Carrizo Oil & Gas sold for $3.2 billion

Callon Petroleum to acquire Carrizo Oil & Gas in all-stock deal valued at $3.2B

Carrizo sold for $3.2 billion, Stockwinners

Callon Petroleum (CPE) and Carrizo Oil & Gas (CRZO) announced that their Boards of Directors have unanimously approved a definitive agreement under which Callon will acquire Carrizo in an all-stock transaction valued at $3.2B.

This highly complementary combination will create a leading oil and gas company with scaled development operations across a portfolio of core oil-weighted assets in both the Permian Basin and Eagle Ford Shale.

Callon Petroleum buys Carrizo for $3.2B, Stockwinners

Under the terms of the agreement, Carrizo shareholders will receive a fixed exchange ratio of 2.05 Callon shares for each share of Carrizo common stock they own.

This represents $13.12 per Carrizo share based on Callon’s closing common stock price on July 12 and a premium of 18% to Carrizo’s trailing 60-day volume weighted average price.

Following the close of the transaction, Callon shareholders will own approximately 54% of the combined company, and Carrizo shareholders will own approximately 46%, on a fully diluted basis.

The all-stock transaction is intended to be tax-free to Carrizo shareholders.

The transaction has been unanimously approved by the Boards of Directors at both Callon and Carrizo.

In addition, each of the Carrizo directors has committed to vote his or her shares in favor of the transaction.

Upon closing, the Board of Directors of the combined company will consist of 11 members, including Callon’s eight current Board members and three to be appointed from the Board of Carrizo.

The combined company will be led by Callon’s executive management team and will remain headquartered in Houston, Texas.

The transaction, which is expected to close during the fourth quarter, is subject to customary closing conditions and regulatory approvals, including the approval of shareholders of both companies.

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Rig Counts Declined Last Week!

Baker Hughes reports U.S. rig count down 4 to 983 rigs

The international offshore rig count for April 2018 was 194. Stockwinners
Rig Counts Declined in the U.S. and Canada, Stockwinners

Baker Hughes (BHGE) reports that the U.S. rig count is down 4 rigs from last week to 983, with oil rigs down 5 to 797, gas rigs up 1 to 186, and miscellaneous rigs unchanged at 0.

The U.S. Rig Count is down 76 rigs from last year’s count of 1,059, with oil rigs down 62, gas rigs down 12, and miscellaneous rigs down 2.

The U.S. Offshore Rig Count is unchanged at 22 and up 3 rigs year-over-year.

The Canada Rig Count is up 15 rigs from last week to 78, with oil rigs up 16 to 38 and gas rigs down 1 to 40.

The Canada Rig Count is down 3 rigs from last year’s count of 81, with oil rigs up 3 and gas rigs down 6.

The Baker Hughes rig count is an important business barometer for the oil drilling industry. When drilling rigs are active they consume products and services produced by the oil service industry. The active rig count acts as a leading indicator of demand for oil products.

Crude oil is up 40 cents to $58.30 per barrel. Brent crude is up 57 cents to $68.33 per barrel.

Note that crude oil is rebounding from its 100-day moving average. The Commodity topped around $66 per barrel in the Spring.

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Tesla higher after raising money

Tesla offers $650M of shares, $1.35B of notes to ‘strengthen’ balance sheet

Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla higher after raising money, Stockwinners

Tesla (TSLA) confirmed in a press release that it disclosed this morning offerings of $650M of common stock and $1.35B aggregate principal amount of convertible senior notes due in 2024 in concurrent underwritten registered public offerings.

In addition, Tesla has granted the underwriters a 30-day option to purchase up to an additional 15% of each offering.

Elon Musk, Tesla’s CEO, will participate by purchasing $10M of common stock.

The aggregate gross proceeds of the offerings, assuming full exercise by the underwriters of their option to purchase additional securities, would be approximately $2.3B before discounts and expenses.

