The Iraqi government is auctioning 12 exploration blocks and 47 other companies have been qualified to bid in the leasing round, currently scheduled for May 30-31. Among those companies welcomed into the auction are Royal Dutch Shell plc (NYSE: RDS-A), a partner with Exxon in developing Iraq’s massive West Qurna field.

Chevron Corp. (NYSE: CVX) and Occidental Petroleum Corp. (NYSE: OXY) are the only other US-based companies included among the qualified companies. BP plc (NYSE: BP), Total SA (NYSE: TOT), and Eni SpA (NYSE: E) were also okayed. A complete list is available from Reuters.

Paul Ausick

The unofficial closing bells put the DJIA up about 58 points to 13,252.76 (0.44%), the NASDAQ rose more than 15 points (0.51%) to 3,056.37, and the S&P 500 rose 0.60% or more than 8 points to 1,402.59.

There were several analyst upgrades and downgrades today, including Norfolk Southern Corp. (NYSE: NSC) cut to ‘equal weight’ at Barclays; Dendreon Corp. (NASDAQ: DNDN) started as ‘hold’ at Stifel Nicolaus; Ebay Inc. (NASDAQ: EBAY) cut to ‘neutral’ at Credit Suisse; Celgene Corp. (NASDAQ: CELG) started as ‘buy’ at Stifel Nicolaus; and Digital Realty Trust (NYSE: DLR) cut to ‘hold’ at Jefferies.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Abraxas Petroleum Corp. (NASDAQ: AXAS) is down -4.6% at $3.55; AMC Networks Inc. (NASDAQ: AMCX) is down -4% at $44.18; Cato Corp. (NYSE: CATO) is down -0.2% at $27.51; ENI S.p.A. (NYSE: E) is up 1.1% at $47.89; FutureFuel Corp. (NYSE: FF) is up 1.4% at $11.53; Ross Stores Inc. (NASDAQ: ROST) is down -0.5% at $56.31; and Travelcenters of America LLC (AMEX: TA) is up 15% at $6.10.

Other standouts from today include the following stocks:

Euro Tech Holdings Co. Ltd. (NASDAQ: CLWT) is up 55% at $4.50. The Chinese water treatment company has been awarded two new contracts.

Towerstream Corp. (NASDAQ: TWER) is up nearly 42% at $3.69. The 4G wireless provider reported better-than-expected earnings after markets closed yesterday.

Aixtron SE (NASDAQ: AIXG) is up more than 18% at $131. The LED maker is getting a boost from an analyst’s upgrade. More coverage here.

Winnebago Industries Inc. (NYSE: WGO) is up about 16% at $10.32. The recreational vehicle maker missed estimates this morning, but reported a strong order backlog.

Coffee Holding Co. Inc. (NASDAQ: JVA) is up more than 15% at $13.73. The coffee wholesaler continues to attract buying on its strong earnings report last week.

Scholastic Corp. (NASDAQ: SCHL) is up more than 14% at $36.89 after posting a new 52-week high of $40.17 earlier today. The children’s media company raised its 2012 guidance.

Flamel Technologies SA (NASDAQ: FLML) is down nearly -23% at $6.18. The French-based biopharmaceutical company has acquired Eclat Pharmaceuticals and Eclat’s CEO will take over the combined company.

Verso Paper Corp. (NYSE: VRS) is down nearly -13% at $1.77. The paper firm is giving back last week’s gains as its tender offer had to be extended.

Eagle Bulk Shipping Inc. (NASDAQ: EGLE) is down more than -12% at $1.58. The dry bulk shipper reported a narrower-than-expected loss yesterday, but shipping companies still face a terrible year.

Vringo Inc. (AMEX: VRNG) is down more than -11% at $1.63. The social networking software company is merging with Innovate/Protect Inc. See the press release for details.

Stay tuned for Friday. Chicago Federal Reserve President Charles Evans is giving a speech. We have also noted the following events on the schedule (all times Eastern):

• 8:30 a.m. – Consumer price index
• 9:15 a.m. – Industrial production
• 9:55 a.m. – Reuters/University of Michigan consumer sentiment index

Your email address

subscribe

terms and conditions

Paul Ausick

The new gathering system will serve the Keathley Canyon area and serve producers Anadarko Petroleum Co. (NYSE: APC), Apache Corp. (NYSE: APA), Exxon Mobil Corp. (NYSE: XOM), Eni SpA (NYSE: E), Petroleo Brasileiro (NYSE: PBR), and Plains Exploration & Production Co. (NYSE: PXP). Keathley Canyon was the site of the first major oil discovery in the US Gulf once drilling was reopened following the Macondo well explosion in April 2010 that killed 11 workers on a rig operated by BP plc (NYSE: BP). Exxon, which made the discovery, has estimated the resource at 700 million barrels.

