Oil & Gas Stock Roundup: Exxon Sets $40B Capex, Chevron Wins Ecuador Suit - Analyst Blog

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Both crude and natural gas prices remained flat last week.

Among the newsmakers, energy major Exxon Mobil Corp. ( XOM ) announced plans to spend $39.8 billion this year, while Chevron Corp. ( CVX ) scored a big legal victory in the Ecuador pollution case.   

Crude Oil:

Crude prices got a boost from upbeat U.S. spending and factory data. The commodity got some more support from better-than-expected nonfarm payroll report for February that painted a positive picture of the economy. This has fueled hopes for robust fuel and energy demand in the world's biggest oil consumer.

However, the bulls were offset by waning fears of an imminent conflict in Ukraine and concerns about an economic slowdown in China - the second largest oil consumer in the world. Crude prices were also pressured by a surprise rise in distillate stockpiles (including diesel and heating oil) despite the ongoing cold weather. 

As a result of these factors, by close of trade on Friday, West Texas Intermediate (WTI) oil settled at around $102.6 per barrel, more or less unmoved from the previous week. 

Natural Gas:

Natural gas remained flat last week, as a bullish supply data and geopolitical concerns over the Ukraine crisis were offset by forecasts of a break in cold weather conditions.

The EIA's weekly inventory release showed that natural gas stockpiles held in underground storage in the lower 48 states fell by 152 billion cubic feet (Bcf) for the week ended Feb 28, above the guided range (of 135-139 Bcf drawdown). Moreover, the decrease was higher than both last year's withdrawal of 149 Bcf and the 5-year (2009-2013) average reduction of 105 Bcf for the reported week.

Natural gas was further boosted by the prevailing tensions in Ukraine that may disrupt the commodity's availability to downstream customers in Europe, sending prices soaring. 

However, to even up things, milder spring weather forecasts - over much of the country in the next few days - are likely to limit natural gas' demand for heating.

Influenced by these factors, natural gas prices ended Friday at $4.62 per million Btu (MMBtu), essentially flat over the week.

Energy Week That Was:

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

Exxon Set for Record Startups in '14

Energy biggie Exxon Mobil Corp. announced that it expects to start production at 10 major projects - a company record - in 2014. This would add new capacity of about 300,000 net oil equivalent barrels per day, paving way for growth.

However, in 2014, Exxon Mobil's capital spending is estimated to decline to $39.8 billion from a peak of $42.5 billion in 2013. Per the company, it will shell out an average of just under $37 billion per year from 2015 to 2017 and grow liquids volumes 4% each year during the same period.

Chevron Wins Favorable Court Ruling in Ecuador Case

A New York federal judge overturned a record $9.5 billion Ecuadorean court judgment against U.S. energy behemoth Chevron Corp. The judge declared that the environmental damage award by the south American country is unenforceable in the U.S. on grounds of fraudulent activities by the Ecuadorian legal team.

This long, drawn-out court battle dates back to Feb 2011, when a judge in Ecuador issued an $18 billion verdict against Chevron for the contamination of an oil field, Lago Agrio, by one of its affiliates, Texaco Petroleum. This charge was later reduced to $9.5 billion.

BP Plans New Unit for US Lower 48 Biz

Oil giant BP Plc ( BP ) has proposed to form a separate business to manage its offshore oil and gas assets - including its shale operations - in the U.S. Lower 48. Currently, BP manages the region through its North America Gas group based in Houston.

The new business will be managed from a new location in Houston and not the existing Westlake campus. The unit will also have a separate management team and different governance, processes and systems suited to deal with the unique competitive and operating environment onshore U.S. Lower 48.

Anadarko Provides 2014 Guidance

Independent energy explorer Anadarko Petroleum Corp. ( APC ) offered a glimpse of its 2014 capital spending plans. The Woodlands, Texas-based oil and gas player said that it will increase its capital expenditures by about 8%, as it aims to increase liquids production by 40,000 barrels per day. Anadarko has pegged its 2014 capital budget at $8.1-8.5 billion. Of the total, roughly 70% will go toward oil production activities.

Helmerich & Payne, YPF in 5-Year Contract

Tulsa, OK-based contract drilling services provider Helmerich & Payne Inc. ( HP ) has inked a five year deal with Argentina's state energy company YPF S.A. Under the drilling contract, 10 existing FlexRigs will be supplied by Helmerich & Payne, which will operate in the Vaca Muerta play in the Latin American country's Neuquen Province.

The first FlexRig is slated to start work in the final quarter of fiscal 2014. The remaining fleet will be deployed in due course. By the end of the second quarter of fiscal 2015, all the FlexRigs are expected to be operational.

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

-1.22%

+7.50%

CVX

+0.15%

-6.52%

COP

+0.48%

-3.28%

OXY

+0.43%

+7.05%

SLB

+0.95%

+6.69%

RIG

+1.01%

-12.02%

VLO

+10.43%

+48.24%

TSO

+3.90%

+14.74%

Other Headline News on Energy:

McDermott Sinks on Shocking Q4

Shares of offshore oil and gas-focused engineering and construction firm McDermott International Inc. ( MDR ) fell 9% after coming out with poor quarterly results. The company reported a loss, while revenues plunged, as McDermott struggled with a deep-water project off Malaysia. What's more, the service provider suspended guidance for the foreseeable future until it pushes ahead with organizational changes.      

Canadian Natural Earnings Improve, Hikes Dividend

Independent exploration and production company Canadian Natural Resources Ltd. ( CNQ ) reported a jump in its fourth quarter earnings on the back of increased production, particularly from its Pelican Lake project in Alberta. The Calgary-based company also announced a raise in its dividend - for the second time in three months.

Petrobras Finds Quality Oil in Santos Basin

Brazil's state-run energy giant Petrobras reported discovery of good quality oil from two recently completed wells. These wells are located in the pre-salt reservoirs Florim and Entorno de Iara, in the Santos Basin in the Transfer of Rights area. Petrobras will complete the exploration phase of these areas by Sep 2014 and may declare the commercial viability of the region by then.

This Week's Outlook:

Apart from the usual releases in this holiday shortened week - the U.S. government data on oil and natural gas - market participants will be closely tracking Thursday's monthly retail sales data for February that will shed further light on the economy's wellness and the need for the bond buying policy. Energy traders will also be focusing on developments in Ukraine.

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ANADARKO PETROL (APC): Free Stock Analysis Report

BP PLC (BP): Free Stock Analysis Report

CDN NTRL RSRCS (CNQ): Free Stock Analysis Report

CHEVRON CORP (CVX): Free Stock Analysis Report

HELMERICH&PAYNE (HP): Free Stock Analysis Report

MCDERMOTT INTL (MDR): Free Stock Analysis Report

EXXON MOBIL CRP (XOM): 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 , APC , BP , CNQ , CVX

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