I'm sure you've heard it said that you have to spend money to make money. Several companies in the oil and gas industry have a different spin on that phrase, as these companies believe you need to spend money in order to save it. In each case the company is building out its own business unit to save the money it would have spent by contracting with a third party. In doing so, these companies are also building up a hidden asset that one day could be unlocked.
An Oasis of hidden value
The Bakken has created a lot of value for energy investors; however, that value doesn't come cheap. It's very expensive to drill in the Bakken, with costs upwards of $10 million per well. To get that cost down, exploration and production companies are exploring all options, including taking well services in-house.
That's exactly what Oasis Petroleum (NYSE: OAS ) decided to do when it formed Oasis Well Services. The company made an initial investment of $24 million in equipment, which has been money well spent. The business is exceeding expectations both in terms of performance and savings since completing its first frac job last March. In the past year the business saved the company $17.5 million in capital, and it expects to save about $500,000 per gross well going forward. It also expects to generate about $200,000 per gross well of incremental cash flow from its non-operated partners going forward. This has enabled the company to already recoup its initial investment in the business.
Hot Rising Companies To Watch In Right Now: Pinecrest Energy Inc (PNCGF.PK)
Pinecrest Energy Inc. (Pinecrest), formerly Antler Creek Energy Corp., is a Canada-based junior oil and gas exploration company. Pinecrest is engaged in the acquisition, exploitation and development of petroleum and natural gas-related assets primarily in Western Sedimentary Basin. During the fiscal year ended July 31, 2010 (fiscal 2010), Pinecrest was engaged in two (0.4 net) wells that were drilled in the southeast Saskatchewan Bakken. On July 14, 2010, the Company acquired the Loon Properties. On July 14, 2010, Pinecrest acquired the Red Earth #1 Properties. On July 15, 2010, the Company acquired the Red Earth #2 Properties. Advisors' Opinion:- [By MLP Trader]
Here are the current top five companies in the list:
CompanySymbolEV/BOEPD/NetbackPrice/NAVEV/DACFPinecrest(PNCGF.PK)53564%4.0XLightstream(LSTMF.PK)131753%4.5XNovus(NOVUF.PK)133290%4.1XZargon(ZARFF.PK)138664%5.6XTwin Butte(TBTEF.PK)155885%5.5XOf the larger companies, one that remains obstinately near the top of the list is Lightstream . Lightstream trades at 40% of its book value and a whopping 13.4% yield.
Hot Energy Stocks For 2014: JA Solar Holdings Co. Ltd.(JASO)
JA Solar Holdings Co., Ltd., through its subsidiaries, engages in the design, development, manufacture, and sale of photovoltaic solar cells and solar products, which convert sunlight into electricity in the People's Republic of China. The company?s principal products include monocrystalline and multicrystalline solar cells, as well as various solar modules. It also provides silicon wafer and solar cell processing services. The company sells its products primarily under the JA Solar brand name, as well as produces equipment for original equipment manufacturing customers under their brand names. It sells its solar cell and module products primarily to module manufacturers, system integrators, project developers, and distributors in the Germany, Italy, the United States, Hong Kong, Spain, India, the Czech Republic, France, and South Korea. The company has strategic partnerships with various solar power companies, such as BP Solar, Solar-Fabrik, and MEMC/SunEdison. JA Solar Holdings Co., Ltd. was founded in 2005 and is based in Shanghai, the People?s Republic of China.
Advisors' Opinion:- [By Paul Ausick]
In the Chinese solar sector we tracked the following short interest changes: JA Solar Holdings Co. Ltd. (NASDAQ: JASO), LDK Solar Co. Inc. (NYSE: LDK), Suntech Power Holdings Co. Ltd. (NYSE: STP), Trina Solar Ltd. (NYSE: TSL) and Yingli Green Energy Holding Co. Ltd. (NYSE: YGE).�For China-based firms, the percentage of shares short is not available because the companies are also listed on other exchanges.
