Tag Archives: West Texas Intermediate

News, Politics, Government

Oil rises above $88 per barrel

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The price of oil rose above $88 per barrel on Friday as traders waded back into commodities following sharp sell-offs.

Benchmark crude for May delivery was up 36 cents to $88.09 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract for West Texas Intermediate rose $1.05, or 1.2 percent, to finish at $87.73 a barrel on Thursday.

Oil dropped $2.04, or 2.3 percent, on Wednesday, which was in its fourth daily drop of at least 2 percent in April. Crude had lost $10 a barrel over the past two weeks as the outlook for the global economy weakened and oil supplies remained high. The relatively low prices have rekindled investor interest, analysts said.

A dimmer outlook for global economic growth has caused the price of oil and other commodities to drop sharply. This week China reported slower-than-expected economic growth while the International Monetary Fund lowered its outlook for world economic growth for this year.

In London, Brent crude, which is used to price oil used by many U.S. refiners, was up 40 cents at $99.53 on the ICE Futures exchange.

In other energy futures trading on the Nymex:

— Gasoline rose 0.6 cent to $2.754 per gallon.

— Heating oil rose 1.2 cents to $2.78 a gallon.

— Natural gas fell 0.5 cent to $4.396 per 1,000 cubic feet.

From: http://feeds.foxnews.com/~r/foxnews/world/~3/NBhqUayBAKU/

Business, Finance, Occupation & Industry

Who Wins if Keystone XL Is Approved?

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By Arjun Sreekumar, The Motley Fool

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The debate over the controversial northern leg of the Keystone XL pipeline continues to rage.

On the one side are environmentalists and climate change campaigners who argue that the pipeline’s construction would be like a slap in the face to all those who take global warming seriously.

They suggest that green-lighting Keystone would lead to further development in Alberta’s oil sands – a region where oil production emits substantially greater quantities of greenhouse gases than conventional methods. This, they argue, would raise the earth’s temperature to potentially dangerous levels.

But the energy companies have their own agenda and continue to push for Keystone’s approval. Let’s take a look at some of the companies likely to benefit from Keystone’s construction.

Energy companies pushing for Keystone
If constructed, TransCanada‘s 875-mile Keystone XL Pipeline expansion project would transport up to 830,000 barrels per day of crude oil from Alberta’s oil sands to Steele City, Neb. From Nebraska the crude would make its way to Cushing, Okla., from where it would be moved south via Seaway – a major pipeline that runs from Cushing to refineries along the U.S. Gulf Coast and is operated jointly by midstream companies Enbridge and Enterprise Products Partners .

Refiners in particular would benefit tremendously from the pipeline, which would bring them barrel upon barrel of heavy, sour crude – a type of oil for which they currently have to rely on countries like Mexico and Venezuela.

Many are so thirsty for heavy crude oil that they’ve turned to alternative methods like rail and barge to get it. For instance, Valero‘s president, Joe Gorder, announced earlier this month that the company is looking into shipping Canadian crude via rail and barge to two of its plants – its Wilmington refinery in southern California, which would accept crude delivered via rail, and its St. Charles refinery in Louisiana, which would process crude shipped by barge from a delivery point in Illinois.

Similarly, PBF Energy announced in February that, starting next year, it will use rail to ship some 80,000 barrels a day of Canadian crude oil to its Delaware refinery. And Phillips 66 recently announced that its California refineries have now started to accept rail deliveries of heavy Canadian crude.

Another group of energy companies that stands to benefit from Keystone are the oil sands producers themselves. Due to limited outbound infrastructure from Alberta, these companies have languished at the hands of extremely low prices for their product, which, until recently, traded at more than a $30 discount to West Texas Intermediate, the main benchmark for American crude oil. Faced with shrinking margins, many have been forced to curtail spending.

Suncor, Canada‘s largest oil and gas producer by market value, announced in December that it would reduce its capital spending budget for 2013 by C$200 million. And Canadian Natural Resources , another major oil sands player, said that it plans to cut costs related to thermal sand production, a process used to heat …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

2 Big Challenges for Canadian Oil Sands Producers

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By Arjun Sreekumar, The Motley Fool

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The Canadian province of Alberta contains some of the largest known reserves of recoverable oil sands anywhere in the world. Not only can these oil sands provide both the U.S. and Canada with greater energy security, but their continued development could also lead to tens of thousands of jobs and other economic benefits for both nations.

