MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Monday, May 21
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8:04 PM Japanese utilities plan to increase fees for peak-hour electricity usage in an effort to head off possible power shortages this summer following the closure of the nation's nuclear power plants. Starting in June rates for some power plants will be four to six times higher during the peak hours of 1 p.m. and 4 p.m. than those for night time hours. 7 Comments
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6:15 PM Russia objects to findings that show the country's oil production fell sharply from 10.37M bbl/day in December to 9.92M in March, sending it below Saudi Arabia in world rankings. Russia has been pumping hundreds of thousands of bbl/day more than Saudi Arabia and believes it can increase output Y/Y, Russia's Energy Ministry claims its own data show. Comment!
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5:54 PM CFR's Michael Levi casts a skeptical eye on arguments that cheap natural gas from shale will really lead to a dramatic revival of U.S. manufacturing, but he may have overlooked two factors: many petrochemical plants have been reopening in places like Louisiana and Texas, and the need for pipelines and hydraulic fracturing equipment could cause a mini-boom on its own. 1 Comment
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4:32 PM The Iran premium in the price of a barrel of oil may have dropped to as low as $5 in the spot market, as worries about global demand trump concerns about supply disruption, Capital Economics says. There’s a “good chance” this week’s meeting between Iran and Western officials will raise the possibility that EU sanctions could be withdrawn, it says, a prospect the markets haven't considered. 2 Comments
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3:55 PM Moody's raises its outlook on SM Energy (SM +6.7%) to positive from stable, citing increased production scale and low borrowing levels. Moody's still rates SM at Ba3, three notches below investment grade, but says it could raise SM by a notch in 2013 if it sees increases in reserves and production scale, better investment returns and continued low leverage. Comment!
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3:47 PM NV Energy (NVE +1%) trades up after Moody's upgraded the company's junk level rating to just below investment-grade territory, saying the Nevada utility operator's steady improvement in its finances should continue for several years. Comment!
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3:33 PM GreenHunter Energy (GRH +20.4%) significantly expands its Eagle Ford Shale presence with a new JV agreement to develop seven salt water disposal in south Texas. GRH says the new wells will establish it as the dominant operator of SWD capacity and a leading provider of water management solutions in the region. Comment!
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3:10 PM Sinopec (SNP +0.4%) and South African national oil company PetroSA will build a refinery in South Africa that could process 400K bbl/day of oil and cost $9B-$10B to construct. China has become Africa's biggest trading partner, and the new refinery could play a role in furthering its ambition to expand global resource trading by being a destination for crude oil. Comment!
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2:12 PM Coverage of Penn Virginia (PVA +12.9%) is started at Brean Murray with a Buy rating and a $10 price target, as the firm says proceeds from the company's anticipated Granite Wash divestiture should shift market focus from liquidity concerns to the value of its Eagle Ford acreage. Comment!
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1:45 PM SA author Kevin Quon highlights 5 firms that are prospering from low natural gas prices, including those that benefit from the use of gas as a fuel source and those that make it readily available. The five are Clean Energy Fuels (CLNE +7.55%), Fuel Systems (FSYS +2.9%), Golar LNG (GLNG +3.6%), Chart Industries (GTLS +5.3%) and Westport (WPRT +11.3%). 8 Comments
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12:44 PM NGL Energy Partners (NGL +10.9%) acquires crude oil transportation and water treatment services from in High Sierra Energy in a $693M deal. High Sierra's crude oil segment handles ~50K bbl/day of crude and controls 32 pipeline injection facilities and three crude oil terminals; its water services segment handles ~80K bbl of water per day. Comment!
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12:29 PM With just days remaining before a deal deadline, Cove Energy (CNVGF.PK) says it continues to believe the $1.8B offer from Royal Dutch Shell (RDS.A, RDS.B) is in the best interests of shareholders. Cove's earlier announcement that it found even more gas on its license in Mozambique has not sparked a bid battle for the company. Comment!
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12:08 PM Nabors Industries (NBR +6.5%) is one of today's top S&P gainers after Guggenheim upgrades shares to Buy from Neutral, "first and foremost" a valuation call. "Improving U.S. gas market fundamentals and expanding international margins [may] prompt investors to consider how oversold the stock has become" relative to its underlying asset value and strong cash flow. Comment!
