Wed, Feb. 18, 6:26 PM
- California's workplace safety agency has ordered the shutdown of the 100K bbl/day central gasoline producing unit at Exxon Mobil's (NYSE:XOM) Torrance refinery, which was heavily damaged today after an explosion and fire, until its investigation is complete.
- The agency says the shutdown of the unit could last up to six months, which pushed up spot prices for California gasoline today by nearly $0.12 to $2.01; oil analyst Tom Kloza thinks local retail gas prices in the area could rise to as much as $3.25/gallon by April from a recent average in California of ~$2.80.
- XOM shares tumbled 2.2% in today's trade; Tesoro (NYSE:TSO), which has three California refineries and may benefit from the XOM incident, rose 4.6%.
Wed, Feb. 18, 1:22 PM| 9 Comments
Wed, Feb. 18, 11:27 AM
- WSJ’s report that China’s government is considering merging some of its big oil companies has caught the attention of Asia’s energy analysts, but Jefferies analysts doubt that the leadership actually will pull the trigger, saying the merger talk is "more brainstorming and thinking outside the box rather than feasible proposals.”
- The firm notes that CNPC (NYSE:PTR) already is plenty big enough to compete with Exxon Mobil (NYSE:XOM): It is bigger than XOM on an asset basis, production at the group level exceeded XOM in 2013, and the value of CNPC's proved reserves at year-end 2013 likely exceeded XOM's by ~50%.
- Jefferies also notes that Sinopec’s (NYSE:SNP) production and value of in-ground reserves exceeds that of ConocoPhillips (NYSE:COP).
- A merger between Cnooc (NYSE:CEO) and SinoChem could make sense, as it would create a fully integrated, 1M bbl/day company spanning upstream and downstream operations.
- WSJ's Liam Denning writes that any such merger would be a step backward because smaller companies offer a better chance for growth, and supermajors such as XOM and COP mostly have struggled to increase their production.
Wed, Feb. 18, 10:34 AM
- Exxon Mobil (XOM -1.7%) is well positioned to pick up assets in Australia amid the sharp drop in energy prices, including assets that could be bolted on to existing operations, says Richard Owen, the chairman of XOM's Australian business.
- Meanwhile, XOM continues to assess whether to develop deeper gas fields in the Bass Strait of the country's south coast, where future gas reservoirs are more expensive to develop since they are smaller, deeper and have higher levels of impurities.
Tue, Feb. 17, 5:11 PM
- Warren Buffett added to his IBM bet amid the IT giant's Q4 selloff: Berkshire Hathaway (BRK.A, BRK.B) owned 77M IBM shares at the end of Q4, up from 70.5M at the end of Q3. (13F filing)
- Berkshire also upped its stake in Suncor (NYSE:SU) by nearly 4M shares to 22.4M as oil prices plunged. However, the firm dumped the 41M-share stake in Exxon Mobil (NYSE:XOM) it held at the end of Q3, and its 5M-share stake in ConocoPhillips (NYSE:COP). Its 449K-share stake in Express Scripts (NASDAQ:ESRX) was also liquidated.
- A new 8.4M-share stake was taken in Restaurant Brands (QSR - rose 8.7% today following earnings), and a 4.7M-share stake in 21st Century Fox (NASDAQ:FOXA). Existing stakes in GM, DirecTV, MasterCard, and Visa were moderately upped (among others), and stakes in Bank of New York and National Oilwell moderately lowered.
- Berkshire owned 17.1M Deere (NYSE:DE) shares at the end of Q4, up from 7.6M at the end of Q3 (the Q3 stake was kept confidential). Deere is up 1.6% AH.
- Overall, Buffett's firm created or expanded positions in 15 companies, and cut or liquidated positions in 5.
Sat, Feb. 14, 8:25 AM
- Exxon (NYSE:XOM), Chevron (NYSE:CVX), Conoco (NYSE:COP) and Shell (RDS.A, RDS.B) have held steady even as the price of crude has fallen from $80/bbl to $50, which suggests little upside for the shares if oil turns up and big trouble if it doesn't, according to a weekend feature in Barron's.
