tag:blogger.com,1999:blog-60407130998063116062024-03-06T00:10:48.988-08:00HBBRBusiness news, analyst views and market commentary by Sarfaraz A. Khan. S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comBlogger491125tag:blogger.com,1999:blog-6040713099806311606.post-64554976274775123772015-07-07T03:15:00.000-07:002015-07-07T03:15:53.837-07:00What's Next For BP Following The $18.7 Billion Settlement?<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was first published by <a href="http://seekingalpha.com/article/3301155-whats-next-for-bp-following-the-18_7-billion-settlement" target="_blank">Seeking Alpha</a> on Jul. 3, 2015.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Summary: BP
has finally reached agreements to settle claims related to the 2010 Gulf of
Mexico oil disaster. The settlement removes the dark clouds of uncertainty that
have been hanging over this stock and will allow the company to re-focus on its
core exploration and production work. The settlement will also fuel takeover
speculation, with Exxon Mobil as the most likely buyer, albeit an acquisition
is not going to be easy.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">On Thursday,
Bloomberg revealed that BP (NYSE:BP), one of Europe's leading vertically
integrated energy companies and the prime suspect in the 2010 Gulf of Mexico
oil disaster, has reached a settlement with the U.S. and five Gulf Coast states
following a lengthy legal battle. The revelation was later confirmed by BP in a
press release in which the company said that it has reached agreements to
settle all federal and state claims arising from the incident which led to the
death of 11 people and the worst oil spill in U.S. history.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The company
has agreed to pay the U.S. $5.5 billion in civil penalty under the Clean Water
Act (CWA) over a period of 15 years, $7.1 billion to the U.S. and Alabama,
Florida, Louisiana, Mississippi and Texas for natural resource damage also
payable over 15 years, $4.9 billion to Gulf Coast states to settle economic and
other claims payable over 18 years and up to $1 billion to resolve claims
related to more than 400 local government bodies. Overall, BP will pay $18.7
billion to settle …. Read <a href="http://seekingalpha.com/article/3301155-whats-next-for-bp-following-the-18_7-billion-settlement" target="_blank">full article at Seeking Alpha</a>. <o:p></o:p></span></div>
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S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-13350987474311731992015-07-02T00:15:00.003-07:002015-07-02T00:15:35.003-07:00Sony: The Sell-Off Is An Opportunity To Buy This Turnaround Stock<div class="MsoNormal">
<span style="font-family: Arial, sans-serif;">This article was <a href="http://seekingalpha.com/article/3296755-sony-the-sell-off-is-an-opportunity-to-buy-this-turnaround-stock" target="_blank">first published by Seeking Alpha</a> on July 1, 2015</span></div>
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<span style="font-family: Arial, sans-serif;">By Sarfaraz A. Khan </span></div>
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<b><span style="font-family: "Arial","sans-serif";">Summary</span></b><span style="font-family: "Arial","sans-serif"; mso-bidi-font-weight: bold;">: </span><span style="font-family: "Arial","sans-serif";">Sony’s
shares have dropped by more than 8% following announcement of an equity and
bond offering. The company has been struggling for years, but has been eyeing a
turnaround by doubling down on image sensors.Sony has often disappointed
investors by slashing forecasts at an average of more than two times per year,
but it has transformed into a beat-and-raise story. I believe it won’t be long
before the CEO Kazuo Hirai and CFO Ken Yoshida do the victory lap.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">The Japanese
electronics giant <b>Sony</b> has said that it is going to raise
¥322 billion/$2.63 billion through equity offering and ¥120 billion/$982
million through a convertible bond offering. That's a big deal for a company
which hasn't issued new equity in more than two decades. The dilution fears has
led to more than 8% drop in Sony's American Depository Receipts currently
hovering around $28.40, but I believe this could be an opportunity to buy this
turnaround stock.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Sony has been
struggling for years due in large part to its focus on retaining its market
share at all cost, rather than improving the bottom-line. The increasing
competition from <b>Apple</b>, <b>Microsoft</b>, <b>Samsung</b> and <b>LG
Electronics</b> exacerbated Sony's woes. Sony also lacked any cost
discipline. Sony has often outspend Apple - a company 20x its size in terms of
market cap - in terms of annual selling, general and administrative expenses.<o:p></o:p></span></div>
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<span style="font-family: Arial, sans-serif;">But Sony
has been eyeing a turnaround since 2012, ever since Kazuo Hirai became the new …. Read </span><a href="http://seekingalpha.com/article/3296755-sony-the-sell-off-is-an-opportunity-to-buy-this-turnaround-stock" style="font-family: Arial, sans-serif;" target="_blank">full article at Seeking Alpha</a><span style="font-family: Arial, sans-serif;">. <o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-719899884759309052015-07-01T01:15:00.000-07:002015-07-01T01:15:01.783-07:00Noble Energy - Clouds Of Uncertainty Dissipating From Key Asset In Israel<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">This article
was <a href="http://seekingalpha.com/article/3290985-noble-energy-clouds-of-uncertainty-dissipating-from-key-asset-in-israel" target="_blank">first published by Seeking Alpha</a> on June 29, 2015.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">By Sarfaraz
A. Khan</span></div>
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<span style="font-family: "Arial","sans-serif";"><b>Summary:</b> Noble
Energy has been eyeing development of the giant Leviathan field, located in
offshore Israel. Noble Energy, the only U.S. oil producer to invest in Israel,
has faced a major regulatory hurdle, but recent decision from the country’s
security cabinet has cleared its way. The company is now awaiting final
government approval, which will pave the way for binding supply contracts and
full scale development.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Noble Energy has been eyeing development of one of the world's biggest offshore
gas fields off northern Israel by partnering with Israel's Delek Group, but its plans were stalled by anti-trust regulators on concerns
related to monopoly. On Thursday, however, Israel's security cabinet voted in
favor of Noble and Delek.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">The leading
U.S. based energy companies have generally shied from investing in Israel,
despite its vast natural gas deposits and the government's efforts to lure
foreign oil and gas producers, fearing the country did not have adequate
regulatory framework to protect the interest of foreign investors. Noble,
however, is an exception. The Houston, Texas - based company is the only U.S.
oil producer willing to bet on Israel's resources, but it did not receive the
warm welcome it would have expected. The stand-off between Noble and the
anti-trust commissioner David Gilo has certainly not helped in improving
Israel's image among U.S. oil and gas producers as an investment destination.
