“Formula for success: rise early, work hard, strike oil.” - J. Paul Getty
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Shares of offshore drillers gained across the board today, even as Ensco (NYSE:ESV) was downgraded to Underperform at Wells Fargo and Transocean (NYSE:RIG) was maintained with a Sell rating at Evercore ISI.
Calumet Specialty Products Partners (CLMT -9.9%) sinks to a 52-week low after Credit Suisse downgrades units to Neutral from Outperform with an $18 price target, cut from $32, following weak Q4 results.
Credit Suisse says it applauds CLMT's desire to focus on its core specialties business and away from more commoditized pursuits, but adds it could be a long road ahead before CLMT finds its business on a more stable footing, with balance sheet and dividend path risks not entirely shared by other refiner MLP names.
The firm is less optimistic generally about U.S. independent refiners, and cuts its price targets for CVR Refining (CVRR -5.9%) to $16 from $23, and for Alon USA Partners (ALDW -2.6%) to $21 from $31.
Weatherford International (WFT -6.8%) and a Swiss inspections group are exchanging blame for the disappearance last year of radioactive material used to test pipes at an oil field in southern Iraq.
Pacific Exploration & Production (OTCPK:PEGFF -7.5%) says it reached a forbearance agreement with certain noteholders, giving it more time to achieve a restructuring of its balance sheet.
The deal follows the company's decision last month not to make scheduled interest payments due on the notes and to seek restructuring alternatives.
The agreement is with holders of ~40% of its $4.1B in 5.375% senior notes due 2019 and of its 5.625% senior notes due 2025.
$ENB - Enbridge (ENB -2.1%) is lower as part of today's broad energy rout, even after reporting better than expected Q4 earnings as record oil shipments on its main pipeline system shielded the company from the collapse in prices.
ENB's Mainline system, which moves most of Canada's crude exports to the U.S., shipped an average of 2.2M bbl/day of oil during Q4, compared with 2.1M a year earlier.
ENB says it will defer C$5B in capex planned for this year and the next to 2018, as the Sandpiper and Line 3 replacement pipeline projects to Wisconsin are delayed to 2019 from 2017 to allow for completion of environmental reviews and permitting in Minnesota.
ENB also says the secured component of its 2015-19 growth capital program totals C$26B, of which ~$8B already has been funded and brought into service through the end of 2015.
EP Energy (EPE -21.2%) sinks to a 52-week low as UBS downgrades shares to Neutral from Buy with a $2.75 price target, cut from $4.50, after the company announced lower than expected Q4 volumes and FY 2016 earnings guidance.
With the amount of debt on the balance sheet and recent declines in production, UBS believes EPE may not be able to continue to produce enough oil in the near term to remain a strong player in the oil market.
UBS also notes that EPE's capex is expected to fall 25%-60% Y/Y to save cash and maintain company operations, but also ensures that EPE will have a difficult time growing either their top-line or profitability.
Halliburton (HAL -1.2%) likely will need to sell more assets than initially planned to gain Australia's approval for its merger with Baker Hughes (BHI -0.8%), an Australian competition lawyer familiar with the case tells CTFN.
According to the lawyer, the critical issue for HAL is finding an alternate buyer that will take a bundle of divested assets to be a stronger competitor across various markets.
The Australian regulator was due to decide on the deal on Dec. 17 but delayed the decision indefinitely.
The merger also is awaiting clearance from Brazil, China, India and the European Commission.
Antero Resources (AR -3.8%) extends its two-day loss to 10% since announcing a 23% Y/Y reduction to its 2016 capital budget to $1.4B from its prior-year spending of $1.8B.
$AR plans to operate an average of 7 drilling rigs between the Marcellus and Utica Shale plays, 50% fewer than its average 14 drilling rigs operated in 2015; in shifting activity toward the Marcellus from the Utica, AR says ~75% of its drilling and completion budget is allocated toward the Marcellus.
