Friday, October 29, 2010

Citigroup (NYSE:C) Sees Bob Dudley's Strategic Guidance More Important than Quarterly Results

A lot of analysts and commentators are giving their input into the upcoming third quarter report from BP (NYSE:BP), but Citigroup (NYSE:C) rightly notes that what's the most important aren't the earnings for the third quarter, but new CEO Bob Dudley's vision of where he wants to take the company.

Citigroup said, the "path to rehabilitation post Macondo and Bob Dudley's new strategic direction are the key to performance rather than Q3 earnings."

In other words, investors shouldn't be looking at BP in any way concerning short-term results, as they're going to be completely unpredictable and unreliable in the current environment BP is operating in.

Like the Halliburton revelation on their cement job, there are still a lot of unknowns that remain to be resolved before any type of normality will return to the company.

What's most important, as Citigroup says, is how Dudley is going to deal with those realities and not only stabilize the company, but how he's going to grow it.

BP (NYSE:BP) in Talks with Sinopec over Shale Gas

With the ability to access oil and gas in shale at profitable rates now available, energy-hungry China is in talks with BP (NYSE:BP) via Sinopec, to work out an exploration and development deal concerning shale gas resources in country.

Sinopec says they're planning on increasing the number of bids to six more shale blocks at this time. Adding to the 42 shale gas blocks they already own.

Sinopec's Chief Financial Officer Wang Xinhua said, "We are now in talks with BP on potential cooperation," although he didn't elaborate on it.

As usual, China understands the resource, but doesn't have the technological ability or knowledge to extract the gas from the shale, which is why they have been partnering with Western companies like BP.

Is Halliburton (NYSE:HAL) Protected from BP (NYSE:BP) Via Indemnity?

After the oil spill commission released a report saying the cement mix used in the Macondo well was unstable, Halliburton (NYSE:HAL) took a big hit, but began to almost immediately fight back, hoping to hold onto their indemnity from their contract with BP (NYSE:BP).

The question which will determine liability and whether or not Halliburton will remain protected would be the quality of work performed.

Here's the agreement:

COMPANY shall save, indemnify, release, defend, and hold harmless CONTRACTOR GROUP against all claims, losses, damages, costs (including legal costs) expenses and liabilities resulting from:

(a) loss or damage to any well or hole (including the cost to re-drill);

(b) blowout, fire, explosion, cratering, or any uncontrolled well condition (including the costs to control a wild well and the removal of debris);

BP is the company mentioned and Halliburton the contractor group, which I put in capital letters.

Already admitting they didn't completely finish the testing on the final cement formulation used, it's unknown at this time if that does anything to void the above agreement between the two companies.

Consequently, until that is sorted out, Halliburton will have this hanging over them, and more than likely their share price will swing in both directions on bits and pieces of news as it emerges, as well as rumors.

At this time it seems there are questions as to whether the indemnity will hold. But that's a long way from a certainty.

Halliburton (NYSE:HAL) Admits Skipping Major Test on BP (NYSE:BP) Cement Job

While disputing some of the allegations concerning the cement mixture used to seal the BP (NYSE:BP) oil well before it failed, Halliburton did admit they didn't perform a critical test on the final cement formula used on Macondo before it blew.

Tests performed by the oil spill commission have shown the cement formulation used was unstable.

The final cement mix used wasn't tested concerning its stability for use.

BP, as well as others, have pointed to the cement mix as one of the key elements as to why the accident happened. With Halliburton being the cement contractor, it could end up costing them into the billions as a result, although the investigation is far from over and conclusive, as Halliburton still maintains the mixture asserted to be unstable isn't the same mixture they used.

Halliburton said in a statement: "Contrary to the letter...the slurry tested in February was not 'a very similar foam slurry design to the one actually pumped.'"

Pioneer Natural Resources (NYSE:PXD) Should Enjoy Double-digit Growth Says Barclays (NYSE:BCS)

Pioneer Natural Resources (NYSE:PXD) should grow by double-digits for some time, says Barclays (NYSE:BCS), citing their exposure to Eagle ford shale and Spraberry Trend Field.

Barclays said, "Strong growth in the Spraberry Trend Field and from the emerging Eagle ford shale play should drive double-digit volume growth as well as margin expansion in 2011 and beyond. PXD trades at a premium to historical multiples of forward cash flow estimates but we feel the premium is justified by the prospects of accelerated cash flow growth.

"Higher projected 2011 cash flow (+$60mm) and an increased target multiple (to 7.5x 2011E PICF) each account for about half of the target price increase. PXD trades at a debt-adjusted multiple of 7.2 x mid-cycle estimates; a 13% premium to peer averages."

Barclays maintains an "Equalweight" oil and gas company. Pioneer closed Thursday at $69.18, losing $0.72, or 1.03 percent. Barclays has a price target of $72 on them, raising it from $65.

Nabors Industries (NYSE:NBR) Lowers Internationa Guidance, Higher Taxes Remain Concern

Citing lower international guidance from Nabors Industries (NYSE:NBR), UBS (NYSE:UBS) said they're maintaining their "Neutral" rating on the company.

UBS said, "We are raising our 2011 EPS estimate by 11% to $1.70 from $1.53 reflecting 25% accretion from the Superior deal. However, the increase was partially offset by lower international guidance and higher taxes...We
continue our Neutral rating on Nabors. The company will benefit from its 20% exposure to pressure pumping near-term, as well as the ultimate sale of its E&P businesses. However, we believe there is risk for a flat to declining North American rig count in 2011 and prefer to sit on the sidelines until we begin to see the rig count roll over."

Nabors closed Thursday at $20.30, losing $0.22, or 1.07 percent. UBS increased their price target on the land drilling contractor from $19 to $22.

A123 Systems (Nasdaq:AONE), Clean Energy Fuels (Nasdaq:CLNE), Codexis Nasdaq:CDXS), Getting Coverage from Barclays (NYSE:BCS)

Targeting the so-called clean technology companies in the United States, Barclays (NYSE:BCS) iniatiated coverage on Clean Energy Fuels Corp. (Nasdaq:CLNE) and Codexis, Inc. (Nasdaq:CDXS), while saying their key pick in the electric vehicle segment is A123 Systems (Nasdaq:AONE).

Barclays said, "We remain constructive on the longer-term growth prospects of three alternative fuel technologies - natural gas, biofuels and electric vehicle batteries. In this report, we examine the outlook for these emerging alternative fuel technologies...We expect the market for alternative fuels to grow from $195 billion today to nearly $675 billion by 2030 owing to favorable government policies, technological advances and cost reduction. We expect the three alternative fuel technologies to both complement and compete with each other. In the near term, we believe significant investment opportunities exist in the natural gas segment.

"Our key pick in the electric vehicle segment is A123 Systems (Nasdaq:AONE). We expect the market for lithium-ion batteries to increase from around $2 billion currently to more than $50 billion by 2020 and to potentially exceed $100 billion by 2030 as supportive government legislation and accelerated cost reductions make electric vehicles attractive in several regions of the world."

Clean Energy was started off with an "Equalweight" rating. They closed Thursday at $14.33, losing $0.43, or 2.91 percent. They have a price target of $16 on them.

Codexis, Inc. was also started off with an "Equalweight." They closed at $8.87 Thursday, losing $0.37, or 4.00 percent. They have a price target of $11 on them.

Whiting Petroleum (NYSE:WLL) Outperforms on Lower Costs

Whiting Petroleum (NYSE:WLL) had a solid quarter based on getting operational costs under control, leading them to beat expectations for earnings per share.

Ticonderoga Securities said, "WLL reported its 3Q last night. Earnings were $0.05 ahead of our $1.27 estimate, driven largely by better than expected costs. Production was in line with our estimate...Based on company guidance, we are raising our 4Q EPS estimate to $1.71 from $1.50, which brings our 2010 full-year estimate to $5.51, up from $5.27. We also revised our 2011 EPS estimate to $7.63 from $6.72.

"We reiterate our rating on the stock due to valuation. Our NAV remains unchanged at $116/share. Currently, the stock trades at 86% of our NAV versus 76% for our coverage universe."

Ticonderoga maintains their "Neutral" on Whiting.

Whiting closed at $98.53, losing $1.48, or 1.48 percent. They have a market cap of just above $5 billion.

Halliburton’s (NYSE:HAL) Credit-Default Swaps Soar After Devastating BP (NYSE:BP) Well Report

There is no doubt the report of the oil commission that Halliburton's (NYSE:HAL) choice of cement used on the Macondo well of BP (NYSE:BP) was flawed is devastating to the company, and it showed in their credit-default swaps, which soared in price after the news was released.

Halliburton CDS contracts surged by 27.3 basis points to 87.2 at 4:30 PM EDT in New York, their highest level since June, according to CMA, which provided the data.

The National Commission on the BP Deepwater Horizon Oil Spill found that three of the four tests performed by Halliburton on the cement found it was unstable for use.

Only one test result appears to have reached BP's hands before the Deepwater Horizon disaster.

A credit-default swap pays the buyer face value minus the value of the defaulted debt.

This will no doubt be a huge weight on the share price and liability of Halliburton going forward, as the same uncertainty which has surrounded BP will be, albeit probably to a lesser degree, on Halliburton as well.

Shares of Halliburton were punished Thursday, plummeting to $31.68, dropping $2.74, or 7.96 percent. After hours they were continuing to drop.

Goldcorp (NYSE:GG) Soars and Scores in Third Quarter

Goldcorp (NYSE:GG) soared over 5 percent by the close of trading Thursday, ending the session at $44.29, after a stunning performance in the third quarter.

What was most impressive was its management of costs, even though the reported story will probably be the fact they increased profits y four times the same quarter last year, reaching $4.66.5 million, or 63 cents a share. That's up from $114.2 million, or 16 cents a share, in 2009.

To add a little icing on the cake, they also doubled their dividend to 36 cents a share.

"Our confidence in the Company's financial position and ability to generate strong future cash flows led us to announce a 100% increase in our dividend," CEO Chuck Jeannes said.

Revenue for the quarter also rose nicely, increasing by 28 percent to $885.8 million.

While gold prices are an obvious benefit to every gold miner, it is those who have the discipline and knowledge to control costs who will survive and thrive, as the gold bull market won't last forever, and eventually gold prices alone won't be able to drive performance, which poor ones can be hidden because of the gold price climate we are now experiencing.

To show Goldcorp's ability and determination to control costs, in their first month of operations at their new flagship Penasquito mine, they were able to enjoy a negative cash cost in the first month of production. That's not an easy task to accomplish.

Stifel Nicolaus upgraded Goldcorp from "Hold" to "Buy," saying they see earnings and production growth to continue on.

Goldcorp gained $2.21, or 5.25 percent in Thursday trading. Stifel placed a price target of $53 on them.

Halliburton (NYSE:HAL) Under Fire Over BP (NYSE:BP) Cementing Job

In what could be extraordinarly costly to Halliburton (NYSE:HAL), findings by the oil spill commission point to the cement mixture used to seal the BP (NYSE:BP) oil well was faulty.

The findings contradict prior statements made by Halliburton which asserted the well design of BP was at fault in the crisis.

Investigators said the tests performed by Halliburton, and their results, should have raised flags as to its viability.

Halliburton has claimed their tests results revealed the cement mix was stable for use.

According to the panel, of the four tests performed in February and April, only one of them has results which had the mix holding up. Even worse, the results may not have been shared with BP, or possibly even Halliburton before the cement had been pumped into the well, according to chief investigative counsel Fred H. Bartlit Jr.

