For Immediate Release
Chicago, IL – August 23, 2017 – 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 Transocean Ltd.(NYSE:RIG – Free Report), Chevron Corporation (NYSE:CVX – Free Report), Whiting Petroleum Corporation (NYSE:WLL – Free Report), Seadrill Limited (NYSE:SDRL – Free Report) and Sanchez Energy Corporation (NYSE:SN – 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: Transocean, Chevron & More
It was a week where both oil and natural gas prices suffered losses.
On the news front, Swiss rig behemoth Transocean Ltd. (NYSE:RIG – Free Report) confirmed the acquisition of Norwegian rival Songa Offshore in a $3.4 billion deal, while supermajor Chevron Corporation (NYSE:CVX – Free Report) dropped an appeal to Australia's High Court over a landmark tax dispute.
Overall, it was a dismal week for the sector. West Texas Intermediate (WTI) crude futures edged down 0.6% to close at $48.51 per barrel, while natural gas prices declined about 3% to $2.893 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Andeavor Logistics & Nabors' Acquisitions, BP's Project Start-Up & More.)
Despite a hefty inventory draw, oil prices recorded another weekly decline. The U.S. Energy Department's inventory release showed that crude stockpiles recorded their biggest drop since September on continued strong refinery runs. With oil supplies falling for the seventh week, investor sentiment has turned slightly positive on dissipating fears about a meltdown to sub-$40 levels. Analysts also believe that the trend, if sustained, could help tighten the market significantly. The commodity got further fillip from the reduction in U.S. rig count (number of rigs searching for oil) for the second week in three.
However, these positive effects were more than offset by the steadily rising domestic oil output that continues to be the biggest headwind for the market. At 9.502 million barrels a day, production is at the highest level in more than two years, thereby cancelling out cuts from OPEC and its allies. Surprise builds in refined product inventories – gasoline and distillate – added to the pessimism.
Meanwhile, natural gas dropped following a larger-than-expected increase in supplies. Adding to the bearish sentiment, the build outpaced the five-year average for the first time in six weeks. Investors were also keen to book profits after surges over the prior two weeks.
Recap of the Week’s Most Important Stories
1. Shares of the offshore drilling giant Transocean slumped after the company announced plans to acquire Norway-based drilling contractor Songa Offshore for $3.4 billion - the most expensive deal in the offshore drilling industry since the three-year oil slump period. The decline reflects the investors’ apprehension as the deal is likely to worsen the near-term credit metrics of Transocean by increasing debt by more than 35% and reduce cash by 20%.
Though the transaction will be adversely affecting the near-term financials of Transocean, it is expected to boost its long-term opportunities in the Norwegian market and enhance the company’s position in the offshore drilling industry and help the company penetrate deep-and harsh-water markets. The company expects annual cost and operational synergies of around $40 million from the deal.
Songa’s complementary assets and strong fleet quality will strengthen Transocean’s portfolio, An expanded fleet, serving a larger customer base across a wide geographic footprint, is expected to open up future revenue growth opportunities. The deal is also expected to boost the backlog of the combined entity by over 40%. (Read more Transocean Inks $3.4 Billion Deal to Acquire Songa.)
2. U.S. energy giant Chevron’s Australian arm Chevron Australia recently settled a tax case with the Australian Taxation Office (“ATO”). This is a major victory for the Australian government and the ATO. The settlement is likely to cost Chevron around $1 billion.
ATO has been pursuing Chevron Australia over an intercompany loan, worth Australian$3.7 billion from its parent company, to fund Western Australian gas reserves in 2003. In 2015, The Australian Federal Court found that the loan was not an “arm’s length” transaction but on the contrary, has been undertaken to evade taxes. Chevron Australia avoided Australia's company tax rate of 30% in the five out of the last seven years.
The company currently owes Australian $340 million in back taxes and penalties for breaching the transfer pricing rules. On Apr 26, the Federal Court upheld its decision against the company and directed it to pay Australian $340 million as tax to the ATO. Concurrent to this directive, Chevron Australia intended to appeal to the High Court, but later decided to resolve the issue by entering into an agreement with the ATO.(Read more: Chevron Settles Australian Transfer Pricing Dispute with ATO.)