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12:05 PM Crosstex Energy (XTEX) +4.1%, possibly due to BrightonMarkets releasing new coverage on the stock. The firm says that despite concerns about volatility in 2012, it "continues to identify high momentum situations with growth potential." Forbes argued last week that Crosstex was "very oversold." Comment!
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11:57 AM Bangladesh has struck its first oil, in two gas fields in the northeastern Sylhet region, according to the chairman of the state-run Petrobangla oil company. The oil found was said to be light, low-sulphur quality, estimated at 153M bbl. Comment!
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11:34 AM Sino Clean Energy (SCEI), whose shares were halted earlier, has suspended production at its plant in Dongguan in China at the request of a court, pending the outcome of a lawsuit filed against the previous owner of the facility. 2 Comments
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10:58 AM A federal proposal to ban the construction of coal-fired power plants that release their CO2 into the atmosphere would seem to smooth the way for carbon capture technology. But natural gas is so cheap and plentiful that utilities have little incentive to build coal-fired plants with the technology, NYT reports, and the proposed rule exempts existing coal- and gas-fired plants. Comment!
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10:19 AM The recent selloff in crude oil is "unwarranted," and oil market fundamentals show the supply-demand balance has begun to tighten again, Goldman's David Greely says. "It's only a matter of time" before spare production from OPEC gets soaked up by developed nations, he says, and oil prices should increase in the second half of the year. Comment!
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10:07 AM Continental Resources (CLR +3.4%) shares are up on news that CEO Harold Hamm bought 100K shares of the company on May 16 at $71-$72.50, worth ~$7.2M. Following the purchases, Hamm holds an aggregate of more than 123M shares directly. Comment!
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9:58 AM Goodrich Petroleum (GDP +11%) surges after Canaccord calls it a takeover candidate. The firm believes GDP's 103K net acre Tuscaloosa leasehold is too large for the company to develop alone given its current capitalization; a larger entity could buy GDP in its entirety or the company could enter into a JV and issue equity to fund Tuscaloosa's development. Comment!
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9:46 AM Tidewater (TDW +2.8%) shares jump at the open after reporting FQ4 earnings soared Y/Y, helped by higher utilization and rates for the company's vessels. TDW had being seeing growing expenses such as high-priced fuel and interest costs pressure its bottom line. Operating margin grew to 16.1% from 9.8%. Comment!
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9:34 AM Oil production in Saudi Arabia rose to 9.923M bbl/day in March, from 9.853M bbl/day in February, overtaking Russia (9.920M) as the world's largest producer for the first time in six years. The U.S., at 5.889M, ranks third. (database since 2002) 9 Comments
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9:22 AM An MDU Resources (MDU) subsidiary purchases a 50% interest in Whiting Petroleum's (WLL) Bakken oil and natural gas midstream assets for $66M. The facilities include a newly constructed, state-of-the-industry nat gas processing plant and a nat gas gathering pipeline system connected to the plant. Comment!
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9:15 AM Global power manager Eaton (ETN) will buy Cooper Industries (CBE up 25% premarket) for $72/share in cash and stock and become a new company incorporated in Ireland: Eaton Global Corp. The whole deal has a value of $11.8B and should close in the second half. Comment!
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9:10 AM Penn Virginia Resources (PVR) announces $380M of Marcellus Shale pipeline project investments anchored by long-term agreements with Marcellus natural gas producers including RDS.A, SWN and RRC. PVR will extend its natural gas pipeline in Lycoming County, Pa., and provide gathering, compression and related services to Marcellus producers. 1 Comment
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8:54 AM Alpha Natural Resources (ANR) is raised to Buy from Hold with a $15 price target at Brean Murray, citing valuation: "The fundamentals and the outlook of the company and the met coal market did not materially change over recent weeks. What did change is the stock price." Shares, -46% YTD, +2% premarket. 1 Comment
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8:12 AM Carl Icahn says he has raised his stake in CVR Energy (CVI) to 80% through an extended tender offer, and plans to replace the last two incumbent directors on the oil refiner's board with his own nominees. Comment!
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6:00 AM A Bloomberg review of Chesapeake's (CHK) filings paints a picture of cronyism and nepotism that calls into question the objectivity of its board. Since 2009, Chesapeake has paid $343M to a drilling equipment manufacturer headed by Chesapeake lead director Pete Miller. The company has also employed another director’s relatives and donated millions to a university overseen by a third. 14 Comments
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