But the recent decision from the security cabinet could help.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Noble and
Delek, however, will be required to reduce their stakes in three …. Read <a href="http://seekingalpha.com/article/3290985-noble-energy-clouds-of-uncertainty-dissipating-from-key-asset-in-israel" target="_blank">full article at Seeking Alpha</a>. <o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-43144516078574094852015-07-01T01:10:00.005-07:002015-07-01T01:10:53.740-07:00Worthington Industries' Future Is Looking Better, But It's Not A Buy Yet<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article
was <a href="http://seekingalpha.com/article/3295905-worthington-industries-future-is-looking-better-but-its-not-a-buy-yet" target="_blank">first published by Seeking Alpha</a> on July 1, 2015<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz
A. Khan</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b>Summary</b>: Worthington
Industries has a great business model, but it is at the mercy of the market. The
company’s top and bottom-line is shrinking due to weakness in the macro
environment. The future outlook of steel processing is looking better, but the
other two segments might continue to struggle.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Worthington
Industries, one of North America's leading steel processors and the
world's biggest supplier of pressure tanks and cylinders, has a solid business
model. Thanks to a diverse customer base, the Columbus, Ohio-based company does
not rely on any single sector for most of its revenues. But there's little the
company can do in the face of weakness in prices of various commodities and
sluggish economic growth.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b>Earnings
Recap</b><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">As per the
recently announced fourth quarter results, Worthington gets 63% of its revenues
from steel processing segment in which the company provides its products to
automakers, including General Motors (NYSE:GM), Ford (NYSE:F) and Chrysler.
Nearly 30% of the revenues come from the pressure cylinders segment in which Worthington
primarily serves the energy industry. Most of the remaining revenues come from
the engineered cabs division.<o:p></o:p></span></div>
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<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">During the quarter,
Worthington's net sales dropped by 5.1% from last year to $846 million while
its operating income dropped by 15.8% to $27.2 million. Net profit dropped by
13% from last year to $28.9 million. Excluding the impact of one-off items,
adjusted earnings clocked in at $0.53 per share. The company managed to beat
both top and bottom line estimates of a profit of ….. read <b>f<a href="http://seekingalpha.com/article/3295905-worthington-industries-future-is-looking-better-but-its-not-a-buy-yet" target="_blank">ull article at Seeking Alpha</a></b>. </span></span>S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-47020460105349111712015-05-18T08:30:00.002-07:002015-05-18T08:30:42.179-07:00Kandi Technologies: Was Last Week's Sell-Off A Buying Opportunity?<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">This article was <a href="http://seekingalpha.com/article/3191116-kandi-technologies-was-last-weeks-sell-off-a-buying-opportunity" target="_blank">first published on Seeking Alpha</a> on May 18, 2015. </span></div>
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<span style="font-family: "Arial","sans-serif";">By Sarfaraz A. Khan</span></div>
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<span style="font-family: "Arial","sans-serif";">Shares of
Kandi Technologies (NASDAQ:KNDI), the Chinese company that makes go-karts,
electronic vehicles, ATVs, UTVs and tricycles, have been getting hammered on
high volume. On Monday, the company released a decent earnings report that
featured modest year-over-year revenue growth and a swing to profit, but shares
have fallen by 27.4% since then, settling at $9.13 when the markets closed on
Friday.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";"><b>Favorable
business environment</b><o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Kandi
initially started with making off-road vehicles but later, with its 50% joint
venture with Geely Automotive (OTCPK:GELYY), one of China's biggest automakers
and the owner of Volvo (OTCPK:VOLVY), Kandi has moved into the EV space and
generated a majority of its 2014 revenues and profits from EV parts and
products. The two companies are producing compact electronic cars, unlike the
bigger ones that are manufactured by Tesla (NASDAQ:TSLA). Moreover, unlike
Tesla that sells its vehicles directly to its customers, Kandi's vehicles are
mainly rented at a fixed hourly rate. The company has built automated garages
in China that can store hundreds of vehicles and work like vending machines.
The company intends to build hundreds of such garages throughout the country's
major cities.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">On top of
this, Kandi will begin selling at least two EV models directly to customer this
year. One of these models, the K17 which can accommodate five passengers, is
for the medium-end of the market and will be launched within a couple of weeks.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">For a country
like China, where major urban cities are extremely crowded and vehicle
ownership rates are low … read <a href="http://seekingalpha.com/article/3191116-kandi-technologies-was-last-weeks-sell-off-a-buying-opportunity" target="_blank">full article at Seeking Alpha</a>. <o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-71212620791235497972015-05-18T08:27:00.002-07:002015-05-18T08:27:59.589-07:00Horsehead Holding Is A Turnaround Stock That Could Pop Sooner Than Later<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was <a href="http://seekingalpha.com/article/3191236-horsehead-holding-is-a-turnaround-stock-that-could-pop-sooner-than-later" target="_blank">first published by Seeking Alpha</a> on May 18, 2015.</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Amid the
downturn in the commodities, zinc is a rare bright spot. The prices of the base
metal, which is used to protect steel from corrosion, has been rising on the
back of speculation as well as improving fundamentals. This was highlighted in
my previous article, in which I also mentioned the names of a few zinc miners
that should be on investor's radar. Seeking Alpha commentator TMFDeej pointed
out that a small-cap company Horsehead Holding Corp. (NASDAQ:ZINC) should be on
that list as well, and he's right.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;"><b>Not a zinc
miner</b><o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Horsehead is
the biggest producer of zinc and the largest manufacturer of related products,
such as zinc powder, in the United States. But unlike a majority of its peers
such as Hudbay Minerals (NYSE:HBM), Teck Resources (NYSE:TCK) and Nyrstar
(OTCPK:NYRSY), Horsehead does not actually mine zinc. Rather, Horsehead
produces the base metal from recycled sources, and also gets paid for this
service. Horsehead takes a waste product called electric-arc furnace (EAF) dust
from steel producers for a certain fee. The company then processes the EAF dust
for recovery of zinc.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The
availability of EAF dust, therefore, is an integral part of the company's
business model. Fortunately, Horsehead faces little competition for EAF dust
management contracts. In fact, Mexico - based Zinc Nacional's subsidiary Steel
Dust Recycling is the only major rival.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Horsehead has
a great business model in which it actually gets paid for the raw material.
