumption aid their performance.
- But headwinds are building, especially in Europe: Stocks of gasoline and diesel are near record highs in northwest Europe, according to the IEA, and European refiners that still suffer from overcapacity in many markets are now facing new competitors.
- The prospect of reduced refining profits portends just how bad life could get for major companies such as Exxon Mobil (NYSE:XOM), Royal Dutch Shell (RDS.A, RDS.B), BP and Total (NYSE:TOT) as they cope with the continuing plunge in crude oil prices, according to the report.
Fri, Aug. 28, 12:50 PM
- Exxon Mobil (XOM +1.2%) and Indonesian state-owned oil and gas company Pertamina plan to spend $2.05B jointly to develop the Tiung Biru and Jambaran gas fields, the head of Indonesia's upstream regulator says.
- The Jambaran field is part of Cepu block where XOM and Pertamina each hold 45%, with local governments holding the remaining 10%, while Tiung Biru is outside the Cepu block and 100% owned by Pertamina.
- The fields contain ~1.2T cf of combined recoverable gas and 18.6M barrels of condensate; the Cepu block, which straddles the border between Central Java and East Java, is estimated to contain 600M barrels of oil.
Fri, Aug. 28, 8:22 AM
- Exxon Mobil (NYSE:XOM) and BHP Billiton (NYSE:BHP) say they plan to spend A$400M ($287M) to replace a pipeline that transports crude oil and condensate between two of their sites in Australia's Victoria state.
- The two companies, through their 50-50 joint venture in the Gippsland Basin, will replace a 116-mile pipeline, with construction expected to begin later this year, pending regulatory approval.
Tue, Aug. 25, 7:05 PM
- Dividends of oil E&P companies such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), Anadarko Petroleum (NYSE:APC) and Occidental Petroleum (NYSE:OXY) are “mostly safe" in the shaky commodity landscape despite Chesapeake Energy’s decision to suspend its payout, says Raymond James' Pavel Molchanov and his analyst team.
- Although the firm projects only one company - APC - out of 18 to fully cover the 2016 dividend payout out of cash flow at strip pricing, dividends likely will not be cut since "all the companies that have a healthy balance sheet today should still have a healthy balance sheet at the end of 2016, even if they maintain the current dividend."
- The only dividend payers with a current net debt/cap ratio above 50% are DNR and CRC - a red flag, but both companies’ dividend payouts represent quite small amounts of outlays relative to cash flow, the firm says, adding that the only companies whose leverage is likely to be lower at year-end 2016 than it was in Q2 2015 are HES and QEP.
- Among large-caps, the highest current leverage is at APC, at 45%, and NBL, at 38%, while the companies with the lowest current leverage are CVX, OXY and XOM, all at 15% or lower.
Tue, Aug. 25, 3:33 PM
- A New Jersey judge approves the $225M settlement between New Jersey Gov. Christie's administration and Exxon Mobil (XOM +2.1%) over dozens of polluted sites including the company’s refinery and petrochemical plants in Bayonne and Linden.
- The judge rules that while the deal is much less than the $8.9B New Jersey originally sought, it is a "reasonable compromise" considering "substantial litigation risks" faced by the state in the case.
- Democrat lawmakers and environmental groups have called the settlement inadequate, and the Sierra Club says it expects to appeal the judge's approval of the settlement.
Tue, Aug. 25, 10:20 AM
- Alaska Gov. Walker says he plans to recommend that the state buy out TransCanada's (TRP +2.3%) position in the major liquefied natural gas project Alaska is pursuing.
- Walker estimates buyout costs would total ~$100M.
- The other partners in the project are Exxon Mobil (NYSE:XOM), BP, ConocoPhillips (NYSE:COP) and the Alaska Gasline Development Corp., which would hold the state's interest in liquefaction facilities.
- No decision has been made yet on whether to build the project, which is in a phase of preliminary engineering and design.
