MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Thursday, May 24
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6:35 PM The loss of Japan's nuclear power plants is luring buyers eager for cheap U.S. shale gas, potentially enriching U.S. companies such as Sempra Energy (SRE) and Dominion Resources (D). But companies hoping to export LNG don't yet have permission from the Department of Energy to ship to countries such as Japan that lack free-trade agreements with the U.S. 2 Comments
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5:39 PM Noble Corp. (NE) says it is budgeting for capital spending to grow to $2.3B from $1.9B next year, unless it decides to build a new offshore drilling rig to add to the 11 now in the works. CEO David Williams says new rigs are attractive now due to stronger demand, a general capital shortage, and the financial crisis driving out speculative rig builders who could otherwise flood the market. Comment!
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5:20 PM Strong new commitment, or politically correct charm offensive? Goldman says it plans to channel investments totaling $40B over the coming decade into renewable energy projects. The firm's new target would average out to $4B/year, which may look impressive but it already invests in clean technology - $4.8B worth in 2011. 1 Comment
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4:48 PM Chesapeake Energy (CHK) extends its late-session rally, +2.3% AH, as CNBC reports BlackRock has boosted its stake in the company to 4M-5M shares; as of March 31, BLK owned ~883K shares. Earlier, Bloomberg reported Carl Icahn had taken at least a 4% stake in CHK. 1 Comment
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3:58 PM Chesapeake (CHK +2.6%) shares rally into the close on a Bloomberg report that Carl Icahn has purchased at least a 4% stake in the company. Note that the latest quarterly disclosure of Icahn's holdings showed no CHK shares; he had reported a 5.8% stake in Dec. 2010. 7 Comments
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3:15 PM PetroChina (PTR -1.2%) Chairman Jian Jiemin says the Chinese energy giant plans to focus on storage and refinery assets in the Americas this year, according to China Daily, but plays down reports PTR has been in talks to buy Valero's (VLO -1.7%) refinery in Aruba. Jian says that while the project may be worth a look, he is unaware of any deal. Comment!
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3:01 PM CVR Energy (CVI -1.8%), now controlled by Carl Icahn, begins the process of trying to sell the nitrogen fertilizer company by hiring Jefferies to solicit bids. CVR says the 60-day process begins immediately and that Icahn is willing to consider any offer of at least $35/share. 2 Comments
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2:48 PM Gevo (GEVO +5%), the biofuels company backed by oil company Total (TOT) and chemical maker Lanxess (LNXSF.PK), begins startup of the world's first commercial biobased isobutanol production plant. Isobutanol may be blended with gasoline or refined into jet fuel, specialty chemicals or other products typically derived from petroleum. Comment!
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2:24 PM Forum Energy (FET -0.4%) is initiated at Buy by Deutsche Bank, which says the stock fills an investment void in the oil service space as a high quality small-midcap name with leverage to secular industry growth themes and "one of the highest quality management teams [it has] seen in a company this size." FET has enjoyed several positive outlooks recently, but shares have barely budged. Comment!
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2:05 PM Chesapeake Energy (CHK -1.2%) has put 504K acres in the DJ Basin in Wyoming and Colorado up for sale, as it seeks to raise cash to close a $9B-$10B funding shortfall. The DJ Basin deal includes oil and gas production from 29 wells CHK operates and an interest in 24 non-operated wells. Comment!
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12:12 PM As Kinder Morgan (KMI -1.6%) completes its acquisition of El Paso, it now expects to see cost savings of $400M/year from the deal, up from its previous estimates of $350M in savings. KMI also expects to declare dividends of at least $1.40/share for 2012, up from its previous plan of $1.35. Comment!
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11:44 AM Italy’s Eni (E +0.6%) says it has made a significant oil discovery in Egypt's Western desert, striking more than 250 ft. of net pay at its Emry Deep prospect. Eni plans further appraisal drilling at the find, which it now estimates to hold 150M-250M barrels of oil in place. 1 Comment
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11:27 AM Ship Finance International (SFL +4.7%) shares, up 55% YTD, jump after reporting a rise in Q1 profit on a new cash sweep agreement with tanker firm Frontline. The owner and operator of ships for the maritime and offshore industries says the VLCC tanker market has continued healthy so far in Q2, so it sees another "significant" cash sweep contribution in Q2. Comment!
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11:15 AM Repsol (REPYY.PK) says some of the areas it is exploring off the coast of Brazil contain more than 1B barrels of oil and gas, a development it hopes will help persuade investors its future remains bright even after Argentina's nationalization of YPF. But the areas may not start producing large amounts of oil and gas - and substantial cash flow - for several years. Comment!
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10:58 AM Never before has the price gap between natural gas and diesel been so large, making trucks powered by natural gas an alluring option for company fleets. Examples: Waste Management (WM) says 80% of its truck purchases in coming years will be fueled by nat gas, and Ryder (R) is expanding its program of renting out nat gas trucks and is introducing them in clusters it operates for big retailers. 3 Comments
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10:38 AM Noble Energy (NBL -0.2%) is upgraded to Buy from Hold at S&P Capital IQ, which foresees several years of double-digit production and cash flow growth. NBL has a deep prospect inventory, the firm says, and its "near/mid term growth prospects, geographic scope, margin expansion and superior cash flow generation warrant a premium." Comment!
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10:25 AM As Royal Dutch Shell (RDS.A +0.8%) buys time to consider its response to PTT's bid for Cove Energy (CNVGF.PK), it must choose whether to make further divestments and/or delay its Australian LNG interests to pursue its Mozambique ambitions. RBC says PTT's offer values Cove's stake in a major gas field off Mozambique's coast at $3.4/boe vs. a normal valuation of $2.5-$3/boe for such assets. Comment!
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10:17 AM The IEA reports U.S. carbon emissions fell by 450M metric tons in the past five years, but global emissions continue to rise, now at 31.6B metric tons. IEA attributes U.S. improvement to “policy driving greater efficiency and technology making shale gas production viable.” But abundant U.S. natural gas was more than offset by added coal burning in China and India. 1 Comment
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9:43 AM An increasing number of forecasters in Reuters' monthly survey expect Brent crude to average less than $100/bbl next year thanks to Europe’s debt crisis, slowing Chinese economic growth and a possible resolution of the Iranian nuclear crisis. Macroeconomic risk from Europe will need to fade before crude oil market fundamentals dominate pricing again, says one. 3 Comments
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9:09 AM Arch Coal (ACI) +2.3% premarket after Goldman Sachs upgrades shares to Neutral from Sell with an $8 price target. The firm says the risk/reward is more balanced as concerns about thermal volume cuts and its balance sheet are now mostly discounted in the stock. 3 Comments
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9:03 AM Cheniere Energy Partners (CQP) announces the launch of two new credit facilities totaling ~$2B in connection with the construction of the Sabine Pass liquefaction project, as it continues to aggressively raise funds to build the natural gas export facility. Comment!
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8:28 AM Talks between the P5+1 world powers and Iran have continued for a second day, although big differences still remain. Iran wants the West to cancel its impending oil sanctions for the negotiations to carry on; the EU and U.S. want the country to halt its production of higher-enriched uranium and reverse its current capabilities. Comment!
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8:21 AM Suntech (STP) CEO Zhengrong Shi says if Europe follows the U.S. in levying punitive tariffs on Chinese solar panel imports, it could deal a "lethal" blow to the industry. Beyond words, China signals it may retaliate against the tariffs, saying U.S. government backing for six clean energy projects in China had violated WTO rules and acted as barriers to trade. 1 Comment
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