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The Zacks Analyst Blog Highlights: ConocoPhillips, Anadarko, Occidental, GulfMark and QEP Resources
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For Immediate Release
Chicago, IL –July 18, 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 ConocoPhillips (COP - Free Report) ,Anadarko Petroleum , Occidental Petroleum (OXY - Free Report) , GulfMark Offshore, Inc. and QEP Resources, Inc. .
Here are highlights from Tuesday’s Analyst Blog:
Oil & Gas Stock Roundup: COP, APC, OXY and More
It was a week where both oil and natural gas finished lower.
On the news front, oil biggies ConocoPhillips and Anadarko Petroleum authorized additions to their stock repurchase programs. Meanwhile, Occidental Petroleum recently increased its dividend.
Overall, it wasn’t a good week for the sector. While West Texas Intermediate (WTI) crude futures lost 3.8% to close at $71.01 per barrel, natural gas prices fell around 3.7% to $2.752 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Enbridge's Midstream Sale, Chevron's North Sea Plans & More)
The U.S. crude benchmark slipped for the second week in a row even as the Energy Department's inventory release showed that stockpiles recorded its largest weekly draw since 2016. The massive 12.6 million barrels dip pushed storage levels to their lowest since February 2015, while keeping them under the five-year average. However, the positive reading was more than offset by fears of supply resumption from Libya and escalating trade conflict between the United States and China.
Meanwhile, natural gas prices also moved southward last week as bearish weather predictions pointed to weakening demand and pressured the fuel’s price. Investors were spooked by forecasts of lower-than-normal temperature that could lead to decrease in natural gas demand for air-conditioning.
Recap of the Week’s Most Important Stories
1. ConocoPhillips has received consent from board of directors for increasing share repurchase program for 2018 by 50% to $3 billion from $2 billion. In 2018, the Zacks Rank #1 (Strong Buy) company will have sufficient cash from operations to fund the program along with dividend and capital expenditures. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Currently, the company has a total share repurchase authorization of $6 billion. The 2018 share repurchase program expansion to $3 billion along with shares repurchased worth $3 billion during 2016 and 2017, will fully utilize the board’s existing authorization. Therefore, the board has authorized additional share repurchases of $9 billion, taking the total amount to $15 billion.
ConocoPhillips also announced that it has reduced debt by $2.1 billion during the second quarter and has attained declared debt target of $15 billion much before the original target date of 2019 end. (Read more Conoco Hikes Share Repurchase Program, Lowers Debt)
2. Anadarko Petroleum’s board of directors has authorized a $1-billion hike in share repurchase program and raised its debt reduction plan by $500 million. The authorization indicates the company’s plan to utilize free cash flow to fund repurchase and repayment of debts.
Anadarko Petroleum has been undertaking initiatives to create value for shareholders. On Jun 29, 2018, the company completed its previous $3-billion share repurchase authorization. The recent authorization created another coffer of $1 billion for shares to be repurchased before the end of June 2019.
The current debt/capital ratio of the company is 57.09%, which is higher than the industry average of 35.05%. Anadarko Petroleum had a plan to redeem debts worth $1 billion in the near term. The recent authorization raised the debt reduction program to $1.5 billion. (Read more Anadarko Raises Buyback & Debt Reduction Target by $1.5B)
3. Occidental Petroleum’s Board of Directors announced the company’s regular quarterly dividend of 78 cents per share, which annually stands at $3.12. The figure reflects a 1.3% hike compared with the previous annual rate of $3.08 per share.
The board members of Occidental Petroleum have been clearing annual dividend hikes for more than a decade now. Notably, yearly payout increases are becoming a steady policy for this Oil and Gas major. The company’s latest move marks the 16th consecutive year of dividend raise.
The current annualized dividend yield is 3.7% compared with the S&P 500 average of 1.8%. This rise in distributable income vouches for the company’s strong balance sheet and a constant cash flow position, providing it with financial flexibility and a cushion for incremental dividend. (Read more Occidental's Board Approves 1.3% Hike in Dividend)
4. Offshore services provider, Tidewater Inc has proposed to buy smaller rival — GulfMark Offshore, Inc. The move is expected to create significant synergies and growth prospects as the offshore support vessel (OSV) sector continues to revive with the recovery in oil prices. The combination is anticipated to conclude in the fourth quarter of 2018.
