The Zacks Analyst Blog Highlights: Schlumberger, Baker Hughes, Royal Dutch Shell, Encana and Noble

Zacks

For Immediate Release
 
Chicago, IL – April 23, 2014 – 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-Free Report), Baker Hughes Inc. (BHI-Free Report), Royal Dutch Shell plc (RDS.A-Free Report), Encana Corp. (ECA-Free Report) and Noble Corp. (NE-Free Report).
 
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Here are highlights from Tuesday’s Analyst Blog:

Oil & Gas Stock Roundup
 
Crude prices edged up on positive economic data and geopolitical fears, while natural gas’ continued uptrend was propelled by worries about an imminent supply shortfall.
 
Among the newsmakers, top oilfield service firms Schlumberger Ltd. (SLB-Free Report) and Baker Hughes Inc. (BHI-Free Report) posted better-than-expected first quarter earnings following which their stocks hit new 52-week highs.  
 
Crude Oil:
 
Crude prices got a boost from the latest employment and manufacturing reports, providing further evidence that the U.S. economy is coming out of its winter freeze. This has fueled hopes for robust fuel and energy demand in the world’s biggest oil consumer. The bullish momentum was further propelled by the continued standoff in Ukraine and better-than-expected Chinese economic data.
 
However, to a large extent, the bulls were offset by a massive rise in crude stockpiles. The imminent resumption of oil exports from the Libyan coast added to the negative sentiment.
 
As a result of these factors, by close of trade on Friday, West Texas Intermediate (WTI) oil settled at around $104.30 per barrel, gaining a mere 0.6% for the week.   
 
Natural Gas:
 
Natural gas rallied last week to its highest level in 7 weeks, as another less-than-expected supply increase raised concerns about the country’s ability to refill reserves before the next winter.
The EIA's weekly inventory release showed that natural gas stockpiles held in underground storage in the lower 48 states rose by 24 billion cubic feet (Bcf) for the week ended Apr 11, well below the guided range (of 34–38 Bcf build).
 
As it is, natural gas supplies are coming off their 11-year-lows following a frigid winter, prompting fears about the timely replenishment of the inventories ahead of the next heating season, starting from November.
 
Influenced by these factors, natural gas prices ended Thursday at $4.74 per million Btu (MMBtu), up 2.1% over the week.
 
Energy Week That Was:
 
The week’s energy coverage was dominated by the following news:
 
Oilfield Service Behemoths Beat Earnings Estimates  
 
Thursday saw a kickoff in quarterly reporting from the oilfield services segment, with biggies Schlumberger Ltd. and Baker Hughes Inc. beating Zacks Consensus Estimates, in the process chalking up relatively solid numbers. Apart from pointing towards an improving North American market, coupled with strength in the Middle East and Asia, the companies remain positive about stepped-up activity in the U.S. Gulf of Mexico. However, project awards in Brazil, Canada, Russia and some other regions remain sluggish even as multiple firms run after a shrinking pool of contracts in North American shale fields.
 
Shell Finds Gas Column Offshore Malaysia
 
Integrated energy behemoth Royal Dutch Shell plc (RDS.A-Free Report) announced a deep-water gas discovery off the coast of Malaysia. The well Rosmari-1 is located in Block SK318, 135 kilometers off the shore. Drilled to a depth of 2,123 meters, the well has revealed over 450 meters of gas column. Shell is the operator of the block with an 85% interest, whereas PETRONAS Carigali Sdn Bhd holds the remaining 15%. The find, in a strategic area of interest for Shell, adds to the company’s recent exploration accomplishments in Malaysia.
 
Encana Initiates Alberta Properties Spinoff
 
Canadian energy outfit Encana Corp. (ECA-Free Report) has announced the filing of initial prospectus related to the spinoff of its gas and oil resources in Western Canada. The plan reflects Encana’s intent to vend non-core properties and to primarily focus on five liquid-rich assets. The company that will be formed through the offering – PrairieSky Royalty Ltd. – is expected to own roughly 5.2 million acres of land in Alberta, Western Canada, where production will be free from government royalties.
 
PrairieSky Royalty will not be executing upstream operations on the assets but will instead collect fees from the companies exploring the resources. Encana added that the divesture of PrairieSky Royalty is expected to be closed by the first half of June this year.
 
Noble Earnings & Revs Get the Better of Estimates
 
Offshore driller Noble Corp. (NE-Free Report) reported strong first quarter results, with earnings and revenues both exceeding expectations on the back of contribution from new rigs. A combination of higher average dayrates, decrease in operating downtime and rise in bonus revenues aided the company’s outperformance even as the sector looks set to enter a cyclical downturn.

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