Monday, May 5, 2014

Oasis Reports 1Q14 Earnings; Beats By 2 Cents; Plans To Use Slickwater For Fracks

Press release here; note time of release.

Highlights per press release:
  • Completed the sale of certain non-operated properties in its Sanish project area and other non-operated leases adjacent to its Sanish position (the "Sanish Divestiture") for cash proceeds of approximately $321.9 million, on March 5, 2014.
  • Increased average daily production to 42,856 boepd. Excluding production from Sanish in the fourth quarter of 2013 and the first quarter of 2014, Oasis grew production 5% quarter over quarter. [Remember, this was a very tough winter.]
  • Expects production in the second quarter of 2014 to range between 43,000 and 46,000 Boepd.
  • Grew Adjusted EBITDA to a record $239.8 million in the first quarter of 2014.
  • Invested capital expenditures (CAPEX) of $307.5 million in the first quarter of 2014.
  • Lowered well costs to $7.2 million, including the impact of Oasis Well Services (OWS).
  • Plans to complete over 20% of its wells during the second half of 2014 with slickwater, due to encouraging early production uplift of more than 25% in the areas tested and analyzed.
Other notes:
  • the Company had 15 rigs running and had a backlog of gross operated wells waiting on completion of 25 wells in West Williston and 22 wells in East Nesson as of March 31, 2014
  • average price per barrel of oil, without realized derivatives, was $89.66 in the first quarter of 2014, compared to $93.33 in the first quarter of 2013 and $85.87 in the fourth quarter of 2013 
  • price differentials to WTI increased due to the pipeline market continuing to weaken as a result of refinery down time and increased production from both the United States and Canada
  • more recently, the pipeline market has strengthened, and the Company's price differentials to WTI have decreased
  • for the first quarter of 2014, Oasis reported net income of $170.0 million, or $1.70 per diluted share, as compared to net income of $51.9 million, or $0.56 per diluted share, for the first quarter of 2013

For Investors Only: Bret Jensen On Oasis

Dividends/Distributions: five companies announced increased divs/dist including Penske Automotive
From Yahoo!InPlay and other sources: trading at 52-week highs today -- XOM, EPD (but pulled back after hours) (price target moved from $71 to $80; COP.


A commentator I trust: Bret Jensen. Over at SeekingAlpha he writes:

  • Oasis Petroleum is down some 15% from its highs late last year on a weather-related earnings disappointment.
  • This is a good entry point to accumulate shares, as the company is fairly cheap given its growth prospects.
  • Oasis has been also rumored to be a buyout candidate, could soon join the S&P 500, and reports earnings after the bell today.
One of the few energy stocks to not have a solid 2014 so far is Bakken play, Oasis Petroleum. The stock lost some ~15% from its highs late last year, before rebounding a bit recently. I added to my position at ~$42.50 a share. A good portion of the decline was triggered by an earnings miss in its last reported quarter.

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.


EOG: 1Q14 earnings. Press release"Outstanding" -- EOG.

East Canadian Refineries To Use ONLY US Oil Going Forward -- This Seems To Be Somewhat Newsworthy; Meanwhile, OXY USA Won't Drill In California If Folks Don't Want Them To Drill -- Strong Words From The CEO; Parting Shot As OXY USA Gets Ready To Leave California

Bloomberg is reporting:
Suncor Energy Inc. and Valero Energy Corp. are poised to use only North American crude in eastern Canada by 2015, helping to displace overseas imports.
Suncor’s Montreal refinery will reach that point in 2015 and Valero’s Quebec City plant by the end of this year, the companies said April 29. Imports to Quebec, Ontario and Atlantic provinces from outside North America dropped by more than 50 percent in November from a year earlier.
Enbridge Inc. plans to start a pipeline late this year allowing oil to flow to Montreal from fields in North Dakota and Alberta, further reducing higher-priced supplies from Europe and Africa.
U.S. crude production reached a 26-year high in April, increasing stockpiles in the U.S. to the highest since 1931, while Canadian output is forecast to rise 4.1 percent this year. A shift of oil to eastern Canada, coupled with future potential to export crude, could help alleviate the glut and bring domestic prices to an “equilibrium” with international levels, said Tom Finlon, director of Energy Analytics Group Ltd.
"Within a very short period of time, there won’t be any barrels coming into eastern Canada from overseas,” John Auers, senior vice president of Tuner, Mason & Co., an industry consultant in Dallas, said by phone April 30. “Those shipments will be completely displaced by North American crude.”
Since the beginning of 2011, U.S. benchmark West Texas Intermediate crude has averaged $14.02 a barrel less than Brent oil, the international marker, after being at parity over the previous four years. The WTI-Brent spread was $8.34 yesterday, based on settlement prices. 
Couple this with the news coming out of Saudi today (reported earlier) and things start to get interesting.