Hot Energy Stocks For 2014: Frontline Ltd (FRO)
Frontline Ltd., incorporated on June 12, 1992, is a shipping company. The Company is engaged primarily in the ownership and operation of oil tankers and oil/bulk/ore (OBO) carriers. The Company operates tankers of two sizes: very large crude carriers (VLCCs), which are between 200,000 and 320,000 deadweight tons, and Suezmax tankers, which are vessels between 120,000 and 170,000 deadweight tons. As of December 31, 2010, its tanker and OBO fleet consisted of 73 vessels. The fleet consists of 44 VLCCs, which are either owned or chartered in, 21 Suezmax tankers, which are either owned or chartered in and eight Suezmax OBOs, which are chartered in. The Company also had five VLCC newbuildings and two Suezmax newbuildings on order and three VLCCs under its commercial management. In February 2010, it purchased the VLCC Front Vista from Ship Finance International Limited (Ship Finance). In January 2011, it sold the VLCC Front Shanghai.
The Company operates through subsidiaries and partnerships located in the Bahamas, Bermuda, the Cayman Islands, India, the Isle of Man, Liberia, Norway, the United Kingdom and Singapore. The Company is also engaged in the charter, purchase and sale of vessels. In April 2010, the Company delivered the single hull Suezmax Front Voyager. During the year ended December 31, 2010, six newbuildings were completed. Four Suezmax vessels were delivered: the Northia, on January 5, 2010; the Naticina, on March 9, 2010; the Front Odin, on May 5, 2010, and the Front Njord on August 12, 2010. Two VLCCs were delivered: the Front Cecilie on June 10 and the Front Signe on August 9, 2010. As of December 31, 2010, the Company's newbuilding program consisted of two Suezmax tankers and five VLCCs.
Advisors' Opinion:- [By Dan Caplinger]
The reason for the disconnect between earnings and stock performance has to do with the changing fundamentals for shipping overall. For years, shipping companies both on the dry-bulk and the tanker side of the industry have suffered from weakness in the global economy after having built huge numbers of new ships during better times. That forced Overseas Shipholding Group to seek bankruptcy protection late last year and has left tanker giant Frontline (NYSE: FRO ) under considerable financial pressure as it continues to labor under a substantial debt load.
- [By Tyler Crowe]
Oil tankers could also see a benefit as well. With potential of the SUMED pipeline being shut down, it would mean that tankers would need to increase traffic by 2 million barrels per day and increase its shipment times as much as LNG tankers.�Norway's�Frontline� (NYSE: FRO ) , the world's largest oil tanker fleet, has day rates of about $25,000 for its oil carriers, so it's not as much of a win as LNG carriers. Also, higher fuel prices for all shipments will eat into that revenue boost.�
- [By Karee Venema]
One equity that falls under the small-cap umbrella, and looks poised to benefit from a contrarian boon is shipping concern Frontline Ltd. (FRO).
Shares of Frontline have more than doubled in value since hitting a decade-plus low of $1.71 last May. In fact, the stock tagged a new annual high of $5.18 in early January.
- [By Paul Ausick]
Big Earnings Movers: Hewlett-Packard Co. (NYSE: HPQ) is up 9.1% at $27.37 after beating on both the top and bottom lines last night. 58.com (NYSE: WUBA) is down 10% at $33.56. Frontline Ltd. (NYSE: FRO) is up 16.6% at $2.74.
Hot Energy Stocks For 2014: Northern Tier Energy LP (NTI)
Northern Tier Energy LP, formerly Northern Tier Energy, Inc., incorporated in October 21, 2011, is an independent downstream energy company with refining, retail, and pipeline operations that serves the PADD II region of the United States. The Company operates its assets in two business segments: the refining business and the retail business. The Company owns three pipelines. The Company's operations will be conducted through, and its operating assets will be owned by, its wholly owned subsidiary, Northern Tier Energy LLC, and its subsidiaries. Effective November 12, 2013, Western Refining Inc acquired a 38.681% interest in Northern Tier Energy LP.
