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(Bloomberg) -- WPX Energy Inc. is in talks to buy the oil and gas exploration assets of closely held Felix Energy for about $2.5 billion, according to people familiar with the matter.WPX Energy could announce a deal with Denver-based Felix Energy later this month, said one of the people, who asked to not be identified because the matter isn’t public. No final decision has been made and talks could fall through, the people said.Felix Energy, which is backed by private equity firm EnCap Investments LP, operates in the Delaware Basin, a fast-developing portion of the massive Permian Basin in West Texas and New Mexico, according to its website. The deal won’t include Felix’s pipeline assets, which are being sold separately, the people said.Representatives for WPX Energy and Felix Energy didn’t respond to requests for comment. A representative for EnCap declined to comment.WPX Energy’s shares closed down 2.2% to $10.91 in New York trading Friday, giving the company a market value of about $4.55 billion. The stock fell 5.1% more in after-hours trading.(Updates with details on pipeline unit in third paragraph, after-hours trading last paragraph)To contact the reporters on this story: Kiel Porter in Chicago at email@example.com;David Wethe in Houston at firstname.lastname@example.orgTo contact the editors responsible for this story: Simon Casey at email@example.com, Matthew MonksFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The oil industry in North America has grown dramatically in the last decade. The rapid expansion of fracking technology has opened previously non-viable oil reserves, and discoveries of recoverable shale oil in Texas and the Dakotas have made the US into the world’s largest oil producer six years running. In fact, this past September, the US exported more crude oil than in imported – the first time that has happened since records began in 1949.The boom has not been without growing pains. Expansion of supplies on the market have pushed prices down, negatively impacting oil companies’ incomes and stock prices in recent months. Data for the first week of December showed a surprise build of 800,000 barrels in US stockpiles, a sharp reversal from the expected 2.8-million-barrel reduction. The news put further downward pressure on oil prices.But oil isn’t just a commodity, it’s a necessity in today’s world. According to Norwegian energy consulting firm Rystad, “North American shale supply will continue growing even in an environment with lower oil prices.” The firm sees shale production’s robust growth continuing into 2022.So, the main variable for oil prices heading into next year and beyond is likely to be demand. Oil producers and midstream suppliers will continue to see a profitable environment despite the headwinds as long as economic conditions remain firm. And given last week’s jobs report from the US, that looks to be a sound prediction for the near-term – making the energy sector attractive for investors.To help that along, we’ve used the TipRanks Stock Screener tool to pick out three energy sector players that fit a bullish investment profile. These are Strong Buy stocks with upside potentials exceeding 30%, and the recent price pressure in the oil markets has pushed share prices down, making them bargains to boot.WPX Energy (WPX)WPX is typical of the small- to medium-cap extraction companies that are hard at work exploiting the resources of Texas and North Dakota. WPX operates in the Bakken Formation, one of the early oil patches to benefit from the fracking revolution, but most of the company’s operations are centered in the Delaware Basin of West Texas, a component of the larger Permian Basin that holds the largest recoverable reserves in North America.Recoverable reserves are a key metric in the oil industry, defining the potential resources a company can tap for production and profit. WPX, in its two areas of operation, as more than 480 million barrels of oil equivalent in proved reserves, of which 61% is crude oil and the rest is split between natural gas and natural gas liquids. WPX operates over 700 wells on its land holdings.Strong reserves and strong production have made WPX profitable. The company brought in $2.3 billion in total revenues in calendar year 2018, with a net income exceeding $150 million. Turning to more recent financial results, WPX showed a Q3 EPS of 9 cents per share, missing the 7-cent forecast but beating the year-ago quarter’s 7 cents. Revenues were even better. The $795 million for the quarter beat the forecast by 25%, and beat the year-ago result by an even more impressive 64%.Wall Street is understandably sanguine about WPX shares looking forward. Neal Dingmann, from SunTrust Robinson, writes of the stock, “Given the company’s position as one of the strong operators in both the Williston and Delaware, in our opinion, we believe the company could look to act as a consolidator while noting we don’t see the need to make any large acquisitions in the next 6-12 months.”Dingmann backs up his Buy rating with a $16 price target, implying room for 47% growth on the upside. (To watch Dingmann’s track record, click here)The consensus view