When the well exploded, BP had a single result of the four tests available to them.

"Halliburton should have considered redesigning the foam slurry before pumping it at the Macondo well," Bartlit concluded.

Internal tests by BP and an independent test conducted by Chevron (NYSE:CVX) on behalf of the commission reached the same conclusions, that the cement pumped into the well was flawed.

It appears BP hadn't received reports on the tests until after the accident.

This could be devastating to Halliburton depending on the consequences of the determination.

Hercules Offshore (Nasdaq:HERO) EPS Estimates Lowered for 2011

Hercules Offshore, Inc. (Nasdaq:HERO) faces a number of challenges going forward, even though their third-quarter results beat expectations, although they were fairly low to begin with.

Global Hunter said, "HERO reported a 3Q EPS (loss) of ($0.13), ahead of our expectations of ($0.20) and consensus at ($0.17). With revenue largely in line ($168MM vs $170MM exp), HERO beat our expectations on costs ($124MM vs $129MM exp), as well as D&A and tax benefit. However, near-term concerns loom given the potential for a covenant breach, a US jackup slowdown with low/mid $3 gas and lower international dayrates. We are trimming our 2011 EPS estimate to ($0.40) from a ($0.28) and lowering our price target to $3.10. Given meaningful upside still, we reiterate our rating."

Global maintained their "Buy" on Hercules, although lowering their price target from $3.60 to $3.10. The oil and gas services company closed at $2.31, dropping $0.07, or 2.94 percent.

Thursday, October 28, 2010

BP's (NYSE:BP) TNK-BP Joint Venture Signing Ukraine Shale Gas Agreement

In its ongoing strategy to diversify geographically and by product, BP's (NYSE:BP) joint venture with Russian billionaires, TNK-BP, is reportedly close to signing a shale gas exploration agreement with Ukraine.

They should sign a memorandum for that purpose soon. TNK-BP has a refining business in Ukraine at this time.

TNK-BP has already signed on to acquire BP's assets held in Venezuela and Vietnam in order to expand operations beyond Russia.

Petrobras (NYSE:PBR) Preparing to Resume Gulf Deepwater Drilling

The first production from the Cascade and Chinook fields in the Gulf of Mexico by Brazil's state-owned oil giant Petrobras (NYSE:PBR) is set to launch sometime near the end of 2010.

Petrobras owns the entirety of the Cascade field after acquiring the remaining 50 percent from Devon Energy Corp. (NYSE:DVN), which has turned its focus to onshore natural gas in North America.

Concerning Chinook, Petrobras has a 66.7 percent stake in that field, with Total SA (NYSE:TOT) of France having the remaining 33.3 percent. Petrobras is the operator of both the fields.

The oil moratorium from the Obama administration has set the project back, but since the wells were drilled before the implementation of the moratorium, it won't be negatively impacted from the permitting process, which will take a lot of time for competitors to get approved for.

Gold about to Skyrocket as BAC (NYSE:BAC) Sees QE of $1 Trillion, Goldman (NYSE:GS) - $2 Trillion

A couple of things are working in the favor of gold prices, as they have taken a breather as profits are taken and direction sought concerning the economy and inevitable new round of quantitative easing by the Federal Reserve.

Bank of America sees the Federal Reserve buying $1 trillion in government debt, while Goldman Sachs (NYSE:GS) sees the Fed acquiring $2 trillion in debt.

They are going to do this incrementally most believe in order to keep the shock of how much more they're going into debt hidden from the American people.

The two giant financial institutions see the Fed starting off with $500 billion to begin with, and adding to that throughout the next year. It should all begin sometime right after the Fed meetings on November 2nd and 3rd.

There is no doubt gold prices will soar for the two reasons mentioned above, and when the market understands the quantitative easing fiasco will be implemented in stages, but will still bring possibly trillions more of debt to the nation, it's hard to tell how quickly gold prices will move up as they continue to shatter historical records.

Citigroup (NYSE:C) Sees Strong Headwinds for Hercules Offshore (NASDAQ:HERO)

It appears that Hercules Offshore Inc. (NASDAQ:HERO) will continue to struggle, as Citigroup (NYSE:C) said there are some major headwinds the company faces which will be difficult to overcome until the price of natural gas increases.

Citigroup said they're maintaining their "Hold-Speculative" rating on the company as a result.

“Our $2.40 EV/EBITDA derivation applies a 6.0x EV/EBITDA multiple to our forward-12-month EBITDA of $161 million. The multiple is below the 10.2x peak HERO multiple reached in the most recent downturn and is well above the 1.6x trough reached at the peak of the last upturn. The multiple is based on historical analysis of HERO and relative market multiples and is within the 2.9x–15.6x historical range where the average of offshore driller stocks traded over the past ten years. The median group EV/EBITDA multiple was 7.9x in the most recent cycle,” said Citi.

Citigroup lowered the price target of Hercules significantly, from $3.60 to $2.40. Hercules was at $2.43 a share as of 12:19 PM EDT, gaining $0.05, or 2.10 percent.

BP (NYSE:BP) Watches as Rivals Chevron (NYSE:CVX), Exxon (NYSE:XOM) and Shell (NYSE:RDS-A) Push Ahead in Gulf

All BP (NYSE:BP) can do at this time in the Gulf of Mexico is stand on the sidelines and watch as Chevron (NYSE:CVX), Exxon (NYSE:XOM) and Shell (NYSE:RDS-A) move ahead with their attempts to expand their Gulf presence and gain advantage over their rival.

Major companies can now apply for permits now that the oil moratorium has been lifted in the Gulf, and though technically BP could as well, they know at this time it would be a waste of time and energy, and will focus on cleaning up its image and going through the process of having it determined whether or not they're considered negligent in the matter.

Once that is cleared up, they may feel more free to pursue Gulf permits, which CEO Bob Dudley has implied the company will continue to do, as they have no intention of willingly leaving the Gulf unless forced to.

This will give their competitors a key advantage going forward, and BP will have to weigh that against taking the time to resist in lawsuits and claims which may not be legitimate, but better to settle and get behind them rather than waste precious time.

For now, their competitors have the upper hand in the Gulf and are taking measures to expand that advantage as much as possible.

Pioneer Natural Resources (NYSE:PXD) Production Looks Flat for Full Year

Pioneer Natural Resources (NYSE:PXD) looks like its production will be flat year over year, and UBS (NYSE:UBS) said they're going to maintain their "Neutral" rating on the company, although they did raise their price target.

"PXD reiterated its 4Q production growth target of 10% YoY (guidance range of 115-120 MBoed, or 8.5-13%) driven by accelerating drilling activity in the Spraberry and Eagle Ford, which implies full year production is flat YoY. 2010 capex budget remains $1.2 billion. We’ve fine tuned our 2010-11 EPS/CFPS estimates to $1.65/$9.05 and $2.75/11.45 from $1.70/$9.30 and $2.55/$11.55," UBS said.

Pioneer plunged to $69.90 Wednesday, losing $2.10, or 2.92 percent, although in after hours trading, they had gained all that back as of this writing.

UBS increased their price target on Pioneer from $70 to $73.

BP's (NYSE:BP) Venezuela Assets Priced at $800 Million

According to Venezuela's Oil Minister Rafael Ramirez, the value of assets held by BP (NYSE:BP) in the country which they've been approved to sell to TNK-BP, is $800 million.

TNK-BP is a joint venture between BP and a group of Russian billionaires.

Ramirez said in a press conference, "We authorized the purchase by TNK-BP of BP's stakes ... it is an $800 million transaction that they have agreed. We are going to make all the documents to allow it to happen."

Assets to be sold include Petroperija and Bouqeron fields, which produce light-oil, and Petromonagas, which processes heavy crude into lighter synthetic oil, which is then sent to refineries to be processed again. These projects are majority owned by PDVSA.

BP is selling the assets as part of their effort to raise $30 billion to pay for Gulf liabilities.

National Oilwell Varco (NYSE:NOV) Backlog Looks Strong

National Oilwell Varco (NYSE:NOV) surprised analysts and commentators with their strong backlog outlook for rigs and equipment, and Canaccord Genuity particularly liked it, maintaining their "Buy" on the company on that growing backlog and outperformance in the third quarter.

"New capital equipment orders of $1.18B provided the biggest upside surprise, as two Brazilian floaters and increased global demand for rigs/equipment improved the backlog outlook. For PS&S and Distribution, strong NAM drilling activity and service intensity continue to drive revenue growth and margin expansion. Our Q4 and 2011 EPS estimates are raised to $0.95 and $3.75 respectively."

Others liked the outlook for National Oilwell as well, as they attracted a lot of attention Wednesday, with trading volume almost triple its daily 3-month average.

National closed at $54 even Wednesday, gaining $1.97, or 3.79 percent. Canaccord put a price target of $65 on them.

BP (NYSE:BP) Oil Site Security Zone Ordered by Justice Department

The Justice Department has ordered a security zone to be set up around the site of the BP (NYSE:BP) oil spill to protect against any evidence being lost.

In a statement, the Department of Justice said, "In response to a motion by the US Department of Justice, the US District Court in New Orleans has ordered the establishment of a security zone extending 750 feet in all directions from the mobile offshore drilling unit Deepwater Horizon wreckage site and its debris field.

"The order will be enforced by the United States using the full range of security assets available, including vessels, aircraft or other appropriate means and equipment."

The zone will also extend from the surface to the floor of the sea, in addition to the surface perimeter. The order will last through October 8, 2011 unless it is renewed.

Magnum Hunter (Amex:MHR) Looks Strong on Marcellus, Eagle Ford Trend

Citing Magnum Hunter's (Amex:MHR) significant exposure to Marcellus shale and Eagle Ford trends, Canaccord Genuity maintained a "Buy" rating on them while raising their price target.

Canaccord sees Magnum having a solid 2011.

"We are increasingly constructive on the company’s management team and its relative growth potential in the Eagle Ford and Marcellus trends. In our view, Magnum Hunter is well positioned to outperform based on its leading exposure to the Eagle Ford oil trend and material catalysts (including three initial Eagle Ford well results, Eagle Ford JVs, two initial Marcellus wells, and midstream announcements)," said Canaccord.

Magnum closed Wednesday at $4.76, remaining the same as the prior trading session. Canaccord has a price target of $5.75 on them.

ConocoPhillips (NYSE:COP) Drops on Lower Production in Third Quarter

ConocoPhillips (NYSE:COP) beat earnings estimates for the third quarter but still got punished on lower production, generating questions on future
performance.

For the quarter, earnings per share rose to $1.50, beating Street estimates by 5 cents a share, and doubling last year's earnings in the same quarter.

Earnings for the quarter rose to $3.06 billion, or $2.05 a share. Last year they generated earnings of $1.5 billion, or 97 cents a share.

Lowering costs and higher commodity prices drove the performance for Conoco in the quarter, but lower production could weigh on shares and performance, as there is only so low costs can be lowered, and no guarantees as to prices going forward.

Production would need to rise to build confidence in the future performance of the energy giant.

CEO Jim Mulva commented on the quarterly results, saying, “We had a good
quarter and operated as expected. Our plans to improve returns through
disciplined capital spending, reducing debt and repurchasing shares are on
track.”

As far as natural gas production, that's not necessarily a negative situation, as lower natural gas prices would cause Conoco to decrease margins and earnings.

Oil exploration and production dropped to 1.72 million barrels a day, which is more concerning for shareholders and potential investors.

Revenue for the latest quarter increased to $49.5 billion, beating estimates of $45.59 billion, and the $41.27 billion in revenue last year.

