MARKET CURRENTS
real-time news and commentary for investors
MARKET CURRENTS
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Wednesday, May 23
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8:01 PM The first day of talks between Iran and world powers show a "fair amount of disagreement" but also areas of common ground , says a senior U.S. official. Iran was "engaged" in the discussions, and the meeting would continue into a second day on Thursday, the official said, adding that there was "plenty to go on" for a potential further round of talks. 6 Comments
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7:37 PM Tokyo Electric Power (TKECY.PK) become the first utility to hike power rates for its customers in response to Japan's looming power crisis. The utility behemoth plans to raise rates for some heavy users by 12% starting in July, while the average rate increase for typical household customers will come to 6.9%. Comment!
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6:10 PM Approving the Keystone XL (TRP) pipeline could boost U.S. global warming emissions by as much as 0.3%/year, a CRS report says - not exactly "game over" for the climate but still like putting 4M extra passenger cars on the road. But it's not just Keystone XL; there are plans to send 3.1M bbl/day of oil sands from Alberta to export markets, ~5x as much as Keystone XL. 3 Comments
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5:15 PM Are railroads the new way to play the oil sands boom? Rail sports several advantages over pipelines, thus the weekly number of carloads of oil products in North America has been surging since early 2011. But there are disadvantages too: it costs ~2x as much to move oil on rails than through a pipe, and the boom in oil traffic for trains merely replaces part of what’s being lost in coal traffic. 7 Comments
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4:38 PM ONEOK (OKE) CEO John Gibson predicts net income will grow 18%/year during 2012-14, with dividends growing 40% during the period. If 2013-14 prices for crude oil, natural gas and nat gas liquids remain at levels assumed in 2012 guidance, he says his earnings growth projections would be reduced by just one percentage point annually. Comment!
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4:29 PM There's little new in Chesapeake's (CHK) latest letter to shareholders, rehashing "numerous" actions its board has taken to enhance corporate governance - cutting directors' and CEO compensation, et. al. The letter is said to address issues raised by NYC Comptroller John Liu, who is calling for the rejection of two board members in upcoming elections. Comment!
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3:57 PM BP, the EPA and Indiana regulators reach a settlement that will allow the use of Canadian tar sands crude oil at the company’s 405K bbl/day Whiting, Ind., refinery; in return, BP will install ~$400M of pollution control equipment at the refinery. BP is within a year of finishing a $4B upgrade to enable the refinery to run crude from Canadian tar sands. Comment!
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3:42 PM Kinder Morgan Partners (KMP -0.4%) reduces the size of its planned $4.1B Trans Mountain pipeline expansion in Canada after signing fewer contracts with shippers than expected. The contracts call for 510K bbl/day capacity, but that's ~150K less than KMP had previously announced, due to a few shippers failing to obtain their boards’ approvals. Comment!
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2:58 PM Baker Hughes (BHI -0.4%) CFO Peter Ragauss says the U.S. oil-directed rig count would need to double to more than 2,500 rigs if analyst estimates of a 2M bbl/day increase in U.S. oil production by 2017 are correct. A rapid shift to oil production would ultimately favor BHI because of its technology, Ragauss says. Comment!
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2:40 PM Cove Energy (CNVGF.PK) shares end +11.2% in London to 249p, above the new 240p/share bid from Thailand's PTT and indicating investors think Royal Dutch Shell (RDS.A -2%) may raise the offer. Heard On The Street's Andrew Peaple calculates Shell could yet pay up to $2.5B for Cove; it also has more firepower than PTT, with net debt to equity of 9.9% vs. PTT's 33%. Comment!
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2:24 PM S&P cuts its credit rating on Patriot Coal (PCX +17.4%) for the second time in seven days and says it's on watch for yet another downgrade, citing doubts about PCX's ability to meet near-term obligations amid the company's "highly uncertain" proposed refinancing. The rating is cut two notches to CCC, which denotes highly speculative credit, from B-. 1 Comment
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12:41 PM Peabody Energy (BTU -1.3%) says workers at its Wambo and Wilpinjong Mines in New South Wales approved new labor agreements covering more than two-thirds of its thermal coal exports from Australia. Comment!