3. Domestic oil and gas explorer Whiting Petroleum Corporation (NYSE:WLL – Free Report) recently inked a $500 million deal to divest its Fort Berthold assets in North Dakota to a private explorer RimRock Oil & Gas Williston, LLC. The deal will help the Zacks Rank #3 (Hold) company to reduce debt and streamline its portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Dunn and McLean counties assets span over 29,637 acres which include 29 non-operated units and 17 operated units. Production from the Fort Berthold properties averaged around 7,785 barrels of oil equivalent per day in the second quarter of 2017, representing about 7% of the total production in the quarter. Subject to satisfactory conditions, the deal is set for closure in Sep 1.
The deal is part of Whiting Petroleum’s strategy to bolster its balance sheet and increase its liquidity and enable it to exploit the growth opportunities. The company also wants to shift its focus on its top tier assets and unload the non-core properties. In sync with the objective, Whiting Petroleum sold 50% of its stake in both Robinson Lake natural gas processing plant and Belfield plant last year. (Read more: Whiting Petroleum Cuts Debt by Vending Fort Berthold Assets.)
4. International offshore drilling company Seadrill Limited (NYSE:SDRL – Free Report), which has been grappling with bankruptcy issues of late, recently announced the completion of the amendment of three credit facilities. This move was in line with the company’s objective to protect its subsidiary Seadrill Partners from going bankrupt. Following the announcement, units of Seadrill Partners rallied 17.98% to eventually close at $3.15 on Aug 17.
With Seadrill completing the amendments of the credit facilities relating to the rigs purchased by Seadrill Partners, the latter no longer remains a borrower/ guarantor for any of its parent company’s debt. The three credit covenants involve $1.45 billion facility relating to the West Vela and West Tellus drillships, $420 million facility relating to the West Polaris drillship and $440 million facility T-15 & T-16 tender rigs and the West Telesto jack-up.
With the amendment, the partnership sets itself free from the possibility of default by Seadrill restructuring process, wherein the lenders cannot take any action against the partnership’s assets during negotiations. As part of the amendment transaction, Seadrill Partners also intends to prepay US$100 million upon the closing of the deal and also make two subsequent prepayments of US$25 million. The partnership will also call off the $100 million of revolving credit facility provided by its parent company. The maturities of the partnership’s facilities have also been extended by 2.5 years.
Seadrill Partners intends to resume its quarterly cash distribution to unit holders which it had deferred owing to the prolonged financial restructuring efforts. (Read more: Seadrill Amends Credit Facility to Save Arm from Bankruptcy.)
5. Oil and gas exploration and production company Sanchez Energy Corporation (NYSE:SN – Free Report) recently announced that it has agreed to divest its Javelina asset in the Eagle Ford Shale, for around $105 million in cash to an undisclosed buyer.
The transaction – expected to close in the third quarter – includes around 70,000 net undeveloped acres, with 450 net potential locations in the LaSalle and Webb Counties, TX. Sanchez built this large contiguous acreage over the last 18 months. Per the company, the Javelina assets include about 120-acre well-spacing, with 80% drillable acreage and 100% average working interest. The average estimated ultimate recovery from each well in Javelina is 1,500 - 2,500 thousand barrels of oil equivalents.
One of Eagle Ford’s biggest operators, Sanchez had no plans for developing the Javelina area in 2017. Instead, the company is looking to concentrate on increasing production from other development opportunities, which require funding. Also, at the end of second-quarter 2017, the company had only $128 million cash on hand that justifies the liquification of the relatively risky Javelina acreage. (Read more: Sanchez Energy Divests Eagle Ford Shale Asset for $105M.)
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Get the full Report on RIG - FREE
Get the full Report on CVX - FREE
Get the full Report on WLL - FREE
Get the full Report on SDRL - FREE
Get the full Report on SN - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com/
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
Image: Bigstock
The Zacks Analyst Blog Highlights: Transocean, Chevron, Whiting Petroleum, Seadrill and Sanchez Energy
For Immediate Release
Chicago, IL – August 23, 2017 – 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 Transocean Ltd.(NYSE:RIG – Free Report), Chevron Corporation (NYSE:CVX – Free Report), Whiting Petroleum Corporation (NYSE:WLL – Free Report), Seadrill Limited (NYSE:SDRL – Free Report) and Sanchez Energy Corporation (NYSE:SN – 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: Transocean, Chevron & More
It was a week where both oil and natural gas prices suffered losses.
