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The Zacks Analyst Blog Highlights: Exxon Mobil, Royal Dutch Shell, Petrobras, National Oilwell Varco and Schlumberger
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For Immediate Release
Chicago, IL – June 6, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Exxon Mobil Corporation (XOM - Free Report) , Royal Dutch Shell plc , Petrobras (PBR - Free Report) , National Oilwell Varco, Inc. (NOV - Free Report) and Schlumberger Limited (SLB - Free Report) .
Oil & Gas Stock Roundup: Exxon, Shell, Petrobras & More
It was a week where oil prices tumbled to their lowest levels since April. However, natural gas futures edged closer to the psychologically important $3 level.
On the news front, energy biggie Exxon Mobil Corporation outlined plans to double earnings by 2025 in its annual meeting and European peer Royal Dutch Shell plc announced early production start-up at the Kaikias subsea development in the Gulf of Mexico. Meanwhile, Pedro Parente abruptly resigned from the position of CEO of Brazil’s Petrobras.
Overall, it was another mixed week for the sector. While West Texas Intermediate (WTI) crude futures lost about 3.1% to close at $65.81 per barrel, natural gas prices edged up some 0.8% to $2.962 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Shell's GoM Find, Cheniere's FID on Train 3 & More)
The U.S. oil benchmark slumped for the second week on fears of supply increase, bearish EIA inventory numbers, and soaring rig count.
Oil futures fell after reports emerged that Saudi Arabia and Russia were in discussion to step up output amid reduced supply from Iran and Venezuela.
The commodity was also spooked by the federal government’s EIA report that revealed increases in refined product inventories - gasoline and distillate. On a further bearish note, the report revealed that U.S. output edged up 44,000 barrels per day last week to 10.77 million barrels per day – the most since the EIA started maintaining weekly data in 1983.
Data showing the number of U.S. oil rigs climbing – this time by 2 following a large increase of 15 last week – brought further downside.
Meanwhile, natural gas prices moved northward last week. Apart from the weekly inventory release showing a smaller-than-expected increase in natural gas supplies, the commodity got a leg up from rising power sector demand.
Recap of the Week’s Most Important Stories
1. In its annual meeting, ExxonMobil Corporation announced its intention to increase earnings by more than two-fold by 2025 and address the risks of climate change.
ExxonMobil’s plan will be especially aided by lower-cost-of-supply investments in U.S. tight oil, deepwater and liquefied natural gas (LNG). This will be backed by a group of industry-leading technologies comprising advanced seismology, integrated reservoir modeling and data analytics.
ExxonMobil plans to boost tight oil production by fivefold in the U.S. Permian Basin. The company will also bring online 25 projects globally that will add volumes of more than 1 million oil-equivalent barrels per day. About 10 billion oil-equivalent barrels was added to its resource base in 2017 in locations including the Permian, Guyana, Mozambique, Papua New Guinea and Brazil.
Recently, the company announced plans to reduce greenhouse emission by 2020. ExxonMobil targets a 15% cut in methane emissions and a 25% deduction in flaring from levels in 2016. Since 2000, the company has spent more than $9 billion on lower-emission energy solutions that have enabled it to achieve 10% improvement in energy efficiency across global refining operations. (Read more ExxonMobil Chalks Out Plans to More Than Double Earnings)
2. Royal Dutch Shell has been making a remarkable progress in forging ahead with its deepwater projects of late. The European oil giant recently announced that the first phase of its deepwater Kaikias project in the Gulf of Mexico (GoM) has become functional and that too one year prior to the scheduled date. The first phase of the project is expected to produce up to 40,000 barrels of oil equivalent per day.
The Kaikias project is a joint venture undertaken by Shell and MOEX North America, a subsidiary of Tokyo-based Mitsui Oil Exploration Co. Shell holds 80% operating interest in the project, while the remaining 20% stake is held by MOEX North America. Kaikias is estimated to hold more than 100 million barrels of oil equivalent and the project is set to develop in two phases.
Shell took the final investment decision (FID) on the project in March 2017 and has been betting on cost and technology efficiencies to make the project more competitive since then. Notably, it has managed to lower the cost of Kaikias by 30% since the FID on the project. Simplified well designs, along with utilization of the existing oil/gas processing equipment and subsea umbilicals brought down the costs. While the total cost of the project has not been disclosed; Shell expects to push breakeven oil prices lower than $30 per barrel.
3. Petrobras’s shares declined more than 20% in the mid-day trading to eventually close at $10.13 (14.6% down) on Jun 1, after the Zacks Rank #3 (Hold) company’s CEO Pedro Parente stepped down from his position. Following his resignation, the Brazilian real also weakened against the dollar, sparking fear over the country’s economy. The CEO’s resignation came in the wake of the nationwide trucker strike in Brazil, which had strangled the country’s economy for more than a week. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In an attempt to resolve the truckers’ strike in Brazil, the government intervened on May 23 to temporarily lower diesel prices at the pump by 10% along with freezing the prices for 60 days.
