U.S. Ruling Loosens Four-Decade Ban On Oil Exports- Tanker Stocks May Benefit

Shipments of Unrefined American Oil Could Begin As Early As AugustJune 24, 2014 5:14 p.m. ET Wall Street Journal
The Obama administration has quietly cleared the way for the first exports of unrefined American oil in four decades, allowing energy companies to chip away at the long-standing ban on selling U.S. crude overseas.

Federal officials have told two energy companies that they can legally export a kind of ultra-light oil that has become plentiful as drillers tap shale formations across the U.S. With relatively minimal processing, oil shipments could begin as early as August, according to one industry executive involved in the matter.

Using a process known as a private ruling, the U.S. Commerce Dept.’s Bureau of Industry and Security is allowing Pioneer Natural Resources Co. of Irving, Texas, and Enterprise Products Partners LP of Houston to export ultra-light oil known as condensate to foreign buyers who could turn it into gasoline, jet fuel and diesel.

Both companies confirmed they had received the rulings.

Under current rules, companies can export refined fuel, such as gasoline and diesel, but not oil itself. The Administration’s new approach, which hasn’t been publicly announced, redefines some ultra-light oil as fuel after it has been minimally processed, making it eligible for sale abroad.

The Commerce Department said the companies have improved the processing of the crude in a way that qualifies it for export, even though the oil wouldn’t count as being traditionally refined. Exactly how the agency defines condensate and remains unclear.

The first shipments are likely to be small, but could ultimately encompass a lot of the 3 million barrels a day of oil that energy companies are pumping from shale, industry experts say, depending on how regulators define what qualifies for export

Tankers to benefit from more energy exports, Jefferies says • 11:59 AM

  • While refiner stocks are tumbling on fear that margins will be hurt as the U.S. begins to allow U.S. condensate exports, the sensational headline speculating on the end of the oil export ban “is a long way from giving two companies export permissions to full U.S. crude exports.”
  • However, Jefferies analysts say the news is a near-term positive for tanker companies that ship oil, such as Frontline (FRO -4.6%) and Nordic American Tanker (NAT +1.3%).
  • Even while condensate export volumes are likely to be limited, any increase in export volumes should have a net positive impact on the crude oil tanker market, the firm says, with any heavy condensate volumes exported out of the U.S. to be carried out on either Aframax crude oil tankers and/or Panamax crude oil tankers.

TEEKAY TANKERS LTD(TNK:NYSE, US)

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QUOTE DETAILS

Open 4.18 P/E Ratio (TTM) 17.6x
Last Bid/Size 4.19 / 24 EPS (TTM) 0.24
Last Ask/Size 4.20 / 1 Next Earnings 4 Aug 2014
Previous Close 4.23 Beta 2.10
Volume 184,389 Quarterly Dividend 0.0300
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Day High 4.29 Ex-Dividend Date 15 Apr 2014
Day Low 4.18 Shares Outstanding 83.7M
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52 Week Low 2.49 Short Interest as % of Float 13.74%
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KNIGHTSBRIDGE TANKERS LTD(VLCCF:NASDAQ, US)

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QUOTE DETAILS

Open 14.53 P/E Ratio (TTM) 29.8x
Last Bid/Size 14.68 / 4 EPS (TTM) 0.49
Last Ask/Size 14.69 / 8 Next Earnings 13 Aug 2014
Previous Close 14.57 Beta 0.95
Volume 120,159 Quarterly Dividend 0.2000
Average Volume 431,246 Dividend Yield 5.45%
Day High 14.87 Ex-Dividend Date 20 May 2014
Day Low 14.50 Shares Outstanding 30.5M
52 Week High 16.32 # of Floating Shares 11.83527M
52 Week Low 6.50 Short Interest as % of Float 14.67%
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