BP (NYSE:BP) Not Clear Yet on Continuing Venture with Iran in North Sea

Unsure of what its requirements are in its joint venture with Iranian Oil Co. U.K. Ltd., BP (NYSE:BP) asking for a ruling and guidance on how to proceed.

The European Union announced sanctions against Iran because of its perceived pursuit of a nuclear policy which includes weapons-grade uranium, that could be made into a potent bomb.

Sanction have been put in place which regulate business in such a way as to not allow the nuclear program of Iran to be supported by European technology in any way.

It seems part of the question is whether or not a business enterprise in general that generates revenue would be considered an aid to the Iranian nuclear program.

BP spokesman Richard Grant, based in Aberdeen, said the situation is "quite complex," and the company wants the joint venture with Iran concerning the Rhum field clarified.

If found to be under the new regulations, production at the project would be halted.

Wednesday, October 27, 2010

Eldorado (NYSE:EGO), Agnico (NYSE:AEM), Kinross (NYSE:KGC) Plunge as Gold Prices Today Fall

Kinross Gold Corporation (NYSE:KGC), Eldorado Gold (NYSE:EGO) and Agnico-Eagle (NYSE:AEM) plunged along with the broader gold market, as mixed economic data and the strength of the U.S. dollar pushed gold prices today down.

Even though expectations the global and US economy is slowing down and a new round of quantitative easing is just around the corner, that didn't keep the dollar down today or the price of gold up, as gold continues to temporarily correct. It should be considered a buying opportunity at this time.

For Kinross, Agnico and Eldorado, they're among the largest gold miner losers today, with their share prices falling more than most.

Agnico is the strongest of these three gold miners mentioned, dropping to $69.85, losing $1.82 or 2.54 percent as of 12:59 PM EDT.

Eldorado has fallen to $16.46 a share, losing $0.71, or 4.14 percent.

Kinross was at $17.02, falling $0.63, or 3.57 percent as of 1:01 PM EDT.

Gold Prices Today Plummet on Stronger US Dollar

Gold prices today have plunged as the US dollar strengthened on mixed economic news.

The stronger dollar has also pushed the price of other metals and commodities down, pressuring natural resources companies in general.

Uncertainty surrounding the inevitable resumption of quantitative easing may be pushing gold prices temporarily down as well, as the idea it may done more incrementally than in huge amounts could weigh on gold temporarily, even though in the long haul quantitative easing will produce the same inflationary results which will ultimately push up the price of gold.

Major gold miners like Barrick Gold (NYSE:ABX), Goldcorp (NYSE:GG) and Newmont Mining (NYSE:NEM) were all down by around 2 percent, with Newmont holding the strongest at just under a 2 percent decline for the day, as of 12:50 PM EDT.

BP (NYSE:BP), Shell (NYSE:RDS-A) Rivalry Heating Up

While all major oil companies have taken shots at BP (NYSE:BP) while they're down, it seems Royal Dutch Shell (NYSE:RDS-A) has been the most vocal and public about slamming the company, creating no love lost between the two European energy giants.

That very reality may be why the two seem to be slugging it out with each other on a consistent basis. Shell is valued at close to $65 billion more than BP since the oil spill slashed the value of the oil giant. BP have been worth more than Shell before the Gulf oil spill, although they were very close in value, as a proposed merger had revealed.

Maybe because of the consequences Shell experienced as an innocent bystander is the impetus behind the growing feud, as they suffered when the Obama administration imposed the misguided oil moratorium in deepwater drilling off the coasts of America, which interfered with their Alaskan project.

Shell has recently went so far as to say BP has misled the public and consumers by positioning themselves in a different light than justified by the realities surrounding the company.

Welcome to the new oil wars.

BP (NYSE:BP), Conoco (NYSE:COP), Exxon (NYSE:XOM), Total (NYSE:TOT), Shell (NYSE:RDS-A), Apache (NYSE:APA) Land North Sea Licenses

Major oil companies like BP PLC (NYSE:BP), Royal Dutch Shell SA (NYSE:RDS-A), ConocoPhillips (NYSE:COP), ExxonMobil Corp. (NYSE:XOM), Total SA (NYSE:TOT) and Apache Corp. (NYSE:APA) were awarded gas and oil licenses by the British government to drill in the North Sea.

According the the government, 83 companies were awarded 144 licenses to drill for oil and gas in over 268 blocks in the region.

Although a lower number of licenses were awarded than the previous round of licensing in 2008, where 192 were offered, another 99 blocks entailing up to 45 licenses will be available after more research is done on them.

Oil production in British waters have dropped by about 5 percent annually since peaking in 1999 at 2.6 million barrels a day. In the next five years, even with an estimated 20 billion barrels of oil equivalent estimated to be left in the North Sea, production is expected to drop to about 1 million barrels a day.

In 2009-2010, 1.36 million barrels a day are being produced in British waters.

Shell (NYSE:RDS-A), Saudi Aramco Venture's Second Phase to take Five Years

A statement from the joint venture between Royal Dutch Shell Plc (NYSE:RDS-A) and Saudi Aramco said the second phase of the exploration for natural gas will take five years to finish.

The exploration is being conducted in the southern Rub Al Khali desert.

Over the first phase of exploration, seven wells had been drilled in the Rub Al Khali region, with "good" results.

South Rub al-Khali Co., or SRAK, started the second phase of exploration on July 26.

“We will be conducting activities that will help us further evaluate the hydrocarbon resources of the greater Kidan area, their distribution and properties,” said SRAK.

Conoco's (NYSE:COP) Partner Karoon Gas Selling South American Assets

ConocoPhillips' (NYSE:COP) partner Karoon Gas Australia Ltd. will reportedly sell 1.03 million shares of its South American assets to raise up to $773 million for the purpose of funding exploration.

The stake equals 31.9 percent of their assets, a little higher than the company was looking to divest of when they revealed the possibility of a sale last month.

Karoon has said they wanted to retain 70 percent to 75 percent of the asset.

Shares of Karoon Petroleo & Gas SA will be priced sometime in November, and will raise a minimum of $621 million.

According to a filing with the Australian stock exchange, the money will be used to fund five exploration projects in Peru and seven in Brazil.

This is also a change in direction from the early part of summer, when Karoon has talked of listing on the Brazilian stock exchange to raise capital.

ConocoPhillips is a partner with Karoon in a gas project off the coast of northwestern Australia.

Chevron (NYSE:CVX) Hires Forensic Accountants to Investigate Gorgon Expenses

Chevron has reported hired forensic accountants to investigate whether contractors working on the $43 billion Gorgon gas project have been overcharging them for their labor.

Even so, Chevron, when queried on rumors they had huge cost overruns and were behind schedule, denied the assertions, and said the project will deliver gas as projected by 2014.

It's unknown if this is a fishing expedition or is based upon going over the hefty contracts, which in a year's time have come to $24 billion in total rewarded to contractors and/or subcontractors.

Alleged increasing costs and labor shortages are also part of the idea the company could be getting shortchanged.

Either Chevron believes there's something to the rumors or they're moving to quench the rumors before they get out of control.

Kodiak Oil & Gas (NYSE:KOG) Getting Coverage from Howard Weil

Kodiak Oil & Gas (NYSE:KOG) has had coverage initiated on them from Howard Weil, and were started off with a "Market Outperform."

Since plummeting to $2.46 on August 31, Kodiak has come back strongly, almost doubling their share price as of the close on Monday.

The closed Monday at $4.55, gaining $0.14, or 3.17 percent on the day.

Howard Weil placed a price target of $5.50 on Kodiak.

Wells (NYSE:WFC) Sees No Quick Fix for Blueknight Energy (OTC:BKEP)

Wells Fargo (NYSE:WFC) changed their rating on Blueknight Energy Partners, L.P. (OTC:BKEP), downgrading them from "Outperform" to "Market Perform," citing no quick fix in the short term for their restructuring.

"We’re downgrading BKEP as terms of the announced restructuring are less attractive than we had forecast. According to our preliminary analysis, the restructuring transaction is unlikely to result in potential unit price upside near term. While we still believe Vitol and new GP owner CharlesBank are likely to grow the partnership over time via organic investments and acquisitions (including dropdowns), near-term upside potential appears limited, in our view. Our model and estimates are being reviewed," said Wells.

Wells lowered their valuation range from $12-14 to $5-8. Blueknight closed Monday at $8.95.

Chevron (NYSE:CVX) Garners a "Buy" Rating from Credit Agricole

Credit Agricole believes Chevron (NYSE:CVX) has a lot more room to move upward since bottoming out for the year in July, dropping to as low as $66.83 at the time.

Chevron has since rebounded to an annual high of $85.24, and closed Monday just below that at $85.15, gaining $0.28, or 0.33 percent.

Credit Agricole initiated coverage on them with a "Buy" rating, and placed a price target of $100 on the energy giant.

Freeport (NYSE:FCX) Outlook Strong on Increased Production, Chino Mine

Freeport-McMoRan (NYSE:FCX) was upgraded by Argus Research, citing the company's guidance on increasing production and the restarting of its Chino mine in New Mexico.

The rating was upgraded because it "reflects the company's decisions to increase production in 2010 and to restart its Chino mine in New Mexico, as well as continued copper purchases from China," said Argus.

Freeport also increased its FY10 earnings per share estimate from $8.03 to $8.29 and its FY11 estimate from $8.89 to $9.37. The Street at this time is looking for FY10 and FY11 earnings per share of $8.09 and $9.25.

Another impressive move by Freeport showing confidence going forward was the almost doubling of its quarterly dividend.

Freeport closed Monday at $98.28, soaring $2.21, or 2.30 percent. Argus has a price target of $113 on them.

Citigroup (NYSE:C) Cautious on Boardwalk Pipeline (NYSE:BWP) Natural Gas Exposure

Although Citigroup (NYSE:C) increased its price target on Boardwalk Pipeline (NYSE:BWP) from $31 to $33, they remain concerned over the natural gas exposure of the company, along with transport.

Citi said, "We remain cautious on BWP's transport and nat gas storage segments. A low nat gas price environment and relatively depressed forward curve do not bode well for regional basis differentials or storage margins. BWP generates 13% of cash flow from storage and 10% of its transport income is interruptible."

Citi maintains a "Hold" on the company.

Boardwalk closed Monday at $33.30, losing $0.32, or 0.95 percent. Trading volume was over three times the 3-month average.

Allied Nevada Gold (Amex:ANV) Upgraded by RBC Capital

Allied Nevada Gold (Amex:ANV) was upgraded by RBC Capital from "Sector Perform" to "Outperform."

Since the latter part of July, when Allied was as low as $15.70 a share, they've rebounded to $24.77, where they closed at on Monday. Trading volume was also over 50 percent higher than the 3-month average of 918,000.

Allied operates in the State of Nevada, with its flagship property being the Hycroft Mine, which includes gold and silver as a byproduct.

Its close at $24.77 was a gain of $1.23 on the day, or 5.32 percent. They have market cap of 2.19 billion.

Tuesday, October 26, 2010

Barrick (NYSE:ABX), Newmont (NYSE:NEM), Agnico (NYSE:AEM) Rise in Afternoon Trading

Major gold miners Barrick Gold Corporation (NYSE:ABX), Agnico-Eagle Mines Limited (NYSE:AEM), Newmont Mining Corporation (NYSE:NEM) have all rebounded into positive territory after 1:00 PM EDT. Goldcorp (NYSE:GG) also closed in on being level, but are having trouble finding supporting in positive territory.

