Iraq: Protesters Besiege “Strategic” Oil Sites, Mahdi Blocked by Blocs

Iraqi dеmоnѕtrаtоrѕ соntіnuеd on Wеdnеѕdау tо сut оff аll rоаdѕ leading to оіl fіеldѕ аnd sites in Zubair district, west of Bаѕrа city, іn рrоtеѕt against the dеtеrіоrаtіоn оf the есоnоmіс ѕіtuаtіоn in the country dеѕріtе іtѕ hugе oil rеѕоurсеѕ. According tо nеwѕ sources,” thе dеmоnѕtrаtоrѕ рrеvеntеd еmрlоуееѕ frоm ассеѕѕ tо оіl ѕіtеѕ, whоѕе еxроrtѕ ассоunt fоr 70 реrсеnt оf Iraq’s oil.

Saudi Aramco Announces World’s Largest IPO

Sаudі Arаmсо hаѕ аnnоunсеd аn initial рublіс оffеrіng (IPO), wіth a рrісе rаngе of SAR 30-32 реr ѕhаrе ($8 to $8.50), giving рrіоrіtу to Sаudі іnvеѕtоrѕ. Aссоrdіng tо thе рrісе range, the vаluе оf thе wоrld’ѕ most рrоfіtаblе соmраnу rаngеd frоm $1.6 tо $1.7 trіllіоn. The соmраnу wіll аnnоunсе the final ѕhаrе price оn Dесеmbеr 5.

Sudan Budget, in Need of Cash, Prioritizes Health and Education

Thе Sudаnеѕе Cаbіnеt іѕ mоvіng tо rеduсе ѕреndіng on the ѕесurіtу ѕеrvісеѕ and аuthоrіzеѕ the gеnеrаl budget fоr 2020 to fосuѕ оn thе еduсаtіоn and hеаlth ѕесtоrѕ. Thе sources ѕаіd that the vіѕіоn оf the trаnѕіtіоnаl gоvеrnmеnt is tо асhіеvе a соmрrеhеnѕіvе peace іn thе соuntrу, whісh rеԛuіrеѕ rеduсіng spending оn ѕесurіtу ѕеrvісеѕ. The ѕроkеѕmаn of the Sudanese gоvеrnmеnt Faisal Saleh, іn рrеѕѕ ѕtаtеmеntѕ, ѕаіd thаt the Council of Mіnіѕtеrѕ аррrоvеd thе general guidelines fоr thе budgеt fоr 2020, focusing оn thе еduсаtіоn аnd hеаlth ѕесtоrѕ.

Iran Announces Discovery of New Oil Field with 53 Billion Barrels

Irаn has аnnоunсеd thе dіѕсоvеrу оf a lаrgе oil fіеld, with rеѕеrvеѕ of 53 billion bаrrеlѕ of crude oil. The nеwѕ оf the dіѕсоvеrу оf thе оіl fіеld іn thе іntеrnаtіоnаl mеdіа hаѕ also been widely reflected. Hаѕѕаn Rоuhаnі announced the discovery Sunday on state television. However, Iran fасеѕ rеѕtrісtіоnѕ оn thе ѕuррlу аnd sale оf оіl duе to ѕеvеrе oil sanctions. In аddіtіоn, the еxtrасtіоn and ореrаtіоn of this lаrgе oilfield require ѕресіаlіzеd capital and knоwlеdgе, including foreign capital аnd tесhnоlоgу.

Chesapeake Energy Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 9.5% YTM

This week, Durig looks at an energy company that is making the transition from its historical focus on natural gas to be more focused on oil production. Chesapeake Energy (NYSE:CHK) has been making strides this year to transition towards a more oil focused production portfolio. Chesapeake has already increased oil in its production portfolio from 17% in 2018, to 24% as of the end of the second quarter.  The company estimates it will exit 2019 with oil representing 26% of its production. Oil is a higher margin product, so Chesapeake is already seeing the fruit of its decision (see bullet points above).