Mon, Aug. 24, 3:27 PM
- Chevron (CVX -5%) is upgraded to Neutral from Underperform with a $100 price target at BofA Merrill, which expects CVX’s net debt to stabilize with major projects beginning to contribute in 2017 and a drop in spending to maintenance levels.
- The firm says it has been concerned throughout the past year that CVX's cash burn would dilute equity value through peak spending at the same time that oil prices collapsed, but it no longer sees a risk, as CVX is discounting below strip prices but with a dividend.
- CVX requires sustained spending of $15B-$16B to hold production flat for an extended period,” BofA's Doug Leggate explains, adding that at $45-$50 oil, cash flow by 2017 would be closer to $29B so that the dividend is "more than covered" by cash flow in an ex-growth environment.
- ConocoPhillips (COP -6.2%) is the firm's top pick among the big oils after the stock has been hit hard, which the analyst thinks reflected unwarranted concerns regarding COP's dividend; at current strip prices, Leggate believes COP's upside is second only to Buy-rated Exxon Mobil (XOM -5.3%).
- However, the firm downgrades HollyFrontier (HFC -3.5%), Marathon Petroleum (MPC -7.2%) and Valero (VLO -4.7%) to Underperform and cuts Continental Resources (CLR -10.1%), Marathon Oil (MRO -8.4%), Noble Energy (NBL -5.4%) and Whiting Petroleum (WLL -8%) to Neutral.
Fri, Aug. 21, 1:31 PM
- WTI crude dips below $40 for the first time since 2009 on major concerns over demand from China and a Baker Hughes report indicating producers increased their rig count for the 5th straight week.
- WTI crude traded as low as $39.86.
- Oil majors are down slightly more than broad market averages on the day. Notable decliners include Exxon Mobil (NYSE:XOM) -1.4%, Chevron (NYSE:CVX) -2.5%, Royal Dutch Shell (NYSE:RDS.A) -2.7%, Phillips 66 (NYSE:PSX) -4.5%, and ConocoPhillips -2.1%.
- Related ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
Tue, Aug. 18, 11:47 AM
- Having been "multi-year cautious" on Big Oil, Citigroup's Alastair Syme is getting more bullish, believing current valuations are giving very little chance to the restoration of the group's long-term profitability to long-run averages.
- He notes the sector price-to-book ratio of 1.2x is now below the Q1 2009 and Q4 1998 troughs, even with books marked to reflect world oil in the $50-$70 range.
- "This will be a long process, but the repair (cost-cutting, better capital allocation) has now started," says Syme, recommending investors at least get to benchmark weight in the group. His favored ways to play are ConocoPhillips (NYSE:COP), Statoil (NYSE:STO), Total (NYSE:TOT), and BG Group (OTCQX:BRGYY) as a cheaper way to get into Shell (NYSE:RDS.A).
- Notably not on the list are ExxonMobil (NYSE:XOM) thanks to its valuation premium and low growth (through the strong balance sheet is worth a look), and Chevron (NYSE:CVX) - "slow to adjust to a lower commodity world."
- Previously: BAML: Capitulation in emerging markets, commodities, and energy-related stocks (Aug. 18)
Fri, Aug. 14, 5:08 PM
- Refineries running full throttle likely have delayed making much-needed repairs, and the strain is starting to show, as evidenced by a spate of refinery shutdowns across the U.S.
- The recent shutdown of the BP plant in Whiting, Ind., the largest refinery in the Midwest, is just the latest example of unplanned outages that have plagued U.S. refineries this year, including at Exxon's (NYSE:XOM) refinery in Torrance, Calif., Marathon Petroleum's (NYSE:MPC) refinery in Robinson, Ill., and Shell's (RDS.A, RDS.B) Deer Park jet/diesel unit.
- When summer driving season ends and refiners prepare to shut down for routine fall maintenance, RBN analyst Sandy Fielden says more capacity may go offline this year than usual as refiners catch up on repairs that were put on the back burner while plants ran at a breakneck pace.
