CM - Exxon surprises markets with new euro-denominated bond sale - June 2020Exxon Mobil Corp. dared to go where it hasn’t gone before—into eurobonds. It issued €4.5 billion ($5.24 billion) of notes in four separate tranches on June 23. The eurobonds are a departure from Exxon’s usual corporate debt raising—the first eurobonds among the $46.6 billion in notes currently outstanding on the AA rated issuer’s balance sheet. Including these notes, the US’ largest oil and gas company has floated over $23 billion worth of debt YTD. A 23-bank syndicate sold €1.5 billion...
Jun 26, 2020
IS - Wealth funds and banks put oil sands in their crosshairs - May 2020Norway’s $1 trillion sovereign wealth fund, Norges Bank Investment Management, has excluded Canadian Natural Resources Ltd., Cenovus Energy, Suncor Energy and Imperial Oil from its portfolio. NBIM said the decision was made after its ethics watchdog recommended exclusion, saying the companies had unacceptable greenhouse gas emissions related to oil sands production and lacked specific plans to reduce emissions within a reasonable timeframe. All four companies have emissions goals of...
May 28, 2020
IS - Imperial hits Kearl output record, extends turnaround period - May 2020Imperial Oil’s Kearl oil sands project achieved a quarterly production record in Q1, delivering 226,000 bbl/d of bitumen. Volumes were up 26% compared to the year-ago quarter and rose further to a March average of 248,000 bbl/d. The company credits supplemental crushers for improving reliability. Overall company production of 419,000 boe/d was up 8% YOY. Elsewhere, Cold Lake bitumen production averaged 140,000 bbl/d in Q1, down 5,000 bbl/d versus 1Q19. Imperial’s share of Syncrude...
May 08, 2020
CS - Imperial Oil cutting $1B, with $500MM coming from capex - April 2020Imperial Oil is cutting its 2020 capex by $500 million, from $1.6-1.7 billion to $1.1-1.2 billion, in response to falling commodity prices brought on by the coronavirus pandemic and Saudi-Russian price war. The company said it will cut an additional $500 million from operating expenses, for total savings of $1 billion. The company will reduce the scope of its planned Q2 turnaround of the Sarnia facility, and a planned coker turnaround at Syncrude (25% WI) has been delayed until Q3....
Apr 01, 2020
CS - A similar refrain for O&G and protestors: ‘Hold the line!’ - March 2020Canada’s oil and gas sector got off to a decent start this year, but new problems— the COVID-19 virus and a Saudi-Russian oil price war—as well some old friends like the country’s regulatory regime, have made the future far more uncertain. Teck Resources abandoned its $20.6 billion Frontier oil sands project days before a nine-year regulatory process was finally set to end (PG.1), and it hasn’t been the only project to suffer (PG.8). Rig counts began the year with a slight improvement over the...
Mar 11, 2020
CS - Imperial’s operating cash flow of $4.4B highest in 5-plus years - March 2020Calling 2019 “a year of significant change for the industry in which we operate,” Brad Corson, Imperial Oil’s chairman, president and CEO, said that the company’s $4.4 billion of cash generated from operating activity was the highest in more than five years. Estimated net income of $2.2 billion, however, off 5% YOY despite a $662 million positive non-cash impact from Alberta’s corporate income tax rate decrease. Revenue was down 2% YOY at $34.1 billion, though the company increased production...
Mar 11, 2020
CS - Cenovus and Imperial see boosts in rail shipments - February 2020Cenovus Energy achieved its goal of increasing its crude-by-rail shipments by the end of December to 100,000 bo/d, EVP Drew Zieglgansberger said at a business conference. He attributed the increase to Alberta’s decision to allow producers to surpass mandatory quotas if they transport more oil by rail. The comments followed a Jan. 28 report from Canadian National Railway Co. that it transported 20% more carloads in 2019 than in 2018 and that the company anticipates oil to be a “growth driver”...