Per the agreement, Tidewater will purchase GulfMark by paying about $340 million to create a combined company worth about $1.25 billion in an all-stock deal. GulfMark’s shareholders will get 1.100 shares of Tidewater common stock for each share.
Subject to Jones Act restrictions on maximum ownership of shares by non-U.S. citizens, GulfMark noteholder warrant will be automatically changed into the right to receive 1.100 Tidewater shares. Post the completion of the deal, the GulfMark security holders will jointly hold 27% ownership of the combined company or 26% on a fully-diluted basis.
The combined company will possess the industry’s largest fleet as well as extensive coverage globally in the OSV sector. It will operate 102 Tier 1 vessels, of which 20 are stacked currently, with an average age of about 6.5 years. The reactivation of the stacked vessels is projected to generate an additional annual vessel operating margin of $32 million. (Read Tidewater to Buy GulfMark, Form Combined Entity Worth $1.25B)
5. QEP Resources, Inc. recently inked a $155-million deal to offload its oil and gas assets in the Uinta Basin, in a bid to sharpen focus on the prolific Permian play. Middle Fork Energy Partners, LLC will be purchasing the Uinta assets located in Duchesne and Uintah counties in eastern Utah.
The divested assets comprise acreage of around 230,000 net acres and incorporate 605 billion cubic feet equivalents of proved reserves as of Dec 31, 2017. QEP Resources' net production in the last reported quarter, from the Uinta assets, was 54 million cubic feet of gas equivalent per day. Around 26% of the production was liquids.
The deal is in line with QEP Resources’ strategy to streamline portfolio. The company has been entering into various strategic deals of late to sharpen focus on the more profitable Permian Basin and upgrade portfolio. (Read more QEP Resources to Sell Uinta Assets, Deepen Focus in Permian)
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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights: ConocoPhillips, Anadarko, Occidental, GulfMark and QEP Resources
For Immediate Release
Chicago, IL –July 18, 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 ConocoPhillips (COP - Free Report) ,Anadarko Petroleum , Occidental Petroleum (OXY - Free Report) , GulfMark Offshore, Inc. and QEP Resources, Inc. .
Here are highlights from Tuesday’s Analyst Blog:
Oil & Gas Stock Roundup: COP, APC, OXY and More
It was a week where both oil and natural gas finished lower.
On the news front, oil biggies ConocoPhillips and Anadarko Petroleum authorized additions to their stock repurchase programs. Meanwhile, Occidental Petroleum recently increased its dividend.
Overall, it wasn’t a good week for the sector. While West Texas Intermediate (WTI) crude futures lost 3.8% to close at $71.01 per barrel, natural gas prices fell around 3.7% to $2.752 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Enbridge's Midstream Sale, Chevron's North Sea Plans & More)
The U.S. crude benchmark slipped for the second week in a row even as the Energy Department's inventory release showed that stockpiles recorded its largest weekly draw since 2016. The massive 12.6 million barrels dip pushed storage levels to their lowest since February 2015, while keeping them under the five-year average. However, the positive reading was more than offset by fears of supply resumption from Libya and escalating trade conflict between the United States and China.
Meanwhile, natural gas prices also moved southward last week as bearish weather predictions pointed to weakening demand and pressured the fuel’s price. Investors were spooked by forecasts of lower-than-normal temperature that could lead to decrease in natural gas demand for air-conditioning.
Recap of the Week’s Most Important Stories
1. ConocoPhillips has received consent from board of directors for increasing share repurchase program for 2018 by 50% to $3 billion from $2 billion. In 2018, the Zacks Rank #1 (Strong Buy) company will have sufficient cash from operations to fund the program along with dividend and capital expenditures. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Currently, the company has a total share repurchase authorization of $6 billion. The 2018 share repurchase program expansion to $3 billion along with shares repurchased worth $3 billion during 2016 and 2017, will fully utilize the board’s existing authorization. Therefore, the board has authorized additional share repurchases of $9 billion, taking the total amount to $15 billion.
