Oil Price and WPX Energy Shares Rebound as President Trump Tweets He Expects Russia and Saudi Arabia to Reach Deal

Source: Streetwise Reports 04/02/2020 Shares of WPX Energy traded 25% higher after President Trump tweeted that he expected a deal between Russia and Saudi Arabia to scale back oil production. Today, just about every firm in the oil industry received a giant boost after President Trump tweeted that he expected Russia and Saudi Arabia to come to terms to cut oil production. One firm that appeared to lead the pack following the rebound in oil prices was WPX Energy Inc. (WPX:NYSE), a large independent oil and natural gas exploration and production company based in Tulsa, Oklahoma. The news of the potential production cuts sent West Texas Intermediate (WTI) May price futures up 20% to $24.54/bbl at present, and June is around $27. This is widely believed to be a great benefit for oil producers and service companies globally as the industry has been facing both supply and demand shocks in the last several months. The news is still quite fluid and the WTI prices are still far below the $30-$35/bbl levels most of the U.S. oil firms are looking for in order to stabilize their operations. WPX Energy is an independent oil and natural gas exploration and production company headquartered in Tulsa, Okla., that focuses on exploiting, developing and growing its oil positions in the Delaware (Permian area sub-basin) and San Juan basins in Texas and New Mexico and the Williston Basin in North Dakota. The company operates several hundred wells in the Delaware basin and also owns interests in … Continue reading

Solar Energy Firm Signs Large Deal for New York Project, 12–15 Times Its Average Size

Source: Streetwise Reports 04/02/2020 This project, along with two other new projects, increases the company’s order backlog by 65%. UGE International Ltd. (UGE:TSX.V; UGEIF:OTCQB) announced the signing of an agreement for its largest U.S. project ever, a 6.6 MW project in Westchester County, New York. Located on a corporate campus, the project will feed energy into the grid while providing energy credits to community solar subscribers at a discounted rate. “The project is approximately 12-15 times the size of UGE’s average project and, when completed, will produce power for an estimated 1,000 homes for the duration of the system’s lifetime,” the company stated. The company also has the option of installing battery storage, “which would provide a further boost to project revenue and returns.” The company also announced two additional projects, the first a 1.7 MW, nine-site portfolio in New York City using leased building rooftops. It is also a community solar subscription program and gives residents the “opportunity to save on electric bills through solar energy.” The third project is to develop, build and finance a community solar project in Maine. The 1.1 MW project will have its electricity feed directly into the grid. “In the past six months, Maine has become a top community solar market and UGE has affirmed itself as a leading market participant, with a pipeline of opportunities throughout the state,” the company stated. The three projects provide a total capacity of 9.4 MW, “with an estimated present value of almost USD$20 million across the … Continue reading

2020 Outlook Favorable for Texas Oil & Gas Company

Source: Streetwise Reports 03/31/2020 The elements of Goodrich Petroleum that make it a Buy are presented in a ROTH Capital Partners report. In a March 30 research note, analyst John White reported that ROTH Capital Partners revised its rating and target price on Goodrich Petroleum Corp. (GDP:NYSE) due to its expected “free cash flow, credit strength and a high percentage of hedged production.” ROTH has a Buy rating and a $6.50 per share price target on Goodrich Petroleum, the stock of which is trading now at around $4.26 per share. White wrote that Texas-based Goodrich Petroleum has a favorable outlook for 2020 because it is 99% gas, and gas-weighted names are better positioned now than oil-weighted ones, assuming the Organization of the Petroleum Exporting Countries keeps adding oil to a market in which demand for it is decreasing. If this OEPC trend continues, U.S. oil production should drop significantly and thereby result in less associated gas production, which ultimately should support natural gas prices. That said, White noted, gas prices also face near-term headwinds. Specifically, a U.S. recession would dampen gas demand from the industrial sector, which is what happened during 2008 and 2009 of The Great Recession, when total U.S. natural gas consumption decreased 2.1%. of that decrease, in the industrial sector it dropped 7.5% and in the residential, 2.3%. However, natural gas prices were higher then, averaging $6.53 per million British thermal units ($6.53/MMBtu) Henry Hub versus $1.60/MMBtu today, “which may provide a cushion for U.S. gas demand … Continue reading