Iranian Tanker “Attacked,” Oil Prices Soar

An Iranian tanker was hit on Friday in the Red Sea by two blasts, both of them, according to Iranian state media, caused by missiles. The incident took place off the coast of Saudi Arabia and soon raised fears of escalating tension between the two countries in the unstable region. The missile attack could not yet be independently confirmed, but the location of the Red Sea would be unusual— most hostilities involving Iran occur in the Persian Gulf.

Venezuela “Categorically Rejects” Responsibility for Oil Spill

Venezuela denied responsibility on Thursday for oil spills that polluted more than 130 Brazilian beaches. In the community, Venezuelan state oil company PDVSA said Brazil’s accusations about the origin of the oil are unfounded. “PDVSA categorically rejects statements by Brazil’s Environment Minister Ricardo Salles, who accuses Venezuela of being responsible for crude oil that has contaminated the beaches of northeastern Brazil since early September,” the state-owned company said.

Is Yemen Turning into Saudi Arabia’s Vietnam?

The Saudi monarchy experienced attacks against their oil production facilities in the last week. Tensions in the Middle East escalated following the drone attacks on the two largest oil facilities in Saudi Arabia. Yemen’s Houthi rebels claimed responsibility for the attacks.

The global economic impact will be felt, since Saudi Arabia lost more than half of their crude output via the attacks. The nation is the number one oil producer in the world, holds 5% of the global oil supply, and cut output by 5.7 million barrels per day. last year, Aramco’s net income was $111.1 billion.

California Resources Corporation Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 33.5% YTM

This week, Durig Capital takes a look at a unique oil and gas producer. Reviewed several times in the past, most recently in May of 2019 following the company’s release of their Q1 Results, California Resources Corporation (NYSE:CRC) produces oil, natural gas and natural gas liquids (NGL) strictly within the state of California. And, it sells all of it oil production in the state of California, which, as a state, represents the 5th largest economy in the world. The company recently signed its third major joint venture agreement, which will allow the company to add production and revenue with no initial capital cost to CRC. In addition to this great news, CRC also posted some excellent results from its second quarter (see bullet points above).

CSI Compressco Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 10.25% YTM

This week, Durig Capital takes a look at a company that provides compression services and equipment for the oil and gas industry. With the demand increasing for takeaway capacity from oil and gas fields around the country, CSI Compressco’s services become even more valuable and essential. The company had a fantastic second quarter, with record setting utilization, increased revenues and adjusted EBITDA.

 

  • Second quarter overall utilization came in at a record setting 89.1%.

  • Revenues increased by 36% over second quarter 2018.

  • Adjusted EBITDA increased 22% over first quarter and 41% year-over-year.

  • Outstanding interest coverage of 2.2x.

 

Strait Trippin’: Iran Seizes Tanker, US Downs Drone

A month ago, Iran’s Revolutionary Guard shot down an unmanned American drone in the Strait of Hormuz.  Later that week, President Trump called off a retaliatory military attack on Iran at the last minute.  He explained the next day that he did not believe the loss of Iranian lives to be proportionate to the loss of a machine.  On Thursday, the United States appeared to level the score.  US Marines jammed an unmanned Iranian drone in the Strait, downing the aircraft and destroying it.  The incident reignited tensions between the two countries, which seem to be stumbling toward war.

Alaska Governor, Legislature Remain Far Apart (800 miles) on Budget Impasse

In a scene reminiscent of Oregonor Moldova— two separate sides gathered in two separate locations to convene two separate special sessions of the legislature, ostensibly to find two separate solutions to Alaska’s mounting budget crisis.  With 38 senators and representatives gathered in the state capital, Juneau, and 22 in Wasilla, the hometown of Republican Governor Mike Dunleavy, an attempt to override some $440 million in spending cuts appeared to fail Wednesday.  A three-fourths vote by a joint session (one would assume, held in the same place) will be needed by Friday, or Gov. Dunleavy’s line-item vetos will stand.

