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Despite the U.S.-China trade setback, stocks could still climb in 2019 and beyond, and the tech industry remains a key growth driver. Therefore, we searched for tech companies with our Zacks Stock Screener that also pay a dividend...
The federal government's EIA report revealed that crude inventories rose by 1.4 million barrels, compared to the 1.6 million barrels increase that energy analysts had expected.
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Greif (GEF) is poised to grow positive earnings growth projections, the Caraustar acquisition and diverse product portfolio. Consequently, it is a stock worth retaining in your portfolio.
Investing.com – Volatility was back forcefully in oil Wednesday with the market jumping nearly 3% to recoup almost all it lost in the previous session.
(Bloomberg) -- California intensified its battle against fossil fuels by seeking independent reviews of all pending hydraulic fracturing permits and halting approvals of a key production technique in an area that has pumped crude for more than a century.Governor Gavin Newsom ordered regulators to assess the safety of high-pressure steamflooding, a production process that has been linked to recent oil leaks in Kern County, the state’s Department of Conservation said in a statement Tuesday. The state is also requesting third-party scientific reviews of any pending applications for fracking, as well as looking for ways to toughen regulations to protect residents near oil and natural gas well sites.It’s the latest in a series of actions or threats against unconventional oil and gas production. Democratic presidential contenders Elizabeth Warren and Bernie Sanders have promised to ban fracking if elected. The U.K. government halted new fracking wells in England earlier this month on concerns about earthquakes.Newsom, a San Francisco Democrat in his first term as governor, has been stepping up pressure on oil and natural gas producers through a series of initiatives such as denying permits and drilling leases on land that is or once was protected by federal authorities.California Resources Corp., the state’s largest oil producer, tumbled as much as 32% on the news and its bonds dropped to just 25 cents on the dollar, the lowest since 2016. The company predicted no “significant effect” on its output because the type of steamflooding it employs is exempt from the ban, according to an email.Berry Petroleum Corp., a driller based in California’s de facto oil capital, Bakersfield, slumped as much as 25%. The new rules won’t affect Berry’s 2019 financial performance but “potentially impacts” certain wells that will be drilled in the future, the company said in a statement. KeyBanc Capital Markets analysts Leo Mariani and Steven Dechert downgraded their recommendation for the stock to the equivalent of sell, from the equivalent of hold.“This moratorium is not the most effective way to manage the industry,” Berry said. It will benefit “countries that export oil to California such as OPEC countries, which have poor social justice and environmental records, pay no California taxes and don’t employ our citizens.”Phase OutCalifornia is the sixth-biggest oil-producing state in the nation, ahead of former powerhouses like Alaska. Although in-state output has plunged by 60% since the mid-1980s, explorers rely on so-called enhanced recovery techniques like steamflooding to keep fields first drilled in the 1800s in active production.“These are necessary steps to strengthen oversight of oil and gas extraction as we phase out our dependence on fossil fuels and focus on clean energy sources,” Newsom said. “This transition cannot happen overnight; it must advance in a deliberate way to protect people, our environment, and our economy.”The state fined Chevron Corp. $2.7 million last month after several “surface expressions” of water and oil were found at the Cymric field near Bakersfield. The Department of Conservation attributed the leaks to steamflooding and said they created a “significant threat of harm to human health and the environment.”Yorba LindaChevron said it will comply with the new regulations while protecting people and the environment. Western States Petroleum Association said the state’s moves are “disappointing” given that “multiple state agencies already validate our protection of health, safety and the environment during production.”Steamflooding in California was introduced in the Yorba Linda Field in 1960 and then the massive Kern field a year later.Explorers such as California Resources tout it as a low-cost method for creating steady, long-term crude flows from fields that otherwise would contribute little in terms of output or profits. The technique is also used in West Texas, Colombia and the Persian Gulf region.“Governor Newsom’s historic action protects Californians from some of the most dangerous and destructive oil-extraction techniques,” said Kassie Siegel, senior counsel and director of the Center for Biological Diversity’s Climate Law Institute. “This marks the turning of the tide against the oil industry, which has been allowed to drill at will in our state for more than 150 years.”\--With assistance from Joe Carroll.To contact the reporters on this story: Kevin Crowley in Houston at firstname.lastname@example.org;David Wethe in Houston at email@example.comTo contact the editors responsible for this story: Simon Casey at firstname.lastname@example.org, Tina Davis, Carlos CaminadaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Investing.com – Wall Street fell on Wednesday as tensions between the U.S. and China put a damper on any hope of a trade breakthrough between the two.
