Monday, December 16, 2013

Monday: Light Sweet Crude Glut At The Coast; Hess Is Poised For An Interesting 2014; Three "Things" Weighing On The Market

Active rigs:

Active Rigs19118119916577

RBN Energy: Light sweet crude glut at the Gulf Coast -- how it will affect pricing.
The bases are loaded for another 2 MMb/d of pipeline capacity to bring additional crude supplies to the Texas Gulf Coast by the end of 2014. The majority of that payload will likely be light sweet crude from tight oil formations, a.k.a., shale. As the flood of crude headed to Texas passed through the Midwest over the past two years, prices at Cushing and points north were heavily discounted versus coastal markets. Now the discount action has moved to the Gulf Coast where light sweet crude imports have been pushed out. Today we look at the impact of the changing supply position on crude price differentials.
The Wall Street Journal

Saudi says they were thrown under the bus by the Obama administration working behind the kingdom's back with regard to Iran. Okay.

Rare global warming snowfall snags the Mideast.
Three feet of snow in Jerusalem left the city in a siege-like state over the weekend, with roads blocked, residents confined to their homes and Israeli troops in the streets, as the worst winter storm in decades swept through the Middle East.
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Hess's stock is poised for an interesting 2014.
Hess could offer investors more in 2014. Superficially, it looks like Hess has surpassed its peers on valuation.
It began 2013 trading at just 8.3 times forward earnings, a one-third discount to the S&P 500. Today, Hess's multiple is 13.7 times, a discount of less than 10%.
But earnings metrics can be misleading in the capital-intensive oil business. For example, most of the third-quarter earnings miss that hit Hess's stock in October concerned accelerated depreciation on a Norwegian oil field, a noncash charge.
Cash flow is a better metric. Hess's enterprise value, including net debt, is 4.6 times earnings before interest, tax, depreciation and amortization on a consensus basis—about average among its peers. restructuring offers a hedge for the stock at a time when the risk of weaker oil prices is rising.
Peers such as ConocoPhillips and Marathon have undergone radical change, splitting into more focused companies and paying more cash to shareholders. Both have roundly beaten the market and the sector over the past four years. If oil prices weigh on Hess's stock next year, expect Elliott and others to press for more change.
Whiting Petroleum announces results of exchange offer relating to outstanding, unregistered 5.750% Senior Notes due 2021: Co announces the results of its offer to exchange all of its outstanding, unregistered 5.750% Senior Notes due 2021 issued September 26, 2013, for new, registered 5.750% Senior Notes due 2021, which are an additional issuance of and will be fully fungible and form a single series voting together as one class with the $800 mln aggregate principal amount of its 5.750% Senior Notes due 2021 issued on September 12, 2013. 

Holdings in the 14 biggest ETPs plunged 31 percent to 1,813.7 metric tons since the start of January, the first annual decrease since the funds started trading in 2003, data compiled by Bloomberg show.
Three things weighing on the market:
  • Federal budget compromise -- not yet a done deal. Just political theater. It will be passed.
  • could the Fed announce tapering this week? Nope.
  • will ObamaCare's disarray have significant effect on the US economy in 2014? Yup. 

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