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Top Analyst Upgrades & Downgrades (CQP, DYN, ESV, FNSR, IBKR, LULU, MOS, BKU, POT, STP, RIG, TRIB, UNFI, WEN)

Administrator — Wed, 09 Mar 2011 13:05:20 +0000

These are some of the top analyst upgrades, downgrades, and initiations seen from Wall Street research calls this Wednesday morning.

Cheniere Energy Partners LP. (AMEX: CQP) Raised to Hold at Citigroup.
Dynegy Inc. (NYSE: DYN) Cut to Sell at S&P Equity Research (late-Tuesday call).
Ensco plc (NYSE: ESV) Raised to Outperform and $71 target at Credit Suisse.
Finisar Corporation (NASDAQ: FNSR) Target cut to $29 from $43 at Credit Suisse.
Interactive Brokers Group Inc. (NASDAQ: IBKR) Cut to Underperform and Short-Term Sell at Zacks Investment Research.
Lululemon Athletica Inc. (NASDAQ: LULU) Started as Buy at Stern Agee.
The Mosaic Co. (NYSE: MOS) Cut to Hold at Citigroup.
BankUnited, Inc. (NYSE: BKU) Started as Market Perform at KBW; Started as Buy at BofA/ML; Started as Neutral at Goldman Sachs.
Potash Corp. of Saskatchewan (NYSE: POT) Cut to Hold at Citigroup.
Suntech Power Holdings Co. Ltd. (NYSE: STP) Reiterated Underperform with $7.80 target at BofA/ML; Maintained Buy with $13 target Auriga.
Transocean Ltd. (NYSE: RIG) Started as Market Perform at Morgan Keegan.
Trinity Biotech plc (NASDAQ: TRIB) maintained Outperform as Bull of the Day at Zacks Investment Research.
United Natural Foods Inc. (NASDAQ: UNFI) Cut to Hold at Argus.
United Natural Foods Inc. (NYSE: WEN) Reiterated Sell at Argus.

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JON C. OGG

Filed under: Analyst Calls Tagged: BKU, CQP, DYN, ESV, FNSR, IBKR, LULU, MOS, POT, RIG, STP, TRIB, UNFI, WEN

US Gulf of Mexico Opens for More Deepwater Drilling (NBL, ESV, HLX, NE, DO, RIG, CVX)

247wallst — Tue, 01 Mar 2011 16:23:48 +0000

Two weeks ago, Federal Judge Martin Feldman told the Obama administration to act within 30 days on a number of drilling permits for the deepwater Gulf of Mexico. The Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) has now issued the first deepwater Gulf permit since last year’s Macondo well disaster that killed 11 workers and spewed millions of barrels of crude into the Gulf of Mexico. Now the issues becomes how fast will drilling resume.

Noble Energy Inc. (NYSE: NBL) has received a permit to restart drilling at its Santiago prospect. The drilling rig on the project belongs to Ensco plc (NYSE: ESV) and the well is located in 6,500 feet of water. The well had been drilled to more than 13,000 feet below the sea floor before the moratorium was instituted, and is targeted for total drilling depth of 19,000 feet. Noble Energy is a partner in the group of E&P companies that formed a consortium led by Helix Energy Solutions Group, Inc. (NYSE: HLX) to develop improved subsea control and containment capabilities.

The restart signals good news for other drillers, including Noble Corp. (NYSE: NE; not related in any way to Noble Energy), Diamond Offshore Drilling Inc. (NYSE: DO), and Transocean Ltd. (NYSE: RIG), owner of the Deepwater Horizon rig that exploded last April. At the time the moratorium was first initiated, 16 wells operated by 13 different companies were shut-in. These 16 wells will be the first projects to get going again, but the outlook for new wells is more problematic.

BOEMRE has made the requirements stricter for getting a new deepwater Gulf permit. A new project is likely to need a site-specific environmental assessment, which is also required of a continuing project, but may also be required to get a supplemental environmental impact statement, at a much costlier and much lengthier procedure. In its annual survey of US E&P companies, Grant Thornton LLP reports that 68% of senior gas & oil company executives believe an increase in drilling costs by 20% or more due to government regulation would make new E&P projects too expensive to pursue.