AR forecasts FY 2016 production to rise 15% Y/Y to 1.715B cf/eday of gas, with net liquids increasing 24% to 60K bbl/day.
$BHI - The number of U.S. oil rigs fell by 26 to 413 for a ninth straight week of declines to the lowest level since December 2009, according to the latest survey from Baker Hughes reported Friday.
The total rig count, which includes one fewer gas rig for a total of 101, fell by 27 from last week to 514 and is now down 796 rigs from last year's 1,310, with oil rigs down 606, gas rigs down 188, and miscellaneous rigs down 2.
Janney and Credit Suisse have joined the ranks of firms downgrading SunEdison (SUNE -5.6%), with each cutting shares to Neutral. The battered solar/wind project developer is $0.06 above a low of $1.37.
Credit Suisse cites an "uncertain near-term liquidity profile." However, the firm doesn't think SunEdison needs to restructure its debt or faces near-term insolvency.
"Put simply, SunEdison has tried to run too quickly - seeking hyper growth at the same time capital markets are more challenged - constraining their balance sheet,"
$DUK - Duke Energy (DUK -2.1%) is downgraded to Neutral from Overweight with an $81 price target at J.P. Morgan, based on a “disappointing core business outlook" reflected in DUK's Q4 results and guidance, "as growth now appears to need more time to play out than we had anticipated.”
The firm says DUK's revised FY 2016 and longer-term EPS guidance was lower than it expected, despite expectations of major capital deployment over the next three years, zero cost inflation and high customer count growth.
JPM says its base case scenario for DUK now requires internal equity of $700M in 2018-20, excluding the $500M-$750M this year required to maintain credit ratings for the Piedmont Natural Gas deal.
$ENB - Enbridge (NYSE:ENB) says it is looking for ways to reduce its dependence on oil sands growth, as the crude price collapse casts doubt over the future of projects in western Canada.
Guy Jarvis, the head of ENB’s pipeline operations, said during today's earnings conference call that the company would shift its focus after the current wave of projects draws to a close near the end of the decade, adding that ENB also would look at power generation and energy services as areas for growth.
ENB has escaped much of the impact of the market rout that has hurt its customers, helped by long-term shipping contracts, increasing volumes as current oil sands projects are completed, and little direct exposure to crude pricing.
Q4 earnings beat expectations even as ENB said it would defer spending C$5B of a planned C$18B earmarked for new projects over the next three years.
CEO Al Monaco said during the call that ENB is unlikely to begin construction on its proposed Northern Gateway oil pipeline to Canada’s Pacific coast by a year-end deadline, and may ask Canadian regulators for an extension in the timeline for the project.
$NBR - Concerns around Nabors Industries' (NBR -2.6%) balance sheet are overblown, Citi analyst Scott Gruber says, noting the company closed the year with $250M in cash and an undrawn $2.25B revolver.
NBR can "easily fund" the $350M maturity in Q3 with current liquidity and then has until 2018 to finalize financing options on the next maturity, the analyst says, as he keeps his Buy rating on the shares while lowering his price target to $10 from $11.
Earlier: Nabors beats by $0.03, beats on revenue (Feb. 16)
Sounds like some fun. What parts are you covering in your trip?
$MEP - Midcoast Energy Partners is downgraded (MEP -10.3%) to Underperform from Outperform with a $5 price target, slashed from $16, at Credit Suisse, which says that although the company made progress in 2015, it was inadequate in the face of its rapidly deteriorating fundamentals.
In its Q4 earnings report, MEP's Q4 adjusted EBITDA of $27M came in better than expected, but distributable cash flow of $16 million fell short of estimates due to high maintenance capex and interest expenses, and the company’s guidance for 2016 came in 39% below the consensus, prompting a 21% plunge in the unit price yesterday.
MEP needs $40M in support from Enbridge Energy Partners (EEP +5.2%) to pay 2016 dividends, Credit Suisse says.
We will see. Still a lot of pain and gas is continuing to slump in peak months.