Refining Business
The Company�� refining business primarily consists of a 74,000 barrels per calendar day (84,500 barrels per stream day) refinery located in St. Paul Park, Minnesota. Its location allows it to distribute its refined products throughout the midwestern United States. The Company�� refinery produces a slate of refined products, including gasoline, diesel, jet fuel and asphalt, which are then marketed to resellers and consumers primarily in the PADD II region. It also owns various storage and transportation assets, including a light products terminal, a heavy products terminal, storage tanks, rail loading/unloading facilities and a Mississippi river dock. The Company�� refining business also includes its 17% interest in the Minnesota Pipe Line Company, which owns and operates the Minnesota Pipeline, a 455,000 barrels per calendar day crude oil pipeline system that transports crude oil (primarily from Western Canada and North Dakota) for approximately 300 miles from the Enbridge pipeline hub at Clearbrook, Minnesota to its refinery.
As of March 31, 2012, the Company's storage assets included 84 hydrocarbon storage tanks with a total capacity of 3.7 million barrels (156 million gallons), 0.8 million barrels of crude oil storage and 2.9 million barrels of feedstock and product storage. The Company�� r! efinery supplies all of the gasoline and diesel sold in its company-operated and franchised convenience stores, as well as all of the gasoline and diesel sold in 90 independently owned and operated Marathon branded stores in its marketing area. The Minnesota Pipe Line Company owns the Minnesota Pipeline, a crude oil pipeline system in Minnesota that transports crude oil to the St. Paul area. The Minnesota Pipeline system has multiple lines that run approximately 300 miles from Clearbrook in Clearwater County, Minnesota to Dakota County, Minnesota, transporting crude oil received through the Enbridge pipeline connections at Clearbrook from Western Canada and North Dakota to our refinery and Koch Industries�� Flint Hills Resources refinery in Minnesota.
Retail Business
As of March 31, 2012, the Company�� retail business operated 166 convenience stores under the SuperAmerica brand and also supported 67 franchised convenience stores, which are also operated under the SuperAmerica brand. These convenience stores are located primarily in Minnesota and Wisconsin and sell various grades of gasoline and diesel, tobacco products and immediately consumable items, such as non-alcoholic beverages, beer, prepared food and a range of snacks and prepackaged items. It also owns and operates SuperMom�� Bakery, which prepares and distributes baked goods and other prepared food items for sale in its company-operated and franchised convenience stores and other third party locations.
The Company has a retail-marketing network of 233 convenience stores, as of March 31, 2012, located throughout Minnesota, Wisconsin and South Dakota, of which it operates 166 stores and support 67 franchised stores. All of its company-operated and franchised convenience stores are operated under the SuperAmerica brand. It also owns and operates SuperMom�� Bakery, which prepares and distributes baked goods and other prepared items for sale in its retail outlets and for other third parties. Its refine! ry suppli! es all of the gasoline and diesel sold in its company-operated and franchised convenience stores. The Company has retail customers, which primarily include retail end-users, motorists and commercial drivers. It had a retail-marketing network of 233 convenience stores, as of March 31, 2012, located throughout Minnesota, Wisconsin and South Dakota, of which it operated 166 stores and support 67 franchised stores.
The Company competes with Koch Industries��Flint Hills Resources Refinery, Holiday, Kwik Trip and Wal-Mart.
Advisors' Opinion:- [By Jake L'Ecuyer]
Northern Tier Energy LP (NYSE: NTI) was down, falling 7.37 percent to $18.10 after the company reported an operational issue with crude unit.�
Commodities
In commodity news, oil traded down 1.07 percent to $103.62, while gold traded down 0.73 percent to $1,322.40. Silver traded up 0.10 percent Monday to $21.80, while copper fell 0.54 percent to $3.30. - [By Ben Levisohn]
Delek US,�Western Refining and�Phillips 66 are most exposed to the consensus thinking Westlake and�Advani say. They kept Tesoro (TSO) and Northern Tier Energy (NTI) rated outperform.
- [By Robert Rapier] In last week’s issue I discussed the basics of the refining sector. Today I will provide an overview of four MLPs that hold refining assets.
To review, the refining sector was very profitable in 2012 thanks to unusually high crack spreads, which for many US refiners are approximated by the price differential between Brent and West Texas Intermediate (WTI) crude oils. For a more thorough explanation of this phenomenon, please refer to last week’s issue.