on WPX is a unanimous Strong Buy – 9 analysts have given this stock a Buy in recent months. The stock’s low price offers investors a chance to ‘buy the dip’ on a high-upside opportunity. Shares are priced at $10.89, and the average price target of $15.11 indicates potential for nearly 40% growth. (See WPX stock analysis on TipRanks)Liberty Oilfield Services (LBRT)Exploration, and proving reserves, is only part of the game in the oil business. Owning a barrel’s worth of oil is no use if it can’t be brought to the surface and shipped to market. This is where the oilfield service companies step in. Production companies own wells and drilling machinery and technology; the services companies provide the specialized equipment, tech, and know-how to conduct fracking operations and activate the wells.Liberty occupies this niche. The company supplies the water, sand, chemicals, piping equipment, and engineering knowledge to conduct and maintain fracking operations. It’s a difficult sector in which to operate. Overhead is high, while income can vary based on the price oil, and LBRT has seen both top-line revenues and bottom-line EPS decline year-over-year. In the recent Q3 report, the company showed revenues of $515 million, 1.3% below the forecast, and EPS of 15 cents, 44% below expectations.The poor quarterly results, released at the end of October, hurt share prices, temporarily pushing the stock down by 11%. Share price has since recovered, and surpassed the pre-report values. On a high note, from an investor’s perspective, the current EPS is more enough to sustain the company’s quarterly dividend payout of 5 cents per share. Annualized, this gives LBRT a dividend yield of 2.1%, higher than the average yield among S&P listed companies.Analyzing the company for JPMorgan, analyst Sean Meakim sets out a bullish case: “The company’s differentiated focus on technology, data analytics, and talent has allowed it to deliver peer-leading profitability and return metrics through the cycle… Liberty’s strong customer relationships should help the company maintain margins above the peer group.”Meakim gives LBRT a Buy rating with a $12 price target, indicating confidence in an 18% upside. (To watch Meakim’s track record, click here)With 6 Buy and 1 Hold ratings given in the past 3 months, LBRT stock gets a Strong Buy from the analyst consensus. The stock’s recent headwinds have pushed the share price down to an affordable $10.62, offering a low point of entry for investors. The average price target of $14.07 suggests an upside potential of 33%. (See Liberty stock analysis on TipRanks)Cheniere Energy (LNG)Petroleum isn’t the only product that comes out of oil wells. Oil patches product natural gas and related products in large quantities, sometimes even exceeding the percentage of oil extracted. The flood of natural gas into the markets has driven a revolution in clean energy, as gas burns cleaner than oil. Increased use of natural gas has helped the US to greatly reduce carbon emissions in recent years.Cheniere Energy, based in Texas, is a leading producer of liquefied natural gas (LNG). Liquified gas is less volatile and more easily transported than the gaseous product, and is the chief form in which gas is conveyed to market. Cheniere buys gas from producers, liquifies the product, and loads it onto ocean-going vessels. The company also owns rail cars and pipelines for overland transport within the US. Cheniere has been exporting LNG from the US since 2016, when it became the first company to do so.Falling prices, the flip side of high production, have pushed the company into net loss in the last two quarters. In Q3, the company showed an EPS net loss of $1.25, a severe blow when compared to the expected 8-cent per share profit. Revenues, however, were up, at $2.17 billion beating the estimate by 2.4% and gaining 19% year-over-year.LNG has a great deal of potential, however, even in a low-price regime. Wolfe analyst Steve Fleishman says of the stock, “We believe that upsides are underappreciated by the market including at least one more train and a reversion to wider global gas spreads. We also expect new management to boost visibility and focus on operations and capital efficiency.” Fleisman puts an Outperform rating and $80 price target on LNG, indicating his confidence and a 36% upside. (To watch Fleishman’s track record, click here)5-star analyst Elvira Scotto, of RBC Capital, agrees that LNG is a Buy proposition. She wrote, in a note last month, “We believe LNG can generate highly visible cash flow growth and return significant cash to shareholders via buybacks and dividends longer-term.” In line with her Buy rating, Scotto sets an $84 target on the stock, suggesting a 38% upside potential. (To watch Scotto’s track record, click here)All in all, this natural gas has earned one of the best analyst consensus ratings on the Street. Out of 10 analysts tracked in the last 3 months, 9 are bullish on LNG’s prospects, with just 1 on the sidelines, highlighting a strong bullish backing here. With a healthy return potential of 31%, the stock’s consensus target price stands at $79.80.Check out these 5 ‘Strong Buy’ stocks that top Wall Street analysts recommend.
