For Immediate Release
Chicago, IL – November 16, 2016 – 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 (NYSE:(RDS.A - Free Report) –Free Report),Chevron Corp. (NYSE:(CVX - Free Report) –Free Report),ConocoPhillips (NYSE:(COP - Free Report) –Free Report),ExxonMobil Corp. (NYSE:(XOM - Free Report) –Free Report) and Sunoco Logistics Partners L.P. (NYSE: – 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, CVX and More
It was a week where both oil and gas prices finished sharply lower.
On the news front, European supermajor Royal Dutch Shell plc (NYSE:(RDS.A - Free Report) – Free Report) pledged to invest $10 billion in Brazil over a five-year span, while U.S. biggie Chevron Corp. (NYSE:(CVX - Free Report) – Free Report) and partners commenced production at the Mafumeira Sul development offshore Angola.
Overall, it was another dismal week for the sector. West Texas Intermediate (WTI) crude futures dived 5.4% to close at $43.41 per barrel, while natural gas prices ended down 5.3% to $2.619 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: EOG, Apache Wrap Up Q3 Energy Earnings Season .)
Oil prices sank to multi-month lows after reports showed that output by members of the OPEC cartel – whose associate nations supply around 40% of the world's crude – rose to an all-time high in Oct. At 33.64 million barrels a day, current production is way over OPEC’s target to limit volumes to a range of 32.5 million - 33 million barrels a day. Given the recent data sets, investors have started doubting whether OPEC will be able to rein in production as part of the plan reached in Sep.
Adding to the pessimism was the U.S. Energy Department's weekly inventory release, which showed a dramatic increase in domestic crude production.
Meanwhile, natural gas also turned sharply lower following a larger-than-anticipated inventory build that pushed the commodity’s storage level to a new all-time high. The commodity was further hampered by a warmer-than-normal weather that translates into weak demand for the heating fuel.
Recap of the Week’s Most Important Stories
1. Europe’s largest oil company Royal Dutch Shell plc recently announced its plan to invest $10 billion in Brazil over a span of five years. The company intends to tap into the increased opportunities for foreign companies in the Brazilian oil industry with this move. Shell currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .
Shell – the largest foreign investor in Brazil – plans to continue investing heavily in the country in order to double its global deep water production by the early 2020s. Shell plans to invest around $2 billion every year and it intends to fund the investment from the more than $30 billion in capital that it has already deployed in Brazil.
Following regulatory changes in Brazil, Shell seeks to expand its ultra deepwater oil exploration and production holdings in the country. Notably, the company already operates 5,500 energy stations in the nation and has acquired a large number of oil and gas assets via its takeover of BG Group this year. (Read more: Shell Announces Plan to Invest $10 Billion in Brazil .)
2. Chevron Corp., the second-largest U.S. oil producer, recently reported that it has started production at the Mafumeira Sul oil field along with Angolan state oil major – Sonangol. The initial production capacity of the field is 10,000 barrels per day.
The Mafumeira Sul oil field is estimated to produce 110,000 barrels per day or more, once fully developed. Located off the coast of Angola, the project is worth $5.6 billion and currently uses early production systems or EPS to produce 10,000 barrels of oil per day.
Sonangol has a 41% stake in the Mafumeira Sul oil project. Chevron, on the other hand, holds 39.2% interest. (Read more: Chevron Starts Production at Mafumeira Sul Field .)
3. U.S. independent ConocoPhillips (NYSE:(COP - Free Report) – Free Report) recently announced plans to commence a multi-billion-dollar divestment program next year in order to survive price volatility.
The company intends to sell assets valued between $5 billion and $8 billion, mainly from its North American natural gas portfolio. Given that Brent crude is now trading at about $50 per barrel, these activities will facilitate the company to accomplish its priorities like a debt level of $20 billion, a 20–30% payout of operating cash flows to shareholders as well as modest production growth to drive margin and cash flow expansion. According to the strategy for 2017, ConocoPhillips will announce a $3 billion share repurchase program.
Moreover, the company is expected to further trim its capital expenditures and costs in 2017 from the levels in 2016. Nonetheless, it will target a modest growth in production. ConocoPhillips now expects capex of about $5 billion next year, down 4% from the current year’s guidance of $5.2 billion. This also indicates more than 50% decrease from the 2015 capex and investments of $10.1 billion. (Read more: ConocoPhillips Plans Divestments Worth $8 Billion in 2017 .)
4. World’s largest publicly traded energy company ExxonMobil Corp. (NYSE:(XOM - Free Report) –Free Report) and pipeline operatorSunoco Logistics Partners L.P. (NYSE: – Free Report) recently announced their decision to form a strategic joint venture (“JV”) by combining their key crude oil midstream assets, mainly in the Permian basin of West Texas.
Per a statement, Permian Express Partners – the new JV – will comprise assets owned by both companies. Sunoco Logistics will be the majority owner and operator of the JV assets with a stake of 85%, while ExxonMobil will hold the remaining 15%.
Sunoco Logistics will contribute its Permian Express 1, Permian Express 2 and Permian Longview and Louisiana Access pipelines to the JV. ExxonMobil, on the other hand, will contribute a Texas-Louisiana pipeline as well as its Pegasus pipeline, which runs from Texas to Illinois. (Read more: Exxon & Sunoco Logistics to Merge Midstream Assets, Form JV .)
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