- The expected heavier turnaround season is bad news for oil prices, Fielden says: With several refineries shutting down for weeks at a time, crude stockpiles will start growing again in the fall since the oil has nowhere to go, with inventories at the Cushing, Okla., hub possibly reaching record levels.
- ETFs: USO, OIL, UCO, UWTI, SCO, BNO, DBO, DWTI, DTO, USL, DNO, OLO, SZO, OLEM
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
Thu, Aug. 13, 6:32 PM
- Exxon Mobil (NYSE:XOM) reportedly could ramp up gasoline production as soon as late September at its damaged Torrance, Calif. refinery if it can gain regulatory approval.
- XOM filed an application yesterday to set a Sept. 2 hearing on permission to restart an old electrostatic precipitator while equipment damaged in the blast is still being repaired, says an official at the South Coast Air Quality Management District regulating body in California; if XOM gets permission to install the old ESP, the refinery would have permission to operate at 65% capacity because the older equipment emits more carbon and pollution.
- The official says it may take several more months to repair the ESP that exploded in February from a pressure buildup.
- Earlier: Exxon fined following probe into California refinery explosion
Thu, Aug. 13, 5:38 PM
- Exxon Mobil (NYSE:XOM) is fined more than $560K for workplace safety and health violations following an investigation into February's explosion at its Torrance, Calif., refinery that injured four workers.
- California’s Division of Occupational Safety and Health, the state’s workplace safety regulator, issued 19 citations to XOM, 18 of which were classified as serious, and said the company knew about and ignored hazardous conditions at the refinery.
- The refinery is critical to producing California's specialized gasoline blend designed to meet the state's tough air pollution regulations, and its fluid catalytic cracker has been shut down since the incident, contributing to high pump prices in the state.
Wed, Aug. 12, 3:58 PM
- A federal judge approves Exxon Mobil's (XOM +1.7%) $5M settlement of charges it violated the federal Clean Water Act and state environmental laws in connection with a 2013 oil spill in Arkansas.
- The judge says the agreement complies with the Clean Water Act and is fair to the company and the governments, and rejects a request by the water utility that serves Little Rock to have XOM move another portion of the pipeline that runs beneath a major reservoir.
- The rupture of XOM's Pegasus pipeline led to a March 2013 spill that caused ~3,190 barrels of oil to flow through Mayflower, Ark., and nearby waterways.
Tue, Aug. 11, 10:59 AM
- Many oil companies have been hit hard by low crude prices, but Chevron (CVX -2.4%) also is battling its own expansion ambitions, and some analysts say CVX should abandon its goal of tapping 3.1M bbl/day of oil and gas by 2017, WSJ's Daniel Gilbert writes.
- CVX’s stock price has underperformed Exxon Mobil (XOM -1.7%) and Royal Dutch Shell (RDS.A -0.6%) over the past year after topping them during the previous five years and betting more than them on huge energy projects such as the $54B Gorgon natural gas export plant in Australia.
- "The most important thing to preserve is value,” said IHS Energy's Lysle Brinker, and "if it means they have to sell some of their crown jewels, or small slivers of them, to raise billions of dollars and help maintain the balance sheet and the dividend, that’s what they should do."
Thu, Aug. 6, 1:09 PM
- Exxon Mobil (XOM +0.9%) says it has struck a pair of deals to obtain horizontal development rights in 48K acres in the core of the Midland basin, as it continues to grow its position in a prolific area of the Permian basin through its shale-focused XTO subsidiary.
- The agreements with undisclosed sellers include an acquisition and farm-in adjoining XOM’s existing acreage position in Martin and Midland counties, Tex., providing rights to all intervals within the basin; XTO will operate the acreage.
- XTO is currently operating 11 horizontal and four vertical rigs across its Permian leasehold of 1.5M-plus net acres, with net production of ~115K boe/day.
XOM vs. ETF Alternatives
Exxon Mobil Corporation is engaged in energy, involving exploration for, and production of, crude oil and natural gas, manufacture of petroleum products and transportation and sale of crude oil, natural gas and petroleum products.
Other News & PR