BP Shares Drop after Earnings Miss Expectations

- BP Shares Drop after Earnings Miss Expectations

Tuesday, July 26, 2011
Dow Jones Newswires
LONDON
by Alexis Flynn

BP faced fresh scrutiny from investors Tuesday after quarterly earnings beat last year's level but came in below expectations following a big drop in oil and gas production.

BP posted a 12% rise in adjusted profit for the second quarter as it benefited from higher crude prices and better refining margins. But oil and gas production fell a whopping 11% compared with the 2010 quarter due in part to anemic output in the Gulf of Mexico and unexpected maintenance in the North Sea and Angola.

BP shares were down 11 pence to 464p at 803 GMT, the biggest drop Tuesday morning in the FTSE 100. Analysts also had pointed questions on the slow resumption of BP activities in the Gulf of Mexico, its growth strategy after the demise of a major proposed deal in Russia and the effectiveness of much-touted safety upgrades following a recent fire in the North Sea that has further crimped output.

The U.K.-based energy giant said its clean replacement cost of supplies, a keenly-watched figure that strips out gains or losses from inventories and other non-operating items, for the three months ended June 30 totaled $5.60 billion, compared with $4.98 billion for the second quarter of 2010.

This was below expectations of $6.04 billion in a Dow Jones Newswires poll of 11 analysts. BP said this was due to the loss of production from high-margin areas, such as Angola and the North Sea.

BP Chief Executive Robert Dudley said the company is "making rapid progress" and that the results are in line with expectations that 2011 would be a "year of consolidation" after the travails of recent years.

Total oil and gas production was 3.43 million barrels a day, a decline of almost 11% on the year. BP said that after adjusting for acquisitions and divestitures and entitlement impacts from production agreements, the output decrease was 7% compared with the same period of 2010.

"BP appears to be running a business as usual strategy and we are not convinced that the market will put up with this for much longer," said analyst Dougie Youngson from Arbuthnot Securities. "BP has been significantly under-performing the peer group for some time and this looks set to continue."

Royal Bank of Canada analyst Peter Hutton said investors are anxious about BP's difficulty controlling costs compared with peer companies. A complicating factor is the slow progress in resuming operations in the U.S. Gulf, Hutton added. "Other operators are getting things through and BP has a sum total of zero approvals," Hutton said. "When you rank BP against the others, it is quite stark."

Copyright (c) 2011 Dow Jones & Company, Inc.

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Noble 2Q Earnings Drop on Rig Downtime

- Noble 2Q Earnings Drop on Rig Downtime

Thursday, July 21, 2011
Noble Corp.

Noble reported second quarter 2011 earnings of $54 million, or $0.21 per diluted share, matching earnings reported for the first quarter of 2011. Results for the second quarter included a $0.04 per diluted share benefit relating to the settlement of certain discrete tax matters. First quarter 2011 results included a one-time after-tax net gain of $0.06 per diluted share relating to the substitution of the drillship Noble Phoenix for the drillship Noble Muravlenko in Brazil. Contract drilling services revenues totaled $590 million in the second quarter of 2011, up nine percent from $543 million in the first quarter of 2011. Contract drilling margin percentage for the second quarter of 2011 was approximately 43 percent compared to 44 percent in the prior quarter. Noble invested $815 million in capital projects during the second quarter.

At June 30, 2011, approximately 73 percent of the Company's available rig operating days were committed for the remainder of 2011 and approximately 43 percent were committed for 2012. The Company's total backlog at June 30, 2011 was approximately $13 billion.

David W. Williams, Chairman, President and Chief Executive Officer, noted, "Second quarter results were significantly hindered by several downtime events involving five rigs. Although we were disappointed by the interruption in service on these rigs, most of which pertained to subsea equipment and control systems, four out of five rigs returned to service prior to the end of the second quarter. Despite the fleet downtime, the quarter was characterized by an improvement in business fundamentals, as utilization and tendering activity improved for both jackups and deepwater units, and several Noble rigs returned to active status."

Operations Highlights

In Mexico, six of Noble's jackups returned to active status during the second quarter following the award of contracts, while a contract on the Noble Sam Noble is expected to commence by the end of July. Also, the Noble Roy Butler was awarded a three-year contract in July, which is expected to commence in September 2011 following the completion of a leg-extension project. Dayrates for the rigs that have or will soon return to work range from approximately $80,000 to $100,000. Noble now has all 12 of its jackup rigs in Mexico under contract, with 10 of the 12 units under contract into late 2011 or beyond.