Facing Low Oil Prices, Energy Firm Reduces 2020 Capex, Guidance

Source: Streetwise Reports 03/26/2020 The latest moves of Frontera Energy in response to depressed oil prices and its ability to endure the downturn are addressed in a CIBC report. In a March 23 research note, CIBC analyst Dave Popowich reported that Frontera Energy Corp. (FEC:TSX; FECCF:OTCMKTS) reduced its 2020 capex budget and production guidance in response to weak oil prices. Specifically, the Canadian oil and gas exploration and production firm removed about $200 million from its capex budget for the year and is keeping a “skeleton budget for the remainder of the year.” Frontera’s revised 2020 production guidance is 55,000–60,000 barrels of oil equivalent a day, down from 60,000–65,000 before. The company expects to slash capital spending to $130–150 million from $325–375 million previously. Popowich highlighted that Frontera has a healthy cash balance, $328 million at year-end 2019, but its margins are “razor thin, if not zero or negative, at current spot oil prices.” As such, it is expected that the company can endure a brief, but not a protracted, period of weak oil prices. “The duration of the downturn will be critical,” Popowich added. “Frontera will be in danger of tripping debt covenants and/or having difficulty meeting its existing financial commitments within six months at current oil prices.” Popowich noted that assuming a flat $30 per barrel Brent oil price, Frontera could benefit from about $77 million worth of hedging gains throughout 2020, but it has fixed costs to cover related to transportation and leases. In other news, relayed … Continue reading

Total SA Institutes Action Plan for $30/Barrel Oil

Source: Streetwise Reports 03/23/2020 Shares of Total SA traded 14% higher today after the firm reported that has implemented a company-wide action plan to address the sharp decrease in oil prices. Integrated oil and gas company Total S.A. (TOT:NYSE), today announced its immediate action plan to confront the recent sharp decline in oil prices. The company stated in the report that on March 19, 2020, its Chairman and CEO Patrick Pouyanné addressed the group’s employees to mobilize them to face the challenges ahead. The firm noted that in Pouyanné’s remarks, “he recalled the resilience that the group’s teams demonstrated during the 2015-16 oil crisis as well as the two pillars of the group’s strategy which are the organic pre-dividend breakeven of less than $25/bbl and the low gearing to face this high volatility.” The company advised that in the context of $30/bbl oil prices the firm reported an action plan to be implemented immediately. The plan will focus on three key areas of cap-ex reductions, operating costs savings and suspension of stock buybacks. The company reported that it will cut its organic short-cycle flexible capital expenditures by $3 billion, a greater than 20% reduction of 2020 net investments to less than $15 billion. The firm stated that it will now have increased 2020 operating costs savings of $800 million compared to 2019, versus the $300 million savings which was announced previously. The company also stated that it was suspending its stock buyback program. The firm initially announced a $2 billion … Continue reading

Methanol Pure Play 'Attractive,' Share Price 'Too Punitive'

Source: Streetwise Reports 03/19/2020 The leverage Methanex Corp. could use to still pay its dividend in a low price environment is discussed in a BMO Capital Markets report. In a March 17 research note, BMO Capital Markets analyst Joel Jackson reported that Methanex Corp. (MEOH:NASDAQ; MX:TSX; METHANEX:SSE) is an attractive investment opportunity given that methanol is resilient and the company could defer completion of its G3 plant. Jackson noted that Methanex is expected to make an announcement before or at its annual meeting in late April about a potential G3 delay. That move would ease balance sheet pressure more than a partial divestment of its Egypt stake, a logistics asset sale and leaseback, and/or a receivables sale would. A G3 deferral for two years would result in roughly $1.2 billion left to spend after 2019, Jackson indicated. This assumes a minimal, incremental G3 capex spend as of Q2/10, about $25 million in 2021 for care and maintenance along with $125 million per year in companywide maintenance capex. Yet, were Vancouver-based Methanex not to defer G3 but, instead, keep Titan idle until 2021 and Chile IV idle until Q4/20, Jackson indicated, the company still would have enough free cash flow to cover the 12% dividend, even in scenarios in which methanol prices recovered slowly. Jackson provided two such low price scenarios in which Methanex could still pay its $110–115 million dividend. It could do so at a methanol price of $250 per ton over the next few quarters and increasing to … Continue reading

NGL Energy Partners Shares Rise 80% as the Firm Confirms 2020 Guidance

Source: Streetwise Reports 03/19/2020 Shares of NGL Energy Partners traded higher after the company confirmed its fiscal 2020 EBITDA guidance and provided an update on current operations and capital expenditure reductions. Midstream energy firm NGL Energy Partners LP (NGL:NYSE) today provided an update on its business operations in the face of the current commodity price environment. The partnership reported that its three primary businesses should continue to perform as expected in the near term. The firm advised that “fiscal Year 2020 ending March 31, 2020 Adjusted EBITDA from continuing operations guidance range remains unchanged at $565-595 million.” The partnership additionally indicated that current produced water transportation and disposal volumes on its systems have increased in March to a record 1.9 MMbbl/d, including about 1.5 MMbbl/d in the Delaware Basin. The company additionally stated that it expects that the balance outstanding on its $1.9 billion revolving credit line will be about $1.5 billion as of March 31, 2020. The company’s CEO Mike Krimbill commented, “Like many companies across our industry, the current environment will present us with real challenges going forward, but also presents us with new opportunities…We must be thoughtful and prudent in our response to greater crude oil supply and lower demand resulting from the effects of the coronavirus. We have taken a number of pro-active steps to solidify our financial position while keeping our operations running smoothly.” The partnership advised that has undertaken several measures to strengthen its business operations. Specifically, it stated that it “high graded its … Continue reading