They are moving in conjunction with spot gold prices, which were down earlier in the trading session, but almost level, but still down by about $0.20, coming in at $1,340.10.

Goldcorp is down slightly at $42.59, losing $0.05, or 0.12 percent as of 1:08 PM EDT.

Newmont was at $59.63, gaining $0.26, or 0.44 percent. Barrick Gold has moved up to $46.73, adding $0.20, or 0.43 percent. Agnico moved up to $71.94, or $0.56, gaining 0.78 percent.

BP's (NYSE:BP) TNK-BP Profits Drop 14 Percent

TNK-BP, the joint venture between BP (NYSE:BP) and Russian billionaires, had its profits fall by 14 percent in the third quarter, according to their latest report.

Net profit for the quarter ending September 30 was $1.45 billion, down from the $1.68 billion generated last year. The drop was largely based on the profits garnered from the sale of their oil services unit last year.

Revenue for TNK-BP did increase to $11.40 billion, a boost of 11 percent.

Earnings were $2.56 before interest, taxes, depreciation and amortization, and operating cash flow came in at $3.01 billion.

The company pointed to lower natural gas production as the major reason for the drop in profits, but Chief Financial Officer Jonathan Muir said the oil production at the West Siberian fields was also down by 3.5 percent, and that will probably continue on throughout 2011, Muir added.

BP (NYSE:BP) Paying $20 Million for Seafood Safety and Marketing

Even though test after test concludes the seafood in the Gulf of Mexico is safe, the public in general isn't completely convinced yet, and businesses are hesitant to buy Gulf seafood as they did before the BP (NYSE:BP) oil spill.

To respond to that effect, BP will pay $20 million, to be spent over a 3-year period, to continue testing of the Gulf of Mexico seafood and to let the public know it is safe to eat through marketing efforts.

Florida Agriculture and Consumer Services Commissioner Charles H. Bronson communicated with BP over the issue three months ago, asking for the additional financial help.

Before the oil spill was capped, the original request had been for $59 million from Bronson.

Approximately 5,300 commercial fisherman work the Florida waters.

BP's (NYSE:BP) Well Design Under Fire Again

A day after BP (NYSE:BP) CEO Bob Dudley came out swinging to support and defend the company, competitors from major oil companies - Chevron (NYSE:CVX) and Total SA (NYSE:TOT) - came out and criticized the well design of BP on the Macondo Well, saying wasn't the best for the type of well it was.

Talking to a parliamentary committee in the UK, Richard Cohagan, managing director of Chevron UK, and Roland Festor, managing director of Total's Exploration and Production unit in the UK, said the the design of the Macondo Well wasn't the type that should have been used in a reservoir like Macondo.

This seems to be an ongoing attempt by most major oil companies to say their practices wouldn't have resulted in the explosion and resultant disaster.

Even so, Chevron and Total executives wouldn't commit to saying the design of the well was the cause of the explosion and oil leaking into the Gulf of Mexico.

BP with their internal investigation concluded there was no relationship between the design of the well and the accident. Investigations are ongoing as to the cause of the disaster.

BP (NYSE:BP), Businesses Supporting Those Opposing Climate Change Hoax

A hilarious article in the UK newspaper the Guardian, attempted to lump BP's (NYSE:BP) name in with the Tea Party movement, pollution and big business, as if somehow that should be considered a negative thing.

They particularly are going into hysterics over what they attempt to smear the entire group as climate change deniers, as if that carries any weight when the theory has already been completely debunked as the hoax and false "science" it is.

So evidently the fact that businesses are supporting some candidates who agree with those understanding the false science behind the climate change hoax is a negative outcome, is ludicrous.

It's funny to see them almost foaming at the mouth as they see businesses and individuals from socialist Europe backing solid American candidates who know and understand the reasons behind the climate change lies and the attempt to extend global governance over Americans, while stealing their money through draconian global tax laws.

While companies gave to other candidates as well, the outrage is over the fact that more was given to those who oppose their agenda than those who back it.

This was all written under the guise of a cloak and dagger operation when it was out there in the open for everyone to see.

Good things those more friendly to business, the free market and freedom in general are getting the majority of the funding. Good thing for BP as well to bravely participate.

BP (NYSE:BP) CEO Points to the Positive of Company and Oil Spill

Speaking to a group of British businessmen, BP (NYSE:BP) CEO Bob Dudley began his initial steps to restore and repair the reputation of the company.

He has made safety the initial primary focus of his tenure at the company, making it the key metric for bonuses in the short term, while working on developing even better best practices in the area.

Dudley did point to some of the good things the company has already done:

"The first thing to say is that we have stopped the leak and made huge progress in cleaning up the spill.

"Second, our containment and clean-up efforts have gotten results.

"Third, we are meeting our commitments as a responsible party of this accident."

Finally, one of things several large energy companies have also said, including Dudley and BP, is they now have to be much more selective in their choice of third parties and manage the process and work much more closely.

JPMorgan (NYSE:JPM) Launches Coverage on Cenovus (NYSE:CVE), Nexen (NYSE:NXY), Talisman (NYSE:TLM), Canadian Natural Resources (NYSE:CNQ) and Suncor (

JPMorgan took aim at companies with strong exposure to the Canadian oil sands in Alberta, with analyst Katherine Minyard initiating coverage on Cenovus Energy (NYSE:CVE), Nexen (NYSE:NXY), Talisman Energy NYSE:TLM), Canadian Natural Resources (NYSE:CNQ), Suncor Energy (NYSE:SU) and Husky Energy (TSE:HSE).

She started off Cenovus Energy, Nexen, and Talisman Energy with "Overweight" ratings. Canadian Natural Resources and Suncor Energy with "Neutral" ratings, and Husky Energy with an "Underweight" rating.

“We believe depth of resource base, production growth visibility and exposure to an increasingly important source of global oil supply make for an attractive value proposition in oil sands-rich Canadian oils,” Minyard said in a note to clients.

Minyard concedes her outlook on the sector is based on the ongoing support underlying oil prices. If they were to drop, the scenario for the above-mentioned companies in the short term could change significantly.

She concluded, “Although our near- and long-term oil price modeling assumptions do not call for prices to differ significantly from the current $81/barrel, significant or sustained weakness in the oil price would likely pressure share prices.”

BP (NYSE:BP) CEO Says Oil Spill Had Positive Effect on Advancing Safety in Industry

Speaking at an event for the first time since taking the reins of BP (NYSE:BP), CEO Bob Dudley covered a lot of topics in a talk Britain, including finding the positive in the negative Gulf oil spill event.

Dudley said, "A silver lining of the event is the significant and sustained advance in industry preparedness that will now exist going forward, [including] the learnings and the equipment and techniques invested by necessity under pressure to contain the oil and stop the well."

The CEO added media hysteria almost caused the company to fail because extraordinary and exaggerated claims, such as the oil ultimately going to reach Europe.

It barely stayed in the Gulf region after the Gulf cleansed itself of the vast majority of the oil spill quickly.

Concerning continuing to drill in the Gulf, Dudley said "It can be done safely."

BP is the largest oil and gas producer in the Gulf of Mexico.

Wells Fargo (NYSE:WFC) Initiates Coverage on Key Energy (NYSE:KEG), Oceaneering (NYSE:OII), Drill-Quip (Nasdaq:DRQ), National Oilwell (NYSE:NOV)

A number of financial institutions launched coverage on a number of energy companies, and Wells Fargo (NYSE:WFC) initiated coverage on Key Energy Services, Inc (NYSE:KEG), Oceaneering International, Inc. (NYSE:OII), Drill-Quip, Inc. (Nasdaq:DRQ) and National Oilwell Varco, Inc. (NYSE:NOV).

On Key Energy Services, which Wells started off with a "Market Perform," they said, "We like KEG's transformation strategy and initial focus on heavy duty, workover rigs, and large-diameter, coiled tubing units. Legacy U.S. rigs should benefit from a 10%+ rise in flowing oil wells over the next 18 months. Finally, it's pushing into new foreign markets, like Colombia and MENA. But, it's pricing in credit for much of this and, before considering higher multiples, we'd prefer to see more results."

They have a valuation range of $10.70 to $11.25 on Key Energy.

On National Oilwell Varco, they were started with an "Outperform" by Wells.

They said, "NOV's narrative has shifted from one plotline--the global rig construction boom - to several, some underappreciated in our view. While an encore of the '05-08 frenzy is unlikely, newbuilding has strong, secular drivers across asset types that are spurring a pick-up, with PetrobrĂ¡s about to move on its first 9 floaters, and U.S. contractors regrowing shale-oriented fleets; and should ensure an ongoing, healthy flow. But, NOV also 1) is the best positioned in the rig equipment aftermarket; 2) has grown its exposure to FPSOs; 3) should make more $500MM+ acquisitions."

A valuation of $63.00 to $65.00 was placed on them.

Drill-Quip, Inc. was started off with a "Market Perform" rating.

Wells said about them, "The purest, deepwater capital equipment play, DRQ is a well run manufacturer that, over a 2011-12 expected upturn in floater activity, should generate highly competitive earnings growth and returns. Beyond 2012, it's well positioned for Petrobras' planned 20+ newbuilds, and continued, general secular growth. DRQ's valuation premium is warranted and largely reflects its appeal as takeover target. However, we presently find the stock fairly valued and await a better entry point."

A valuation range of $66.00 to $71.00 was placed on them by Wells.

Oceaneering Int'l was launched with an "Outperform by Wells Fargo.

"OII offers compelling risk-reward. We think potential variance to its expected U.S. Gulf of Mexico earnings is skewed to the upside. Globally, the floater fleet should expand by 61 new units and shift towards a more equal balance between exploration and development. Both factors should fuel ROVs and Subsea Products growth. Finally, OII should use its ample fire power continue to return cash, most likely via share repurchases, and make accretive, if likely tiny, acquisitions."

A valuation range of $63.00 to $66.00 was appointed by Wells on Oceanering.

Marathon (NYSE:MRI), Holly (NYSE:HOC) Upgraded to "Buy" on Strong Refinery Margins

While Deutsche Bank (NYSE:DB) believes the refining industry needs to be shrunk in the U.S., there is good news for companies like Marathon (NYSE:MRI) and Holly (NYSE:HOC) serving in that capacity, as margins are up and earnings will follow as a result.

Both companies were upgraded to "Buy" on enhanced margins.

Deutsche Bank said, "Demand is weak and expected to never attain its previous peaks; but more refining capacity has been added. The need is to retire refineries, a slow and painful aging process for a twilight industry. However in this note we list the many positive factors that have driven US refining margins, particularly in the MidCon, towards the upper end of the 2000-2010 range. Long MidCon: Raise Marathon to BUY, Holly to BUY, re-iterate ConocoPhillips (NYSE:COP) BUY, Frontier (NYSE:FTO) BUY, CVR Energy (NYSE:CVI) BUY."

It seems Deutsche is wrong concerning oil refinery capacity, which has caused problems in the past in the U.S. when a number of them were shut down.

BP (NYSE:BP) Committed to Drilling in Gulf, Says CEO Dudley

With the selling of four deepwater oil and gas fields in to a Japanese group Monday, the question was put forth on whether or not BP (NYSE:BP) was going to remain in the Gulf.

BP's CEO Bod Dudley put that question to rest, reaffirming the commitment of the company to remain drilling in the Gulf.

Some media outlets were evidently ignorant of the fact that many of the assets BP is selling are non-core assets, and these Gulf assets are included in the bunch, as they came with an investment of other assets, which BP said the four fields were never going to remain part of the company, whether the oil spill had happened or not.