(Bloomberg) -- Oil dropped the most in seven weeks as American crude stockpiles are forecast to rise and U.S.-China trade talks stall.Futures fell 3.2% in New York, the biggest decline since Sept. 30. U.S. oil inventories probably rose by 1.5 million barrels last week, according to a Bloomberg survey ahead of a government report on Wednesday. Markets are also being pressured by the impasse in trade discussions between the U.S. and China. While Russia is unlikely to agree to deepen output cuts, it could extend existing curbs to support Saudi Arabia, Reuters reported.“We are going into this week with another storage build expected in the EIA’s report,” said Bob Yawger, director of futures division at Mizuho Securities USA. “The trade deal has soured and the vibe on the deal has turned a bit negative and that will affect demand too.”The ebb and flow of trade talks between Washington and Beijing has weighed on oil prices, which have fallen more than 15% from an April peak. The report that Russia isn’t considering deeper cuts follows news of other large producers in OPEC+ who aren’t pushing for deeper oil-supply cuts either, according to delegates across the coalition.“The market push down was already vulnerable,” said Phil Flynn, senior market analyst at Price Futures Group in Chicago. “Russia is playing hardball going into an OPEC meeting, but they always do.”West Texas Intermediate for December delivery fell $1.84 to settle at $55.21 a barrel on the New York Mercantile Exchange. The front-month contract will expire on Wednesday.Brent for January settlement slipped $1.53 to end the session at $60.91 on the London-based ICE Futures Europe Exchange. The global benchmark crude traded at a $5.56 premium to WTI for the same month.U.S. crude stockpiles are at the highest level in four months. If official government data confirms the forecast in inventories on Wednesday, it would be the fourth straight weekly advance.\--With assistance from Kriti Gupta.To contact the reporter on this story: Jacquelyn Melinek in New York at email@example.comTo contact the editors responsible for this story: David Marino at firstname.lastname@example.org, Catherine Traywick, Mike JeffersFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- ConocoPhillips announced a 10-year plan to buy back $30 billion of shares, equivalent to about half of its current market capitalization, as the oil producer attempts to distance itself from the troubled U.S. shale industry.The company also said it will pay dividends of about $20 billion over the period and limit average capital expenditure to about 10% above current levels.Chief Executive Officer Ryan Lance told investors and analysts at a presentation in Houston on Tuesday that the long-term plan sets the company apart from its peers amid a fight to regain the interest of shareholders in U.S. oil and gas, one of the worst-performing sectors this year.“The industry faces a flight of sponsorship by investors,” Lance said during the presentation. There’s a “struggle for relevance unless the industry can create value on sustained basis.”After being forced into a painful dividend cut during the 2014-2016 oil price crash, the third-largest U.S. oil producer has regrouped under Lance and has built a reputation of being one of the more dependable producers, differentiating itself from other shale operators that have disappointed on production and earnings.Energy stocks have shrunk to less than 5% of the S&P 500 Index, less than half the level a decade ago, after shale producers burned through nearly $200 billion of cash in pursuit of surging flows of oil and gas. Oil and gas producers have responded by returning more cash to shareholders. At the end of their most recent full fiscal years, U.S. energy companies in the S&P 500 bought back $24.2 billion of shares, compared with $10.5 billion in the previous year, according to data compiled by Bloomberg.With investors focused on returns rather than output expansion, Conoco is busy morphing into a low-growth but high cash-generating company that’s built to withstand low crude prices and peak oil demand, which the International Energy Agency says could happen around 2030.Conoco’s plan “shows sustainability over a long period” and a business model “that can deliver competitive returns and appeal to a wide range of investors,” Scott Hanold, an analyst at RBC Capital Markets LLC, said in a note.Conoco was 0.8% higher at $57.15 at 2:27 p.m. in New York trading. The stock has dropped 8.3% this year, while the Standard and Poor’s 500 Energy Index has advanced 1.3%.Investors have delivered stinging rebukes to energy companies this year for paying substantial premiums for acquisitions, such as Occidental Petroleum Corp.’s $37 billion deal for Anadarko Petroleum Corp. Chief Operating Officer Matt Fox admitted that the “elephant in the room” is the possibility Conoco will use its cash hoard for a major deal.