The joint venture, called the Southeast Keathley Canyon Pipeline Co. LLC (SEKCO), plans to build an 18-inch pipeline to transport 115,000 barrels/day of crude to a floating production platform and connect to Enterprise’s Poseidon pipeline system to move the oil onshore. The southeast portion of Keathley Canyon is estimated to hold about 300 million barrels of reserves.

In related transactions, Genesis is acquiring a 28% stake in the Poseidon pipeline system from Marathon Oil Corp. (NYSE: MRO), as well as a 29% stake in the Odyssey pipeline system which is majority owned and operated by Royal Dutch Shell plc (NYSE: RDS-A) and a 23% stake in the Eugene Island pipeline system owned by a group including Exxon, Shell, Chevron Corp. (NYSE: CVX), and ConocoPhillips (NYSE: COP). Genesis is paying about $206 million for these three acquisitions, which includes about $26 million for the value of the crude already in the pipelines. The company used its revolving credit facility to finance the purchases.

The SEKCO pipeline system is expected to be in service by mid-2014.

Paul Ausick

Eni SpA (NYSE: E) is down over 4% around $42.30 and shares are down 3% in Milan.  Luxottica Group SpA (NYSE: LUX) has not traded and we do not yet have Ney Work indications, but shares were down 3.1% in Milan.  Telecom Italia SpA (NYSE: TI) is indicated down around 7% in New York at $11.30 but shares are down 4.5% in local trading in Milan.

Elsewhere in Europe….

Alcatel-Lucent (NYSE: ALU) is down around $1.98 (ouch, 52-week low) after a $2.16 close in New York, and shares are down almost 4% in local trading in Paris.

Arcelor Mittal (NYSE: MT) is down over 8% at $19.03 and BHP Billiton Ltd. (NYSE: BHP) is down 4.5% at $76.47 in New York trading in the early pre-markets.

Banco Santander, S.A. (NYSE: STD) is down 7% at $7.50 in active early New York trading but the stock is down more than 3% in local trading in Madrid.

The Bank of Ireland (NYSE: IRE) is down 1.4% at $5.17 in New York and shares are down 2.2% in local trading in Dublin.

Credit Suisse Group (NYSE: CS) is down 7.1% at $24.77 and UBS AG (NYSE: UBS) is down 6.1% at $11.97 in early New York pre-market trading.

Deutsche Bank AG (NYSE: DB) is down over 9% at $36.80 in New York and shares are down about 5% in Frankfurt.

France Telecom (NYSE: FTE) has not traded in New York yet but its shares are down 2% in local trading in Paris.

Koninklijke Philips Electronics NV (NYSE: PHG) is indicated down around $19.65 after a $20.86 close in New York for a loss of close to 6%.

LM Ericsson Telephone Co. (NASDAQ: ERIC) is indicated down 5% around $10.15; Nokia Corporation (NYSE: NOK) is down 4.7% at $6.50.

National Bank of Greece SA (NYSE: NBG) is indicated flat to down a couple cents after a $0.59 close in New York but shares are down 4.1% in local trading in Athens.

Siemens AG (NYSE: SI) is down 4.5% at $98.56 in New York trading and shares are down 1.6% in local trading in Frankfurt.

iShares MSCI Italy Index (NYSE: EWI) is trading down 5.2% at $12.87.

Another rough day is being brought on by the woes of the nanny and endless welfare nations in Europe.  S&P futures are down over 2% with well over two hours until the market opens.

