The thoughts of restricting the pay packages of the CEOs of public companies may be in the air, but new data on chief executive compensation show that boards of directors are not taking any of it seriously.
Stephen Schwarzman, head of financial firm Blackstone (BX), made over $702 million in 2008 based on data from The Corporate Library. Read More
We’ve been closely tracking the weekly rig counts published by Baker Hughes Inc. (NYSE:BHI) for a while now. Drilling for oil has slowed significantly in the US, and drilling for natural gas has slowed even more. A year ago, Baker Hughes counted 1,227 gas rigs; last week, there were just 810, a drop of 44%. The biggest drop came in vertical rigs, with horizontal drilling off much less. Horizontal drilling is common in the shale gas plays such as the Barnett and Haynesville shales, and tends to drain the reservoirs more quickly than traditional vertical or directional drilling.
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These are some of the top pre-market analyst upgrades and positive calls we have seen this Tuesday morning with well over two hours until the market opens:
AXA (AXA) Started as Buy at Jefferies.
Energy Conversion Devices (ENER) Raised to Buy at Piper Jaffray.
Infineon (IFX) Raised to Hold at RBS.
Manpower (MAN) Raised to Neutral from Sell at Goldman Sachs.
Rio Tinto (RTP) Raised to Buy from Hold at Deutsche Bank.
XTO Energy (XTO) Raised to Outperform at RBC.
Jon C. Ogg
February 10, 2009
These are some of the early upgrades we are seeing on Wall Street this Thursday morning:
Jon C. Ogg
November 6, 2008
Shares of XTO Energy Inc. (NYSE: XTO) are trading higher after announcing a rather large acquisition. The company is acquiring privately held Hunt Petroleum Corp. for some $4.2 Billion in cash and stock.
The actual break-down of the merger is some $2.6 Billion consideration in cash and 23.5 million shares of XTO’s stock. As far as what it gets for the $4.2 Billion, the estimated reserves total about 1.052 trillion cubic feet of natural gas. As far as the daily additions, it could add 197 million cubic feet of natural gas, 2,300 barrels of natural gas liquids, and 8,500 barrels of oil. The company also expects to generate more than $1.2 Billion in cash flow next year at expected oil and gas prices.
The bulk of the properties are concentrated in East Texas as well as in in central and northern Louisiana with the rest being in or around the gulf of Mexico. It also has a small exposure for operations in the North Sea. This will take its production goal gains even higher based upon the additional properties. It had previously expected a 23% production growth target, and now it sees 28% to 30% growth. This is its second deal over the last 30-days.
XTO Energy shares are trading up about 1% at $68.39 on the day, and its 52-week trading range is $40.40 to $70.00. As far as its size, the market cap is now roughly $35 Billion.
You can join our open email distribution list to hear about other developments in IPO’s, secondary financings, spin-offs, mergers, and other special situations.
Jon C. Ogg
June 10, 2008
The American Exploration and Production Council (AXPC) today released a study by Wood Mackenzie, an energy consulting firm, claiming that costs to the natural gas industry associated with the pending alterations to the Lieberman/Warner Climate Security Act of 2007 put at risk the development of US natural gas resources. The 25-member council includes Chesapeake (NYSE:CHK), Williams (NYSE:WMB), XTO Energy (NYSE:XTO), Occidental (NYSE:OXY), Apache (NYSE:APA), El Paso (NYSE:EP), and Devon (NYSE:DVN).
Here’s the money quote from the AXPC press release: "…it is likely that a significant share of
government-imposed consumer emission allowance costs assessed on processors would actually be paid by exploration and production companies in the near term as funds are diverted, contracts are renegotiated, and the market adjusts to this new commodity burden." The conclusion is that if E&P companies must pay for carbon allowances, they will spend less on production, prices for natural gas will rise, and consumers will face higher prices due to limited availability on natural gas.
