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The Zacks Analyst Blog Highlights: Royal Dutch Shell, Apache, Encana, Williams and SM Energy
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For Immediate Release
Chicago, IL – Jan 17, 2018 – 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 Royal Dutch Shell plc , Apache Corp. (APA - Free Report) , Encana Corp. , The Williams Companies, Inc. (WMB - Free Report) and SM Energy Company (SM - Free Report) .
It was a week where both oil and gas prices logged handsome gains.
On the news front, Anglo-Dutch oil giant Royal Dutch Shell plc agreed to acquire a 43.8% stake in Silicon Ranch – a solar energy company, while upstream players Apache Corp. and Encana Corp. provided updates regarding their fourth-quarter production outlook.
Overall, it was a bullish week for the sector. West Texas Intermediate (WTI) crude futures gained about 4.7% to close at $64.30 per barrel, while natural gas prices soared nearly 15% to $3.20 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Hess' Oil Find, Petrobras' $2.95B Settlement & More)
Building on its second annual gain in a row, oil prices maintained its solid start to the New Year. The second week of 2018 saw U.S. oil benchmark attain its highest closing since December 2014. The major catalyst was the Energy Department's inventory release, which revealed that crude stockpiles recorded another higher-than-expected weekly draw. On a further bullish note, domestic oil production snapped its steadily rising trend and fell for the second time since October.
Oil stockpiles have shrunk in 32 of the last 40 weeks and are down almost 114 million barrels since April. The gradual fall has helped the U.S. crude market shift from year-over-year storage surplus to a deficit. At 419.5 million barrels, current crude supplies are 13.2% below the year-ago period and the lowest since 2015.
Meanwhile, natural gas – one of 2017’s worst-performing commodities – registered a big jump following a record decrease in supplies. The massive, 359 billion cubic feet (Bcf) withdrawal was blamed on strong demand due to freezing temperatures over bulk of the country.
Recap of the Week’s Most Important Stories
1. In a bid to bolster its renewable energy business, Royal Dutch Shell recently inked a deal to acquire a 43.8% stake in Silicon Ranch Corporation from Partners Group. The deal will help Shell leverage its position as one of the top three wholesale power sellers in the United States along with boosting its New Energies division.
Silicon Ranch is a leading solar energy company in the United States and the deal will make Zacks Rank #1 (Strong Buy) Shell its largest stakeholder. Silicon Ranch operates around 100 solar facilities across the United States, having about 1.9 gigawatts of solar-based power facilities in its development portfolio. Per the deal, the company will continue to operate under its existing management and retain its brand. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The transaction could be valued up to $217 million in cash, contingent on Silicon Ranch’s performance. Subject to regulatory approvals and satisfactory closing conditions, the deal is scheduled for completion in the first quarter of 2018. Further, the deal also provides Shell an opportunity to increase its stake in Silicon Ranch after 2021. (Read more Shell Expands Renewable Foothold, Buys Stake in Silicon Ranch)
2. Shares of Apache fell around 3% to eventually close the day at $44.55 on Jan 9 after the company issued drab production outlook for the fourth quarter of 2017. Houston-based upstream player estimates fourth-quarter production from international operations to miss the prior guidance — provided in October 2017 — owing to weaker-than-expected performance of some of its projects in the North Sea.
The company currently expects the fourth quarter production values from international operations to be in the range of 138,000-140,000 barrels of oil equivalent per day (BOE/d) compared with its prior forecast levels of 150,000-160,000 BOE/d. Unexpected shutdown of Forties Pipeline System and underperformance of wells in the Beryl area have been the primary factors for the lower forecast. Nevertheless, Apache expects improved realized prices to offer respite amid the declining volumes.
As it is, the company has been bearing the brunt of contracting production volumes in all the last three reported quarters. From January to September 2017, Apache’s production averaged 345,495 BOE/d, down 13% from the first nine months of 2016. (Read more Apache Stock Down on Production Guidance Cut for Q4)
3. Shares of Encana moved up around 2.5% to eventually close the day at $13.64 on Jan 9 after the company announced that fourth-quarter production volumes from core assets beat estimates. The upstream operator has successfully repositioned its asset base and shifted focus to four key growth areas namely Montney, Duvemay, Eagle Ford and Permian.
On the back of the strength of core assets, Canadian energy behemoth delivered year-over-year production growth of approximately 31% in the fourth quarter of 2017. Further, the output also topped the high end of the company’s guidance range of 25-30%.
