Club holdings Coterra Energy (CTRA) and Pioneer Natural Resources (PXD) delivered fourth-quarter earnings beats Wednesday. But we’ll be watching for how the market responds to higher capital expenditure outlooks and lower quarterly dividends for both of these Texas-based oil-and-gas firms. Coterra’s total revenue increased 2.5% year-over-year, to $2.28 billion, beating analysts’ forecasts of $2.11 billion, according to estimates compiled by Refinitiv. Coterra’s adjusted diluted earnings-per-share (EPS) grew 40% compared with the year prior, to $1.16 a share, narrowly beating expectations for EPS of $1.10, Refinitiv data showed. Pioneer’s total revenue increased 18% year-over-year, to $5.10 billion, beating analysts’ forecasts of $3.53 billion, according to Refinitiv. Pioneer’s adjusted diluted EPS grew 29% on an annual basis, to $5.91 a share, topping expectations for EPS of $5.77, Refinitiv data showed. Note : Both companies are scheduled to host their earnings conference calls with analysts and investors Thursday at 10:00 a.m. ET. Bottom line Solid production and pricing, coupled with low costs, helped both companies deliver fourth-quarter results ahead of expectations. But with investors looking ahead to 2023, Coterra and Pioneer could both see their stock prices come under pressure over concerns about lower dividends on a sequential basis and higher capital expenditures in 2023 — as was the case with Club holding Devon Energy (DVN) last week. That move prompted us to reduce our exposure to any potential post-earnings downside by trimming Coterra and Pioneer late last week. However, given last week’s energy sell-off some of the dividend news may have already been priced into their share prices. After a strong 2022, energy stocks have stumbled out of the gate this year, tracking the declines in the underlying commodities. West Texas Intermediate crude — the U.S. oil benchmark — has fallen about 7.5% this year, to hover around $74 a barrel, while natural gas has seen its value come down by more than half, to around the low $2-per-cubic-foot level. We’ll look for more color on both companies’ 2023 frameworks tomorrow on their conference calls. For the moment, we reiterate 2 ratings on both firms. In afterhours trading Wednesday, Coterra was trading up more than 2%, at $23.80 a share, while Pioneer was up nearly 1%, at $207.11 a share. Capital allocation Coterra Energy said its upcoming quarterly fixed-plus-variable dividend will be 57 cents a share — factoring in a base dividend of 20 cents a share and a variable of 37 cents a share — compared with 68 cents per share in the prior quarter. Still, the new annualized payment represents a hefty 9.8% dividend yield based on Coterra’s closing price of $23.26 on Wednesday. Coterra also increased its annual base dividend to 80 cents per share from 60 cents, while announcing a new $2 billion share repurchase program. The company continues to target returning 50% or more of its free cash flow to shareholders, but its new priorities are to pay out the higher base dividend first, repurchase stock second, and pay variable dividends third. The decision to put more emphasis on share repurchases instead of variable dividends makes sense given the stock’s weak performance since June of last year. Management currently expects the company will generate $1.9 billion of free cash flow in 2023. After funding the base dividend, at least $400 million would be left over for additional shareholder returns. Pioneer said its upcoming quarterly fixed-plus-variable dividend will be $5.58 a share — factoring in a base dividend of $1.10 a share and a variable of $4.48 a share — compared with $5.71 per share in the prior quarter. But the annualized dividend yield based on Pioneer’s closing price of $205.27 Wednesday provides shareholders with a significant 10.87% yield, making it still one of the highest yielding companies in the S & P 500 . Pioneer also continues to make headway on its share repurchase program. The company bought back $400 million worth of stock in the fourth quarter and said Wednesday it has already bought back $250 million so far in the current quarter. Fourth-quarter production Coterra Energy’s oil-and-gas production came in above the high end of the company’s guidance and edged out analysts’ estimates, too. Meanwhile, Pioneer’s oil production slightly missed analysts’ forecasts — a disappointing outcome given the company is oil-weighted and crude returns higher profit margins than natural gas. Even so, Pioneer beat expectations on production of natural gas liquids and gas. Notably, Pioneer doesn’t hedge its oil production, making its realized pricing closer to that of the underlying commodity. Pioneer closed all its hedges at the start of 2022, a prescient move considering crude’s gains last year. 2023 outlook Guidance provided by Coterra and Pioneer echoed that of Devon: Softer production but higher capital expenditures in 2023. Coterra’s total production outlook for oil and gas was below estimates at the mid-point. But it beat on expectations for oil production, which should please investors given the high margins of crude production. On the other hand, Pioneer’s total production outlook was slightly higher than expected, though oil was roughly in line at the mid-point. Capital expenditure outlooks were higher than expected, too, and we suspect both companies are feeling some of the same inflationary pressures Devon cited last week . Still, both are very low cost operators. Coterra sees its corporate free cash flow breakeven at $45 per barrel of WTI and $2.25 per one thousand cubic feet of Henry Hub natural gas, while Pioneer’s 2023 corporate breakeven is $39 per barrel of WTI. (Jim Cramer’s Charitable Trust is long CTRA, PXD, DVN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
The sun sets behind a crude oil pump jack on a drill pad in the Permian Basin in Loving County, Texas, U.S. November 24, 2019.
Angus Mordant | Reuters
Club holdings Coterra Energy (CTRA) and Pioneer Natural Resources (PXD) delivered fourth-quarter earnings beats Wednesday. But we’ll be watching for how the market responds to higher capital expenditure outlooks and lower quarterly dividends for both of these Texas-based oil-and-gas firms.
National Grid Renewables has broken ground on its 100 MW Apple River Solar Project in Polk County, Wisconsin.