[Update: a reader reminded me that OXY USA already announced it is moving from Los Angeles to Houston. I probably posted that once upon a time and forgot. I'm not going to take the time to change the post below -- for now. Just note that OXY USA is moving to Houston.]

Maybe this is why OXY USA hasn't left North Dakota yet. The tea leaves some months ago suggested OXY USA was going to leave the Bakken, but OXY USA is as active as ever in the Bakken. Either they have long term plans in the Bakken, or they are continuing to "stage" their Bakken assets for a future sale.

With this story, one thinks there may be a reason for OXY USA to stay in the Bakken. Bloomberg is reporting:
Occidental Petroleum Corp. Chief Executive Officer Steve Chazen said the company’s California spinoff will have plenty of places to drill that won’t be hindered by a growing anti-fracking movement in the state.
The new company, which will be spun off to shareholders as California Resources Corp. by year end, won’t drill in communities that oppose oil and gas activity or hydraulic fracturing, known as fracking, Chazen said in a call with investors today. Occidental can avoid communities such as Beverly Hills, which have passed limits on fracking, he said.
“To the extent that towns don’t want us there, we won’t be there,” Chazen said, noting that some communities that oppose drilling have high unemployment rates. “Maybe the people in Beverly Hills should park their Rolls Royces and ride bicycles going forward. You can see why I’m not going to be part of the California company.
Management of the new company will be named in the third quarter. Chazen has said he’ll remain as CEO of Occidental.
OXY USA's corporate headquarters are located on Wilshire Avenue, Los Angeles, California. My hunch is that once the spin-off is complete, OXY USA will move its headquarters to its offices in Dallas.  By the way, if that happens, I opined on that a long, long time ago, that it was just a matter of time before OXY USA leaves California. Remember: the three big plays in the US right now -- the Permian, the Eagle Ford, and the Bakken.

Eight (8) New Permits -- Williston Basin, North Dakota, USA; Whiting Reports A "High-IP" Well

Companies reporting earnings Monday:
  • APC ($1.16): after market close-- actual: despite litigation loss, beats by 10 cents; shares up 2%
  • EOG ($1.21): after market close; actual -- beats by 21 cents; stock up nicely;
  • EOX (0): after market close; actual beats, by 3 cents;
  • OAS (63 cents): after market close; actual -- $1.70 but that includes a one-time gain; without the one-time gain: 65 cents -- so beats by 2 cents; and the $1.70 will get attention
  • OXY ($1.70): before market opens; actual - beats by 5 cents -- $1.75
  • OTTR (53 cents): after market close; actual -- beats by 4 cents; 
  • ROSE (84 cents): after market close; misses by 7 cents;
Active rigs:

Active Rigs186192210177109

Eight (8) new permits  --
  • Operators: XTO (4), Oasis (2), Whiting, EOG
  • Fields: Siverston (McKenzie), Baker (McKenzie), Sanish (Mountrail), Parshall (Mountrail)
  • Comments:
Wells coming off the confidential list have been posted; see sidebar at the right. Whiting had a high-IP well.

