Tue, Apr. 28, 3:28 PM
- BP (BP +1%) and Total (TOT +2.3%) can thank much of their higher than expected profits in the latest quarter to steep increases in profits from refining, as the big slump in oil prices has meant refineries can process much cheaper crude and generate higher profits on fuels such as diesel or gasoline.
- As a result, BP's underlying pre-tax replacement cost profit from downstream businesses in Q1 more than doubled to $2.2B, while pre-tax profits from oil and gas production, or upstream, collapsed to $600M from $4.4B a year ago.
- At TOT, Q1's adjusted net operating income from refining and chemicals more than tripled Y/Y to $1.1B, almost matching contributions from upstream of $1.36B, which fell 56%.
- Global majors with high downstream exposure such as Shell (RDS.A, RDS.B) and Exxon (NYSE:XOM) should benefit from the strong refining environment, which BP expects to last into Q2, according to Edison Investment Research.
- Despite the plunge in upstream earnings, analysts noted that both BP and TOT enjoyed strong increases in production after years of unimpressive growth, meaning earnings should recover quickly as soon as oil prices rise.
Mon, Apr. 27, 9:56 AM
- Statoil (STO +1.3%) must move ahead with the delayed expansion of the Snorre oil and gas field in the North Sea because it is a time-critical investment, Norway's energy minister says.
- STO last month delayed a decision on the $4B Snorre upgrade, which could yield an additional 300M barrels of oil, saying margins on the project were too low, particularly after the recent drop in crude prices; STO expects to decide in late 2016 whether to move ahead with building a new platform and extending the field's lifetime to 2040.
- Exxon Mobil (NYSE:XOM) owns a 17.4% share of Snorre.
Mon, Apr. 27, 7:44 AM
- In his "We Are Full of Bull" note this morning, Morgan Stanley's Adam Parker says the economy will accelerate in Q2 and Q3, bringing stocks along for the ride. If investors are gun-shy thanks to record levels for the averages, Parker suggests looking for names with decent long-term earnings forecasts trading at a discount to the market.
- The ten largest U.S. stocks trading at a discount, but with above-average expected growth rates: Apple (NASDAQ:AAPL), Citigroup (NYSE:C), Gilead (NASDAQ:GILD), Union Pacific (NYSE:UNP), Actavis (NYSE:ACT), Twenty-First Century Fox (NASDAQ:FOXA), Time Warner (NYSE:TWX), Ford (NYSE:F), BlackRock (NYSE:BLK).
- Conversely, one might want to avoid those stocks selling for substantial premiums. The ten largest stocks trading at a premium to the market while growing at a below-average rate: Exxon (NYSE:XOM), Procter & Gamble (NYSE:PG), Chevron (NYSE:CVX), Coca-Cola (NYSE:KO), Pepsico (NYSE:PEP), Schlumberger (NYSE:SLB), MMM, McDonald's (NYSE:MCD), UPS, Nike (NYSE:NKE).
- Source: Bloomberg
Sat, Apr. 25, 7:25 AM
- Texas regulators have ordered Exxon Mobil's (NYSE:XOM) XTO Energy subsidiary and another company to prove their wells near Fort Worth are not causing earthquakes.
- On Friday the Texas Railroad Commission, which regulates the state’s oil and gas industry, told both companies they need to appear at hearings scheduled for June to justify why their wells should not be shut down.
- The action follows a Southern Methodist University study released this week that linked a rash of small earthquakes in the area to nearby natural gas wells and the injection of wastewater deep underground.
- Also this week, the U.S. Geological Survey reported that an increase in seismic activity in Texas, Oklahoma and six other states "very likely" was caused by wastewater injection from oil and gas operations.
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, DIG, DUG, XES, IYE, IEO, IEZ, FENY, PXE, PXJ, RYE, FXN, DDG
Wed, Apr. 22, 12:57 PM
- Exxon Mobil (XOM +0.6%) agrees to pay more than $5M as part of a settlement for the 2013 rupture of a pipeline in Arkansas that was carrying oil sands from Canada.
- XOM’s Pegasus pipeline failed in March 2013, spewing 134K gallons of oil in a suburban housing development near Mayflower, Ark.
- XOM will pay $3.19M in federal civil penalties and must comply with a series of government requirements, including placing spill-response equipment in three places along the pipeline route before it can reopen; XOM also must pay state and local fines of $1.88M.
Tue, Apr. 21, 6:24 PM
- BP CEO Bob Dudley says he does not expect a wave of mergers in the energy industry unless oil prices stay low for long, downplaying talk that Shell's takeover of BG Group could trigger a wave of multibillion-dollar deals like those that reshaped the industry in the 1990s.
