Tuesday, November 23, 2010

Hess (NYSE:HES) Expands Bakken Holdings at Bargain Price

Hess Corp. (NYSE:HES) enlarged its holdings in the Bakken shale, acquiring an additional 167,000 acres at a bargain price of $4,500 an acre.

"HES agreed to acquire 167,000 net acres in the Bakken shale play from privately held TRZ Energy for $1.05 billion in cash, or an attractive price of -$4,500/acre after adjusting for 4.4 MBoed of production. This is well below the $8,500/acre price paid by WMB last week, the $5,000/acre paid for AEZ’s acreage, and other recent deal metrics of $5,500-$6,500/acre. The transaction will be funded by HES’ $2.4 billion cash balance at the end of 3Q, and is expected to close by year-end," said UBS.

UBS reiterated their "Buy" rating on Hess, which was trading at $68.86, losing $0.83, or 1.19 percent at 12:32 PM EST. UBS has a price target of $78 on Hess, increasing it from $76.

UBS (NYSE:UBS) Reiterates "Neutral" Rating on Willbros (NYSE:WG)

UBS (NYSE:UBS) sees challenges ahead for Willbros Group (NYSE:WG), as there are little catalysts to boost the company in the short term. Consequently they maintain their "Neutral" rating on them at this time.

UBS said, "WG reduced 2010 rev guidance to $1.1-$1.2b, from $1.2-$1.3b, due to weak T&D. EPS guidance was raised to $0.25-$0.30, but includes the earnout contingency reversal benefit we calculate at $0.96. Overall, the FEP execution was even better than we expected, but the weak T&D segment was disappointing. The Downstream segment is slowly regaining profitability, but the market is still challenging."

Willbros closed Monday at $6.99, dropping $0.10, or 1.41 percent. UBS lowered their price target on them from $9 to $7.75.

Monday, November 15, 2010

BP (NYSE:BP) Surpasses $500 Million in Gulf Oil Spill Costs

According to reports from congressional auditors, BP Plc (NYSE:BP) has now paid out over $500 million for costs related to the cleanup of the Gulf of Mexico after the oil spill starting from the explosion on the Deepwater Horizon oil rig.

This shouldn't be confused with the Gulf Coast Claims Facility, which is the one run by Kenneth Feinberg and has paid out far more than the over $500 million paid from the federal oil spill fund. The Gulf Coast Claims Facility is the $20 billion fund BP has promised to pay claims out of over a four-year period.

The fund is question is called the Oil Spill Liability Trust Fund, where capital is raised through a tax of 8 cents a barrel of oil.

The Government Accountability Office said that fund is running out of money, and as it stands, can't extract more than $1 billion from any one company over any one incident.

As of the end of September, over $1.6 billion was still in the fund, but concerns are it'll very soon reach the $1 billion limit, and no more funds will be able to be dispersed.

This is the existing rule even if a company reimburses the government fund and there are funds available to pay out.

At this time Congress is thinking about removing the $1 billion cap and introducing legislation which would offer a more flexible cap where the money paid by an oil company over an accident wouldn't be included in the limits now constraining the fund.

Friday, November 12, 2010

Jindal Blasts Obama over BP (NYSE:BP) Oil Spill in Book

In a book released by Louisiana Governor Bobby Jindal named "Leadership and Crisis," he blasted Barack Obama for being more concerned about his image than he was about fixing the problems associated with the BP (NYSE:BP) oil spill.

Jindal called the response of the Federal Government "lackadaisical" in the book, repeating what he said many times in press conferences during the oil crisis.

"The White House seemed to focus on the wrong things. I felt like we needed to be on a wartime footing against the oil, and the president was wondering, why is everybody criticizing me," Jindal said.

"You would think following the withering criticism of President Bush during Hurricane Katrina that the federal response this time would have been swift and sure .... You would have thought that a White House so concerned about its image would have been all over this," he added.

Other topics covered by the conservative Jindal in the book includes health care reform and deficit spending, which Jindal also takes aim at Obama and the administration over.

Thursday, November 11, 2010

BP's (NYSE:BP) Well Has Commemoration Star for 11 Workers Killed

After another round of testing to ensure the BP (NYSE:BP) well was completely plugged, a cap of a star with 11 points on it was placed on the well in remembrance of the 11 workers who lost their lives when the Deepwater oil rig exploded.

U.S. Coast Guard Rear Admiral Paul Zukunft said the cap was installed on November 8 after final testing was completed.

Zukunft added that cleanup efforts continue along the coastline and is focusing on marshes and beaches at this time. About 9,000 people continue to work on the cleanup.

"Some of our more persistent oil is in that sand column on both recreational beaches and also on national park shorelines," said Zukunft. "In some cases it is either removed manually or we are using heavy equipment."

Wednesday, November 10, 2010

Chevron (NYSE:CVX) Acquiring Atlas Energy (NASDAQ:ATLS) for $4.3 Billion

An agreement between Chevron Corporation (NYSE:CVX) and Atlas Energy, Inc. (NASDAQ:ATLS) was announced Tuesday where Chevron will acquire Atlas for $4.3 billion. The amount paid for Atlas will include debt.

The offer will equal a value of $43.34 a share for Atlas shareholders, a premium of 37 percent over the 'November 8' close of Atlas.

Shareholders in Atlas will receive $38.25 in cash for each share they own plus a pro-rata share of a distribution of more than 41 million units of Atlas Pipeline Holdings, L.P. (NYSE:AHD), valued at $5.09 each share.

"All of our shareholders should benefit from this sale and upon its completion, Atlas will have achieved a return of well over 800% since its initial public offering less than 6 1/2 years ago. All of our employees and shareholders should know that, through Chevron’s acquisition of Atlas Energy, we will be bringing into the Marcellus Shale one of the world’s largest corporations, an energy company second to none in its skills and dedication to excellence. This augurs well for customers and suppliers, our joint venture partners, those of our employees who will be continuing with Chevron, the local communities in which we have been active – and our nation, for all of whom Chevron’s involvement in development of this resource will be of enormous benefit," said Atlas Energy Chairman and CEO Edward E. Cohen.

Goldman Sachs (NYSE:GS) advised Chevron on the deal and Jefferies & Company, Inc. was lead advisor for Atlas.

Tuesday, November 9, 2010

Oil States (NYSE:OIS) Expanding on Several Fronts

Oil States International Inc. (NYSE:OIS) had excellent results in the third quarter, and has the foundation laid to launch a successful expansion strategy in multiple areas.

"Solid 3Q results across all segments drove the 3Q upside surprise. Looking ahead, we expect strength in North America, growth in the Oil Sands Accommodations business, the addition of "The MAC" in Australia and rising offshore activity to bolster earnings and lead to multiple expansion," said Jefferies.

Oil States closed at $54.71, gaining $1.24, or 2.32 percent. Jefferies raised their price target on them from $63 to $66, while maintaining their "Buy" rating.

Monday, November 8, 2010

Oil Prices Today Hit Two-year High, Nigerian Rig Attacked

With the announcement the Federal Reserve was going to print another $600 billion in U.S. dollars to buy up government debt in an attempt to stimulate the economy, oil prices, and other commodities, have been pushed up as the value of the U.S. dollar continues to plummet.

That means the industry is under tension, and when anything is added to the mix, oil prices can spike, like they have today with the reported attack on a Nigerian oil rig.

The main contract for light sweet crude for December delivery in New York surged to 87.49 a barrel, reaching its highest level since the latter part of 2008.

In Nigeria an oil rig in the Okoro field was attacked, with five crew members thought to be taken hostage. Usually that results in a ransom demand being made and paid to criminal gangs operating in the region.

So with the new implementation of quantitative easing, every time something major happens affecting oil prices, one way or the other we'll see swings in price in response to them.

Going forward, most of that will probably be on the upside for oil, as well as a number of other commodities.

BP (NYSE:BP) About to Sign Deal with CNOOC

A report from Mark Kleinman of Sky News said that BP (NYSE:BP) is close to signing a “major” exploration deal China National Offshore Oil Corp. (CNOOC), the state-owned energy company.

The two companies would explore the South China Sea together, according to Kleinman, writing on his blog. BP and CNOOC have worked together in the past in the same region.

British Prime Minister David Cameron is set to visit China this week, and the deal should be completed before that time.

Neither company commented on the assertion, which cited unnamed sources.

Bronco Drilling (Nasdaq:BRNC) Could Move on Sold Term Contracts Says FBR

FBR Capital said they're maintaining their "Market Perform" rating on Bronco Drilling (Nasdaq:BRNC), citing potential solid term contracts for newbuild rigs.