Denbury Bonds, Short Term, High Yield, Fixed Income Investment, Yielding 18.25% YTM

This week, Durig Capital looks at an oil producer who has built its company using non-traditional production techniques. Denbury Resources (NYSE:DNR) has been successfully using enhanced oil recovery (EOR) techniques to build its name in the world of tertiary oil production. The company had a fantastic 2018 as well as a solid first quarter.

Has Oil Bottomed? If Demand is So Low Due to China, Why isn’t Copper Showing Any of the Same Patterns?

If oil demand is down so much due to the China trade war and tariffs, how come the more economically sensitive materials, such as copper, have not felt the same economic downward price effects?

Today China has asked it’s refineries to hold off on placing new orders for crude oil imports in anticipation of lower prices once and if demand stalls further. The Chinese buyers have cut off purchases of U.S. crude oil as the trade dispute between Beijing and Washington continues.

Is the Economy Slowing? A Few Indicators Are Saying Yes.

  1. Interest Rates: The 10-year Treasury is hitting around 2.08%, down from 3.25% just three months ago.
  2. Oil is down around $53 per barrel. Down from about $65 in April.
  3. Industrial Production has hit multi-year lows.
  4. Gold and the dollar are moving up.

These four indicators have many forecasting both a tougher time ahead and a rotation into safe havens.  The central focus of concern is the trade wars with China and the new tariffs with Mexico.

Explore Over 17% YTM with California Resources Corporation, Bonds Mature September 2021

This week, Durig Capital takes a look at a unique oil and gas producer. California Resources Corporation (CRC) produces oil, natural gas and natural gas liquids (NGL) strictly within the state of California. Most people know that California is one of the largest states (physically) in the U.S. But most probably don’t know that it represents the world’s 5th largest economy. Against this backdrop, CRC produces oil, natural gas and NGLs and sells all of it in the state of California. This looks to be a great situation for CRC – a local buyer for all of its product and a huge appetite for more. CRC, a spinoff of Occidental Petroleum in 2014, has spent the past few years recovering from the oil doldrums of 2016 and it looks to be on the upswing. Some of the highlights from its most recent quarterly results in bullet points above.

Oil Becomes Black Gold Again

Venezuela: The World’s Richest Country in Resources with the Worst Economy in Generations; What Happened?

Updated Review of Entrec Corporation, 16% YTM, Maturing June of 2021

This week, Durig Capital reviews a Canadian heavy haul transportation and crane company. Entrec Corporation provides heavy haul transportation and crane solutions to the oil and gas, construction and power generation industries, among others.  Entrec’s most recent results for both its fourth quarter and full year 2018 showcase healthy growth in the company’s U.S. operations. And given the volatility in oil and gas late last year, the company’s results are even more impressive.

Pull Nearly 12% YTM with CSI Compressco, Bonds Mature August 2022

This week, Durig Capital takes a look at a company that provides compressions services and equipment for the oil and gas industry. CSI Compressco (CCLP) has had multiple successive quarters where the company has increased revenues and its latest quarter did not disappoint. Included with this increase were several other notable achievements.

With the continued demand for LNG and the current and planned LNG terminals in the U.S. and Canada, CSI Compressco looks to be perfectly positioned to take advantage of this demand. In light of the company’s solid performance in 2018, the company’s short-term bonds maturing 2022 are an ideal candidate for additional weighting in Durig Capital’s Fixed Income 2 (FX2) High Yield Managed Income Portfolio, shown below.

Yield Enhancement and Easy Recyclability Pushing n-Hexane Growth in Oil Industry

The n-hexane market will witness significant demand from end-use applications such as oil extraction, polymerization, pharmaceuticals, rubber processing, adhesive & sealant, industrial cleaning & degreasing and others (Inks, Glues, leather dressing, etc.), according to Persistence Market Research’s report titled “n-Hexane Market: Global Industry Analysis 2013–2017 and Forecast 2018–2026.”

