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Analysts Clip Oil Patch (ME, BP, CVX, COP, XOM, RDS.A)

247wallst — Tue, 14 Apr 2009 11:52:09 +0000

These are some of the analyst calls we have seen up and down in the oil patch this Tuesday morning:

Mariner Energy (ME) Started as Buy at Jefferies.
BP (BP) Cut to Perform at Oppenheimer.
Chevron (CVX) Cut to Perform at Oppenheimer.
ConocoPhillips (COP) Cut to Perform at Oppenheimer.
Exxon Mobil (XOM) Cut to Perform at Oppenheimer.
Royal Dutch Shell (RDS.A) Cut to Perform at Oppenheimer.

Jon C. Ogg

Posted in Analyst Calls, Oil & Gas Tagged: BP, COP, CVX, ME, RDS.A, XOM

Oil & Energy Upgrades & Downgrades (APA, DNR, E, XOM, OXY, PXP, RDS.A, SPWRA)

247wallst — Mon, 16 Mar 2009 12:20:11 +0000

These are the top analyst calls we have seen in the oil patch and in the energy sector this Monday morning:

Apache (NYSE: APA) Raised to Outperform at Credit Suisse.
Denbury Resources Inc. (NYSE: DNR) Cut to Neutral at Credit Suisse.
ENI S.p.A. (NYSE: E) Raised to Overweight at JPMorgan.
Exxon Mobil (NYSE: XOM) Started as Buy at Citigroup.
Occidental Petroleum (NYSE: OXY) Cut to Neutral at Credit Suisse.
Plains Exploration (NYSE: PXP) Cut to Neutral at Credit Suisse.
Royal Dutch Shell (NYSE: RDS.A) Cut to Market Perform at Sanford Bernstein.
SunPower (NASDAQ: SPWRA) Cut to Underweight at Morgan Stanley.

JON C. OGG

Posted in Alternative Energy, Analyst Calls, Oil & Gas Tagged: APA, DNR, E, OXY, PXP, RDS.A, SPWRA, XOM

Analysts Up & Down The Oil Patch (BP, COP, XOM, RDS.A, STO, TOT)

247wallst — Mon, 23 Feb 2009 14:14:27 +0000

We have actually seen a lot of analyst calls in the oil patch this morning. Some are conflicting against each other as you will see.

BP plc (NYSE: BP) Started as Underweight at Barclays.
ConocoPhillips (NYSE: COP) Raised to Hold at Deutsche Bank.
Exxon Mobil (NYSE: XOM) Raised to Buy at Deutsche Bank.
Royal Dutch Shell (NYSE: RDS.A) Started as Underweight at Barclays.
StatoilHydro (NYSE: STO) Cut to Neutral at JPMorgan.
Total S.A. (NYSE: TOT) Started as Overweight at Barclays.

Jon C. Ogg
February 23, 2009

Posted in Analyst Calls, Oil & Gas Tagged: BP, COP, RDS.A, STO, TOT, XOM

Woes in the Oil Patch (RDS.A, XOM, COP, CVX)

247wallst — Fri, 26 Dec 2008 10:29:05 +0000

Flying J Oil, Inc., a privately-held oil company headquartered in Ogden, Utah, filed for bankruptcy protection under Chapter 11 on December 22nd. The company owns and operates more than 250 retail outlets in the western US; produces oil and gas in eastern Utah and eastern Montana; owns and operates a 70,000 barrel/day refinery in Bakersfield, California; and owns the 700-mile Longhorn pipeline that carries 70,000 barrels/day of gasoline from the Gulf Coast to El Paso, Texas.

Details of the filing are scarce, but the Salt Lake Tribune reported that the company estimated its liabilities at $100-$500 million, and its assets at more than $1 billion. According to the newspaper, the company’s president stated that "the decline of oil prices happened so quickly that Flying J didn’t have time to convert assets that weren’t tied to petroleum prices into cash that could fund its obligations."