"Bronco’s land drilling fleet has been more profitable than expected due to strong daily cash margins and rig day rate improvements giving the stock some momentum. We believe the announcement of newbuild rigs with solid term contracts could be a catalyst for BRNC. We estimate the company should have enough cash flow to build three new rigs in 2011 should it be able to obtain term contracts," said FBR.

In a press release on their most recent quarterly performance, Bronco revealed: "Results for the third quarter of 2010 were adversely affected by several non-recurring charges. These charges were related to the divestment of our well service assets, certain mechanical drilling rigs and ancillary drilling equipment, all of our trucking assets and a one-time loss related to Bronco MX. These items resulted in a pre-tax charge of approximately $28.5 million in the third quarter. Without these non-recurring charges, fully diluted earnings per share for the quarter would be a loss of $0.05."

Earnings per share for the quarter came in at a loss of $0.69 after a loss of $18.8 million.

Bronco closed Friday at $5.40, gaining $0.45, or 9.09 percent. FBR has a price target of $5 on them.

Friday, November 5, 2010

BP (NYSE:BP) Rises on Exxon (NYSE:XOM) Bid Rumor

Rumors were rampant this morning that Exxon Mobil was interested in acquiring BP (NYSE:BP), pushing the stock up in early trading, where in London it rose as high as 451.35 pence, and up to $43.98 in New York before pulling back.

At 11:45 AM EDT, BP was trading at $43.75, down $0.16, or 0.38.

BP had no comment on the speculation, and Exxon communicated the usual idea that it was "not our practice to comment on market speculation, rumors or media reports."

Even if a company was interested in BP, it seems they would wait until the decision on whether or not they would be considered grossly negligent in the Gulf oil spill, which could cost them billions more than they're looking at at this time.

Schlumberger (NYSE:SLB), Brigham Exploration (Nasdaq:BEXP), Oasis Petroleum (NYSE:OAS) Soar on Rising Oil Prices

Schlumberger (NYSE:SLB), Brigham Exploration (Nasdaq:BEXP), Oasis Petroleum (NYSE:OAS) all closed higher Thursday, moving up with the broader commodity sector on news of the quantitative easing about to be implemented by the Federal Reserve which will add about $600 billion to the money supply over the next several months, increasing inflationary pressures.

Commodity prices, including oil prices, responded as expected, moving up across the board, with gold growing to record levels again, closing in on $1,400 and ounce, while silver rose to over $26 an ounce. Aluminum increased to levels not seen since April.

Light, sweet crude for December delivery settled the trading session increasing $1.80a barrel on the New York Mercantile Exchange at $86.49.

Schlumberger closed at $75.80 Thursday, rising $3.59, or 4.97 percent. Brigham Exploration surged to close at $22.96, gaining $0.96, or 4.36 percent. Oasis Petroleum was up to $23.44 at the end of the trading session, gaining $1.31, or 5.92 percent.

Venoco Inc. (NYSE:VQ), Whiting Petroleum (NYSE:WLL), Rosetta Resources (Nasdaq:ROSE) Soar on Increasing Oil Prices

Venoco Inc. (NYSE:VQ), Whiting Petroleum (NYSE:WLL), Rosetta Resources (Nasdaq:ROSE) all rose in price Thursday, increasing with the broader commodity sector on news of the quantitative easing about to be implemented by the Federal Reserve, which will add about $600 billion to the money supply over the next several months, placing the value of the U.S dollar at even more threat.

Oil price, as well as most commodity prices, responded as expected, moving up across the board, with gold growing to record levels again, closing in on $1,400 an ounce, while silver increased to over $26 an ounce. Aluminum was boosted to price levels not seen since April.

Light, sweet crude for December delivery settled the trading session increasing $1.80 a barrel on the New York Mercantile Exchange at $86.49.

Venoco Inc. closed at $15.64 Thursday, rising $0.67, or 4.48 percent. Whiting Petroleum surged to close at $106.86, gaining $3.84, or 3.73 percent. Rosetta Resources was up to $25.41 at the end of the trading session, gaining $1.29, or 5.35 percent.

TransAtlantic Petroleum (NYSE:TAT), Vaalco (NYSE:EGY), Northern Oil and Gas (Amex:NOG) Soar on Rising Oil Prices

TransAtlantic Petroleum (NYSE:TAT), Vaalco Energy (NYSE:EGY), Northern Oil and Gas (Amex:NOG) all closed over 4 percent higher Thursday, moving up with the broader commodity sector on news of the quantitative easing about to be implemented by the Federal Reserve which will add about $600 billion to the money supply over the next several months, increasing inflationary pressures.

Commodity prices, including oil prices, responded as expected, increasing across the board, with gold rising to record levels again, and silver surpassing $26 an ounce. Aluminum rose to levels not seen since April.

Light, sweet crude for December delivery settled the trading session increasing $1.80 a barrel on the New York Mercantile Exchange at $86.49.

TransAtlantic Petroleum closed at $3.22 Thursday, rising $0.14, or 4.55 percent. Vaalco Energy surged to close at $6.45, gaining $0.25, or 4.03 percent. Northern Oil and Gas was up to $20.21 at the end of the trading session, gaining $0.84, or 4.34 percent.

Encana (NYSE:ECA), Petrohawk (NYSE:HK), Valero Energy (NYSE:VLO) Soar on Rising Oil Prices

Encana (NYSE:ECA), Petrohawk (NYSE:HK), Valero Energy (NYSE:VLO) all moved up Thursday on the inflationary measures announced by the Federal Reserve through QE2, which pushed the broader commodity market up, along with commodity companies within each sector, including the oil and gas producers.

Commodity prices increased in general, including silver, which rose to over $26 an ounce. Gold prices surged to all-time record highs as well, moving toward the $1,400 an ounce mark. Aluminum soared to its highest levels since April.

Light, sweet crude for December delivery settled the trading session increasing $1.80 a barrel on the New York Mercantile Exchange at $86.49.

Encana Corp. closed at $29.31 Thursday, rising $0.97, or 3.42 percent. Petrohawk surged to close at $16.84, gaining $0.35, or 2.12 percent. Valero Energy was up to $18.93 at the end of the trading day, rising by $0.79, or 4.36 percent.

Citigroup (NYSE:C) Raises Devon Energy (NYSE:DVN) PT

Citigroup (NYSE:C) raised the price target they have on Devon Energy (NYSE:DVN), while maintaining a "Hold" rating on the energy company.

Earnings per share for the full year was also lowered from $5.76 to $5.73 for 2010, and from $5.23 to $5.96 for 2011.

Devon rose with the rest of the commodity and energy sector Thursday, closing the trading day at $69.60, gaining $1.38, or 2.02 percent.

Citigroup raised their price target on Devon from $68 to $72.

Hess (NYSE:HES), Petrobras (NYSE:PBR), PetroChina (NYSE:PTR) Surge on Rising Oil Prices

Hess Corporation (NYSE:HES), Petrobras (NYSE:PBR), PetroChina (NYSE:PTR) were all moving up Thursday on the inflationary measures put in place by the Federal Reserve through QE2, which pushed the broader commodity market up, along with raw materials companies within each sector, including the oil producers.

Commodity prices overall rose, including silver, which increased to over $26 an ounce. Gold prices rose to all-time record highs again, closing in on the $1,400 an ounce mark. Aluminum surged to its highest levels since April.

Light, sweet crude for December delivery settled the trading day up $1.80 a barrel on the New York Mercantile Exchange at $86.49.

Hess Corporation closed at $69.25 Thursday, rising $2.81, or 4.23 percent. Petrobras surged to close at $20.42, gaining $0.96, or 4.93 percent. PetroChina was up to $131.06 at the end of the trading day, rising by $2.25, or 1.75 percent.

PDC Energy (Nasdaq:PETD), PetroQuest Energy (NYSE:PQ), Plains Exploration (NYSE:PXP) Soar on Increasing Oil Prices

PDC Energy (Nasdaq:PETD), PetroQuest Energy (NYSE:PQ), Plains Exploration & Production (NYSE:PXP) all rose in price Thursday, increasing with the broader commodity sector on news of the quantitative easing about to be implemented by the Federal Reserve, which will add about $600 billion to the money supply over the next several months, placing the value of the U.S dollar at even more threat.

Oil price, as well as most commodity prices, responded as expected, moving up across the board, with gold growing to record levels again, closing in on $1,400 an ounce, while silver rose to over $26 an ounce. Aluminum increased to price levels not seen since April.

Light, sweet crude for December delivery settled the trading session increasing $1.80a barrel on the New York Mercantile Exchange at $86.49.

PDC Energy closed at $35.72 Thursday, rising $1.72, or 5.06 percent. PetroQuest Energy surged to close at $6.64, gaining $0.46, or 7.44 percent. Plains Exploration & Production was up to $29.55 at the end of the trading session, gaining $1.01, or 3.54 percent.