Parente believed that the strike had challenged the implemented pricing policy, which is depicted in a statement during his resignation. Per the statement, his role “as CEO had stopped being positive and the government needed to consider alternatives to its pricing policy going forward”.
Ivan Monteiro will be serving as the interim CEO after Parente’s resignation. Monteiro has been the CFO of Petrobras since 2015, supervising the company’s successful debt-reduction attempts. He had also led the initial public offering of the company’s fuel-distribution unit, Petrobras Distribuidora S.A. that managed to raise $1.5 billion. (Read more Petrobras Thrown into Disarray on CEO Parente's Exit)
4. National Oilwell Varco, Inc. recently agreed to acquire a Dutch rig design and engineering company, GustoMSC. The deal is expected to enable Houston, TX-based National Oilwell to expand its equipment-providing business to the upstream companies. The financial details of the deal are yet to be disclosed.
GustoMSC’s designs are present in 10% of the jackup fleet and 8% of the floater fleet, both of which are currently active globally. Hence, the acquisition strengthens equipment provider, National Oilwell’s hold in the offshore industry. Moreover, with the recent improvement in the oil-price environment, the deep-water energy sector is expected to bounce back, making National Oilwell’s move even more profitable in the coming days.
Additionally, the acquisition is expected to help the company enhance its jack up equipment, geophysical gear transporting skids and other vessels, with the services designed to broaden its portfolio. The move boosts National Oilwell’s supply chain and is considered as a vertical integration. Furthermore, along with providing offshore oil and gas services, GustoMSC also serves the wind markets.(Read more Is National Oilwell's GustoMSC Acquisition Beneficial?)
5. Schlumberger Limited recently decided to break the OneLNG joint venture (JV) with Golar LNG Limited, primarily due to financial delays. The JV was created to develop the offshore Fortuna LNG project in Equatorial Guinea, in association with Ophir Energy Plc. The project is located in the Block R, operated by Ophir.
Although the development plan of the project was ready way back, finding attractive debt financing for the project and finalizing on the investment decision got delayed. The JV was created in July 2016, in which Schlumberger holds 49% stake. The JV holds 66.2% interest in the Joint Operating Company — which was created to develop the offshore Fortuna FLNG project — and Ophir owns the rest of the stake. The total cost of the Fortuna project is anticipated to be around $2.1 billion.
With oil price on the rise, the profitability of the project has increased. Yet, the final investment decision failed to meet the previously announced timelines. Focusing on the project would only block Schlumberger’s resources, which the company can use in other projects. (Read more Schlumberger to Exit From OneLNG JV, Fortuna Project)
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Exxon Mobil, Royal Dutch Shell, Petrobras, National Oilwell Varco and Schlumberger
For Immediate Release
Chicago, IL – June 6, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Exxon Mobil Corporation (XOM - Free Report) , Royal Dutch Shell plc , Petrobras (PBR - Free Report) , National Oilwell Varco, Inc. (NOV - Free Report) and Schlumberger Limited (SLB - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Tuesday’s Analyst Blog:
Oil & Gas Stock Roundup: Exxon, Shell, Petrobras & More
It was a week where oil prices tumbled to their lowest levels since April. However, natural gas futures edged closer to the psychologically important $3 level.
On the news front, energy biggie Exxon Mobil Corporation outlined plans to double earnings by 2025 in its annual meeting and European peer Royal Dutch Shell plc announced early production start-up at the Kaikias subsea development in the Gulf of Mexico. Meanwhile, Pedro Parente abruptly resigned from the position of CEO of Brazil’s Petrobras.
Overall, it was another mixed week for the sector. While West Texas Intermediate (WTI) crude futures lost about 3.1% to close at $65.81 per barrel, natural gas prices edged up some 0.8% to $2.962 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Shell's GoM Find, Cheniere's FID on Train 3 & More)
The U.S. oil benchmark slumped for the second week on fears of supply increase, bearish EIA inventory numbers, and soaring rig count.
Oil futures fell after reports emerged that Saudi Arabia and Russia were in discussion to step up output amid reduced supply from Iran and Venezuela.
The commodity was also spooked by the federal government’s EIA report that revealed increases in refined product inventories - gasoline and distillate. On a further bearish note, the report revealed that U.S. output edged up 44,000 barrels per day last week to 10.77 million barrels per day – the most since the EIA started maintaining weekly data in 1983.
Data showing the number of U.S. oil rigs climbing – this time by 2 following a large increase of 15 last week – brought further downside.
Meanwhile, natural gas prices moved northward last week. Apart from the weekly inventory release showing a smaller-than-expected increase in natural gas supplies, the commodity got a leg up from rising power sector demand.
Recap of the Week’s Most Important Stories
1. In its annual meeting, ExxonMobil Corporation announced its intention to increase earnings by more than two-fold by 2025 and address the risks of climate change.
ExxonMobil’s plan will be especially aided by lower-cost-of-supply investments in U.S. tight oil, deepwater and liquefied natural gas (LNG). This will be backed by a group of industry-leading technologies comprising advanced seismology, integrated reservoir modeling and data analytics.