Plains All American (PAA) is set to jointly develop a new 45-mile pipeline, namely Byhalia Connection. This is likely to enable the firm to benefit from rising crude oil production.
It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth […]
WPX Energy (WPX) President and Chief Operations Officer Clay M. Gaspar has been elected to the company’s board of directors effectively immediately. Gaspar has held increasing levels of leadership with WPX since joining the company in 2014. He is a member of the Society of Petroleum Engineers and holds a bachelor’s degree in petroleum engineering from Texas A&M and a master’s degree in petroleum and geosciences engineering from the University of Texas at Austin.
Noble Energy's (NBL) Q3 loss is narrower than expected. The company lowers its 2019 capital expenditure guidance, indicating that its important projects are close to completion.
Devon Energy's (DVN) Q3 earnings are better than expected on the back of strong production from its U.S. assets and cost-cutting initiatives.
WPX Energy's (WPX) Q3 earnings miss expectation. Strong production from Delaware and Williston basins allows the company to raise total production forecast for 2019.
WPX (WPX) delivered earnings and revenue surprises of -18.18% and 24.84%, respectively, for the quarter ended September 2019. Do the numbers hold clues to what lies ahead for the stock?
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of WPX Energy, Inc. New York, October 24, 2019 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of WPX Energy, Inc. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
WPX (WPX) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
The elite funds run by legendary investors such as David Tepper and Dan Loeb make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don't follow. Because of their pay structures, they have strong incentives to do the research necessary […]
Oil prices continued their near-month-long, post-September 16, post-Saudi Arabian drone attack slide on Tuesday. After falling 5.5% last week, WTI Crude futures closed down 0.3% at $52.46 yesterday, and Brent Crude was off a similar 0.3%, closing at $59.07.The reason, unfortunately, is not that the Middle East has suddenly become a safer place to do business. It hasn't, with a new border war due to break out along the Iraq-Turkey border any day now, and a Saudi response to Iran's (alleged) strike against its oil facilities still pending. Instead, market participants are becoming more anxious about the next round of U.S.-China trade talks later this week, and what a failure of the two superpowers to reach an accommodation might mean for the global economy.Naturally, worries like these are pushing the price of oil stocks down in tandem with oil prices. For example, independent oil and gas exploration and production company Pioneer Natural Resources has lost 16% of its value since the September 16 attacks. Another independent producer, CNX Resources, has lost 20%, while yet a third, WPX Energy, is down 21%.But here's the good news: According to the consensus of Wall Street analysts, all three of these stocks could go back up -- as much as 30%. Let's take a closer look:CNX Resources (CNX)The most heavily leveraged of these three "strong buy" rated oil stocks, CNX Resources boasts a $1.3 billion market capitalization ... and $2.8 billion in debt.Despite all the debt, CNX Resources is a profitable operation, generating more than $300 million in net profit over the last 12 months -- enough to give the stock a trailing P/E ratio of just over 4.2. The stock is not free cash flow positive, however, burning through more than $250 million in cash over the last 12 months.Still, in a note recommending the stock, Jefferies analyst Zach Parham predicted that "a more capital efficient budget than expected in 2020," combined with plans to "hold production flat in 2021" hold out the prospect for CNX generating positive free cash flow in the near future -- which would provide cash CNX could use to pare its debt load.Parham predicts the stock could close out this year with about $85 million in free cash flow -- and grow that number by nearly half, to perhaps $110 million, in 2021. With a $10 price target on the stock, the analyst believes the stock can rise about 40% over the next 12 months. (To watch Parham's track record, click here)"CNX remains one of only two Buy rated gassy E&Ps (along with COG), as we believe CNX can generate growth and FCF in 2020, while also having the potential to bring forward value through asset sales (CNXM GP, CNXM units, remaining midstream assets, CBM, etc)," the analyst concluded.How does