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On CNBC’s “Options Action,” Mike Khouw spoke about an options strategy that he would use to get a long exposure in the energy space after a sharp move higher.
He said that crude oil inventory is still incredibly high and he thinks that it won’t trade significantly higher until the inventory declines.
Related Link: Crude oil Rips North
Instead of trading crude oil, he would consider making a modestly bullish bet in Schlumberger Limited. (NYSE: SLB), which is the strongest company in the oil service space. Khouw added that the company is cash flow positive and it makes money even when crude oil prices are low.
Hot Oil Stocks To Watch For 2016: Transocean Inc.(RIG)
Transocean Ltd. provides offshore contract drilling services for oil and gas wells worldwide. It offers deepwater and harsh environment drilling, oil and gas drilling management, and drilling engineering and drilling project management services. The company also offers well and logistics services. In addition, it engages in oil and gas exploration, development, and production activities primarily in the United States offshore Louisiana and Texas, and in the United Kingdom sector of the North Sea. As of February 10, 2011, the company owned, had partial ownership interests in, and operated 138 mobile offshore drilling units, including 47 high-specification floaters, 25 midwater floaters, 9 high-specification jackups, 54 standard jackups, and 3 other rigs, as well as 1 ultra-deepwater floater and 3 high-specification jackups under construction. Transocean Ltd. was founded in 1953 and is based in Zug, Switzerland.
- [By Ben Levisohn]
Credit Suisse analyst Gregory Lewis and team highlight seven factors that will help sway how investors react to earnings from offshore drillers like Transocean (RIG), Noble (NE),Diamond Offshore Drilling (DO), Seadrill (SDRL), and Ensco (ESV):
- [By Ben Levisohn]
Shares of Noble have gained 5% to $9.32 at 1:59, but that appears downright disappointing next to Seadrill (SDRL), Transocean (RIG) and Atwood Oceanics (ATW). Transocean has climbed 7.2% to $11.28, Seadrill has jumped 7.6% to $3.40, and Atwood Oceanics has soared 9.9% to $12.31.
- [By Ben Levisohn]
Shares of Transocean (RIG) are getting hit today but not nearly as hard as other offshore drillers, including Ensco (ESV), Diamond Offshore Drilling (DO), Atwood Oceanics (ATW) and Noble (NE). The reason: Transocean announced the results of a tender offer to buy back debt. RBC’sKurt Hallead andBenjamin Owens explain:
Transocean’s Sedco 714 offshore platform in dry dock Bloomberg News
: RIG announced it has received valid tender offers from investors to repurchase ~$943mn of face value debt for $845mn, or a 90% weighted average discount. We view the move as a positive as it enhances the company’s liquidity and flexibility…
Nearer-term debt maturities look manageable:Transocean has ~$2.8bn in debt maturing between now and YE18: $1bn in 2016, $0.6bn in 2017, and $1.2bn in 2018…
With cash on hand of $2.6bn, $0.2bn in excess proceeds from the note offering, our forecast is for aggregate 2016/17 FCF of $0.6bn, and an undrawn $3.0bn revolver we thinkTransocean has ample liquidity (>$6.5bn) to manage through these debt maturities…
Still not interested in raising equity at this time:Transocean has essentially ruled out doing an equity offering at this time, indicating it feels confident with the capital structure.
Transocean said it would explore other financing options such as secured borrowing against its new drillships with 10-year contracts, if necessary, before doing an equity offering.
Jefferies analyst Eduardo Royes and team argue that Atwood Oceanics and Diamond Offshore drilling “intrigue, but for conflicting reasons.” They explain:
Atwoodscreens attractive on both a normalized multiple and DCF (heavily driven by normalized) basis, suggesting it could be a good play for recovery. An improving offshore sentiment and catalyst potential (e.g., term contract on the Osprey) could benefitAtwood as well. However, shares are very expensive in the tro
Hot Oil Stocks To Watch For 2016: Encana Corporation(ECA)
Encana Corporation and its subsidiaries engage in the exploration for, development, production, and marketing of natural gas, oil, and natural gas liquids. The company owns interests in resource plays that primarily include the Greater Sierra, Cutbank Ridge, Bighorn, and Coalbed Methane resource plays located in British Columbia and Alberta, as well as the Deep Panuke natural gas project offshore Nova Scotia in Canada. It also holds interests in resource plays comprising the Jonah in southwest Wyoming, Piceance in northwest Colorado, Haynesville in Louisiana, and Texas resource play, including east Texas and north Texas. The company serves primarily local distribution companies, industrials, energy marketing companies, and other producers. Encana Corporation was founded in 1971 and is headquartered in Calgary, Canada.