The question was meaningless, as part of the strategy of BP, if they're allowed to go forward with it, is to grow a significant portion of their business through North American assets, with a lot of that being the Gulf of Mexico.

Monday, October 25, 2010

BP (NYSE:BP), Deepwater Drilling Will Remain in Gulf, and Everywhere

For those of you with any delusions about drilling for oil in the Gulf of Mexico being cut back in response to the BP (NYSE:BP) oil spill, you may as well forget that, as not only will BP remain drilling in the Gulf (unless by order from the government), but they'll continue to grow, as well as other oil companies as well.

The demand and need for oil isn't going away, and the future of oil drilling and production for the foreseeable future is in deep waters around the world.

Just in the last couple of months deal after deal has been announced for new offshore deepwater drilling projects around the world.

The fantasy of so-called "clean energy" is just that. It is so ridiculously far off as far as enough energy produced and being affordable, that if oil were to be cut back on, it would devastate the economies of the world.

Even the alleged benefit of the wind turbines are devastating to birds and bats, which are slaughtered from just one windmill graveyard than the entirety of the Gulf oil spill of BP. You don't hear much about that slaughter in the press.

Again, the costs are also enormous, as well as other clean energy sources, which will evidently be available and affordable to the elites and wealthy in the future, but not the middle class or poor, who couldn't come close to affording it.

Natural gas is extremely abundant, but at this time so inexpensive companies can't produce it at a profit. Most are gravitating themselves toward oil until that changes, which will be a long time.

Contrary to the alleged peak oil myth, there are still tons of areas around the globe that haven't even been explored for oil yet, and it's going to continue to expand and enlarge because of that strong demand.

Brazil has proven there are tens of billions of oil still locked away under the ocean, with some recent discoveries estimated to be at close to 100 billion barrels combined, and they're just getting started.

Deepwater drilling and oil demand will continue for decades and longer, and unless demand changes, nothing can be done to stop it.

BP (NYSE:BP) Takeover Speculation and the Dividend

Mounting pressure on BP's (NYSE:BP) Bob Dudley to reinstate the dividend says something about the way shareholders view the company, and if they believe the management has confidence going forward.

Continuing speculation the company could be ripe for a takeover isn't without some justification, as numerous elements remain in place that haven't been resolved, and make it difficult, if not impossible, to bring the dividend back.

From the point of view of BP shareholders, they can't understand the numerous variables involved in the underlying reasons behind decision-making at BP, but one thing almost all shareholders understand, no matter what company of sector they're in, is if they increase the dividend or have a dividend, the company has confidence in its future prospects.

For that reason, if BP is able to, they will reinstate the dividend as soon as possible. If not, they could be announcing to their shareholders and competitors they're on the auction block.

In the near future, shareholders don't have to understand the complexities surrounding the fallout coming from the Gulf disaster, all they have to do is wait to see if the dividend is reinstated.

If it isn't, BP is saying through their action, or rather, non-action, they have no confidence at the time for the prospects of the company. If they do that for too many quarters, shareholders will start to flee the company, especially large institutional investors, and BP will have little, if any, defense against being taken over by a larger rival.

The only other option would probably be to split the company up.

Shareholders are getting impatient, and CEO Bob Dudley, and the board of directors, if at all possible, need to get the dividend reinstated asap.

BP (NYSE:BP) Shares Hurt by Moratorium

Being the largest energy company operating in the Gulf of Mexico, BP (NYSE:BP) was hit hard by the oil drilling moratorium imposed by the Obama administration. Their next quarter will reflect that with lower revenue and earnings.

Expectations for the performance of BP for the last quarter are being lowered, as it looks like they'll be generating a profit of $4.8 billion, down from $5.4 billion in profits last year in the same quarter.

This will be measured against BP's peers, who are expected to have improved quarters, and which will put the pressure on new CEO Bob Dudley to do something to improve the performance of the company and reinstate the dividend.

Most industry observers say if BP doesn't reinstate the dividend soon, they will probably incur a loss of major shareholders like pension funds who have held onto their shares in light of hopes of the dividend being instated soon; the only reason they invest in BP in the first place.

BP has historically paid out more than their competitors in dividends.

BP will report their earnings on November 2.

BP (NYSE:BP) Sells Gulf Assets to Japan's Marubeni

BP (NYSE:BP) to divest of non-core assets to raise capital to pay for its mounting liabilities from the Deepwater Horizon oil spill in the Gulf of Mexico.

This time the oil giant has sold four fields in deepwater areas in the Gulf of Mexico to Marubeni of Japan, for $650 million. This will bring the total amount raised through selling of assets to over $12 billion. BP wants to raise about $30 billion overall to cover itself for existing and potential liabilities.

The specific fields sold are the Merganser, Magnolia, Nansen and Zia fields, which combined produce about 15,000 barrels of oil equivalent per day of oil and gas.

Evidently, BP would have sold these assets whether or not they oil spill happened: "When BP acquired Devon's Gulf of Mexico assets it was clear that these four fields did not fit well with the rest of our business in the region," said Andy Hopwood, vice president for Strategy and Integration.

The deal is expected to close in the early part of 2011.

BP (NYSE:BP) Needs These 5 Things to Happen to Resume Growth

Although there have been some foreign deals forged and implemented by BP (NYSE:BP), which is good news for them and their shareholders, they're still, for the most part, in a holding mold until four major things are handled and resolved.

Only one of the four things needed to be done are under the direct control of BP, and that is the divesting of parts of the company to raise capital to pay for liabilities associated with the Gulf of Mexico oil spill.

The other three things that need to happen are the completed examination of the blowout preventer, determination of whether or not they are found in gross negligence over the accident, and how much, if any, shared liability with partners they'll participate in.

The last thing, which will be mostly determined by the four mentioned above, is the reinstatement of the dividend by BP.

As far as the blowout preventer, that will probably take longer than the rest, and is just starting the process of examination. It's important in whether or not Cameron International, which developed it, will be liable for part of the costs of the spill.

In the largest liability remaining to be determined, BP is awaiting the decision on whether or not they're going to be designated as being grossly negligent in the ordeal. If they are, it could cost them over $17 billion more in fines, above and beyond all existing and future payouts.

That also is connected to the next element, which is shared liability. If they aren't found grossly negligent, their partners in the Macondo well: Anadarko (NYSE:APC) and MOEX, via their majority owned Mitsui (Nasdaq:MITSY), would have to pay out some significant capital for their part in the failure.

Selling of their assets, as mentioned, is under the control of BP, and that will give shareholders and potential investors more confidence in the company, which would ultimately be crowned with the reinstatement of their dividend, which mounting pressure is being asserted on the company to do.

If and when all these happened and/or are concluded, we'll see a much clearer picture of the future of BP, which remains tenuous at best.

Depending on the outcomes of the mentioned events that need to happen, will determine whether BP will be split up or taken over by a larger competitor, or continue on as a leaner but competitive energy firm.

Pressure Rising to Restore BP's (NYSE:BP) Dividend

BP (NYSE:BP) CEO Bob Dudley is under increasing pressure to restore the dividend of BP, as rivals increase their margin of growth over the oil giant.

This of course must include the increase of the share price of BP in the aftermath of the Gulf oil spill, and the remaining uncertainties as to the level of liability BP will face.

The major unknown continues to be whether BP will be designated as being grossly negligent in the circumstances. At stake is billions in liability.

One major reason for the pressure to restore the dividend is to call the bluff of the company at to their confidence going forward. A dividend is one of those elements confirming the confidence of management concerning the future of a company.

If the dividend isn't restored, shareholders will probably flee the company, opening them up to being taken over, as some rumors have already been circulating about.

BP's (NYSE:BP) CEO Bod Dudley Blasts Media's Culture of Fear

While BP (NYSE:BP) chief executive officer Bob Dudley has taken responsibility for mistakes made by the company and the unfortunate consequences resulting from them, at the same time he has blasted the media for its jumping to conclusions far before the facts came in surrounding the incident.

Speaking at an annual conference held by CBI in Britain, Dudley said, "A great rush to judgment by a fair number of observers before the full facts could possibly be known, even from some in our industry.

"I watched graphic projections of oil swirling around the gulf, around Florida, across and around Bermuda to England - these appeared authoritative and inevitable. The public fear was everywhere."

Dudley called it a climate of fear which was created by the media.

Responding to criticism of BP's practices from major competitors like Shell (NYSE:RDS-A), Exxon (NYSE:XOM) and Chevron (NYSE:CVX), Dudley said BP's practices are how the general industry operates, and not specific to BP alone.

Their rivals have contradicted that conclusion, saying they wouldn't have drilled in the way BP had.

Gulf Fisherman Deserve BP (NYSE:BP) Money, Insurance Money?

An unfortunate scenario is playing out from the BP (NYSE:BP) oil spill, as dubious claims by Fisherman and fish processors contradict one another.

First, honest fisherman and research confirm fishing is as good as it has ever been because of the low fishing pressure because of part of the Gulf being closed to commercial fishing. That has resulted in more and bigger fish.

Tests from investigators have found virtually no taint in seafood from the Gulf.

But fisherman seeking to get insurance benefits are hurting seafood distributors by making claims that the oil spill was a disaster for them, when as measured by tainted food, is a completely false statement.

As far as having fishing waters closed, that's a legitimate claim, but continuing to paint a narrative of tainted fish and seafood is an outright lie.

Those suffering from that false narrative are the food processors, who now have to fight the story put forth by some fisherman in order to convince consumers food from the area is edible and safe.

Why some fisherman are allowed to continue to make their assertions is puzzling.

Exxon Mobil (NYSE:XOM) Now Covered by Standpoint Research

Standpoint Research has launched coverage on Exxon Mobil (NYSE:XOM), starting the energy giant off with a "Buy" rating.

Exxon has struggled over the last 12 months, dropping below $57 at its low point in July, but rebounding from then on.

On Friday they closed at $66.34, gaining $0.02, or 0.03 percent. Standpoint has a price target of $78 on the oil giant.

Exxon has a market cap of approximately $337.79 billion.

GeoResources (Nasdaq:GEOI), REX Energy (Nasdaq:REXX) Now Covered by BMO Capital

BMO Capital announced it is initiating coverage on GeoResources (Nasdaq:GEOI) and REX Energy (Nasdaq:REXX), starting them both off with a "Market Perform" rating.

Rex Energy operates in the Illinois Basin and the Appalachian Basin as an independent oil and gas company.

GeoResources, Inc. is also an independent oil and gas company, operating primarily in Louisiana, Texas, North Dakota, Colorado, Oklahoma and Montana.

GeoResources closed Friday at $17.09, gaining $0.08, or 0.47 percent. Geo has a market cap of $337.07 million. Rex closed at $12.71, dropping $0.15, losing 1.17 percent. They have a market cap of about $560 million.

BP (NYSE:BP) Money Wasted on Louisiana Sand Berms

Evidently in an effort to use up all the money provided by BP (NYSE:BP) to construct sand berms in Louisiana, the government continues to have them built with little value to the state, as the oil is for the most part gone from the Gulf.

This is probably an attempt to keep people working, but it still doesn't make much sense whatever way you look at it.

Berms are used to protect coastlines from oil reaching them. They are basically miniature sand islands lying low in the water. BP paid $360 million to build the berms.

According to experts, the any oil left in the Gulf is widely dispersed, making berms basically useless.