- XOM and its peers are struggling to grow production, incurring heavy capital expenditures, dealing with increasingly difficult host governments, and facing a world in which energy demand is growing at about half the rate of global GDP; despite $38B in capital spending last year, XOM’s energy production fell ~2% and is projected to be unchanged this year.
- Energy stocks actually have outperformed the broader market so far this month as crude oil prices have bounced off lows, but many experts expect oil to resume its downward slide; Citigroup, for one, warns crude could dip as low as $20, which surely would spark another broad downturn for energy stocks as companies are forced to shut down wells.
- That’s the main reason analysts are calling for energy sector earnings to worsen in the coming quarters, which makes stocks that look cheap at first glance actually quite expensive and suggests they still haven’t hit bottom.
Thu, Feb. 12, 3:27 PM
- Exxon Mobil's (XOM +1.9%) push for workers at its Beaumont, Tex., refinery to sign a five-year contract, nearly twice as long as the last one, is part of an effort to avert labor stoppages during a possible expansion that could make it the largest such plant in the U.S., according to Reuters.
- XOM is said to have offered a $4,500 bonus to hourly workers represented by the United Steelworkers union, which normally only signs three-year deals in the refining industry.
- Acceptance of the proposal would leave the USW Beaumont local out of sync with the union’s current national bargaining program for refinery workers.
- As reported in July, before crude prices plunged, XOM is evaluating a five-year, multibillion-dollar expansion to lift the refinery’s processing capacity to 500K-800K bbl/day from 344K now.
Thu, Feb. 12, 2:14 PM
- If Exxon Mobil (XOM +1.6%) decides to go hunting for struggling energy peers with shrinking cash flow - as it did five years ago when it acquired XTO Resources for $25B, during an energy rout worse than today's - it would need to go big or not go at all in order to meaningfully boost its oil and gas reserves, WSJ writes as it discusses BP (BP +2.1%) as a potential takeover target.
- BP “is the obvious fit says Wolfe Research's Paul Sankey; buying BP, which is still dealing with the fallout of the 2010 Gulf of Mexico oil spill, “would close out a damaged brand at a terrific price” and bolster XOM’s capacity to find new sources of oil and gas, he says.
- Other potentially attractive targets singled out by analysts include a smaller tier of companies such as Anadarko (APC +1.9%) and BG Group (OTCPK:BRGXF, OTCQX:BRGYY), which have discovered huge deposits of oil and gas but may lack the cash flow to develop them quickly.
Thu, Feb. 12, 11:33 AM
- Pennsylvania Gov. Tom Wolf is proposing a new 5% severance tax on natural gas extraction in the state, saying the measure could generate $1B or more.
- The measure could face some pushback in the state's Republican-controlled legislature, but some kind of fracking tax could pass, as lawmakers from both parties already have proposed taxes from 3.2% to 8%.
- Like other major natural gas producing states, Pennsylvania already has a severance tax on the value of the gas extracted at the wellhead.
- Top Marcellus Shale producers include CHK, RRC, RDS.A, RDS.B, TLM, APC, ATLS, COG, CVX, CNX, EQT, EOG, XOM, WPX, XCO, CRZO, SWN, AR.
Wed, Feb. 11, 12:43 PM
- Royal Dutch Shell (RDS.A, RDS.B) and BP are resisting efforts by Abu Dhabi to get them to pay a multibillion-dollar signing-on fee for a stake in developing the emirate’s biggest onshore fields, FT reports, adding that Exxon Mobil (NYSE:XOM) already has walked away from talks.
- Abu Dhabi's state-owned oil company is said to have demanded ~$8B combined from a number of companies hoping for part of a 40% equity stake in oil reserves to be jointly developed over the next 40 years; industry insiders consider the upfront payments one of the bigger ever for an oil concession.
- Total (NYSE:TOT) last week became the first to sign a new concession with Abu Dhabi in which the company paid a ~$2B upfront fee to secure its stake, under which it will earn ~$2.85 for every barrel sold vs. $1/bbl under a previous concession.
