Oil & Gas Stock Roundup: Crude Extend Gains; Williams, Shell Unveil Large Deals - Analyst Blog


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Weekly Review: Crude Oil & Natural Gas Prices

Oil prices rose to another 9-month high last week, as tensions over Iraq continued to feed supply concerns in the Middle East. By close of trade on Friday in New York, West Texas Intermediate (WTI) crude futures was up 0.7% during the week to close at $106.83 per barrel.

The recent natural gas rally took a breather last week on apprehensions of lower electric power demand with the imminent break in hot weather conditions across certain central U.S. regions. Sentiments were further dampened by a bearish supply data. Natural gas prices ended Friday at $4.53 per million Btu (MMBtu), down 4.4% over the week.

Major Newsmakers

U.S. pipeline operator Williams Companies Inc. ( WMB ) shares jumped after it agreed to a $6 billion deal to buy control of natural gas processor Access Midstream Partners L.P.

European energy biggie Royal Dutch Shell plc ( RDS.A ) decided to sell most of its shares in Australia's Woodside Petroleum Ltd. For $5 billion, while it's Houston-based midstream subsidiary filed for an U.S. IPO.    

Energy Week That Was: Detailed Analysis

The week's energy coverage was dominated by the following news:  

Williams Companies to Spend $6B on Access Midstream Buyout

Shares of North American energy firm Williams Companies Inc. surged 19% after announcing plans to purchase the remaining 50% general partner (GP) interest and 55.1 million limited partner (LP) units in Access Midstream Partners L.P. Williams will spend roughly $6.0 billion in cash to procure the stake and units of the master limited partnership (MLP) engaged in the midstream business. The acquisition - likely to close by the third quarter - will likely give Williams full GP ownership and 50% LP interest in the Oklahoma City-based partnership. Importantly, the ownership expansion will boost the pure play energy infrastructure company's presence in areas with growing energy output from shale formations.      

Shell to Shed 19% Stake in Woodside for $5B, Subsidiary Applies for $750M IPO

Europe's largest oil company Royal Dutch Shell plc announced plans to reduce its stake in the Australian petroleum exploration and production company, Woodside Petroleum Ltd. by 19%. The 156.5 million shares sale is expected to garner around $5 billion for Shell. The Anglo Dutch energy major's management stated that the deal was a means to improve the company's capital efficiency and that it intends to drive growth in Australia through directly owned assets.

Later in the week, Shell Midstream Partners, L.P., a wholly owned subsidiary of the integrated energy behemoth, filed for an initial public offering. The subsidiary intends to list its units on the NYSE under the ticker SHLX. The offering will likely take place in the second half of 2014 and Shell expects to raise a maximum of $750 million from it. 

ConocoPhillips to Shed Nigerian Unit

The world's largest independent energy explorer and producer ConocoPhillips ( COP ) has received the consent of the Minister of Petroleum Resources of Nigeria for divestiture of its assets in the West African nation. The properties would be acquired by the leading Nigeria-focused oil and gas explorer Oando Plc for $1.65 billion in cash. The to-be-sold assets hold an estimated 213 million oil-equivalent barrels in proved reserves with average daily production of about 43,000 barrels of oil in 2013. The deal - expected to close by Jun 30 - will help ConocoPhillips to exit Nigeria, a country that has been plagued by unrest, violence and crude theft in recent years.

Weatherford Shareholders Approve Relocation to Ireland

Oilfield services giant Weatherford International Ltd. ( WFT ) announced that its shareholders have approved the relocation of its legal domicile to Ireland from Switzerland. The approval was received at an Extraordinary General Meeting of Shareholders at which over 98% of the shareholders voted in favor of the proposal.  The company also announced that it would delist its shares from the Swiss stock exchange. The incorporation under the Irish law will strengthen Weatherford's activities and facilitate operations at the lowest possible cost. It will also boost the company's ability to rapidly and efficiently progress on its transformational path, while facilitating to retain and further attract the finest personnel in the industry.

Precision Drilling to Sell Trucking Assets, Focus on Core Ops

Canada's largest drilling contractor Precision Drilling Corp. ( PDS ) declared that it has entered into an agreement with oilfield hauling and rentals company Aveda Transportation and Energy Services Inc. to divest a part of its trucking operations. The closure of the deal is expected on Jul 1. The assets under sale include trucks and other associated assets that are used to move drilling rigs for Precision Drilling and other third parties based in Texas and New Mexico. Precision Drilling's management stated that the company intends to use the funds generated from divesting these non-core assets to facilitate growth of its core operations in Canada, the U.S. and other regions abroad.

Performance Chart of Some Major Companies:

The following table shows the price movement of the major oil and gas players over the past 5 days and during the last 6 months.


Last 5 Day's Performance

6 month performance

























Other Headline News on Energy:

CNOOC to Share Production with Eni Unit in South China Sea

China's number one offshore oil producer CNOOC Ltd. ( CEO ) has entered into a production sharing agreement with Rome-based energy giant Eni SpA 's ( E ) subsidiary - Eni China B.V. - for Block 50/34 in the South China Sea. The acreage is located in the Qiongdongnan Basin, offshore Hainan Island, with a total area of 2,000 square kilometers. Per the agreement, Eni China will conduct 3D seismic survey and drill an exploration well in Block 50/34 during the six and half years exploration period. The local unit of the Italian major will bear all the expenditures during this period. CNOOC Ltd. will have a 51% working interest in any commercial discovery in the block.

Encana Seals $3.1B Buyout of Eagle Ford Assets

Canadian energy outfit Encana Corp. announced the closure of its previously announced agreement with mineral explorer Freeport-McMoRan's oil and gas subsidiary to acquire 45,500 net acres of oil-rich Eagle Ford properties. Being a predominantly natural gas player, Encana's profit in recent times have fluctuated wildly due to volatile natural gas prices that made the company restructure its asset base with a focus on oil-producing resources. The latest deal, which aims to double the company's oil output, corroborates this shift.

Range Resources, EQT Complete Asset Swap

Fort Worth, TX-based energy explorer Range Resources Corp. announced the closure of an asset exchange transaction with EQT Corp., a predominantly natural gas player. Per the agreement, Range Resources transferred the ownership of about 73,000 net acres and related assets in Glasscock and Sterling Counties, TX to EQT. On the other hand, Range Resources acquired operated ownership interests spread across 138,000 net acres and the remaining stake in 1,200 miles of gathering pipelines and compression in the Nora Field of Virginia from EQT.

This Week's Outlook:

Apart from the usual releases in this week - the U.S. government data on oil and natural gas - market participants will be closely tracking the Q1 GDP read, apart from reports on housing sector, consumer confidence, durable orders and personal consumption. Energy traders will also be focusing on developments in Iraq.

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WILLIAMS COS (WMB): Free Stock Analysis Report

CNOOC LTD ADR (CEO): Free Stock Analysis Report

WEATHERFORD INT (WFT): Free Stock Analysis Report

CONOCOPHILLIPS (COP): Free Stock Analysis Report

ROYAL DTCH SH-A (RDS.A): Free Stock Analysis Report

ENI SPA-ADR (E): Free Stock Analysis Report

PRECISION DRILL (PDS): Free Stock Analysis Report

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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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