In March 2005, the company purchased the Bakersfield refinery from Royal Dutch Shell plc (NYSE:RDS.A). The refinery had all but shut down at the time, but Flying J brought it back into full production. The revived refinery buys its oil from a number of local independent oil producers, most of which depend on it for all or most of their income. The refinery produces about 6% of California’s supply of diesel fuel and 2% of the state’s gasoline.

Flying J also expanded its retail operations at a time when major integrated oil companies such as Exxon Mobil Corporation (NYSE:XOM), ConocoPhilips Corporation (NYSE:COP), and Chevron Corporation (NYSE:CVX) were looking to shed retail travel centers and filling stations . While retail operations could cope with high pump prices, they can not adjust equally well to rapidly falling prices coupled with declining traffic.

People aren’t driving as much because they’re using the money to pay for food and rent and clothing. The weakness and fear in the overall economy trumps lower gasoline prices. It’s that simple.

Oil exporting countries, indeed all oil companies, need prices to rise, and that won’t happen until the global economy turns around. Withholding supply, as OPEC plans to do, won’t cause the price to rise unless OPEC turns off the tap completely–and the OPEC countries can’t afford to do that.

We noted the squeeze on refiners earlier this week. Overall, the oil majors could show weaker than expected results for the fourth quarter. Crude prices have fallen through the floor, refining margins have tanked, and costs have risen. Fortunately for Exxon and the other majors, they have very large deposits of cash. They’re going to need it.

Paul Ausick
December 26, 2008

Posted in Oil & Gas Tagged: COP, CVX, RDS.A, XOM

Wanted: Investors in Russian Energy (XOM, RDS.A, BP)

247wallst — Wed, 10 Dec 2008 10:14:59 +0000

Falling crude oil prices have hit Russia particularly hard. The country needs a crude price of about $70/b to cover production costs and to fund the government. So, what do they do when the price falls into the $40s?

According to Platts, a vice-president of Gazprom Neft, the giant natural gas company’s oil division, held a press conference and announces that now is a "good time" for foreign oil companies to invest in Russia’s oil and gas sector. The question now is whether or not Big Oil will line up to come to Russia’s rescue.

Back in the wild and woolly 1990s, Russia sold production sharingagreements to vast fields of oil and gas. Then, in late 2004, theystarted taking it all back. First, the government decimated Yukos,Russia’s largest independent producer. Then it pulled back on ExxonMobil (NYSE:XOM), Shell (NYSE:RDS.A), and BP plc (NYSE:BP). Theproduction sharing agreements were torn up and government-controlledcompanies like Gazprom and Rosneft got majority stakes in the fields.

If Russia does open up a bit, it’s very likely that Big Oil will goback in, provided they get a decent split on costs and profits. Russianreserves of oil and gas are enormous, with much of the natural gasstill undeveloped. The catch is that most of the reserves are eitherfar from existing infrastructure or in some of the most forbiddingclimate on earth.

The Russians still need Western technology to get the oil and gas outof the ground. It remains to be seen what the government will give upin return.

Paul Ausick
December 10, 2008

Posted in Emerging Markets, Oil & Gas Tagged: BP, RDS.A, XOM

Exxon & Big Oil Actually Like Low Oil Prices (XOM, RDS.A, MUR)

247wallst — Thu, 30 Oct 2008 08:31:02 +0000

It may be a stretch to say that oil companies actually like lower oil prices, but these oil companies keep posting great earnings even though oil has fallen from north of $140/barrel in June to the $60′s in October. Exxon Mobil (NYSE:XOM) announced record earnings excluding special items for the third quarter of $13.38 billion (EPS of $2.59). Its chairman credited the company’s "disciplined business approach" for the record quarter.

Upstream earnings were up more than 33%, mostly attributable to higherrealized prices for crude oil and refined products. Crude oilproduction was off by 8% compared with the same period a year ago, andnatural gas production was also slightly lower. Downstream earnings(refining and marketing) were also up by about a third, due to highermargins.