$DVN - Devon Energy (NYSE:DVN) -6.8% premarket after upsizing its public offering to 69M common shares, with an underwriters option to purchase an additional 10.35M shares, and pricing the offering at $18.75/share.
The offering, first announced after yesterday's close, originally was sized at 55M shares.
RBC Capital cuts its price target on DVN to $35 from $50, noting that management seemed to imply in its Q4 earnings call that an equity raise was not necessary, but the offering looks like a reaction to current market conditions and improves liquidity for an oil price recovery (Briefing.com).
Ultra Petroleum (NYSE:UPL): Q4 EPS of -$0.25 misses by $0.09.
Revenue of $189.3M (-40.7% Y/Y) misses by $16.8M.
TransAlta (NYSE:TAC): Q4 EPS of C$0.01 misses by C$0.12.
Revenue of C$595M (-17.1% Y/Y) misses by C$105.5M.
$DNR - Denbury Resources (NYSE:DNR) -7.2% premarket after posting a surprise Q4 loss on below-consensus revenues that were 44% lower than the year-ago quarter.
DNR says it expects FY 2016 capex of ~$200M, which would represent a 51% reduction from 2015 capex of $407M.
Despite the second year in a row of reduced capital spending, DNR says its production declines should be minimized due to the long-lived low-decline profile of its asset base; the company sees 2016 production of 64K-68K boe/day, a 7%-12% Y/Y decrease.
Q4 production averaged 72K boe/day, up 1% Q/Q and down 4% Y/Y; total estimated proved oil and natural gas reserves at Dec. 31 were 289M boe.
CVR Partners (NYSE:UAN): Q4 EPS of $0.26 beats by $0.06.
Revenue of $66M (-11.3% Y/Y) misses by $4.15M.
CVR Refining (NYSE: $CVRR ): Q4 EPS of -$0.83 misses by $0.59.
Revenue of $948.3M (-46.4% Y/Y) misses by $47.57M.
$DUK Duke Energy (NYSE:DUK) -1.8% premarket after Q4 earnings fell short of expectations amid warmer weather in some of its markets.
DUK says Q4 earnings at its regulated utilities segment, its biggest, rose 9% Y/Y to $601M, helped by higher pricing and updated contracts with more favorable margins that countered the effect of record warm weather in the Carolinas and across the Midwest.
Q4 income in the international business fell 5.6% Y/Y to $68M, pressured by lower methanol prices, partially offset by an improvement in Brazilian operations; DUK has said it is looking to sell all or part of the international business.
DUK issues FY 2016 EPS guidance of $4.50-$4.70, in-line with analyst consensus.
Energen (NYSE:EGN) announces a public offering of 12M common shares, with an underwriters option to purchase up to an additional 1.8M shares.
EGN says it plans to use the proceeds to repay borrowings under its credit facility, fund drilling and development activities, and other general corporate purposes.
$NBL - Noble Energy +1.2% premarket after reporting better than expected Q4 earnings on reduced revenue despite boosting oil and gas output.
NBL reported an unadjusted quarterly loss, compared with a year-earlier profit, hurt by $2.2B in charges including asset writedowns.
NBL says Q4 total operating costs averaged $6.93/boe, down 22% Y/Y, while its average realized price for crude oil fell 44% and its realized price for natural gas decreased 27%.
The company says total Q4 sales volumes jumped 34% to 422K boe/day but forecasts Q1 production available for sale of 395K-405K boe/day, citing downtime at its Alba field compression project offshore Equatorial Guinea for the decline.
NBL forecasts FY 2016 sales volumes averaging ~390K boe/day, a 10% Y/Y increase and essentially flat pro-forma for the Rosetta merger.
NBL reaffirms 2016 capex at $1.5B, a ~50% reduction from 2015 levels.
SandRidge Energy (NYSE:SD) says it will exercise its grace period and defer making $21.7M in interest payments on its outstanding $543.6M principal amount of 7.5% senior notes due 2023 and its outstanding $46.9M principal amount of 7.5% senior convertible notes due 2023.
