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Energy Market Commentary: Mixed Opening For Energy Stocks


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Thursday, January 04, 2018

Sector Commentary

Energy stocks are set to open mixed and very close to breakeven, though the group will likely be pulled higher by the gravitational force of surging broader equities. The Dow Jones is set to open higher by over 100 points, which will put the key benchmark above 25,000.

In sector news, Bank of America Merrill Lynch made several recommendation changes across its integrated and E&P coverage. Jefferies also tweaked several recommendations across its oilfield services and drillers coverage.

WTI crude oil rose to its highest level since May 2015 on Thursday, supported by unrest in Iran that has raised concerns about supply risks, cold weather in the U.S., which is boosting demand and OPEC-led output cuts. Six days of anti-government protests in OPEC's third-largest producer have added a geopolitical risk premium to oil prices , although Iran's production and exports have not been affected. Brent crude, the international benchmark, was down 11 cents at $67.73 recently. It traded as high as $68.27 earlier in the session. "There is enough support for prices with the cold in the U.S. and the geopolitical factor," said Olivier Jakob, oil analyst at Petromatrix. API data last night showed a draw of 4.99 million barrels of crude oil, along with a build of 1.83 million in gasoline inventories.

Natural gas futures are higher by nearly 1% ahead of the EIA's weekly inventory release due out later this morning. Analysts expect a drawdown of 219 Bcf.

U.S. INTEGRATEDs

Bank of America Merrill Lynch downgraded Chevron to 'Neutral' from 'Buy'.

INTERNATIONAL INTEGRATEDS

(Late Wednesday) Reuters - Suncor Energy said on Wednesday it and Teck Resources have taken higher stakes in the Fort Hills oil sands mine from partner Total , resolving a dispute over building costs.

CAnadian INTEGRATEDS

(Late Wednesday) Reuters - Husky Energy has cut production at its Lima, Ohio, refinery after a rail car accident on Sunday damaged a carriage associated with the plant's 23,000 bpd coking unit. retrieve

Press Release - Suncor Energy provided a business update for the fourth quarter of 2017, highlighting upstream production of 736,000 barrels of oil equivalent per day, which is in line with record production from the third quarter of 2017. Oil sands operations produced approximately 447,000 barrels per day including 6,000 bbls/d from Fort Hills. Syncrude produced 325,000 bbls/d for the quarter, 174,000 bbls/d net to Suncor. Production from other upstream assets remained solid with total production from Exploration & Production assets in Canada, the U.K. and Libya of 115,000 boe/d.

(Late Wednesday) Reuters - Suncor Energy said on Wednesday it and Teck Resources have taken higher stakes in the Fort Hills oil sands mine from partner Total, resolving a dispute over building costs.

U.S. E&PS

Press Release - Hilcorp Energy completed the acquisition of 1,491 conventional wells located in Moxa Arch area in Greater Green River Basin, southwest Wyoming, the US, from Anadarko Petroleum and QEP Energy Company , for a purchase consideration of US$450 million.

(Late Wednesday) Press Release - Cabot Oil & Gas announced that its Board of Directors declared a 20 percent increase in its regular quarterly dividend to six cents ($0.06) per share on the Company's common stock. The dividend will be paid on February 7, 2018 to all shareholders of record as of the close of business on January 24, 2018.

Bank of America Merrill Lynch upgraded California Resources to 'Neutral' from 'Underperform'.

Societe Generale downgraded California Resources to 'Hold' from 'Buy'.

Piper Jaffray initiated coverage of Callon Petroleum at 'Overweight'.

Bank of America Merrill Lynch upgraded Concho Resources to 'Buy' from 'Neutral'.

Drexel Hamilton dropped coverage of the Energy industry.

Bank of America Merrill Lynch downgraded EOG Resources to 'Neutral' from 'Buy'.

Investec started Kosmos Energy started at 'Buy'.

Bank of America Merrill Lynch upgraded Marathon Oil to 'Buy' from 'Neutral'.

Bank of America Merrill Lynch upgraded Newfield Exploration to 'Buy' from 'Neutral'.

(Late Wednesday) Press Release - CNX Resources Corporation and CNX Midstream Partners LP jointly announced that CNX has closed its previously announced acquisition of Noble Energy, Inc. 's 50% membership interest in CONE Gathering LLC, which holds the general partner interest and incentive distribution rights in CONE Midstream Partners LP. In conjunction with the closing, CONE Midstream Partners LP was renamed CNX Midstream Partners LP and will commence trading on the New York Stock Exchange under the ticker "CNXM" effective January 4, 2018.

Bank of America Merrill Lynch downgraded Occidental Petroleum to 'Neutral' from 'Buy'.

Bank of America Merrill Lynch downgraded Range Resources to 'Neutral' from 'Buy'.

CANADIAN E&PS

(Late Wednesday) Press Release - Obsidian Energy is pleased to announce that Mr. Edward H. Kernaghan has been appointed to the Obsidian Energy Board of Directors.

OIL SERVICES

Press Release - Baker Hughes announced the final results of the previously announced cash tender offers by its subsidiary, Baker Hughes, a GE company, LLC to purchase up to $175 million in aggregate purchase price of the outstanding (i) 8.550% Debentures due 2024 and (ii) 6.875% Notes due 2029. The terms and conditions of the Maximum Tender Offers are described in the Offer to Purchase, dated December 4, 2017. The pricing and early tender results of the Maximum Tender Offers were announced in BHGE's news releases dated December 18, 2017.

TD Securities upgraded Ensign Energy Services to 'Buy' from 'Hold'.

Jefferies downgraded Oceaneering International and Weatherford International to 'Underperform' from 'Hold'.

Press Release - Patterson-UTI Energy reported that for the month of December 2017, the Company had an average of 163 drilling rigs operating. For the three months ended December 31, 2017, the Company had an average of 161 drilling rigs operating.


Press Release - Petroleum Geo-Services expects to report total MultiClient revenues of approximately $170 million in Q4 2017, which should result in a consolidated EBITDA in excess of $100 million.

(Late Wednesday) Press Release - Tiger Rentals Group acquired Production Management Industries from Superior Energy Services . The transaction enables Tiger Rentals to expand its value-added service offerings to its existing offshore and onshore oilfield customers.

(Late Wednesday) Press Release - Willbros Group announced that it completed the sale of its tank construction and repair and maintenance business to Alliance Tank Services. The transaction is effective January 1, 2018 and will be reflected in first quarter 2018 results.

DRILLERS

Jefferies downgraded Diamond Offshore Drilling to 'Underperform' from 'Hold'.

Jefferies upgraded Transocean to 'Buy' from 'Hold'.

MARKET COMMENTARY

U.S. stock futures pointed to a higher opening, as global stock markets hit record highs buoyed by strong data from the world's biggest economies. The dollar edged down. Gold steadied as profit-taking set in amid worries over looming U.S. rate hikes.

Nasdaq Advisory Services Energy Team is part of Nasdaq's Advisory Services -- the most experienced team in the industry. The team delivers unmatched shareholder analysis, a comprehensive view of trading and investor activity, and insights into how best to manage investor relations outreach efforts. For questions, please contact Tamar Essner . This communication and the content found by following any link herein are being provided to you by Corporate Solutions, a business of Nasdaq, Inc. and certain of its subsidiaries (collectively, "Nasdaq"), for informational purposes only. Nasdaq makes no representation or warranty with respect to this communication or such content and expressly disclaims any implied warranty under law. Sources include Reuters, TR IBES, WSJ, The Financial Times and proprietary Nasdaq research.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



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