JON C. OGG

Aetna Inc. (NYSE: AET) Raised to Conviction Buy List at Goldman Sachs.
AMERIGROUP Corporation (NYSE: AGP) Raised to Buy at Goldman Sachs.
Eni SpA (NYSE: E) Raised to Buy at S&P.
JB Hunt Transport Services Inc. (NASDAQ: JBHT) Cut to Hold at Stifel Nicolaus.
Juniper Networks, Inc. (NYSE: JNPR) Raised to Outperform at RBC.
The Kroger Co. (NYSE: KR) Started as Neutral at JPMorgan.
News Corp. (NASDAQ: NWSA) Started as Neutral at UBS.
RPC, Inc. (NYSE: RES) Raised to Buy at Canaccord Genuity.
Safeway Inc. (NYSE: SWY) Started as Neutral at JPMorgan.
Salesforce.com (NYSE: CRM) Cut to Equal-weight at Global Equities Research.
SanDisk Corporation (NASDAQ: SNDK) Cut to Neutral at Stern Agee; named value stock of the day at Zacks.
Tanger Factory Outlet Centers Inc. (NYSE: SKT) Cut to Neutral at Credit Suisse.
TMS International Corp. (NYSE: TMS) Started as Outperform with $11 target at Credit Suisse.
Vodafone Group Plc (NYSE: VOD) Cut to Underperform as Bear of the Day at Zacks.
Watson Pharmaceuticals, Inc. (NYSE: WPI) named as Bull of the Day at Zacks.
Weyerhaeuser Co. (NYSE: WY) Raised to Hold at Deutsche Bank.
Whole Foods Market Inc. (NASDAQ: WFM) Started as Neutral at JPMorgan.

We also have some more data on analysts and the calendar.  Here are the top analyst upgrades and downgrades of the last week.  We also have the top twelve earnings reports and an economic calendar for what is coming down the pipe this week.

Your email address

subscribe

terms and conditions

JON C. OGG

We wanted to give our readers an updated list of those with Libya exposure.  These companies should now be the beneficiary of the outcome rather than be the losers due to the conflict and interruptions.  At the time of the outbreak of fighting, Libya produced around 1.5 million barrels per day and that was mostly exported to Europe.

AECOM Technology Corporation (NYSE: ACM) originally had what was roughly a $500 million contract over five years building Libyan infrastructure projects.  Much of the work had been done, but now that infrastructure has been damaged it would seem that they would be a shoe-in for more infrastructure building unless the old regime ties are just deemed too strong by the new leadership.  Shares were around $28 after the first drop from the Libyan exposure, and along with the rest of the global austerity the stock closed Friday at $18.64.

Eni SpA (NYSE: E), the big Italian energy company, withdrew its foreign personnel with 10% of its natural gas supplies in Libya and much more throughout North Africa.  It was close to $47.55 at the time of the withdrawal and shares closed at $35.48 on Friday.

As Italy has larger exposure than many nations to Libya, the iShares MSCI Italy Index ETF (NYSE: EWI) is down at $12.56 per Friday’s close, about 30% lower than the $18.13 price.  This ETF had a whopping 18% exposure to ENI earlier this year before Libya blew up.

Occidental Petroleum Corporation (NYSE: OXY) has (or had) operations there and shares were around $106 after the Libya situation first blew up.  Occidental closed Friday at $80.91.

Global oil players have exposure in Libya, although they are very diversified.  Royal Dutch Shell (NYSE: RDS-A) operated under permits in Libya as well and shares were around $70.85 per ADR after the situation erupted; shares closed Friday at $61.72.  BP plc (NYSE: BP) had deeper ties in Libya and its shares were around $48 after the blow-up began; shares closed Friday at $38.46.

Petroleo Brasileiro (NYSE: PBR) originally said that there were no indications at the start of the onslaught that its operations in Libya were affected over its exploratory offshore block in the North African country.  The ADR was at $38.89 back then, and shares closed at $27.17 on Friday.

Market Vectors Africa Index ETF (NYSE: AFK) had 20% at the time of its allocations in Egypt but nothing seen about Libya.  Shares closed at $28.37 on Friday and the 52-week range is $26.77 to $36.45.

JON C. OGG

These are all of the non-earnings events to watch this week.  We have already compiled a separate key company earnings calendar with detailed previews and we also already featured the top analyst calls of last week as well.

Apple Inc. (NASDAQ: AAPL) had many rumors from Friday through the weekend about the unveiling of the new iPad3, as if the iPad and iPad2 weren’t yet good enough.  The rumored features are retinal scans and more.  The iPhone5 is still due in September if the reports are still accurate.

Barnes & Noble, Inc. (NYSE: BKS) may have caused serious harm last week despite “the good news’ that it was staying independent and has secured an investment from John Malone and Liberty.  Shares were down 17% or so on Friday and the bookseller will have to now fend for itself against Amazon, Apple, and others.

Clearwire Corporation (NASDAQ: CLWR) will be key to watch this week after a big pop Friday on the reports that Sprint Nextel Corp. (NYSE: S) may take on an investment that could allow Sprint to just acquire its 4G partner.