Concurrently with this offering of common stock and pursuant to a separate prospectus supplement, Tesla is offering convertible senior notes due 2024 to the public in an aggregate principal amount of $1.35B, or $1.55B if the underwriters for the concurrent convertible notes offering exercise in full their option to purchase additional notes.

Tesla intends to use the net proceeds from the offerings to “further strengthen its balance sheet, as well as for general corporate purposes.”

The notes in the offering will be convertible into cash and/or shares of Tesla’s common stock at Tesla’s election. The interest rate, conversion price and other terms of the notes are to be determined.

Goldman Sachs and Citigroup are acting as lead joint book-running managers for the offering, with BofA Merrill Lynch, Deutsche Bank Securities, Morgan Stanley and Credit Suisse acting as additional book-running managers, and Societe Generale and Wells Fargo Securities acting as co-managers.

Wolfe Research

#Wolfe Research analyst Daniel Galves downgraded Tesla to Peer Perform from Outperform and cut his price target for the shares to $265 from $375. Tesla’s product is “truly differentiated” with a multi-year sustainable advantage in long-range electric powertrains and highly-assisted driving, Galves told investors in a research note. However, the analyst says it is now clear that “broad consumer awareness doesn’t happen overnight.”

In the interim, he believes shares of Tesla will be driven by investor confidence in the company’s medium-term demand and earnings power. And #Galves no longer has confidence in substantial free cash flow at Tesla until its Model 3 volumes rise to 7,000 per week. As such, the analyst moves to the sidelines saying he can no longer recommend the shares.

Shares of Tesla are up 4%, or $9.09, to $243.55 in Thursday’s trading following the news.

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Rig counts declined by three

  • Baker Hughes reports U.S. rig count down 3 to 1,022 rigs last week
  • The U.S. Rig Count is up 14 rigs from last year’s count of 1,008
Oil Rigs, See Stockwinners.com Market Radar to read the latest on oil and rig count
Rig counts declined by three, See Stockwinners.com

Baker Hughes (BHGE) reports that the U.S. rig count is down 3 rigs from last week to 1,022, with oil rigs up 2 to 833, gas rigs down 5 to 189, and miscellaneous rigs unchanged at 0.

The U.S. Rig Count is up 14 rigs from last year’s count of 1,008, with oil rigs up 18 to 833, gas rigs down 3 to 189, and miscellaneous rigs down 1.

The U.S. Offshore Rig Count is up 1 rig to 23 and up 7 rigs year-over-year.

The Canada Rig Count is down 2 rigs from last week to 66, with oil rigs down 4 to 18 and gas rigs up 2 to 48.

The Canada Rig Count is down 36 rigs from last year’s count of 102, with oil rigs down 23 and gas rigs down 13.

Crude oil (WTI) is up 66 cents to $64.25 per barrel. Brent crude is up 95 cents to $64.27 per barrel.

The international offshore rig count for April 2018 was 194. Stockwinners
Oil is higher on the new, Stockwinners

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Anadarko Petroleum sold for $50 billion

Chevron to acquire Anadarko for $65 per share or $33B


Anadarko sold for $50 billion, Stockwinners

Chevron Corporation (CVX) announced that it has entered into a definitive agreement with Anadarko Petroleum (APC) to acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at $33B, or $65 per share.

Based on Chevron’s closing price on April 11, and under the terms of the agreement, Anadarko shareholders will receive 0.3869 shares of Chevron and $16.25 in cash for each Anadarko share.

Chevron sees synergies of $2 billion, Stockwinners

The total enterprise value of the transaction is $50B.

“The acquisition of Anadarko will significantly enhance Chevron’s already advantaged Upstream portfolio and further strengthen its leading positions in large, attractive shale, deepwater and natural gas resource basins.

Furthermore, Western Midstream Partners, LP (WES) is a successful midstream company whose assets are well aligned with the combined companies’ upstream positions, which should further enhance their economics and execution capabilities.”

Chevron’s Chairman and CEO Michael Wirth said, “This transaction builds strength on strength for Chevron. The combination of Anadarko’s premier, high-quality assets with our advantaged portfolio strengthens our leading position in the Permian, builds on our deepwater Gulf of Mexico capabilities and will grow our LNG business.