Although that has given the company a cost advantage, with breakeven … read
<a href="http://seekingalpha.com/article/3191236-horsehead-holding-is-a-turnaround-stock-that-could-pop-sooner-than-later" target="_blank">full article at Seeking Alpha</a>. </span><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-78793868476085949992015-04-24T14:00:00.000-07:002015-04-24T14:00:01.903-07:00Triangle Petroleum Delivers Strong Results, But Its Subsidiary Is Losing Steam<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article
was first published by Seeking Alpha on April 15, 2015<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz
A. Khan. Research Asst. David Richardsons</span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">Triangle
Petroleum (NYSEMKT:TPLM) has recently released its strong fourth quarter
results in which the company's total revenues increased by 83.6% from the same
quarter last year to $156.9 million. Revenues from its energy services
subsidiary RockPile more than doubled to $83.97 million while hydrocarbon sales
climbed 27.6% to $63 million thanks to 103.4% increase in production to 14,747
barrels of oil equivalents per day (boepd). This translated into adjusted
earnings of $0.06 per share, down from $0.12 per share in the same quarter last
year. However, the company's revenues, earnings and production numbers were
better than markets' consensus estimates. The company managed to beat revenues
and earnings estimates by $0.01 per share and $3.41 million respectively.<o:p></o:p></span></div>
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<span style="font-family: Arial, Helvetica, sans-serif;">The top and
bottom-line beat was driven by significantly better than expected production.
In a report emailed to me, Topeka Capital Market's analyst Gabriele Sorbara
wrote that Triangle Petroleum's output was ahead of the market's consensus
estimate of 12,289 boepd. On the other hand, RockPile, despite delivering
strong results, could actually weigh on the company's performance.<o:p></o:p></span></div>
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<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">Triangle Petroleum
formed RockPile in 2011 and the company began its operations by offering
hydraulic fracturing services a year later in the Williston Basin. The addition
of RockPile to Triangle Petroleum's portfolio has been great for the company as
it has allowed the parent to increase its focus on its exploration and
production work while opening a new revenue stream by offering RockPile's
pressure pumping services to third parties. During the previous fiscal year,
RockPile provided …… read <a href="http://seekingalpha.com/article/3073036-triangle-petroleum-delivers-strong-results-but-its-subsidiary-is-losing-steam" target="_blank">full article at Seeking Alpha</a>. </span></span>S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-87066039098772857182015-04-23T08:16:00.000-07:002015-04-23T08:16:00.867-07:00Cloud Peak Energy - The Best House In A Bad Neighborhood<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">This article
was <a href="http://seekingalpha.com/article/3070466-cloud-peak-energy-the-best-house-in-a-bad-neighborhood" target="_blank">first published by Seeking Alpha</a> on April 13, 2015<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">By Sarfaraz
A. Khan. Research Asst. Elena Kaufmann</span></div>
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<span style="font-family: "Arial","sans-serif";">The price of
thermal coal, which is the single biggest source of energy for power
generation, continues to deteriorate on the back of excess supply and soft
demand. The benchmark price at Newcastle in Australia, the export hub of the
commodity, dropped to its lowest level since May 2007 to around $54 per ton on
Friday.<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">The weakness
has been driven in large part by the soft demand from China. The Chinese
government has been clamping down on coal use for power generation to tackle
the rising pollution levels. In addition to this, the country also introduced
quality restrictions and other protectionist measures on imports in 2014 to
defend the domestic producers. Consequently, last year, China's coal imports dropped
for the first time in more than ten years and will likely continue to head
lower. In an April report emailed to me, UBS's analysts led by Matt Murphy
predicted that China will reduce thermal coal imports "by almost 80 Mt on
an annualized basis following peak imports in 2013."<o:p></o:p></span></div>
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<span style="font-family: "Arial","sans-serif";">Meanwhile,
the U.S. has also been trying to reduce carbon emissions by cutting the use of
coal for power generation, which will adversely impact the commodity's demand.
The country's power sector is responsible for 38% of the energy-related carbon
emissions, more than three-quarter of which comes from coal-based power plants.
President Obama aims to slash emissions by at least 26% by 2025 as compared to
2005 levels. The change will be driven, in part, by tougher environmental regulation.
The cheap …… read <a href="http://seekingalpha.com/article/3070466-cloud-peak-energy-the-best-house-in-a-bad-neighborhood" target="_blank">full article at Seeking Alpha</a>. </span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-37889211579405661872015-04-23T08:12:00.002-07:002015-04-23T08:17:14.996-07:00Zero Improvement In Crude Prices Is A Scary Thought, But Not For PDC Energy<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was first published by Seeking Alpha on April
13, 2015</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan. </span></div>
<a name='more'></a><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">A number of independent exploration and production companies
have rapidly grown over the last few years but following the 50% drop in oil
prices since last summer, most have scaled back their operations. On the other
hand, PDC Energy (NASDAQ:PDCE) has recently revealed that it will grow its
production at a compounded annual growth rate of between 25% and 30% through
2017, even if crude prices hover at $50 a barrel during this period.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">PDC Energy is an independent oil and gas producer that holds
250 million barrels of oil equivalents of proven reserves in Colorado's
Wattenberg field and Ohio's Utica Shale formation. During its Analyst Day last
week, the company laid out its plans on how it is going to perform under three
oil price scenarios.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">In the unlikely event of oil staying at $50 per
barrel in the current and the next two years (resilient case), the company will
grow its production at an average annual rate of 25% to 30%. Under the
"base case" scenario which assumes gradual improvement from March 20
strip prices to $61.24 per barrel by 2017, the company intends to increase its
production at CAGR of 31% to 36%. In the upside scenario, which assumes $50,
$60 and $70 per barrel crude prices for 2015, 2016 and 2017 respectively, the
company intends to grow its output at a CAGR of 35% to 40%. …… read <a href="http://seekingalpha.com/article/3067256-zero-improvement-in-crude-prices-is-a-scary-thought-but-not-for-pdc-energy" target="_blank">fullarticle at Seeking Alpha</a>. </span></span>S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-36085763140262376182015-04-23T08:09:00.002-07:002015-04-23T08:16:41.692-07:00Royal Dutch Shell Takes The First Step, Focus Shifts To Exxon Mobil<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was first published by Seeking Alpha on April
9, 2015</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan. Research Asst. Elena Kaufmann</span></div>
<a name='more'></a><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Historically, a prolonged slump in oil prices has led to an
uptake in the M&A activity in the exploration and production space. After
the drop in oil prices in the late 1990s, for instance, the industry witnessed
two massive deals -- BP (NYSE:BP)'s acquisition of Amoco for $64.3 billion and
Exxon's $85.6 billion merger with Mobil that gave birth to Exxon Mobil
(NYSE:XOM). Those deals reshaped the oil and gas industry. Following the 50%