Of course these "experts" don't want to have the money given back to BP, but used on other projects. Since when was money supplied by BP to be used as if it was taxes collected from citizens which could be applied to whatever the government wanted it to be?

Some of the so-called experts are from universities, which explains a lot, as they are greedily eyeing the money for their own pet projects, which is where most of the major criticism is coming from.

Louisiana officials are asserting the threat of oil staining the shores of Louisiana are still there, but that's highly unlikely.

Like any government entity, once they get the money they'll keep on using it till it runs out no matter how wasteful their actions are.

BP (NYSE:BP): More Fishing Waters Opened in Gulf

Now that NOAA reopened another 7,000 square miles of Gulf of Mexico fishing waters, 96 percent of all waters are opened to be fished in, with only the immediate area around the formerly leaking Macondo oil well, which accounts for the 4 percent of the waters still closed, remaining off limits to fisherman.

The newly reopened waters are about 60 miles east of the Macondo well location.

Exhaustive testing of 155 finfish in the area, including chemical analysis and smell tests, found no taint of oil or oil dispersants.

Fish are resilient, and if they ever did contact oil, they are able to process it within a two-day period, according to scientists at NOAA and FDA.

Other testing continuing to be done is in processing plants around the Gulf coast region and shallow-water areas around docks.

Newfield Exploration (NYSE:NFX) Maximizing Returns on Asset Base

Newfield Exploration Company (NYSE:NFX) had its "Outperform" rating maintained on them by FBR Capital, citing a deep and diverse asset base.

FBR said, "Recognition of depth and diversity of asset base allowing capital allocation flexibility, and thus maximization of returns, has been well rewarded, allowing the stock to appreciate 18% during the third quarter compared to an average 8% for the peer group. Future absolute and relative outperformance/multiple expansion, successful Alberta Basin Bakken and Eagle Ford drilling and/or evidence of ability to pull forward cash flows faster (further acceleration in Monument Butte, Bakken, or other) than currently modeled is needed."

Newfield closed Friday at $59.11, gaining $0.20, or 0.34 percent. FBR raised the price target on Newfield from $65 to $72.

BP (NYSE:BP), Chevron (NYSE:CVX), Transocean (NYSE:RIG), Exxon (NYSE:XOM), Conoco (NYSE:COP), Shell (NYSE:RDS-A), Diamond (NYSE:DO), Hercules (Nasdaq:HERO) Have 100s of Wells Waiting for Approval in Gulf

Although BOEMRE director Michael Bromwich has said ther are only 10 new wells waiting for permits in the Gulf of Mexico, companies like BP (NYSE:BP), Chevron (NYSE:CVX), Transocean (NYSE:RIG), Exxon (NYSE:XOM), Conoco (NYSE:COP), Shell (NYSE:RDS-A), Diamond (NYSE:DO) and Hercules (Nasdaq:HERO) in fact have hundreds of wells waiting to be approved.

The disingenuous figures put forth by Bromwich are so small because hundreds of wells haven't been approved to enter into the permitting process.

There are 69 exploration and development plans are backlogged, just sitting there awaiting action, with each one including three to five wells, according to senior vice president and general counsel of Hercules, James W. Noe. And that was as of August 17. Since then no figures have been released, suggesting far more waiting to have decisions made.

Since the moratorium was lifted on October 12, there have only been six permits approved by the Bureau of Ocean Energy Management, Regulation and

Enforcement, and those were only in shallow-water areas, not the deepwater sections which allegedly have had the moratorium lifted.

I say allegedly because the regulations and permits are effectively having the same results as if a moratorium were still in place for deepwater drilling.

BHP (NYSE:BHP) Spending $900 Million on Gas and Oil Exploration in Fiscal Year

In their fiscal year ending June 2011, BHP Billiton Ltd. (NYSE:BHP) said they plan on spending a record $900 million in oil and gas exploration.

The 2010 fiscal year exploration budget of BHP was $817 million. Spending in the quarter ending September 30 was only $74 million, as the bulk of the spending will occur in the second half of their fiscal year.

On the company website, BHP says their primary gas and oil exploration focus going forward will be the Gulf of Mexico, Australia, Canada, the Falklands and Malaysia.

Even with Gulf operations being slowed by the Obama administration moratorium, BHP still sees results being in line with 2010's.

Overall production for last year increased by 15 percent to 158.6 million barrels.

Precision Drilling (NYSE:PDS) Outlook Positive Says Canaccord

After reporting their quarterly results, Precision Drilling (NYSE:PDS) maintained their "Buy" rating from Canaccord Genuity.

Rob McNally, Executive Vice President and Chief Financial Officer, said on the conference call:

"Precision had a very solid quarter. We reported net earnings of $61 million or $0.21 per diluted share on revenues of $359 million for the third quarter. These results do include an $18 million foreign exchange gain which equates to about $0.05 per share relating to our debt being primarily US dollar denominated.

"Our Q3 2010 EBITDA was $113 million, which represents a 31% increase over the $86 million achieved in the third quarter of 2009. The improved third quarter results primarily reflect increased utilization. Activity levels have increased meaningfully with the continuation of positive momentum building from the beginning of the year."

Canaccord said, "We reiterate our rating and target price (based on 6.0x 2011E EV/EBITDA) following PD’s in-line Q3 results; our thesis remains intact as the company has a large mix of high-performance rigs and enjoys geographic diversity across North America. The company also continues to benefit from increasing oil and liquids-rich drilling, pricing traction starting to take in Canada, and moving forward with its new build programs."

Precision closed Friday at $7.76, gaining $0.21, or 2.78 percent. Canaccord has a price target of C$10 on them.

Kinross (NYSE:KGC) JV Partner Millrock Resources (TSE:MRO) Releases Council Gold Results

Drilling results by Kinross Gold's (NYSE:KGC) joint venture partner Millrock Resources (TSE:MRO) from its Council gold project in Western Alaska have been released by the company.

Millrock's report:

"At Albion, 2,062m of reverse circulation drilling in 17 holes was completed. Two holes, CNL1013 and CNL1014, intersected more than 1 g/t gold mineralization, confirming bedrock mineralization at the site. Hole CNL 1013 returned 4.6 metres at 1.4g/t gold, and hole CNL 1014 intersected 9.1 metres at 1.02 g/t gold."

Millrock said the best results of the 1990 soil samples take was 344 ppb, from the ground between the northwest-striking 900m by 2000m Albion geochemical anomaly.

"The new survey results join the Albion and northern anomaly areas along a previously undefined, northeast trend consisting of anomalous gold and pathfinder elements. The total length of this new trend is 3800m," said Millrock.

Along with eight gold-copper properties in Alaska, Millrock also has three porphyry copper prospects in Arizona.

Harmony (NYSE:HMY), Newcrest (OTC:NCMGY) Wafi-Golpu Project Resources Double Original Estimates

Harmony Gold Mining Co. (NYSE:HMY) and Newcrest Mining (OTC:NCMGY) are about to start their $150 million prefeasibility study at the Wafi-Golpu copper-gold project in Papua New Guinea.

According to Harmony Chief Executive Officer Graham Briggs, the mine may contain almost double the previous copper and gold resources estimated at the project.

Wafi-Golpu may have as much as 30 million ounces of gold and 8 million metric tons of copper.

So far it appears we have found “another high-quality, world-class operation in Papua New Guinea,” asserted Briggs.

Cost to construct the mine could be as high as $3 billion. The prefeasibility study should be completed by the early part of 2012.

Part of the strategy for Harmony for Wafi is to move away from the volatile and unpredictable South African market, where the ruling socialists are pushing to nationalize the mining industry.

The business-friendly Papua New Guinea is “rapidly being seen as a significant and welcoming gold region,” said Harmony in a recent statement.

They and Newcrest are also looking to increase production at their Hidden Valley mine. Gold production is expected to increase to 250,000 ounces and silver to 3.5 million ounces annually.

Wells Fargo (NYSE:WFC) Says Whiting Petroleum (NYSE:WLL) Reaches Upside Limits

Whiting Petroleum (NYSE:WLL) was downgraded by Wells Fargo (NYSE:WFC), citing most of the upside is priced into the share price. They were downgraded from "Outperform" to "Market Perform."

Wells said, "With success at Sanish and now initial success at Lewis and Clark, WLL has executed and erased Bakken inventory concerns. Given, YTD outperformance, much of the upside is already priced into shares, in our opinion and we believe risk/reward is now neutral."

The valuation range was also lowered from $105-$110 to $100-$110.

Whiting closed Friday at $100.97, dropping $0.51, or 0.50 percent.

AngloGold Ashanti (NYSE:AU) Upgraded by HSBC

AngloGold Ashanti (NYSE:AU) has been fairly resilient in the wake of the gold correction, and were upgraded by HSBC from "Neutral" to "Overweight."

They've dropped a little, but will rebound extremely quickly as gold prices jump again after taking a temporary breather.

Gold prices started back in the positive slowly Friday, and AngloGold moved in unison with them.

AngloGold closed Friday at $45.89. gaining $0.38, or 0.83 percent. HSBC has a price target of $58 on them, increasing it from $46.

Petrobras (NYSE:PBR) Upgraded on Falling Share Price

After dropping 13 percent since early October, and 31 percent on the year, Petrobras (NYSE:PBR) has been out of favor with investors, enduring many downgrades as their debt load continues to be formidable with more on the horizon.

Petrobras has recently stated they may have to borrow another $60 billion over the next five years as well.

Believing they've bottomed out, UBS (NYSE:UBS) upgraded the Brazilian oil giant, citing the fall in price. That "warrants an upgrade" said UBS. They were raised from "Sell" to "Neutral."

The upcoming election in Brazil is important as it relates to Petrobras and potential investors. If the preferred candidate of president Luiz Inacio Lula da Silva, Dilma Rousseff, wins, it would be considered bad for the company as far as offering returns to investors, as there is sure to be much more spending by the government's mandate, which would push returns down.

On the other hand, a win by opposition leader Jose Serra, considered more centrist than Rousseff, would be better for the company and shareholders. Unfortunately, it seems the favorite is Rousseff at this time. The election will be held on October 31.

Petrobras is controlled by the Brazilian state, and so who is heading the country has an immediate impact on the oil giant.

Another challenge for them is the recent announcement they are going to fall short of its production goal of 2.1 million barrels of oil a day. Coupled with the large debt load, it doesn't look good for those who could get better returns elsewhere.

BP (NYSE:BP), Chevron (NYSE:CVX), Conoco (NYSE:COP), Exxon (NYSE:XOM) Met with Ken Salazar on Safety Issues

BP (NYSE:BP), Chevron (NYSE:CVX), Conoco (NYSE:COP) and Exxon (NYSE:XOM) met recently with Interior Secretary Ken Salazar and Michael Bromwich, among others, over creation of new organization to improve safety measures in the industry through the establishment of best practices guidelines and new technologies related to the industry.

The new entity would be called the Ocean Energy Safety Institute, and would include the Coast Guard, regulators and industry representatives. The technological side would include using funds to do research and develop certain technologies to help the industry.

Interior spokeswoman Kendra Barkoff said about the meeting, “Secretary Salazar, Deputy Secretary David Hayes and Director Bromwich met with industry representatives today to discuss strategies for further developing and making available blowout containment capabilities moving forward.”

Some talk about whether or not the government will help fund the initiative has started, and in our view this shouldn't be something taxpayers should have to pay for.

Let the industry pay for things that could help improve operational safety, led by those that understand what's needed and the stakes at risk.

Other than ensuring compliance, the government should have no other role in the matter.

