Oil - Service, Equipment, Pipelines etc

Re: Oil - Service, Equipment, Pipelines etc

Postby winston » Wed Jul 27, 2016 8:17 pm

Why Zombies Are the Greatest Risk to the Rally in Oil

By Matt Badiali

The zombies are taking over.

Last week, I explained why I believe oil prices are heading higher over the long term. But we aren't buying just yet… because of the zombies.

Let me explain…

Last July, we discussed "zombie wells" – wells that have been drilled but not completed. The wells aren't fracked or set up to produce oil. They're essentially dead wells, waiting to come alive as soon as oil prices rise.

There were 4,230 zombie wells as of April 1, according to Bloomberg Intelligence. They're evenly divided among four major shale plays: North Dakota's Bakken, Colorado's Niobrara, and Texas' Eagle Ford and Permian Basin.

That's about 10% of all the wells drilled in 2014. It's a lot of oil just waiting to come to the market. Here's what I wrote last year when I was first worried about it…

It means there's a huge buildup of oil waiting to hit an already oversupplied market. When prices get high enough, this oil will flood pipes and refineries… which could cause prices to fall again.

Back then, we didn't know when those wells would go into production. Now we do.

The good news is that if oil prices stay above $40 per barrel, that will kill the zombies. In other words, oil companies will complete these wells as long as oil prices remain at or above today's levels. According to Bloomberg Intelligence, 70% of the zombie wells in Texas will be completed by the end of 2017.

As you can see from the chart below, prices are heading toward that critical point…

Please Enable Images to See this

As the zombie wells come online, the oil market will be flooded with more supply… which will slow the decline in U.S. production… and keep oil prices lower for longer.

As I explained last week, the current oil supply is only about 2 million barrels of oil per day more than demand. The predicted decline in U.S. production would cut half of that out. As that happens, oil prices will continue to rise.

But because zombie wells could prolong that decline and keep oil prices lower, we aren't ready to go out and buy a ton of oil producers yet. As the industry continues to wake back up and complete the zombie wells to pump money back into the industry, service companies that took huge hits to their revenue will profit.

Put some high-quality oil-services companies – like Schlumberger (SLB), Halliburton (HAL), and Baker Hughes (BHI) – on your watch list today. When we see confirmation of an uptrend in oil prices, shares of these companies should rebound sharply.


Source: Stansberry Resource Report
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Re: Oil - Service, Equipment, Pipelines etc

Postby winston » Wed Aug 03, 2016 6:27 pm

by behappyalways:-

10 O&M stocks that could be in financial hot water

Source: The Edge

http://www.theedgemarkets.com.sg/node/292527
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Re: Oil - Service, Equipment, Pipelines etc

Postby winston » Fri Sep 23, 2016 8:25 am

Not all doom & gloom for Singapore’s O&G sector if you know where to look

By Michelle Zhu

SINGAPORE (Sept 22): OCBC Investment Research is shining the spotlight on certain companies catering to the downstream segment of the troubled oil and gas (O&G) sector, highlighting that they are still going strong, with even a few turning around on the previous years’ negative results.

(See Banks key to survival of O&G companies)

This is because the current oil glut situation has led to a shortage of storage facilities around the world, explains lead analyst Low Pei Han in a Wednesday report.

Although the biggest beneficiaries are likely the domestically entrenched EPC providers and terminal owners, Low believes there remains a chance that SGX-listed companies such as PEC Ltd, Rotary Engineering, Mun Siong Engineering and Hiap Seng Engineering can similarly benefit from higher demand for storage facilities.

“The market has been overly focused on low oil prices and beleaguered companies such that certain segments of the broader industry have been forgotten,” says Low.

“In the midst of all the doom and gloom, companies catering to the downstream segment are still operating well.”

According to the analyst, opportunities for such companies abound.

For one, locally-listed O&G companies can look forward to expanding on opportunities in places where they have a foothold in where the construction of large oil terminals are still taking place, says the analyst, who cites Malaysia, Indonesia, and Thailand as examples.

“A new liquid bulk terminal will also be built in Jurong Port in Singapore, opening up opportunities for bidding,” she continues. “Work is also being eyed in the Middle East, where PEC and Rotary have secured work in Fujairah in recent years.”

The biggest market lies in China, which is aggressively building up its strategic petroleum reserves after the drastic fall in oil prices. However, margins are low and it is therefore tough for foreign players to compete in this case, notes Low.

“In general, a few of the locally-listed downstream players are trading at low levels like their upstream counterparts, which may not be justified given continuing order momentum and recurring work from plant maintenance activities,” the analyst concludes.