Wed, Feb. 11, 11:57 AM
- Pavilion analysts think the consensus has gone from being overly optimistic about the earnings of major energy companies such as Exxon (NYSE:XOM), Chevron (NYSE:CVX) and ConocoPhillips (NYSE:COP) to being too pessimistic.
- The firm sees earnings expectations that are now lower than the realized earnings in 2008 when oil prices went as low as $33/bbl; six months ago, analysts expected the sector earnings to grow nearly 10% in a year., but they are now expecting the largest earnings decline on record.
- ETFs: XLE, ERX, VDE, OIH, XOP, ERY, FCG, DIG, GASL, DUG, IYE, XES, IEO, IEZ, PXE, FENY, PXJ, RYE, FXN, DDG
Wed, Feb. 11, 11:45 AM
- Colombia wants to stop a decline in oil production by making its royalties system more favorable to large drillers, the head of the country’s planning department says.
- A proposal in the government's new four-year development plan would give oil companies a major incentive to invest in increasing output at existing fields by treating the extra crude as though it were from a new discovery, making it eligible for lower levies.
- Colombia’s crude output fell last year for the first time since 2005, while plunging oil prices has prompted Ecopetrol (NYSE:EC) and Pacific Rubiales (OTCPK:PEGFF) to cut investment.
- Exxon (NYSE:XOM), Shell (RDS.A, RDS.B) and ConocoPhillips (NYSE:COP) reportedly have deferred shale exploration plans in the country.
Tue, Feb. 10, 5:59 PM
- Exxon Mobil (NYSE:XOM) reportedly is deferring shale exploration plans in Colombia, as collapsing crude oil prices are said to have exacerbated concerns over gaps in rules covering hydraulic fracturing in the country.
- Royal Dutch Shell (RDS.A, RDS.B) and ConocoPhillips (NYSE:COP) also have deferred shale exploration spending in the country, the Bloomberg report says.
- The moves would be a blow to Colombia’s hopes of developing shale deposits as a way of countering stagnating conventional oil reserves.
Mon, Feb. 9, 11:29 AM
- Exxon Mobil (XOM +0.5%) is downgraded to Hold from Buy at Argus, which believes XOM's recent outperformance relative to peers is likely to end given its difficulties in growing reserves and production.
- Argus is concerned that XOM could overreach in trying to grow reserves by pursuing an acquisition that could destroy shareholder value, as happened when the company overpaid for XTO Energy in 2009.
- The firm also thinks XOM's decision to reduce quarterly stock buybacks to $1B in Q1 from the usual level of $3B will weigh on investor sentiment.
Thu, Feb. 5, 5:50 PM
- Big oil companies had a poor record of finding and producing oil and gas last year, Reuters reports as it cites figures out in the past week, and big cuts in spending in response to falling crude prices could undermine their plans to turn that around.
- Royal Dutch Shell (RDS.A, RDS.B), Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP) and BP released provisional figures showing together they replaced only two-thirds of the hydrocarbons they extracted in 2014 with new reserves; combined with Exxon Mobil (NYSE:XOM), they posted an average drop in oil and gas production of 3.25% in 2014.
- The 2014 results echo long-term trends: Over the past decade, the biggest Western oil majors have seen reserves growth stall, production drop 15% and profits fall by nearly 20%.
- Some analysts warn that overly aggressive cuts could have long-term repercussions; the expertise needed to develop new fields and infrastructure takes long periods to build up, thus if companies lose this expertise, they may struggle to expand their portfolios when oil prices recover.
Mon, Feb. 2, 6:24 PM
- Canadian Oil Sands (OTCQX:COSWF) jumped 20% today in Toronto on rumors it could be a takeover target by one of its partners in Syncrude Canada.
- Canadian Oil Sands is the largest shareholder in Syncrude, with a 37% stake, but larger companies such as Imperial Oil (NYSEMKT:IMO) also own major stakes in the venture; the rumors appeared to take flight as IMO parent company Exxon Mobil (NYSE:XOM) signaled today that it would be acquisitive in the current low oil price environment.
- FirstEnergy Capital analyst Michael Dunn says a Canadian Oil Sands “takeout by another Syncrude partner is a distinct possibility should the shares continue to languish."
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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