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.
Showing posts with label Natural Gas Prices. Show all posts
Showing posts with label Natural Gas Prices. Show all posts
Wednesday, November 3, 2010
Thursday, October 28, 2010
Citigroup (NYSE:C) Sees Strong Headwinds for Hercules Offshore (NASDAQ:HERO)
It appears that Hercules Offshore Inc. (NASDAQ:HERO) will continue to struggle, as Citigroup (NYSE:C) said there are some major headwinds the company faces which will be difficult to overcome until the price of natural gas increases.
Citigroup said they're maintaining their "Hold-Speculative" rating on the company as a result.
“Our $2.40 EV/EBITDA derivation applies a 6.0x EV/EBITDA multiple to our forward-12-month EBITDA of $161 million. The multiple is below the 10.2x peak HERO multiple reached in the most recent downturn and is well above the 1.6x trough reached at the peak of the last upturn. The multiple is based on historical analysis of HERO and relative market multiples and is within the 2.9x–15.6x historical range where the average of offshore driller stocks traded over the past ten years. The median group EV/EBITDA multiple was 7.9x in the most recent cycle,” said Citi.
Citigroup lowered the price target of Hercules significantly, from $3.60 to $2.40. Hercules was at $2.43 a share as of 12:19 PM EDT, gaining $0.05, or 2.10 percent.
Citigroup said they're maintaining their "Hold-Speculative" rating on the company as a result.
“Our $2.40 EV/EBITDA derivation applies a 6.0x EV/EBITDA multiple to our forward-12-month EBITDA of $161 million. The multiple is below the 10.2x peak HERO multiple reached in the most recent downturn and is well above the 1.6x trough reached at the peak of the last upturn. The multiple is based on historical analysis of HERO and relative market multiples and is within the 2.9x–15.6x historical range where the average of offshore driller stocks traded over the past ten years. The median group EV/EBITDA multiple was 7.9x in the most recent cycle,” said Citi.
Citigroup lowered the price target of Hercules significantly, from $3.60 to $2.40. Hercules was at $2.43 a share as of 12:19 PM EDT, gaining $0.05, or 2.10 percent.
ConocoPhillips (NYSE:COP) Drops on Lower Production in Third Quarter
ConocoPhillips (NYSE:COP) beat earnings estimates for the third quarter but still got punished on lower production, generating questions on future
performance.
For the quarter, earnings per share rose to $1.50, beating Street estimates by 5 cents a share, and doubling last year's earnings in the same quarter.
Earnings for the quarter rose to $3.06 billion, or $2.05 a share. Last year they generated earnings of $1.5 billion, or 97 cents a share.
Lowering costs and higher commodity prices drove the performance for Conoco in the quarter, but lower production could weigh on shares and performance, as there is only so low costs can be lowered, and no guarantees as to prices going forward.
Production would need to rise to build confidence in the future performance of the energy giant.
CEO Jim Mulva commented on the quarterly results, saying, “We had a good
quarter and operated as expected. Our plans to improve returns through
disciplined capital spending, reducing debt and repurchasing shares are on
track.”
As far as natural gas production, that's not necessarily a negative situation, as lower natural gas prices would cause Conoco to decrease margins and earnings.
Oil exploration and production dropped to 1.72 million barrels a day, which is more concerning for shareholders and potential investors.
Revenue for the latest quarter increased to $49.5 billion, beating estimates of $45.59 billion, and the $41.27 billion in revenue last year.
performance.
For the quarter, earnings per share rose to $1.50, beating Street estimates by 5 cents a share, and doubling last year's earnings in the same quarter.
Earnings for the quarter rose to $3.06 billion, or $2.05 a share. Last year they generated earnings of $1.5 billion, or 97 cents a share.
Lowering costs and higher commodity prices drove the performance for Conoco in the quarter, but lower production could weigh on shares and performance, as there is only so low costs can be lowered, and no guarantees as to prices going forward.
Production would need to rise to build confidence in the future performance of the energy giant.
CEO Jim Mulva commented on the quarterly results, saying, “We had a good
quarter and operated as expected. Our plans to improve returns through
disciplined capital spending, reducing debt and repurchasing shares are on
track.”
As far as natural gas production, that's not necessarily a negative situation, as lower natural gas prices would cause Conoco to decrease margins and earnings.
Oil exploration and production dropped to 1.72 million barrels a day, which is more concerning for shareholders and potential investors.
Revenue for the latest quarter increased to $49.5 billion, beating estimates of $45.59 billion, and the $41.27 billion in revenue last year.
Monday, October 18, 2010
Halliburton (NYSE:HAL) Crushed After Earnings Report
With expectations at high levels, the improved revenue and earnings of Halliburton Company (NYSE:HAL) weren't enough to satisfy investors, who sold the stock off after the released quarterly report.
Revenue for the third quarter soared 30 percent to $4.67 billion, up from the $3.59 in the same quarter last year. Net profit grew to $544 million, over double last years' numbers. That equaled 60 cents a share, in contrast to $262 million, or 29 cents a share last year.
Over half the revenue for Halliburton was generated in North America even with the Gulf oil crisis, amounting to $2.4 billion.
Outside of the United States and Canada, results were disappointing, with slow growth in Latin America and the Middle-East-Asia regions, and decline of growth in former Soviet nations, Europe and Africa.
Shale gas fields led the way in North America, helping the company generate record revenue in the quarter.
Interestingly, Halliburton is moving toward more gas production in a depressed natural gas price market, generating strong revenues, while gas companies have been expanding into the oil market for the same reasons: lower margins and prices.
Halliburton plunged to $33.82, losing $2.00, or 5.58 percent at 2:11 PM EDT.