In the North Sea, the jackup Noble Byron Welliver was awarded a three-well contract at a dayrate of $91,000, while the jackup Noble Lynda Bossler was awarded a two-well contract at a dayrate of $105,000. Both rigs are expected to commence their new contracts in or around January 2012.

The Company continued to build its presence in Saudi Arabia following the award of contracts for the jackups Noble Gene House and Noble Joe Beall. The three-year contracts are expected to commence in September 2011 with an operating dayrate for each rig of $81,000. With these awards, the Company now has four jackups committed to Saudi Aramco.

Finally, in the U.S. Gulf of Mexico, the semisubmersible Noble Jim Day began receiving its full contract dayrate of $485,000 on July 11 following the award to our client of permits necessary to commence well operations in the region. In addition, certification of the subsea control system on the semisubmersible Noble Driller was completed in July and the rig is expected to resume operations shortly at its full operating dayrate, pending receipt of a drilling permit. The Company now has certified subsea equipment and control systems on all six of its active semisubmersibles in the U.S. Gulf of Mexico.

"Offshore demand continues to build in most regions around the world, supporting expectations for gradually improving utilization and dayrates among our jackups and floating rigs," said Williams. He added, "Additional client demand for jackups is visible in Mexico and the Middle East. In the deepwater sector, Petrobras continues to tender for dynamically positioned and moored rigs for offshore Brazil with contract lengths of three to five years and we continue to see client interest in some of the emerging deepwater frontiers."

In closing, Williams stated, "Our fleet enhancement program, currently composed of the construction of seven ultra-deepwater drillships and four high-specification jackups, is transforming Noble into one of the industry's most modern and capable offshore drilling contractors. As client demand in the offshore sector increases and expands geographically, so does the need for technically advanced, versatile and efficient rigs that address both shallow and deepwater prospects. We believe our strategic growth initiatives strongly position the Company to benefit from further client demand and offshore industry expansion."

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Investors Wait For Next Asset To Drop In Conoco's Sales Plan

- Investors Wait For Next Asset To Drop In Conoco's Sales Plan

Thursday, June 30, 2011
Dow Jones Newswires
HOUSTON
by Isabel Ordonez & Ben Lefebvre

ConocoPhillips (COP) investors are hoping for the company to quickly unveil the next step of its plan to sell up to $17 billion in noncore assets by the end of 2012 and reinvest a bulk of the proceedings in share buybacks.

Conoco's stock outperformed rivals Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX) last year after investors embraced a large-scale, two-year restructuring plan presented in late 2009 that included a $10-billion asset sale and was aimed at shoring up its finances. Conoco's shares surged more than 30% in 2010, helped by evidence that the plan was going full steam ahead. By the end of last year, the sale plan seemed to be moving along. Conoco had sold $7 billion in assets, including its stake in oil sands oil producer Syncrude Canada Ltd. and the majority of its 20% stake in Russia's oil giant Lukoil OAO for $5.82 billion. Conoco said the Lukoil proceedings were excluded from the original $10-billion asset-sale plan and that money would be used to buy back the company's own shares. Those sales went so well that the Houston-based company announced in March it will expand its planned program through 2012 by selling an additional $10 billion of older, higher-cost assets.

But after a strong start, the company has this year given few signs that the asset sale is on schedule, says Fadel Gheit, an analyst at Oppenheimer & Co. "The company is keenly aware that the market is looking for news on the progress they are making in their asset sale," he said.

Conoco still has another year to complete the plan, but uncertainty about the pace of the second phase of the asset sales is starting to take a toll on its stock. Year to date, Conoco's shares are up 9.7%, underperforming the stock of Exxon and Chevron, which are up 10.6% and 12.1%, respectively.

Some analysts believe ConocoPhillips would have to make a significant announcement by the end of July, when it will report second-quarter earnings, if it wants to maintain momentum with investors; worries will only increase the longer no announcement is made. "If they don't announce something in the third quarter, the concern could rise," says Allen Good, an analyst at Morningstar.