Well, you can’t blame gas producers for trying, but this is akin to yelling "Boo!" during a horror movie: who cares? What the producers are probably really upset about is the Act’s restriction on how much the cost of the allowances they will be allowed to recover from customers. If emission costs are borne 100% by producers, the Wood Mackenzie study estimates that nearly 50% of projected production for 2012-2017 becomes uneconomic to produce. If 50% of emissions costs are forced on producers, up to 14% of production becomes uneconomic.
The price of natural gas for US consumers is likely to depend far more on the spot price of LNG than it is on the cost of carbon allowances. If LNG prices are high (and there’s every reason to believe they will be), the price of US-produced natural gas will also be high. The AXPC may be fighting an unnecessary battle on this issue. Congress has determined that the best way to assess carbon allowances is at the wellhead or the point of import. Once that’s done, producers, processors, and consumers are treated the same. The producers might not like it, but they may just have to deal with it.
George Soros noted that speculation is driving up energy prices, and we also saw T. Boone Pickens call for $150 per barrel for oil by the end of this year.
Paul Ausick
May 29, 2008
Below are the top analyst calls we are focusing on this Wednesday morning:
Jon C. Ogg
April 2, 2008
Jon Ogg produces the Special Situation Investing Newsletter and he can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.
The largest losers among the big companies in the S&P 500 for the first quarter were:
Microsoft (MSFT) down 21.6%, Google (GOOG) down 36.7%, Apple (AAPL) down 27.8%, Intel (INTC) down 22%, Citigroup (C) down 29.3%, AIG (AIG) down 26.6%, Verizon (VZ) down 17.9%, Schering-Plough (SGP) down 22.1%, Merck (MRK) down 23.4%, Wachovia ((WB) down 31.7%, United Health (UNH) down 40.9%, Merrill Lynch (MER) down 26.3%, Marathon Oil (MRO) down 23.6%, EMC (EMC) down 22.8%, Amazon (AMZN) down 24.7%, Valero (VLO) down 30.1%, Fannie Mae (FNM) down 34.9%, CME Group (CME) down 30.1%, WellPoint (WLP) down 50.7%, Motorola (MOT) down 42.6%, Lehman (LEH) down 42.3%. Spint (S) down 51.1%, Best Buy (BBY) down 23%, Freddie Mac (FRE) down 25.3%, and NYSE Euronext (NYX) down 30.4%.
The largest winners among the big companies in the S&P 500 in the first quarter were:
Wal-Mart (WMT) up 9.7%, Devon Energy (DVN) up 17.3%, Yahoo! (YHOO) up 24.6%, Burlington Northern (BNI) up 10.5%, XTO Energy (XTO) up 18.2%, EOG Resources (EOG) up 33.2%, Calgene (CELG) up 28.6%, Chesapeake Energy (CHK) up 16.1%, CSX (CSX) up 28.6%, and Nucor (NUE) up 16.2%.
Douglas A. McIntyre
XTO Energy Inc. (NYSE: XTO) intends to sell 20,000,000 shares of common stock in a secondary offering, pursuant to its shelf offering. Lehman Brothers, Goldman Sachs, and JPMorgan are joint book-runners for the offering, and the overallotment option is for 3 million shares.
Proceeds of the offering are expected to fund recently announced property acquisitions and to repay indebtedness under its commercial paper program.
At current prices, this would indicate a sale of some $1.13 Billion in stock, and today’s market cap is $27.3 Billion.
XTO shares closed up 1% at $56.61, but shares are down roughly 2% on this offering.
Jon C. Ogg
February 13, 2008
Jim Cramer on tonight’s MAD MONEY has an oil stock pick since the energy companies are not reinvesting in exploration and wildcatting. One oil company that exploits higher oil prices is XTO Energy (XTO-NYSE). He says he went ahead and bought some for his charitable trust yesterday so he’d own the best wildcatter in the US.