Market Vectors Egypt Index ETF (NYSE: EGPT) will be worth watching if tensions with Israel remain heightened after last week’s attacks that led to Egyptian police being killed at the border.

Eni SpA (NYSE: E) could be in for a huge week if Libya’s Gadhafi is losing control as fast as the reports are indicating.  This Italian energy company was hit hard after it had to basically all but leave its infrastructure in Libya.

iShares Silver Trust (NYSE: SLV) has proven to be a death trap each time it went very much over $40.00 along with the price of silver.  This time may be different, but all it takes is new margin requirements or any new regulation for the devil’s metal to get a severe haircut.  THese shares are indicated north of $42.25 early Monday after closing at $41.68.  Friday was only the second $40+ close in the last 90 days (August 3 was last).

Market Vectors Mortgage REIT Income ETF (NYSE: MORT) has fallen in price as have the value of most stocks, but this one is a new MBS REIT that offers what appear to be 10%+ yields.  If the low rate environment holds with close to zero on short-term borrowing costs, then these will continue to attract investor interest.

Puda Coal Inc. (PUDA) has seen its shares suspended in trading by the SEC due to a lack of current and accurate information.  More woes out of China.

Sanderson Farms, Inc. (NASDAQ: SAFM) could face a haircut after the producer of chickens was hammered in Barron’s saying it “faces brutal conditions. Feeding costs are rising, demand is slack and industry inventories are bulging.”  Barron’s said the stock could crack.

Time Warner Cable Inc. (NYSE: TWC) is still one to watch as it was reported at the end of last week that it was a step closer to buying Carlyle’s Insight Communications for close to $3 billion including the assumption of debt.

Tudou Holdings Limited (NASDAQ: TUDO) was just another bad Chinese IPO that makes this China-IPO-hype more and more like Groundhog Day on Wall Street.  Shares closed at the week’s low of $19.24 on Friday.

Verizon Communications Inc. (NYSE: VZ) has some 45,000 striking workers returning to work on Tuesday.  A final pact has not been reached as of yet but negotiations are said to be closer.

Washington Mutual (WAMUQ) is set to find out if there is any value left in these residual shares.  A Delaware federal bankruptcy court is set to hear final arguments this week over the revised Chapter 11 plan.

WisdomTree Investments, Inc. (NASDAQ: WETF) was featured positively in Barron’s over the weekend as the asset manager is a pure-play on ETF growth that has outperformed the market while rival shares have weakend.

You are invited to join our free daily email distribution list to hear more about analyst upgrades and downgrades, top day trader and active trader alerts, dividend trends, news on Buffett and other investment gurus, IPOs, secondary offerings, private equity, and more.

JON C. OGG

AECOM Technology Corporation (NYSE: ACM) had what was roughly a $500 million contract over five years building Libyan infrastructure projects, much of which has apparently already been received.  Shares are down 5.6% at $28.19, so this is more heavily impacting than some might have considered.

Eni SpA (NYSE: E), the Italian energy company, is removing its foreign personnel with 10% of its natural gas supplies in Libya and much more throughout North Africa.  ADRs are down 5.4% at $47.55.  As Italy has larger exposure than many to Libya, the iShares MSCI Italy Index ETF (NYSE: EWI) is down 4.2% at $18.13 due to its 18% exposure to ENI.

Occidental Petroleum Corporation (NYSE: OXY) is lower as a result of its operations there and shares are down 1% at $106.35.  Royal Dutch Shell (NYSE: RDS-A) operates under permits and shares have recovered to being down only 0.2% at $70.85.  BP plc (NYSE: BP) has deeper ties in Libya, although it is much more diversified, and its shares are back up to flat at $47.93 after opening down almost 1%.

Petroleo Brasileiro (NYSE: PBR), or Petrobras, has reportedly said that there were no indications yet that its operations in Libya have been affected.  It operates an exploratory offshore block in the North African country and its operations are generally considered to be elsewhere.  Petrobras shares (ADRs) are up 2.3% at $38.89.