Oil & Gas Firm Responds to Oil Price Drop

Source: Streetwise Reports 03/11/2020 Occidental Petroleum’s two recent moves are reviewed and commented on in a Raymond James report. In a March 10 research note, Raymond James analyst Pavel Molchanov reported that Occidental Petroleum Corp. (OXY:NYSE) cut both its capex and dividend in response to the recent “meltdown in the oil market.” Molchanov added, “We are emphatically not fans of the latter move, although we acknowledge that at [a] sub-$40 West Texas Intermediate [oil price], it would have been hard to avoid.” Molchanov discussed the steps Occidental took. For one, the Texas-based company reduced its 2020 capital spend by 30% to $3.5–3.7 billion from $5.2–5.4 billion. “Our sense is that Occidental’s new level of spending will result in a low to mid single-digit production decline over the next 12 months,” he wrote. Two, the oil & gas exploration and production company cut its quarterly dividend by 86%, to $0.11 per share from $0.79. The new yield is 3.2%. “This is genuinely frustrating and disappointing to see, especially after the repeatedly, consistently stated commitment to the dividend from management, including after the Anadarko deal and, in fact, just last week,” commented Molchanov. Company management did say its dividend is only sustainable above a $40 WTI oil price. “However, we had thought, wrongly, that the company would hold out for a price improvement, at least for several quarters, before taking such a step,” Molchanov noted. Taking both changes into account, Raymond James estimated “all-in 2020 cash flow neutrality at $36 WTI,” meaning … Continue reading

$7.5 Million Debt Conversion Clears Path for Major Upside

Source: Peter Krauth for Streetwise Reports 03/10/2020 Hot on the heels of Torchlight Energy Resources discovering a new oil field in Texas, debt holders have elected to convert to Working Interest. Torchlight Energy Resources Inc. (TRCH:NASDAQ), a dynamic junior oil and gas explorer, recently confirmed a major discovery. That came in the form of measured substantial Initial Potential (IP) oil and gas production from its Orogrande Basin Project. To be sure, it’s a very big deal. Despite that there remains, for now, a sizeable short market position that’s likely weighing down shares. Yet hot on the heels of this exciting discovery comes still more exciting news that could dramatically change the narrative. It’s a development that might well push this oversized short position to reverse and dash for cover. And that could mean explosive upside price action in the stock in the very near term. Here’s what you need to know… Torchlight is Rapidly De-Risking Torchlight debt holders of $6 million in principal and $1.5 million in accrued interest have elected to convert into Working Interest in the Orogrande, per their right of conversion when the transaction was consummated. This is significant, and a testament to their conviction of the deep inherent value in Orogrande. That’s because the transaction instantly eliminates that debt from Torchlight’s books, while reducing the company’s working interest in the Orogrande project to 66.5. What’s more, just two weeks ago, TRCH announced a noteworthy extension to a portion of its debt maturity. $4 million of the … Continue reading

With Clean Tech Red Hot, 'A Rare Value Idea'

Source: Streetwise Reports 03/05/2020 The reason for the upgrade to Outperform and the factors that make First Solar an attractive investment are delineated in a Raymond James report. In a Feb. 24 research note, analyst Pavel Molchanov reported that Raymond James upgraded its rating on First Solar Inc. (FSLR:NYSE) to Outperform from Market Perform for the first time since 2010. This is because cleantech is “red hot” and “the backdrop is the best all-around investor sentiment on cleantech in more than a decade,” added Molchanov. For instance, already this year the Eco Index rose 27% and last year it increased 58%. Molchanov described First Solar as being far from the most exciting cleantech story but in the commoditized module market, it is among the industry leaders. “This is one of the few remaining value ideas, arguably deep value, in cleantech,” he commented, “and we think risk/reward is nicely tilted to the upside.” First Solar manufactures thin film photovoltaic modules. Here is what Arizona-based First Solar has going for it, according to Molchanov. It is the only U.S.-based supplier in the global Top 10. Of those, it is the only one without direct exposure to China. It is large scale, cost competitive and highly bankable. Also, First Solar has a “sterling,” cash abundant balance sheet. Though cash flow will likely still be negative this year, year-end net cash of $1.3–1.5 billion equals 25% of the energy company’s current market cap. Further, cash outlay is dropping from its peak of $740 million … Continue reading