ConocoPhillips also announced that it has reduced debt by $2.1 billion during the second quarter and has attained declared debt target of $15 billion much before the original target date of 2019 end. (Read more Conoco Hikes Share Repurchase Program, Lowers Debt)
2. Anadarko Petroleum’s board of directors has authorized a $1-billion hike in share repurchase program and raised its debt reduction plan by $500 million. The authorization indicates the company’s plan to utilize free cash flow to fund repurchase and repayment of debts.
Anadarko Petroleum has been undertaking initiatives to create value for shareholders. On Jun 29, 2018, the company completed its previous $3-billion share repurchase authorization. The recent authorization created another coffer of $1 billion for shares to be repurchased before the end of June 2019.
The current debt/capital ratio of the company is 57.09%, which is higher than the industry average of 35.05%. Anadarko Petroleum had a plan to redeem debts worth $1 billion in the near term. The recent authorization raised the debt reduction program to $1.5 billion. (Read more Anadarko Raises Buyback & Debt Reduction Target by $1.5B)
3. Occidental Petroleum’s Board of Directors announced the company’s regular quarterly dividend of 78 cents per share, which annually stands at $3.12. The figure reflects a 1.3% hike compared with the previous annual rate of $3.08 per share.
The board members of Occidental Petroleum have been clearing annual dividend hikes for more than a decade now. Notably, yearly payout increases are becoming a steady policy for this Oil and Gas major. The company’s latest move marks the 16th consecutive year of dividend raise.
The current annualized dividend yield is 3.7% compared with the S&P 500 average of 1.8%. This rise in distributable income vouches for the company’s strong balance sheet and a constant cash flow position, providing it with financial flexibility and a cushion for incremental dividend. (Read more Occidental's Board Approves 1.3% Hike in Dividend)
4. Offshore services provider, Tidewater Inc has proposed to buy smaller rival — GulfMark Offshore, Inc. The move is expected to create significant synergies and growth prospects as the offshore support vessel (OSV) sector continues to revive with the recovery in oil prices. The combination is anticipated to conclude in the fourth quarter of 2018.
Per the agreement, Tidewater will purchase GulfMark by paying about $340 million to create a combined company worth about $1.25 billion in an all-stock deal. GulfMark’s shareholders will get 1.100 shares of Tidewater common stock for each share.
Subject to Jones Act restrictions on maximum ownership of shares by non-U.S. citizens, GulfMark noteholder warrant will be automatically changed into the right to receive 1.100 Tidewater shares. Post the completion of the deal, the GulfMark security holders will jointly hold 27% ownership of the combined company or 26% on a fully-diluted basis.
The combined company will possess the industry’s largest fleet as well as extensive coverage globally in the OSV sector. It will operate 102 Tier 1 vessels, of which 20 are stacked currently, with an average age of about 6.5 years. The reactivation of the stacked vessels is projected to generate an additional annual vessel operating margin of $32 million. (Read Tidewater to Buy GulfMark, Form Combined Entity Worth $1.25B)
5. QEP Resources, Inc. recently inked a $155-million deal to offload its oil and gas assets in the Uinta Basin, in a bid to sharpen focus on the prolific Permian play. Middle Fork Energy Partners, LLC will be purchasing the Uinta assets located in Duchesne and Uintah counties in eastern Utah.
The divested assets comprise acreage of around 230,000 net acres and incorporate 605 billion cubic feet equivalents of proved reserves as of Dec 31, 2017. QEP Resources' net production in the last reported quarter, from the Uinta assets, was 54 million cubic feet of gas equivalent per day. Around 26% of the production was liquids.
The deal is in line with QEP Resources’ strategy to streamline portfolio. The company has been entering into various strategic deals of late to sharpen focus on the more profitable Permian Basin and upgrade portfolio. (Read more QEP Resources to Sell Uinta Assets, Deepen Focus in Permian)
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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 http://www.zacks.com/performance for information about the performance numbers displayed in this press release.