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11:59 AM Agreements signed by India and Pakistan to begin an estimated $7.6B project to pipe natural gas from Turkmenistan's massive Galkynysh field through Afghanistan mark a milestone in regional relations. But given Taliban control of large areas along the planned route and a separatist rebellion in southwest Pakistan, security problems make the timeline for construction a bit unclear. 1 Comment
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11:48 AM Brazil's HRT says it has hired a semi-submersible drill rig from Transocean (RIG -1.7%) to drill prospects later this year or early next year off the coast of Namibia. The rig will be on charter for 280 days, “enough to drill at least four exploration wells." HRT estimates it has 28B bbl of potential oil and natural gas resources in the African country. 1 Comment
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11:30 AM Anadarko Petroleum (APC -2.3%) says an exploration well drilled at its Spartacus prospect in the Gulf of Mexico has turned up dry. The unsuccessful well is a small setback for APC amid a string of major discoveries in the Gulf, an area where the company sees huge potential and plans to drill 6-8 exploration and appraisal wells this year. Comment!
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10:42 AM In the wake of the PCX disaster, is there any bottom in sight for trashed coal stocks (KOL -1.8%)? Not yet, chartist Robert Sinn writes. "A stock like ANR at $11/share has almost turned into a call option on the Chinese economy and thermal coal prices," Sinn says, but "just like a call option, it will bleed time premium if China continues to deteriorate and thermal prices continue lower." Comment!
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10:24 AM Goodrich Petroleum (GDP +0.2%) announces the completion of the Encana-Anderson 17H-1 well in the Tuscaloosa Marine Shale with a 72-hour production rate of 1,082 boe/day. GDP also says it is participating with Encana (ECA) for a ~25% working interest in another Tuscaloosa well. Comment!
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10:03 AM India hikes gasoline prices 11.4%, effective tomorrow as the rupee at all-time lows just adds to cost pressures for the nation's refiners. The price of crude is off 15% this month alone, but a weakened currency may be negating much of the salutary effects. Comment!
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9:57 AM Despite announcing his resignation, NRC chair Gregory Jaczko may be around for a while longer. Jaczko plans to stay on the job until the Senate confirms a successor, and Majority Leader Harry Reid sounds like he's in no hurry to take action; he says he’d be fine if his former aide stays until his term expires in June 2013. Comment!
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9:55 AM TRC Capital makes an unsolicited mini-tender offer of $36.55 a share for up to 3M shares in Exelon (EXC), or about 0.35% of its common stock. The nuclear power plant operators advises shareholders not to tender their stock to TRC. Excelon is -0.05% at $37.05. (PR) Comment!
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9:41 AM Patriot Coal (PCX +6.4%) shares enjoy a decent rebound after yesterday's disaster, and the company sends a letter to employees saying "operations are performing well." A bit late after yesterday's 28% drubbing, Deutsche Bank downgrades PCX to Hold from Buy, citing the uncertainty of the company's financing arrangements. Comment!
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9:19 AM Uranium giant Cameco's (CCJ) planned effort to raise as much as $1B through a combination of securities may signal an upcoming acquisition, BMO Capital suggests, citing falling uranium equity valuations in recent weeks and CCJ's ample funding capability. Potential targets: Paladin Energy (PALAF.PK), Denison Mines (DNN), UEX Corp. (UEXCF.PK) 2 Comments
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8:41 AM Recon Technology (RCON) +67.3% premarket on news it signed a contract to provide China National Petroleum with Emerson PCS & SIS systems in its South Yolotan Gas Field Project located in Turkmenistan. The total contract value exceeds $3M. Comment!
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6:08 AM Iran expects "good news" from the latest talks with the P5+1 group of World Powers - which are due to take place today in Baghdad - although the U.S. says Iran won't receive relief from sanctions. News yesterday of an agreement between the IAEA and Iran over the inspection of nuclear sites sent oil prices lower. 1 Comment
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3:29 AM Thailand's PTT Exploration and Production trumps Shell's (RDS.A) bid for Cove Energy (CNVGF.PK), offering £1.22B ($1.9B) for the Mozambique-focused explorer. Cove's management says it now backs PTT's bid, with the reversal coming just hours ahead of a deadline for investors to accept Shell's $1.8B offer. Shell -1.2% in London. Comment!
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