It creates attractive growth opportunities in areas that play to Chevron’s operational strengths and underscores our commitment to short-cycle, higher-return investments.

This transaction will unlock significant value for shareholders, generating anticipated annual run-rate synergies of approximately $2 billion, and will be accretive to free cash flow and earnings one year after close,” Wirth concluded.

“The strategic combination of Chevron and Anadarko will form a stronger and better company with world-class assets, people and opportunities,” said Anadarko Chairman and CEO Al Walker.

“I have tremendous respect for Mike and his leadership team and believe Chevron’s strategy, scale and operational capabilities will further accelerate the value of Anadarko’s assets.”

The acquisition consideration is structured as 75% stock and 25% cash, providing an overall value of $65 per share based on the closing price of Chevron (CVX) stock on April 11.

In aggregate, upon closing of the transaction, Chevron will issue approximately 200M shares of stock and pay approximately $8B in cash. Chevron will also assume estimated net debt of $15B.

Total enterprise value of $50B includes the assumption of net debt and book value of non-controlling interest.

The transaction has been approved by the boards of both companies and is expected to close in the second half of the year. The acquisition is subject to Anadarko (APC) shareholder approval. It is also subject to regulatory approvals and other customary closing conditions.

Upon closing, the company will continue be led by Michael Wirth as chairman and CEO. Chevron will remain headquartered in San Ramon, California.

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Rig counts rise in March

Baker Hughes announces March international rig count of 1,039, up 12

The international offshore rig count for April 2018 was 194. Stockwinners
The international offshore rig count rises in March, Stockwinners

Baker Hughes (BHGE) announced that the Baker Hughes international rig count for March 2019 was 1,039, up 12 from the 1,027 counted in February 2019, and up 67 from the 972 counted in March 2018.

The international offshore rig count for March 2019 was 247, down 3 from the 250 counted in February 2019, and up 62 from the 185 counted in February 2018.

The average U.S. rig count for March 2019 was 1,023, down 26 from the 1,049 counted in February 2019, and up 34 from the 989 counted in March 2018.

The average Canadian rig count for March 2019 was 151, down 79 from the 230 counted in February 2019, and down 67 from the 218 counted in March 2018.

The worldwide rig count for March 2019 was 2,213, down 93 from the 2,306 counted in February 2019, and up 34 from the 2,179 counted in March 2018.

Crude oil is up 2 cents to $62.12 per barrel.

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Economy expanded at a moderate rate

Fed’s Beige Book says “economic activity continued to expand”



Fed’s Beige Book says economic activity continued to expand , Stockwinners


Fed’s Beige Book: “economic activity continued to expand in late January and February,” said the report.

But 10 Districts noted “slight-to-moderate” growth, with Philly and St Louis reporting flat conditions. That’s the most tepid characterization in sometime, as the more normal description has been “moderate” to “modest.”

About half of the Districts said the shutdown weighed on some sectors, including consumer spending was mixed, but in part due to “harsh winter weather and higher costs of credit.”

Manufacturing generally strengthened but “numerous” contacts worries about weaker global growth, higher costs due to tariffs, and continued trade policy uncertainty.

The service sector increased at a modest-to-moderate pace. Also, residential construction activity was steady or slightly higher in most of the U.S., but home sales were generally lower.

There was little change in the employment outlook, with employment increasing in most Districts, with “modest-to-moderate gains in a majority of Districts and steady to slightly higher employment in the rest.

Labor markets remained tight for all skill levels.

Wages continued to increase for both low- and high-skilled positions, and a majority of Districts reported increases were moderate.

And for prices, they continued to increase at a modest-to-moderate pace, “with several Districts noting faster growth for input prices than selling prices. The ability to pass on higher input costs to consumers varied by region and industry.”

The report (prepared by KC Fed with data collected on or before February 25) is consistent with the FOMC’s outlook for slower growth with tame inflation.