Halliburton (NYSE:HAL), Apache Corp (NYSE:APA), Chevron (NYSE:CVX) Up on Rising Oil Prices

Halliburton (NYSE:HAL), Apache Corp (NYSE:APA), Chevron (NYSE:CVX) were all moving up Thursday on the inflationary measures announced by the Federal Reserve through QE2, which pushed the overall commodity market up, along with companies within each sector, including the oil producers.

Commodity prices in general increased, including silver, which increased to over $26 an ounce. Gold prices surged to all-time record highs again, nearing the $1,400 an ounce mark. Aluminum increased to its highest levels since April, and silver went over $26 an ounce.

Light, sweet crude for December delivery settled the trading day up $1.80 a barrel on the New York Mercantile Exchange at $86.49.

Halliburton closed at $32.85 Thursday, rising $1.16, or 3.66 percent. Apache Corp surged to close at $107.79, gaining $5.21, or 5.08 percent. Chevron was up to $85.14 at the end of the trading session, rising by $2.44, or 2.95 percent.

Apache (NYSE:APA) Soars as BP (NYSE:BP), Mariner (NYSE:ME) Expansion Deals Near Completion

Apache Corp. (NYSE:APA) closed the part of their deal with BP (NYSE:BP) for their oil and gas assets in Egypt, while are set to also close their acquisition of Mariner Energy Inc. (NYSE:ME) once shareholders vote on Wednesday on whether or not to approve the deal, which is valued at $2.6 billion.

The overall deal with BP was for $7 billion, including a variety of assets around the world.

Talking on their earnings call Thursday, Chief Executive Officer Steven Farris said, "The most important thing we face is how we allocate the cash flow that we have. That is key to taking advantage of what we bought. I think we have a truly formidable asset base now."

Company leaders said their major focus going forward will be to integrate the recent acquisitions into the operations of the company.

Profit for the most recent quarter rose to $778.3 million, or $2.12 a share, 76 percent over the $442 million, or $1.30 a share generated last year in the same quarter.

Earnings per share, even though solid, did significantly miss analysts' expectations of $2.24 a share.

The aggressive expansion and its near completion clouded out the miss by Apache, and share price soared by $5.21, closing at $107.79, a 5.08 percent increase.

BP (NYSE:BP), Anadarko (NYSE:APC), Conoco (NYSE:COP) Surge on Rising Oil Prices

BP (NYSE:BP), Anadarko (NYSE:APC), Conoco (NYSE:COP) all rose Thursday on the inflationary measures implemented by the Federal Reserve via QE2, which drove the overall commodity market up, along with companies within each sector, including the oil producers.

Commodity prices in general increased, including silver, which increased to over $26 an ounce. Gold prices surged to all-time record highs again, approaching the $1,400 an ounce mark. Aluminum moved up to its highest levels since April, and silver surpassed $26 an ounce.

Light, sweet crude for December delivery settled the day up $1.80 a barrel on the New York Mercantile Exchange at $86.49.

BP closed at $43.91 Thursday, rising $1.54, or 3.63 percent. Anadarko surged to close at $65.96, gaining $2.32, or 3.65 percent. Conoco was up $61.25 at the end of the trading session, increasing by $1.84, or 3.10 percent.

Berry Petroleum (NYSE:BRY), Callon Petroleum (NYSE:CPE), Carrizo Oil & Gas (Nasdaq:CRZO) Surge on Rising Oil Prices

Berry Petroleum (NYSE:BRY), Callon Petroleum (NYSE:CPE), Carrizo Oil & Gas (Nasdaq:CRZO) all rose higher Thursday, moving up with the broader commodity sector on news of the quantitative easing about to be implemented by the Federal Reserve, which will add about $600 billion to the money supply over the next several months, putting inflationary pressure on the economy.

Commodity prices, including oil prices, responded as expected, moving up across the board, with gold growing to record levels again, closing in on $1,400 an ounce, while silver rose to over $26 an ounce. Aluminum increased to price levels not seen since April.

Light, sweet crude for December delivery settled the trading session increasing $1.80a barrel on the New York Mercantile Exchange at $86.49.

Berry Petroleum closed at $37.83 Thursday, rising $1.25, or 3.42 percent. Callon Petroleum surged to close at $5.13, gaining $0.16, or 3.22 percent. Carrizo Oil & Gas was up to $24.64 at the end of the trading session, gaining $0.73, or 3.05 percent.

Exxon Mobil (NYSE:XOM), Transocean (NYSE:RIG), Shell (NYSE:RDS-a) Up on Rising Oil Prices

Exxon Mobil (NYSE:XOM), Transocean (NYSE:RIG), Shell (NYSE:RDS-a) were all in positive territory Thursday on the inflationary measures announced by the Federal Reserve through QE2, which drove the overall commodity market up, along with companies within each sector, including the oil producers.

Commodity prices overall rose, including silver, which increased to over $26 an ounce. Gold prices surged to all-time record highs again, nearing the $1,400 an ounce mark. Aluminum increased to its highest levels since April, and silver went over $26 an ounce.

Light, sweet crude for December delivery settled the trading day up $1.80 a barrel on the New York Mercantile Exchange at $86.49.

Exxon Mobil closed at $69.38 Thursday, rising $1.41, or 2.07 percent. Transocean surged to close at $64.21, gaining $0.25, or 0.39 percent. Shell was up $68.29 at the end of the trading day, increasing by $1.10, or 1.64 percent.

Cameron International (NYSE:CAM), Marathon Oil (NYSE:MRO), Devon Energy (NYSE:DVN) Soar on Rising Oil Prices

Cameron International (NYSE:CAM), Marathon Oil (NYSE:MRO), Devon Energy (NYSE:DVN) were all moving up Thursday on the inflationary measures announced by the Federal Reserve through QE2, which pushed the overall commodity market up, along with companies within each sector, including the oil producers.

Commodity prices overall rose, including silver, which increased to over $26 an ounce. Gold prices increased to all-time record highs again, closing in on the $1,400 an ounce mark. Aluminum soared to its highest levels since April.

Light, sweet crude for December delivery settled the trading day up $1.80 a barrel on the New York Mercantile Exchange at $86.49.

Cameron International closed at $45.59 Thursday, rising $1.93, or 4.42 percent. Marathon Oil surged to close at $33.83, gaining $0.76, or 2.30 percent. Devon Energy was up to $69.60 at the end of the trading day, rising by $1.38, or 2.02 percent.

Thursday, November 4, 2010

BP (NYSE:BP) Update on Iraqi Rumaila Oilfield Progress

Since being awarded a contract for for developing the Rumaila oilfield in Iraq, Bp (NYSE:BP) said the project is progressing nicely, and the higher amount of activity at the location has been happening since they won the contract in June of 2009.

BP said they're focusing on increasing production at the wells already being operated, while also opening up new wells. Also targeted is the infrastructure surrounding the project, where flowlines are being checked and other elements examined to ensure a strong flow once production reaches higher levels.

Estimated reserves at Rumaila are about 17.8 billion barrels of oil, which are being developed by BP and its Chinese partner, CNPC.

Production at this time is about 1 million barrels on a daily basis.

BP's (NYSE:BP) Biofuel Strategy Focued on Brazil, U.S.

Brazilian sugar can and grasses in the United States are the focus of BP's strategy to invest in biofuels at this time, said a senior executive of its global energy group.

Head of strategy at BP Biofuels, James Primrose, said the U.S. and Brazil markets are more conducive to success because of clear regulations and the incentives they offer to build out their biofuel business.

In contrast, Asia and Europe aren't nearly as clear, and have a lot of grey areas when it comes to the sector.

"In order to deliver on our plans, we have to focus on those markets first where there is the regulatory clarity and the cost-advantaged feed stocks," said Primrose.

In Brazil it's the low cost factor and quality of the sugar cane which is attractive to BP, while in the U.S., grasses which produce energy are what drives their strategy.

When BP acquired technology from Verenium, a partner in the U.S., it was for the purpose of using it for the development of cellulosic biofuels.

Devon Energy (NYSE:DVN) Undervalued on Onshore Resource Plays Says Ticonderoga

Devon Energy (NYSE:DVN) is undervalued in almost all the key valuation metrics against its peers, and Ticonderoga Securities said they're maintaining their "Buy" rating on them as a result.

"We view DVN as an undervalued asset base that should generate better results given the shift in focus toward onshore unconventional resource plays. And with $3.6B of cash on hand currently (excluding the expected $3.2B close of Brazilian assets), the company is in a strong financial position as well. The company’s shares are trading below peers on almost all relevant valuation metrics, including at a steep discount to our $118.00 NAV. The resulting P/NAV of 66% compares with a group median of 78% for our E&P universe. DVN’s EV/2010 EBITDA is 5.0 compared with 7.1 for the group and its P/CF is 5.9 compared with 6.4 for the group, said Ticonderoga.