SD says it has sufficient liquidity to make the payments but will use the 30-day grace period in connection with its ongoing discussions with stakeholders.
Foresight Energy (NYSE:FELP) says it will exercise its grace period and defer making $23.6M in interest payments due under the indenture governing its 7.875% senior notes due 2021.
During the 30-day grace period, FELP says it will continue to engage in discussions and negotiations with noteholders and secured lenders.
Sometimes it is a non issue. Other cases it can be a sign of the times. Let's hope the former.
I've seen it where ample liquidity doesn't hinder Chapter 11. Many times creditors don't want to wait until there is none left to attempt a reorganization.
I have got to admit that is pretty funny.
Chesapeake Energy is fighting tooth and nail to make it through this downturn, and restructure ~$10 billion in debt.
That may work, or it may not. In any case, Chesapeake Energy's reassurance to investors that the company does not pursue bankruptcy has had the opposite effect.
This has added to rampant speculation that bankruptcy may be the only alternative for the company if a debt restructuring fails.
This could mean little to no common equity left. It likely will make for some good trading opportunities but possibly not before the bottom falls out further.
$RDS.A - The $53B mega deal - creating the world's biggest trader of liquefied natural gas - came into force today after shareholders waved through the tie-up at the end of January despite slumping oil prices.
"We will now be able to shape a simpler, leaner, more competitive company, focusing on our core expertise in deep water and LNG," CEO Ben Van Beurden declared.
Shell (RDS.A, RDS.B) has said it will cut more than 10K jobs from the combined group and sell $30B of assets over the next three years in order to finance the deal, buy back shares and support dividends.
We largely are off market but source data trough drillinginfo and other sources. We get information from the various A & D groups. The big brokerage sites are oil & gas clearing house and energynet. Haven't used them much but know them well.
They will likely going through a reverse split to try to comply. May be a rough forward near term.
PGN says the plan will allow it to reduce more than $1.1B of debt and loosen some covenants.
Noble Corp. (NE +8.3%), PGN’s former parent, says it reached an agreement that would release it from all claims related to the 2014 spinoff.
Paragon Offshore (OTCQX:PGNPF +146%) says it has reached an agreement with creditors to restructure its $2.7B of debt, and plans to file for Chapter 11 bankruptcy by Sunday.
$WLL - Whiting Petroleum (WLL -5.7%) is sharply lower even as most energy stocks are higher today, as Moody’s downgrades WLL's corporate family rating to Caa1 from Ba2, a drop of five notches deeper into junk territory.
The ratings agency says its move reflects expectations of very weak cash flow-based leverage metrics in 2016 and particularly in 2017, when WLL's hedges roll off; with the company facing structurally low oil prices through 2017 and a heavy debt burden, Moody's sees a heightened risk of a debt restructuring for the company.
$WFM - Whole Foods will be swimming against the current to sustain current earnings.
Not only must price investments be significant enough to reverse traffic trends and increase basket, they also require meaningful cost reductions to offset declining gross margin.
With the growth of lower priced organic and upscale groceries at Trader Joe's, Kroger, and Costco (among others), the road ahead still looks challenging and complex.
Further, if customer perception does not change, more price investments may be required to reverse declining traffic trends.
That suggests Whole Foods could be losing its premium franchise and margins will likely be lower in 1-2 years time.
$BHI $UWTI - The U.S. oil rig count fell for the eighth consecutive week, shedding 28 to 439, according to the latest Baker Hughes survey.
The total U.S. rig count, which includes two fewer natural gas rigs to 102, fell by 30 to 541 following last week's decline of 48.
Compared to last year, the total U.S. rig count has fallen by 62%, with oil rigs down by 60%.
Chesapeake Energy (CHK -7.3%) remains sharply lower even after a Bloomberg report that it is is planning to pay $500M of debt maturing in March, using a combination of cash on hand and other liquidity that may include its credit line.