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ExxonMobil to increase its Permian Basin output

Exxon Mobil to increase Permian output to 1M barrels per day by 2024

ExxonMobil to increase its Permian Basin output, Stockwinners

ExxonMobil (XOM) said it has revised its Permian Basin growth plans to produce more than 1 million oil-equivalent barrels per day by as early as 2024 – an increase of nearly 80 percent and a significant acceleration of value.

https://stockwinners.com
ExxonMobil expects to make 10% return on its Permian Basin fields at $35 per barrel oil, Stockwinners

The size of the company’s resource base in the Permian is approximately 10 billion oil-equivalent barrels and is likely to grow further as analysis and development activities continue.

ExxonMobil’s investments in the Permian Basin are expected to produce double-digit returns, even at low oil prices.

At a $35 per barrel oil price, for example, Permian production will have an average return of more than 10 percent.

The anticipated increase in production will be supported by further evaluation of ExxonMobil’s Delaware Basin’s increased resource size, infrastructure development plans, and secured capacity to transport oil and gas to ExxonMobil’s Gulf Coast refineries and petrochemical operations through the Wink-to-Webster, Permian Highway and Double E pipelines.

Among the company’s key advantages in the Permian, is its acreage position.

The company has large, contiguous acreage that enables multi-well pads in large development corridors connecting to efficient gathering systems, reducing development costs and accelerating production growth.

ExxonMobil’s scale, financial capacity and technical capabilities enable the company to maximize the value of the resource. ExxonMobil is actively building infrastructure to support volume growth.

Plans include construction at 30 sites to enhance oil and gas processing, water handling and ensure takeaway capacity from the basin. Construction activities include central delivery facilities designed to handle up to 600,000 barrels of oil and 1 billion cubic feet of gas per day and enhanced water-handling capacity through 350 miles of already-constructed pipeline.

The investment plans will also bring great benefits to the local area. ExxonMobil’s expansion in the region will benefit communities in West Texas and southeast New Mexico through billions in property tax revenue, economic development and the creation of high-paying jobs.

ExxonMobil remains one of the most active operators in the Permian Basin and has 48 drilling rigs currently in operation and plans to increase its rig count to approximately 55 by the end of the year.

Increased use of technology, including enhanced subsurface characterization, subsurface modeling and advanced data analytics to support optimization and automation, will help the company reduce costs, improve its development plan and increase resource recovery.

Crude oil is up 5 cents to $56.64 per barrel. XOM last traded at $80.22.

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Rig counts rise!

Baker Hughes reports U.S. rig count up 2 to 1,051 rigs

The international offshore rig count for April 2018 was 194. Stockwinners
The U.S. rig count rises to 1,051

Baker Hughes (BHGE) reports that the U.S. rig count is up 2 rigs from last week to 1,051 rigs, with oil rigs up 3 to 857 and gas rigs down 1 to 194.

The U.S. Rig Count is up 76 rigs from last year’s count of 975, with oil rigs up 59 and gas rigs up 17.

The U.S. Offshore Rig Count is up 2 rigs to 21 and up 3 rigs year-over-year.

The Canada Rig Count is down 16 rigs from last week to 224, with oil rigs down 6 to 152 and gas rigs down 10 to 72.

The Canada Rig Count is down 94 rigs from last year’s count of 318, with oil rigs down 66 and gas rigs down 28.

USO is up 12 cents to $11.60.

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EQGP Holdings sold for $20.00 per share

Equitrans Midstream to acquire EQGP Holdings for $20.00 per unit in cash

Equitrans Midstream Corporation (ETRN) announced that it has entered into definitive purchase agreements with certain unitholders of EQGP Holdings (EQGP) to acquire limited partner interests in EQGP for $20.00 per unit in cash, which is a 17.5% premium to the EQGP closing market price as of November 29, 2018.

The Private Purchases are expected to close on or about December 31, 2018, after which ETRN and its affiliates will own more than 95% of the outstanding EQGP Common Units. Upon closing of the Private Purchases, ETRN intends to exercise the Limited Call Right under EQGP’s partnership agreement to acquire all remaining EQGP Common Units not then owned by ETRN and its affiliates.