While production from Alberta’s oil sands has ramped up significantly in recent years, transporting the crude oil to U.S. refiners has proved a major obstacle. In fact, limited transportation infrastructure has been one of the biggest reasons for the massive price disparity between Canadian oil sands crude and other crude oil benchmarks like Brent and West Texas Intermediate.

Let’s take a closer look at these transport challenges, as well as some of the methods U.S. refiners have used to overcome them.

Transport difficulties
In transporting crude to the U.S. Gulf Coast, Canadian producers have encountered two main problems.

The first is the delay of the proposed northern leg of the Keystone XL pipeline, operated by Canadian midstream company TransCanada . Its construction continues to face serious opposition on environmental grounds, though it did recently get a major boost from a U.S. State Department study that concluded in its favor.

The second is the strong competition between Canadian oil sands crude and American crude supplies, such as those produced in North Dakota’s Bakken Shale, for the limited pipeline capacity that currently exists.

As a result of these problems, Canadian oil sands crude – as reflected by the benchmark Western Canada Select – has traded at a massive discount to other crude oil benchmarks. Oil sands producers, which already face exorbitantly high production costs due to the complexity of oil sands drilling, have responded by reducing expenses.

For instance, Suncor , Canada‘s biggest oil and gas producer by market value, announced in December that it would reduce its capital spending budget for 2013 from C$7.5 billion to C$7.3 billion. And Canadian Natural Resources announced that it will be reducing expenses related to thermal sand production, a process commonly used in Alberta’s oil sands.

Rail emerges as a dominant alternative to pipelines
While Canadian pipeline giant Enbridge has attempted to combat some of these transport issues by boosting capacity on existing pipelines from Western Canada and by reversing some pipelines to transport crude into Eastern Canada, it hasn’t been enough to satisfy U.S. refiners. Faced with limited pipeline options, many are increasingly turning to rail and other methods to quench their thirst for heavy Canadian crude.

For instance, Phillips 66 recently said that it is now delivering Canadian crude to its California refineries via rail. Though it didn’t provide further details, the company does have prior experience in using rail to transport crude, having already purchased about 2,000 general purpose railcars to move inland oil to its refineries.

And Valero is also expecting to boost its use of rail and barge …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

3 Companies That Could Save America From $250 Oil

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By Tyler Crowe, The Motley Fool

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Despite increased oil production in the U.S. from unconventional sources such as the Bakken and Eagle Ford shales, oil prices haven’t gone down. In fact, the price for a barrel of West Texas Intermediate crude is at about $93 and climbing. What’s even worse is that one international group believes that the price of oil is poised to go up — way up.

Who is proclaiming this bad news? The Organization of Economic Cooperation and Development, or OECD. Based on its models, a barrel of oil could be in the range of $150 to $270 by the end of the decade. Let’s look at why they could be right and how we could avoid the sting of surging oil prices.

Why they could be right
Despite the large increase in domestic production, it costs more to access these new sources, and demand is still outpacing supply. According to EIA, demand for oil was about 1 million barrels per day higher than supply in 2011, and the projections for global demand are expected to continue to climb, thanks in large part to two countries: China and India.

On a worldwide proven-reserve basis, China and India are not well endowed, nor do they have a copious amount of deposits. Collectively, the two countries have only about 20.4 billion barrels of proven reserves, or about 1.3% of the world’s total supply. Also, a few weeks ago, the U.S. Department of Energy reported that China had surpassed the U.S. as the world’s largest importer of oil. From a raw numbers perspective, India doesn’t hold a candle to China, but it still imports about 80% of its oil needs. With China and India — the two most populous countries in the world — growing GDP at roughly 8% and 6% annually, demand will more than likely skyrocket.

Why they could be wrong
Models are great, and they can give a decent window into the future — if the correct assumptions are made. The OECD admits that these projections could be thrown off by two things: a slowing of global GDP, and the potential for oil substitutes to capture market share. Obviously, a slowing economy would put a dent in oil demand, but growing oil prices could be what brings GDP down as well. According to the IMF, imbalances in oil supply and demand could affect global GDP growth by as much as 1% annually — a bit of a Catch-22.

