MARKET CURRENTS
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MARKET CURRENTS
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Today - Tuesday, May 22
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5:35 PM The proposed Keystone XL pipeline would raise U.S. gasoline prices, according to the National Resources Defense Council: The pipeline would divert crude oil from the U.S. Midwest to Gulf Coast refineries geared to producing diesel fuel for export, which would reduce gasoline produced for U.S. consumers and raise production costs, making the fuel more expensive. 6 Comments
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4:45 PM A group of investors led by Warburg Pincus will pump as much as $1.125B into a deepwater oil-and-gas exploration start-up, continuing private equity's dive into the Gulf of Mexico but differing from many in its focus on the high-risk, high-reward deepwater business. "With the improved safety procedures and ramp-up in activity, the timing is great," says Brian Reinsborough, head of the start-up. Comment!
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4:34 PM Falling commodity prices, tightening processing margins and renewed fears of a European banking crisis have dragged down master limited partnerships, but Credit Suisse says fundamentals remain strong. The firm suggests investors overweight MLP portfolios with large-cap, diversified names such as Kinder Morgan (KMP), Enterprise Products (EPD) and Plains All American (PAA). 2 Comments
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3:31 PM Transocean (RIG -0.9%) says its CFO misspoke when he said the company expected the U.S. to file more charges against "ourselves and BP and Halliburton and other employees" of the companies involved in the 2010 Gulf oil spill. RIG is well prepared to defend itself in court, although it is also open to a fair settlement, Steve Cauthen had said. Comment!
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3:02 PM Patriot Coal's (PCX -29.4%) news release this afternoon offered no new information, 24/7's Paul Ausick writes. It doesn’t deny the company's need for restructuring help, and says nothing new about the $625M term loan it couldn't close last week. "Is the commitment letter signed, sealed, and delivered? Doesn’t sound like it." Comment!
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2:46 PM Chesapeake (CHK +0.2%) stands by its plan to expand its oil production, saying it will spend 90% of its planned $7B capital budget for 2013 on drilling in oil fields, including ~40% earmarked for the liquids-rich Eagle Ford shale formation. CHK still plans on spending 7% of capex on dry gas production despite depressed gas prices. Comment!
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2:13 PM Patriot Coal (PCX) says it has entered into a commitment letter for a new revolving credit facility and new term loan facility for a total of $625M. Shares had collapsed -34.5% before the announcement; trading now halted. Comment!
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1:05 PM The technology led revolution in energy supply in the Western hemisphere means that "the days of Opec...are numbered," writes Roger Altman in the FT. "The threat of disruptions is actually diminishing," and "no embargo...will be severely disruptive." 5 Comments
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12:19 PM Patriot Coal (PCX -28.6%) plunges and is pulling all coal stocks (KOL -1.8%) lower, due to a report the company has fielded informal pitches from bankruptcy advisors. Last week, PCX delayed a refinancing after disclosing a potential contract cancellation from a key customer. ACI -7%, JRCC -6.3%, ANR -5.1%, BTU -3.8%, WLT -3.5%, CNX -2.3%. 10 Comments
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11:46 AM The massive oil fields in the Santos Basin cluster found off Brazil's coast by Petrobras (PBR -1%) and its partners hold 15B-20B barrels of oil to be developed, CFO Almir Barbassa says. Oil from the region will start being produced in the next three to four years and "we will soon be cash-flow positive," Barbassa says. Comment!
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11:20 AM More on Hugoton Realty Trust (HGT -23%): The company disclosed late Friday it will bear ~80% of a $29.6M XTO Energy (XOM) settlement, which is expected will cause costs to exceed revenues for HGT in its Oklahoma and Kansas properties and affect the Trust's distributions going forward. (earlier) Comment!
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11:12 AM Shares of Hugoton Royalty Trust (HGT -22.9%) plunge as a Sir Perfluis analysis on Seeking Alpha says "purchasing HGT units at current prices is like buying 60 cents for a dollar... Quite literally, unless natural gas prices stage a rally, a current HGT unit-holder can expect to receive total cash flows of less than the current share price." 6 Comments
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10:56 AM Investors can grab Plains All American Pipeline (PAA +1%) and its 5.3% dividend yield even cheaper than director Gary Petersen did when he bought 5K shares on May 17 at $79.47 each, DividendChannel writes. A long-term dividend history chart strongly suggests PAA is likely to continue paying a comparably attractive dividend. Comment!
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10:40 AM Nigeria's oil minister says it expects to renew onshore oil drilling licenses with Chevron (CVX) and Royal Dutch Shell (RDS.A, RDS.B) by June. Several licenses that expired as far back as 2008 have been in negotiations between foreign oil majors, Nigeria's state-oil firm and government for years. Comment!
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10:22 AM The selloff in Chesapeake Energy (CHK +0.2%) creates a buying opportunity, Oppenheimer says while maintaining its Outperform rating and $28 price target. CHK is accelerating its liquids production growth and asset monetization, and the firm thinks its net asset value after pending asset sales is above its current share price.
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10:09 AM EnerNOC (ENOC +12%) shares surge after Needham raises its rating to Buy from Hold, believing the stock has bottomed and should become more attractive to long-term investors. The firm says ENOC isn't another Comverge (now private), "as the company has far more substantial scale, prior history of profitability, and healthier overall capitalization." Comment!
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9:29 AM U.S. Energy (USEG) strikes a deal with privately-held Mueller Exploration to participate in the oil-rich Woodbine Sub-Clarksville 7 project located in Texas. USEG will pay $1.7M in cash to earn an initial 26.5% working interest in ~6,766 gross acres. Comment!
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8:57 AM Royal Dutch Shell (RDS.A) believes rising natural gas demand will underpin its future profits, even though oil pricing still accounts for 80% of its margins, CEO Peter Voser says. The long-term nat gas pricing outlook remains strong despite current low prices, Voser says, as Asian-Pacific customers increasingly switch from powering their industrial plants with oil to gas. Comment!
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8:15 AM UN atomic inspectors and Iran reach agreement that will allow the IAEA to inspect suspected nuclear weapons sites, possibly opening the door to a deal to ease sanctions which could push crude oil prices down another $5/bbl or more. Iran's incentive: Its crude shipments are stalled, with ~40M bbls floating around in the Persian Gulf with nowhere to go. 4 Comments
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