For Immediate Release
Chicago, IL – September 02, 2015 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the Schlumberger Ltd. (SLB), Cameron International Corp. (CAM), Transocean Ltd. (RIG), Encana Corp. (ECA) and TOTAL S.A. (TOT).
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Here are highlights from Tuesday’s Analyst Blog:
Oil & Gas Stock Roundup
It was a week where oil prices experienced the biggest 1-day rise since March 2009 and natural gas futures gained on favorable weather forecast. On the news front, Schlumberger Ltd. (SLB) has agreed to acquire Cameron International Corp. (CAM) for $14.8 billion, while Transocean Ltd. (RIG) plans to eliminate its dividend.
Overall, it was a bullish week for the sector. West Texas Intermediate (WTI) crude futures snapped a ten-week losing streak and jumped around 12% to close at $45.22 per barrel, while natural gas prices rose 1.5% to $2.72 per million Btu (MMBtu). (See the last ‘Oil & Gas Stock Roundup’ here: Crude Dips Below $40, Cobalt Sells Angola Blocks.)
Rebounding from 6½-year lows, oil prices finally halted their weekly losses and surged ahead. The trigger for the rally was a report that Venezuela may be pushing the OPEC cartel to hold an emergency meeting to discuss the possibility of production cuts and halt the oil price rout. The latest weekly U.S. government report showing a surprise decline in crude supplies and the recent turn of events in Yemen – raising concerns over stability in the Middle East – also provided support.
Natural gas also fared well as the effects of a bearish inventory build was more than offset by predictions of strong late summer cooling demand with forecasts of warm weather across majority of the country over the next few days.
Recap of the Week’s Most Important Stories
1. World’s largest oil-field service company Schlumberger Ltd. announced that it has entered into an agreement to acquire Cameron International Corp. Per the deal, Schlumberger would acquire its smaller rival in a stock and cash transaction carrying total value of $14.8 billion. Upon the closure of the transaction, Cameron shareholders will own about 10% of Schlumberger's outstanding shares of common stock. The deal is expected to close in the first quarter of 2016. The agreement was unanimously approved by the boards of directors of both companies.
Schlumberger management expects the deal to be earnings accretive in the first year itself. The company expects to realize pretax synergies of $300 million in the first year and $600 million in the second. Initially, the synergies are primarily related to reducing operating costs, streamlining supply chains, and improving manufacturing processes. Subsequent to that, management is hopeful of growing components of revenue synergies. (See More: Schlumberger to Acquire Smaller Rival Cameron for $14.8B.)
2. Offshore drilling powerhouse Transocean Ltd. is the latest energy firm to announce dividend suspension. The company has proposed to cancel the third and fourth installation of dividends. Earlier this year, the company announced an 80% cut in dividend to tackle the pricing woes. However, that does not seem to have panned out well, thereby requiring harsher measures.
Moreover, Transocean stated that it plans to cancel all the shares that have been purchased under its share buyback program approved in 2009. Further, the company anticipates non-cash impairments of over 2 billion Swiss francs due to the deteriorating condition of the offshore drilling market. These proposals would be put to shareholders’ vote in an Extraordinary General Meeting of Shareholders to be held on Oct 29. (See More: Transocean Dividend Suspension: Smart Plan or Risky Bet?.)
3. Encana Oil & Gas (USA) Inc., a wholly owned subsidiary of the upstream energy firm Encana Corp. (ECA), has entered into an agreement to sell its Haynesville natural gas assets for a total cash consideration of $850 million. These assets, located in northern Louisiana, would be sold to GEP Haynesville, LLC (GeoSouthern) – a joint venture between GeoSouthern Haynesville, LP and GSO Capital Partners L.P.
The deal – expected to close in the fourth quarter of this year – would result in reduced commitments worth $450 million for Encana by transferring its current and future obligations. Additionally, the company would transport and market the joint venture’s Haynesville production for the next five years on a fee-for-service basis. This gas marketing arrangement, therefore, brings additional revenue potential for Encana. (See More: Encana to Sell Haynesville Natural Gas Assets for $850M.)
4. France-based Integrated oil and gas company TOTAL S.A. (TOT) announced that it will sell its interest in the FUKA and SIRGE gas pipelines and the St. Fergus Gas Terminal to North Sea Midstream Partners for $905 million (£585 million), subject to customary approvals. TOTAL has a 100% operating interest in FUKA and the St. Fergus Gas Terminal and has a 67% operating interest in the SIRGE pipeline.
TOTAL continues to make strategic acquisitions in high potential areas and divest assets that do not go well with its long-term objectives. During the first half of 2015, TOTAL acquired assets worth $2.77 billion. The investments included a carry agreement in the Utica basin in the U.S. and renewal of licenses in Nigeria. TOTAL disposed of assets worth $3.47 billion in the first half. (See More: TOTAL's U.K. Midstream Asset Sale to Fetch $905M.)
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SCHLUMBERGER LT (SLB): Free Stock Analysis Report
CAMERON INTL (CAM): Free Stock Analysis Report
TRANSOCEAN LTD (RIG): Free Stock Analysis Report
ENCANA CORP (ECA): Free Stock Analysis Report
TOTAL FINA SA (TOT): Free Stock Analysis Report
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