“Obviously we can’t and we shouldn’t rule that out, but we can rule out doing a bad acquisition driven by the wrong reasons,” Fox said during the presentation. “We’re not going to do something that undermines our financial framework.”What Bloomberg Intelligence Says“With leverage below 1x cash flow, Conoco has plenty of room to make opportunistic acquisitions. The Permian Basin is likely the biggest target, with significant assets in the area and a relatively small presence in Conoco’s portfolio. However, overdrilling by some of its neighbors will drive management to be highly selective of deals.”\--Brett Gibbs, BI analystRead the research here.Conoco also has conventional production in Alaska, Europe and Asia, while also operating in shale basins. Though Conoco aims to avoid the pitfalls of rival shale producers, the sector will provide much of the company’s growth and account for about 60% of its capital expenditure over the next decade. Its shale production from the Permian Basin, Eagle Ford, Bakken and Montney in Canada will more than double to 900,000 barrels a day by 2029.Conoco said it will stick with about 20 drill rigs and won’t try to chase higher production in times of high crude prices, which tends to destroy shareholder capital, Fox said.“Unfortunately, we know this because we did it,” he said.(Updates with industry buybacks in sixth paragraph)\--With assistance from Brad Skillman.To contact the reporter on this story: Kevin Crowley in Houston at email@example.comTo contact the editors responsible for this story: Simon Casey at firstname.lastname@example.org, Christine BuurmaFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Opinion) -- ConocoPhillips knows how to please a crowd, even one as shrunken and beaten-down as energy investors. By Tuesday lunchtime, as Conoco’s analyst day was wrapping up in Houston, it was the only big U.S. oil and gas stock flashing green, what with oil prices slipping almost 3%.This says a lot about why Conoco’s message resonates: It comes with a hefty dollop of FUD.“Fear, uncertainty, doubt” is what bears thrive on, but Conoco has refined it into something useful. CEO Ryan Lance set the tone with an opening slide called “Two Charts We Can’t Ignore,” showing how oil had dropped from its pre-2015 triple-digit level to the “new normal of lower, more volatile prices” and how the sector’s weighting in the S&P 500 had slumped from 12% in 2012 to today’s 4%. The subtitle of that slide could have been “but Lord knows the industry has tried to ignore them anyway,” which is how it ended up at that 4% weighting.Hence, Conoco continues to beat a different drum. The common thread running through Tuesday’s 152 slides is that oil and gas production is a mature business with a bad track record on capital management and a future clouded by climate change. There is no room for banking on higher commodity prices, and investors have given up paying for the oil option in E&P equities anyway.So forget exuberance and focus on resilience. Conoco’s message can be boiled down to cutting its breakeven cost per barrel and returning a lot of cash to shareholders. It plans on generating $12 billion a year of cash from operations, on average, through the 2020s, of which 60% goes to capital expenditure and 40% to buybacks and dividends. The latter equate to about 80% of the current market cap and are split themselves 60/40 in favor of buybacks, reflecting the reality of the cycle.Conoco bases its math on a $50 real oil price and expects production would grow by roughly a third over the next decade — or, factoring in the buybacks, significantly more than doubling on a per-share basis. Altogether, a projected average return made up of 8% free cash flow yield plus 3% growth is tailor-made for today’s energy investor, in contrast to the old, failed paradigm of a 10%-plus return owing everything to growth and nothing to payouts. Needless to say, Conoco was at pains to emphasize its cautious view on potential acquisitions, fear of which has weighed on the stock this year as fracker valuations have collapsed.None of this makes Conoco immune to oil’s vicissitudes, of course. Free cash flow tilts toward the back end of the decade, and the