No surprises at Exxon. The company thrived on record high prices forcrude and refined products. If prices remain as low as they are now,the fourth quarter could be significantly different.

Royal Dutch Shell (NYSE:RDS.A/RDS.B) also reported third quarterearnings before the bell this morning. The company announced EPS of$1.77 on revenues of $131.567 billion. EPS improved by more than 30%,while revenues were essentially flat and crude production was down.Here again, record high prices for crude tell the tale.

After the market closed yesterday, Murphy Oil (NYSE:MUR) announced itsthird quarter results, and, while not record-shattering, the company’sperformance was very good. Murphy turned in fully-diluted EPS of $3.04,up about two-thirds from a year ago. Revenues hit $8.19 billion, upmore than 40% from a year ago. The company attributed the increases tohigher margins in both upstream and downstream segments. In otherwords, high prices yield high revenues and earnings. How many high-paidexecutives did it take for Exxon, Shell, and Murphy to figure that out?

One guy who figured this out for himself is T. Boone Pickens. Duringthe bull market on oil, he was riding high. He’s been out of the oilmarket for "several weeks" as his hedge funds have reportedly lostabout $2 billion.

Right before the opening bell this morning, Exxon is trading up nearly 1%, Shell isdown about 1.5%, and Murphy is up about 2.5% If oil stays in a trading range it will at least get much easier for these companies to budget and plan..

Paul Ausick
October 30, 2008

Posted in Earnings, Oil & Gas Tagged: MUR, RDS.A, XOM

Top 10 Pre-Market Analyst Upgrades & Downgrades (RE, FIG, PRE, SGEN, TROW, AUY, NT, RICK, RDS.A, X)

247wallst — Mon, 27 Oct 2008 06:50:49 +0000

These are ten of the top analyst upgrades and downgrades we have seen this Monday morning with about 2 hours to the the open:

Everest Re (RE) to Outperform at Wachovia.
Fortress Investment (FIG) Raised to Hold from Sell at Citigroup.
PartnerRe (PRE) Raised to Outperform at Wachovia.
Seattle Genetics (SGEN) Raised to Outperform at Oppenheimer.
T. Rowe Price (TROW) Raised to Outperform at KBW; raised to Outperform at Wachovia.
Yamana Gold (AUY) Raised to Outperform at CIBC.
Nortel (NT) Cut to Neutral at UBS.
Rick’s Cabaret (RICK) Cut to Neutral at Merriman Curhan Ford.
Royal Dutch Shell (RDS.A) Cut to Underperform at Credit Suisse.
US Steel (X) Cut to Sell at UBS.

Jon C. Ogg
October 27, 2008

Posted in Analyst Calls Tagged: AUY, FIG, NT, PRE, RDS.A, RE, RICK, SGEN, TROW, X

Energy Watch Part III: Big Oil Well Off Highs (XOM, COP, RDS.A, CVX, BP, MRO, PCZ, APA)

247wallst — Mon, 18 Aug 2008 09:05:03 +0000

Even with oil prices well off of recent highs, these are still very much considered as above historical highs. The large integrated oil companies have experienced either declines or very small gains in value over the last year, and these are generally well off of their 52-week highs. Exxon Mobil (NYSE:XOM) has declined almost 4.5% over the last year but is down about 20% from its 52-week highs. BP (NYSE:BP) has fallen over 25% from its highs; Royal Dutch Shell (NYSE:RDS.A) is down 22% from its highs. ConocoPhillips (NYSE:COP) is off about 18% from its highs and Chevron (NYSE:CVX) is off almost 20% from its highs. Among smaller companies, the losses from recent highs are even worse. Apache (NYSE:APA) is down more than 28% from recent highs, Marathon (NYSE:MRO) is down about 28% from its recent highs%, and PetroCanada (NYSE:PCZ) is down about 31% from its recent highs. As you will see below, there are many reasons for these exaggerated drops and perhaps some underlying opportunities as well.