Others believe that it's good for shareholders that the company is taking its time to make concrete sales plans. "With asset sales, it is rarely a good idea to rush the process," says Pavel Molchanov, an analyst at Raymond James. "A lower, more deliberate process can allow the seller to maximize value for the asset."

Conoco spokesman John Roper said the company doesn't "discuss potential acquisitions and dispositions prior to their closings. While we expect additional announcements this year, we have none to discuss at present."

Conoco has made a few medium-sized deals this year, including an April sale of a 15% stake in the planned Australia Pacific LNG Project in Queensland for $1.5 billion and the sales of its Seaway Products Pipeline in South Texas for an undisclosded price. But the company needs to make a couple of large-scale assets sale announcements to let the market know that it isn't behind schedule, Gheit said.

Conoco could shed assets in Australia and Kazakhstan, say UBS analysts who in June met with ConocoPhillips Chief Financial Officer Jeff Sheets. Those could include new stakes in Conoco's Australian liquefied natural gas venture with Origin Energy Ltd. (ORG.AU), and its 8.4% interest in the Kashagan oilfield in Kazakhstan, UBS said. Conoco's partner in the field, Exxon Mobil, received a $5 billion bid for its identical stake in Kashagan, according to the Wall Street Journal.

Alan Hirshberg, Conoco's Senior Vice President of Planning and Strategy, said in a presentation at a May energy conference that the company is also looking at leaving countries where it has a small presence, and selling some marginal refining assets like the Wilhelmshaven refinery in Germany. Hirshberg said Conoco is also considering turning refineries into product terminals and striking joint venture agreements, exchanging refining capacity for oil and gas assets.

Conoco would most likely want to pull out of the East Coast market, where fuel imports into New York Harbor make price competition extremely difficult, UBS said. The company has two major refineries in the area, the 238,000 barrel-a-day Bayway refinery in Linden, New Jersey; and the 185,000 barrel-a-day refinery in Trainer, Penn. Valero Energy Corp. (VLO) sold two of its refineries in that region in 2010 to private equity firm PBF Energy. PBF declined to say whether it was interested in the Conoco refineries in the area.


Copyright (c) 2011 Dow Jones & Company, Inc.

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Toyota Motor Estimates 31% Drop Full Year Net Profit

- Toyota Motor Estimates 31% Drop Full Year Net Profit



Jun 10, 2011

Toyota Motor (NYSE:TM) said today it expects its net profit to fall by almost a third this year, as production continues to be disrupted 3 months after the massive earthquake and tsunami that struck Japan on March 11th.

The company predicted its profit for the full year ending in March 2012 would decline 31% to $3.5 billion.

Analysts had been expecting a profit of $5.28 billion, and the company reported $5.1 billion in profit for the year ending March 2011.

The company expects full year sales to decline 2%, and said global production wouldn't recover completely until November.

Toyota Motor has a potential upside of 14.3% based on a current price of $80.84 and an average consensus analyst price target of $92.4.

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Commodity Corner: Oil Settles Higher After Sharp Drop

- Commodity Corner: Oil Settles Higher After Sharp Drop

Friday, May 20, 2011
Rigzone Staff
by Matthew V. Veazey

Crude oil for June delivery gained $1.05 to end a volatile trading day at $99.49 a barrel.

The front-month contract plunged to an intraday low of $95.99 as the U.S. dollar gained 0.75 percent against the euro. Oil becomes a better value for investors holding non-U.S. currencies when the dollar grows weaker because crude is priced in dollars.

Given the relative value of the expiring June oil contract relative to the higher July contract price, however, oil rebounded later Friday as investors sensed a buying opportunity. Crude topped out at $99.49 for the day and is down less than 0.2 percent for the week.

A day after falling 2.6 percent following a U.S. Energy Information Administration report showing a higher-than-expected build in inventories, June natural gas gained 14 cents to settle at $4.23 per thousand cubic feet. Buoying Friday's rally were forecast models predicting above-normal temperatures throughout the eastern U.S. for the remainder of the month. Warmer conditions in the region would likely boost demand for electricity to power air conditioners.

June natural gas traded within a range from $4.08 to $4.26 Friday. It is down 0.5 percent for the week.

The June gasoline contract gained a penny to end the day at $2.94 a gallon. It fluctuated from $2.86 to $2.96. June gasoline has fallen 4.2 percent since last Friday.

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