"Today’s news (earnings report) is positive and supports our Buy rating, and should please investors who have been looking for consistent results/growth from DVN quarter-to-quarter. We would look toward the year-end reserve report for signs of better organic growth and improving finding cost as an indication that the company’s resource strategy is working long-term. We don’t believe the sharp discount to peers is justified, and would continue to look for periods of weakness when the stock/group trades down to accumulate shares."

Devon surged to close at $68.22 Wednesday, gaining $2.29, or 3.47 percent. Ticonderoga has a price target of $78 on Devon.

Magellan Midstream (NYSE:MMP) Gasoline and Diesel Volumes Increasing

Magellan Midstream (NYSE:MMP) performed close in line to estimates, and UBS (NYSE:UBS) maintains their "Buy" on them, saying gasoline and diesel volumes exceeded expectations.

UBS said, "Excluding non-cash items, MMP achieved 3Q10 EPU of $0.58 versus UBS’ and consensus’ $0.61/$0.55 estimates, respectively. Despite integrity testing in the ammonia pipeline costing $7.6mm (-$0.07/unit), improving gasoline and diesel volumes combined with the BP acquisition performing ahead of expectations drove distributable cash flow of $86mm, roughly inline with UBS’ $87mm estimate."

Product demand should continue to grow in going forward.

Magellan Midstream closed Wednesday at $54.39, dropping $0.19, or 0.34 percent. UBS has a price target of $61 on them, raising it from $59.

Citigroup (NYSE:C) Upgrades K-Sea (NYSE:KSP), Lowers Price Target

Although K-Sea Transportation Partners LP (NYSE:KSP) handily surpassed expectations in their latest quarterly report, it's hard to see anything to get excited about, although Citigroup (NYSE:C) upgraded the marine transportation company from "Sell" to "Hold."

Chief Executive Officer Timothy Casey said in a statement recently, "We benefited this past quarter from the clean-up work in the Gulf of Mexico, which is now essentially over, and the ongoing contribution from our efficiency efforts."

With that scenario in mind, it's difficult to understand the upgrade.

K-Sea was trading at $5.37, losing $0.19, or 3.42 percent as of 3:18 PM EDT Wednesday. Citigroup lowered their price target from $7 to $6 on K-Sea.

BP (NYSE:BP) Confirms UK Awards the Seven Exploration Licences in North Sea

On their Website today, BP (NYSE:BP) confirmed they have been awarded seven licenses to explore the North Sea.

To reinforce their commitment and trust in BP, this represents the largest licensing approval for BP in the UK in over 10 years by the government.

Trevor Garlick, Regional President for BP in the North Sea said on the company site, “These licence awards are a significant success for BP and a further boost to the long-term future of our North Sea business. With six major projects currently underway in the UK and Norwegian sectors, BP is investing strongly in the North Sea to develop today’s resource base and we are also building a complementary portfolio of future opportunities.”

The blocks awarded are:

16/24a (split) - Kinnoull area – Central North Sea
22/20b - ETAP area – Central North Sea
22/30e (split) - Culzean area (operated by Maersk) - Central North Sea
23/26e - Culzean area (operated by Maersk) - Central North Sea
30/1a (split) - Kessog area - Central North Sea
47/10c (split) - West Sole SNS area – Southern North Sea
48/6c (split) - West Sole SNS area – Southern North Sea

Brigham Exploration (Nasdaq:BEXP) Increases Wells, Production

Citing the increased number of wells and beating production estimates, Global Hunter Securities likes the growth prospects of Brigham Exploration Co. (Nasdaq:BEXP), raising their price target on them and maintaining a "Buy."

"BEXP increased its fourth quarter guidance to 10.2-10.8 Mboped with 77% of volumes now oil. We are published at 10 Mboped for 4Q10 but moving volumes up to the top end of the range causing our previous respective 4Q10 EPS and CFPS of $0.11 and $0.25 to $0.12 and $0.37, as well as increasing our total year 2010 EPS and CFPS estimates from $0.42 and $1.02 to $0.52 and $1.18, respectively. BEXP is continuing the trend in 2011 with the addition of seven wells to our model resulting in our production estimates climbing from 13,927 Boepd to 16,134 Boepd prompting an increase in EPS and CFPS estimates from $0.70 and $1.98 to $0.87 and $2.35, respectively. Please note that full year 2011 EBITDA is increasing by $41.3 million," said Global.

Brigham closed Wednesday at $22, rising $0.83, or 3.92 percent. Global has a price target of $29.50 on them.

Citigroup (NYSE:C) Raises Anadarko (NYSE:APC) PT After Earnings Report

Liking what they heard from Anadarko Petroleum Corp (NYSE:APC) from their latest earnings report, Citigroup (NYSE:C) maintained their "Buy" on the energy company, while raising their price target significantly on them.

Sales volume for the latest quarter came in at the high end of guidance for Anadarko.

Anadarko Chairman and CEO Jim Hackett said, "The portfolio continues to perform at a high level, enhancing our confidence in delivering upon the five-year objectives we presented in March, which include increasing production at a 7 to 9 percent compounded annual growth rate."

The company closed at $63.64 Wednesday, losing $0.18, or 0.28 percent. Citigroup raised their price target on Anadarko from $74 to $80.

Goldman (NYSE:GS) Shows BP (NYSE:BP) Some Love, Upgrades them to "Buy"

After generating results beyond expectations, BP plc (NYSE:BP) was upgraded today by Goldman Sachs (NYSE:GS) from "Neutral" to "Buy" on the stronger-than-expected quarter and valuation.

Citing the attractive valuation whereby BP is trading at a 2011E 14% EV/DACF discount after paying out liabilities after the Gulf of Mexico oil spill, they see the company beginning to come back.

There is also light at the end of the tunnel for selling off its assets, which is probably more of a positive than most analysts and commentators note, as it's helping them to whittle down the non-core assets to be a much stronger company over time. So far they've raised about $14 billion, with another approximate $16 billion targeted for sale within the next year.

That puts them in a more predictable light, which makes shareholders and investors less nervous.

Goldman also likes that BP raised their earnings per share estimates for the next three years.

Finally, the reinstatement of the dividend, which is gaining steam, could end up with the income investor base returning said Goldman.

Goldman sees them reinstating the dividend at probably $0.08, and over the next couple of years increasing it to about $0.11.

BP closed Wednesday at $42.37, gaining $0.95, or 2.29 percent.

Petrohawk Energy's (NYSE:HK) Margins, Debt Will Keep Company Under Pressure

Petrohawk Energy (NYSE:HK) has problems in the short term because of their high debt and margins being pressured, according to FBR Capital.

HBP drilling will continue to cause the company to struggle as a result in the short term.

FBR said, "We continue to remain fans of significant long-term asset value embedded within the Haynesville and Eagle Ford franchises. Near term, though, continued Haynesville drilling for HBP reasons despite margin squeeze and high (though manageable debt position) continues to give investors heartburn. Also, the Eagle Ford position, though highly prospective, still needs to mature, thereby exacerbating the funding gap issue. As such, we are reiterating our rating but are lowering our 12-month price target to $23/share to reflect a larger-than-expected funding gap."

Petrohawk closed Wednesday at 16.49, dropping $0.71, or 4.13 percent.

FBR maintains their "Outperform" rating on them, while Lazard Capital downgraded Petrohawk from "Buy" to "Hold." FBR has a price target of $20 on the energy company, dropping them from $23.

Transocean (NYSE:RIG) Earnings Crushed on Gulf Spill Effects

Earnings for Transocean fell of the cliff to the tune of 48 percent from the same quarter last year, as effects of the BP (NYSE:BP) Gulf oil spill linger, and uncertainty over liability and when drilling in the Gulf will resume weighs on the company, as it does on all with exposure to the oil spill.

Particularly harmful was the oil moratorium, which while officially lifted, effectively remains in place because of the permitting process and time it will take to comply with new regulations put in place.

Net income for the quarter plummeted to $368 million, or $1.15 a share, down from $710 million, or $2.20 a share last year.

Revenue was also down, falling from $2.82 to $2.31 year over year.

While analysts had expected a drop in performance, it was much worse than the expected $2.47 billion in revenue and $1.36 earnings per share looked for.

Costs were a major factor, with an increase in insurance premiums, lawsuits, one-time costs, and retiring debt all taking a toll on the company's performance.

