Oil & Gas Stock Roundup: Crude Up on Iraq Premium, Anadarko Jumps on Exxon's Bid Rumor - Analyst Blog

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Oil prices rose to their highest level in nearly nine months last week, as tensions over Iraq continued to feed supply concerns in the Middle East. By close of trade on Friday in New York, West Texas Intermediate (WTI) crude was up 3.5% during the week to close at $106.91 per barrel, rising above the $106 threshold for the first time since Sep 2013.

(Read our full coverage on the Iraq turmoil and how it affects energy companies: Crude Rallies on Iraq Conflict: Oil Stocks in Focus )

Natural gas also rallied to a five-week high on expectations of an uptick in electric power demand with the imminent arrival of summer months. This was supported by a bullish supply data. Natural gas prices ended Friday at $4.74 per million Btu (MMBtu), up 0.6% over the week.

Among the newsmakers, energy explorer and producer Anadarko Petroleum Corp. ( APC ) stock reached a new high after being touted as a potential takeover target for the largest U.S. oil company Exxon Mobil Corp. ( XOM ). On the other hand supermajors Chevron Corp. ( CVX ) and Royal Dutch Shell plc ( RDS.A ) both announced deals to sell assets.         

Energy Week That Was:

The week's energy coverage was dominated by the following news: 

Anadarko Rises on Hopes of Exxon Mobil Acquisition

As per the market speculation, oil and gas explorer Anadarko Petroleum Corp. may be acquired by the energy giant Exxon Mobil Corp. Following the rumor, shares of Anadarko hit its 52-week high of $109.00 on Jun 11. Finally, the stock closed at $108.32, up roughly 4.2% from the previous day's closing. The company's strategically located operations in several mineral-rich areas, its active presence in numerous international markets, a disciplined capital spending program and attractive growth ventures make it a lucrative take-over target for energy biggies like Exxon Mobil.    

Chevron Sells Stake in Chad & Cameroon for $1.3B

U.S. energy major Chevron Corp. announced that a subsidiary - Chevron Global Energy Inc. - has sold to the Republic of Chad its 25% non-operated interest in an oil producing acreage located in southern Chad, in addition to a stake in the related pipeline system. Chevron closed the deal on Jun 13 and received about $1.3 billion. The assets under consideration include 7 oilfields located in the Doba Basin in which the company holds stake. These fields had an average net yield of 18,000 barrels of oil per day in 2013. The transaction also covers sale of Chevron's 21% non-operated interest in a pipeline that delivers oil to the Cameroon coast and other related marine facilities. Chevron's management said that the sale is a strategic move to maximize the value of its upstream portfolio. The company also stated that though these assets have been profitable for its African operations in the past 14 years of holding, the current market scenario and size of the assets make it an ideal time to sell.

Shell to Sell Orion Oil Sands Project to Osum for C$325M

The Canadian arm of Europe's largest oil company Royal Dutch Shell plc entered into an agreement with private oil sands producer, Osum Oil Sands Corp. to sell its Orion Oil Sands Project, located in the Cold Lake oil sands area in Alberta. Shell is likely to receive about C$325 million from the deal, the closure of which is anticipated on or around Jul 31. Post the completion of this transaction, Osum will be the 100% stake owner as well as operator of the project. The Orion Oil Sands Project had started commercial production in 2007. For the first quarter of 2014, the project yielded about 6,700 barrels of bitumen per day from 22 well pairs. At the forecasted rate of production, the project is estimated to have an economic life of over 25 years.

Chesapeake's Spin-Off Plan Approved

U.S. gas giant Chesapeake Energy Corp. ( CHK ) has received the board of directors' approval for the previously announced spin-off its oilfield services business unit - Chesapeake Oilfield Operating LLC. The proposed restructure is in line with the company's ongoing strategy of shifting focus from natural gas drilling to liquids production. Involved in drilling, hydraulic fracturing, rig relocation, and other related services, the to-be-divested business generated revenues of $2.2 billion last year. Post spin-off, the new unit would be named Seventy Seven Energy Inc. The new entity would be traded on the New York Stock Exchange under the symbol SSE.

Exxon Mobil's CLOV Projects Begins per Schedule

Integrated energy major Exxon Mobil said that the CLOV project in Angola has commenced operations on time and is projected to achieve daily production capacity of 160,000 barrels in the coming months. CLOV represents the fourth major development hub in Block 17, which is operated by France-based TOTAL SA. Girassol, Dalia and Pazflor are the first three developments in the block. An Exxon Mobil affiliate has a 20% working interest in CLOV. The project will produce oil from the four fields of Cravo, Lirio, Orquidea and Violeta that lie in water depths of 3,600 feet to 4,593 feet.     

Performance Chart of Some Major Companies:

The following table shows the price movement of the major oil and gas players over the past 5 days and during the last 6 months.

Ticker

Last 5 Day's Performance

6 month performance

XOM

+1.14%

+5.59%

CVX

+2.59%

+5.86%

COP

+2.99%

+19.04%

OXY

+2.78%

+13.50%

SLB

+2.09%

+24.43%

RIG

+3.36%

-8.05%

VLO

-2.91%

+14.95%

TSO

-0.70%

-1.01%

Other Headline News on Energy:

Oceaneering Enters Deal with FMC Tech to Provide Umbilicals

Oilfield services company Oceaneering International Inc. ( OII ) announced that it has signed an agreement with a subsidiary of the oil drilling equipment maker FMC Technologies Inc. to purvey production control umbilicals. Per the agreement, Oceaneering will provide super-duplex, steel tube umbilicals for FMC Technologies' Jangkrik project, located off the coast of Indonesia, in the Muara Bakau production sharing contract area. The umbilicals will have a total length of roughly 50 kilometers. Product manufacturing is slated to begin in the final quarter of this year, with projected delivery in the second quarter of 2016. 

Eni Tie-Up with KazMunayGas for Kazakhstan Venture

Italy-based Eni SpA ( E ) announced that it has collaborated with state-owned KazMunayGas (KMG) to jointly discover an offshore oil field in Kazakhstan. Notably, the move will also enable Eni to increase its footprint in the Central Asian country. Per the agreement, both Eni and KMG will hold 50% stake each, of the exploration and production rights in the Isatay offshore exploration block in the north Caspian Sea. The block, likely to be operated by a joint operating company, is projected to have considerable oil resources.

Talisman Energy May Sell a Stake in Duvernay Gas Resources

As per media reports, Canadian energy explorer Talisman Energy Inc. is now in an initial stage of discussion with PT Pertamina - an Indonesian state-owned energy company - to sell a stake at its Alberta-based Duvernay shale gas resources. With the investment in Duvernay shale development, Pertamina will explore oil and gas properties in Canada for the first time. Talisman's plan to divest its Duvernay asset reflects its intention to get rid of those properties that do not fit into its long-term growth plan.

This Week's Outlook:

Apart from the usual releases in this week - the U.S. government data on oil and natural gas - market participants will be closely tracking Wednesday's Federal Reserve policy meeting, apart from data on industrial production, housing, inflation and leading indicators. Energy traders will also be focusing on developments in Iraq.

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CHEVRON CORP (CVX): Free Stock Analysis Report

CHESAPEAKE ENGY (CHK): Free Stock Analysis Report

ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report

ENI SPA-ADR (E): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): Free Stock Analysis Report

ANADARKO PETROL (APC): Free Stock Analysis Report

OCEANEERING INT (OII): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: WTI , KMG , CVX , CHK , E

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