company would effectively borrow to fund some of its buybacks through 2025, at $50 oil. That said, having cut net debt by two-thirds since the end of 2016, Conoco doesn’t envisage leverage rising to even one times Ebitda in 2025. Under a stress-test scenario, where oil prices average $40 a barrel between 2023-25, the company doesn’t see leverage breaching two times Ebitda.Let’s just step back here in 2019 and acknowledge that, looking back at everything that’s unfolded in oil over the past decade, any 10-year projection should be treated less like a Google map and more like asking someone on the street for directions. Indeed, for me, the most important slide in Conoco’s deck looked back rather than forward(1). Here, COO Matt Fox talked through lessons learned from prior investment programs, chief of which is to stop committing the industry’s original sin: pro-cyclicality. In other words, don’t base your spending on how much spending power you have at any given moment. Rather, by targeting low breakeven costs, which factor in wherever the industry happens to be in the cycle, you smooth out investment and minimize spending when cost inflation is high and bringing on new production just as commodity prices turn down.This spend high/sell low approach pretty much sums up what the industry did over the past 10 years, vaporizing capital in the process. The chart below uses the U.S. onshore rig count as a proxy for industry capex, and you can see how it surged in the early years on the back of high oil prices, with much of the subsequent growth in production arriving after prices crashed. Even though frackers made real gains in efficiency in that time, the performance of the sector ETF tells you what this did to returns:This is especially important in the context of the new mantra being preached by many E&P companies today: namely, that they will live within their means. Conoco’s message is that just ensuring you don’t spend more than you make in a given year isn’t the cure for the sector’s ills. Rather, it’s about smoothing spending, production — and thereby payouts — over time in order to escape the boom and bust cycle. It is the latter that has eroded confidence in the industry’s earnings and, hence, led to lower and lower multiples being put on those earnings.Fear and doubt will always attach to oil prices, but companies can do something about uncertainty.(1) Slide 32 if you download the deck.To contact the author of this story: Liam Denning at email@example.comTo contact the editor responsible for this story: Mark Gongloff at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Best Buy (BBY) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
(Bloomberg) -- When Securities and Exchange Commission Chairman Jay Clayton handed a policy win to corporate executives this month, he pointed to a surprising source of support: a mailbag full of encouragement from ordinary Americans.To hear Clayton tell it, these folks are really focused on the intricacies of the corporate shareholder-voting process. “Some of the letters that struck me the most,” he said at a commission meeting in Washington, “came from long-term Main Street investors, including an Army veteran and a Marine veteran, a police officer, a retired teacher, a public servant, a single mom, a couple of retirees who saved for retirement.” Each bolstered Clayton’s case for limiting the power of dissenting shareholders.But a close look at the seven letters Clayton highlighted, and about two dozen others submitted to the SEC by supposedly regular people, shows they are the product of a misleading -- and laughably clumsy -- public relations campaign by corporate interests.That retired teacher? Pauline Yee said she never wrote a letter, although the signature was hers. Those military vets? It turns out they’re the brother and cousin of the chairman of 60 Plus Association, a Virginia-based advocacy group paid by corporate supporters of the SEC initiative. That single mom? Data embedded in the electronically submitted letter says someone at 60 Plus wrote it. That retired couple? Their son-in-law runs 60 Plus.“I never wrote a letter,” said one of the retirees, Vytautas Alksninis, reached by phone at his home in Connecticut. “What’s this all about?”Then there’s the public servant Clayton mentioned. Marie Reed’s letter has sharp words for proxy advisers, firms that counsel fund companies on how to vote at shareholder meetings. But when reached by phone in California, the retired state worker said she wasn’t familiar with the term. She said the letter originated with a public-affairs firm that contacted her out of the blue.