With oil potentially getting that expensive, we need to seriously consider the potential of seeing another energy source replace oil demand. In the past 23 years, gasoline prices and the price for a barrel of West Texas intermediate in the U.S. have traded at a multiple of roughly 33.1. Based on the OECD‘s projections, this could mean that gasoline in the U.S. would cost somewhere in the range of $6.05 to $10.85. With current prices already causing a consideration of alternative fuels, $10 a gallon certainly would tip the scales …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Phillips 66 Signs Domestic Crude Logistics Agreements To Increase Access to Secure, Advantaged Crude

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By Business Wirevia The Motley Fool

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Phillips 66 Signs Domestic Crude Logistics Agreements To Increase Access to Secure, Advantaged Crude

HOUSTON–(BUSINESS WIRE)– As an energy manufacturing company, Phillips 66 (NYS: PSX) is helping to shape the energy revolution in the U.S. by increasing supplies of cost-advantaged North American crude oil to its U.S. refineries. Phillips 66 has reached agreements with several logistics providers for rail loading and terminaling services and a pipeline project, all of which support a rapidly changing domestic energy landscape and energy security.

“We are aggressively pursuing increased access to advantaged crudes in North America by partnering with leading third-party transportation providers and better leveraging our own system capabilities,” said Greg Garland, Phillips 66 chairman and chief executive officer. “Increasing our utilization of those advantaged crudes should allow us to capture significant value in our Refining and Marketing businesses.”

Details of the agreements include:

  • Enbridge Energy Partners, L.P. (NYS: EEP) subsidiary Enbridge Rail (North Dakota) LLC has agreed to a three-year deal for railcar loading of Bakken shale crude at Enbridge’s Berthold, N.D., terminal beginning in May 2013, with volumes ramping up to 35,000 to 40,000 barrels per day (BPD) by November. The crude oil will be delivered to Phillips 66 refineries on the West and East Coasts, and the company may also pursue opportunities to send it to its Gulf Coast refineries.
  • Targa Resources Partners LP (NYS: NGLS) has agreed to provide rail unloading and barge loading services in Tacoma, Wash., The five-year agreement, which began in late 2012, allows advantaged U.S. or Canadian crude oil to be unloaded from railcars at Targa’s Tacoma terminal and transloaded onto barges for delivery to the Phillips 66 Ferndale, Wash., refinery. The facility also allows for delivery into the San Francisco, Calif., refinery, where crude imported from outside of North America could be replaced. Currently, the terminal is capable of receiving manifest rail (individual cars), but as volumes ramp up it will transition to unit train capability this summer. At full volume, the delivery capability is estimated to be approximately 30,000 BPD.
  • Magellan Midstream Partners, L.P. (NYS: MMP) has signed an agreement to transport advantaged crude on Magellan’s pipelines near Phillips 66’s refinery in Ponca City, Okla. The project will replace West Texas Intermediate crude from Cushing, Okla., with virgin crude from the nearby …read more
    Source: FULL ARTICLE at DailyFinance
Business, Finance, Occupation & Industry

IEA Lowers Oil Demand Forecast

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By 24/7 Wall St.

153715598

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In the wake of yesterday’s OPEC oil market report, we have the latest monthly report from the International Energy Agency (IEA) today. While the two differ somewhat in specifics, the general story is the same. Global demand for crude will not grow as quickly as either OPEC or the IEA had originally forecast, and prices will be lower.

The IEA today lowered its forecast global demand growth to 820,000 barrels a day, or a total of 90.6 million barrels a day. Yesterday OPEC forecast demand growth of 800,000 barrels a day for a total of 89.7 million barrels a day.

According to the IEA, OPEC production rose by 150,000 barrels a day in February to 30.49 million barrels a day, due mainly to an increase in Iraqi production. Demand for OPEC crude fell by 100,000 barrels a day, due largely to refinery maintenance in the United States and Europe.

Non-OPEC production fell by 60,000 barrels a day in February to 54.1 million barrels a day, which is still 600,000 barrels a day higher than average 2012 production. The IEA forecasts non-OPEC supply to grow by 1.1 million barrels a day in 2013 to a total of 54.5 million barrels a day.