If the Limited Call Right is exercised, the remaining holders of EQGP Common Units will receive at least the same cash price per unit that will be paid in the Private Purchases.

The Limited Call Right is expected to close in January 2019 and will be a taxable transaction for EQGP unitholders.

ETRN intends to use the cash proceeds from a newly issued Term Loan B to finance the Private Purchases and the purchases pursuant to the Limited Call Right.

ETRN has secured committed financing in support of these purchases. ETRN also announced that it has made a proposal to EQM Midstream Partners (EQM) for the exchange of its incentive distribution rights and the economic general partner interest in EQM for 95 million units in EQM and a non-economic general partner interest in EQM, subject to the closing of the Private Purchases and completion of the Limited Call Right.

ETRN expects that a portion of the units received will be in the form of Payment-In-Kind Units.

The PIK Units would receive distributions in the form of additional PIK Units and would convert on a one-to-one basis into common units representing limited partner interests in EQM at a date to be determined.

Final terms of the Proposed IDR Transaction are subject to negotiation with the board of directors of EQM’s general partner or its conflicts committee, and assuming an agreement is reached, ETRN expects that the Proposed IDR Transaction would close in the first quarter of 2019.

Upon completion of the Private Purchases, the Limited Call Right, and the Proposed IDR Transaction, ETRN will have accomplished a full simplification of EQGP and EQM, resulting in a projected 61% ownership of EQM.

Additionally, EQM will be the only publicly traded partnership under ETRN and is expected to benefit from the elimination of the IDR burden, as well as stronger coverage and balance sheet metrics.

Highlights: The proposed transactions would not result in a distribution cut for EQM unitholders; Targeting 6% – 8% annual distribution growth beginning in 2019; 2019 distribution coverage in excess of 1.0x; Long-term distribution coverage target in excess of 1.2x beginning in 2020; Long-term debt to EBITDA target of 3.5x – 4.0x beginning in 2020; PIK Units will provide balance sheet and coverage support; Improves cost of capital; No equity issuance is required to fund capital projects for the next several years; Reduces corporate overhead associated with the elimination of a publicly traded entity.

ETRN expects that the EQM Conflicts Committee will review the Proposed IDR Transaction. Unitholder voting is not required in connection with the Private Purchases, the exercise of the Limited Call Right, or the Proposed IDR Transaction.


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WildHorse Resource sold for $3.977 billion

Chesapeake to buy WildHorse Resource in $3.977B cash and stock deal

WildHorse Resource sold for $3.977 billion, Stockwinners
WildHorse Resource sold for $3.977 billion, Stockwinners

Chesapeake Energy (CHK) and WildHorse Resource Development (WRD) today jointly announced that Chesapeake has entered into a definitive agreement to acquire WildHorse, an oil and gas company with operations in the Eagle Ford Shale and Austin Chalk formations in southeast Texas, in a transaction valued at approximately $3.977B, based on yesterday’s closing price, including the value of WildHorse’s net debt of $930M as of June 30, 2018.

At the election of each WildHorse common shareholder, the consideration will consist of either 5.989 shares of Chesapeake common stock or a combination of 5.336 shares of Chesapeake common stock and $3 in cash, in exchange for each share of WildHorse common stock.

The transaction was unanimously approved by the Board of Directors of each company.

The deal is projected to double adjusted oil production by 2020 from stand-alone adjusted 2018 estimates, increasing to a projected range of 125,000 to 130,000 barrels of oil per day in 2019, and 160,000 to 170,000 bbls of oil per day in 2020; Chesapeake’s 2020 projected adjusted oil production mix is expected to increase to approximately 30% of total production, compared to approximately 19% today; Increases projected EBITDA per barrel of oil equivalent margin by approximately 35% in 2019 and by approximately 50% in 2020, based on current strip prices; $200M-$280M in projected average annual savings, totaling $1B-$1.5B by 2023, due to operational and capital efficiencies as a result of Chesapeake’s significant expertise with unconventional assets and technical and operational excellence; incremental savings through elimination of redundant corporate overhead, gathering, processing and transmission synergies and improved capital markets execution due to improved credit metrics.