“They wrote it, and I allowed them to use my name after I read it,” she said. “I didn’t go digging into all of this.”The SEC declined to comment on any irregularities with the letters. In a Tuesday interview, Clayton sidestepped a question about how the agency ensures comment letters are genuine. He did emphasize that the regulator’s potential revamp of shareholder voting rules are proposals, adding that there will be ample time for people on both sides to weigh in before any changes are finalized.“We welcome input in all ways,” Clayton said in the interview with Bloomberg Television’s David Westin. “On this issue, where there are a lot of different views and a lot of different interests, we encourage people to come in and talk to us, send us their comments.”Unusual ErrorEven a casual reading of the letters shows something amiss. Four of the seven bear the same unusual error -- an out-of-context phrase inserted into the SEC’s mailing address. The same mistake turns up in at least 20 other letters submitted by supposedly ordinary Americans in support of the change. It’s an inadvertent digital fingerprint revealing the scope of the campaign.At issue is the proxy process, the rules for how corporations conduct shareholder votes, such as when directors stand for re-election at annual meetings. Most of the time, management wins in a landslide. But shareholders occasionally revolt over excessive pay or mismanagement, or a small investor forces a vote on an issue that management doesn’t endorse.In recent years, more small shareholders have been proposing resolutions about social or environmental issues such as climate change. And investment managers that control large numbers of votes, such as BlackRock Inc., have begun prioritizing these topics as well, arguing that they’re relevant to the long-term sustainability of business models. That’s an unwelcome change for some corporate boards, especially in the fossil-fuel industry.Last year, the National Association of Manufacturers helped form the Main Street Investors Coalition to oppose what it calls the “politicization” of the investment process and to argue that fund managers and boards should focus on maximizing profits. One of its priorities is changing shareholder voting rules.Although the coalition has other members, NAM provided most of its initial funding, according to a person with knowledge of the arrangement who spoke on condition of anonymity. The manufacturers’ association represents corporate giants such as Exxon Mobil Corp. and Chevron Corp.NAM said in a statement that it didn’t fund 60 Plus or direct any advocacy efforts on the SEC issue. Chevron wouldn’t comment on the coalition but acknowledged in a statement that it sometimes works with trade associations to “help inform their understanding of issues.” Exxon Mobil said it had no immediate comment.Public CommentsLast year, Clayton signaled he was considering changes to the rules and issued a call for public comments. Letters poured in. Most were from investment firms, corporations, trade groups and other interested parties that openly identified themselves. Many fund managers wrote to say some of the changes under consideration would be counterproductive.The National Association of Manufacturers, Exxon Mobil and Chevron all called for new limits on shareholders’ proposals. So did two ordinary citizens who identified themselves as members of Main Street Investors. Other letters were ostensibly written by regular folks.But more than two dozen of them appear to have ties to 60 Plus, a member of the Main Street Investors Coalition. While the nonprofit group calls itself an advocate for senior citizens’ issues, it routinely takes money from corporations and advocates for their causes on issues as varied as sugar subsidies and Alabama utility commissioners.The group didn’t cast a wide net in recruiting letter-writers. Names included those of a woman who used to work at 60 Plus’s accounting firm; a former secretary at 60 Plus; and various friends and relatives of Saul Anuzis, the 60 Plus president. None mentioned a connection to the organization.One letter bore the name of Chad Connelly. In an email, Connelly acknowledged being friends with Anuzis but disavowed the letter. “Someone apparently used my name,” he wrote. “That’s not a letter I’ve ever even seen.”Even Scott Hogenson, a contractor for 60 Plus who has appeared in the press as its spokesman, submitted a comment. The letter gives his name as S. Alan Hogenson and doesn’t