Tue, Sep. 1, 8:49 AM
- California air quality officials late yesterday postponed consideration of Exxon Mobil's (NYSE:XOM) proposal to increase refining operations at its Torrance facility until after further review of how such a move would affect homeowners near the plant.
- XOM is seeking approval to use an old pollution control system in place of one damaged in a February explosion at the Torrance refinery; the old pollution control equipment releases more pollutants in violation of air quality standards.
- Since the February explosion, Torrance has run at less than 20% of its normal operations, contributing to high gasoline prices in California and the Los Angeles region; use of the old pollution control system would increase Torrance's operations to ~85%.
Mon, Aug. 31, 6:48 PM
- Pres. Obama - visiting Alaska this week - agreed earlier this month to allow Royal Dutch Shell to resume Arctic oil exploration, yet Alaska officials say it may not be enough to save the 800-mile Trans-Alaska Pipeline System, the state’s economic lifeline for the past 40 years.
- Volume on the pipeline, which funnels crude to Valdez in the south from Prudhoe Bay in the north, has declined along with North Slope oil production during the past three decades; flows are dropping ~5%/year and slid to 513K bbl/day in 2014 from a peak of 2M in 1988.
- Alaska projects North Slope crude production to fall to ~320K bbl/day by 2024, and officials say a drop below 300K would trigger a “fundamental change” in operations and perhaps make the pipeline unfeasible.
- Three major oil companies - BP, ConocoPhillips (NYSE:COP) and Exxon Mobil (NYSE:XOM) - mostly fund Trans-Alaska operator Alyeska Pipeline Service.
Mon, Aug. 31, 3:49 PM
- West Texas crude oil surged 8.8% to $49.19/bbl, capping a three-day rally that added more than 27% to the price - the largest three-day rally since January 2009 - after U.S. oil production data showed output falling and OPEC said it would talk with other producers about low prices.
- Brent crude rallied 7.4% to $53.80, as the spread between the two benchmarks widened to more than $5 intraday after narrowing to $4.33.
- "Oil markets are hungry for any evidence of a fall in production, anywhere,” says Global Hunter's Robert Hastings.
- The SPDR Energy ETF (XLE +1.2%) jumped after being down as much as 2.5% early in the day, and the Market Vectors Oil Services ETF (OIH +2.3%) reversed a 2.6% loss at its intraday low.
- However, trading volumes were lower and volatility perhaps greater than usual due to a U.K. holiday.
- Andrew Keene tells CNBC he is selling today's pop, noting that XLE is again trading at its 20-day MA and "we haven't traded above this moving average since May."
- Among the shares of some of the more active energy companies, Chevron (CVX +0.5%) and Exxon Mobil (XOM +0.4%) are higher after respective early losses of 3.1% and 2.4%; also, COP +5%, PSX +2.6%, SLB +2.2%, RIG +4.1%, HAL +2.4%, WLL +8.3%, MRO +3.4%, NFX +5.1%, LINE +5.7%.
- Other ETFs: VDE, ERX, XOP, ERY, FCG, DIG, GASL, DUG, BGR, XES, IYE, IEO, IEZ, FENY, PXE, PXI, FIF, PXJ, NDP, RYE, FXN, DDG
Mon, Aug. 31, 12:58 PM
- The $225M settlement approved last week between Exxon Mobil (XOM -0.3%) and New Jersey confirms the company must clean up more than 1,500 contaminated properties from gas stations to refineries, but no one can say exactly how much the company will spend or how long the cleanup will take, which has outraged environmental groups.
- An XOM spokesperson says the cleanup may take years, while the state's Department of Environmental Protection says the extent of contamination and the geology of each site will be among the issues that will determine the timetable; bigger sites, such as some named in the settlement, could take decades.
- The total cost of cleanup also is unclear; XOM has spent nearly $260M since 1991 to clean up the Bayonne and Linden refinery sites and could spend "in the hundreds of millions range," the Superior Court judge wrote in his judgment.
Mon, Aug. 31, 7:12 AM
- Canadian Oil Sands (OTCQX:COSWF) says it has halted crude oil production at the Syncrude oil sands project after a fire damaged equipment at its processing facility in northern Alberta on Saturday.
- COSWF says the main coker conversion units were not damaged and Syncrude continues to operate, but it has suspended synthetic crude oil production and is currently developing a recovery plan.
- The company does not estimate the volume or value of lost production, but Syncrude’s synthetic crude output averaged 207.7K bbl/day in Q2.
- COSWF holds a 37% stake in Syncrude, and six other companies own the rest, including lead operator Exxon Mobil (NYSE:XOM) unit Imperial Oil (NYSEMKT:IMO), Suncor Energy (NYSE:SU), Sinopec (NYSE:SNP) and Cnooc (NYSE:CEO) subsidiary Nexen.
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
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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