As pump prices for gasoline rise in response to political upheaval in Libya (and potentially elsewhere in the oil-rich nations of North Africa and the Middle East), US drivers, who are also voters, will raise a clamor for lower prices and politicians will react. After all, the next election is less than 18 months away.

The New York Times cites the president of Chevron Corp.’s (NYSE: CVX) North American E&P division as calling the Noble Energy permit “a step in the right direction,” but also adding, “It is time for the government to clear the backlog of deepwater drilling permit applications so industry can create the energy, jobs and economic growth our nation needs so badly.”

Notice that Chevron’s executive didn’t say that it’s safe to go back into the deepwater, or that the industry knows what to do to prevent another disastrous blowout. BOEMRE’s chief did note that Noble Energy had met new safety and environmental rules put into place since the Macondo blowout, and that the Helix subsea system Noble Energy will use is capable of meeting government spill-response requirements.

Now that the first permit is out, the pressure on BOEMRE to issue more will only intensify. Industry associations, politicians, and industry players will all be pushing for quicker approval of restarts and faster review and approval of new drilling projects. Everyone who matters assumes that the new regulations will make deepwater drilling safer. The rest of us are left to hope everyone who matters is right.

Paul Ausick

Filed under: General Tagged: CVX, DO, ESV, HLX, NBL, NE, RIG

Federal Judge Orders Action on Drilling Permits in US Gulf of Mexico (BP, ESV, CVX, COP, XOM, RDS-A, HLX)

Administrator — Fri, 18 Feb 2011 15:35:31 +0000

Federal Judge Martin Feldman has pushed the Obama administration to resume drilling in the Gulf of Mexico ever since late June 2010. That’s when he first ruled against the moratorium on drilling ordered by the administration after the spill and explosion at the Macondo well owned by BP plc (NYSE: BP) which killed 11 workers. The US Department of Interior made some changes to the moratorium rules, and re-instated it. The moratorium ended in October, but no deepwater drilling has resumed because the Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE) says the drilling companies have not yet shown that they have the technology to control deepwater wells or reliably to contain the oil that would be discharged in the event of a blowout.

Now, Judge Feldman has ruled that the federal government has 30 days to act on five applications for drilling permits from Ensco plc (NYSE: ESV). On the judge’s side, a consortium called the Marine Well Containment Company that was formed to create a response plan for a major spill in the Gulf announced that it has an interim plan ready to go. The five oil companies, Chevron Corp. (NYSE: CVX), Exxon Mobil Corp. (NYSE: XOM), ConocoPhillips Corp. (NYSE: COP), Royal Dutch Shell plc (NYSE: RDS-A), and BP, announced the plan yesterday. Helix Energy Solutions Group, Inc. (NYSE: HLX) is developing a similar system.

Most politicians and industry associations are eager to get Gulf exploration started again. The New York Times cites the president of the National Ocean Industries Association, “…the time to begin issuing permits is now. The court has spoken — the containment technology is there.”

That’s not exactly what’s happened. Judge Feldman’s ruling is based on his determination that the Department of Interior needs to act on permit applications in a reasonable amount of time. He did not say anything about the efficacy of new containment technology.

The Marine Well Containment Company said that BOEMRE has witnessed a functional test of its interim solution, which works in water up to 8,000 feet deep at well pressures up to 15,000 pounds/square inch, and is capable of capturing 60,000 barrels of fluid/day. The company is also working on an expanded system that would work in depths up to 10,000 feet and have the capacity to capture 100,000 barrels/day of liquid. Here’s an illustration of the interim system.

As we’ve noted elsewhere, the latest report on the Gulf disaster amounts to nothing more than a me-too document that adds nothing to understanding what happened at the Deepwater Horizon or where the blame lies for that disaster.

Judge Feldman clearly didn’t care last June whether we knew what caused the blowout, and he doesn’t care now. The judge just wants the drilling to start up again. And so does the National Commission that issued the latest report on the Deepwater Horizon disaster. What most of us want is a steady supply of oil as cheaply as we can get it. Gulf of Mexico drilling will resume very soon now.