There are also several ETFs and funds on the move, whether deserved or not.  Market Vectors Africa Index ETF (NYSE: AFK) is getting hit this morning as it has 20% or so of its allocations in Egypt but nothing seen about Libya in the most recent fact sheet.  Market Vectors Egypt Index ETF (NYSE: EGPT) appears to still be trading like a closed-end fund rather than an ETF and shares are actually up 1.4% at $18.99. Go figure.  Elsewhere, iShares MSCI Turkey Invest Mkt Index (NYSE: TUR) is down 2.9% at $62.10.  iShares MSCI Israel Cap Invest Market Index (NYSE: EIS) is down 2% at $57.75.

JON C. OGG

Twelve of the thirteen companies or their subsidiaries are publicly traded: Anadarko Petroleum Corp. (NYSE: APC), ATP Oil & Gas Corp. (NASDAQ: ATPG), BHP Billiton plc (NYSE: BHP), Chevron Corp. (NYSE: CVX), Cobalt International Energy, Inc. (NYSE: CIE), ENI SpA (NYSE: E), Hess Corp. (NYSE: HES), Marathon Oil Corp. (NYSE: MRO), Murphy Oil Corp. (NYSE: MUR), Noble Energy Inc. (NYSE: NBL), Royal Dutch Shell plc (NYSE: RDS-A), and Statoil ASA (NYSE: STO).

There are 16 drilling projects covered by the agency’s ruling and drilling could resume within a few weeks. Any resumption would require the driller to comply with requirements issued in December that aim to ensure that drillers have a approved plan for containing the oil in the event of a blowout. It’s not clear that all 16 projects meet that requirement or how long it will take for the requirement to be met.

US crude production will lose about 220,000 barrels/day in 2011 as a result of the Gulf disaster, about 13% of offshore production. For the US economy, that means more imports at higher prices. For the economy of the Gulf coast states, the temporary loss of 8,000-12,000 jobs just goes on and on.

Drillers have been holding idle rigs in the Gulf, waiting for permits to go ahead with their projects. But that can’t continue indefinitely at costs of hundreds of thousands of dollars a day. Smaller companies, like ATP Oil & Gas, can afford to wait even less than the majors like Chevron and Shell. Permits that once took just days to get approved, can now take up to five months.

For its part, the BOEMRE says it has approved some permits for modifications to existing wells, but that the agency’s priority remains safe and environmentally responsible development.

While Gulf production is stalled, the missing 220,000 barrels/day add to the volatility of the crude market. If crude rises above $100/barrel this year, the federal government will take some serious heat for the increase. The heat will turn to flames if gasoline prices rise to $4/gallon.

Paul Ausick

Of that amount, 42% is produced by private oil companies. The largest companies working in the country are Petroleo Brasileiro SA, or Petrobras, (NYSE: PBR), Spain’s Repsol YPF S.A. (NYSE: REP), and Italy’s Eni SpA (NYSE: E). Chevron Corp. (NYSE: CVX), as a result of its purchase of Texaco, is currently involved in litigation claiming as much as $27 billion in damages for environmental violations.

In a move reminiscent of the takeover of Occidental Petroleum’s (NYSE: OXY) Ecuadorian operations in 2006, the government is threatening to expropriate all foreign-owned oil field operations unless the companies agree to re-negotiate existing contracts to increase Ecuador’s share of production revenues.

The government wants to move eliminate contracts what are now essentially production sharing agreements to contracts where the producer would be paid a production fee and re-imbursed for investment costs. Needless to say, the producers like the current system better because they make a lot more money off production that they would off a production fee. Recent contracts awarded in Iraq have set a production fee of $1.90/b. The Ecuadorian government has not specified a fee yet, but it is unlikely to be significantly higher.

The Ecuadorians are following the example of both Venezuela and Bolivia in trying to force production contract changes to maximize revenue from the country’s hydrocarbon deposits. The government expects to sign new contracts within 60 days.

The Wall Street Journal reports that the oil companies have drastically reduced investment in Ecuador, spending just enough to maintain existing output. President Rafael Correa promises to submit a bill to the Ecuadorian Congress to allow him to expropriate the oil assets if the companies do not sign the new agreements.

Repsol YPF, Petrobras, and Eni are likely to cave in rather than lose the revenue, even though the number of barrels is fairly small. The new agreements essentially turn the companies into oil field services companies. That’s not necessarily a bad thing, and if these companies don’t want to bother with it, companies like Schlumberger Ltd. (NYSE: SLB), Halliburton (NYSE: HAL), and other services companies would not turn down the opportunity to operate the Ecuadorian fields for a straight fee. That’s their business model after all.

As in all these cases, the government has the upper hand. The choice for the oil companies is one between two evils.

Paul Ausick