- [By Ben Levisohn]
Barclays analyst Thomas Driscoll and team see more dividend cuts and equity raises coming for oil & gas stocks like Apache (APA), Devon Energy (DVN),Encana (ECA), Anadarko Petroleum (APC), and Marathon Oil (MRO). They explain why:
- [By Ben Levisohn]
Productivity analysis favors stock picking framework of shale scale + the next rung down. We continue to maintain our Buy ratings on several shale productivity winners such asEOG Resources (CL),Diamondback Energy (CL),PDC Energy (CL),Pioneer Natural Resources and RSP Permian, while increased visibility in a path towards oil price recovery has heightened our confidence in next rung down stocks such as Hess (HES) (CL), Anadarko Petroleum (APC), Encana (ECA), Carrizo Oil & Gas (CRZO) and Whiting Petroleum (WLL). While our well results analysis supports our thesis on these shale scale winners, we note that a number of these higher beta stocks also screened particularly well, further bolstering our view on these equities.
Best Healthcare Equipment Stocks To Buy For 2016: Magellan Midstream Partners L.P.(MMP)
Magellan Midstream Partners, L.P., together with its subsidiaries, engages in the transportation, storage, and distribution of refined petroleum products and crude oil in the United States. Its pipeline system transports petroleum products and liquefied petroleum gases from the Gulf Coast refining region of Texas through the Midwest to Colorado, North Dakota, Minnesota, Wisconsin, and Illinois. The company owns and operates marine terminals, which store and distribute refined petroleum products, blendstocks, crude oils, heavy oils, and feedstocks, as well as inland terminals that consist of storage tanks connected to third-party interstate pipeline systems to deliver refined petroleum products. Its ammonia pipeline system transports ammonia from production facilities in Texas and Oklahoma to terminals in the Midwest. The company also stores, blends, and distributes biofuels, such as ethanol and biodiesel. As of March 31, 2011, it operated approximately 9, 600 miles of petr oleum products pipeline system and 51 terminals; 6 marine petroleum terminals located along the United States Gulf and East Coasts; a crude oil storage in Cushing, Oklahoma; 27 petroleum products inland terminals located principally in the southeastern United States; and a 1,100-mile ammonia pipeline system and 6 associated terminals. The company also provides ancillary services, such as heating, blending, and mixing of stored petroleum products and additive injection services. Its customers comprise independent and integrated oil companies, wholesalers, retailers, railroads, airlines, and regional farm co-operatives. The company serves various markets, including retail gasoline stations, truck stops, farm co-operatives, railroad fueling depots, and military and commercial jet fuel users. Magellan GP, LLC serves as the general partner of the company. The company was founded in 2000 and is based in Tulsa, Oklahoma.
- [By WWW.INVESTOPEDIA.COM]
Companies in the oil storage business can take advantage of what is known as contango, which is when forward prices are higher than current prices, allowing the purchase of cheap oil to be stored and sold at a later date while securing income using derivatives. Five companies that appear to be in a good position to take advantage of reduced oil storage capacity are Magellan Midstream Partners (NYSE: MMP), Enterprise Products Partners (NYSE: EDP), Spectra Energy Partners (NYSE: SEP), Buckeye Partners (NYSE: BPL) and EQT Midstream Partners (NYSE: EQM).
Hot Oil Stocks To Watch For 2016: ONEOK Partners L.P.(OKS)
ONEOK Partners, L.P. engages in the gathering, processing, storage, and transportation of natural gas in the United States. The company?s Natural Gas Gathering and Processing segment gathers and processes natural gas produced from crude oil and natural gas wells located in the Mid-Continent region; and gathers natural gas in the Williston Basin, which spans portions of Montana and North Dakota, and the Powder River Basin of Wyoming. Its Natural Gas Pipelines segment primarily owns and operates regulated natural gas transmission pipelines, natural gas storage facilities, and natural gas gathering systems for non-processed gas. It also provides interstate natural gas transportation and storage services. This segment?s interstate natural gas pipeline assets transport natural gas through FERC-regulated interstate natural gas pipelines in North Dakota, Minnesota, Wisconsin, Illinois, Indiana, Kentucky, Tennessee, Oklahoma, Texas, and New Mexico. In addition, it transports intra state natural gas through its assets in Oklahoma; and owns underground natural gas storage facilities in Oklahoma, Kansas, and Texas. Its Natural Gas Liquids segment gathers, fractionates, and treats natural gas liquids (NGLs), as well as stores NGL products primarily in Oklahoma, Kansas, and Texas. This segment owns FERC-regulated natural gas liquids gathering and distribution pipelines in Oklahoma, Kansas, Texas, Wyoming, and Colorado; terminal and storage facilities in Missouri, Nebraska, Iowa, and Illinois; and FERC-regulated natural gas liquids distribution and refined petroleum products pipelines in Kansas, Missouri, Nebraska, Iowa, Illinois, and Indiana that connect its Mid-Continent assets with Midwest markets, including Chicago, Illinois. ONEOK Partners GP serves as the general partner of the company. The company was formerly known as Northern Border Partners, L.P. and changed its name to ONEOK Partners, L.P. in May 2006. The company was founded in 1993 and is base d in Tulsa, Oklahoma.
- [By Garrett Cook]
Citi maintains Buy ratings on Targa Resources (NYSE: TRGP), ONEOK (NYSE: OKE) and Oneok Partners (NYSE: OKS) citing the companies stories around natural gas liquids (NGLs).