Revenue for the third quarter soared 30 percent to $4.67 billion, up from the $3.59 in the same quarter last year. Net profit grew to $544 million, over double last years' numbers. That equaled 60 cents a share, in contrast to $262 million, or 29 cents a share last year.
Over half the revenue for Halliburton was generated in North America even with the Gulf oil crisis, amounting to $2.4 billion.
Outside of the United States and Canada, results were disappointing, with slow growth in Latin America and the Middle-East-Asia regions, and decline of growth in former Soviet nations, Europe and Africa.
Shale gas fields led the way in North America, helping the company generate record revenue in the quarter.
Interestingly, Halliburton is moving toward more gas production in a depressed natural gas price market, generating strong revenues, while gas companies have been expanding into the oil market for the same reasons: lower margins and prices.
Halliburton plunged to $33.82, losing $2.00, or 5.58 percent at 2:11 PM EDT.
Ticonderoga Launches Coverage on Range Resources (NYSE:RRC)
Ticonderoga Securities started its coverage of Range Resources (NYSE:RRC) off with a "Buy" rating and a price target of $45, citing strong growth from Marcellus Shale and natural gas price support at current levels.
"RRC is an independent exploration and production company largely weighted toward natural gas, which accounts for 84% of its proven reserve base. While more than half of RRC’s production currently comes from the Mid-Continent/Southwest region of the U.S., the company’s reserves, growth, and upside are dominated by its activities in the Appalachian Basin and its leverage to the developing Marcellus Shale...While we have yet to identify any short-term catalyst for natural gas markets we see little downside in gas prices from here. RRC’s valuation should be viewed as an attractive entry point, especially for longer-term investors."
No one can be exactly sure, but one possible catalyst which could drive gas prices down is the ongoing recession. If people aren't able to afford current prices or incremental increases in natural gas, they will rebel or simply not pay it. Either way it could hurt natural gas companies.
There's a reason many natural gas companies have been buying up oil assets.
Range Resources closed Friday at $37.59, gaining $0.28, or 0.75 percent.
"RRC is an independent exploration and production company largely weighted toward natural gas, which accounts for 84% of its proven reserve base. While more than half of RRC’s production currently comes from the Mid-Continent/Southwest region of the U.S., the company’s reserves, growth, and upside are dominated by its activities in the Appalachian Basin and its leverage to the developing Marcellus Shale...While we have yet to identify any short-term catalyst for natural gas markets we see little downside in gas prices from here. RRC’s valuation should be viewed as an attractive entry point, especially for longer-term investors."
No one can be exactly sure, but one possible catalyst which could drive gas prices down is the ongoing recession. If people aren't able to afford current prices or incremental increases in natural gas, they will rebel or simply not pay it. Either way it could hurt natural gas companies.
There's a reason many natural gas companies have been buying up oil assets.
Range Resources closed Friday at $37.59, gaining $0.28, or 0.75 percent.
Wednesday, September 22, 2010
Advantage Oil (NYSE:AAV) Downgraded by TD Newcrest
Advantage Oil & Gas Ltd. (NYSE:AAV) was downgraded by TD Newcrest from "Action List Buy" to "Buy," with a price target of $8 on the company.
As with many companies with significant exposure to natural gas, concerns over prices going forward were the major reason for the downgrade.
"Although we have maintained our PT, we have reduced our rating to BUY to reflect our reduced forecast for natural gas prices. We are mindful of the high future development capital in the company’s 2009 year-end reserve report and the impact lower gas prices may have on Advantage’s implied growth timeline," said TD.
TD did note in spite of that, "the company will be complete its Glacier gas plant in Q2/11, which is doubling in size to 100 mmcf/d. Development of its Glacier Montney gas play remains on track."
Advantage closed Tuesday at $6.23, dropping $0.05, or 0.80 percent.
As with many companies with significant exposure to natural gas, concerns over prices going forward were the major reason for the downgrade.
"Although we have maintained our PT, we have reduced our rating to BUY to reflect our reduced forecast for natural gas prices. We are mindful of the high future development capital in the company’s 2009 year-end reserve report and the impact lower gas prices may have on Advantage’s implied growth timeline," said TD.
TD did note in spite of that, "the company will be complete its Glacier gas plant in Q2/11, which is doubling in size to 100 mmcf/d. Development of its Glacier Montney gas play remains on track."
Advantage closed Tuesday at $6.23, dropping $0.05, or 0.80 percent.
Tuesday, September 14, 2010
Exxon (NYSE:XOM) Downgraded by RBC Capital
RBC Capital Markets downgraded Exxon Mobil Corp. (NYSE:XOM), saying their exposure to the weak natural gas market makes them vulnerable.
This was a reference to the acquisition of XTO Energy in the early part of 2010, which resulted in Exxon becoming the largest natural gas company in the United States.
Natural gas companies have been attempting to diversify by acquiring oil assets because of the expectations the abundant supply of natural gas will keep the price of the energy source down.
RBC said the weak price of natural gas will damage the earnings of Exxon, along with their market valuation. They lowered the price target for the next 12 months from $76 a share to $70 a share, while downgrading them from "Outperform" to "Sector Perform."
This was a reference to the acquisition of XTO Energy in the early part of 2010, which resulted in Exxon becoming the largest natural gas company in the United States.
Natural gas companies have been attempting to diversify by acquiring oil assets because of the expectations the abundant supply of natural gas will keep the price of the energy source down.
RBC said the weak price of natural gas will damage the earnings of Exxon, along with their market valuation. They lowered the price target for the next 12 months from $76 a share to $70 a share, while downgrading them from "Outperform" to "Sector Perform."
Subscribe to:
Posts (Atom)