Feb 19, 2020
CS - Canada O&G: Do you want the good or bad news first? - February 2020What must feel like an unending litany of bad news in Canada’s oil and gas industry is showing some signs of relenting. The Canadian Association of Petroleum Producers is forecasting a $2 billion increase in upstream capital spending this year (PG.1), and the Petroleum Services Association of Canada revised its forecast for 2020 drilling up by 7% (PG.15). Both Cenovus and Imperial Oil have increased crude-by-rail shipments recently (PG.8), and rail shipments should continue to grow, although...
Feb 18, 2020
MI - Enbridge: Proposal could delay Mainline conversion by a year - February 2020Enbridge defended its plan to move the Canadian Mainline crude system to 90% contracted service by mid-2021 and told the Canada Energy Regulator that proposals by Canadian Natural Resources Ltd. would delay the process at least one year. The pipeline giant suggested on CNR was seeking a delay so it can wait for more certainty on the Trans Mountain and TC Energy’s Keystone XL pipelines. “Such delay might benefit CNRL by providing more time for it to sort out its transportation options,”...
Feb 11, 2020
A&D - Analyst Notes - November 21, 2019Callon Petroleum (CPE; $4.19-Nov. 4; Buy; PT-$8) …we continue to believe that the combined company is better long term suited to compete than the two standalone companies though we also believe Callon can prosper if remaining on their own. Incorporating Carrizo (CRZO – Buy) into our model beginning January 1, 2020, we forecast $77MM in FCF pre-preferred dividend payments, ($56MM post) vs. our prior estimates of CPE as roughly FCF neutral in 2020. Additionally, we forecast leverage for...
Nov 21, 2019
CM - Analyst Notes - November 15, 2019Chesapeake Energy Corp. (NYSE: CHK; $1.28-Nov. 6; Sell; PT-$0) With our model now updated to reflect the company’s 2020 outlook as we see $1,367MM capex /423mboepd /114mbopd, our 3P NAV falls to $0/shr at a LT price deck of $49.74 WTI / $2.45 HHUB / $55.59 Brent and warrants a downgrade to Sell. While we don’t expect this move to come as a surprise given balance sheet issues, the going concern warning in the most recent 10-Q highlighted a declining leverage covenant that may be...
Nov 15, 2019
CS - Alberta producers dodging limits with new wells & crude-by-rail
- November 2019As of Nov. 8, Alberta producers are able to drill new conventional oil wells unrestricted by the curtailment program, although existing wells will still be affected. The province made the change to drive investment, increase drilling activity and support economic growth. “Companies are currently making investment decisions and we want those dollars and jobs to be in Alberta,” Energy Minster Sonya Savage said. Alberta produced 480,000 bo/d of conventional oil in September, of which...
Nov 13, 2019
CS - Imperial’s net falls, but operating cash flow rises to $1.4 billion - November 2019Imperial Oil Ltd. reported net income of $424 million in Q3, compared with $749 million in the same period a year ago, while revenue fell 6% to $8.7 billion. It generated about $1.4 billion in cash from operating activities, up from $1.2 billion a year ago, while spending $442 million on capital and exploration activities in the quarter, 18% more YOY. Overall production averaged 407,000 boe/d, up 3.5% YOY. Chairman and CEO Rich Kruger noted, “Imperial achieved its highest third quarter...
Nov 13, 2019
A&D - Analyst Notes - October 31, 2019Parsley Energy (PE; $15.18-Oct. 14; Overweight; PT-$27) While the market sold the stock off in part due to a misplaced view that Parsley was a likely near-term seller, we see the deal as a positive for the company’s outlook. Based on our initial cut at the model, we see the stock now yielding ~3.5% in FCF in 2020E, up substantially from before the deal, and see sustainable FCF going forward that can support a growing dividend … The acquired acreage is a direct offset of Parsley’s Trees...
Oct 31, 2019
CM - News Briefs - April 24, 2020BNK Petroleum Inc.’s US subsidiary now has a $23.5 million borrowing base on its revolving line of credit after redetermination. The company, dual listed on the OTC and Toronto Stock Exchange, also said it made a $3 million principal payment on the revolver and will bring it down to $21 million by November. BNK expects $5.7-6.5 million in funds flow assuming $22-$35/bbl oil prices. Ring Energy, Inc. expects to pay down amounts on its senior credit facility with the $31.5 million of...
Apr 24, 2020