Energy Select Sector SPDR® ETF

The Midland and Delaware basins, which are sub-basins of the Permian, had IRRs of 15% even at sub-$40 oil prices. Apache (APA) has significant operations in both of these basins.

Phillips 66 (PSX) has segments in refining, midstream, chemicals, and marketing. In 1Q16, the refining segment contributed $86 million, or 24%, to its adjusted net income.

Range Resources is growing its portfolio in the Southeast US. Natural gas exports seem to be a promising growth area. The deal will enhance its credit profile.

Among the biggest ETFs in the offshore drilling space, investors can choose between ETFs like OIH, XLE, and IYE for exposure to offshore drilling.

Anadarko Petroleum’s preliminary capex (capital expenditure) budget for 2016 is $2.8 billion—nearly 50% less than 2015 levels.

Unconventional sources of onshore drilling have started gaining popularity in recent years, but the crude from these sources are costly to produce.

Even in the same category of rigs, different water depth capabilities cause offshore drilling day rates differ. Day rates are also impacted by region.

Chinese energy companies CNOOC, China Petroleum & Chemical, and PetroChina Company have fallen below their 100-day and 20-day moving averages.

OPEC has estimated that the road transportation sector will account for one-third of the global crude oil demand growth between 2014 and 2040.

ONEOK (OKE) is currently trading 57% below its 50-day moving average. It’s generally been trading below its 50-day moving average since mid-2014 when energy prices began falling.

RRR reflects how many barrels of oil equivalent the company adds to its reserves in replacement of ones that are produced.

Economic growth is the biggest driver of earnings growth. Earnings growth seems to follow the same trajectory of GDP growth.

Schlumberger (SLB) provides technology, project management, and information technology services to the oil and natural gas exploration and production industry.

As the above chart shows, Seadrill (SDRL) has the highest leverage, with a debt-to-asset ratio of 46%. Ensco (ESV) has the second highest ratio at 36%.

Demand for OCTG products is expected to be subdued in the coming months. This would continue to put pressure on U.S. Steel’s Tubular segment.

According to Wall Street analysts’ consensus outlook, Kinder Morgan’s (KMI) dividend is expected to grow by ~15.3% year-over-year by the end of 2015.

According to data from the U.S. Energy Information Administration, US crude production dropped to 9.4 million barrels per day in the week ended July 24.

August WTI crude oil futures contracts fell by $0.74 and closed at $50.15 per barrel on July 20. Brent fell by $0.45 and settled at $56.65 at the close of trade.

The Energy Select Sector SPDR ETF (XLE) rose 0.22% in the week to June 26. The ETF tracks a diverse group of ~45 of the largest US energy stocks.

EOG Resources (EOG) has generated above-par returns over a three-year period. EOG returned 91.8% in the last three years, mainly due to its strong performance.

EOG Resources’ 1Q15 adjusted revenue fell 39% quarter-over-quarter. This was mainly a result of the fall in crude oil and natural gas prices starting in 2H14.

EOG’s reserves-to-production ratio, or reserve life, increased from 10.6x in 2012 to 11.5x in 2014. It would take EOG 11.5 years to deplete its proved reserves at its 2014 production rate.

On the heels of weak energy prices, EOG Resources wants to maintain steady production. This may result in flat production growth in 2015.

Of the top American upstream stocks, EOG Resources has been the outperformer since June 2012, returning 93%. During the same period, Pioneer Natural Resources (PXD) returned 61%.

There were 217 natural gas rigs operating in the week ended April 17, a loss of eight from the previous week. Natural gas rig count increased by three the previous week.

Gasoline demand increased from ~8.61 MMbpd to ~8.91 MMbpd last week. Gasoline inventories remain outside the five-year range despite the draw in inventories reported on Wednesday.

Distillate demand drives crude demand and crude prices. So, energy investors watch distillate inventories closely.

On Tuesday, April 14, the U.S. Bureau of Labor Statistics released its PPI (Producer Price Index) figures for February. The PPI gained 0.2% in March.

Magnetar Capital was established in 2005 by Alec Litowitz and Ross Laser. Currently, the hedge fund manages assets in excess of $12 billion.

In the past five years, many of the upstream and integrated energy companies have increased their debt. Some are more leveraged than others.

In 2010, US upstream energy companies aggregated $128 billion of total debt. As of 4Q14, this increased to $199 billion of combined debt, a jump of 55%.

Capping the month with a gain of 3.1% since January 30, WTI’s (West Texas Intermediate) increase has been small compared to Brent’s 18% increase.

Spectra Energy 4Q14 adjusted earnings beat estimates by 46%. On average, adjusted EPS has exceeded consensus EPS by ~9% in the past ten quarters.

Location-advantaged refiners like Valero Energy (VLO), Phillips 66 (PSX), and Marathon Petroleum (MPC), with refineries along the Gulf Coast, can export refined products.

Valero Energy’s (VLO) refining segment’s throughput volumes increased by 41,000 barrels a day compared to the previous year’s fourth quarter.

Natural gas inventory levels have a direct bearing on natural gas prices, which in turn affect the profitability of natural gas producers.

ConocoPhillips’ capex breakdown for 2015 includes major projects, development drilling, exploration and appraisal, and base maintenance.

The Clifton Ridge crude system is made up of three pipelines and two terminals. It supports the Lake Charles refinery in Westlake, Louisiana.

Phillips 66 Partners (PSXP) is a master limited partnership formed by Phillips 66 (PSX). PSXP operations are integral to PSX refineries.

In India, the consumption of oil products saw steady growth over the years. The CAGR (compound annual growth rate) for the ten years ending in March 2014 is above 3.5%.

Before moving on to India’s petroleum consumption, production, and refining, it would be beneficial to take a look at the various products that India produces and consumes.

Canton to East Sparta consists of two parallel pipelines that connect MPC’s Canton refinery with the MPLX East Sparta, Ohio, breakout tankage and station.

Apache Corporation is planning asset sales of certain of its oil and gas operations. The company is focused on building onshore acreage instead.

Exxon Mobil’s (XOM) stock price went up 2.4%, to $96.71, on October 31, 2014. Starting in November 2013, Exxon Mobil’s share price went up by 1.5%.

Activist investor Mario Gabelli’s GAMCO Investors, which owns a 9.1% in National Fuel Gas (NFG), is pressuring the company to spin off its gas utility segment from its natural gas exploration and midstream assets.

Chesapeake Energy (CHK) is an eminent energy exploration and production company in the U.S. Its operations span across the Marcellus, Utica, Niobrara, Mississippian Lime, Eagle Ford, Barnett, and Haynesville shales.

Intelligent investors have an opportunity to earn profits and avoid losses, if they understand how the yield curve may move when the Fed acts.

WTI traded flat last week, but firstly traded up $100 per barrel since December 27. This past week’s upward movement in prices was a short-term positive for the sector.

The spread between WTI and Brent closed through most of 2013, but it has experienced some volatility in recent months, given events in Libya and Syria.