For Immediate Release
Chicago, IL - January 25, 2017 - 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 Schlumberger Ltd. (NYSE: SLB - Free Report ), Halliburton Co. (NYSE: HAL - Free Report ), ExxonMobil Corp. (NYSE: XOM - Free Report ), Noble Energy Inc. (NYSE: NBL - Free Report ) and Clayton Williams Energy Inc. (NYSE: CWEI - Free Report ).
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Here are highlights from Tuesday's Analyst Blog:
Oil & Gas Stock Roundup: SLB, HAL, XOM, NBL, CWEI
It was a week where oil prices tallied a small gain, while natural gas futures slipped on weather worries.
On the news front, oilfield service majors Schlumberger Ltd. (NYSE: SLB - Free Report ) and Halliburton Co. (NYSE: HAL - Free Report ) kicked off the energy earnings season with contrasting numbers. Importantly, both the companies indicated that activity in North America have improved but it would still take some time for international operation to rebound. Meanwhile, there were deals galore in the lucrative Permian shale area.
Overall, it was a mixed week for the sector. While West Texas Intermediate (WTI) crude futures inched up 0.1% for the week to close at $52.42 per barrel, natural gas prices slumped 6.3% to $3.204 per million Btu (MMBtu). (See the last 'Oil & Gas Stock Roundup' here: Williams' Dividend Hike, SM Energy's Asset Sale and More .)
Posting its fifth weekly gain in 6 weeks, oil prices continued the positive trend. Investors and analysts remain upbeat that producers will adhere to their agreed output cut quotas, which will reduce the global inventory glut next year. A report from energy watchdog IEA confirming a decline in production by OPEC nations provided further support. However, an unexpected rise in domestic oil supplies and a burgeoning rig count kept prices in check.
Oils-Energy Sector 5YR % Return
Meanwhile, natural gas turned sharply lower despite a higher-than-expected withdrawal. The heating fuel was pressured by forecasts of mild weather that translates into weak demand.
Recap of the Week's Most Important Stories
1. The world's largest oilfield services provider Schlumberger Ltd. reported fourth-quarter 2016 earnings of 27 cents per share (excluding charges and credits), in line with the Zacks Consensus Estimate. Higher activities in the U.S. land market, recovery of fracturing works in unconventional resources, and higher horizontal logging work in Qatar favored the result.
However, the bottom line decreased substantially from 65 cents per share earned in the year-earlier quarter. Slowdown of drilling works due to frigid winter in Russia and Norway resulted in the year-over-year deterioration.
While Schlumberger maintained that North American drillers will lead the resurgence in energy prices and production in 2017, the company warned that recovery in the international markets will be slower and could take more time to materialize. (Read more: Schlumberger's Q4 Earnings In-Line, Decrease Y/Y .)
2. Smaller rival Halliburton Co. reported better-than-expected fourth quarter profit on the back of continued and effective cost management. The world's No. 2 oilfield-services company's tenth consecutive quarterly outperformance was also helped by improved utilization on the back of growing North American rig count. Halliburton currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Along the results, Halliburton also sounded optimistic in its view that the North American land market is improving and appears to be past the worst. As it is, rig counts have generally been rising during the last seven months since plunging to an all-time low of 404 in May 2016, with the addition of a flood of new units. As a proof of the recovery, Halliburton returned to operating profitability in the region, while garnering a larger market share and improving margins by an impressive 65%.
However, the international market recovery is set to start slower, with lower capex spend for the third successive year affecting economics across deepwater and mature field markets. Halliburton sees a turnaround in the in the international markets not before the second half of 2017. (Read more: North America Helps Halliburton Beat Q4 Earnings .)
3. World's largest publicly traded oil company ExxonMobil Corp. (NYSE: XOM - Free Report ) announced its intention to more than double its Permian Basin resource of 6 billion barrels of oil equivalent. The integrated major aims to achieve this through the buyout of companies owned by the Bass family of Fort Worth, TX.
These acquired assets are estimated to hold resources of 3.4 billion barrels of oil equivalent in New Mexico's Delaware Basin. Alongside an upfront payment of $5.6 billion, ExxonMobil will make a series of additional contingent cash payments of up to $1 billion. The payments are to be made from 2020 and ending no later than 2032, in accordance to the development of the resource.
The acquired companies, which include the operating entity BOPCO, are estimated to have about 275,000 acres of leasehold and production capacity of over 18,000 net oil equivalent barrels per day, of which about 70% is liquids.
ExxonMobil is the latest to jump on the bandwagon of purchasing acreage in the Permian basin in a bid to expand its drilling portfolios in West Texas and New Mexico. In spite of the drop in oil prices, the value of the land in the Permian basin has shot up to record highs amid a bout of land buying as companies prepare for a rebound. (Read more: ExxonMobil to Buy Bass Family Assets, Double Permian Yield .)
4. Independent oil and gas finder Noble Energy Inc. (NYSE: NBL - Free Report ) entered into a definitive agreement to acquire Texas producer Clayton Williams Energy Inc. (NYSE: CWEI - Free Report ) in a bid to expand its footprint in Permian Basin - the U.S.' most prolific oil-producing region. The transacted is anticipated to close in the second quarter of 2017.
The transaction is worth $3.2 billion, post Noble Energy's assumption of Clayton Williams' net debt of $500 million. Clayton Williams' shareholders are entitled to 2.7874 shares of Noble Energy common stock and $34.75 in cash for each share of common stock held.
The transaction provides Noble Energy with large acreage position adjacent to its existing position, and solid midstream opportunities. The acquisition will render Noble Energy the second-largest Southern Delaware Basin acreage position in the industry and provide more than 4,200 drilling locations on nearly 120,000 net acres. (Read more: Noble Energy to Acquire Clayton Williams for $3.2B .)
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