Whether demand will catch up with supply in 2013 is the big question. Given the weakness in the global economy, betting that crude demand will grow and prices will rise is no better than an even-money proposition.

For a better read than the forecasts from the IEA or OPEC, it is worth paying attention to the price of gasoline at New York Harbor and to compare that to the price of Brent and to the differential between Brent and West Texas Intermediate. Then look at the futures prices and the open interest on the futures market. In the early part of this year, commodities traders and refiners were selling gasoline futures and buying crude futures following the closing of the Hess Corp. (NYSE: HES) refinery. Once the gasoline stores were determined to be sufficiently supplied, crude buying slowed and prices fell.

Filed under: 24/7 Wall St. Wire, Economy, Oil & Gas, Research Tagged: HES

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Global Partners Earnings: An Early Look

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By Dan Caplinger, The Motley Fool

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Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Global Partners is about to release its quarterly earnings. The key to making smart investment decisions with stocks releasing their quarterly reports is to anticipate how they’ll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you’ll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

The midstream and downstream segments of the energy industry have gotten a lot of attention lately, as high levels of oil and gas production have swamped the available capacity to move those products efficiently to where they’re needed. Global Partners combines both segments under one roof, with an impressive logistical network and about 1,000 gas stations focused in the northeastern United States. Let’s take an early look at what’s been happening with Global Partners over the past quarter and what we’re likely to see in its quarterly report on Thursday.

Stats on Global Partners

Analyst EPS Estimate

$0.50

Change From Year-Ago EPS

11%

Revenue Estimate

$4.36 billion

Change From Year-Ago Revenue

6.2%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Will Global Partners keep investors energetic this quarter?
Analysts have been cautious about Global Partners‘ near-term prospects but are highly bullish about its longer-term prospects. In the past few months, they’ve cut back on the master limited partnership’s earnings per share by $0.02, but they’ve added more than $1.20 per share to their calls for the full 2013 year. The stock has responded similarly, soaring more than 60% since early December.

The big news for Global Partners came in January, when refining giant Phillips 66 announced a deal with Global Partners to ship oil from the Bakken shale play in North Dakota to a Phillips refinery facility in Pennsylvania. Under the five-year contract, Phillips 66 takes on a commitment to take about 91 million barrels of crude, or roughly 50,000 barrels per day, which puts the contract’s value at about $8 billion given current prices for West Texas Intermediate. Because of a shortage of pipeline capacity serving the Bakken, Global plans to use its partnership with Canadian Pacific to send the oil by rail.

The Phillips 66 news caused Global Partners to raise its guidance for 2013. The MLP now expects EBITDA to grow at roughly a 50% pace this year compared with 2012. With the transportation deal adding about $10 to $15 per barrel to the price of crude, Global Partners is benefiting from the big disparity between global prices for Brent crude and the domestic price of oil linked to the WTI benchmark.

In its quarterly report, watch for Global Partners to discuss not just the Phillips 66 deal but …read more
Source: FULL ARTICLE at DailyFinance

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Can Canada's Oil Sands Overcome This Huge Hurdle?

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By Arjun Sreekumar, The Motley Fool

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While it’s easy to get caught up in the euphoria surrounding America’s shale oil and gas revolution, let’s not forget that our neighbors to the north have also been blessed with massive reserves of unconventional oil and gas.

Though Canada might be better known for producing another sticky, brownish commodity – maple syrup – its province of Alberta lays claim to one of the largest reserves of recoverable oil sands anywhere in the world.

In addition to being plentiful, crude oil derived from Canada’s oil sands is as cheap as the dirt it’s separated from. It’s also denser and has higher sulfur content than crude produced in U.S. shale oil plays, which makes it attractive as a feedstock for many U.S. Gulf Coast oil refineries.

But Texas is a long way from Alberta and pipelines are few and far between, leaving energy producers with few options. While many refiners are making do with alternative forms of transportation, there should be pipeline relief on the way.

Limited transport options for Canadian crude
With new production of up to 250,000 barrels per day expected from Western Canada this year, new pipeline capacity is in high demand. But unfortunately, existing pipeline infrastructure transporting Western Canadian crude to American markets is bursting at the seams. As a result, Western Canadian crude is trading at a massive discount to the main American crude oil benchmark, West Texas Intermediate.

