CHICAGO, May 22, 2014 /PRNewswire/ --Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the ExxonMobil Corporation (NYSE:XOM-Free Report), Imperial Oil Ltd. (AMEX:IMO-Free Report), BP plc (NYSE:BP-Free Report), Encana Corporation (NYSE:ECA-Free Report) and Helmerich & Payne Inc. (NYSE:HP-Free Report).
Today, Zacks is promoting its 'Buy' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Wednesday's Analyst Blog:
Exxon Plans Deepest Well in Arctic
Oil major ExxonMobil Corporation's (NYSE:XOM-Free Report) Canadian subsidiary, Imperial Oil Ltd. (AMEX:IMO-Free Report) is at present considering the drilling of the deepest offshore well in the Arctic.
A project description of the same was submitted by Imperial Oil to Canadian regulators, seeking to go ahead with the proposed exploratory well. The well, projected to take two to four years for completion, could extend about 6 miles below the floor of the Beaufort Sea. If approved, it would be the most expensive well to be drilled.
Imperial Oil did not disclose the depth of the well, which could vary and will be revealed only after a formal application is made. However, the geological target is expected to be a maximum depth of about 4.7 miles. To deal with the technical complexities of these deep high pressure wells, which may be drilled over 6 miles, complex well casing, cementing and drilling plans are required.
The proposed well is likely to be drilled in the Canadian Arctic, about 110 miles off the coast of the Northwest Territories town of Tuktoyaktuk. The particular area is owned by Imperial, ExxonMobil and partner BP plc (NYSE:BP-Free Report).
Canada updated its Arctic drilling policy following the disastrous 2010 Deepwater Horizon blowout spill in the Gulf of Mexico. It laid down the need to have two rigs on site, including a backup competent of drilling a separate emergency relief well to stop the flow of oil in case of an accident.
However, Canada's main energy regulator, the National Energy Board (NEB), left a potential escape clause by permitting exceptions in cases where operators can "meet or exceed" a same-season relief well's ability to stop a spill. An average High Arctic drilling season lasts for around 120 days from around May to November.
Imperial Oil and its partners intend to drill an exploratory well in the summer of 2020, which would be the first offshore drilling in Canada's Arctic waters since 2005, subject to approvals.
As the company stated that it cannot meet a longstanding requirement to stop an accidental blowout within the short Arctic summer drilling season by drilling a so-called relief well, environmentalists have voiced their concern. The latter asked Canada's NEB last month to clarify whether it was ready to preemptively grant a policy exception in this case.
At present, ExxonMobil carries a Zacks Rank #3 (Hold). Another stock in the oil and gas sector worth considering is Encana Corporation (NYSE:ECA-Free Report), which sports a Zacks Rank #1 (Strong Buy).
Staying Bullish on Helmerich & Payne
On May 15, 2014, we issued an updated research report on Tulsa, Oklahoma-based contract drilling services provider Helmerich & Payne Inc. (NYSE:HP-Free Report). We remain optimistic about the firm's near-term prospects, supported by its superior and diversified drilling fleet, continued strong operating performance led by an efficient management team, and an investor-friendly financial policy.
Helmerich & Payne is a major land and offshore drilling contractor in the western hemisphere, having the youngest and most efficient drilling fleet. The company specializes in shallow to deep drilling in oil and gas-producing basins of the U.S. and in drilling for oil and gas in international locations.
We believe that Helmerich & Payne's technologically-advanced FlexRigs are the key to its success, helping to increase its count of active rigs and maintain relatively strong daily-rate margins even during times of market uncertainty.
The company's proprietary FlexRig design makes the rigs move faster than conventional rigs, drill quicker and more efficiently, and allows for a safer operating environment. As such, these are better suited for the new demands of the exploration business and, therefore, command higher dayrates and utilization than rigs from other land drillers.
Helmerich & Payne recently approved a raise in its quarterly cash dividend to 62.5 cents per share ($2.50 per share annualized), representing an increase of 25% over the previous payout. The significant dividend hike not only highlights the company's commitment to create value for shareholders but also underlines Helmerich & Payne's strong cash generation capabilities.
Helmerich & Payne has always been extremely conservative with the allocation of capital and the use of leverage on its balance sheet. This not only insulates the company during uncertain times, but also led to the generation of $737 million in profit for the fiscal year 2013, despite volatile prices and credit restrictions.
Another positive in the Helmerich & Payne story is the quality of its client base, which mostly includes well-capitalized oil majors or large independents.
Helmerich & Payne currently carries a Zacks Rank #2 (Buy).
Today, Zacks is promoting its 'Buy' stock recommendations. Get #1Stock of the Day pick for free.
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