While the exact total production figures have not been released, an increase of around 31% implies that the output from the core assets jumped to around 310,601 barrels of oil equivalent per day (BOE/d) in the fourth quarter of 2017 as against the 237,100 BOE/d (or 74% of the total production) recorded in the year-ago quarter. (Read more Encana Gains as Output From Key Assets Tops Estimates in Q4)
4. The Williams Companies, Inc.’s Constitution Pipeline project recently suffered a major setback when the Federal Energy Regulatory Commission (FERC) refused to rescind New York’s denial of a water permit to the project. The ruling has come as a blow to pipeline developers’ endeavors to transport additional natural gas to New England, which relies heavily on pipeline imports from Canada and overseas.
Williams Companies applied for the water permit in August 2013. However, the company withdrew and resubmitted the application twice, which led to the resetting of the one-year deadline by New York Department of Environmental Conservation (DEC). In 2016, the DEC announced its decision not to grant the water permit to Williams Companies.
From Interestingly, the project had received FERC’s approval in early 2016. However, the DEC denied issuing a water quality permit to the pipeline claiming that the owners of the project and the FERC did not analyze the environmental impacts of the project adequately and the pipeline will possibly impact over 250 streams adversely. (Read more Williams Companies' Constitution Pipeline Hits a Roadblock)
5. SM Energy Company has inked a definitive agreement to divest a bulk of its Powder River Basin resources for a total value of $500 million in cash.
The assets comprise net acreage of about 112,000 located in northwest Converse County, parts of southeast Johnson and southwest Campbell Counties, Wyoming. The transaction with an effective date of Oct 1, 2017, is scheduled to close in the first quarter of 2018, and is subject to the fulfillment of the necessary closing conditions. The closure of the transaction may be deferred.
The proceeds from the transaction will be used for general corporate purposes, including lowering of debt. The sale is in line with its strategy to focus on development of Midland Basin and Eagle Ford assets. Based on this transaction, as of the end of third-quarter 2017, there will be a likely lowering in net debt by about 20% and net debt to EBITDAX ratio to less than three times. (Read more: SM Energy to Sell Powder River Basin Assets for $500M)
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 >>.
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.
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/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: Royal Dutch Shell, Apache, Encana, Williams and SM Energy
For Immediate Release
Chicago, IL – Jan 17, 2018 – 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 Royal Dutch Shell plc , Apache Corp. (APA - Free Report) , Encana Corp. , The Williams Companies, Inc. (WMB - Free Report) and SM Energy Company (SM - 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: RDS.A, APA, ECA and More
It was a week where both oil and gas prices logged handsome gains.
On the news front, Anglo-Dutch oil giant Royal Dutch Shell plc agreed to acquire a 43.8% stake in Silicon Ranch – a solar energy company, while upstream players Apache Corp. and Encana Corp. provided updates regarding their fourth-quarter production outlook.
Overall, it was a bullish week for the sector. West Texas Intermediate (WTI) crude futures gained about 4.7% to close at $64.30 per barrel, while natural gas prices soared nearly 15% to $3.20 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Hess' Oil Find, Petrobras' $2.95B Settlement & More)
Building on its second annual gain in a row, oil prices maintained its solid start to the New Year. The second week of 2018 saw U.S. oil benchmark attain its highest closing since December 2014. The major catalyst was the Energy Department's inventory release, which revealed that crude stockpiles recorded another higher-than-expected weekly draw. On a further bullish note, domestic oil production snapped its steadily rising trend and fell for the second time since October.
Oil stockpiles have shrunk in 32 of the last 40 weeks and are down almost 114 million barrels since April. The gradual fall has helped the U.S. crude market shift from year-over-year storage surplus to a deficit. At 419.5 million barrels, current crude supplies are 13.2% below the year-ago period and the lowest since 2015.
Meanwhile, natural gas – one of 2017’s worst-performing commodities – registered a big jump following a record decrease in supplies. The massive, 359 billion cubic feet (Bcf) withdrawal was blamed on strong demand due to freezing temperatures over bulk of the country.
Recap of the Week’s Most Important Stories
1. In a bid to bolster its renewable energy business, Royal Dutch Shell recently inked a deal to acquire a 43.8% stake in Silicon Ranch Corporation from Partners Group. The deal will help Shell leverage its position as one of the top three wholesale power sellers in the United States along with boosting its New Energies division.