In view of the broader O&G sector, OCBC is maintaining its “neutral” view, with Sembcorp Industries as its preferred “buy” pick at a fair value estimate of $3.07.

Shares of Sembcorp Industries closed 3 cents lower at $2.56.

PEC closed flat at 56 cents; Rotary Engineering closed 1 cent lower at 38 cents; Mun Siong Engineering closed flat at 6.4 cents; and Hiap Seng Engineering closed flat at 13.5 cents.

Source: The Edge

http://smr.theedgemarkets.com/article/n ... where-look
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Re: Oil - Service, Equipment, Pipelines etc

Postby behappyalways » Fri Sep 23, 2016 10:08 am

Oil bet gone wrong: rusting tankers and rigs clog up Asian waters
http://www.hellenicshippingnews.com/oil ... an-waters/
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Re: Oil - Service, Equipment, Pipelines etc

Postby winston » Tue Nov 22, 2016 8:07 pm

Oil-services giants Baker Hughes and Halliburton surge to fresh 52-week highs.
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Re: Oil - Service, Equipment, Pipelines etc

Postby winston » Sun Nov 27, 2016 10:13 am

Singapore Readies $1.1 Billion in Loans for Oil & Gas-Linked Firms

Singapore. Singapore plans to offer financial assistance to its liquidity-hit marine and offshore engineering companies that could help them raise as much as S$1.6 billion, or $1.1 billion, in loans.

The two-year downturn in oil prices has forced several firms, including oilfield services firm Swiber, oil and gas service provider Swissco Holdings Ltd and container ship owner Rickmers Maritime, to seek restructuring of their debt.

Billions of dollars have been wiped off the market value of the sector's listed companies and thousands of jobs have been axed in the worst-hit area of Singapore's slowing economy.

Many of the companies in the affected sectors have not been able to issue debt or get bank loans.

Singapore's Ministry of Trade and Industry (MTI) said in a statement on Friday (25/11) the loans it is organizing will be available from next month and could "catalyze" about S$1.6 billion in total financing to the sector over the next year.

The MTI said it will introduce a scheme allowing affected companies to borrow up to S$5 million for up to six years. A borrower group can tap financing of up to S$15 million.

A separate finance scheme aimed at assisting with project and asset financing support will be enhanced so that the maximum loan will be raised to S$70 million per borrower group from the current S$30 million, it said.

The statement did not provide any details on the financing costs. The facilities will be administered by government agencies SPRING and IE Singapore through local banks. The government will take 70 percent of the financing risk for both the schemes.

"The industry's financing challenges have intensified in recent months. Some industry consolidation is inevitable as companies restructure and adapt to the challenging environment," Minister for Trade and Industry S Iswaran said.

"The government will continue to monitor the economy closely and stands ready to act if necessary."

Those that qualify for the scheme include shipyards and their contractors, exploration, production and offshore services firms, oil and gas equipment and services companies and their suppliers.

Source: Reuters
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Re: Oil - Service, Equipment, Pipelines etc

Postby winston » Wed Nov 30, 2016 9:29 am

Singapore - Oil & Gas sector: 2017 to be as newsflow heavy

After enduring a dramatic fall in stock prices in 2H14, further drops in 2015, and lacklustre performance in 2016, could it be time for a recovery for the Oil and Gas sector in 2017.

Currently, many companies are now trading at about 0.5x book or lower, pricing in most negatives.

However, investors must understand that there are different sub-sectors in the industry, and when you recover depends on where you are on the value chain.

In 2017, we could also see more corporate finance activities; possible privatisation candidates include PACC Offshore Services Holdings, Mermaid Maritime, PEC Ltd, Baker Tech, Dyna-Mac Holdings and possibly Pacific Radiance at a later point in time.

In this report, we also update on our earlier stock take of companies’ financial positions and debt servicing abilities.

Maintain NEUTRAL on the broader sector given the dim outlook and depressed valuations;

Our preferred pick for now is Sembcorp Industries given its more diversified business operations and undervaluation of its utilities segment.

Source: OCBC
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Re: Oil - Service, Equipment, Pipelines etc

Postby winston » Fri Dec 23, 2016 8:09 am

not vested

OPEC’s production cut isn’t enough to save the O&M industry

By Gwyneth Yeo

SINGAPORE (Dec 22): Maybank Kim Eng has maintained its “negative” rating on the Singapore offshore and marine sector, even as the Organization of the Petroleum Exporting Countries announced a production cut to stem falling oil prices.

Maybank Kim Eng’s analysts Yeak Chee Keong and Neel Sinha explained that the issue lies in the asset oversupply among the local shipyards and offshore support vessel owners, and higher oil prices do not immediately translate into higher vessel utilitisation.

