Dec. 12, 2014, 11:55 AM
- The timing couldn't be worse for Mexico in lifting its 75 years of state monopoly in oil production, as plunging oil prices dim the chances that U.S. producers will move in with their fracking and horizontal drilling capabilities.
- Mexican offshore assets have drawn interest from oil majors from Exxon (NYSE:XOM) to Shell (RDS.A, RDS.B), but the question is how quickly producers will be willing to move into the higher-risk, more costly prospects in an environment of reduced investment budgets.
- Mexico’s oil regulator this week approved preliminary rules for the first round of bidding on 14 shallow-water oil blocks in July, two months behind the original timetable; the deputy energy minister said bidding terms may be changed for the Chicontepec formation, which holds more than 17B boe.
Dec. 11, 2014, 10:45 AM
- Investors in giant gas export terminals from Australia to Canada are facing the prospect of losing nearly $250B plowed into the projects during the past seven years, as weaker oil prices threaten to wipe out returns.
- Oil-linked pricing means LNG producers stand to get much less revenue than expected on delivery of their first shipments, and oil prices have fallen so low that U.S. shale gas producers with plans to export the usually cheaper fuel to Asia suddenly find themselves facing a much tougher competitive environment.
- LNG prices in Asia have sunk below $10/MMBtu, while most Australian LNG projects would need to sell the commodity for at least $12-$14 to break even; for example, the breakeven point for the $54B Gorgon project under construction by Chevron (NYSE:CVX), Exxon (NYSE:XOM) and Shell (RDS.A, RDS.B), is ~$17.7/MMBtu.
- Other relevant tickers: LNG, TOT, COP, CEO, FCG, GASL, OTCPK:BRGXF, OTCQX:BRGYY, OTCPK:STOSF
Dec. 10, 2014, 12:58 PM
- Energy stocks are slammed across the board as oil prices take another nosedive (I, II), with the losses heaviest on shares of small, U.S.-based oil and gas producers.
- “Financial leverage is being thrown out the window, and everything else is being purged as well,” says Simmons analyst Bill Herbert, who adds that cuts to production budgets in the coming year likely will mean more pain for oil service companies.
- Among the hardest-hit shares: TPLM -15.2%, CRK -12.4%, GDP -11.9%, NOG -9.5%, AREX -8.6%.
- Investors have been less quick to dump shares of integrated oil companies, but today they have been smacked too: XOM -2.8%, CVX -2.9%, COP -2.3%, BP -2%, RDS.A -2.2%, TOT -2.3%.
- Today's worst performers on the S&P 500 include OKE -8.2%, DNR -7.4%, NE -5.6%.
- Service companies also are down: SLB -2.6%, HAL -2.7%, WFT -6.6%, BHI -2%.
- ETFs: XLE, ERX, VDE, OIH, ERY, DIG, DUG, IYE, XES, IEZ, PXI, FENY, PXJ, RYE, FXN, DDG
Dec. 10, 2014, 10:37 AM
- Sinopec (SNP -1.4%) reportedly wants to sell some long-term liquefied natural gas import deals as a slowing Chinese economy and cheaper retail gas makes LNG imports unprofitable, signalling the end of a five-year boom fueled by rising Chinese demand.
- Reuters reports that SNP is planning to offload LNG from new export plants in Australia and potentially Papua New Guinea to BP, amid growing unease over the scale of an expansion that has seen the construction of 11 LNG import terminals since 2006 with plans for 25 more.
- SNP also may sell excess volumes coming from its stake in Exxon's (NYSE:XOM) Papua New Guinea LNG, in which it invested in 2009 when LNG prices were low but Chinese demand was expected to grow for decades to come.
Dec. 9, 2014, 6:20 PM
- North Dakota issues strict new oil standards that will require energy companies operating in the state to strip explosive gases from crude oil that shows a high vapor pressure reading, in an effort to make crude-by-rail transport safer.
- Under the new mandate, North Dakota oil can’t be transported unless it has a vapor pressure reading of 13.7 lbs./sq. in. or lower.
- The rule, which will take effect on April 1, 2015, is the first major move by regulators to address the role of gaseous, volatile crude oil in railroad accidents which have been linked to several fiery explosions, including one last year in Quebec that killed 47 people.
- Top Bakken producers: CLR, EOG, KOG, WLL, HES, XOM, OAS, NOG, EOX, MRO.