Paul Ausick

Filed under: Oil & Gas Tagged: BP, COP, CVX, ESV, HLX, RDS-A, XOM

Offshore Drilling May Not Be as Strong as Expected (ESV, PDE, RIG, BP, WOPEY, DO, PBR)

Administrator — Mon, 07 Feb 2011 18:07:42 +0000

Today’s announcement of a definitive merger agreement between Ensco plc (NYSE: ESV) and Pride International Inc. (NYSE: PDE) is the first major deal among offshore drillers since the Macondo well explosion last April. The combined company will be the second-larges offshore driller in the world, behind only Transocean Ltd. (NYSE: RIG). The deal has been talked about for some time, and is largely grounded on the ideas that scale will work to the combined companies’ favor and that offshore drilling is about to boom. But is that really true?

The disaster in the Gulf of Mexico at the Macondo well owned by BP plc (NYSE: BP) has led to stricter proposed regulation in the US portion of the gulf. And Reuters noted in January that “the oil industry worldwide is preparing for a crackdown on risky and expensive offshore drilling” as a result of the Gulf disaster. Australia tightened its permitting regime before issuing permits to BP and Woodside Petroleum Ltd. (OTC: WOPEY), and Brazil is also considering tightening its regulations.

The Financial Times recently reported that the five largest oil companies in the world are set to spend $128 billion on capital investment in 2011. A lot of that spending will occur onshore in North America, where drilling for shale gas is much easier, surer, and less risky financially. It’s a rare hole in a shale gas play that comes up dry.

Shale gas development has also begun in Europe, particularly in Eastern Europe and, interestingly, in France, as well as projects ramping up in China. The catch is that shale gas does not fill the world’s demand for transportation fuel. Currently, only oil does that.

MarketResearch.com has estimated that $64.2 billion will be spent on offshore drilling in 2011, about half the total $128 billion investment predicted by the FT. The bulk of the investments are expected to be made in the Asia-Pacific region, although MarketResearch.com also notes expected growth in the US Gulf of Mexico, Brazil, and West Africa.

Another hitch is the availability of offshore drilling rigs. According to PennEnergy’s weekly offshore rig count, there are a total of 790 offshore rigs in the world’s supply, of which 571 are currently in use. The global utilization rate is 72.3%.

With that much spare capacity, day rates could come under pressure, hurting revenue and profits at drillers like Ensco, Transocean, and Diamond Offshore Drilling Inc. (NYSE: DO). Rig utilization in western Africa, arguably the least regulated offshore drilling area in the world, is still just under 72%.

Drilling in the Arctic will also not begin in earnest this year, although drilling activity is expected to increase in the North Sea. Utilization of offshore rigs in Europe is at nearly 80%, so this could be a bright spot for drillers in 2011.

Transocean shares are trading at around $80, with a mean price target for the next 12 months of $82.57. The company’s 52-week range is $41.88-$92.67. Ensco’s target price (before the merger announcement) was $57.19 and its 52-week range was $33.33-$55.88. Ensco’s shares closed last Friday at $54.41. Diamond’s 52-week range is $54.70-$93.42, its mean price target is $69.67, and it is currently trading around $72.55.

The offshore drillers will feel the effects of the slowdown in the US Gulf of Mexico, and are vulnerable to tighter regulations in Australia and, perhaps, even the North Sea. As long as there is regulatory uncertainty surrounding offshore drilling, it is best to be cautious about the cheery outlook for these drillers.

And let’s not omit Petrobras (NYSE: PBR). It now sits on billions of barrels of oil that were purchased from the Brazilian government.

Paul Ausick

Filed under: Mergers and Buy Outs, Oil & Gas Tagged: BP, DO, ESV, PBR, PDE, RIG, WOPEY

Mergers As Far As The Eyes Can See (AOL, BEC, DHR, BRK-A, BRK-B, WSC, ESV, PDE, SNY, GENZ, GGOX, ENWV)

Administrator — Mon, 07 Feb 2011 13:49:17 +0000

They call it “Merger Monday” for a reason. Today’s news is not dominated by football hangovers. It is dominated by a slew of headlines over mergers, mergers, and more mergers. We compiled a brief summary of each deal this morning.

AOL Inc. (NYSE: AOL) is paying $315 million to acquire privately-held Huffington Post to revamp its online content.