slump in oil prices in the second half of 2014, the markets were anticipating
another round of major deal making activity. The anticipation intensified
following Halliburton's (NYSE:HAL) decision to acquire its rival Baker Hughes
(NYSE:BHI) for $35 billion in one of the biggest deals in the oilfield services
patch. Finally, yesterday, Europe's biggest oil and gas producer took the first
step.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Oil major Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) has
recently announced the energy deal of the decade. The company is going to
purchase its European peer BG Group (OTCQX:BRGYY) for $70 billion in a cash and
stock deal which will propel its position as the second biggest Western oil
company, ahead of Chevron (NYSE:CVX) and behind only Exxon Mobil.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">Shell is paying a hefty premium of 52% for the
purchase, which will increase Shell's reserve base by 25% and significantly
increase the company's exposure to Brazil's lucrative deep water projects and
Australia's LNG sector. Shell has been amassing gas assets in Australia, ever
since the company doubled down on natural gas and LNG under its former …… read
<a href="http://seekingalpha.com/article/3059296-royal-dutch-shell-takes-the-first-step-focus-shifts-to-exxon-mobil" target="_blank">full article at Seeking Alpha</a>. </span></span>S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-61172395434581592752015-04-10T08:52:00.001-07:002015-04-10T08:52:11.183-07:00Are Iran's Crude Supply Fears Overblown?<div class="MsoNormal">
<span style="font-family: Arial, sans-serif; line-height: 115%;">This article was first published by Seeking Alpha on
April 8, 2015. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, sans-serif; line-height: 115%;">By Sarfaraz A. Khan</span></div>
<a name='more'></a><o:p></o:p><br />
<div class="MsoNormal">
<span style="font-family: Arial, sans-serif; line-height: 115%;">On the first day of the second quarter, the benchmark WTI
prices posted the biggest gain in more than two months as traders weighed the
possibility of peaking U.S. production, thanks to some positive indicators. The
rally continued in the subsequent days as prices rose above $53 a barrel on
Tuesday, but dropped to $52 a barrel in the early hours of Wednesday. All the
while, the market has been trying to figure out how the biggest geopolitical
wild card, the negotiations between Iran and the P5+1, which includes Germany
and five permanent members of the U.N. Security Council, will impact the
commodity's prices.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, sans-serif; line-height: 115%;">The increase in prices in the beginning of this month
came on the back of the first drop in U.S. oil production growth since January
as output dropped by 0.4% from the previous week and better-than-expected oil
demand from a number of major consumers. The recently released strong U.S. jobs
data that showed a surge in U.S. job openings to their highest levels in 14 years
and the latest EIA monthly report in which the agency raised its forecast for
oil demand while lowering expectations of U.S. oil production growth also
supported the bullish sentiments.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<span style="font-family: Arial, sans-serif;">On Wednesday, however, the prices dropped
following, among other things, EIA's report that predicted a significant inflow
of the "volume of Iranian barrels" into the market if the U.S. and
its partners lift the sanctions against the country's crude. This could worsen
the market's …. read <a href="http://seekingalpha.com/article/3058066-are-irans-crude-supply-fears-overblown" target="_blank">full article at Seeking Alpha</a>. </span>S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-65208627582320043122015-04-10T08:42:00.000-07:002015-04-10T08:42:22.759-07:00Royal Dutch Shell Takes The First Step, Focus Shifts To Exxon Mobil<div class="MsoNormal">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">This article was first published by Seeking Alpha on April
9, 2015.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></span></div>
<a name='more'></a><span style="font-family: Arial, Helvetica, sans-serif; line-height: 115%;"> </span><br />
<div class="MsoNormal">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">Historically, a prolonged slump in oil prices has led to
an uptake in the M&A activity in the exploration and production space.
After the drop in oil prices in the late 1990s, for instance, the industry
witnessed two massive deals -- BP (NYSE:BP)'s acquisition of Amoco for $64.3
billion and Exxon's $85.6 billion merger with Mobil that gave birth to Exxon
Mobil (NYSE:XOM). Those deals reshaped the oil and gas industry. Following the
50% slump in oil prices in the second half of 2014, the markets were
anticipating another round of major deal making activity. The anticipation
intensified following Halliburton's (NYSE:HAL) decision to acquire its rival Baker
Hughes (NYSE:BHI) for $35 billion in one of the biggest deals in the oilfield
services patch. Finally, yesterday, Europe's biggest oil and gas producer took
the first step.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">Oil major Royal Dutch Shell (NYSE:RDS.A) (NYSE:RDS.B) has
recently announced the energy deal of the decade. The company is going to
purchase its European peer BG Group (OTCQX:BRGYY) for $70 billion in a cash and
stock deal which will propel its position as the second biggest Western oil
company, ahead of Chevron (NYSE:CVX) and behind only Exxon Mobil.<o:p></o:p></span></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">Shell is paying a hefty premium of 52% for the purchase,
which will increase Shell's reserve base by 25% and significantly increase the
company's exposure to Brazil's lucrative deep water projects and Australia's
LNG sector. Shell has been amassing gas assets in Australia, ever since the
company doubled down on natural gas and LNG under its … <a href="http://seekingalpha.com/article/3059296-royal-dutch-shell-takes-the-first-step-focus-shifts-to-exxon-mobil" target="_blank">read full article atSeeking Alpha</a>. </span><span style="font-family: Arial, sans-serif; font-size: 9pt;"><o:p></o:p></span></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-91957229507511364452015-04-02T09:48:00.000-07:002015-04-02T09:48:00.064-07:00Shale Oil's Burst-In-Progress Is Due To The Treadmill Dynamics<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">This article was
first published by Seeking Alpha on March 30, 2015.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">By Sarfaraz
A. Khan</span></div>
<a name='more'></a><o:p></o:p><br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">Several shale
producers have grown rapidly over the last decade, due to the healthy pricing
environment and availability of capital. These companies spent billions in
unlocking the United States' vast tight oil resources and played a key role in
making this nation the world's biggest oil producer, ahead of Saudi Arabia and
Russia. However, some of these producers have also taken a lot of debt to drill
new wells, and the stock of these companies felt the brunt of the oil price
collapse.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">Take,
SandRidge Energy (NYSE:SD), for instance which carries the twin evils of a
highly levered balance sheet and a poor performing asset (Mississippi Lime).
SandRidge has fallen by 60% over the last six months, even though the company
has significant hedges in place for 2015. Similarly, the shares of Goodrich
Petroleum (NYSE:GDP), which also has a weak balance sheet and significant
exposure to Tuscaloosa Marine Shale, one of the least economical shale plays in
the U.S, have fallen by nearly 79% over the last six months. Other E&P stocks
with similar problems, such as Approach Resources (NASDAQ:AREX), Exco Resources
(NYSE:XCO) and Halcon Resources (NYSE:HK) have all plunged by more than 50% in
the corresponding period.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">Part of the
reason why producers took on debt is the peculiar nature of unconventional
wells; specifically, their decline rates. Oil and gas well typically produce
the highest level of output during the first 24 hours of production.