Wednesday, November 3, 2010

E0G (NYSE:EOG) Hammered After Lowering Guidance, Missing

EOG Resources (NYSE:EOG) reported losses of $70.9 million in the third quarter, and lowered their production growth target for the full year from 13 percent to 9 percent, causing the share price to plummet over 11 percent early in the trading session.

The huge increase in natural gas production in shale fields in the U.S. has resulted in an exceeding abundance of supply, which has pressured natural gas prices down.

Also affecting the performance was the failure of the company to procure the equipment they needed to perform hydrofracturing on the rock. It looks like they'll continue to be slow in acquiring the needed equipment.

EOG Chief Executive Officer Mark Papa said at current prices the company has no intention of increasing natural gas production, which led to the share price getting crushed.

Papa also said the company will be selling some of its Marcellus and Eagle Ford shale assets.

EOG was trading at $88.87, losing $8.87, or 9.08 percent as of 1:37 PM EDT.

ExxonMobil (NYSE:XOM) to Drill for Natural Gas in Germany's Rhineland

News that ExxonMobil (NYSE:XOM) and other energy companies would begin to drill for natural gas in Germany's Rhineland was met with mixed response, although opposition was from radical environment groups and politicians from the country.

Rhineland has already granted Exxon and other firms from Canada, Australia and Germany to drill in the state.

The focus of drilling will be close to the northern Münsterland region. ExxonMobil plans to start drilling in Borken, Steinfurt and Nordwalde soon. Additional regions include the northern and southern Ruhr Valley and counties in Sauerland.

A so-called energy expert for the Greens, Oliver Krischer, alledged, “We are surprised. We didn’t know a thing. The claims were staked quietly and secretly.”

The usual fears of damaging ground water from drilling for the gas has generated opposition from those living in the Münsterland region. It's unlikely it'll hinder the process for the companies.

Devon (NYSE:DVN) Beats Estimates, Production Increases

Devon Energy (NYSE:DVN) beat Street estimates for the quarter, generating production and profits beyond projections.

Excluding the properties they sold, Devon increased production by four percent for the latest quarter, as it moves away from offshore to onshore fields as their strategy.

Earnings for the quarter reached $1.44 a share, up from the $1.29 analysts had been expecting, on $2.1 billion.

Much of the profit gain was from the sale of assets they had held in Azerbaijan. They are also in the middle of selling off assets held in Brazil, which combined with Azerbaijan assets should reach $10 billion in pre-tax revenue for the year.

BP (NYSE:BP) Pipelines in Alaska Could Fail Says Internal Report

According to an internal maintenance report of BP (NYSE:BP), a minimum of 148 pipelines on the North Slope in Alaska are in danger of failing, generating questions on BP's new commitment to safety.

The company has ranked the 148 pipelines as an "F" at this time.

Most of the pipeline problems come from what is described as severe corrosion, in some cases worn to levels of only millimeters from bursting, says the report.

Responding to the alleged pipeline problem, BP's Alaska spokesman, Steve Rinehart, said there was "an aggressive and comprehensive pipeline inspection and maintenance program" in place to deal with the testing for safety concerning corrosion.

BP's Alaska spokesman, Steve Rinehart, said the company had , which included spending millions of dollars and regularly testing for safety, reliability and corrosion.

Also at issue is the reliability of fire and gas warning systems, which Rinehart also said are tested on a regular basis.

"We will not operate equipment or facilities that we believe are unsafe," Rinehart concluded.

BP's (NYSE:BP) Dudley Working on Balancing Defense and Offense

Now that BP (NYSE:BP) has finally entered into a stage where crisis management isn't the word used to describe their purpose, CEO Bob Dudley is seen to be working on bringing balance back to the company, as he retains the defensive posture related to the Gulf, while looking for some offense in relationship to growth.

Some of the final steps that need to be taken are to sell enough assets to pay for the estimated $40 billion the company will pay out through the years.

They've committed to raising about $30 billion through asset sales, and so far have sold off close to $14 billion.

Two assets they haven't made a decision on yet include Prudhoe Bay in Alaska, and its Pan American Energy LLC asset in Argentina. Pan American would bring them as much as $9 billion if they choose to go that route.

Part of BP's problem on the defensive side is awaiting the decision on whether or not they'll be designated as being grossly negligent concerning the oil spill in relationship to the Clean Water Act.

How that is determined could result in a liability differential of up to $10 billion.

It seems they're operating under the assumption they won't be paying the high end of the fine, but still need to raise an additional $16 billion or so to prepare for the financial challenges still remaining.

The problem for BP as a company is it keeps them in a defensive posture until they take care of it, so may take care of it sooner rather than later.

They have time as far as the payouts are concerned, but it's more the psychological factor for workers and the leaders of the company, who need to proceed in a way that shows they're going forward, while being sure they don't end up with any new fiasco.

Neglect of either one will hurt BP, and Dudley, from his comments and decisions, shows he understands that and is working hard to bring that about.

Anadarko (NYSE:APC) Building Up Strong Cash Balance, Production Guidance Down

The latest quarterly report of Anadarko Petroleum (NYSE:APC) was somewhat mixed, reflecting lower international production, but stronger production in the U.S.

Ticonderoga did say one thing they like is the way Anadarko is building up their cash balance.

"Anadarko reported its 3Q last night. The GAAP results were ($0.05)/share versus our ($0.10)/share estimate. Adjusted earnings were $0.26/share versus consensus of $0.29/share. 3Q production was 629.3 kboe/d versus our 613.5 kboe/d estimate. U.S. oil production was at the high end of company guidance, while international oil production was at the low end of guidance. 4Q production is forecast to be down 2% to 617 kboe/d based on the midpoint of guidance. Previously, we had been forecasting production to be up 1%. Most notably, U.S. gas production next quarter is forecast to be down 5.5% over 3Q," said Ticonderoga.

"We are marking our estimates to reality and incorporating 4Q guidance. Our 4Q estimate rises to ($0.23)/share from ($0.17)/share, and the full year increases to $1.06/share from $0.94/share. Most interestingly on the financial front is the fact that APC is amassing a considerable cash balance."

Anadarko closed up at $63.82, gaining $0.66, or 1.04 percent on Tuesday. Ticonderoga maintains a "Neutral" rating on them.

BP (NYSE:BP) Looking to Brazil for Growth

BP (NYSE:BP) CEO Bob Dudley said one of the major strategies in relationship to growth is to develop projects off of Brazil.

Dudley stated that the U.S. is their first obligation in the ongoing fallout from the Gulf oil spill, and BP must “first, meet our obligations in the U.S.”

From there, he sees growth led by Brazil, and then exploration projects in the UK and Azerbaijan. Dudley added, “... we’ve built a growing business in Brazil. We’ve got Shah Deniz in Azerbaijan, we’ve got some U.K. exploration now to go. We’ve got a growing business in Egypt. We will be participating in China.”

Dudley knows that BP, while necessarily having to remain focused on making things right in the U.S., can't make that their only goal, as playing defense will never work over the long run for any company.

They have to have forward momentum, and Dudley has been going on the offensive more recently in what appears to be a move to rally his troops and lift the stigma that they are only struggling to survive off the company.

Hercules Offshore (Nasdaq:HERO) International Earnings Pressuring Company

Hercules Offshore, Inc. (Nasdaq:HERO) will probably have its international earnings pressure profits going forward because of the rolling over of contract to existing market rates, according to FBR Capital.

"We are introducing our 2012 estimates (0.75), which are meaningfully lower than our 2011 estimates due to lower international earnings as contracts roll over to current market rates. We maintain our Market Perform rating as we view HERO's risk-reward profile as roughly balanced. The company has the optionality from improvement in the shallow water GOM activity and de-leveraging," said FBR.

Hercules, which offers shallow-water drilling and marine services to the oil and natural gas exploration and production industry, closed Tuesday at $2.42, gaining $0.06, or 2.54 percent. FBR has a price target of $3.50 on them.

Noble Corporation (NYSE:NE) Has Solid Balance of Shallow, Deepwater Markets Says FBR

Liking the balanced exposure to shallow and deepwater markets, FBR Capital said they're maintaining their "Outperform" on Noble Corporation (NYSE:NE), although they're lowering the earnings per share estimates based on the Pemex contract extension.

FBR said, "We are lowering our EPS estimates to $0.53, $4.00, and $4.95 from $0.54, $4.15, and $5.10 for 4Q10, 2011, and 2012, respectively. Our new rates reflect the recent contract extension rates that Noble Corp. has received from Pemex...We are maintaining our rating for NE based on the company's balanced exposure to the shallow and deepwater markets and attractive valuation. The company has a strong backlog and ample liquidity to grow even after adding four modern deepwater units in the Bully and Globetrotter rigs."