It has ensured growth for years now with the purchase of assets from Dominion Resources, Inc. (D-NYSE). It held many oil and gas properties that were sold to XTO and to Loew’s (LTR-NYSE). XTO bought the natural gas reserves for $2.00 per gas unit that can ultimately sell it for $9.00 down the road. XTO sold off shares to help finance this and shares are now at a discount to the pricing because of the weak market. Cramer also thinks it has the best management team in the business.
Jon C. Ogg
June 7, 2007
Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.
Bed Bath & Beyond (BBBY) downgraded from Buy to Neutral.
Earnings estimates Raised: Aracruz Celulose S.A. (ARA), Sappi Ltd. (SPP), Celanese (CE). Earnings estimates Cut: XTO Energy (XTO).
Weyerhaeueser (WY) was pretty decent estimate hike. Goldman raised its 2007 EPS target to $1.40 from $1.20 and raised 2008 EPS from $2.05 to $2.40. Domtar (UFS) was added to the Americas Conviction Buy List and raised estimates for 2007 from $0.40 to $0.55 and 2008 from $0.55 to $0.75.
After the Scholastic (SCHL) share buyback plan, Goldman raised the 2008 EPS target from $2.50 to $2.65 based on the 14% share count drop.
(CCK) Crown Holdings removed from Americas Conviction Buy List to make room for Domtar (UFS) to go on.
Jon C. Ogg
June 5, 2007
Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he owns.
Dominion Resources Inc. (D-NYSE) has been trying to trim down its focus on more core assets via assets sales and select combinations. This morning the company has enetered into two seperate asset sales in a combined deal worth more than $6.5 Billion.
Loews Corporation (LTR-NYSE) is buying Dominion’s operations in the Permian Basin, Michigan and Alabama for $4.025 billion, including reserves of approximately 2.5 TCFE on Dec. 31, 2006.
XTO Energy Inc. (XTO-NYSE) is buying Dominion’s operations in the Rocky Mountains, Gulf Coast, San Juan Basin and South Louisiana for $2.5 billion; including proved reserves of approximately 1 TCFE on Dec. 31, 2006.
The company says it now has enough data on a post-sale basis for forward investment models. Domonion is internally projecting 2008 fiscal operating earnings per share to come in at $6.00 per share, with 4% to 6% growth thereafter. Here is a site link for its newer 2008 model on a post-sale basis. http://www.dom.com/investors/ir.jsp
XTO is an obvious play, but Loews Corp was a bit of a surprise from an outsider’s viewpoint. Loews does already own LNG storage and pipeline operations, but many were not expecting the company to spend this much to add on to LNG operations.
Jon C. Ogg
June 4, 2007
Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.
Stock Tickers: APA, BHI, BJS, CHK, DVN, ESV, XTO, VLO
After digging through the Barron’s list of "under-dividend" companies, something else came back to mind again: there are too many energy companies with tiny P/E ratios that yield under 1%. This is only some because there is a subjective group of companies. It is possible that some may have decided to bump their dividends, but here are eight more "under-dividend" energy related stocks that could all be dividend hiking candidates:
Company (Ticker) Yield P/E
Apache (APA) 0.8% 10.9
Baker Hughes (BHI) 0.6% 11.0
BJ Services (BJS) 0.7% 11.0
Chesapeake Energy (CHK) 0.7% 10.4
Devon Energy (DVN) 0.7% 12.6
Valero (VLO) 0.7% 8.0
XTO Energy (XTO) 0.9% 12.1
Ensco (ESV) 0.2% 10.7
The truth is that these companies are all probably looking at other alternatives and opportunities and these have frequently reserved cash for outside opportunities. If they aren’t going to make acquisitions that will help solidify their operations, then these should all start loosening up the hold on their wallets.
Shareholders now have more power then in prior times. Activist shareholders force all sorts of action now, so if a company isn’t being generous enough with shareholders then it might be their own fault.
Jon C. Ogg
May 19, 2007
Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.
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