ExxonMobil plans to boost tight oil production by fivefold in the U.S. Permian Basin. The company will also bring online 25 projects globally that will add volumes of more than 1 million oil-equivalent barrels per day. About 10 billion oil-equivalent barrels was added to its resource base in 2017 in locations including the Permian, Guyana, Mozambique, Papua New Guinea and Brazil.
Recently, the company announced plans to reduce greenhouse emission by 2020. ExxonMobil targets a 15% cut in methane emissions and a 25% deduction in flaring from levels in 2016. Since 2000, the company has spent more than $9 billion on lower-emission energy solutions that have enabled it to achieve 10% improvement in energy efficiency across global refining operations. (Read more ExxonMobil Chalks Out Plans to More Than Double Earnings)
2. Royal Dutch Shell has been making a remarkable progress in forging ahead with its deepwater projects of late. The European oil giant recently announced that the first phase of its deepwater Kaikias project in the Gulf of Mexico (GoM) has become functional and that too one year prior to the scheduled date. The first phase of the project is expected to produce up to 40,000 barrels of oil equivalent per day.
The Kaikias project is a joint venture undertaken by Shell and MOEX North America, a subsidiary of Tokyo-based Mitsui Oil Exploration Co. Shell holds 80% operating interest in the project, while the remaining 20% stake is held by MOEX North America. Kaikias is estimated to hold more than 100 million barrels of oil equivalent and the project is set to develop in two phases.
Shell took the final investment decision (FID) on the project in March 2017 and has been betting on cost and technology efficiencies to make the project more competitive since then. Notably, it has managed to lower the cost of Kaikias by 30% since the FID on the project. Simplified well designs, along with utilization of the existing oil/gas processing equipment and subsea umbilicals brought down the costs. While the total cost of the project has not been disclosed; Shell expects to push breakeven oil prices lower than $30 per barrel.
3. Petrobras’s shares declined more than 20% in the mid-day trading to eventually close at $10.13 (14.6% down) on Jun 1, after the Zacks Rank #3 (Hold) company’s CEO Pedro Parente stepped down from his position. Following his resignation, the Brazilian real also weakened against the dollar, sparking fear over the country’s economy. The CEO’s resignation came in the wake of the nationwide trucker strike in Brazil, which had strangled the country’s economy for more than a week. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
In an attempt to resolve the truckers’ strike in Brazil, the government intervened on May 23 to temporarily lower diesel prices at the pump by 10% along with freezing the prices for 60 days.
Parente believed that the strike had challenged the implemented pricing policy, which is depicted in a statement during his resignation. Per the statement, his role “as CEO had stopped being positive and the government needed to consider alternatives to its pricing policy going forward”.
Ivan Monteiro will be serving as the interim CEO after Parente’s resignation. Monteiro has been the CFO of Petrobras since 2015, supervising the company’s successful debt-reduction attempts. He had also led the initial public offering of the company’s fuel-distribution unit, Petrobras Distribuidora S.A. that managed to raise $1.5 billion. (Read more Petrobras Thrown into Disarray on CEO Parente's Exit)
4. National Oilwell Varco, Inc. recently agreed to acquire a Dutch rig design and engineering company, GustoMSC. The deal is expected to enable Houston, TX-based National Oilwell to expand its equipment-providing business to the upstream companies. The financial details of the deal are yet to be disclosed.
GustoMSC’s designs are present in 10% of the jackup fleet and 8% of the floater fleet, both of which are currently active globally. Hence, the acquisition strengthens equipment provider, National Oilwell’s hold in the offshore industry. Moreover, with the recent improvement in the oil-price environment, the deep-water energy sector is expected to bounce back, making National Oilwell’s move even more profitable in the coming days.
Additionally, the acquisition is expected to help the company enhance its jack up equipment, geophysical gear transporting skids and other vessels, with the services designed to broaden its portfolio. The move boosts National Oilwell’s supply chain and is considered as a vertical integration. Furthermore, along with providing offshore oil and gas services, GustoMSC also serves the wind markets.(Read more Is National Oilwell's GustoMSC Acquisition Beneficial?)
5. Schlumberger Limited recently decided to break the OneLNG joint venture (JV) with Golar LNG Limited, primarily due to financial delays. The JV was created to develop the offshore Fortuna LNG project in Equatorial Guinea, in association with Ophir Energy Plc. The project is located in the Block R, operated by Ophir.
Although the development plan of the project was ready way back, finding attractive debt financing for the project and finalizing on the investment decision got delayed. The JV was created in July 2016, in which Schlumberger holds 49% stake. The JV holds 66.2% interest in the Joint Operating Company — which was created to develop the offshore Fortuna FLNG project — and Ophir owns the rest of the stake. The total cost of the Fortuna project is anticipated to be around $2.1 billion.
With oil price on the rise, the profitability of the project has increased. Yet, the final investment decision failed to meet the previously announced timelines. Focusing on the project would only block Schlumberger’s resources, which the company can use in other projects. (Read more Schlumberger to Exit From OneLNG JV, Fortuna Project)
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year. See these high-potential stocks free >>.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.