mention his relationship to the group. In an interview, Hogenson said he wrote the letter and stands by it.Anuzis, the 60 Plus president, acknowledged that his group recruited submitters, provided drafts and, in two cases, sent letters on members’ behalf. He also acknowledged getting money from members of the coalition. “We don’t get paid for specific projects,” he said in an interview. “We get contributions from members who are part of the coalition. We’re not getting paid for a specific letter.”Anuzis said the project aligns with 60 Plus’s policy goals and that no names were used without permission. Those who said they hadn’t agreed, such as his in-laws, were mistaken. “They are 80-some-years old,” he said. “This happened months ago. I’m sure it’s not top of their minds.”Clandestine AidTwo letters point to another source of clandestine aid for the coalition. Reed, the retired state worker from California whose letter was cited by Clayton, said the man who provided her with a letter worked at FSB Core Strategies, a California public-affairs shop, and said he was working on behalf of a group called Protect Our Pensions. Another SEC letter containing similar phrases, also cited by Clayton, came from a California sheriff who said in a 2017 interview that he was introduced to Protect Our Pensions by the same FSB staffer. An FSB executive didn’t respond to requests for comment.Protect Our Pensions, whose talking points align with those of the fossil-fuel industry, was the subject of a 2017 Bloomberg Businessweek article showing it was put together by corporate public-affairs employees and that some of its alleged members, including the retired firefighter identified as its founder, said they had nothing to do with it or couldn’t remember agreeing to join.Opponents of changes to the voting system stuffed the SEC’s mailbox too. The agency reported getting more than 18,000 identical form letters supporting the current rules. Those letters were obvious duplicates and are grouped together on the SEC’s comments page. Clayton’s speech didn’t mention them.In his Nov. 5 remarks, Clayton unveiled proposals along the lines of those pushed by Main Street Investors Coalition and its corporate backers that would shift power from investors to corporate boards. In addition to Clayton, who was appointed by President Donald Trump, the changes are backed by two Republicans on the five-member commission. For the changes to take effect, the SEC will have to vote again to finalize the rules after a 60-day public comment period.The SEC’s proposal would increase the amount of stock newer shareholders must own to get a proposal on the ballot, aligning with corporate claims that many resolutions are wastes of time and money. Under current rules, investors must have owned at least $2,000 of stock for a year before they can submit resolutions. The SEC’s proposal would raise that dollar threshold to $25,000 for shareholders of less than two years and $15,000 for shareholders of less than three years, while leaving the $2,000 threshold in place for longer-term holders.The proposal also would impose new restrictions on proxy-advisory firms, whose recommendations are often decisive on shareholder votes. Corporations complain that their advice is sometimes poorly reasoned or inscrutable. Clayton would require the firms to show their recommendations to companies before issuing them.Fund managers warn the measure may have a chilling effect on proxy advisers, because a corporation could threaten a lawsuit if a draft recommendation isn’t revised.Anuzis said he was glad to hear that Clayton had cited letters generated by his organization. “I’m extremely proud that we were very effective,” he said. “If four of our letters were quoted, that means we did a great job.”(Adds comment from Jay Clayton in the eighth and ninth paragraphs.)\--With assistance from Ben Bain.To contact the reporters on this story: Zachary R. Mider in New York at email@example.com;Benjamin Elgin in San Francisco at firstname.lastname@example.orgTo contact the editors responsible for this story: Robert Friedman at email@example.com, John VoskuhlFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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If you want to know who really controls Occidental Petroleum Corporation (NYSE:OXY), then you'll have to look at the...
Investing.com – Wall Street rose on Tuesday as investors remained optimistic about trade after Washington extended an exception for U.S. companies that do business with black-listed Chinese firm Huawei.