Silicon Ranch is a leading solar energy company in the United States and the deal will make Zacks Rank #1 (Strong Buy) Shell its largest stakeholder. Silicon Ranch operates around 100 solar facilities across the United States, having about 1.9 gigawatts of solar-based power facilities in its development portfolio. Per the deal, the company will continue to operate under its existing management and retain its brand. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The transaction could be valued up to $217 million in cash, contingent on Silicon Ranch’s performance. Subject to regulatory approvals and satisfactory closing conditions, the deal is scheduled for completion in the first quarter of 2018. Further, the deal also provides Shell an opportunity to increase its stake in Silicon Ranch after 2021. (Read more Shell Expands Renewable Foothold, Buys Stake in Silicon Ranch)
2. Shares of Apache fell around 3% to eventually close the day at $44.55 on Jan 9 after the company issued drab production outlook for the fourth quarter of 2017. Houston-based upstream player estimates fourth-quarter production from international operations to miss the prior guidance — provided in October 2017 — owing to weaker-than-expected performance of some of its projects in the North Sea.
The company currently expects the fourth quarter production values from international operations to be in the range of 138,000-140,000 barrels of oil equivalent per day (BOE/d) compared with its prior forecast levels of 150,000-160,000 BOE/d. Unexpected shutdown of Forties Pipeline System and underperformance of wells in the Beryl area have been the primary factors for the lower forecast. Nevertheless, Apache expects improved realized prices to offer respite amid the declining volumes.
As it is, the company has been bearing the brunt of contracting production volumes in all the last three reported quarters. From January to September 2017, Apache’s production averaged 345,495 BOE/d, down 13% from the first nine months of 2016. (Read more Apache Stock Down on Production Guidance Cut for Q4)
3. Shares of Encana moved up around 2.5% to eventually close the day at $13.64 on Jan 9 after the company announced that fourth-quarter production volumes from core assets beat estimates. The upstream operator has successfully repositioned its asset base and shifted focus to four key growth areas namely Montney, Duvemay, Eagle Ford and Permian.
On the back of the strength of core assets, Canadian energy behemoth delivered year-over-year production growth of approximately 31% in the fourth quarter of 2017. Further, the output also topped the high end of the company’s guidance range of 25-30%.
While the exact total production figures have not been released, an increase of around 31% implies that the output from the core assets jumped to around 310,601 barrels of oil equivalent per day (BOE/d) in the fourth quarter of 2017 as against the 237,100 BOE/d (or 74% of the total production) recorded in the year-ago quarter. (Read more Encana Gains as Output From Key Assets Tops Estimates in Q4)
4. The Williams Companies, Inc.’s Constitution Pipeline project recently suffered a major setback when the Federal Energy Regulatory Commission (FERC) refused to rescind New York’s denial of a water permit to the project. The ruling has come as a blow to pipeline developers’ endeavors to transport additional natural gas to New England, which relies heavily on pipeline imports from Canada and overseas.
Williams Companies applied for the water permit in August 2013. However, the company withdrew and resubmitted the application twice, which led to the resetting of the one-year deadline by New York Department of Environmental Conservation (DEC). In 2016, the DEC announced its decision not to grant the water permit to Williams Companies.
From Interestingly, the project had received FERC’s approval in early 2016. However, the DEC denied issuing a water quality permit to the pipeline claiming that the owners of the project and the FERC did not analyze the environmental impacts of the project adequately and the pipeline will possibly impact over 250 streams adversely. (Read more Williams Companies' Constitution Pipeline Hits a Roadblock)
5. SM Energy Company has inked a definitive agreement to divest a bulk of its Powder River Basin resources for a total value of $500 million in cash.
The assets comprise net acreage of about 112,000 located in northwest Converse County, parts of southeast Johnson and southwest Campbell Counties, Wyoming. The transaction with an effective date of Oct 1, 2017, is scheduled to close in the first quarter of 2018, and is subject to the fulfillment of the necessary closing conditions. The closure of the transaction may be deferred.
The proceeds from the transaction will be used for general corporate purposes, including lowering of debt. The sale is in line with its strategy to focus on development of Midland Basin and Eagle Ford assets. Based on this transaction, as of the end of third-quarter 2017, there will be a likely lowering in net debt by about 20% and net debt to EBITDAX ratio to less than three times. (Read more: SM Energy to Sell Powder River Basin Assets for $500M)
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1 Stock of the Day pick for free.
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 >>.
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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/performance for information about the performance numbers displayed in this press release.