Subsequently, the reservoir pressure falls and the ….. read <a href="http://seekingalpha.com/article/3037976-shale-oils-burst-in-progress-is-due-to-the-treadmill-dynamics" target="_blank">full article at Seeking Alpha</a>. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-77881752135600403512015-04-02T09:46:00.000-07:002015-04-02T09:46:00.254-07:00Frank's International: A Hidden Gem In The Oilfield-Services Patch Is On Sale<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was first published by Seeking Alpha on March
27, 2015.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></div>
<a name='more'></a><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">The oilfield services company Frank's International
(NYSE:FI) is a fairly unknown stock. The company is one of the oldest names in
the energy sector, yet it barely gets any coverage in the financial media. This
stock, however, could be an interesting pick for energy investors who have been
bottom-picking some high-quality names during the ongoing downturn.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Frank's International debuted at the New York Stock Exchange
in 2013 but it has been operating as a family business since 1938. Keith
Mosing, whose grandfather built Frank's International, now sits as the
executive chairman. The company provides variety of tubular services to
exploration and production companies all over the world. Frank's International,
together with Weatherford International (NYSE:WFT), forms the duopoly in the
global tubular services market. Last year, Frank's generated nearly half of its
total revenues and EBITDA from outside the U.S. while ~75% of its services
revenues - that represent 84% of its total revenues - came from offshore
projects.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Last year, Frank's reported 7% increase in revenues and 2.5%
increase in adjusted earnings to record levels of $1.15 billion and $450
million respectively. Frank's runs a free cash flow positive business, meaning
the company generates more cash from operations than what it spends on
expanding its asset base. Last year, Frank's generated $368.8 million as cash
flows from operations while its capital expenses came in at $172.9 million.
This translated into free cash flows of $196 million, up from $93 million in
2013.</span></div>
<div class="MsoNormal">
<br /></div>
<span style="font-family: Arial, Helvetica, sans-serif;">Due to its financial strength, Frank's has been …..
read <a href="http://seekingalpha.com/article/3034336-franks-international-a-hidden-gem-in-the-oilfield-services-patch-is-on-sale" target="_blank">full article at Seeking Alpha</a></span>S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-19906174250468107522015-04-01T09:30:00.000-07:002015-04-01T09:30:06.638-07:00Berkshire Hathaway: Who Should Replace Warren Buffett?<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">This article
was first published by Seeking Alpha on March 2, 2015.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">By Sarfaraz
A. Khan</span></div>
<a name='more'></a><o:p></o:p><br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">Warren
Buffett, one of the world's greatest investors who built Berkshire Hathaway
(NYSE:BRK.A) (NYSE:BRK.B) from nothing into one of the world's biggest
conglomerates with more than 80 businesses and a $117 billion stock portfolio
has recently released his highly anticipated letter to the shareholders along
with his company's fourth quarter results.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">In the
letter, which marks Buffett's 50-years at the helm, the Oracle of Omaha laid
out the company's plans for the future. Buffett continues to look for
acquisition opportunities, which have been one of the key driving engines for
Berkshire Hathaway. Last year, Berkshire Hathaway spent nearly $8 billion on
making 31 acquisitions. But the company hasn't purchased an
"elephant" since 2013 when it acquired half of H.J. Heinz (NYSE:HNZ)
for $12.25 billion. With more than $63 billion of cash reserves, Berkshire
Hathaway has ample resources to make another major acquisition while
maintaining significant cash cushion.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">As always,
Buffett's focus will be on investing in American companies, despite showing
greater interest abroad, particularly in Germany where Buffett has recently
agreed to acquire a motorcycle equipment retailer for $452 million and has
shown his interest in buying more German companies in the future.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">Buffett also
said that Berkshire Hathaway is now a "sprawling conglomerate, constantly
trying to sprawl further." Those investors who purchased a single
Berkshire Hathaway share about five decades ago at $11 and kept it would have
seen phenomenal returns, with a single share priced at $221,180 when the
markets closed on Friday. However, the next fifty years ….. read <a href="http://seekingalpha.com/article/2964496-berkshire-hathaway-who-should-replace-warren-buffett" target="_blank">full articleat Seeking Alpha</a>.<o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-41691602199933259292015-04-01T09:26:00.001-07:002015-04-01T09:26:53.184-07:00Vulcan Materials Poised To Rise Amid Cyclical Recovery<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article
was first published by Seeking Alpha on March 4, 2015.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz
A. Khan</span></div>
<a name='more'></a><span style="font-family: Arial, Helvetica, sans-serif;"><o:p></o:p></span><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Vulcan
Materials (NYSE:VMC) is the biggest producer of construction aggregates in the
U.S., such as crushed stone, sand and gravel, as well as one of the leading
producers of other aggregates-based construction materials, such as asphalt and
concrete. These materials are then used in the development of various
construction projects such as highways, buildings and sewer systems.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Vulcan
Materials and its peer Martin Marietta Materials (NYSE:MLM) represent the
duopoly in the U.S. aggregates market. However, Vulcan Material owns the
biggest proven and probable reserves of aggregates in the U.S. and benefits
from having significant coast-to-coast footprint, with exposure to some of the
key states that will be responsible for 75% of the total growth of the U.S.
population, 71% of the growth in household formation as well as above-average
employment growth during the ten years ending 2020. This puts Vulcan in a
strong position to post long-term growth. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Vulcan
reported its annual results earlier in February in which the company's revenues
and adjusted earnings (EBITDA) climbed by 8% and 28% to $2.99 billion and $600
million respectively, thanks to the 10% increase in aggregates shipments and 2%
increase in freight-adjusted selling price. Raw aggregates have been
responsible for a majority of Vulcan's revenues and profits. Last year, Vulcan
generated 78% of its total revenues and 92% of its gross profits from sale of
aggregates.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Those
revenues, however, were still lower than what Vulcan earned prior to the
financial crisis. During 2006-08, the company's annual revenues were more than …..
read <a href="http://seekingalpha.com/article/2971706-vulcan-materials-poised-to-rise-amid-cyclical-recovery" target="_blank">full article at Seeking Alpha</a>.</span><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-74471459980918530382015-04-01T09:20:00.002-07:002015-04-01T09:20:19.968-07:00Yingli Green Energy Has A Bigger Problem On Its Hands<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article
was first published by Seeking Alpha on March 4, 2015, prior to the company’s disappointing
<a href="http://seekingalpha.com/pr/12928386-yingli-green-energy-reports-fourth-quarter-and-full-year-2014-results" target="_blank">fourth quarter results</a> on March 25.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz
A. Khan</span></div>
<a name='more'></a><span style="font-family: Arial, Helvetica, sans-serif;"><o:p></o:p></span><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Yingli Green
Energy (NYSE:YGE) used to be the world's leading manufacturer of solar panels
until it was displaced by its Chinese competitor Trina Solar (NYSE:TSL) in
2014. But Yingli retained the second spot, ahead of JinkoSolar (NYSE:JKS), also
Chinese, Canadian Solar (NASDAQ:CSIQ) and Japan's Sharp Corp. (OTCPK:SHCAY).