“In our view, utilisation improvements from better oil price sentiment may not be fast enough before some players run out of cash,” said the pair in a note on Wednesday.

To be sure, access to capital through the bond and equity markets will be limited in the new year, given the bond defaults in 2016.

“This means that players that cannot generate self-sustaining cashflows face the risk of going down like Swiber and Swissco,” says Yeak and Sinha.

The pair is also expecting another round of provisions to be seen in the full-year results announced next year, which would dampen share prices until then.

To that end, the brokerage recommends Ezion Holdings as it is a financially strong asset owner that would be an early beneficiary of higher oilfield activities.

On the other hand, Maybank Kim Eng recommends selling the shipyards Keppel Corporation and Sembcorp Marine, as they continue to be affected by the oversupply of rigs and OSVs and the competition from Korean and Chinese yards.

“A change to a more neutral stance may be warranted in 2HFY17 if cancellation risks fade but we still see some time before orders return for the shipyards,” concluded Yeak and Sinha.

Shares in Ezion, Keppel and SembMarine are trading at 36 cents, $5.80 and $1.37 respectively on Wednesday.

Source: The Edge

http://smr.theedgemarkets.com/article/o ... up-content
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Re: Oil - Service, Equipment, Pipelines etc

Postby behappyalways » Thu Mar 09, 2017 5:16 pm

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Re: Oil - Service, Equipment, Pipelines etc

Postby winston » Mon Apr 03, 2017 10:57 am

Money-Making Trend #3: The U.S. Energy Boom is for Real

Unless you’ve been living under one of those oh-so-profitable rocks that are driving the shale oil and gas revolution, you’ve heard about the explosion of domestic fossil fuel supplies.

This development is truly astounding — a remarkable turnaround from the fears that we’d be hooked on oil from unfriendly foreign suppliers forever more.

No longer. Now U.S. energy development could literally be the most important driver of economic growth in America over the next 25 years.

It’s been a bumpy road to get here—the 2015 crash in oil prices wiped out many weaker players and even slashed the outlooks of giants like ExxonMobil and Chevron.

But the selling went much too far. Even after a sizable rebound in energy stocks, you still have a time to cash in on this new energy gold rush.

Don’t lose sight of just how much the world has changed. Thanks to the twin innovations of fracking and horizontal drilling, we now know that the U.S. is sitting on astounding amounts of oil and natural gas that have turned the energy world upside down.

To say that this is a game changer would be the understatement of the century. Just look at the trends in domestic oil and gas production:

Energy independence reduces the cost of production for American manufacturers, lowers transport costs, and allows the U.S. to gradually step back from its policing duties in the volatile Middle East.

Not to mention if we eliminated energy imports entirely, our trade deficit would be cut by 75% in one fell swoop... which would put the U.S. dollar and our national accounts on much firmer footing.

Of course, this windfall also brings fabulous profit opportunities for U.S. energy plays that just a few months ago were thought to be headed for the cellar.

So you’re going to be kicking yourself if you don’t get a share of the profits coming our way.

Careful: Profiting From Energy Safely Is Tricky!

Energy prices are volatile and you can get killed by short-term price fluctuations. Speculating on energy prices is a one-way street to an early heart attack... or at the very least an ulcer!

So we play the energy boom with a classic “picks-and-shovels” strategy.

Instead of gambling on the miners of the California gold rush, you would have made far more betting on the companies supplying all those greedy prospectors.

Levi Strauss made his fortune that way, and so did countless other hawkers of real estate, dry goods, housing, livestock and food.

In energy today, that means we steer clear of the explorers that can go belly-up with just one wrong move.

The easiest way to go bust is by falling for the trap of investing in a “massive new field” uncovered in some obscure corner of the U.S. Those “big strikes” often don’t pan out.

Instead, we focus on the pipelines and other infrastructure plays that ignore the price of energy and just bank steady profits month after month from the commodities flowing through their facilities.

Let’s start with picking up a few shares of one of the world’s largest independent oil refiners — Valero (NYSE: VLO). As a major player in the Gulf Coast refining game, this company is a leader in the growing field of exporting America’s surplus fossil fuels to resource-poor countries around the globe.

The combination of a shareholder-friendly management team, one of the strongest balance sheets in the sector and massive free cash flow has allowed the company to buy back stock like it’s going out of style. (Over $400 million in the second quarter alone!).

This should boost the stock nicely in the coming months all by itself, but a rising dividend will heighten the interest. The dividend has quadrupled since 2008 and now stands at 4.24%. Add it all up and I think Valero’s 160% gain over the last 5 years is just the start.

Source: Profitable Investing
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