Beckman Coulter Inc. (NYSE: BEC) is being acquired by Danaher Corp. (NYSE: DHR) for $5.87 billion. The deal comes to $83.50 per share and the $5.87 billion compares to a market cap of roughly $31.5 billion for Danaher. Danaher investors better hope that synergies and cost efficiencies can be had in a serious way because this was about $10.00 above what we thought was a fair market value in December when the rumors first broke.

Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) is finally making good on an event that first surfaced last August. Warren Buffett and friends are acquiring the rest of Wesco Financial Corporation (NYSE Amex: WSC), the remaining 19.9% not owned, for cash or shares of Berkshire Hathaway Class B common stock at the election of each shareholder for almost $550 million with a starting value before gains and items of $386.55 per share.

Ensco Plc (NYSE: ESV) is acquiring Pride International (NYSE: PDE) in a cash and stock deal valued at $41.60 prior to any dilution or share value change. The deal is for 0.4778 shares and $15.60 in cash.

Sanofi-Aventis (NYSE: SNY) is reportedly close to striking a deal to acquire Genzyme Corporation (NASDAQ: GENZ) for some $74 to $77 per share plus what will be up to a $5 to $6 earn-out right per share based upon certain milestones.

In a much smaller deal, GigOptix, Inc. (OTCBB: GGOX) is acquiring Endwave Corporation (NASDAQ: ENWV) in a stock for stock deal that appears to be close to a merger of equals. Endwave shareholders will own some 42.5% of the combined company.

JON C. OGG

Filed under: Mergers and Buy Outs Tagged: AOL, BEC, BRK-A, BRK-B, DHR, ENWV, ESV, GENZ, GGOX, PDE, SNY, WSC

Carl Icahn Gets More Into Energy Stocks (BP, CHK, APC, ESV, NRG)

Administrator — Mon, 16 Aug 2010 19:20:32 +0000

Carl Icahn is known for many things, particularly when it comes to shaking companies up. A theme throughout Icahn’s newest holdings as of June 30 was an increase in the energy sector. Icahn owns no BP plc (NYSE: BP) shares per his latest 13-F filing, but the BP spillover, no pun intended, did bring down many solid energy companies and it seems that Icahn decided to use the second quarter’s falling share prices in the sector as a catalyst to acquire more shares.

Chesapeake Energy Corporation (NYSE: CHK) was a large increase. The March 31 position of roughly 2.1 million shares was boosted up to 12.739 million shares.

Anadarko Petroleum Corporation (NYSE: APC) was a 2 million share stake, which was new in the quarterly reports. Another add was a position of 200,000 ADRs of Ensco PLC (NYSE: ESV). Ensco is an offshore contract drilling services outfit for the oil and gas industry.

NRG Energy, Inc. (NYSE: NRG) was a new stake at 2.37 million shares, although it is on the power generation side of the equation.

Icahn is known for sometimes loud entrances and quiet exits, so who knows if he has gotten deeper into these companies since the June 30 close-out date.

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

JON C. OGG

Filed under: Activist Investor, Oil & Gas Tagged: APC, BP, CHK, ESV, NRG

Top 10 Analyst Upgrades and Downgrades (BRK-B, BP, ESV, NSC, RIMM, SNDK, SIRI, TASR, TOT, WFMI)

247wallst — Mon, 01 Mar 2010 13:07:15 +0000

These are ten of the top analyst upgrades, downgrades, and initiations we have seen from Wall Street research calls this Monday morning in the pre-market hours:

Berkshire Hathaway Inc. (NYSE: BRK-B) Cut to Market Perform at KBW.
BP plc (NYSE: BP) Raised to Buy at BofA/Merrill Lynch.
Ensco International (NYSE: ESV) Raised to Conviction Buy List at Goldman Sachs.
Norfolk Southern (NYSE: NSC) Raised to Overweight at Barclays.
Research-in-Motion (NASDAQ: RIMM) Target raised to $100 at Canaccord.
SanDisk Corporation (NASDAQ: SNDK) Maintained as Dell at Auriga.
SIRIUS XM Radio Inc. (NASDAQ: SIRI) Cut to Hold at Wunderlich.
TASER International (NASDAQ: TASR) Cut to Neutral at JPMorgan.
Total SA (NYSE: TOT) Cut to Neutral at BofA/Merrill Lynch.
Whole Foods Market, Inc. (NASDAQ: WFMI) Raised to Neutral at UBS.