Parham's bullish bet weigh in against the Street? It appears the analyst is not the only one enthusiastic on this oil stock, with TipRanks analytics demonstrating CNX as a Strong Buy. Out of 3 analysts polled in the last 3 months, all 3 are bullish on the stock. With a return potential of nearly 36%, the stock’s consensus target price stands at $9.67. (See CNX stock analysis on TipRanks)WPX Energy (WPX) Next on our list today is another three-lettered oil company: WPX. Like CNX, it's a debt-laden company with strong GAAP profits but no free cash flow to speak of -- in fact, WPX burned through nearly a half-billion dollars in cash over the last year. But with a $4.1 billion market capitalization, WPX is a bit bigger, and perhaps a bit better able to manage its debt -- which at $2.1 billion net of cash, is actually a bit lighter than what CNX is carrying around.One bright note on this stock: Last quarter marked the first quarter in more than a year that WPX generated positive free cash flow from its business. It wasn't a lot -- $39 million to be precise -- but it might have been a sign of better times to come.Guggenheim analyst Subash Chandra highlighted positive free cash in Q2 combined with 10% production growth and the prospect of $55-a-barrel oil prices as supporting hopes for consistent cash generation at the company -- beginning with another $56 million generated in Q3. While risk-averse investors might prefer to see the company use some of this cash to begin paying down debt, Chandra believes it's more likely that WPX will deploy its cash as part of "a $400mm stock buyback program" -- which to be sure, would also be a plus for shareholders."The company pushed the maturity wall to 2023 while reducing borrowing costs [...] At $55 oil, we estimate a FCF yield of 9-10% assuming maintenance capex of $900mm next year, with potential upside if WPX can achieve the 15-20% LOE improvements targeted. Markets may worry about Bakken inventory as the play has been the primary oil growth driver. But otherwise WPX has addressed many issues dogging other companies. We expect shares to outperform with our price target upside potential realized if an appetite for 2P resources return," the analyst opined.And as far as target prices go, Chandra is even more optimistic than most other analysts. Whereas the consensus on Wall Street is that WPX will go to $15 over the next year (53% upside), Chandra thinks the shares are worth at least $17 -- which if correct, would mean 73% profits for investors who buy today. (See WPX Energy stock analysis on TipRanks)Pioneer Natural (PXD)Last and far from least, we come to Pioneer Natural -- at $20.6 billion in market cap, by far the biggest of these three oil companies. That's not all that Pioneer stock has to recommend it, though.With only a $1.6 billion debt load (net of cash), Pioneer sports by far the cleanest balance sheet of this bunch, the least leverage, and the lowest level of absolute debt to boot. It's also the only one of these companies in sufficiently fine financial fettle to sustain a regular dividend payment -- 1.4%.Evercore ISI analyst Stephen Richardson, who recommends the stock, praised Pioneer for raising its dividend in its Q2 update -- a report that also featured reductions in general and administrative spending. Like WPX, Richardson noted that Pioneer is conducting a buyback program, having repurchased $200 million worth of stock in the quarter. The analyst liked the fact that after declaring that he "saw value and ... a discount to intrinsic value" in the stock price, Pioneer's board moved quickly to put its money where its mouth was, and scoop up some cheap stock.And speaking of cheap ... Wall Street in general thinks this stock is pretty cheap, too. Predicting the shares will fetch more than $180 12 months from now, the consensus on the Street is that within a year, people buying Pioneer stock at today's prices could be sitting on a 46.5% profit! (See Pioneer Natural stock analysis on TipRanks)
Brookfield Infrastructure Partners (BIP) issues $500 million of 3.538% medium-term notes. The proceeds from the same are going to be used for refinancing old debts and funding its pipeline projects.
Black Hills Corporation (BKH) is set to issue $700 million notes to refinance outstanding debt and utilize balance proceeds for general corporate purposes.
Billionaire hedge-fund investor Leon Cooperman thinks the 10-year-old great bull stock market is far from over, which to him means there is plenty of upside left. Quite simply, bull markets don’t end when stocks reach fair valuations, which is the case today, the CEO of Omega Advisors said.