- It probably will take “quite a bit of time to work off” the high levels of U.S. crude inventories at Cushing, Okla., and other oil hubs, Dudley told the IHS CERAWeek energy conference, adding that if sanctions against Iran were lifted, it would not take long to add 500K bbl/day of oil to the global market.
- Dudley’s remarks could suggest that Exxon Mobil (NYSE:XOM), which has been speculated to be considering a move, would have difficulty persuading the BP board to accept an agreed offer; BP today denied a Bloomberg report that it had stepped up internal reviews of takeover scenarios following the Shell-BG deal.
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, FCG, DIG, GASL, DUG, XES, IYE, IEO, IEZ, FENY, PXE, PXJ, RYE, FXN, DDG
Tue, Apr. 21, 2:15 PM
- Exxon Mobil's (XOM -0.4%) Rex Tillerson predicts oil prices will remain low over the next few years, but says the energy industry is at a “turning point” and will show its resiliency in the current down cycle.
- The CEO says in the keynote address at the IHS Energy CERAWeek conference in Houston that the oil industry could behave the same way U.S. shale gas did, when a significant decline in rig activity in prior years did not result in a drop in production capacity, thanks in part to improvements in efficiency.
- Government regulators need to give oil companies the freedom to innovate to enable “safer, more secure and more efficient production,” Tillerson says, citing government oversight of fracking, a technique he says has proven effective and safe in the most delicate ecosystems.
- Tillerson says the government should open up the U.S. Arctic to oil production, approve infrastructure projects such as the Keystone XL pipeline, and lift the decades-old ban on crude oil exports from the U.S.; the CEO says such policies would lead to more investment, which in turn would lead to more advanced technology.
- ETFs: XLE, VDE, ERX, OIH, XOP, ERY, FCG, DIG, GASL, DUG, XES, IYE, IEO, IEZ, FENY, PXE, PXJ, RYE, FXN, DDG
Tue, Apr. 21, 10:15 AM
- BP execs reportedly are concerned the company is vulnerable to a takeover bid, and they are said to have stepped up internal reviews of takeover scenarios and war-gamed defense strategies with advisers from firms including Morgan Stanley.
- While a move for BP may seem unlikely because of still-unknown legal liabilities from the 2010 Gulf of Mexico oil spill, there’s at least one good reason for BP's paranoia: Before ruling it out by going for BG, Royal Dutch Shell was said to have taken a hard look at buying BP.
- Even a slimmed-down BP still has plenty to attract potential acquirers, including strong deepwater prospects in Angola and the Gulf of Mexico, a refining business that has outperformed peers, and an industry-leading trading outfit.
- BP views Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) as the only realistic predators remaining, according to the report.
Mon, Apr. 20, 8:58 AM
- The U.A.E.'s national oil company says it is still in talks with major global oil companies about concessions at its largest fields and has not set a deadline for deciding on the awards.
- Total (NYSE:TOT) is the only company to be awarded a stake in Abu Dhabi National Oil's new venture so far, agreeing in February to pay a $2.2B signing bonus for a 10% share in the onshore concession.
- TOT, along with BP, Shell (RDS.A, RDS.B) and Exxon (NYSE:XOM) were all partners in a previous concession that operated the same onshore fields in Abu Dhabi for 75 years until it expired in January 2014; XOM balked at the new terms and decided not to seek to renew its concession.
- Abu Dhabi plans to boost capacity for producing crude oil to 3.5M bbl/day by 2017 from ~3M bbl/day currently.
Fri, Apr. 17, 5:49 PM
- Nearly 60 institutional investors ask the SEC to require oil and gas companies to publish a detail analysis of the risks of climate change to their business models, much in the way companies already disclose information on factors outside their control such as commodity and currency price swings.
- Some oil companies already provide general information about how much they could lose if climate change worsens and regulation or cultural shifts reduce consumption, but the new request seeks more details about how they reached their conclusions.
- Exxon Mobil (NYSE:XOM) said last year climate change poses little risk to its reserves but agreed to start providing some information about how it arrived at such a conclusion.
- The action comes the day after Calpers sponsored a successful shareholder resolution at BP's annual meeting that requires the company to begin stress-testing its operations against climate change risks.
Fri, Apr. 17, 2:29 PM
- Anadarko Petroleum (APC -1.4%) is considering selling its multi-billion dollar stake in Mozambique's gas reserves, with Exxon Mobil (XOM -1.5%) and Qatar Petroleum showing interest, Reuters reports.
- APC reportedly could sell up to its full 26.5% stake in Mozambique's offshore Area 1 license in the Rovuma Basin; Area 1 holds more than 75T cf of recoverable gas, enough to meet at least four years of total European gas demand.