While these solar stocks have been under pressure due to the larger macro
headwinds, Yingli Green Energy has a much bigger problem on its hand.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">The Baoding,
China-based Yingli, however, has done a great job in terms of improving its
margins and shipments. During the third quarter, the company's total PV
shipments clocked in at 903.4MW. This was in line with the company's guidance,
and shows improvement from 887.9MW in the second quarter. Meanwhile, Yingli's
gross margins came in at a strong 20.9% - this was considerably higher than
15.6% in the second quarter and 13.7% in the same quarter last year.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">The higher
margins have come on the back of the company's cost reduction efforts. Yingli
has reduced its in-house overall cost per watt from $0.52 in the first quarter
to $0.48 in the third quarter, led by the drop in non-silicon costs from $0.42
to $0.39 in this period. The overall costs could continue to decline in the
coming quarters as the company narrows the gap with the cost leader JinkoSolar.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Moreover,
Yingli has managed to significantly lower its operating expenses, despite
growing the R&D expenditure. In the third quarter, the company's operating
expenses dropped by 17% from the second ….. read <a href="http://seekingalpha.com/article/2973156-yingli-green-energy-has-a-bigger-problem-on-its-hands" target="_blank">full article at Seeking Alpha</a>.</span><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-30266276171678030352015-04-01T09:14:00.002-07:002015-04-01T09:14:44.716-07:00Magnum Hunter Resources: Not All Debt-Laden Energy Companies Are Created Equal<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was first published by Seeking Alpha on March 9, 2015</span></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></div>
<a name='more'></a><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">The 50% slump in oil prices since last summer has raised
concerns about the future prospects of a number of oil and gas producers,
especially those that have a weak balance sheet. Investors fear that with
persistent weakness in oil prices, some of the highly leveraged energy
companies could go under. One such name is Magnum Hunter Resources (NYSE:MHR).<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Magnum Hunter is a small-cap oil and gas producer that has
been growing its production at strong rates, but it also has a debt-laden
balance sheet. The company's long-term debt of $938 million is 1.7 times as
large as its market cap and more than twice as large as its equity.
Consequently, with the plunge in oil prices, the company was punished by the
markets. It also didn't help that Magnum Hunter failed to deliver
better-than-expected results in the last two quarters. However, the markets
have been a little too harsh on this Houston, Texas-based company.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">The company's shares have fallen substantially, due in part
to the plunging oil prices. Over the last six months, Magnum Hunter's stock has
dropped by nearly 58%, which compares against the 46% drop in WTI oil futures
in the same period. However, Magnum Hunter has limited exposure to oil as it is
primarily a natural gas play which is becoming even gassier.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Magnum Hunter has been undergoing an oil-to-gas transition
over the last five years. In 2010, a majority of the company's production of
1,276 boe per day was oil. But last year, around ….. read <a href="http://seekingalpha.com/article/2983666-magnum-hunter-resources-not-all-debt-laden-energy-companies-are-created-equal" target="_blank">full article at Seeking Alpha</a>.</span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-60809540661485625722015-04-01T09:07:00.002-07:002015-04-01T09:07:39.868-07:00Western Gas Partners - Undercovered Midstream Gem With Minimum Commodity Exposure<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was first published by Seeking Alpha on March 9, 2015.</span></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></div>
<a name='more'></a><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Amid the
ongoing downturn in the energy space, the dividends of several energy companies
have come under pressure. But the cash distributions offered by some midstream
master limited partnerships - such as Western Gas Partners (NYSE:WES) -- offer
protection against the commodity price swings.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Western Gas
Partners is a relatively young midstream MLP which was formed by Anadarko
Petroleum (NYSE:APC) and debuted at the stock market in 2008. Around 8% of the
MLP's limited partner interest is owned by Anadarko while 35% of its limited
partner and nearly 2% of the general partner interest is held by Western Gas
Equity Partners (NYSE:WGP). Western Gas Partners owns and operates natural gas
gathering systems, pipelines, treating and processing plants as well as NGL
pipelines and a single oil pipeline. These assets are located in Colorado,
Utah, Wyoming, Kansas, Oklahoma, Pennsylvania and Texas.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Western Gas
has a fee-based business model under which it receives a payment at
predetermined rates for every unit of gas gathered, treated or processed at its
facilities. This rate of payment is usually underpinned by long-term
agreements. These factors minimize the company's exposure to commodity price
swings.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<span style="font-family: Arial, Helvetica, sans-serif;">Western Gas Partner's cash flows have virtually
no exposure to the volatility in commodity prices. That's because about 80% of
its services are based on fee-based long-term agreements. In addition to this,
the company also signs commodity price swap agreement for most of its
percent-of-proceeds and keep-whole contracts. Consequently, last year, 99% of Western
Gas's gross margins came from either long-term ...... read <a href="http://seekingalpha.com/article/2986446-western-gas-partners-undercovered-midstream-gem-with-minimum-commodity-exposure" target="_blank">full article at Seeking Alpha</a>.</span><br />
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comNew York, NY, USA40.7127837 -74.00594130000001840.3275822 -74.651388300000022 41.097985200000004 -73.360494300000013tag:blogger.com,1999:blog-6040713099806311606.post-2203806642783505052015-03-26T08:00:00.000-07:002015-03-26T08:00:07.563-07:00Fortescue Metals Group: Great Execution, Bad Timing<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">This article
was <a href="http://seekingalpha.com/article/3016506-fortescue-metals-group-great-execution-bad-timing" target="_blank">first published</a> by <a href="http://seekingalpha.com/article/3016506-fortescue-metals-group-great-execution-bad-timing" target="_blank">Seeking Alpha</a> on March 20, 2015<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">By Sarfaraz
A. Khan</span></div>
<a name='more'></a><o:p></o:p><br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">The iron-ore
miners have been struggling due to the slump in the commodity's prices but the
industry leaders such as BHP Billion (NYSE:BHP), Rio Tinto (NYSE:RIO) and Vale
(NYSE:VALE) are in a strong position to weather the slump. However, Fortescue
Metals Group (OTCQX:FSUGY), world's fourth biggest iron-ore producer, is caught
in the downturn. <o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";"><br /></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">Unlike other
diversified mining companies, the Perth, Australia based Fortescue Metals Group
is a pure-play on the sea-borne iron-ore market for China. Fortescue was formed
in 2003 to tap into the growing iron-ore demand from China. The company began
hunting for the commodity in the Pilbara region of Western Australia - where
BHP Billiton and Rio Tinto have also invested billions - and discovered
high-quality deposits in the Chichester and Hamersley Range. It started
building its first mine in 2006 and made the first shipment in 2008.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">In the
subsequent years, Fortescue underwent phenomenal growth, especially during
2010-14 when the company embarked on its ambitious debt -powered $9.2 billion
expansion plan to almost triple its seaborne iron ore production rate to 155
mtpa (million tonnes per annum). It was also impressive that Fortescue
completed the expansion work ahead of schedule in 2014.<o:p></o:p></span></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";"><br /></span></div>
<br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">When
Fortescue announced its expansion plan, the market had strong fundamentals with
healthy demand coming from Asian customers, particularly from China, as the
commodity's price climbed by more than 40% in the second half of 2010.