The Wisconsin solar farm, which will use US-made First Solar Series 6 Plus bifacial modules, will be constructed by The Boldt Company, creating 150 construction and service jobs. Apple River Solar will generate over $36 million in direct economic benefits over its first 20 years.
Once it comes online in late 2025, Apple River Solar will supply clean energy to Xcel Energy, which serves customers throughout the Upper Midwest. According to National Grid Renewables, the solar farm will generate enough energy to power around 26,000 homes annually. It will also offset about 129,900 metric tons of carbon dioxide emissions each year – equivalent to taking 30,900 cars off the road.
“We are excited to see this project begin as it underscores our dedication to delivering clean, reliable and affordable energy to our customers,” said Karl Hoesly, President, Xcel Energy-Wisconsin and Michigan. “This project is an important step in those goals while bringing significant economic benefits to Polk County and the local townships.”
Electrekreported in February that Xcel Energy, Minnesota’s largest utility, expects to cut more than 80% – and possibly up to 88% – of its emissions by 2030, putting it on track to hit Minnesota’s goal of net zero by 2040. It also says it’s on track to achieve its clean energy goals for all the Upper Midwest states it serves – Minnesota, Wisconsin, North Dakota, South Dakota, and Michigan.
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Tesla has announced that it will finally deliver 500 kW charging as it is about to install its long-awaited V4 Supercharger cabinets.
The rollout of Supercharger V4 has been a strange one, to say the least.
Tesla has been deploying the new charging stations for two years and calling them “Supercharger V4”, but it has only been deploying the charging stalls.
Supercharger stations are made of two main parts: the stalls, which are where the charging cable is located, and the cabinets, which are generally located further back and include all the power electronics.
For all these new “Supercharger V4”, Tesla was actually using Supercharger V3 cabinets. This has been limiting the power output of the charging stations to 250 kW – although
Today, Tesla officially announced its “V4 Cabinet”, which the automaker claims will enable of “delivering up to 500kW for cars and 1.2MW for Semi.”
Here are the main features of the V4 Cabinet as per Tesla:
Faster charging: Supports 400V-1000V vehicle architectures, including 30% faster charging for Cybertruck. S3XY vehicles enjoy 250kW charge rates they already experience on V3 Cabinet — charging up to 200 miles in 15 minutes.
Faster deployments: V4 Cabinet powers 8 posts, 2X the stalls per cabinet. Lower footprint and complexity = more sites coming online faster.
Next-generation hardware: Cutting-edge power electronics designed to be the most reliable on the planet, with 3X power density enabling higher throughput with lower costs.
Tesla reports that its first sites with the new V4 Cabinets are going into permitting now. The company expects its first sites to open next year.
We recently reported about Tesla’s new Oasis Supercharger project, which includes larger solar arrays and battery packs to operate the charging station mostly off-grid.
Early in the deployment of the Supercharger network, Tesla promised to add solar arrays and batteries to all Supercharger stations, and Musk even said that most stations would be able to operate off-grid.
While Tesla did add solar and batteries to a few stations, the vast majority of them don’t have their own power system or have only minimal solar canopies.
Back in 2016, I asked Musk about this, and he said that it would now happen as Tesla had the “pieces now in place” with Supercharger V3, Powerpack V2, and SolarCity:
It took about 8 years, but it sounds like the pieces are now getting actually in place with Supercharger V4, Megapacks, and this new Oasis project.
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Hyundai has a new secret weapon it’s about ready to unleash. To revamp the brand in China and counter BYD’s surge, Hyundai is launching a new AI-powered EV next year. The new model will be Hyundai’s first dedicated electric car for the world’s largest EV market.
With the help of Haomo, a Chinese autonomous startup, Hyundai will launch its first EV equipped with generative AI. It will also be its first model designed specifically for China.
A Hyundai Motor official said (via The Korea Herald) the company is “working to load the software” onto the new EV model, “which will be released in the Chinese market next year.” The spokesperson added, “The level of autonomous driving is somewhere between 2 and 2.5.”
In comparison, Tesla’s Autopilot is considered a level 2 advanced driver assistance system (ADAS) on the SAE scale (0 to 5), meaning it offers limited hands-free features.
With Autopilot, you still have to keep your eyes on the road and hands on the steering wheel, or the system will notify you and eventually disengage.
Haomo’s system, DriveGPT, unveiled last spring, takes inspiration from the OpenAI’s popular ChatGPT.
The system can continuously update in real-time to optimize decision-making by absorbing traffic data patterns. According to Haomo, DriveGPT is used in around 20 models as it looks to play a bigger role in China.
Hyundai hopes new AI-powered EV boosts sales in China
Electric vehicle sales continue surging in China. According to Rho Motion, China set another EV sales record last month with 1.2 million units sold, up 50% from October 2023.
Over 8.4 million EVs were sold in China in the first ten months of 2024, a notable 38% increase from last year.
BYD continues to dominate its home market. According to Autovista24, BYD accounted for 32.9% of all PHEV and EV (NEV) sales in China through September, with over half of the top 20 best-selling EV models.
Tesla was second with a 6.5% share of the market, but keep in mind these numbers only include plug-in models (PHEV).
Like most foreign automakers, Hyundai is struggling to keep up with the influx of low-cost electric models in China. Beijing Hyundai’s sales have been slipping since 2017. Through September, Korean automaker’s share of the Chinese market fell to just 1.2%.
According to local reports, Hyundai is partnering with other local tech companies like Thundersoft, a smart cockpit provider, and others in China to power up its next-gen EVs
With its first AI-powered EV launching next year, Hyundai hopes to turn things around in the region quickly. The new model will be one of five to launch in China through 2026.
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