Are Oil Prices About to Gush?

Load Up On Over 9% YTM from Teekay Corporation, Bonds Mature January 2020

This week, Durig Capital takes a look at a leading marine transportation company. Teekay Corporation provides marine transportation, storage, and vessel leasing for the oil and natural gas industry. The company’s third quarter saw increases in its subsidiaries revenues over second quarter. Here are some highlights from its third quarter results.

 

  • Teekay Tankers nearly doubled its quarterly revenues from the prior year period.

  • Teekay Corporation recorded adjusted cash flow from vessel operations of $19.8 million as compared to $1.2 million a year earlier.

  • Teekay LNG revenues increased to $123.3 million as compared to $104.3 million a year earlier.

Has the Market Bottomed? A Lot of Smart People Think So!

Some Analysts Calling for Oil Rise to $100; Others Say Down to $40 a Barrel; Who’s Right?

Hidden Factors Driving these Markets: Natural Gas up 40% and Oil Down 20%

American Shale Oil: Real Long Term Growth or Does History Repeat Itself with Boom then Bust?

Drive Over 8.75% Yield-to-Maturity with CSI Compressco, Bonds Mature August 2022

This week’s bond issuer is a company entrenched in production and transportation of natural gas. CSI Compressco’s (CCLP) first and second quarters have been outstanding, both recording consecutive increases in revenues. The oil and gas industry’s activity level has been steadily increasing over the past 18 months and CCLP has started to see the effects of this on all three of its business segments – Compression Services, Aftermarket Services, and Equipment Sales. Its second quarter results gives investors reason to look twice at this natural gas services company.

 

  • Q2 revenues increased 33% year-over-year, and 17% over Q1 2018.

  • Adjusted EBITDA increased 21% over Q1 and 19% year-over-year.

  • Compressions Services increased gross margin by 460 basis points.

  • At the conclusion of Q2, new equipment sales had generated a backlog of $102 million, revenue to be recognized later this year and the first half of 2019.

Pick Up Over 7.5% Yield-to-Maturity with Approach Resources, Bonds Mature June 2021

This week, Durig Capital takes a look at an oil and gas producer who has balanced its revenue streams between oil, natural gas and natural gas liquids (NGLs).  Approach Resources has posted excellent results the past two quarters and has some unique advantages amongst oil and gas producers – significant, contiguous acreage, 100% owned infrastructure, improved well recovery and a balanced product portfolio. It’s most recent quarter continued the positive trend set in Q1.

 

  • A 21% increase in revenues year-over-year.

  • Production increases over Q1 by 2%, at the high end of quarterly guidance.

  • 18% increase in EBITDAX.

  • Interest coverage of 2.7x.

Parker Drilling, Over 13.25% Yield-to-Maturity, August 2020

This week, Durig Capital looks again at Parker Drilling, a company that provides contract drilling / drilling related services and rental tools to the oil industry. (Durig Capital reviewed Parker Drilling in June 2015). Having survived the unprecedented declines in oil prices over the past three years, Parker Drilling has emerged as a leaner, more competitive company. Its most recent quarterly results show a company that continues to perform.

 

  • Q2 adjusted EBITDA growth of 39% year over year.

  • Consecutive quarterly revenue growth of 8.1%.

  • Gross margin as a percentage of revenues increased to 22.8%, up from 16.5% in Q1.

  • Q2 interest coverage ratio of 2.4x.

Discover 7.75% YTM with Denbury Resources, Bonds Mature August 2021

This week’s bond review focuses on a company involved in tertiary oil production. Denbury Resources produces oil using carbon dioxide injections to draw more oil out of fields that have exhausted their production from conventional methods. Denbury has had a fantastic year since our last review of the company and has just posted results from the company’s second quarter. Highlights include:

 

  • 56% increase in revenues.

  • Production growth of 4%.

  • Adjusted Cash Flow from Operations increased 106% year-over-year.

  • Q2 interest coverage was 3.4x