Meanwhile, Australian iron-ore producers had a unique advantage to tap into
this demand thanks to their proximity to … read <a href="http://seekingalpha.com/article/3016506-fortescue-metals-group-great-execution-bad-timing" target="_blank"><b>full article at Seeking Alpha</b></a>. <o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-45850473693320846442015-03-26T07:30:00.000-07:002015-03-26T07:30:01.952-07:00Halliburton: The Bottom Might Be In<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">This article
was <a href="http://seekingalpha.com/article/3013496-halliburton-the-bottom-might-be-in" target="_blank">first published</a> by <a href="http://seekingalpha.com/article/3013496-halliburton-the-bottom-might-be-in" target="_blank">Seeking Alpha</a> on March 19, 2015<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">By <a href="https://twitter.com/Sarfaraz_A_Khan" target="_blank">Sarfaraz A. Khan</a> </span></div>
<a name='more'></a><o:p></o:p><br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">The number of
drilling rigs across the U.S. continues to decline, which was evident in the
latest data released by Baker Hughes (NYSE:BHI). The total number of oil and
gas rigs in the U.S has fallen to 1,125 for the week ending Friday, down from
more than 1,800 a year earlier, after the oil rig count fell for the fourteenth
consecutive week to 866 -- its lowest level in approximately four years.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">However, so
far, the low rig count has not made any major impact on U.S. oil production
growth due to two main reasons. Firstly, a large portion of the rigs that
initially came off were directional/vertical rigs rather than the horizontal
rigs. The latter produce significantly greater volumes of hydrocarbons in a day
than the former. Secondly, the process of the drop in the number of rigs and
its impact on U.S. oil production is a lengthy one which usually takes a couple
of months, not days.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="font-family: "Arial","sans-serif";">The number of
rigs will likely continue to head lower in the near future. Oppenheimer's
analyst James Schumm wrote in a recent report emailed to me that the U.S. rig
count will drop by 28% in the first quarter as compared to the final quarter of
the last year. That's bad news for oilfield services companies Schlumberger
(NYSE:SLB), Halliburton (NYSE:HAL) and Baker Hughes whose woes have been
compounded by .… read <a href="http://seekingalpha.com/article/3013496-halliburton-the-bottom-might-be-in" target="_blank"><b>full article at Seeking Alpha</b></a>. <o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-75014927270160472912015-03-26T07:00:00.000-07:002015-03-26T07:00:06.154-07:00United Technologies: Don't Need No Activist Investor<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article
was <a href="http://seekingalpha.com/article/3010406-united-technologies-dont-need-no-activist-investor" target="_blank">first published</a> by <a href="http://seekingalpha.com/article/3010406-united-technologies-dont-need-no-activist-investor" target="_blank">Seeking Alpha</a> on March 18, 2015<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz
A. Khan</span></div>
<a name='more'></a><span style="font-family: Arial, Helvetica, sans-serif;"><o:p></o:p></span><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Generally
speaking, well established companies - such as Apple (NASDAQ:AAPL), Microsoft
(NASDAQ:MSFT) and Procter & Gamble (NYSE:PG) - make significant changes to
their businesses when they are forced to do so by ornery investors. However,
Greg Hayes, the new head of United Technologies (NYSE:UTX), has been shaking up
his Hartford, Connecticut based company, even though he is not facing any
serious pressure from shareholders.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Historically,
United Technologies has been one of the most profitable conglomerates in the
U.S., providing equipment to the commercial aerospace, defense and building
industries. The company suffered a major blow in November last year when its
former CEO Louis Chênevert - who was the brains behind the massive $16.3
billion acquisition of Goodrich around five years ago - abruptly retired after
remaining at the helm for six years. He was immediately replaced by his
long-time CFO Hayes, and this could turn out to be a blessing in disguise.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">That's
because following Chênevert's departure, United Technologies started to review
its portfolio of businesses in December, including the former CEO's favorite
Sikorsky Aircraft unit. Last week, after years of speculation, the company
finally confirmed that it is exploring "strategic alternatives" for
Sikorsky - the business which makes Black Hawk helicopters for the U.S.
military as well as other helicopters.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">I believe
this is a positive development and shows that Hayes is willing to make the big
changes before the company sees any shareholder activism. Although Sikorsky
dominates the global military helicopter market, it has been struggling .… read
<a href="http://seekingalpha.com/article/3010406-united-technologies-dont-need-no-activist-investor" target="_blank">full article</a> at <a href="http://seekingalpha.com/article/3010406-united-technologies-dont-need-no-activist-investor" target="_blank">Seeking Alpha</a>. </span><span style="font-family: Arial, sans-serif;"><o:p></o:p></span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-10878597963294236982015-03-25T07:58:00.000-07:002015-03-25T07:58:27.348-07:002 Factors That Will Damage RPC's Outstanding Track Record<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was <a href="http://seekingalpha.com/article/3021036-2-factors-that-will-damage-rpcs-outstanding-track-record" target="_blank">first published</a> by <a href="http://seekingalpha.com/article/3021036-2-factors-that-will-damage-rpcs-outstanding-track-record" target="_blank">Seeking Alpha</a> on March
23, 2015</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></div>
<a name='more'></a><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Few oil and gas service companies can match RPC, Inc's
(NYSE:RES) track record in terms of profitability, return on capital and free
cash flow yields. However, with the slump in oil prices and pressure from
competitors, the company's earnings and margins are set to fall substantially.
