The Zacks Analyst Blog Highlights: PetroChina, Exxon Mobil, Pioneer Natural Resources, ConocoPhillips and National Oilwell Varco
CHICAGO, Dec. 4, 2013 /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 PetroChina Co. Ltd. (NYSE:PTR-Free Report), Exxon Mobil (NYSE:XOM-Free Report), Pioneer Natural Resources Company (NYSE:PXD-Free Report), ConocoPhillips (NYSE:COP-Free Report) and National Oilwell Varco Inc. (NYSE:NOV-Free Report).
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Here are highlights from Tuesday's Analyst Blog:
Oil & Gas Stock Roundup
Crude prices weakened on Iran nuke deal, while natural gas rocketed higher on weather forecasts.
Crude Oil:
Crude prices declined last week, responding to the landmark Iran nuclear deal that seeks to arrest the West Asian country's alleged march towards nuclear power, while possibly bringing more of its oil to global markets.
On Nov 24, Iran reached a temporary accord with six world powers – the U.S., Great Britain, France, Russia, China and Germany – to restrict its nuclear activities in return for Tehran's relief from international sanctions on oil, auto parts, gold and precious metals. Though Iranian oil export is not expected to rise significantly and flood international markets, the groundbreaking agreement will surely go a long way in make it easier for the country to sell oil.
Sentiments were further dampened by the Energy Information Administration (EIA) report that showed another big jump in inventories, which remains well above the upper limit of the average for this time of the year.
As per the EIA's weekly 'Petroleum Status Report,' crude inventories climbed by an unexpected 2.95 million barrels for the week ending Nov 22 to 391.42 million barrels. A surge in production – now at their highest level in almost 25 years – led to the stockpile pile-up with the U.S. What's more, storage at the Cushing terminal in Oklahoma, the key delivery hub for U.S. crude futures traded on the New York Mercantile Exchange, was also up 676,000 barrels, the seventh straight weekly gain.
Concerns that the Fed may taper its $85 billion bond repurchase plan in coming months also held back crude prices. Traders have voiced concerns that Fed's shift away from the bond buying policy may lead to dollar-denominated oil prices to increase in local-currency terms in emerging markets, thus slowing growth.
As a result of these factors, by close of trade on Friday, West Texas Intermediate (WTI) oil was firmly in the red and settled at $92.72 per barrel, losing 1.9% for the week.
Natural Gas:
Investors continue to focus on temperature patterns to understand the fuel's economic dynamics. As it is, natural gas fundamentals look uninspiring with supplies remaining ample in the face of underwhelming demand. In fact, it is expected to take many years for the commodity's demand to match supply in the face of newer projects.
Despite these issues, natural gas rallied last week on the back of a larger-than-expected decrease in natural gas supplies and forecasts of cold weather conditions.
The EIA's weekly inventory release showed that natural gas stockpiles held in underground storage in the lower 48 states fell by 13 billion cubic feet (Bcf) for the week ended Nov 22, higher than the guided range (of 7–11 Bcf drawdown). Chilly weather forecasts – in the key U.S. consuming regions over the next fortnight – are likely to further spur the commodity's demand for heating.
Influenced by these factors, natural gas spot prices ended Friday at $3.95 per million Btu (MMBtu), up 4.5% over the week.
The Energy Week That Was:
The week's energy coverage was dominated by the following news:
PetroChina Buys Exxon Stake in Iraq
Chinese energy giant PetroChina Co. Ltd. (NYSE:PTR-Free Report) has acquired a 25% interest in the West Qurna-1 oilfields in Iraq from U.S. oil major Exxon Mobil (NYSE:XOM-Free Report). The deal – whose financial details were not disclosed – should help PetroChina to set a stronger foothold in Iraq and synergize with its other projects in the nation. This should also aid the Chinese government which has become a significant importer of Iraqi crude. With a slowdown in domestic oil output, China is looking at other international oil fields to meet its energy demands.
Weather Hurts Pioneer Texas Biz
Pioneer Natural Resources Company's (NYSE:PXD-Free Report) output and drilling operations in the Spraberry, Wolfcamp, Eagle Ford Shale and Barnett Shale Combo plays were hurt by a severe cold spell in Texas. Shares of the company felt the chill as the price dropped 2.5% and 0.6% in the two trading sessions to touch $177.75 on Friday.
Spraberry and Wolfcamp were the worst hit areas. Intense icing and low temperatures resulted in widespread power outages, facility hindrances, loading curtailment, and restricted access to production and drilling facilities in these plays. A lengthy recovery period is expected and the full impact of the weather condition will be known in a couple of weeks. Pioneer had not accounted for this unforeseen severe weather in its production and financial guidance for the fourth quarter of 2013, which was released along with the company's third quarter earnings.
ConocoPhillips Divests Algerian Arm
U.S. energy giant ConocoPhillips (NYSE:COP-Free Report) has completed the sale of its Algeria business unit to Indonesia's state owned oil company – PT Pertamina. The sales consideration totaled $1.75 billion. ConocoPhillips' divestment of its Algerian unit will be value accretive for its shareholders as well as raise funds to concentrate on higher return assets. It will facilitate the company to focus on capital investments that will benefit production and cash margins and enhance returns on capital.
NOV Hives Off Distribution Biz
Global large-cap energy equipment maker National Oilwell Varco Inc. (NYSE:NOV-Free Report) is on track with the previously announced spin-off of its Distribution business segment. For this purpose, a new corporation christened NOW Inc. based in Delaware has been formed. This new entity will, in time, operate as an independent, publicly traded company under the proposed name of DistributionNOW.
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