After years of trading at a $1 to $3 per barrel discount to WTI, Brent began fetching a premium a few years ago as a glut of crude developed in the mid-continent area of the US. In 2011 the Brent-WTI price differential increased to more than $25/bbl, and it remained historically high in 2012.
But pipeline capacity started to catch up this year, and the share prices of refiners retreated as the glut began to dissipate and the Brent-WTI differential shrank. In Q3 2012, the Brent-WTI differential averaged $17.43/bbl, but by Q3 of this year, the differential had fallen to $4.43/bbl. This promises bad news for refiners about to report Q3 earnings.
Many analysts downgraded the refining sector in Q3, but as the differential fell below $5/bbl it was hard to imagine that the news could get much worse. With poor Q3 results largely priced in, the differential subsequently rose back above $10/bbl, signaling better refining margins moving into Q4.
Refiners began to post earnings this past week, and as expected they were weak. Valero (NYSE: VLO) reported slightly higher revenues year-over-year, but net earnings fell more than 50 percent from a year ago. Nevertheless, they beat the extremely pessimistic expectations of analysts, and Valero shares rose on the news.
Phillips 66’s (NYSE: PSX) refining unit actually posted a loss, but its chemical business turned in a solid quarter which more than compensated for the disappointing refining results.
The rest of the refine - [By Robert Rapier]
Northern Tier Energy (NYSE: NTI) will report earnings this week. The partnership closed last week down less than 1 percent, but interested investors should find a cheaper entry point this week as earnings will undoubtedly be disappointing.
Hot Energy Stocks For 2014: Bonavista Energy Corp (BNPUF.PK)
Bonavista Energy Corporation (Bonavista) is engaged in the acquisition, exploration, development and production of oil and natural gas assets. The Company operates approximately 87% of its assets which are concentrated within three core regions in western Canada. Each core region contains a well-balanced portfolio of oil and natural gas assets with considerable opportunities. Its operations are geographically focused within three regions of Western Canada, which includes Western region, Northern region and Eastern region. The Company�� subsidiaries include Bonavista Petroleum (BP), Bonavista Energy LP (BELP) and Bonavista Energy Inc. (BEI). Advisors' Opinion:- [By Stephan Dube]
Cold Lake's most notable producers:
Husky Energy (HUSK.PK), see article here.Pengrowth Energy Corporation (PGH), see article here.Southern Pacific Resource (STPJF.PK), see article here.Canadian Natural Resources (CNQ), see article here.Devon Energy (DVN), see article here.Imperial Oil (IMO), see article here.Baytex, see article here.Bonavista Energy (BNPUF.PK), see article here.Athabasca's most notable producers:
Hot Energy Stocks For 2014: GASFRAC Energy Services Inc (GFS)
GASFRAC Energy Services Inc. (GASFRAC) is an oil and gas service company, whose business is to provide liquid petroleum gas (LPG) fracturing services to oil and gas companies in Canada and the United States of America. As of December 31, 2011, GASFRAC had three 32 tons and nine 100 tons sand storage vessels, 47 fracturing pumpers, 150 LPG storage tanks and related equipment. GASFRAC�� services are marketed and operated under the name of its wholly owned subsidiary GASFRAC Energy Services Limited Partnership. The Company has commercialized the use of LPG as the fracturing fluid. The Company�� subsidiaries include GASFRAC Services GP Inc., GASFRAC US Holdings Inc., GASFRAC Inc., GASFRAC Energy Services (US) Inc. and GASFRAC Luxembourg S.a.r.l. Advisors' Opinion:- [By Sofia Horta e Costa]
G4S Plc (GFS) dropped 1.7 percent to 225.6 pence. Goldman Sachs Group Inc. reiterated its ��onviction sell��recommendation on the provider of security services, citing continued pressure on its profit margin in the second quarter.
- [By Sarah Jones]
G4S Plc (GFS) sank 15 percent to 260 pence. The security company reported a lower operating margin for the first quarter, citing challenging economic and trading conditions in continental Europe. It expects the margin trend to continue for the full year.
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