Refining and marketing have had a serious impact on earnings for allthese companies, with the exception of Apache, which is strictly anexploration and production operation. Refining margins are either waydown or non-existent. As we’ve noted before, gasoline inventories areat the top of their historical ranges, primarily because US drivers arekeeping their cars parked. What’s selling at premium prices are dieseland jet fuel, and refineries are aggressively seeking light, sweetcrude that yields as much as 30 gallons of distillates per 42-gallonbarrel. Production declines in Nigeria have reduced supplies of thistype of crude by as much as 400,000 b/d.

The refineries are forced to turn to heavy, sour crude which yieldsonly about 20 gallons of distillates per barrel. This has driven up thecost of diesel and jet fuels, and put a serious crimp in major oilcompany valuations. The situation is unlikely to change untilrefineries increase their capacity to produce distillates from theheavier crudes. Most are working on the issue, but it will take sometime and some serious investment.

A final word about Apache. It’s second quarter earnings and revenuesbeat analysts’ expectations, but production declines cast a chill overthe good news.

Big oil valuations depend on proved reserves and quarterly production.Production glitches have been covered up by high prices, and provedreserves are not growing. That combination is strong enough to keepstock prices low even when these companies report record earnings. Yes,it’s a mean old world.

Paul Ausick
August 18, 2008

Top Pre-Market Analyst Upgrades (AIG, AU, AAPL, BLKB, CREE, GENZ, HGG, LL, RDS.A, WBD)

247wallst — Tue, 05 Aug 2008 06:28:26 +0000

These are some of the top analyst upgrades and positive calls we are seeing this Tuesday morning:

American International Group (AIG) Raised to Buy at UBS.
Anglogold (AU) Raised to Outperform at Credit Suisse.
Apple (AAPL) Started as Buy at UBS.
Blackbaud (BLKB) Raised to Buy at Jefferies.
Cree (CREE) Raised to Outperform at Morgan Keegan.
Genzyme (GENZ) Started as Buy at Banc of America.

Hhgregg (HGG) Started as Buy at KeyBanc.
Lumber Liquidators (LL) Started Aa Buy at KeyBanc.
Royal Dutch Shell (RDS.A) Raised to Overweight at HSBC.
Will-Bill-Dan Foods ADR (WBD) Raised to Buy at Citigroup.

Jon C. Ogg
August 5, 2008

Fluor Adds Wind To Its Pocket (FLR, SI, RDS.A)

247wallst — Wed, 14 May 2008 07:28:17 +0000

Fluor Corporation (NYSE:FLR) won a contract from Scottish & Southern Energy to construct a 500 MW wind farm, the world’s largest, off the coast of Suffolk in the UK. Fluor will book the $1.8 billion contract in the second quarter of 2008. On Monday, Fluor reported a 63% jump in earnings and revenue growth of 32%, boosting the stock price by nearly $25.00 yesterday. This single project is equal to nearly a third of the company’s reported new business in the first quarter of 2008. Fluor’s stock is off $1.46 in pre-open trading. On any other day besides after a huge earnings move, this contract would have likely moved the stock differently.

The Greater Gabbard Offshore Wind Farm will generate enough electricity to power more than 415,000 homes, approximately the entire demand from Suffolk. Each of the 140 turbines will generate 3.6 MW. A division of Siemens (NYSE:SI) will supply the turbines. Construction is scheduled to begin in 2009, and the project is expected to be completed in 2011.

Earlier this month, Shell (NYSE:RDS.A) withdrew from an 1 GW wind farm project located in the Thames estuary that would have generated enough power to supply one-quarter of the homes in London. Shell’s move was interpreted as a significant blow to the British government’s eventual goal of 33 GW of offshore wind capacity, which would provide electricity to every home in the country. Today’s announcement by Fluor takes some of the sting out of that ill-wind.

Paul Ausick
May 14, 2008