Noble closed Tuesday at $34.46, gaining $0.28, or 0.82 percent. FBR has a price target of $42 on the drilling service provider.

BP (NYSE:BP) CEO Says Won't Run from Deepwater Drilling Risk

Taking on a welcome more aggressive posture on behalf of BP (NYSE:BP) recently, CEO Bob Dudley said the company won't run from the risk associated with deepwater drilling, but will get better at managing it.

Dudley said in an interview in London, “Companies like BP, one of the roles they play in the industry is working in riskier areas. BP is now going to become incredibly focused on managing the risks, for example, of deep-water. It’s not going to shy away from the risk, it’s going to get even better at it.”

Dudley also said he's preparing a strategy update which will be revealed in February, and he warned it would be modest and more incremental, rather than radical and aggressive.

“The idea of coming out in February with a massive firework around strategic direction from BP may sound exciting, but it’s not quite realistic,” Dudley said. “You will likely see an immediate set of steps by BP, and further ones to come in 2011 and 2012.”

Baker Hughes (NYSE:BHI) Needs to Improve International Margins Says FBR

Commenting on the performance of Baker Hughes (NYSE:BHI) over the next year, FBR Capital said the value in the company will be their ability to increase margins at the international level.

FBR said, "The acquisition of BJ Services is resulting in strong North American results. However, we believe the key to investors recognizing value over the next several quarters is execution on international margin improvement. While we believe sustainably higher international E&P activity should increase both volume and price over the next few years, we believe Baker Hughes' high U.S. frac exposure makes it a less favorable way to play the cyclical recovery in international oil investment. Baker Hughes is also more heavily levered to offshore markets than peers and thus sentiment could hurt the company as uncertainty remains around the timing and magnitude of a recovery in spending in the GOM...We are increasing our 2011 EPS to $3.25 and are introducing our 2012 EPS estimate at $3.75."

FBR said they're maintaining a "Market Perform" rating on the company.

Baker Hughes closed Tuesday at $49.28, gaining $0.91, or 1.88 percent. FBR raised their price target on them from $48 to $56.

Tuesday, November 2, 2010

BP (NYSE:BP) Results Lag Exxon (NYSE:XOM), Marathon (NYSE:MRO), Chevron (NYSE:CVX)

While higher oil prices helped major oil companies like Exxon (NYSE:XOM), Marathon (NYSE:MRO), Chevron (NYSE:CVX) to solid quarters, although Chevron was weaker than expected, it wasn't able to help BP (NYSE:BP) overcome continuing charges related to expenses incurred from the Gulf of Mexico oil spill.

Still, it was good news for BP in that they generated a profit for the quarter soon after permanently plugging the Macondo oil well.

After taking another charge of $7.7 billion, it brings the total estimated costs of the BP oil spill to almost $40 billion, already exceeding expectations, and will surely rise more going forward.

A significant amount of the financial health of BP will relate to whether or not they're designated as being grossly negligent, which could cost them billions more if they are.

CEO Bob Dudley says he's confident that isn't going to happen.

Earnings per share for the latest quarter reached $0.59, a major improvement over the $5.42 they lost in the second quarter, but obviously falling short of the $1.60 generated last year in the same quarter before the spill.

BP (NYSE:BP) Will Stand in Line before Restarting Gulf Drilling

BP (NYSE:BP) CEO Bob Dudley recently reiterated his commitment to continue drilling in the Gulf of Mexico, but noted it wouldn't be wise to be the first company to resume operations since the oil moratorium was lifted, and so will stand in line while others begin drilling in Gulf waters before they start drilling again.

To prepare for a successful and safe reboot in the Gulf, the company said they'll go through all their equipment and procedures before getting back into the game.

Dudley stated, “It would not be sensible for us to raise our hand and rush with the first permit application.”

After completing their preparations, the oil giant will at that time get a better picture on the length of time it'll take to start drilling again, and from there make a decision on what to do with their idle Gulf rigs.

“We’re waiting to see the pace at which things progress in the Gulf before making a decision,” Dudley added.

BP (NYSE:BP) Exceeds Expectations, Earnings Reach $1.79 Billion

Although net income in the third quarter dropped about 67 percent, BP (NYSE:BP) was still able to generate earnings of $1.79 billion for the quarter. That was down from last year when they generated $5.34 billion, which was before the oil spill.

After excluding items, the oil giant had an operating profit of $5.53 billion, over an 18 percent increase from the $4.67 billion generated last year. Analysts had been looking for $4.6 billion.

BP took another pre-tax charge of $7.66 billion, bringing their total bill for the spill to $40 billion.

CEO Bob Dudley said in a statement, “This strong operating performance shows the determination of everyone at BP to move the company forward and rebuild confidence after the terrible events of the past six months.”

The additional charges were in connection to taking longer to seal the Macondo oil well in September, along with legal, cleanup and administration costs.

BP said they'll review the timing for reinstating the dividend sometime in the early part of 2011.

Chevron (NYSE:CVX) Rebranding Havoline Under Chevron Logo

Chevron (NYSE:CVX) announced Monday they're rebranding Havoline under the Chevron logo by the middle of 2011.

Doug Hinzie, vice president, Americas, Chevron Lubricants, said in a statement, "Moving the Havoline product line under the Chevron family is the natural next step in consolidating our North America lubricants, coolants, additives and chemicals products under one master brand. In 2008, the company began this process by successfully bringing its commercial and industrial product lines under the Chevron master brand. With this move, the Havoline brand will achieve greater visibility, increased retail opportunities, expanded marketing support and the benefits of being part of the Chevron brand, which enjoys a much larger presence than Texaco in North America. This change is one component of our long-term plan to reinforce and grow the Havoline brand - one of the most enduring, respected and valued brands in the lubricant market."

Chevron released disappointing results for the last quarter on Friday, with third-quarter earnings dropping almost 2 percent on currency exchange challenges and the Gulf oil moratorium imposed by the Obama administration.

DTE Energy (NYSE:DTE) Trading Continues to be Major Concern Says Barclays (NYSE:BCS)

Although DTE Energy (NYSE:DTE) had a decent quarter, Barclays (NYSE:BCS) sees trading to continue to be one of their major concerns.

"DTE reported solid Q3 EPS and tightened their guidance range for 2010: DTE reported Q3'10 EPS of $0.96, in-line with the consensus estimate, and tightened their 2010 guidance range to $3.50-$3.70 from $3.45-$3.80. Rate relief at MichCon, tight cost controls at both utilities, and meaningful improvements at the P&I segment helped results, while another challenging quarter at trading was the biggest concern," said Barclays.

"We are tweaking our '10-'12 estimates to $3.62/$3.72/$3.88 from $3.67/$3.74/$3.92 and adjusting our target to $52. We are embedding $56M in earnings at P&I, flat performance at midstream, and a return to historical contributions by trading of $45M and assuming that the utilities will be able to earn their authorized 11% ROEs."

DTE closed Monday at $45.67, dropping $1.09, or 2.33 percent. Barclays increased their price target from $50 to $52, while maintaining their "Equalweight" on them.

Chevron (NYSE:CVX) Ordered to Improve Inspection and Leak Detection Systems in Utah

A summer leak near the University of Utah campus resulted in about 800 barrels of oil spilling into Red Butte Creek for close to 10 hours before Chevron (NYSE:CVX) even found out about it, suggesting their inspection and leak detection system needs to be significantly improved, according to the Transportation Department.

Chevron will reportedly be required to respond to allegations and comply to the order within a 30-day period.

Chevron spokesman Mickey Driver said, “Chevron has not yet received the order. When we do receive the order, we will review the agency findings before making any comments on them.”

The agency said in a statement that the oil giant may have failed to patrol its pipeline rights of way, control corrosion on its system and protect its pipeline from stray electrical currents.

A fine of $423,600 has been proposed by the U.S. Transportation Department.

Oceaneering International (NYSE:OII) Strongly Positioned for Deepwater Drilling says Barclays (NYSE:BCS)

Contrary to the perception created by media reports because of the BP (NYSE:BP) deepwater oil disaster, offshore drilling in deep waters remains vibrant, and is in fact growing, and Oceaneering International (NYSE:OII) is strongly positioned to profit from that reality over the next decade says Barclays (NYSE:BCS).

There has been a plethora of deepwater deals cut in the midst of the BP disaster, underscoring the demand for oil which won't be hindered by any type of accident, even one as large as BP's.

Barclays said, "We believe that Oceaneering International is well positioned to benefit from the secular growth in deep-water drilling and subsea completions that we forecast over the coming decade. Given its unique franchise and long-term visibility in its markets, we believe Oceaneering should trade at a meaningful premium to the oil service group."