Dec. 9, 2014, 2:19 PM
- Global energy demand will rise 35% from 2010 to 2040, and renewable energy will be the fastest growing major energy source through 2040, Exxon Mobil (XOM -0.4%) says in its annual outlook on global energy.
- XOM sees renewable energies such as wind, solar and biofuels growing 6%/year on average through 2040, at which point they will make up ~4% of global energy demand, while emissions in the developed world surge 50%.
- North America is set to become a net exporter of oil and natural gas, and its production of unconventional will nearly triple by 2040, surpassing the combined output of Russia and the Caspian region as the largest gas-producing area, the report says.
Dec. 9, 2014, 10:58 AM
- ConocoPhillips' (COP +0.1%) move to cut next year's capital spending by 20%, including less on some large projects that are nearing completion, is a clear sign that big energy companies are taking a second look at their mega-projects costing billions of dollars as they face the fallout of declining oil prices, WSJ reports.
- Big companies seek out big projects in normal times, since they have the engineering expertise to develop fields beyond the grasp of smaller firms and need to keep adding reserves to offset production declines in mature areas, but oil at $63/bbl is not part of the equation; Shell (RDS.A +0.1%) says a new project must be able to break even at $70, and BP (BP -0.7%) says it uses a long-term planning price of ~$80 when considering new investments.
- Bernstein Research analyst Iain Pyle says companies will have to review big investments; if prices fail to rebound soon, “what we’re going to see is projects getting canceled.”
- Also: XOM -0.1%, CVX +0.2%.
Dec. 8, 2014, 12:30 PM
- M&A likely will become a bigger theme in the energy exploration and production sector in 2015, and Exxon Mobil (XOM -2%) is among companies rumored to be headed for a deal.
- XOM is said to be interested in BG Group (OTCPK:BRGXF, OTCQX:BRGYY); with XOM's long-term growth plans in Russia at risk in today’s environment, the company could use some new, exciting opportunities, and BG’s Brazilian assets or an E&P company’s U.S. shale prospects would fit the bill, WSJ's Liam Denning says.
- XOM may be spooked by its 2010 deal for XTO Energy, which helped cut its annual return on capital employed to 18% last year from 34% in 2008; BG's return on capital last year was ~10%.
- With XTO’s legacy still apparent, Denning says XOM needs a clear bargain price to sell a strategic deal to investors but the dismal outlook for oil prices could make it easier to do as next year unfolds.
- Earlier: Low price oil could lead to big mergers
Dec. 5, 2014, 6:28 PM
- The rout in oil prices has knocked $46M off the potential compensation for Nabors Industries (NYSE:NBR) CEO Anthony Petrello, the highest-paid oil executive in the U.S., whose future pay passed $100M in July but has fallen to $58M as shares in the company plunged 57% during the last five months.
- “The land rig sector, of which Nabors is the biggest, is facing some severe headwinds on the earnings and cash flow they will make," says Credit Suisse analyst James Wicklund.
- Petrello’s losses are almost twice as much as those of the next four highest-paid U.S. oil CEOs combined; Exxon’s (NYSE:XOM) Rex Tillerson, Conoco's (NYSE:COP) Ryan Lance, Schlumberger’s (NYSE:SLB) Paal Kibsgaard and Chevron's (NYSE:CVX) John Watson lost an average 19%, or ~$24M, of the value of their compensation since July 3, according to Bloomberg data.
Dec. 5, 2014, 5:38 PM
- The Eagle Ford shale formation in south Texas produced its billionth barrel of oil some time last month, according to analysts at research firm Wood Mackenzie.
- Eagle Ford now accounts for 16% of total U.S. oil production, and the firm forecasts E&P spending of $30.8B in the region next year, ~22% of the total $139.3B expected in U.S. onshore spending.
- Eagle Ford is widely considered the most profitable U.S. shale field, and many analysts speculate the break-even price for production to remain profitable is ~$50/bbl in much of the play.
- Top Eagle Ford producers include EOG, CHK, COP, MRO, BHP, APC, APA, BP, COG, CRZO, CWEI, CRK, XOM, GDP, HES, MTDR, MUR, NFX, PVA, PXD, ROSE, RDS.A, RDS.B, SN, SM, STO, SFY, TLM, ZAZA
Dec. 5, 2014, 5:07 AM
- "Our recent visit to Oil Search's (OTCPK:OISHF) PNG assets further underlined our positive view on the company. Performance to date at the PNG LNG project has exceeded all expectations, with the focus increasingly shifting to expansion opportunities," firm says.