While transport via rail and barge is serving as a temporary solution to deliver Canadian crude to Gulf Coast refiners, pipelines are still the most efficient and most economical long-term solution. Currently, U.S. companies use the Keystone XL pipeline, operated by TransCanada , to transport crude from Canada’s oil sands to a limited number of destinations in the U.S.

For instance, ConocoPhillips uses Keystone to move oil sands production to its Wood River refinery in Roxana, Ill. – about 15 miles northeast of St. Louis. The first delivery of crude to Wood River started in July 2010 and provides the refinery with greater flexibility in processing heavier grades of crude.

However, even with the expansion of the Seaway pipeline, operated jointly by Enbridge and Enterprise Products Partners , the volumes of crude from Canadian oil sands being shipped to the U.S. are relatively insignificant. As it stands, Canadian crude is finding its way to coastal Texas refineries at a rate of some 100,000 barrels per day – a relative trickle compared to the quantities of oil being shipped from the Eagle Ford and the Permian Basin, two prolific oil plays in Texas.

But in the years ahead, two projects are aiming to change all that. Let’s take a look at both.

Proposed new pipeline to St. James
On Feb. 15, Enbridge and Energy Transfer Partners announced that they have agreed to jointly develop a project that will allow pipeline access to eastern Gulf Coast refiners from a hub located in Patoka, Ill.  

The Patoka hub …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why This Refining Stock Could See Further Gains

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By Arjun Sreekumar, The Motley Fool

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The U.S. Gulf Coast is about to be inundated with oil. But not foreign oil, as was often the case in the past. I’m talking about light, sweet crude oil produced right here in America. The reason?

A number of pipeline projects — some already in service and others expected to come on line this year — will provide a substantial boost to takeaway capacity from the Eagle Ford and the Permian Basin, both major oil plays located in Texas. When the crude oil deluge hits the Gulf Coast, analysts expect the regional benchmark price — Louisiana Light Sweet, or LLS — to fall substantially.

At the same time, the expansion of the Seaway pipeline and the start-up of the Keystone XL Gulf Coast extension project are expected to lead to a narrower spread between the main domestic oil benchmark — West Texas Intermediate, or WTI) — and the global crude oil benchmark, Brent.

These are both major changes with some major implications for different refiners. Let’s first look at the broad impacts on mid-continent and Gulf Coast refiners and then examine one refining stock that appears best positioned to capitalize on these trends.

Impact on mid-continent refiners
Over the past couple of years, mid-continent refiners with access to cheap WTI have enjoyed remarkable profits and soaring stock prices. As a whole, their net operating margins averaged $18.59 last year, significantly higher than margins in 2011.  

For instance, HollyFrontier , which operates five refining facilities in the mid-continent, southwestern, and Rocky Mountain regions, benefited tremendously from its access to crude oil flowing from North Dakota’s Bakken shale and Texas’ Permian Basin. In the fourth quarter, the company’s overall refining margins jumped to $24 a barrel, up from $15.32 a barrel in the year-earlier  period.

This favorable refining environment, along with an increase in production, contributed to the company’s record 2012 earnings. In the fourth quarter, HollyFrontier posted a profit of $391.6 million, or $1.92 a share, representing a whopping 75% increase over the year-earlier period.

Similarly, Western Refining , a company that struggled for years with heavy debt and poor refining margins, has also reaped the rewards stemming from its highly advantageous geographic position. The company’s 128,000-barrel-per-day refinery in El Paso, Texas, has capitalized on cheap crude flowing from the nearby Permian Basin, which has boosted overall margins and allowed the company to reduce its debt load and even raise its dividend.

Going forward, however, if the spread between WTI and Brent narrows significantly, it would lead to weaker refining margins for these companies. But for reasons I discussed in a separate article, I think there’s a good chance that this is unlikely and that the WTI-Brent spread will remain wide throughout the year.

Impact on Gulf Coast refiners
On the other hand, I’m more convinced that LLS prices will fall, which would be good news for Gulf Coast refiners. Analysts at Tudor Pickering, an integrated energy …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Has Tesoro Become the Perfect Stock?