Jon C. Ogg

Filed under: Analyst Calls Tagged: BP, BRK-B, ESV, NSC, RIMM, SIRI, SNDK, TASR, TOT, WFMI

Early Bird Analyst Downgrades (DO, ESV, HBC, MORN, PPO, PWAV, RDC, TDW, TROW)

247wallst — Fri, 31 Oct 2008 06:00:00 +0000

These are some of the early analyst downgrades we are seeing from Wall Street this Friday morning with about two and a half hours until the open:

Diamond Offshore (DO) Cut to Hold at Jefferies.
Ensco (ESV) Cut to Hold at Jefferies.
HSBC (HBC) Cut to Sell at Goldman Sachs.
Morningstar (MORN) Cut to Market Perform at KBW.
Polypore International (PPO) Cut to Hold at BB&T.
Powerwave (PWAV) Cut to Neutral at Baird.
Rowan Companies (RDC) Cut to Hold at Jefferies.
Tidewater (TDW) Cut to Hold at Jefferies.
T. Rowe Price (TROW) Cut to Market Perform at KBW.

Jon C. Ogg
October 31, 2008

Posted in Analyst Calls Tagged: DO, ESV, HBC, MORN, PPO, PWAV, RDC, TDW, TROW

Oil Patch Offers No Great Earnings Assurances (NBR, NE, ESV, PDE)

247wallst — Thu, 02 Oct 2008 10:14:24 +0000

Oilfield services company Nabors Industrial (NYSE:NBR) revised its guidance downward after the market closed yesterday and its share price is approaching a new 52-week low. And its bringing its competitors down with it. Noble Corporation (NYSE:NE) is off more than 7%, Ensco International (NYSE:ESV) is off more than 5%, and Pride International (NYSE:PDE) is off nearly 7% in early trading today. Both Pride and Noble have touched new 52-week lows.

Nabors now expects third quarter EPS of $0.65-$0.68, below analysts’ expectations of $0.80. The biggest component of thedownturn is an expected mark-to-market loss of $22 million on Nabors’s450 million-share investment in Honghua Group Ltd. Nabors alsoestimates $13 million in property losses due to Hurricanes Gustav andIke. The company also plans to record a tax adjustment of $0.06/share.On more than 280 million shares outstanding, that amounts to about $17million.

The nearly 19% drop in EPS is the headline number here. The componentsof that drop are probably unique to Nabors and don’t really have anyrelevance to other oilfield services companies. Operationally, evenNabors appears to be doing okay, although its international segment hasexperienced "excessive" downtime in Mexico and Saudi Arabia and otherdelays elsewhere.

The problem looks like cash flow. With the exception of Noble, theseoutfits had negative cash flows in the June quarter. It’s no secretthat credit is hard to get. Crude pricesare falling because of recession fears, and that means less drilling.Even if the US Congress approves the bailout/rescue plan, globaleconomic growth is likely to continue to be slow. E&P companieswon’t spend as much on capex or new exploration, and the drillers arelikely to contract even more. Growth looks to be out of the picture.

Paul Ausick
October 2, 2008

Posted in Earnings, Earnings Warning, Oil & Gas Tagged: ESV, NBR, NE, PDE

Top Pre-Market Analyst Upgrades (BSX, CCMP, DAL, ESV, HBI, JNPR, NE, RVBD, TER, VIA)

247wallst — Fri, 25 Jul 2008 06:32:40 +0000

These are some of the top analyst Upgrades and positive calls we are seeing early this Friday morning:

Boston Scientific (BSX) Started as Outperform at Piper Jaffray.
Cabot Micro (CCMP) Raised to Outperform at JPMorgan.
Delta Airlines (DAL) Raised to Buy at Merrill Lynch.
Ensco (ESV) Raised to Buy at Jefferies.
Hanesbrands (HBI) started as Outperform at Morgan Keegan.
Juniper Networks (JNPR) Raised to Outperform at FBR; Raised to Buy at Citigroup.
Noble (NE) Raised to Buy at Jefferies.
Riverbed Tech (RVBD) Raised to Outperform at Baird.
Teradyne (TER) Raised to Overweight at Lehman.
Viacom (VIA) Raised to Buy at Goldman Sachs.

Jon C. Ogg
July 25, 2008