- "The project continues to exceed our expectations, achieving world class utilization rates (>98%) within the first 9 months. With debottlenecking studies underway, and a 6% capacity increase already achieved in the upstream, we see potential for further value and earnings accretion at the base
project in the near term."
- Oil Search's JV partner in the PNG LNG project is ExxonMobil (NYSE:XOM).
- Price target of A$10.20 vs. current A$7.68. Implied upside of 32.8%.
Dec. 4, 2014, 3:22 PM
- There's an increasing rate of reports of long lines at convenience store outlets across the U.S. as consumers rush to find sub-$2.50 gas.
- C-store chains are pricing aggressively in order to increase traffic into stores where margins tend to be higher.
- The sector has been identified by retail analysts as likely to outperform in Q4 due to the spending boost provided by lower gas prices (you could ski down the chart of retail gas prices over the last three months). Some forecast in-store spending will pop.
- Convenience store operators in the mix: Circle K (OTCPK:ANCUF), 7-11, Pantry (NASDAQ:PTRY), BP Connect (NYSE:BP), On the Run (NYSE:XOM), Speedway America (NYSE:MPC), Kwik Shop (NYSE:KR), Caseys General Stores (NASDAQ:CASY), and Qwiktrip.
- Related: Let's talk $2 gas (Nov. 29 2014), Sub-$2 per gallon spotted as pump prices fall to 4-year low (Dec. 03 2014)
Dec. 3, 2014, 11:32 AM
- The energy sector (XLE +1.5%) continues its momentum from yesterday, leading the way again as the best performing sector in early trading with crude oil rising 1.2% so far today and reports that U.S. well permits fell 40% last month.
- Top performers include Clayton Williams (CWEI +7.7%), Transocean Partners (RIGP +10.6%), Gaslog (GLOG +13.8%) and Energy XXI (EXXI +15.7%).
- Other leading energy names are showing stronger recoveries as they clear last Friday's bearish gap zone: XOM +0.2%, CVX +0.4%, COP +2.5%, OXY +2.5%, DVN +2.9%, EOG +2.5%, HES +2.2%, MUR +1.5%, NBL +2.3%, PXD +4.2%, SU +3%, CNQ +1.9%.
- Some analysts warn that the worst may not be over, however, as much of the advance is being driven by investors repurchasing ETFs they used to make short bets; investors also could opt to sell oil shares at a loss in coming weeks to reduce tax burdens.
Dec. 3, 2014, 10:15 AM
- Exxon Mobil (XOM +0.7%) can weather the downturn in oil prices even if prices sink to $40/bbl, CEO and Chairman Rex Tillerson tells CNBC.
- XOM's large projects in areas such as liquefied natural gas and deepwater drilling are decade-long investments that have been tested to perform across a broad range of prices as low as $40 to as high as $120, Tillerson says.
- The CEO says he is comfortable with XOM's North American exposure, but that lower oil prices will lead to a "sorting out" of smaller unconventional players in the U.S.
Dec. 3, 2014, 8:24 AM
- Imperial Oil (NYSEMKT:IMO) says it has restarted production at the Kearl oil sands mine in Alberta to pre-shutdown levels after it halted operations last month because of a mechanical problem.
- Exxon Mobil's (NYSE:XOM) Canadian subsidiary suspended production after detecting a vibration issue in the mine’s core ore-crushing machinery used to extract heavy oil; Kearl had averaged 92K bl/day of crude in Q3 prior to the halt.
- Kearl amounts to ~50% of IMO’s total 3.6B boe of proved reserves, and is expected to ultimately produce up to 4.6B barrels of oil over the next 40 years.
Dec. 3, 2014, 7:58 AM
- The plunge in oil prices has erased more than half of Tullow Oil’s (OTCPK:TUWLF, OTCPK:TUWOY) market value since June, and Bloomberg reports that management is now concerned the company could be vulnerable to a takeover approach by a larger oil and gas producer.
- Tullow offers “a significant operating position that would not look out of place in the portfolio of a larger company,” says Societe Generale's David Mirzai, adding that the drop in oil prices “would certainly make it a lot easier to win the investor base around than in previous years.”
- Total (NYSE:TOT), Cnooc (NYSE:CEO) and Exxon (NYSE:XOM) would be among logical bidders since they’ve expressed interest in African assets before, BMO says, adding that a buyer would not need to contend with obstacles such as a poison pill or dual-class stock structure.
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.
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