The Zacks Analyst Blog Highlights: Kinder Morgan, Exxon Mobil, Transocean, Royal Dutch Shell and Chiquita Brands International
CHICAGO, Aug. 13, 2014 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Kinder Morgan Inc. (NYSE: KMI-Free Report), Exxon Mobil Corp. (NYSE: XOM-Free Report), Transocean Ltd. (NYSE: RIG-Free Report), Royal Dutch Shell plc (NYSE: RDS.A-Free Report) and Chiquita Brands International Inc. (NYSE: CQB-Free Report).
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Tuesday's Analyst Blog:
Oil & Gas Stock Roundup
Houston-based oil and gas pipeline company Kinder Morgan Inc. (NYSE: KMI-Free Report) saw its shares jump 9% after unveiling a $70 billion mega-deal to consolidate its four related pipeline entities into one.
Overall, it was a mixed week for the sector. West Texas Intermediate (WTI) crude futures were down slightly during the period to close at $97.65 per barrel. However, natural gas prices continued their winning streak and ended the week at around $4 per million Btu (MMBtu), up more than 4% from the previous week. (See last 'Oil & Gas Stock Roundup' here: Crude Drops Further, Production Sags at Exxon, Chevron)
Oil prices fell further below $100 to another six-month low on the commodity's plentiful inventory particularly that of fuel products like gasoline. This was partially offset by the anticipated supply disruption following the U.S. authorization of airstrikes against Islamic militants in Iraq, OPEC's second-largest producer.
Natural gas fared much better, helped by an in-line supply gain and expectations of strong electric power demand with forecasts of warm summer weather across most parts of the U.S.
Recap of the Week's Most Important Stories
1. Shares of energy company Kinder Morgan Inc. soared 9% after it announced the decision to purchase all the outstanding equity securities of three subsidiaries – Kinder Morgan Energy Partners, L.P., Kinder Morgan Management, LLC and El Paso Pipeline Partners, L.P. The $70 billion restructuring is expected to close by end of 2014. With an enterprise value of about $140 billion, the combined entity will represent the largest energy infrastructure company in North America and the third-largest energy company overall.
2. U.S. energy behemoth Exxon Mobil Corp. (NYSE: XOM-Free Report) and Rosneft – Russia's biggest oil producer – are moving together despite the ongoing Ukrainian imbroglio between Russia and the Western world. The joint venture company Karmorneftegaz has began drilling of Universitetskaya-1, the Russian Federation's northernmost well, using the West Alpha rig. The West Alpha rig was provided by the Norwegian company North Atlantic Drilling Ltd. (NADL), which signed long-term agreements with Rosneft on Jul 30, 2014 for offshore drilling.
3. Offshore drilling giant Transocean Ltd. (NYSE: RIG-Free Report) reported higher-than-expected second-quarter 2014 results on higher dayrates and reduced operating and maintenance costs. Total average dayrates increased to $410,000 in the quarter under review from $382,800 in the year-earlier quarter. The upside was driven by higher dayrates from High-Specification Floaters, Midwater Floaters and High-Specification Jackups. Meanwhile, total operating and maintenance expenses decreased 10.6% year over year to $1,213 million. (Read More: Transocean Beats Q2 Earnings on Higher Dayrates, Shares Up)
4. Europe's largest oil company Royal Dutch Shell plc (NYSE: RDS.A-Free Report) announced that its subsidiary has commenced operations of a project in Nigeria to produce and sell oil, providing a new source of energy and economic benefits. Operated by Shell Nigeria Exploration and Production Co. Ltd. (or SNEPCo), a Shell affiliate, the deepwater Bonga North West project involves the recovery of 40,000 oil equivalent barrels per day at its peak. (Read More: Royal Dutch Shell Starts Bonga North West Project in Nigeria)
Chiquita Shares Go Bananas on Buyout Offer
Chiquita Brands International Inc. (NYSE: CQB-Free Report) seems to have become the center of attention in the agribusiness industry with another fruit company expressing interest in merging with the company. Countering Chiquita's already agreed deal to buy Irish rival Fyffes Plc, a partnership of Brazilian juice maker Cutrale Group and investment firm Safra Group have proposed to buy the former in an all cash transaction.
The Cutrale Group and the Safra Group have proposed to buy all of Chiquita's shares for $13 per share, or about $611 million excluding debt. This offer represents a 29% premium to Chiquita's closing share price of $10.06 as of Aug 8, 2014.
Further, the private Brazilian companies displayed aggressive buyout intent proposing to close the deal by end of the year, following due diligence, almost maintaining the same time frame when Chiquita is expected to complete its deal with Fyffes.
Following the news, we saw the markets acknowledging the Brazilian partnership's proposal, sighting more value in it compared with the company's previous tie-up with Fyffes. The shares of Chiquita shot up over 30% to close above the offered bid at $13.10 per share.
While the Fyffes deal will help the company gain greater access to the worldwide market becoming a leading distributor of banana and other fresh produce, the new offer from the Brazilian firms will provide Chiquita extensive industry expertise along with access to significant financial resources.
Today, Zacks is promoting its ''Buy'' stock recommendations.
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