Upon closing, Chesapeake shareholders will own approximately 55% of the combined company, and WildHorse shareholders will own approximately 45%, depending on the consideration elected.

Chesapeake expects to finance the cash portion of the WildHorse acquisition, which is expected to be between $275M and approximately $400M, through its revolving credit facility.

The transaction, which is subject to shareholder approvals from both companies and customary closing conditions and regulatory approvals, is expected to close in the first half of 2019.


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Tesla jumps on results, upgrades

Tesla rises as analysts digest first profit in two years

Tesla Model 3 named Popular Mechanics' Car of the Year
Tesla Model 3 named Popular Mechanics’ Car of the Year

Shares of Tesla (TSLA) are on the rise after the company reported third quarter results, with a net profit of $312M, the electric-vehicle maker’s largest ever.

Tesla also said deliveries of its Model 3 grew to 56,000, adding that it “was the best-selling car in the U.S. in terms of revenue and the 5th best-selling car in terms of volume.”

Following the announcement, Wolfe Research analyst Dan Galves upgraded Tesla to Outperform, while several other firms raised their targets on the stock. Nonetheless, some Wall Street analysts remain bearish on Tesla, telling investors to “not get used to [this quarter’s profitability.]”

stockwinners.com/blog
Tesla jumps on results, upgrades – See Stockwinners Market Radar

RESULTS

Last night, Tesla reported third quarter adjusted earnings per share of $2.90 and revenue of $6.82B, both above consensus of (19c) and $6.3B, respectively.

The company said that, “Model 3 quarterly production and deliveries should continue to increase in the fourth quarter compared to the third quarter.

Our target of delivering 100,000 Model S and X vehicles this year remains unchanged.

We expect gross margin for Model 3 to remain stable in the fourth quarter as manufacturing efficiencies and fixed cost absorption offset a slightly lower trim mix and the negative impact of tariffs from Chinese sourced components.

https://stockwinners.com/blog/
Stockwinners.com,Tesla jumps on results, upgrades

For all three vehicles, additional tariffs in the fourth quarter on parts sourced from China will impact our gross profit negatively by roughly $50M […] The third quarter of 2018 was a truly historic quarter for Tesla.

Model 3 was the best-selling car in the U.S. in terms of revenue and the 5th best-selling car in terms of volume.

With average weekly Model 3 production through the quarter, excluding planned shutdowns, of roughly 4,300 units per week, we achieved GAAP net income of $312M.”

WOLFE RESEARCH SAYS BUY TESLA

In a post-earnings research note, Wolfe Research’s Galves upgraded Tesla to Outperform from Peer Perform, with a $410 price target.

Saying that “Tesla became a real company,” the analyst argued that third quarter non-GAAP earnings of $2.90 and free cash flow of $881M are proof that Tesla’s earnings power is likely to outperform traditional automakers.

Management’s focus on cost and capital efficiency boosted Galves’ confidence that priorities have changed from unit growth at all cost to profitable growth and self-funding.

Further, the analyst argued that demand and margin outlook appear “very positive” and the fact that 50% of trade-ins on the Model 3 are non-luxury vehicles indicates the buyer base is likely bigger than expected.

Also bullish on the stock, Piper Jaffray analyst Alexander Potter raised his price target for Tesla to $396 from $389 as he believes the company reported a “milestone quarter,” with margins, earnings, and cash flow easily beating expectations.

While there is a still a lot of “hair” on the company, bears will struggle to poke holes in the results, Potter contended, adding that Tesla appears increasingly likely to achieve financial self-sufficiency.

The analyst reiterated an Overweight rating on Tesla shares. Oppenheimer, JMP Securities, and RBC Capital also raised their price targets on the stock.