One (1) producing well completed:
  • 26434, 412, Whiting, Littlefield 41-12-2XH, Sanish, t4/14; cum --
Whiting canceled two permits:
  • 23023, PNC, Whiting, Pesek Trust 151-102-35D-26-4H, Nameless,
  • 23023, PNC, Whiting, Pesek Trust 151-102-35D-26-3H, Nameless,
Wells coming off confidential list Tuesday:
  • 24653, 600, OXY USA, Henry Kovash 4-7-6H-142-95, Manning, t11/13; cum 15K 3/14;
  • 25040, 2,981, QEP, Lawlar 3-5-8TH, Grail, t4/14; cum --
  • 26118, drl, HRC, Grev 157-100-30B-31-2H, Marmon, no production data,
  • 26410, drl, Oasis, Prairie USA 1-12H, Foreman Butte, producing,
  • 26469, 752, Newfield, Wisness State 152-96-21-16-10H, Westberg, t2/14; cum 17K 3/14;
  • 26509, 595, Hess, TI-Blikre-158-95-1324H-2, Tioga, t3/14; cum 20K 3/14;

Monday, May 5, 2014 -- Traveling -- Minimal Blogging; Saudi Increases Prices -- HIghest Premium Since April, 2009

Finally: Target CEO resigns.  Reported everywhere

Active rigs:

Active Rigs185192210177109

RBN Energy: CBR -- Canadian update
Canadian producers trying to get their crude to market have come under pressure from two directions at once. US regulators have extended the deadline to make a decision on the Keystone pipeline that would relieve ongoing pipeline congestion out of Western Canada. Canadian regulators have increased pressure on crude by rail development plans, designed to bypass pipelines, by implementing new standards for rail tank cars. With no other apparent alternatives and despite some delays, rail terminal development plans in Canada are proceeding. Today we detail the progress of rail unloading terminals that can handle heavy Canadian crude at the US Gulf Coast.
In the first episode in this series we distinguished between oil sands producers that are able to deliver their bitumen crude to market direct from the production plant as pipeline quality dilbit via feeder pipelines and smaller producers that mostly do not have that luxury.
We pointed out that it is often more convenient for small producers to deliver their crude by truck to rail terminals because of the overhead costs associated with blending up their crude to pipeline specifications and securing scarce capacity on pipelines out of Alberta.
However, we also noted that such small producers are unable to justify shipping their crude on unit trains of 100 cars or more even though doing so would achieve economies of scale. Until these smaller producers are able to ramp up production and invest in improved infrastructure, they are essentially price takers.
In the second episode we looked at the unit train rail loading options available to larger Canadian oil sands producers. We noted that the large terminals being built in Edmonton, Hardisty and Kerrobert are designed to carry pipeline quality dilbit. That means producers still have to pay the “diluent penalty” incurred by carrying up to 30 percent additional light hydrocarbons blended into bitumen crude to allow it to flow in pipelines. That reality will not change until railroad operators build diluent recovery units (DRUs) that can remove some or all of the diluent before loading crude onto tank cars – a prospect not expected to be realized until 2015.
The continued diluent penalty has not deterred the development of rail loading capability – reflecting the sense of urgency felt by producers unable to find adequate pipeline capacity to get their crude to the Gulf Coast markets where their heavy crude is in demand. It remains to be seen if the new Transport Canada tank car safety regulations will slow crude-by-rail development further. In this episode we review progress in building rail unload destination facilities.
From readers:

Bloomberg is reporting
Saudi Arabian Oil Co., the world’s largest crude exporter, raised differentials used in determining its official selling prices for all crude grades to customers in the U.S. by 80 cents a barrel each and increased levels for its two lightest blends to buyers in Asia for June.
The state-owned producer, known as Saudi Aramco, boosted the June premium for Arab Medium for U.S. buyers to $1 a barrel more than the Argus Sour Crude Index, from 20 cents over the benchmark for May, the company said today in an e-mailed statement. The premium will be the highest for the blend since April 2009, according to data compiled by Bloomberg
 I'm not sure what to think of that, at the moment. It's too early, 6:25 a.m. Mountain Time. A huge "thank you" to Ed for sending me this link.

The Wall Street Journal -- more briefly than usual --

Putin eyeing Latvia?

Fear of wider effect on economy tempers sanctions.

This is a cool story: a USAF U-2 caused wide-spread ATC outage last week across four Western states.

Transfused blood rejuvenates old mice -- study. Isn't this called doping? Didn't Lance pay a high price fo this?

The Los Angeles Times

Target CEO resigns.