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By Dan Caplinger, The Motley Fool

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Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing’s for sure: You’ll never discover truly great investments unless you actively look for them. Let’s discuss the ideal qualities of a perfect stock, then decide if Tesoro fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it’s certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can’t produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management’s attention. Companies with strong balance sheets don’t have to worry about the distraction of debt.
  • Money-making opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can’t afford to pay too much for even the best companies. By using normalized figures, you can see how a stock‘s simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can’t be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let’s take a closer look at Tesoro.

Factor

What We Want to See

Actual

Pass or Fail?

Growth

5-year annual revenue growth > 15%

8.4%

Fail
 

1-year revenue growth > 12%

8.5%

Fail

Margins

Gross margin > 35%

7.5%

Fail
 

Net margin > 15%

2.3%

Fail

Balance sheet

Debt to equity < 50%

33.6%

Pass
 

Current ratio > 1.3

1.61

Pass

Opportunities

Return on equity > 15%

17.7%

Pass

Valuation

Normalized P/E < 20

8.91

Pass

Dividends

Current yield > 2%

1.4%

Fail
 

5-year dividend growth > 10%

(5.1%)

Fail
       
 

Total score

  

4 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at Tesoro last year, the company has held onto all three points it gained from 2011 to 2012. The stock has absolutely soared, up about 120% over the past year.

Tesoro has enjoyed perfect conditions in the refining industry lately. Because of the massive rise in production of domestic crude, refineries that obtain oil supplies that are priced based on West Texas Intermediate benchmarks have enjoyed …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Has HollyFrontier Become the Perfect Stock?

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By Dan Caplinger, The Motley Fool

Filed under:

Every investor would love to stumble upon the perfect stock. But will you ever really find a stock that provides everything you could possibly want?

One thing’s for sure: You’ll never discover truly great investments unless you actively look for them. Let’s discuss the ideal qualities of a perfect stock and then decide whether HollyFrontier fits the bill.

The quest for perfection
Stocks that look great based on one factor may prove horrible elsewhere, making due diligence a crucial part of your investing research. The best stocks excel in many different areas, including these important factors:

  • Growth. Expanding businesses show healthy revenue growth. While past growth is no guarantee that revenue will keep rising, it’s certainly a better sign than a stagnant top line.
  • Margins. Higher sales mean nothing if a company can’t produce profits from them. Strong margins ensure that company can turn revenue into profit.
  • Balance sheet. At debt-laden companies, banks and bondholders compete with shareholders for management’s attention. Companies with strong balance sheets don’t have to worry about the distraction of debt.
  • Moneymaking opportunities. Return on equity helps measure how well a company is finding opportunities to turn its resources into profitable business endeavors.
  • Valuation. You can’t afford to pay too much for even the best companies. By using normalized figures, you can see how a stock‘s simple earnings multiple fits into a longer-term context.
  • Dividends. For tangible proof of profits, a check to shareholders every three months can’t be beat. Companies with solid dividends and strong commitments to increasing payouts treat shareholders well.

With those factors in mind, let’s take a closer look at HollyFrontier.

Factor

What We Want to See

Actual

Pass or Fail?

Growth

5-year annual revenue growth > 15%

33.2%

Pass
 

1-year revenue growth > 12%

30.1%

Pass

Margins

Gross margin > 35%

16.2%

Fail
 

Net margin > 15%

8.6%

Fail

Balance sheet

Debt to equity < 50%

21.2%

Pass
 

Current ratio > 1.3

2.23

Pass

Opportunities

Return on equity > 15%

28.9%

Pass

Valuation

Normalized P/E < 20

6.87

Pass

Dividends

Current yield > 2%

2.1%

Pass
 

5-year dividend growth > 10%

68.2%

Pass
       
 

Total score

  

8 out of 10

Source: S&P Capital IQ. Total score = number of passes.

Since we looked at HollyFrontier last year, the company has gained another point after climbing three points from 2011 to 2012, as the stock‘s dividend yield soared. Yet the share price has jumped even further, rising about 70% over the past year.