On the news front, Swiss rig behemoth Transocean Ltd. (NYSE:RIG – Free Report) confirmed the acquisition of Norwegian rival Songa Offshore in a $3.4 billion deal, while supermajor Chevron Corporation (NYSE:CVX – Free Report) dropped an appeal to Australia's High Court over a landmark tax dispute.
Overall, it was a dismal week for the sector. West Texas Intermediate (WTI) crude futures edged down 0.6% to close at $48.51 per barrel, while natural gas prices declined about 3% to $2.893 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Andeavor Logistics & Nabors' Acquisitions, BP's Project Start-Up & More.)
Despite a hefty inventory draw, oil prices recorded another weekly decline. The U.S. Energy Department's inventory release showed that crude stockpiles recorded their biggest drop since September on continued strong refinery runs. With oil supplies falling for the seventh week, investor sentiment has turned slightly positive on dissipating fears about a meltdown to sub-$40 levels. Analysts also believe that the trend, if sustained, could help tighten the market significantly. The commodity got further fillip from the reduction in U.S. rig count (number of rigs searching for oil) for the second week in three.
However, these positive effects were more than offset by the steadily rising domestic oil output that continues to be the biggest headwind for the market. At 9.502 million barrels a day, production is at the highest level in more than two years, thereby cancelling out cuts from OPEC and its allies. Surprise builds in refined product inventories – gasoline and distillate – added to the pessimism.
Meanwhile, natural gas dropped following a larger-than-expected increase in supplies. Adding to the bearish sentiment, the build outpaced the five-year average for the first time in six weeks. Investors were also keen to book profits after surges over the prior two weeks.
Recap of the Week’s Most Important Stories
1. Shares of the offshore drilling giant Transocean slumped after the company announced plans to acquire Norway-based drilling contractor Songa Offshore for $3.4 billion - the most expensive deal in the offshore drilling industry since the three-year oil slump period. The decline reflects the investors’ apprehension as the deal is likely to worsen the near-term credit metrics of Transocean by increasing debt by more than 35% and reduce cash by 20%.
Though the transaction will be adversely affecting the near-term financials of Transocean, it is expected to boost its long-term opportunities in the Norwegian market and enhance the company’s position in the offshore drilling industry and help the company penetrate deep-and harsh-water markets. The company expects annual cost and operational synergies of around $40 million from the deal.
Songa’s complementary assets and strong fleet quality will strengthen Transocean’s portfolio, An expanded fleet, serving a larger customer base across a wide geographic footprint, is expected to open up future revenue growth opportunities. The deal is also expected to boost the backlog of the combined entity by over 40%. (Read more Transocean Inks $3.4 Billion Deal to Acquire Songa.)
2. U.S. energy giant Chevron’s Australian arm Chevron Australia recently settled a tax case with the Australian Taxation Office (“ATO”). This is a major victory for the Australian government and the ATO. The settlement is likely to cost Chevron around $1 billion.
ATO has been pursuing Chevron Australia over an intercompany loan, worth Australian$3.7 billion from its parent company, to fund Western Australian gas reserves in 2003. In 2015, The Australian Federal Court found that the loan was not an “arm’s length” transaction but on the contrary, has been undertaken to evade taxes. Chevron Australia avoided Australia's company tax rate of 30% in the five out of the last seven years.
The company currently owes Australian $340 million in back taxes and penalties for breaching the transfer pricing rules. On Apr 26, the Federal Court upheld its decision against the company and directed it to pay Australian $340 million as tax to the ATO. Concurrent to this directive, Chevron Australia intended to appeal to the High Court, but later decided to resolve the issue by entering into an agreement with the ATO.(Read more: Chevron Settles Australian Transfer Pricing Dispute with ATO.)