As far as proposed taxes on the industry, that wasn't included in the discussions, but that as well needs to be dropped so American consumers aren't hit with increased energy costs, which is what the outcome of more taxes would be.

When the government taxes any industry, it's the people who end up paying for it with higher costs.

Friday, October 22, 2010

Government Corruption Caused BP (NYSE:BP) Oil Spill, Testimony

The recent testimony of William Reilly of the National Committee on the BP Deepwater Horizon, asserted the BP (NYSE:BP) oil spill from the explosion on the Deepwater Horizon oil rig was caused by government corruption, rather than simply being an accident.

Reilly blamed the "accident" on the government and its regulatory agencies like MMS refusing to enforce or implement basic safety practices and measures.

Reilly said, “We have found that the industry has distorted and impeded effective rule making and prevented rules from being made.”

In other words, Reilly claims the government and industry are working together against safe drilling.

“The regulatory and inspection process has been subject to political and industry pressure. The industry has successfully sought congressional intervention to prevent implementation of mms rule making,” concluded Reilly.

As long as lawmakers and the oil industry are in bed together, safety issues will not be properly addressed and more oil spills could happen in the future in the Gulf of Mexico, according to Reilly.

BP’s (NYSE:BP) Azerbaijan Gas Venture Won't be Sanctioned by EU

Plans to sanction Iran for their ongoing pursuit of expanding their nuclear program, won't include the gas venture of BP (NYSE:BP) with Azerbaijan.

Why it's even an issue is the Iranian government has a stake in the project.

The unnamed source said the Shah Deniz gas field in Azerbaijan won't be sanctioned. An official announcement will reportedly be made on October 26.

Technology from Europe used in the project won't be allowed to be exported to Iran, according to the source.

The project is part of Europe's initiative to move away from too much reliance on natural gas supply from Russia.

Other industries being sanctioned in Iran besides energy are shipping firms and banks.

BP (NYSE:BP) Begins Restart of Texas City Refinery Resid Hydrotreater

The process of restarting their resid hydrotreater unit train 400 by BP (NYSE:BP) at their Texas City refinery started Friday, as the company had shut it down for maintenance purposes.

Resid is heavy crude oil which is processed into lighter streams by the hydrotreater unit.

The restart began at 6 PM EDT, and should be completed by that time on October 29.

The troubled refinery is able to process up to 456,000 barrels of crude oil daily.

BP (NYSE:BP) and Electric Car Chargers a Waste of Time

In an attempt to appease radical environmentalists, BP (NYSE:BP) ignorantly has decided to put electric car charges in 45 of its BP and ARCO stations.

One thing BP needs to learn is this is a form of extortion and once they do it, the environmentalists will continue to attack the company because of their warped ideology.

This is a belief system by many extreme environmentalists, and not just a concern about conservation and responsibility.

What a waste of money in reference to electric cars and chargers, which is nothing more than throwing money down a whole.

BP is partaking in what is called ECOtality's EV Project, which has a goal of have 15,000 of ECOtality's Blink electric vehicle DC Fast Chargers installed across six states eventually.

BP spokesman Kevin Phelan, vice president of sales and marketing for BP, said, "We understand the importance of finding future energy solutions and this pilot allows us to test EV charging technology, gather real-world data and learn about how motorists use and charge electric vehicles."

BP (NYSE:BP) Vietnam Assets Draw Interest of PetroVietnam

According to Vietnam News, state-owned PetroVietnam may be interested in acquiring the assets held in the company by BP (NYSE:BP), rather than allow the deal to go through where TNK-BP agreed to buy the assets for about $1 billion.

TNK-BP is a joint venture between BP and a group of Russian billionaires.

Via a preemption clause, PetroVietnam will have 60 days to decide whether or not it wants to acquire the stake BP holds. The countdown to consider that started on October 19.

Vietnam News cited PetroVietnam CEO Phung Dinh Thuc as showing some interest in possibly buying the assets.

Included in the assets are a power plant, gas pipeline and an offshore gas block.

BP (NYSE:BP) Acquires Cargoes from Conoco (NYSE:COP), Trafigura Beheer BV

BP (NYSE:BP) bought two cargoes, each one including 150,000 barrels of gasoil. The gasoil, which has 10 parts per million of sulfur, will be loading from November 11 to November 15.

Cost for the cargo was $2.10 a barrel premium against prices of gasoil with 0.5 percent sulfur.

BP acquired one cargo from ConocoPhillips (NYSE:COP) and the other from Trafigura Beheer BV.

After oil prices rose this week, the Asian gasoil crack, which is how the processing profit is measured when converting Dubai crude into fuel, dropped.

Citigroup (NYSE:C) Lands Energy Investment Team of UBS AG (NYSE:UBS)

The energy investment team from UBS AG (NYSE:UBS) has left the company en masse to join Citigroup (NYSE:C), citing concerns over future compensation from the financial institution.

Stephen Trauber, the head of UBS’ energy investment unit, and senior directors Jerry Schretter, Joel Foote II, Sam Pitts and Michael Jamieson are those who left the bank.

UBS AG spokesman Doug Morris commenting on the departure said, “UBS is firmly committed to serving its energy clients and remaining very active in the sector.”

UBS closed at $18.10 Thursday, dropping $0.11, or 0.60 percent.

Will Diamond Offshore (NYSE:DO) and Noble (NYSE:NE) Halliburton (NYSE:HAL) and Weatherford (NYSE:WFT) Rebound After Moratorium Lifted?

While the earnings of oil field services like Diamond Offshore (NYSE:DO) and Noble (NYSE:NE), Halliburton (NYSE:HAL) and Weatherford (NYSE:WFT) could have been worse, overall they didn't fare too badly in light of the conditions they faced in the latest quarter.

The question is will they start to improve now that the Gulf oil moratorium has been lifted by the Obama administration.

The quick and easy answer to that is no they won't improve. At least as to how the Gulf limitations affect their businesses.

In reality, as far as effectively, the moratorium is really still in place, as the permitting process and new regulations will limit drilling and work in the Gulf for some time.

That's why Obama lifted the moratorium, as he could keep things as they are while permits and regulations force companies to take a lot of time to adjust and be approved.

So Obama can say he lifted the moratorium before the November elections, while keeping the affect of the moratorium on the companies who want to work in the Gulf.

Short-term the companies will still continue to struggle depending on their exposure to the Gulf.

The last quarter should be the same as this quarter for productivity in the Gulf of Mexico for the oil field services companies.

Newfield Exploration (NYSE:NFX) Keeps "Overweight" from Barclays (NYSE:BCS) on Liquid Gas

Barclays (NYSE:BCS) reiterated its "Overweight" on Newfield Exploration (NYSE:NFX), citing a move toward liquid natural gas.

"Capital is shifting away from dry natural gas toward liquids-rich plays. Investors are eager to hear results (early Q1 announcement likely) in the Eagle Ford shale and the Southern Alberta Basin where Newfield has recently begun drilling operations...We are revising EPS to reflect lower gas prices. Lowering 4Q'10 benchmark gas-price forecast to $3.75/MMBtu and '11E to $4.00/MMBtu. NFX has nearly 70% of expected 2011 gas production hedged at $6.15/MMBtu," Barclays said.

Earnings estimate for full year 2011 was increased on Newfield from from $4.40 to $4.60, but lowered for 2012 from $4.45 to $4.40.

Newfield closed Thursday at $58.91, gaining $0.06, or 0.10 percent. Barclays has a price target of $60 on them.

BP (NYSE:BP) Oil Spill Caused Very Little Damage to Wildlife

Contrary to ridiculous claims and assertions, relatively little wildlife was killed from the BP (NYSE:BP) oil spill.

Test after test from numerous federal and state agencies found fish haven't really been touched at all; will fish being killed or contaminated in any way.

Out of a combined 5,000 tests, both sensory and chemical, only two failures have occurred, and with chemical, none have occurred.

The reports of the thousands of birds collected, reaching 6,104 total, were all birds collected, not those only affected by the oil spill. Of that number, 2,263 of the birds found had some oil on them.

Even that's not conclusive, as they could easily have died of natural causes in areas that included oil.

The hype about sea turtles was just that as well. of the 603 collected, only 17 had oil on the.

Mammals the same thing. Only 97 were collected in all, and only four of those had made contact with oil.

As far as the birds, which were the most affected, that many are killed quickly from the so-called clean energy and non-destructive windmill farms than from the Gulf oil spill. And that's just from one grouping of them.

Altogether windmill farms destroy huge numbers of birds and bats, one of their dirty little secrets.

The data above was reported by NOAA.

Tesoro (NYSE:TSO) Patterson-UTI (Nasdaq:PTEN) ECA Marcellus Trust (NYSE:ECT) Rated by RBC Capital

RBC Capital said it has made some changes on some of its ratings on oil and gas stocks, including Tesoro Corp. (NYSE:TSO), Patterson-UTI Energy (Nasdaq:PTEN) and ECA Marcellus Trust (NYSE:ECT).

Patterson-UTI Energy (Nasdaq:PTEN) was upgraded from "Sector Perform" to "Outperform," with their price target raised from $23 to $27. Patterson closed at $19.44, dropping $0.11, or 0.56 percent.

Tesoro Corp. was downgraded from "Outperform" to "Sector Perform," with a price target on them of $15 a share. Tesoro closed Thursday at $13.14, losing $0.78, or 5.60 percent.

RBC initiated coverage on ECA Marcellus Trust with an "Outperform" rating, and a price target of $25. ECA ended Thursday's trading session at $23.34, falling $0.22, or 0.93 percent.

Pan American Silver (Nasdaq:PAAS) Upgraded by Credit Suisse (NYSE:CS)

Pan American Silver (Nasdaq:PAAS) was upgraded by Credit Suisse (NYSE:CS), as the metal continues to be one of the hotter commodities, although overshadowed by gold because of the enormous record prices it has been trading at.

Credit Suisse upgraded the from "Neutral" to "Outperform."

The ratio between silver and gold has been steadily moving back to historical proportions, giving investors another reason to invest in silver producers.

Pan Am closed Thursday at $29.80, losing $0.52, or 1.70 percent. They have a market cap of 3.19 billion.

Citigroup (NYSE:C) Sees AmeriGas (NYSE:APU) Tops for Distribution Growth in Sector

Citigroup Inc. (NYSE:C) said they believe AmeriGas Partners, LP (NYSE:APU) should be the leader in distribution growth in the sector going forward. They maintain a "Hold" rating on the propane company.

Citigroup's John K. Tysseland said, "We are maintaining our Hold...rating for APU based on valuation, but believe the partnership is likely to have the best distribution growth in the sector and continues to be an active consolidator. We would consider buying APU, all things being equal, on a significant pullback in the unit price. We are increasing our target price to $49 from $40."

Concerning earnings projections for 2010-2011, AmeriGas said in a press release, "The Partnership expects to report net income attributable to AmeriGas Partners of approximately $165 million for its fiscal year ended September 30, 2010. Adjusted earnings before interest expense, income taxes, depreciation and amortization excluding the impacts of a previously reported $12.2 million loss related to the termination of interest rate protection agreements and an additional $7.0 million litigation reserve recorded during the fiscal year 2010 fourth quarter (Adjusted EBITDA), are expected to be approximately $340 million for fiscal 2010."

AmeriGas closed Thursday at $46.56, gaining $0.02, or 0.04 percent.

Libya Counting on BP (NYSE:BP) to Revive Oil Success

With major oil companies like Chevron (NYSE:CVX), Conoco Phillips (NYSE:COP) Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS-A), among others, unsuccessfully working the offshore areas of Libya, the country is counting on a successful exploration from BP to help them return to an important player in the oil sector.