‘DON’T GET USED TO IT’

Still bearish on Tesla shares, UBS analyst Colin Langan reiterated a Sell rating on the stock in a research note titled “Profitability at last, just don’t get used to it.”

The analyst continues to expect Model 3 average selling prices to decline into fourth quarter and 2019 as Tesla begins delivering the new $46,000 mid-range model.

Voicing a similar opinion, Needham analyst Rajvindra Gill told investors that while Tesla posted its first quarterly profit and positive free cash flow in over two years thanks to higher-margin Model 3 sales, he remains concerned over margin in the first half of 2019 given an “unfavorable mix shift of Model 3s, decline in ZEV sales, service margins stay in -35%-40% and pricing pressure on Model S/X.” Gill also questions the speed and profitability of Tesla’s production of a $45K car, “not to mention the $35K version”, in order to match its backlog of orders.

The analyst reiterated an Underperform rating on the shares.

PRICE ACTION

In Thursday’s trading, shares of Tesla have gained about 5% to $302.46.


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Ocean Rig sold for $2.7B

Transocean to acquire Ocean Rig for $2.7B including debt

 

Ocean Rig sold for $2.7B, Stockwinners
Ocean Rig sold for $2.7B, Stockwinners

Transocean (RIG) and Ocean Rig UDW Inc. (ORIG) announced that they have entered into a definitive merger agreement under which Transocean will acquire Ocean Rig in a cash and stock transaction valued at approximately $2.7B, inclusive of Ocean Rig’s net debt..

The transaction consideration is comprised of 1.6128 newly issued shares of Transocean plus $12.75 in cash for each share of Ocean Rig’s common stock, for a total implied value of $32.28 per Ocean Rig share, based on the closing price on August 31, 2018.

This represents a 20.4% premium to Ocean Rig’s ten-day volume weighted average share price.

The transaction has been unanimously approved by the board of directors of each company.

Transocean intends to fund the cash portion of the transaction consideration through a combination of cash on hand and fully committed financing provided by Citi.

The merger is not subject to any financing condition. Upon completion of the merger, Transocean’s and Ocean Rig’s shareholders will own approximately 79% and approximately 21%, respectively, of the combined company.

No changes to Transocean’s board of directors, executive management team, or corporate structure are anticipated as a result of the acquisition.

The Company will remain headquartered in Steinhausen, Switzerland, with significant operating presence in Houston, Texas, Aberdeen, Scotland and Stavanger, Norway.

The transaction, which is expected to be completed during the first quarter of 2019, is subject to the approval of both Transocean and Ocean Rig shareholders and the satisfaction of customary closing conditions, including applicable regulatory approvals.

The merger is not subject to any financing condition.

Also, consistent with the Company’s strategy of recycling less competitive rigs, Transocean will retire two of its floaters, the ultra-deepwater drillship C.R. Luigs and the midwater floater Songa Delta.

The rigs will be classified as held for sale and will be recycled in an environmentally responsible manner. Both floaters are currently stacked.

Transocean anticipates re-ranking the combined fleet, which may result in additional rigs being recycled.


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The Philly Fed rises to 25.7 in July

The Philly Fed bounce to 25.7

 

The Philly Fed rises to 25.7 in July , Stockwinners
The Philly Fed rises to 25.7 in July , Stockwinners

The Philly Fed bounce to 25.7 from a 19-month low of 19.9 in June and a 1-year high of 34.4 in May was accompanied by an ISM-adjusted Philly Fed rise to 59.7 from 59.4 in June and a 45-year high of 62.5 in May, versus the same 59.7 in April.

The Federal Reserve Bank of Philadelphia reports that regional manufacturing activity continued to expand in July. All the broad indicators remained positive, with the general activity and new orders indexes improving this month. The survey’s price indexes suggest widespread increases for purchased inputs, and more firms reported price increases for their own manufactured goods. Expectations for the next six months continued to moderate but remain positive overall.