"We are increasing our earnings per share estimates for 2011 and 2012 to $3.80 and $4.40 from $3.45 and $4.05. The company's guidance for 2011 is $3.45 to $3.75."

Oceaneering International soared on Monday, closing at $63.77, gaining $1.90, or 3.07 percent. Barclays raised their price target on Oceaneering from $58 to $70. They maintain an "Overweight" on them.

Is Halliburton (NYSE:HAL) a Crap Shoot Now?

With the battle for the truth concerning Halliburton's (NYSE:HAL) role in the failed Macondo oil well, BP (NYSE:BP), Halliburton, government officials, and investors, analysts and commentators on the sidelines have all been giving their two cents on how it all will play out for Halliburton.

That's why financial institutions like Goldman Sachs (NYSE:GS) view Halliburton as a buying opportunity at this time, while others such as Morgan Stanley (NYSE:MS) have lowered their price target on the company.

Goldman maintains their "Buy" rating on Halliburton and Morgan Stanley their "Equalweight." Morgan cut their price target on Halliburton from $50 to $45 while Goldman maintained their $40 price target.

Every story coming out in the media is a he/says, she/says situation, and then you go beyond that to the so-called scientific input and it gets even more confusing as the enormous number of variables are weighed, and in reality - guessed at, as to what this means for Halliburton.

If nothing else, this will weigh on the shares of the stock for some time, and even with the assertions of all those involved ensuring the rest of us how things will play out, we've really just begun to see the process in reference to Halliburton, and until things clear up that will remain the case for the company.

Since the news, the market seems to be reacting the same way, as the share price, once the obvious plunge in price was over, rebounded and has been flat while contradictory news continues to be the norm.

Issues that are part of the story all surround the quality of the cement mix used by Halliburton to seal the well, which according to BP, was, for the most part, the major reason for the overall failure.

The oil spill commission agreed with that assessment, and Halliburton has admitted they didn't successfully complete a test on the final mix.

You also have Halliburton saying the internal test of BP concerning the mix, as well as the independent test conducted by Chevron (NYSE:CVX), were both different mixes, and not the actual one used to seal the well.

Then you have a little sample of the original mix which was ordered to be tested by a judge, but some say is now too old to be analyzed successfully.

Evidently the situation is as messed up as the mix was, and it's uncertain if it will ever be able to be absolutely proven whether or not the mix was ultimately the cause of the event, although other oil companies have stated they believe it was a key factor as the mix was described to them.

Halliburton is now going to have this cloud hanging over them, and may have to decide whether or not to settle in order for their reputation not to take a huge battering, or the actual cost of damages could be inconsequential in comparison to the reputation lost, along with possible future business.

BP (NYSE:BP) Paying Louisiana $218 Million for Oil Spill Damage

BP (NYSE:BP) and Louisiana have reached an agreement for the oil giant to pay $218 million to the state for a variety of consequences related to the Gulf oil spill.

Among the uses the money will be put toward will be the ongoing testing of seafood, tourism, and the restoration of the Louisiana coast.

More than half of the money will be used to help restore the Louisiana coastline, with $140 targeted toward that project. Included in the restoration will be the barrier islands.

For the tourism industry, using funds to market the Gulf region has proven successful in Florida, and should work well for Louisiana too.

While extensive testing on seafood has shown the resource is completely clean from oil and corexit, ongoing tests will reinforce that and hopefully cause people to have confidence in the resource.

The seafood program will receive $48 million and the state Department of Culture, Recreation and Tourism the remaining $30 million.

BP (NYSE:BP) Shares Should Trade Active Today

BP's (NYSE:BP) shares are expected to trade active today in anticipation and response to their latest quarterly report.

There are no expectations of surprises from BP, which should remain suppressed from the ongoing uncertainty of its overall liability in the Gulf of Mexico oil spill.

Analysts on average are looking for about $1.51 earnings per share, with a range of $1.44 to $1.59 per share from several analysts.

BP closed Monday at $40.77, losing $0.03, or 0.07 percent.

Monday, November 1, 2010

EXCO Resources' (NYSE:XCO) CEO Makes Offer for Entire Company

In a bid to take the company private, EXCO Resources' (NYSE:XCO) Chairman and CEO, Douglas H. Miller, has made a bid of $20.50 for the company, almost 40 percent above Friday's close.

According to Miller, others have shown an interest in acquiring the remaining shares with him, including T. Boone Pickens, Oaktree Capital Management, L.P. and Ares Management LLC. "Each has expressed an interest in pursuing the acquisition with me," said Miller."

The offer by Miller values the company at about $4.4 billion.

EXCO shares have skyrocketed to $19.25, gaining $4.42, or 29.80 percent as of 2:42 PM EDT.

EXCO Resources, Inc., is an independent oil and natural gas company, which engages in the exploration, exploitation, development, and production of onshore oil and natural gas properties in North America.

Morgan Stanley (NYSE:MS) Lowers Chevron's (NYSE:CVX) Earnings Estimate

Chevron (NYSE:CVX) had its earnings estimate lowered by Morgan Stanley (NYSE:MS) in 2010, although Morgan did maintain their "Overweight" rating on the giant energy company.

For fiscal 2010, earnings per share were downwardly adjusted from $9.53 to $9.29, and for fiscal 2011, earnings were upwardly adjusted from $9.60 to $9.72.

Chevron was trading at just above level at 1:40 PM EDT, rising to $82.76, gaining $0.16, or 0.19 percent.

ExxonMobil (NYSE:XOM) Discovers Rich Gas Condensate Off Nigeria

ExxonMobil (NYSE:XOM) revealed today it has made a discovery of rich gas condensate off the coast of Nigeria.

The find was made in the Pegi-1 discovery well, with about 165 net feet of rich gas condensate found. Rich gas condensate is a form of natural gas liquid.

Mark Ward, chairman of Mobil Producing Nigeria Unlimited, the joint venture of Exxon in Nigeria, said, "We are focused on developing oil and gas reserves and supplying natural gas that will boost commercial power production in line with the federal government's aspiration."

Nigeria has been desperate to wean their people off of expensive diesel-fired generators because of the shortage of electricity in the country.

To that end, they added in their statement, that "Significant additional potential remains in untested deeper targets within the Pegi fault block as well as in adjacent fault blocks."

BP's (NYSE:BP) Earnings Should Mirror Last Year

Earnings for the quarter by BP (NYSE:BP), expected to be released November 2, on average look to come in at close to where they did last year, when they were $1.50 a share.

Analysts have a $0.15 spread on the earnings, coming in as low as $1.44 share to as high as $1.59 a share. If it meets somewhere in the middle, it'll be very close to last year's performance. Not bad considering the challenges they face.

Consensus this quarter is at $1.51 a share on revenue of $72.46 billion.

Shareholders have been pressing new CEO Bob Dudley and the board of directors to reinstate the dividend.

Cenovus'(NYSE: CVE) Downstream Will Weigh on Them Says TD Newcrest

According to TD Newcrest, the downstream of Cenovus Energy Inc (NYSE:CVE) will weigh the company down, and they downgraded them from "Buy" to "Hold" based on that assumption.

TD said, "Of note, our 2010 CFPS estimate is now marginally higher since we were already at the low-end of the new target range. Our 2011 CFPS estimate also increases marginally (drives 75% of the EV/DACF component of our target price calculation) but since we reduced our target multiple to 8.5x from 9x to reflect current peer group multiples, our target price falls to $32/share. We note that 2010 guidance had not been updated since April 2010. With a target return of 15%, we are concurrently downgrading to HOLD."

Cenvus closed Friday at $27.82. losing $0.35, or 0.89 percent. They lowered their price target from C$33 to C$32 on the company.

Key Energy (NYSE:KEG) Outlooks Should Improve After Weak Quarter

The last quarterly report by Key Energy Services (NYSE:KEG) wasn't too impressive, but Canaccord Genuity sees things improving for them going forward, and maintain a "Buy" rating on them.

"We reiterate our BUY rating on KEG as we expect pricing to gain more traction in the US well servicing business driven by a high oil price and an increasing oil-directed rig count, stronger coiled tubing demand, equipment going to work in new locations internationally like Colombia and Bahrain, and integration of its OFS Energy acquisition," said Canaccord.

Key Energy closed Friday at $9.85, down $0.20, or 1.99 percent. Canaccord has a price target of $13.50 on them.

Halliburton (NYSE:HAL), Transocean (NYSE:RIG), Anadarko (NYSE:APC), Cameron (NYSE:CAM), Mitsui (Nasdaq:MITSY): Will They Pay BP (NYSE:BP) Anything?