The Gulf of Sidra, which BP will be drilling in, hasn't been drilled before, and BP will be drilling the first in the area in hopes of tapping into Libyan oil and gas reserves.

Libya has a goal of reaching levels from the 1970s, where they peaked a 3 million barrels of oil a day being produced by 2015. By 2020 they want to increase daily production to 3.5 million barrels, although some close to the situation say the possibility of those goals being met is slim.

National Oil Corp., the Libyan state state energy company, said more realistic would be attaining about 2.5 million barrels a day by 2015.

In a deal with Libyan leader Muammar Gaddafi, BP will drill five deepwater offshore wells in the Gulf of Sidra, along with an onshore concession in Ghademe Basin.

The bad news for BP and Libya is Royal Dutch Shell has already drilled two wells in the Gulf of Sidra and came up empty.

Thursday, October 21, 2010

Amarillo Gold (TSX.V:AGC), Goldgroup (TSX:GGA) (OTC:GGAZF) Otis Gold (OTC:OGLDF) All Undervalued Junior Gold Miners

In an interview with 'The Gold Report,' the author of The Mercenary Geologist newsletter, Mickey Fulp, said he considers most junior miners overvalued, but some like Amarillo Gold Corp. (TSX.V:AGC), Goldgroup Mining Inc. (TSX:GGA)(OTC:GGAZF.PK) Otis Gold Corp. (TSX:OOO) (OTCBB:OGLDF) remain undervalued.

He likes Amarillo Gold because two of its projects have over 1.5 million ounces of "43-101 qualified resources."

Since going public, he cites 14 of the 15 months Goldgroup Mining Inc. via its Cerro Colorado mine, have positive cash flow. He basis his assessment of them being undervalued on " per-ounce-in-the-ground valuation." They also have two advanced exploration projects with resources: Caballo Blanco in southeast Mexico and San Jose de Gracia in western Mexico, said Fulp.

Last, when measured on a per-ounce basis against the overall peer group they compete against, Otis Gold Corp. is undervalued. They have the Kilgore project in Idaho, and are continuing to drill and enlarge another resource.

Freeport (NYSE:FCX) Exceeds Expectations on Higher Commodity Prices

Led by higher copper and gold prices, Freeport-McMoRan (NYSE:FCX) soared in the third quarter, with earnings rising by 30 percent over the same period in 2009, rising to $1.2 billion, or $2.49 a share. Analysts had been looking for $2.12 a share.

Revenue was up almost by the same, increasing to $5.2 billion, rising by 27 percent from $4.1 billion last year in the same quarter. That means margins held pretty strongly for the quarter. Analysts had been looking for about $4.63 billion in revenue.

Going forward, the interest rate boost by China has left the industrial metals sector a little weaker than in the recent past, suggesting China may be cutting back on spending to cool down its economy more. That could cut into revenue and earnings in the near-term.

Freeport made a big move for it shareholders with dividends, increasing them to $2 a share, a 33 percent increase.

The diversified miner was trading at $95.86, gaining $0.51, or 0.53 percent at 1:17 PM EDT.

BP (NYSE:BP) Oil Spill Could Cost Insurance Losses of $6 Billion

According to Fitch Ratings, insurance costs related to the BP (NYSE:BP) look like they could be twice what original estimates were, rising to as high a $6 billion.

Fitch's Chris Waterman said at a presentation in Zurich that it could cost the industry from $4 billion to $6 billion. Total economic losses will reach as high as $35 billion, added Waterman.

There was no breakdown of how that would be distributed among companies.

This will be the largest man-made insurance loss since September 11 terrorist attacks.

Chevron (NYSE:CVX) Pursuing Deepwater Gulf Drilling

The affect of the BP (NYSE:BP) oil spill on the attitude of competitors like Chevron (NYSE:CVX) is little if any, as far as continuing operations in the area, as the oil giant will continue to open up drilling projects in the area, including Jack field and Malo field.

Chevron has a 50 percent working interest in the Jack field and a 51 percent stake in Malo field.

Initial capital expenditure for the two fields is $7.5 billion. The fields sit in 7,000 feet of water, a little less than 300 miles south of New Orleans.

Oil demand isn't going to go away for a long time, and those that think the Gulf oil disaster will affect that are only fooling themselves.

That doesn't mean changes won't be made to improve safety, but demand is what is driving the market, nothing else.

Net daily production by Chevron in the Gulf is about 149,000 barrels of oil and 484 million cubic feet of natural gas for 2009.

Production for the two fields is expected to launch in 2014. Recoverable barrels of oil equivalent are estimated to be about 500 million.

ExxonMobil (NYSE:XOM), Chevron (NYSE:CVX) Profits Under Pressure in Africa

ExxonMobil (NYSE:XOM) and Chevron (NYSE:CVX) could be hit hard from the volatile and unpredictable consequences of doing business in Africa, as governments renege on their agreements and change them to extract far more money than they originally agreed to from the energy companies.

Basically what has been happening is governments are coming under pressure from socialist elements in their countries in order to change the terms of the deal through increased royalties and taxes from oil production.

Unfortunately leaders without principal don't mind changing the terms of the deal to satisfy voters.

This could dramatically affect expected margins and earnings of the sub-Saharan Africa assets held by Chevron and Exxon Mobil as the nations impose new terms.

Companies can find themselves held up in circumstances like these after paying for licenses. Governments can refuse to give approval for the licenses even after they've been paid for in order to increase taxes after the deal has been made.

Africa could suffer if they continue to operate in this way, as money will stop flowing to the region.

Energy companies and investors will need to take this into account when they make decisions and estimates about earnings expected from the region.

BP (NYSE:BP) Group Leads Production Increase in Azerbaijan

Oil and condensate production in Azerbaijan increased by 1.9 percent from January to September, over the same period the year before, based on a group led by BP (NYSE:BP).

Production in that period increased to 38.5 million tons.

Oilfields Azeri, Guneshli and Chirag were where the oil production boost came from, while the Shah Deniz gasfield was where condensate production rose. Condensate production grew to 32.2 million tons in the time period, up from 31.4 million tons in 2009.

Oil production in 2009 came in at 50.38 million tons, an increase of 13.5 percent. In 2010 the goal is to produce 52 million tons of oil in the country.

BP (NYSE:BP) Sells North Forties to PT Pertamina of Indonesia

BP (NYSE:BP) participated in two separate actions related to North Sea Forties crude, one in which they sold to shipments of oil to Indonesia’s state-run PT Pertamina, and the second, in which they acquired a cargo of crude from the region from Royal Dutch Shell Plc (NYSE:RDS-a).

The cargo from shell will be loaded on November 1 to November 3, which BP acquired at 65 cents below the Dated Brent benchmark.

PT Pertamina's two loads were from Africa, with a load from Qua Iboe of Nigeria, and one from Saharan Blend of Algeria.

Indonesia acquired 2 million barrels of Bonny Light grade earlier in October.

Atlas Energy (Nasdaq:ATLS), Stone Energy (NYSE:SGY) Downgraded by CapitalOne Southcoast

Atlas Energy (Nasdaq:ATLS) and Stone Energy (NYSE:SGY) smaller, regional players in the oil and gas sector, were both downgraded by CapitalOne Southcoast from "Add" to "Neutral."

Atlas has had an up and down year, which has gone nowhere over the last twelve months, dropping to a little lower than they were a year ago.

Stone Energy was level from November 2009 to April 2009, but the bottom dropped out from April through August, and they started to regain some ground, although they're not back to November levels yet.

Stone closed Wednesday at $16.09, gaining $0.29, or 1.84 percent. Atlas closed at $30.77, increasing $0.19, or 0.64 percent.

Worst of BP (NYSE:BP) Oil Spill Over Says Government

At the annual Clean Gulf Conference, government officials and executives from the oil industry said the worst of the BP (NYSE:BP) Gulf of Mexico oil spill in now behind us.

Other comments asserting the oil spill was never as bad as media hype has been communicated by the government, as scientists said most of the oil had dispersed from the Gulf, fisheries have been reopened, and the moratorium on drilling in the region lifted.

The moratorium was considered more of a hindrance than a help from the beginning, so it's not something that should be cited as a confirmation everything is better.

It probably hurt the area economically as much as anything else, and still will as little drilling will resume any time because of the permitting process and new regulations. That's why it was safe for the Obama administration to appear to lift restrictions through abandoning the oil moratorium before the November elections.

Assertions to the contrary have been made by so-called independent scientific sources, but very little has been proven, while a lot has been proffered through media outlets.

Government Parasites Seeking BP (NYSE:BP) Fund Money

An increasing number of parasitical government entities are seeking to use the BP (NYSE:BP) escrow fund as a means to make up for budget shortfalls, rather than shrinking the size of government to manageable levels.

One such entity is Santa Rosa County School district, which may attempt to, along with other schools, prepare what are called Request For Proposals (RFP) to present to attorneys to see if any are interested in representing them on a contingency basis.

One wise member of the school board, Ed Gray III, suggested it's very questionable as to whether or not the Santa Rosa School District had in fact been damaged from the Gulf of Mexico oil spill.

Gray said, “Everyone knows Escambia County took a big hit all the way around, and they have a claim, probably, for their school district. But as far as the other counties, I am not sure they were damaged to the point of needing to file a claim.

“The major impact to us will probably be in sales tax revenues. Our financial officer has told us the sales tax revenues we have received so far are about the same as last year.”

So in a period of ongoing recession, sales tax revenues are the same, which implies poor management on the part of the county in controlling costs.

With that being the reality, it's strange to see them think they can apply for BP funds when they haven't done any damage to the county.

Maybe they should focus on limited government and reducing taxes to spur economic growth, rather than new ways of siphoning money from the BP fund and those who really were hurt by the oil spill.

Occidental Petroleum (NYSE:OXY) Downgraded by Credit Suisse (NYSE:CS)

Credit Suisse (NYSE:CS) lowered its rating on Occidental Petroleum (NYSE:OXY) from "Outperform" to "Neutral," as the company has enjoyed a 29 percent increase in net profit in its latest quarter.

Production soared in the quarter, which in addition to the higher price of oil, increased earnings per share to $1.47, handily beatings analysts' estimates of close to $1.35 a share.

Some analysts believe Occidental will be able to keep up their torrid pace.

The majority of growth for the quarter was in the Middle East/north Africa.

Occidently pulled back to $80.97 on Wednesday, losing $0.23, or 0.28 percent. Credit Suisse lowered their price target from $92 to $89 on them.

Weatherford (NYSE:WFT) Faces Risk Going Forward, Downgraded

Considered a high risk company and stock at this time, Weatherford International (NYSE:WFT) was downgraded by FBR Capital and Credit Agricole.

FBR lowered their rating from "Outperform" to "Market Perform," while Credit Agricole downgraded them from "Outperform" to "Underperform."

"We are downgrading WFT as we believe its risk/reward profile is less favorable than that of other stocks in our coverage group. In part, we believe the recovery in international markets will continue to be slower than many expect. This, coupled with the risk of how and when Weatherford settles the Foreign Corrupt Practices Act (FCPA) investigation and how the TNK-BP put is settled, adds an element of risk that we believe requires a higher potential return than we see in the stock," said FBR.

Weatherford closed at $17.37, gaining $0.20, or 1.14 on Wednesday. Credit Agricole has a price target of $18 on Weatherford, lowering it from $19, and FBR Capital dropped its price target on them from $23 to $21.