According to the latest consensus data from Thomson Reuters, RPC's earnings per
share could drop by more than 80% while its EBIT margin could shrink by more
than 50% to 6.4% in 2015 from last year.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">The significant decline in oil prices since mid-2014 and
little support from natural gas have dampened the future prospects of all oil
and gas service companies. Hydrocarbon producers have slashed their capital
budgets and drilling activity has come down sharply. The latest data from Baker
Hughes (NYSE:BHI) shows another drop in the total number of rigs in the U.S. to
1,069 - lowest in more than five years - while the number of oil rigs fell to
825 -lowest in four years. Furthermore, drilling activity will remain subdued
in the near future due to the persistent weakness in oil prices, which is bad
news for all oil and gas service stocks.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">RPC operates in a highly competitive oilfield
services market where it has to guard its position against more than two dozen
rivals. These include well established names such as Schlumberger (NYSE:SLB)
and various smaller players who have grown over the last few years as a result
of the strong oilfield activity and availability of ….. read <a href="http://seekingalpha.com/article/3021036-2-factors-that-will-damage-rpcs-outstanding-track-record" target="_blank">full article at Seeking Alpha</a>.</span></span>S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-41701219267024032082015-03-25T07:52:00.001-07:002015-03-25T07:52:57.677-07:00Steel Producers: Building Momentum For The Anti-Dumping Trade Case<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was <a href="http://seekingalpha.com/article/3024836-steel-producers-building-momentum-for-the-anti-dumping-trade-case" target="_blank">first published</a> by <a href="http://seekingalpha.com/article/3024836-steel-producers-building-momentum-for-the-anti-dumping-trade-case" target="_blank">Seeking Alpha</a> on March
24, 2015</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></div>
<a name='more'></a><span style="font-family: Arial, Helvetica, sans-serif;"> </span><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Last year, the U.S. witnessed phenomenal growth in steel
imports due to the excess global steel-making capacity and strengthening
dollar. The significantly higher steel prices in the U.S. as compared to rest
of the world also made this an attractive market for foreign producers. The
finished steel imports to U.S. rose 35% in 2014 and took an all-time record
level of 28% of the market share, despite tariffs on some of the steel
products. With continuing imports, that market share climbed to 32% in January.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">While the U.S. steel producers have been accusing their
foreign competitors of "dumping" the steel in the U.S. -- the illegal
practice of selling a product below cost to gain market share -- they have not
yet filed a trade case. I believe this was mainly due to two reasons; firstly,
it is extremely hard to prove that a foreign competitor is actually selling the
product below cost. Secondly, most of the U.S. steel producers had a terrific
2014, with U.S. Steel (NYSE:X) reporting record annual net income since 2008,
which would have made it difficult for the industry to prove the negative
impact coming from growing steel imports.</span></div>
<div class="MsoNormal">
<br /></div>
<span style="line-height: 115%;"><span style="font-family: Arial, Helvetica, sans-serif;">Last year, the U.S. steel producers benefited
from healthy demand, thanks to the strength in the local manufacturing
activity. But this year is going to be different. The increasing imports have
forced U.S. steel producers, such as U.S. Steel and Nucor (NYSE:NUE), to slash
prices to their lowest levels in more than five ….. read <a href="http://seekingalpha.com/article/3024836-steel-producers-building-momentum-for-the-anti-dumping-trade-case" target="_blank">full article at Seeking Alpha</a>. </span></span><br />
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.comtag:blogger.com,1999:blog-6040713099806311606.post-47947481685411412552015-03-25T07:24:00.001-07:002015-03-25T07:24:56.871-07:00Whiting Opts Short-Term Pain For Long-Term Gain As Uncertainty Lingers Over Oil's Future<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">This article was <a href="http://seekingalpha.com/article/3027306-whiting-opts-short-term-pain-for-long-term-gain-as-uncertainty-lingers-over-oils-future" target="_blank">first published</a> by <a href="http://seekingalpha.com/article/3027306-whiting-opts-short-term-pain-for-long-term-gain-as-uncertainty-lingers-over-oils-future" target="_blank">Seeking Alpha</a> on March
25, 2015</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">By Sarfaraz A. Khan</span></div>
<a name='more'></a><br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">The shares of Whiting Petroleum (NYSE:WLL), the biggest
hydrocarbon producer from North Dakota's Bakken formation, tanked yesterday,
dropping by 19.5% when the markets closed, after the company announced that it
will issue equity and debt, thereby signaling that the company has failed to
find a buyer. Whiting plans to issue 35 million shares at $30 a piece, $1
billion convertible bonds that haven't been priced yet and $750 million 6.25%
senior notes due in 2023 as it follows in the footsteps of its peers Energy XXI
(NASDAQ:EXXI), RSP Permian (NYSE:RSPP), Antero Resources (NYSE:AR), Encana
Corp. (NYSE:ECA) and Noble Energy (NYSE:NBL) who have also raised equity and
debt.</span></div>
<div class="MsoNormal">
<br /></div>
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Last year, Denver-based Whiting purchased its debt-laden
competitor Kodiak Oil & Gas at a time when WTI was still priced at over $95
a barrel. Consequently, Whiting's long term debt climbed from $2.65 billion at
the end of 2013 to $5.63 billion at the end of 2014, but oil prices plunged by
nearly 50% in this period. With a weaker balance sheet, un-hedged oil
production, and the anticipated cash flow deficit, Whiting found itself in a
difficult position. Earlier this month, WSJ reported that Whiting was actively
"seeking a buyer" while Bloomberg said that the company has hired a
bank to help with the process.<o:p></o:p></span></div>
<div class="MsoNormal">
<br /></div>
<br />
<div class="MsoNormal">
<span style="font-family: Arial, Helvetica, sans-serif;">Clearly, shareholders, who have been looking towards the
bigger oil producers such as Exxon Mobil (NYSE:XOM), Hess Corp. (NYSE:HES),
Marathon Oil (NYSE:MRO) and Statoil (NYSE:STO) as possible suitors, are
disappointed, and perhaps rightly so. The sale of the … read <a href="http://seekingalpha.com/article/3027306-whiting-opts-short-term-pain-for-long-term-gain-as-uncertainty-lingers-over-oils-future" target="_blank">full article</a> at
<a href="http://seekingalpha.com/article/3027306-whiting-opts-short-term-pain-for-long-term-gain-as-uncertainty-lingers-over-oils-future" target="_blank">Seeking Alpha</a>. </span></div>
S.A.Khanhttp://www.blogger.com/profile/02190927721775499163noreply@blogger.com