In its refining operations, HollyFrontier has continued to benefit from the big price differential between West Texas Intermediate and Brent crude. The situation has created a dividing …read more
Source: FULL ARTICLE at DailyFinance

News, Politics, Government

World Oil Hits Supply Constraints; North Sea Production Nears Historic Low

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By Kenneth Rapoza, Contributor

Anyone in the northeast filling up their house with heating oil knows, oil prices are going higher. What investors know is that crude oil markets have had quite the week, with Brent oil futures settling above the $118 per barrel on most days.  With the United States being a net importer of oil, of course, that European Brent crude price is more important that West Texas Intermediate, which is now trading at $96 a barrel. ven though macroeconomic sentiment weakened slightly on the back of poor fourth quarter GDP numbers in Europe, oil continues to get price support from a solid underlying demand-supply equation and ongoing geopolitical elements in the middle east. In this context, last week saw yet another failure in talks between the International Atomic Energy Agency and the government of Iran. No date has been set for future talks and the failure in a negotiated agreement comes just two weeks before more meetings, this time between Iran and the so-called P5+1 (China, France, Germany, Russia, U.K. and the U.S.). That in mind, Barclays Capital told clients in a note on Feb. 15 that supply constraints would serve as strong support for oil prices in the weeks ahead. The full set of supply figures for North Sea oil (Brent basis) for 2012 was released by the Norwegian Petroleum Directorate and these show the country’s production averaging 1.91 million barrels daily of oil and oil equivalents over the year. That figure stands at historic lows and 13% below the country’s own production expectations for the year. Over 2012, output was negatively affected by a multiplicity of technical problems at a variety of fields, including Hog, Oseberg, Vigdis and Troll. Preliminary data for January show total output at 1.85 mb/d, lower on the year by an impressive 255 thousand b/d, though 1% higher than the Directorate’s forecast production for the month. Then there are the ongoing outages in Brazil, Syria and Sudan in non-OPEC nations. As a result, Barclays’ tally of non-OPEC supply disruptions now stands at 875 thousand barrels daily, about 256 thousand less barrels of oil less than the previous month. …read more
Source: FULL ARTICLE at Forbes Latest

News, Politics, Government

Oil rises above $94 on China, US recovery hopes

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Oil prices rose above $94 on Monday, supported by signs of economic recovery in the U.S. and China.

Benchmark oil for February delivery was up 56 cents to $94.12 per barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. The contract dropped 26 cents to finish at $93.56 a barrel in New York on Friday.

Gordon Kwan, head of energy research at Mirae Asset Securities Ltd. in Hong Kong, said oil prices were rising on signs that the fragile economic recoveries in the world’s two biggest economies appeared to be gaining traction. The U.S. housing market has shown steady improvement, while China‘s trade growth rebounded strongly in December.

“China and the U.S. appear to be on a very solid track of economic recovery. This supports oil prices at much higher levels.” He said that prices were also moving up because of increased energy consumption in China, which is enduring its coldest winter in nearly three decades.

“There is the possibility that West Texas Intermediate could reach $95 per barrel in the coming days and Brent could go to $115,” Kwan said.

Brent crude, used to price international varieties of oil, was up 39 cents to $110.23 per barrel on the ICE Futures exchange in London.

In other energy futures trading on Nymex:

— Wholesale gasoline rose 0.3 cent to $2.758 a gallon.

— Heating oil rose 1.1 cents to $3.02 a gallon.

— Natural gas rose 3.3 cents to $3.36 per 1,000 cubic feet.

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Follow Pamela Sampson on Twitter at http://twitter.com/pamelasampson

Source: FULL ARTICLE at Fox World News

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Why Low 2013 Gas Prices Will Soon Evaporate

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By Breaking News

gas pump Why Low 2013 Gas Prices Will Soon Evaporate

Gasoline prices, which hit a 2012 low of $3.22 a gallon Dec. 19, are up 8 cents in the past two weeks and will likely continue climbing through April. Experts say the 2013 national average will likely top out at about $3.95 a gallon.

That early winter break you’ve been getting at the gasoline pump? It’s beginning to show signs of cracking.

Gasoline prices remain below $3 a gallon in at least 50% or more outlets in 14 states. But the national average has crept up three cents to $3.30 a gallon the past week and 8 cents since hitting a 2012 low of $3.22 in mid-December.

It’s likely to get worse in the coming weeks. Crude oil prices are up about $10 a gallon the past month, with benchmark West Texas Intermediate crude closing at $93.09 a barrel Friday, finishing the week up 2.5%.

Read more at USA Today.

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Source: FULL ARTICLE at Western Journalism