- The last Area 1 sale - a 10% stake that went for $2.64B in 2013 to India's ONGC - was seen as overpriced, and oil and gas prices have since plunged, making it difficult to value APC's asset.
- XOM could be the front-runner after Shell dropped out following its planned merger with BG Group, which will give it access to large gas assets in neighboring Tanzania.
Wed, Apr. 15, 3:15 PM
- May crude oil futures rose 6% today to $56.25/bbl, the highest settlement of the year, enjoying a boost from a higher global oil demand forecast from the International Energy Agency and another rise in U.S. crude supplies.
- The weekly inventory report showed a lower-than-expected 1.294M-barrel build in inventories, enough to send U.S. crude oil inventories to 483.7M barrels for their highest level at this time of year in at least 80 years.
- The narrative that oil prices may have found a bottom is beginning to pick up, which is helping drive buying interest in energy stocks; among today's gainers are XOM +1.9%, CVX +1.6%, COP +1.6%, BP +1.4%, RDS.A +2.9%, HES +4.5%, SLB +2.9%, HAL +3.9%.
- ETFs: USO, OIL, XLE, UCO, UWTI, VDE, ERX, OIH, SCO, XOP, BNO, DBO, DWTI, ERY, DIG, DTO, DUG, USL, XES, IYE, IEO, IEZ, DNO, FENY, PXE, PXI, PXJ, OLO, SZO, RYE, FXN, TWTI, OLEM, DDG
Wed, Apr. 15, 10:45 AM
- BP (BP +0.9%) may face irate shareholders over rising executive pay during its annual meeting tomorrow after CEO Bob Dudley’s total 2014 compensation rose 4.9% to $15.4M.
- BP is not alone: Royal Dutch Shell (RDS.A, RDS.B) paid CEO Ben Van Beurden $32.2M last year, nearly 3x the amount his predecessor Peter Voser earned in 2013.
- But BP’s net income has dropped in six of the past 12 quarters and Shell’s has fallen in nine; BP’s shares have declined in four of the past five years, and Shell’s have dropped in two of the past three years and are down 5% YTD.
- Elsewhere, Rex Tillerson, CEO of Exxon Mobil (NYSE:XOM), received compensation last year valued at $33M, up 18% from $28M in 2013, and John Watson of Chevron received $26M last year, up 8.3% Y/Y.
Tue, Apr. 14, 7:31 PM
- Papua New Guinea's state oil company says it is looking to raise billions of dollars to help fund new oil and gas projects, as the country battles a drop in forecast revenue from plunging prices for energy commodities.
- The company holds a 16.6% stake in the PNG LNG project, which operator Exxon Mobil (NYSE:XOM) hopes to expand, and has rights to take up to a 20% stake in the Elk-Antelope fields, Papua's largest undeveloped gas resource and operated by Total (NYSE:TOT).
- Funding an expansion of PNG LNG and any Elk-Antelope development would require the state-run firm to contribute billions of dollars in the next three years, so it makes sense for it to raise debt well before it needs the money.
- Papua New Guinea's economy grew by 8.4% last year, making it one of the fastest growing in the world, and the energy projects are seen as vital to the economy.
Tue, Apr. 14, 3:57 PM
- The Dutch government says it will implement a court order to halt production at part of the Groningen gas field - Europe's largest - amid local protests over earthquakes allegedly linked to extraction work.
- Production will be halted "for the time being" around the village of Loppersum in the northern province of Groningen, where the field is located, but the court ruling stopped short of imposing a full block on production in the gas field that complainants had sought.
- Loppersum production previously was capped at 3B cm for 2015, representing ~9% of overall output from Groningen, which is jointly managed by Royal Dutch Shell (RDS.A, RDS.B), Exxon Mobil (NYSE:XOM) and the Dutch government.
- Earlier: Dutch court refuses to halt Groningen gas production (April 1)
Tue, Apr. 14, 12:58 PM
- Canadian Oil Sands (OTCQX:COSWF +5.5%), the company with the largest stake in oil sands miner Syncrude Canada, is a prime takeover target and its most likely suitor is Imperial Oil (IMO +1.9%), the company with the second-largest stake, says FirstEnergy Capital analyst Michael Dunn.
- The analyst says his report is partly based on recent investor meetings with senior IMO execs who believe now is a good time to consider making acquisitions.
- Dunn thinks IMO would not want to pay more than a price in the low teens for COSWF, so its stock would have to fall further to make a bid attractive, and he suggests the company would not want to take on excessive debt - which could mean an equity-based offer, help from its controlling shareholder, Exxon Mobil (NYSE:XOM), or enrolling a current Syncrude partner such as Suncor (NYSE:SU).
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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