Even though there are agreements in place which indemnify or protect oil companies like Halliburton (NYSE:HAL), Transocean (NYSE:RIG), Anadarko Petroleum (NYSE:APC) and Cameron International (NYSE:CAM) from liability in most cases, in reference to the BP (NYSE:BP) oil spill, it's hard to imagine they'll escape completely form bearing some responsibility in the matter.

The courts have said sometime in 2011 they should reach a conclusion concerning that, although in some cases, like the blowout preventer provided by Cameron International, it's going to take some time to accurately investigate it to see where the failure came.

The recent conclusion of the oil spill commission that Halliburton provided an unstable cement mix used to seal the failed oil well puts pressure on these companies as to whether or not the indemnity agreements will hold under that type of scrutiny.

BP could be helped immensely if all of these companies would have to share in paying for the disaster, as since they've already been paying for almost everything, for them it would be money returned, which could dramatically improve their financial health whe spread across the companies mentioned above. It would be a game changer for them.

For the other companies mentioned above, there is more at risk though, as if they're considered negligent and liable in some ways, there is no doubt more lawsuits will emerge which will cost them and change their financial circumstances and reputation management will have to ensue.

There is also the increased costs of legal battles and insuring their debt via credit-default swaps.

So while BP, other than awaiting the final determination of whether or not they were grossly negligent in the accident, which could result in a fine of up to $17.6 billion, they have faced pretty much the worst case scenario and are coming out on the other side of it, as far as understanding their liabilities.

The other companies are now entering into the stage of uncertainty in relationship to liability, and that could weigh on the stocks for some time until that is cleared away.

Halliburton's role in the cement job reminds shareholders and investors that the situation is far from being resolved for all parties involved.

BP (NYSE:BP) Pays $767 Million to Florida So Far

So far in the state of Florida alone, BP (NYSE:BP) has paid out $767 million to individuals, businesses and governments, according to the energy giant.

BP said in a statement, "Of the $767 million BP has paid so far in the state of Florida, $577 million has gone directly to business and individuals through the claims process.

"The next largest amount, nearly $72 million, has gone to those working in the Vessels of Opportunity Program, [a program that] put fisherman and captains to work over the summer helping with oil recovery."

Other major payments made to Florida included that granted to tourism, where "$32 million has gone to help Florida's tourism industry. Several Panhandle communities used the tourism grants to put on weekend festivals. Most recently, Pensacola Beach hosted the De Luna Festival, which was extended a third day because of BP funding," added BP.

Claims continue to be made in Florida, and other Gulf states over the oil spill disaster.

LINN Energy's (Nasdaq:LINE) Hedge Strategy a Winner Says UBS (NYSE:UBS)

Citing their hedging strategy, UBS (NYSE:UBS) raised their price target on LINN Energy (Nasdaq:LINE) while maintaining their "Buy" rating on them.

"Signaling confidence in LINE’s operations and balance sheet strength as well as its ability to capitalize on growth initiatives, mgmt lifted the 3Q distribution -5%, to $0.66, its first increase since 1Q08. In addition, mgmt added to hedge positions and now estimates that -100% of planned natgas production is hedged through 2015, while planned oil production is hedged -100% through 2013 and 70% in 2014-15. We applaud the move to secure price protection and note oil hedges were added well above our forecasts. We also highlight LINE’s extensive use of put contracts," UBS said.

LINN closed Friday at $34.99, gaining $0.56, or 1.63 percent. They raised their price target from $36 to $38.

Concerning EPU for 2010, they cut that from $1.53 to $1.47.

Southwestern Energy (NYSE:SWN) Capex Expected to Plunge

Citing low natural gas prices and dropping three rigs, UBS (NYSE:UBS) has slashed their price target on Southwestern Energy (NYSE:SWN).

"We believe the combo of SWN dropping 3 rigs and low gas prices is a signal it will reduce 2011 capex vs 2010. Thus, we lowered our ‘10 capex by - $100 MM to $2.0 bn, and 2011-12 capex by - $400 MM/year to $1.9 bn & $2.3 bn, respectively. As a result, we reduced our production growth forecast to 23% and 25% in 2011-‘12, (vs. - 30% per annum previously) and lowered our 2011-2012 EPS/CFPS to $2.15/$5.50 and $3.10/$7.45 from $2.20/
$5.70 and $3.25/$7.95, respectively," said UBS.

Southwestern closed on Friday at $33.84, gaining $0.20, or 0.59 percent. UBS lowered their price target on them from $56 to $45.

Patterson-UTI Energy (Nasdaq:PTEN) Could Benefit from Traditional Markets

Even though Canaccord Genuity kept their "Hold" rating on Patterson-UTI Energy (Nasdaq:PTEN), they see a potential catalyst in their traditionally strong markets, specifically in rig deployments and pressure pumping fleet.

Canaccord said, "Although we have PTEN at a HOLD, we continue to warm up to the story as we believe that the next catalysts could come in the integration and expansion of its pressure pumping fleet and further rig deployments in PTEN’s traditionally strong geographic markets. We are biased to the upside on PTEN and have admittedly been caught a little flat footed with PTEN’s outperformance over the past two months."

Patterson closed Friday at $19.41, gaining $0.24, or 1.25 percent. Canaccord has a price target of $22 on the company.

Concerns Rise on ExxonMobil's (NYSE:XOM) Stock Repurchase Strategy

The purpose of the repurchase of shares by ExxonMobil (NYSE:XOM) has UBS (NYSE:UBS) concerned, as it's not to the end they hoped for after the highly dilutive acquisition of natural gas producer XTO.

"XOM repurchased $3 billion in shares in 3Q, and is increasing the pace to $5 billion in 4Q. However, XOM does not seem to intend to accelerate repurchases to retire the shares issued for the dilutive XTO acquisition; rather, the buyback will remain the “flywheel” to regulate excess cash. We are slightly revising ’10/ ‘11 EPS estimates from $5.77/$5.76 to $5.83/$5.96 primarily on the increased pace of the buyback and higher int’l R&M performance," said UBS.

Exxon closed Friday at $66.49, gaining $0.27, or 0.41 percent. UBS raised their price target on the energy giant from $63 to $65.

Halliburton (NYSE:HAL) Share Price Driven by Headlines in Near Term on BP (NYSE:BP) Cement Job

There is no doubt in the short term that Halliburton (NYSE:HAL) shares will fluctuate based on headlines related to uncertainties surrounding the cement job which was identified as unstable by the oil spill commission investigating the cement mixture used on BP's (NYSE:BP) Macondo well.

As the smoke clears some though, a number of financial institutions consider the risk is small for ancillary companies like Halliburton, and believe will be indemnified in the incident.

Canaccord said, "While not a smoking gun, the findings do put more focus on HAL’s cementing role in the Macondo incident. However, do keep in mind that BP made all final decisions, and an unstable cement test alone does not put liability on HAL. In short, we believe that BP remains operator with full responsibility, and HAL still has indemnification protection, from reservoir pollution or contamination, outside of gross negligence (as stated in its service contract with BP, posted in response to today’s letter)."

"Chevron (NYSE:CVX) will discuss the report at the public hearing on Nov 9. Expect headlines to drive stock near term. Market has generally dismissed significant liability for other third-party contractors involved, such as Transocean (NYSE:RIG) and Cameron (NYSE:CAM), whose operations have also been called into question. In other words, we believe the market has scrutinized third-party liability and contract indemnity over the past 6 months, and has come away anticipating BP to bear the full brunt of financial responsibility."

Halliburton closed Friday at $31.86, gaining $0.18, or 0.57 percent. Canaccord has a price target of $45 on the oil services company.

Goldman (NYSE:GS) Says Buy Halliburton (NYSE:HAL), Citing Liability Headlines

Goldman Sachs (NYSE:GS) said investors should buy into Halliburton (NYSE:HAL) based on liability headlines which very likely won't pan out in their view.

Although there are a lot of contradictory stories emerging from the report from the National Commission on the BP Deepwater Horizon Oil Spill, which concluded the cement mud used to seal the Macondo well of BP (NYSE:BP) was unstable, Goldman seems sure Halliburton did what it could to provide a safe seal, and the drop in share price should be considered a buying opportunity.

"The slurry that was actually used on the well was tested, and passed, prior
to being pumped," Goldman asserted.

Goldman reminded clients in their note that "due to the low number of stabilizers that BP chose to use and urged BP to conduct all proper tests (including a cement bond log, which was not done)."

"At the end of the day, BP ran a negative pressure test and accepted the inconclusive results", Goldman concluded.

This seems to be far too optimistic, far too soon, to come to this conclusion, which bears the resemblance of cheerleading rather than a decision based upon objective response to the conditions.

It's not that Goldman may or may not end up being right about Halliburton, it's that it seems too soon to look at this as an opportunity to buy before this part of the narrative plays out.