Berry Petroleum (BRY) receives diatomite approval. This morning, Berry announced it had received approval from the California Division of Oil, Gas, and Geothermal Resources (DOGGR) to move forward with the next phase of diatomite development. Recall that the company deferred diatomite production earlier in the year, ramping its recently acquired Wolfberry development instead. Berry will start two rigs in early October and hopes to receive approval for the remaining development over the next six months. Bottom line: Though Berry was able to maintain 2010 production guidance by ratcheting up Wolfberry activity, the diatomite approval clears the way for continued production growth in 2011.
Newpark Resources (NR) Provides update on Gulf of Mexico operations, minimal impact. Yesterday after the close, Newpark provided an update for expected revenue and operating income loss related to the Gulf of Mexico moratorium in 3Q. The original guidance estimated that only about 5% of total revenues, or $8-9 million, would have been affected by the events in the Gulf of Mexico during this quarter. A larger-than-expected benefit from clean-up work related to its environmental division appears to be able to mostly offset the decreased activity from base operations. This drops the revenues loss assumption to $3-4 million. All in, the effects from this updated guidance should be minimal, as this figure was never expected to be much of a loss from the beginning. Still, this should provide a minimal boost, if any, during this morning's trading.
Valero (VLO) announced that the company signed an agreement to sell its 185 mb/d (000's b/d) Paulsboro refinery to PBF Holding Co. for approximately $360 million plus an estimated $275 million for net working capital and inventories. At a nelson complexity of 9.4x and a crude capacity of 166 mb/d, this equates to $231 per daily barrel of complexity, which appears as a reasonable price compared to the group's current average of $386 per barrel of complexity. In the last 2 cyclical troughs in 1999 and 2002, SUN (mostly Northeast refineries) traded at a discount of $21 and $96 per daily barrel of complexity to the group's median average, respectively. Bottom line: This announced asset sale is a slight positive factor for VLO, with selling price largely in-line most expectations.