3. Domestic oil and gas explorer Whiting Petroleum Corporation (NYSE:WLL – Free Report) recently inked a $500 million deal to divest its Fort Berthold assets in North Dakota to a private explorer RimRock Oil & Gas Williston, LLC. The deal will help the Zacks Rank #3 (Hold) company to reduce debt and streamline its portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Dunn and McLean counties assets span over 29,637 acres which include 29 non-operated units and 17 operated units. Production from the Fort Berthold properties averaged around 7,785 barrels of oil equivalent per day in the second quarter of 2017, representing about 7% of the total production in the quarter. Subject to satisfactory conditions, the deal is set for closure in Sep 1.
The deal is part of Whiting Petroleum’s strategy to bolster its balance sheet and increase its liquidity and enable it to exploit the growth opportunities. The company also wants to shift its focus on its top tier assets and unload the non-core properties. In sync with the objective, Whiting Petroleum sold 50% of its stake in both Robinson Lake natural gas processing plant and Belfield plant last year. (Read more: Whiting Petroleum Cuts Debt by Vending Fort Berthold Assets.)
4. International offshore drilling company Seadrill Limited (NYSE:SDRL – Free Report), which has been grappling with bankruptcy issues of late, recently announced the completion of the amendment of three credit facilities. This move was in line with the company’s objective to protect its subsidiary Seadrill Partners from going bankrupt. Following the announcement, units of Seadrill Partners rallied 17.98% to eventually close at $3.15 on Aug 17.
With Seadrill completing the amendments of the credit facilities relating to the rigs purchased by Seadrill Partners, the latter no longer remains a borrower/ guarantor for any of its parent company’s debt. The three credit covenants involve $1.45 billion facility relating to the West Vela and West Tellus drillships, $420 million facility relating to the West Polaris drillship and $440 million facility T-15 & T-16 tender rigs and the West Telesto jack-up.
With the amendment, the partnership sets itself free from the possibility of default by Seadrill restructuring process, wherein the lenders cannot take any action against the partnership’s assets during negotiations. As part of the amendment transaction, Seadrill Partners also intends to prepay US$100 million upon the closing of the deal and also make two subsequent prepayments of US$25 million. The partnership will also call off the $100 million of revolving credit facility provided by its parent company. The maturities of the partnership’s facilities have also been extended by 2.5 years.
Seadrill Partners intends to resume its quarterly cash distribution to unit holders which it had deferred owing to the prolonged financial restructuring efforts. (Read more: Seadrill Amends Credit Facility to Save Arm from Bankruptcy.)
5. Oil and gas exploration and production company Sanchez Energy Corporation (NYSE:SN – Free Report) recently announced that it has agreed to divest its Javelina asset in the Eagle Ford Shale, for around $105 million in cash to an undisclosed buyer.
The transaction – expected to close in the third quarter – includes around 70,000 net undeveloped acres, with 450 net potential locations in the LaSalle and Webb Counties, TX. Sanchez built this large contiguous acreage over the last 18 months. Per the company, the Javelina assets include about 120-acre well-spacing, with 80% drillable acreage and 100% average working interest. The average estimated ultimate recovery from each well in Javelina is 1,500 - 2,500 thousand barrels of oil equivalents.
One of Eagle Ford’s biggest operators, Sanchez had no plans for developing the Javelina area in 2017. Instead, the company is looking to concentrate on increasing production from other development opportunities, which require funding. Also, at the end of second-quarter 2017, the company had only $128 million cash on hand that justifies the liquification of the relatively risky Javelina acreage. (Read more: Sanchez Energy Divests Eagle Ford Shale Asset for $105M.)
About Zacks Equity Research
Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
Strong Stocks that Should Be in the News
Many are little publicized and fly under the Wall Street radar. They're virtually unknown to the general public. Yet today's 220 Zacks Rank #1 "Strong Buys" were generated by the stock-picking system that has nearly tripled the market from 1988 through 2015. Its average gain has been a stellar +26% per year.See these high-potential stocks free >>.
Get the full Report on RIG - FREE
Get the full Report on CVX - FREE
Get the full Report on WLL - FREE
Get the full Report on SDRL - FREE
Get the full Report on SN - FREE
Follow us on Twitter: https://twitter.com/zacksresearch
Join us on Facebook: https://www.facebook.com/home.php#/pages/Zacks-Investment-Research/57553657748?ref=ts
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com/
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss.This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.