Monday’s Empire State headline slipped to 22.6 in July from an 8-month high of 25.0 in June but a lower 20.1 in May, while the ISM-adjusted measure fell more sharply, to 54.6 from a 12-year high of 57.9 in June and 56.9 in May.

The U.S. state of New York has been known by many nicknames, most notably as the Empire State, adopted as late as the 19th century. This nickname has been incorporated into the names of several state buildings and events, and is commonly believed to refer to the state’s wealth and resources.

For later July surveys, analysts expect a Richmond Fed drop to 17.0 from 20.0, a Dallas Fed drop to 30.0 from 36.5, a Chicago PMI decline to 60.0 from 64.1 in June, an ISM drop to 59.0 from 60.2, and an ISM-NMI drop to 58.0 from 59.1

The mix should allow the ISM-adjusted average of the major surveys to slip back to 58 from the 59 cycle-high set in May and June, versus the same 58 readings in six of eight months through April.

Producer sentiment is enjoying a lift from fiscal stimulus, the mining and factory resurgence, and a stronger global economy that has translated to strength in trade in the face of limited capacity constraints and little near-term inflation risk.


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Market higher at midday

Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800 for the first time since the middle of March.

Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800, Stockwinners
Stocks on Wall Street were higher at midday as the S&P 500 rose above 2,800, Stockwinners

The Dow has also been strong, though not much of that outperformance is due to JPMorgan (JPM) after the bank and several of its large peers kicked off earnings season with their reports this morning.

ECONOMIC EVENTS:

In the U.S., the June trade price report was mixed, with a weaker than expected 0.4% import price decline and a stronger than expected 0.3% increase in export prices.

The University of Michigan consumer sentiment survey was weaker than expected, falling 1.1 points to a 6-month low of 97.1 in the preliminary print for July. In Asia, China’s exports were strong in June, rising 11.3%, while imports fell a bit short of expectations with an increase of 14.1%.

COMPANY NEWS:

Shares of JPMorgan advanced fractionally after it started off this summer’s earnings season by reporting better than expected earnings for the second quarter. Of note, the bank’s CEO Jamie Dimon said he sees “good global economic growth, particularly in the U.S.”

Meanwhile, Wells Fargo (WFC) slipped 2% after reporting downbeat results for Q2, with the company noting in presentation slides that the third party review of customer accounts is “ongoing.”

Citi (C) shares also fell about 2% after its quarterly report, though the bank’s headline earnings for the quarter beat analysts’ estimates.

In addition, PNC Financial (PNC) reported better than expected results for the quarter and guided for third quarter net interest income to be up low-single digits…

Meanwhile, AT&T (T) was in focus after the U.S. Department of Justice said it plans to appeal the approval of the merger between AT&T and Time Warner. In an interview on CNBC this morning, AT&T CEO Randall Stephenson said that he doesn’t know exactly what the government basis will be for an appeal and that the move by the DOJ “changes nothing”.

Johnson & Johnson (JNJ) dipped about 1% after a Missouri jury awarded $4.69B to 22 women who alleged that use of J&J’s talcum powder products caused their ovarian cancer. The jury award includes $550M in compensatory damages and $4.14B in punitive damages against the company. J&J responded by saying it “intends to pursue all available appellate remedies.”

MAJOR MOVERS:

Among the noteworthy gainers was Biocept (BIOC), which surged 58% after it announced a provider agreement with Alliance Global FZ.

Also higher was Achillion (ACHN), which gained 13% after it said it began dosing in its Phase 1 trial of ACH-5548. Among the notable losers was Gogo (GOGO), which fell 11%, reversing last night’s afterhours gains following the company’s announcement of a strategic review.

Also lower was Ingredion (INGR), which dropped 11% after it announced a $125M cost savings program, provided lower than expected Q2 guidance, and cut its outlook for fiscal 2018.

INDEXES:

Near midday, the Dow was up 93.18, or 0.37%, to 25,018.07, the Nasdaq was up 13.35, or 0.17%, to 7,837.26, and the S&P 500 was up 4.74, or 0.17%, to 2,803.03.


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This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility.